Anil Yilmaz Vastardis, Lecturer in Law, Human Rights Centre, University of Essex
Following the UK’s decision to leave the European Union, there is widespread uncertainty about the future. While political questions about the UK’s exit dominate the discussion, the consequences extend far beyond, impacting individuals worldwide, including victims of human rights abuses perpetrated by British corporations. A key concern revolves around the fate of EU laws implemented in the UK, either through legislation or direct application.
The Brussels I Regulation, a crucial piece of EU law, governs jurisdiction for member state courts and the enforcement of legal judgments in civil and commercial matters within the EU. There are predictions that the UK’s adherence to the Brussels I regime will see significant changes, potentially even complete replacement, post-Brexit. The chosen approach will have ramifications for overseas human rights victims seeking to sue multinational enterprises (MNEs) in UK courts.
Jurisdiction in Cases Against Multinationals Based in England
Increasingly, human rights advocates are filing lawsuits in developed countries to hold MNEs responsible for abuses committed by their overseas branches. They often pursue legal action in the MNE’s “home” country (where it is headquartered - see Article 60 of Brussels I) due to factors like inadequate legal systems in the host state or financial instability of the subsidiary. England, with its concentration of multinationals and supportive environment for innovative litigation, has emerged as a preferred jurisdiction for such cases against UK-based MNEs. Victims typically seek compensation from the parent company based on common law principles of tort. However, despite their efforts, legal hurdles in these developed countries often hinder attempts to establish parent company liability. Jurisdiction rules pose a significant challenge.
Historically, the forum non conveniens (FNC) doctrine presented a major obstacle to suing England-domiciled MNEs for harm caused by their subsidiaries abroad. The FNC allows English courts to decline jurisdiction if a more appropriate forum exists, considering factors like evidence and witness location. Numerous cases in England faced delays due to disputes over FNC, requiring claimants to demonstrate a substantial denial of justice in the host state to establish English jurisdiction (see Connely v RTZ Corporation, Lubbe v Cape Plc).
Article 2 of Brussels I, as interpreted by the Court of Justice of the European Union (CJEU) in Owusu v Jackson, effectively prevents English courts from using the FNC doctrine in civil liability cases against MNEs domiciled in England. Article 2 dictates that individuals domiciled in a Member State are subject to lawsuits in that state’s courts, regardless of their nationality. It doesn’t specify whether this applies to events or harm occurring outside the EU. In Owusu v Jackson, the CJEU clarified that Article 2 prevents member state courts from declining jurisdiction based on a more appropriate non-EU forum. Therefore, jurisdiction applies to UK-domiciled MNEs even if the dispute has connections to a non-EU state.
Preventing Years of Jurisdictional Battles
The combined effect of Article 2 and the Owusu ruling has eliminated lengthy litigation surrounding the proper jurisdiction for lawsuits against England-domiciled MNEs. While adjudication in English courts doesn’t guarantee parent company liability, which hinges on case specifics and the applicable law (likely that of the country where the harm occurred - see Article 4 of the Rome II Regulation), it streamlines the process.
Overcoming the FNC defense holds significant implications. While no ruling has yet held a parent company liable for a subsidiary’s actions, lawyers confidently file strategic cases in English courts, knowing they won’t be bogged down in jurisdictional challenges. MNEs have fewer opportunities to exploit jurisdictional issues to delay proceedings, sparing victims from depleting resources fighting for their cause. Brussels I offers victims a genuine opportunity to present their cases in the MNE’s home country, drawing public attention to corporate wrongdoing that often contrasts with their carefully constructed images of social responsibility. Furthermore, the potential for substantive claims compels some MNEs, like Royal Dutch Shell, to offer out-of-court settlements to victims exceeding what they would have considered otherwise. While such settlements may preclude legal precedent, they provide essential relief to those affected.
Should the UK leave the EU without a post-exit agreement maintaining equivalent provisions to Brussels I, the FNC defense could reemerge in business and human rights litigation against England-domiciled MNEs. This would severely hinder access to justice for overseas victims of corporate abuse seeking redress in English courts.
Barnard & Peers: chapter 9, chapter 27
Photo credit: the times.com
JHA4: chapter II:8