Vicarious Liability and Corporate Groups

Abstract

The corporate form of modern businesses has travelled a long way since a royal charter enacted by parliament was required to start a company. Today, technological advances, the law, and management have made it easy to start, scale, and manage even large, complex multinational corporations (MNCs). Many of these MNCs have adopted corporate groups as part of the preferred methods of organising global enterprise. The reach, size, and breadth of the activities of MNCs and their affiliates are unprecedented in modern history. Some of these advances are laudable for their overall increase in goods and services. However, MNCs are also creating an ever-increasing adverse effect on human rights including harms of a delictual nature. As it stands, there is a lack of consensus about how best to respond to the legal challenges MNCs present. There is an ineffective patchwork of soft law guidelines, international law, regional law, and state laws that regulate MNCs. All these guidelines and laws largely fail to give adequate legal recourse to delictual harms caused by MNC activities. The Bhopal gas leak disaster in India on 2 December 1984 aptly represents the challenge of bringing MNCs to account for delictual harms. In this thesis, I inquire into how the law of delict ought to respond to the unique position in which delict claimants find themselves concerning harms committed by MNCs that operate in corporate groups. Such an inquiry should not be confined within the law of delict. There are complex questions about how the law of delict must interact with international and especially private international law principles brought about by the cross-border nature of the delictual harms. There are further questions of how delict interacts with corporate law, legislation, the common law, and most importantly, the transformative Constitution of the Republic of South Africa. In this thesis, I evaluate the relevant provisions of the Constitution, company law and the law of delict to determine how we might hold corporate groups accountable for delicts. The result is a proposal for the constitutionally-inspired development of the common law of vicarious liability that would enable victims to hold parent companies liable for the delicts of their subsidiaries