Harmonizing Multinational Parent Company Liability for Foreign Subsidiary Human Rights Violations

63 Pages Posted: 4 Sep 2016

Date Written: August 31, 2016

Abstract

A notable development of recent years has been the simultaneous legal invisibility and ubiquity of the giant multinational corporation where its subsidiaries operate elsewhere under legal structures that preserve the parent company from liability for the subsidiary’s conduct. This article focuses on multinationals whose parent company is at home in a developed country and subsidiaries operate in a developing state, and specifically where the foreign subsidiary is alleged to have violated norms of universal human rights. It examines current legal theory, and offers a comparative perspective on legislative and judicial traditions and innovations in several home states of large multinational parent companies, including an exposé of relevant aspects of the new Restatement (Fourth) of Foreign Relations Law of the United States, still in draft form, but approved by vote of the American Law Institute membership in May, 2016. Its overall goal is to explore transnational legal harmonization possibilities.

In the aftermath of the Second World War and its upheavals, the 1948 Universal Declaration of Human Rights formed the basis of subsequent international human rights concepts, and may thus serve as a point of departure when considering victim rights, however much narrower legal rights may remain than their theoretical underpinnings. In the current era of transnationalization and deterritorialization, law has produced new challenges to human rights as circumstances have altered and destabilized existing structures. We have seen the ability of large corporations to operate across the globe beyond the reach of states with stricter human rights standards of conduct than often exist in the developing world, in part because universal human rights so far have had little claim in practice to universality or to the extraterritorial jurisdiction of courts. In the United States, jurisdictional standards have tightened since the Supreme Court Kiobel and Daimler decisions.

Both of those decisions undertake to further comity, however, and recent legal developments in several countries, particularly in the area of legislation and court decisions, suggest that harmonization might yet eclipse enough of the divide among legal regimes of different nations to bring foreign subsidiaries’ violations of human rights under extraterritorial jurisdiction, or, alternatively, to reconfigure the appropriate legal theory such that extraterritoriality ceases to be an issue. These developments, appropriate to a transnationalizing world and what may evolve in its wake, suggest the potential for increasing international and national laws’ respect for human rights issues in a variety of ways that need not be mutually exclusive.

Keywords: Multinational corporations, parent company liability, foreign subsidiary human rights violations, international human rights, comparative law, transnational legal harmonization

Suggested Citation

Curran, Vivian Grosswald, Harmonizing Multinational Parent Company Liability for Foreign Subsidiary Human Rights Violations (August 31, 2016). Chicago Journal of International Law, Forthcoming, U. of Pittsburgh Legal Studies Research Paper No. 2016-24, Available at SSRN: https://ssrn.com/abstract=2832915

Vivian Grosswald Curran (Contact Author)

University of Pittsburgh - School of Law ( email )

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Pittsburgh, PA 15260
United States
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