"Suing Goliath: An analysis of civil cases against EU companies for overseas human rights and environmental abuses", 28 September 2021

From energy to food to electronics, European companies are failing to prevent appalling human rights abuses and environmental harm perpetrated overseas by their subsidiaries, suppliers and subcontractors. A new report by ECCJ argues that the EU must make it easier to enforce corporate due diligence rules and give affected people an avenue for judicial remedy.

The report looks at 22 major recent civil cases against EU companies, and identifies serious and systemic barriers to justice preventing victims of business-related abuses from accessing judicial remedy.

Most national legal systems do not provide for parent company and value chain liability for human rights abuses and environmental harms. To rectify this, the future EU directive on Sustainable Corporate Governance must include a parent company and value chain liability regime that allows victims to claim damages as well as injunctive relief before EU courts.

Even where accountability standards can hold corporations liable, claimants often face insurmountable obstacles. 

First, cases are often heard based on the law of the country where the harm occurred, not where the parent or lead company is headquartered. 

Second, in most cases brought to EU courts so far, whether it relates to the collapse of the factory or the pollution of a river, harm is suffered by a collective of people. However, national legal systems do not always allow for a large number of claimants to seek compensation collectively...

...The regulatory gaps are clear:

• Of all civil proceedings analysed, only two have so far resulted in judgments favourable to the claimants, both against Royal Dutch Shell.
• No final judgment has so far ordered an EU company to pay compensation for damages.

The lack of consequences for the negligent management of human rights and environmental impacts in global value chains means there is little incentive for companies to address those impacts.

This has started to change recently. In 2017, France adopted the Duty of Vigilance Law, and Germany and Norway adopted similar laws in 2021. Jurisprudence has also recently advanced civil liability of multinational companies for their impacts in their global value chains under Common Law.

The future EU directive should not merely enshrine a corporate due diligence duty, but also establish consequences for non-compliant companies and ensure access to judicial remedy for victims when businesses fail to take adequate action...