Transcript Faculty of Law

Business and
Human Rights
Menno Kamminga
Emergence of non-state actors
• IGOs
• NGOs
• Individuals
• MNEs
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Race to the bottom
• Elimination of boundaries
• Freedom of foreign direct investment
(FDI)
• Competition between states to attract
investment produces lowering of
standards
• Investment protection
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Accountability (or governance) gap
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Not subject to one legal system
One brand and one profit but limited liability
Rights but no duties under international law
States unable or unwilling to hold companies
accountable
• Market provides ineffective accountability
mechanism
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Positive impact of MNEs
• Jobs
• Technology transfer
• Revenues
• Schools/medical facilities
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Union Carbide (Bhopal)
• Explosion in 1984
• 16.000 killed, 50.000 permanently
disabled
• Lawsuits in New York and India
• $470 million out of court settlement
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Curse of the minerals
• Extractive industries
• Collusion with host state government
• Revenues to Swiss bank accounts
• Lack of transparency
• Angola, Congo, Nigeria, Sudan,
Myanmar
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Who is responsible under int. law?
1. Host state
2. Home state
3. Multinational enterprise
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1. Host state responsibility
• Traditional approach
• Positive obligations. Due diligence
• But doesn’t work if government is
unable or unwilling
• Myanmar(Burma) and the ILO
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2. Home state responsibility
• Examples of extraterritorial legislation
• Problems with this approach
• Except if home state actively supports
foreign investment e.g. through export
credits
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3. Direct corporate responsibility
• Preferred approach
• Just as for states and individuals
• International minimum standards
• International supervision
• International Criminal Court?
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Three types of corporate liability
1. Direct abuses (e.g. by security
guards)
2. Taking advantages of abuses (e.g.
involuntary resettlement or abuses in
supply chain)
3. Failing to speak out against abuses
(sphere of influence)
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International codes of conduct
• ILO Tripartite Declaration of Principles
Concerning Multinational Enterprises and
Social Policy (1977)
• OECD Declaration on International
Investment and Multinational Enterprises
(1976, revised several times)
• UN Global Compact (2000)
• But vague language and limited supervision
systems
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Corporate codes of conduct
• Impressive texts on corporate websites
• But usually lack of supervision
• Impact on consumers?
• Legal significance?
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Multistakeholder initiatives
• Characteristics
• Extractive Industries Transparency
Initiative
• Voluntary Principles on Security and
Human Rights
• Kimberley Process Certification Scheme
• Advantages and disadvantages
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UN Special Representative John Ruggie
• Mandate (since 2005): “identify and
clarify” international standards
• Fantastic networker
• Managed to establish global consensus
• Ruggie framework: Protect, Respect
and Remedy
• Guiding Principles (2011)
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Guiding Principles on Business and Human
Rights (2011)
• Adopted by UN Human Rights Council
without any change (!)
• Not binding
• Don’t cover home state obligations
• Corporate due diligence obligation:
ticking the boxes; obligation of effort
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Lawsuits
• Purpose: relief for victims and establish
precedents by bottom-up approach
• So far mainly in USA (ATCA)
• But increasingly also in other
countries: no ATCA required
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Legal hurdle 1: Competent court
• Forum non conveniens
• EU Regulation 44/2001 on Jurisdiction
and Enforcement of Judgments in
Civil Matters (EEX): company may be
sued where it has its statutory seat
• ECJ case C-281/102, Owusuwu, par.
46
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Legal hurdle 2: Applicable law
• Lex loci delicti
• Public policy exception
• Customary international law (Unocal)
• But see Kiobel v. Shell
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Legal hurdle 3: Imputability
• Limited liability of subsidiary
• Lifting corporate veil
• Enterprise (or corporate group) liability
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Out of court settlements
• Union Carbide/Dow Chemicals (India): $470
million
• Unocal (Myanmar/Burma): secret amount
• Trafigura (Cote d’Ivoire): app. $250 million
• Wiwa v. Shell (Nigeria): $15.5 million
• Texaco/Chevron (Ecuador) next?
• Problems with settlements
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The future
• Disasters needed?
• Demand for level playing field?
• A convention codifying international
corporate obligations
• With a binding enforcement
mechanism
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Want to know more?
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