Direct Parental Negligence Liability: An Expanding Means to Hold Parent Companies Accountable for the Human Rights Impacts of Their Foreign Subsidiaries

Abstract

In order to provide access to remedy for victims of human rights impacts and encourage parent companies to prevent future impacts by their foreign subsidiaries, there is a need for national courts to apply tort law duty of care obligations to parent companies. This paper argues that parent companies with high levels of control or supervision of their subsidiaries owe a direct duty of care to those whose risk of injury is foreseeable. When these parents act negligently – failing to meet this duty of care or exercise due diligence – in controlling the actions of their subsidiaries, they should be held directly liable. The paper aims to clarify why and how parent companies can be held liable for failing to exercise a requisite duty of care in controlling the acts of their subsidiaries when human rights impacts result. First, the need to turn to conventional tort litigation of human rights impacts in the wake of Kiobel is discussed. Next, the paper discusses the normative justifications for holding parent companies accountable and gives a short overview of alternative approaches to doing so. The paper then turns to two recent decisions that have opened up the ability to bring direct parental negligence claims and that should serve as examples for other courts, especially those operating under common law tort principles. In the U.K., the court in Chandler v. Cape held a parent company owed a direct duty of care to the employees of its subsidiary and that that duty was breached. In Canada, the Choc v. Hudbay court found that a parent company may owe a direct duty of care to a Guatemalan indigenous community whose rights were violated by a subsidiary of a Canadian parent company. Finally, the conformity of these decisions with international human rights law principles will be considered.