Anil Yilmaz Vastardis, Lecturer in Law, Human Rights Centre,
University of Essex
In wake of the UK’s EU membership
referendum result,
people from all walks of life are wondering what will happen next. While a big
uncertainty looms over the political questions surrounding the process of the
UK’s exit from the EU, the repercussions go far beyond the UK – and some of those wondering “what next” are
likely overseas victims of human rights abuses by British corporations. The
question remains as to what happens to all the EU law that either the UK has
transposed into its legal order via acts of parliament, or that have direct
application in the UK, such as EU Regulations.
Brussels
I Regulation (Recast) is one of many such EU law instruments. It prescribes
the rules on jurisdiction of member state courts, as well as the rules on the
recognition and enforcement of judgments in civil and commercial matters within
the EU. It has been predicted
that the UK's adherence to the Brussels I regime “is likely to be significantly
modified, if not entirely replaced, in the event of Brexit.” The authors of
that piece outline the different scenarios on the fate of the English rules on
civil jurisdiction post-Brexit. The course chosen may have an impact on the
ability of human rights victims overseas to bring suit against multinational
enterprises (MNEs) in UK courts.
Jurisdiction over Civil Liability Claims against Multinationals domiciled
in England
Rights advocates are increasingly
bringing lawsuits
in the global north to hold MNEs accountable for human rights harm caused by
their overseas subsidiaries. Among the reasons for pursuing the MNE in its
“home” state (the state where they are domiciled – see Article 60 of Brussels
I) are the existence of a dysfunctional legal system in the host state (place
where the harm occurred) and/or a defunct or underfunded subsidiary. England is
a popular jurisdiction for bringing such suits against UK domiciled MNEs. It is
home to many multinationals and it offers advantages for creative litigation.
Victims and their lawyers generally seek reparations from the parent entity on
the basis of common law tort
principles. While rights defenders are eager to hold parent companies
accountable for harm inflicted by their subsidiaries, the legal landscape in
the global north is fraught with obstacles
to holding parent companies liable. Among them are the rules on civil
jurisdiction.
In England, the forum non conveniens doctrine (FNC) used
to be a major
challenge to bringing suit against an MNE domiciled in England for harm
caused overseas by its subsidiaries. The FNC allows English courts to refuse to
exercise jurisdiction over a case if another forum is clearly better suited to
adjudicate the case, due to for instance location of evidence and witnesses. A
number of cases brought in England were protracted due to a battle over FNC.
Claimants had to demonstrate substantial denial of justice in the host state
legal system in order to convince English courts to exercise jurisdiction (see Connely
v RTZ Corporation, Lubbe
v Cape Plc).
Article 2 of Brussels I and its
interpretation by the Court of Justice of the EU (CJEU) in Owusu
v Jackson blocked the use of the FNC doctrine by English courts in
civil liability suits filed against MNEs domiciled in England. According to
Article 2 ‘persons domiciled in a Member State shall, whatever their
nationality, be sued in the courts of that Member State.’ There is no
indication here as to whether this rule would prevail if the lawsuit concerns
events that occurred or harm suffered overseas (i.e. outside the European
Union). In Owusu v Jackson, the CJEU
held that Article 2 precludes a member state court from "declining to exercise jurisdiction on the ground that a
court in a non-EU would be a more appropriate forum" and thus jurisdiction
shall be exercised over the UK domiciled MNE even if the dispute has certain
connections with a state outside the EU.
Years need not be wasted fighting a jurisdiction battle
Article 2, read together with Owusu, brought an end to the protracted
litigation over whether a lawsuit against an MNE domiciled in England should be
adjudicated by English courts or the courts of the host state. Admittedly,
adjudicating the dispute before English courts does not guarantee the liability
of the parent company. That depends on whether the facts of the case warrant
holding the parent liable under the law applicable to the substance of the case
(which is likely to be the law of the country where the harm occurred – see
Article 4 of the Rome
II Regulation).
Nevertheless, the defeat of the
FNC defence was not in vein. Even though we are yet to see a ruling that holds
the parent company liable for harm caused by an overseas subsidiary, lawyers
continue filing strategic cases with English courts with the confidence that
they would not lose years battling an FNC challenge. MNEs are less able to
protract litigation through jurisdictional questions, draining victims of the
funds necessary to support the litigation. Brussels I gives victims a real
chance to plead their case before home state courts, and thus attract more
public attention to the alleged wrongdoings of MNEs that sometimes paint a
‘socially responsible’ picture to their consumer base in the global north.
Finally, the concern of fighting such a claim on its substance pushes major MNEs
like Royal Dutch Shell to offer
out of court settlements to victims for amounts much greater than they
would have offered in the absence of such concern. Although such settlements
prevent the development of legal precedent in this area, they provide much
needed relief to individual victims.
If the UK leaves the EU and no
longer complies with Brussels I, without a post-exit deal between the two
entities that incorporates equivalent provisions, the FNC defence is likely to
be resurrected in business and human rights litigation against MNEs domiciled
in England. This would be a big step back for access to justice in England for
overseas victims of business abuse.
Barnard & Peers: chapter 9,
chapter 27
Photo credit: the times.com
JHA4: chapter II:8
No comments:
Post a Comment