Parent Company Responsibility of Corporations for the Acts of Their Overseas Group Subsidiaries (The European Union / United Kingdom Perspective)

Abstract

Nowadays we are witnessing multinational corporations (“Multinationals”) growing to be more powerful than certain countries. Joel Bakan perceives this “dramatic rise to dominance [as] one of the remarkable events of modern history” (emphasis added). But is this ‘rise’ in fact ‘fall’ for human rights protection or the ratio is not always an inverse one? Where does this ‘rise’ fit in the society expectations equation: Necessary Respect of Human rights = Corporations’ Aiming at Profit (what exactly)?One answer to the question of the missing element can be: parent company responsibility for the acts of their overseas group subsidiaries. Engaging such type of corporate liability is an issue subordinated to Corporate Social Responsibility (“CSR”) implications, because as it is argued below, from CSR point of view, law and its dynamics can be regarded not only as the sanitary minimum for compliance, but also as the necessary basis and impulse for development of the CSR agenda and thus for assumption of higher levels of responsibility by the Multinationals.In order to fully provide for proper appreciation of these submissions, this paper examines first the European Union’s (“EU”) CSR positon by colliding two approaches: one which takes due account of the effects of the EU legislation, CSR policy making and EU case law and another which is more stricter and formalistic in estimating the EU’s achievements in the area of such type of parent company liability (see Section B below).Next, as the United Kingdom (“UK”) provides the most sound examples which truly shed light on the matter at national level an analysis from two different angles is presented. The first angel is the tort claims’ admissibility issue (i.e. whether the court has jurisdiction to adjudicate over a given case) and the second is the ‘in substance’ issue (i.e. the question of the most appropriate liability doctrine) (see Section C below). Finally, the paper aims at giving an objective and critical review of the CSR consequences of engaging of such type of parent company responsibility by presenting both its positive and negative effects (see Section D below).