Legal Hurdles in Bringing a Successful Claim with regard to Foreign Direct Liability against the Host Country under International Law

Abstract

The subject of foreign direct investment occupies a central place in international law. It is often seen as important catalysts for economic growth in developing countries and it is an important vehicle of technology transfer from developed countries to developing countries. Its basic principle, now well established, provides that foreign direct investment stimulates domestic investment and facilitates improvements in human capital and institutions in the host countries. One of the most controversial problems regarding the foreign direct liability concerns the legal hurdles that need to be overcome when a foreign plaintiff is to bring a successful foreign direct liability claim against parent company. Foreign direct liability provides that parent companies will be accountable in their home jurisdiction for negative environmental or health and safety impacts, or complicity in human right abuses in developing countries where they operate. This article examines the legal obstacles of foreign direct liability claims that focusing on choice of Law, jurisdiction of the court, political corruption and risk of human rights abuse, lack of access to justice and establishing a duty of care on the part of the parent company over the subsidiary. The present paper takes the views that the absence of domestic laws that promote responsible corporate activity has caused recalcitrant businesses to engage in activities that violate environmental laws, health and safety laws as well as human rights law. Finally, the current study identifies and analyzes legal cases in regard to these legal problems that resulting in the difficulty for victims to bring foreign direct liability claims before the court against parent company.