In April 2013, a factory collapsed in the Savar subdistrict of Bangladesh, killing more than 1100 people and injuring thousands more.  Subsequent reports revealed substandard working conditions, overcrowding and shoddy construction of the factory itself.  Remedy for victims was largely handled through informal and non-judicial means.  

Rana Plaza, while not the first tragedy of its kind, was a call to action.  In the same year, we formed a research consortium of over 20 leading academic scholars and practitioners across 6 European Union (EU) Member States and coordinated by the Global Institute for Democratic Governance in San Sebastian, Spain.  Our project implementation began in 2014 along three main work streams: to research, teach, and disseminate solutions for business and human rights challenges for cross border litigation in the EU.

The particular focus of our project concerns the third pillar of the United Nations Guiding Principles on Business and Human Rights: greater access by victims to effective remedy, both judicial and non-judicial. Our research focused on the following question:  How do we provide justice in the EU for human rights violations committed abroad by EU companies?

We believe the solutions lie in the removal of barriers, both legal and practical, to provide effective access to remedy.  Our research results focus on providing concrete and feasible recommendations directed to EU institutions and Member States concerning judicial remedies and issues related to jurisdiction and applicable law, corporate obligations regarding duties of care and non-judicial remedies; specifically, company-based grievance mechanisms and international arbitration.

On issues related to jurisdiction, we recommend that EU Member States’ courts reverse the foreseeability test applied in the European Court of Justice (ECJ)’s Painer case to put the burden on the defendant company to prove that it was unforeseeable that a parent company may be held jointly liable with its subsidiary.  Moreover, Member States should consider allowing their domestic courts to exercise jurisdiction over civil claims concerning business-related human rights abuses against foreign subsidiaries of companies domiciled within their jurisdiction if such claims are closely connected with civil claims against the latter companies.  Where companies are not domiciled within their jurisdiction, EU member States should consider the possibility of allowing their domestic courts to exercise jurisdiction over civil claims concerning business-related human rights abuses against such a business enterprise, if no other effective forum guaranteeing a fair trial is available (forum necessitatis) and there is a sufficiently close connection to the Member State concerned.  Member States should also consider introducing a rebuttable presumption of control in determining a subsidiary’s central administration; a wholly owned or majority-owned subsidiary is presumed to have its central administration with the parent company, unless the parent can prove that the subsidiary makes business decisions independently from the parent and has no ties with the parent’s place of incorporation.

Concerning applicable law, we recommend that the Rome II Regulation’s special rule on environmental damage be extended to human rights-related damage as well as, possibly, health & safety-related damage.  Regarding practical barriers action should be taken by the individual Member States as well as at the EU-level to prevent procedural rules and practical circumstances, especially those relating to costs, collective redress and access to evidence, from resulting in a denial of justice for victims of corporate abuse.

Considering the corporate responsibility to respect human rights, we put forward three possible scenarios for legal reform.  On access to evidence, we recommend introducing a specific disclosure obligation in civil court procedure about the control a parent company exercises over its subsidiaries and contractors, which would allow claimants to request the court to order a company-defendant to disclose all details of the control over and management of its subsidiaries and contractors, its involvement in the specific case connected to the claim.  

In the second scenario, we suggest that a court should be required to accept prima facie evidence that a company exercises control over its subsidiaries or other business partners, and then shifts the burden of proof to the company to prove that it did not exercise such control.

The final recommendation is to make human rights due diligence (HRDD) compulsory by creating statutory duties to identify, prevent, mitigate and cease human rights abuses for which the company conducting the HRDD is directly or indirectly responsible, and by providing remedies (damages, injunctions) in case such duties would be breached.

Concerning non-judicial remedies, in particular, company-based grievance mechanisms, companies should establish independent entry channels for filing complaints that are dealt with by (ideally: external) stakeholders who strive to achieve equitable solutions for all parties.  Moreover, confidentiality should be ensured for individual complaints.  Information concerning the grievance mechanism should be provided to (potential) victims of corporate-related human rights abuse so that they have adequate knowledge about channels available to obtain redress and can choose the best option according to their specific situations.  Such information should be delivered in a culturally and linguistically appropriate way that takes into account fear of reprisals.  Concerning international arbitration, we recommend that the EU Member States give a mandate to the Permanent Court of Arbitration (PCA) to adopt a set of arbitration rules in disputes relating to corporate related human rights abuses.  Such rules should provide for transparency, amicus curiae participation, collective redress, site visits, specialized arbitrators, financial assistance, and oversight of the implementation of the award.  Moreover, EU Member States should give a mandate to the PCA to adapt the Financial Assistance Fund to provide financial assistance to non-state parties when the subject matter of the dispute involves corporate related human rights abuses.

It is our hope that our research results lead to more concise and effective legal reforms so as to promote access to justice for corporate related human rights abuses in the EU.  The challenge to adapt to the needs of an ever-increasing globalized economy without compromising fundamental values and human rights is however, collective and cross-border.  Implication is requested from all global citizens.

The Human Rights in Business project, co-funded by the European Commission DG Justice and coordinated by the Globernance Institute for Democratic Governance, shares key project deliverables: an executive summary of research results and a Practical Handbook for Civil Society Organizations and Human Rights Defenders for access to remedy in the European Union for corporate related human rights abuses. The Handbook is freely available for download in English, French, Portuguese, and Spanish.