Local parents as ‘anchor defendants’ in European courts for claims against their foreign subsidiaries in human rights and environmental damages litigation: recent case law and legislative trends

Local parents as ‘anchor defendants’ in European courts for claims against their foreign... Abstract Over the last few years, litigation in European courts against gross human rights violations and widespread environmental disasters has intensified. Recent case law shows that victims domiciled in third States have attempted to start proceedings in Europe, where the parent company of a negligent local subsidiary is seated. In light of this, national courts of the EU have been asked to determine whether the parent company located in the State of the court seized with the matter may serve as an ‘anchor defendant’ for claims against its foreign subsidiary. In Okpabi & Ors v Royal Dutch Shell Plc & Anor, Akpan v RDS, and KiK, national courts’ assessment regarding international jurisdiction has significantly diverged. Unsatisfied with this result, some States have adopted—or are in the process of adopting—legislation that establishes or reinforces the duty of care or vigilance of parent companies directly towards victims. This article examines the latest legislative developments that took place in France, Switzerland, and Germany. Notably, many States have opted for the amendment of their substantive law (only) rather than (additionally) for the modification of private international law rules. I. Introduction The globalization of trade, coupled with the rise of technologies, has created new opportunities for companies to expand their commercial activities over national borders. At the same time, however, the pressure of globalized markets has fostered aggressive competition between operators. In such a context, international trade has given rise to (no longer so) new kinds of harms, which may damage large groups of people or society as a whole. From a legal perspective, therefore, such a result requires the delineation of corporate responsibility standards and the promotion of access to remedies. At the international level, significant efforts have been made to raise companies’ awareness of the transnational impact of their activities and their corresponding consequences. For instance, the well-known ‘Ruggie Principles’1 and the Organisation for Economic Co-operation and Development’s Guidelines for Multinational Enterprises2 encourage the observance of human rights by multinationals. Nevertheless, these efforts are not legally enforceable against corporations and perhaps not sufficient to induce a more respectful behaviour.3 As for the European institutions, these have not adopted a legislative act on this topic yet.4 In this context, the following text focuses on a specific question: whether the parent company located in the State of the court seized with the matter may serve as an ‘anchor defendant’ for claims against its foreign subsidiary. This inquiry is part of a broader topic and concern regarding the ability of private international law rules on jurisdiction to provide an accessible forum to victims of human rights violations or environmental disasters. In Europe, the question has gained interest, given the intensification of litigation against parent companies for human rights violations as well as the increasingly restrictive approach of US courts regarding jurisdiction in these matters. Indeed, those courts have toughened the requirements that enable them to assert jurisdiction over environmental or human rights violations that have occurred outside their territory.5 Section II of this article surveys those jurisdictional concerns in Europe. In particular, the recent English judgment Okpabi & Ors v Royal Dutch Shell Plc & Anor is a telling example in this respect.6 In this case, one of the European ‘counterparts’ to the US case Kiobel,7 the English High Court, Queen’s Bench Division, by its Technology and Construction Court, decided that it had no international jurisdiction to hear claims in tort against the Nigerian subsidiary of Shell in connection with environmental and health damages due to oil pollution in the context of the group’s oil production in Nigeria. English case law illustrates the current struggle of national courts to deal with human rights violations or environmental disasters when these take place in third States and are attributable to local subsidiaries. This question will be discussed from a comparative perspective. Following this, section III of this article puts the spotlight on legislative developments in the rest of Europe. Unsatisfied with the present situation, some States have adopted—or are in the process of adopting—legislation that establishes or reinforces the duty of care or vigilance of parent companies directly towards victims. Notably, those States have opted for the amendment of their substantive law rather than the modification of private international law rules. However, both disciplines should work hand in hand in order to come up with satisfying results. II. Jurisdiction over parent companies and their subsidiaries: selected case law 1. Okpabi The Okpabi case deals with liability for oil pollution in Nigeria. We use this emblematic case in the following paragraphs as a tool to guide our private international law reasoning. We further develop our analysis with a view to additional English case law. All selected judgments follow the same pattern: they involve actions—for injunctive relief and/or damages—against a parent company seated in the United Kingdom (UK) and a subsidiary located in a third State, which is the place where the damage occurred. A. Facts Okpabi involves two sets of proceedings against Royal Dutch Shell plc (RDS), a holding company incorporated in the UK, and Shell Petroleum Development Company of Nigeria (SPDC), a Nigerian production company. In particular, the claimants started proceedings in the English courts8 against RDS and SPDC for the economic and environmental damages that oil spills emanating from SPDC’s pipelines caused. The ‘class’ of victims was composed of Nigerian nationals, many of whom belonged to the Nigerian Ogale community. They essentially argued that both the SPDC’s defective maintenance policy and the theft of crude oil (‘bunkering’), which is committed on a regular basis, seriously polluted the environment and harmed the Nigerian Ogale Community’s livelihood. For this reason, the claimants brought an action for injunctive relief as well as for damages. The Court assessed jurisdictional challenges together for both sets of proceedings, as they generate relatively similar questions. From a structural perspective, the Court first examined whether the claimants possessed a legitimate claim against RDS that would enable them to pursue their actions against the said defendant in the UK. As we explain in section II.2, the Court concluded that no real issue against RDS had to be tried. Therefore, the second step of the jurisdictional analysis, whereby the Court would consider whether a claim against SPDC should proceed in England and Wales was discarded, as there was no anchor defendant and no self-standing ground of jurisdiction. It has to be highlighted that the assessment of jurisdictional challenges, as a preliminary issue, does not require a full exposition of questions of fact and law.9 B. The claim against Royal Dutch Shell (RDS) a. Article 4 of the Brussels Regulation (Recast) Article 4 of the Brussels I Regulation (recast) (BRIbis),10 which allocates jurisdiction to the courts of the defendant’s domicile, enables Nigerian claimants to start proceedings against RDS in the UK.11 Since RDS has its domicile in the European Union (EU), the Court correctly recalls that the jurisdictional grounds contained in the Regulation are mandatory in nature. In other words, European private international law rules on jurisdiction do not leave any room for the application of any forum non conveniens doctrine that is usually available in States of common law tradition.12 Specifically, in Owusu,13 the Court of Justice of the European Union (CJEU) explained that the application of such a doctrine would undermine the principle of legal certainty, which represents the cornerstone of the Brussels regime.14 In the case at issue, therefore, the analysis regarding the application of Article 4 of the BRIbis is straightforward: claimants may sue RDS in its domicile, and further challenges regarding the appropriateness of such a forum must be rejected.15 In Vedanta,16 a case that involved a claim against a parent company seated in the UK and its subsidiary for the pollution of the Kafue River in Zambia, as well as the adverse consequences of such an occurrence on the local population, Justice Coulson spent more time in his judgment dealing with challenges against Article 4 of the BRIbis. Although it was clear that the defendants could not invoke the forum non conveniens doctrine under the lex fori to reject the application of said provision, they argued that the claim brought against the parent company was a device, the sole purpose of which was to attract the subsidiary in the UK. Relying on the CJEU’s case law on Article 8(1) of the BRIbis, the defendants sustained that the action brought against them was abusive. Indeed, according to the European case law related to this provision, a defendant shall not be attracted outside the Member State where it is domiciled if the sole purpose is to oust it from this natural forum.17 In absence of European case law on this question in relation to Article 4 of the BRIbis, it is not certain that the application of that provision should be rejected in case claimants use the Regulation in an ‘abusive’ manner. On the one hand, it is doubtful to what extent the Regulation actually permits abusive strategic behaviour by the parties. In this sense, it is useful to recall that the Brussels regime looks at forum shopping unfavourably. On the other hand, however, one must acknowledge that Article 8(1) of the BRIbis aims at preserving the reasonable expectation of the defendant that it will be sued in its domicile. Following this line of reasoning, it is rather contradictory, if not bizarre, to use this argument to then reject the application of Article 4 of the BRIbis. In Vedanta, the Technology and Construction Court eventually concluded that a claim that raises a ‘real issue’ between the claimants and the anchor defendant can hardly be considered a mere device.18 Back to the Okpabi case, the Court recalled that the availability of the forum presumes that the claimants possess an actual claim against the defendant. In other words, in the Court’s view neither the Regulation nor the Owusu case removes the necessity under the lex fori that ‘a real issue to be tried against RDS’ exists.19 In order to determine the prima facie existence of a claim, it is necessary to dive into the merits of the case. As the Court pointed out, however, the burden to prove that point should not be a high one. Since the CJEU did not rule on this particular issue either, it is not clear whether the application of Article 4 of the BRIbis actually requires, or allows at all, the national court to require that a valid claim be brought against the defendant. On the one hand, the mandatory force of Article 4 of the BRIbis could impede that any argument regarding the admissibility of the claim be made.20 Accordingly, courts should not be able to merge considerations regarding the strength or the meritorious character of an action with its analysis concerning jurisdiction. Therefore, courts would have to examine the admissibility of a claim only after having asserted jurisdiction over the case. Following this line of reasoning, the Court of Appeal in Vedanta upheld Justice Coulson’s judgment and reinforced the mandatory nature of Article 4 of the BRIbis by stating that the ‘effect of the CJEU decision in Owusu v. Jackson is that article 4 of the Recast Regulation precludes the English Court from declining what is a mandatory jurisdiction where the defendant is a company domiciled in England and Wales’.21 Additionally, the Court did not further develop whether a valid claim is needed for Article 4 of the BRIbis to apply. Therefore, this could confirm that the admissibility of the claim is irrelevant as far as jurisdiction is concerned. On the other hand, however, Justice Fraser’s decision in Okpabi calls into question the absolute mandatory nature of Article 4 of the BRIbis. It is true that only a person with an actual claim would in principle sue the defendant in the courts of its domicile. Therefore, according to Justice Fraser’s reasoning, it is not unreasonable for courts to accept jurisdiction only where there is a ‘real issue to be tried’. In case such reasoning is endorsed, however, one might wonder how high the burden of proof should be. b. The validity of the claim Following this, therefore, the English Court examined the validity of the claims against RDS in an attempt to determine the reach of its jurisdictional power. It did so according to English law. To be more precise, the acts and omissions that occurred before 11 January 2009 are governed by English law as it represents the most appropriate one, pursuant to sections 77 and 1.2 of the Private International Law Act 1995.22 Then, according to Article 7 of the Rome II Regulation,23 which applies to the acts and omissions that took place after 11 January 2009, the law of England and Wales is applicable since it is the place where the event giving rise to the damage occurred.24 According to English case law, the validity of a claim against the parent company will be substantiated if the latter owes a duty of care towards the claimants.25 Therefore, the Court in Okpabi adopted a two-stage analysis. The first one consists in applying the well-known Caparo test, which was developed by the House of Lords in Caparo Industries plc v Dickman and requires the fulfilment of three conditions.26 Specifically, the damage must have been foreseeable for the anchor defendant; a certain proximity has to exist between the claimants and said defendant;27 and, finally, imposing a duty of care on the defendant must be fair, just, and reasonable. In the case at issue, the Court concluded that no duty of care could reasonably be imposed on RDS. It relied on the following indicia in order to support its analysis.28 To start with, RDS does not directly hold shares in SPDC. Moreover, RDS is not an operating company, and it does not possess the relevant license to conduct operations in Nigeria. Moreover, it appears that RDS does not influence its subsidiary’s management. In this context, the Court noted that although two members of RDS were part of the Executive Committee of SPDC, they still represented a minority. Finally, it does not seem fair, just, and reasonable to impose a duty of care on RDS since this would amount to the creation of an indeterminate liability on the parent company for its acts and omissions globally. Relying on previous case law, Justice Fraser then added that the Court must decide whether the parent company was in a better position to prevent the harm because of its superior knowledge and expertise.29 Additionally, the subsidiary must have relied on the parent company and its knowledge in order to avoid the harm. In the case at issue, the Court observed the general corporate structure of the Shell group and recalled that, under English law, companies are separate entities, and membership in the same group does not mean that a parent company is automatically responsible for the acts or omissions of its subsidiaries. The Court then reiterated that RDS did not undertake any operational activities in Nigeria. Furthermore, it appears that the parent company neither supervised its Nigerian subsidiary nor transferred knowledge. To conclude, since claimants did not possess any actual claim against RDS, there was no defendant to be anchored to. Hence, the claimants could not attract SPDC in England—at least in first instance.30 For the sake of this article and in order to be exhaustive, we will still proceed to examine whether jurisdiction for the subsidiary would have been available in the event that the claimants’ action against the anchor defendant would have had a real prospect of success, as was the case in Vedanta. We use this case, as well as the Unilever case,31 to support our reasoning. C. The claim against the subsidiary In the event that there is a real issue to be tried against the anchor defendant, the next question to be solved is whether the subsidiary can be attracted in the UK, which corresponds to the domicile of the parent company. Article 8(1) of the BRIbis is irrelevant in this case since it only enables a person domiciled in a Member State to be sued in the domicile of a co-defendant. As a result, when the subsidiary is located in a third State, national rules on civil procedure apply. Under English law, the requirements of paragraph 3.1(3) of Practice Direction 6B must be fulfilled. According to this provision, ‘a claim is made against a person (“the defendant”) on whom the claim form has been or will be served … and—(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim’. In Vedanta, the Court extracted a five-step test from this provision, whereby a court must answer the following questions: does the claimants’ claim against the subsidiary have a real prospect of success (Step 1); if so, is there a real issue between the claimants and the anchor defendant (Step 2); is it reasonable for the court to try that issue (Step 3); is the subsidiary a necessary or a proper party to the claim against the anchor defendant (Step 4); and is England the proper place in which to bring the claim (Step 5)? Steps 2 and 3 relate to the validity of the claim against the anchor defendant. It corresponds to the analysis we undertook in the previous part of this article. Therefore, we do not repeat it here. We recall that Article 4 of the BRIbis limits the court’s margin of manoeuvre under Step 3; (at least) as long as a ‘real issue’ is to be tried, the Brussels regime opens a forum in the defendant’s domicile, and further considerations regarding the appropriateness of this forum under the forum non conveniens doctrine are not allowed. The remaining steps concern the claim against the subsidiary. In particular, the Court must determine whether such a claim has a real prospect of success in accordance with the appropriate applicable law. This requirement should be easily met since the subsidiary will usually be the actor conducting operations in the State where the damage occurred and substantive law will in principle punish the allegedly unlawful behaviour. As far as Step 4 is concerned, it corresponds to the condition expressed in paragraph 3.1(3)(b), which states that a claim will be served on a person located overseas in case it is considered a ‘necessary or proper party’ to that claim. It has been established by case law that this test is as broad as the Court’s power to order a joinder under Rule 19.2(2) of the Civil Procedure Rules (CPR).32 Finally, although the requirements of said paragraphs are fulfilled, it is important to note that English courts still have the power to reject the service on a subsidiary located outside the EU under Rule 6.37(3) of the CPR. To be more specific, where a court is not persuaded that England and Wales is the proper place in which to bring the claim, it can reject the service of that claim. In order to illustrate these rather dogmatic considerations, we take the recent Unilever and Vedanta cases as examples. Unilever involved a claim brought by Kenyan nationals against a holding parent company located in the UK, on the one hand, and a subsidiary that operated a tea plantation in Kenya, on the other. Its employees were victims of ethnic violations, which took place after the Kenyan presidential election of 2007. To be more specific, after the announcement of the result of the elections, a group of armed men invaded the tea plantation, destroyed homes, and assaulted people from rival tribes. As a result, claimants started proceedings against both companies in the UK, alleging that the defendants had failed to provide them due protection. In this case, Justice Elisabeth Laing concluded that, like in Okpabi, the claim against the parent company raised no real issue.33 Nevertheless, the Court continued its analysis on the assumption that such a claim would have a real prospect of success. To start with, the Court explained that, according to the parties, Kenyan law applied to the claim against the subsidiary.34 Following that law, Justice Laing concluded that the Occupiers’ Liability Act did not impose a duty on the subsidiary to protect the claimants from an attack, such as the one that occurred after the 2007 elections.35 Indeed, the duty that is imposed by the Kenyan legislation is much narrower than the one that was pleaded. Therefore, the Court established that the claim against the subsidiary had no prospect of success.36 Otherwise, the Court would have to determine, additionally, whether the subsidiary is a ‘necessary or proper’ party to the claim brought against the parent company. In Unilever, the Court answered positively to that question since both actions required one investigation.37 Moreover, they refered to the same facts and legal principles. Finally, they concerned the same losses and involved similar causation arguments. The last question that would have to be examined is whether England and Wales was the proper forum where the claim against the subsidiary should be brought. Referring to the Connelly v RTZ case, the Court stated that the defendant would have to demonstrate that another, more appropriate forum, exists.38 Then it would be for the claimant to show that substantial justice cannot be achieved in that forum, for example, by proving the lack of funding and the impossibility to have access to justice.39 In Vedanta, the Court of Appeal validated a different conclusion. Specifically, Justices Jackson, Simon, and Asplin considered that the claim against the subsidiary had a real prospect of success, inasmuch as the latter operated the mine that discharged toxic substances into the local waters and that Zambian law imposed a strict liability on such behaviour.40 Additionally, like in Unilever, the Court of Appeal confirmed that the subsidiary was a necessary and proper party to the claim and that England and Wales was the proper place in which to bring the claims.41 2. Akpan The Dutch courts also had to deal with claims regarding oil spills allegedly caused by the negligence of RDS and SPDC. In Akpan v RDS, a Nigerian farmer and fisherman sued both RDS and SPDC in the District Court of The Hague, alleging that oil spills harmed his livelihood.42 In particular, spills were due to a lack of maintenance of a wellhead and inadequate safety measures leading to sabotage. In these proceedings, the claimant was supported by Milieudefensie, an association promoting environmental care. Although RDS is registered in the UK, Dutch courts can assert jurisdiction over the action under Articles 4 and 63(1) of the BRIbis in view of the fact that the company is actually headquartered in the Netherlands.43 Against the interlocutory judgment on jurisdiction, the defendants argued that the start of proceedings in the Netherlands constituted an abuse of law since the claimant’s action against RDS was certain to fail.44 The District Court of The Hague rejected this defence and stated that: the claims against RDS could not be designated as clearly certain to fail beforehand, because beforehand it could be defended that under certain circumstances, based on Nigerian law, the parent company of a subsidiary may be liable based on the tort of negligence against people who suffered damage as a result of the activities of that (sub-) subsidiary.45 In other words, the Dutch Court concluded that it had jurisdiction since, under Nigerian law, a claim against the parent company may be brought. Interestingly, the Court did not enter further into the merits of the case but merely observed abstractly whether a claim would be possible under substantive law.46 At the same time, the Court did not exclude categorically an argument of abuse under Article 4 of the BRIbis based on the prospects of success in the subject matter. Once the District Court of The Hague asserted jurisdiction over the actions, it determined that the existence of a potential duty of care towards the claimants should be assessed according to Nigerian law.47 Since the latter was deemed to resemble English law, the Court proceeded to apply the Caparo test.48 It eventually concluded that RDS did not assume any duty of care and, thus, should not be held liable for the oil spills that occurred in 2006 and 2007.49 To support its analysis, the Court explained that RDS was not engaged in oil production in Nigeria, contrary to SPDC.50 Therefore, it was not clear that the parent company should have a better knowledge regarding the prevention of risks. Therefore, it could not be assumed that RDS had the obligation to intervene in the subsidiary’s policy to avoid the damage at issue.51 As a result, the Court found no proximity between the claimants and RDS, nor did it find it fair, just, and reasonable to impose a duty of care on the latter.52 For this reason, the District Court dismissed all claims against RDS.53 As far as SPDC was concerned, the District Court in The Hague relied on section 7(1) of the Dutch Code of Civil Procedure in order to attract the subsidiary in the Netherlands.54 Section 7(1) (in translation) reads as follows: In the event that the Dutch court has jurisdiction over one of the defendants in matters that must be initiated by a writ of summons, the Dutch court also has jurisdiction over other defendants involved in the same proceedings, provided the claims against the various defendants are connected to such an extent that reasons of efficiency justify a joint hearing.55 In an attempt to strike the application of this provision, the defendants argued that the basis of the two claims against them was not the same. They relied on European case law, which should apply to the Dutch provision by analogy. In Painer, for example, the CJEU ruled that a difference in legal basis between various actions does not per se impede the application of Article 8(1) of the BRIbis,56 provided that it was foreseeable by the defendants that they could be sued in the domicile of one of the defendants.57 Following this line of reasoning, SPDC argued that it could not predict being sued in the courts of the Netherlands. The District Court rejected both arguments. In its opinion, the actions against both defendants shared the same basis since they were accused of tort of negligence under Nigerian law. Additionally, defendants could have predicted the start of the proceedings in the Dutch courts, provided the current trend continued to hold parent companies liable for the acts or omissions of their subsidiaries located overseas. Regarding this last statement, we would rather suggest that what creates predictability is the existence of a previous link between the defendants and not the knowledge of international litigation practices.58 In this case, it is the corporate structure of the Shell group that makes the attraction of the subsidiary in the Dutch forum foreseeable. Eventually, the District Court considered that reasons of efficiency justified the extension of its jurisdictional power over the Nigerian subsidiary.59 In this sense, Dutch law seems to have more power of attraction than English law, which allows courts to reject the service of a claim on a co-defendant seated outside the EU, provided that the UK is not the right forum to rule over the action. Importantly, the Dutch Court emphasized that it would retain jurisdiction over SPDC, even though the claims against the parent company were eventually dismissed. It would do so even if ‘no connection or hardly any connection would remain with Dutch jurisdiction’.60 On the merits, the District Court of The Hague found that SPDC violated its duty of care towards the claimant. Specifically, the subsidiary should have realized that a risk of sabotage of the well was high.61 Accordingly, the company had to take the appropriate measures to prevent that risk. 3. KiK As opposed to the UK and the Netherlands, there are no comparable cases in Germany. This is because the German national procedural law applicable to third State defendants does not provide for an equivalent forum connexitatis like in Article 8(1) of the BRIbis, paragraph 3.1(3) of the UK Practice Direction 6B, or section 7(1) of the Dutch Code of Civil Procedure. This may be illustrated by a recent litigation, the KiK litigation,62 which was instituted in Germany and structurally resembles the Okpabi and Akpan cases, at least to a certain extent. On 11 September 2012, 260 workers of Ali Enterprises in Karachi, Pakistan, died in a fire at the production site, 32 workers were injured. The German textile importer and reseller KiK Textilien and Non-Food GmbH, seated in Bönen, Germany, was the main buyer for Ali Enterprises. On 15 March 2015, four Pakistani victims instituted proceedings at the Regional Court of Dortmund, Germany, (solely) against KiK for damages of €30.000 each for pain and suffering. The claimants argued that KiK, as the main buyer, was placed under vicarious liability for its (economically dependent) supplier as well as under liability for negligence in regard to the safety of the workers. The claimants submitted, inter alia, that the windows were barred and the emergency exits blocked. According to the decision of 29 August 2016, the Court granted legal aid on the grounds that, in the main proceedings, Pakistani law would apply. Therefore, the Court would need to retain expert evidence on Pakistani law, and in order to enable the claimants to pay for the necessary upfront fees to the Court, they would be entitled to legal aid.63 Indeed, according to Article 4(1) of the Rome II Regulation, the law of the place where the harmful effects occurred applies. To be sure, this case must be distinguished from Okpabi and Akpan in that it concerned supply chain relations rather than groups of enterprises with their local subsidiaries. But, as we will show in section III, the current legislative trends in Europe to improve the situation of claimants in developing countries encompass both groups of enterprises and supply chain relations by establishing and/or reinforcing direct delictual responsibility of the parent and main buyers respectively. Nevertheless, it remains telling for the special situation in Germany that the claimants in KiK did not also raise claims against the local producer that would be directly responsible for the damage. As was already mentioned, there is no general forum connexitatis under German autonomous procedural law. Nor did the claimants take up any line of argument driving towards a liability of joint tortfeasors to establish delictual jurisdiction for both of the tortfeasors at all places of harmful effect and acting by mutual imputation of the respective contributions to the damage that would theoretically be available under the delictual jurisdiction in section 32 of the German Code of Civil Procedure.64 But this was due to the fact that the claimants in KiK, as opposed to the claimants in Okpabi and Akpan, sought to concentrate on receiving damages by solvent debtors rather than obtaining additional injunctive relief to achieve improvements locally. Even if this latter interest had been part of the picture in KiK, there would of course be the issue of recognition and enforcement of a German decision in Pakistan.65 Be that as it may, Germany should, in light of the comparative legal analysis undertaken here in regard to the BRIbis, the UK, and the Netherlands, reconsider its restrictive position on the forum connexitatis.66 But, as we will see in section III.3, Germany took a restrictive stand not only on the level of jurisdiction (which is not connected to the specific cases discussed here and the grounds on general policy considerations67) but also and particularly on the level of substantive law-making when it comes to shaping the responsibility of German multinational companies for their foreign corporate or supply chain relations. III. Current trends in law-making Our analysis of the Okpabi, Akpan, and KiK cases shows that national courts’ assessment regarding jurisdiction over parent companies and their subsidiaries for violations committed abroad diverge. Moreover, their private international law legislations do not always easily permit the attraction of the subsidiary in a European forum. Therefore, courts do not follow any common pattern in the way they accept or reject jurisdiction. In light of these uncertainties, some States have enacted—or are about to enact—legislative measures that reinforce corporate responsibility and accountability for human rights violations and damages to the environment. As we explain below, the current trend consists in amending substantive law rather than private international law. 1. France On 21 February 2017, the Loi n° 2017–399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre (Duty of Vigilance Law) was adopted.68 According to this legislation, parent companies of a certain size have a legal obligation to establish a vigilance plan (plan de vigilance), the objective of which consists in identifying risks and preventing human rights violations, including the protection of the environment, health, and labour conditions. The failure to implement such a plan will incur the liability of parent companies for damages that a well-executed plan could have avoided. This legislation, which was supported by the French left wing party, was designed to avoid social and environmental catastrophes, such as the Rana Plaza tragedy in India.69 The French legislative power reacted by enacting the Duty of Vigilance Law, which reinforces the obligation of parent companies to control the activities of their subsidiaries located in other States. In particular, the newly adopted French law amends the Code de commerce (Commercial Code or FCC) and, in particular, its chapter concerning public limited companies (sociétés anonymes) by introducing Articles L.225-102-4–5. These provisions state that both parent companies localized in France, which employ more than 5,000 workers in their premises or through subsidiaries, as well as parent companies employing more than 10,000 people worldwide, disregarding the State of their domicile, must establish a vigilance plan. Therefore, the obligation to launch such a plan concerns both French companies and multinationals whose seat might be located in France or abroad. Although the connecting factor that would oblige foreign multinationals to comply with the requirements of the FCC is rather unclear, it is reasonable to assume that, at least, the presence of a subsidiary on French territory should trigger the obligation to provide a vigilance plan.70 In regard to the content of such a plan, the Duty of Vigilance Law does not offer much detail. According to Article L.225-102-4 of the FCC, the plan must contain reasonable vigilance measures, including (i) the identification, analysis, and categorization of potential risks; (ii) the assessment of the efficiency of the vigilance measures; (iii) actions aiming at mitigating risks and preventing serious damages; (iv) an alert mechanism; and (v) an evaluation procedure. The vigilance plan applies to the parent company and its subsidiaries as well as to subcontractors and suppliers. Under French law, when a company holds more than half of the capital share of another company, the latter is considered a subsidiary of the first (Article L.233-1 of the FCC). Under the Duty of Vigilance Law, it does not matter whether the parent company directly holds shares in the subsidiary. Indirect control falls equally under the material scope of the law.71 Notably, vigilance duties are not limited to entities linked by a corporate relationship. The legal obligation of vigilance extends to subcontractors and suppliers with which the parent company and its subsidiaries entertain established commercial relationships. The violation of the obligations mentioned in Article L.225-102-4—that is, the non-establishment of a vigilance plan, the absence of publication of such a plan, or its poor execution—entails the liability of the parent company, pursuant to Articles 1240 and 1241 of the FCC.72 These provisions require the claimants to prove that the parent company acted negligently and that their damage actually originated from such behaviour. This might represent a relatively heavy burden for victims.73 To conclude, the Duty of Vigilance Law establishes a legal obligation for parent companies to exercise some control over the activities of their subsidiaries and business partners. The violation of their obligation will entail their liability under the FCC. Some welcome the broad application of the duty of vigilance, which applies not only to subsidiaries but also to subcontractors and suppliers. Additionally, this law reaches French companies as well as multinationals. Others regret that the obligation to establish a vigilance plan is limited to certain companies with regard to their corporate form—sociétés anonymes, sociétés en commandite par actions, and sociétés par actions simplifiées—or their size. Apparently, only 150 companies would be submitted to the duty of vigilance.74 Although the French Duty of Vigilance Law certainly represents significant progress towards the accountability of corporations for human rights violations or environmental damages, we regret the absence of coordination between substantive law and conflict-of-law rules. In principle, according to Article 4 of the Rome II Regulation, the law applicable to the action will be the one in force where the damage occurred (lex loci damni). Therefore, it is far from certain that the Duty of Vigilance Law would apply in a case similar to Okpabi or Akpan. Some suggest that French law could apply through Article 7 of the Rome II Regulation, since it allows the selection of the lex loci delicti commissi.75 However, the occurrence of an unlawful act committed in France would still have to be proved, which might not be an easy task. Alternatively, Article 4(3) of the Regulation could displace the general principle mentioned above and support the application of the ‘manifestly more closely connected’ law. Again, it is not certain that French law would be more closely connected than the lex loci damni. Finally, Article 16 of the Regulation could force the application of French law. Nevertheless, the French legislator did not make clear that the duty of vigilance qualifies as an overriding mandatory provision. 2. Switzerland On 16 October 2016, a coalition of non-governmental organizations launched an initiative populaire (the Initiative), the goal of which consists in reinforcing the protection of human rights by imposing a duty of due diligence on companies domiciled in Switzerland.76 In particular, the initiative suggests the amendment of the Swiss Constitution by introducing Article 101a on the liability of companies.77 A subsequent federal law (loi d’application) would further develop the constitutional text. According to the Initiative, companies whose statutory seat, central administration, or principal place of business is in Switzerland must respect internationally acknowledged human rights as well as environmental norms on the Swiss territory and abroad (proposed Article 101a(2)(a) of the Swiss Constitution). In other words, Swiss companies would have a duty of due diligence that obliges them to prevent and repair the negative consequences of their activities on human rights and the environment (proposed Article 101a(2)(b) of the Swiss Constitution). Importantly, this duty of due diligence would have to be exercised in relation to companies under their control as well as to their commercial partners. Small- and medium-size companies may be exempted from these obligations. The violations of human rights and environmental norms committed by companies under control would engage the responsibility of controlling companies located in Switzerland. Contrary to French law, the proposed Swiss provisions establish that, in principle, the liability of the Swiss company is presumed.78 However, no liability will be imposed if the latter proves that it correctly exercised its duty of due diligence (proposed Article 101a(2)(c) of the Swiss Constitution). This scheme is based on Article 55 of the Swiss Code of Obligations, which deals with the responsibility of the employer for the activities of its employees.79 Interestingly, the obligations designated by proposed Article 101a of the Swiss Constitution subsist even where conflict-of-law rules designate a different law than the Swiss one. In other words, the Initiative seeks to confer an imperative nature to the proposed provisions (overriding mandatory provisions), which apply extraterritorially.80 At the end of last summer, the Federal Council declared that it would not support the adoption of the Initiative.81 Although the text pursues fundamental social goals, the Council is of the view that its material scope is too far-fetched. Additionally, it argued that there is a risk, in absence of a concerted action at the international level, of imposing a too heavy burden on Swiss companies that may eventually relocate to neighbouring States. Finally, the Federal Council stated that by opening a forum for litigation of cases involving human rights violations or environmental damages that occurred abroad, the Swiss legislator would not respect the sovereign power of sister States.82 Instead, the Federal Council supported the enactment of non-binding principles at the international level. 3. Germany On 21 December 2016 and under the auspices of the German Federal Foreign Office (Auswärtiges Amt), the German government adopted a ‘National Action Plan on Business and Human Rights’.83 This plan is to ‘implement’ the Ruggie Principles,84 and the government considered it an ‘ambitious project’: For the first time, German companies’ responsibilities as regards upholding human rights are laid down in a fixed framework by stipulating homogeneous and verifiable global standards. The Action Plan pools the strengths of the various stakeholders from the State, business sector, civil society and trade unions, with the aim of improving the human rights situation along the supply and value chain in Germany and worldwide. The German government expresses its clear expectation in the Action Plan: companies must carry out human rights due diligence.85 However, all of the suggested measures are not obligatory but voluntary, coupled with an expectation that until 2020 at least 50 per cent of large enterprises (with more than 500 employees) will have completed implementation. This was criticized by some as being too ‘soft’ and disappointing, particularly in comparison with other EU Member States,86 whereas others have argued in a general economic analysis that binding and strict obligations in one jurisdiction would increase costs for enterprises there and that such enterprises would rather withdraw from the affected business relations and that other enterprises from elsewhere under worse standards would step in (‘race to the bottom’).87 With respect to the special question of access to justice in Germany, the government considered the legal landscape as satisfactory. However, as has been shown, there is no forum connexitatis in German autonomous procedural law, and (compared to other jurisdictions) there are only limited means of obtaining evidence and collective redress,88 but this is due to deeply rooted notions and traditions of civil procedure in Germany. IV. Conclusions Our analysis of the most recent case law from European courts shows that parent companies may not automatically be held liable for the acts and omissions of their subsidiaries located overseas. The law on international jurisdiction allows attracting subsidiaries located in third States in a forum within the EU only under certain conditions varying from State to State. Against this background, some national legislators have amended their substantive law with the objective of reinforcing corporate accountability. Notably, in France, the recent Duty of Vigilance Law requires large French companies and multinationals to establish a vigilance plan in order to prevent human rights violations and damages to the environment. Nevertheless, in other States, such as Germany and Switzerland, the government prefers to rely on non-binding measures, even though their effectiveness is seriously called into question by some. Along this line of reasoning, a national, non-concerted action would impose a too heavy burden on companies that would eventually relocate to more favourable legal environments. Therefore, an action at the European level might be more satisfactory. For the time being, however, the EU has only adopted certain indirect and sector-based, and, as such, rather hesitant, measures. However, since the Rome II Regulation often leads to the application of the lex loci damni, legislative developments undertaken in European Member States will prove pointless if not coupled with appropriate private international law provisions that guarantee their applicability. Indeed, the enhancement of corporate accountability is a global concern that requires legal disciplines to work hand in hand. Footnotes 1 Available at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 26 December 2017). 2 Available at http://www.oecd.org/corporate/mne/1922428.pdf (accessed 26 December 2017). 3 Muzaffer Eroglu, Multinational Enterprises and Tort Liabilities (Edward Elgar 2008), 232–5; Justine Nolan, ‘The Corporate Responsibility to Respect Human Rights: Soft Law or Not Law?’, in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (Cambridge University Press, 2013), 138–61. 4 However, some related measures are worth mentioning: to start with, the Directive 2014/95/EU as regards disclosure of non-financial and diversity information [2014] OJ L330/1, as well as the accompanying Guidelines on non-financial reporting [2017] OJ C215/1, require large companies to report on the ‘impact of [their] activity, relating to, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters’, which might well be seen as a ‘revolution’ by accounting with far-reaching impact, see e.g. Peter Hommelhoff, ‘Nicht-finanzielle Ziele im Unternehmen von öffentlichem Interesse: Die Revolution übers Bilanzrecht’, in Reinhard Bork et al. (eds), Festschrift für Bruno M. Kübler zum 70. Geburtstag (Munich 2015), 291 et seq. Second, Art. 1(5) of Directive 2013/50/EU [2013] OJ L294/13, as well as Chapter 10 of Directive 2013/34/EU [2013] OJ L182/19, impose an obligation on issuers active in the exploitation or logging of primary forest to disclose payments made to governments. The objective of these pieces of legislation is to reinforce the accountability of resource-rich governments. Finally, in 2017, the European Union adopted Regulation (EU) 2017/821 [2017] OJ L130/1, laying down supply chain due diligence obligations for Union importers of tin, tantalum, and tungsten, their ores, and gold originating from conflict-affected and high-risk areas, and which aims at stopping forced labour to mine minerals that eventually helps financing armed conflicts. The entry into force of this due diligence duty is scheduled on 1 January 2021. 5 This trend can be traced back to the Kiobel case (Kiobel v. Royal Dutch Petroleum Co., 133 S.Ct. 1659 (2013)), where the US Supreme Court rejected the extraterritorial application of the Alien Tort Statute to human rights violations committed in Nigeria against Nigerian victims. On this case from a private international law perspective, see Chris Thomale, ‘The Forgotten Discipline of Private International Law: Lessons from Kiobel v Royal Dutch Petroleum’, 7 (2016) Transnational Legal Theory, 155 et seq. and 287 et seq. In the near future, the US Supreme Court might further close the door in its forthcoming judgment Jesner v. Arab Bank (on the status of this case see the Supreme Court of the United States (SCOTUS) Blog, http://www.scotusblog.com/case-files/cases/jesner-v-arab-bank-plc, accessed 26 December 2017) in the event that it prohibits the application of the Alien Tort Statute to corporations categorically. For a recent overview of the American approach towards jurisdiction in Alien Tort Statute cases, see (among many others) Stefanie Khoury and David Whyte, Corporate Human Rights Violations: Global Prospects for Legal Action (Routledge, 2017), 77–102; Martin Metz, US-Menschenrechtsklagen und Neoterritorialismus (Peter Lang Publishing, 2017; Studien zum vergleichenden und internationalen Recht vol 194), in particular 14–17 and 19–63; Hans van Loon, The Global Horizon of Private International Law (2016; Collected Courses of the Hague Academy of International Law t 380), 89-94. Regarding our specific research question, two judgments highlight the restrictive approach of US courts regarding jurisdiction over parent companies and their subsidiaries: first, in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), the Court rejected general jurisdiction over foreign subsidiaries of an American company, due to their lack of sufficient contacts with the forum. Second, in Ranza v. Nike, Inc., 793 F.3d 1059 (9th Cir. July 16, 2015), the Ninth Circuit Court confirmed that trend by rejecting jurisdiction over an Amercan company’s foreign subsidiary, which allegedly violated the Employment Act in The Netherlands. Additionally, that Court dismissed the case against the parent company under the forum non conveniens doctrine. 6Okpabi & Ors v Royal Dutch Shell Plc & Anor [2017] EWHC 89 (TCC), 26 January 2017. In Okpabi & Ors v Royal Dutch Shell Plc & Anor (Rev 1) [2018] EWCA Civ 191 (14 February 2018), the Court of Appeal (Civil Division) dismissed the victims’ appeal against the first instance court’s judgment. Unfortunately, the details of this appeal decision could no longer be taken into account for this paper. 7 See above at n 5. Both litigations arise from essentially the same factual situation against the same defendant, but were instituted by different claimants. 8 Claimants may be motivated to start proceedings against the parent company in a European forum for different reasons. To start with, the subsidiary may not have sufficient assets to provide recovery to the claimants. Therefore, the parent company will often be the entity with the ‘deepest pockets’. Then, the infrastructure of the judicial system where the subsidiary is located may be deficient (lack of legal expertise, no legal aid available, absence of impartiality, etc.) and unfavorable to the claimants. Finally, the subsidiary sometimes benefits from the support of the State, which makes this forum unattractive to the claimants. See Peter Nygh, ‘The Liability of Multi-national Corporations for the Torts of Their Subsidiaries’, 3/1 (2002) European Business Organization Law Review, 55–7; Marta Requejo Isidro, ‘Litigación civil internacional por abusos contra derechos humanos: El problema de la competencia judicial internacional’, X (2010) Anuario español de derecho internacional privado, 264; Cees van Dam, ‘Tort Law and Human Rights: Brothers in Arms on the Role of Tort Law in the Area of Business and Human Rights’, 2/3 (2011) Journal of European Tort Law, 228–31. 9Okpabi (n 6) para 9. 10 Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2012] OJ L351/1. 11 Other provisions of the BRIbis would be technically available to claimants like Art. 7(2), the forum for tort and (quasi)-delict, as well as Art. 7(5) which opens a forum in the domicile of a branch. Nevertheless, the usefulness of those provisions is limited in practice: on the one hand, the place where the damage occurred will rarely be located in Europe, unless the claimants prove that the decision of the parent company seated in Europe was taken there and actually led to the damage. In all cases, this provision will lose its added value every time it overlaps with Art. 4 BRIbis. On the other hand, Art. 7(5) only applies when both the parent company and the subsidiary are domiciled in the EU. See Requejo Isidro (n 8) 272–7; Geert van Calster, ‘The Role of Private International Law in Corporate Social Responsibility’, 3 (2014) Erasmus Law Review, 129–30. In the event that all the companies to be sued are located in the European Union and are considered joint tortfeasors under substantive law, other jurisdictional options would be available. For example, one interesting question is whether Art. 8(2) BRIbis would allow claimants to attract co-tortfeasors at the place where the damage occurred. 12Okpabi (n 6) paras 64–8. 13 Case C-281/02 Andrew Owusu v N. B. Jackson, trading as ‘Villa Holidays Bal-Inn Villas’ and Others [2005] ECR I-01383. 14Ibid, paras 37–46. 15 Nevertheless, as Simon Baughen correctly points out, in the event that the defendant seeks a declaration of non-liability in the courts of a third State, the courts where a subsequent, similar action is brought would have discretion to stay proceedings if the conditions of Art. 33 BRIbis are met. As a result, if the proceedings in the court of the third State are concluded and have resulted in a judgment capable of recognition and enforcement, then the court secondly seized shall dismiss proceedings (Art. 33(3) BRIbis). See Simon Baughen, Human Rights and Corporate Wrongs: Closing the Governance Gap (Edward Elgar, 2015), 176. 16Lungowe & Ors v Vedanta Resources Plc & Anor [2016] EWHC 975 (TCC), 27 May 2016. 17 Case C-98/06 Freeport plc v Olle Arnoldsson [2007] ECR I-08319, para 54; Case 352/13 Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Evonik Degussa GmbH and Others [2013], ECLI:EU:C:2015:335, para 28. 18Vedanta (n 16) paras 76-82. The Court of Appeal equally considered that an abusive behaviour could in principle displace the application of Art. 4 BRIbis. However, according to that Court, the argument of RDS and SPDC ‘will only succeed where there is sufficient evidence to show that the party against whom the complaint is made has conducted itself in such a way as “to distort the true purpose of that rule of jurisdiction” ... As the Judge indicated, at [58] of his judgment, there is a high threshold to be overcome for an abuse argument to succeed. It does not do so in the present case’. See Lungowe & Ors v Vedanta Resources Plc & Anor [2017] EWCA Civ 1528, 13 October 2017, para 38. 19Okpabi (n 6) para 69. 20 Along the same line of reasoning, the CJEU already ruled that a co-defendant may be attracted in the forum of a local defendant through Art. 8(1) BRIbis, even though the action against the latter was inadmissible. See Case C-103/05 Reisch Montage AG v Kiesel Baumaschinen Handels GmbH [2006] ECR I-06827, paras 31–3. Accordingly, the Brussels Regulation’s provisions seem to have a relatively strong mandatory force. 21Vedanta (n 16) para 34. 22Okpabi (n 6) para 51. 23 Regulation (EC) No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) [2007] OJ L199/40. 24Okpabi (n 6) para 51. According to Art. 7 of the Rome II Regulation, the claimant has a right to select the law applicable to the environmental damage. It could either be the law where the damage occurred (Art. 4 Rome II Regulation) or the law where the event giving rise to the damage took place. This alternative strengthens the level of environmental protection, since it refrains companies located in a ‘high-protection’ State to freely pollute in a ‘low-protection’ neighbor State. In England, the claimant may select the applicable law until the judgment. Moreover, under English procedural law, if parties do not plead the application of foreign law and prove its content, English law will in principle apply. See Lord Collins of Mapesbury et al., Dicey, Morris & Collins: The Conflict of Laws (Sweet & Maxwell, 2012; 15th ed; vol 1 and 2), 318–34, 2237–8. 25 Note that the establishment of a duty of care is not the only option available to hold the parent company potentially liable for the acts or omissions of the subsidiary. The (perhaps most common) alternative is the piercing of the corporate veil. For a broader overview of additional options, see Baughen (n 15) 155–66, 179–90; Eroglu (n 3) 140–56; Richard Meeran, ‘Access to Remedy: The United Kingdom Experience of MNC Tort Litigation for Human Rights Violations’, in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (Cambridge University Press, 2013), 386–93; Nygh (n 8) 63–80; Requejo Isidro (n 8) 283–90; Olivier de Schutter, Extraterritorial Jurisdiction as a Tool for Improving the Human Rights Accountability of Transnational Corporations (22 December 2006), 37–43, available at http://cridho.uclouvain.be/documents/Working.Papers/ExtraterrRep22.12.06.pdf (accessed 26 December 2017). The selection of one option or the other may trigger the application of different laws. On the one hand, in Okpabi, the Court evaluated whether the direct tortious liability of the parent company was involved. Art. 7 of the Rome II Regulation applies to such non-contractual obligations in environmental matters. On the other hand, when courts consider piercing the corporate veil in order to impose indirect liability over the parent company, it is not clear that the Rome II Regulation applies. Indeed, one might rather consider that this is a corporate matter, which is excluded from the Rome II Regulation through its Art. 1(2)(d). For more information regarding this topic, see Uglješa Grušić, ‘International Environmental Litigation in EU Courts: A Regulatory Perspective’, 35 (2016) Yearbook of European Law, 180–228; Nygh (n 8) 63–80. 26Caparo Industries plc v Dickman [1990] 2 AC 605, 8 February 1990. 27 The proximity requirement is often assessed in light of Chandler v Cape Plc [2012] EWCA Civ 525, 25 April 2012, where Justice Arden established four factors, the presence of which advocates the existence of proximity: (i) the two companies operate the same business; (ii) the parent company has a superior/specialist knowledge compared to the subsidiary; (iii) the parent company knows about its subsidiary’s system of work; (iv) the parent company knows that the subsidiary would rely on that knowledge to protect the claimants. These conditions are difficult to fulfil since Thompson v The Renwick Group plc [2014] EWCA Civ 635, 13 May 2014, where the Court of Appeal clarified that there is no sufficient proximity when the parent company appoints the director of the subsidiary. Additionally, the fact that the subsidiary is run as a division of the group and shares some resources with the parent company does not call into question this conclusion. 28Okpabi (n 6) paras 114–15. 29Ibid, para 79. The reasons that led Justice Fraser to restructure the Caparo test are not entirely clear. This second stage of analysis actually looks like an autonomous assessment of the proximity criterion mentioned at n 27. 30 Apparently, the judgment of the Court has been appealed by the claimants. See John Ogilvie et al., ‘Successful Challenge to English Court Jurisdiction over Claims against UK Domiciled Parent Company in Relation to Acts of Subsidiary Abroad’, Herbert Smith Freehills – Litigation Notes (2 February 2017), available at https://hsfnotes.com/litigation/2017/02/02/successful-challenge-to-english-court-jurisdiction-over-claims-against-uk-domiciled-parent-company-in-relation-to-acts-of-subsidiary-abroad/ (accessed 26 December 2017). 31AAA & Ors v Unilever Plc & Anor [2017] EWHC 371 (QB), 27 February 2017. 32 The provision reads as follows: ‘2) The court may order a person to be added as a new party if – (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.’ 33Unilever (n 31) para 111. 34Ibid, paras 77–8. 35Ibid, paras 125–7. 36Ibid. 37Ibid, para 133. 38Ibid, paras 135–8. 39Ibid, paras 134–71. 40Vedanta (n 18) para 56. 41Ibid, paras 98–135. 42A.F. Akpan v. Royal Dutch Shell, plc, case number C/09/337050 / HA ZA 09-1580 (District Court of The Hague), 30 January 2013. All court documents regarding the Akpan case are available at https://milieudefensie.nl/english/shell/courtcase/documents (accessed 26 December 2017). Although the judgment of the District Court is currently under appeal, a preliminary verdict was issued by the Court of Appeal of The Hague on 17 December 2015, where it upheld the first instance court’s judgment regarding jurisdictional questions. For more information on the procedural history of the case, see Cees van Dam, Preliminary Judgments Dutch Court of Appeal in the Shell Nigeria Case, available at http://www.ceesvandam.info/default.asp?fileid=643 (accessed 26 December 2017); van Loon (n 5), 96–8. Note that the District Court ruled on two relatively similar cases, namely Dooh et al. v. Royal Dutch Shell PLC and Shell Petroleum Development Company of Nigeria LTD et al. and Oguru and Efanga et al. v. Royal Dutch Shell PLC and Shell Petroleum Development Company of Nigeria LTD et al., both available on Milieudefensie’s website mentioned above. 43 Lee James McConnell, ‘Establishing Liability for Multinational Oil Companies in Parent/Subsidiary Relationships’, 56/2 (2014) Environmental Law Review, 91–2. 44Akpan (n 42) para 4.3. 45Ibid. 46 Nicola Jägers et al., ‘The Future of Corporate Liability for Extraterritorial Human Rights Abuses: the Dutch Case against Shell’, (2014) AJIL Unbound, 40. 47Akpan (n 42) paras 4.8–10. 48 See above at n 26. and accompanying text. 49 Interestingly, Liesbeth Enneking notes that ‘if the case had been decided on the basis of Dutch tort law, which is less restrictive than English tort law when it comes to assuming a duty to act in civil liability cases pertaining to omissions, the court might have decided differently on the issue of parent company liability’. See Liesbeth Enneking, ‘The Future of Foreign Direct Liability? Exploring the International Relevance of the Dutch Shell Nigeria Case’, 10/1 (2014) Utrecht Law Review, 52. 50Akpan (n 42) para 4.31. 51Ibid, para 4.33. 52Ibid. 53Ibid, para 4.34. 54 Alternatively, Art. 9 of the Dutch Code of Civil Procedure provides for a forum necessitatis, in the event that access to courts abroad is barred or due process is not guaranteed. See Alex Geert Castermans and Jeroen van der Weide, ‘The Legal Liability of Dutch Parent Companies for Subsidiaries’ Involvement in Violations of Fundamental, Internationally Recognised Rights’, (15 December 2009), 45–7, available at https://papers.ssrn.com/sol3/papers.cfm?abstract-id=1626225 (accessed 27 December 2017). 55 The English translation of this provision is available at http://www.dutchcivillaw.com/civilprocedureleg.htm (accessed 27 December 2017). 56 Case C-145/10 Eva-Maria Painer v Standard VerlagsGmbH and Others [2013] ECR I-12533. 57Ibid, para 81. 58 Francisco Garcimartín, Derecho internacional privado (Civitas, 2016; 3rd ed), 141. 59Akpan (n 42) para 4.1. 60Ibid, para 4.6. This is in line with the Reisch Montage case (n 20). 61Ibid, 4.35–61. 62 See Regional Court of Dortmund, docket no. 7 O 95/15, proceedings pending in first instance. 63 Regional Court of Dortmund, ‘Landgericht Dortmund gewährt pakistanischen Klägern Prozesskostenhilfe für ein Klageverfahren gegen “KiK” auf Zahlung von Schmerzensgeld und holt in der Hauptsache schriftliches Rechtsgutachten zum pakistanischen Recht ein’ (Press Release of 30 August 2016), available at http://www.lg-dortmund.nrw.de/ behoerde/presse/Pressemitteilungen/PM-KiK_docx.pdf (accessed 27 December 2017). 64 Federal Court of Justice, judgment of 22 November 1994, docket no. XI ZR 45/91, 1995 Neue Juristische Wochenschrift (NJW) 1225, at 1226, regarding joint tortfeasors vis-à-vis capital investors (‘churning’). See also Reinhard Patzina, Münchener Kommentar zur Zivilprozessordnung (Munich, 2016; 5th ed), section 32 para. 14. 65 It is generally held in Germany that Pakistani judgments are not to be recognized in Germany under section 328(1) no. 5 German Code of Civil Procedure because German judgments would not be recognized in Pakistan (‘principle of reciprocity’). See e.g. Peter Gottwald, Münchener Kommentar zur Zivilprozessordnung (Munich, 2016; 5th ed), section 328, para. 151, sub ‘Pakistan’; Dirk Otto, in Geimer/Schütze (eds), Internationaler Rechtsverkehr (Munich, 2017; vol. VI), sub O. ‘Country Reports’, sub ‘Pakistan’, 1109 et seq. 66 See also Wolfgang Hau, Deutscher Bundestag, Nationaler Aktionsplan Wirtschaft und Menschenrechte (Berlin, 28 September 2015; Hearing 5), sub 5: ‘Internationales Zivilprozessrecht’: ‘passive Streitgenossenschaft’. 67 See e.g. Haimo Schack, Internationales Zivilverfahrensrecht (Munich, 2017; 7th ed), 159 at para 409: risk of abuse, but this risk appears to be manageable if sufficient and substantial weight is attributed to the quality of the nexus. 68 Published in the French Official Journal on 28 March 2017. An overview of the legislative evolution of this law is available either on the website of the Senate (https://www.senat.fr/dossier-legislatif/ppl14-376.html, accessed 27 December 2017) or on the website of the National Assembly (http://www.assemblee-nationale.fr/14/dossiers/devoir_vigilance_entreprises_donneuses_ordre.asp, accessed 27 December 2017). 69 The Rana Plaza building, where important European companies produced clothes, collapsed in 2013 and killed more than 1,000 workers. 70 Dominique Potier, Rapport fait au nom de la Commission des lois constitutionnelles, de la législation et de l’administration générale de la République sur la proposition de loi (n° 2578), relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, 61–2, available at http://www.assemblee-nationale.fr/14/rapports/r2628.asp (accessed 27 December 2017). 71Ibid, 64–5. 72Ibid, 78. Originally, civil liability had to be coupled with the possibility to impose fines (up to €10,000,000) on companies. However, the provisions related to the latter option have been invalidated by the Constitutional Council because of their lack of precision. The decision of the Council is available at http://www.conseil-constitutionnel.fr/conseil-constitutionnel/francais/actualites/2017/decision-2017-750-dc-[devoir-de-vigilance-des-societes-meres].148856.html (accessed 27 December 2017). 73 Sandra Cossart and Marie-Laure Guislain, ‘Le devoir de vigilance pour les entreprises multinationales, un impératif juridique pour une économie durable. Pourquoi le raisonnement juridique ne peut pas constituer un obstacle aux choix politiques’, 104 (May 2015) Revue Lamy de Droit des Affaires, 77–8. 74 Pierre-Louis Périn, ‘Devoir de vigilance et responsabilité illimitée des entreprises : qui trop embrasse mal étreint’, 2 (April-June 2015) Revue trimestrielle de droit commercial, 217–18; Observations du Gouvernement sur la loi relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre (28 March 2017), para 1.A., available at https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000034290672&categorieLien=id (accessed 27 December 2017). 75 The following arguments regarding the application of the Rome II Regulation are developed by Cossart and Guislain (n 73) 80; van Calster (n 11) 130–1; van Dam (n 8) 231–2. 76 The initiative populaire is regulated at Art. 139 of the Swiss Constitution. The gathering of signatures started in April 2015 and the deposit of the text took place on 16 October 2016. 77 The text of the Initiative is available at https://www.admin.ch/ch/f/pore/vi/vis462t.html (accessed 27 December 2017). 78 The adoption of such a presumption was discussed in France, but eventually discarded. See Cossart and Guislain (n 73) 76; Périn (n 74) 223. 79Rapport explicatif de l’initiative populaire fédérale ‘Entreprises responsables – pour protéger l’être humain et l’environnement’, available at http://konzern-initiative.ch/de-quoi-il-s-agit/?lang=fr (accessed 27 December 2017). 80Ibid, 20–1. 81 Federal Council, Message relatif à l’initiative populaire ‘Entreprises responsables – pour protéger l’être humain et l’environnement’ (15 September 2017), 6023, available at https://www.admin.ch/opc/fr/federal-gazette/2017/5999.pdf (accessed 27 December 2017). 82 Vivian Grosswald, ‘Harmonizing Multinational Parent Company Liability for Foreign Subsidiary Human Rights Violations’, 17/2 (2017) Chicago Journal of International Law, 417–19, suggests that both reluctance to act unilaterally and comity concerns are the central arguments against the enactment of more stringent legislations regarding parent corporate liability. 83 Federal Foreign Office, National Action Plan for Business and Human Rights, available at https://www.auswaertiges-amt.de/en/aussenpolitik/themen/aussenwirtschaft/161221-nap-kabinett-node (accessed 27 December 2017). For the respective Action Plans by other EU Member States as suggested by the EU in its own CSR Strategy see http://ec.europa.eu/growth/industry/corporate-social-responsibility/in-practice_en (accessed 27 December 2017). 84 See above n 1. 85 Federal Foreign Office (n 83). 86 See e.g. Deutsches Institut für Menschenrechte, Stellungnahme zur Verabschiedung des deutschen Nationalen Aktionsplans für Wirtschaft und Menschenrechte (Berlin 2016), http://www.institut-fuer-menschenrechte.de/fileadmin/user_upload/Publikationen/Stellungnahmen/Stellungnahme_Verabschiedung_NAP_Wirtschaft_und_Menschenrechte.pdf (accessed 27 December 2017). 87 E.g. Gerhard Wagner, Haftung für Menschenrechtsverletzungen, 80 (2016) RabelsZ, 718 et seq., at 779 et seq. 88 Deutsches Institut für Menschenrechte (n 86) 9 et seq. © The Author(s) (2018). Published by Oxford University Press on behalf of Unidroit. All rights reserved. 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Local parents as ‘anchor defendants’ in European courts for claims against their foreign subsidiaries in human rights and environmental damages litigation: recent case law and legislative trends

Uniform Law Review/Revue De Droit Uniforme , Volume Advance Article (2) – May 3, 2018

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D.O.I.
10.1093/ulr/uny018
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Abstract

Abstract Over the last few years, litigation in European courts against gross human rights violations and widespread environmental disasters has intensified. Recent case law shows that victims domiciled in third States have attempted to start proceedings in Europe, where the parent company of a negligent local subsidiary is seated. In light of this, national courts of the EU have been asked to determine whether the parent company located in the State of the court seized with the matter may serve as an ‘anchor defendant’ for claims against its foreign subsidiary. In Okpabi & Ors v Royal Dutch Shell Plc & Anor, Akpan v RDS, and KiK, national courts’ assessment regarding international jurisdiction has significantly diverged. Unsatisfied with this result, some States have adopted—or are in the process of adopting—legislation that establishes or reinforces the duty of care or vigilance of parent companies directly towards victims. This article examines the latest legislative developments that took place in France, Switzerland, and Germany. Notably, many States have opted for the amendment of their substantive law (only) rather than (additionally) for the modification of private international law rules. I. Introduction The globalization of trade, coupled with the rise of technologies, has created new opportunities for companies to expand their commercial activities over national borders. At the same time, however, the pressure of globalized markets has fostered aggressive competition between operators. In such a context, international trade has given rise to (no longer so) new kinds of harms, which may damage large groups of people or society as a whole. From a legal perspective, therefore, such a result requires the delineation of corporate responsibility standards and the promotion of access to remedies. At the international level, significant efforts have been made to raise companies’ awareness of the transnational impact of their activities and their corresponding consequences. For instance, the well-known ‘Ruggie Principles’1 and the Organisation for Economic Co-operation and Development’s Guidelines for Multinational Enterprises2 encourage the observance of human rights by multinationals. Nevertheless, these efforts are not legally enforceable against corporations and perhaps not sufficient to induce a more respectful behaviour.3 As for the European institutions, these have not adopted a legislative act on this topic yet.4 In this context, the following text focuses on a specific question: whether the parent company located in the State of the court seized with the matter may serve as an ‘anchor defendant’ for claims against its foreign subsidiary. This inquiry is part of a broader topic and concern regarding the ability of private international law rules on jurisdiction to provide an accessible forum to victims of human rights violations or environmental disasters. In Europe, the question has gained interest, given the intensification of litigation against parent companies for human rights violations as well as the increasingly restrictive approach of US courts regarding jurisdiction in these matters. Indeed, those courts have toughened the requirements that enable them to assert jurisdiction over environmental or human rights violations that have occurred outside their territory.5 Section II of this article surveys those jurisdictional concerns in Europe. In particular, the recent English judgment Okpabi & Ors v Royal Dutch Shell Plc & Anor is a telling example in this respect.6 In this case, one of the European ‘counterparts’ to the US case Kiobel,7 the English High Court, Queen’s Bench Division, by its Technology and Construction Court, decided that it had no international jurisdiction to hear claims in tort against the Nigerian subsidiary of Shell in connection with environmental and health damages due to oil pollution in the context of the group’s oil production in Nigeria. English case law illustrates the current struggle of national courts to deal with human rights violations or environmental disasters when these take place in third States and are attributable to local subsidiaries. This question will be discussed from a comparative perspective. Following this, section III of this article puts the spotlight on legislative developments in the rest of Europe. Unsatisfied with the present situation, some States have adopted—or are in the process of adopting—legislation that establishes or reinforces the duty of care or vigilance of parent companies directly towards victims. Notably, those States have opted for the amendment of their substantive law rather than the modification of private international law rules. However, both disciplines should work hand in hand in order to come up with satisfying results. II. Jurisdiction over parent companies and their subsidiaries: selected case law 1. Okpabi The Okpabi case deals with liability for oil pollution in Nigeria. We use this emblematic case in the following paragraphs as a tool to guide our private international law reasoning. We further develop our analysis with a view to additional English case law. All selected judgments follow the same pattern: they involve actions—for injunctive relief and/or damages—against a parent company seated in the United Kingdom (UK) and a subsidiary located in a third State, which is the place where the damage occurred. A. Facts Okpabi involves two sets of proceedings against Royal Dutch Shell plc (RDS), a holding company incorporated in the UK, and Shell Petroleum Development Company of Nigeria (SPDC), a Nigerian production company. In particular, the claimants started proceedings in the English courts8 against RDS and SPDC for the economic and environmental damages that oil spills emanating from SPDC’s pipelines caused. The ‘class’ of victims was composed of Nigerian nationals, many of whom belonged to the Nigerian Ogale community. They essentially argued that both the SPDC’s defective maintenance policy and the theft of crude oil (‘bunkering’), which is committed on a regular basis, seriously polluted the environment and harmed the Nigerian Ogale Community’s livelihood. For this reason, the claimants brought an action for injunctive relief as well as for damages. The Court assessed jurisdictional challenges together for both sets of proceedings, as they generate relatively similar questions. From a structural perspective, the Court first examined whether the claimants possessed a legitimate claim against RDS that would enable them to pursue their actions against the said defendant in the UK. As we explain in section II.2, the Court concluded that no real issue against RDS had to be tried. Therefore, the second step of the jurisdictional analysis, whereby the Court would consider whether a claim against SPDC should proceed in England and Wales was discarded, as there was no anchor defendant and no self-standing ground of jurisdiction. It has to be highlighted that the assessment of jurisdictional challenges, as a preliminary issue, does not require a full exposition of questions of fact and law.9 B. The claim against Royal Dutch Shell (RDS) a. Article 4 of the Brussels Regulation (Recast) Article 4 of the Brussels I Regulation (recast) (BRIbis),10 which allocates jurisdiction to the courts of the defendant’s domicile, enables Nigerian claimants to start proceedings against RDS in the UK.11 Since RDS has its domicile in the European Union (EU), the Court correctly recalls that the jurisdictional grounds contained in the Regulation are mandatory in nature. In other words, European private international law rules on jurisdiction do not leave any room for the application of any forum non conveniens doctrine that is usually available in States of common law tradition.12 Specifically, in Owusu,13 the Court of Justice of the European Union (CJEU) explained that the application of such a doctrine would undermine the principle of legal certainty, which represents the cornerstone of the Brussels regime.14 In the case at issue, therefore, the analysis regarding the application of Article 4 of the BRIbis is straightforward: claimants may sue RDS in its domicile, and further challenges regarding the appropriateness of such a forum must be rejected.15 In Vedanta,16 a case that involved a claim against a parent company seated in the UK and its subsidiary for the pollution of the Kafue River in Zambia, as well as the adverse consequences of such an occurrence on the local population, Justice Coulson spent more time in his judgment dealing with challenges against Article 4 of the BRIbis. Although it was clear that the defendants could not invoke the forum non conveniens doctrine under the lex fori to reject the application of said provision, they argued that the claim brought against the parent company was a device, the sole purpose of which was to attract the subsidiary in the UK. Relying on the CJEU’s case law on Article 8(1) of the BRIbis, the defendants sustained that the action brought against them was abusive. Indeed, according to the European case law related to this provision, a defendant shall not be attracted outside the Member State where it is domiciled if the sole purpose is to oust it from this natural forum.17 In absence of European case law on this question in relation to Article 4 of the BRIbis, it is not certain that the application of that provision should be rejected in case claimants use the Regulation in an ‘abusive’ manner. On the one hand, it is doubtful to what extent the Regulation actually permits abusive strategic behaviour by the parties. In this sense, it is useful to recall that the Brussels regime looks at forum shopping unfavourably. On the other hand, however, one must acknowledge that Article 8(1) of the BRIbis aims at preserving the reasonable expectation of the defendant that it will be sued in its domicile. Following this line of reasoning, it is rather contradictory, if not bizarre, to use this argument to then reject the application of Article 4 of the BRIbis. In Vedanta, the Technology and Construction Court eventually concluded that a claim that raises a ‘real issue’ between the claimants and the anchor defendant can hardly be considered a mere device.18 Back to the Okpabi case, the Court recalled that the availability of the forum presumes that the claimants possess an actual claim against the defendant. In other words, in the Court’s view neither the Regulation nor the Owusu case removes the necessity under the lex fori that ‘a real issue to be tried against RDS’ exists.19 In order to determine the prima facie existence of a claim, it is necessary to dive into the merits of the case. As the Court pointed out, however, the burden to prove that point should not be a high one. Since the CJEU did not rule on this particular issue either, it is not clear whether the application of Article 4 of the BRIbis actually requires, or allows at all, the national court to require that a valid claim be brought against the defendant. On the one hand, the mandatory force of Article 4 of the BRIbis could impede that any argument regarding the admissibility of the claim be made.20 Accordingly, courts should not be able to merge considerations regarding the strength or the meritorious character of an action with its analysis concerning jurisdiction. Therefore, courts would have to examine the admissibility of a claim only after having asserted jurisdiction over the case. Following this line of reasoning, the Court of Appeal in Vedanta upheld Justice Coulson’s judgment and reinforced the mandatory nature of Article 4 of the BRIbis by stating that the ‘effect of the CJEU decision in Owusu v. Jackson is that article 4 of the Recast Regulation precludes the English Court from declining what is a mandatory jurisdiction where the defendant is a company domiciled in England and Wales’.21 Additionally, the Court did not further develop whether a valid claim is needed for Article 4 of the BRIbis to apply. Therefore, this could confirm that the admissibility of the claim is irrelevant as far as jurisdiction is concerned. On the other hand, however, Justice Fraser’s decision in Okpabi calls into question the absolute mandatory nature of Article 4 of the BRIbis. It is true that only a person with an actual claim would in principle sue the defendant in the courts of its domicile. Therefore, according to Justice Fraser’s reasoning, it is not unreasonable for courts to accept jurisdiction only where there is a ‘real issue to be tried’. In case such reasoning is endorsed, however, one might wonder how high the burden of proof should be. b. The validity of the claim Following this, therefore, the English Court examined the validity of the claims against RDS in an attempt to determine the reach of its jurisdictional power. It did so according to English law. To be more precise, the acts and omissions that occurred before 11 January 2009 are governed by English law as it represents the most appropriate one, pursuant to sections 77 and 1.2 of the Private International Law Act 1995.22 Then, according to Article 7 of the Rome II Regulation,23 which applies to the acts and omissions that took place after 11 January 2009, the law of England and Wales is applicable since it is the place where the event giving rise to the damage occurred.24 According to English case law, the validity of a claim against the parent company will be substantiated if the latter owes a duty of care towards the claimants.25 Therefore, the Court in Okpabi adopted a two-stage analysis. The first one consists in applying the well-known Caparo test, which was developed by the House of Lords in Caparo Industries plc v Dickman and requires the fulfilment of three conditions.26 Specifically, the damage must have been foreseeable for the anchor defendant; a certain proximity has to exist between the claimants and said defendant;27 and, finally, imposing a duty of care on the defendant must be fair, just, and reasonable. In the case at issue, the Court concluded that no duty of care could reasonably be imposed on RDS. It relied on the following indicia in order to support its analysis.28 To start with, RDS does not directly hold shares in SPDC. Moreover, RDS is not an operating company, and it does not possess the relevant license to conduct operations in Nigeria. Moreover, it appears that RDS does not influence its subsidiary’s management. In this context, the Court noted that although two members of RDS were part of the Executive Committee of SPDC, they still represented a minority. Finally, it does not seem fair, just, and reasonable to impose a duty of care on RDS since this would amount to the creation of an indeterminate liability on the parent company for its acts and omissions globally. Relying on previous case law, Justice Fraser then added that the Court must decide whether the parent company was in a better position to prevent the harm because of its superior knowledge and expertise.29 Additionally, the subsidiary must have relied on the parent company and its knowledge in order to avoid the harm. In the case at issue, the Court observed the general corporate structure of the Shell group and recalled that, under English law, companies are separate entities, and membership in the same group does not mean that a parent company is automatically responsible for the acts or omissions of its subsidiaries. The Court then reiterated that RDS did not undertake any operational activities in Nigeria. Furthermore, it appears that the parent company neither supervised its Nigerian subsidiary nor transferred knowledge. To conclude, since claimants did not possess any actual claim against RDS, there was no defendant to be anchored to. Hence, the claimants could not attract SPDC in England—at least in first instance.30 For the sake of this article and in order to be exhaustive, we will still proceed to examine whether jurisdiction for the subsidiary would have been available in the event that the claimants’ action against the anchor defendant would have had a real prospect of success, as was the case in Vedanta. We use this case, as well as the Unilever case,31 to support our reasoning. C. The claim against the subsidiary In the event that there is a real issue to be tried against the anchor defendant, the next question to be solved is whether the subsidiary can be attracted in the UK, which corresponds to the domicile of the parent company. Article 8(1) of the BRIbis is irrelevant in this case since it only enables a person domiciled in a Member State to be sued in the domicile of a co-defendant. As a result, when the subsidiary is located in a third State, national rules on civil procedure apply. Under English law, the requirements of paragraph 3.1(3) of Practice Direction 6B must be fulfilled. According to this provision, ‘a claim is made against a person (“the defendant”) on whom the claim form has been or will be served … and—(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim’. In Vedanta, the Court extracted a five-step test from this provision, whereby a court must answer the following questions: does the claimants’ claim against the subsidiary have a real prospect of success (Step 1); if so, is there a real issue between the claimants and the anchor defendant (Step 2); is it reasonable for the court to try that issue (Step 3); is the subsidiary a necessary or a proper party to the claim against the anchor defendant (Step 4); and is England the proper place in which to bring the claim (Step 5)? Steps 2 and 3 relate to the validity of the claim against the anchor defendant. It corresponds to the analysis we undertook in the previous part of this article. Therefore, we do not repeat it here. We recall that Article 4 of the BRIbis limits the court’s margin of manoeuvre under Step 3; (at least) as long as a ‘real issue’ is to be tried, the Brussels regime opens a forum in the defendant’s domicile, and further considerations regarding the appropriateness of this forum under the forum non conveniens doctrine are not allowed. The remaining steps concern the claim against the subsidiary. In particular, the Court must determine whether such a claim has a real prospect of success in accordance with the appropriate applicable law. This requirement should be easily met since the subsidiary will usually be the actor conducting operations in the State where the damage occurred and substantive law will in principle punish the allegedly unlawful behaviour. As far as Step 4 is concerned, it corresponds to the condition expressed in paragraph 3.1(3)(b), which states that a claim will be served on a person located overseas in case it is considered a ‘necessary or proper party’ to that claim. It has been established by case law that this test is as broad as the Court’s power to order a joinder under Rule 19.2(2) of the Civil Procedure Rules (CPR).32 Finally, although the requirements of said paragraphs are fulfilled, it is important to note that English courts still have the power to reject the service on a subsidiary located outside the EU under Rule 6.37(3) of the CPR. To be more specific, where a court is not persuaded that England and Wales is the proper place in which to bring the claim, it can reject the service of that claim. In order to illustrate these rather dogmatic considerations, we take the recent Unilever and Vedanta cases as examples. Unilever involved a claim brought by Kenyan nationals against a holding parent company located in the UK, on the one hand, and a subsidiary that operated a tea plantation in Kenya, on the other. Its employees were victims of ethnic violations, which took place after the Kenyan presidential election of 2007. To be more specific, after the announcement of the result of the elections, a group of armed men invaded the tea plantation, destroyed homes, and assaulted people from rival tribes. As a result, claimants started proceedings against both companies in the UK, alleging that the defendants had failed to provide them due protection. In this case, Justice Elisabeth Laing concluded that, like in Okpabi, the claim against the parent company raised no real issue.33 Nevertheless, the Court continued its analysis on the assumption that such a claim would have a real prospect of success. To start with, the Court explained that, according to the parties, Kenyan law applied to the claim against the subsidiary.34 Following that law, Justice Laing concluded that the Occupiers’ Liability Act did not impose a duty on the subsidiary to protect the claimants from an attack, such as the one that occurred after the 2007 elections.35 Indeed, the duty that is imposed by the Kenyan legislation is much narrower than the one that was pleaded. Therefore, the Court established that the claim against the subsidiary had no prospect of success.36 Otherwise, the Court would have to determine, additionally, whether the subsidiary is a ‘necessary or proper’ party to the claim brought against the parent company. In Unilever, the Court answered positively to that question since both actions required one investigation.37 Moreover, they refered to the same facts and legal principles. Finally, they concerned the same losses and involved similar causation arguments. The last question that would have to be examined is whether England and Wales was the proper forum where the claim against the subsidiary should be brought. Referring to the Connelly v RTZ case, the Court stated that the defendant would have to demonstrate that another, more appropriate forum, exists.38 Then it would be for the claimant to show that substantial justice cannot be achieved in that forum, for example, by proving the lack of funding and the impossibility to have access to justice.39 In Vedanta, the Court of Appeal validated a different conclusion. Specifically, Justices Jackson, Simon, and Asplin considered that the claim against the subsidiary had a real prospect of success, inasmuch as the latter operated the mine that discharged toxic substances into the local waters and that Zambian law imposed a strict liability on such behaviour.40 Additionally, like in Unilever, the Court of Appeal confirmed that the subsidiary was a necessary and proper party to the claim and that England and Wales was the proper place in which to bring the claims.41 2. Akpan The Dutch courts also had to deal with claims regarding oil spills allegedly caused by the negligence of RDS and SPDC. In Akpan v RDS, a Nigerian farmer and fisherman sued both RDS and SPDC in the District Court of The Hague, alleging that oil spills harmed his livelihood.42 In particular, spills were due to a lack of maintenance of a wellhead and inadequate safety measures leading to sabotage. In these proceedings, the claimant was supported by Milieudefensie, an association promoting environmental care. Although RDS is registered in the UK, Dutch courts can assert jurisdiction over the action under Articles 4 and 63(1) of the BRIbis in view of the fact that the company is actually headquartered in the Netherlands.43 Against the interlocutory judgment on jurisdiction, the defendants argued that the start of proceedings in the Netherlands constituted an abuse of law since the claimant’s action against RDS was certain to fail.44 The District Court of The Hague rejected this defence and stated that: the claims against RDS could not be designated as clearly certain to fail beforehand, because beforehand it could be defended that under certain circumstances, based on Nigerian law, the parent company of a subsidiary may be liable based on the tort of negligence against people who suffered damage as a result of the activities of that (sub-) subsidiary.45 In other words, the Dutch Court concluded that it had jurisdiction since, under Nigerian law, a claim against the parent company may be brought. Interestingly, the Court did not enter further into the merits of the case but merely observed abstractly whether a claim would be possible under substantive law.46 At the same time, the Court did not exclude categorically an argument of abuse under Article 4 of the BRIbis based on the prospects of success in the subject matter. Once the District Court of The Hague asserted jurisdiction over the actions, it determined that the existence of a potential duty of care towards the claimants should be assessed according to Nigerian law.47 Since the latter was deemed to resemble English law, the Court proceeded to apply the Caparo test.48 It eventually concluded that RDS did not assume any duty of care and, thus, should not be held liable for the oil spills that occurred in 2006 and 2007.49 To support its analysis, the Court explained that RDS was not engaged in oil production in Nigeria, contrary to SPDC.50 Therefore, it was not clear that the parent company should have a better knowledge regarding the prevention of risks. Therefore, it could not be assumed that RDS had the obligation to intervene in the subsidiary’s policy to avoid the damage at issue.51 As a result, the Court found no proximity between the claimants and RDS, nor did it find it fair, just, and reasonable to impose a duty of care on the latter.52 For this reason, the District Court dismissed all claims against RDS.53 As far as SPDC was concerned, the District Court in The Hague relied on section 7(1) of the Dutch Code of Civil Procedure in order to attract the subsidiary in the Netherlands.54 Section 7(1) (in translation) reads as follows: In the event that the Dutch court has jurisdiction over one of the defendants in matters that must be initiated by a writ of summons, the Dutch court also has jurisdiction over other defendants involved in the same proceedings, provided the claims against the various defendants are connected to such an extent that reasons of efficiency justify a joint hearing.55 In an attempt to strike the application of this provision, the defendants argued that the basis of the two claims against them was not the same. They relied on European case law, which should apply to the Dutch provision by analogy. In Painer, for example, the CJEU ruled that a difference in legal basis between various actions does not per se impede the application of Article 8(1) of the BRIbis,56 provided that it was foreseeable by the defendants that they could be sued in the domicile of one of the defendants.57 Following this line of reasoning, SPDC argued that it could not predict being sued in the courts of the Netherlands. The District Court rejected both arguments. In its opinion, the actions against both defendants shared the same basis since they were accused of tort of negligence under Nigerian law. Additionally, defendants could have predicted the start of the proceedings in the Dutch courts, provided the current trend continued to hold parent companies liable for the acts or omissions of their subsidiaries located overseas. Regarding this last statement, we would rather suggest that what creates predictability is the existence of a previous link between the defendants and not the knowledge of international litigation practices.58 In this case, it is the corporate structure of the Shell group that makes the attraction of the subsidiary in the Dutch forum foreseeable. Eventually, the District Court considered that reasons of efficiency justified the extension of its jurisdictional power over the Nigerian subsidiary.59 In this sense, Dutch law seems to have more power of attraction than English law, which allows courts to reject the service of a claim on a co-defendant seated outside the EU, provided that the UK is not the right forum to rule over the action. Importantly, the Dutch Court emphasized that it would retain jurisdiction over SPDC, even though the claims against the parent company were eventually dismissed. It would do so even if ‘no connection or hardly any connection would remain with Dutch jurisdiction’.60 On the merits, the District Court of The Hague found that SPDC violated its duty of care towards the claimant. Specifically, the subsidiary should have realized that a risk of sabotage of the well was high.61 Accordingly, the company had to take the appropriate measures to prevent that risk. 3. KiK As opposed to the UK and the Netherlands, there are no comparable cases in Germany. This is because the German national procedural law applicable to third State defendants does not provide for an equivalent forum connexitatis like in Article 8(1) of the BRIbis, paragraph 3.1(3) of the UK Practice Direction 6B, or section 7(1) of the Dutch Code of Civil Procedure. This may be illustrated by a recent litigation, the KiK litigation,62 which was instituted in Germany and structurally resembles the Okpabi and Akpan cases, at least to a certain extent. On 11 September 2012, 260 workers of Ali Enterprises in Karachi, Pakistan, died in a fire at the production site, 32 workers were injured. The German textile importer and reseller KiK Textilien and Non-Food GmbH, seated in Bönen, Germany, was the main buyer for Ali Enterprises. On 15 March 2015, four Pakistani victims instituted proceedings at the Regional Court of Dortmund, Germany, (solely) against KiK for damages of €30.000 each for pain and suffering. The claimants argued that KiK, as the main buyer, was placed under vicarious liability for its (economically dependent) supplier as well as under liability for negligence in regard to the safety of the workers. The claimants submitted, inter alia, that the windows were barred and the emergency exits blocked. According to the decision of 29 August 2016, the Court granted legal aid on the grounds that, in the main proceedings, Pakistani law would apply. Therefore, the Court would need to retain expert evidence on Pakistani law, and in order to enable the claimants to pay for the necessary upfront fees to the Court, they would be entitled to legal aid.63 Indeed, according to Article 4(1) of the Rome II Regulation, the law of the place where the harmful effects occurred applies. To be sure, this case must be distinguished from Okpabi and Akpan in that it concerned supply chain relations rather than groups of enterprises with their local subsidiaries. But, as we will show in section III, the current legislative trends in Europe to improve the situation of claimants in developing countries encompass both groups of enterprises and supply chain relations by establishing and/or reinforcing direct delictual responsibility of the parent and main buyers respectively. Nevertheless, it remains telling for the special situation in Germany that the claimants in KiK did not also raise claims against the local producer that would be directly responsible for the damage. As was already mentioned, there is no general forum connexitatis under German autonomous procedural law. Nor did the claimants take up any line of argument driving towards a liability of joint tortfeasors to establish delictual jurisdiction for both of the tortfeasors at all places of harmful effect and acting by mutual imputation of the respective contributions to the damage that would theoretically be available under the delictual jurisdiction in section 32 of the German Code of Civil Procedure.64 But this was due to the fact that the claimants in KiK, as opposed to the claimants in Okpabi and Akpan, sought to concentrate on receiving damages by solvent debtors rather than obtaining additional injunctive relief to achieve improvements locally. Even if this latter interest had been part of the picture in KiK, there would of course be the issue of recognition and enforcement of a German decision in Pakistan.65 Be that as it may, Germany should, in light of the comparative legal analysis undertaken here in regard to the BRIbis, the UK, and the Netherlands, reconsider its restrictive position on the forum connexitatis.66 But, as we will see in section III.3, Germany took a restrictive stand not only on the level of jurisdiction (which is not connected to the specific cases discussed here and the grounds on general policy considerations67) but also and particularly on the level of substantive law-making when it comes to shaping the responsibility of German multinational companies for their foreign corporate or supply chain relations. III. Current trends in law-making Our analysis of the Okpabi, Akpan, and KiK cases shows that national courts’ assessment regarding jurisdiction over parent companies and their subsidiaries for violations committed abroad diverge. Moreover, their private international law legislations do not always easily permit the attraction of the subsidiary in a European forum. Therefore, courts do not follow any common pattern in the way they accept or reject jurisdiction. In light of these uncertainties, some States have enacted—or are about to enact—legislative measures that reinforce corporate responsibility and accountability for human rights violations and damages to the environment. As we explain below, the current trend consists in amending substantive law rather than private international law. 1. France On 21 February 2017, the Loi n° 2017–399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre (Duty of Vigilance Law) was adopted.68 According to this legislation, parent companies of a certain size have a legal obligation to establish a vigilance plan (plan de vigilance), the objective of which consists in identifying risks and preventing human rights violations, including the protection of the environment, health, and labour conditions. The failure to implement such a plan will incur the liability of parent companies for damages that a well-executed plan could have avoided. This legislation, which was supported by the French left wing party, was designed to avoid social and environmental catastrophes, such as the Rana Plaza tragedy in India.69 The French legislative power reacted by enacting the Duty of Vigilance Law, which reinforces the obligation of parent companies to control the activities of their subsidiaries located in other States. In particular, the newly adopted French law amends the Code de commerce (Commercial Code or FCC) and, in particular, its chapter concerning public limited companies (sociétés anonymes) by introducing Articles L.225-102-4–5. These provisions state that both parent companies localized in France, which employ more than 5,000 workers in their premises or through subsidiaries, as well as parent companies employing more than 10,000 people worldwide, disregarding the State of their domicile, must establish a vigilance plan. Therefore, the obligation to launch such a plan concerns both French companies and multinationals whose seat might be located in France or abroad. Although the connecting factor that would oblige foreign multinationals to comply with the requirements of the FCC is rather unclear, it is reasonable to assume that, at least, the presence of a subsidiary on French territory should trigger the obligation to provide a vigilance plan.70 In regard to the content of such a plan, the Duty of Vigilance Law does not offer much detail. According to Article L.225-102-4 of the FCC, the plan must contain reasonable vigilance measures, including (i) the identification, analysis, and categorization of potential risks; (ii) the assessment of the efficiency of the vigilance measures; (iii) actions aiming at mitigating risks and preventing serious damages; (iv) an alert mechanism; and (v) an evaluation procedure. The vigilance plan applies to the parent company and its subsidiaries as well as to subcontractors and suppliers. Under French law, when a company holds more than half of the capital share of another company, the latter is considered a subsidiary of the first (Article L.233-1 of the FCC). Under the Duty of Vigilance Law, it does not matter whether the parent company directly holds shares in the subsidiary. Indirect control falls equally under the material scope of the law.71 Notably, vigilance duties are not limited to entities linked by a corporate relationship. The legal obligation of vigilance extends to subcontractors and suppliers with which the parent company and its subsidiaries entertain established commercial relationships. The violation of the obligations mentioned in Article L.225-102-4—that is, the non-establishment of a vigilance plan, the absence of publication of such a plan, or its poor execution—entails the liability of the parent company, pursuant to Articles 1240 and 1241 of the FCC.72 These provisions require the claimants to prove that the parent company acted negligently and that their damage actually originated from such behaviour. This might represent a relatively heavy burden for victims.73 To conclude, the Duty of Vigilance Law establishes a legal obligation for parent companies to exercise some control over the activities of their subsidiaries and business partners. The violation of their obligation will entail their liability under the FCC. Some welcome the broad application of the duty of vigilance, which applies not only to subsidiaries but also to subcontractors and suppliers. Additionally, this law reaches French companies as well as multinationals. Others regret that the obligation to establish a vigilance plan is limited to certain companies with regard to their corporate form—sociétés anonymes, sociétés en commandite par actions, and sociétés par actions simplifiées—or their size. Apparently, only 150 companies would be submitted to the duty of vigilance.74 Although the French Duty of Vigilance Law certainly represents significant progress towards the accountability of corporations for human rights violations or environmental damages, we regret the absence of coordination between substantive law and conflict-of-law rules. In principle, according to Article 4 of the Rome II Regulation, the law applicable to the action will be the one in force where the damage occurred (lex loci damni). Therefore, it is far from certain that the Duty of Vigilance Law would apply in a case similar to Okpabi or Akpan. Some suggest that French law could apply through Article 7 of the Rome II Regulation, since it allows the selection of the lex loci delicti commissi.75 However, the occurrence of an unlawful act committed in France would still have to be proved, which might not be an easy task. Alternatively, Article 4(3) of the Regulation could displace the general principle mentioned above and support the application of the ‘manifestly more closely connected’ law. Again, it is not certain that French law would be more closely connected than the lex loci damni. Finally, Article 16 of the Regulation could force the application of French law. Nevertheless, the French legislator did not make clear that the duty of vigilance qualifies as an overriding mandatory provision. 2. Switzerland On 16 October 2016, a coalition of non-governmental organizations launched an initiative populaire (the Initiative), the goal of which consists in reinforcing the protection of human rights by imposing a duty of due diligence on companies domiciled in Switzerland.76 In particular, the initiative suggests the amendment of the Swiss Constitution by introducing Article 101a on the liability of companies.77 A subsequent federal law (loi d’application) would further develop the constitutional text. According to the Initiative, companies whose statutory seat, central administration, or principal place of business is in Switzerland must respect internationally acknowledged human rights as well as environmental norms on the Swiss territory and abroad (proposed Article 101a(2)(a) of the Swiss Constitution). In other words, Swiss companies would have a duty of due diligence that obliges them to prevent and repair the negative consequences of their activities on human rights and the environment (proposed Article 101a(2)(b) of the Swiss Constitution). Importantly, this duty of due diligence would have to be exercised in relation to companies under their control as well as to their commercial partners. Small- and medium-size companies may be exempted from these obligations. The violations of human rights and environmental norms committed by companies under control would engage the responsibility of controlling companies located in Switzerland. Contrary to French law, the proposed Swiss provisions establish that, in principle, the liability of the Swiss company is presumed.78 However, no liability will be imposed if the latter proves that it correctly exercised its duty of due diligence (proposed Article 101a(2)(c) of the Swiss Constitution). This scheme is based on Article 55 of the Swiss Code of Obligations, which deals with the responsibility of the employer for the activities of its employees.79 Interestingly, the obligations designated by proposed Article 101a of the Swiss Constitution subsist even where conflict-of-law rules designate a different law than the Swiss one. In other words, the Initiative seeks to confer an imperative nature to the proposed provisions (overriding mandatory provisions), which apply extraterritorially.80 At the end of last summer, the Federal Council declared that it would not support the adoption of the Initiative.81 Although the text pursues fundamental social goals, the Council is of the view that its material scope is too far-fetched. Additionally, it argued that there is a risk, in absence of a concerted action at the international level, of imposing a too heavy burden on Swiss companies that may eventually relocate to neighbouring States. Finally, the Federal Council stated that by opening a forum for litigation of cases involving human rights violations or environmental damages that occurred abroad, the Swiss legislator would not respect the sovereign power of sister States.82 Instead, the Federal Council supported the enactment of non-binding principles at the international level. 3. Germany On 21 December 2016 and under the auspices of the German Federal Foreign Office (Auswärtiges Amt), the German government adopted a ‘National Action Plan on Business and Human Rights’.83 This plan is to ‘implement’ the Ruggie Principles,84 and the government considered it an ‘ambitious project’: For the first time, German companies’ responsibilities as regards upholding human rights are laid down in a fixed framework by stipulating homogeneous and verifiable global standards. The Action Plan pools the strengths of the various stakeholders from the State, business sector, civil society and trade unions, with the aim of improving the human rights situation along the supply and value chain in Germany and worldwide. The German government expresses its clear expectation in the Action Plan: companies must carry out human rights due diligence.85 However, all of the suggested measures are not obligatory but voluntary, coupled with an expectation that until 2020 at least 50 per cent of large enterprises (with more than 500 employees) will have completed implementation. This was criticized by some as being too ‘soft’ and disappointing, particularly in comparison with other EU Member States,86 whereas others have argued in a general economic analysis that binding and strict obligations in one jurisdiction would increase costs for enterprises there and that such enterprises would rather withdraw from the affected business relations and that other enterprises from elsewhere under worse standards would step in (‘race to the bottom’).87 With respect to the special question of access to justice in Germany, the government considered the legal landscape as satisfactory. However, as has been shown, there is no forum connexitatis in German autonomous procedural law, and (compared to other jurisdictions) there are only limited means of obtaining evidence and collective redress,88 but this is due to deeply rooted notions and traditions of civil procedure in Germany. IV. Conclusions Our analysis of the most recent case law from European courts shows that parent companies may not automatically be held liable for the acts and omissions of their subsidiaries located overseas. The law on international jurisdiction allows attracting subsidiaries located in third States in a forum within the EU only under certain conditions varying from State to State. Against this background, some national legislators have amended their substantive law with the objective of reinforcing corporate accountability. Notably, in France, the recent Duty of Vigilance Law requires large French companies and multinationals to establish a vigilance plan in order to prevent human rights violations and damages to the environment. Nevertheless, in other States, such as Germany and Switzerland, the government prefers to rely on non-binding measures, even though their effectiveness is seriously called into question by some. Along this line of reasoning, a national, non-concerted action would impose a too heavy burden on companies that would eventually relocate to more favourable legal environments. Therefore, an action at the European level might be more satisfactory. For the time being, however, the EU has only adopted certain indirect and sector-based, and, as such, rather hesitant, measures. However, since the Rome II Regulation often leads to the application of the lex loci damni, legislative developments undertaken in European Member States will prove pointless if not coupled with appropriate private international law provisions that guarantee their applicability. Indeed, the enhancement of corporate accountability is a global concern that requires legal disciplines to work hand in hand. Footnotes 1 Available at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (accessed 26 December 2017). 2 Available at http://www.oecd.org/corporate/mne/1922428.pdf (accessed 26 December 2017). 3 Muzaffer Eroglu, Multinational Enterprises and Tort Liabilities (Edward Elgar 2008), 232–5; Justine Nolan, ‘The Corporate Responsibility to Respect Human Rights: Soft Law or Not Law?’, in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (Cambridge University Press, 2013), 138–61. 4 However, some related measures are worth mentioning: to start with, the Directive 2014/95/EU as regards disclosure of non-financial and diversity information [2014] OJ L330/1, as well as the accompanying Guidelines on non-financial reporting [2017] OJ C215/1, require large companies to report on the ‘impact of [their] activity, relating to, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters’, which might well be seen as a ‘revolution’ by accounting with far-reaching impact, see e.g. Peter Hommelhoff, ‘Nicht-finanzielle Ziele im Unternehmen von öffentlichem Interesse: Die Revolution übers Bilanzrecht’, in Reinhard Bork et al. (eds), Festschrift für Bruno M. Kübler zum 70. Geburtstag (Munich 2015), 291 et seq. Second, Art. 1(5) of Directive 2013/50/EU [2013] OJ L294/13, as well as Chapter 10 of Directive 2013/34/EU [2013] OJ L182/19, impose an obligation on issuers active in the exploitation or logging of primary forest to disclose payments made to governments. The objective of these pieces of legislation is to reinforce the accountability of resource-rich governments. Finally, in 2017, the European Union adopted Regulation (EU) 2017/821 [2017] OJ L130/1, laying down supply chain due diligence obligations for Union importers of tin, tantalum, and tungsten, their ores, and gold originating from conflict-affected and high-risk areas, and which aims at stopping forced labour to mine minerals that eventually helps financing armed conflicts. The entry into force of this due diligence duty is scheduled on 1 January 2021. 5 This trend can be traced back to the Kiobel case (Kiobel v. Royal Dutch Petroleum Co., 133 S.Ct. 1659 (2013)), where the US Supreme Court rejected the extraterritorial application of the Alien Tort Statute to human rights violations committed in Nigeria against Nigerian victims. On this case from a private international law perspective, see Chris Thomale, ‘The Forgotten Discipline of Private International Law: Lessons from Kiobel v Royal Dutch Petroleum’, 7 (2016) Transnational Legal Theory, 155 et seq. and 287 et seq. In the near future, the US Supreme Court might further close the door in its forthcoming judgment Jesner v. Arab Bank (on the status of this case see the Supreme Court of the United States (SCOTUS) Blog, http://www.scotusblog.com/case-files/cases/jesner-v-arab-bank-plc, accessed 26 December 2017) in the event that it prohibits the application of the Alien Tort Statute to corporations categorically. For a recent overview of the American approach towards jurisdiction in Alien Tort Statute cases, see (among many others) Stefanie Khoury and David Whyte, Corporate Human Rights Violations: Global Prospects for Legal Action (Routledge, 2017), 77–102; Martin Metz, US-Menschenrechtsklagen und Neoterritorialismus (Peter Lang Publishing, 2017; Studien zum vergleichenden und internationalen Recht vol 194), in particular 14–17 and 19–63; Hans van Loon, The Global Horizon of Private International Law (2016; Collected Courses of the Hague Academy of International Law t 380), 89-94. Regarding our specific research question, two judgments highlight the restrictive approach of US courts regarding jurisdiction over parent companies and their subsidiaries: first, in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), the Court rejected general jurisdiction over foreign subsidiaries of an American company, due to their lack of sufficient contacts with the forum. Second, in Ranza v. Nike, Inc., 793 F.3d 1059 (9th Cir. July 16, 2015), the Ninth Circuit Court confirmed that trend by rejecting jurisdiction over an Amercan company’s foreign subsidiary, which allegedly violated the Employment Act in The Netherlands. Additionally, that Court dismissed the case against the parent company under the forum non conveniens doctrine. 6Okpabi & Ors v Royal Dutch Shell Plc & Anor [2017] EWHC 89 (TCC), 26 January 2017. In Okpabi & Ors v Royal Dutch Shell Plc & Anor (Rev 1) [2018] EWCA Civ 191 (14 February 2018), the Court of Appeal (Civil Division) dismissed the victims’ appeal against the first instance court’s judgment. Unfortunately, the details of this appeal decision could no longer be taken into account for this paper. 7 See above at n 5. Both litigations arise from essentially the same factual situation against the same defendant, but were instituted by different claimants. 8 Claimants may be motivated to start proceedings against the parent company in a European forum for different reasons. To start with, the subsidiary may not have sufficient assets to provide recovery to the claimants. Therefore, the parent company will often be the entity with the ‘deepest pockets’. Then, the infrastructure of the judicial system where the subsidiary is located may be deficient (lack of legal expertise, no legal aid available, absence of impartiality, etc.) and unfavorable to the claimants. Finally, the subsidiary sometimes benefits from the support of the State, which makes this forum unattractive to the claimants. See Peter Nygh, ‘The Liability of Multi-national Corporations for the Torts of Their Subsidiaries’, 3/1 (2002) European Business Organization Law Review, 55–7; Marta Requejo Isidro, ‘Litigación civil internacional por abusos contra derechos humanos: El problema de la competencia judicial internacional’, X (2010) Anuario español de derecho internacional privado, 264; Cees van Dam, ‘Tort Law and Human Rights: Brothers in Arms on the Role of Tort Law in the Area of Business and Human Rights’, 2/3 (2011) Journal of European Tort Law, 228–31. 9Okpabi (n 6) para 9. 10 Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2012] OJ L351/1. 11 Other provisions of the BRIbis would be technically available to claimants like Art. 7(2), the forum for tort and (quasi)-delict, as well as Art. 7(5) which opens a forum in the domicile of a branch. Nevertheless, the usefulness of those provisions is limited in practice: on the one hand, the place where the damage occurred will rarely be located in Europe, unless the claimants prove that the decision of the parent company seated in Europe was taken there and actually led to the damage. In all cases, this provision will lose its added value every time it overlaps with Art. 4 BRIbis. On the other hand, Art. 7(5) only applies when both the parent company and the subsidiary are domiciled in the EU. See Requejo Isidro (n 8) 272–7; Geert van Calster, ‘The Role of Private International Law in Corporate Social Responsibility’, 3 (2014) Erasmus Law Review, 129–30. In the event that all the companies to be sued are located in the European Union and are considered joint tortfeasors under substantive law, other jurisdictional options would be available. For example, one interesting question is whether Art. 8(2) BRIbis would allow claimants to attract co-tortfeasors at the place where the damage occurred. 12Okpabi (n 6) paras 64–8. 13 Case C-281/02 Andrew Owusu v N. B. Jackson, trading as ‘Villa Holidays Bal-Inn Villas’ and Others [2005] ECR I-01383. 14Ibid, paras 37–46. 15 Nevertheless, as Simon Baughen correctly points out, in the event that the defendant seeks a declaration of non-liability in the courts of a third State, the courts where a subsequent, similar action is brought would have discretion to stay proceedings if the conditions of Art. 33 BRIbis are met. As a result, if the proceedings in the court of the third State are concluded and have resulted in a judgment capable of recognition and enforcement, then the court secondly seized shall dismiss proceedings (Art. 33(3) BRIbis). See Simon Baughen, Human Rights and Corporate Wrongs: Closing the Governance Gap (Edward Elgar, 2015), 176. 16Lungowe & Ors v Vedanta Resources Plc & Anor [2016] EWHC 975 (TCC), 27 May 2016. 17 Case C-98/06 Freeport plc v Olle Arnoldsson [2007] ECR I-08319, para 54; Case 352/13 Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Evonik Degussa GmbH and Others [2013], ECLI:EU:C:2015:335, para 28. 18Vedanta (n 16) paras 76-82. The Court of Appeal equally considered that an abusive behaviour could in principle displace the application of Art. 4 BRIbis. However, according to that Court, the argument of RDS and SPDC ‘will only succeed where there is sufficient evidence to show that the party against whom the complaint is made has conducted itself in such a way as “to distort the true purpose of that rule of jurisdiction” ... As the Judge indicated, at [58] of his judgment, there is a high threshold to be overcome for an abuse argument to succeed. It does not do so in the present case’. See Lungowe & Ors v Vedanta Resources Plc & Anor [2017] EWCA Civ 1528, 13 October 2017, para 38. 19Okpabi (n 6) para 69. 20 Along the same line of reasoning, the CJEU already ruled that a co-defendant may be attracted in the forum of a local defendant through Art. 8(1) BRIbis, even though the action against the latter was inadmissible. See Case C-103/05 Reisch Montage AG v Kiesel Baumaschinen Handels GmbH [2006] ECR I-06827, paras 31–3. Accordingly, the Brussels Regulation’s provisions seem to have a relatively strong mandatory force. 21Vedanta (n 16) para 34. 22Okpabi (n 6) para 51. 23 Regulation (EC) No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) [2007] OJ L199/40. 24Okpabi (n 6) para 51. According to Art. 7 of the Rome II Regulation, the claimant has a right to select the law applicable to the environmental damage. It could either be the law where the damage occurred (Art. 4 Rome II Regulation) or the law where the event giving rise to the damage took place. This alternative strengthens the level of environmental protection, since it refrains companies located in a ‘high-protection’ State to freely pollute in a ‘low-protection’ neighbor State. In England, the claimant may select the applicable law until the judgment. Moreover, under English procedural law, if parties do not plead the application of foreign law and prove its content, English law will in principle apply. See Lord Collins of Mapesbury et al., Dicey, Morris & Collins: The Conflict of Laws (Sweet & Maxwell, 2012; 15th ed; vol 1 and 2), 318–34, 2237–8. 25 Note that the establishment of a duty of care is not the only option available to hold the parent company potentially liable for the acts or omissions of the subsidiary. The (perhaps most common) alternative is the piercing of the corporate veil. For a broader overview of additional options, see Baughen (n 15) 155–66, 179–90; Eroglu (n 3) 140–56; Richard Meeran, ‘Access to Remedy: The United Kingdom Experience of MNC Tort Litigation for Human Rights Violations’, in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (Cambridge University Press, 2013), 386–93; Nygh (n 8) 63–80; Requejo Isidro (n 8) 283–90; Olivier de Schutter, Extraterritorial Jurisdiction as a Tool for Improving the Human Rights Accountability of Transnational Corporations (22 December 2006), 37–43, available at http://cridho.uclouvain.be/documents/Working.Papers/ExtraterrRep22.12.06.pdf (accessed 26 December 2017). The selection of one option or the other may trigger the application of different laws. On the one hand, in Okpabi, the Court evaluated whether the direct tortious liability of the parent company was involved. Art. 7 of the Rome II Regulation applies to such non-contractual obligations in environmental matters. On the other hand, when courts consider piercing the corporate veil in order to impose indirect liability over the parent company, it is not clear that the Rome II Regulation applies. Indeed, one might rather consider that this is a corporate matter, which is excluded from the Rome II Regulation through its Art. 1(2)(d). For more information regarding this topic, see Uglješa Grušić, ‘International Environmental Litigation in EU Courts: A Regulatory Perspective’, 35 (2016) Yearbook of European Law, 180–228; Nygh (n 8) 63–80. 26Caparo Industries plc v Dickman [1990] 2 AC 605, 8 February 1990. 27 The proximity requirement is often assessed in light of Chandler v Cape Plc [2012] EWCA Civ 525, 25 April 2012, where Justice Arden established four factors, the presence of which advocates the existence of proximity: (i) the two companies operate the same business; (ii) the parent company has a superior/specialist knowledge compared to the subsidiary; (iii) the parent company knows about its subsidiary’s system of work; (iv) the parent company knows that the subsidiary would rely on that knowledge to protect the claimants. These conditions are difficult to fulfil since Thompson v The Renwick Group plc [2014] EWCA Civ 635, 13 May 2014, where the Court of Appeal clarified that there is no sufficient proximity when the parent company appoints the director of the subsidiary. Additionally, the fact that the subsidiary is run as a division of the group and shares some resources with the parent company does not call into question this conclusion. 28Okpabi (n 6) paras 114–15. 29Ibid, para 79. The reasons that led Justice Fraser to restructure the Caparo test are not entirely clear. This second stage of analysis actually looks like an autonomous assessment of the proximity criterion mentioned at n 27. 30 Apparently, the judgment of the Court has been appealed by the claimants. See John Ogilvie et al., ‘Successful Challenge to English Court Jurisdiction over Claims against UK Domiciled Parent Company in Relation to Acts of Subsidiary Abroad’, Herbert Smith Freehills – Litigation Notes (2 February 2017), available at https://hsfnotes.com/litigation/2017/02/02/successful-challenge-to-english-court-jurisdiction-over-claims-against-uk-domiciled-parent-company-in-relation-to-acts-of-subsidiary-abroad/ (accessed 26 December 2017). 31AAA & Ors v Unilever Plc & Anor [2017] EWHC 371 (QB), 27 February 2017. 32 The provision reads as follows: ‘2) The court may order a person to be added as a new party if – (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.’ 33Unilever (n 31) para 111. 34Ibid, paras 77–8. 35Ibid, paras 125–7. 36Ibid. 37Ibid, para 133. 38Ibid, paras 135–8. 39Ibid, paras 134–71. 40Vedanta (n 18) para 56. 41Ibid, paras 98–135. 42A.F. Akpan v. Royal Dutch Shell, plc, case number C/09/337050 / HA ZA 09-1580 (District Court of The Hague), 30 January 2013. All court documents regarding the Akpan case are available at https://milieudefensie.nl/english/shell/courtcase/documents (accessed 26 December 2017). Although the judgment of the District Court is currently under appeal, a preliminary verdict was issued by the Court of Appeal of The Hague on 17 December 2015, where it upheld the first instance court’s judgment regarding jurisdictional questions. For more information on the procedural history of the case, see Cees van Dam, Preliminary Judgments Dutch Court of Appeal in the Shell Nigeria Case, available at http://www.ceesvandam.info/default.asp?fileid=643 (accessed 26 December 2017); van Loon (n 5), 96–8. Note that the District Court ruled on two relatively similar cases, namely Dooh et al. v. Royal Dutch Shell PLC and Shell Petroleum Development Company of Nigeria LTD et al. and Oguru and Efanga et al. v. Royal Dutch Shell PLC and Shell Petroleum Development Company of Nigeria LTD et al., both available on Milieudefensie’s website mentioned above. 43 Lee James McConnell, ‘Establishing Liability for Multinational Oil Companies in Parent/Subsidiary Relationships’, 56/2 (2014) Environmental Law Review, 91–2. 44Akpan (n 42) para 4.3. 45Ibid. 46 Nicola Jägers et al., ‘The Future of Corporate Liability for Extraterritorial Human Rights Abuses: the Dutch Case against Shell’, (2014) AJIL Unbound, 40. 47Akpan (n 42) paras 4.8–10. 48 See above at n 26. and accompanying text. 49 Interestingly, Liesbeth Enneking notes that ‘if the case had been decided on the basis of Dutch tort law, which is less restrictive than English tort law when it comes to assuming a duty to act in civil liability cases pertaining to omissions, the court might have decided differently on the issue of parent company liability’. See Liesbeth Enneking, ‘The Future of Foreign Direct Liability? Exploring the International Relevance of the Dutch Shell Nigeria Case’, 10/1 (2014) Utrecht Law Review, 52. 50Akpan (n 42) para 4.31. 51Ibid, para 4.33. 52Ibid. 53Ibid, para 4.34. 54 Alternatively, Art. 9 of the Dutch Code of Civil Procedure provides for a forum necessitatis, in the event that access to courts abroad is barred or due process is not guaranteed. See Alex Geert Castermans and Jeroen van der Weide, ‘The Legal Liability of Dutch Parent Companies for Subsidiaries’ Involvement in Violations of Fundamental, Internationally Recognised Rights’, (15 December 2009), 45–7, available at https://papers.ssrn.com/sol3/papers.cfm?abstract-id=1626225 (accessed 27 December 2017). 55 The English translation of this provision is available at http://www.dutchcivillaw.com/civilprocedureleg.htm (accessed 27 December 2017). 56 Case C-145/10 Eva-Maria Painer v Standard VerlagsGmbH and Others [2013] ECR I-12533. 57Ibid, para 81. 58 Francisco Garcimartín, Derecho internacional privado (Civitas, 2016; 3rd ed), 141. 59Akpan (n 42) para 4.1. 60Ibid, para 4.6. This is in line with the Reisch Montage case (n 20). 61Ibid, 4.35–61. 62 See Regional Court of Dortmund, docket no. 7 O 95/15, proceedings pending in first instance. 63 Regional Court of Dortmund, ‘Landgericht Dortmund gewährt pakistanischen Klägern Prozesskostenhilfe für ein Klageverfahren gegen “KiK” auf Zahlung von Schmerzensgeld und holt in der Hauptsache schriftliches Rechtsgutachten zum pakistanischen Recht ein’ (Press Release of 30 August 2016), available at http://www.lg-dortmund.nrw.de/ behoerde/presse/Pressemitteilungen/PM-KiK_docx.pdf (accessed 27 December 2017). 64 Federal Court of Justice, judgment of 22 November 1994, docket no. XI ZR 45/91, 1995 Neue Juristische Wochenschrift (NJW) 1225, at 1226, regarding joint tortfeasors vis-à-vis capital investors (‘churning’). See also Reinhard Patzina, Münchener Kommentar zur Zivilprozessordnung (Munich, 2016; 5th ed), section 32 para. 14. 65 It is generally held in Germany that Pakistani judgments are not to be recognized in Germany under section 328(1) no. 5 German Code of Civil Procedure because German judgments would not be recognized in Pakistan (‘principle of reciprocity’). See e.g. Peter Gottwald, Münchener Kommentar zur Zivilprozessordnung (Munich, 2016; 5th ed), section 328, para. 151, sub ‘Pakistan’; Dirk Otto, in Geimer/Schütze (eds), Internationaler Rechtsverkehr (Munich, 2017; vol. VI), sub O. ‘Country Reports’, sub ‘Pakistan’, 1109 et seq. 66 See also Wolfgang Hau, Deutscher Bundestag, Nationaler Aktionsplan Wirtschaft und Menschenrechte (Berlin, 28 September 2015; Hearing 5), sub 5: ‘Internationales Zivilprozessrecht’: ‘passive Streitgenossenschaft’. 67 See e.g. Haimo Schack, Internationales Zivilverfahrensrecht (Munich, 2017; 7th ed), 159 at para 409: risk of abuse, but this risk appears to be manageable if sufficient and substantial weight is attributed to the quality of the nexus. 68 Published in the French Official Journal on 28 March 2017. An overview of the legislative evolution of this law is available either on the website of the Senate (https://www.senat.fr/dossier-legislatif/ppl14-376.html, accessed 27 December 2017) or on the website of the National Assembly (http://www.assemblee-nationale.fr/14/dossiers/devoir_vigilance_entreprises_donneuses_ordre.asp, accessed 27 December 2017). 69 The Rana Plaza building, where important European companies produced clothes, collapsed in 2013 and killed more than 1,000 workers. 70 Dominique Potier, Rapport fait au nom de la Commission des lois constitutionnelles, de la législation et de l’administration générale de la République sur la proposition de loi (n° 2578), relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, 61–2, available at http://www.assemblee-nationale.fr/14/rapports/r2628.asp (accessed 27 December 2017). 71Ibid, 64–5. 72Ibid, 78. Originally, civil liability had to be coupled with the possibility to impose fines (up to €10,000,000) on companies. However, the provisions related to the latter option have been invalidated by the Constitutional Council because of their lack of precision. The decision of the Council is available at http://www.conseil-constitutionnel.fr/conseil-constitutionnel/francais/actualites/2017/decision-2017-750-dc-[devoir-de-vigilance-des-societes-meres].148856.html (accessed 27 December 2017). 73 Sandra Cossart and Marie-Laure Guislain, ‘Le devoir de vigilance pour les entreprises multinationales, un impératif juridique pour une économie durable. Pourquoi le raisonnement juridique ne peut pas constituer un obstacle aux choix politiques’, 104 (May 2015) Revue Lamy de Droit des Affaires, 77–8. 74 Pierre-Louis Périn, ‘Devoir de vigilance et responsabilité illimitée des entreprises : qui trop embrasse mal étreint’, 2 (April-June 2015) Revue trimestrielle de droit commercial, 217–18; Observations du Gouvernement sur la loi relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre (28 March 2017), para 1.A., available at https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000034290672&categorieLien=id (accessed 27 December 2017). 75 The following arguments regarding the application of the Rome II Regulation are developed by Cossart and Guislain (n 73) 80; van Calster (n 11) 130–1; van Dam (n 8) 231–2. 76 The initiative populaire is regulated at Art. 139 of the Swiss Constitution. The gathering of signatures started in April 2015 and the deposit of the text took place on 16 October 2016. 77 The text of the Initiative is available at https://www.admin.ch/ch/f/pore/vi/vis462t.html (accessed 27 December 2017). 78 The adoption of such a presumption was discussed in France, but eventually discarded. See Cossart and Guislain (n 73) 76; Périn (n 74) 223. 79Rapport explicatif de l’initiative populaire fédérale ‘Entreprises responsables – pour protéger l’être humain et l’environnement’, available at http://konzern-initiative.ch/de-quoi-il-s-agit/?lang=fr (accessed 27 December 2017). 80Ibid, 20–1. 81 Federal Council, Message relatif à l’initiative populaire ‘Entreprises responsables – pour protéger l’être humain et l’environnement’ (15 September 2017), 6023, available at https://www.admin.ch/opc/fr/federal-gazette/2017/5999.pdf (accessed 27 December 2017). 82 Vivian Grosswald, ‘Harmonizing Multinational Parent Company Liability for Foreign Subsidiary Human Rights Violations’, 17/2 (2017) Chicago Journal of International Law, 417–19, suggests that both reluctance to act unilaterally and comity concerns are the central arguments against the enactment of more stringent legislations regarding parent corporate liability. 83 Federal Foreign Office, National Action Plan for Business and Human Rights, available at https://www.auswaertiges-amt.de/en/aussenpolitik/themen/aussenwirtschaft/161221-nap-kabinett-node (accessed 27 December 2017). For the respective Action Plans by other EU Member States as suggested by the EU in its own CSR Strategy see http://ec.europa.eu/growth/industry/corporate-social-responsibility/in-practice_en (accessed 27 December 2017). 84 See above n 1. 85 Federal Foreign Office (n 83). 86 See e.g. Deutsches Institut für Menschenrechte, Stellungnahme zur Verabschiedung des deutschen Nationalen Aktionsplans für Wirtschaft und Menschenrechte (Berlin 2016), http://www.institut-fuer-menschenrechte.de/fileadmin/user_upload/Publikationen/Stellungnahmen/Stellungnahme_Verabschiedung_NAP_Wirtschaft_und_Menschenrechte.pdf (accessed 27 December 2017). 87 E.g. Gerhard Wagner, Haftung für Menschenrechtsverletzungen, 80 (2016) RabelsZ, 718 et seq., at 779 et seq. 88 Deutsches Institut für Menschenrechte (n 86) 9 et seq. © The Author(s) (2018). Published by Oxford University Press on behalf of Unidroit. All rights reserved. For permissions, please email journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices)

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