The Directed Studies of The Hague Academy on Private International Law – An Insider’s View (pt. 2)

Résumé : Le second post de notre série dédiée aux Directions d’études de l’école d’été de l’Académie de La Haye traite des sources du droit international privé et examine comment celles-ci se développent pour tenter de pallier les limites de notre vision traditionnellement territorialiste du droit. Tout au long de ce post, nous empruntons des exemples tirés du droit des sociétés ainsi que du droit du travail pour illustrer nos propos.

The present post is the second of a series of six posts, in which we discuss the content of the Directed Studies of The Hague Academy on private international law (our first post is available here). Our second seminar tackled the “sources of private international law: soft law, transnational governance and corporate social responsibility”. To be more precise, we examined the challenges generated by the territorial application of the law and its limitations in a globalised context.

When Territoriality Meets Globalisation

As we mentioned in our previous post, the globalisation process clashes with the principle of territoriality, which underpins our traditional vision of the law. Typically, the scope of application of public law rarely extends over the national borders and courts’ jurisdictional power is limited accordingly. Nevertheless, such an approach impedes those courts to deal with conflicts of global relevance.

Nowadays, therefore, the question is whether courts may/should extend their jurisdictional power into violations that occur outside the national territory. In international law, courts may adjudicate actions based on violations of ius cogens –such as torture– without territorial considerations, i. e. even though the violation was committed by a foreign defendant outside the territory (universality principle). Nevertheless, it is doubtful that national courts can actually claim civil jurisdiction over this type of action under similar circumstances. In Europe, such an approach certainly challenges the spirit of the Brussels regime. Moreover, Article 1 of the European Convention on Human Rights only obliges States to prevent violations that may take place within (but not outside) their jurisdiction. In this context, many wonder whether the universality principle could somehow be transposed to private international law.

In the US, the situation is not promising either. For example in Kiobel v. Royal Dutch Petroleum Co., Nigerian nationals sought redress in the US courts against Shell Petroleum Development Company of Nigeria, Ltd. and its holding parent companies for violations committed in Nigeria. In particular, victims argued that the above-mentioned corporations supported the Nigerian government in committing human rights abuses and thus, violated the Alien Tort Statute (hereafter, ATS). In this case, the US Supreme Court established a presumption against the extraterritorial application of the law. In other words, the Court ruled that the ATS is not meant to govern human rights violations that entertain no connection whatsoever with the American territory. This judgment might seriously affect victims injured and domiciled in States whose judicial system is inefficient, unfair or inaccessible, inasmuch as access to US courts was their only available option.

Conflict of Law Issues

Similar problems arise in the field of conflict of laws. For example, in corporate responsibility cases, whereby claimants try to hold European parent companies liable for the actions or omissions of their subsidiaries incorporated in third States, Article 4 of the Rome II Regulation will usually designate the applicable law. Pursuant to this provision, the lex loci damni applies to non-contractual obligations. Nevertheless, this situation might lead to an unsatisfying result for claimants, in the event that the substantive law of the State where the damage occurred unreasonably shields the defendant from any liability or does not offer sufficient protection to victims.

In light of this, claimants may advocate the application of another, more closely connected law according to Article 4(3) of the Rome II Regulation. Alternatively, claimants may try to displace the application of the lex loci damni if such a law violates the public policy of the forum (Article 26 Rome II Regulation). Nevertheless, the lex loci damni is a “highly appropriate” applicable law from a private international law perspective and thus, it might be difficult to find a more suitable one, even though it could be more protective of the victims’ interests. Similarly, arguing that public policy has been violated is a challenging task, which might be hard to prove. In all cases, one must admit that the application of national norms to global questions is a rather unsuitable solution.

Similar considerations apply in employment disputes. Indeed, extending workers’ protection to extraterritorial situations is a tricky exercise, since trade unions negotiate collective agreements on a national basis and labour laws possess a territorial scope as well. In this context, the Rome I Regulation states that the law applicable to labour relations is the law where the work is usually carried out. On the one hand, the fragmented character of this legal landscape has been beneficial for companies, which have achieved cost reduction through delocalisation. On the other hand, however, “fragmentation” also means that workers of a subsidiary located in a third State will in principle not be able to benefit from the working conditions of the law where the parent is incorporated. In case European courts have to rule over violations of employees’ rights that occurred abroad, those courts might consider applying the overriding mandatory provisions of the lex fori. However, it is not clear whether such rules have an extraterritorial effect, i. e. apply to actions which entertain no connection with the forum.

In light of this unsatisfactory situation, soft law initiatives that aim at raising market players’ awareness about the international impact of their activities have popped up, such as the well-known Ruggie principles, which reinforce multinationals’ corporate responsibility. However, it is doubtful that such initiatives will create sufficient incentives for those players to modify their behaviour. In a similar context, it is interesting to note that in the US, the Court of Appeal for the Ninth Circuit undercut the value of soft law measures by ruling that a company located in the US could not be held liable for the mistreatment of employees working for their suppliers, although a Code of Conduct ruled the relationships of the American company with its trade partners (Doe v. Wal-Mart). In light of this, it remains to be seen whether other sources of private international law will be able to fill the present governance gap.

Alexia Pato, Research assistant at the EBS University (Wiesbaden)

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