Overcoming Legal Barriers to Remedy

Abstract

As discussed in Part I, there is increasing international consensus that it is unfair and unjust for parent corporations to receive the immense financial benefits derived from operations of subsidiaries or affiliates while being able to avoid liability when those wholly owned subsidiaries engage in human rights violations, even if the parent corporation is not directly at fault. Indeed, it is clear that the doctrine of limited liability, as applied to corporate parents, should be reconsidered – at least in circumstances such as high-risk industries operating within fragile or high-risk countries where remedies for serious torts are probably unavailable within the legal system of the subsidiary’s domicile. Therefore, the question becomes how to hold parent corporations accountable and liable for a subsidiary’s human rights abuses, particularly if the corporate veil cannot be pierced. Scholars in recent years have advanced multiple theories, including enterprise liability, the so-called “due diligence” approach, and general tort-based approach. However, none of these approaches sufficiently addresses the problem. A different approach is needed – one that moves away from the current notion that a parent corporation should only be liable where it has some actual control over a subsidiary, and that moves toward parent corporate liability in appropriate circumstances even absent actual control. Any such approach should serve to create an incentive for parent corporations to assert their influence over subsidiaries or other operations in developing countries, especially when engaging in high-risk industries, in order to engage in processes that would serve to reduce potential violations of international human rights standards. Such a fundamental change to the notion of limited corporate liability will necessarily require statutory change. In order to enact such an approach, lawmakers would need to enact changes to state limited liability statutes, removing the