An assessment of the efficiency of the duty of care to make transnational corporations liable for harm caused by their subsidiaries

Abstract

The fairness of globalization is called into question when subsidiaries of large transnational corporations harm local populations in countries where they have little chance of obtaining compensation, and these victims cannot turn against the parent companies that enjoy significant advantages by outsourcing their activities. Indeed, parent companies can in principle hide behind the corporate veil to avoid having to compensate the victims of their subsidiaries' activities, unless the latter establish that the parent company owed them a duty of care. By allowing the establishment of a direct liability of the parent companies, the duty of care enables the difficulties caused by the principle of separate legal personality to be overcome. This concept thus seems relevant to enable victims of acts committed by a subsidiary to obtain compensation directly from its parent company, and it turns out that Canada is one of the countries where the discussion on the duty of care of parent for the actions of their subsidiaries has been the more elaborate. This thesis aims to evaluate the effectiveness of the use of the duty of care to engage the liability of Canadian parent companies for the negative effects of their subsidiaries’ activities abroad.