Business and Human Rights Menno Kamminga. Faculty of Law 2 Emergence of non-state actors IGOs NGOs...

Business and

Human Rights

Menno Kamminga

Faculty of Law 2

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

• 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 state2. Home state3. 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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