Judicial Mechanisms * * *

JUDICIAL – SECTION II – PART I. Extraterritorial Civil Liability S E C T I O N I I JUDICIAL MECHANISMS * * * FIDH – Guide on recourse mechanisms / 177 V Bhopal: an environmental industrial castrophe. A toxic cloud escaping from a chemical plant operated by a subsidiary of Union Carbide Company (USA) led to the death of more than 25 000 people. © CC-BY-SA-2.0. / Simone.lippi 178 / FIDH – International Federation for Human Rights JUDICIAL S E C T I O N I I JUDICIAL MECHANISMS – SECTION II – PART I The Extraterritorial Civil Liability of Multinational Corporations for Human Rights Violations PART I. Extraterritorial Civil Liability Multinational corporations do not benefit from legal personhood under international law. They enjoy a de facto immunity that protects them against all chal- lenges. Invoking the civil liability of a multinational corporation can therefore be done only at the national level, either in the corporation’s country of origin or in its host country. In countries where the parent companies of multinational corporations are based, a variety of systems have been used over time to prosecute multinationals for their abuses, despite the complexities of their structures and operations. This is an important development because the individuals affected by a multinational’s activities often have a low probability of obtaining redress in their own country, the host country of an investment. A lack of political will or insufficient legal capacity among local authorities (inadequate legislation, poor infrastructure, cor- ruption, lack of legal aid, the politicisation of the judiciary, etc), at times due to pressures intended to attract foreign investment, are common in this area. It is not uncommon for a multinational implementing local intermediaries (subsidiaries, subcontractors or business partners) to be insolvent or uninsured. Because the parent company often perpetrates the alleged crime, or at least makes the decisions that lead to the violation, evidence is often located in the multinational’s country of origin. Numerous obstacles continue to prevent victims from accessing justice, including issues associated with access to information, the costs of legal proceedings, and both substantive and procedural norms. In this study, we limit ourselves to the examination of two separate legal systems: those of the United States and the European Union.1 Beyond the practical considerations 1 See also Oxford Pro Bono Publico, Obstacles to Justice and Redress for Victims of Corporate Human Rights Abuse - A Comparative Submission Prepared for Prof. John Ruggie, UN SG Special Representative on Business and Human Rights, 3 November 2008, www.law.ox.ac.uk/opbp. The report examines the legal systems of the following countries: Australia, The Democratic Republic of the Congo, The European Union, France, Germany, India, Malaysia, China, Russia, South Africa, The United Kingdom and The United States. For illustrative purposes, this chapter discusses several decisions by Canadian courts, without analyzing specific legislation. FIDH – Guide on recourse mechanisms / 179 related to the impossibility of conducting an exhaustive study, this limitation is based on three primary factors: 1 – The parent companies of multinational corporations are often located in the US and E.U., 2 – Over the past decade, the volume of legal proceedings brought by victims seeking recognition and compensation for their injuries has increased in countries where multinationals are domiciled, and 3 – More than those of other countries, these two legal systems have devel- oped specific procedures to hold legal persons liable for acts committed abroad. References to specific cases brought before other courts, however, are inserted occasionally in the text. What are the current methods of seeking compensation through suing a multinational corporation in a US or EU Member State’s civil court when the multinational violates the rights of its employees or the surrounding local community as part of its operations abroad? Our inquiry looks to private international law as it relates to personal relationships with foreign components. Our situation is therefore subject to the internal regulations of each state. The application of private international law can be examined from two angles: Jurisdictional conflict – International jurisdiction: In which courts will the matter be considered? Which state will have jurisdiction? – Recognition and enforcement of foreign judgments: This point concerns the recognition and enforcement of foreign judgments issued by the forum court. It involves determining the binding effect and enforceability of a foreign authority’s legal decision. Because this guide focuses on ways to file suit against a multinational corporation for human rights violations, the recognition and enforcement of foreign judgements will not be discussed herein. Conflict of laws: What law will apply to the case at hand? The EU has issued several community regulations which standardize the rules governing conflicts of jurisdiction and law within the E.U.’s 27 different legal systems. These EU standards are compulsory and applicable in all Member States immediately upon publication. This study is devoted primarily to these community standards and their application in EU Member States.2 2 Note that there is one exception. The Rome II regulation does not apply to Denmark. 180 / FIDH – International Federation for Human Rights JUDICIAL CHAPTER I Establishing the Jurisdiction of a US Court – SECTION II – and Determining the Law Applicable to the Case * * * Under what conditions will a US court recognize jurisdiction? PART I. Extraterritorial Civil Liability The primary instruments US courts use to establish their jurisdiction for cases that fall within our inquiry are the Alien Tort Claims Act (ATCA) of 1789 and the Torture Victim Protection Act (TVPA) of 1991.3 Z An overview of the Alien Tort Claims Act Enacted in 1789 for reasons that continue to be debated, the ATCA has become an indispen- sable basis invoked in most tort cases brought in the US against multinational corporations for human rights violations committed abroad. US federal courts have near-universal jurisdiction. They may hear any civil case: – Introduced by a foreigner, – Introduced by a victim of a serious violation of the ”law of nations”, or customary international law, in force in the US, – Regardless of where the crime was committed, – Regardless of the nationality of the perpetrator (US or foreign citizen),4 – Knowing that the defendant in the case must be on US soil when the suit is brought (this is the only connecting factor).5 In addition to the Alien Tort Claims Act, the Torture Victim Protection Act (TVPA) is another tool which allows US courts to hear cases involving violations of international law committed against private persons. 3 We recommend reading the chapter on the United States in: Pro Bono Publico Oxford, op.cit., p. 303 and following. 4 First Judiciary Act 1789 (ch. 20, §9(b)), as codified in 28 USC. § 1350: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” 5 B. Stephens and M. Ratner, International Human Rights Litigation in US Courts, Irvington-on-hudson, Transnational publishers Inc, New York, 1996, p. 9 ff. FIDH – Guide on recourse mechanisms / 181 Z An overview of the Torture Victim Protection Act Adopted in 1991, the TVPA allows US and foreign nationals to sue in federal court for redress from perpetrators of torture or extrajudicial executions,6 including those carried out outside the US The TVPA does not replace the ATCA, but complements it. On the one hand, the TVPA’s scope is more limited than that of the ATCA because only acts of torture and extrajudicial executions are litigable under the TVPA. On the other hand, the TVPA extends the scope of the ATCA, in that it accords the right to sue not only to foreigners but to US citizens as well.7 1. Applying the ATCA to private individuals and multinational corporations The application of the ATCA for violations of international human rights law is the culmination of a long process of evolution. Initially, the ATCA applied only in situations involving human rights violations committed by persons acting under color of law as public officials (see Filártiga v. Peña-Irala).8 The ATCA’s scope was subsequently extended to cover violations committed by individuals acting outside any official capacity (see Kadic v. Karadzic),9 which subsequently led to the application of the ATCA to tort actions brought in the US against multinational corporations for violations of human rights committed abroad. In the TVPA, references to individuals exclude private and public actors, particularly governments. There is some controversy with respect to legal persons,10 as some courts have ruled that the law is applicable11 while others ruled it is not.12 What is clear is that the TVPA applies to physical persons (i.e. “natural persons”) represent- ing or appointed by a legal person (e.g. an employee).13 6 Unlike the ATCA, which leaves to international law the task of defining the concept of harm (suits brought under the ATCA are still subject to internal rules of subject matter jurisdiction, personal jurisdiction and other procedural rules), the TVPA defines torture and summary execution. 7 B. Stephens and M. Ratner, op.cit., 1996, p. 25; B. Stephens, “Corporate Accountability : International Human Rights Litigation Against Corporations in US Courts”, in M. T. Kamminga and S. Zia-Zarifi (eds.), Liability of Multinational Corporations under International Law, Kluwer Law International, 2000, p. 210; Wiwa v. Royal Dutch Petroleum Co, F.Supp.2d, 2002 WL 319887 (S.D.N.Y., 2002). 8 Filartiga v Pena-Irala 577 F Supp 860 (DC NY 1980) 867. 9 Kadic v. Karadzic, 70 F.3d 232 (2nd Cir. 1995). 10 See Beanal v. Freeport-McMoran, Inc, 197 F.3d 161 (5th Cir.

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