The Common Denominator of the Trafigura Case, Foreign Direct Liability Cases and the Rome II Regulation

Abstract

Abstract: As part of a current trend towards so–called ‘foreign direct liability cases’, attempts are being made to hold parent companies of multinational corporations liable in their home countries for damage caused in host countries. This trend, of which the Trafigura case serves as a recent example here, suggests that tort law may have a regulatory part to play when it comes to the transboundary activities of multinational corporations. However, the extent to which tort law can act as a regulatory mechanism is dependent on its applicability, which, in turn, is determined by private international law. The recently adopted Rome II Regulation, which lays down conflict–of–law rules for non–contractual obligations, will only have a limited conducive effect on the feasibility of the regulation through tort law of the transboundary activities of multinational corporations. On the basis of this Regulation, it is only in cases where the resulting damage consists of environmental damage that home country tort law may be applicable. In all other cases, attempts to hold the parent company of the multinational corporation liable for damage caused in the host country will have to be based on the tort law of the host country. This effectively diminishes the feasibility of home country tort law as a mechanism for the regulation of the transboundary activities of multinational corporations.