Multinational Enterprisess Liability for the Acts of Offshore Subsidiaries: The Aftermath of Kiobel and Daimler

Abstract

Multinational enterprises (MNEs) play significant role with worldwide subsidiaries in the global economy. MNEs generally dominate agreements with their offshore subsidiaries to promote their global operation. How to hold MNEs liable for the tortious acts of their offshore subsidiaries is a pressing issue. National courts, international norms and MNEs’ internal code of conduct cannot legally and effectively hold MNEs liable for offshore subsidiaries’ tortious acts. After the Supreme Court case Filartiga v. Pena-Irala in 1980, the U.S. Alien Tort Statue (ATS) rose to provide a mechanism to hold MNEs liable for offshore tortious acts. Suits filed under the ATS have caused conflict in United States courts in the past, including those related to the issue of corporate ATS liability. The Supreme Court in Kiobel v. Royal Dutch Petroleum Co. in 2013 asserted that the ATS could only apply to violations occurring within the territory of the United States. Half a year later, with facts similar to those in Kiobel, the Supreme Court in Daimler AG v. Bauman in January 2014 asserted that ATS litigation should also satisfy the strict general jurisdiction requirement. And thus many cases are filtered out of United States courts due to ATS territorial limitation and jurisdictional limitation. Barriers to post-Daimler litigating under the ATS to hold MNEs liable for the tortious acts of offshore subsidiaries are difficult to pass through. These barriers could include the principle of presumption against extraterritorial application, the limitation of personal jurisdiction, and international comity, among other barriers. The United States seems to have closed the door for transnational litigation to hold MNEs liable for the tortious acts of offshore subsidiaries. Even though United States courts are returning to their original position prior to the rise of ATS litigation, several strategies to impose liability on MNEs for the acts of offshore subsidiaries after Kiobel and Daimler might achieve success, including the correct application of the ATS, litigation in state courts or under state law, the expansion of the piercing the corporate veil doctrine and obtainment of consent from parties.