The flaws lurking in the James Hardie compensation deal

Third, the James Hardie’s rolling funding obligation to the Special Purpose Fund (SPF) “will rank behind senior lenders”. It must also not be ignored that James Hardie will appoint the majority of the Board of SPF, which will be accounted for as a subsidiary of James Hardie.

Fourth, the NSW Government will not only release James Hardie as well as its directors, officers and employees from any additional civil liability, but also will “endeavour to legislate to extinguish other possible asbestos-related non-civil liabilities against JHINV and the former subsidiaries”. Thus, victims will have no rights to sue James Hardie beyond and outside this agreement.

Finally, neither Jackson’s report nor the debates surrounding compensation negotiations have adequately dealt with several key issues that require reform if future repetitions of James Hardie are to be avoided. One such contentious issue is the legal liability, if any, of a parent corporation for wrongs committed by its subsidiaries.

In view of the above, the HOA should be greeted with caution, if not suspicion, rather than being taken as evidence of James Hardie becoming a “holy cow” overnight. Arguably, at best the HOA may result in ensuring funding to victims, but not justice. Considering the hurdles that victims are facing all over the world in making corporations accountable for human rights abuses, this achievement is no mean feat, but it should not be treated as setting an ideal precedent for future. After all, the HOA might also be cited as another successful example of how to negotiate out of corporate legal responsibility for human rights obligations.