The role of domicile in the social responsibility of transnational groups of companies in the European Union

Abstract

As a result of globalisation and technological development, European Union (EU) companies have expanded their activities beyond the European single market, forming transnational groups of companies (TNG). TNG influences the economy of states; this influence has both positive and negative aspects. Corporate Social Responsibility intervenes in order to eliminate the adverse effects, which result mainly from the violation of human rights and the violation of the rules on environmental protection.

The classic form of TNG is a group of companies in which a parent company controls its subsidiaries through shares or other forms of ownership. This paper will consider parent companies or group’s dominant companies domiciled in the EU and subsidiaries or dependent companies domiciled in third countries. Using the mechanisms of private international law, we will show that the EU-based parent company can be held liable for damages caused by a subsidiary based in a third country. We will present some emblematic cases solved by EU courts, which illustrate the paradigm shift in the EU space regarding the social responsibility of TNG. Finally, we will briefly analyse the developments of the EU and its member states legislation.