Using Courts

Some advocates look to the courts to seek justice for communities whose human rights have been violated by companies. If the project involves several responsible actors along the investment chain, legal action may be possible in more than one jurisdiction. For example:

It may be possible to sue the company directly responsible for violations in the country where the project and violations are taking place.

If the company managing the project or its parent company is foreign, it may be possible to take legal action in the country where the company is registered.

It may be possible to take legal action against financial institutions backing the project in the countries where the financial institutions are registered.

It may also be possible to sue buyers that have purchased the product produced by the project. It may be possible to bring legal action against a buyer in the country that is importing the product.

If litigation is possible in a jurisdiction with strong rule of law and an independent judiciary, it can be an effective way to hold a company accountable. If the community wins and the judgment is enforceable, the company involved will be legally required to comply with the court order even if the community is in another country. Sometimes, just starting litigation will place enough pressure on the company to persuade it to settle the dispute rather than face the risk of losing the case in court.

There are, however, many obstacles to using courts, including:

Political interference and corruption in courts in many countries;

Weaknesses or gaps in laws and regulations governing the activities that have caused human rights violations;

Lack of legal liability of lenders, investors and buyers in many countries, even though they make the projects possible and receive a portion of the profits;

Difficulty of attributing legal responsibility to one member of a corporate group, such as a parent company, for the activities of another part of the group, such as a subsidiary, when they are registered as separate legal entities;

Limits on extraterritorial — or transnational — jurisdiction. Courts may reject a case because the wrongdoing occurred in another country;

Lengthy court processes that can take many years; and

The high cost of litigation and the difficulty of finding free legal representation. Even if you are able to find a lawyer, there are many other costs involved. In many courts, if you lose the case, the judge may order you to pay the legal fees of the other party, which can be an enormous sum.

RECENT BREAKTHROUGHS IN TRANSNATIONAL LITIGATION

Although transnational litigation is often extremely challenging, costly and unpredictable, in some cases, it is a powerful tool for corporate accountability. Recent decisions in the Netherlands, the United Kingdom, and Thailand indicate that some jurisdictions may be becoming more open to these types of cases. The Dutch court decision in particular (discussed below) set an important precedent for corporate accountability by ordering compensation for harms caused overseas and finding that the parent company holds a legal responsibility to communities affected by its subsidiary.

Dutch Court Ordered Shell to Compensate for Oil Spills in Nigeria

In January 2021, the Dutch Court of Appeal issued a landmark ruling that found Shell Nigeria liable for damage caused by oil spills in 2004 and 2005. The court also held that Royal Dutch Shell, the parent company, owed a duty of care to affected villagers and would be liable for a failure to prevent future oil spills. The case is the first foreign direct liability case to result in an enforceable decision on the merits (the facts and evidence) in favor of claimants. It is also the first to find that a parent company owed a duty of care to claimants residing in another country. It sets a precedent for future transnational litigation.

The case began in 2008 and 2009, when four Nigerian farmers, together with Milieudefensie (Friends of the Earth Netherlands), filed three separate lawsuits in the Netherlands, where the parent company is headquartered. The lawsuits related to devastating oil spills in three different Nigerian villages. The case had to overcome many hurdles along the way, including challenges related to jurisdiction, applicable law and disclosure of relevant company documents. The January 2021 decision requires Shell Nigeria to pay compensation to two of the villages. Litigation regarding the third village is ongoing.

United Kingdom Supreme Court Confirmed Parent Company Duty of Care to People Harmed by Foreign Subsidiaries

In April 2019, the U.K. Supreme Court upheld a 2017 decision of the Court of Appeal affirming the possibility that U.K. mining company Vedanta Resources had a duty of care to Zambian villagers allegedly harmed by the activities of its Zambian subsidiary. The decision allowed the case to move forward to a trial on the merits. In January 2021, the villagers and Vedanta issued a joint statement announcing that they had reached a settlement (an agreement).

The case began in 2015, when Zambian villagers filed a lawsuit against Vedanta Resources and its Zambian subsidiary for allegedly polluting their land and destroying their livelihoods. Vedanta and its subsidiary challenged the jurisdiction of the U.K. courts but lost their Supreme Court appeal in 2019. The ruling is significant because it opens the possibility of a parent company having a duty of care to all those directly affected by the operations of its subsidiaries, including those operating in other countries. However, whether Vedanta actually had a duty of care to the affected community in Zambia was never established because a settlement was reached before it went to trial on the merits.

For an example of how community advocates successfully filed a cross boundary lawsuit in the courts of Thailand for harms caused by a Thai company in Cambodia, see:

CASE STUDY: HOLDING A THAI SUGAR COMPANY ACCOUNTABLE FOR LAND GRABBING

MANDATORY HUMAN RIGHTS DUE DILIGENCE LEGISLATION

As mentioned above, one of the many challenges to transnational litigation is the lack of legal responsibility in many countries for lenders, investors, buyers and even parent companies. A new wave of mandatory human rights due diligence legislation, however, may bring a new era of corporate accountability.

Under the U.N. Guiding Principles on Business and Human Rights, companies have a responsibility to undertake human rights due diligence. There is growing momentum, particularly in Europe, to make this a legally enforceable standard, opening companies to the possibility of legal consequences when they cause or contribute to harm. The trend began with the French Duty of Vigilance law, adopted in 2017, which creates binding obligations for companies and judicial pathways for victims. While this legislation is groundbreaking, it has some notable weaknesses. For example, there have been challenges identifying which companies are covered, many companies are not publishing comprehensive vigilance plans, and there is no official government monitoring of companies’ implementation of the law. The first two legal proceedings under the Duty of Vigilance law have been brought against French oil company Total. The first was dismissed by the civil courts in 2020 based on lack of jurisdiction, but in February 2021, a French civil court ruled that it had jurisdiction over the second.

Norway and Germany have recently adopted human rights due diligence laws, which are expected to come into force in 2022 and 2023, respectively. Similar laws are being actively considered at the European Union level, as well as in the Netherlands and several other European countries.

USEFUL RESOURCES

If, after conducting research, you believe that your case is strong and it may be possible to use the courts despite the many challenges, there are several organizations that you can contact. In addition to legal aid organizations in your own country, the following organizations may be able to provide you with free legal advice or connect you with pro bono lawyers:

Above Ground (Canada)

Environmental Defender Law Center

Trustlaw

Center For Constitutional Rights (U.S.)

Earthrights International (U.S.)

Sherpa (France)

Leigh Day (U.K.)

Prakken D’oliveira (Netherlands)

Pilnet

Human Rights Law Centre (Australia)

International Senior Lawyers Project

International Commission Of Jurists

Corporate Justice Coalition (U.K.)

Additionally, the Business and Human Rights Resource Centre’s Corporate Legal Accountability portal includes a lawyers directory, as well as a database tracking more than 200 lawsuits and a variety of litigation resources and other publications.