Responsibility of multinational corporations in municipal jurisdictions

Abstract

A multinational corporation is defined as a range of commercial corporate entities existing in more than one country with different legal jurisdictions. Usually there is the parent company, referring to the main control unit of the company; the subsidiary company, typically an extension of the parent in a different country. Just like any other entity, it has its fair share of pros and cons. Aside from the provision of more job opportunities and the role it plays in the advancement of technology; it also has a position in the enhancement of the world‟s gross product as well as the industrial output. Displacement of people from their homes, environmental harm like pollution and forced labour are some of the key cons arising from multinational corporations especially to their host country causing many to form complaints against them. However, the implementations of corporate sues are rather difficult with the law being in favour of them. This law, arising from Salomon‟s strict principle of separate personality states that corporate entities exist separately from each other and not necessarily as a group. With this been said, it is then understood that a claimant wishing to sue a parent company based on harm done by a subsidiary company in a different country will have to come up with solid proof showing an agency relationship between the subsidiary company to the parent one. This paper seeks to address three issues specifically: whether the principle of corporate separateness applies to multinational corporations and to what extent, whether a parent company can be held liable for the acts of its foreign subsidiaries, and finally whether courts should rely on the doctrine of forum non conveniens when dealing with cases brought against multinational corporations for wrongs committed by their foreign subsidiaries