1. Corporate Social Responsibility 2 Liability for damages caused by MNCs

2. Spectacular cases Involvement in coups in Latin America Industrial accidents –Bhopal, Ali Enterprises (Karachi), Rana Plaza (Dhaka) Continuous degradation of the environment –Shell, Texaco Sweat shops –Foxcomm

3. Questions Where to sue? Whom to sue? What legal basis? Which law applies? Can the judgment be enforced?

4. Background Transfer or operation of risk technology in developing countries Production by subsidiaries Knowledge gap Financial dependence

5. Strategies Starting point: Legal independence of the subsidiary Legal action against the subsidiary? Legal action against the parent company –In the developing country courts P.: Enforcement of a decision in the country where the parent company is domiciled –In the courts of the country where the parent company is domiciled

6. Jurisdiction No worldwide Convention EU: Regulation 44/2001 Basic rule – the domicile of the defendant (Art. 2) Special jurisdictions, e.g. the country where the damage occurred P.: forum non conveniens

7. Forum non conveniens Anglo-Saxon concept pointing at the better suited court when there are competing jurisdictions Allows the court to take into considerations issues like –Practicalities, such as collecting evidence –Political economy In Re Union Carbide Corporation Gas Plant Disaster at Bhopal, India, 1984, 634 F. Supp. 842 (S.D. N.Y. 1986) –Workload of the courts Rockware Glass v. MacShannon [1978] AC 795. –Access to justice Dagi v BHP and Ok Tedi Mining Ltd (No 2) [1997] 1 VR 428 Sithole & Others v. Thor Chemicals Holdings Limited & Others [1999] All ER (D) 102 Incompatible with Regulation 44/2001/EC (now Regulation 1215/2012/EU) – ECJ, Owusu

8. The internal structure of MNCs Rarely merely financial control Usually intense control of subsidiaries, in particular in risk industries –Internal guidelines, handbooks –Special department within the parent company –Auditors

9. Human rights law MNCs as addressees of human rights law? –Classical doctrine – only states and international organisations –Failed initiatives UN Draft Code of Conduct on Transnational Corporations 1982 - 1992 –The rise of the MNC in international investment law –P.: Jurisdiction –New soft law instruments, in particular the Ruggie Principles

10. Company Law Legal separation v. socio-economic unity or classical company law doctrine v. Ruggie General rejection of joint liability Exceptions –Germany: special rules for ruling companies –US / UK: Piercing the corporate veil Abuse of the separation –UK: Director‘s liability Sectoral liability? - Teubner P.: which law applies?

11. Contract law Guarantee by the parent company to ensure that the subsidiary will fulfil its obligations Reaction to the legal separation in company law Various forms of declarations Legally binding? –P.: usually not in relation to tort victims

12. Tort law General tort law – negligence Strict liability regimes, in particular environmental liability Organisational torts –Actions –Omissions Independence from company law –Williams v. Natural Life Health Foods Ltd [1998] 1 WLR 830

13. Liability for direct influence In particular in cases of direct influence, eg orders in the individual case or in handbooks Which law applies? –Art. 4 (1) of Regulation 864/2007 („Rome II“)

14. Liability from assuming responsibility General tort law –Amoco Cadiz – responsibility of the parent company for the safety of the fleet and for training the staff –No decisions in Thor Chemicals and Ok Tedi Environmental liability –US Comprehensive Environmental Response, Compensation and Liability Act –Europe: national laws, Environmental Liability Directive 2004/35/EC –Liability of the „operator“ –P.: which law applies? – eg Art. 7 Rome II Reg

15. Liability for insufficient organisation of the MNC? Examples from other areas, e.g. money laundering Organisational torts, enterprise liability –Duty to organise the production in such a way as to avoid damages? Application to MNC structures?

16. Chandler v. Cape David Chandler had been employed by a wholly owned subsidiary company of Cape plc for just over 18 months between 1959 to 1962. In 2007 Mr Chandler discovered that, as a result of exposure to asbestos during that period of employment, he had developed asbestosis. The subsidiary no longer existed and had no policy of insurance covering claims for damages for asbestosis. Mr Chandler brought a claim against Cape plc, alleging it had owed (and breached) a duty of care to him. Cape plc denied that it owed a duty of care to the employees of its subsidiary company.

17. Chandler v Cape (1) In summary, this case demonstrates that in appropriate circumstances the law may impose on a parent company responsibility for the health and safety of its subsidiary’s employees. Those circumstances include a situation where, as in the present case, (1) the businesses of the parent and the subsidiary are in a relevant respect the same (2) the parent has, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; (3) the subsidiary’s system of work is unsafe as the parent company knew, or ought to have known; and (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees’ protection.

18. Chandler v Cape (2) For the purpose of (4) it is not necessary to show that the parent is in the practice of intervening in the health and safety policies of the subsidiary. The court will look at the relationship between the companies more widely. The court may find that element (4) is established where the evidence shows that the parent has a practice of intervening in the trading operations of the subsidiary, for example production and funding issues.

19. Role of CSR instruments CSR instruments can be relevant for the assessment of the individual standard of knowledge and the duty of care CSR instruments can raise the standard of due diligence objectively –Broader effect!