Jurisdiction by Necessity and the Regulation of the Transnational Corporate Actor

A. The Growth of Corporate Power

It is well-settled that TNCs have become such powerful global actors that many individual countries lack the resources and will to regulate them.⁸ Many TNCs have grown into entities of such ‘astonishing magnitude’ that, in terms of economic power, they fully measure up to individual countries.⁹ Crucial to the growth in their power is their ability to incorporate in one country and operate in many other countries simultaneously through a complex web of subsidiaries.¹⁰ The nature and grasp of their operations are such that ‘they often operate in jurisdictions in which human rights violations occur, obtain benefits from subsidized arrangements with governments that commit human rights violations, provide goods and services that result in human rights violations, or organize in ways that violate the rights of workers.’¹¹ The Canadian Lawyers Association for International Human Rights (CLAIHR) cites four ways in which a corporation’s activities may ‘bolster the repressive capacity and the staying power of a regime that systematically violates human rights’:

1. It can provide goods and services that support the regime’s despotic capability;

2. It can be a main source of revenue that reinforces the despotic capability of the regime;

3. It can provide the regime infrastructure (like roads, railways, power stations, et cetera) that increases its repressive capability; and

4. Its presence there may provide the repressive regime international credibility.¹²

In many instances, TNCs operate in countries that are split by violent conflicts and sometimes fall ‘prey to one faction or another.’¹³ In other instances, their operations generate opposition that sparks violent unrest. When violence erupts, some have responded by ‘tapping directly into the military expertise and firepower of both state and private armies.’¹⁴

Orthodox methods of regulation through host-countries’ domestic laws have proved ineffective to regulate TNCs. This is because the developing countries where virtually all of the violations occur are concerned that severe regulation of TNCs might drive TNCs away to other countries and thereby hamper the countries’ economic development. As the editors of Liability of Multinational Corporations Under International Law observe:

Professor Forcese cites a US State Department Report that observes that in some of the developing countries where such corporate abuses occur, the courts are short-staffed. Judges are often absent from court, frequently because they are pursuing other means of livelihood to supplement their meagre salary. Courtrooms lack modern equipment and court officials often lack the proper training and motivation for work, due also to inadequate salary and poor work environment.¹⁶

Jonathan Clough has summarised the key features of the scenarios that make exclusive host-country regulation of TNCs difficult:

• The defendant is a large, well-resourced transnational corporation.

• The alleged human rights abuses occurred in a country (the ‘host jurisdiction’) other than the transnational corporation’s country of incorporation (the ‘home jurisdiction’).

• The host jurisdiction is unable and/or unwilling to investigate and prosecute the alleged abuses.

• The transnational corporation is alleged to be complicit in the human rights abuses either directly or, more commonly, indirectly through the interposition of subsidiaries or other intermediaries such as independent contractors.¹⁷

For their part, Western countries – the ‘birthplace’ of most of the TNCs – have shown strong reluctance, even opposition, to the regulation of the activities of their corporations abroad. A notorious example was the George W Bush administration’s relentless efforts to eviscerate the Alien Tort Statute – the major legal recourse for most victims of corporate human rights abuses in the developing world.¹⁸ In 2003, following the US-UK invasion of Iraq and the ousting of President Saddam Hussein, President Bush issued Executive Order 13303 immunising US corporations from any suit arising from any activity, including environmental damage and human rights violations, undertaken by a US corporation in furtherance of the Iraq invasion.¹⁹ The order prevented lawsuits by US citizens against corporations and precluded foreigners from invoking the statute. Such acts of corporate protectionism by Western countries symbolize, arguably, the extent of the influence of TNCs even within their home countries.

B. The Current State of International Law

The current state of international law offers little to no assistance to victims of corporate human rights abuses in developing countries without effective accountability mechanisms. Traditionally, international law applies to States alone, although, since the Nuremberg trials that followed World War II, international law has been held to apply also to individuals.²⁰ All other non-State actors, such as corporations, are still held to relate indirectly with international law via their national governments.²¹ Attempts by victims of egregious corporate human rights abuses to frame their claims in terms of international law violations always meet with the almost insurmountable challenge that corporations are ‘incapable of violating international law’ or ‘cannot be held accountable for international law violations’ – depending on the intellectual sensitivity of the particular challenger. In a 2008 report to the UN Human Rights Council, Professor John Ruggie noted that the international community had yet to adapt the human rights regime to protect individuals and communities against corporate human rights abuses.²² He decried the ‘governance gap created by globalization’ as ‘the root cause of the business and human rights predicament today.’²³ Thus while the international community condemns violations of international fundamental norms, ‘it provides limited effective remedies for individual victims of [those violations].’²⁴ Yet the need for accountability is readily apparent and compelling. As Professor Naomi Roht-Arriaza puts it, ‘[a]ccountability [for corporate human rights violations] is now routinely demanded ... in part due to a recognition that the seeds of future violations are sown, in part, in the failure to come to terms with past cycles of violations.’²⁵ Necessity jurisdiction may have partially come to the rescue.

C. Existing Jurisdictional Doctrines

Beyond executive efforts by home-countries to block corporate accountability for human rights violations committed by their corporations in developing countries, the aforementioned features of transnational corporate conduct have rendered existing jurisdictional doctrines ineffective to allow litigation in the courts of home-countries. First, jurisdiction is traditionally based on territorial considerations aimed at establishing the existence of some link between the forum country and the dispute. Depending on the jurisdiction, such link is described as ‘a real and substantial connection’²⁶ or as ‘minimum contacts’²⁷ between the dispute and the forum seized. The connection or contacts may relate to the subject matter of the litigation (the tort, contract or the property that is the subject matter of the litigation) or to the parties (especially the defendant). But what exactly amounts to the requisite connection depends on the specific facts of each case. The rules serve as a check upon excessive jurisdiction. In some jurisdictions, such as Canada and the US, they are regarded as constitutional imperatives, preventing courts and legislatures from derogating from them.²⁸

In addition, there are other jurisdictional standards that are usually considered independently of the above connection tests, although they do reflect the spirit of the tests. Especially in common law jurisdictions, the presence of the defendant within the forum, consent or attornment to the jurisdiction of the forum court, can serve as independent bases of (in personam) jurisdiction. In some civil law jurisdictions, such as France, jurisdiction is tied to the nationality of the parties, especially that of the defendant.²⁹ In many other civil law countries, such as Austria,³⁰ Germany,³¹ Denmark,³² Sweden³³ and Switzerland,³⁴ it is even tied to the existence of the defendant’s property within the forum. The rules thus differ jurisdiction to jurisdiction.

Some regional treaties have however been created to establish uniform jurisdictional rules for the State parties to them. There is, for instance and perhaps most notably, Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (Brussels I Regulation)³⁵ which applies to EU member States. Difficulties encountered in the recognition and enforcement of foreign judgments due to differing jurisdictional rules between national borders necessitated the emergence of the regulation. The effect of the differing rules was that States denied recognition and enforcement to foreign judgments that arose from jurisdictional assumptions that were based on standards that were inconsistent with the jurisdictional standards of the recognising State. As one scholar puts it, this had the practical effect of ‘one hand taking back what the other hand conferred.’³⁶ To ensure ‘decisional harmony’, ‘predictable and easily administered jurisdictional norms’ and ‘free movement of judgments’³⁷ regional jurisdictional rules were conceived. The collapse of negotiations of the Hague Conference on Private International Law for a Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters³⁸ thwarted international efforts to create a treaty with world-wide application.

Brussels I Regulation established the defendant’s domicile as the primary jurisdictional standard.³⁹ This is regardless of the defendant’s nationality and regardless of the plaintiff’s domicile. But a member State reserves the right to assert jurisdiction, in accordance with its national law, over a defendant who is not domiciled within its territory.⁴⁰ In cases of multiple defendants, jurisdiction over one defendant automatically confers on the court jurisdiction over all the other defendants, provided there is a close relationship among the claims against the defendants, rendering it pragmatic to adjudicate all the claims together to avoid the risk of conflicting decisions from separate proceedings.⁴¹ Jurisdiction over original proceedings equally triggers jurisdiction to adjudicate third party proceedings relating to the same facts.⁴² The same applies to counterclaims.⁴³ In situations where there are parallel proceedings, however, the first-seized rule applies, enabling the court first-seized of jurisdiction to take precedence over the court later seized.⁴⁴

Besides domicile, alternative bases of jurisdiction are established under Article 7 of the Regulation. In matters relating to contracts, the court of the member State where the contract is to be performed is the valid jurisdictional forum.⁴⁵ In matters relating to tort, the court of the member State on whose territory the wrong occurred has jurisdiction, provided the defendant is domiciled in the territory of a member State.⁴⁶ Where the civil claim relates to an act over which a court is exercising criminal jurisdiction, the same court can assert jurisdiction over the civil claim as well.⁴⁷

But these jurisdictional rules have not always met the dictates of justice. In an increasing number of cases, strict adherence to them has resulted in denials of access to justice. Such denials violate fundamental international principles of justice. Article 6(1) of the ECHR, for instance, provides that ‘in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law’. This provision has been construed as granting a right of access to justice or a right of access to a court.⁴⁸ The provision speaks to the need for exceptional jurisdictional policies that, serving as safety valves, cater for cases in which the established jurisdictional standards would be unworkable from an access-to-justice standpoint. Jurisdiction by necessity may represent such a safety valve.

Indeed, Canadian courts have explicitly recognized the inadequacy of the real and substantial connection test to meet the demands of justice in civil proceedings for extraterritorial human rights violations. In Bouzari v Islamic Republic of Iran⁴⁹ – a case in which the plaintiff claimed to have been tortured in Iran by the Islamic Republic of Iran – the Ontario Court of Appeal found that Iran had no connection with Ontario beyond its diplomatic presence. Finding that this did not suffice for jurisdiction under the real and substantial connection test, the Court looked to international law and found ‘no broadly shared international practice among states to assume jurisdiction over civil actions in similar circumstances.’⁵⁰ The Court then opined:

The Court did not however proceed to determine how the real and substantial connection test should be applied to meet the requirements of justice and fairness that are embedded in it, because the doctrine of state immunity would bar suit against Iran in any case. But the above statements speak clearly to the need for something more in jurisdictional considerations to meet the demands of justice in transnational human rights cases. As McConville has argued, ‘[t]ransnational human rights torts litigation … does not easily fit into the framework of territorial jurisdiction.’⁵² Although the Bouzari case involved a State defendant, rather than a corporate defendant, cases involving corporate defendants present similar – perhaps even more – jurisdictional difficulties (with the exception of the doctrine of immunity).

In 2010, the Ontario Court of Appeal took the matter further. In Van Breda v Village Resorts Ltd⁵³ – a consolidated appeal from two separate tort claims for damages for personal injury suffered by Canadian tourists during scuba diving accidents that occurred when they were vacationing at resorts in Cuba – the Court explicitly recognised the inadequacy of the real and substantial connection test and went on not only to reformulate the doctrine to meet the demands of justice, but also to adopt the doctrine of ‘forum of necessity’ as a jurisdictional corrective applicable to cases ‘where there is no other forum in which the plaintiff could reasonably seek relief’.⁵⁴ The Court wrote:

This acknowledgement marked a remarkable development in the law of jurisdiction in Ontario. Although on appeal, the Supreme Court declined to pronounce on the doctrine’s validity within the Canadian legal system because the case was not argued on that term, this has not restrained the courts of other provinces from citing the decision, usually with explicit approval.⁵⁶ A leading Canadian scholar has stated: ‘[a] flexible approach to jurisdiction that takes into account and gives appropriate weight to the particular subject matter of the proceedings and that does not insist on direct territorial connections in cases where none could ever exist is surely a welcomed development.’⁵⁷ Jurisdiction by necessity may fulfill this important role.

A. The Requirement of a Connection with the Forum

The national statutes explicitly requiring a connection with the forum have used such concepts as ‘sufficiently connected’,⁸² ‘sufficient connection’,⁸³ ‘close connections’,⁸⁴ ‘adequate relation’,⁸⁵ or ‘strong linking factor’.⁸⁶ But they do not define what constitutes such connections. Nuyts writes that in Belgium, the ‘close contacts’ requirement is not applied stringently.⁸⁷ The Belgian nationality or domiciliary or habitual residence of the plaintiff satisfies the requirement, as do cases where the parties have assets in Belgium.⁸⁸ In jurisdictions, such as France, Austria and Germany, where assets in the province constitute a valid ground for jurisdiction, the existence of such assets would obviate the need to consider necessity jurisdiction. In Austria, there is an explicit requirement that the plaintiff be an Austrian national, domiciliary or resident.⁸⁹ In Quebec, because the doctrine applies as an exception to the real and substantial connection test due to ‘the impossibility of having access to a foreign court in a litigation that has a sufficient link with Québec’,⁹⁰ a ‘sufficient connection’ with Quebec must be understood as a lesser degree of connection than the real and substantial connection test requires. This must be so because the Quebec Code permits jurisdiction ‘even though a Quebec authority has no jurisdiction to hear a dispute’. The requirement of a ‘sufficient connection’ may thus not be applied stringently, as otherwise, jurisdiction by necessity may become indistinguishable from the real and substantial connection test. Hence, it has been suggested that temporary residence of one of the parties in Quebec, or the fact that ‘a juridical act is to be used here,’ or the existence of any of the parties’ property in Quebec, may supply the required ‘sufficient connection’.⁹¹ What is not clear, however, is whether the residence or property in the forum must be shown to have existed when the cause of action arose. Given the exceptional nature of the doctrine, however, and the fact that the doctrine aims at avoiding a denial of access to a court, it would appear that a cause of action threshold would not be required.

Applying this to litigations concerning transnational corporate wrongs, the plaintiffs can establish that the action has a connection with the chosen forum by showing that any of the plaintiffs resides within the forum. A majority of the transnational human rights cases that have been litigated against corporations have this feature.⁹² The existence of the corporation’s parent or subsidiary within the forum may also supply the needed connection even if that parent or subsidiary is not implicated in the alleged violations. Normal jurisdictional doctrines would generally not regard the mere existence of the corporation’s parent or subsidiary in the forum as a sufficient link where the parent or subsidiary is not also implicated in the violations,⁹³ but there is no reason why a court should not regard it as sufficient for the purpose of asserting jurisdiction by necessity, as a stronger link would most likely give the court normal jurisdiction and thereby render jurisdiction by necessity unnecessary.

B. Impossibility of Bringing Proceedings Abroad

None of the statutes adopting jurisdiction by necessity define the meaning of impossibility of bringing proceedings abroad. It is therefore not clear whether it refers to legal impossibility or to practical impossibility or to both. In the absence of statutory clarification, the general practice has been to interpret impossibility as both legal impossibility and practical impossibility.⁹⁴ But given the existence of the fourth element – the reasonableness of requiring proceedings abroad – it makes more sense to regard this element as speaking to legal impossibility alone, as otherwise the two elements will inextricably overlap. Thus, in Anvil – a case involving allegations of human rights abuses in the Democratic Republic of Congo by a company incorporated under the laws of the Northwest Territories of Canada but with its headquarters in Australia – the Quebec Court of Appeal rejected the plaintiff’s claim that difficulties in getting Australian lawyers to take up the case in Australia met the impossibility requirement.⁹⁵

It has been suggested that legal impossibility arises ‘where no foreign court has jurisdiction,’ or where ‘only a court which has annulled a clause choosing the forum’ has jurisdiction,⁹⁶ or ‘when there is a legal obstacle to accessing the foreign court’⁹⁷ or when ‘the foreign court lacks jurisdiction under the foreign law or has already dismissed the claim for lack of jurisdiction’.⁹⁸ In Germany and, debatably, in France, the fact that the foreign judgment is unenforceable in the forum has been accepted as a valid ground.⁹⁹ But a court cannot decide that it is not impossible to bring the action elsewhere simply by showing that another forum might exercise necessity jurisdiction. In other words, the existence of necessity jurisdiction in another forum cannot defeat the successful application of the impossibility element.

Legal impossibility would also include cases where the claim is non-justiciable in the forum that otherwise has jurisdiction. The non-justiciability could be due to the existence of a legal immunity protecting the defendant from liability. Cases in which particular types of claims are ousted from the jurisdiction of the courts in the foreign forum are also included. In the former case, however, policy considerations might call for respect for certain immunity clauses, specifically, where the immunity clause was created as part of an amnesty mechanism – as was the case in Phillips v Eyre¹⁰⁰ – to promote peace in countries recovering from conflicts. Disregard of such clauses might do irreparable harm to such countries and cannot be regarded as consistent with international public policy.

Given the typical nature of transnational corporate wrongs litigation, the legal impossibility element is not likely to be relied upon, for it would rarely be the case that the country where the conduct occurred would lack jurisdiction in the matter or bar legal proceedings. It is to the ‘reasonableness of requiring proceedings abroad’ element that the plaintiffs would more likely turn.

C. The Reasonableness of Requiring Proceedings Abroad

Unreasonableness has been expressed in different ways. In Belgium, requiring foreign proceedings must be considered ‘unreasonable’; in Austria, it must be ‘unacceptable’; in Portugal it must involve an ‘unreasonable difficulty’; and in Estonia the plaintiff ‘cannot be expected’ to bring proceedings in the foreign forum.¹⁰¹ This requirement thus speaks to non-legal or practical difficulties in bringing the suit in the foreign forum. Minus those practical difficulties, there is no legal barrier to bringing the action in the foreign forum. Such practical difficulties must be so onerous that it would be unreasonable to require the plaintiff to bring the suit in that foreign forum. The problem then in the application of this element is how to determine what amounts to an unreasonable requirement.

An undoubted example is the existence of war or other violent conflicts in the foreign forum, causing a shutdown of the legal system or making it unsafe for the plaintiff to travel there to initiate the action. Such a situation constitutes a genuine obstacle rendering it unreasonable to require the plaintiff to risk his/her life to initiate the proceedings in the foreign forum. A plaintiff’s well-founded fear that he/she might be politically persecuted if found in that foreign forum, or might lose his/her life or be subjected to torture or other inhuman treatment if he/she is found there, should be respected. In a case of unlawful imprisonment and torture in Libya brought by a Libyan plaintiff in 2012 during the Libyan crisis that resulted in the killing of Muammar Gaddafi, a Dutch court held that in view of the situation in Libya, the plaintiff could not reasonably be required to bring the action in Libya.¹⁰² It may also happen that asking the plaintiff to wait for the end of the war or conflict to bring the suit in the foreign forum might result in the suit becoming statute-barred under the laws of the foreign forum.

Also in Solvochem v Rasheed Bank,¹⁰³ the Hague Court of Appeal affirmed the Hague District Court’s assumption of jurisdiction in a case that should have been brought in Iraq, because at the time the claim was initiated in the Netherlands, the Dutch plaintiff could not have been expected to bring the action in Iraq at a time when the Iraqi crisis was still raging.

In Kiefer v Canada (Minister of Justice), the Quebec Superior Court of Justice (Canada) stated that ‘[m]ere inconvenience’ is not enough.¹⁰⁴ In Lamborghini, the Court considered the relative inconvenience of accessing the foreign court as not meeting the reasonable requirement test.¹⁰⁵ In Obégi v Kilani,¹⁰⁶ the Ontario Superior Court of Justice (Canada) relied on the defendant’s ‘past conduct and ability to evade potential future obligations’¹⁰⁷ to rule that the plaintiff could not reasonably be required to bring proceedings abroad, although it found that the case met the requirements of the real and substantial connection test and so did not ultimately base its jurisdiction on necessity.

Other circumstances have been suggested: (1) the fact that the country is affected by natural disasters;¹⁰⁸ (2) where the exercise of jurisdiction in the foreign forum is ‘discretionary’;¹⁰⁹ (3) where ‘the defendant benefits from a certain immunity’;¹¹⁰ (4) where the plaintiff is ‘a refugee who cannot act in the country he has fled’;¹¹¹ (5) ‘cases of superior force such as war’;¹¹² (6) where there is a defect in the foreign proceedings, such as delay in the administration of justice, corrupt judiciary or an ‘ideological imperative’;¹¹³ (7) where the remedy sought is ‘specific to the domestic purposes’ of the forum and ‘an effective decision can be achieved by [that forum] alone’;¹¹⁴ (8) where ‘an unacceptable risk’ to the plaintiff is involved if he is to litigate in the foreign forum, and if the plaintiff is financially incapable of litigating the suit there.¹¹⁵

Some of the above suggestions are however problematic. For instance, where the foreign court’s jurisdiction is discretionary, it is not clear how that makes it unreasonable to require the plaintiff to initiate the proceedings there. There is no reason to speculate on how the foreign court would exercise its discretion. The plaintiff should be required to give the foreign court an opportunity to exercise its discretion before it can be said that it would be unreasonable to require the plaintiff to initiate the suit in the foreign court. But even this would appear to give rise to a case of legal impossibility rather than practical impossibility to which the reasonable requirement test speaks, since, if the foreign court exercises its discretion negatively, it becomes legally impossible for the plaintiff to litigate there.¹¹⁶ Similarly, where the defendant would benefit from a certain immunity in the foreign forum, it becomes a matter of legal impossibility rather than practical impossibility.¹¹⁷ In addition, claims that the foreign judiciary is corrupt, or what McEvoy calls an ‘ideological imperative’ – such as in commercial transactions where the parties entered into a choice of court agreement in favour of a capitalist State that subsequently transformed into a Marxist State – may raise imperialism concerns where the foreign country is a former colony of any Western country.¹¹⁸ Lastly, factors like delays in the administration of justice may create too low a threshold for the application of the doctrine.

In Belgium, the reasonableness requirement covers cases where fair trial is not guaranteed in the foreign forum.¹¹⁹ This however does not include cases where the foreign jurisdiction ‘would declare the plaintiff’s claim inadmissible or would dismiss it on the merits.’¹²⁰ In Olney v Rainville, the British Columbia Supreme Court (Canada) stated that necessity jurisdiction ‘refers to the ability [of the plaintiff] to commence an action, not to barriers to success.’¹²¹ This means that that the plaintiff may not be successful in the competent forum cannot render it unreasonable to require him/her to litigate in that forum.

But, in Belgium, the fact that bringing the action in the foreign forum would be ‘out of proportion’ with the financial interests involved would suffice, provided its practical effect would deprive the plaintiff of effective access to the court.¹²² By contrast, in the Netherlands, poverty alone, or the fact that the costs of bringing the foreign proceedings would be prohibitively high, is not enough.¹²³

To apply the doctrine in a balanced manner, in jurisdictions where the plaintiff’s financial incapacity to bring the suit in the foreign jurisdiction is accepted as a valid ground, the financial capacity of the defendant to litigate in the plaintiff’s chosen forum ought to be considered as well. For if the defendant cannot reasonably be expected to afford to defend the suit in the plaintiff’s chosen forum, the essence of jurisdiction by necessity would be missed, which is to ensure that a forum is provided where the plaintiff can ventilate his/her grievances and the defendant present his/her defence. Justice is for both parties. ‘Even in times of war, where the plaintiff cannot reasonably be expected to institute the suit in the warring State, the ability of the defendant to travel out of that warring State (assuming the defendant resides there) to the plaintiff’s chosen forum is an important consideration.’¹²⁴

The court must thus endeavour to balance the relative capacity of both parties to litigate in the forum,¹²⁵ although care must be taken to avoid the analysis reverting into a forum non conveniens analysis.¹²⁶ That the plaintiff cannot reasonably be expected to bring the action in the foreign forum does not mean that just any other forum should take up the adjudication of the dispute based on jurisdiction by necessity. There could be several other forums permitting jurisdiction by necessity. In fact, it may be desirable for the court to invoke the doctrine of forum non conveniens to decide whether it should proceed to adjudicate the dispute where there exists another forum that allows jurisdiction by necessity and the dispute at bar is shown to meet the requirements of jurisdiction by necessity under the laws of that other forum – that is, where that other forum is deemed more suitable for the litigation. It is fair to not unreasonably require the plaintiff to litigate in the foreign forum; but the plaintiff cannot be given an absolute right to decide the forum of necessity.

Attempts to use statutes of limitation as the basis to invoke the necessity jurisdiction of the court have been made in Canada. In Wolfe v Wyeth,¹²⁷ the requirements of the real and substantial connection test were met, but the Ontario Superior Court of Justice ignored this finding and resorted to the ‘exceptional doctrine of Forum of Necessity.’¹²⁸ The court appeared to suggest that the expiration of the limitation period in the natural forum for the litigation (Pennsylvania) was a relevant consideration in the application of the doctrine.¹²⁹ On appeal, the Ontario Court of Appeal affirmed the finding that the real and substantial connection test was met and declined to consider necessity jurisdiction.¹³⁰ In Jordan v Schatz,¹³¹ the British Columbia Supreme Court stated that ‘simple fairness and justice’ justified the exercise of jurisdiction where the action had become statute-barred in the foreign forum.¹³² The learned trial judge appeared to have been persuaded by the plaintiff’s claim that the defendant ‘lulled’ him to sleep until the limitation periods in the forums where the action might have been brought expired. Although the defendant denied lulling the plaintiff to sleep, the British Columbia Court of Appeal overturned the decision, stating that ‘jurisdiction simpliciter cannot be founded on the simple fact that the Alberta and Saskatchewan limitation periods expired, whether or not the plaintiff was lulled to sleep by the defendant.’¹³³ In Josephson v Balfour Recreation Commission¹³⁴ – a case where a claim for contribution and indemnity was made against a third party defendant – the limitation period in Idaho where the action should have been brought had expired, but the British Columbia Supreme Court either inadvertently overlooked or did not want to consider its significance and assumed necessity jurisdiction on the basis that it was not reasonable to require the defendant to proceed against the third party defendant in Idaho since any suit filed there would not be recognized under Idaho law.¹³⁵ It was a case in which, if the defendant failed to join the third party, he would never again be able to bring proceedings against the third party.

The question is whether the consequences of a statute of limitation can be avoided through third party proceedings for contribution and indemnity in another forum. Jurisdiction by necessity does not seem to comprehend a situation like this. Statutes of limitation are well-established legal rules that have sound foundations. They cannot become objectionable merely because the plaintiff has nowhere else to turn to. The Josephson situation was quite complicated in that case the purpose for which the defendant sought to invoke jurisdiction by necessity was to enable him claim contribution and indemnity against a third party he truly believed was responsible for the harm and against whom he would otherwise not be able to make the claims again. But sad as his situation may be, would it be fair to deny the third party the benefits of a statute of limitation the third party was fully entitled to? The answer is most likely in the negative. However, in cases of gross violations of international fundamental norms, where the limitation period provided under the laws of the foreign country may be described as unreasonably short given all the circumstances of the case, and the party seeking to invoke necessity jurisdiction can show that he/she was unable to bring the action in time due to no fault or negligence on his/her part, it may be just to allow the case to proceed.

To apply the above analysis to the context of the transnational corporate actor, it is useful to observe the features of a typical transnational lawsuit alleging human rights violations by multinational corporations in developing countries. In these cases, the plaintiffs are typically poor villagers in developing countries ravaged by the activities of the corporation. The corporation is often a subsidiary of another corporation headquartered in a country other than where the alleged conduct occurred. In some cases, the parent corporation is implicated. Due to the importance of the corporation to the national economy of the plaintiffs’ country, the plaintiffs’ government is hardly able or willing to bring the corporation to justice. In some cases, the plaintiffs’ government is complicit in the violations. In addition, the cases often present complex evidentiary difficulties that would require expensive means of proof as well as experienced and frequently very expensive lawyers to conduct the case effectively. The plaintiffs are hardly able to afford such expertise. Without financial assistance, they may not be able to bring the action in the first place. Further, legal aid is often not available in the plaintiffs’ country, or is generally available, but not for actions of this nature. Contingency fee services may be outlawed. Following protests by the villagers against the conduct of the corporation, the kingpins of the protests (who frequently become the named plaintiffs) are often forced to self-exile in another country by harassments, threats and intimidation from their government, and are often unable to return to their homeland. In exile, they connect with human rights NGOs who help them to initiate the proceedings in the foreign land. The suits are thus brought in the courts of a country other than the country where the alleged violations occurred. This is a typical case; individual cases may not share all of these characteristics.

But with those facts, the plaintiffs stand a chance of being able to establish practical difficulties in initiating the suit in their home country that render it unreasonable to require them to initiate the suit there. Such difficulties may be comprised in their inability to return to their country for the purpose of the litigation. On the relative capacity of the parties to litigate the dispute either in their home country or in their chosen forum, the fact that the defendant is a multinational corporation weighs in favour of litigation in the plaintiffs’ chosen forum. For it will hardly be the case that a multinational corporation with offices and businesses in several countries around the world will be financially unable to send one of its officers to any forum to defend the corporation. Moreover, the suits are typically brought where the headquarters of the parent corporation is located. So the issue of the defendant’s capacity to litigate in the plaintiffs’ chosen forum poses no serious difficulties in transnational corporate wrongs litigation.

D. Absence of Fair Trial in the Foreign Forum

Fair trial has to do with the prospect that the plaintiff may not receive fair trial in the foreign jurisdiction if compelled to initiate the proceedings there. As indicated earlier, none of the statutes adopting the doctrine explicitly contains a fair trial element. But according to Nuyts, a fair trial element has been read into the statutes in some jurisdictions, Belgium, for example.¹³⁶ It is likely that other jurisdictions will follow suit when a proper case comes before them.

The attitude of Dutch courts – in commercial cases – has been to ascertain whether the likelihood of an unfair trial in the foreign jurisdiction was foreseeable to the plaintiff at the time of entering into the transaction and to hold, if it was foreseeable, that the plaintiff must accept that forum as he/she finds it. In Tbilisi Central Plaza BV v JSC BTA Bank,¹³⁷ the parties entered into a contract which stipulated Kazakhstan as the jurisdiction where any dispute arising from the contract would be settled. The plaintiff sought to avoid settlement in Kazakh courts on the basis of systemic corruption in Kazakhstan. The District Court of Rotterdam began by noting that corruption and lack of impartiality were a valid basis of jurisdiction in exceptional circumstances. Those circumstances, the court argued, should in this particular case, take into consideration the fact that the parties freely entered into the choice of jurisdiction agreement stipulating Kazakhstan. While it does not appear that the choice of jurisdiction agreement was the principal theory of the decision, it certainly was considered relevant.¹³⁸

Similarly, in Llanos Oil Exploration Ltd v Republiek Colombia and Ecopetrol SA,¹³⁹ the plaintiff claimed that it was impossible to obtain fair trial in Columbia, particularly in cases in which the Republic of Columbia was a party, due to pervasive corruption in that country. It furnished documentary evidence showing that Columbia was one of the most corrupt nations in the world where lawyers and judicial officers were frequently under death threats. The case related to an oil concession contract which the plaintiff claimed the defendants – which included the Republic of Columbia and an oil company – illegally terminated. It claimed damages in tort and in contract. In the contract were choice of jurisdiction and choice of law clauses in favour Columbia. The Hague District Court stated that the plaintiff knew the existence of the alleged circumstances in Columbia when it chose Columbian law as the governing law of the contract and Columbian courts as the court to which they shall turn to in the event of a dispute. The court regarded the circumstances as not so unforeseen or exceptional that trial in Columbia ought reasonably not to be required. The court also found that the case lacked a sufficient connection with the Netherlands.¹⁴⁰ This last finding appeared to be a subsidiary issue in the decision while the plaintiff’s knowledge of corruption in Columbia was the principal issue. The court thus disregarded a more important element in the application of the doctrine and focused on an element that was only read into the text of the adopting statute. Although the result would have been the same, the court’s approach raises questions about the integrity of the decision.

Given that negative judicial pronouncements regarding the justice system of other countries can create international relations problems¹⁴¹ and can destroy inter-judicial cooperation between the courts of different legal systems, courts should avoid venturing into such pronouncements whenever they can. In fact, such pronouncements may well destroy the doctrine’s credibility and honour.