Canadian or American multinationals’ accountability

in Canada or the USA for the human rights violations

that they commit abroad

Shirley Li

MGMT 563 International Law and Global Trade Organizations

Dr. Connie Carter

June 12, 2013

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Introduction:

In the process of globalization multinational corporations (MNCs) have substantial

economic and political influence. The crucial presence in many national economies

makes MNCs in a historical position to influence economic development and

government policies and also enables them to contribute in both positive and negative

ways to basic human rights issues, among which some MNCs that are solely pursuing

profits are implicated in many human rights abuses.

Whether Canadian or American MNCs should be held accountable in Canada or the

USA for the human rights violations that they commit abroad? My answer is YES.I

will explain this answer by using legal principles and embed legislations like C-323

bills, Alien Tort Statute1789 with real case analysis with each principle. Also, there

are substantial obstacles existing against enabling justice in the current Canadian and

American legal systems, which should also try to be improved and conquered.

Principles:

1. State Responsibility

Respect for human rights is one of the general principles recognized by civilized

nations. Ten human rights principles of UN (August, Mayer and Michael 2013, 44)

require companies to respect human rights and labor standards. The UN Human

Rights Council recently also endorsed a set of Guiding Principles that regulate the

state duty and corporate responsibility to protect human rights. The foundational

principles are “countries must protect against human rights abuse within their territory

and/or jurisdiction by third parties, including business enterprises” and “Business

enterprises should respect human rights.” (United Nations Human Rights 2013).

However, these principles have defects. For example each country are only

responsible for the human rights violations within its sovereign territory, companies

are encouraged but not obliged to respect human rights. There is no clause talking

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about MNCs’ accountability in its home country if it violated human rights in other

countries. Because of the lack of regulation from international institution, there is a

high chance that MNCs will continue to perform their violations provided there are no

national enforcement mechanisms to regulate their behavior.

This explains international institutions do not have scrutiny and sanctions mechanism

to regulate the corporate behavior and as a result leaves the obligation to each country

to use its domestic legal system to regulate these corporations and to protect global

human rights and justice. Canada and USA should keep aligning their legal practice

with international law to regulate their own MNCs and address the benefits for all the

human beings without bias in order to achieve international justice.

2. Victims’ difficulty to get justice in local court

MNCs usually have a parent corporation in home country (usually developed

countries) and subsidiaries in other host countries (usually underdeveloped countries).

The host countries that people suffer from harms, tortures and other abuses are either

labor or natural resource intensive regions with serious governmental corruption or

they are giving priority to economy development. They either have poor legal system

or do not have sufficient enforcement of laws. Hence it becomes very difficult for the

victims in host countries to seek redress through their own legal system. While home

countries usually have sophisticated legal system and sufficient law enforcement.

There is a lawsuit called Somji v Somji about a dispute over matrimonial property in

Tanzania, a judge in Alberta decided that Alberta was the better forum for a dispute

involving Tanzanian law because “Tanzania presently faces significant governance

issues” (Meeran 2011)

At the same time, acts and legislations like C-323 bill (pending to be law) in Canada

and Alien Tort Statute1789 (ATS) in USA are means to seek justice for protecting

basic human rights of people in other countries.

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3. Parent company’s duty of care and negligence

Although we justified the motivation why victims seek remedy from the headquarters

of MNCs in their home court, another question is raised for discussion whether parent

company is responsible for the local operation of its subsidiaries.

Based on the “corporate veil”, corporations have separate corporate personalities,

which means a parent company as a separate legal person could not be held

accountable for the conduct of its subsidiaries although it invest as a shareholder to its

subsidiaries (Salmon v A Salmon & Co Ltd 1897). However there are also exceptional

situations. For instance when the subsidiary is operated by its parent company and the

parent company misconducted on its behalf because of the wrong doings like fraud or

“direct negligence” (Meeran 2011), then the parent company is held accountable.

In most of the real world practices, MNCs’ parent companies usually have an integral

involvement in the process management in its subsidiaries abroad. Moreover, there

are general understanding about that corporations (as they have breached) have a

“moral obligation” to its subsidiaries companies and the local communities,

employees and environment, MNCs parent companies hence could not avoid “duty of

care” and “negligence” in managing its subsidiaries’ conduct.

4. Alien Tort Statute

The Alien Tort Statute (ATS) is a U.S. federal law which was first adopted in 1789.

This law gives the federal courts jurisdiction to hear lawsuits filed by aliens (non-U.S.

citizens) for violation of international law. Nowadays non-U.S. citizens use ATS to

bring lawsuits in U.S. federal courts for the violations of international law which have

expanded to human rights abuse such as arbitrary arrest, torture, killing, war crimes,

and other crimes against humanity. For a long time since the first case that used ATS,

victims of human rights violations in other countries have used it as an effective

means to seek justice in the United States. (The centre for justice and accountability

n.d.)

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In the case of Wang Xiaoning v. Yahoo! for example, Wang (victim) sued the Chinese

subsidiary of Yahoo! company (defendant) under the ATS. The Chinese Yahoo! gave

the Chinese government Wang’s identity information which allowed the government

authorities to arrest him and Wang was subjected to various human right abuse like

torture arbitrary arrest and forced labor and other cruel treatment and punishment. In

the year 2007, World Organization for Human Rights USA filed a lawsuit against

Yahoo! on behalf of Wang Xiaoning under the ATS. (Diaz and Cha 2007)

In November 2007 Yahoo! settled the case for an undisclosed amount of money, and it

agreed to cover the plaintiff's legal costs as well. In a statement released by Yahoo!

after the settlement was made, this company promise that it will provide “financial,

humanitarian and legal support to these families” and create a separate “humanitarian

relief fund' for other dissidents and their families.” (Diaz and Cha 2007)

This is a good example that foreign citizens defend their human rights against

American companies outside of US (a subsidiary) under the ATS there are more

successful cases. However it is also critical that most of them get settled outside of the

court.

Obstacles

1. Procedural factors and “Comity”

Although there are obvious reasons for Canada and USA courts to hold its own MNCs

(head office in their countries) accountable for their overseas misconduct, the way to

get justice in Canada and USA is not easy.

There are jurisdiction over a claim against a parent company, but there are several

procedural factors will depend whether the court will accept or not. In particular the

following ones: a, The extent to which the MNC home courts are able to decline to

exercise jurisdiction; b, The law by reference to which the liability of the parent

company is to be determined; c, Other procedural and practical factors affecting the

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financial viability of litigation and victims’ lawyers’ ability and willingness to act.

(Meeran 2011).

So the essential question for Canadian court is whether Canada is “an appropriate

forum” or is there a “more appropriate forum” for the trial than Canadian court that

the application could be served which is called “The forum non conveniens”

principle.

For example in the law case of Recherches Internationales Quebec v Cambior Inc, as

many as 23,000 victims affected by the spill of toxic effluents into Guyana’s main

waterway because of a gold mine burst. One shareholder is Cambior Inc. of Quebec.

During the proceeding process, the Quebec court was especially concerned and

emphasized comity and respect for the courts of Guyana by focusing on the evidence

of how effectively Guyanese courts work, which finally lead to the dismissal of the

proceedings (Lee 2005).

2. Unbalanced power

Although victims from host countries could sometimes get help from NGOs, they can

mostly not afford of harm and usually at the lowest social hierarchy while the MNCs

have abundant of resource and interest of the state and sometimes these industries are

strong enough to avoid the laws or influence to change the rules or treaties (Eisenberg

2013).

Canada for example, as a home to 75% of the world’s mining companies, its global

mining industry (majority overseas) consists of corporations which are “the worst

human rights and environmental offenders in the world” (Whittington 2010) Some

investment treaties that the Canadian government made allow companies to challenge

environmental, public health or other resource-related policies that affect mining

profits so that the mining industries can enjoy impunity. ?? The way to do that is by

not offering legal resources to the impacted victims. These conditions have made

Canada a “heaven” for the global mining industry. (Karunananthan 2013)

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The human right violations happened in the mining industries outside of Canada

include Anti-mining activists are brutally attacked and killed for opposition and

tremendous consumption and contamination of precious local water resource

(Earthworks and miningWatch canada 2012). However, even when Canadian

corporations are found in violation of human rights, very few of the victims could get

justice to hold them accountable in a Canadian court.

3. ATS and effect of Kiobel v. Shell for future claims

The ATS in US gives federal courts the power to hear suits by aliens for torts. In the

case of John Doe v. Unocal Corp, the Burmese plaintiffs sued the American oil

company Unocal in California court under the ATS, for the various human rights

abuse including forced labor, false imprisonment assault and brutal oppression of

people living near a pipeline project in Myanmar, formerly known as Burma. In the

same year, a U.S. federal district court agreed to hear the case and the result they gave

was that Unocal can be held accountable under ATS for the violation of human rights

overseas and that U.S. courts have the authority to do such claims. Although

eventually the case was voluntarily dismissed because the parties announced that they

had reached a settlement but it becomes a landmark case that ATS is a very useful tool

for victims overseas to bring a lawsuit to United States and hold US companies

accountable. (Wikipedia n.d.)

However, the lawsuit brought by Nigerian citizens against Royal Dutch Shell

Corporation didn’t get a satisfying result. Shell, the defendant, allegedly assisted the

military dictatorship in the torture, rape, and killing of unarmed protesters and

Nigerian citizens in the 1990s. The plaintiffs were not able to sue the defendant due

to the domestic legal and political situation hence sued in the United States by using

ATS. At the same time the defendant argued that corporations are not bound by

human right law so US court should not rule the activities companies whose head

quarter in other country outside of US commit human rights violation in the third

country. (Kiobel v. Shell n.d.)

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The end result from US Supreme Court was plaintiffs’ failure. This brought

significant impact as a precedent was set so that in any cases like this one, where a

foreign (instead of US) corporation acted overseas, the defendant cannot be held

liable in U.S. federal courts.

Conclusion

From the above analysis, we can get a conclusion that Canadian and US corporations

should be held accountable in their home countries for their human rights violations

committed abroad because of international requirement, unbalanced legal resource in

and out their countries, their own responsibilities and capabilities (ATS). There are

sufficient evidence that social justice could be obtained in Canada and USA as long as

they could positively proceed the lawsuits.

However at the same time, Canada and US’s legal system also set a lot of obstacles

and hurdles for foreign victims. X As stated above, complicated procedural factors

and “Comity” to other sovereign countries might just turn out to be a good excuse not

to perform their responsibility. The deeper root of this is the big influence from

profitable industries and egocentrism to protect national interest. From the cases that

foreign plaintiffs accuse US companies for violation of human rights under Alien Tort

Statute, only very few companies were finally held accountable while most of them

were settled outside of the court. This might be a good example that the legal system

in Canada and US needs to be more efficient to regulate their MNCs behavior outside

their territory.

Although there are pros and cons for the execution to hold Canadian or American

MNCs accountable in Canada or the USA for the human rights violations that they

commit abroad, I would like to conclude that it is necessary, beneficial and possible to

because this can keep universal justice, in order to realize which need more

improvement instead of excuses.

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Bibliography

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