Skip to main content Accessibility help
×
Home

The Duty of Care of the Parent Company: A Comparison between French Law, UK Precedents and the Swiss Proposals

  • Dalia PALOMBO (a1)

Abstract

In 2017, France established a due diligence statutory obligation for French parent companies to monitor extraterritorial human rights and environmental abuses committed by their off-shore affiliates. Switzerland is also considering adopting a similar law for Swiss parent companies. These obligations are comparable to the duty of care that, according to recent case law, British parent companies owe towards their subsidiaries’ neighbours. This article compares and contrasts the newly introduced French due diligence statutory obligation, the UK precedents, and two alternative Swiss legislative proposals on the due diligence and duty of care of parent companies.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      The Duty of Care of the Parent Company: A Comparison between French Law, UK Precedents and the Swiss Proposals
      Available formats
      ×

      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      The Duty of Care of the Parent Company: A Comparison between French Law, UK Precedents and the Swiss Proposals
      Available formats
      ×

      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      The Duty of Care of the Parent Company: A Comparison between French Law, UK Precedents and the Swiss Proposals
      Available formats
      ×

Copyright

Corresponding author

Footnotes

Hide All

Note that part of this article is also reproduced in the forthcoming book Dalia Palombo, Business and Human Rights The Obligations of the European Home States (Hart Publishing, 2019). I would like to thank Professor David Kershaw, Professor Florian Wettstein and Mr. Daniel Leader for their extremely useful comments on various versions of this article. I also would like to thank Professor Anita Ramasastry and the anonymous reviewers for their helpful suggestions. However, please note that the views of the author are her own.

Footnotes

References

Hide All

1 Vazquez, Carlos Manuel, ‘Direct vs Indirect Obligations of Corporations under International Law’ (2005) 43 Columbia Journal of Transnational Law 927 ; Ratner, Steven R, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (2001) 111 Yale Law Journal 443 .

2 See, e.g., OECD, OECD Guidelines for Multinational Enterprises (Organisation for Economic Co-operation and Development 2011); Ruggie, John Gerard, ‘Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’ (2011) 29 Netherlands Quarterly of Human Rights 224 .

3 Skinner, Gwynne, ‘Rethinking Limited Liability of Parent Corporations for Foreign Subsidiaries’ Violations of International Human Rights Law’ (2015) 72 Washington and Lee Law Review 1769 .

4 The term ‘affiliate’ includes both subsidiaries and/or supply chains.

5 Stiglitz, Joseph E, ‘Multinational Corporations: Balancing Rights and Responsibilities’ (2007) 101 Proceedings of the ASIL Annual Meeting 3 ; Muchlinski, Peter, Multinational Enterprises and the Law (2nd edn, Oxford University Press, 2007); Deva, Surya, ‘Human Rights Violations by Multinational Corporations and International Law: Where from Here’ (2003) 19 Connecticut Journal of International Law 1 .

6 Vanderkerckhove, Karen, Piercing the Corporate Veil (Kluwer/Aspen, 2007) 123 ; Gamble, Andrew and Gavin, Kelly, ‘The Politics of the Company’, The Political Economy of the Company (Hart Publishing, 2001) 2934 ; Leebron, David W, ‘Limited Liability, Tort Victims, and Creditors’ (1991) 91 Columbia Law Review 1565 ; Blumberg, Phillip I, ‘Limited Liability and Corporate Groups’ (1985-1986) 11 Journal of Corporation Law 573 .

7 Dam, Cees van, European Tort Law (2nd edn, Oxford University Press, 2013) 169224 .

8 Beisinghoff, Niels, Corporations and Human Rights: An Analysis of ATCA Litigation against Corporations (Peter Lang, 2009) 1341 ; Vazquez, note 1; Ratner, note 1.

9 Kershaw, David, Company Law in Context: Text and Materials (2nd edn, Oxford University Press, 2012) 776781 ; Leebron, note 6; Blumberg, note 6.

10 Vanderkerckhove, note 6, 3–9; Hansmann, Henry and Kraakman, Reinier, ‘Toward Unlimited Shareholder Liability for Corporate Torts’ (1991) 100 The Yale Law Journal 1879 ; Kershaw, note 9, 3–46; Leebron, note 6.

11 See, e.g., UK cases Prest v Petrodel Resources Limited and others [2013] UKSC 34; Woolfson v Strathclyde Regional Council [1978] SC 90 (HL); Adams and Others v Cape Industries Plc and Another [1990] Ch 433; DHN Food Distributors Ltd v Tower Hamlets London Borough Council Bronze Investments Ltd v Same DHN Food Transport Ltd v Same [1976] W.L.R. 1 852; Jones and Another v Lipman and Another [1962] W.L.R. 1 832; Gilford Motor Company, Ltd v Horne [1933] Ch 935.

12 Vazquez, note 1; Ratner, note 1; van Dam, note 7 169–224.

13 Meeran, Richard, ‘Tort Litigation against Multinational Corporations for Violation of Human Rights: An Overview of the Position Outside the United States’ (2011) 3 City University of Hong Kong Law Review 1 ; Menno T Kamminga, ‘Transnational Human Rights Litigation against Multinational Corporations Post-Kiobel’, What’s Wrong with International Law?: Liber Amicorum A.H.A. Soons (Brill-Nijhoff, 2015); Jägers, Nicola and Heijden, Marie-Jose van der, ‘Corporate Human Rights Violations: The Feasibility of Civil Recourse in the Netherlands’ (2008) 33 Brooklyn Journal of International Law ; Wesche, Philipp and Saage-Maaß, Miriam, ‘Holding Companies Liable for Human Rights Abuses Related to Foreign Subsidiaries and Suppliers before German Civil Courts: Lessons from Jabir and Others v KiK ’ (2016) 16 Human Rights Law Review 370 ; Enneking, Liesbeth, Foreign Direct Liability and Beyond: Exploring the Role of Tort Law in Promoting International Corporate Social Responsibility and Accountability (Eleven International Publishing, 2012 ); Enneking, Liesbeth, ‘Crossing the Atlantic – The Political and Legal Feasibility of European Foreign Direct Liability Cases’ (2009) 40 George Washington International Law Review 903 .

14 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters 2001 (OJ L012).

15 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (recast) 2012 (OJ L351).

16 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) 2007 (OJ L199).

17 Hartley, Trevor C, ‘Choice-of-court Agreements, Lis Pendens, Human Rights and the Realities of International Business: Reflections on the Gasser Case’, Le droit international privé : esprit et méthodes : Mélanges en l’honneur de Paul Lagarde (Dalloz-Sirey, 2005); Council Regulation (EC) No 44/2001, art 63.

18 Regulation (EC) No 864/2007 (Rome II), art 4; Bach, Ivo, ‘Art 4 Rome II’, Rome II Regulation: Pocket Commentary (Sellier, 2011); von Hein, Jan, ‘Article 4 General Rule’, Rome Regulations: Commentary on the European Rules of the Conflict of Laws (Kluwer/Aspen, 2011).

19 Regulation (EC) No 864/2007 (Rome II), art 7.

20 von Hein, Jan, ‘Article 7 Environmental Damage’, Rome Regulations: Commentary of the European Rules of the Conflict of Laws (Kluwer/Aspen, 2011); Fuchs, Angelika, ‘Art. 7 Rome II’, Rome II Regulation: Pocket Commentary (Sellier, 2011).

21 Regulation (EC) No 864/2007 (Rome II), art 16, 26.

22 Arif Yascha, ‘Overriding Mandatory Provisions and Administrative Authorisations According to the Rome II Regulation’ (2011) 11 The European Legal Forum 113; Mattei, Alberto, ‘Prospects for Industrial Relations: Overriding Mandatory Provisions in the Transnational Labour Market’ in Blampain, Roger (ed), Labour Markets, Industrial Relations and Human Resources Management: From Recession to Recovery (Kluwer Law International, 2012); Van Den Eeckhout, Veerle, ‘Corporate Human Rights Violations and Private International Law. The Hinge-Function and Conductivity of PIL in Implementing Human Rights in Civil Proceedings in Europe: a Facilitating Role for PIL or PIL as a Complicating Factor’ (2012) 2 Contemporary Readings in Law and Social Justice 178 ; Dickinson, Andrew, The Rome II Regulation: The Law Applicable to Non-Contractual Obligations (Oxford University Press, 2008) 625641 ; Rogerson, Pippa, Collier’s Conflict of Laws (4th edn, Cambridge University Press, 2013) 424433 ; Nollkaemper, André, ‘Public international law in transnational litigation-prospects and problems in the courts of the Netherlands’, Liability of Multinational Corporations under International Law (Kluwer Law International, 2000) 277279 ; Regulation (EC) No 864/2007 (Rome II), rec 32.

23 Cassel, Doug, ‘Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence’ (2016) 1 Business and Human Rights Journal 179 . For different approaches, see Skinner, note 3; Cossart, Sandra, Chaplier, Jérôme and de Lomenie, Tiphaine Beau, ‘The French Law on Duty of Care: A Historic Step Towards Making Globalization Work for All’ (2017) 2 Business and Human Rights Journal 317 .

24 Enneking, Foreign Direct Liability and Beyond, note 13; Enneking, ‘Crossing the Atlantic – The Political and Legal Feasibility of European Foreign Direct Liability Cases’, note 13; McCorquodale, Robert, ‘Waving Not Drowning: Kiobel Outside the United States’ (2013) 107 American Journal of International Law 846 .

25 Enneking, ‘Crossing the Atlantic – The Political and Legal Feasibility of European Foreign Direct Liability Cases’, note 13; Enneking, Liesbeth, ‘The Future of Foreign Direct Liability? Exploring the International Relevance of the Dutch Shell Nigeria Case’ (2014) 10 Utrecht Law Review 44 ; Sanger, Andrew, ‘Crossing the Corporate Veil: The Duty of Care Owed by a Parent Company to the Employees of its Subsidiary’ (2012) 71 The Cambridge Law Journal 478 ; Goldhaber, Michael D, ‘Corporate Human Rights Litigation in Non-U.S. Courts: A Comparative Scorecard’ (2013) UC Irvine Law Review 127 .

26 Cassel, note 23; Skinner, note 3; Cossart, Chaplier and Lomenie, note 23.

27 Lubbe and Others v Cape plc and Related Appeals [2000] UKHL 41.

28 Lungowe & Ors v Vedanta Resources plc & Anor [2016] EWHC TCC 975; Lungowe & Ors v Vedanta Resources plc & Anor [2017] EWCA Civ 1528; Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents) [2019] UKSC 20.

29 Okpabi & Ors v Royal Dutch Shell plc & Anor (Rev 1) [2018] EWCA Civ 191; Okpabi & Ors v Royal Dutch Shell plc & Anor [2017] EWHC TCC 89.

30 AAA & Ors v Unilever plc & Anor [2018] EWCA Civ 1532; AAA & Ors v Unilever plc & Anor [2017] EWHC 371.

31 Chandler v Cape plc [2012] EWCA civ 525.

32 Thompson v the Renwick Group plc [2014] EWCA Civ 635.

33 C-281/02 Andrew Owusu v NB Jackson [2005] ECR I (CJEU); CJS Knight, ‘Owusu and Turner: The Shark in the Water?’ (2007) 66 Cambridge Law Journal 288.

34 Forum non-conveniens is still relevant with respect to foreign companies including subsidiaries of UK parent corporations.

35 Lungowe v Vedanta [2016], note 28; Lungowe v Vedanta [2017], note 28; Vedanta v Lungowe [2019], note 28.

36 AAA v Unilever [2017], note 30, paras 77–78.

37 Okpabi & Royal Dutch Shell plc [2017], note 29.

38 Caparo Industries plc v Dickman and Others [1990] HL A.C. 2 605 633.

39 Vedanta v Lungowe [2019], note 28, para 44.

40 Okpabi v Royal Dutch Shell plc [2018], note 29; AAA v Unilever [2018], note 30.

41 Vedanta v Lungowe [2019], note 28, para 51.

42 Home Office v Dorset Yacht Co Ltd [1970] UKHL 2.

43 Ibid.

44 Petrin, Martin, ‘Assumption of Responsibility in Corporate Groups: Chandler v Cape plc’ (2013) 76 The Modern Law Review 603 ; Bullimore, Tim, ‘Sins of the Father, Sins of the Son’ (2012) 28 Professional Negligence 212 ; Palombo, Dalia, ‘Chandler v Cape: An Alternative to Piercing the Corporate Veil beyond Kiobel v Royal Dutch Shell’ (2015) 4 British Journal of American Legal Studies 453 .

45 Caparo v Dickman, note 38. See also Jane Stapleton. ‘Duty of Care and Economic Loss: A Wider Agenda’ (1991) Law Quarterly Review 249.

46 David Newton Sealey v ArmorGroup Services Ltd [2008] EWHC (QB) 233.

47 Petrin, note 44; Sanger, note 25; Palombo, note 44; Bullimore, note 44; Chandler v Cape plc, note 31, paras 62–66.

48 Christian Witting, ‘Duty of Care: An Analytical Approach’ (2005) 25 Oxford Journal of Legal Studies 33.

49 Chandler v Cape plc, note 31, paras 72–81.

50 Thompson v the Renwick Group plc, note 32, para 38; Grušić, Uglješa, ‘Responsibility in Groups of Companies and the Future of International Human Rights and Environmental Litigation’ (2015) 74 The Cambridge Law Journal 30 .

51 Loi 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre 2017 (JORF) 2017–399.

52 In French devoir de vigilance, see R-C Drouin, ‘Le Développement Du Contentieux à l’encontre Des Entreprises Transnationales : Quel Rôle Pour Le Devoir de Vigilance?’ (2016) Droit social 246.

53 The threshold of 10,000 employees is reduced to 5,000 when the companies directly or indirectly controlled by the parent company are all incorporated in France.

54 Périn Pierre-Louis, ‘Devoir de Vigilance et Responsabilité Illimitée: Qui Trop Embrasse Mal Étreint’ (2015) Revue trimestrelle de droit commercial et de droit économique 215.

55 Loi 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre 2017–399, L 225-102-5.

56 Delpech Xavier, ‘Bientôt Un Devoir de Vigilance à La Charge Des Sociétés Mères et Des Donneurs d’ordre’ (2015) Dalloz Actualité; Drouin, note 52; Pierre-Louis, note 54; Stéphane Brabant and Elsa Savourey, ‘A Closer Look at the Penalties Faced by Companies’ (2017) Revue Internationale de la Compliance et de l’Ethique des Affaires 50.

57 ‘Conseil National Session de Printemps 2015 Neuvième Séance 11.03.15 15h00 14.3671’ (2015), https://www.parlament.ch/fr/ratsbetrieb/amtliches-bulletin/amtliches-bulletin-die-verhandlungen?SubjectId=35082 (accessed 6 June 2016).

58 Commission des affaires juridiques du Conseil des Etats, ‘16.077 Droit de la société anonyme (projet 2)’; Commission des affaires juridiques du Conseil national, ‘16.077 Droit de la société anonyme’.

59 ‘Responsible Business Initiative’, http://konzern-initiative.ch/initiativtext/?lang=en (accessed 26 April 2018).

60 RK-N: Eidgenössische Volksinitiative ‘Für verantwortungsvolle Unternehmen – zum Schutz von Mensch und Umwelt’, Indirekter Gegenentwurf 2018 6.

61 Cossart, Chaplier and Lomenie, note 23.

62 Commission des affaires juridiques du Conseil national, note 58; Commission des affaires juridiques du Conseil des Etats, note 58.

63 Council Regulation (EC) No 44/2001.

64 Convention on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters 2007 (OJ L339).

65 Lungowe v Vedanta [2017], note 28, paras 122–126; Okpabi v Royal Dutch Shell [2017], note 29, paras 50–61.

66 Loi 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, L 225-102-5.

67 von Hein, Jan, ‘Article 16 Overriding Mandatory Provisions’, Rome Regulations: Commentary on the European Rules of the Conflict of Laws (Kluwer/Aspen, 2011); Fuchs, Angelika, ‘Art. 16 Rome II’, Rome II Regulation: Pocket Commentary (Sellier, 2011); Dickinson, note 22.

68 Kuipers, Jan-Jaap and Migliorini, Sara, ‘Qu’est-Ce Que Sont Les Lois de Police? Une Querelle Franco-Allemande Après La Communautarisation de La Convention de Rome’ (2011) 19 European Review of Private Law 187 ; Chng, Kenny, ‘A Theoretical Perspective of the Public Policy Doctrine in the Conflict of Laws’ (2018) Journal of Private International Law 130 .

69 Étienne Pataut, ‘Le devoir de vigilance – Aspects de droit international privé’ (2017) Droit social 833.

70 Regulation (EC) No 864/2007 (Rome II), art 4(3) ‘Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question’.

71 RK-N: Eidgenössische Volksinitiative, note 60.

72 Chandler v Cape plc, note 31, para 80.

73 Lubbe and Others v Cape plc and Related Appeals, note 27; AAA v Unilever [2018], note 30; AAA v Unilever [2017], note 30; Okpabi v Royal Dutch Shell plc [2018], note 29; Okpabi v Royal Dutch Shell plc [2017], note 29; Lungowe v Vedanta [2016], note 28; Lungowe v Vedanta [2017], note 28; Vedanta v Lungowe [2019], note 28.

74 Palombo, note 44.

75 Loi 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre; Drouin, note 52.

76 ‘Responsible Business Initiative’ note 59.

77 Cossart, Chaplier and Lomenie, note 23; Brabant and Savourey, note 56.

78 David Newton Sealey v ArmorGroup Services Ltd, note 46; Caparo v Dickman, note 38; Petrin, note 44; Bullimore, note 44.

79 Thompson v the Renwick Group plc, note 32; Chandler v Cape plc, note 31.

80 ‘Responsible Business Initiative’, note 59; RK-N: Eidgenössische Volksinitiative note 60.

81 Lubbe and Others v Cape plc and Related Appeals, note 27; AAA v Unilever [2018], note 30; AAA v Unilever [2017], note 30; Okpabi v Royal Dutch Shell plc [2018], note 29; Okpabi v Royal Dutch Shell plc [2017], note 29; Lungowe v Vedanta [2016], note 28; Lungowe v Vedanta [2017], note 28; Vedanta v Lungowe [2019], note 28.

82 Vedanta v Lungowe [2019], note 28 paras 6-14 and 42-62.

83 Xavier, note 56; Drouin, note 52; Pierre-Louis, note 54; Brabant and Savourey, note 56; Vedanta v Lungowe [2019], note 28 paras 6-14 and 42-62.

84 ‘Responsible Business Initiative’,; RK-N: Eidgenössische Volksinitiative, note 60.

85 Vedanta v Lungowe [2019], note 28.

86 Commission des affaires juridiques du Conseil des Etats, note 58.

87 OECD, note 2; ‘National Contact Points for the OECD Guidelines for Multinational Enterprises – OECD’, http://www.oecd.org/investment/mne/ncps.htm (accessed 1 June 2016); Davarnejad, Leyla, ‘In the Shadow of Soft Law: The Handling of Corporate Social Responsibility Disputes under the OECD Guidelines for Multinational Enterprises’ (2011) Journal of Dispute Resolution 351 ; John Gerard Ruggie and Tamaryn Nelson, ‘Human Rights and the OECD Guidelines for Multinational Enterprises: Normative Innovations and Implementation Challenges’ (2015) 66 Corporate Social Responsibility Initiative Working Paper; Santner, Ashley L, ‘A Soft Law Mechanism for Corporate Responsibility: How the Updated OECD Guidelines for Multinational Enterprises Promote Business for the Future’, (2011) 43 The George Washington International Law Review 375 .

88 Alston, Philip (ed), Non-State Actors and Human Rights (Oxford University Press, 2005); Karavias, Markos, Corporate Obligations under International Law (Oxford University Press, 2013).

Note that part of this article is also reproduced in the forthcoming book Dalia Palombo, Business and Human Rights The Obligations of the European Home States (Hart Publishing, 2019). I would like to thank Professor David Kershaw, Professor Florian Wettstein and Mr. Daniel Leader for their extremely useful comments on various versions of this article. I also would like to thank Professor Anita Ramasastry and the anonymous reviewers for their helpful suggestions. However, please note that the views of the author are her own.

Keywords

The Duty of Care of the Parent Company: A Comparison between French Law, UK Precedents and the Swiss Proposals

  • Dalia PALOMBO (a1)

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed