5 - Limited Liability of Parent Corporations

Summary

There are multiple obstacles to accessing judicial remedies for transnational harms, all of which combine to make access to justice for victims of human rights violations by TNCs exceptionally difficult and frequently impossible. The twin principles of separate legal personality and limited liability, together with limitations on extraterritorial jurisdiction and the evidentiary burdens of bringing a claim, are major barriers that victims encounter. While each issue plays an important role in denying victims a chance of obtaining access to remedy, the complex corporate structures that characterize the organization of modern business are at the heart of these obstacles. In the absence of legislation clarifying standards for parent company liability, victims face an enormous challenge to demonstrate how a parent company of a multinational enterprise, domiciled in the home state, bears responsibility for the harm carried out by its subsidiary in the host state.