Rights as Usual

This blog post by Dr Ekaterina Aristova is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Dr Aristova is Leverhulme Early Career Fellow, Bonavero Institute of Human Rights, University of Oxford.

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In April 2023, I had the pleasure of presenting at the symposium ‘Colonisation in, of and through Business & Human Rights’ convened by Tilburg University. My contribution focused on the adjudication of human rights and environmental claims involving transnational corporations (TNCs) in the courts of their home states in relation to the harm arising from overseas operations. Foreign claimants often seek justice in the courts of TNCs’ home state because host states are unwilling or unable to address corporate human rights abuses committed within their jurisdiction. Yet, the exercise of jurisdiction under private international law by the home state courts may be said to be an interference with the internal affairs of the host state or even amount to a form of neo-colonialism. How can we resolve this puzzle? When is it reasonable for a home state court to adjudicate a dispute about human rights and environmental performance of its TNC if the events leading to the abuse have occurred in a foreign state?

The sovereignty concerns of host states regarding extraterritorial human rights protection by the Western states should not be discarded lightly. At the same time, I don’t think that acceptance of jurisdiction by a home state court in a case involving human rights or environmental performance of a TNC should be automatically considered imperialistic. I will share some thoughts about the jurisdictional reasonableness test in this blogpost and suggest a list of factors that may be used in evaluating the legitimacy of an exercise of adjudicative jurisdiction in business and human rights litigation. Often, the home state court is the only avenue available to the victims of business-related human rights and environmental abuses.

Before I frame an argument, a few points should be highlighted. First, I approach business and human rights litigation in home state courts as one of the many avenues to enhance corporate accountability. I do not consider it a more effective or legitimate approach than remedies available to the claimants in the host state or any other forum. In an ideal world, individuals and local communities affected by corporate abuses should have access to domestic judicial remedies, but this is not always the case. Second, the analysis of jurisdictional issues surrounding litigation against TNCs presented in this piece is a very short summary of substantial research from my forthcoming book, ‘Tort Litigation against Transnational Corporations in the English Courts: The Challenge of Jurisdiction (Oxford University Press 2024). In this work, I address a normative argument about the limits of adjudicative jurisdiction over business and human rights claims in-depth.

The Problem of Jurisdiction

Adjudication of human rights and environmental claims against TNCs in the Western states is an established trend. In the US, claimants from all over the world had high hopes that the Alien Tort Statute (ATS) would provide them with redress for harm they suffered from the operations of TNCs. Other jurisdictions, including Canada, several EU Member States and the UK, witnessed over the last few decades an emergence of civil liability claims alleging a breach of the parent company’s duty of care in relation to the activities of its subsidiaries and suppliers abroad. More recently, there has been a surge in climate change litigation against corporate actors. Individuals and communities from host states have different incentives to commence litigation in the home states, ranging from weak local remedies to provide redress to a more favourable procedural environment of Western states to pursue a class action.

The question of jurisdiction is one of the most central and important aspects of business and human rights litigation. The decision of the court of the home state to accept jurisdiction has the potential to open the door for claimants to proceedings before experienced jurists and expose TNCs to significant awards of damages. However, at the same time, it may constitute an intervention in the internal affairs of another sovereign state. The dispute often has a strong connection with the territory of the host state in which subsidiaries or suppliers conduct their operations and the claimants sustained their injuries. More importantly, when the home state court declines jurisdiction to hear the claims, and the claimants are unlikely to obtain a fair trial in the host state, the question is whether litigation can proceed at all in any forum. Business and human rights litigation against TNCs triggers many narratives about the scope of adjudicative jurisdiction, including the location of the appropriate forum, the limits of extraterritoriality, and the suitability of the existing connecting factors under private international law to capture peculiarities of cross-border business operations. Moreover, the so-called ‘delocalised justice’ by the home states raises concerns about the sovereignty, self-determination and legal and economic development of the host states (Boggio 2006; Duval and Plagis 2021).

Narrative of Judicial Imperialism

The sovereignty objection and imperialistic critiques in the business and human rights literature often build on the TWAIL (Third World Approaches to International Law) scholarship, which seek to reconsider the history and development of international law and highlights its colonial legacy (see, e.g., Chimni 2004 and Anghie 2005). Sara Seck refers to the ‘impoverished sovereignty’ of Third World states as opposed to the full sovereignty enjoyed by Western states. Oyeniyi Abe highlights the imbalances of power and negotiating capacity between non-state actors and the African states. Using a TWAIL lens, Caroline Omari Lichuma and Debadatta Bose scrutinise human rights due diligence legislation adopted by Western states. The adjudication of disputes under the ATS has drawn strong criticism about US courts becoming the ‘world courts’ (see, for instance, Bradley 2001 and Moore 2016).

On the other hand, some commentators call for a more nuanced approach to assessing legitimate limits of extraterritorial home state regulation and the adjudication of disputes against TNCs (among these voices are Seck 2011, Chambers 2018, Palombo 2022). Jennifer Zerk also reminds us that the interests of individuals and communities in the host states can differ from those of the governments of host states. By way of example, the right of an employee to safe and healthy working conditions can be undermined by the actions of the host states to lower the regulatory requirements with an aim of protecting foreign direct investment.

Jurisdictional Reasonableness Test

I join scholars who place rightsholders at the centre of the debate about the adjudication of human rights and environmental claims against TNCs. In the absence of an international treaty and effective remedies in the host states, it is feasible that foreign citizens suffering from business-related human rights and environmental abuses will continue to seek opportunities to access justice, including by recourse to the courts of states where the headquarters of TNCs are located. It is also assumed that the assertion of jurisdiction in business and human rights litigation by the national courts of home states necessarily involves some degree of extraterritoriality.

I suggest that the reasonableness of exercising extraterritorial jurisdiction by Western courts could be determined case-by-case by evaluating four factors. The first one is the strength of the territorial nexus between the forum and the dispute. For instance, the claims against English parent companies in English courts for harms abroad have been framed as an alleged breach of duty of care by the parent company. In cases such as Lungowe v Vedanta and Okpabi v Shell, claimants established that parent companies exercised significant managerial control and otherwise supervised group operations, giving rise to an argument that human rights and environmental performance of the subsidiaries were shaped from England and, therefore, strengthened the territorial nexus between the dispute and the forum.

A second factor to consider is the legitimacy of the home state’s interest in regulating overseas operations of its TNCs. The legitimacy of home state regulation derives from the strength and significance of the personal and territorial connections between the home state and the TNC. TNCs enjoy multiple benefits from locating their headquarters in states with a stable economy, favourable tax regime and well-developed legal system. These privileges often come with responsibilities, such as anti-money laundering regimes, disclosure requirements and tax measures. Moreover, home states also receive vast political and economic gains from the overseas activities of their TNCs. It has been widely accepted by the UN human rights treaty bodies that states are required to take necessary steps to prevent human rights violations abroad by businesses domiciled within their jurisdiction within the limits permitted by public international law (for instance and among many others, CESCR 2017). Many Western states have been enhancing their monitoring and control of the human rights and environmental performance of their TNCs, including by way of reporting regimes and human rights due diligence legislation.

The next factor to examine is whether there is a sufficient international support on the assertions of the jurisdiction by the home state courts. It must be remembered that several international organisations have recently encouraged home states to ensure that their domestic courts have jurisdiction over civil claims concerning the overseas activities of local companies domiciled within their jurisdiction and, in certain circumstances, their foreign subsidiaries (International Law Association 2012, section 2 ; Council of Europe 2016, [35]-[36]; European Parliament 2016, [25]; EU Agency for Fundamental Rights 2017, 7-8; UN Draft Treaty on Business and Human Rights 2023, Article 9).

A final factor for analysis is the extent to which the host states where events leading to the dispute occurred object to the adjudication of business and human rights claims by the home states. There are established methods by which host states can express concerns about the exercise of extraterritorial civil jurisdiction, such as diplomatic protests, blocking or retaliatory statutes, the non-recognition of judgments and amicus curiae briefs.

Looking Forward

These suggested factors could serve as a valuable starting point to assess the legitimacy of home states’ assertion of jurisdiction in business and human rights litigation. Ultimately and unavoidably, it will be a balancing exercise that is naturally connected with the broader question of when and how home states should be involved in managing the operations of their TNCs. I reiterate a statement made at the start: home state regulation is not a panacea. Political and economic concerns inform arguments in favour of and against home state regulation, and it is easy to lose the voice of the rightsholders in the debate. Claimants from the affected regions often initiate litigation via one of the few avenues available to them to assert their rights and request a remedy. A multilateral binding framework is arguably a better way to increase access to justice for victims of business-related human rights abuses. However, in the absence of one, labelling home state adjudication as illegitimate and abusive could do more harm than good.