1 Introduction

Transnational litigation against MNEs originated in common law jurisdictions – mainly the US and England – in the 1980s and 1990s. However, the nature of this litigation has been different in both countries. While in England victims of business-related human rights abuse and environmental damage brought general tort claims against parent companies of MNEs, in the US they mainly took advantage of the particularities of the ATS¹ to challenge wrongful corporate conduct in foreign countries. In both countries, plaintiffs have nevertheless hoped to gain faster and easier access to financial compensation and to obtain the recognition of the harm they have suffered. By contrast, the practice of transnational litigation against MNEs in European civil law countries appeared more recently. It has developed under various forms of law, including criminal, tort, and specialized law, as a result of litigators using various legal strategies.

In both common law and civil law jurisdictions, the existence of cause-lawyers and CSOs linked to the corporate accountability movement has been crucial in triggering the emergence of transnational litigation against MNEs. This type of litigation has direct links to the broader civil society agenda on globalization and corporate accountability.² It supports the aim of improved regulation of business activities at both international and national levels. In general, cause-lawyers and CSOs behind transnational claims seek not only effective remedy for victims but also MNE accountability for their involvement in human rights abuse and environmental damage. Litigation is therefore a strategic tool for attracting visibility, revealing MNE impunity towards human rights and the environment, and demanding legal and policy reform for improved corporate accountability.

2 Origins of transnational litigation against MNEs in common law jurisdictions

Transnational litigation against MNEs emerged in common law jurisdictions around two sets of cases that started in the 1990s. First, plaintiffs brought civil actions based on the ATS before the US federal courts against foreign companies for their involvement in alleged violations of human rights in their foreign operations. Second, a series of tort actions were brought before the domestic courts of various common law jurisdictions – including the US, England, Canada, and Australia – to hold MNEs accountable for wrongs committed abroad. In this second set of cases, plaintiffs have typically targeted the parent company for a tort committed in the context of its subsidiaries’ activities.³ These cases will be briefly considered in this section.

The rise and fall of Alien Tort Statute litigation in the United States

The ATS is a US federal statute that was enacted in 1789.⁴ It provides: ‘The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.’ Although there is little information about the origins of the ATS, it is assumed that the statute was enacted to ensure that the US, then a new nation, had an obligation to comply with international law. More practically, the US Congress feared that international law violations could trigger retaliation against the US by a more powerful State.⁵

For almost 200 years the ATS was rarely used.⁶ It remained more or less dormant until the 1980s when the first claim in relation to gross human rights violations was brought under it. In the landmark Filártiga v Peña-Irala case,⁷ the plaintiffs argued that the US courts had jurisdiction under the ATS to hear their civil action against a former Paraguayan police official for the alleged torture and killing of a member of their family. The US Court of Appeals for the Second Circuit eventually ruled in favour of the plaintiffs. It found that it had jurisdiction under the ATS based on the universal acknowledgement that acts of official torture are contrary to the law of nations. It held the former police official liable for the torture and killing of the plaintiffs’ family member. The plaintiffs were also awarded around US$ 10 million in damages. This ruling was a decisive moment for the adjudication of human rights claims based on the ATS. As Enneking notes, ‘the statute fast became famous for providing a legal basis upon which those who had suffered egregious breaches of their human rights could bring civil lawsuits against their wrongdoers before US federal courts.’⁸

Following Filártiga, more ATS-based claims were filed against many different perpetrators of human rights violations. At first, claims were mainly aimed at States and foreign high officials.⁹ However, they progressively targeted private actors, such as private individuals alleged to have perpetrated genocide or forced labour¹⁰ and, eventually, corporate actors. In Doe v Unocal,¹¹ a group of Burmese villagers alleged that they were subjected to gross human rights violations, including forced labour, murder, rape, and torture, by the Burmese military regime in the context of the construction of the Yadana gas pipeline. They accused the US-based oil MNE Unocal, as well as other corporate actors, of complicity for the violations they had suffered. According to the plaintiffs, Unocal was liable because it hired the Burmese military to provide security knowing that the military would violate human rights while doing so. In 1997, the US District Court for the Central District of California ruled that it had jurisdiction to hear the plaintiffs’ claim against Unocal under the ATS. The case never reached a verdict, as the parties eventually settled. Nevertheless, Unocal became a milestone in providing precedent for the use of ATS-based claims to hold companies accountable for human rights violations.¹²

Since Unocal, companies have regularly found themselves defendants for their direct and indirect involvement in human rights violations. In most claims, plaintiffs relied on secondary, or vicarious, liability to hold corporate defendants liable for their assistance in, or other formal connection to, human rights violations committed by the government with which they do business.¹³ For example, in Wiwa v Royal Dutch Petroleum Co.,¹⁴ the plaintiffs alleged that the oil MNE Royal Dutch Shell conspired with, or aided and abetted, Nigeria’s military in the commission of human rights violations, including the conviction of the Ogoni Nine.¹⁵ However, cases against corporations have raised the issue of how to distinguish ‘actionable corporate complicity in egregious human rights abuses from non-tortious doing business in foreign countries’.¹⁶ This is an issue that has divided US federal courts.

Until 2010, there was a strong consensus among US federal courts that corporations could be subject to suit under the ATS to the same extent as natural persons. However, this consensus started to crumble in Kiobel v Royal Dutch Petroleum Co. In 2010, the divided panel of the US Court of Appeals for the Second Circuit ruled that the ATS does not provide jurisdiction over claims against corporate defendants.¹⁷ The two-judge majority held that international law governs the scope of the violations actionable under the statute, including who can be held liable for those violations, and that international law does not recognize corporate liability for human rights violations.¹⁸ The US Supreme Court reviewed the case in 2013.¹⁹ However, it did not address the question whether corporations could be sued under the ATS. It focused instead on the separate question of the extraterritorial application of the ATS. The US Supreme Court ruled that ‘the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts that presumption’. In this case, all the relevant conduct took place outside the US. Therefore, the petitioners’ case was barred from seeking relief for violations of the law of nations occurring outside the US. The Supreme Court added that:

This ruling struck a blow against the use of the ATS to hold foreign companies accountable for human rights violations committed abroad. In 2018, the US Supreme Court definitively closed the doors of the ATS to claims targeting foreign companies. In Jesner v Arab Bank,²⁰ the Supreme Court held that foreign corporations cannot be sued, and therefore are excluded from liability, under the ATS. For some observers, this ruling completed the exclusion of transnational human rights litigation from US federal courts started by Kiobel.²¹

At the present time, ATS-based claims remain possible against domestic corporations. However, a number of substantial barriers may limit the possibility of bringing these claims.²² First, US corporations often do business abroad through subsidiaries incorporated under foreign law. When human rights violations take place in the context of a foreign subsidiary’s activities, plaintiffs will have to either convince the court to attribute the tortious conduct of the subsidiary to the parent company or find tortious conduct on the part of the parent itself. However, US courts have been reluctant to pierce the corporate veil in ATS cases.²³ Second, most ATS claims against corporations allege that the company aided and abetted violations by foreign governments. To date, US courts have nonetheless been divided on the required criminal intent (mens rea) standard applicable to corporations to hold them liable for aiding and abetting.²⁴ Third, ATS-based claims must satisfy Kiobel’s requirement that they touch and concern US territory. Again, US courts have disagreed on the meaning of this requirement. While some have held that the US nationality of the defendant is not sufficient by itself, others have ruled that only the location of the conduct matters.²⁵ In Nestle USA Inc. v Doe,²⁶ a case alleging US companies’ involvement in child slavery on Ivory Coast cocoa farms, the Supreme Court dismissed the plaintiffs’ claim on the grounds that they improperly sought extraterritorial application of the ATS. Furthermore, because the statute did not apply extraterritorially, the plaintiffs should have established that the relevant conduct to the ATS’ focus occurred in the US, even if other conduct occurred abroad. However, pleading general corporate activity, like ‘mere corporate presence’, did not draw a sufficient connection between the cause of action sought by the respondents and domestic conduct. The Supreme Court’s decision suggests that few ATS-based claims against corporations will be allowed to proceed in the future. Furthermore, the likely difficulty in showing the involvement of the US parent company in the human rights violations complicates the task further. As Dodge ironically points out, ‘So, while corporations continue to be subject to customary international law norms of human rights law, the prospects of holding them liable for violating those norms in US courts have faded nearly to vanishing point.’²⁷

Transnational tort claims against MNEs

Civil actions based on general tort law have also been brought before domestic courts of various common law jurisdictions in order to hold MNEs accountable for wrongs committed abroad. Flexible rules on access to evidence, class or group actions, and the possibility of obtaining a high amount of damages, including punitive damages, have contributed to the appeal of common law countries, especially the US and England, as forums for transnational claims against MNEs. At the same time, plaintiffs have faced a number of obstacles in accessing courts in these countries. In most cases, plaintiffs have struggled with the application of the forum non conveniens doctrine and other jurisdictional issues, which have prevented their claims from reaching the merits phase. Moreover, the high costs of bringing these lawsuits remain problematic. Furthermore, reforms in England regarding legal aid and cost recovery have reduced accessibility to the domestic courts by victims of business-related abuse from host countries. The following overview of claims in the US, Canada, Australia, and England therefore shows the main opportunities and challenges for holding MNEs accountable in common law jurisdictions.

United States

In the US, the first transnational tort claim was brought against the US chemical company Union Carbide following the infamous industrial disaster that took place in Bhopal, India, in 1984. However, the case was dismissed on grounds of forum non conveniens, as India was seen as the appropriate forum for the claims against Union Carbide. The doctrine of forum non conveniens ‘deals with the discretionary power of a court to decline to exercise a possessed jurisdiction whenever it appears that the case before it may be more appropriately tried elsewhere’.²⁸ It was originally invoked to protect the defendant from being harassed by a plaintiff choosing a genuinely inconvenient or inappropriate forum. However, ‘it has become in many instances a device for parent companies to escape liability for tortious acts committed abroad.’²⁹ Critics of forum non conveniens point out that this doctrine is simply inadequate to treat claims that arise in modern transnational business patterns and that it limits access to justice by victims.³⁰

In general, tort claims relating to human rights violations against foreign corporations are unlikely to succeed,³¹ most notably as a result of the Supreme Court’s recent decisions strictly limiting the assertion of general personal jurisdiction over corporations.³² In particular, in Daimler AG v Bauman the Supreme Court rejected the idea that courts in California could have jurisdiction to hear a suit against German car-maker Daimler for the actions of its subsidiary in Argentina.³³ In this case, the plaintiffs had filed a suit in the California Federal District Court alleging that MB Argentina, a subsidiary of Daimler, had collaborated with state security forces during Argentina’s 1976–1983 dictatorship to kidnap, detain, torture, and kill workers of the subsidiary. The Supreme Court held that Daimler was not amenable to suit in California for injuries allegedly caused by the conduct of MB Argentina that took place entirely outside the US. It rejected the idea that general jurisdiction can be exercised ‘in every State in which a corporation engages in a substantial, continuous, and systematic course of business’. Continuous and systematic activities alone are not sufficient for jurisdiction over claims unrelated to those activities. A corporation’s affiliations with a State must be so continuous and systematic as to render it essentially at home in the forum State.³⁴ The Supreme Court also concluded that California’s exercise of general jurisdiction over Daimler would violate the Due Process Clause of the Fourteenth Amendment. For most observers, Daimler put an end to an era of general jurisdiction jurisprudence in the US.³⁵

Canada

In Canada, around seven transnational claims have so far been brought against MNEs.³⁶ In particular, most of these claims have concerned Canadian extractive companies operating abroad.³⁷ This is not surprising since Canada is alleged to be home to half of the world’s mining companies.³⁸ In these cases, plaintiffs have accused extractive companies of having directly and indirectly contributed to human rights violations and environmental damage, including environmental pollution following a tailings dam failure in Guyana,³⁹ war crimes and gross violations of human rights in the DRC,⁴⁰ bodily injuries, death threats, and intimidation by private security forces against demonstrators in Ecuador⁴¹ and in Guatemala,⁴² rape and murder by security personnel in Guatemala,⁴³ and use of forced labour and inhuman and degrading treatment in Eritrea.⁴⁴ Recently, a tort claim targeted a retail company for its liability in the collapse of the Rana Plaza building in Bangladesh.⁴⁵

Plaintiffs have generally struggled to establish jurisdiction in Canada. One early case was a claim brought against Cambior, a mining MNE based in Quebec, for pollution originating from its gold mine in Guyana.⁴⁶ In 1998, the Quebec Superior Court⁴⁷ dismissed the case on grounds of forum non conveniens, finding that Guyana was the appropriate forum given the location of the evidence and witnesses, and the interests of justice.⁴⁸ Furthermore, the plaintiffs did not have a right to a forum in Quebec.⁴⁹ In Anvil Mining, the Court of Appeal for Quebec dismissed a collective redress action for lack of jurisdiction. In this case, plaintiffs alleged that Anvil Mining, an extractive company based in Australia but with activities in Quebec, had provided logistical assistance to the DRC military, which then committed war crimes and crimes against humanity in Katanga, DRC. The Court of Appeal found that the dispute had no connection with Anvil Mining’s activities in Quebec. In Copper Mesa, the Court of Appeal for Ontario dismissed the claims for failing to disclose a reasonable cause of action. The plaintiffs were Ecuadorian residents who alleged that two directors of Copper Mesa, a British Colombian company that controlled a mining project in Ecuador, were negligent in failing to prevent acts of violence and threats committed against them by security forces hired by the operating subsidiary. According to the plaintiffs’ claim, the directors were liable for what happened because the facts gave rise to an affirmative duty on their part to prevent the harm that materialized. However, the Court of Appeal rejected that the directors could be held liable in negligence for failing to prevent harm. It also held that a ‘corporate director had no established duty in law to be mindful of the interests of strangers to the corporation when discharging their duties as a director’.⁵⁰

In recent years, however, plaintiffs have been more successful in establishing jurisdiction in Canada. In Tahoe Resources, the British Columbia Court of Appeal allowed an action against Tahoe Resources to be heard in Canada. It held that there was substantial risk of an unfair trial should the case be heard in the Guatemalan courts due to, among other things, procedural obstacles, the limitation period, and evidence pointing to a high risk of injustice because of widespread corruption in the Guatemalan court system.⁵¹ In Hudbay Minerals, the defendant originally contested that the claims should be heard in Canada. However, it withdrew its opposition and the Superior Court of Ontario ruled in July 2013 that the claims could proceed to trial in Canada. Finally, the Supreme Court of Canada addressed the issue of jurisdiction in a landmark ruling in Nevsun.⁵² In this case, the plaintiffs filed a lawsuit against Nevsun Resources Ltd (Nevsun), a Canadian mining company, for its complicity in the use of forced labour at a mine it owns in Eritrea. The plaintiffs claimed they had been conscripted into forced labour and subjected to violent, cruel, inhuman, and degrading treatment by Nevsun’s subcontractor. In February 2020, the Supreme Court allowed the case to go forward. Importantly, it held that the breaches of customary international law, or jus cogens, relied on by the Eritrean plaintiffs could apply to Nevsun. It added, ‘Since the customary international law norms raised by the Eritrean workers form part of the Canadian common law, and since Nevsun is a company bound by Canadian law, the claims of the Eritrean workers for breaches of customary international law should be allowed to proceed.’ For some observers, the Supreme Court opened the door for international human rights tort claims in Canada.⁵³

Despite the plaintiffs’ success in establishing the jurisdiction of courts in Canada, in the coming years courts will decide on the merits in Hudbay Minerals alone, as in Tahoe Resources and Nevsun the parties reached an out-of-court settlement.⁵⁴ Such settlements are welcome as a way to provide for speedy dispute resolution and effective redress to victims for the damage they have suffered. However, at the same time they prevent the formulation of judgments that could outline the contours of corporate liability in human rights cases involving MNEs. Unless a settlement is also reached in Hudbay Minerals, the outcomes of this case will show whether Canada could become a valid jurisdiction for victims in search of corporate accountability.

Australia

Although transnational litigation against MNEs started in Australia in the 1990s, less than a handful of claims have been brought before Australian courts to date. These claims have produced limited results from a corporate accountability perspective; two cases ended up in out-of-court settlements, and another case is still ongoing. The first claim was brought as early as 1994 by landowners from Papua New Guinea against BHP, an Anglo-Australian mining company.⁵⁵ In this case, the plaintiffs alleged that BHP dumped mine tailings waste into local rivers, which led to environmental damage and destruction of their traditional lifestyle. Their claim was admissible on jurisdictional grounds because of Australia’s generally pro-plaintiff approach to the issue of choice of jurisdiction.⁵⁶ The parties eventually reached an out-of-court settlement. For almost 20 years afterwards no transnational claims were brought against MNEs. However, in 2014 an Iranian national became the lead plaintiff in a class action lawsuit brought before the Supreme Court of Victoria against Australia and two corporate contractors who operated an immigration detention centre on Manus Island in Papua New Guinea. The plaintiff alleged that the defendants breached a duty of care they owed to asylum seekers detained in the centre.⁵⁷ In 2017 the parties agreed to settle.⁵⁸ Finally, in 2016 approximately 15,000 Indonesian seaweed farmers filed a class action lawsuit before the Federal Court of Australia against PTTEP Australasia, a subsidiary of a Thai state-owned oil and gas company, following the Montara oil spill in the Timor Sea in 2009.⁵⁹ The plaintiffs alleged that the oil spill caused damage to seaweed farming activities in Indonesia. Hearings started in June 2019 and the case was ongoing at the time of writing.

As a result of settlements between plaintiffs and defendants, transnational litigation against MNEs has barely developed in Australia. It is therefore difficult to assess the potential of Australia as a reliable forum for future claims. Some scholars have nonetheless argued that Australia remains a viable forum for various reasons.⁶⁰ First, its pro-plaintiff approach departs from that in common law jurisdictions with respect to the application of the doctrine of forum non conveniens, which has plagued litigation in other countries. In general, cases will only be stayed on forum non conveniens grounds if Australia is a ‘clearly inappropriate forum’.⁶¹ Second, Australian courts may be more inclined to hear tort claims involving damage suffered partly within the jurisdiction, since foreign corporations are susceptible to the exercise of personal jurisdiction where they conduct business in Australia. Courts have taken a particularly permissive approach to establishing presence in the jurisdiction, and in practice it is not a significantly high threshold to overcome.⁶² Third, when determining the applicable law, although courts will apply the lex loci delicti principle strictly, there is a deal of flexibility around the test for determining where the relevant wrong has occurred. Finally, Australia allows class action suits, which is an advantage for plaintiffs.⁶³ At the same time, issues such as funding and costs remain significant barriers for plaintiffs.⁶⁴

England

In Europe, transnational litigation against MNEs started in England where the first tort claims were brought against parent companies of MNEs for harm resulting from their subsidiaries’ activities in developing countries. These claims have alleged a variety of harms, such as asbestos-related occupational disease,⁶⁵ oil spills and environmental pollution,⁶⁶ toxic waste dumping,⁶⁷ and torture and ill treatment.⁶⁸ According to Richard Meeran, a British lawyer from Leigh Day, the London-based law firm that pioneered this type of litigation, the fundamental objectives of tort litigation against MNEs are twofold: to ‘provide a level of compensation to a victim which as much as possible reinstates the victim in the position that he or she would have been in if the negligence had not occurred’, and to ‘act as a deterrent against future wrongdoing by the perpetrator and others generally’.⁶⁹

England has been a favoured home country forum for victims of business-related abuse as a result of its flexible rules on evidence and group actions. At the same time, plaintiffs have faced various procedural hurdles, in particular to establish the jurisdiction of the English courts, as well as practical obstacles, such as the costs of proceedings. Courts have also often been reluctant to hold parent companies liable for human rights abuse taking place in the context of their overseas activities. However, recent Supreme Court decisions suggesting that a parent company may incur a duty of care in respect of the activities of a subsidiary indicate a potential shift in the legal landscape governing corporate accountability.

Jurisdiction

The first plaintiffs who brought tort litigation against MNEs for conduct committed abroad in the English courts had to deal with the doctrine of forum non conveniens.⁷⁰ The significance of this obstacle was particularly visible in two cases concerning personal injuries or death caused by exposure to uranium and asbestos respectively: Connelly v RTZ Corporation Plc⁷¹ and Lubbe v Cape Plc.⁷² In both cases, the parent company applied for a stay of proceedings on the grounds that the host State (Namibia and South Africa respectively) was the more appropriate forum to hear the claim. The High Court of Justice (High Court) originally accepted the defendants’ argument, granting a stay of proceedings. However, in both cases the House of Lords ultimately rejected the decision to decline jurisdiction in favour of either Namibia or South Africa. It found that a stay would lead to a denial of justice where the plaintiffs could demonstrate, through evidence such as the absence of adequate funding or legal representation in the host State, that they would be unable to obtain justice in the foreign forum.

Things changed after the 2005 Owusu v Jackson case,⁷³ in which the CJEU foreclosed the use of the forum non conveniens doctrine in the English courts.⁷⁴ The CJEU reasserted that Article 2(1) of Regulation 44/2001⁷⁵ was directly applicable to all EU Member States, who could not derogate from this rule. In particular, the doctrine of forum non conveniens was deemed incompatible with the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters,⁷⁶ as it would undermine the principle of legal certainty and the uniform application of European rules of jurisdiction. Consequently, since Owusu, forum non conveniens is no longer an issue in transnational cases against MNEs in England, thus opening the way for subsequent litigation.⁷⁷ However, following the UK’s withdrawal from the EU, observers have validly questioned whether English courts will resume the application of the forum non conveniens doctrine.⁷⁸

Despite the progress made with regard to forum non conveniens, the jurisdiction of the English courts has remained problematic for plaintiffs and continues to consume the majority of their resources during litigation. In particular, plaintiffs face the question of whether they have a sufficiently substantial case on the merits to justify the court’s exercise of jurisdiction. This question, which demonstrates how closely jurisdictional and liability issues are intertwined, was exemplified in the Okpabi v Royal Dutch Shell Plc case. In this ongoing case, two Nigerian communities have sought redress against Royal Dutch Shell Plc (RDS), an Anglo-Dutch oil company,⁷⁹ and Shell Petroleum Development Company of Nigeria Ltd (SPDC), its Nigerian subsidiary, for environmental damage caused by several oil spills that occurred from SPDC’s pipelines. The claimants argue that the oil spills were caused by SPDC’s negligence. They also contend that RDS owed them a common law duty of care because it exercised significant control over material aspects of SPDC’s operations and/or assumed responsibility for SPDC’s operations, and that RDS allegedly failed to protect the claimants against the risk of foreseeable harm arising from SPDC’s operations. Both the High Court⁸⁰ and the Court of Appeal⁸¹ rejected the suggestion that the English courts should exercise jurisdiction over the claims. Both courts concluded that although they had jurisdiction to try the claims against RDS, the claimants were unable to demonstrate a properly arguable case that RDS owed them a duty of care. Since the claims against RDS, the anchor defendant, did not have a real prospect of success, the conditions for granting permission to serve the claim on SPDC as a ‘necessary or proper party’ to the claims against RDS were not met. Both rulings raised concerns about the risk of seeing the interlocutory stage transformed into a ‘mini-trial’, which would place ‘an unreasonably high burden on the claimants to establish an arguable case on the duty of care at the jurisdictional stage of proceedings’.⁸² Victims may face significant barriers as a result of this approach, as they would have to present a substantial case before disclosure proceedings could start.⁸³

However, in a landmark judgment given in February 2021,⁸⁴ the UK Supreme Court rejected the lower courts’ approach. It clarified that courts should not conduct a mini-trial when deciding on jurisdictional issues. It is not the task of the courts to assess the weight of the evidence and to exercise judgement based on that evidence at the interlocutory stage. The factual assertions made in support of the claim should be accepted unless, exceptionally, they are demonstrably untrue or unsupportable.⁸⁵ This was not the case in this instance. Furthermore, the UK Supreme Court rejected the contention that a parent company could never incur a duty of care in respect of the activities of a subsidiary by maintaining group-wide policies and guidelines. It found that the Shell group’s vertical corporate structure involved significant delegation of authority, including in relation to operational safety and environmental responsibility. How this organizational structure worked in practice and the extent to which authority was delegated clearly raised triable issues.⁸⁶

The Supreme Court’s decision in Okpabi is significant for a number of reasons, one of which being that it removes some of the barriers that plaintiffs have recently faced in establishing the jurisdiction of the English courts, including the risk of a mini-trial at the interlocutory stage and the assumption that claims based on the parent company’s duty of care for its subsidiary activities do not raise a triable issue.⁸⁷ In particular, this judgment helps to improve access to justice and reparation by clarifying ‘the application of the jurisdictional test in such a way as to expedite claimants’ access to a proper fair trial’.⁸⁸

Corporate group liability

In the majority of claims against MNEs, plaintiffs have raised the tort liability of the parent company for its negligence arising from a breach of a duty of care.⁸⁹ They have used this legal basis in order to circumvent the corporate veil theory. As Chambers and Tyler suggest, ‘By targeting the parent company, claimants have avoided having to argue that the corporate veil should be pierced to trace liability for the actions of the local subsidiary back to the parent company or other branch of the business in the [UK].’⁹⁰

The English courts have, at times, shown receptiveness to such arguments raised by plaintiffs. In claims against MNEs, judges have accepted the need ‘to be more creative and influential in solving the legal problems before them, which enhances the chances of success for plaintiffs who are bringing novel legal arguments’.⁹¹ This was particularly visible in Chandler v Cape Plc, which opened the door to liability of parent companies when they breach their duty of care towards their subsidiaries’ employees. Chandler was employed by Cape Building Products Ltd (Cape Products) in England between 1959 and 1962. Cape Products was a wholly-owned subsidiary of Cape Plc that manufactured asbestos products. In 2007, Chandler discovered that he had contracted asbestosis as a result of exposure to asbestos during his employment with Cape Products. However, by that time Cape Products no longer existed and its remaining insurance policies excluded asbestosis. Therefore, Chandler brought a claim for damages against Cape Plc, the parent company, for breach of its duty of care towards Chandler.

In 2011, the High Court ruled that Cape Plc was liable to Chandler on the basis of the common law concept of assumption of responsibility.⁹² Applying the three-stage test in Caparo Industries Plc v Dickman (1990) for determining whether the situation gives rise to a duty of care, the High Court found that Cape Plc owed, and had breached, a duty of care to Chandler. First, the defendant should have foreseen the risk of injury to the claimant. Second, there was sufficient proximity between Chandler and Cape Plc. Third, it was fair, just, and reasonable for a duty of care to exist. Cape Plc appealed against that decision. In 2012, the Court of Appeal upheld the High Court’s decision and found that Cape Plc owed a direct duty of care to the employees of Cape Products.⁹³ Given Cape Plc’s superior knowledge about the nature and management of risks from asbestos, it was appropriate to find that Cape Plc assumed a duty of care either to advise Cape Products on what steps it had to take in light of the knowledge then available to provide those employees with a safe system of work, or to ensure that those steps were taken. In this case, Cape Plc failed to advise on precautionary measures.⁹⁴ Importantly, the Court of Appeal provided guidance on the conditions under which a parent company could be held liable for harm suffered by its subsidiaries’ employees:

Chandler was a landmark case in the development of parent company liability for the harm caused by subsidiaries in the context of corporate group activities. However, in this case both the parent company and the subsidiary were registered in England and the subsidiary’s activities took place in England.

Following Chandler, in several cases the English courts had to answer the question whether parent companies owe a duty of care to third parties affected by the operations of their foreign subsidiaries. In AAA v Unilever Plc, the Court of Appeal held that the law of tort does not recognize that the parent company has a legal responsibility vis-à-vis persons affected by the activities of its subsidiary. However, a parent company may have a duty of care in relation to its subsidiary’s activity if ordinary, general principles of the law of tort regarding the imposition of a duty of care on the parent are satisfied in the particular case.⁹⁶ A parent company may have a duty of care in relation to its subsidiary’s activities in two situations: (1) where the parent has in substance taken over the management of the relevant activity of the subsidiary in place of, or jointly with, the subsidiary’s own management; or (2) where the parent has given relevant advice to the subsidiary about how it should manage a particular risk.⁹⁷ However, none of the claims in Unilever fell within one of these two situations. The Court of Appeal also rejected the claim that Chandler laid down a separate test, distinct from general principles, for the imposition of a duty of care on the parent.

Shortly after Unilever, the Supreme Court clarified the contours of the parent company’s duty of care for the activities of its subsidiary in its landmark judgment in Vedanta Resources Plc v Lungowe.⁹⁸ In this case, the plaintiffs were farmers from Zambia who alleged that their health and farming activities had been damaged by the discharge of toxic matter from the Nchanga Copper Mine owned by Konkola Copper Mines Plc (KCM), a Zambian company. They brought a group claim against KCM and Vedanta Resources Plc (Vedanta), its parent company, for negligence and breach of statutory duty. In 2019, the Supreme Court considered a procedural appeal regarding jurisdiction of the English courts for the group tort claim and had to answer, among other questions, whether there was an arguable case against Vedanta. It clarified that ‘the liability of parent companies in relation to the activities of their subsidiaries is not, of itself, a distinct category of liability in common law negligence’.⁹⁹ It held as follows:

Furthermore, the Supreme Court rejected that all cases of the parent’s liability could be shoehorned into the specific categories developed in Unilever, as ‘[t]‌here is no limit to the models of management and control which may be put in place within a multinational group of companies’.¹⁰¹ It also dismissed the claim that ‘a parent could never incur a duty of care in respect of the activities of a particular subsidiary merely by laying down group-wide policies and guidelines, and expecting the management of each subsidiary to comply with them’ as ‘[g]roup guidelines about minimising the environmental impact of inherently dangerous activities, such as mining, may be shown to contain systemic errors which, when implemented as of course [sic] by a particular subsidiary, then cause harm to third parties’.¹⁰² Group-wide policies may give rise to a duty of care to third parties if the parent takes active steps, by training, supervision, and enforcement, to see that they are implemented by relevant subsidiaries. Moreover, ‘the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken.’¹⁰³ Ultimately, the Supreme Court found that Vedanta’s published materials in which it asserted its own assumption of responsibility for the maintenance of proper standards of environmental control over the activities of its subsidiaries, and the implementation of those standards by training, monitoring, and enforcement, were sufficient on their own to show that a substantial level of intervention by Vedanta in the conduct of operations at the mine may be demonstrable at trial. Therefore, the Supreme Court recognized that a parent company may owe a duty of care to third parties affected by its foreign subsidiary’s activities in specific circumstances.

Two years after Vedanta, the Supreme Court reaffirmed its position and clarified various points pertaining to the parent company’s duty of care in Okpabi.¹⁰⁴ First, it clarified the factors and circumstances that may give rise to a duty of care of the parent company. It held that the Court of Appeal’s conclusion that a parent company could never incur a duty of care in respect of the activities of a subsidiary by adopting group-wide policies and standards was inconsistent with Vedanta.¹⁰⁵ Moreover, the Supreme Court found that the Court of Appeal had focused inappropriately on the issue of control. While control is a starting point in considering the extent to which the parent did take over or share with the subsidiary the management of the relevant activity, it may not demonstrate the de facto management of the activity. As the Supreme Court pointed out, a ‘subsidiary may maintain de jure control of its activities, but nonetheless delegate de facto management of part of them to emissaries of its parent’.¹⁰⁶ Second, the Supreme Court clarified the analytical framework to determine whether a duty of care of the parent company exists. It reasserted that ‘there is “no special doctrine in the law of tort of legal responsibility on the part of a parent company in relation to the activities of its subsidiary, vis-à-vis persons affected by those activities”’.¹⁰⁷ This approach results from the fact that MNEs may put in place various models of management and control.¹⁰⁸ Furthermore, ‘the liability of parent companies in relation to the activities of their subsidiaries is not, of itself, a distinct category of liability in common law negligence. … The general principles which determine such liability “are not novel at all” … ‘It “require[s]‌ no added level of rigorous analysis beyond that appropriate to any summary judgment application in a relatively complex case.”’¹⁰⁹

Plaintiffs have also tried to hold parent companies liable for the acts of third parties under the theory of accessory liability for assisting torts.¹¹⁰ However, this strategy has been unsuccessful so far. In Kalma v African Minerals Ltd, plaintiffs from Sierra Leone brought a tort claim against African Minerals Ltd (AML), a minerals company listed on the Alternative Investment Market (AIM) of the London Stock Exchange and headquartered in London.¹¹¹ In this case, AML had provided various types of support (accommodation, vehicles, and money) to the police in exchange for protection of its mining operations in the Tonkoli district in Sierra Leone. However, when local unrest broke out as a result of the impact of the mine on inhabitants, the police responded to the unrest with excessive force, ‘during the course of which many villagers were variously beaten, shot, gassed, robbed, sexually assaulted, squalidly incarcerated and, in one case, killed’.¹¹² The plaintiffs sought to hold AML liable for the wrongful acts of the police on different legal grounds, including accessory liability in furtherance of a common tortious design with the police and breach of the defendants’ direct duty in failing to take adequate steps to prevent the police from committing torts. However, both the High Court and the Court of Appeal rejected the plaintiffs’ claims.¹¹³

The courts found that AML could not be held liable based on accessory liability by reason of common design for the police’s violence. In providing resources to the police, AML may have foreseen that the police might use excessive violence to suppress the disturbance. However, foreseeability does not justify the imposition of accessory liability. ‘In order to establish tortious liability for common design, there needs to be something more than the foreseeability that, in certain circumstances, a tort might be committed by a third party.’¹¹⁴ In this case, the courts did not find that AML had intended for the police to use violence. In particular, the fact that AML sought protection and assistance from the police could not lead to an inference that AML intended that the police ‘should quash protest, if need be by violent means’.¹¹⁵

The courts also rejected the contention that AML owed a duty of care to the plaintiffs. The Court of Appeal adopted the position that this was a pure omissions case.¹¹⁶ In this context, AML did not have a duty of care because it had not carried out any relevant activity, and the damage was not caused by anything which AML had done. Furthermore, the provision of money, vehicles, and accommodation was not a breach of any duty, as such assistance was common in Sierra Leone.¹¹⁷ The Court of Appeal also dismissed the claim that AML could have had a freestanding duty of care according to the three-stage criteria from Caparo.¹¹⁸ A relationship of proximity between the plaintiffs and AML was not established, and it would not have been fair, just, or reasonable to impose the alleged duty of care in this case. Another important point here is that the Court of Appeal rejected the idea that companies’ voluntary commitment could create a duty of care. It held that:

This review of cases in England has revealed that, for a long time, uncertainty around the contours of corporate group liability posed a significant barrier to victims seeking justice for corporate human rights abuses. Courts have, in particular, been reluctant to hold parent companies liable for the damage caused by their group activities. However, recent Supreme Court decisions have clarified the circumstances under which parent companies may have a duty of care for the activities of their subsidiaries. In the future, how lower courts will interpret the Supreme Court’s guidance in Vedanta and Okpabi, particularly how the intervention of the parent company in the management of its subsidiary’s activities can give rise to a duty of care, will be critical in determining whether parent companies can be held liable for the harm caused by their subsidiaries.

Access to evidence

In England, plaintiffs must be able to prove that the parent company had a role in causing the harm to have a cause of action for liability against the parent company. However, MNEs are often in possession of documents containing important supporting evidence. Therefore, it is crucial for plaintiffs to be able to gain access to such material.

Despite the existence of a number of restrictions, the disclosure process has been favourable to plaintiffs in transnational litigation against MNEs.¹²⁰ Courts have generally been inclined to order disclosure of documents needed by claimants. For instance, in Vava v Anglo American South Africa Ltd¹²¹ the High Court held that, if no orders were to be made requiring the MNE to produce documents, ‘there [was] a very great risk that the claimants [would] be contesting the jurisdiction issue at an unfair disadvantage and that must be addressed’.¹²² As a result, the disclosure system has allowed plaintiffs to demonstrate the parent company’s role in the cause of the harm. Importantly, it has reduced the inequality of arms between the parties by improving the opportunities of plaintiffs to put pressure on MNEs to reach a fast resolution of the dispute, and their capacity to negotiate strategically.

In some cases, the English disclosure process has also benefited plaintiffs in similar cases in other European countries. In the Bodo Community v Shell Petroleum Development Company of Nigeria Ltd case,¹²³ a Nigerian fishing and farming community known as the Bodo City community (Bodo community) filed a tort claim against SPDC, a Nigerian oil company, for the harm suffered following two successive oil spills. During the proceedings before the High Court, SPDC was required to disclose a number of internal documents. Information from these documents was later used as evidence in the context of similar proceedings against SPDC and its parent company in the Netherlands.¹²⁴

In recent years, a number of cases have raised concerns that the lack of access to evidence at the early stages of proceedings may affect the ability of plaintiffs to establish jurisdiction in England. In Okpabi, the Court of Appeal rejected the plaintiffs’ group claim on the grounds that the plaintiffs had not demonstrated a properly arguable case that RDS owed a duty of care to third parties affected by the operations of its Nigerian subsidiary. However, it reached this conclusion even though there had been no opportunity for cross-examination and minimal disclosure from RDS.¹²⁵ Ultimately, the Supreme Court found that such an approach was inappropriate at the interlocutory stage and concluded that the Court of Appeal had erred in its approach as to the prospect of the disclosure of internal corporate documents material to the claims made.¹²⁶ Significantly, it emphasized the importance of internal corporate documents ‘in the context of cases concerning the negligence liability of a parent company for the acts of its subsidiary’.¹²⁷

Litigation costs

The transnational nature of claims against MNEs and the complexity of the legal issues at stake render this type of litigation particularly costly for plaintiffs. In particular, evidence-gathering and representation for large groups of claimants exacerbate litigation costs and lawyers’ fees. Excessive litigation costs raise a number of issues regarding accessibility of English courts by foreign victims with few financial resources. For instance, they generally deter law firms from engaging in transnational claims against MNEs.

The availability of collective redress in England has allowed large numbers of victims of corporate abuse to seek justice. For instance, in Motto v Trafigura Ltd the British law firm Leigh Day filed a tort claim in the High Court on behalf of 30,000 Ivorians against Trafigura Ltd and Trafigura Beheer BV¹²⁸ for damages relating to personal injury and economic loss caused by illegal dumping of toxic waste in Abidjan, Ivory Coast.¹²⁹ However, group actions mean higher procedural costs. In this case, Leigh Day undertook to represent the claimants on a conditional fee basis, also known as ‘no win no fee’. This means that, in general, if the plaintiff loses, the lawyer will recover no fees, and if the plaintiff wins, the lawyer will claim fees, but they will almost always be paid by the defendants. When acting on such a basis, lawyers can charge a ‘success fee’, which is capped at a maximum of 100 per cent of the lawyer’s ordinary fee, and the success fee is treated as part of the recoverable costs if the defendants have to pay the claimant’s costs. Moreover, Leigh Day also took on the full costs of evidence-gathering in Ivory Coast.¹³⁰ Ultimately, the group action took a huge amount of logistical organization and required a large sum of financial resources.¹³¹

In Motto, in 2009 the parties reached a confidential out-of-court settlement in which Trafigura agreed to pay approximately £30 million to the claimants, which amounted to roughly £1,000 per claimant.¹³² Trafigura also agreed to pay the costs of the claimants.¹³³ Nonetheless, a new judicial battle took place when Leigh Day presented a £105 million bill to Trafigura for the entirety of its costs and sought a 100 per cent success fee.¹³⁴ Trafigura contested the bill, which it found ‘staggeringly high’.¹³⁵ The costs claim also stirred controversy among lawyers and litigation experts.¹³⁶ Leigh Day came under attack for these unusually high costs, for seeking what was perceived as a huge success fee, and for its lack of costs management.¹³⁷ In October 2011, the Court of Appeal upheld an earlier ruling which had reduced Leigh Day’s success fee from 100 to 58 per cent.¹³⁸ However, the parties reached a confidential agreement in December 2011.¹³⁹

Since 2010, changes to domestic legislation governing legal aid in England have affected the financing of transnational claims against MNEs. Following its entry into force in 2013, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) has fundamentally reformed the civil costs system and the provision of civil legal aid.¹⁴⁰ Before LASPO, law firms litigating against MNEs, such as Leigh Day, were able to fund their cases based on their ability to recover the full legal costs, success fees, and litigation insurance premiums from corporate defendants. However, LASPO has generally eliminated the ability to recover success fees and insurance premiums.¹⁴¹ Furthermore, legal fees for a successful claimant now have to be paid out of the claimant’s damages and they cannot exceed 25 per cent of the damages.¹⁴² Finally, LASPO introduced a new test of proportionality in costs assessment.

Lawyers and NGOs have contended that LASPO restricts funding in transnational claims against MNEs, making these claims even less attractive for law firms.¹⁴³ In 2011, Ruggie, in his capacity as SRSG, also wrote to the UK Minister of Justice to express his concerns that the proposed reforms would ‘constitute a significant barrier to legitimate business-related human rights claims being brought before UK courts in situations where alternative sources of remedy are unavailable’.¹⁴⁴

3 Progressive development of transnational litigation against MNEs in European civil law jurisdictions

Since the beginning of the 21st century, transnational claims against MNEs have gained in importance in European civil law jurisdictions. A recent study commissioned by the EP shows that, in the EU, cases have been concentrated in only a few Member States.¹⁴⁵ France is the country where most cases have been brought. Other countries where cases have been heard include Germany, Italy, the Netherlands, Sweden, and Switzerland. The uneven distribution of cases across Member States is likely the result of the fact that the MNEs targeted by legal proceedings – usually large companies or companies with operations or controlled suppliers in third countries – are concentrated in a few Member States. Another potential explanation is the lack of social movement structure or interest to support these claims. CSOs in other EU Member States might use legal mobilization less often or focus on other more pressing domestic issues.¹⁴⁶

In general, claims have targeted large MNEs with brand recognition from various economic sectors, such as textiles, natural resource extraction, banks, information technology (IT), or construction. However, there is a slight over-representation of companies in natural resources extraction.¹⁴⁷ MNEs have been sued for a wide range of human rights abuses taking place in third countries, including forced labour and slavery; State-sponsored violence against civilians; killing of trade unionists; genocide, crimes against humanity, and war crimes; labour rights violations; torture; and violation of privacy. They have also been sued for environmental damage occurring in host States,¹⁴⁸ such as oil pollution, dumping of toxic waste, illegal deforestation, and land-grabbing.

An important aspect of litigation against MNEs in European civil law countries is that plaintiffs have initiated both civil and criminal proceedings. In most countries, criminal litigation has been the favoured way to hold MNEs liable. For instance, in France most claims have been of a criminal nature (12 out of 16 claims since 2002). In Germany, the first tort claim was filed in March 2015 against a German textile retailer for its involvement in a factory fire in Pakistan. Litigators point out that despite Germany’s influence in international trade and foreign direct investment, and the fact that it hosts a high number of companies accused of human rights abuse, ‘Germany has not been at the centre of tort-based business and human rights litigation thus far’.¹⁴⁹ The focus on criminal litigation is surprising in a country where corporate criminal liability does not exist. Nonetheless, tort litigation against MNEs is slowly expanding among European civil law jurisdictions.

To date, transnational claims against MNEs have rarely led to a successful outcome for the plaintiffs. Most criminal claims have been dismissed for lack of evidence or as a result of the reluctance of prosecutors to pursue complex and sensitive cases involving MNEs. Furthermore, while courts have generally agreed to hear civil claims against MNEs, procedural rules regarding time limitation or access to evidence, and the absence of clear standards to hold corporate groups liable, have proved to be major obstacles for plaintiffs.

This section provides a short summary of cases in France and the Netherlands, on which Part II of this book focuses.

France

Criminal litigation

The first criminal claim in France was brought in 2002 against Rougier, a French timber company, SFID, its Cameroonian subsidiary, and their executive directors by a group of Cameroonian villagers and les Amis de la Terre, the French branch of Friends of the Earth. In Rougier, the plaintiffs alleged that they suffered harm from the destruction of their agricultural resources and source of livelihoods after SFID had illegally cut down trees and built roads on their plantations. They accused the defendants of various criminal offences, including criminal destruction of property, forgery and use of forgery (faux et usage de faux), fraud, receiving (recel), and corruption of governmental officials. In particular, they alleged that Rougier and its directors were guilty of receiving¹⁵⁰ by accepting dividends from SFID which resulted from the commission of the illegal acts. The criminal complaint was eventually dismissed by the Court of Cassation (Cour de cassation) in 2005 on the grounds that the prosecution of misdemeanours could only be instigated at the behest of the prosecutor in this case and that there had not been any final judicial decision in Cameroon.¹⁵¹

One of the most emblematic cases against an MNE in France was the Total case. In 2002, a group of Burmese villagers initiated criminal proceedings against three executive directors of Total, a French oil and gas MNE, by bringing a civil action before the examining magistrate (juge d’instruction) for Nanterre. The claim concerned the construction of the Yadana gas pipeline in Myanmar, which was operated by various foreign and national companies including Total. The project was plagued by various human rights abuses, including forced labour, land confiscation, forced relocation, rape, torture, and murder.¹⁵² Because the French Criminal Code (Code pénal) did not criminalize forced labour at the time of the facts, the plaintiffs alleged the defendants were criminally liable for abduction and illegal confinement (séquestration). In 2004, the prosecutor requested the dismissal of the complaint on the grounds that the facts did not qualify as criminal offences under French law. Nonetheless, the examining magistrate rejected the prosecutor’s request and continued the judicial enquiry. The prosecutor appealed this decision before the Versailles Court of Appeal, which dismissed the appeal and ordered the continuation of the judicial enquiry. However, in 2005 the plaintiffs and Total settled out of court. The examining magistrate subsequently dismissed the complaint in 2006.¹⁵³

Trafigura is another famous case that was heard in France. In late 2005, Trafigura, an MNE trading international commodities, refined a large amount of petroleum through an industrial process called caustic washing on board the ship Probo Koala. After several unsuccessful attempts to dispose of the waste produced during the caustic washing, in August 2006 the Probo Koala illegally unloaded the shipment of toxic waste in the city of Abidjan, Ivory Coast. During the following days, more than 100,000 individuals experienced various physical symptoms, including headaches, skin irritations, breathing difficulties, and nosebleeds. The Ivorian authorities attributed at least 15 deaths to exposure to the waste.¹⁵⁴ The Probo Koala incident resulted in one of the worst sanitary crises in the history of the Ivory Coast. In 2007, FIDH, a French NGO, filed a criminal complaint with the prosecutor for Paris on behalf of a group of Ivorian citizens against Claude Dauphin and Jean-Pierre Valentini, two French executives of Trafigura.¹⁵⁵ The complaint alleged administration of noxious substances, manslaughter, corruption, and criminal offences related to transboundary movements of hazardous waste.¹⁵⁶ In 2008, following a preliminary enquiry, the prosecutor declined to investigate further.¹⁵⁷ Although FIDH appealed this decision, no further progress was made on this case.¹⁵⁸ It should be mentioned that the events in Abidjan led to litigation in the Ivory Coast, England, France, and the Netherlands.

In DLH¹⁵⁹ in 2009, a Liberian national and various French and British NGOs (Sherpa, Greenpeace France, les Amis de la Terre, and Global Witness) filed a criminal complaint with the prosecutor for Nantes against DLH Nordisk A/S, a Danish timber company, and DLH France, its subsidiary.¹⁶⁰ The plaintiffs argued that, between 2001 and 2003, the companies purchased, imported into France, and distributed across Europe timber from Liberian companies that were directly involved in human rights abuse and war crimes under Charles Taylor’s regime. The complaint alleged concealment of bribery (recel de corruption), influence-peddling, and destruction of property. After the complaint was transferred to the prosecutor for Montpellier, it was eventually dismissed for lack of evidence in 2013. In 2014, the plaintiffs initiated new criminal proceedings by bringing a civil action before the examining magistrate for Montpellier.¹⁶¹ In December 2017, the examining magistrate discontinued the criminal proceedings on the grounds that the facts were time-barred, as it could not be proven that DLH still benefited from the trade of illegal timber. However, in March 2018 the Investigating Chamber (chambre de l’instruction) overruled this decision and ordered the continuation of the investigation.¹⁶² The case was pending at the time of writing.

NGOs have initiated several criminal proceedings against IT companies for alleged complicity in the commission of torture and gross human rights abuse in third countries. In the Amesys cases, FIDH and Ligue des Droits de l’Homme (LDH) filed a criminal complaint against Amesys, a French IT company, with the prosecutor for Paris in 2011. They alleged that Amesys was complicit in acts of torture committed by the Gaddafi regime in Libya before the Arab Spring. The NGOs accused Amesys of providing the Libyan government with software, equipment, and assistance, which subsequently led to the arrest and torture of several individuals.¹⁶³ Amesys was eventually placed under the status of assisted witness (témoin assisté).¹⁶⁴ In addition, in 2017 FIDH and LDH filed a new criminal complaint against Amesys (now renamed Nexa Technologies) with the specialized unit responsible for prosecuting crimes against humanity and war crimes in France (Crimes against Humanity Unit) for complicity in torture and enforced disappearances in Egypt. The NGOs alleged that Amesys sold the Egyptian government surveillance technology similar to that it had sold to Libya.¹⁶⁵ The prosecutor for Paris opened a formal judicial investigation.¹⁶⁶ Both cases were pending at the time of writing.

In Qosmos,¹⁶⁷ FIDH and LDH filed a criminal complaint against French IT company Qosmos with the prosecutor for Paris in 2012. They alleged that Qosmos was complicit in serious human rights violations committed by the Bashar al-Assad regime in Syria. The NGOs claimed that the al-Assad regime used a large-scale electronic communication surveillance system installed by Qosmos in order to track, torture, and execute al-Assad’s opponents in Syria. In 2014, the case was transferred to the Crimes against Humanity Unit, and a judicial investigation into the alleged role of Qosmos in aiding and abetting acts of torture in Syria was opened. In 2018, the examining magistrate in charge of the case expressed their intention to close the investigation. Shortly after, FIDH and LDH filed an application to hear a new witness, which was accepted by the examining magistrate.¹⁶⁸ The case was pending at the time of writing.

CSOs have also initiated criminal proceedings against MNEs for misleading advertising. In these cases, the plaintiffs alleged that the companies had deceived French consumers by providing false information about the working conditions in their factories. They also accused the companies of violating their voluntary CSR commitments.

In Samsung, a group of CSOs, including Sherpa, filed a criminal complaint against Samsung France, the French subsidiary of the South Korean MNE Samsung, with the prosecutor for Bobigny in 2013. Based on a report by China Labor Watch describing labour rights abuse in Samsung’s factories in China,¹⁶⁹ the complaint alleged that Samsung France had breached its ethical commitments. The prosecutor opened a preliminary enquiry, but eventually dismissed the complaint in 2014. Nonetheless, in 2018 Sherpa and ActionAid France filed two new criminal complaints against Samsung France and its Korean parent company, the first one with the prosecutor for Paris, who eventually dismissed it, and the second one with an examining magistrate, who indicted Samsung France on the charge of deceptive marketing practices.¹⁷⁰ However, in April 2021 a French judge ruled that the complaint was inadmissible after Samsung argued that the NGOs did not have standing to file a complaint about deceptive marketing practices. The indictment was eventually dismissed. Both NGOs filed an appeal with the Court of Cassation.¹⁷¹ The case was still pending at the time of writing.

In Auchan in 2014, a group of NGOs, including Sherpa, filed a criminal complaint against Auchan, a French retailing MNE, with the prosecutor for Lille.¹⁷² This complaint was brought following the collapse of the Rana Plaza factory in Bangladesh in April 2013.¹⁷³ The prosecutor opened a preliminary enquiry, but eventually dismissed the complaint in 2015. The plaintiffs initiated new criminal proceedings by bringing a civil action directly before the examining magistrate for Lille.¹⁷⁴ The case was still pending at the time of writing.

In Vinci, Sherpa filed a criminal complaint against Vinci, a French construction company, and the French executive directors of its Qatari subsidiary with the prosecutor for Nanterre in 2015.¹⁷⁵ Sherpa claimed that Vinci was involved in human rights abuses committed during the construction of arenas for the 2022 FIFA World Cup in Qatar. The complaint alleged forced labour, slavery, and receiving stolen property. The prosecutor opened a preliminary enquiry,¹⁷⁶ but decided to close the case in 2018. Following this dismissal, Sherpa and other NGOs filed a new criminal complaint and an examining magistrate opened a judicial inquiry in 2019.¹⁷⁷ The case was pending at the time of writing. In parallel, Vinci brought various libel actions against Sherpa and its staff members, which were eventually dismissed.¹⁷⁸

In Lafarge in 2016, a group of Syrian employees, together with Sherpa and the European Center for Constitutional and Human Rights (ECCHR) (two NGOs), filed a criminal complaint against Lafarge, a cement company, for alleged abuses committed by its subsidiary in Syria. They argued that Lafarge had been complicit in war crimes, crimes against humanity, financing a terrorist enterprise, deliberate endangerment of people’s lives, and forced labour. Between 2011 and 2014, Lafarge decided to maintain its business activities in Syria in the midst of the Syrian Civil War. In order to do so, the company allegedly bought raw material from diverse jihadist groups, including the Islamic State of Iraq and the Levant (ISIS), and allegedly negotiated safe passage for its workers and products in exchange for compensation. In June 2017, a judicial investigation (information judiciaire) was opened, and Lafarge was charged in June 2018 with complicity in crimes against humanity, financing a terrorist enterprise, and endangering the lives of others. In December 2018, Lafarge referred the case to the Investigating Chamber, seeking a ruling on the nullity of its indictment.¹⁷⁹ In October 2019, the Investigation Chamber of the Paris Court of Appeal lifted Lafarge’s charge of complicity in crimes against humanity while upholding the charges of financing terrorism and endangering people’s lives. It also declared that Sherpa’s and ECCHR’s civil party claims were inadmissible.¹⁸⁰ However, in September 2021, the Court of Cassation issued an important decision in the Lafarge case.¹⁸¹ It overturned the Investigating Chamber’s decision to annul Lafarge’s indictment for complicity in crimes against humanity. It also confirmed the company’s indictment for financing terrorism. Furthermore, the Court of Cassation decided that only the NGO ECCHR could bring a civil action, and only in relation to the offence of complicity in crimes against humanity for which Lafarge was charged. Finally, it overturned the Investigating Chamber’s decision to uphold Lafarge’s indictment for endangering the lives of Syrian employees. The Court of Cassation’s decision is significant because it clarifies the contours of complicity in crimes against humanity, how NGOs can participate in criminal proceedings, and the impact of the parent company’s interference in its foreign subsidiary. The case was pending at the time of writing.

Banks have also been targeted by criminal complaints for complicity in genocide, crimes against humanity, and war crimes in third countries. In the BNP Paribas cases, the French bank BNP Paribas has been accused of complicity in genocide, crimes against humanity, and war crimes for the events that took place in Rwanda in 1994,¹⁸² and in Sudan in the 2000s.¹⁸³ In the case pertaining to the events that took place in Rwanda, following a complaint from a group of French NGOs, including Sherpa, in 2017, an examining magistrate from the Crimes against Humanity Unit subsequently opened a judicial inquiry.¹⁸⁴ Both cases were ongoing at the time of writing.

Civil litigation

In Alstom, in 2007, Association France Palestine Solidarité (AFPS), an NGO, and the Palestinian Liberation Organization (PLO) brought a civil claim against Alstom and Veolia, two French energy and transportation MNEs, before the Nanterre Regional Court (Tribunal de grande instance¹⁸⁵ or TGI).¹⁸⁶ The plaintiffs sought the annulment of various concession contracts concluded between Israel and Citypass, a joint venture in which Alstom and Veolia participated, to build a light rail system in the occupied West Bank. They also requested an injunction prohibiting the defendants from performing the contract, and claimed damages. The plaintiffs argued that the contracts were illicit because they related to a project which violated international law, including international humanitarian law conventions and customary international law.¹⁸⁷ However, the French courts successively dismissed their claim on the merits.¹⁸⁸ Finally, the plaintiffs lodged an application with the ECtHR, which was rejected in April 2015. In parallel to these civil proceedings, AFPS initiated proceedings before the administrative courts, which were also rejected.¹⁸⁹

In COMILOG, in 2007, a group of more than 800 former Congolese employees of COMILOG, a Gabonese mining company, filed civil claims with the Paris Labour Court against COMILOG, ERAMET (COMILOG’s parent company based in France), COMILOG International, and COMILOG France.¹⁹⁰ The plaintiffs alleged that, in 1991, COMILOG dismissed them without just and sufficient cause and without providing any compensation. Following their dismissal, they sought to obtain their severance pay before the courts of the Republic of Congo, but were never able to obtain a final decision on their case. In 2011, the Labour Court ruled it was incompetent to hear the claims and rejected the suggestion that the plaintiffs had faced a denial of justice in their own country.¹⁹¹ However, in 2013 the Paris Court of Appeal overturned this judgment.¹⁹² In 2015, in a landmark ruling, the Court ruled that COMILOG had to pay financial compensation to around 600 plaintiffs who could prove that they had been unable to obtain justice in the Republic of Congo.¹⁹³ However, in 2017 the Court of Cassation overturned this ruling.¹⁹⁴ It held that the foreign court was already seised of the dispute, which showed that it was therefore possible for the employees to have access to a judge responsible for ruling on their claim. Furthermore, the mere acquisition by a French company of a shareholding in the capital of COMILOG was not a connecting factor by virtue of the denial of justice doctrine. In 2019, the Court of Appeal rejected the claims in order to align with the Court of Cassation’s ruling.¹⁹⁵

In AREVA, in 2010, the family of Serge Venel brought a civil claim for damages against AREVA, a French nuclear power company, and AREVA NC, its subsidiary, before the Melun Social Security Tribunal (Tribunal des affaires de la sécurité sociale or TASS).¹⁹⁶ The plaintiffs alleged that Venel died of lung cancer as a result of his exposure to dangerous levels of radioactive substances while working at the Nigerien uranium mine of COMINAK, a joint venture between AREVA NC and the State of Niger, between 1978 and 1984. In 2012, the TASS held that AREVA NC was Venel’s co-employer and was liable for gross negligence (faute inexcusable).¹⁹⁷ However, in 2013 the Paris Court of Appeal overturned the judgment.¹⁹⁸ The Court of Appeal’s ruling was upheld by the Court of Cassation in 2015.¹⁹⁹

In Bolloré,²⁰⁰ in 2015, a group of Cambodians brought a civil claim against Bolloré, a French MNE, and Compagnie du Cambodia, a subsidiary of Bolloré, before the Nanterre Regional Court.²⁰¹ The plaintiffs claimed damages for land-grabbing, environmental destruction, and human rights abuse in Cambodia. The case was pending at the time of writing.

Netherlands

Criminal litigation

Litigation was also brought in the Netherlands against Trafigura following the dumping of toxic waste in Abidjan, Ivory Coast. A first set of criminal proceedings focused on events that occurred in the Netherlands. Before the Probo Koala illegally unloaded the toxic waste in Abidjan, it had tried to dispose of the waste on several occasions. Most notably, in June 2006 Trafigura arranged to deliver the waste to the Amsterdam Port Services (APS) in the Netherlands. However, while unloading the waste, APS discovered that the waste was far more contaminated than it had thought and raised the price for treatment. Trafigura rejected the new quote and asked for the waste to be reloaded onto the Probo Koala. A few weeks later, the waste was illegally dumped in the Ivory Coast.²⁰²

In 2008, the prosecutor brought charges against Trafigura Beheer BV (Trafigura BV) and one executive of Trafigura Ltd for illegal export of hazardous waste to Ivory Coast and other criminal offences.²⁰³ The Dutch courts found that the defendants were guilty of delivering and concealing hazardous goods, and ordered Trafigura BV to pay a €1 million fine.²⁰⁴ Trafigura BV and the prosecutor appealed this ruling to the Dutch Supreme Court (Hoge Raad).²⁰⁵ In parallel, in 2008 Claude Dauphin, Trafigura’s chairman, was initially charged with various criminal offences, including the illegal export of waste from the Netherlands. No progress was made until January 2012, when the Amsterdam Court of Appeal decided that Dauphin could be prosecuted. Dauphin challenged the jurisdiction of the Dutch Court and the absence of evidence, but the Court of Appeal dismissed his claim. Ultimately, in 2012 the prosecutor and Trafigura BV reached an out-of-court settlement, after which the criminal proceedings against Trafigura BV and Dauphin were withdrawn. Neither the MNE nor its chairman faced any conviction or admitted liability.²⁰⁶

A second set of criminal proceedings focused on the events that occurred in Ivory Coast. In 2008, the Dutch prosecutor decided not to investigate potential criminal offences in Ivory Coast. However, in 2009 Greenpeace appealed this decision. In 2011, the Court of Appeal of The Hague held that the Dutch courts did not have jurisdiction for events in Ivory Coast and rejected Greenpeace’s complaint.²⁰⁷

In Riwal, in 2010 Al-Haq, a Palestinian NGO, submitted a criminal complaint to the prosecutor for Rotterdam against Lima Holding BV and other companies of the Riwal group, as well as a number of executive directors.²⁰⁸ Al-Haq alleged that, since 2004, the companies had contributed to the commission of war crimes and crimes against humanity in the Netherlands and/or the Occupied Palestinian Territory (OPT). The complaint referred directly to contributions of the Riwal companies to the construction of the wall and illegal settlements by Israel in the West Bank.²⁰⁹ Following the complaint, the prosecutor opened an investigation into the Riwal group’s activities in Israel and the OPT. However, in 2013 he decided not to initiate criminal proceedings against the Riwal group.²¹⁰

Civil litigation

Oil MNE Shell has been targeted by several civil claims for its activities in Nigeria. In Shell in 2008, several victims of oil spills in Nigeria and Milieudefensie, the Dutch branch of Friends of the Earth, brought a tort claim against RDS²¹¹ and its Nigerian subsidiary SPDC before the Dutch courts. The plaintiffs claimed that both companies were liable for the environmental and economic damages they had suffered. In 2009, the District Court of The Hague held that it had jurisdiction to hear the claims.²¹² However, it later rejected their request to access evidence in the defendants’ possession.²¹³ In January 2013, the District Court sentenced SPDC to pay damages in one of the claims while dismissing the other claims.²¹⁴ Regarding the liability of RDS, the District Court dismissed all the claims. Both the claimants and the corporate defendants appealed this ruling. In September 2013, the claimants filed a motion to request that the defendants produce specific documents.²¹⁵ In 2015, the Court of Appeal of The Hague reversed the District Court’s judgment. It also confirmed the jurisdiction of the Dutch courts to hear the claims against RDS and SPDC and ordered disclosure of a number of internal documents.²¹⁶ In January 2021, in several landmark rulings,²¹⁷ the Court of Appeal of The Hague found SPDC liable for the damage caused by two of the oil spills in question. Although it did not find RDS liable for those oil spills, it held that the parent company owed the plaintiffs a duty of care. The Court of Appeal imposed an obligation on both SPDC and RDS to build a better warning system in the pipelines to detect future leaks. At the time of writing, the amount of compensation had yet to be determined in a follow-up procedure. Furthermore, in Kiobel in 2017 a group of Nigerian plaintiffs brought a civil claim against RDS and SPDC before the Dutch courts. They alleged that the companies were liable for complicity in the unlawful arrest, detention, and execution of their husbands in Nigeria in the 1990s.²¹⁸ In 2019, the District Court of The Hague ruled that it had jurisdiction to hear the case,²¹⁹ which was pending at the time of writing.

In the context of the various proceedings brought against Trafigura for the illegal dumping of toxic waste in Ivory Coast, in 2015 more than 110,000 Ivorian victims brought a tort claim against Trafigura before the Dutch courts.²²⁰ They alleged that the MNE caused bodily, moral, and economic injury to the plaintiffs, and they requested that Trafigura pay each plaintiff €2,500 in damages and clean up the pollution. The case was pending at the time of writing.

4 The role of the corporate accountability movement

The corporate accountability movement has played an instrumental role in the emergence of transnational claims against MNEs. While cause-lawyers have represented victims in courts, NGOs have provided important evidentiary support and have helped to make these cases visible in the public sphere. Furthermore, the procedural and substantive obstacles that victims face in the context of transnational litigation against MNEs are blatant examples of the need for the legal and policy reform advocated by the corporate accountability movement. This section will provide an overview of the corporate accountability movement and describe the benefits of using strategic litigation as a way to achieve reform.

Understanding the corporate accountability movement

The corporate accountability movement at issue in this book is historically recent. Influenced by previous social movements concerned with human rights and environmental protection, and the global justice movement, it emerged at the beginning of the 21st century.²²¹ It is characterized by a discourse that advocates corporate obligations and the importance of the right of victims to seek redress. The corporate accountability movement has been particularly active in Europe, where NGOs and lawyers regularly cooperate to hold businesses to account.

Emergence

Traditionally, human rights and environmental CSOs were concerned with State violations of human rights abuse, and State territorial and extraterritorial environmental pollution. However, with the liberalization of the global economy and the increase in the number of MNEs operating across borders, they started to observe the negative impacts of corporate activities on humans and the environment, especially in developing countries.²²² In particular, disasters caused by corporate activities, such as the 1984 Bhopal tragedy or the 1989 Exxon Valdez oil spill, triggered CSO campaigns against corporations.²²³

Since its emergence, activism regarding corporate impacts on humans and the environment has evolved considerably.²²⁴ These changes are directly linked to the evolution of the relationship between CSOs and businesses. In the 1980s, CSOs focused their activities on governmental commitments to regulate companies. However, they started to be critical of what they perceived as failed attempts by governments and international organizations, such as the UN or the OECD, to regulate MNEs.²²⁵ This led CSOs to direct their attention to private regulation by businesses themselves. During the 1990s, there was an evolution of the CSO strategy from ‘barricades’ to ‘boardrooms’.²²⁶ CSOs increased engagement with companies to solve social, human rights, and environmental issues. As a result, the concepts of CSR and private, or voluntary, regulation became prevalent in CSO discourse. However, towards the end of the 1990s, some CSOs and other activists began to question the effectiveness of CSR initiatives and private regulation. In particular, these actors were concerned about corporate control over the way the CSR agenda was framed, how some crucial issues related to global injustice remained largely out of bounds, and the general failure of CSR initiatives to restrict the growth of corporate power.²²⁷ As a result, some CSOs shifted to a new type of activism and started to mobilize around the banner of ‘corporate accountability’.²²⁸

Characteristics

The agenda of the corporate accountability movement is based on a distinction between corporate responsibility and corporate accountability.²²⁹ While corporate responsibility refers to any attempts to encourage companies to behave responsibly towards humans and the environment on a voluntary basis, corporate accountability refers to requiring companies to comply with legal norms or face consequences.²³⁰ Utting suggests that the corporate accountability movement seeks to redirect ‘attention to the question of corporate obligations, the role of public policy and law, the imposition of penalties in cases of non-compliance, the right of victims to seek redress, and imbalances in power relations’.²³¹

The tactics of the corporate accountability movement have focused on social contestation, critical research, and campaigns pushing for legal reforms.²³² Among its portfolio of actions, the corporate accountability movement has organized public campaigns, lobbied for legal and policy reforms, and tested and used soft and hard law to seek redress.²³³ As a result, it has contributed to several regulatory developments.²³⁴ The corporate accountability movement also emphasizes the role of traditional regulatory organizations and institutions, including policy-makers, courts, and State enforcement bodies, in improving corporate behaviour.²³⁵ Importantly, it pays strong attention to the role of courts in punishing companies when they do not comply with legally binding obligations and in providing victims with remedies.

The corporate accountability movement does not adhere to the view that voluntary initiatives should be a preferred substitute for legally binding regulation. Instead, it reasserts the role of the law in social, human rights, and environmental domains. It also expands the terrain for hybrid regulation where voluntary and mandatory regulations merge.²³⁶ Moreover, the corporate accountability movement has drawn attention to the need for an expanding body of hard and soft law that targets companies, especially in international law.²³⁷

Ultimately, Utting suggests that ‘the corporate accountability agenda attempts to strengthen an arena of law that is sometimes referred to as “subaltern legality” or “counter-hegemonic legality”’.²³⁸ He explains this as follows:

The corporate accountability movement involves a more representative cross-section of civil society actors and international, regional, and national coalitions, connecting actors and organizations that were previously disconnected or wary of each other’s agendas. Utting argues that the coalitions of the modern corporate accountability movement are overcoming the fragmentation and tensions that have divided CSOs concerned with MNEs.²⁴⁰ In particular, the movement has brought together CSOs from Northern and Southern countries in national, regional, and international networks. Such relations are visible in transnational campaigns and legal actions, such as transnational litigation against MNEs.²⁴¹ Furthermore, the corporate accountability movement has used networking to enhance resource mobilization, political opportunities, and collective identity formation.

However, a number of issues exist with regard to the potential of networks, including significant imbalances in power relations favouring CSOs from the North.²⁴² Scholars have argued that CSOs from developed countries can marginalize the interests and the role of local CSOs from developing countries.²⁴³ Moreover, campaigns for corporate accountability have been criticized for the marginalization of victims of business-related abuse from developing countries. Transnational solidarity is often produced through socially thin relations and raises questions about the durability and potential of its agency for social change, and the practices of human rights and democracy that are locally routinizing within civil society.²⁴⁴

The European corporate accountability movement

Since its creation, the corporate accountability movement has grown across Europe. It is composed of a broad range of CSOs, including NGOs traditionally concerned with environmental and human rights (eg Friends of the Earth, Amnesty International), trade unions (eg the Trades Union Congress (TUC)), scholars and universities (eg the Essex Business and Human Rights Project at the University of Essex), and lawyers and law firms (eg William Bourdon, Leigh Day). While some organizations focus on specific business sectors (eg extractive or garment industries), others target companies in general. The European corporate accountability movement is characterized by the existence of networks operating at national²⁴⁵ and regional²⁴⁶ levels. There are close links between these various networks, which regularly collaborate on common issues, initiatives, and campaigns (eg global supply chains or oil activity in Nigeria). They take advantage of opportunities offered by transnational interactions, through the Internet, social media, and regional and international institutions, to achieve common aims. For instance, the annual UN Forum on Business and Human Rights in Geneva gives CSOs the opportunity to work together in order to raise awareness about specific issues and influence policy-makers.²⁴⁷

Importantly, the presence of regional institutions contributes to the elaboration of common strategies around the topic of corporate accountability in Europe. In particular, the EU institutions have been the object of intense campaigning, as they have a major influence on the drafting of national policies and legislation governing business activities and access to justice. Furthermore, the excessive focus of the EU on CSR policies has contributed to renewed demands for corporate accountability from CSOs since 2000.²⁴⁸ Finally, the EU is generally a major source of funding for NGOs in the region. As such, it may contribute resources to corporate accountability NGOs, helping to fund, directly or indirectly, campaigns or projects related to corporate accountability and access to justice.

Within the European corporate accountability movement, lawyers, law firms, and legal NGOs have provided the main impetus towards transnational litigation against MNEs. For instance, the British law firm Leigh Day was one of the first law firms to bring human rights claims against MNEs in England at the end of the 1990s. Leigh Day is generally identified with the British corporate accountability movement as a result of its litigation work against companies and its involvement in the Corporate Responsibility Coalition (CORE Coalition).²⁴⁹ In France, the legal NGO Sherpa was created in 2001 by William Bourdon, a French lawyer involved in human rights NGOs,²⁵⁰ to prevent and fight ‘economic crimes’.²⁵¹ Sherpa campaigns actively for the adoption of binding norms to govern MNE activities, and has been involved in most of the claims brought against MNEs before the French courts. In Germany, a group of human rights lawyers created the legal NGO ECCHR in 2007. Since its creation, the ECCHR has been involved in most cases against MNEs in Germany and Switzerland.²⁵² In the Netherlands, Prakken d’Oliveira (formerly Böhler Advocaten) is a law firm specializing in international law and human rights.²⁵³ This law firm’s name has been associated with a number of famous human rights and international criminal law cases.

These actors are cause-lawyers, meaning activist lawyers who seek to use the courts as a vehicle to achieve social change or social justice beyond the individual claim at stake.²⁵⁴ They usually specialize in human rights and environmental law issues, and they regularly work with disadvantaged groups. They are often the only litigators to offer legal assistance or representation to foreign victims of corporate abuse. In general, law firms and lawyers are reluctant to take on transnational cases against MNEs, not only because of the costs and complexity of this type of litigation but also to avoid potential conflicts with other corporate clients.²⁵⁵

Ward distinguishes between two main categories of cause-lawyers involved in transnational litigation against MNEs.²⁵⁶ The first category is composed of legal NGOs that work on strengthening MNE accountability. They receive support for their work from major foundations and see litigation as part of their broader work. In France, Sherpa was created to hold parent companies of corporate groups legally and financially liable for the activities of their foreign companies, and to support foreign victims in accessing courts.²⁵⁷ It engages in litigation as well as awareness-raising and lobbying. The second category is composed of profit-making law firms which take on cases that have strong public interest elements either on the basis of ‘no win no fee’ or legal aid. They work to obtain remedies for victims who would otherwise not be compensated for their injuries.²⁵⁸ In the Netherlands, Prakken d’Oliveira represents individuals and groups which are oppressed or experience difficulties gaining access to law.²⁵⁹ Its lawyers are currently representing the plaintiffs in the Shell case on the basis of legal aid.

One can observe a constructive tactical alliance between CSOs and cause-lawyers relative to the challenges and opportunities confronted at various stages of transnational litigation against MNEs.²⁶⁰ In general, the existence of networks facilitates collaboration between CSOs and cause-lawyers in building, pursuing, and raising the visibility of claims. Cause-lawyers benefit from their collaboration with CSOs regarding access to evidence, funding, and visibility. For example, Leigh Day built its legal case against Monterrico, a mining MNE, thanks to information provided by various American and Peruvian NGOs.²⁶¹ Similarly, Prakken d’Oliveira used various documents produced by other NGOs, such as Amnesty International and Platform London, to build its claims against Shell in the Netherlands.²⁶² Milieudefensie has also played a decisive role in funding, collecting evidence, and raising the visibility of the case. In France, Sherpa strategically mobilizes a network of various actors, including lawyers, law professors, and NGOs, to work on specific cases, or to develop legal arguments on corporate liability or access to justice. Furthermore, the presence of international NGOs, such as Friends of the Earth, within the European corporate accountability movement is advantageous for lawyers, as these NGOs usually have a presence in host countries that allows them easier access to information and to victims of human rights and environmental abuse. For instance, Milieudefensie collaborated with the Nigerian section of Friends of the Earth to collect evidence for Shell. CSOs also benefit from collaboration with cause-lawyers, as they may lack the legal expertise to put together a legal strategy or bring a claim directly before a court. Therefore, cause-lawyers are precious collaborators, as they are more willing to work on complex claims raising human rights abuse and environmental damage.

At the same time, collaboration between CSOs and cause-lawyers presents some challenges. Lawyers may perceive that such collaboration interferes with their relationship with their clients. Furthermore, lawyers are bound by confidentiality vis-à-vis their clients, which complicates the possibility of disclosing certain information to CSOs, and by their clients’ decisions during the proceedings. In this regard, settlement agreements may create tensions between CSOs and cause-lawyers when their interests diverge.

Legal mobilization for corporate accountability in Europe

Transnational litigation against MNEs is an indissociable component of the corporate accountability movement. Legal mobilization is one of the strategies used by activist organizations and lawyers to achieve political and legal reform regarding MNE conduct in host countries.

Strategic litigation

The nature of transnational litigation against MNEs is twofold. First, it is a traditional form of litigation in the sense that it seeks to hold specific companies liable for the harm they cause, while providing an opportunity for victims to obtain a judicial remedy for the damage they suffer. At the same time, it is a strategic form of litigation, as it also seeks to achieve broader goals beyond the success of a specific case. Scholars have argued that transnational litigation against MNEs is similar to public law litigation.²⁶³ Often, plaintiffs are not simply acting on their own behalf, but also serve as representatives of the larger community affected by the company.²⁶⁴ More importantly, litigators use transnational claims against MNEs to encourage legal reform to strengthen corporate accountability and improve access to justice. On multiple occasions, European litigators have asserted the twofold nature of these claims. For instance, Sherpa insists that ‘the law can be a tool for rights advocacy, at the same time fighting against the impunity of economic (public and private) actors and providing a remedy for the damage suffered by the victims’.²⁶⁵ In Germany, the ECCHR claims to use strategic litigation to hold non-State actors accountable for human rights violations in selected ‘pilot cases’ which highlight structural problems, raise legal questions that have until now gone unanswered, and hopefully provide a precedent for enforcing human rights in the future.²⁶⁶ A goal of such litigation is ‘to effect change above and beyond the individual case at hand’.²⁶⁷

As a strategic form of litigation, transnational claims against MNEs aim to achieve various goals. First, they invite home country courts to clarify specific legal concepts, such as the boundaries of corporate liability.²⁶⁸ For instance, the ECCHR has used litigation to ensure that clear guidelines exist on the extent of the parent company’s liability.²⁶⁹ Second, transnational claims against MNEs raise the visibility of existing regulatory gaps and encourage legal and policy reforms at both national and European levels. This approach is particularly observable in France where Sherpa has brought transnational claims against MNEs to ‘concretely show decision-makers and legislators the difficulties which exist to hold companies liable for the harm they commit’.²⁷⁰ After several years of litigation and lobbying, in 2013 Sherpa and other corporate accountability activists achieved enough support in the French Parliament for the introduction of a legislative bill creating a duty of care of parent and controlling companies.²⁷¹ This initiative eventually led to the adoption of the groundbreaking Act on the duty of vigilance of parent companies and controlling companies.²⁷² In Germany, the ECCHR has used litigation to point out loopholes in national criminal law and encourage the German legislator to introduce a regime of corporate criminal liability.²⁷³ Litigation against MNEs is also a tool to assess the extent of the legal and policy reform needed. Third, transnational litigation against MNEs breathes new life into, or raises the visibility of, campaigns deemed unsuccessful. In the Netherlands, the Shell case was partly the result of a strategic decision by corporate accountability activists to improve the effectiveness of a public campaign seeking Shell’s accountability for its activities in Nigeria. Ultimately, the rise of transnational claims against MNEs is linked to the absence of effective global mechanisms to hold corporations accountable. Until political leaders address the imbalance between corporate rights and obligations, NGOs and local communities will continue to call for further litigation against MNEs.²⁷⁴

The existence of a hostile legal opportunity structure²⁷⁵ and the strategic nature of transnational litigation affect the number of claims that successfully end up in home country courts. To date, plaintiffs have faced a number of obstacles (eg high litigation costs, complex regimes of corporate liability, limited substantive legal victories, etc). To improve their chances of success, litigators carefully select the claims they bring against MNEs.²⁷⁶ The claim must also ‘make sense’ in the context of the litigator’s aims and activities. In France, Sherpa brought the claim against Vinci at a time when it strategically coincided with the debate on the duty of care of parent and controlling companies in the French Parliament. Sherpa claimed that the human rights violations alleged in the claim demonstrated the need to enact a law which would regulate MNE activities abroad.²⁷⁷ Ability to collaborate with victims and CSOs in host States is also an important criterion for litigators. They will evaluate victims’ profiles and motivations as potential claimants, as well as the reliability of potential partners in host countries. Some litigators have developed specific procedures to select potential cases. In 2013, Sherpa created a formal procedure to select situations of alleged abuse that could potentially become claims based on their strategic importance and the amount of resources required.²⁷⁸ The case must comply with the mandate of Sherpa and it must give rise to judicial or non-judicial proceedings.²⁷⁹ Ultimately, an important criterion for launching proceedings is the strategic benefit that the claim may bring.²⁸⁰

The strategic nature of transnational litigation against MNEs is visible in the way lawyers and CSOs cultivate links with the media. William Bourdon, the founder of Sherpa, stated that ‘the media are an instrument for lawyers’.²⁸¹ They are ‘a tool to spark public debates, to create power relations, and, sometimes, to use as a strategy of intimidation of the opponent’.²⁸² Media attention reinforces public pressure on MNEs and adversely impacts their reputation. Lawyers and CSOs strategically use the media to raise the profile of claims. In England, the Monterrico case became highly publicized after newspaper The Guardian published pictures of police and army officers brutalizing local demonstrators in Peru.²⁸³ Transnational cases against MNEs targeting companies with highly visible brands are more likely to receive media attention.²⁸⁴ For instance, litigation against Shell in England, the Netherlands, and the US has received extensive media coverage, most notably due to campaigns running in parallel. Ultimately, the relationship between the media on the one hand and CSOs and lawyers on the other is mutually enriching, as litigators may benefit from broad public coverage while the media may have access to sellable stories.

Measuring the success of transnational litigation against MNEs

As mentioned above, transnational litigation against MNEs aims to achieve various goals: victims seek to gain access to remedies, lawyers want to hold corporate actors liable, and CSOs seek to shed light on corporate human rights abuse and the need for legal and policy reform. Legal mobilization may successfully achieve one or several of these aims while failing to attain others.

Legal and non-legal benefits

Legal mobilization theory shows that there are multiple ways of assessing the ‘success’ or the ‘failure’ of litigation for law reform.²⁸⁵ In transnational litigation against MNEs, success may be interpreted in terms of legal and non-legal benefits.

Looking at legal benefits, litigators have won on some legal and procedural issues, such as jurisdiction or NGO standing. In the Netherlands, the Dutch courts’ decisions to hear the claims against the parent company of Shell was seen as a victory. At the same time, few cases have, to date, reached the merits stage and, when they did so, home State courts have rarely found MNEs liable for human rights or environmental abuse taking place in host countries (only recently in the Shell case before the Dutch courts). As a result, one could suggest that legal mobilization has contributed little towards achieving corporate liability. Furthermore, plaintiffs have rarely been awarded financial compensation for the harm suffered or other remedies, such as clean-up of environmental pollution.

The most important benefits of transnational litigation against MNEs may be its non-legal benefits or indirect effects. Legal mobilization has contributed to improving the visibility of the corporate accountability movement, especially in the context of campaigns against specific MNEs or for legal and policy reform. In some instances, plaintiffs and litigators pursue litigation for reasons other than winning legal arguments or obtaining financial compensation.²⁸⁶ Victims may get the mental satisfaction of obtaining ‘justice’ by having an official acknowledgement of the corporate wrongs or crimes.²⁸⁷ Litigation may also buy time to mobilize resistance around a project.²⁸⁸ In one case, the ECCHR stated that:

The impact of bringing or threatening to bring cases may also be more important than the legal outcomes.²⁹⁰ Litigation may affect corporate behaviour in host countries by incentivizing companies to pay attention to the impacts of their activities on local communities, employees, and the environment. However, it is difficult to evaluate exactly how litigation changes corporate behaviour.²⁹¹ Since litigation may play a key part in larger activist campaigns against a specific company, ‘it is often impossible to disaggregate the impact of litigation from the impact of other forms of activist campaigning on the firm’s public perception or its share price’.²⁹²

Holzmeyer explains that legal mobilization in Doe v Unocal had four principle indirect effects on the corporate accountability movement: organizational growth and capacity-building; growth of transnational advocacy networks and potential for boomerang effects; broadening tactical repertoires of activists and litigators, including possibilities for synergy among different tactics and movements; and cultivation of symbolic and communicative resources for movement-building and mobilization.²⁹³ Therefore, transnational claims against MNEs can bolster the organizational strength, tactical repertoires, and discursive resources of activists.²⁹⁴

Transnational litigation against MNEs can also be an efficient public education and reform tool.²⁹⁵ It may demonstrate inequities in existing laws and highlight the need for legal and policy change, such as in the case against Vinci in France. Therefore, the success of legal mobilization against MNEs is linked to the capacity of its participants to create an alternative discursive space where hegemonic discourse on neoliberal globalization and legal norms sustaining inequality and corporate impunity are challenged.²⁹⁶

Out-of-court settlements

In a number of cases, especially in common law countries, plaintiffs and business defendants have reached out-of-court settlements. In general, MNEs agree to compensate the claimants or to create a fund to develop local projects to help host country communities. For instance, in France in 2005, Total and the plaintiffs reached a confidential out-of-court settlement.²⁹⁷ Total agreed to pay €10,000 to each plaintiff in exchange for the withdrawal of the complaint. In addition, the company pledged to create a fund of €5.2 million to implement humanitarian and development projects.²⁹⁸ In England, a significant number of transnational claims against MNEs have resulted in out-of-court settlements between claimants and MNEs.²⁹⁹

Settlements offer advantages to both claimants and corporate defendants. Transnational litigation against MNEs is expensive and time-consuming, and its outcome is uncertain for both parties, especially plaintiffs. Therefore, settlements offer victims a negotiated resolution of the conflict and improve their opportunities to obtain remediation in a much faster way than through litigation.³⁰⁰ Litigation can also damage the MNE’s reputation and negatively impact business opportunities. Settlements limit such risks by ending the legal proceedings, since plaintiffs generally agree to withdraw their claim. Furthermore, settlements can influence the dismissal of criminal complaints, such as in the case against Total in France.³⁰¹ In this case, the settlement between the victims and Total allowed the company ‘to buy a certain peace of mind by ending the embarrassing proceedings and limiting the subsequent publicity’.³⁰²

Litigators usually present out-of-court settlements as great successes. Following the settlement with Total, William Bourdon, the founder of Sherpa, stated:

In the future, settlements may be the favoured way to solve disputes, as part of ‘the contemporary trend to “privatize” justice’.³⁰⁴ In particular, they may provide a ‘pragmatic’³⁰⁵ approach to achieving the ideals behind transnational litigation against MNEs in comparison with judicial proceedings, especially since courts are reluctant to remedy corporate human rights and environmental abuse.³⁰⁶ Future settlements could include ‘the creation of pre-emptive codes, the aggressive monitoring of those codes, the involvement of communities and local NGOs, and efforts to persuade consumers, NGOs, and judges to give force to the norms expressed in those codes’.³⁰⁷

At the same time, settlements raise a number of issues. First, claimants and MNEs may struggle to reach an out-of-court settlement. In Bodo v Shell, even though the corporate defendant formally admitted liability for the oil spills in 2011,³⁰⁸ the plaintiffs and the company were originally unable to reach an agreement regarding various aspects of a potential settlement (eg the quantity of spilled oil, the extent of the damage to the Bodo community and the ecosystems of the Bodo region, and the amount of financial compensation owed by SPDC).³⁰⁹ After four years of intermittent talks, SPDC and Leigh Day eventually agreed to a £55 million settlement.³¹⁰

Second, settlements are usually confidential. Apart from the parties’ press releases, it is very difficult to know how those agreements are negotiated and what they contain. Furthermore, the confidentiality of these agreements may have a negative impact on other victims of corporate abuse. Following the settlement between Leigh Day and Trafigura in Motto, medical expert evidence could not be seen by other victims or used to aid effective health interventions.³¹¹ NGOs and scholars have suggested that the lack of transparency prevents the rights of victims’ access to justice, truth, and remedy.³¹²

Third, in most cases MNEs refuse to recognize their involvement, or liability, in the human rights abuse or environmental pollution claims raised by the claimants. For instance, Trafigura rejected any responsibility, stating that it did not foresee, and could not have foreseen, the illegal dumping of toxic waste in Abidjan.³¹³

Fourth, the conclusion of settlements does not ensure that all victims will obtain financial compensation, especially in the context of group actions, or that the MNE is not exposed to more litigation risks. Despite Trafigura and Leigh Day reaching an out-of-court settlement for 30,000 victims, more than 100,000 Ivorian victims brought a new tort claim against Trafigura in the Netherlands in February 2015.³¹⁴ They demanded compensation for ‘bodily, moral and economic injury’ caused to them as well as a clean-up of the toxic waste in Ivory Coast. This highlights that settlements often neglect to remediate long-term social and environmental issues.

Fifth, settlements prevent the setting of legal precedent or the adoption of legal and policy reform of corporate liability standards for MNEs. As Stephens points out, ‘[c]‌onfidential settlements and monetary payment without admission of responsibility enable the corporation and its employees, in effect, to purchase the right to commit abuses’.³¹⁵

Out-of-court settlements between plaintiffs and corporate defendants may prove a stumbling block to the aims of the corporate accountability movement and may create potential conflicts between cause-lawyers and activists. While cause-lawyers tend to praise these agreements for allowing victims to gain effective access to remedy, corporate accountability activists have sometimes criticized them for undermining efforts to create strong corporate liability standards. For instance, Total’s out-of-court agreement in France sparked tensions among the different activist groups campaigning against the MNE for its activities in Myanmar.³¹⁶ While some activists welcomed the settlement,³¹⁷ a number of observers criticized it for ‘ignor[ing] responsibilities for the commission of serious violations of human rights in favour of a financial transaction allowing the Total group to clean up its act’.³¹⁸ In particular, the position of Sherpa received a lot of criticism for ‘endors[ing] Total’s version of its lack of responsibility for the acts alleged against the group’.³¹⁹ It should be pointed out that, in parallel, Total’s lawyers also tried to reach an out-of-court settlement with another group of victims who had brought a criminal claim against the MNE in Belgium. However, the plaintiffs refused the offer on the grounds that their complaint aimed at holding Total accountable for its behaviour in Myanmar.³²⁰ Similarly, a number of international and Ivorian CSOs insisted that the settlement between Leigh Day and Trafigura did not exonerate the MNE from its responsibility for the ‘social, health, and environmental disaster’ caused in Abidjan.³²¹ On the other hand, Leigh Day acknowledged, in the light of expert evidence, that ‘the slops could at worst have caused a range of short-term low-level flu like symptoms and anxiety’.³²²

The conclusion of out-of-court settlements may also create tensions between plaintiffs and their local community.³²³ In the Monterrico case, the MNE made compensation payments to 33 of the victims, without admitting liability.³²⁴ It was reported that ‘the decision by the victims to settle was seen by many as “selling out” and preventing the communities from having their day in court, although that was never the claimants’ intention’.³²⁵ Furthermore, in Peru the settlement ‘resulted in a significant division among some previously tight-knit communities, resulting in a number of the victims feeling the need to move away’.³²⁶ It also created tension among the claimants. Some victims felt pressured into settling to support the others, and others felt guilty for receiving larger sums of money. In addition, a number of victims did not receive any compensation.³²⁷

The tensions created by out-of-court settlements shed light on the dual nature of transnational litigation against MNEs, and the constraints imposed on cause-lawyers and corporate accountability activists by legal mobilization and the politicization of the law. Settlements may prevent the achievement of aims linked to the corporate accountability movement, such as punishing MNEs for human rights or environmental abuse, or triggering policy and legal reform. Settlements also challenge the twofold positions of cause-lawyers as private practitioners acting in their client’s best interests and as activists seeking to establish a precedent that will improve the legal position of the cause.³²⁸ Legal practice also imposes a number of financial and other constraints on lawyers. In some countries, the cost of litigation is exorbitant and lawyers, who work on the basis of market-based mechanisms, are exposed to high financial risks when they take on transnational claims against MNEs. When the legal rules governing liability and procedure limit their chances of success, cause-lawyers may be under pressure to reach a settlement with corporate defendants to avoid failure and not recovering any costs. Furthermore, lawyers must protect their clients’ interests and are normally bound by their clients’ decisions. As a result, they cannot prevent them from opting for a quick and easy way to obtain financial compensation.

5 Conclusions

This chapter has described the development of transnational litigation against MNEs in home countries, comparing experiences in common law and civil law jurisdictions. It also analysed the dynamics between social movements and transnational litigation against MNEs in Europe.

Transnational litigation against MNEs emerged in common law jurisdictions around two sets of cases that started in the 1990s. First of all, plaintiffs have brought civil actions based on the ATS before the US federal courts against foreign companies for their involvement in alleged violations of human rights in their foreign operations. However, recent decisions of the US Supreme Court have closed the doors of the ATS, preventing foreign companies from being held accountable for human rights violations committed abroad. Furthermore, a series of tort actions have been brought before domestic courts of various common law jurisdictions to hold MNEs accountable for wrongs committed abroad. Until recently, however, the success of this type of litigation had been limited, most notably because of jurisdictional issues and the application of the forum non conveniens doctrine. Nonetheless, courts are increasingly inclined to exercise jurisdiction over this type of litigation. Furthermore, by accepting in Vedanta and Okpabi that a parent company could incur a duty of care in respect of the activities of its subsidiary under certain circumstances, the UK Supreme Court opened the door to future claims for compensation against parent companies for human rights abuse and environmental pollution.

The increasing number of claims in European civil law jurisdictions may result in Europe becoming a primary venue for transnational claims against MNEs. Litigators have used diverse legal strategies to hold companies liable in the context of MNE activities. Nonetheless, while some victories have been won on procedural issues, such as court jurisdiction, a number of obstacles still exist, including access to evidence and reluctance by prosecutors and judges to hold MNEs to account. As a result, the success of transnational litigation against MNEs to hold parent companies liable in the context of their foreign activities and to secure remediation to victims remains limited in European civil law countries. However, the recent landmark ruling in Shell in the Netherlands, which recognized for the first time that a parent company had a duty of care to local communities affected by the activities of its foreign subsidiary, may boost transnational claims for corporate accountability.

For several decades, civil society actors concerned with business abuse have alternated between various strategies to influence corporate conduct, ranging from pressure to collaboration. However, increased corporate power and limited results of voluntary initiatives to effectively prevent business-related abuse of human rights and environmental pollution resulted in the emergence of a distinct social movement. The corporate accountability movement focuses on the role of policy-makers and courts to effectively regulate corporate conduct through binding obligations and punishment. While this movement is global, it has also developed specific characteristics in Europe as a result of the existence of regional institutional and legal frameworks. The years since 2000 have also seen the emergence of law firms and legal NGOs fully or partly dedicated to corporate accountability litigation in Europe. The interaction of these cause-lawyers with actors of the corporate accountability movement has triggered the use of legal mobilization as a strategy to hold MNEs accountable and shed light on the need for legal and policy reform. In this context, transnational litigation against MNEs is a strategic type of legal mobilization which aims to achieve remediation of corporate abuse, corporate group liability, and legal and policy reform. While victories on issues such as MNE liability or access to remedies have been rare in courts so far, litigation has produced various other legal and non-legal benefits. At the same time, the conclusion of confidential and out-of-court settlements between plaintiffs and corporate defendants has been a source of disagreement within the corporate accountability movement, revealing the constraints that legal mobilization imposes on both cause-lawyers and activists.

The next chapter provides an in-depth analysis of civil litigation against MNEs in France and the Netherlands.