Litigation for Overseas Corporate Human Rights Abuses in the European Union: The Challenge of Jurisdiction

Abstract

I. INTRODUCTION It is well-known that a number of states, typically developing states, hardly regulate the activities of transnational corporations (TNCs). In some instances, they do so on purpose in order to attract foreign direct investment. In other instances, a regulatory vacuum arises because of a nonfunctioning or corrupt government. Either way, vulnerable populations may fall victim to the practices of TNCs. Because the host state fails to assume its regulatory responsibilities, and because no international court has jurisdiction over corporate abuses,1 it has been argued that the home state of the TNC, typically (but not always) a Western state, should fill the regulatory vacuum (home State regulation).2 Because Western states have failed to adopt specific legislation regulating the overseas activities of their TNCs,3 victims' hopes have converged around corporate litigation in Western courts on the basis of general principles of tort law.4 Specifically in the United States since the 1990s, victims and their representatives have filed a considerable number of tort claims against U.S. TNCs under the Alien Tort Claims Act (ATCA), pursuant to which [t]he 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.5 This Article examines whether tort litigation for corporate abuses, human-rights abuses in particular, that have occurred abroad or are at least producing effects abroad, has a future in the European Union. It is striking that although national courts in the European Union appear to have jurisdiction over any defendant corporation that is domiciled in the European Union, irrespective of where the harm occurred or the nationality of the plaintiffs,6 very few tort cases have so far been brought. It is submitted that this is attributable to the fact that European domestic legal systems - and, for that matter, most domestic legal systems that do not statutorily authorize their courts to exercise tort jurisdiction over overseas violations - have a territorial focus, whereas TNCs inevitably have a transnational reach.7 In a transnational situation, therefore, European courts will typically look for a territorial nexus with the forum.8 It will be argued that this territorial focus is not necessarily fatal to national courts in the European Union that assume tort jurisdiction over corporate abuses diat produce adverse effects abroad. If the origin of these abuses can be situated in the forum, plaintiffs may duly have a cause of action. This will notably be the case when negligence of the TNCs parent corporation can be established. As the parent corporation typically organizes the transnational corporate group's activities from headquarters in the Western home state, a parent corporation's failure to live up to its duty of care has a territorial nexus.9 The identification of this nexus may ease concerns over the extraterritorial application of the home state's law and over the attendant intervention in the internal affairs of the host state.10 Even if the standard of duty of care were to be employed, however, it remains no less true that the harm itself has occurred in the host state. In order to weaken defenses based on unwarranted intervention of the home state in the host state, it will therefore be proposed to construe the duty of care in light of universally accepted principles of international human-rights law.11 The same argument holds for forum-non-conveniens defenses, although, in Europe, these defenses have lost their strength anyway after a 2005 judgment of the European Court of Justice.12 The current European tort system remains less hospitable than the U.S. one for challenging overseas corporate human-rights abuses. In the United States, the ATCA explicidy creates a cause of action for international-law violations committed abroad, where as in the European Union, jurisdictional requirements based on nationality and territoriality may discourage victims of overseas corporate human-rights abuses from filing complaints in domestic courts. …

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