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Smart Regulation Proposal 1:  Extending Parent Company Liability David Chivers
The Legal Proposal <ul><li>In the fields of human rights abuse and environmental damage, parent companies will be liable f...
Why is the Proposal needed? <ul><li>The existing law allows parent companies to profit from their subsidiaries’ human righ...
Limited Liability EU Parent Non EU Subsidiary Non EU Victim Profit Liability
Aim of the Proposal <ul><li>The proposal seeks to achieve better human rights and environmental standards by ensuring that...
Scope of the Proposal <ul><li>The law will extend to all companies incorporated in the EU </li></ul><ul><li>To protect EU ...
Is limited liability dead? <ul><li>The proposal extends  only  to the areas of human rights and the environment </li></ul>...
Are directors liable? <ul><li>If directors are ultimately responsible for damage then they will be held liable </li></ul><...
Enforcement <ul><li>Civil claims by victims of damage under EU law </li></ul><ul><li>Public liability enforced by state  o...
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Smart Regulation 1: Extending Parent Company Liability

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Presentation given by David Chivers (lawyer Queen's Council) at the ECCJ/PSE conference on 29 May 2008 in Brussels

Published in: Economy & Finance
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Smart Regulation 1: Extending Parent Company Liability

  1. 1. Smart Regulation Proposal 1: Extending Parent Company Liability David Chivers
  2. 2. The Legal Proposal <ul><li>In the fields of human rights abuse and environmental damage, parent companies will be liable for the losses caused by their subsidiaries </li></ul><ul><li>Parent company means, in this context, a company with real control over another company </li></ul><ul><li>Control is not limited to rights of ownership </li></ul>
  3. 3. Why is the Proposal needed? <ul><li>The existing law allows parent companies to profit from their subsidiaries’ human rights and environmental abuses, but protects them from any adverse legal consequences </li></ul><ul><li>Only in very rare cases is a parent presently liable for the activities of its subsidiary </li></ul><ul><li>Questions of jurisdiction create an additional hurdle to the provision of justice </li></ul>
  4. 4. Limited Liability EU Parent Non EU Subsidiary Non EU Victim Profit Liability
  5. 5. Aim of the Proposal <ul><li>The proposal seeks to achieve better human rights and environmental standards by ensuring that those in control of companies are accountable for their conduct </li></ul>
  6. 6. Scope of the Proposal <ul><li>The law will extend to all companies incorporated in the EU </li></ul><ul><li>To protect EU companies from unfair competition, the law will also extend to non-EU companies that have a direct or indirect presence in the EU </li></ul>
  7. 7. Is limited liability dead? <ul><li>The proposal extends only to the areas of human rights and the environment </li></ul><ul><li>Existing concepts of limited liability are unaffected in all other fields </li></ul><ul><li>Ordinary commercial liabilities are not affected. </li></ul>
  8. 8. Are directors liable? <ul><li>If directors are ultimately responsible for damage then they will be held liable </li></ul><ul><li>Fault based liability, directors acting reasonably will be protected </li></ul>
  9. 9. Enforcement <ul><li>Civil claims by victims of damage under EU law </li></ul><ul><li>Public liability enforced by state or interested agencies applying accepted principles of international law </li></ul><ul><li>Clear basis for accepting jurisdiction </li></ul>

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