In claims for compensation that are not based on contractual obligations, the Rome II regulation determines what law applies in cross-border litigation. If, for example, a German person causes a car accident in France and the French victim sues the German for damages in the latter’s domicile in Germany, then this regulation controls which law applies. Usually, the applicable law is the law of the country in which the damage occurred – in this example, France. The courts in the defendant’s home country have jurisdiction – in this case, Germany. This means that the French victim could sue the German in Germany for damages arising from the car accident. The German court would apply French law.
Rome II is a gateway into German law in the KiK case: for the Ali Enterprises factory fire, Pakistani law applies. The Pakistani legal system is part of the common law legal system, which is found in many English-language countries and former British colonies. It is not based only on codified laws but also on past judgments – which set a precedent – and is also developed further by judicial interpretation. Pakistani courts generally see themselves as bound by Indian and British case law. That is why it is appropriate to base this lawsuit on claims based on the common law as developed in the UK and India.
These claims are comparable to the compensation provisions of the German Civil Code (Article 823 and 813). The German Civil Code also provides for liability for employees (in this case, textile workers) and nominally “freelance” employees who are essentially employees by another name (in this case, Ali Enterprises), but this liability is broader under common law than in Germany.
The lawsuit was based on recent developments in the common law that have been solidified by Pakistani, Indian and British courts. These court judgments increasingly take account of modern economic structures; the courts impose liability for buyer companies where there was a sufficiently close relationship between the buyer and the supplier. Since the Pakistani factory produced almost exclusively for KiK and as KiK has repeatedly stressed its regular visits to oversee all its suppliers, the business ties between KiK and the Pakistani factory are strong and close enough to hold KiK accountable for the fire safety issues.