Sunday, February 16, 2014

It just got harder to prosecute corporate abuse

Credit: James Burke via Flickr (Creative Commons)

A Supreme Court ruling in January has made it easier for large multinational corporations to avoid responsibility for its abuses anywhere in the world.

A recent analysis on the blog of the Castan Center for Human Rights Law examines a case that the U.S. Supreme Court looked at last month, Daimler AG v Bauman. The case involved a lawsuit, filed in California, by Argentinian residents against Daimler, accusing the company's subsidiary in Argentina of direct involvement of the abuse, including kidnapping and killing, of Argentinian workers during a war in the 1970s and 80s. The Supreme Court ruled against the plantiff, explaining that Californian courts lacked jurisdiction over Daimler, a German company, even though Daimler had a subsidiary in the U.S., Mercedes Benz.

The Supreme Court decision could have a major cooling effect on suits against large corporations involving human rights violations. Basically, the majority determined that in order for Daimler or Mercedes Benz to be sued in California, the proportion of their business activities in California (or any legal jurisdiction) would need to be assessed relative to their global activities. The specific quote is as follows (p. 21 of the ruling):
"General jurisdiction instead calls for an appraisal of a corporation's activities in their entirety, nationwide and worldwide."
But the judgment is not clear because it does not indicate the threshold of activities that should be met before a company can be considered subject to the laws of a given jurisdiction.

The most concerning part about this ruling is that if interpreted broadly going forward, a large multinational corporation with diversified business activities around the world will be able to effectively defend itself against a legitimate rights violations claim based on the fact that none of its business activities are centralized in the related jurisdiction.

This case reminds me of other factors that have allowed some multinational companies to avoid liability for human rights abuses in China. For example, big corporations like Samsung, HP, Mattel Toys, and many others make heavy use of supplier factories in China to manufacture their products. But even though most of these factories are infringing upon workers' rights on a daily basis--including through child labor, discrimination, working hours, unpaid wages, and more--multinationals can claim to have no direct responsibility for the abuse because they do not own the supplier companies.

Though it is true that these suppliers are not owned by multinationals, the multinationals have tremendous influence over labor standards in the factories. Of course, in the courtroom, influence is a far cry from direct liability.

As power and resources continue to be distributed more and more inequally throughout the world, the health and soul of global society requires that laws more intensely restrict the abuse of power. And yet powered interests are unraveling their legal bounds right in front of our eyes.


  1. So disheartening:( I am afraid that the consequences of these immoralities are not good.

  2. An historical problem. How are people who do not have power or access to power protect themselves against abuses or lack of resources. Systems are slow to respond. Only when an overwhelming self interest of the powerful occurs does change begin to happen and then only when the right persons emerge to name and create energy for change.

  3. I would also add: those in power can be moved by movements. But it's questionable how frustrated or desperate Americans must become to protest. Perhaps enough Americans are just quite comfortable enough to let it slide.