Business and

Human Rights

Menno Kamminga

Faculty of Law 2

Emergence of non-state actors

• IGOs• NGOs• Individuals• MNEs

Faculty of Law 3

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

Faculty of Law 4

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

Faculty of Law 5

Positive impact of MNEs

• Jobs• Technology transfer• Revenues• Schools/medical facilities

Faculty of Law 6

Faculty of Law 7

Faculty of Law 8

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

Faculty of Law 9

Curse of the minerals

• Extractive industries• Collusion with host state government• Revenues to Swiss bank accounts• Lack of transparency • Angola, Congo, Nigeria, Sudan,

Myanmar

Faculty of Law 10

Who is responsible under int. law?

1. Host state2. Home state3. Multinational enterprise

Faculty of Law 11

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

Faculty of Law 12

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

Faculty of Law 13

3. Direct corporate responsibility

• Preferred approach• Just as for states and individuals• International minimum standards• International supervision• International Criminal Court?

Faculty of Law 14

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)

Faculty of Law 15

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

Faculty of Law 16

Corporate codes of conduct

• Impressive texts on corporate websites• But usually lack of supervision• Impact on consumers?• Legal significance?

Faculty of Law 17

Multistakeholder initiatives

• Characteristics• Extractive Industries Transparency

Initiative• Voluntary Principles on Security and

Human Rights• Kimberley Process Certification Scheme• Advantages and disadvantages

Faculty of Law 18

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)

Faculty of Law 19

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

Faculty of Law 20

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

Faculty of Law 21

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

Faculty of Law 22

Legal hurdle 2: Applicable law

• Lex loci delicti• Public policy exception• Customary international law (Unocal)• But see Kiobel v. Shell

Faculty of Law 23

Legal hurdle 3: Imputability

• Limited liability of subsidiary• Lifting corporate veil• Enterprise (or corporate group) liability

Faculty of Law 24

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

Faculty of Law 25

The future

• Disasters needed?• Demand for level playing field?• A convention codifying international

corporate obligations• With a binding enforcement

mechanism

Faculty of Law 26

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