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A Comparative Review Of The Environmental Liability Of Parent Companies For The Acts Of Their Foreign Subsidiaries

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A Comparative Review Of The Environmental Liability Of Parent Companies For The Acts Of Their Foreign Subsidiaries

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Abstract

This article seeks to examine the liability of parent companies for environmental damages or harms attributable to the operations of their subsidiaries operating in foreign jurisdictions. The issue has attracted judicial pronouncements in several jurisdictions and this article focuses attention on four selected jurisdictions namely, Nigeria, United Kingdom, United States of America and Canada. The general rule is that a parent company is not liable for the acts of its subsidiary and by extension its foreign subsidiary based on the doctrine of corporate personality which is a worldwide company law principle that has held sway over the years. However, the doctrine of corporate personality admits of certain exceptions as the veil of incorporation may be pierced or lifted in certain circumstances to make a parent company liable for the environmental damages caused by its foreign subsidiary. Aside from piercing or lifting the veil, liability could also be directly imputed to the parent company based on specific statutes as well as judicial interpretation of the relationship between a parent company and its subsidiary. Some of these jurisdictions have developed legal principles and legislation to cover the liability of a parent company for the environmental damages of its subsidiary in certain areas. The article concludes by highlighting the circumstances under which a parent company can be held liable for the environmental damages of its foreign subsidiary and makes recommendations on measures to minimize such liabilities.

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