Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents

Memorandum submitted by Richard Hermer QC and Rachel Chambers


  These submissions are premised upon the following simple but fundamental principles:

    — Those who commit, or are complicit in, human rights abuses must be held accountable.

    — The victims of such abuses should be afforded practical and effective means of redress.

    — The above principles should not be dependent upon the status or the legal personality of the Defendant. It should be irrelevant whether those who commit, or are complicit in, human rights abuses are individuals, governments or corporations.

    — It should be the responsibility of government to ensure that practical effect is given to the realisation of these principles.

  These submissions are also based upon the following facts:

    — That human rights law and its concomitant enforcement mechanisms are at present primarily addressed to the responsibility of nation-states, an understandable fact in light of the events of history from which they were borne, but one that fails to reflect the complexity of the modern world.

    — That Multi-National Corporations ("MNCs") have been identified in many cases as committing or being complicit in human rights abuses across the globe.

    — That existing international human rights law is currently ill-equipped to deal with this phenomena.

    — That the various voluntary agreements brokered by the UN and the OECD, amongst others, do not provide adequate enforceable mechanisms for accountability and redress.

  As will be seen from the short biographies attached, the authors are able to assist the Committee with analysis as to the effectiveness of "regulatory" mechanisms, in particular experience of the OECD Guidelines in both the United Kingdom and Australia. This submission focuses in the main however upon the availability of remedies in tort law. In the absence of either national legislation providing enforceable mechanisms for justice, or international frameworks that meet the same aims, domestic tort law presently provides the most suitable and effective framework for accountability and redress against MNCs with links to the UK.

  Accordingly, this submission will address questions seven and eight from the Committee's Call for Evidence. In respect of number seven it will focus on the existing legal and regulatory framework and identify obstacles to seeking and obtaining an appropriate remedy within this framework. The obstacles will be divided into two categories: legal and practical. The particular problems faced by individuals from other jurisdictions who have no local options for seeking remedy and therefore must turn to the UK Courts will be highlighted within both categories. The submission will go on to address question 8 using the same sub-headings as those under question 7.

Question 7:  Does the existing legal, regulatory and voluntary framework provide adequate opportunity to seek an appropriate remedy for individuals who allege that their human rights have been breached as a result of the activities of UK businesses?

  Tort law is an imperfect vehicle for ensuring accountability and redress for victims of human rights abuses. As set out below, our common law system has yet to develop a clear body of jurisprudence that addresses many of the major issues that are capable of arising in litigation of this nature. A series of cases brought over the past few years has demonstrated that it can provide, in certain circumstances, effective remedies for victims. Further law reform is however required.


Cause of action

  The causes of action used in human rights cases are generally torts relating to trespass to the person such as battery, assault, false imprisonment and torture; the tort of intimidation; the tort of negligence; or breach of contract. These torts are well established in the common law. A difficulty arises however if an associate of the UK business such as a supplier or partner commits the trespass rather than the business itself. In this scenario the UK business may be found to be negligent, if for example it has failed to observe health and safety precautions, or it might be found to have acted deliberately by procuring the tort; conspiring to injure the individual or through agency or vicarious liability. These are developing areas of law and the exact requirements to prove the necessary connection between the business and its associate have yet to be established by the Courts.

  Another obstacle arises when the associate that commits the trespass is a subsidiary. The difficulty in holding a parent company liable in this (common) scenario is that corporations are legally distinct from their shareholders. Thus a "corporate veil" exists which establishes a separate juridical personality for each corporation and protects shareholders (including corporate shareholders such as the parent company) from liability for corporate activities beyond the extent of their investment. The Courts have shown themselves unwilling to lift the corporate veil in order to prevent parent companies taking advantage of limited liability in relation to tort liability, although some exceptions to the principle have been established. In practice thus far the most common means of establishing liability of the parent company is through direct liability. This involves showing that the parent is so directly involved in the acts leading to the legal claim as a contracting party or a joint tortfeasor, that it is directly liable for them. This approach shares the legal uncertainties described in the paragraph above. The position is even more complicated in circumstances in which the UK business is merely a shareholder in a relevant company.

  The Courts have yet to assess whether Article 6 of the European Convention on Human Rights will materially impact upon the ability of the "corporate veil" to protect parent companies against actions premised on the acts of their subsidiaries. Much will depend in this respect on whether the concept is deemed to be a procedural or a substantive bar to access to the Court (only the former is capable of engaging Article 6).

Choice of laws—substantive law and damages

  On 11 January 2009 EU regulation no. 864/2007 on the law applicable to non-contractual obligations (Rome II) became law in the UK. Article 15(c) provides that the assessment of compensation will be governed by the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred. This is significant given that the damages awarded on the UK scale will often be substantially more than those awarded under local scales, particularly those in developing nations. With respect to the law governing the substantive issues, the Private International Law (Miscellaneous Provisions) Act 1995 provides that the applicable law is that of the country in which the tort was committed. This can present individuals with difficulty if for example tort law is not well developed in that country or if an amnesty has been passed exempting violators from liability. Section 12 of the Act does however provide the UK Courts with a discretion to displace the general rule where they see fit and section 14 provides an exemption to the application of foreign laws when they would conflict with principles of public policy.


  The Foreign Limitation Periods Act 1984 provides that the law governing the substantive issues applies to the limitation period. There is an exception to this principle, based on public policy, where its application would result in undue hardship for a person who is or might be made a party to the proceedings. Assuming that UK law does apply, the limitation period for claims in negligence, nuisance or breach of duty where the damages claimed include personal injuries is three years. For simple breach of contract and tort claims the limitation period is six years (Limitation Act 1980). A discretion is conferred on the Courts to exclude the time limit in actions for personal injury or death where they consider it would be equitable to do so. Victims of human rights violations must first discover they may have legal recourse through the UK courts, and then face such difficulties as identifying lawyers and finding funds to cover costs. In these circumstances issuing proceedings within the limitation period is often a problem.

  The presumption that the limitation period of the foreign jurisdiction applies has also been entrenched in Rome II in a manner which might well make it more difficult to apply the exception clauses.

Group/class action

  Provision for such litigation allows a large number of individual Claimants to bring, before a single Court, similar claims against a Defendant company. This is relevant given that there are frequently multiple victims of human rights violations by MNCs. In ordinary proceedings where representative parties, as Claimants or Defendants, represent numerous persons having the same interest in the matter a Court may make a group litigation order ("GLO").[85] This provides for the case management of claims which give rise to common or related issues of fact or law. Any judgment or order given on a GLO issue is binding upon other parties on the group register. The GLO is an "opt-in" system (Claimants must issue proceedings and then apply to join the group register in order to participate in a GLO), which contrasts with the "opt-out" systems of Australia, Canada and the United States (where all potential Claimants are presumed to participate). The GLO schema does not address various important issues associated with the conduct of group litigation, such as judicial approval of settlement agreements and limitation periods (these issues are covered in the "opt-out" system in Australia).



  Most cases of the type under consideration are excluded from public funding and must therefore be funded through a conditional fee agreement ("CFA"). There is an expectation that a prospective litigant entering into a CFA will, if they do not already have some form of insurance cover, take out after-the-event insurance to cover their potential liability for their opponent's costs. There are several companies which offer this type of insurance; however it is a hurdle for any victim of a human rights violation by a UK business to find a willing insurer and the funds to pay the insurance premium. Individuals seeking to enter into a CFA must have sufficient prospects of success in the proposed litigation to make such an agreement financially viable for the legal representative. The prospects of success will inevitably be lower when there are jurisdictional difficulties in bringing the claim; when the cause of action is relatively new or untested; or when it is unclear who the Defendant is (local subsidiary or parent company). Such factors might all be present in a claim against UK businesses.

Lawyers willing to take on the cases

  This is linked in a large part to the section above. Since cases are generally funded through CFAs, law firms must be in a position to take on the risk of losing and to afford the up-front costs of investigating the claim, commencing the litigation etc. In these circumstances such costs may well be substantial due to the fact that the individual Claimants live overseas and the law of the relevant jurisdiction must be investigated. At present claims against corporations have invariably been conducted on behalf of Claimants by Leigh Day & Co—few others have had the resources or commitment to undertake such work.

Action by UK businesses

  There is usually an enormous disparity in resources available to the parties to litigation. Defendants are often able to deploy considerable funds to the ligation and utilise the services of libel lawyers and public relations firms to seek to control media coverage of the claims.

Question 8:  If changes are necessary, should these include: Judicial remedies (If so, are legislative changes necessary to create a cause of action, or to clarify that a cause of action exists; or to enable claims to proceed efficiently and in a manner that is fair to both Claimants and respondents).

  As stated above, the authors of this submission are in a position to assist the Committee in respect of the need for regulatory change both at the domestic and international levels. At this stage however the submissions are confined to tort law.


Cause of action

  In an area as important as this, there should no room for uncertainty. Companies need to know what they are permitted to do and what is prohibited. They need to understand clearly what their obligations are in respect of subsidiaries and companies in which they are significant shareholders. Uncertainty prejudices business as well as victims.

  There is a need to ensure that there is clarity as to the legal basis upon which a company can be liable in damages for its role in the "supply chain" and for the acts of its subsidiaries (and the basis of that liability) including the circumstances in which the corporate veil can be pierced. This cannot be left to the Courts to develop but should be addressed by Parliament. By way of example only, there could be a reversal of the burden of proof in certain cases so that the parent company with a controlling interest in a subsidiary would automatically be liable for negligence along with that subsidiary unless the parent can demonstrate it took all reasonable steps to prevent the damage or injury occurring.[86]

Choice of laws—substantive law and damages

  Legislative change would be difficult to effect given that this area of law derives from European Law. However the Courts need to be open to exercising the discretion afforded by the Private Law (Miscellaneous Provisions) Act 1995 in favour of individuals bringing human rights claims again UK businesses. As noted above, this discretion enables the judiciary to displace the general rule (that the applicable law is that of the country where the tort was committed) when it is clear that the law of the state in which the violation has occurred will not provide an appropriate remedy. One possible legislative change is that the "public policy" exception could be specified as being applicable where to apply a foreign law (instead of English law) would allow a Defendant to escape liability for serious human rights abuses.

  The powers to displace the general rule on choice of law are also contained in Rome II and may therefore be used to determine the question of the applicable law on the assessment of damages. The same degree of clarity is required in respect of ensuring that Rome II does not apply foreign limitation periods in a manner that will unjustly "shut out" victims of human rights abuses.

Group/Class Actions

  It is not suggested that the US model of "opt out" class actions would necessarily increase access to justice for victims nor be capable of being successfully transplanted into this jurisdiction. There are however elements of the US system that do offer some advantages. A more expansive approach to "representative actions", flexibility in locus standi in private law claims and the use of anonymity for victims in carefully defined circumstances may well facilitate claims from countries in which victims are too remote or simply too frightened to fully participate in litigation.


Funding & Lawyers willing to take on the cases

  Legislative change is required to expand the provision of public funding to cases against UK businesses brought by individuals from overseas, particularly less developed nations, for whom costs will be a prohibitive factor in their pursuit of remedy. This is to ensure not only that they may have access to justice through the UK Courts, but also that they will be able to find lawyers to represent them. Furthermore in cases in which after-the-event insurance is unavailable, consideration should be given to widening the Courts' jurisdiction to impose "Protective Costs Orders" so that they are available in suitable cases in which a Claimant has a private interest in the litigation.

Action by UK businesses

  There is perhaps little that Parliament can do directly to curtail the ability of large corporations to seek to "defend their reputation" by deployment of often limitless funds. The excesses of such companies in the course of litigation should however be a matter of concern to the Courts and might for example be a basis for extending the availability of exemplary damages and/or a punitive element in costs awards when such methods have been used in an oppressive manner.

  Richard Hermer QC is a specialist in international and human rights law. He has been instructed in many of the claims brought against MNCs in the domestic courts in recent years, including the Colombian case against BP and the pending case against Trafigura concerning the alleged dumping of toxic waste in the Ivory Coast. He is an external member of the Advisory Board to the UK's National Contact Point (OECD Guidelines). In 2000 he was appointed the first "Human Rights Practitioner in Residence" at Columbia University New York, where his research field was international human rights and corporate responsibility.

  Rachel Chambers is a practicing barrister. In 2004 she was appointed Research Fellow at Monash University, Melbourne where she specialised in the accountability of corporations for human rights violations. Her publications include "The Unocal Settlement: Implications for the Developing Law on Corporate Complicity in Human Rights Abuses" 13 No. 1 Hum. Rts. Brief 14 (2005); "The UN Human Rights Norms for Corporations: The Private Implications of Public International Law" co-authored with Professor David Kinley Vol. 6 No. 3 Human Rights Law Review 447 (2006) and "Human Rights Translated: A Business Reference Guide" (2008) co-authored with Professor Sarah Joseph. Working with local NGOs she has issued a complaint under the OECD Guidelines in Australia.

Richard Hermer QC

Rachel Chambers

85   Part 19 of the Civil Procedure Rules 1998. Back

86   This option was proposed in the CORE Paper "Corporate Abuse in 2007: A discussion paper on what changes in the law need to happen" (written by Jennifer Zerk). Back

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