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BUSINESS & HUMAN RIGHTS:
THE FUTURE OF CORPORATE ACCOUNTABILITY FOR HUMAN
RIGHTS VIOLATIONS IN THE EXTRACTIVE SECTOR
By
Melba Ethel Kapesa, BA Law, LLB
Thesis submitted in fulfilment of the requirements of the degree of
Doctor of Juridical Science
Monash University
School of Law
September 2012
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TABLE OF CONTENTS
Table of Contents........................................................................................................................................i
Abstract......................................................................................................................................................vi
Certificate of Compliance..........................................................................................................................vii
Copyright Notices......................................................................................................................................viii
Acknowledgments......................................................................................................................................ix
CHAPTER 1: INTRODUCTION
1.1. Introduction ........................................................................................................................................1
1.2. A Brief Look at the Background on Business and Human Rights.......................................................4
1.2.1 The Impact of Globalisation.................................................................................................4
1.2.2 The Rise of Multinational Corporations...............................................................................6
1.3. ‘The Canary in the Coal Mine’: Impact of Extractive MNCs on Human Rights.................................9
1.3.1 Case Studies: A Global Overview.......................................................................................10
1.3.1.1 Texaco Oil Operations in Ecuador.....................................................................11
1.3.1.2 Rio Tinto Mining Operations in Papua New Guinea.........................................13
1.3.1.3 Anvil Mining Operations in the Democratic Republic of Congo......................14
1.3.2 Common Themes and Insights............................................................................................17
1.4. Thesis Aims and Limitations...............................................................................................................19
1.5. Structure of the Thesis.........................................................................................................................22
CHAPTER 2: IMPOSING HUMAN RIGHTS ACCOUNTABILITY ON MULTINATIONAL CORPORATIONS
2.1. Introduction...........................................................................................................................................24
2.2. The Possibility Issue: Can MNCs be Subjects of International Law?..................................................26
2.3. The Reality Issue: Do Corporations have Human Rights Obligations under International Law?.......29
2.4. The Source Issue: Is there a Basis in International Law to Impose Corporate Human Rights Accountability?............................................................................................................................................34
2.4.1 A Brief Reflection on the Philosophical Discourse on Human Dignity...............................34
2.4.2 Human Dignity in International Law....................................................................................38
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2.4.3 The Meaning of Human Dignity...........................................................................................41
2.4.4 Human Dignity as the Overarching Principle to Corporate Human Rights Accountability................................................................................................................................45
2.5. Conclusion.............................................................................................................................................52
CHAPTER 3: REVIEW OF EXISTING MECHANISMS OF ACCOUNTABILITY
3.1. Introduction.............................................................................................................................................53
3.2. Voluntary Initiatives................................................................................................................................55
3.2.1 Corporate Codes of Conduct...................................................................................................55
3.2.2 Extractive Initiatives................................................................................................................57
3.2.2.1 Voluntary Principles on Security and Human Rights................................................................................................................................................57
3.2.2.2 The International Council on Mining and Minerals Sustainable
Development Framework....................................................................................................60
2.2.3 International Finance Corporation Performance Standards on Social and
Environmental Sustainability..............................................................................................63
3.3. Soft Law Mechanisms...............................................................................................................................68
3.3.1 The OECD Guidelines..............................................................................................................68
3.3.2 The ILO Declaration.................................................................................................................72
3.3.3 United Nations Initiatives.........................................................................................................74
3.3.3.1 The UN Global Compact.........................................................................................74
3.3.3.2 The UN Norms........................................................................................................76
3.4. Some Broad Lessons on the General Flaws Limiting the Efficacy of Existing Mechanisms......................................................................................................................................................79
3.4.1 A ‘Patchwork’ of Mechanisms Limited in Scope.....................................................................79
3.4.2 Reliance on a Pure Voluntarism Approach...............................................................................80
3.4.3 Lack of Effective Enforcement Systems...................................................................................81
3.5. Conclusion.................................................................................................................................................83
CHAPTER 4: THE UN ‘PROTECT, RESPECT & ACCESS TO REMEDY’ FRAMEWORK AND ITS GUIDING PRINCIPLES
4.1. Introduction................................................................................................................................................84
4.2. Brief History of the SRSG’s Mandate........................................................................................................86
4.2.1 The First Mandate (2005-2008).................................................................................................86
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4.2.2 The Second Mandate (2008-2011)..........................................................................................88
4.3. Elements of the UN Framework..............................................................................................................90
4.3.1 Foundation: Doctrine of Principled Pragmatism.....................................................................90
4.3.2 The ‘Protect, Respect and Remedy’ Framework.....................................................................92
4.3.2.1 The State Duty to Protect........................................................................................92
4.3.2.2 The Corporate Responsibility to Respect................................................................95
4.3.2.3 Access to Remedies.................................................................................................98
4.3.3 Concluding Remarks................................................................................................................101
4.4. Extracting It Right: Implementing the UN Framework...........................................................................102
4.4.1 South Sudan’s ‘Duty to Protect’ under the Guiding Principles...............................................104
4.4.1.1 Content and Implementation..................................................................................104
4.4.1.2 Effectiveness..........................................................................................................106
4.4.2 Mazuri’s ‘Responsibility to Respect’ under the Guiding Principles.......................................110
4.4.2.1 Content and Implementation..................................................................................110
4.4.2.2 Effectiveness..........................................................................................................113
4.4.2.3 A Further Hypothetical Scenario: Unanswered Questions............................................................................................................................116
4.5. Towards MNC Accountability: Is the UN Framework ‘A Game Changer’?...........................................119
4.6. Conclusion................................................................................................................................................127
CHAPTER 5: WALKING THE TALK: PROPOSALS FOR AN INTERNATIONAL ACCOUNTABILITY FRAMEWORK
5.1. Introduction.......................................................................................................................................128
5.2. Towards an Integrated Theory of International and Legal Responsibility........................................133
5.3. Proposal No. 1: International Ombudsperson....................................................................................135
5.3.1 The Case in Favour of a New Accountability Mechanism..................................................136
5.3.2 Proposed Design and Function of the BHIO.......................................................................143
5.3.2.1 Overall Purpose.....................................................................................................143
5.3.2.2 Underlying Principles............................................................................................144
5.3.2.3 Source of Standards...............................................................................................145
5.3.2.4 Jurisdiction of the BHIO.......................................................................................148
5.3.2.5 Access to the BHIO...............................................................................................149
5.3.2.6 Proposed Core Functions: A Hybrid Model..........................................................150
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5.3.2.7 Remedies................................................................................................................153
5.3.2.8 Enforcement: The Recipe for Success...................................................................155
5.3.2.9 Funding.....................................................................................................................160
5.3.3 Perceived Benefits of Adopting the Proposed Mechanism........................................................162
5.3.3.1 Victims’ Perspectives...............................................................................................162
5.3.3.2 MNC Perspective......................................................................................................162
5.3.3.3 Government Perspective...........................................................................................164
5.3.4 Possible Limitations to the Successful Implementation of the BHIO........................................164
5.3.4.1 Political barriers........................................................................................................165
5.3.4.2 Financial barriers.......................................................................................................166
5.3.4.3 Contractual barriers...................................................................................................166
5.3.4.4 Institutional capacity barriers....................................................................................167
5.3.4.5 Jurisdictional barriers................................................................................................167
5.3.5 Conclusions and Recommended Next Steps..............................................................................169
5.4. Proposal No. 2: Home State Extraterritorial Regulation.............................................................................170
5.4.1 A Primer on Extraterritorial Regulation and International Human Rights Law.........................172
5.4.1.1 Basis for Extraterritorial Regulation..........................................................................172
5.4.1.2 State Extraterritorial Obligations and MNC Human Rights Violations.....................174
5.4.2 Proposal for a Two-Tiered Design for Home State Extraterritorial Regulation..........................178
5.4.2.1 The International Dimension......................................................................................179
5.4.2.2 The Domestic Dimension.........................................................................................187
5.4.3 Possible Challenges......................................................................................................................191
5.4.3.1 Lack of Political Will among Home States.................................................................191
5.4.3.2 Infringement of a Host State’s Sovereignty................................................................193
5.4.3.3 Complex Corporate Structures....................................................................................194
5.4.4 Concluding Remarks....................................................................................................................195
5.5. Conclusion....................................................................................................................................................196
CHAPTER 6: CONCLUSION
6.1. Overview of Thesis Aims.............................................................................................................................197
6.2. The Case in Favour of MNC Accountability for Human Rights Abuses.....................................................197
6.2.1 The Why.......................................................................................................................................197
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6.2.2 The What....................................................................................................................................200
6.2.3 The How...................................................................................................................................204
6.3. Looking Ahead: Implications for Future Research...................................................................................207
6.4. Conclusion: The Bottom Line...................................................................................................................208
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ABSTRACT OF THESIS
The accountability for human rights violations by multinational corporations (“MNCs”) has
been one of the most debated human rights issues of the last decade. Nongovernmental
organisations, industry groups, governments and even businesses themselves have generated
a plethora of recommendations on how best to respond to the negative human rights impacts
created by MNCs that operate in States that are unable or unwilling to protect their citizens’
human rights. While there is broad agreement among these different stakeholders about the
need for an effective regulatory regime, there is less agreement about the form that this
should take.
The landmark ‘Protect, Respect and Remedy’ framework proposed in 2008 by John Ruggie,
the former Special Representative of the United Nations (“UN”) Secretary-General on the
issue of business and human rights, followed in 2011 by its ‘Guiding Principles on Business
and Human Rights’ (together, the “UN Framework”), has been hailed as the most significant
and progressive instrument to date in the business and human rights domain. But, can the UN
Framework be considered a game-changer in that it guarantees that victims of MNC human
rights abuses are able to obtain effective remedy?
This thesis will explore the causes, challenges and possible future remedies of MNC human
rights accountability in three distinct ways. First, it will canvass the possible ways in which
businesses affect the human rights of individuals and posit a theory of corporate
accountability embedded in the fundamental value of human dignity. Secondly, it will
evaluate major policy frameworks that purport to regulate MNC human rights
responsibilities, including the newly launched UN Framework, with a view to exposing their
(in)adequacy in addressing MNC human rights violations. Finally, it will suggest necessary
reforms or alternative enforcement mechanisms, which could be used to enhance MNCs
human rights accountability at the international realm with both voluntary and legal
dimensions.
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CERTIFICATE OF COMPLIANCE
Monash University Institute of Graduate Research
This thesis contains no material which has been accepted for the award of any other degree or diploma in any university or other institution. To the best of my knowledge, the thesis contains no material previously published or written by another person, except where due reference is made in the text of the thesis.
This thesis does not incorporate work which was previously submitted for any of the four LLM coursework units which contributed to the coursework component. If it does incorporate any such coursework, the coursework involved has been fully disclosed in the thesis.
Candidate’s Signature: _____________________ Date: ________________
viii
COPYRIGHT NOTICES
Notice 1
Under the Copyright Act 1968, this thesis must be used only under the normal conditions of scholarly fair dealing. In particular no results or conclusions should be extracted from it, nor should it be copied or closely paraphrased in whole or in part without the written consent of the author. Proper written acknowledgement should be made for any assistance obtained from this thesis.
Notice 2
I certify that I have made all reasonable efforts to secure copyright permissions for third-party content included in this thesis and have not knowingly added copyright content to my work without the owner’s permission.
ix
ACKNOWLEDGEMENTS
I would like to express my gratitude to my supervisor, Dr. Adam McBeth. The value of his
counsel throughout the entire process of writing this thesis has been of the highest order. His
scholarship, attention to detail and hard work have set an example I hope to match some day.
I would also like to thank Professor Sarah Joseph, who patiently assisted me with my thesis
proposal and generously gave of her time and input at that important juncture in my
candidature.
I owe a special thank-you to my mother, Salome Mbeyu Mwendar, for her encouragement,
unwavering support and friendship throughout the entire process. More than this, I thank her
most sincerely for instilling in me confidence and a drive for pursuing my dreams and
teaching me to ‘paddle my own canoe’ during life’s journey. I would also like to thank my
future parents in-law, Aggrey and Monique Wasunna, for holding me in mind and in their
prayers since the beginning.
I would especially like to thank my fiancé, Aubrey Wasunna, for offering me a safe haven
throughout this journey; and also for his love, patience and humour, without which I could
never have completed this work.
Last - but certainly not least - thank you God; if not for Your mercy, if not for Your love, I
most likely would have given up. If not for Your favor I never could say I’m still standing.
1
CHAPTER 1 INTRODUCTION
1.1 INTRODUCTION
From Papua New Guinea to South Africa, India to Ecuador, Congo to Peru and
Sudan to Myanmar, social protests and legal campaigns are increasingly
mobilised by individuals and communities against perceived human rights abuses
of oil, gas and mining operations perpetrated by giant corporations that are based
in developed countries such as the USA, Canada, Australia and the United
Kingdom. According to John Ruggie, the former United Nations (“UN”) Special
Representative on the issue of business and human rights, these “escalating
charges of corporate-related human rights abuses are the canary in the coal mine”
today.1 Lying at the heart of this conundrum is the discordance between the right
to an effective remedy accorded to victims of human rights violations2 and the
corresponding duty or responsibility by States and businesses to, respectively,
protect or respect human rights.3
This is a multifaceted and complex issue, which can broadly be illustrated as
follows: (a) developing States, driven by the need for economic development
and/or fear of repelling foreign direct investment, lower their labour,
environmental and human rights standards or in some cases, exempt (some) global
1 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Protect, Respect and Remedy: A Framework for Business and Human Rights UN Doc A/HRC/8/5 (7 April 2008), para 2. Ruggie was appointed as Special Representative on the issue of business and human rights in July 2005 by the then Secretary-General of the United Nations, Mr. Koffi Annan. His mandate lasted for 6 years until its expiration in June 2011. For more information on Ruggie’s entire mandate, see http://www.business-humanrights.org/SpecialRepPortal/Home (Last visited on 20 September 2012).
2 The right to an effective remedy generally encompasses the ability by potential victims to access justice and receive adequate remedies or reparation from the perpetrators of the human rights abuses. See, for example, Universal Declaration of Human Rights, GA Resolution 217A (III), UN Doc A/810 (10 December 1948), article 8; International Convention on Civil and Political Rights, opened for signature 16 December 1966, 999 UNTS 171 (entered into force 23 March 1976), article 2(3); and The Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law, UN Doc A/RES/60/147 (21 March 2006).
3 Report of the Special Representative Note 1, paras 11-16. See also, David Kinley Civilizing Globalisation: Human Rights and the Global Economy (Cambridge University Press, 2009) 177-179.
2
businesses from certain legal and regulatory requirements;4 (b) corporations based
in developed countries, enticed by high profits from largely unexplored natural
resources in developing States as well as little regulation or governmental
interference of their activities, set up operations in developing States without due
regard for the human rights of the citizens in those countries;5 (c) vulnerable
individuals, whose human rights have been adversely affected by the company’s
activities, have little or no legal redress against the corporation under their
country’s domestic laws.6 The result has been what Justice Ian Binnie accurately
describes as “an unfair imbalance ... between the price paid by the first world and
the real costs incurred in the third world”.7
These circumstances led to a 40-year search for a suitable regulatory mechanism
to hold corporations accountable for the adverse impact of their transnational
activities, particularly in the developing world.8 This global search for corporate
accountability for human rights violations recently culminated in a conceptual
framework proposed by Ruggie in 2008 known as the ‘Protect, Respect and
Remedy’ Framework, which was unanimously endorsed by the UN Human Rights
Council (“2008 Framework”).9 Following an extension of his mandate to provide
4 Radu Mares The Dynamics of Corporate Social Responsibilities (Martinus Nijhoff Publishers, 2008) 15; Beth Stephens ‘The Amorality of Profit: Transnational Corporations and Human Rights’ (2002) 20 Berkeley Journal of International Law 45, 51-53.
5 David Horton ‘Illuminating the Path of Aliens’ Judicial Recourse: Preventing another Bowoto v Chevron by Congressional Legislation’ (2010) 10 Appalachian Journal of Law 27, 30; Ratna Kapur ‘From Human Tragedy to Human Rights: Multinational Corporate Accountability for Human Rights Violations’ (1990) 10 Boston College Third World Law Journal 1, 13.
6 Amnesty International ‘Oil in Sudan: Deteriorating Human Rights’ AFR 54/01/00ERR (2000) 2-4. Available at http://www.amnesty.org/en/library/asset/AFR54/001/2000/en/82ee4ed1-dfc5-11dd-8e17-69926d493233/afr540012000en.pdf (Last visited on 11 June 2012); Jenness Duke ‘Enforcement of Human Rights on Multinational Corporations: Global Climate, Strategies and Trends for Compliance’ (2000) 28 Denver Journal of International Law and Policy 339, 340-341.
7 Justice Ian Binnie ‘Confronting Corporate Complicity in International Human Rights Abuses’ (International Commission of Jurists, Conference on Legal Remedies for Human Rights Abuse Involving Corporations, 2010). Available at http://www.icj.org/dwn/img_prd/FINAL-BinnieJ-ICJSpeakingNotes_092310.pdf (Last visited on 11 May 2012).
8 John Ruggie Recommendations on Follow-Up to the Mandate of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises. Available at http://www.business-humanrights.org/media/documents/ruggie/ruggie-special-mandate-follow-up-11-feb-2011.pdf (Last visited on 22 March 2012).
9 See Report of the Special Representative Note 1 above.
3
guidance on the operationalisation of the 2008 Framework, in 2011 Ruggie issued
the practical steps for implementing his framework in a document known as the
‘Guiding Principles on Business and Human Rights’ (“Guiding Principles”,
together with the 2008 Framework, the “UN Framework”), which the UN Human
Rights Council also unanimously endorsed.10
Subsequent to the endorsement of the UN Framework, it is fair to say that the
relationship between business and human rights has now entered a critical phase.
Today, it is generally accepted that corporations should bear some responsibility
for the negative impact of their operations on the human rights.11 However, heated
debate still prevails regarding the nature, extent and enforcement of such
responsibility.12 In particular, there has been growing tension between proponents
of the concepts of corporate responsibility and accountability, which both seek to
address the relationship between business entities and human rights.13 The former,
which enjoys overwhelming support from businesses, is based on a platform
whereby corporations are encouraged, but not required, to proactively engage with
human rights norms.14 In other words, corporate responsibility signifies no more
than a “voluntary uptake of ethical conduct by corporations that is not ... legally
enforceable”.15
The concept of corporate accountability on the other hand, which is
predominantly championed by human rights non-governmental organizations
10 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework UN Doc A/HRC/17/31 (16 June 2011).
11 Report of the Special Representative Note 1, paras 23-24.
12 Ruggie Note 8, 2-3.
13 Andrew Clapham Human Rights Obligations of Non-State Actors (Oxford University Press, 2006) 195. For a review on the evolution of these two concepts spanning over the last century, see generally, Joanne Ciulla ‘Why is Business Talking about Ethics? Reflections on Foreign Conversations’ (1991) California Management Review 67.
14 Chris Avery ‘The Difference between CSR and Human Rights’ (2006) 89 Corporate Citizenship Briefing 4, 4.
15 Justine Nolan ‘The United Nations’ Compact with Business: Hindering or Helping the Protection of Human Rights?’ (University of New South Wales Faculty of Law Research Series, Research Discussion Paper No 10, 2010), 4.
4
(“NGOs”), is based on the expectation that corporations, as global or domestic
citizens, should be legally accountable for their negative human rights impacts.16
Thus, unlike corporate responsibility, which implies that corporations may
voluntarily choose to engage with human rights principles, corporate
accountability obliges them to do so or face legal sanctions.17 The key question
that arises for consideration is: how can this apparent tension be resolved to the
reasonable, if not entire, satisfaction of both interests groups to ensure that victims
of corporate human rights abuses are able to obtain justice?
Against this backdrop, this thesis shall have three main objectives. First, I will
briefly canvass possible ways in which businesses affect the human rights of
individuals, review the conceptual problems arising out of the extension of human
rights responsibilities to MNCs and posit a theory of corporate accountability
based on the fundamental value of human dignity. Secondly, I will explore the
UN Framework in detail in order to decipher whether Ruggie’s efforts to
reposition the business community vis-à-vis their human rights responsibilities,
unlike existing mechanisms, can be considered successful. Thirdly, I will argue
that in today’s globalised economy, multiple regulatory dimensions that are
nonetheless interlinked, are necessary to ensure corporate accountability.
Therefore I will propose a robust accountability regime at the international level
that enables both legal and voluntary measures to have key complementary roles
to play in the enforcement of the human rights responsibilities of MNCs.
1.2 A BRIEF LOOK AT THE BACKGROUND ON BUSINESS AND HUMAN RIGHTS
1.2.1 The Impact of Globalisation
Former UN Secretary General Kofi Annan declared that “in the end, if
globalisation cannot work for all, it will work for none”.18 Globalisation is a term
16 Elisa Morgera Corporate Accountability in International Environmental Law (Oxford University Press, 2009) 19.
17 Avery Note 14, 4.
18 Kofi Annan Address to World Economic Forum (Davos, 2001). Available at http://www.unis.unvienna.org/unis/pressrels/2001/sg2772.html (Last visited on 11 January 2012).
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used to describe the profound transformation of the world’s economy since the
1980’s. It refers to the unprecedented movement of capital across national
boundaries, the progressive removal of barriers to trade and investment and the
rapid technological advances that have allowed individuals to interact freely on a
global scale.19 The process of globalisation has ensured that business sectors such
as finance, investment, production and marketing no longer fall within the
exclusive province of States but are increasingly being dominated by corporate
entities whose actions are not confined by national borders.20 This in turn has
contributed to developing States embracing foreign direct investment as a
necessary initiative for expanding their economies.21 Consequently, business
enterprises based in developed States have moved to set up operations in
developing States, often through local subsidiaries thereby leading to an
expansion in size and influence of these corporations.22
Meanwhile, human rights have also been undergoing a process of globalisation.23
That is, globalisation has contributed to an improvement in the quality of life of
millions across the globe and directly or indirectly supported fundamental rights
such as the rights to work, food, shelter, education and freedom of movement.24
However, like a double-edged sword, globalisation has also resulted in less than
desirable consequences for many individuals, particularly in developing States.
General concerns include the exploitation of workers and the environment by
business entities, the proliferation of economic inequality between developed and
19 Justice M Wilcox ‘Foreword’ in Melinda Jones and Peter Kriesler (eds) Globalisation, Human Rights and Civil Society (Prospect Media, 1998) 6. See also, Clapham Note 13, 5.
20 Ibid.
21 Scott Jerbi ‘Business and Human Rights at the UN: What Might Happen Next?’ (2009) 31 Human Rights Quarterly 299, 303.
22 David Kinley and Justine Nolan ‘Trading and Aiding Human Rights: Corporations in the Global Economy’ (2007) 25 Nordisk Tidsskrift for Menneskerettigheter 353, 358.
23 Philip Alston ‘Downsizing the State in Human Rights Discourse’ in N. Dorden and P. Gifford (eds) Democracy and the Rule of Law (Congressional Quarterly Press, 2001) 357-368.
24 Philip Alston ‘The Myopia of the Handmaidens: International Lawyers and Globalisation’ (1997) 8 European Journal of International Law 435, 442.
6
developing countries and the diminution of the respect for human rights in the
pursuit of corporate investments.25
In sum, the phenomenon of globalisation draws attention to the ever-changing
international context whereby States are no longer considered the most dominant
political and economical powers but are, instead, increasingly giving way to the
influence of corporations.26 As it will be shown later in the thesis, this poses
serious implications for the protection of individual human rights, especially in
developing States.
1.2.2 The Rise of Multinational Corporations
The remarkable and unprecedented increase in the economic and political power
of businesses has given rise to a class of companies termed multinational
corporations (MNCs).27 In essence, these are entities with massive economic
wealth that often eclipse the economic capacities of the countries in which they
operate.28 As a result, they have become major actors in the international field
today since their commercial activities or operations usually transcend the
regulatory borders of many States.29 Today, there are approximately 80,000
MNCs with ten times as many subsidiaries in the world.30 As of 2008, only 21
States had gross domestic products that exceeded the annual sales of the six
25 Gare A. Smith ‘An Introduction to Corporate Social Responsibility in the Extractive Industries’ (2008) 11 Yale Human Rights and Development Law Journal 1, 2.
26 Clapham Note 13, 8.
27 For a general discussion on the origin and development of MNCs over the last few decades, see Peter T. Muchlinski Multinational Enterprises and the Law (Oxford University Press, 2nd Ed, 2007) 8-44. See also, Emeka Duruigo ‘Corporate Accountability and Liability for International Human Rights Abuses: Recent Changes and Recurring Challenges’ (2008) 6 Northwestern Journal of International Human Rights 222, 229-231.
28 Kinley and Nolan Note 22, 356-8.
29 Ibid.
30 Report of the Special Representative Note 10, 5.
7
largest MNCs.31 Research also reveals that only about 300 MNCs account for
approximately 25% of the world’s total wealth and assets.32
Despite the term being used extensively in academic literature, there is currently
no universally agreeable definition of an MNC.33 In this thesis, the term MNC
will be used to refer to an economic enterprise that owns, controls or manages
operations or productions in two or more countries, whether its actions are
directed by a head office in a single State or by various control systems across the
globe.34 This definition is predicated on the modern ‘corporate enterprise theory’,
which allows all constituent corporations that are part of an integral business
group to be treated as a single economic unit for the purposes of attaching
liability.35 The theory relies on the concept of ‘control’ between the parent
company and its subsidiaries, which may take the form of holding a majority of
the shares or the power of one entity to control or direct the management and
policies of another entity.36
The corporate enterprise approach is viewed by various commentators as a more
suitable response to overcoming the difficulties presented by the amorphous 31 Smith Note 25, 3.
32 Ibid.
33 It should be noted that literature on this subject describes MNCs in a variety of interchangeable terms such as transnational corporations (TNCs), multinational enterprises (MNEs), global businesses or international corporations. According to Jenks, the lack of an agreed authoritative definition of an MNC attests to the fact that “it has no coherent existence as a legal entity; it is a political and economic fact which expresses itself in a bewildering variety of legal forms and devices”. C.W. Jenks ‘Multinational Entities in the Law of Nations’ in W. Friedman, L. Henkin and O. Lissitzyn (eds) Essays in Honor of Phillip C. Jessup ( Columbia University Press, 1972), 80; cited in Morgera Note 16, 59.
34 International Labour Organisation (ILO) Tripartite Declaration on Multinational Enterprises and Social Policy (ILO, 4th ed, 2006) para 6; Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises (OECD Publishing, 2011) ‘Concepts and Principles’ Part 1, para 4. See also, Christine Baez ‘Multinational Enterprises and Human Rights’ (1999-2000) 8 University of Miami International & Comparative Law Review 183, who analyses the definition of an MNC from various perspectives such as ownership, location of production or operation, location of headquarter, size, and percentage of sales made in foreign countries.
35 Phillip I. Bloomberg ‘The Increasing Recognition of Enterprise Principles in Determining Parent and Subsidiary Corporation Liabilities’ (1996) 28 Connecticut Law Review 295, 296-297. Bloomberg contrasts the doctrine against the traditional ‘corporate entity theory’, which treats each corporation as a separate legal entity with its own rights and duties.
36 Bloomberg Note 35, 298.
8
nature of an MNC.37 Moreover, in the last few decades, countries such as the
United States have embraced this corporate enterprise theory in different areas of
domestic law because of the globalised nature of the world economy and the
structural challenges posed by global corporations.38 Thus, by relying on the
corporate enterprise theory, this thesis embraces a pragmatic approach that is
cognisant of an MNC’s diverse structures and modes of operating within the
global economic context.39 Unless otherwise specified, the term ‘MNC’ shall be
used throughout this thesis to represent a large business enterprise, which has its
parent company in one country (the “Home State”) and operates in foreign
jurisdictions (the “Host State”) through wholly or partially-owned subsidiaries.40
It should be noted that, overall, this description focuses on the “relationship
between the entities and the exercise of control among them, rather than their
legal form”.41
37 See, for example, Steven R. Ratner ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (2001) 111 The Yale Law Journal 443, 496; Sarah L. Seck ‘Home State Responsibility and Local Communities: The Case of Global Mining’ 11 Yale Human Rights and Development Law Journal 177, 188; Surya Deva ‘Acting Extraterritorially to Tame Multinational Corporations for Human Rights Violations: Who Should Bell the Cat?’ (2004) 5 Melbourne Journal of International Law 37, 47-48.
38 Bloomberg Note 35, 298.
39 This view was echoed by the court in Amoco Cadiz Oil Spill, (1984) 2 Lloyd’s Rep 304, 2123, which stated that “as an integrated multinational corporation which is engaged through a system of subsidiaries in the exploration, production, refining, transportation and sale of petroleum products throughout the world, standard the American parent corporation is responsible for the tortious acts of its wholly owned subsidiaries and instrumentalities AIC and Transport”; cited in Olivier De Schutter ‘Extraterritorial Jurisdiction as a Tool for Improving the Human Rights Accountability of Transnational Corporations’ (Seminar Paper Prepared for the Office of the UN High Commissioner for Human Rights, Brussels, 2006) 40. Available at http://www.corporatejustice.org/extraterritorial-jurisdiction-as-a,101.html?lang=fr (Last visited on 2 January 2012).
40 The argument here might be extended to various other forms through which MNCs conduct their business, for example partnerships, joint ventures, cross-shareholdings or common directorships, among others. However, as per the definition of an MNC given above, a detailed consideration of these other forms lies outside the scope of the thesis. For a detailed review of the various business forms and models MNCs may adopt, see Muchlinski Note 27, 45-79.
41 Adam McBeth International Economic Actors and Human Rights (Routledge, 2010) 247.
9
1.3 ‘THE CANARY IN THE COAL MINE’: IMPACT OF EXTRACTIVE
MNCs ON HUMAN RIGHTS
This thesis chooses to focus on one key commercial area, the extractive sector, in
order to highlight the significant impact that MNCs can (and do) have on human
rights. For many developing States, the extractive operations conducted by MNCs
are a vital source of revenue that contributes to the country’s economic growth
and stability.42 Often, the substantial infrastructure and exploration investments
required for oil, gas and mining ventures usually mean that exploitation of natural
resources in developing States cannot proceed without the involvement of foreign
business entities.43 When governance is good and the exploitation of these
resources is carried out in a responsible manner, revenues from extractive MNCs
foster growth, reduce poverty and improve the quality of lives of individuals and
communities in the endowed country.44 However, when governance is weak or
simply absent, the extractive operations by MNCs often result in poverty,
corruption, and conflict in the endowed country, all of which adversely affect
individual human rights.45 Indeed, research conducted in 2006 by Ruggie revealed
that out of 65 cases covering 27 countries from around the world, the oil, gas and
mining sector accounted for two thirds of the corporate-related human rights
abuses.46 Furthermore, the vast majority of these corporate abuses occurred in
42 Terra E. Lawson-Remer ‘A Role for the International Finance Corporation in Integrating Environmental and Human Rights Standards into Core Project Covenants: Case Study of the Baku-Tbilisi-Ceyhan Oil Pipeline Project’ in Olivier De Schutter (ed) Transnational Corporations and Human Rights (Hart Publishing, 2006) 395.
43 Lawson-Remer Note 42, 396.
44 Sarah Joseph Corporations and Transnational Human Rights Litigation (Hart Publishing, 2004) 1; Rainbow Insights ‘Evaluating the EITI’s Impact on the Transparency of Natural Resource Revenues’ (Report No 1, 2009), 3. Available at http://eiti.org/files/Rainbow%20Insight%20Report.pdf (Last visited on 2 February 2012).
45 Ibid. See also, Amnesty International ‘Petroleum, Pollution and Poverty in the Niger Delta’ AFR 44/017 (2009) 1. Available at www.amnesty.org/en/library/info/AFR44/017/2009 (Last visited on 1 September 2012).
46 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Interim Report UN Doc E/CN4/2006/97 (22 February, 2006) para 24-25.
10
developing countries in Africa, Asia & Pacific, Latin America and the Middle
East.47
This thesis shall use case studies to give a practical illustration of the varied
human rights issues that can arise from the operations of extractive MNCs in a
developing country (the “Host State”). Research on other aspects of the thesis
shall draw upon academic literature, corporate policies, accountability
mechanisms in the extractive sector, international human rights instruments and
international guidelines for businesses.
1.3.1 Case Studies: A Global Overview
In this section, I intend to use case studies depicting real events in order to give a
practical illustration of the varied human rights issues that can arise from the
operations of extractive MNCs in a Host State ranging from geographical locale,
nature of alleged human rights violations and available remedies to victims,
among others. Out of many, I shall consider the following three: (a) Texaco’s oil
and gas operations in Ecuador, Latin America; (b) Rio Tinto’s mining operations
in Papua New Guinea, Asia-Pacific; and (c) Anvil’s mining operations in the
Democratic Republic of Congo, Africa. The starting point for each case study will
be a consideration of the factual circumstances giving rise to the allegations of the
MNC’s human rights violations. I shall then briefly look at the local remedies that
were available to the victims as well as the obstacles they faced while seeking to
vindicate their rights against the relevant MNC. Finally, I will offer an analysis of
the common obstacles that seemed to face the corporate victims irrespective of
their geographical locales. It should be noted that the point of my analysis is not to
engage in a so-called witch hunt of ‘abusive’ extractive MNCs, but rather to
illuminate the diverse range of actors, jurisdictions and accountability issues
arising from potential MNC human rights violations.
47 Ibid.
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1.3.1.1 Case Study No. 1: Texaco Oil Operations in Ecuador
In 1964, the government of Ecuador invited Texaco Petroleum Company, an
American corporation, to explore for and produce oil on a commercial basis in the
Ecuadorian Amazon or the Oriente, as it is locally known, through a partnership
with the government.48 Up until then, the area was virtually inaccessible and
uninhabited except by the indigenous communities who lived entirely off the
land.49 For the next two decades, Texaco, through its subsidiary known as
Texpert, explored for and produced oil in the Oriente through a business
partnership.50
Texaco’s tenure allegedly had devastating consequences on local communities,
particularly the original indigenous inhabitants.51 It was alleged that throughout
the two decades of Texaco operations, an average of 3.2 million gallons of toxic
waste water generated every day was either dumped into open air pits that were
close to indigenous homes or channelled into rivers on which the locals relied on
for their livelihood.52 Additionally, Texaco allegedly spilled at least 16.8 million
gallons of oil from the trans-Ecuadorian pipeline into the Amazon River.53 This
contamination allegedly led to serious health problems like increased rates of
cancer, skin rashes and even deaths.54 Furthermore, Texaco allegedly ceased its
operations without performing any significant clean-up operations for the billions
of gallons of toxic waste they left behind nor did they suffer any penalties or
48 Judith Kimerling ‘The Environmental Audit of Texaco’s Amazon Oil Fields: Environmental Justice of Business as Usual? (1994) 17 Harvard Human Rights Journal 199, 201.
49 Kimerling Note 48, 201-202.
50 Using the enterprise approach adopted above, Texpert’s actions will be imputed to Texaco, its parent corporation and they shall be treated as a single economic unit for the purposes of attaching liability. Bloomberg Note 35, 298.
51 Chris Jochnick and Nina Rabaeus ‘Business and Human Rights Revitalized: A New U.N. Framework Meets Texaco in the Amazon’ (2010) 33 Suffolk Transnational Law Review 413, 421.
52 Jochnick and Rabaeus Note 51, 422.
53 Kimerling Note 48, 205.
54 For a fuller discussion, see Judith Kimerling ‘Indigenous Peoples and the Oil Frontier in Amazonia: The Case of Ecuador, Chevron Texaco, and Aguinda v. Texaco’ (2006) 38 New York University Journal of International Law and Policy 413.
12
compensate the thousands of Ecuadorians that were (and still are) affected by their
operations.55
The Constitution of Ecuador, which was in existence at the time of Texaco’s
commercial activities, provides for the fundamental human right to an
environment free of contamination.56 Despite this and other similar protections
under local law, the environmental consequences of Texaco’s oil production
received little domestic political or legal attention due to Ecuador’s weak and
fragile democratic institutions.57 The executive dominated the government and
severely influenced the judiciary making it politicized, inefficient and corrupt.58
Furthermore, the enforcement agencies with jurisdiction to enforce the
environmental laws were severely under resourced, with little financial resources,
political and technical support.59 Convinced that they could not receive a fair and
impartial trial in Ecuador, in 1993, a group of Ecuadorian citizens of the Oriente
region decided to challenge Texaco’s practices in Ecuador in the United
States.60 This began a legal battle that would spurn over two decades and still
remains unresolved as of today.61
55 See video coverage ‘Bad Oil: The Amazon’s Toxic Mess’, which aired on Channel 7 News on 9 October 2011. Available at http://au.news.yahoo.com/sunday-night/features/article/-/10403960/bad-oil-the-amazons-toxic-mess/ (Last visited on 13 October 2011).
56 Constitution II (Ecuador) (as translated in Kimerling Note 48, 208), Para 2, Article 19, Section 1. Contamination is defined in the Constitution as “the presence in the environment of one or more pollutants that are harmful to human life, health or well-being, or to the flora and fauna, or constitute a nuisance or defile the quality of air, water, soils and other public or private property.”
57 Kimerling Note 48, 202.
58 Ibid.
59 Ibid.
60 Aguinda v. Texaco, 303 F 3d 470, 473-474 (2d Cir 2002) summarizing proceedings and underlying facts of Aguinda v Texaco, 93 Civ 7527 (SDNY 1994). The plaintiffs, who were aggrieved locals from the Oriente, filed a class action lawsuit against Texaco in a US federal court alleging that between 1964 and 1992, Texaco’s oil operations polluted the rainforests and rivers in Ecuador resulting in environmental damage and consequential harm to the health of those who live in the region.
61 See http://www.chevron.com/ecuador/ (Last visited on 16 August 2012). In the United States, civil claims against corporations for human rights violations are possible under the arcane Alien Tort Claims Act 1789, which grants federal courts jurisdiction over civil actions brought by aliens for torts committed in violation of ‘the law of nations’. This avenue, whereby victims rely on the Home States’ domestic regimes to obtain redress, shall be explored more fully in chapter 5, below.
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1.3.1.2 Case Study No. 2: Rio Tinto Mining Operations in PNG
During the 1960’s, Rio Tinto, the world’s third largest mining conglomerate,
which is based in the UK and Australia, decided to build a mine in the village of
Panguna on Bougainville, an island rich in natural resources such as copper and
gold, located just off the main island of Papua New Guinea (“PNG”).62
It has been alleged that Rio Tinto’s copper mining operations, through its local
subsidiary Bougainville Copper Limited, negatively impacted the entire island of
Bougainville.63 During the tenure of its operations, Rio Tinto allegedly dumped
hundreds of millions of tons of pollutants - 150,000 tons a day - into the island’s
two primary rivers, the Jaba and Kawerong.64 This killed the marine and plant life
at a rapid pace and before long both rivers were completely devoid of
fish populations, which had previously sustained Bougainvillean families.65 The
flow of the rivers was also reduced, such that those who had been relying on the
river water to irrigate their crops found that the agricultural productivity of their
land had decreased considerably.66 Rio Tinto’s mining operations in Bougainville
also allegedly polluted the island’s atmosphere resulting in an increase in
respiratory infections and asthma.67
A local Mining Act of 1974 (Bougainville Copper Agreement) vested in PNG’s
Department of Minerals and Energy the power to control and monitor
environmental pollution generated by the Panguna mine.68 However, the PNG
62 Rio Tinto is an international mining group comprising of Rio Tinto plc, a British corporation, and Rio Tinto Limited, an Australian corporation (collectively “Rio Tinto”) and is currently headquartered in the United Kingdom and Australia. See http://www.riotinto.com.au/ (Last visited on 10 June 2012).
63 ‘Rio Tinto Law Suit: re Papua New Guinea’. Available at http://www.business-humanrights.org/Categories/Lawlawsuits/Lawsuitsregulatoryaction/LawsuitsSelectedcases/RioTintolawsuitrePapuaNewGuinea (Last visited on 12 April 2012).
64 Sarei v. Rio Tinto PLC, 221 F. Supp. 2d 1116 (CD Cal 2002), 1124.
65 Ibid.
66 Ibid.
67 Rio Tinto Law Suit Note 63.
68 Sarei v. Rio Tinto PLC Note 64, 1125.
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government allegedly never acted on its mandate and the pollution of the island
from the mining activities went unchecked and unregulated.69 In 1988, the local
inhabitants staged a protest against the Panguna Mine, which culminated in the St.
Valentine’s Day Massacre on February 14, 1990 where many civilians were killed
by the PNG military.70 The military claimed to have received logistical support
such as helicopters and other vehicles to transport the troops to the island, to
quash the uprising, from Rio Tinto.71 Bougainvilleans responded by calling for
secession from PNG, a move that instigated a civil war that would continue for
almost a decade and claim more than 15,000 civilian lives.72
In 2000, the people of Bougainville lodged a landmark class action suit against
Rio Tinto in California, USA for its vicarious liability in atrocities allegedly
committed by the PNG military, including environmental degradation, war crimes
and other charges.73 More than a decade later, Rio Tinto remains locked in a legal
battle with the locals in US courts over the original environmental damage and
human rights abuses.74
1.3.1.3 Case Study No. 3: Anvil Mining Operations in the DRC
Anvil Mining Limited (“Anvil”), a company incorporated in Canada, commenced
its mining operations in Democratic Republic of Congo (“DRC”) in October 2002
69 Ibid
70 Amnesty International ‘Papua New Guinea Bougainville: The Forgotten Human Rights Tragedy’ ASA/34/01 (1997), 2-3. Available at https://www.amnesty.org/en/library/info/ASA34/001/1997/en (Last visited on 21 April 2012).
71 Ibid.
72 Jodi Michalski ‘Sairei v. Rio Tinto, PLC’ (2007) 15 Tulane Journal of International and Comparative Law 751.
73 Brian Thompson ‘Rio Tinto Caused War: Somare’ (The Age, 2011). Available at http://www.theage.com.au/national/rio-tinto-caused-war-somare-20110625-1gkow.html#ixzz1e1BVbVsj (Last visited on 17 November 2011).
74 An appeal was recently lodged in October 2011 by Rio Tinto in the United States Court of Appeals for the Ninth Circuit. For further details, see Sarei v. Rio Tinto Plc, 9th US Circuit Court of Appeals, No 02-56256.
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through a locally incorporated subsidiary called Anvil Mining Congo SARL at the
Dikulushi copper and silver mine, near Kilwa town in Katanga Province.75
On October 14, 2004, a rebel group known as Mouvement Revolutionnaire pour
la Libreation du Katanga launched a minor insurrection in Kilwa town declaring
the independence of the province of Katanga and that the time for “pocketing
money from the mines” was over for the president and his associates.76 On
October 15, 2004, the Congolese military launched an attack against the ill-
equipped rebels and executed about 30 of them as well as over 100 civilians.77
Scores of women and children were also raped in the process and several homes
looted.78 Anvil reportedly acknowledged at the time that it had provided logistical
support to the Congolese army during the military operation in the form of
vehicles and aeroplanes chartered by the company to transport the troops but
claimed not to have any knowledge of how its resources were used by the
military.79 Later, Anvil asserted that the vehicles were actually commandeered by
the Congolese military and they had had no choice in the matter.80
75 It should be noted that at that time, 90% of Anvil Mining Congo SARL was actually owned by Anvil Mining Holdings limited, an entity incorporated in the United Kingdom, which was in tun a wholly owned subsidiary of Anvil Mining Management NL, which was incorporated in Australia. The Australian entity was a wholly owned subsidiary of the Canadian company, Anvil Mining Limited. See, Adam McBeth ‘Crushed by an Anvil: A Case Study on the Responsibility of Human Rights in the Extractive Sector’ (2008) 11 Yale Human Rights and Development Law Journal 127, 130-131.
76 McBeth Note 75, 132. According to African Business Online, the DRC is the twelfth largest country in the world with substantial natural resources such as gold, copper, and diamonds. The “total mineral wealth of the ... DRC [as of 1 February 2009] is estimated to be $24 trillion - equivalent to the GDP of [the European Union] and the United States combined”. However, despite the country’s vast natural resources and mineral wealth, “the DRC is one of the poorest countries in the world, with [a] per capita ... income of ... $171”. M.J. Morgan, ‘DR Congo’s $24 Trillion Fortune’ (African Business Online, 2009). Available at http://www.thefreelibrary.com/DR+Congo's+%2424+trillion+fortune.-aOl93800184 (Last visited on 23 August 2011).
77 Rights and Accountability in Development (“RAID”) ‘Kilwa Trial, A Denial of Justice: A Chronology October 2004 - July 2007’ (2007) 2. Available at http://raid-uk.org/docs/Kilwa_Trial/Kilwa-chron-EN-170707.pdf (Last visited on 11 December 2011).
78 Ibid.
79 McBeth Note 75, 134. It was also alleged that the vehicles were used to transport the looted property, corpses and some rebels who were destined for execution.
80 McBeth Note 75, 135.
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Bowing to international pressure, local Congolese authorities commenced an
investigation into the Kilwa incident in June 2005 with the result that in October
2006, several military officials as well as three individual employees of Anvil
were charged in a local court with knowingly facilitating the crimes perpetrated
by the military.81 Anvil itself, however, was exempted from the charges. In June
2007, the court convicted almost all military personnel (all being of Congolese
nationality) but fully acquitted the Anvil employees on the ground that their
behaviour did not amount to war crimes, and further, that the Anvil employees
had been coerced into providing the logistical support.82 Following the trial, the
Special Rapporteur on the Independence of Judges and Lawyers portrayed his
doubt on the legitimacy of the court ruling by stating in part that “the [DRC]
judicial system is rarely effective and … human rights violations, the most
frequent and serious of which are rapes, summary executions, arbitrary detention,
and looting and destruction of property, generally go unpunished”.83
In November 2010, the Canadian Association Against Impunity, representing
survivors of the Kilwa Incident, launched a class action law suit against Anvil
Mining in the Quebec Superior Court, Canada.84 The plaintiffs alleged that Anvil
Mining was complicit in the human rights violations that occurred in Kilwa in
2004.85 The matter is still ongoing.86
81 RAID Note 77, 4-9.
82 McBeth Note 75, 144-145. Other independent investigations that had been started, for example in Australia, were subsequently dropped upon the conclusion of the trial process in Congo.
83 Leandro Despouy, Report of the Special Rapporteur on the Independence of Judges and Lawyers: Preliminary Note on the Mission to the Democratic Republic of Congo Delivered to the Human Rights Council and General Assembly, UN Doc A/HRC/4/25/Add.3 (24 May 2007) 4.
84 Note, ‘Court Ruling a Major Step Forward for Case against Canadian Mining Company’ (Global Witness, 2011). Available at http://www.globalwitness.org/library/court-ruling-major-step-forward-case-against-canadian-mining-company (Last visited on 8 April 2012).
85 Ibid.
86 In March 2012, the Canadian Association Against Impunity filed an application with the Supreme Court of Canada on behalf of the plaintiffs seeking leave to appeal the dismissal of the case by the Quebec Court of Appeal against Anvil Mining, which had overturned an earlier decision of the Quebec Superior Court that found that Quebec had jurisdiction to hear the case. Available at www.globalwitness.org (Last visited on 16 April 2012). See also, http://www.miningwatch.ca/article/statement-regarding-quebec-court-appeal-decision-canadian-association-against-impunity-v (Last visited on 16 April 2012).
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1.3.2 Common Themes and Insights
The observations above paint a bleak picture. The case studies make it manifestly
clear that MNCs pose a real, and not merely theoretical, threat to human rights.87
Even a single occurrence of corporate human rights abuse can give rise to several
claims, in several different jurisdictions and sometimes against several alleged
perpetrators.88 A victim’s attempts to obtain effective remedy, particularly in
developing countries with weak governance systems, can therefore be frustrated
to say the least.89 This section shall offer a summary of the factors which highlight
that sole reliance on the domestic regulation of MNCs, particularly in developing
States, is bound to prove inadequate in delivering justice to victims of MNC
human rights violations.
First, MNC human rights abuses usually occur in Host States that are developing
not just economically but also in terms of their level of education, technological
sophistication, legal regulations and institutions.90 Thus, Host States often lack the
capacity to properly regulate MNC operations and to implement or monitor
compliance with their human rights policies and standards.91 Some have even
naively relied on the MNC to provide and adhere to its own regulatory
mechanism, often with disastrous consequences.92
87 Surya Deva ‘Human Rights Violations by Multinational Corporations and International Law: Where From Here?’ (2003-4) 19 Connecticut Journal of International Law 1, 8 and 48.
88 Ibid. The Kilwa case study conducted above is a prime example attesting to this fact.
89 The traditional view in international law is that States can and do control all the activities individuals and entities operating within their respective jurisdictions. Therefore, there is an assumption that the State where the human rights abuses occur (the Host State) shall use its regulatory laws and enforcement mechanisms to effectively vindicate the rights of individuals that have been adversely affected by corporate activities. Kapur Note 5, 32-34.
90 Isabella Bunn ‘Global Advocacy for Corporate Accountability: Transatlantic Perspectives from the NGO Community’ (2004) 19 American University International Law Review 1265, 1293-96.
91 Lawson-Remer Note 42, 396.
92 Ibid. A startling example is provided by Kimerling who points out the Ecuadorian government agreed for “Texaco [to]set its own environmental standards and police itself .... The company did not instruct its Ecuadorian personnel about environmental matters, and oil field workers who were trained by Texaco were so unaware of the hazards of crude oil ... that they applied it to their heads to prevent balding”. Kimerling Note 48, 452.
18
Second, the MNCs are often more wealthy and powerful that the Host States in
which they operate.93 This puts the Host State in a subordinate power relation vis-
à-vis the MNC such that the Host State may feel that it is not in a position to
regulate a corporation too stringently for fear of losing foreign direct
investment.94 Market forces being what they are often propel developing countries
to compete against each other for foreign direct investment.95 This enables MNCs
to “pit one country against another by threatening to [take] their investments
elsewhere if the ‘investment climate’ is not sufficiently benign”.96 The lure of
foreign direct investment coming from the MNC may be more appealing to the
developing State than the need to protect promote and protect human rights
standards.97 Hence Host governments may sacrifice human rights standards in a
bid to bolster their burgeoning economies.
Third, some Host States lack political will to enact or implement human rights
laws and policies that would constrain MNC activities.98 Even after becoming
aware of corporate abuses, a Host State may still turn a blind eye to MNC
violations of human rights in its territory for fear of losing or repelling corporate
investment from the MNC.99 Some Host States have been known to go so far as to
protect abusive MNCs from being held accountable within their jurisdictions. For
example, the government in Papua New Guinea enacted legislation making it a
criminal offence for its citizens to sue MNCs in foreign courts.100
93Ibid.
94 Sarah Joseph ‘Liability of Multinational Corporations’ in Malcolm Langford Social Rights Jurisprudence: Emerging Trends in International and Comparative Law (Cambridge University Press, 2009) 614.
95 Jerbi Note 21, 303.
96 Natalie L. Bridgeman and David B. Hunter ‘Narrowing the Accountability Gap: Toward a New Foreign Investor Accountability Mechanism’ (2008) 20 Georgetown International Environmental Law Review 187, 197.
97 Ibid.
98 Joseph Note 94, 614.
99 Ibid
100 In this case, the PNG government sought to protect BHP Billiton, an Australian mining giant, from potential liability for the environmental damage caused by its operations in the OK Tedi river basin. See http://www.business-
19
Fourth, even if they are in effect single commercial units, MNCs usually tend to
be organized as a cluster of interrelated but separate legal entities.101 Host States,
which often only have jurisdiction over the local subsidiary, are therefore
prevented from pursuing the broader conglomerate and are instead limited to the
local subsidiary which may not have adequate assets to compensate the victims.102
In other words, Host States cannot exercise effective control over MNCs because
they do not operate within a definite territory, and often transcend the regulatory
capacity of one State.
These four factors highlight the weakened ability of most Host States, a
disproportionate amount of which are developing countries, to effectively regulate
the activities of MNCs that negatively impact upon human rights. A lacuna
therefore exists as to how transnational violations of human rights by MNCs can
be addressed at the international level.
1.4 THESIS AIMS AND LIMITATIONS
The primary aim of this thesis is to address the accountability gap in human rights
protections against corporate violations, especially when the operations of an
MNC occur in a developing country with weak governance systems. An old adage
comes to mind: with great power comes great responsibility. Therefore, I will
argue that the immense economic, political and social powers that MNCs have
garnered at the international realm must be accompanied by commensurate
responsibility through the innovative use of law and other non-legal institutions.
To this end, this thesis embraces the concept of corporate accountability to play an
enabling role in future efforts to resolve the business-human rights dilemma once
and for all. However, contrary to accountability hardliners, this thesis posits that
corporate accountability for human rights violations need not unnecessarily be
limited to legal mechanisms; other social mechanisms can also be used to
humanrights.org/Categories/Lawlawsuits/Lawsuitsregulatoryaction/LawsuitsSelectedcases/BHPlawsuitrePapuaNewGuinea (Last visited on 2 April 2012).
101 Deva Note 87, 48.
102 Ibid.
20
successfully facilitate such accountability.103 The same conclusion was reached by
Ruggie who, in acknowledging the evolving societal expectations for businesses
to respect human rights, accepted that the effectiveness of any given mechanism
purporting to hold corporations accountable necessarily requires a blurring of the
lines between strictly voluntary (social) and mandatory (legal) approaches.104
Thus, my arguments shall proceed from the corporate accountability standpoint,
as elaborated, by responding to three distinct questions labelled as ‘why’, ‘what’
and ‘how’. The first set of why questions address the following queries: given the
negative impact of extractive operations on human rights, do MNCs have any
responsibility to respect international human rights? If so, what is the nature and
extent of these responsibilities? Are they similar to those of States? Could such a
responsibility be justified within a binding human rights framework?105 The
second type of questions relate to the what dimension: assuming that corporations
have some human rights responsibilities, are there existing mechanisms, other
than those available under domestic regimes, which regulate corporate human
rights violations? What are their goals? What methodologies do they have for
monitoring and implementation? Are they effective? If not, why are they not
effective? Who does this affect and how? What can we learn from these existing
mechanisms in order to avoid their failures?106
The third set of questions deal with how to improve corporate human rights
accountability: what needs to be done to improve MNC regulation? Do we need
new systems to address MNC accountability or simply improve on old ones?
103 Morgera Note 16, 21.
104 John Ruggie Human Rights Impact Assessments - Resolving Key Methodological Questions A/HRC4/74 (2007) paras 56-62.
105 Stephens Note 4; Kinley and Nolan Note 22; Ratner Note 37; David Kinley and Sarah Joseph ‘Multinational Corporations and Human Rights: Questions About Their Relationship’ (2002) 27 Alternative Law Journal 7; Sigrun I. Skogly and Mark Gibney ‘Transnational Human Rights Obligations’ (2002) 24 Human Rights Quarterly 781.
106 Nolan Note 15; Deva Note 87; Kinley and Joseph Note 105; Brittany T. Cragg ‘Home is Where the Halt Is: Mandating Corporate Social Responsibility through Home State Regulation and Social Disclosure’ (2010) 24 Emory International Law Review 73; Oxford Pro Bono Publico ‘Obstacles to Justice and Redress for Victims of Corporate Human Rights Abuse: A Comparative Submission Prepared for Professor John Ruggie’ (Oxford University, 2008). Available at http://www.law.ox.ac.uk/opbp (Last visited on 12 November 2011).
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What kind of mechanism or system would effectively regulate MNCs to hold
them accountable for their impact on human rights? What should the parameters
of such regulation be? Should the regulation take place at the domestic or
international level? How should the regulation be enforced to promote MNC
accountability and who should play a role in the implementation? What kind of
sanctions could be imposed against those corporations which fail to comply with
the regulatory initiatives?107
Before beginning, the following parameters should be noted. First, my thesis will
revolve around the following key actors: (a) MNCs that conduct extractive
operations; (b) the State in which the MNC is based or domiciled (the “Home
State”); (c) the State where an MNC conducts its extractive operations (the “Host
State”) and (d) the victims adversely affected by the MNC’s extractive activities
in the Host State. Secondly, my thesis shall be grounded in international human
rights law, not international economic law, as the platform upon which to consider
the issue of MNC accountability for human rights violations. Thirdly, the paper
excludes full consideration of the role of business in conflict zones (for instance,
where there is an ongoing civil war) because those circumstances are more
appropriately dealt with under the field of international humanitarian law.108
Fourthly, I shall limit the discussion in this thesis on the direct impact of an
MNC’s own operations on human rights. I shall not address concerns relating to
other related parties such as business partners and suppliers or related fields such
as the manufacturing industry, although of course many of the principles
discussed herein may also be applicable to them.
107 Horton Note 5; Seck Note 37; Deva Note 87; Cragg Note 106; Danwood M. Chirwa ‘The Doctrine of State Responsibility as a Potential Means of Holding Private Actors Accountable for Human Rights’ (2004) 5 Melbourne Journal of International Law 1; Kenneth F. McCallion and Rajan Sharma ‘Environmental Justice Without Borders: The Need for an International Court of the Environment to Protect Fundamental Environmental Rights’ (2000) 32 The George Washington Journal of International Law and Economics 385; Adrienne Bernhard ‘Response to Sarah L. Seck, Home State Responsibility and Local Communities: The Case of Global Mining’ (2008) 11 Yale Human Rights and Development Law Journal 207.
108 For a detailed consideration of these circumstances, see generally, Report of the International Commission of Jurists Expert Legal Panel on Corporate Complicity in International Crimes Facing the Facts and Charting a Legal Path (Corporate Complicity and Legal Accountability, Vol 1, 2008). Available at http://icj.org/IMG/Volume_1.pdf (Last visited on 28 August 2012).
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1.5 STRUCTURE OF THE THESIS
To begin, Chapter 2 will engage with the issue of ‘why’ MNCs, as entities
designed to create and maximize profit, should follow internationally recognised
human rights norms during their operations. It shall be argued that in so far as
their corporate activities infringe upon the human rights of those affected by their
operations, international human rights law is open to such accountability coming
into existence on the basis of the fundamental principle of human dignity. In order
to provide an essential background within which to understand the current
conceptual debate on MNC human rights accountability, this chapter will also
briefly engage with the separate, but complementary, issues of whether MNCs are
capable of incurring obligations in international human rights law and if so,
whether actual human rights obligations do exist in international instruments.
Chapter 3 will explore the form, nature and effect of current mechanisms and
conceptual frameworks that purport to regulate the conduct of MNCs with respect
to human rights. My analysis of the ‘what’ dimension of corporate accountability
will evaluate corporate codes of conduct, leading extractive industry initiatives,
international soft law initiatives launched under the auspices of the Organisation
for Economic Co-operation and Development and the International Labour
Organisation and some regulatory initiatives proposed and/or implemented by the
United Nations. My goal in this brief overview is to expose the enforcement
challenges that these mechanisms face and ultimately argue that even where they
offer some protection against MNC abuses of human rights, such protection is at
best minimal and fragmented.
Chapter 4 will introduce and critically analyse the newly launched 2008 ‘Protect,
Respect and Remedy’ Framework and its Guiding Principles (collectively, the
“UN Framework”) by John Ruggie, Special Representative of the UN Secretary-
General on Business and Human Rights. This part will also provide an analysis of
the UN Framework within a practical context by assessing its provisions within
the extractive sector to determine the impact of its provisions. As the newest
articulation of international standards relating to substantive corporate human
rights responsibilities, I will critically discuss whether the UN Framework goes
23
‘far enough’ to address MNC human rights accountability and can be considered a
‘game-changer’ in the business and human rights domain.
Chapter 5 will channel the preceding discourse on the UN Framework into the
era of international accountability and propose ‘how’ a robust multi-regulatory
accountability framework at the international level can effectively deal with MNC
human rights violations. I will set out my views on what such an innovative
framework (detailing its structure and benefits) would look like and consider the
implications of my proposals in the context of the recommendations that have
been made by the SRSG. Having previously argued that current international law
does not yet recognize clear obligations for MNCs with respect to human rights,
the first objective in this chapter is to propose a non-judicial international
accountability mechanism that clearly promotes the standards in the UN
Framework and yet does not encounter the difficulties associated with the lack of
binding obligations in international law. The second objective is to supplement
what could be perceived as a voluntary model, by proposing an alternative legal
enforcement mechanism using the tool of Home State extraterritorial regulation.
In my view, given the sheer nature, structure and modus operandi of MNCs in
today’s global economy and their impact on human rights, these two proposed
mechanisms would, if well coordinated, achieve a robust regulatory regime of
MNC accountability for human rights violations.
Chapter 6 provides conclusions on the subject and offers some guidance for
future research.
24
CHAPTER 2 IMPOSING HUMAN RIGHTS ACCOUNTABILITY ON
MULTINATIONAL CORPORATIONS
2.1 INTRODUCTION
This chapter will discuss whether MNCs can and should legitimately be perceived
as potential new duty-holders in international human rights law. One of the
greatest challenges facing the business and human rights field, in as far as
corporate accountability is concerned, is the traditional view that States are the
primary duty holders of human rights obligations.109 This is because the
international human rights framework was conceived on the assumption that
States can and do control all the activities of all individuals and entities operating
within their respective jurisdictions.110 Accordingly, some have contended that the
protection of human rights is the sole responsibility of the State such that any
infringement of rights from non-State entities falls within domestic jurisdictions to
be pursued under national laws.111 This view is succinctly stated by
McCorquodale as follows:
International human rights law, for all its diversity and size, places direct legal obligations only on states. The international human rights law system is a state-based system, a system in which the law operates in only one area: state action. It ignores actions by nonstate actors, such as ... transnational corporations (TNCs).... Nonstate actors are treated as if their actions could not violate human rights, or it is pretended that states can and do control all their activities.112
However, as evident from the case studies in the previous chapter, in today’s
rapidly rising global economy, MNCs have the capacity to transcend the
109 Robert McCorquodale ‘Human Rights and Global Business’ in Stephen Bottomley and David Kinley (eds) Commercial Law and Human Rights (Dartmouth Publishing, 2002) 92; Duruigbo Note 27, 233-234.
110 Adam McBeth, ‘Human Rights in Economic Globalisation’ in Sarah Joseph and Adam McBeth (eds), Research Handbook on International Human Rights Law (Edward Elgar, 2010) 139.
111 Robert McCorquodale and Penelope Simons ‘Responsibility Beyond Borders: State Responsibility for Extraterritorial Violations by Corporations of International Human Rights Law’ (2007) 70 The Modern Law Review 598, 605.
112 Robert McCorquodale ‘Overlegalizing Silences: Human Rights and Nonstate Actors’ (2002) 96 American Society International Law Proceedings 381, 384.
25
regulatory capacity of a single State. This poses significant barriers to the
protection of human rights as most MNC operations fall outside the exclusive
jurisdiction of any one State. A lacuna has therefore developed as to how
transnational violations of human rights by MNCs can be addressed to enable
victims to obtain justice. This thesis posits that it is incumbent upon the
international community to reflect on how and to what extent MNCs can be made
accountable for violations of internationally recognized human rights. Thus, the
issue is no longer whether corporations are capable of infringing upon the human
rights of individuals - they are - but rather whether international human rights law
can, does or should impose legal obligations on MNCs to respect human rights.
This is a highly contentious not to mention complex matter, which can be summed
up in the following three separate, but related, queries: (i) can an intimate
relationship be established between MNCs and international human rights? In
other words, are MNCs capable of bearing human rights obligations under
international law (the “Possibility” Issue)?; (ii) if so, do MNCs have real and
existing obligations in international human rights law to respect and promote
human rights (the “Reality” Issue)?; (iii) or is there another basis in international
human rights law to create and impose legal obligations on MNCs (the “Source”
Issue)? The first two issues have been explored at length by many commentators,
and it is not my intention to give a detailed analysis of them here. Instead, I shall
briefly show that while MNCs can be said to be subjects of international law, and
are therefore capable of bearing human rights obligations, claims for the actual
existence of such obligations are tenuous at best. I will then conduct an in-depth
examination of the Source Issue in order to determine possible rules in
international law that might facilitate the establishment of a binding relationship
between MNCs and human rights values. I will argue that international human
rights law is open to such obligations coming into existence on the basis of the
foundational principle of human dignity.
26
2.2 THE POSSIBILITY ISSUE: CAN MNCS BE SUBJECTS OF
INTERNATIONAL HUMAN RIGHTS LAW?
This section will briefly address the question of whether MNCs are capable of
bearing human rights obligations.
Traditionally, the system of international human rights law has predominantly
focused on States as the primary violators of human rights and thus the holders of
binding human rights obligations.113 However, non-State organs have also long
been recognized as being subject to international law. For example, the preamble
of the Universal Declaration of Human Rights (“UDHR”) requires not only States
but also “every individual and organ of society” to participate in the promotion
and protection of basic human rights.114 Thus it can be said that MNCs, as ‘organs
of society’, have, at the very least, the ability to hold as well as enforce rights and
obligations.115
In addition, there have been certain developments in international law in the last
few decades that have led non-State actors to being increasingly recognized as
subject to international law. To begin with, jurisprudence emerging from
international criminal tribunals for Nuremberg, Tokyo, Rwanda and Yugoslavia
has confirmed that individuals who commit acts considered to be crimes in
international law will be held responsible for their actions and will be liable for
punishment.116 Also, international organizations such as the United Nations and
the World Health Organization have been recognized by the International Court of
Justice as endowed with international legal personality and are therefore subject to
international law independent of the member States comprising the
113 Ibid. The author has previously commented on this debate in a previous work submitted as part f the author’s SJD coursework on the subject ‘Human Rights in the Global Economy’ (Monash University, Law 7253, 2011).
114 Universal Declaration of Human Rights, GA Res 217A (III), UN Doc A/810 (10 December 1948), preamble.
115 Deva Note 87, 53.
116 Olefumi Amao, ‘Corporate Social Responsibility, Social Contract, Corporate Personhood and Human Rights Law: Understanding the Emerging Responsibilities of Modern Corporations’ (2008) 33 Australian Journal of Legal Philosophy 100, 132. See for example, United States v. Goering, 6 F.R.D. 69 (1946) cited in Duruigbo Note 27, 237.
27
organizations.117 This jurisprudence from the international courts confirms that
individuals, whether natural or legal, can be held directly responsible for violating
international human rights law rules in certain circumstances.118
MNCs, admittedly, entered the international scene at a much later stage and like
private citizens, were assumed to be accountable only under domestic law.119
However, in recent years, MNCs have been treated as distinct legal personalities
with the ability to enjoy certain rights under the international law regime. For
instance, they have the capacity to bring international claims in areas concerning
economic law under bilateral or regional investment treaties and free trade
agreements.120 The First Protocol to the European Convention on Human Rights
also recognizes the rights of corporations to property,121 free speech,122 fair trial123
and privacy.124 This modern trend, which allows and enables MNCs to utilize
international law mechanisms to protect their interests and facilitate their
activities, leads me to the conclusion that MNCs must also possess the legal
capacity to bear direct duties under the same regime.125 As noted by Ratner, “If
states and international organizations can accept rights and duties of corporations
in some [international law] areas, there is no theoretical bar to recognizing duties
more broadly, including duties in the human rights area”.126 Indeed, some
117 See, respectively, Reparations for Injuries Suffered in the Service of the United Nations (Advisory Opinion) [1949] ICJ Rep 174, 178-179 and Legality of the Use by a State of Nuclear Weapons in Armed Conflict (World Health organization) (Advisory Opinion) [1996] ICJ 66.
118 Amao Note 116, 133.
119 David Kinley and Junko Tadaki ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law’ (2003-04) 44 Virginia Journal of International Law 931, 937.
120 Menno Kamminga and Saman Zia-Zafiri ‘Introduction’ in Menno Kamminga and Saman Zia-Zafiri ‘(eds), Liability of Multinational Corporations under International Law (Kluwer International, 2000) 7- 8.
121 First Protocol to the European Convention on Human Rights signed 4 November 1950 (hereinafter “European Convention”), article 1.
122 European Convention Note 121, article 10.
123 European Convention Note 121, article 6.
124 European Convention Note 121, article 8.
125 Muchlinski Note 27, 509; McBeth Note 110, 71-72.
126 Ratner Note 37, 488.
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international treaties, especially in the field of international environmental law,
have already placed direct legal obligations on MNCs, albeit in a limited
fashion.127
Moreover, new economic realities in modern times, which have been exacerbated
by the process of globalisation, render the traditional argument that MNCs, as
non-State actors, cannot be subjects of international law as antiquated and
impractical. Triggs argues that “through their network of subsidiaries and their
capacity to invest and conduct business in other States, trans-national corporations
appear to have gained … international legal personality and defined rights and
responsibilities”.128 Hence, the view that MNCs are capable of bearing human
rights obligations should not be viewed as an extraordinary and unprecedented
development but rather as an extension of the position prevailing at international
law and practices under which MNCs already enjoy rights, and bear limited
obligations.
Critics may argue that imposing direct human rights obligations on MNCs would
take away the responsibility of a State to protect and promote human rights.129
MNCs, so the argument goes, are non-State actors whose only duty is to obey the
law, whereas States should regulate on matters of social responsibility.130 It is
conceded that States continue to be the primary subjects of international human
rights law.131 However, international law does not preclude the existence of
concurrent obligations to be borne by non-State actors, including MNCs.132 In my
view, given their capacity to transcend a single State’s jurisdiction and the effect 127 For example, the International Covenant on Civil Liability for Oil Pollution Damage, opened for signature 20 November 1969 UNTS (entered into force 19 June 1976); Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, opened for signature 27 November 1992 UNTS (entered into force 30 May 1996).
128 Gillian Triggs International Law: Contemporary Principles and Practices (LexisNexis Butterworth, 2nd Ed, 2011), 183.
129 Peter T. Muchlinski, ‘Human Rights and Multinationals: Is There a Problem?’ (2001) 77 International Affairs 31, 35-36.
130 Ibid.
131 Duruigbo Note 27, 241.
132 Ibid.
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of their activities on people’s lives across the globe, conferring legal status to
MNCs in international human rights law should be viewed as merely
complementary to the existing State-centric regime.133
In all, States should not be absolved of their primary obligations to protect and
promote human rights within their jurisdictions.134 However, MNCs are entities
also capable of being the bearers of direct human rights obligations and thus
should be held responsible for human rights abuses, at the very least within the
scope of their operations.135 Simply put, “MNCs to an extent have, or at least have
the potential to possess, international legal personality”.136
2.3 THE REALITY ISSUE: DO CORPORATIONS HAVE HUMAN
RIGHTS OBLIGATIONS UNDER INTERNATIONAL LAW?
Having concluded that MNCs are capable of bearing human rights obligations, the
key question then becomes whether existing international human rights law
already imposes obligations on corporations, or whether substantive legal change
would be necessary to impose such obligations.
Proponents point out that the preamble of the UDHR asserts that “every organ of
society … [shall] secure [the] universal and effective recognition and observance
[of human rights]”. Also, articles 29 and 30 of the UDHR stipulate that
“everyone” owes human rights duties to the community to which they are a part.
Likewise both the International Covenant on Civil and Political Rights (“ICCPR”)
and International Covenant on Economic, Social and Cultural Rights (“ICESCR”)
contemplate the existence of obligations for non-State entities by asserting: “the
individual, having duties to other individuals and to the community to which he
belongs, is under a responsibility to strive for the promotion and observance of the
133 Kamminga and Zia-Zafiri Note 120, 6.
134 McBeth Note 41, 251.
135 Ibid.
136 Duruigbo Note 27, 241.
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rights recognized in the present covenant”.137 It has therefore been argued that
every ‘individual’ and every ‘organ of society’, as the case may be, excludes no
one, not even corporations in the promotion and the protection of human rights.138
Also offered in support of this viewpoint are some commentaries by human rights
treaty bodies. For instance, the UN Committee on Economic Social and Cultural
Rights (“ESCR Committee”), in its General Comment 12, asserted that “all
members of society [including] private business sector have responsibilities in the
realization of the right to adequate food”.139 On the basis of these provisions,
proponents assert that international human rights law is not limited to reach States
only but also clearly imposes duties on corporations to respect and promote
human rights.140 Some argue that from the perspectives of the victims, it is
irrelevant for them whether the violator is a State, an individual or a corporation;
therefore whoever the perpetrator is shall be liable under international human
rights law.141
With respect, even though some authors may claim that the UDHR represents
customary international law142 in its entirety, this article takes a cautious approach
and recognizes that while some aspects of the instrument are indeed customary
law, it is doubtful that the provisions invoked above, in as far as MNC obligations
137 International Convention on Civil and Political Rights, opened for signature 16 December 1966, 999 UNTS 171 (entered into force 23 March 1976), preamble; and International Convention on Economic, Social and Cultural Rights, opened for signature 16 December 1966, 993 UNTS 3 (entered into force 3 January 1976), preamble.
138 Michael K. Addo ‘Introduction’ in Michael K. Addo (ed) Human Rights Standards and the Responsibility of Transnational Corporations (Kluwer Law International, 1999) 31; Louise Henkin ‘The Universal Declaration at 50 and the College of the Global Markets’ (1999) 25 Brooklyn Journal of International Law 17, 25. See also, Skogly and Gibney Note 105, 787-788.
139 Committee on Economic, Social and Cultural Rights, General Comment 12: Right to Adequate Food, UN Doc E/C12/1999/5 (1999) para 20.
140 McBeth Note 41, 8; Henkin Note 138, 24-25; Jordan J. Paust ‘The Reality of Private Rights, Duties and Participation in the International Legal Process’ (2004) 25 Michigan Journal of International Law 1229, 1242-1243; David Kinley ‘Human Rights as Legally Binding or Merely Relevant?’ in Bottomley and Kinley Note 109, 38.
141 Clapham Note 13, 546; Addo Note 138, 266-269.
142 Customary international law generally emerges when two essential criteria are met: first, unambiguous and consistent practice by States in a particular field (State practice) and second, a sense of legal obligation by States to follow the practice (opinion juris). Clapham Note 13, 86.
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are concerned, qualify.143 That is, the status of the UDHR as customary
international law, especially with respect to corporate duties, by no means enjoys
universal acceptance.144 This is illustrated by the lack of consistent State practice
in so far as directly imposing international human rights duties on corporations is
concerned and the ambiguity in the “duties” provisions themselves.145 With
respect to the latter, even if a reference is made to individual “duties” in the
UDHR, which arguably could include those of corporations, there is no
clarification of exactly what these duties entail.146 It is also instructive to note that
other international human rights treaties do not include a provision on correlative
private duties similar to articles 29 and 30 of the UDHR; only their preambular
paragraphs make reference to duties that individuals have towards other
individuals.147 In my view, these provisions at best may serve as a springboard
towards a new conception of human rights in which commitments of corporations
are more clearly articulated.148 This avenue shall be explored in greater detail in
the section directly below. For now, it suffices to say that the above arguments fail
to offer sufficient proof that the UDHR provides binding corporate human rights
obligations.149
143 For more discussion on the status of the UDHR as customary international law, see Skolgy and Gibney Note 105 and H. Hannum, ‘The Status of the Universal Declaration of Human Rights in National and International Law’ (1995/6) 25 Georgia Journal of International and Comparative Law 287.
144 Certain provisions under the UDHR are generally accepted to have acquired the status of customary international law, and are therefore legally binding. These include rules prohibiting slavery, torture, arbitrary killing and systematic racial discrimination. The customary law status of other rights, especially economic, social and cultural rights, remains deeply contested. Clapham Note 13, 86-87. See also, Philip Alston ‘A Human Rights Perspective on the Millennium Development Goals’ (Paper Presented as a Contribution to the Work of the Millennium Project Task Force on Poverty and Economic Development, 2004), para 35. Available at www2.ohchr.org/english/issues/millenium-development/.../alston.doc (Last visited on 14 June 2012).
145 Jan Arno Hessbruegge ‘Human Rights Violations Arising from the Conduct of Non-State Actors’ (2005) 11 Buffalo Human Rights Law Review 21, 35.
146 Ibid.
147 See for example, ICCPR Note 137, preamble and ICESCR Note 137, preamble.
148 Larissa van den Herik and Jernej Letnar Cernic, ‘Regulating Corporations under International Law: From Human Rights to International Criminal Law and Back Again’ (2010) 8 Journal of International Criminal Justice 725, 734.
149 McCorquodale Note 109, 94.
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Furthermore, the reliance on the commentary from human rights treaty bodies for
the existence of corporate human rights obligations seems to be misplaced. While
these treaty bodies do indeed acknowledge that corporations have human rights
duties, they seem to endorse their existence only through domestic State action.
For instance, in its General Comment 15, the ESCR Committee stated that “steps
should be taken by States parties to prevent their own citizens and companies
from violating the right to water of individuals and communities in other
countries”.150 Similarly, the ESCR Committee stated that “the violations of the
obligation to protect follow from the failure of a State to take all necessary
measures to safeguard persons within their jurisdiction from infringements of the
right to health by third parties … [including] failure to regulate the activities …
corporations so as to prevent them from violating the right to health of others”.151
Therefore, under the current paradigm of international law, the obligation to
ensure specific rights is addressed to the State, and corporations are only restricted
indirectly through State action at the domestic level. This contemporary position
has been set out as follows by the Human Rights Committee in its General
Comment 31: “The article 2, paragraph 1, obligations are binding on States
[Parties] and do not, as such, have direct horizontal effect as a matter of
international law. The Covenant cannot be viewed as a substitute for domestic
criminal or civil law”.152
The prevailing position appears to be that for victims of corporate human rights
violations to obtain effective remedy, they must seek justice within a domestic
legal system. This explains why MNCs have been able to largely operate in a
legal vacuum - because international human rights law does not impose direct
obligations on their transnational activities. At this juncture, it would be prudent
to briefly discuss, and clarify, recent developments involving international
criminal responsibility of corporations, a subject currently under intense debate by 150 Committee on Economic, Social and Cultural Rights, General Comment 15: The Right to Water (UN Doc E/C12/2002/11 (2002), para 33.
151 Committee on Economic, Social and Cultural Rights, General Comment 14: The Right to the Highest Attainable Standard of Health UN Doc E/C12/2000/4 (2000) para 51.
152 Human Rights Committee, General Comment 31: Nature of the General Legal Obligation Imposed on States Parties to the Covenant CCPR/C/21/Rev.1/Add.13 (2004) para 8.
33
the international community.153 Whereas the assertion that international human
rights law imposes clear duties on corporations has been rejected in this thesis,
recent scholarship suggests that the position may be different in the international
criminal law context.154 Indeed, there is growing evidence that a marked shift
towards direct liability under international criminal law has occurred in the last
few decades with respect to individuals, including corporate entities, which
commit international crimes such as genocide or crimes against humanity.155 A
detailed consideration of these circumstances, however, lies beyond the scope of
the thesis and is more appropriately discussed under international humanitarian
law.156 For now, it suffices to note that despite the strong insistence by some
quarters that these changes in the international criminal law context extend
beyond international crimes to include violations of international human rights
law, it is contended that corporations have only gradually incurred responsibilities
towards human rights, not actual human rights obligations.157 This distinction is
important as a misdirected reliance on direct legal obligations under international
criminal law may constitute a formidable obstacle in making meaningful progress
in devising effective ways through which MNCs can be held accountable for their
negative human rights impacts.
153 See, for example, Kiobel v Royal Dutch Petroleum, US Supreme Court Docket No 10-1491 (12 June 2012), a matter involving Nigerian plaintiffs seeking to bring civil claims against a US corporation for extrajudicial killing, torture, crimes against humanity, and prolonged arbitrary arrest and detention, among others. The case is currently under consideration by the US Supreme Court following a previous ruling by the Second Circuit, Kiobel v Royal Dutch Petroleum Co 621 F.3d 111 (2d Circ. 2010), which rejected the proposition that corporations may be held directly liable for torts in violation of international law under the antiquated Alien Torts Claims Act 1789 (US). For further information on developments surrounding the case, see generally, http://harvardhumanrights.wordpress.com/criminal-justice-in-latin-america/alien-tort-statute/kiobel-v-royal-dutch-petroleum-co/ (Last visited on 13 September 2012).
154 Duruigbo Note 27, 226-227; Andrew Clapham ‘The Question of Jurisdiction under International Criminal Law over Legal Persons: Lessons from the Rome Conference on an International Criminal Court’ in Kamminga and Zia-Zafiri Note 120, 139.
155 See, for example, Report of the International Commission of Jurists Note 108, which agrees with the position that corporations are now considered direct duty bearers under international criminal law. See also, Brief Amici Curiae of the Former UN Special Representative for Business and Human Rights, Professor John Ruggie, Professor Philip Alston and the Global Justice Clinic at NYU School of Law in Support of Neither Party’ submitted to the US Supreme Court in Kiobel v Royal Dutch Petroleum, US Supreme Court Docket No 10-1491 (12 June 2012).
156 Ibid. See also previous thesis parameters established in chapter 1, at 1.4 above.
157 Report of the Special Representative Note 1, paras 23 and 54.
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The question then becomes whether there is additional room under international
law for harnessing the emerging human rights responsibilities of corporations
towards accountability.158 How to move towards such a new conception will be
explored in the section below.
2.4 THE SOURCE ISSUE: IS THERE A BASIS IN INTERNATIONAL LAW TO IMPOSE CORPORATE HUMAN RIGHTS ACCOUNTABILITY?
Having accepted that international economic (and even political) power has
shifted from individual States to MNCs, this thesis posits that a re-examination of
the international human rights framework is necessary in order to determine a
basis upon which MNCs can and should be held accountable for their
transnational violations of human rights.159 In this section, I shall seek to fill this
jurisprudential gap by using the concept of human dignity as the foundational
principle of corporate accountability. My aim is to show that human dignity
represents both a modern philosophical concept and a key legal principle for
dealing with threats to human rights posed by MNCs. To this end, I shall explore
the meaning of the concept of human dignity and the ways in which human rights
rest on, give voice to, or seek to realize this concept. Ultimately, it shall be argued
that the notion of human dignity constitutes the best, if not the only, available
ground for the development of international accountability for MNC human rights
abuses.
2.4.1 A Brief Reflection on the Philosophical Discourse on Human Dignity
The concept of human dignity is not confined to modern legal discourse but has
deep roots in the theology of religion, moral and political philosophy. This section
will provide a brief overview of the historical development of human dignity.
While a detailed account would not be possible or, indeed, desirable here, I hope
to draw upon historical philosophical conceptions to shed light on the meaning of
the term in modern times.
158 Van den Herik and Cernic Note 148, 731.
159 Deva Note 87, 51.
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The philosophical underpinnings of the principle of human dignity can be traced
all the way back to classical Roman law, which used the concept to convey an
individual’s rank and status in society.160 This viewpoint was later displaced by
early Christian religious teachings, which asserted that human dignity was
completely based upon one distinguishing feature bestowed upon humans by God:
that man was created in His own likeness and has dominion over all other
creatures.161 St. Thomas Aquinas (1225-1274), in particular, considered that the
likeness of man to God constituted human dignity.162 This idea was subsequently
developed in the period of Renaissance, where human dignity was seen as a
universal quality enjoyed by all human beings.163 This period served to fortify the
idea that dignity is not merely inherent and inalienable but also universal to all
people.164
The notion of human dignity was eventually received in the secular context where
prominent philosophical writers in the 17th century such as Samuel von Pufendorf
(1632-1694) incorporated the concept of human dignity into his doctrine of
natural law.165 According to Pufendorf, an individual possessed human dignity
because of his or her immortal soul and because he or she was endowed with
understanding or the ability to reason; hence because all humans were so
160 Yehoshua Arieli ‘The Emergence of the Doctrine of the Dignity of Man’ in David Kretzmer and Eckart Klein (eds) The Concept of Human Dignity in Human Rights Discourse (Kluwer Law International, 2002) 12-15.
161 Ibid.
162 For an in-depth teleological account of the concept of human dignity and its emergence in early Christian religious teachings, see Yair Lorberbaum ‘Blood and the Image of God: On the Sanctity of Life in Biblical and Early Rabbinic Law, Myth and Ritual’ in Kretzmer and Klein Note 160, 55-85.
163 Matthias Mahlmann ‘The Basic Law at 60 - Human Dignity and the Culture of Republicanism’ (2010) 11 German Law Journal 9, 14.
164 Don Chalmers and Ryuichi Ida ‘On the International Legal Aspects of Human Dignity’ in Jeff Malpas and Norelle Lickiss (eds) Perspectives on Human Dignity: A Conversation (Springer, 2007) 158.
165 Joern Eckert ‘Legal Roots of Human Dignity in German Law’ in Kretzmer and Klein Note 160, 44.
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endowed, they were equal by nature.166 Increasingly, other philosophers dropped
the religious concepts previously associated with the concept and expounded on
this modern development of dignity, which drew substantially on the importance
of human beings as having the capacity of reason.167
Arguably, the most influential person on this concept, who has even been called
the “god-father” of the modern doctrine of human dignity, is Immanuel Kant
(1724-1804).168 Similar to Pufendorf, Kant argued that the basis of human dignity
is the ability of man to reason or to think.169 However, contrary to Pufendorf who
believed that only human relations could provide human dignity, Kant believed
there was a deeper value in human dignity - one that extended beyond its relativity
to mankind.170 Kant asserted that “man does not exist as a mere means for any use
or will, but as an end in himself. Thus, he always has to be regarded, in all actions
both towards himself and to other reasonable beings, as the end, too”.171 This
formulation is what is commonly referred to as the categorical imperative of the
Kant doctrine. Later, in order to shed more light on his doctrine, Kant developed it
into the practical imperative as follows: “Act in such a way as to treat humanity,
whether in your own person or that of another, always as the end, never merely as
the means”.172
According to Kant, this means that a human being should be regarded as a person
who possesses a dignity (an absolute inner worth) by which he demands respect
166 Ibid.
167 Christopher McCrudden ‘Human Dignity and Judicial Interpretation of Human Rights’ (2008) 19 The European Journal of International Law 665, 659.
168 Chalmers and Ida Note 164, 159.
169 Jack Donnelly ‘Human Dignity and Human Rights’ (Geneva Academy of International Humanitarian Law and Human Rights, Research Project on Human Dignity, 2009), 20. Available at http://www.udhr60.ch/report/donnelly-HumanDignity_0609.pdf (Last visited 22 February 2012).
170 Eckert Note 165, 46.
171 Immanuel Kant ‘The Metaphysics of Morals’ (1797) in Mary Gregor Cambridge Texts in the History of Philosophy (Cambridge University Press, 1996) 186.
172 Kant Note 171, 209.
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for himself from all other rational beings in the world.173 One can see that Kant
explicitly links the notion of dignity to respect as he stipulates that our humanity
demands that others respect us while at the same time we respect them.174 He
further asserts, “do not let others tread with impunity on your rights” thereby also
linking dignity to human rights.175 It can therefore be surmised that for Kant,
human dignity is universal and inherent; possessed by every human being and
expressed in the form of human rights. As we shall see below, the Kantian
doctrine became one of the inspirations for the inclusion of the notion of human
dignity in the UDHR and other international human rights instruments.
Also of note is the work of Ronald Dworkin, who is today considered to be one of
the most influential modern legal philosophers on the concept of human dignity.
Similar to Kant, Dworkin provides a conception of human dignity in his latest
work cryptically called Justice for Hedgehogs, which, amongst others, embodies
the notion of self-respect.176 Dworkin sees self-respect as an underlying principle
of human dignity that requires individuals to recognize not just their inherent
worth but also imposes a moral duty to respect the lives of others who are
similarly endowed with inherent worth.177 It is worth mentioning that in his earlier
work, Taking Rights Seriously, Dworkin asserted that legal principles (including
international human rights standards) flow from certain underlying moral
principles such as justice, fairness and human dignity.178 For my purposes, it is
not necessary to break down Dworkin’s overall teleological account of the
concept of human dignity. Instead, it is simply enough to note that according to
Dworkin, human dignity is a moral principle that demands that people’s human
rights be taken into account by other individuals.
173 Eckert Note 165, 46-47.
174 Donnelly Note 169, 21.
175 Ibid.
176 Ronald Dworkin Justice for Hedgehogs (Harvard University Press, 2011).
177 Dworkin Note 176, 256-268.
178 Ronald Dworkin Taking Rights Seriously (Harvard University Press, 1977) 22.
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Overall, although there are interesting differences among philosophers on the
meaning of human dignity, what is clear from these different strands, and is
pivotal to this thesis, is that central to the concept is the idea that all human beings
are worthy of respect - an inherent value that exists simply by virtue of our
humanity. Whether this understanding of the concept is the basis upon which
human rights exist today shall be elucidated in the section below.
2.4.2 Human Dignity in International Law
After the atrocities of World War II, human dignity was formally protected in
international human rights law and has since come to be considered as the
“foundational concept of the global human rights regime”.179 The UDHR
identifies human dignity as the basis of human rights by stating that the
“recognition of inherent dignity … is the foundation of freedom, justice and peace
in the world”.180 Article 1 then goes on to reaffirm the Kantian doctrine by
asserting that “[a]ll human beings are born free and equal in dignity and rights.
They are endowed with reason and conscience and should act towards one another
in a spirit of brotherhood”.181 Furthermore, article 22 states that a person’s
economic, social and cultural rights are indispensable for his or her dignity.
Most human rights treaties also expressly endorse human dignity as the source of
human rights. The UN Charter preamble states:
Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person … and have determined to promote social progress and better standards of life in larger freedom….182
Article 1 of the UN Charter takes up this theme and provides: “[a]ll human beings
are born free and equal in dignity and rights. They are endowed with reason and
179 Donnelly Note 169, 3.
180 UDHR Note 114, preamble. 181 Ibid.
182 Charter of the United Nations 1031, TS 993 (entered into force 24 October 1945).
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conscience and should act towards one another in a spirit of brotherhood”.183
There are also several more specific uses of dignity in the remainder of the UN
Charter. For instance, Article 22, on the right to social security, provides:
Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.
In addition, article 23(3), which articulates an individual’s fundamental right to
work, provides that “everyone who works has the right to just and favourable
remuneration ensuring for himself and his family an existence worthy of human
dignity, and supplemented, if necessary, by other means of social protection”.
Similarly, the ICCPR, the ICESCR and the International Covenant on the
Elimination of Racial Discrimination all affirmed in their preambles that human
dignity is the underlying foundation of international human rights law.184 More
recently, emerging from the comprehensive reconsideration of international
human rights law at the World Conference on Human Rights in 1993, the Vienna
Declaration asserts dignity as being the proper source of international human
rights law.185 The preamble of the Declaration affirms that:
... all human rights derive from the dignity and worth inherent in the human person, and that the person is the central subject of human rights and fundamental freedoms, and consequently should be the principal beneficiary and should participate actively in the realization of these rights and freedoms.
The Vienna Declaration not only adopted dignity as a foundational principle to
human rights in general, but also explicitly recognized the concept in provisions
dealing with particular areas of human rights, such as the treatment of indigenous
183 Ibid.
184 ICCPR Note 137, preamble; ICESCR Note 137, preamble and International Convention on the Elimination of All Forms of Racial Discrimination, opened for signature 21 December 1965, UN Treaty Series vol. 660 (entered into force 4 January 1969), preamble.
185 Vienna Declaration and Programme of Action, UN Doc A/CONF 157/24 (12 July 1993), preamble.
40
peoples,186 the prohibition of torture,187 the prohibition of gender-based violence
and harassment,188 the abolition of poverty,189 and the issue of biomedical
ethics.190 It should also be noted that the notion of dignity is not restricted to
international human rights instruments. It has also become embedded in the texts
of regional human rights treaties, most notably in the preambles to the Inter-
American,191 Arab,192 African,193 and (some) European194 human rights
instruments.195
In sum, the inclusion of human dignity in the above international and regional
instruments demonstrates the idea that human dignity is the underlying foundation
of international human rights law.196 As it will be argued later on, any violation of
186 Vienna Declaration Note 185, article 20.
187 Vienna Declaration Note 185, article 55.
188 Vienna Declaration Note 185, article 18.
189 Vienna Declaration Note 185, article 25.
190 Vienna Declaration Note 185, article 11.
191 American Convention on Human Rights, opened for signature 22 November 1969, 1144 UNTS 123 (entered into force 18 July 1978).
192 League of Arab States, Revised Arab Charter on Human Rights (2005) 12 International Human Rights Law Journal 893.
193 African [Banjul] Charter on Human and Peoples’ Rights, opened for signature 27 June 1981, 21 ILM 58 (entered into force 21 October 1986).
194 Convention for the Protection of Human Rights and Fundamental Freedoms, Council of Europe (CETS No. 184), Rome 4.XI.1950, as amended by Protocol 13. See also, the European Social Charter (revised) opened for signature 18 October 1961, CETS 035 (entered into force 26 February 1965).
195 There are many other international instruments that proclaim human dignity as part to their ethos. See, for example, Geneva Convention Relative to the Treatment of Prisoners of War, 75 UNTS 135 (entered into force 12 August 1949); Rome Statute of the International Criminal Court, 2187 UNTS 7 (entered into force 1 July 2002); Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery, 226 UNTS 3 (entered into force 7 September 1956); Convention on the Rights of the Child, 1577 UNTS 3 (entered into force 2 September 1990); International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, 2220 UNTS (entered into force18 December 1990).
196 Paolo G. Carozza ‘Subsidiarity as a Structural Principle of International Human Rights Law’ (2003) 97 American Journal of International Law 38, 46.
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dignity, whether by States or private actors, should be included within the legal
architecture that protects human rights.197
2.4.3 The Meaning of Human Dignity
Having considered the philosophical underpinnings of the notion of human
dignity and its embodiment in international human rights instruments, the
question then becomes: how do we understand the concept of dignity in modern
times? It is worth noting that despite its apparent centrality to human rights law,
the term is never explicitly defined in the text of the international instruments.
This raises the following questions: what does dignity actually mean in these
instruments? Is it a basis for human rights, a right in itself, or is it simply a
synonym for human rights? This section shall tackle these queries with a view to
articulating what it actually means to have human dignity and what implications
this has for developing a coherent legal and philosophical justification for
corporate accountability of human rights violations.
Contemporary literature on the meaning of the term reveals that there are two
broad philosophical views that attempt to explain whether and how the notion of
human dignity provides a foundation for human rights: reductionism and
essentialism.198 According to the first viewpoint, reductionism, the lack of a
substantive definition in international instruments implies that the term human
dignity is a mere rhetorical slogan, a catch-all phrase that lacks any real or
substantial expression in law.199 Proponents of this viewpoint have even gone so
197 Rex D. Glensy ‘The Right to Dignity’ (2011) 43 Columbia Human Rights Law Review 65, 80.
198 Leslie Meltzer Henry ‘The Jurisprudence of Dignity’. Available at http://ssrn.com/abstract=1928768 (Last visited on 1 November 2011), 12.
199 Henry Note 198, 11-12.
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far as to describe the term as “useless”,200 “vague”,201 “a fuzzy concept”,202 and
“elusive as to be virtually meaningless”,203 amongst others.
Reductionists further believe the term human dignity amounts to no more than the
existing philosophical principle of autonomy.204 Dignity, they argue, merely aims
to protect an individual’s right to control his or her life or destiny, that is, self-
rule.205 Therefore, the concept simply requires every person to respect every other
person’s right to make choices and to take action based on that person’s own
values and belief system.206 On this account, dignity involves not only refraining
from interfering with others’ choices, but sometimes actually providing them with
the necessary conditions and opportunities for exercising their autonomy.207
Proponents of this viewpoint contend that human dignity adds nothing more than
that which has already been articulated by the principle of autonomy because it
merely amounts to “treating people in the way that they wish to be treated”.208
In contrast, essentialists believe that human dignity contains certain features that
differentiate it from other philosophical concepts such as autonomy.209 Their
approach is to “distill dignity’s meaning down to its fundamental core by
searching for the root or basic meaning of dignity”.210 Essentialists tend to view
200 Ruth Macklin, ‘Dignity is a Useless Concept’ (2003) 327 British Medical Journal 1419, 1420.
201 Dworkin Note 176, 198-199.
202 Donnelly Note 169, 81.
203 Ibid.
204 Henry Note 198, 12.
205 Glensy Note 197, 68.
206 Henry Note 198, 12.
207 Glensy Note 197, 68.
208 Henry Note 198, 12. See also, Yehoshua Arieli ‘On the Necessary and Sufficient Conditions for the Emergence of the Doctrine of Dignity of Man and His Rights,’ in Kretzmer and Klein Note 160, 12, who argues that dignity is a central claim of man’s autonomy and involves his or her “capacity to be lord of his fate and the shaper of his future”.
209 Guy E. Carmi ‘Dignity-The Enemy from Within: A Theoretical and Comparative Analysis of Human Dignity as a Free Speech Justification’ (2007) 9 University of Pennsylvania Journal of Constitutional Law 957, 966.
210 Henry Note 198, 13.
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the concept as possessing a minimum core, which recognizes that every human
being possesses an intrinsic worth that should be recognized and respected by
others.211 Following the Kantian doctrine, essentialists believe that autonomy and
reason serve as the foundation of human dignity.212
This thesis aligns itself with the second viewpoint for the following reasons. In
my view, it would be a mistake to conclude from the lack of a definition in
international human rights instruments that human dignity is simply a slogan,
which is too ambiguous to be meaningful in international law or that it is
reducible to the principle of autonomy. Admittedly, the concept does indeed lack
a clear definition in human rights texts; however, as it will be shown, this in no
way detracts from its essence and usefulness in human rights jurisprudence.
Reductionists seem to confuse the notion of inherent dignity of the human person
with that of moral dignity.213 The former, which forms the subject of analysis in
this paper, plays a central role in legal instruments and is inseparable from the
human condition while the latter is a synonym for ‘honour’ and relates to the
behaviour of human beings in choosing good over bad.214 In addition,
reductionists are reminded of other fundamental concepts such as “equality”,
“justice” “discrimination” and “freedom”, which have also not been defined by
international law instruments but are nonetheless considered to be meaningful.215
This, as Andorno points out, is not only because of the impossibility of finding a
precise definition of such terms that satisfies everyone in a multi-cultural world,
but also because rigid definitions often lead to unsolvable difficulties in the
211 Mahlmann Note 163, 30.
212 Donnelly Note 169, 81.
213 Joseph Azize ‘Human dignity and Euthanasia Law’ (2007) 9 University of Notre Dame Australia Law Review 47, 59.
214 Ibid.
215 For example, article 7 of the UDHR provides “All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination”. Neither “equal” nor “discrimination” is defined within the instrument.
44
implementation of legal norms.216 McCrudden agrees that while “there is no
common substantive conception of dignity ... there [nonetheless] appears to be an
acceptance of the concept of dignity”.217
It is contended that by international instruments asserting that dignity is “inherent
… to all members of the human family”,218 that all human beings are “free and
equal in dignity and rights”,219 and that “these rights derive from the inherent
dignity of the human person”,220 these instruments offer invaluable guidance for
clarifying the meaning of human dignity as used in international law. First, dignity
is a permanent and intrinsic attribute that is inseparable from our humanity; thus it
is not a value that can be derived from some specific personal features such as
age, nationality, race or gender.221 Secondly, dignity implies that basic rights are
equal for all; therefore if human dignity is the same for all, then all human beings
possess equal basic rights.222 Thirdly, rights derive from human dignity, a pre-
existing value that therefore cannot be taken away arbitrarily.223 These three
elements lead me to conclude that, at the very least, the ‘minimum core’ of human
dignity entails the following: every human being has his or her own intrinsic
worth simply by virtue of being human, which should be recognised and respected
by others; and thus human rights, which flow from human dignity, are inherent in
every human individual and should be respected.224
216 Roberto Andorno ‘Human Dignity and Human Rights as a Common Ground for a Global Bioethics’ (2009) Journal of Medicine and Philosophy 1, 6.
217 McCrudden Note 167, 712. See also, Azize Note 213, 60, who argues along similar lines.
218 UDHR Note 114, preamble.
219 UDHR Note 114, article 1.
220 See ICCPR Note 137, preamble and ICESCR Note 137, preamble.
221 Azize Note 213, 60.
222 Andorno Note 216, 6.
223 Ibid. See also, Oscar Schachter ‘Human Dignity as a Normative Concept’ (1983) 77 American Journal of International Law 848, 849-850.
224 Adam McBeth ‘Every Organ of Society: The Responsibility of Non-State Actors for the Realization of Human Rights’ (2008-9) 30 Hamline Journal of Public Law & Policy 37, 46.
45
It would be prudent, at this stage, to make a distinction between human dignity
and human rights as these maybe confused as being one and the same concept.
The Vienna Declaration clearly asserts that “all human rights derive from the
dignity and worth inherent in the human person”.225 In my view, this suggests that
these are two separate, but nonetheless intimately linked concepts. Donnelly
points out that “the practice of human rights provides a powerful mechanism to
realize in the social world the underlying dignity of the person”.226 Therefore the
link between human rights and human dignity is that human rights are a practical
social instrument, which reflect and aim to realize the underlying encompassing
value of human dignity.227
To conclude, if we accept the notion that human beings have intrinsic worth, it
follows then that not only is each individual entitled to fundamental rights and
freedoms but also that human beings deserve to be protected from serious threats
to their dignity. One can see that unlike the reductionist approach, which asserts
that dignity overlaps with philosophical concepts like autonomy, essentialists
correctly take into account other aspects of our human experience that provide a
richer conception of dignity.228 The impact that this understanding of human
dignity will have on corporate human rights violations will be explored next. 2.4.4 Human Dignity as the Overarching Principle to Corporate Human Rights Accountability
Having accepted that the international human rights framework is a mechanism
for the realisation of the foundational value of human dignity, the question then
becomes: how do we use human dignity to construct the foundations of corporate
human rights accountability at the international level? In addressing this issue, I
shall combine, on the one hand, the appeal to human dignity as an overarching
principle with, on the other hand, the recourse to human rights norms as
225 Vienna Declaration Note 185, preamble. Emphasis added.
226 Donnelly Note 169, 11.
227 Ibid.
228 Henry Note 198, 15.
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embedded in international law so as to provide an effective and practical way
forward for dealing with MNC human rights abuses.
I should begin by pointing out that the primary reason for my emphasis on human
dignity as the basis for achieving MNC accountability for their human rights
violations is that corporate activities are closely connected to the most basic
human rights, namely the rights to work, to adequate standard of living, health and
access to a clean environment, among others.229 In my view, if human dignity is
the foundation upon which these and other human rights are based, then it is not
too farfetched to invoke the concept as the ultimate rationale for the enforcement
of human rights responsibilities of MNCs at the international level.230
It follows from my earlier discussion that human dignity is the underlying
foundation of the international human rights regime, that human dignity
constitutes a fundamental source from which new human rights may be derived or
existing rights extended to apply to new situations.231 This means that human
dignity provides us with a key point of leverage to effect the transition from what
‘ought’ to what ‘is’ and thus provides a fuller and richer content of international
human rights norms. In fact, human dignity has already played an important role
in several social and political movements of the 20th century, which sought to
advance human rights principles. These include the civil rights movements in the
United States, the advancement of women’s rights in the workplace, discussions
on the ethics of biomedical research, the issue of euthanasia and the issues of
genetic manipulation, among others.232
229 Andorno Note 216, 5.
230 Ibid. As previously noted, the position that corporations have international human rights responsibilities (rather than international obligations) has gained more ground following the endorsement of the UN Framework by the Human Rights Council in June 2011. See chapter 1, at 1.1 above. The exact content and scope of such responsibilities will be explored more fully in chapter 4, below.
231 Schachter Note 223, 853.
232 McCrudden Note 167, 662-663.
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In relation to MNC abuses of human rights, Ratner points out that “if human
rights are aimed at the protection of human dignity, the law needs to respond to
abuses that do not implicate the state directly”.233 Kinley and Tadaki agree that
the concept of human dignity possesses “a norm-making capacity that can both
effect corporate behaviour and form a basis for future ... regulation”.234 Therefore
it is submitted that human dignity, as a legal and philosophical concept, is
uniquely positioned to provide a key vehicle for re-analysing and renaming what
businesses currently perceive as ‘corporate risks’ into ‘corporate violations’ and
as such demands accountability for any negative impacts on human rights.235
Keeping the above in mind, this thesis identifies a distinctively useful institutional
function which dignity can play with respect to corporate human rights violations:
enhancing a victim’s right to effective remedy under international human rights
law.236 In this regard, it is contended that human dignity can play a dual role: one
involving a legal dimension that relates to the ability by victims to bring claims of
wrongdoing and seek reparation; the second involving a moral dimension relating
to the substantive reparation itself, whereby an individual whose rights have been
violated is able to obtain relief from the wrongdoer.237
The distinction between these two different, but related, spheres is based on the
practical consequences that each has under international law. Here, sensitivity to
context is essential requiring a recapitulation of the business and human rights
predicament, as follows: despite the negative impacts that MNCs can and do have
on human rights and the failure by (some) Host States to effectively regulate
MNCs’ adverse impacts on human rights, international law currently does not
233 Ratner Note 37, 472.
234 Kinley and Tadaki Note 119, 958.
235 Kinley and Tadaki Note 119, 1022.
236 McCrudden Note 167, 721-722; Schachter Note 223, 853.
237 Amnesty International ‘Comments in Response to the UN Special Representative of the Secretary General on Transnational Corporations and other Business Enterprises: Guiding Principles - Proposed Outline’ Doc IOR 50/001 (2010), 18. Available at http://www.amnesty.org/en/library/asset/IOR50/001/2010/en/71401e1e-7e9c-44a4-88a7-de3618b2983b/ior500012010en.pdf (Last visited on 13 June 2012).
48
provide for specific corporate human rights obligations thus leaving many victims
of corporate human rights abuses without effective remedy. Therefore, the first
role of human dignity in enhancing MNC accountability as proposed herein
envisions a direct legal function for the concept and is consistent with the clear
duty imposed on States by international law to protect human rights.238 In other
words, this dimension utilizes dignity, as an underlying principle of the
international human rights framework, to compel all States to comply with their
international duty to protect human rights including by providing access to
judicial systems to enable persons whose rights have been violated by MNCs to
obtain effective remedy.239
The second leans on the emerging social responsibility of corporations to respect
international human rights, as accepted by businesses themselves (albeit under
pressure from stakeholders).240 In this context, the concept of human dignity is
used as an apparatus to propel MNCs to voluntarily reassess their business
activities in light of international human rights norms and address their negative
impacts, whether or not the State judicial and administrative machinery is
effective, thus preserving the fundamental idea that each individual human being
is deserving of respect and concern.241 The common theme in both these
conceptual paths is that a denial of either is implicitly incompatible with the basic
idea of the inherent dignity and worth of a human being that currently exists under
philosophical, social and legal discourse.242
The major advantage to this dual approach is that it paves the way for critical
political consensus concerning the role of international human rights law in
ensuring that MNCs respect human rights principles during the course of their
238 Report of the Special Representative Note 1, para 18.
239 Schachter Note 223, 851.
240 Report of the Special Representative Note 1, paras 24 and 54.
241 Erin Daly ‘The Constitutional Right to Dignity’ (2009), 5. Available at http://www.ialsnet.org/meetings/constit/papers/DalyErin%28USA%29.pdf (Last visited on 17 July 2012).
242 Amnesty International Note 237, 18.
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business operations.243 In other words, dignity can play a significant role
politically in smoothing over the different philosophical outlooks and values of
States, businesses and human rights organizations and promote the possibility of a
concrete global agreement among these differing outlooks to ensure MNC
accountability for their transnational human rights violations.244 As noted by
Schachter, the notion of human dignity “has acquired a resonance that leads it to
be invoked widely as a legal and moral ground for protest against degrading and
abusive treatment. No other ideal seems so clearly accepted as a universal social
good”.245 Indeed, the business world seems to be open to this suggestion as
affirmed by the Business Leaders Initiative on Human Rights, when it set out to
find practical ways of implementing the UDHR within its various business
organizations around the world.246
Critics may argue that international human rights law only charges States with
being responsible for protecting the rights of those within their jurisdictions.247 By
implication, so the argument goes, non-State actors, including MNCs, are exempt
from human rights accountability at the international level because human rights
are currently expressed as belonging to the jurisprudence of States.248 However, as
McBeth points out:
... the strong focus on the State in … efforts to secure the rights declared in the UDHR should be viewed as a practical matter for the implementation of the UDHR rights; it should not distract one from the character of the UDHR as an explicit acknowledgement of the existence … of pre-existing human rights that accrue to every human being and derive from human dignity.249
243 Schachter Note 223, 848-9.
244 Ibid.
245 Ibid.
246 Business Leaders Initiative on Human Rights ‘Building Understanding’ (Report No. 1, 2003). Available at http://www04.abb.com/global/seitp/seitp202.nsf/c71c66c1f02e6575c125711f004660e6/fd8d7d261d06a2adc1256df9003b68f0/$FILE/BLIHR1report.pdf (Last visited on 21 December 2012).
247 McCorquodale Note 112, 384-385.
248 Ibid.
249 McBeth Note 41, 43.
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In other words, the protection of human dignity - the need to ensure that the
inherent worth of every human being is respected - is not necessarily bonded to
the exercise of State power. Human dignity, inextricably linked to human rights,
may be violated by any person or entity, including MNCs and as such demands
accountability. Moreover, as Clapham asserts, “the strength of the human rights
system has always been its ability to adapt to new demands and new non-state
actors”.250 Thus, it is submitted that human dignity provides us with a sound
jurisprudential and legal foundation through which the existing human rights
machinery may be reoriented to cope with the new demands for protection from
harmful MNC activities.251
Ultimately, however, it should be noted that recourse to the fundamental value of
human dignity for MNC human rights accountability is a necessary, but not in
itself a sufficient mechanism for providing an effective response to the complex
challenges posed by transnational corporate human rights violations. Some further
mechanisms will be required for dignity to actually become functional. This is a
vital concept to grasp. While we need to recur to human dignity as the ultimate
justification of imposing accountability on corporations, this thesis contends that
more concrete or practical notions are needed to flesh out the principle in real life.
Later on in the thesis, I shall attempt to provide concrete mechanisms through
which the fundamental value of human dignity may be harnessed, legally and
socially, to provide for MNC accountability. It shall be argued that States should
adopt an international instrument that clarifies their role, extraterritorially, in
ensuring that MNCs comply with their human rights responsibilities abroad.252 At
the same time, I will rely on the concept to invoke effective social processes that 250 Clapham Note 13, 32.
251 Ibid.
252 Clapham Note 13, 268. On this point, it is worth taking note of the recent trends by States in addressing diverse fields such as corruption, terrorism and human trafficking, which demonstrate that States can and do use international law to ensure that business entities respect certain human rights principles. See, for example, Council of Europe Convention on Action against Trafficking in Human Beings Warsaw, 16 V 2005 (entered into force 1 December 2009); International Convention for the Suppression of the Financing of Terrorism, opened for signature 10 January 2000, GA Res 54/109 (entered into force 10 April 2002).
51
urge corporate compliance with their human rights responsibilities.253 From this,
one may infer that while the law remains a key avenue through which the value of
human dignity may be realized and protected, in some cases, violations of dignity
by MNCs may be more appropriately and effectively alleviated through social or
market processes and institutions rather than legal ones.254 In other words, the
concept of human dignity should be viewed as having a transcendental quality
with a wide range of applications that may fall outside of the sphere of strict legal
measures to enforce human rights.255
In sum, if, as Clapham avers, the overriding objective of human rights is to protect
the victim’s inherent dignity, then the victim has to be protected from everyone,
including non-State actors such as corporations.256 However, the transnational
character of MNCs poses significant barriers to the protection of human rights
mainly because their operations are usually conducted beyond the exclusive
jurisdictional control of a single State.257 This thesis has sought to take an existing
philosophical and legal concept - human dignity - and place it at the centre of the
quest towards ensuring MNC accountability for human rights violations. Such
accountability is premised on the idea that human rights protect the dignity or
inherent worth of human beings and consequently, upon their violation, human
beings lose their ‘human character’.258 Thus, the appeal in human dignity as a
foundational basis for future MNC accountability lies not just in the fact that it is
an overarching principle in international human rights law but that it also
reconciles the profit-driven demands of doing business with the social
expectations on businesses to respect human rights and provides a foundational
platform whereby both voluntary and legal mechanisms may have relevant and
253 These proposals shall be discussed in greater detail in a forthcoming chapter of the thesis See Chapter 5 below, ‘Walking the Talk: Proposals for an International Accountability Framework’.
254 Clapham Note 13, 546.
255 Schachter Note 223, 854.
256 Clapham Note 13, 546.
257 McBeth Note 41, 11.
258 Surya Deva ‘Corporate Code of Conduct Bill 2000:Overcoming Hurdles in Enforcing Human Rights Obligations Against Overseas Corporate Hands of Local Corporations ‘(2004) 8 New Castle Law Review 87, 107.
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reinforcing roles to play in regulating the relationship between business and
human rights.259
2.5 CONCLUSION
The premise that international human rights law only governs State relations is
clearly antiquated and requires modification. Given the massive scale of modern
commercial projects in today’s globalised economy, MNCs are now, more than
ever, capable of infringing fundamental human rights in the pursuit of greater
profits, investment or economic development.260 This chapter has shown that
MNCs are indeed also capable of bearing obligations in international human
rights law. However, neither treaty law nor international jurisprudence has - as of
yet - articulated the actual existence of such standards. Nevertheless, there are no
legal obstacles in international law to the formation of such obligations. Therefore
it has been contended that the concept of human dignity provides the international
community with a natural philosophical and legal foundation upon which MNCs
can (and should) be held accountable for their human rights violations. My
analysis of the concept has shown that the basic minimum content, which can be
discerned from international human rights instruments, is that each human being
possesses an intrinsic worth that should be respected and that some forms of
conduct, including by corporations, are inconsistent with the respect for this
intrinsic worth. In my view, corporate infringement of human dignity, regardless
of circumstances, is never acceptable and should not be tolerated. It is hoped that
the above analysis offers a framework for the global community to begin to derive
a set of principles that will guarantee corporate accountability of human rights
violations.
259 Clapham Note 13, 267-268.
260 McBeth Note 41, 7.
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CHAPTER 3
REVIEW OF EXISTING MECHANISMS OF ACCOUNTABILITY
3.1 INTRODUCTION
The case studies conducted earlier in the thesis illustrate that extractive MNCs are
increasingly expanding their operations into ever-more remote parts of the world,
which are often inhabited by communities that resist the foreign incursion in their
pristine regions.261 Others operate in Host States that have little regulatory or
technological capacity to effectively oversee the MNC’s extractive operations or,
in some cases, are experiencing some form of political or social strife.262 In light
of the negative impacts that MNCs can and do have on human rights, the absence
of clear international obligations on MNCs to respect human rights and the failure
by some Host States to effectively regulate MNCs’ adverse impacts on human
rights, the international community has responded by introducing a variety of
regulatory mechanisms aimed at providing MNC accountability for human rights
abuses.
My intention in this chapter is to discuss some of these measures in an attempt to
determine whether they are effective accountability mechanisms.263 This thesis
posits that to be an effective accountability mechanism, the initiative must meet
the following minimum requirements. First, the human rights standards to which a
corporation should adhere must be clearly articulated.264 This would not only help
to foster a culture of business respect for human rights principles, but would also
provide external stakeholders with definite benchmarks upon which to evaluate an
MNC’s behaviour with respect to human rights as well as the overall efficacy of
261 Gare A. Smith ‘An Introduction to Corporate Social Responsibility in the Extractive Industries’ (2008) 11 Yale Human Rights and Development Law Journal 1, 4- 5.
262 Joseph Note 94, 614.
263 The focus in this chapter shall be on international extrajudicial mechanisms. The question of whether judicial enforcement systems in Home States can efficiently address MNC human rights violations shall be addressed separately in the chapter 5, below.
264 Sir Geoffrey Chandler ‘Keynote Address: Crafting a Human Rights Agenda for Businesses’ in Addo Note 138, 41; Deva Note 87, 18.
54
the mechanism.265 Second, the mechanism should have in place an effective
monitoring or enforcement system that will ‘police’ corporate activities with
respect to human rights and provide effective remedy to victims when corporate
human rights harms occur.266 This element requires that an enforcement system
have the ability to investigate an MNC’s activities according to a pre-existing set
of standards and impose sanctions upon violations or provide remedies to those
whose rights have been adversely affected.267 It is submitted that these two
dimensions are fully consistent with the basic concept of human dignity, which as
the underlying foundation of the international human rights framework, can be
used to hold MNCs to account at the international level.268
From the outset, it should be noted that a detailed survey will not be carried out
because many scholars have, in some fashion or other, also analysed these
mechanisms to determine their efficacy in regulating the field of business and
human rights.269 The purpose of the review in this chapter is two-fold: to briefly
analyse the nature and scope of human rights responsibilities their standards entail
for MNCs; and to determine what, if any, enforcement mechanisms are prescribed
and whether they are effective. Therefore, Part II begins by evaluating voluntary
codes of conduct, which represent a company’s intention or commitment to
respect human rights. This part will also include an examination of leading
extractive industry corporate codes to determine their scope and effectiveness in
curbing MNC abuses of human rights. Part III will then discuss international soft
law initiatives launched under the auspices of the Organisation for Economic Co-
operation and Development, the International Labour Organisation and the United
Nations. Part IV summarizes the overall weaknesses of the above mechanisms and
draws together some general lessons as to why they inadequately protect against
MNC human rights violations. Overall, my analysis will show that the prevailing 265 Ibid.
266 Nolan Note 15, 20. See also, Amnesty International Note 237, 15.
267 Ibid.
268 See previous discussion on the concept of human dignity as an overarching principle in the goal towards ensuring corporate accountability for human rights violations, in chapter 2 at 2.4 above.
269 See, for example Stephens Note 4; Clapham Note 13; Kinley and Nolan Note 22; and Deva Note 87.
55
framework does promote a culture of business respect for human rights; however,
it critically fails to provide effective redress to victims of MNC human rights
abuses, thus resulting in no more than a “patchwork of disconnected, toothless
initiatives”.270
3.2 VOLUNTARY INITIATIVES
This section shall provide a short overview of voluntary codes of conduct, both at
corporate and industry levels, which arguably seek to bring business practices
more closely in line with human rights norms.
3.2.1 Corporate Codes of Conduct
Recent years have seen many MNCs adopt voluntary codes of conduct as the
principal means through which they express their support for, and commitment to
respect, human rights.271 Corporate codes are written policies or ethical
standards, which outline a company’s social responsibilities and represent an
attempt to respond to increased stakeholder social concerns such as respect for
human rights and conservation of the environment.272 Research conducted on the
Fortune Global 500 firms shows that almost all major companies have some sort
of policies in place that address human rights concerns.273 Some companies even
have codes that explicitly enunciate their support for international human rights
instruments.274 These corporate codes have become increasingly visible and often
270 Jochnick and Rabaeus Note 51, 413.
271 Levi-Strauss is usually credited as being the first MNC to establish a comprehensive code of conduct in 1991 regarding its global sourcing operations. Fiona McLeay ‘Corporate Codes of Conduct and the Human Rights Accountability of Transnational Corporations: A Small Piece of a Larger Puzzle’ in De Schutter Note 42, 221.
272 ILO Governing Body, Working Party on the Social Dimensions of the Liberalisation of International Trade Overview of Global Developments and Office Activities Concerning Codes of Conduct, Social Labelling and other Private Sector Initiatives Addressing Labour Issues GB 273/WP/SDL/1 (1998) 3.
273 See generally, Human Rights Council Policies and Management Practices: Results from Questionnaire Surveys of Governments and the Fortune Global 500 Firms, UN Doc AIHRC/4/35/Add.3 (28 February 2007).
274 Rio Tinto’s code for example states “We support and respect human rights consistent with the Universal Declaration of Human Rights and actively seek to ensure we are not complicit in human rights abuses committed by others”. Rio Tinto ‘The Way We Work: Our Statement of Business
56
feature on company websites and annual reports, along with details of the
company’s social and environmental performance.275
It is submitted that these voluntary corporate codes are a positive step towards
enhancing business respect for human rights in that they establish certain
aspirational standards with respect to a corporation’s workplace relations, labour
rights, health, environmental and safety standards, among others.276 They are
arguably especially useful to MNCs operating in Host States whose domestic laws
fail to provide adequate guidance in relation to certain acts that are prohibited in
the MNC’s Home State.277 Moreover, although they have no binding status in
domestic or international law, they have the potential to incur adverse social (and
even legal) consequences for non-compliant corporations.278
However, as some critics aptly observe, “the Achilles heel of self-regulatory
arrangements to date is their underdeveloped accountability mechanisms”.279
Practical experience has shown that MNCs can, and often do, choose not to
comply with their own standards without incurring any repercussions or sanctions
Practice’. Available at http://www.riotinto.com/documents/The_way_we_work.pdf (Last visited on 23 January 2012) 14.
275 For example, Shell publishes an annual report on its social and environmental performances, which is publicly available on its website. See http://www.shell.com/home/content/environment_society/reporting/s_reports/ (Last visited on 8 July 2012).
276 Danwood Mzikenge Chirwa ‘The Long March to Binding Obligations of Transnational Corporations in International Human Rights Law’ (2006) 22 South African Journal of Human Rights 76, 76.
277 For instance, discrimination, child labour and slavery. Emeka A. Duruigbo Multinational Corporations and International Law: Accountability and Compliance Issues in Petroleum Industry (Transnational Publisher, 2003), 107.
278 See for example Kasky v. Nike, Inc., 539 US 654 (2003), where the plaintiff sued Nike, a sportswear and clothing corporate giant, for allegedly making false and misleading public statements, through a series of press releases, regarding the working conditions of the workers in its overseas suppliers’ factories. Nike experienced worldwide condemnation, which had a profound negative impact on the company image, and also presumably, its revenues. Available at http://business-humanrights.org/Categories/Lawlawsuits/Lawsuitsregulatoryaction/LawsuitsSelectedcases/NikelawsuitKaskyvNikeredenialoflabourabuses (Last visited on 15 January 2012).
279 John Gerard Ruggie ‘Current Developments Business and Human Rights: The Evolving International Agenda’ (2007) 101 The American Journal of International Law 819, 836. See also, Stephens Note 4, 48.
57
whatsoever.280 Penovic asserts that these codes often constitute nothing more than
a “tokenistic response to public pressure” and are usually “overlooked in the face
of large potential profits”.281 Moreover, unless specifically incorporated in a
contractual undertaking, corporate codes are generally non-enforceable in that
they do not impose liability on MNCs if they are violated nor do they, upon such
violations, provide victims with any remedies.282 In my view, these shortcomings
render corporate codes ineffective, and therefore unsatisfactory mechanisms for
holding MNCs accountable for their transnational human rights abuses.
3.2.2 Extractive Industry Initiatives
This section shall briefly review several leading regulatory initiatives from the
extractive industry to determine their effectiveness in preventing, or providing
redress to, MNC human rights abuses.
3.2.2.1 Voluntary Principles on Security and Human Rights
Extractive MNCs operating in high-risk or conflict environments are often
confronted with serious human rights issues such as loss of habitat, life and
physical integrity of the local communities.283 Allegations of human rights
violations, especially levelled against US and UK company security forces,
highlighted to their Home governments the need to address the issue of human
rights and security in the extractive sector.284 In response, the Voluntary
280 Ruggie Note 279, 837; Chandler Note 264, 42.
281 Tania Penovic ‘Undermining Australia’s International Standing: The Failure to Extend Human Rights Protections to Indigenous Peoples Affected by Australian Mining Companies’ Ventures Abroad’ (2005) 11 Australian Journal of Human Rights 3. Available at http://www.austlii.edu.au/au/other/ahric/ajhr/ajhrindex.html/2005/3.html (Last visited on 19 July 2011).
282 Duruigbo Note 277, 133, noting that in the 1990’s the Shell Oil Company in Nigeria adopted a code of conduct which at the time was widely regarded as being path-breaking in the business community for addressing human rights concerns. However, it soon became clear that it did not alleviate the suffering of the local people in any concrete way as Shell could not be forced to comply with its own code.
283 Salil Tripathi ‘Have the Voluntary Principles Realised their Full Potential?’ (2010) http://www.business-humanrights.org/Links/Repository/1000064/link_page_view (Last visited on 6 October 2011).
284 Ibid.
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Principles on Security and Human Rights (“VPs”) were created in 2000 to
strengthen the capacity of extractive MNCs to address complex security and
human rights issues in their business operations around the world.285 Today,
participants in the initiative include 7 States, 9 NGOs, 18 companies and 3
organizations with observer status.286
The VPs essentially provide a set of principles that guide extractives MNCs in
“maintaining the safety and security of their operations within an operating
framework that ensures respect for human rights and fundamental freedoms”.287
The VPs encourage extractive MNCs to perform several measures that will
strengthen their capacity to address complex security and human rights issues in
their business operations, particularly in developing countries. These generally
include: conducting comprehensive assessments of human rights risks associated
the MNC’s general operations as well as any specific security arrangements;288
maintaining relations with the public security forces of the Host State and using
its influence to ensure that the local forces respect the human rights of the
surrounding communities;289 and in circumstances where a Host government is
unable or unwilling to provide adequate security for an MNC’s personnel or
285 The VPs were issued by the US State Department and the Foreign and Commonwealth Office of the United Kingdom, after a yearlong process involving government officials, extractive MNCs companies and NGOs. They are available at http://voluntaryprinciples.org/files/voluntary_principles_english.pdf (Last visited on 3 July 2012).
286 ‘Voluntary Principles on Security and Human Rights Focus on Promotion of Human Rights and Increasing Total Number of Participants’. Available at http://www.prnewswire.com/news-releases/voluntary-principles-on-security-and-human-rights-focus-on-promotion-of-human-rights-and-increasing-total-number-of-participants-118453464.html (Last visited on 22 August 2012).
287 Information Working Group ‘The Voluntary Principles: Columbia Case Study’ (Report No 1, 2008), 1. Available at http://psm.du.edu/media/documents/regulations/global_instruments/multi_stakeholder/voluntary_principles/voluntary_principles_colombia-case-study.pdf (Last visited on 31 August 2012).
288 See, generally, ‘Risk Assessments’ Voluntary Principles Note 285. These risk assessments should consider factors such as patterns of violence in the local areas, available human rights records of security forces as well as past allegations of human rights violations and the capacity of the local authorities to hold accountable those responsible for human rights abuses, among others.
289 See, generally, ‘Interactions between Companies and Public Security’ Voluntary Principles Note 285.
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assets, ensure that any private security arrangements act lawfully and observe
international human rights principles.290
It is conceded that the VPs provide useful guidance to MNCs on how to manage
their security needs while concurrently fulfilling their responsibilities to respect
human rights.291 However, the VPs suffer from a weak institutional basis: as the
name suggests, the principles are non-prescriptive in nature and only provide
recommendations to extractive companies on how to address complex human
rights-related security issues. Therefore companies cannot be held legally
accountable for failing to adhere to them.292 In addition, participation in the
initiative is purely voluntary.293 Thus, extractive MNCs are under no obligation to
report what they have done in terms of compliance and neither do they suffer any
sanctions or repercussions for failing to abide with the VPs.294 Another key
shortcoming is that the language of the VPs is quite vague and suffers from a
general lack of clarity in terms of implementation.295 For example, the VPs urge
companies to “use their influence to remind the local government agencies to live
up to their international legal obligations”.296 However, they fail to specify to
companies exactly how this may be achieved especially with respect to Host
States that lack political will to protect human rights.297
290 See, generally, ‘Interactions between Companies and Private Security’ Voluntary Principles Note 285.
291 John G. Ruggie ‘Keynote Remarks at Extraordinary Plenary Voluntary Principles on Security & Human Rights’ (Department of Foreign Affairs and International Trade, Ottawa, 2011). Available at http://www.csrandthelaw.com/2011/09/articles/security/keynote-remarks-at-the-voluntary-principles-extraordinary-plenary-meeting/ (Last visited on 3 November 2011).
292 In strict legal terms, this could probably be achieved if the VPs are incorporated into contractual agreements. Muchlinski Note 129, 37.
293 Niza/Action Aid ‘Government Mining in Africa: African Perspectives, State Initiatives and International Standards’ (Report No 1, 2011) 24. Available at http://archive.niza.nl/ (Last visited on 24 October 2011).
294 Ibid.
295 Information Working Group ‘Overview of Company Efforts to Implement the Voluntary Principles’, 4. Available at http://voluntaryprinciples.org/files/vp_company_efforts.pdf (Last visited on 8 June 2012).
296 See, ‘Interactions between Companies and Public Security’ Voluntary Principles Note 285.
297 Information Working Group Note 295, 4.
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As a result of these shortcomings, it is submitted that even within their limited
mandate to ensure that an MNC’s private security forces respect human rights, the
VPs are an ineffective accountability mechanism that are unable to provide
effective remedy to individuals and communities adversely affected by an MNC’s
activities.
3.2.2.2 The International Council on Mining and Minerals Sustainable Development Framework
The International Council on Mining and Minerals (“ICMM”) was established in
2001 to improve sustainable development performance in the mining sector.298
The concept of sustainable development involves meeting the need of businesses
to enhance their economic growth while simultaneously addressing socio-political
challenges and environmental concerns stemming from their activities.299 Today,
the ICMM is regarded as the main regulatory voice of the extractive industry and
boasts amongst its membership extractive giants such as Rio Tinto, BHP Billiton
and Anglo American.300 The ICMM regularly engages with various stakeholders
to discuss issues such as mining impacts on indigenous peoples, risk assessments
and community engagement.301
In 2003, the ICMM adopted its Sustainable Development Framework (“ICMM
Framework”), which consists of ten principles that contain ethical substantive and
procedural guidelines for extractive MNCs on the issue of sustainable
development.302 Most notably, the ICMM Framework encourages its corporate
members to “uphold fundamental human rights and respect cultures, customs and
values in dealings with employees and others who are affected by ... [its]
298 ICMM ‘About Us’. Available at http://www.icmm.com/about-us (Last visited on 6 July 2012).
299 United Nations Report of the World Commission on Environment and Development GA Res 42/187 (11 December 1987). For further information on the concept, see Charles Smith and Gareth Rees Economic Development (Macmillan Publishers, 2nd Ed, 1998).
300 ICMM Note 298.
301 Ibid.
302 The International Council on Mining and Minerals Sustainable Development Framework. Available at http://www.icmm.com/our-work/sustainable-development-framework (Last visited on 6 July 2012).
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activities”.303 This principle means, in part, that a company should ensure fair
remuneration for its employees, minimise involuntary resettlements of the local
community, provide fair compensation for any adverse effects on the community
that cannot be avoided and respect the local culture and heritage of surrounding
communities.304 Additionally, in order for companies to demonstrate compliance
with its Framework, the ICMM urges them to commit themselves to using an
international standard for reporting on their sustainability efforts, for example the
Global Reporting Initiative.305
The ICMM Framework admittedly provides a minimum standard that has been
developed by key industry players, which can be used to evaluate the corporate
behaviour of mining companies with respect to human rights.306 However, the
ICMM Framework suffers from various shortcomings, which call into question its
efficacy as an accountability mechanism. To begin with, only the corporations
that join the ICMM are required to implement the ICMM Framework. Thus many
extractive MNCs that choose not to join the initiative are not required to adhere to
its Framework despite their negative impacts on human rights. Additionally, the
principles in the ICMM Framework are stated in very general terms that are quite
vague, leaving plenty of room for (mis)interpretation by businesses. That is, rather
than incorporate international human rights standards in its principles, the
Framework only broadly provides that companies should “uphold ... human rights
and respect cultures, customs and values in dealings with employees and others
who are affected by our activities”.307 Even this general reference to human rights
appears to be specifically targeted to employee labour rights, with only a
peripheral consideration of the rights of local communities.308 Moreover, even
303 ICMM Framework Note 302, principle 3.
304 Ibid.
305 Ibid. The Global Reporting Initiative is a non-profit organization that produces certain guidelines for promoting economic sustainability, including those relating to corporate social responsibility. See, generally, https://www.globalreporting.org/Pages/default.aspx (Last visited on 6 July 2012).
306 Niza/Action Aid Note 293, 23.
307 ICMM Framework Note 302, principle 33.
308 Ibid.
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within its limited ambit, the ICMM Framework fails to articulate exactly how
companies are required to comply with its standards thereby leaving much to the
discretion of businesses.
Furthermore, it is unclear what sanctions, if any, will be imposed in case of non-
compliance by its corporate members. Admittedly, the ICMM Framework
encourages companies to set up complaints mechanisms for aggrieved employees
and communities.309 It also requires its corporate members to “obtain independent
third party assurance of their sustainability performance ... [to] review and assess
the quality of their reports, systems and processes”.310 This, however, betrays an
over-reliance on the company itself to identify material social development risks
of its activities and to determine its own approach to managing such risks,
including choosing its auditor.311 It fails to specify consequences for the corporate
members who simply fail to comply with its principles, including failing to set up
complaints mechanisms or conduct independent verification processes, thus
weakening the Framework further. In short, the ICMM Framework seems to
heavily rely on voluntary participation by businesses for its effectiveness.
For these reasons, it is submitted that the ICMM Framework is an unsatisfactory
mechanism that fails to ensure effective accountability for MNC human rights
violations in the extractive sector.
309 ICMM ‘Human Rights in the Mining and Metals Industry: Overview, Management Approach and Issues’ (2009) 11. Available at http://www.icmm.com/page/14809/human-rights-in-the-mining-and-metals-industry-overview-management-approach-and-issues (Last visited on 1 August 2012).
310 ICMM ‘Assurance’. Available at http://www.icmm.com/our-work/sustainable-development-framework/assurance (Last visited on 1 August 2012).
311 ICMM ‘Applying the ICMM Assurance Procedure: An Interpretive Guide’ (2010) 2. Available at http://www.icmm.com/page/54068/applying-the-icmm-assurance-procedure-an-interpretive-guide (Last visited on 1 August 2012)
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3.2.2.3 International Finance Corporation Performance Standards on
Social and Environmental Sustainability
The International Finance Corporation (“IFC”) is a part of the World Bank group,
which also includes the International Bank for Reconstruction and Development,
the International Development Association, the Multilateral Investment Guarantee
Agency and the International Centre for the Settlement of Investment Disputes.312
The main purpose of the IFC is to provide loans, equity and technical advice to
private enterprises in order to finance development projects in developing
States.313 Today, the IFC reportedly invests more than $3 billion a year in
developing countries, compared to $700 million just three years ago, with the
primary goal of reducing poverty and improving people’s lives in these emerging
economies.314
In 2006, IFC issued the Performance Standards on Social and Environmental
Sustainability (“Performance Standards”) in response to growing concerns from
the international community about the negative environmental, social and human
rights impact of MNCs doing business in developing countries.315 The
Performance Standards generally define IFC’s clients’ responsibilities for
managing their environmental and social risks including requiring them to avoid,
reduce, mitigate or compensate individuals and communities harmed by the
negative impacts of their development projects.316 The Performance Standards
have since become one of the most widely-accepted frameworks for managing
312 The World Bank Group ‘About Us’. Available at http://web.worldbank.org/ (Last visited on 12 June 2012).
313 International Finance Corporation ‘About IFC’. Available at http://www1.ifc.org (Last visited on 12 June 2012). The IFC was established in 1956 and today currently consists of 182 member countries making it the “largest multilateral source of loan and equity financing for private-sector projects in the developing world”.
314 See IFC History ‘Six Decades of Creating Opportunity’ Available at http://ifcext.ifc.org/ifcext/masterinternet.nsf/AttachmentsByTitle/ifctFS.htm/$FILE/ifctFS.htm (Last visited on 23 March 2012).
315 IFC ‘Performance Standards on Social and Environmental Sustainability’ (2006). Available at www.ifc.org (Last visited on 14 December 2011).
316 Ibid.
64
environmental and social risks of international finance projects in the developing
world.317
On 1 January 2012, the IFC introduced new revisions to its Performance
Standards, which expressly recognise that businesses “should respect human
rights”.318 This means that they should “avoid infringing on the human rights of
others and address adverse human rights impacts business may cause or contribute
to”.319 In order to meet this responsibility, the IFC urges companies to create
“access to an effective grievance mechanism that can facilitate early indication of,
and prompt remediation of various project-related grievances”.320 The IFC also
affirms that the corporate responsibility to respect human rights exists
independently of the Host State’s duties to respect, protect, and fulfil human
rights.321
According to the IFC Performance Standards, the steps that an MNC must follow
in order to meet its corporate responsibility to respect human rights are as follows.
First, an MNC must conduct integrated social and environmental assessments to
identify the impacts and risks associated with the project.322 These impact
assessments could include factors such as identifying potential and actual changes
resulting from the MNC’s business activity to the physical, natural or cultural
317 Steven Herz et al ‘The International Finance Corporation’s Performance Standards and The Equator Principles: Respecting Human Rights and Remedying Violations?’ (Submission to the UN Special Representative to the Secretary General on Human Rights and Transnational Corporations and other Business Enterprises, Bank Information Center et al, 2008) 2. Available at http://www.ciel.org/Publications/IFC_Aug08/Ruggie_Submission.pdf (Last visited on 4 September 2012).
318 International Finance Corporation ‘Performance Standards on Social and Environmental Sustainability’ (2012). Available at www.ifc.org (Last visited on 14 June 2012). Performance Standard 1, para 3.
319 IFC Performance Standards Note 318, para 12. It should be noted that these revisions reflect the second pillar of the recently launched UN ‘Protect, Respect and Remedy’ Framework and its Guiding Principles by John Ruggie, the UN Special Representative on the issue of business and human rights. An in-depth discussion of Ruggie’s normative framework follows in Chapter 4 below.
320 Ibid.
321 Ibid.
322 IFC Performance Standards Note 318, paras 5-12.
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environment of the surrounding communities.323 Secondly, an MNC must
establish and maintain an effective process that identifies the environmental and
social risks and impacts of the project.324 Therefore, it must regularly engage with
local communities to consult on matters that directly affect them as well as with
its suppliers and contractors to address identified risks and impacts.325 Thirdly, an
MNC must establish management programs that oversee its environmental and
social performance during the life of the project.326 Where identified risks and
impacts cannot be avoided, the MNC must employ mitigation measures and
establish the necessary actions to ensure the project will operate in compliance
with a Host State’s applicable laws and regulations, including its international
obligations.327
However, despite the obvious improvements the IFC Performance Standards bring
in promoting corporate accountability in the extractive sector, it is contended that
their normative framework remains weak and largely ineffective for the following
reasons. First, although the Performance Standards now contain explicit
references to human rights, they fail to specify their actual content.328 That is,
they address critical human rights issues in an overly simplistic way that fails to
adequately reflect international human rights norms and standards. For example,
rather than stipulate the content of the human rights their corporate clients are
expected to observe, the Performance Standards merely provide that each of its
foundational principles “has elements related to human rights dimensions that
businesses may face in the course of their operations”.329
Secondly, the ambit of the Performance Standards is narrowly limited to only
those business entities that borrow money directly from the IFC. That is, if an 323 Ibid.
324 IFC Performance Standards 1 Note 318, paras 13-16.
325 Ibid.
326 IFC Performance Standards Note 318, paras 17-24.
327 Ibid.
328 Herz Note 317, 7.
329 IFC Performance Standards Note 318, para 3.
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MNC decides to accept financing from the IFC, it must comply with its
Performance Standards, which now include demonstrating respect for human
rights standards.330 This means that the application of the IFC Performance
Standards cannot be extended beyond this narrow group of entities, which leaves
countless other business entities across the globe beyond their reach.331 Thirdly,
the IFC Performance Standards fail to provide a strong enforcement system to
grant remedies to victims in situations where an MNC has accepted IFC funding
but fails to comply with its principles. It is worth mentioning here the Compliance
Advisor/Ombudsman (“CAO”), the enforcement mechanism of the IFC, which
has the authority to address complaints raised regarding violations of the IFC’s
Performance Standards.332 In essence, the CAO “responds to complaints from
[IFC] project-affected communities with the goal of enhancing social and
environmental outcomes on the ground”.333 Research reveals that out of 20 IFC
projects with open cases at the CAO, nearly a third concern extractives
projects.334
Briefly, the role of the CAO is three-fold: compliance, advisor, and ombudsman.
First, upon receipt of a complaint, the CAO functions as an ombudsman to help
affected stakeholders resolve grievances about the social and environmental
impacts of IFC projects through conciliation processes.335 Second, if the CAO
Ombudsman concludes that the parties are not willing or able to reach a facilitated 330 Niza/Action Aid Note 293, 16.
331 Ibid.
332 It should be noted that the CAO reviews complaints from communities affected by development projects undertaken by the World Bank’s two private sector arms: the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). MIGA aims to promote direct foreign investment in developing States by underwriting investor political risk insurance. For further information, see http://www.cao-ombudsman.org/ (Last visited on 30 July 2012). The discussion herein will focus on the IFC.
333 CAO ‘Our Mandate’ Available at http://www.cao-ombudsman.org/ (Last visited on 30 July 2012).
334 Bretton Woods Project ‘The World Bank and Extractives: A Rich Seam of Controversy’. Available at http://www.brettonwoodsproject.org/art-569560 (Last visited on 30 July 2012).
335 To clarify, the CAO Ombudsman does not make judgment about the merits of a complaint neither does it impose solutions or find any party at fault; its main objective is to help the parties identify and implement their own mutually agreed-upon solutions. See, ‘CAO Ombudsman’ http://www.cao-ombudsman.org/howwework/ombudsman/ (Last visited on 30 July 2012).
67
solution, then the CAO assumes a compliance role to audit the IFC’s social and
environmental due diligence at the project-level and ascertain how the IFC
assured itself of project performance.336 Finally, as an advisory unit, the CAO
provides advice to the staff, management and President of the IFC on broader
social and environmental issues facing its projects.337
From the above, one can see that a critical shortcoming of the CAO is that it only
receives complaints from individuals and communities who have been adversely
affected by IFC projects. Therefore, many other victims of corporate human rights
abuses do not have access to the CAO to resolve their grievances simply because
the harmful projects were not funded by the IFC. It also appears that the IFC’s
primary recourse is to facilitate mediation processes between the aggrieved
parties. However, there is no suggestion from the mechanism or the Performance
Standards themselves that human rights protection should be prioritised during
such processes nor does there seem to be any independent mechanism, once
resolution has been reached, to monitor that the MNC adequately addresses the
concerns of the affected communities.338 Moreover, the CAO lacks full
investigatory powers to ascertain whether its corporate clients are ‘at fault’ and
can only provide informal advice and recommendations to the IFC on the
matter.339 Therefore, should the mediation process fail, there is no guarantee
under the Performance Standards that the IFC will insist on compliance neither is
there any fall-back recourse by victims to obtain effective remedy except that the
IFC’s compliance unit will investigate the IFC’s own performance with respect to
336 The purpose of CAO audits is to ensure IFC’s compliance with its standards and how IFC assured itself of project performance. This means that “potential non-compliances identified by the CAO are non-compliances in how [the] IFC has assured itself of compliance, not necessarily that the project does not perform in compliance with IFC requirements”. See ‘CAO Compliance’ http://www.cao-ombudsman.org/howwework/compliance/ (Last visited on 30 July 2012).
337 IFC ‘CAO Advisor’ Available at http://www.cao-ombudsman.org/howwework/advisor/ (Last visited on 30 July 2012).
338 Brettonwoods ‘IFC Updated Performance Standards Weak on Human Rights, Other Shortcomings’. Available at http://www.brettonwoodsproject.org/art-568878 (Last visited on 30 July 2012).
339 Ibid.
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the project.340 As Park points out, “the only leverage the CAO has to sway project
sponsors [to respect human rights] is the cooperation of IFC ... in investing in or
guaranteeing the project. This [in turn] depends on the percent IFC has invested or
at what time the complaint occurs (and how much IFC has invested or
recouped)”.341
To conclude, while the IFC Performance Standards, together with the CAO,
arguably promote business respect for human rights norms, the factors discussed
above severely hamper their efficacy in providing accountability for MNC human
rights violations.
3.3 SOFT LAW INITIATIVES
The international community has come up with several initiatives to regulate the
relationship between business and human rights, most notably, through the
Organisation for Economic Co-operation and Development, the International
Labour Organization and the United Nations. A brief analysis of each follows
directly below.
3.3.1 OECD Guidelines The Organisation for Economic Co-operation and Development (“OECD”) is an
international organisation comprising of 34 States whose main objective is to
promote economic policies aimed at securing sustainable fiscal growth and the
expansion of global free trade.342 In 1976, the OECD adopted Guidelines for
340 See, for example, Halifax Initiative ‘Glamis Gold and the IFC: Gross Mismanagement in Guatemala’. Available at http://www.miningwatch.ca/sites/www.miningwatch.ca/files/HI-FoE_brief_0.pdf (Last visited on 30 July 2012); ‘Karachaganak Project, Kazakhstan: Case of Residents in the Village of Berezovka’ http://www.crudeaccountability.org/en/uploads/File/karachaganak/CAO_Audit_Report_C_I_R7_Y06_F079_ENGLISH.pdf (Last visited on 30 July 2012).
341 Susan Park ‘Assessing the Accountability of the World Bank Group’ (Warwick University Centre for the Study of Globalisation and Regionalisation, Workshop Paper No 6, 2007) 4-25. Available at www2.warwick.ac.uk/fac/soc/csgr/.../workshops/.../papers/park.pdf (Last visited on 30 July 2012).
342 See generally www.oecd.org (Last visited on 14 August 2012). OECD members include many of the world’s most advanced countries with few emerging countries like Chile, Slovenia and Estonia gaining membership in 2010.
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Multinational Enterprises (“Guidelines”) as part of its Declaration on International
Investment and Multinational Enterprises.343 The Guidelines were adopted by
member States as recommendations to MNCs domiciled under their respective
jurisdictions to ensure that they maintain a level of control over MNCs operating
abroad thereby encouraging the opening up of foreign economies to foreign direct
investment.344 The Guidelines are essentially standards for responsible business
conduct in areas relating to information disclosure, bribery, consumer interests,
science and technology, environment, competition, employment, taxation, and
recently, human rights.345
In 2000, the Guidelines were revised to address the relationship between business
and human rights for the first time.346 The review generally called for MNCs to
“[r]espect the human rights of those affected by their activities consistent with the
host government’s international obligations and commitments”.347 More recently,
in June 2011, the OECD updated its Guidelines to provide clearer guidance to
member States in addressing adverse human rights impacts stemming from
harmful transnational corporate behaviour.348 A fully-fledged chapter on human
rights was introduced that explicitly called for MNCs to “[r]espect human rights,
which means they should avoid infringing on the human rights of others”.349 This
means that MNCs should take adequate steps to prevent, minimize or address
adverse impacts on human rights when they occur.350 Similar to the revised IFC
Performance Standards canvassed above, the new human rights chapter in the 343 OECD Guidelines for Multinational Enterprises. Available at www.oecd.org (Last visited on 14 August 2012). The OECD Guidelines have been revised on a number of occasions since their adoption, most recently in 2011 to incorporate a new chapter on human rights.
344 Ibid.
345 Ibid.
346 Ibid.
347 Part II OECD Guidelines Note 343.
348 ‘New OECD Guidelines to Protect Human Rights and Social Development’. Available at http://www.oecd.org/document/19/0,3746,en_21571361_44315115_48029523_1_1_1_1,00.html (Last visited on 14 August 2012).
349 New OECD Guidelines Note 348, chapter IV, para 1.
350 New OECD Guidelines Note 348, chapter IV, paras 2-3.
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OECD Guidelines explicitly draws on, and is fully aligned with, the recently
launched UN Framework proposed by Ruggie.351 Briefly, it requires companies to
have in place a human rights policy to foster a corporate culture of respect for
human rights, carry out human rights due diligence procedures in order to identify
and address their adverse impacts in all areas covered by the OECD Guidelines
and establish legitimate remediation processes to address adverse corporate
human rights impacts that occur.352
It is also noteworthy that the new chapter explicitly calls for MNCs to “[r]espect
the internationally recognised human rights of those affected by their
activities”.353 This provision suggests that MNCs are expected to observe
international human rights norms while conducting their operations even if the
Host State is not itself in conformity with the principles. Furthermore, the 2011
revisions revitalised its main supervisory mechanism, the National Contact Points
(“NCPs”), to further the effectiveness of the Guidelines.354 Organised by adhering
countries, the NCPs were previously only empowered to promote discussion
between the MNC and affected stakeholders and issue statements when parties
fail to reach agreement.355 The 2011 revisions, however, now explicitly call for
NCPs to actively contribute to the resolution of issues and make public the results
of any proceedings whether or not a resolution has been reached.356 Moreover, the
revised Guidelines also place an obligation on adhering States to make available
human and financial resources to their NCPs so that they can effectively fulfil
their responsibilities.357
351 For an in-depth analysis of Ruggie’s normative framework, see chapter 4 below.
352 New OECD Guidelines Note 348, chapter IV, paras 4-6.
353 New OECD Guidelines Note 348, chapter II, para 2.
354 New OECD Guidelines Note 348, Procedural Guidance ‘Implementation in Specific Instances’, part A, paras 1-3.
355 Ibid.
356 Ibid.
357 New OECD Guidelines Note 348, part I, para 4.
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It is conceded that the above revisions signify some willingness by some Home
States to not only accept that businesses have human rights responsibilities but
also to regulate their adverse impacts on human rights, particularly in developing
States. Furthermore, the new human rights chapter provides a welcome
clarification on the nature and scope of the human rights responsibilities facing
corporations in their global activities. However, in my view, these reforms still
fail to address several key concerns regarding the accountability of MNCs for
their human rights abuses. First, even though the Guidelines mandate OECD
member States to regulate MNCs domiciled in their respective jurisdictions and
ensure their compliance with its principles, the update has failed to ensure binding
commitment from Member States “to implement the OECD Guidelines is
achieved by attaching consequences to breaches of the Guidelines”.358 It is also
instructive to note the conspicuous absence of any guidance or recommendations
in the Guidelines for member States to impose sanctions on MNCs that fail to
comply with the human rights standards specified in the Guidelines.359 Hence, in
essence, the Guidelines remain non-binding recommendations, which only
promote voluntary compliance with its principles.
Secondly, despite the strengthened provisions of the NCP complaints mechanism,
their effectiveness is compromised as NCPs still lack investigative powers or the
power to enforce the Guidelines, for example, through imposing sanctions on
MNCs upon a finding of infringement.360 Hence, even when violations by MNCs
against the Guidelines can be proved, it is still not possible for victims to obtain
relief or reparations under the Guidelines without the co-operation of the MNC.361
358 OECD Watch ‘Statement on the Update of the OECD Guidelines for MNEs: Improved Content and Scope, but Procedural Shortcomings Remain’ (Publication 3675, 2011) 4. Available at http://oecdwatch.org/publications-en/Publication_3675/ (Last visited on 14 August 2012).
359 Ibid.
360 Olivier De Schutter ‘The Challenge of Imposing Human Rights Norms on Corporate Actors’ in De Schutter Note 42, 9.
361 Beatriz Huarte Melga et al ‘The 2011 Update of the OECD Guidelines for Multinational Enterprises: A Balanced Outcome or an Opportunity Missed?’ (Transnational Economic Law Research Center, Martin Luther University Halle-Wittenberg, 2011) 45-46. Available at http://telc.jura.uni-halle.de/sites/default/files/BeitraegeTWR/Heft112_0.pdf (Last visited on 27 July 2012).
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As OECD Watch avers, the update should have clarified the NCP’s “role in
making determinations on the observance of the Guidelines when mediation has
failed ... based on an examination of the facts and arguments”.362 Moreover, the
updated Guidelines remain unclear with regard to the role of the NCPs in
monitoring and following up on their own recommendations and agreements
reached between the parties. This would likely have strengthened the instrument
and effectively promoted greater observance of its principles.
In conclusion, despite its recent reforms, the impact of the OECD Guidelines in
terms of making sure that MNCs are held accountable for their human rights
violations remains doubtful, particularly due to its lack of a strong enforcement
system to ensure MNC compliance with its principles.
3.3.2 ILO Declaration
In 1977, the International Labour Organization (“ILO”) adopted the Tripartite
Declaration on Multinational Enterprises and Social Policy (“ILO Declaration”)
because labour issues formed a central part of the concerns raised by MNCs in
their relations with Host States in the 1960-70s.363 The ILO Declaration offers
guidelines to MNCs, governments, and employers’ and workers’ organizations in
areas such as employment, conditions of work and life, and industrial relations.364
The ILO Declaration is based on the finding that:
... the advances made by [MNCs] in organizing their operations beyond the national framework may lead to abuse of concentrations of economic power and to conflicts with national policy objectives and with the interest of the workers. In addition, the complexity of [MNCs] and the difficulty of clearly perceiving their diverse structures, operations and policies sometimes give rise to concern either in the home or in the host countries, or in both.365
362 OECD Watch Note 358, 4.
363 ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (ILO, 4th Ed, 2006).
364 Ibid.
365 ILO Declaration Note 363, para 1.
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The primary aim of the ILO Declaration, therefore, is to “encourage the positive
contribution which [MNCs] can make to economic and social progress and to
minimise and resolve the difficulties to which their various operations may give
rise”.366 With respect to human rights, the ILO Declaration requires MNCs to not
only “respect the sovereign rights of States, obey the national laws and
regulations” but to also “give due consideration to local practices and respect
relevant international standards”.367 In addition, MNCs are required to:
... respect the Universal Declaration of Human Rights and the corresponding International Covenants adopted by the General Assembly of the United Nations as well as the Constitution of the International Labour Organisation and its principles according to which freedom of expression and association are essential to sustained progress.368
The ILO Tripartite Declaration constitutes an acknowledgement by member
States that corporations have certain human rights responsibilities, such as
ensuring fair remuneration, while conducting their business activities, particularly
in Host States.369 It has also served as an important reference point for businesses
in developing corporate codes of conduct, which detail their social
responsibilities.370
However, the principles in the ILO Declaration are recommended to MNCs to
“observe on a voluntary basis”.371 As such, the ILO Declaration is essentially a
non-binding instrument, which greatly limits its effectiveness as an accountability
mechanism as corporations are free to disregard it without suffering any
consequences under the initiative.372 In other words, the ILO Declaration has no
powers to either find a violation its principles or to grant relief to victims of its
366 ILO Declaration Note 363, para 2.
367 ILO Declaration Note 363, para 8.
368 Ibid.
369 Muchlinski Note 129, 37.
370 Chirwa Note 276, 88.
371 ILO Declaration Note 363, para 7.
372 Deva Note 87, 12-13.
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infringements.373 Moreover, since it mainly focuses on labour and employment
issues, its usefulness is limited in that there are no possibilities for extending the
application of the Declaration beyond these narrow fields.374 Therefore, it is
submitted that the ILO Declaration is a weak accountability mechanism that fails
to adequately address human rights abuses by MNCs.
3.3.3 United Nations Initiatives
In the last decade, various organs of the UN have proposed several regulatory
initiatives that attempt to authoritatively engage businesses in the issue of human
rights.
3.3.3.1 The UN Global Compact
In 2000, the UN made its first ‘successful’ attempt to establish international rules
to regulate the activities of business entities with respect to human rights.375 The
UN Global Compact is a voluntary initiative, which essentially asks companies to
contribute to a more sustainable and inclusive global market by embracing,
supporting and enacting ten principles concerning human rights, labour standards,
and environmental practices.376 Participation in the Global Compact is open to all
companies across the globe.377 Generally, participating companies are expected to
integrate each of the ten principles into their operations, promote the goals of the
Global Compact, and publish annual reports or other documents evidencing how
they have been supporting the Global Compact and its ten principles.378 With
373 Ibid.
374 Chirwa Note 276, 88.
375 Previously, in the 1970s, the United Nations had attempted to establish binding international rules to govern the activities of transnationals and their impact on human rights. Negotiations were deadlocked between the so-called ‘Western’ countries and the ‘Eastern’ countries partly due to the Cold War, and were formally abandoned in 1992. Ruggie Note 279, 819.
376 See generally, The UN Global Compact Principles. Available at www.un.globalcompact.org (Last visited on 14 June 2012). The Global Compact was proposed by the UN Secretary-General Kofi Annan at the World Economic Forum held in Davos, Switzerland on 31 January 1999.
377 Currently, there are over 4000 corporations from around the world that have committed themselves to comply with the ten principles. See, Global Compact ‘About Us’. Available at http://www.unglobalcompact.org/aboutthegc/faq.html (Last visited on 8 June 2012).
378 Ibid.
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respect to human rights, the Global Compact specifically calls on corporations to
“respect the protection of international human rights within their sphere of
influence”379 and “make sure they are not complicit in human rights abuses”.380
It is submitted that the Global Compact is an important step by the UN in
addressing the negative effect of corporate activities because it not only allows for
participation by all companies, whatever their legal form, but it also expects
companies to publish in their annual reports or other documents a description as to
how they have been supporting the ten principles, including human rights, thus
promoting corporate accountability.381 However, as an MNC human rights
accountability initiative, the Global Compact has several critical flaws. First, the
two human rights principles that businesses should ‘respect’ internationally
recognised human rights and not become ‘complicit’ in human rights abuses are
very broadly framed and fail to specify the exact content of the human rights that
business should support.382 In addition, the Global Compact fails to provide
detailed guidance to MNCs on how these principles may be implemented.383
Nolan points out that this lack of conceptual clarity means that corporations have
a wide discretion regarding the application and interpretation of human rights
principles while conducting their operations.384
Secondly, corporate compliance with the Global Compact’s principles is
conducted on a purely voluntary basis in that it does not provide a set of
mandatory standards nor does it hold its corporate members liable by way of
penalties or sanctions for violating its principles.385 Therefore, critics aptly assert
that the lack of legally enforceable standards allows corporations to gain public
379 UN Global Compact Note 376, principle 1.
380 UN Global Compact Note 376, principle 2.
381 Ibid.
382 Surya Deva ‘The UN Global Compact for Responsible Citizenship: Is it Still Too Compact to be Global?’ (2006) 2 Corporate Governance Law Review 145, 184.
383 Ibid.
384 Nolan Note 15, 18.
385 Mahmoud Monshipouri et al ‘Multinational Corporations and the Ethics of Global Responsibility’ (2003) 25 Human Rights Quarterly 965, 980.
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relations benefits from associating with the UN in the form of a ‘UN Seal of
Approval’ while at the same time maintaining questionable business practices or
failing to take meaningful steps to implement the Compact’s standards.386 Finally,
the Global Compact has not put in place an effective monitoring or enforcement
mechanism to ensure that corporations comply with its principles.387 Instead, the
Global Compact openly states that it does not ‘police’ or monitor company
compliance with its principles but rather only seeks to stimulate best practices
among business towards human rights values.388 Therefore, it is submitted that its
failure to provide enforceable standards renders the Global Compact a fairly
underdeveloped accountability mechanism and as such cannot seriously be
expected to command much adherence from MNCs.389
3.3.3.2 The UN Norms
In 2003, the UN Sub-Commission on the Promotion and Protection of Human
Rights attempted to develop a binding international framework for business and
human rights by adopting the Norms on the Responsibilities of Transnational
Corporations and other Business Enterprises with Regard to Human Rights (“UN
Norms”).390 The UN Norms essentially sought to impose a strong legal basis on
businesses with respect to their engagement with human rights norms by deriving
their principles from existing human rights instruments.391 The UN Norms
explicitly stated that corporations should “promote, secure the fulfilment of,
386 Nolan Note 15, 18; Deva Note 382, 185.
387 Monshipouri et al Note 385, 980.
388 See Global Compact ‘About Us’. Available at http://www.unglobalcompact.org/aboutthegc/faq.html (Last visited on 8 June 2012).
389 Deva Note 382, 184.
390 Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights, UN Doc E/CN4/Sub2/2003/12/Rev2 (2003) (herein after “UN Norms”).
391 See the preamble to the UN Norms, which makes reference to a plethora of treaties including the ICCPR Note 137; ICESCR Note 137; International Convention on the Elimination of All Forms of Racial Discrimination, opened for signature 21 December 1965, UN Treaty Series vol. 660 (entered into force 4 January 1969); the Convention on the Elimination of All Forms of Discrimination against Women, opened for signature 18 December 1979 (entered into force 3 September 1981); and the Convention on the Rights of the Child, opened for signature 20 November 1989, 1577 UNTS 3 (entered into force 2 September 1990).
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respect, ensure respect of and protect human rights recognised in international as
well as national law … within their respective spheres of influence”.392 The UN
Norms also attempted to specify the rights and obligations of MNCs under
international human rights law by providing that:
Transnational corporations and other business enterprises shall respect economic, social and cultural rights as well as civil and political rights and contribute to their realisation, in particular the rights to development, adequate food and drinking water, the highest attainable standard of physical and mental health, adequate housing, privacy, education, freedom of thought, conscience, and religion and freedom of opinion and expression, and shall refrain from actions which obstruct or impede the realisation of those rights.393
In addition, the UN Norms stated that MNCs and other business enterprises
should provide for “prompt, effective and adequate reparation” to victims for their
non-compliance with the Norms.394
The Norms are to be commended for their radical departure from previous
international efforts addressing the obligations of non-State actors with regard to
human rights.395 Indeed, at the time of their adoption, the Norms received
overwhelming support from civil society organizations for attempting to create
binding and enforceable human rights obligations for MNCs.396 However, the
very considerations that gave the Norms their popularity amongst civil society
groups, also earned them a lot of criticism from other stakeholders and ultimately
led to their downfall. In particular, the business community, represented by the
International Chamber of Commerce and the International Organisation of
Employers, firmly rejected and vigorously lobbied against the UN Norms as
unnecessary and overly intrusive.397 They argued that the UN Norms wrongly and
392 UN Norms Note 390, paragraph A.
393 UN Norms Note 390, para 12.
394 UN Norms Note 390, para 18.
395 Chirwa Note 276, 96.
396 Ibid.
397 International Chamber of Commerce and International Organisation of Employers ‘Joint Views of the IOE and ICC on the Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ (2004). Available at
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unfairly imposed on businesses the same legal obligations under international
human rights law that States had accepted for themselves under treaties that they
have ratified.398 This, so the argument goes, would have co-mingled the separate
roles of States and business making it impossible to determine who was
responsible for what, how and to what extent.399
The Norms were submitted to the UN Commission on Human Rights (since then
replaced by the Human Rights Council) for confirmation but the reception from
many governments was frigid.400 In response, while the Commission allowed that
the Norms contained “useful elements and ideas”, it distanced itself from the
Norms asserting that the initiative had been unsolicited and that as “a draft
proposal, it had no legal standing”.401 Eventually, the Commission refused to
adopt the UN Norms. However, many States still felt that the human rights
responsibilities of businesses are an important issue that warranted further
investigation and clarification.402 In response, the Commission asked the UN
Secretary-General to appoint a Special Representative on the issue of businesses
and human rights to investigate further some of the outstanding issues relating to
the field and prepare a report on, among other things, the standards of corporate
responsibility and accountability.403 The Special Representative’s contributions
are quite extensive and shall form the subject of analysis in following chapter.
http://www.reports-andmaterials.org/IOE-ICC-views-UN-norms-March-2004.doc (Last visited on 12 December 2011).
398 Ibid.
399 John G. Ruggie ‘The Construction of the UN “Protect, Respect and Remedy” Framework for Business and Human Rights: the True Confessions of a Principled Pragmatist’ (2011) 2 European Human Rights Law Review 127, 127.
400 Larry C. Backer ‘Multinational Corporations, Transnational Law: The United Nations’ Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility in International Law’ (2006) 37 Columbian Human Rights Law Review 287, 288.
401 See, UN Commission on Human Rights, Report to the Economic and Social Council on the Sixtieth Session of the Commission, UN Doc E/CN.4/2004/L.11/Add.7 (2004).
402 Ruggie Note 279, 821.
403 Ibid.
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3.4 SOME BROAD LESSONS ON THE GENERAL FLAWS LIMITING
THE EFFICACY OF EXISTING MECHANIMS
Upon reflecting on the above initiatives, one can see that the mechanisms have,
collectively, helped broaden corporate focus on human rights issues particularly
over the last decade. However, in my view, the prevailing framework suffers from
several inherent weaknesses, which appear to come from at least three distinct
areas: (a) a variety of inconsistent standards, many of which are limited in scope,
(b) over-reliance on voluntary participation by MNCs for their effectiveness and
(c) lack of effective monitoring or enforcement mechanisms to ensure corporate
compliance with their respective standards. Each of these shall be summarily
discussed in turn below.
3.4.1 A ‘Patchwork’ of Mechanisms Limited in Scope
The analysis above demonstrates great diversity in the structure, focus and content
of the accountability initiatives purporting to regulate the field of business and
human rights.404 There is a general lack of consensus among the initiatives on the
applicable human rights standards to be followed resulting in piecemeal
implementation of international human rights principles to business activities that
address different ‘pockets’ such as labour, security issues and environmental
conservation, among others.405 Deva asserts that this lack of specificity makes the
prevailing framework unworkable because even if an MNC is keen to respect and
follow human rights, it is unclear which standard should be followed.406
Another major problem with the existing network of accountability mechanisms
lies in the elusive nature of their broadly framed human rights principles. For
many of the mechanisms, there is a lack of conceptual clarity on the applicable
human rights standards MNCs are expected to respect and how these should be
404 JM Diller ‘Social Conduct in Transnational Enterprise Operations: the Role of the International Labour Organisation’ in R. Blanpain (ed) Bulletin of Comparative Labour Relations: Multinational Enterprises and the Social Challenges of the XXIst Century (Kluwer Law International, 2000), 24.
405 McLeay Note 271, 234.
406 Deva Note 87, 18.
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implemented, which leaves a wide margin of interpretation for businesses.407 In
fact, businesses appear to be free to choose their own definitions and standards of
human rights, ignoring those articulated at the international level.408 Along with
the lack of specificity in defining the relevant rights, there is a vagueness
concerning the scope of the initiative, in particular the degree of responsibility a
company assumes in embracing, supporting or implementing these rights. For
example, the Global Compact uses the phrase “sphere of influence” to denote the
limit of a particular company’s responsibility for human rights.409 However, it
fails to define this crucial term or provide detailed guidance on its
implementation. This lack of conceptual clarity means that corporations have a
wide discretion regarding the application and interpretation of human rights
principles while conducting their operations.410
3.4.2 Reliance on a Pure Voluntarism Approach
The rapid uptake of the various codes of conduct and industry or multi-
stakeholder guidelines developed over the last three decades illustrates a greater
recognition among businesses of the need to engage with human rights. However,
this demonstrates “an obvious propensity of companies to endorse a self
regulatory approach to [human] rights protection”.411 The prevailing framework
essentially asks MNCs to self regulate and determine the nature and extent of their
human rights responsibilities. The language used in the regulatory instruments
supports this assertion. For example, the Voluntary Principles explicitly provide
that participation and adherence by MNCs is to be conducted at a purely voluntary
level.412 Other cases, such as the OECD Guidelines, are admittedly not ‘strictly’
voluntary in that they impose an obligation on adhering governments to ensure
407 Nolan Note 15, 16.
408 Christine Broecker ‘“Better the Devil You Know”: Home State Approaches to Transnational Corporate Accountability’ (2008) 41 Journal of International Law and Politics 159, 173.
409 UN Global Compact Note 376, principle 1.
410 Nolan Note 15, 18.
411 Nolan Note 15, 20.
412 Voluntary Principles Note 285, 1-3.
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that MNCs domiciled under their respective jurisdictions comply with the
Guidelines.413 However, no sanctions are attached for non-compliance by OECD
members, thus essentially rendering the mechanism ‘voluntary’. Echoing these
concerns, Deva laments that “if the past and present serve as guides, the fact
remains that with some possible exceptions, corporations [are] hardly ...
“encouraged” to respect human rights beyond expressing that encouragement in
words”.414
Moreover, by primarily relying on voluntary participation for its effectiveness, the
prevailing framework fails to respond to the recurring scenario (illustrated by the
case studies earlier on) in which MNCs do not voluntarily cooperate in observing
human rights unless domestic laws require them to do so.415 If the latter are absent
or weakened due to lack of a Host State’s institutional capacity, then the MNCs
are free to act with impunity thus leaving many victims adversely affected by their
activities without any effective remedies. This, Broecker adds, potentially places
socially responsible companies at an economic disadvantage “as their poorly
scrutinized competitors continue to abuse human rights with impunity”.416 In my
view, these concerns show the necessity of an independent monitoring and
enforcement systems outside of the MNCs themselves which can be entrusted
with the task of implementing a set of standards addressing business and human
rights concerns. This point is discussed in greater detail directly below.
3.4.3 Lack of Effective Enforcement Systems
Existing mechanisms critically fail to provide strong supervisory or enforcement
systems through which their standards may be enforced against abusive MNCs or
provide effective remedies to victims upon their violations.417 The Global
Compact, for example, has explicitly stated that it is “more like a guide dog than a 413 New OECD Guidelines Note 348, para 1.2.
414 Deva Note 87, 20.
415 Ibid.
416 Broecker Note 408, 173.
417 J Hong ‘Enforcement of Corporate Codes of Conduct: Finding a Private Right of Action for International Laborers against MNCs for Labor Rights Violations’ (2000) 19 Wisconsin International Law Journal 41, 48.
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watch dog”.418 This highlights its narrow ambition as it does not seek to monitor
or enforce a company’s compliance with its principles, but only to “promote good
corporate citizenship”, a term that is not defined.419 In the rare circumstances that
existing mechanisms provide enforcement systems, such as the OECD’s NCPs,
these have been proven to be weak and ineffective because they lack the power to
impose sanctions on MNCs that fail to comply with their standards.420 It is
submitted that in the absence of any effective legal or social sanctions for MNC
non-compliance, the prevailing regime is rendered spineless in terms of
implementation.421As a result, businesses are often free to join such initiatives
without being pressured to prove that they are implementing the practices they
claim to promote. Indeed, it is because of this particular accountability weakness –
failure to impose enforcement systems - that some sceptics have described some
accountability mechanisms as “at best a form of public relations for powerful
multinationals, and at worst a misleading seal of approval [of human rights
compliance]”.422 Therefore, the prevailing framework is struggling from a paucity
of independent and effective enforcement systems that can contribute towards
developing an enduring culture of business respect for human rights and ensure
that MNC are held accountable for their human rights violations.
Overall, the factors listed above reflect three dimensions of the inadequacy of the
existing framework’s effectiveness: the first factor denotes inadequacy in the
presence of standards; the second points to inadequacy regarding the structure;
and the third signifies inadequacy regarding implementation.423 It can therefore be
surmised that the prevailing framework is unsatisfactory as it is unable to ensure
effective accountability of MNCs for human rights violations. Therefore an
418 UN Global Compact Note 376.
419 Ibid.
420 McLeay Note 271, 234-236.
421 Deva Note 87, 21.
422 Broecker Note 408, 175.
423 Deva Note 87, 21.
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alternative regulatory model that does not suffer from these infirmities is
necessary.424 Some thoughts in this direction are described in chapter 5 below.
3.5 CONCLUSION
Corporate accountability for human rights violations has received a lot of
attention over the last few decades from human rights organizations, governments
and even corporations themselves. This chapter has reviewed leading mechanisms
of accountability, which purport to ensure that MNCs and other business
enterprises respect human rights. My analysis has shown that their usefulness is
seriously impaired by their lack of legal force and mandatory enforcement
mechanisms. That is, in terms of ensuring corporate compliance with human
rights standards, the existing mechanisms are not backed up by any civil or
criminal sanctions nor do they provide victims with effective remedy.425
Moreover, the existing systems are built on the erroneous premise that allowing
corporations the freedom to adopt the mechanisms or not and/or to select the
principles they want to commit to, is the best way of achieving human rights.
They shun quite firmly even a minimal system of international regulation and
instead continuously promote self-regulation. Deva correctly states that the
mechanisms “only work when MNCs, the potential violators of human rights,
want it to work … they exist [as] a moral guiding light”.426 Ultimately, it has been
shown that these initiatives offer some degree of accountability; such
accountability, however, is at best minimal and fragmented, resulting in no more
than a “patchwork of disconnected, toothless initiatives”.427
424 Ibid.
425 Deva Note 87, 18. This is with the notable exception of the IFC CAO, which provides conciliation services to aggrieved individuals and the relevant corporation. However, its mandate is strictly limited to IFC related projects, therefore leaving many victims, whose rights have been infringed by corporations not funded by the IFC, without effective remedy.
426 Deva Note 87, 17.
427 Jochnick and Rabaeus Note 51, 413.
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CHAPTER 4
THE UN ‘PROTECT, RESPECT & ACCESS TO REMEDY’ FRAMEWORK AND ITS GUIDING PRINCIPLES
4.1 INTRODUCTION
In the last few decades, the international community has witnessed a plethora of
mechanisms aiming to regulate the relationship between business and human
rights. As I have shown in the previous chapter, these have so far failed to
guarantee corporate accountability for human rights violations and provide
effective remedies for those whose human rights have been infringed. In a move
to effectively address this governance gap, in July 2005, the then Secretary-
General of the United Nations (“UN”), Kofi Annan, appointed John Ruggie, a
professor at Harvard University, as Special Representative of the UN Secretary-
General on the issue of business and human rights (the “SRSG” or “Ruggie”).428
After a series of initial reports, in 2008, Ruggie proposed a conceptual and policy
framework he named Protect, Respect and Remedy: a Framework for Business
and Human Rights (the “2008 Framework”),429 which was unanimously adopted
by the UN Human Rights Council (the “HRC”).430 The HRC then extended
Ruggie’s mandate for a further three years to operationalize the 2008 Framework
such that governments, businesses and other social actors have practical and
428 UN Commission on Human Rights Human Rights and Transnational Corporations and other Business Enterprises, UN Doc E/CN/4/2005/L87 (15 April 2005). At the time of his appointment, Ruggie was Kirkpatrick Professor of International Affairs and Director for Business and Government at the John F. Kennedy School of Government, Harvard University. He had also previously held the post of Assistant Secretary-General and senior adviser for strategic planning to the then UN Secretary-General, Kofi Annan. Additionally, in 2000, he helped to establish the UN Global Compact, which has encouraged thousands of companies to work together to promote business respect for human rights. For more information, see http://www.ohchr.org/EN/NewsEvents/Pages/HoldingbusinessaccountableHRabuses.aspx (Last visited on 12 September 2012).
429 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Protect, Respect and Remedy: A Framework for Business and Human Rights UN Doc A/HRC/8/5 (7 April 2008) (hereinafter, “2008 Framework”).
430 UN Human Rights Council Mandate of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises UN Doc A/HRC/RES/8/7 (18 June 2008).
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concrete guidance on the human rights responsibilities expected of businesses.431
In April 2011, Ruggie issued the Guiding Principles on Business and Human
Rights: Implementing the United Nations “Protect, Respect and Remedy”
Framework (the “Guiding Principles” or “GPs”, together with the 2008
Framework, the “UN Framework”), which were endorsed by the HRC on 16 June
2011.432
From the outset, it should be noted that while the 2008 Framework and the
Guiding Principles are basically two sides of the same coin, and together
constitute the UN Framework, they in fact fulfil different objectives. The 2008
Framework addresses the ‘what’ question: that is, what do States and businesses
need to do in order to ensure respect for human rights? On the other hand, the GPs
address the ‘how’ question: that is, how can States and businesses demonstrate
that they are indeed respecting human rights?433 In other words, the 2008
Framework provides the conceptual underpinnings of the UN Framework (the
foundational principles) whereas the Guiding Principles, as the name suggests,
provide guidance on practical steps to be taken in order to foster business respect
for human rights (the operational principles).434
This chapter seeks to evaluate the UN Framework as a whole, examining both
how it draws on international human rights norms and whether it establishes a
new set of international corporate obligations for businesses thereby changing the
status quo. To begin, Part II will briefly canvass the SRSG’s six-year mandate so
as to provide critical insights into the evolution of the UN Framework. Part III
will then discuss the conceptual underpinnings of the 2008 Framework and
highlights the standards, legal or otherwise, that are proposed to govern the
business and human rights arena. Part IV will attempt to place the Guiding
Principles within a practical context by assessing its provisions within the 431 Ibid.
432 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework UN Doc A/HRC/17/31 (16 June 2011) (hereinafter ,“Guiding Principles” or “GPs”).
433 Ruggie Note 399, 129.
434 Ibid.
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extractive sector. The aims of this part are two-fold: to road test the GPs by using
a case study of a fictitious MNC aiming to conduct extractive operations in a
developing country; and to provide a critical analysis of their benefits and any
major deficiencies that seriously undermine their efficacy. Finally, Part V will
conclusively address the key question of whether the UN Framework as a whole
can be considered a ‘game-changer’ in the global search towards ensuring MNC
accountability for human rights violations. Ultimately, it shall be argued that
although the UN Framework provides a promising start towards preventing
corporate human rights abuses, its lack of effective enforcement systems renders it
woefully inadequate for redressing corporate human rights abuses, an overture
that may ultimately lead to its downfall.
4.2 BRIEF HISTORY OF THE SRSG’S MANDATE
This part will provide a brief outline of the significant milestones in the evolution
of Ruggie’s six-year mandate. Although it is not possible to detail all the progress
steps, the most notable are highlighted below.435
4.2.1 The First Mandate (2005-2008)
Ruggie’s initial mandate was for a period of two years where he was tasked with
looking at, and possibly resolving, the contentious issue of corporate
responsibility and accountability for human rights and clarifying the respective
roles of States and corporations.436 This wide mandate was defined in the
following terms:
(a) To identify and clarify standards of corporate responsibility and accountability for transnational corporations and other business enterprises with regard to human rights;
(b) To elaborate on the role of States in effectively regulating and adjudicating the role of transnational corporations and other business enterprises with regard to human rights, including through international cooperation;
435 For a detailed review of the Ruggie’s mandate, see the annual reports submitted by the SRSG throughout his mandate to the HRC available at http://www.business-humanrights.org/SpecialRepPortal/Home (Last visited on 15 August 2012).
436 UN Commission on Human Rights Human Rights and Transnational Corporations and other Business Enterprises UN Doc E/CN.4//RES/2005/69 (15 April 2005).
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(c) To research and clarify the implications for transnational corporations and other business enterprises of concepts such as “complicity” and “sphere of influence”;
(d) To develop materials and methodologies for undertaking human rights impact assessments of the activities of transnational corporations and other business enterprises;
(e) To compile a compendium of best practices of States and transnational corporations and other business enterprises.437
Ruggie began his mandate by consulting with as many of the interested parties as
possible including governments, MNCs, labour unions, human rights activists and
NGOs, victims of corporate abuse, local communities and international law firms
in order to try to build a body of information and expertise on which to advance
understanding on these complex issues.438
In 2006, Ruggie presented his first report to the Commission on Human Rights
(since then replaced by the HRC).439 In his report, Ruggie argued that the
governance gaps created by globalisation - between the scope and impact of
economic forces and actors on the one hand and the capacity of States to manage
their adverse consequences on the other - had led to a permissive environment in
which companies could negatively impact human rights without adequate sanction
or reparation.440 However, much to the acute disappointment of many human
rights NGOs, Ruggie declined to follow the approach of the UN Norms that had
imposed direct human rights obligations on corporations citing their “exaggerated
legal claims and conceptual ambiguities”.441
437 Ibid.
438 David Bilchitz ‘The Ruggie Framework: An Adequate Rubric for Corporate Human Rights Obligations?’ Available at http://www.surjournal.org/eng/conteudos/getArtigo12.php?artigo=12,artigo_10.htm (Last visited on 30 June 2012).
439 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Interim Report E/CN4/2006/97 (22 February 2006) (the “2006 Report”).
440 2006 Report Note 439, paras 9-19.
441 2006 Report Note 439, para 59.
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In 2007, Ruggie presented his second report to the HRC whereby he advanced his
argument that MNCs are not bound by international law.442 Furthermore, per
paragraph 1(d) of the mandate, he presented an in-depth analysis on how human
rights impact assessments could be used by companies as diagnostic tools to
determine the impact of their activities on human rights.443 The HRC renewed
Ruggie’s mandate for an additional year inviting him to submit his views and
recommendations on the future regulation of the business and human rights
field.444
Accordingly, in June 2008, Ruggie proposed his three-prong ‘Protect, Respect and
Remedy’ policy framework as a coherent and “authoritative focal point around
which different stakeholders’ expectations could converge”.445 This, briefly,
consists of the State ‘duty to protect’ against human rights violations by third
parties, including business; the corporate ‘responsibility to respect’ human rights,
which means that businesses should avoid infringing on the rights of others and
address adverse impacts with which they are involved; and greater access by
victims to ‘effective remedy’, both judicial and non-judicial.446 As noted above,
the HRC unanimously adopted the 2008 Framework, marking this the first time
that a UN intergovernmental body has endorsed a substantive policy position on
this issue.447
4.2.2 The Second Mandate (2008-2011)
The HRC extended Ruggie’s mandate until 2011 in order to “operationalize” and
“promote” the Framework so as to provide “practical recommendations” and
442 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Human Rights Impact Assessments - Resolving Key Methodological Questions A/HRC4/74 (5 February 2007) (the “2007 Report”).
443 2007 Report Note 442, paras 1-29.
444 Guiding Principles Note 432, 3.
445 Guiding Principles Note 432, 3.
446 2008 Framework Note 429, paras 18-26.
447 Note, ‘Business and Human Rights: The Ruggie Mandate’ (The Law Society of England and Wales, 2010). Available at http://international.lawsociety.org.uk/node/10388 (Last visited on 10 January 2012).
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“concrete guidance” to States, businesses and other social actors on the issue of
corporate responsibility and accountability for human rights.448 In his 2009
report, Ruggie reiterated the regulation of business and human rights as one of the
core concerns in the world today.449 The report recognized that States have the
primary responsibility to protect and promote human rights. Ruggie also
acknowledged that “there are ... strong policy reasons for Home States to
encourage their companies to respect rights abroad, especially if a State itself is
involved in the business venture – whether as owner, investor, insurer, procurer,
or simply promoter”.450 With respect to corporations, the 2009 report stated that
“the responsibility to respect is the baseline norm for all companies in all
situations”.451 Ruggie further observed that “operating conditions may impose
additional requirements on companies, for example, the need to protect employees
in conflict affected areas, or from violence in the workplace”.452 In his 2010
report, Ruggie systematically mapped patterns of corporate-related human rights
abuse as well as existing standards and initiatives that regulate corporate
responsibility.453 He also canvassed possible measures by States and corporations
themselves, including both preventative and remedial, to promote corporate
respect for human rights and prevent corporate-related human rights abuse.454
Ruggie’s final report was submitted in April 2011, when he issued the Guiding
Principles that were promptly endorsed by the HRC. The Guiding Principles
448 UN Human Rights Council Mandate of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises UN Doc A/HRC/RES/8/7 (18 June 2008).
449 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Business and Human Rights: Towards Operationalizing the 'Protect, Respect and Remedy' Framework UN Doc No A/HRC/11/13 (22 April 2009) (“the 2009 Report”), para 121.
450 2009 Report Note 449, para 16.
451 2009 Report Note 449, para 48.
452 2009 Report Note 449, para 66.
453 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Business and Human Rights: Further Steps Toward the Operationalisation of the “Protect, Respect and Remedy” Framework A/HRC/14/27 (9 April 2010) (the “2010 Report”).
454 Ibid.
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essentially highlight the practical steps States should take to foster business
respect for human rights; how companies should tangibly show that they respect
human rights and act to reduce the risk of causing or contributing to human rights
abuses; and various processes through which victims could access remedies for
grievances.455
Following the expiration of his mandate in 2011, Ruggie called for the
establishment of an advisory and capacity-building function within the UN to
continue his work.456 On 17 June 2011, the UN established a five person inter-
regional expert group to oversee the implementation and further operationalisation
of the UN Framework, particularly the Guiding Principles.457
4.3 THE ELEMENTS OF THE UN FRAMEWORK
This part will provide an overview of the key conceptual components of the 2008
Framework by mapping the standards, legal or otherwise, that are proposed to
govern the business and human rights arena.
4.3.1 Foundation: Doctrine of Principled Pragmatism
From the beginning of his mandate, the SRSG openly stated that his chief
objective was to achieve “the maximum reduction in corporate-related human
rights harm in the shortest possible period of time ... by establishing a common
platform for action, on which cumulative progress can be built, without
foreclosing any promising longer-term developments”.458 This doctrine of
principled pragmatism requires that human rights policy rhetoric must be “in step
455 Guiding Principles Note 432, 6.
456 Ruggie Note 8, 3.
457 UN Human Rights Council Human Rights and Transnational Corporations and other Business Enterprises UN Doc. A/HRC/RES/17/4 (6 July 2011). The Working Group formally commenced their role on 1 November 2011. For progress on their work thus far, see http://www.humanrightsbusiness.org/un+working+group+on+human+rights+and+business (Last visited on 12 July 2012).
458 Ruggie Note 399, 132.
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with field realities ... [so that it does not] remain impotent in the face of new ...
challenges”.459
The SRSG identified three underlying themes of the doctrine, which in his view
are pivotal to any framework regulating business and human rights. First, an
acknowledgement that international law is severely limited as it currently does not
impose direct legal obligations on businesses to respect human rights.460
Secondly, while establishing individual corporate liability for human rights abuses
is a critical element that must be addressed in its own right, one must not overlook
the reality that human rights harms suffered are the often product of the actions of
many actors, not just businesses.461 Thirdly, many elements of the overall strategy
must lie beyond the legal sphere given the lack of binding human rights norms on
corporate behaviour.462 Therefore, in accordance with the doctrine, any successful
regulatory initiative needs to be accompanied by willingness on the part of human
rights NGOs to look beyond strict legal compliance and harness other moral,
social, and economic factors that can direct the behaviour of corporations towards
positive change.463
It is noteworthy that the doctrine has been invoked elsewhere in the broader
human rights arena. Most recently, responding to criticism from the human rights
community on the alleged lagging US human rights agenda, the US Secretary of
State, Hillary Clinton, defended the doctrine as being central to the US foreign
policy approach.464 She affirmed that “the idea behind principled pragmatism is
that when we run up against a wall we will not retreat with resignation - or
repeatedly run up against it - but respond with strategic resolve to find another
459 2006 Report Note 439, para 81.
460 Ruggie Note 279, 839.
461 Ibid.
462 Ruggie Note 279, 840.
463 Ibid.
464 Ben Smith ‘Principled Pragmatism on Human Rights’ (Politico, 2009). Available at http://www.politico.com/blogs/bensmith/1209/Principled_pragmatism_on_human_rights.html (Last visited on 11 December 2011).
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way to effect change and improve people’s lives”.465 Therefore, human rights
must be perceived in a broader context that allows for multiple responses so as
make a real and long-term difference in people’s lives.466 Arguing along similar
lines, the SRSG has strong words for critics who see the application of the
doctrine in business and human rights as a sell-out to businesses:
This is no time to let the elusive quest for perfection--however you define it--to become the enemy of the good. This is no time to allow narrow institutional interests--of whatever segment of society you represent--to stand in the way of achieving results that benefit all. Nor is it the time to subject hard-won consensus to unrelated political bargaining. Progress is precious; we must not let it slip away when we are this close.467
In conclusion, by relying on the doctrine of principled pragmatism, the SRSG
seeks to provide an effective normative framework that is consistent with the law
‘as it is’ rather than the law ‘as it should be’, while still drawing on international
human rights law in creative ways to develop stronger standards for corporate
behaviour.
4.3.2 The ‘Protect, Respect and Remedy’ Framework
In this section, I will discuss the three different pillars of the 2008 Framework,
which Ruggie posits “rest on differentiated but complimentary responsibilities”.468
It should be noted that the following overview is purely descriptive and will
outline ‘what’ States and businesses are required to do in order to ensure respect
for human rights rather than ‘how’ they can demonstrate their respect. The latter,
along with an in-depth critique of the strengths and weaknesses of each pillar,
follows in the next section.
4.3.2.1 The State Duty to Protect
This first pillar provides that international law imposes a duty on States to protect
against human rights abuses by non-State actors, including national and foreign-
465 Ibid.
466 Ibid.
467 Ruggie Note 399, 133.
468 2008 Framework Note 429, para 9.
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based business entities, through appropriate policies, regulation and adjudication
of corporate activities.469 This duty requires that States “take all necessary steps to
protect against such abuse, including to prevent, investigate, and punish the abuse,
and to provide access to redress”.470 Therefore, in accordance with international
human rights law, the first pillar affirms that States have the primary role in
preventing and addressing corporate-related human rights abuses within their
jurisdictions.471
The SRSG goes on to articulate the legal or policy actions States might take to
fulfil their duty as operating in two separate spheres: the domestic and the
international levels. At the domestic level, Ruggie points out that although States
interact with businesses in numerous ways, many currently lack adequate policies
and regulatory arrangements for effectively managing the complex business and
human rights agenda.472 Legal and policy incoherence arises because the
departments and agencies which directly shape business practices – including
corporate law and securities regulation, investment, export credit and insurance,
and trade – typically work in isolation from, and uninformed by, their
government’s own human rights obligations and agencies.473 To address this
deficiency, Ruggie proposes the following innovative approaches.
First, governments should promote a corporate culture whereby respecting human
rights is an integral part of conducting businesses.474 This can be achieved by
requiring all businesses to frequently submit sustainability reports; a practice that
is currently required by a growing number of financial regulations and developed
States such as Sweden.475 He also urges States to embrace as part of their
469 2008 Framework Note 429, para 18.
470 Ibid.
471 Ibid.
472 2008 Framework Note 429, paras 22 and 33.
473 2008 Framework Note 429, para 22.
474 2008 Framework Note 429, para 29.
475 2008 Framework Note 429, paras 29-30.
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‘corporate culture’ the revolutionary idea of looking at a company’s policies and
practices to determine criminal liability and punishment instead of merely looking
to the individual acts of employees and officers.476 This approach arguably
provides an incentive to companies to have in place appropriate compliance
systems and policies.477
Secondly, Ruggie asserts that States should align their policies, including their
commercial, investment and corporate governance policies, to take into account
their international human rights commitments.478 Host States in particular should
work towards developing better means of balancing investor interests with their
human rights obligations.479 He urges them to streamline their own domestic
policies to show a commitment to human rights principles when their internal
departments (such as trade, foreign affairs and investment) engage with
businesses, whether as owners, investors, regulators or procurers.480 Home States
on the other hand, should strive to achieve greater policy coherence and
effectiveness across internal departments which finance private investments in
regions that are considered “too risky for the private sector alone”.481 He argues
that there are strongly policy reasons that such departments not only represent
commercial interests but also broader public interest.482 Therefore they should
require their clients to perform human rights impact assessments to flag serious
human rights concerns.483
476 2008 Framework Note 429, para 31.
477 Ibid.
478 2008 Framework Note 429, para 33.
479 2008 Framework Note 429, paras 34-38. This is especially in light of many a Host State’s need to attract and secure foreign investment but often at the expense of relaxing their human rights standards for fear of repelling foreign investment.
480 2008 Framework Note 429, paras 39-41.
481 2008 Framework Note 429, para 39.
482 2008 Framework Note 429, paras 39-41.
483 Ibid.
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At the international level, Ruggie asserts that human rights treaty bodies should
make recommendations to States on how to implement their human rights
obligations vis-à-vis corporate activities.484 Ruggie also encourages ‘peer
learning’ whereby States share information about challenges and best practices
with each other, and where possible, technical and financial resources.485 He
argues that this would assist weaker States to strengthen their enforcement of
human rights standards.486 With respect to conflict zones, where Ruggie rightly
points out that some of the most egregious human rights abuses occur, he
encourages Home States to provide access to information to help businesses to
beware of human rights risks and ensure that corporations act appropriately when
conducting their business activities.487 However he reiterates that Hosts States still
have the primary duty to protect against corporate abuses within their
jurisdictions.488
Therefore, it can be surmised that the first pillar in the 2008 Framework has, at the
very least, “helped to remove any remaining doubts that the duty to protect covers
the activities of corporations and ... clarified how the duty operates”.489 Put
simply, States can fulfil their duty to protect human rights by fostering a corporate
culture respect of human rights, ensuring domestic policy alignment with human
rights principles, promoting peer-learning at the international level and
establishing policies to prevent harmful corporate practices in conflict regions.
4.3.2.2 The Corporate Responsibility to Respect Human Rights
This second pillar of the 2008 Framework requires businesses not to infringe on
the human rights of individuals, or in other words of the SRSG, “to do no
484 2008 Framework Note 429, para 43.
485 2008 Framework Note 429, paras 43-44.
486 2008 Framework Note 429, paras 43-46.
487 2008 Framework Note 429, paras 47-48.
488 2008 Framework Note 429, para 49.
489 John H. Knox ‘The Ruggie Rules: Applying Human Rights to Corporations’ (2011). Available at http://ssrn.com/abstract=1916664 (Last visited on 2 January 2012), 16.
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harm”.490 However, Ruggie is quick to point out that “doing no harm” entails
more than a passive responsibility and in certain circumstances would require
companies to take positive steps.491 Furthermore, unlike the State duty to protect
human rights, which is founded in international law, the second prong is only a
social norm expected of all companies in all situations.492 Ruggie states the
“broader scope of the responsibility to respect is defined by social expectations -
as part of what is sometimes called a company’s social licence to operate”.493 He
justifies this conclusion by asserting that corporations are “specialized economic
organs, not democratic public interest institutions ... [therefore] their
responsibilities cannot and should not mirror the duties of States”.494
According to the 2008 Framework, the corporate responsibility to respect
generally applies to all internationally recognized human rights.495 In this regard,
Ruggie firmly breaks away from previous efforts, most notably the UN Norms,
which attempted to enumerate certain rights for which businesses bear
responsibility. Rejecting the latter approach, Ruggie asserts that such as approach
is “inherently problematic” as “there are few if any internationally recognized
rights businesses cannot impact - or be perceived to impact- in some manner”.496
The discussion below focuses on the distinct corporate responsibilities that are
identified in Ruggie’s normative framework in relation to human rights.
To begin with, Ruggie posits that in order for a company to discharge its
responsibility to respect human rights under the Framework, it should carry out
due diligence processes so as “to become aware of, prevent and address adverse
490 2008 Framework Note 429, para 24.
491 2008 Framework Note 429, para 55. The example Ruggie gives is that in a situation where a company has a workplace anti-discrimination policy, then it might be required to adopt specific recruitment and training programs that reflect this policy.
492 2008 Framework Note 429, paras 23 and 54.
493 2008 Framework Note 429, para 54.
494 2008 Framework Note 429, para 53.
495 2008 Framework Note 429, paras 51-52.
496 2008 Framework Note 429, para 52.
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human rights impacts”.497 In determining the scope of a company’s human rights
due diligence requirements, Ruggie proposes the following three factors. First, a
company needs to consider the country (and local) contexts within which it
conducts its business activities, noting any particular human rights challenges that
may arise.498 These might include “public sector’s institutional capacity, ethnic
tensions, migration patterns [and] scarcity of critical resources like water”.499
Second, a company must consider the impact on human rights that its own
activities may have within such contexts, whether in its capacity as “producer,
service provider, employer [or] neighbour”. 500 Third, a company must consider
whether through any of its business relationships connected to its activities such
as partners, suppliers or State agencies, it might contribute to human rights
abuse.501
Companies also need to determine the substantive content of the due diligence
processes; that is, what the responsibility to respect actually entails. Ruggie posits
that companies should respect all internationally recognized human rights.502 He
directs companies to look, at a minimum, to the Universal Declaration of Human
Rights, the International Covenants on Civil and Political Rights and on
Economic, Social and Cultural Rights and the core conventions of the ILO.503
These, he argues, adequately embody principles that are most universally agreed
upon by the international community and provide invaluable benchmarks against
which the human rights impacts of companies are commonly judged by other
social actors.504
497 2008 Framework Note 429, para 56,
498 2008 Framework Note 429, para 57.
499 John Gerard Ruggie ‘Protect, Respect and Remedy: A United Nations Policy Framework for Business and Human Rights’ (2009) ASIL Proceedings 281, 285.
500 2008 Framework Note 429, para 57.
501 Ibid.
502 2008 Framework Note 429, paras 24 and 58.
503 2008 Framework Note 429, Para 58.
504 Ibid.
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With respect to the procedural aspects, Ruggie asserts that a basic human rights
due diligence process should include the following core elements: a human rights
policy or statement detailing the company’s commitment to respecting rights,505
impact assessments of business operations on human rights to avoid negative
human rights impacts,506 integrating its human rights policies into company
operations, internal functions and processes,507 and developing monitoring and
auditing processes to track ongoing developments and ensure continuous human
rights compliance.508 Ruggie also clarifies that a company’s “sphere of influence”
is determined by “the potential and actual human rights pacts resulting from a
company’s business activities and the relationships connected to those
businesses”.509
In conclusion, the second pillar of the 2008 Framework requires companies to
avoid infringing on the human rights of others and to address adverse human
rights impacts which occur. The due diligence processes described above provide
greater clarity on the precise responsibilities companies have in relation to human
rights and aid companies to comply with their role in meeting their human rights
responsibilities. By grounding this responsibility on societal expectations rather
than international human rights law, Ruggie has provided a less controversial, if
somewhat weak, basis for corporate responsibility.510 The implications that this
has for business and human rights will be addressed further in the chapter.
4.3.2.3 Access to Remedies
Ruggie focuses on the access to remedies as the third, and arguably the most
conceptually difficult, pillar of the 2008 Framework. He views the importance of
the role played by effective grievance mechanisms as two-fold: with respect to (a)
the State duty to protect, any State regulation that proscribes certain corporate 505 2008 Framework Note 429, Para 60.
506 2008 Framework Note 429, Para 61.
507 2008 Framework Note 429, Para 62.
508 2008 Framework Note 429, Para 63.
509 2008 Framework Note 429, Para 72,
510 Knox Note 489, 16.
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conduct in relation to human rights will have little impact if not accompanied by
mechanisms to investigate, punish, and redress corporate abuses; and (b) the
corporate responsibility to respect, victims who have incurred harm due to a
company’s activities need a means to bring this to the company’s attention and
seek remediation, without prejudice to any legal channels that may be available.511
Ruggie begins by giving an overview of current effective grievance mechanisms.
He notes that various UN treaty bodies are increasingly recommending that States
should investigate, punish and redress corporate abuse through compensation,
restitution, guarantees of non-repetition, changes in relevant law and public
apologies.512 In addition to judicial processes, States are also required to provide
or allow for non-judicial mechanisms so as to ensure adequate and effective
access to remedy.513 Some of these State-based non-judicial mechanisms include
agencies with oversight of particular standards; publicly funded mediation
services; national human rights institutions; or mechanisms such as the OECD’s
National Contact Points.514 He also notes that some of these initiatives are linked
to industry-based organizations or multi-stakeholder mechanisms that ensure
member compliance with standards.515 However, Ruggie correctly perceives that
this existing “patchwork” of mechanisms is not only “incomplete” but also
“flawed” and as such must be improved.516
With respect to judicial mechanisms, Ruggie acknowledges that judicial
mechanisms in some States are often under-equipped to provide effective redress
prompting some corporate victims to seek remedies in the company’s Home State
where they also face significant obstacles such as legal costs, lack of legal
standing, statutes of limitation etc.517 He therefore encourages States to
511 2008 Framework Note 429, para 82.
512 2008 Framework Note 429, para 83.
513 2008 Framework Note 429, para 84,
514 2008 Framework Note 429, paras 84-85.
515 2008 Framework Note 429, para 86.
516 2008 Framework Note 429, para 87. For an overall analysis of the ‘flaws’ of the existing mechanisms, see chapter 3, at 3.4 at above.
5172008 Framework Note 429, paras 88-89.
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“strengthen judicial capacity to hear complaints and enforce remedies against all
corporations operating or based in their territory” including addressing obstacles
that bar foreign victims from accessing justice.518
With respect to non-judicial grievance mechanisms, Ruggie asserts that in order to
be credible and effective, these should, at a minimum, conform to certain
principles of legitimacy, accessibility, predictability, rights-compatibility,
equitability and transparency.519 With respect to company level grievance
mechanism, Ruggie suggests that they should focus on mediation and dialogue
rather than the company itself acting as adjudicator of its own actions. 520
With respect to State-based non judicial mechanisms, the SRSG recognized the
potential of National Human Rights Institutions and OECD National Contact
Points to handle grievances.521 Despite their shortcomings highlighted in the
previous chapter, Ruggie argues that they are well-placed important vehicles that
can provide information and advice as well as effective processes that are
culturally appropriate, accessible and expeditious.522 Finally, with respect to
multi-stakeholder and industry initiatives, these “provide an important check on
[company] performance”.523 For instance, financial institutions can mandate
companies to comply with human rights standards in the projects that they
finance.524
In conclusion, for many victims, seeking redress for corporate human rights
abuses is a daunting task. This third pillar of the 2008 Framework - access to
remedies - suggests crucial processes for vindicating their rights. Whether these
are effective and ensure corporate accountability will be analysed shortly.
518 2008 Framework Note 429, paras 88-91.
519 2008 Framework Note 429, para 92.
520 2008 Framework Note 429, para 95.
521 2008 Framework Note 429, paras 96-99.
522 2008 Framework Note 429, paras 97-98.
523 2008 Framework Note 429, para 100.
524 Ibid.
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4.3.3 Concluding Remarks
The Human Rights Council’s endorsement of the 2008 Framework could not have
been clearer or more enthusiastic; it unanimously extended the SRSG’s mandate
for an additional three years to elaborate on practical ways of implementing his
Framework.525 Meanwhile, international organizations such as the OECD and
Organisation of Employers and International Chamber of Commerce rapidly took
up and endorsed the 2008 Framework as being a progressive instrument.526 In a
similar show of support, intergovernmental bodies such as the European
Commission also welcomed the 2008 Framework and urged their respective
members to abide by its standards.527 In addition, numerous corporations
applauded the 2008 Framework for, among other things, “clarify[ing] the distinct,
interrelated roles and responsibilities of States and business entities” and for
helping to “operationalize … respective approaches to human rights in a business
context”. 528
By contrast, leading international human rights non-governmental organizations
(NGOs) took a cautious stance towards the 2008 Framework. For example,
Amnesty International recognised the extensive work done by the SRSG in
delineating the respective roles of States and businesses in addressing corporate-
related human rights abuses but averred that the 2008 Framework did not go far
enough to regulate the negative human rights impact of MNCs.529 In particular,
Amnesty International was disappointed that the 2008 Framework failed to
impose binding international obligations on corporations to respect human 525 See Note 448 above.
526 2009 Report Note 449, paras 3-5.
527 Robert C. Blitt ‘Beyond Ruggie’s Guiding Principles on Business and Human Rights: Charting an Embracive Approach to Corporate Human Rights Compliance’ (University of Tennessee Knoxville, Research Paper No. 158, 2012), 13.
528 Ibid. See for example, ‘Letters to John G. Ruggie’ from General Electric, Flextronics and Cola Company, among others, available at http://www.global-businessinitiative.org/SRSGpage/files (Last visited on 12 January 2012).
529 Amnesty International ‘Submission to the UN Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ Doc IOR40/018/ (2008) 1. Available at www.amnesty.org/en/library/info/IOR40/018/2008/en (Last visited in 30 June 2012).
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rights.530 Similarly, Human Rights Watch welcomed the SRSG’s affirmation of
the corporate responsibility to respect all human rights (and the corresponding
requirement for concrete action by companies to discharge this duty) but called
for the imposition of accountability mechanisms “to give greater visibility and
voice to those whose rights are negatively affected by business activity”.531
Despite this lukewarm reception, the NGOs remained hopeful that during the
extended three-year mandate of the SRSG, their concerns towards ensuring
binding accountability standards and effective remedial measures would be
addressed.532
In April 2011, Ruggie issued the Guiding Principles on business and human
rights, to provide practical guidance on how MNCs can demonstrate their respect
for human rights.533 These were subsequently unanimously endorsed by the HRC
on 16 June 2011.534 The next section turns to the Guiding Principles where I will
critically analyse whether they effectively address negative MNC human rights
impacts thus achieving “tangible results for affected individuals and
communities”.535
4.4 EXTRACTING IT RIGHT: IMPLEMENTING THE UN FRAMEWORK
This part makes an attempt to pilot the Guiding Principles by using a fictitious
case study of an MNC intending to commence oil extractive operations in a
developing country.536 The Guiding Principles are organized into three pillars,
530 Ibid.
531 Human Rights Watch ‘Joint NGO Statement to the Eighth Session of the Human Rights Council’ (Human Rights Council, Eighth Session, 2008). Available at http://www.hrw.org/news/2008/05/19/joint-ngo-statement-eighth-session-human-rights-council (Last visited on 30 June 2012).
532 Ibid.
533 See, generally, Guiding Principles Note 432.
534 UN Human Rights Council Human Rights and Transnational Corporations and other Business Enterprises, UN Doc. A/HRC/RES/17/4 (6 July 2011).
535 Guiding Principles Note 432, 6.
536 Readers should take note of the existence of other piloting schemes of the GPs conducted by the SRSG as well as some business entities. These ‘real’ piloting schemes are mostly limited to the
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corresponding to those in the 2008 Framework, addressing ‘how’ to move from
concept into practice. The purpose of my analysis in this chapter is two-fold: first,
to provide a ‘dry-run’ of the Guiding Principles by demonstrating how States and
businesses can both show their compliance with the accountability parameters
specified therein; second, to determine the key strengths and weaknesses of the
Guiding Principles from an operational perspective.537 This methodology – first
the description, then the critique – aims to expose any accountability gaps still
prevalent within the framework and determine whether some further reforms,
conceptual or operational, are needed and if so, in what direction.
I shall begin setting the stage by naming my fictitious business entity, Mazuri Inc.
(“Mazuri”). For the sake of argument, let us say that Mazuri is a giant oil
company incorporated in the US (Home State), which conducts its extractive
operations in several countries in Latin America, the Pacific and Africa. It is listed
on the New York Stock Exchange, has two headquarters in Australia and the
United Kingdom and has a net worth of US $300 billion.538 Now, let us assume
that Mazuri is looking is looking to explore and exploit the huge oil reserves in
the non-fictitious State of South Sudan (Host State), the world’s newest country
and also one of the poorest.539 Emerging from a 30-year old civil war, South
Sudan is endowed with abundant natural resources such as petroleum, iron-ore, third pillar - access to remedies. See, for example, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Piloting Principles for Effective Company/Stakeholder Grievance Mechanisms: A Report of Lessons Learned UN Doc A/HRC/17/31/Add.1 (24 May 2011), which aimed to test the practical applicability of the set of six principles for effective non-judicial grievance mechanisms as provided in the third pillar. Refer to chapter 5 below, at 5. 3.2.2, for a full discussion of these principles. It is submitted that unlike the fictitious piloting scheme herein, which aims to test all three pillars within a specific sector, existing ones are limited in scope as they fail to engage with the full scale of the GPs.
537 The third limb - access to remedies - of the UN Framework shall be interwoven in my analysis of the separate but complementary State duty to protect and corporate responsibility to respect.
538 Not an insignificant nor an unrealistic amount considering that the world’s leading oil company, Exxon Mobil, reportedly had a staggering net worth of $440 billion as of August 2012. See http://www.theirnetworth.com/Businesses/Exxon_Mobil/ (Last visited on 16 August 2012).
539 South Sudan gained independence from (North) Sudan on 9 July 2011. At the time, it only had a GDP of US $13,227 billion. See ‘Press Release of First Gross Domestic Product (GDP) and Gross National Income (GNI) figures for South Sudan by the NBS’ South Sudan National Bureau of Statistics (11 August 2011). Available at http://ssnbs.org/storage/GDP%20Press%20release_11.08.11.pdf (Last visited on 14 December 2011).
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copper and zinc, large reserves of which remain unexplored. According to its
Ministry of Finance and Economic Planning, 98% of the country’s budget comes
from its oil reserves, which currently amounts to more than $8 billion in
revenue.540 South Sudan presently has approximately 5.44 billion barrels of
untapped oil.541 However despite its vast natural wealth, like most developing
States, South Sudan is woefully underdeveloped and faces several challenges
including little existing infrastructure, weak governmental and democratic
institutions, little regulatory oversight of corporate activities, recurring tribal
tensions and clashes and the presence of hitherto ignored indigenous
communities.542 As we saw in chapter 1, Mazuri’s extractive operations, if not
properly regulated, could pose significant human rights risks for the people of
South Sudan.543
Before beginning, it is important to note that the discussion below is not intended
to be exhaustive but merely to highlight some practical ways the GPs may be
employed followed by an assessment of whether they provide effective measures
that ensure MNC accountability.
4.4.1 South Sudan’s ‘Duty to Protect’ under the Guiding Principles544
4.4.1.1 Content and Implementation
According to this first pillar, South Sudan should employ a variety of preventative
measures that will foster a culture of business respect for human rights. From a
practical standpoint, this means that the government should enact or enforce laws 540 Vincent Trivett ‘Choose between North Sudan, China and the US’ (Business Insider, 2011). Available at http://www.businessinsider.com/southern-sudan-independence-2011-7#ixzz1gSaXNCVU (Last visited on 14 December 2011).
541 Ibid.
542 Ibid.
543 For example, similar to the Rio Tinto and Anvil Mining case studies conducted at the beginning of the thesis, Mazuri’s oil mining operations in South Sudan could infringe on a number of human rights including the right to health, the right to a clean environment and, in extreme cases, the right to life.
544 Due to a scarcity of available research materials, this thesis will progress on the assumption that South Sudan is yet to effectively implement its duty to protect human rights in the field of business and human rights.
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ranging from anti-bribery, labour laws, protection of environment, among others,
that will directly or indirectly regulate business respect for human rights
principles.545 It should also provide clear guidance to corporations to enable them
to respect human rights throughout their operations, including advising on
appropriate human rights due diligence procedures that take into account South
Sudan’s local issues and demographics such as gender inequality and tensions
between different ethnic groups.546
Other preventative measures specified by the GPs, as part of South Sudan’s duty
to protect, include: maintaining adequate oversight over businesses owned,
controlled or transacting with the government as well as ensuring policy
coherence between governmental departments and institutions;547 helping
businesses operating in conflict-affected areas to respect human rights including
by engaging with such entities to identify and mitigate human rights impacts or
“denying access to public support and services ... [if] ... involved with gross
human rights abuses”;548 ensuring that any investment treaties or contracts do not
unduly constrain “its domestic policies and regulatory ability to protect human
rights”;549 and when acting an a member of a multilateral institution, ensuring that
its duty to protect remains “unhindered”.550
The GPs also provide some guidance with respect to remedial measures by, for
example, requiring South Sudan to “take appropriate steps to ensure, through
judicial, administrative, legislative or other appropriate means, that when such
545 GP3(a) & (b) Note 432, 8; Commentary Note 432, 8.
546 GP3(c) & (d) Note 432, 8; Commentary Note 432, 8.
547 GPs 4-6 Note 432, 9-11.
548 GP 7 Note 432, 10. South Sudan is currently embroiled in conflict with Sudan in a decades’ long war over natural resources. Therefore, the possibility of Mazuri (and other business entities) conducting extractive operations while conflicts are occurring is quite high.
549 GP 9 Note 432, 12; Commentary Note 432, 12. It is also worth noting that as a new State in the world economy, one which is endowed with abundant natural resources, South Sudan is particularly vulnerable to aggressive economic agreements with other States and business entities that can constrain it from fully implementing its human rights obligations.
550 GP 10 Note 432, 12.
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abuses occur within [its] territory and/or jurisdiction those affected have access to
effective remedy”.551 This means that South Sudan has a duty to provide most of
the remedial mechanisms stipulated in the third pillar - access to remedies – which
includes both judicial and non-judicial remedies.552 With respect to the former,
South Sudan is required to ensure that its legal rules and judicial enforcement
mechanisms operate effectively to provide victims with adequate remedies, which
includes removal of barriers such as prohibitive costs, lack of legal representation
and corruption.553 With respect to the latter, the GPs encourage the government to
provide mediation-based or rights-compatible mechanisms that will supplement
more formal judicial processes to prevent the court systems from becoming
overburdened.554 Therefore, the newly formed South Sudan Human Rights
Commission could provide critical mediation-based processes that allow citizens
to engage with an MNC in a non-litigious forum.555
4.4.1.2 Effectiveness
The first pillar of the GPs is to be lauded for making a welcome clarification that
all States have an obligation under international law to protect against human
rights abuses in their territories, including those committed by corporations.556
The GPs further emphasize that States must ensure that all their agencies and
departments, which influence business practice, should be trained to observe the
State’s international human rights obligations.557 This is an important step since
551 GP 25 Note 432, 22.
552 GPs 25-30 Note 432, 22-26.
553GP 26 Note 432, 3; Commentary Note 432, 23.
554GP 27 Note 432, 24; Commentary Note 432, 24.
555 For more information on the Southern Sudan Human Rights Commission, see http://www.goss-online.org/magnoliaPublic/en/Independant-Commissions-and-Chambers/Human-Rights-Commisions.html (Last visited on 16 July 2012).
556 John G. Ruggie ‘Sir Geoffrey Chandler Speaker Series’ (The Royal Society for the Encouragement of Arts, Manufacturers and Commerce, London, 2011) 7. Available at http://www.ohchr.org/Documents/Press/ChandlerLecture_Final.pdf (Last visited on 1 September 2012).
557 These include export credit agencies and investment insurance or guarantee agencies. GP 4 Note 432, 9.
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agencies tend to narrowly focus on their fields of specialisation and ignore the
human rights implications of their decisions.558 It is submitted that these and other
explicit recommendations to States on the procedural steps they could undertake
to ensure compliance with their international obligations will help to drive
business and human rights concerns into major policy areas, a move that will
undoubtedly foster a culture of business respect for human rights.559
However, it is submitted that the recommendations on the State duty to protect are
erroneously based on the assumption that all States have the political will and
institutional capacity to enforce their human rights obligations. On the contrary,
some of the most notorious cases of alleged MNC human rights violations – such
as we saw in the case studies conducted at the beginning of the thesis - involve
Host States that are unable or unwilling to regulate the negative impacts of MNC
operations on the local communities.560 The GPs, naively perhaps, contain the
expectation that South Sudan will effectively implement its duty to protect against
human rights abuses within its territory by third parties, including business
enterprises, by enacting and implementing effective policies and legislation.561
This assertion seems to miss the point that Ruggie himself raised as the main
predicament in the business and human rights field:
States, particularly some developing countries, may lack the institutional capacity to enforce national laws and regulations against transnational firms doing business in their territory even when the will is there, or they may feel constrained from doing so by having to compete internationally for investment.562
The Guiding Principles fail to provide recommendations on how to proceed in
these circumstances and should have specified legal and other policy measures in 558 Robert Grabosch ‘SRSG John Ruggie’s Draft Guiding Principles for the Implementation of the United Nations ‘Protect, respect and Remedy Framework’ (European Center for Constitutional and Human Rights, Report No. 1, 2011), 13. Available at http://www.cora-netz.de/wp-content/uploads/20110127-ecchr-position-paper-on-ruggie-draft-guiding-principles_final.pdf (Last visited on 1 September 2012).
559 Ruggie Note 499, 284.
560 See chapter 1, at 1.3.1 above.
561 GP 1 Note 432, 6.
562 2008 Framework Note 429, para 14.
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situations where the Host State is unable or unwilling to hold corporate entities
involved in human rights abuses accountable.
In a related vein, the first pillar of the Guiding Principles fails to fully reflect
recent developments in modern international human rights law regarding the
extraterritorial dimension of the State duty to protect.563 The GPs only provide
that “there are strong policy reasons for Home States to set out clearly the
expectation that businesses respect human rights abroad”.564 This, however, does
not reflect increasing international recognition that States have an obligation to
take steps that prevent third parties, including corporations, from violating the
human rights of individuals in other countries.565 This assertion is founded upon
the principle of international cooperation, which imposes an obligation on States
to act jointly in the face of collective problems faced by the broader international
community and assist each other to realize the human rights of individuals
regardless of their geographical locales.566 Article 1 of the Vienna Declaration
provides that:
enhancement of international cooperation in the field of human rights is essential for the full achievement of the [State obligation] to promote universal respect for, and observance and protection of, all human rights and fundamental freedoms for all in accordance with the Charter of the United Nations .
The Guiding Principles failed to take note of this long-standing principle in
international law and should have provided clear and explicit guidance to Home
States on the measures (legislative or otherwise) that they ought to undertake to
prevent their corporate nationals from abusing the human rights of individuals
abroad and to provide such victims with access to their judicial and enforcement
563 Amnesty International Note 237, 4.
564 GP 2 Note 432, 6-7.
565 UN Committee on Economic, Social and Cultural Rights, General Comment No. 14 The Right to the Highest Attainable Standard of Health, UN Doc No E/C12/2000/4 (2000) para 39.
566 Article 1(3) of the UN Charter imposes an obligation on member States “to achieve international cooperation in … promoting and encouraging respect for human rights and for fundamental freedoms for all”.
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systems.567 Home States arguably have a wider range of tools and resources at
their disposal to ensure that their corporate citizens are called to account for
violating the rights of others abroad.568
This viewpoint appears to be consistent with recent interpretations of international
human rights law by treaty bodies, which have boldly clarified Home State extra-
territorial obligations to protect human rights. For example, in its General
Comment 14 concerning the right to health, the Committee on Economic, Social
and Cultural Rights (“CESCR”) provided that:
To comply with their international obligations in relation to article 12, State parties have to respect the enjoyment of the right to health in other countries, and to prevent third parties from violating the right in other countries, if they are able to influence these third parties by way of legal or political means, in accordance with the Charter of the United Nations and applicable international law.569
CESCR also made similar observations on the right to water in General Comment
15,570 and the right to social security in General Comment 19.571 In the next
chapter, I will present the tool of Home State extraterritorial regulation as a
feasible approach to addressing MNC human rights violations and suggest ways
through which it may be implemented.
To conclude, the State duty to protect carries far greater application than is
currently proposed under the Guiding Principles.572 Ruggie’s rather tepid
encouragement for Home States to set out an ‘expectation’ for businesses to
protect human rights abroad, is a critical shortcoming that fails to take into
consideration the reality of the legal vacuum that MNCs currently operate
567 Amnesty International Note 237, 4.
568 Jochnick and Rabaeus Note 51, 429.
569 UN Committee on Economic, Social and Cultural Rights, General Comment 14: The Right to the Highest Attainable Standard of Health, E/C12/2000/4 (2000) para 39.
570 U Committee on Economic, Social and Cultural Rights, General Comment 15: The Right to Water E/C.12/2002/11 (2002) para 33. 571 UN Committee on Economic, Social and Cultural Rights, General Comment No. 19: The Right to Social Security E/C.12/GC/19 (2008) para 54. 572 Amnesty International Note 237, 4.
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whereby Host States have for various reasons so far not coped with the problem of
corporate human rights violations.
4.4.2 Mazuri’s ‘Responsibility to Respect’ under the Guiding Principles
The corporate responsibility to respect generally requires that all business entities
irrespective of their size, structure or sector respect all internationally recognised
human rights by avoiding infringing on the human rights of others and addressing
adverse human rights impacts when they occur.573 Briefly, in order to meet its
responsibility to respect human rights, an MNC must: (a) put in place a “policy
commitment” to demonstrate its willingness to respect human rights; (b)
implement a “human rights due diligence process to identify, prevent, mitigate
and account for how [it will] address its impacts on human rights”; and (c)
provide “processes to enable remediation” and ensure that victims and other
stakeholders have access to effective grievance mechanisms that will provide
redress for “any adverse human rights impacts they cause or to which they
contribute”.574
This section will provide demonstrate how Mazuri may implement these three
dimensions – human rights policy, due diligence and remediation - under the
Guiding Principles; followed by a critical analysis of their effectiveness in
addressing MNC human rights violations.575 It bears repetition that the analysis is
not meant to be exhaustive but merely to determine whether the range of measures
put forth by the GPs meaningfully address corporate human rights abuses.
4.4.2.1 Content and Implementation
According to the GPs, the first step Mazuri should undertake to demonstrate its
respect for human rights is to put in place a human rights policy that explicitly
573 GPs 11-14 Note 432, 13-14.
574 GP 15 Note 432, 13-15.
575 It should be noted that my analysis below, as has been done throughout the thesis, shall be limited to the impact of an MNC’s own extractive operations on human rights. See the thesis parameters set in chapter 1, at 1.4 above. Therefore, even though the GPs arguably apply to business entities with which an MNC has contractual relationships, for example suppliers, such an analysis falls outside of the scope of the thesis and will not be conducted here.
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stipulates its commitment to human rights.576 The human rights policy must be
approved at the most senior level, informed by relevant experts and clearly
stipulate the human rights expectations facing its personnel when conducting
business on Mazuri’s behalf.577 The policy must also be publicly available and
translated into the local languages of South Sudan such as Arabic, Bari and
Dinka.578
The second step Mazuri should undertake is to conduct human rights due
diligence, which is considered as the core operational element of the corporate
responsibility to respect.579 The human rights due diligence measures consist of a
variety of preventative, mitigation and remediation processes through which
businesses can “both know and show that they respect human rights in
practice”.580 To begin, Mazuri should conduct human rights impact assessments of
its potential extractive activities by determining the scope and scale of the human
rights risks facing the business.581 Ruggie distinguishes a human rights risk from
all other forms of corporate risks by stating that it must go “beyond simply
identifying and managing material risks to the company itself, to include risks to
rights-holders”.582 Mazuri should therefore conduct human rights impact
assessments as early on as possible in its extractive activities, for example at the
early stages of structuring contracts, and identify any adverse human rights
impacts that could occur.583 Mazuri is then required to integrate its findings from
the impact assessments across all relevant internal functions and processes in
order to prevent or mitigate potential adverse impacts.584 This would assist the
576 GP 16 Note 432, 15.
577 GP 16 (a)-(c) Note 432, 15.
578 GP 16(d)-(e) Note 432, 15.
579 GP 17 Note 432, 16.
580 Commentary Note 432, 20.
581 GP 18 Note 432, 17.
582 Commentary Note 432, 16.
583 GP 18 Note 432, 17.
584 GP 19 Note 432, 18.
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company to promote a corporate culture that is aware of and respects human
rights.
Thereafter, Mazuri is required to track whether its human rights policy is being
implemented optimally and that its integration measures are effective in order to
enable it to actually know whether it is effectively addressing adverse human
rights impacts as identified in its impact assessments.585 Mazuri may utilise
tracking methodologies such as performance contracts and reviews, surveys and
audits within its internal reporting processes to determine whether identified
adverse human rights impacts are being effectively addressed.586 The last of due
diligence measures require Mazuri to publicly communicate how it is addressing
adverse human rights impacts.587 This provides a measure of transparency and
accountability to the surrounding communities whose rights have been adversely
impacted as well as relevant stakeholders.588 The Guiding Principles provide that
communication can take a variety of forms including, submitting formal reports
such as financial reports or sustainability reports, telephone conversations, in
person meetings with employees or online communication.589
According to the GPs, the third and final overall step Mazuri should undertake to
demonstrate its compliance with its responsibility to respect human rights is
remediation.590 This step, which is interlinked with the third pillar of the UN
Framework - access to remedies - seeks to address adverse human rights impacts
that have actually occurred despite the presence of a human rights policy and the
implementation of the due diligence measures described above. The GPs provide
that “the responsibility to respect human rights requires active engagement in
585 GP 20 Note 432, 19.
586 Ibid.
587 GP 21 Note 432, 20.
588 Commentary Note 432, 20.
589 Ibid.
590 GP 22 Note 432, 20.
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remediation, by itself or in cooperation with other actors”.591 They suggest
operational-level grievance mechanisms, which focus on mutually agreed
solutions through dialogue with affected individuals and local communities.592
These may be administered solely by Mazuri’s employees or in collaboration
with relevant stakeholders such as human rights organizations and community
elders. The point of the remediation prong is to provide victims with a choice to
either engage the MNC directly through mediation processes or seek remediation
through independent third parties such as the judicial system.593
4.4.2.2 Effectiveness
The above analysis underscores the heightened human rights social expectations
facing MNCs today. One of the crowning achievements of the second pillar has
been to include all human rights within the ambit of the corporate responsibility to
respect. Ruggie argues that “because business enterprises can have an impact on
virtually the entire spectrum of internationally recognized human rights, their
responsibility to respect applies to all such rights”.594 Thus looking for a list of
human rights responsibilities specially directed at corporations would have been a
useless, redundant and misguided exercise given the varied impact that business
activities could have on international human rights norms. In addition, the GPs
aptly provide that the corporate responsibility to respect human rights applies to
all business enterprises, irrespective of their size or location.595
Another key contribution of the second pillar is that it provides greater clarity and
extensive recommendations on the steps MNCs should implement to comply with
their human rights responsibilities. Previously, the most effective tool that
relevant Stakeholders had at their disposal, in the absence of an effective domestic
regulatory regime, was to ‘name and shame’ abusive MNCs by going public with
591 Commentary Note 432, 20.
592 Ibid.
593 GP 29 Note 432, 25.
594 Guiding Principles Note 432, para 12.
595 2008 Framework Note 429, paras 54-55.
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their claims of the MNC’s human rights impacts.596 In this regard, the Guiding
Principles have made a critical advancement by actually requiring companies,
through implementation of human rights due diligence procedures, to “know and
show” that they respect human rights.597 The distinction is crucial, because as
Ruggie avers, whereas naming and shaming was the arms-length response by
external stakeholders to the failure of companies to respect human rights,
“knowing and showing is the internalization of that respect by companies
themselves through human rights due diligence”.598 This, therefore, allows a
company to timely identify, mitigate or resolve, as the case may be, specific
human rights risks.599
However, it is submitted that the second pillar of the GPs still faces various
critical challenges that impede its efficacy in addressing corporate-related human
rights abuses. To begin with, it leaves ample room for businesses to engage in
“creative” or “symbolic compliance”.600 This means that an MNC could design its
human rights impact assessments and management primarily to avoid incurring
liability even while at the same time being aware that abuses might still occur or
are indeed occurring.601 As Sullivan and Hachez put it, a corporation faced with
allegations of human rights abuses “could escape liability for causing or
contributing to human rights abuses if it was able to argue that it had a convincing
enough due diligence policy, rather than because it could show a concrete absence
of fault on its part”.602 Therefore, attention could wrongly be diverted, as least
from a human rights perspective, from the outcome (whether or not human rights
596 2008 Framework Note 429, paras 59-63.
597 Guiding Principles Note 432, para 15.
598 Amnesty International Note 237, 14.
599 Guiding Principles Note 432, para 17.
600 Rory Sullivan and Nicolas Hachez ‘Human Rights Norms for Business: The Missing Piece of the Ruggie Jigsaw in the Case of Institutional Investors’ (Leuven Centre for Global Governance Studies, Report No 67, 2011) 20-21.
601 Sullivan and Hachez Note 600, 20.
602 Ibid.
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violations occurred) to the process (the presence or absence of due diligence
procedures).
By the same token, it is also worrisome that the second pillar (inadvertently
perhaps) appears to subvert the original overriding objective of the GPs to prevent
adverse human rights impacts and instead propels it to the business realm of costs
and benefits.603 Some critics justifiably argue that it promotes the idea that human
rights “are just another business risk which corporations should manage as they
would any other commercial risk”.604 That is, it contributes to reinforcing, in the
corporate minds at least, the idea that respect for human rights is simply a risk
management issue, and not a responsibility in its own right. Therefore, it is
submitted that the GPs should have emphasised that respect for human rights is
the end-goal whereas the risk-based due diligence measures are simply a means to
achieve it.605
Another shortcoming of the second pillar is that it has the potential to create
conflicting obligations without providing a solution.606 For example, there is little
guidance to businesses that find themselves in situations where a Host State’s
domestic laws conflict with international standards (such as in cases where a Host
State legislates to take away a particular right, for example, the right to gender
equality) or in cases where blind compliance by corporations with local law might
expose such companies to become complicit in State violations of international
human rights norms. Ruggie should have included explicit measures addressing
any such conflicts in favour of human rights protections instead of simply
asserting that business enterprises should “seek ways to honour the principles of
internationally recognised human rights when faced with conflicting
requirements”.607
603 Mark Taylor ‘The Ruggie Framework: Polycentric Regulation and the Implications for Corporate Social Responsibility’ (2011) 5 Etikk i Praksis. Nordic Journal of Applied Ethics 9, 17.
604 Sullivan and Hachez Note 600, 20.
605 Ruggie Note 556, 17.
606 Blitt Note 527, 12.
607 GP 23 (b) Note 432, 21.
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Perhaps the greatest shortcoming of the second pillar is the conspicuous absence
of material guidance for businesses in situations whereby their operations
adversely impact on human rights and the Host State is unwilling or unable to
protect its citizen’s human rights. In other words, the manner in which the GPs
address harmful corporate human rights impacts appears to weigh heavily in
favour of urging MNCs to act in advance to meet their responsibility to respect
human rights (and thus prevent adverse human rights impacts from occurring).
When it comes to providing effective redress for negative MNC human rights
impacts, however, the GPs are mostly silent or unclear thereby failing to offer
effective guidance. The best way of illustrating this dichotomy in a more concrete
manner is to present a different set of facts, as below.
4.4.2.3 A Further Hypothetical Scenario: Unanswered Questions
Let us imagine that in the last two years, Mazuri, through a wholly-owned local
subsidiary, Maz Sub Inc, has been exploiting oil and gas reservations in the
northern part of South Sudan, a remote oil-rich region inhabited mostly by
indigenous communities. Eight months ago, Maz Sub Inc began constructing a
natural gas pipeline through the region, providing an opportunity for South Sudan
to receive much needed revenues for its development goals. However, as soon as
the construction began, the government forcefully evicted the local indigenous
communities without providing any compensation or alternative homes to
displaced individuals and communities. Private security forces, which had been
employed by Maz Sub Inc to protect its property and personnel, are allegedly
subjecting the local villagers to forced labour, torture, rape and murder. In
addition, as work on the pipeline progresses, oil spillages occur near the villages,
which are left unattended. Gas flares have become frequent; large quantities of the
oil depots have been swept into the Nile River, affecting the livelihood and food
of local communities that are dependent on it.
Taking these simplified facts into account, Mazuri Sub Inc’s operations in South
Sudan arguably infringe on a number of rights, most clearly the rights to life,
health and bodily integrity. Additionally, Mazuri Sub Inc is possibly infringing
upon the rights to food and water and various indigenous rights such as land
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rights, cultural rights and consultation rights.608 Despite criticisms raised by
NGOs and local people affected by the project, the government of South Sudan is
unwilling to intervene on its citizens’ behalf due to the potential wealth to be
derived from the foreign direct investment.609 For the sake of argument, let us
imagine that the project is estimated to generate between $800 million and $1.5
billion in government revenue over the next 5 years.
It is contended that this latter scenario, which is illustrative of past practices of
some MNCs (many of which still persist today), raises several critical queries to
which the Guiding Principles are ambiguous, unclear or simply remain silent.
First, in the event that South Sudan is unwilling or unable to protect its citizens’
human rights, what options do the local communities, adversely impacted by the
MNC’s activities, have under the Guiding Principles to obtain effective remedy
for the harms they have suffered? The only solution provided by the GPs that is
not dependent on adequate judicial and administrative enforcement machinery
provided by the Host State, is for the MNC to initiate mediation proceedings with
the alleged victims and also provide financial and technical support for the entire
process.610 The effectiveness of this provision, however, is questionable because it
provides no incentives for MNCs to do so other than ‘it is the right thing to do’.
Furthermore, there is no discussion of fall back plans in the event that the
corporate-controlled mediation proceedings are unsuccessful (or if an MNC fails
to provide this mechanism in the first place).
Second, given that the alleged human rights violations were perpetrated by the
local subsidiary, Mazuri Sub Inc, what responsibility does the parent corporation,
Mazuri, have under the Guiding Principles for the conduct of its subsidiaries? It is
trite that MNCs tend to operate in a cluster of interrelated entities, most of which
are insulated from legal liability on the basis of the doctrine of separation of
608 Convention Concerning Indigenous and Tribal Peoples in Independent Countries, opened for signature 27 June 1989, 28 ILM 1382 (entered into force 5 September 1991).
609 It shall be assumed, and research reveals it is likely the case, that South Sudan lacks technical expertise and sufficient resources to effectively monitor or regulate the complex human rights issues for example environmental degradation that could arise from this scenario.
610 GP 29 Note 432, 25.
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entities.611 According to the doctrine, each entity within a corporate group is
legally endowed with limited liability overlooking the fact that a parent
corporation and its subsidiaries often form a collective enterprise.612 This is
particularly significant in today’s global economic context as often, the local
subsidiary of an MNC is nothing more than a shell company with little to no
resources to compensate victims.613 Ruggie admits that “despite the
transformative changes in the global economic landscape ... [the doctrine] make[s]
it exceedingly difficult to hold the extended enterprise accountable for human
rights harm[s]”.614 However, the SRSG fails to provide substantive
recommendations, legal or social, on how to deal with this issue, including
whether and how parent corporations, which in most cases direct the actions of
their subsidiaries, could be held accountable. On this point, the GPs merely – and
disappointingly - invoke that the responsibility of a business to respect
internationally recognised human rights extends throughout its entire corporate
structure.615
Third, even assuming that Mazuri Sub Inc. does have the resources to settle any
claims brought forward by the local communities, the GPs fail to clearly specify
that corporations should make reparation to those adversely affected by their
activities and the possible forms this could take. It is contended that in order to
serve any real purpose, the ‘access to remedy’ pillar of the GPs should have
expressly included that businesses, in discharging their responsibility to respect
human rights, should provide reparation to individuals and communities adversely
affected by their activities. Such reparation may take the form of restitution,
compensation or rehabilitation for any damage to land, among others.616 In my
611 Peter Muchlinski ‘The Changing Face of Transnational Business Governance: Private Corporate Law Liability and Accountability of Transnational Groups in a Post Financial Crisis World’ (2011) 18 Indiana Journal of Global Legal Studies 665, 679.
612 Ibid.
613 Stephens Note 4, 55-56.
614 2008 Framework Note 429, para 13.
615 GP 13 Note 432, 14.
616 Surya Deva ‘The UN’s Human Rights Norms for Transnational Corporations and Other Business Enterprises: An Imperfect Step in the Right Direction? (2003-2004) 10 ILSA Journal of International and Comparative Law 493, 519.
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view, this provision is important because of at least two reasons. First, it serves to
embed the notion that an individual whose dignity has been violated has a right to
claim compensation directly from the perpetrator whether or not the Host State’s
judicial and enforcement machinery is effective.617 Second, in situations where it
may be difficult to attribute harm to identifiable individuals, for example, where
an oil spillage occurs affecting the surrounding environment, compensation may
arguably be claimed by communities, presumably for violation of collective
rights.618
To conclude, the GPs in the second prong have managed to provide robust
policies and procedures, which play a vital role in fostering a culture of business
respect for human rights. However, when faced with situations whereby MNC
human rights abuses are actually occurring, it is submitted that the second pillar
raises more accountability questions than it answers.
4.5 TOWARDS MNC ACCOUNTABILITY: IS THE UN FRAMEWORK A
‘GAME CHANGER’?
The foregoing examination of the Guiding Principles illustrates the potential as
well as the limitations of each pillar in addressing the negative impact on human
rights of MNC activities. This part seeks to determine once and for all, whether
the UN Framework, as a whole, constitutes an effective accountability tool for
MNC human rights violations.619
Until now, business consideration of human rights principles has been assessed
against a wide range of standards, which are not all universal, have not always
drawn from international human rights law and tend to narrowly deal with
‘pockets’ of human rights such as labour and the environment.620 The UN
617 Deva Note 616, 517. See also, Kapur Note 5, 3.
618 Ibid.
619 The thesis previously defined an ‘effective accountability mechanism’ to generally mean a framework that has a clear set of standards that can not only pre-empt human rights violations by MNCs but that can also offer adequate remedies to victims whose rights have been violated as well as an enforcement system for its decisions. See chapter 3, at 3.1 above.
620 See general discussion in chapter 3, at 3.4.1 above.
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Framework must be credited with providing a comprehensive set of normative
standards regulating the field of business and human rights.621 The UN
Framework has made it clear that corporations do have human rights
responsibilities and that these exist independently from, but concurrently with, a
State’s duty to protect and promote human rights.622 Ruggie clarifies that “the
State duty to protect … lies at the very core of the international human rights
regime; while the corporate responsibility to respect … is the basic expectation
society has of business in relation to human rights”.623 These separate but
complementary obligations and responsibilities of States and businesses,
respectively, make their relationship in addressing human rights reasonably clear.
Whereas States retain the primary obligation to protect and promote human rights,
the task for corporations takes a more passive form: to respect human rights
through refraining from doing harm.624 In my view, even though the scope and
nature of MNC human rights responsibilities are still hotly debated, there can be
no doubt that their general outline has become much clearer through the
conceptual and operational principles of the UN Framework.
The UN Framework must also be applauded for its role in promoting dialogue
between businesses, governments and human rights NGOs - a task that had
remained elusive until now - in the process of deciphering the relationship
between human rights and business. Ruggie’s commitment to involving a large
variety of stakeholders generated “a profound shift in the dynamic of the business
and human rights debate, from deep polarization to a greater understanding of the
621 Grabosch Note 558, 8.
622 John Ruggie ‘OECD: On Businesses and Human Rights’. Available at http://www.youtube.com/watch?v=dVDupBFJiqE (Last visited on12 January 2012). See also, Navanethem Pillay ‘Opening Statement: OHCHR Consultation on Business and Human Rights’ (United Nations High Commissioner for Human Rights, Palais Des Nations Room XVIII, 2009) 3. Available at http://www.unglobalcompact.org/docs/news_events/9.6/Pillay_Speech_5_Oct2009.pdf (Last visited on 24 August 2012).
623 Ruggie Note 556, 6.
624 Blitt Note 527, 9; Penelope Simons ‘International Law’s Invisible Hand and the Future of Corporate Accountability for Violations of Human Rights’ (2012) 3 Journal of Human Rights and the Environment 9, 9.
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challenges”.625 In my view, this achievement of initiating commitment among
these stakeholders is hugely significant as it essential to achieving legitimacy and
long-term sustainability of the UN Framework. Ochoa affirms that “the most
valuable contribution of the SRSG’s mandate has been in the form of ...
organizing the prolific and dispersed dialogues on business and human rights, and
channelling that discourse into the [UN Framework which is] well designed to
carry the issue ... into the era of law and legal institutions”.626
However, as one author fears, “Ruggie’s set of principles … will like a brand new
ship released with fireworks and champagne after ... years of intensive work ...
look “definitely better than nothing at all” and yet – based on flawed assumptions
– start to sink as it leaves the wharf”.627 Hence, while the UN Framework makes
sincere effort to formulate conceptual and practical standards for regulating the
business and human rights domain, its usefulness as an effective accountability
tool is limited in several critical ways. First, whereas the distinction between the
obligations of States (duty to protect) and businesses (responsibility to respect)
seems both logical and comprehensive, a closer look reveals that whereas the
former has a legal basis embedded in international human rights law, the latter is
merely “a social expectation”, in other words, a moral norm.628 Ruggie uses the
term corporate responsibility rather than duty to denote that business respect for
human rights is not a legal obligation imposed by international human rights
law.629 His firm rejection of the potential existence of binding international
625 Note, ‘Holding Business Accountable for Human Rights Abuses’. Available at http://www.ohchr.org/EN/NewsEvents/Pages/HoldingbusinessaccountableHRabuses.aspx (Last visited on 14 August 2012).
626 Ruggie Note 499, 292.
627 Note ‘The Ruggie Guiding Principles for Business and Human Rights: Five Predictions’. Available at http://internationallawnotepad.wordpress.com/2011/04/07/ruggie-guiding-principles-business-humanrights-predictions/ (Last visited on 11 October 2011).
628 GP 11 Note 432, 13.
629 2008 Framework Note 429, para 14; Ruggie Note 399, 130. It is important to note that Ruggie draws a distinction between violations of human rights (for which he believes there are no corporate obligations under international law) and international war crimes such as genocide (where he posits that corporations could incur direct liability under international criminal law). The SRSG believes that while this shift in direct corporate liability is emerging in the field of international criminal law, it has not yet extended to other aspects of international human rights law. For an in-depth look at Ruggie’s position, see ‘Brief Amici Curiae of the Former UN Special Representative for Business and Human Rights, Professor John Ruggie, Professor Philip Alston
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obligations for MNCs has come under heavy criticism from various
commentators.630 The SRSG is particularly accused of unnecessarily pre-empting
all development of what was a robust on-going debate by the international
community regarding the existence of emerging international duties of
corporations.631
It may well be that in order to attract the necessary political support to move
beyond the stalemate that had been created by the UN Norms, Ruggie had little
choice but to reject any such binding formulation or interpretation towards
protecting international human rights.632 Muchlinski asserts that “while there are
compelling theoretical reasons for extending direct responsibility for human rights
violations to [MNCs] the legal reality is that such responsibility remains to be
achieved”.633 Nonetheless, it is entirely possible that the principles in the UN
Framework will - through civil society action, shifting domestic law, and the
efforts of international organizations for example – one day become enforceable
international norms that carry serious repercussions for corporations.
Along similar lines, this thesis had previously argued that international human
rights law has so far not yet articulated clear binding duties for corporations.634
However, I also argued that the international human rights framework is
nonetheless open to such developments on the basis of the fundamental value of
human dignity.635 In my view, human dignity provides us with a sound
and the Global Justice Clinic at NYU School of Law in Support of Neither Party’ submitted to the US Supreme Court in Kiobel v Royal Dutch Petroleum, US Supreme Court Docket No 10-1491 (12 June 2012). See also 2007 Report Note 442, paras 22-33, where Ruggie explicitly recognised that corporations may be held directly liable under international criminal law for business activities that constituted international crimes.
630 Grabosch Note 558, 18.
631 Patricia Feeney ‘Business and Human Rights: The Struggle for Accountability in the UN and the Future Direction of the Advocacy Agenda’ International Journal of Human Rights. Available at http://www.surjournal.org/eng/conteudos/getArtigo11.php?artigo=11,artigo_08.htm (Last visited on 24 August 2012). See also Grabosch Note 558, 18 and Bilchitz Note 438, 36.
632 Knox Note 489, 14; Bilchitz Note 438, 82.
633 Muchlinski Note 129, 42.
634 See Chapter 2, at 2.3 above.
635 Ratner Note 37, 472. For fuller discussion, see Chapter 2, at 2.4 above.
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jurisprudential and legal foundation through which the existing human rights
machinery may be reoriented to provide concrete mechanisms to deal with the
increasing demands for global protection from harmful MNC activities.636 The
next chapter will develop my arguments further and propose a robust multi-
faceted global regime of accountability, with both legal and voluntary dimensions,
that ensures that the fundamental value of human dignity is protected and
individuals whose human rights have been adversely impacted by MNCs can
obtain effective redress.
Secondly, flowing from the implications of the non-binding responsibility by
businesses to respect human rights, it is contended that the UN Framework
essentially speaks only to “the willing”.637 These are business entities that “wish
to respect human rights, but which for lack of processes to understand their
potential impacts, inadvertently cause adverse effects”.638 In all other cases
however, it appears that MNCs have the freedom to choose whether or not to
comply with their responsibility to respect human rights under the UN
Framework.639 That is, unless enforced through domestic legal sanctions, the UN
Framework essentially appeals to a corporation’s moral responsibility to respect
human rights, which is already a tried - and failed - standard as evidenced by the
little success enjoyed by existing initiatives such as the UN Global Compact in
curbing MNC abuses.640 In my view, by relying on voluntary action by MNCs,
the UN Framework carries a real risk of non-compliance, which may lead to a loss
of credibility of the mechanism. It is submitted that the UN Framework should
have specified coercive measures that would follow if an MNC fails to implement
its standards thereby ensuring that even companies that are not ‘willing’ to carry
out due diligence measures, are nonetheless motivated to do so.641
636 Clapham Note 13, 32.
637 Amnesty International Note 237, 15.
638 Ibid.
639 Blitt Note 527, 21.
640 Knox Note 489, 17.
641 Amnesty International Note 237, 15.
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Thirdly, the UN Framework has failed to propose a monitoring mechanism to
supervise the implementation of its principles or a concrete enforcement system to
compel compliance by MNCs that fail to adhere to its standards. The UN
Framework therefore leaves its “implementation up to exactly those actors that
have so far notoriously failed”.642 The most immediate and obvious consequence
of this oversight is that individuals whose rights have been infringed by an
MNC’s activities, especially in situations where the Host State is unwilling or
unable to protect them, are left without effective remedy.643 It is submitted that an
enforcement system, which is endowed with the powers to receive complaints,
investigate them and where appropriate, impose sanction, is critical for achieving
MNC accountability for their human rights abuses.644 Without any such concrete
enforcement system, either at domestic or international levels, to supervise the
implementation of the UN Framework or offer adequate remedies to victims in
cases of violations, the UN Framework is weakened to the point of being yet
another ‘toothless’ mechanism.645
Based on the above considerations, it is timely at this juncture to respond to the
question posed at the beginning of this chapter, namely: can the UN Framework,
as the latest normative instrument in the field of business and human rights, be
considered a game changer in ensuring MNC accountability for their adverse
impact on human rights? The analysis above has revealed that despite failing to
create new international human rights law obligations for corporations, the UN
Framework has managed, where previous initiatives had failed, to clarify the
content and scope of the human rights standards that a company is expected to
comply with and integrated them within a single, coherent and comprehensive
template.646 However, its key stumbling block remains the lack of an effective
642 Sullivan and Hachez Note 600, 8.
643 Blitt Note 527, 21.
644 Amnesty International Note 237, 15.
645 Ibid.
646 Sullivan and Hachez Note 600, 5.
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monitoring or enforcement system to ensure that MNCs implement the standards
articulated in the UN Framework. Therefore, returning to my outstanding
question, this thesis firmly answers: no, the UN Framework cannot be regarded as
a game-changer as it merely maintains the status quo whereby businesses are
encouraged, but not required, to respect human rights.647 In other words, despite
its improvement in the “formulation ... of human rights standards over previous
such attempts at the international level, [the UN Framework] still falls short of
what is required for creating an effective international regulatory regime for
corporate human rights accountability”.648
In my view, we are now faced with a different conceptual challenge: finding the
most effective way forward, legal or social, to advance the goal of achieving
MNC accountability without losing the momentum achieved by the UN
Framework. On the one hand, we could begin anew the entire process of getting
consensus on a set of international principles, this time legally binding, to regulate
business-related human rights impacts.649 Alternatively we could fully embrace
the UN Framework ‘as is’ and hope for the best: that MNCs will take seriously
the UN Framework and freely choose to comply with the principles articulated
therein. In my view, neither option is valid. The former would be a redundant and
pointless exercise as the UN Framework has, for the most part, clarified and
elaborated on the standards for the accountability of MNCs with regard to human
rights. Gunning for a set of ‘corporate human rights obligations’ would only serve
to provoke the stalemate caused by the UN Norms, once again resulting in a
policy paralysis between businesses and human rights. The latter is simply naive
as the limits of self-regulation by corporations should be obvious. Urging
companies to voluntarily give an account of their activities and impacts on human
rights, and voluntarily improve upon their social and environmental performance
647 Human Rights Watch ‘UN Human Rights Council: Weak Stance on Business Standards’ (2011). Available at http://www.hrw.org/en/news/2011/06/16/unhuman-rights-council-weak-stance-business-standards (Last visited on 29 June 2012). 648 Deva Note 616, 495.
649 Bilchitz Note 438, 85.
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throughout their global operations, would leave vulnerable individuals without
adequate protection.650
This chapter proposes a third, forward-looking option: to build on, rather than
reject, the UN Framework and develop a robust accountability regime at the
international level whereby both legal and voluntary measures shall have key
complementary roles to play in the enforcement of the human rights
responsibilities of MNCs.651 Thus, the new challenge is no longer developing a
comprehensive set of normative standards to regulate the relationship between
business and human rights – the UN Framework aptly fulfils this role – but rather
how to adapt the principles identified therein to achieve a comprehensive
enforcement mechanism. In short, “a new mechanism is needed to close the
‘accountability gap’ between the aspirational quality of these standards and norms
[in the UN Framework] and their implementation”.652
To this end, it is proposed that a pluralistic approach, with both voluntary and
legal dimensions, would help bypass some of the problems currently presented by
the paucity in international law of binding corporate human rights obligations.653
That is, rather than rely solely on either legal measures or voluntary initiatives to
address business impacts on human rights, it is submitted that an integration of
both these approaches would introduce a different but effective dynamic in
ensuring MNC accountability.654 As Kinley and Tadaki point out “[t]he combined
breadth of the interests of commercial enterprise and human rights protection
necessitates a broad approach and, in fact, promotes wider acceptance of the need
to enforce [human rights responsibilities] through broad engagement between the
650 Donnelly Note 169, 2.
651 Taylor Note 603, 10. See also, International Federation of Human Rights et al ‘Joint Civil Society Statement on Business and Human Rights to the 17th Session of the UN Human Rights Council’ (ESCR-NET, 2011). Available at http://www.escr-net.org/actions_more/actions_more_show.htm?doc_id=1605781 (Last visited on 13 July 2012).
652 Bridgeman and Hunter Note 96, 191.
653 Kinley and Tadaki Note 119, 1022.
654 Sullivan and Hachez Note 600, 27.
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various key stakeholder interests and institutions”.655 In the next chapter, I will
argue that improving MNC accountability can be achieved through these two
conceptual avenues, which are complementary in theory, but shall be proposed as
alternative routes in political and legal discourse.
4.6 CONCLUSION
The discussions in this chapter have starkly revealed that the precise nexus
between business and human rights remains very much a work in progress. Given
the divergent goals of business and human rights, it is perhaps not surprising that
the global search towards achieving accountability for MNC human rights abuses
continues. The UN Framework is the most recent, and I would argue, the most
promising initiative in this quest and has so far been widely accepted by a large
variety of stakeholders including governments, businesses and some human rights
NGOs. Certainly, it has provided crucial consensus and clarity around the human
rights expectations facing businesses and an agreed normative framework against
which corporate human rights performance can be now assessed. However,
certain lacunae still exist, which severely hamper its efficacy, most notably, its
lack of an effective enforcement mechanism. In my view, this oversight renders
the UN Framework woefully inadequate for providing effective redress against
corporate human rights abuses. This thesis contends that it is critical to establish a
robust regulatory regime, which invokes both legal and social sanctions against
non-compliant MNCs, as the way forward in ensuring MNC accountability. This
proposal will be discussed in greater detail in the next chapter.
655 Kinley and Tadaki Note 119, 1019.
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CHAPTER 5
WALKING THE TALK: PROPOSALS FOR AN
INTERNATIONAL ACCOUNTABILITY FRAMEWORK
5.1 INTRODUCTION
The multiple corporate human rights crises – without effective remedy – canvassed
throughout this thesis have glaringly illustrated the urgency of establishing an
effective regulatory regime to promote MNC accountability for their human rights
violations. This is a highly complex issue perpetuated by ineffective domestic
methods of regulation, the immense political and economic powers wielded by
MNCs that by far outstrips that of many Host States and a conspicuous absence in
international human rights law of specific obligations for MNCs to respect or
promote human rights. Previous chapters have established that the international
community is still struggling to establish an effective accountability framework,
which this thesis generally defined to mean a framework that has a clear set of
standards that can not only pre-empt human rights violations by MNCs but that
can also offer adequate remedies to victims whose rights have been violated as
well as an enforcement system for its decisions.656
The UN ‘Protect, Respect, Remedy’ conceptual framework together with its
Guiding Principles (the “UN Framework”), as the latest normative standard in the
business and human rights arena, is at least to be lauded for providing a key focal
point upon which businesses’ impact on human rights may be judged from this
point forward.657 Indeed, Ruggie’s overall efforts, which culminated in the UN
Framework, have managed to illuminate a sharp growth in recognition amongst
MNCs of their actual and potential impact on human rights, accompanied by an
increasing acceptance that they, at the very least, bear a responsibility to avoid or
656 See chapter 3, at 3.1 above. In relevant areas, this chapter draws from, and elaborates substantially an essay submitted as part of the author’s SJD coursework on the subject ‘Human Rights in the Global Economy’ (Monash University, Law 7253, 2011).
657 Protect, Respect and Remedy: A Framework for Business and Human Rights UN Doc A/HRC/8/5 (7 April 2008); Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework UN Doc A/HRC/17/31 (16 June 2011).
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mitigate the negative aspects of such impact.658 However, as Ruggie himself has
been quick to point out:
... endorsement of the [UN Framework], by itself, will not bring business and human rights challenges to an end ... but it will mark the end of the beginning by establishing a common global platform for action, on which cumulative progress can be built, step-by-step, without foreclosing any other promising longer-term developments.659
This chapter hopes to seize the momentum presented by the UN Framework and
join the ongoing global search efforts for an effective regulatory regime that will
ensure MNC human rights accountability.660 This brings us to a critical question
in the current debate: in the absence of clear, binding international human rights
standards for corporations, how may progress be made in achieving MNC
accountability at the international level?661 It is worth recalling that elsewhere in
the thesis I argued that the concept of human dignity provides a practical and
jurisprudential basis for effecting this transition in modern times.662 Kinley and
Tadaki agree that the concept of human dignity possesses a “norm-making
capacity that can both effect corporate behaviour and form a basis for future legal
regulation”.663 In this context, human dignity is understood not as an end in itself,
but rather as a means to an end and provides us with a tool for effecting change.
Therefore, the notion of human dignity, as a legal and philosophical principle,
should be considered as the ‘shaping principle’ for realizing MNC human rights
658 Ibid. John Ruggie is the former Special Representative to the UN Secretary General on the issue of business and human rights whose mandate lasted from 2005-2011. For a full review of his mandate, see chapter 4 above.
659 Guiding Principles Note 432, 5.
660 The UN Human Rights Council established a Working Group on Business and Human Rights, which consists of five independent experts to research into practical ways of implementing the UN Framework. See their work on http://www.business-humanrights.org/Documents/UNWorkingGrouponbusinesshumanrights (Last visited on 1 September 2012).
661 To reiterate, the scope of my analysis shall be limited to the adverse human rights impacts generated by an MNC’s own business activities. Those that are generated through an MNC’s relationships with other parties, such as business partners and entities in its supply chain shall be excluded from my analysis, although of course, many of the principles discussed herein may be applicable to them.
662 See Chapter 2, at 2.4 above.
663 Kinley and Tadaki Note 119, 958.
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accountability at the international arena. This means that a reconceptualisation of
the traditional approach in international law – that (Host) States alone are the sole
bearers of human rights responsibilities – will be required. To this end, the thesis
chooses to focus on practical mechanisms that can regulate business conduct in
the field of human rights and enforce corporate human rights responsibilities.
In my view, the key to achieving such accountability is to build on, rather than
reject, the UN Framework and address the missing element of enforceability: the
capacity of the initiative to impose sanctions on non-compliant corporations and
the ability of victims to obtain effective redress.664 Given the complex nature of
MNCs’ globalised operations, it is submitted that an innovative multi-component
regulatory framework rather than a single international instrument is needed.
Therefore, the challenge in this chapter is two-fold: to design a robust mechanism
that can enforce corporate human rights responsibilities at the international level,
particularly in situations where governments are unable or unwilling to regulate
corporate behaviour; while simultaneously, strengthening rather than
undermining, the role of domestic law in holding companies to account for their
transnational human rights impacts. These two avenues are complementary in
theory but shall be discussed below as alternative routes in social and legal
discourse. It is submitted that these two dimensions are fully consistent with the
basic concept of human dignity and can be used to achieve MNC accountability at
the international level and enhance a victim’s right to effective remedy.665
With the above background in mind, I will thus present my argument in three
distinct ways. Part II will elaborate on the desirability and viability of the
accountability mechanisms proposed herein by presenting a theory of integrated
international and legal responsibility. This novel theory in essence envisages the
integration of, on the one hand, a market-oriented, incentive-based regulatory
664 Peter Newell ‘Civil Society, Corporate Accountability and the Politics of Climate Change’ (2008) 8 Global Environmental Politics 122, 124.
665 The right to an effective remedy generally encompasses the ability by potential victims to access justice and receive adequate remedies or reparation from the perpetrators of the human rights abuses. UDHR Note 114, article 8 and ICCPR Note 137, article 2(3). See also The Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law, UN Doc A/RES/60/147 (21 March 2006).
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initiative at the international level, and, on the other hand, a legally binding
mechanism at the domestic level. It shall be argued that the combination of these
two regulatory models comprised as part of an integrated structure will reverse the
pendulum swing away from corporate responsibility towards corporate
accountability.666
Part III will expand and elaborate on the ‘international responsibility’ aspect of
the theory by proposing a new accountability mechanism at the international
level: an international ombudsperson.667 It shall be argued that developing this
global institution is a matter of first order that will provide prompt relief to
victims of corporate human rights abuse without access to effective remedy under
their domestic regimes. I will begin by exploring how the proposed mechanism
relates to, and advances, the (non-binding) standards articulated in the UN
Framework. I will then outline the core functions, scope of powers and range of
possible outcomes that the international ombudsperson would have in its
regulatory arsenal. To enforce its decisions, I will propose that the international
ombudsperson operate under the auspices of the UN while collaborating with
other international organizations to ensure a balance between any conflicting
interests of global economics and human rights. Finally, I will discuss the benefits
of the proposed mechanism as well as any major potential challenges it may face.
It is my contention that if properly constituted, this would be a valid mechanism
through which the (non-binding) standards in the UN Framework could be
implemented and enforced against MNCs at the international level.
Part IV will tackle the issue of how to overcome the problem of MNCs that refuse
to comply with their human rights responsibilities as articulated in the UN
Framework. Keeping in line with the ‘legal responsibility’ element of my theory, I
will propose that extraterritorial regulation by Home States be used as a tool for
666 The former, which enjoys overwhelming support from businesses, is based on a platform that corporations are encouraged, but not required, to proactively engage with human rights norms. The latter, which is predominantly championed by NGOs is based on the expectation that corporations, as global or domestic citizens, should be held accountable for their negative human rights impacts through legal means and other non-legal institutions where possible. See, generally, Mares Note 4.
667 Literature refers to the terms ‘ombudsperson’ and ‘ombudsman’ as interchangeable. Keeping in line with modern views of gender neutral terminology, I shall use the term ‘ombudsperson’ in this thesis.
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imposing legal accountability on MNCs for the negative human rights impact of
their operations abroad. My analysis will begin by determining whether there is a
basis in international law allowing for extraterritorial regulation by States and the
variety of circumstances in which such regulation may be exercised with respect
to MNCs. I will then discuss the need to adopt a new international instrument
aimed at clarifying, and where necessary extending, the obligations of Home
States to protect human rights against any violations from the activities of MNCs.
I will also offer some reflections and proposals as to how this mechanism may
complement the regulatory initiative of the international ombudsperson proposed
above. Finally, I will examine the hurdles that are likely to confront the Home
State regulation regime as a whole and suggest how any such conceptual and
procedural difficulties may be resolved.
Before addressing the substantive components of my proposals, three further
clarification points must be made. First, the proposals advanced in this chapter
should be understood in the context of my quest to build upon the UN
Framework. Therefore, throughout my analysis, I will offer some reflections as to
how the proposed mechanisms complement, and are compatible with, the SRSG’s
work. Second, my proposals are geared towards developing a robust
accountability regime, which can enforce emerging international human rights
responsibilities of corporations. In my view, despite the failure by international
law to provide clear MNC human rights obligations, there is simply no reason
why accountability mechanisms at the international arena should not be developed
and promoted to obligate MNCs to respect international human rights norms.
Finally, the two proposed mechanisms are not, and should not be considered, as
competing types of mechanisms; instead, they should be viewed as
complementary and part of a complex and dynamic relationship that recognizes
that the international human rights regime has weak enforcement systems and that
the wheels of justice under domestic regimes are slow to turn.
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5.2 TOWARDS AN INTEGRATED THEORY OF INTERNATIONAL &
LEGAL RESPONSIBILITY
In this section, I propose a theory of corporate accountability for human rights
violations that integrates both an international (non-binding) dimension and a
domestic (legally binding) component. Various authors have canvassed each of
these dimensions separately, but not, as shall be attempted in this thesis, within an
integrated framework.668 Ratner, for example, proposed a theory of legal
responsibility for MNCs by arguing that international law should - and could -
provide for corporate obligations for human rights violations, particularly where
an MNC cooperated with a Host State in abusing human rights.669 Deva also
proposed a theory of legal responsibility, but favoured a broader approach
whereby “different variables” such as incentives, market mechanisms or legal
sanctions, whether civil or criminal, at various levels including domestic, regional
or international are used collectively “at all stages of the [regulatory] dilemmas,
with the aim of maximizing efficacy and efficiency”.670
The theory proposed herein borrows from both these approaches and posits an
integrated theory of international and legal responsibility. My theory is: (a)
integrated in that it emphasizes the need for employing different modes of
implementation for corporate human rights responsibilities; (b) international in
that it seeks to incorporate an international mechanism that circumvents the
prevailing position in international law where MNCs currently have no clear
human rights obligations but at the same time harnesses the apparent willingness
by MNCs to respect human rights using guidance from the UN Framework; and
(c) legal in that it asserts the need for legally binding obligations and enforcement
mechanisms at the domestic level to ensure corporate accountability for human
rights violations, particularly over the long term.
668 See, for example, Ratner Note 37, 488; Surya Deva ‘Acting Extraterritorially to Tame Multinational Corporations for Human Rights Violations: Who Should Bell the Cat?’ (2004) 5 Melbourne Journal of International Law 37, 44-46; Pierre-Marie Dupuy ‘Dionisio Anzilotti and the Law of International Responsibility of States’ (1992) 3 European Journal of International Law 13.
669 Ratner Note 37, 449.
670 Deva Note 668, 46.
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The theory posits that insofar as MNC activities infringe on the human dignity of
individuals, they should incur responsibility at the international level, where the
scope of their impact on human rights will be determined in light of the principles
articulated in the UN Framework. At the domestic level, it asserts that Home
States, which are in a position of power vis-à-vis MNCs, should impose liability
on their corporate nationals for their human rights violations committed abroad
through extraterritorial regulation. The former is a market-oriented, incentives-
based approach that envisages a global institution assuming responsibility for
establishing and enforcing human rights responsibilities of MNCs under the UN
Framework; while the latter recognizes the lack of specific binding obligations for
MNCs under international human rights law and taps into the limitless potential of
States as the chief enforcers of human rights responsibilities by obliging Home
States in particular to exercise extraterritorial legal regulation over the harmful
activities of their corporate nationals abroad.
The main thrust of the proposed theory is to inspire immediate action from MNCs
to not only comply with principles of the UN Framework regarding their human
rights responsibilities but to also join in the efforts to create an international body
that will oversee its implementation in a consistent and impartial manner.671 This
is based on an explicit acknowledgement that economic development is a
legitimate goal but that it should not be prioritized to the exclusion of other
values, such as the equally legitimate goal of protection of human rights; and
instead seeks to integrate the two into a balanced value system.672 To supplement
what could be regarded as a voluntary model, the theory taps onto the limitless
potential of States to legally enforce corporate human rights responsibilities
through an emerging doctrine in international law that requires (Home) States to
implement extraterritorial laws that require their corporate nationals to respect
human rights abroad.
That said, it is acknowledged that this approach will not be without its detractors
especially given the divergence in the expectations between the business 671 Despite its non-binding nature, it is submitted that civil society should also lend its support to this agenda as the most pragmatic tool available to regulate business’ impact on human rights.
672 Kapur Note 5, 15.
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community and civil society groups on regulating MNCs’ impact on human
rights. That is, whereas businesses continue to advocate for little to no legal
regulation at either domestic or international levels, human rights groups on the
other hand demand extensive legal regulation of MNCs.673 In anticipation of this
issue, my theory relies on Deva’s observations that, “conjoint regulatory efforts
on the part of diverse interest groups [is necessary] ... to ensure that MNCs respect
... human rights”.674 It is hoped that my proposed theory of international and legal
responsibility will at least initiate constructive dialogue between these two
divergent groups to resolve some of the legal versus non-legal regulation conflicts
to the reasonable, if not entire, satisfaction of both parties.
5.3 PROPOSAL NO. 1: INTERNATIONAL OMBUDSPERSON
This part proposes the creation of a new Business and Human Rights International
Ombudsperson (“BHIO”) to close, or at least significantly narrow, the
‘governance gap’ between the aspirational quality of the UN Framework and its
implementation.675 The primary aim of the BHIO is to provide an independent and
impartial avenue at the international level where victims may voice their
grievances against MNCs and hold them accountable for their human rights
abuses per the standards articulated under the UN Framework.676 Indeed, there
have been some recent calls from leading international human rights organizations
such as Amnesty International to develop a “supra-national institutional structure
673 Deva Note 668, 43.
674 Ibid.
675 It should be noted that other key players in the global economy including international financial institutions are also embracing the mechanism of an ombudsperson to resolve human rights related conflicts. For example, in 2010, the Inter-American Development Bank (IDB) launched the Ombudsman Accountability Mechanism in order to address complaints filed by individuals or groups who feel affected by projects financed by the IDB. See http://www.iadb.org/en/mici/idbs-new-accountability-mechanism-becomes-effective,3218.html (Last visited on 10 August 2012).
676 Briefly, in order for an MNC to meet its responsibility to respect human rights under the UN Framework, it must: (a) put in place a “policy commitment” to demonstrate its willingness to respect human rights; (b) implement a “human rights due diligence process to identify, prevent, mitigate and account for how [it will] address its impacts on human rights”; and (c) provide “processes to enable remediation” and ensure that victims and other stakeholders have access to effective grievance mechanisms that will provide redress for “any adverse human rights impacts they cause or to which they contribute”. GP 15 Note 432, 13-15.
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such as an ombudsman” to address MNC human rights violations.677 Ruggie also
pointed out that a global ombudsperson would not only be uniquely positioned to
offer effective processes to victims of corporate-related human rights abuses, but
would also, if properly constituted, provide timely responses and furnish
appropriate solutions that would take into account different sectors, cultures and
political contexts.678
Despite this apparent support for the development of an international
ombudsperson in the field of business and human rights, few proposals have
actually provided any real detail, as I will attempt in this thesis, of how such a
mechanism would function.679 However, before turning onto the specific design
of the proposed BHIO, a few words about the reasons for not simply extending
similar existing mechanisms are in order.
5.3.1 The Case in Favour of a New Accountability Mechanism (the BHIO)
As previously stated, the key task in this chapter is to move beyond the current
widely accepted social norm that MNCs have a responsibility to respect human
rights and develop a mechanism that promotes their accountability particularly at
the international level. This renewed emphasis on corporate accountability
demands fundamental changes to the prevailing framework in which MNCs
presently operate. There has been some debate as to whether such efforts should
be geared towards strengthening existing frameworks of accountability or creating
677 Amnesty International Note 529, 9.
678 2008 Framework Note 429, Para 103.
679 For example, Bridgeman and Hunter proposed the creation of a similar mechanism they called the Foreign Investor Accountability Mechanism. However, its ambit is narrowly limited to promoting the environment and social sustainability of foreign direct investment by holding MNCs accountable to project affected communities. See, generally, Bridgeman and Hunter Note 96. Other similar proposals relate to the creation of new domestic ombudspersons that can address human rights grievances in relation to companies. See for example, Foreign Policy Practicum Members ‘Canada’s Extractive Industry Ombudsman: Background and Recommendations for an Ombudsperson for Canadian Extractive Companies Operating Abroad’ (Brief Submitted to the Government of Canada Roundtables on Corporate Social Responsibility in the Extractive Sector, University of Ottawa, 2006). Available at www.halifaxinitiative.org/updir/OmbudspersonMemo.pdf (Last visited on 1 September 2012).
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new institutions altogether, and if the latter what form these should take.680 This
section will briefly outline why the creation of a new accountability mechanism at
the international level, the BHIO, is essential to help deliver MNC human rights
accountability and how it is fundamentally different, and preferable, to existing
mechanisms and addresses the concerns of those who see the existing framework
as weak and ineffective.
The primary aim of the proposed new mechanism is to provide an international
forum that is specifically designed such that international human rights principles,
as articulated in the UN Framework, could be applied impartially and consistently
to MNC business operations.681 It is intended that by doing so, the BHIO shall
provide critical support to the emerging consensus that MNCs have ongoing
human rights due diligence responsibilities; provide an avenue for those whose
rights have been adversely impacted by an MNC’s activities to voice their
concerns; and enable corporate-related harms to be addressed and remediated
directly by the MNC (through mediation and investigative proceedings).682
It could be argued that various mechanisms already exist that subject MNCs to a
variety of accountability procedures, most notably the OECD National Contact
Points (“NCPs”), the UN Global Compact and the IFC Compliance Advisor
Ombudsman (“CAO”), which have similar characteristics to my proposed
model.683 These existing mechanisms, so the argument goes, have achieved
certain legitimacy in the international community and could implement the
principles articulated in the UN Framework adequately and effectively, thus
rendering the proposed BHIO redundant.684 Thus, the main issue for consideration
680 Isabella D. Bunn ‘Global Advocacy for Corporate Accountability: Translantic Perspectives from the NGO Community’ (2004) 19 American University International law Review 1265, 1301.
681 Bridgeman and Hunter Note 96, 218.
682 Ruggie has articulated that the process of ‘human rights due diligence’ is a key process requiring businesses to know and show that they are meeting their responsibility to respect human rights and is reflected in both the 2008 Framework and the Guiding Principles.
683 For a full review of these mechanisms, see chapter 3 above.
684 Caroline Rees ‘Access to Remedies for Corporate Human Rights Impacts: Improving Non-Judicial Mechanisms’ (Harvard Kennedy School, Corporate Social Responsibility Initiative Report
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in this section is to determine how the proposed new mechanism of a BHIO is
different to these existing accountability mechanisms.
As we saw previously, the above existing mechanisms vary greatly in terms of
their standards, accessibility and their effectiveness in preventing or redressing, as
the case may be, corporate human rights violations.685 In relation to the NCPs, it is
worth recalling that it is (Home) States not MNCs that commit to implement the
OECD Guidelines. That is, adhering States undertake to ensure that MNCs
incorporated in their respective jurisdictions respect human rights in their
activities abroad.686 Adhering States also commit to create NCPs to hold their
corporate nationals accountable for failing to respect human rights in order to
further the effectiveness of the Guidelines.687 The fundamental shortcoming of
this arrangement is that it “will only be meaningful if adhering countries upgrade
NCP institutional arrangements and procedures to ensure impartiality, equitability
and predictability”.688 In other words, unlike the proposed BHIO, which
constitutes an independent international regulatory body that shall deal directly
with MNCs, the effectiveness of the NCP complaints mechanism is dependent on
whether Home States comply with the OECD Guidelines to the letter, many of
which do not.689 Even then, their effectiveness is compromised as NCPs still lack
investigative powers or the power to enforce the Guidelines, for example, through
imposing sanctions on MNCs upon a finding of infringement.690 In addition,
NCPs are usually housed at the trade, finance, economics or investment
No 32, 2008), 3-4. Available at http://www.hks.harvard.edu/m-rcbg/CSRI/publications/report_32_consultation_report_november_08.pdf (Last visited on 1 September 2012). 3-4.
685 For example, the ILO Declaration only regulates labour related human rights issues and merely offers guidelines to businesses in areas such as employment, conditions of work and life, and industrial relations. See, generally, ILO Declaration Note 363.
686 New OECD Guidelines Note 348.
687 New OECD Guidelines Note 348, Procedural Guidance ‘Implementation in Specific Instances’ Part A, paras 1-3.
688 OECD Watch Note 358, 4.
689 Melga et al Note 361.
690 OECD Watch Note 358, 4.
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departments of their Home governments.691 This could result in a reduction in
legitimacy of the NCP mechanism, stemming from perceptions among victims of
corporate human rights abuses that NCPs are biased towards corporate interests
and doubts of whether they will receive an impartial hearing or adequate remedy
from NCPs.692
Similarly, the CAO is limited in its capacity to provide a satisfactory venue for
implementing corporate human rights responsibilities as provided under the UN
Framework. The CAO, which is the independent complaints mechanism of the
IFC, “responds to complaints from project-affected communities with the goal of
enhancing social and environmental outcomes on the ground”.693 In other words,
complaints are eligible for a CAO assessment if the complaint relates to an IFC
project; raises social and environmental issues as articulated in the IFC
Performance Standards; and is filed by an individual or community that is directly
affected by the IFC project.694
One can see that the CAO can only contribute to the enforcement of human rights
responsibilities in a limited fashion: through the corporations that accept funding
from the IFC and only through the principles in the Performance Standards. This
therefore limits the number of entities that could be regulated by the CAO as well
as the nature of corporate human rights abuses that would qualify as ‘complaints’
under the Performance Standards. Put differently, there are no possibilities under
the CAO mechanism for extending its application beyond the narrow group of
entities that conduct IFC funded projects. Nor does the CAO have full
investigatory powers to ascertain whether its corporate clients are ‘at fault’; it can
only provide informal advice and recommendations to the IFC on the matter.695
This limited ambit casts some doubt on whether the CAO can adequately shoulder 691 Melga et al Note 361, 45-46.
692 Rees Note 684, 3-4.
693 CAO ‘Our Mandate’. Available at http://www.cao-ombudsman.org/ (Last visited on 18 July 2012).
694 CAO ‘How We Work’. Available at http://www.cao-ombudsman.org/howwework/ombudsman/ (Last visited on June 25 2012).
695 Park Note 341, 24-25.
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the proposed functions of the BHIO given that, in addition to providing mediation
services, the proposed new mechanism shall be empowered with extensive
investigatory powers into allegations of corporate human rights violations against
any corporation in the world.
Last, but not least, it may be argued that the UN Global Compact, as the world’s
largest voluntary corporate citizenship initiative, has already taken on the
proposed roles of the BHIO mainly because it is endowed with its own ‘integrity
measures’.696 These essentially permit the Global Compact to “use its own good
offices to encourage resolution of the complaint” including calling upon
companies to submit written comments on allegations of human rights abuses and
providing assistance to the parties to remedy the situation.697 This suggestion is
not without merit, leastwise because the Global Compact has explicitly stated that
its chief aims are to facilitate dialogue and open communication between a
company and those affected by its activities.698
However, this obvious strength of the Global Compact in mainly promoting
dialogue between the parties is also, in my view, its biggest stumbling block. The
Global Compact has explicitly stated that it is “more like a guide dog than a watch
dog” in resolving corporate-related human rights abuses.699 Therefore, unlike the
proposed BHIO, the Global Compact evidences a narrow ambition: to merely
guide companies to respect human rights, not to monitor or enforce a company’s
compliance with its principles. Perhaps its reticence to do so explains why a large
number of corporations have signed onto the initiative, which publicly allows
them to make commitments towards respecting human rights without being
696 Global Compact ‘Integrity Measures’ Available at http://www.unglobalcompact.org/aboutthegc/IntegrityMeasures/index.html (Last visited on 2 August 2012).
697 Ibid.
698 Ibid.
699 UN Global Compact ‘About Us’ Available at http://www.unglobalcompact.org/aboutthegc/faq.html (Last visited on 8 June 2012).
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required to prove that they actually do so.700 In fact, various authors have claimed
that a large number of companies are simply using their participation in the
Global Compact as a marketing tool where they can make “grandiose statements
of corporate citizenship without worrying about being called to account for their
actions”.701
The shortcomings of the existing mechanisms canvassed above highlight the
necessity of creating a new accountability mechanism at the international level to
address these infirmities and advance business respect for international human
rights principles. That said, however, it must be acknowledged that there is some
overlap between these mechanisms and the proposed BHIO particularly in their
efforts to promote the principles of the UN Framework.702 Therefore, a key theme
of the chapter will be to consider the role that existing mechanisms of
accountability could play to enhance the UN Framework and supplement the
effectiveness of the proposed BHIO initiative. The challenge will be ensuring that
the existing mechanisms accept clear, reciprocal undertakings with the BHIO
within a far broader array of policy measures, contractual undertakings and best
practices, built from the ground up. An approach that integrates these existing
accountability mechanisms into the overall structure of the BHIO shall be
discussed later in the chapter.
To sum up, the proposal is innovative because unlike existing accountability
mechanisms, the BHIO initiative shall emphasize three regulatory strategies as
follows: (a) overt recognition of the UN Framework as the main normative
instrument in assessing the role of MNCs in respecting human rights during their
operations; (b) affirmation that mediation processes will be promoted as the initial
means of resolving conflicts, but unlike existing mechanisms, clearly spell out the
700 Canadian Business School CSR Frameworks for the Review of the Extractive Sector (Canadian Business School for Social Responsibility Report, 2009) 4. Available at http://www.cbsr.ca/ (Last visited on 2 June 2012).
701 Nolan Note 15, 18. See also, Deva Note 382, 185.
702 See chapter 3 above, which details how each of the NCP, CAO and Global Compact mechanisms have made attempts to incorporate the principles articulated in the UN Framework into their own policy frameworks and standards.
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consequences of a failure by parties to achieve mutually agreeable solutions,
including an automatic investigation into the merits of the corporate-related
human rights grievance followed by a public announcement of its results; and (c)
identification of other institutional arrangements, both domestically and
internationally, to enforce its decisions thus enhancing the victim’s right to
effective remedy.
Against this backdrop, a reasonable question to raise at this point is why victims,
whose fundamental rights have been infringed by a corporation, might choose to
issue a complaint to the BHIO instead of seeking redress before a court of law. As
shown elsewhere in the thesis, some Host States fail to enforce basic human rights
standards on MNCs – either because they are unable to match the political and
economic might of the MNC or they are simply unwilling to do so. This leaves
many individuals and communities within their territories, whose rights have been
adversely impacted by MNCs, without adequate remedy. The BHIO, at least in
part, aims to facilitate mediation proceedings between the aggrieved individuals
and the corporation thus giving a victim’s right to effective remedy an important
constructive dimension.703 Moreover, unlike the judicial system where a judge can
only decide whether or not a violation has occurred (typically after a balancing
exercise between differing rights or between a right and legitimate economic aims
of MNC activities), the BHIO is not limited to questions of legality but is also
empowered to provide and facilitate a crucial opportunity to reach mutually
compatible decisions, failing which an independent investigation shall be
conducted to verify the allegations of corporate human rights abuses.704 For some
business entities, protection of their brand image and reputation may serve as an
important motivation factor to proactively address the local community’s human
rights concerns through the impartial mediation processes provided by the BHIO.
By the same token, the latter investigative function of the BHIO would also
provide MNCs with a formal way of combating any such public criticisms by
703 European Ombudsman ‘The Role of the European Ombudsman in the Protection and Promotion of Fundamental Rights’ (2011). Available at http://www.ombudsman.europa.eu/en/activities/speech.faces/en/11663/html.bookmark (Last visited on 31 July 2012).
704 Ibid.
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providing an international arena where the MNC’s performance can be
independently evaluated (and vindicated).
The next section will set out a detailed proposal for the design and core functions
of the BHIO in addressing corporate-related human rights abuses at the
international level.
5.3.2 Proposed Design and Function of the BHIO
In this section, my intention is to detail how the BHIO may ideally operate at the
international level to enhance MNC accountability for their human rights
violations. Ultimately, it shall be shown that an international ombudsperson, if
properly constituted, could provide a valuable centralized institution with the
power to effectively address human rights complaints against MNCs,705 at least in
the short-term.
5.3.2.1 Overall Purpose
The BHIO would operate as an impartial intermediary that addresses human rights
complaints that individuals have against MNCs and provide both parties with an
objective and expeditious non-judicial type of dispute resolution at the
international level.706 The BHIO would essentially have the ability to address any
human rights based complaint against any company in the world.707 The primary
services that the BHIO would provide are two-fold: (a) promoting and facilitating
705 Keeping in theme with the thesis so far, the term ‘MNC’ shall be used throughout this thesis to refer to the various entities comprising of parent companies and their subsidiaries, including those incorporated in foreign jurisdictions. However, the proposed new mechanism could also equally be applied to other business entities such as partnerships, joint ventures etc.
706 Ombudsman processes typically involve a number of alternative dispute resolution approaches including conflict assessment, mediation and dispute resolution, consensus building, multi-stakeholder problem solving, and interest-based facilitation and negotiation. For more details on the general functions of an ombudsperson, see http://www.ombudsassociation.org/resources/what-ombuds (Last visited on 24 June 2012).
707 Caroline Rees ‘Grievance Mechanisms for Business and Human Rights: Strengths, Weaknesses and Gaps’ (John F. Kennedy School of Government, Corporate Social Responsibility Initiative Report No 40, 2008) 34. Available at http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_40_Strengths_Weaknesses_Gaps.pdf (Last visited on 1 September 2012).
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dialogue/mediation between the parties to resolve their conflicts in a manner that
is confidential, informal, flexible and supports international human rights
principles; and (b) failing which, launching in-depth investigations into the
parties’ issues to swiftly determine whether corporate human rights violations
have occurred and thereafter making authoritative findings on the matter as well
as propose adequate remedy.708
5.3.2.2 Underlying Principles
To enhance its effectiveness as an accountability mechanism, it is submitted that
the BHIO should be based on and judged against the criteria identified in the
Guiding Principles as follows:709
(a) Legitimacy: all stakeholders including actual and potential victims of
MNC human rights violations, as well as the MNCs themselves, should be
able trust the BHIO as a legitimate and fair non-judicial grievance
mechanism. To inspire such trust, the BHIO should ensure that its
governance structures are clear, transparent and independent such that
neither parties to a grievance nor States can interfere with its fair conduct
of the grievance process;
(b) Accessibility: the BHIO should ensure it is widely publicised, including
through the internet, government gazettes, newspapers etc, to promote
awareness of its existence to all parties who may need to access it. In
addition, it should provide adequate assistance to aggrieved individuals
who are faced with such barriers as language, illiteracy, costs,
geographical limitations and fear of reprisals;
(c) Predictability: the BHIO should provide public information on the
procedures it offers making sure that it details the relevant timeframes for
708 John Hatchard ‘Privatisation and Accountability: Developing Appropriate Institutions in Commonwealth Africa’ in Addo Note 138, 291.
709 These principles for a non-judicial grievance mechanism are based on multi-stakeholder and bilateral consultations conducted by Ruggie throughout the course of his mandate. 2008 Framework Note 429, para 92; Guiding Principles Note 432, para 31.
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various stages, the available outcomes as well as the means for monitoring
the implementation of the outcomes;
(d) Equitability: the BHIO must ensure that all parties have reasonable access
to information and expertise necessary to engage in a grievance process
that is fair and informed. This will address any imbalance (and increase a
perception of fairness) between MNCs and aggrieved individuals in terms
of their ability to access information, which is often hampered by the
latter’s lack of financial resources;
(e) Transparency: the BHIO should disclose information on the grievance
processes in a manner that enables stakeholders to make an informed
analysis of the mechanism’s performance and effectiveness. It is
contended that the transparency should relate to both the process (such as
receipt of the complaints) and the substantive outcomes, while allowing
for dialogue between the parties to remain confidential and, where
requested, for complainant confidentiality;
(f) Rights-compatible: despite the fact that the UN Framework does not create
binding human rights obligations for MNCs, the BHIO should still ensure
that its outcomes and remedies accord with internationally recognized
human rights standards;
(g) Source of continuous learning: the BHIO should regularly analyse and
make public the frequency, patterns and causes of corporate-related human
rights grievances. This will not only improve its internal processes but will
also enable the BHIO to influence corporate policies, procedures and
practices on the issue of human rights and thereby prevent future MNC
related grievances and harm.
5.3.2.3 Source of Standards
This thesis submits that the UN Framework offers us an unparalleled opportunity
to enhance business respect for human rights at the international level and should
therefore constitute the source of normative standards that the BHIO must apply
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to each case before it.710 Ruggie clarified the scope and substance of corporate
responsibilities with respect to human rights by providing practical guidance on
concrete actions business entities, including MNCs, should take to discharge those
responsibilities.711 These, for example, require that MNCs conduct human rights
due diligence procedures (such as conducting impact assessments of their business
operations on human rights) to ensure that their business operations do not harm
the human rights of individuals and surrounding communities.712
Thus, if a claim is brought by an individual from Cambodia against an Australian
company for alleged human rights violation associated with, say, an extractive
project, the BHIO would apply the UN Framework - in particular, the corporate
responsibility to respect human rights - directly to the MNC to determine its (lack
of) compliance with human rights norms. The BHIO would be tasked with
determining exactly how the standards in the UN Framework apply. This means
that the BHIO may tailor its proceedings to require that potential victims
demonstrate that the behaviour of the MNC (a) has failed to comply with the due
diligence requirements that are reasonable in the circumstances and (b) that such
failure has adversely impacted upon their human rights. It is expected that over
time, the BHIO would establish protocols that allow it to efficiently identify
which issues are relevant to which type of entities.713
There are several reasons why I think the BHIO’s reliance on the UN Framework
as a source of standards for its operations is both effective and legitimate. First,
the Guiding Principles are in a form that allows companies to use them as a basis
710 Amnesty International ‘United Nations: A Call for Action to Better Protect the Rights of those Affected by Business-Related Human Rights Abuses’ IOR40/009 (2011), 2. Available at www.amnesty.org/en/library/info/IOR40/009/2011/en (Last visited on 1 September 2012).
711 2008 Framework Note 429, para 24. However, the corporate responsibility to respect human rights is not just a negative obligation; it also requires companies to take positive actions to address adverse human rights impacts with which they are involved or are directly linked to their operations, products, or services by their business relationships.
712 2008 Framework Note 429, para 61.
713 Bridgeman and Hunter Note 96, 226. For instance, it is doubtless that financial businesses and extractive companies would face different issues.
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for managing their human rights impacts.714 Indeed, there is growing evidence
that the UN Framework has already been applied in practice by many companies
and industrial sectors.715 Thus governments, MNCs, communities and other
stakeholders do not need to reach consensus on yet another set of international
standards that the BHIO can directly apply.716 Second, the Guiding Principles are
also in a form that allows independent assessments of corporate performance to be
made. This, in turn, would enable the BHIO to (a) make an assessment of
whether the company is exposed to specific human rights risks (and determine the
significance of these risks) and (b) assess how well the company is managing its
human rights issues (and, in turn, objectively assess the quality of the company’s
response to that engagement).
Third, while it is conceded that Ruggie’s normative framework merely draws on
social expectations, rather than international human rights law as the basis of the
corporate responsibility to respect human rights, it is submitted that it is likely that
any attempt to create international legally binding obligations for MNCs would
have faced the same fate as the UN Norms - utter rejection by governments and
businesses on the basis that international human rights law, as yet, does not apply
directly to corporations. Finally, it is submitted that applying the standards
contained in the UN Framework would provide more certainty and predictability
than simply using the general ‘idea’ of human rights as a standard for holding
MNCs accountable for their human rights violations.717
714 John F. Kennedy School of Government ‘Rights-Compatible Grievance Mechanisms: A Guidance Tool for Companies and their Stakeholders’ (Corporate Social Responsibility Initiative, 2008) 8. Available at http://www.hks.harvard.edu/m-rcbg/CSRI/publications/Workingpaper_41_Rights-Compatible%20Grievance%20Mechanisms_May2008FNL.pdf (Last visited on 1 September 2012).
715 See, generally, http://www.business-humanrights.org/SpecialRepPortal/Home (Last visited on 15 August 2012). See also, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Piloting Principles for Effective Company/Stakeholder Grievance Mechanisms: A Report of Lessons Learned UN Doc A/HRC/17/31/Add.1 (24 May 2011).
716 Bridgeman and Hunter Note 96, 226.
717 Knox Note 489, 17.
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Before moving on from the question of the source of standards, it bears repetition
that the purpose of the proposed mechanism is not to create binding international
human rights standards for corporations but rather to heed to the SRSG’s warning
that the UN Framework will “be at some risk of misinterpretation and in need of
mainstreaming into organizations and disseminating globally ... this will require
capacity building and advisory efforts in order to sustain and fully realize the
potential generated by the [2008] Framework and the Guiding Principles”.718
Therefore, this chapter is explicitly concerned about the question of how the
international community can make progress towards corporate accountability in
the absence of binding international regulation, not the creation of new standards.
5.3.2.4 Jurisdiction of the BHIO
Any person bringing a complaint would automatically accept the BHIO’s
jurisdiction over the process and outcomes. However, any MNC (or other
business entity) that wishes to make use of its services would have to agree to
consent (in writing) to submit to its operating procedures and outcomes. This may
not be as problematic as it may at first be assumed. This is because the UN
Framework has been widely accepted by MNCs and endorsed by many
governments; therefore its legitimacy as the applicable normative framework on
business and human rights issues is arguably already established.719 In addition,
the BHIO would provide MNCs with an independent, predictable, credible,
objective and cost effective fact-finding mechanism through which they can
respond to allegations of human rights abuses. It would provide MNCs with a
formal way of combating any such public criticisms by providing an international
forum where the MNC’s performance can be independently evaluated (and
vindicated). Therefore, it is hoped that MNCs would find it in their best interests
to accept the BHIO’s jurisdiction and have any human rights violation claim
brought against them be determined by an independent and impartial party.720
718 Ruggie Note 8, 2.
719 See, generally, http://www.business-humanrights.org/SpecialRepPortal/Home (Last visited on 2 August 2012).
720 It is worth noting similar international mechanisms, which also ask MNCs to accept their jurisdiction. See for example, the International Centre for Settlement of Investment Disputes (“ICSID”) which has thus far enjoyed considerable success. The ICSID was established in 1965 to
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In cases where a claim is brought against an MNC that refuses to participate in the
proceedings (and therefore fails to accept the BHIO’s jurisdiction), the BHIO may
still issue an ‘advisory opinion’ similar to that of international courts following an
in-depth investigation into the allegations of corporate human rights abuse.721 Of
course, the BHIO’s “ability to address such claims thoroughly and fairly would be
disadvantaged because they would not be guaranteed access to the project site,
records, or staff, and the [MNC] would not be as likely to listen to the
recommendations”.722 However, the BHIO findings are likely to be perceived by
the public at large as independent and impartial and would likely subject the MNC
to international criticism and pressure to make changes. For some, protection of
their brand image and reputation will serve as an important motivation factor to
accept the BHIO’s jurisdiction and proactively address the local community’s
human rights concerns through mediation processes.
To conclude, it bears repetition that as the UN Framework is not a legal
instrument, it would not per se be legally binding on MNCs who are involved in
complaint proceedings. However, once an MNC accepts the jurisdiction of the
BHIO in a dispute, it also accepts the UN Framework as the set of standards upon
which its behaviour will be judged.723
5.3.2.5 Access to the BHIO
Any individual, group or community whose human rights are likely to or have
been adversely affected by an MNC’s activities would be eligible to submit a
complaint to the BHIO. Representatives of those affected, including NGOs or
civil society groups may also file a complaint provided appropriate proof of such
offer conciliation and arbitration facilities to investors to resolve issues relating to whether their investment contracts have been breached. For more information, see, International Centre for Settlement of Investment Disputes Convention , Regulations and Rules ICSID/15 (2006). Available at www.icsid.worldbank.org/ (Last visited on 1 September 2012).
721 Bridgeman and Hunter Note 96, 227.
722 Ibid.
723 Details on the proposed functions of the BHIO shall be provided at 5.3.2.6 below.
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representation is presented. MNCs, on the other hand, would only be allowed
standing before the BHIO in two limited circumstances: first, to respond to claims
of human rights violations and, secondly to make claims against Host States who
are frustrating their efforts to comply with international human rights standards
by, for instance, conducting forcible evictions against local communities without
adequate compensation.724 In my view, allowing MNCs standing to address
claims of human rights violations from individuals and/or to lodge a complaint
against an abusive Host State would strengthen the legitimacy of the mechanism
among the business community. However, an MNC’s ability to obtain standing
before the BHIO would be conditional on whether it accepts the BHIO’s
jurisdiction and procedures. The Host State would in turn only be allowed
standing to respond to these allegations from MNCs.
A final point for consideration with respect to access to the proposed mechanism
is whether a claim can be lodged with the BHIO at the same time that the dispute
is under consideration by another mechanism, such as domestic courts of the Host
State. In my view, there is no theoretical or practical reason why filing a
complaint would preclude action via other mechanisms. The BHIO is effectively a
channel for alternative dispute resolution even where parties are involved in a
legal dispute elsewhere so long as both parties wish to explore this option. Put
simply, the BHIO mechanism is designed to enhance the victim’s right to
effective remedy, without undermining the role of judicial mechanisms as well as
other non-judicial structures.725
5.3.2.6 Proposed Core Functions: A Hybrid Model
Generally speaking, once a complaint has been lodged, the BHIO would evaluate
the complaint to get an initial understanding of the issues and (differing)
724 For instance, a State could engage in forced removals to pave the way for an extractive project. International law demands that any State appropriation of land must be accompanied by adequate compensation; otherwise it constitutes forced removals, which are essentially violations of the right to adequate housing. See for example, Vienna Declaration Note 185, para 30. See also, UN Commission on Human Rights Forced Evictions Resolution 1993/77 (10 March 1993) and UN Commission on Human Rights Prohibition of Forced Evictions Resolution 2004/28 (16 April 2004).
725 Sullivan and Hachez Note 600, 6.
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viewpoints. The complaint must relate to actual or potential violation of
international human rights principles by an MNC. Assuming that both parties
accept the BHIO’s jurisdiction over the matter, the BHIO would then offer the
parties the opportunity for mediation in order to reach a mutually-agreed solution
that will not only encourage practical solutions on the ground but also address
systemic human rights concerns in a way that is compatible with international
human rights norms. Failing that, the BHIO would conduct an automatic
investigation into the merits of the complaint followed by a public finding by the
BHIO of whether the MNC has breached international human rights standards,
based on the criteria laid out in the UN Framework.726 Before examining these
two functions in detail, it is necessary to clarify the underlying scheme.
At first glance, the sequencing of these procedures is counterintuitive - one would
expect that an investigation of the merits of a claim would first be initiated
followed by the option of mediation. However, research shows that this later
approach has been rejected and revised by leading accountability mechanisms,
such as the World Bank’s Compliance Advisor Ombudsman canvassed earlier,
due to a perception of bias by the Ombudsman when it came to conducting
mediation between the parties.727 Under the proposed model, however, the
perception of bias by the BHIO is arguably greatly reduced. It follows that once
the BHIO determines what process, whether mediation or investigation, might be
most useful to the parties, it would forward the matter to the relevant unit for
resolution as follows.
(a) Mediation
During this stage, the BHIO would have the distinct role of providing mediation
services to facilitate a resolution of differences between the MNC and the
aggrieved individuals. The mediation process could range from convening
informal consultation processes between individuals and local communities and 726 Rees Note 707, 24-26. The composition of the BHIO, for example whether it operates under a sole ombudsperson or a panel of experts in the field, need not considered at this point. In my view, procuring global support and commitment to developing the accountability mechanism of a BHIO (and its operating procedures) at this stage is more important than how its executive or secretariat should be constituted.
727 Rees Note 707, 25.
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the MNC to a more formal process.728 While the primary focus of the mediator
would be on promoting direct dialogue between the parties, this stage may require
the mediator to draw on his/her expert knowledge to help direct the parties
towards particular options he/she deems likely to achieve a settlement and ensure
that minimum human rights standards are upheld in the final resolution.729
From the outset however, the BHIO should be careful to manage parties’
expectations of the mediation process that it provides and the outcomes of mutual
agreement. Many aggrieved individuals and civil society groups would expect
adjudication on whether there has been a breach of human rights standards by an
MNC.730 However, the BHIO’s primary function during thus stage is to provide
an opportunity for parties to resolve human rights grievances through constructive
dialogue, not adjudication.731 Deva points out that “the approach of dialogue with
MNCs should not be taken as a sign of weakness, but only as an acknowledgment
of the fact that it is in the self-interest of MNCs to resolve human rights issues
through negotiation”.732
(b) Conducting Investigations
If at any time the mediation arm of the BHIO believes that the dialogue process is
not adequately addressing the dispute, the complaint can be automatically
transferred to the investigation team, which would be a separate unit altogether.
The BHIO would conduct its own independent investigations into the concerns
raised and determine whether the relevant MNC is violating its responsibility to
respect human rights as detailed in the UN Framework. The BHIO would have
broad investigatory powers, including meeting with affected individuals or
communities or their representatives, reviewing existing company files on the
issue, meeting with the Host State’s government officials, conduct site visits, hold
728 John F. Kennedy School of Government Report Note 714, 12.
729 This objective is similar to the conciliation proceedings under the ICSID Convention. See ICSID Convention Note 720, article 34 (1).
730 Rees Note 707, 24.
731 Ibid.
732 Deva Note 87, 42.
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public meetings in the affected areas, request any written submission from any
source including NGOs, and engage with expert consultants on certain technical
or other issues.733
During this stage, the BHIO will need to adopt a neutral and impartial stance: it is
neither the advocate for the complainant nor the representative of the MNC; its
objective is to determine the veracity of the human rights complaints that have
been lodged in the most effective and informal method possible. At the end of its
investigations, BHIO would make authoritative statements on whether there has
been a contravention of human rights standards as articulated in the UN
Framework and also public recommendations to the relevant stakeholders of how
the MNC should address these concerns.734
5.3.2.7 Remedies
Like other international accountability fora, the remedies available to the BHIO
will necessarily be limited primarily because it is not a governmental entity and
therefore does not have its own courts or other enforcement institutions to compel
MNC compliance with its decisions.735 However, unlike these other mechanisms,
the remedies of the BHIO can make a real difference on the ground in the
following critical ways. First, the BHIO can facilitate mediation solutions between
MNCs and aggrieved persons in a way that is mutually beneficial to both, a task
hitherto unaccomplished particularly at the broader international level. Mediation
would help to build trust on the part of the less powerful communities that the
process is a genuine one and that the MNC’s wish to reach settlement is
sincere.736 At the same time, it is beneficial in that it would enable an MNC’s
activities in a particular area to proceed without local hostility or opposition while
733 John F. Kennedy School of Government Report Note 714, 12.
734 Amnesty International Note 710, 3.
735 Hatchard Note 708, 296-297.
736 John F. Kennedy School of Government Report Note 714, 12.
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at the same times evidencing respect for the surrounding community’s human
rights.737
Secondly, upon completing its investigations into a complaint, the BHIO can
make public all the facts and conclusions following its fact finding mission. It can
also produce an authoritative finding with regard to an MNC’s alleged breach of
human right standards, as provided for in the UN Framework. This key
enforcement strategy by the BHIO - naming and shaming - is an effective
enforcement technique that can be both economically damaging and socially
embarrassing for MNCs who have violated international human rights standards
while conducting their business activities.738 However, unlike NGOs who have
often used this tactic, the BHIO findings are likely to be perceived by the public at
large as independent and impartial and would likely subject the MNC to
international criticism and pressure to make changes.739
A recent survey showed that “the protection or enhancement of an organisation’s
reputation and stronger customer loyalty” is one of the key reasons that
corporations today seek to evidence their support for human rights, for example
through implementing corporate codes of conduct.740 Hence, the rise of cyber-
shaming – the act of exposing a company’s human rights behaviour by posting
online the name of the entity and details of its human rights abuses – is steadily
gaining ground as an important enforcement tool.741 For some corporations,
protection of their brand image and reputation is an important motivation to
proactively address human rights concerns. Therefore, the BHIO should explore
possibilities of establishing a business and human rights ‘hall of shame’ on its
website as part of its enforcement strategy, thereby urging MNCs to address their
negative human rights impacts promptly and effectively.742 This paradigm is
737 Ibid.
738 Hatchard Note 708, 296-297.
739 Bridgeman and Hunter Note 96, 232.
740 McLeay Note 271, 222.
741 Ibid.
742 Deva Note 258, 112-113.
155
similar to judicial forums where companies are often motivated to settle cases out
of court rather than face a binding judgment. Similarly, MNCs would be
motivated to engage in mediation processes with aggrieved individuals and
communities rather than risk the results of a BHIO investigation going public.
Third, the BHIO would have the power to recommend remedies such as
compensation damages and positive actions towards compliance.743 Often, these
are the only remedies that would effectively ‘make right’ the victims, such as
those who have lost their livelihoods or source of food due to extensive pollution
of their local rivers by the extractive operations of an MNC. For example, the
BHIO could recommend positive actions that an MNC should undertake such as
environmental clean-ups within a particular timeframe.
5.3.2.8 Enforcement: The Recipe for Success
This section deals with how to ensure that the BHIO effectively enforces its
outcomes from the processes discussed above. It is contended that continued
leadership and involvement of the UN is an important element in creating a robust
international regime for MNC accountability. Besides its central role that resulted
in the adoption of the UN Framework, the UN also enjoys worldwide recognition
and support as a legitimate international human rights organization and is
therefore well positioned to implement and enforce MNC responsibilities.744
This thesis posits that the BHIO should be located within the UN Office of the
High Commissioner for Human Rights (“OHCHR”), which, similar to the SRSG,
reports directly to the UN Secretary-General.745 This would ensure that the
complex field of business and human rights remains a priority of the Secretary-
General.746 The OHCHR is empowered, through the UN system of Special
Procedures, to support a Working Group, which usually consists of an expert or a
group of experts in the relevant human rights field, to conduct investigations into 743 Bridgeman and Hunter Note 96, 232.
744 Kinley and Tadaki Note 119, 996-997.
745 Jacob Gelfand ‘The Lack of Enforcement in the United Nations Draft Norms: Benefit or Disadvantage?’ in De Schutter Note 42, 329. See also, Kinley and Tadaki Note 119, 997.
746 Human Rights Watch Note 531.
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allegations of human rights violations.747 Thus, for example, it would be possible
to convert the existing Working Group on the issue of human rights and business
enterprises to be the BHIO and make it responsible for administering human
rights complaints against MNCs.748
In my view, establishing the office of the BHIO in the form of a UN Working
Group or similar institution would be ideal because their task is “not only to study
a specific problem on a theoretic level, but also to examine individual cases of
alleged violations of human rights falling within their specific subject area and
responding to them”.749 Such a Working Group would have the “competence to
receive and assess information from all stakeholders - governments, NGOs,
affected groups, individuals, and corporations”.750 Amnesty International also
supports this proposal as “critical to take forward and build on both the [UN
Framework] ... [and] ... reflect[s] the need to build on the Guiding Principles in
order to effectively move forward”.751
747 A UN Special Procedure is the general name given to the mechanism established by the UN Human Rights Council to address either specific country situations or thematic issues in all parts of the world. The OHCHR, in turn, usually provides these mechanisms with “personnel, policy, research and logistical support for the discharge of their mandates”. See http://www.ohchr.org/EN/HRBodies/SP/Pages/Welcomepage.aspx (Last visited 30 June 2012).
748 This suggestion stems from criticisms from human rights groups that the current Working Group does not have explicit authority to receive communications from victims of corporate human rights abuses, or to evaluate gaps in legal protection with a view toward preparing a foundation for a legally binding instrument. See, Joint Civil Society Statement ‘Advancing the Global Business and Human Rights Agenda: Follow-up to the Work of the Special Representative of the Secretary-General (SRSG) on Human Rights and Transnational Corporations and Other Business Enterprises’ (International Federation of Human Rights, 2011). Available at http://www.fidh.org/IMG/pdf/Joint-civil-society-statement-on-business-and-human-rights-May-2011.pdf. (Last visited on 6 June 2012). The Working Group whose mandate is currently limited to run until 2014 consists of five independent experts, of balanced geographical representation. See, http://www.ohchr.org/EN/Issues/Business/Pages/WGHRandtransnationalcorporationsandotherbusiness.aspx (Last visited on17 July 2012).
749 Beaute Radolf ‘The Thematic Rapporteurs and Working Groups of the United Nations Commission on Human Rights’ in J.A. Frowein and R. Wolfrum (eds) Max Planck Yearbook of United Nations Law (Kluwer International, 2000) 290. See also, United Nations Office of the High Commissioner Directory of Special Procedures Mandate Holders HRC/NONE/2012/60 (April-June 2012).
750 Kinley and Tadaki Note 119, 999.
751 Amnesty International Note 710, 1.
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One foreseeable problem with this proposal is that its effectiveness, particularly
with regard to its fact finding mission, is significantly dependent upon State
cooperation.752 That is, its investigations ‘on the ground’ may only occur with the
consent of the State where the human rights violations have allegedly occurred.753
However, as of 31 December 2011, 90 countries have issued standing invitations
to the Special Procedures of the OHCHR to investigate human rights issues.754
This would therefore enable the BHIO to initiate a fact-finding mission on alleged
MNC human rights violations to any one of those countries at any time for
whatever reasons. For all other countries however, the BHIO would first have
obtain approval before dispatching its experts to the country.755
That said, UN involvement is but one part of the wider array of actions that must
fall into place to strengthen the enforcement mechanism of the BHIO. As
previously discussed, one major reason for the lack of an effective international
regime of corporate accountability is the structural lacuna created by the ad hoc
approach adopted by global institutions. In other words, there is no sharing of
enforcement responsibilities between international human rights institutions and
financial or trade institutions, despite all being key players in the global
economy.756 Several authors have applauded the use of such organizations,
working together with the UN, as key to enforcing MNC human rights
responsibilities.757
752 Mares Note 4, 15.
753 Jessica Woodroffe ‘Regulating Multinational Corporations in a World of Nation States’ in Addo Note 138, 136.
754 Office of the United Nations High Commissioner for Human Rights United Nations Special Procedures Facts and Figures 2011, 13. Available at http://www.ohchr.org/Documents/HRBodies/SP/Facts_Figures2011.pdf (Last visited on 24 August 2012).
755 Human Rights Education Associates ‘The United Nations Human Rights System’. Available at http://www.hrea.org/index.php?doc_id=437 (Last visited on 18 March 2012).
756 Deva Note 87, 32.
757 For example, Kinley and Tadaki Note 119, 996-998; Christopher Wall ‘Human Rights and Economic Sanctions: The New Imperialism’ (1988) 22 Fordham International Law Journal 577 and Sigrun I. Skolgy The Human Rights Obligations of the World Bank and the International Monetary Fund (Cavendish, 2001).
158
Therefore, this thesis contends that the BHIO, operating under the auspices of the
OHCHR, also serve as ‘an accountability clearing-house’ for other institutions
which purport to regulate the relationship between business and human rights.
This can be accomplished in several ways. First, other international institutions
that have human rights and business normative frameworks or policies but that
lack corresponding mechanisms to ensure compliance to their standards could
include new provisions in their normative frameworks or enabling resolutions
requiring MNCs to accept the BHIO’s jurisdiction for human rights related
complaints.758 This would enable such organisations to benefit from having access
to an independent fact-finder that would give credibility to their goals to ensure
companies comply with international human rights norms.759 Secondly,
organizations that already have complaint mechanisms could use the BHIO as a
resource for assisting in carrying out investigations and/or facilitating mediations
between the MNC and the aggrieved individuals. For example, NCPs, which are
charged with responding to complaints regarding OECD Guidelines, could retain
their mediation function but delegate factual investigation to the BHIO, should
such mediations fail.760
Thirdly, where appropriate, companies may demand, through incorporation of
contractual provisions in undertakings with Host States such as bilateral trade
agreements, that Host States comply with the UN Framework, for example by
ensuring that government personnel and security forces are adequately trained to
respect the rights of the local communities during the MNC’s operations.761 Such
a clause would provide considerable strength to an MNC’s position when faced
with allegations of human rights abuses by victims in a Host State that is non-
compliant with its duty to protect human rights.762 By the same token, where there
is credible evidence of unlawful or abusive behaviour by the MNC, the State in 758 Bridgeman and Hunter Note 96, 223.
759 Ibid.
760 Ibid.
761 Muchlinski Note 611, 700-701. See also, Voluntary Principles Note 285, 6-7, which encourages companies to consider including such clauses in contractual agreements with the Host States in which they operate.
762 Muchlinski Note 611, 703.
159
question may insist upon participation of the BHIO through its mediation or
investigation services.763 For example, the South African Regulation of Foreign
Military Act states that government approval of any agreement to offer private
military services may not be granted if it would “result in the infringement of the
human rights and fundamental freedoms in the territory in which the foreign
military assistance is to be rendered”.764 Clapham notes that this statute is less
about accountability after the fact and more about seeking to force a consideration
of the human rights implications of the business during the negotiation process.765
However, it is submitted that upon a corporate infringement, the South African
government can insist that the BHIO play a central - and impartial - role in
investigating the claims of human rights violations. In all, the BHIO would
enhance a more stakeholder-oriented approach to addressing corporate human
rights violations at the international level.
Fourthly, where there is a BHIO finding of non-compliance by an MNC,
enforcement of the BHIO’s recommended corrective actions could take place
through conditions built into project finance contracts that have been concluded
with other international organisations.766 For example, with the completion of its
revision of Performance Standards in January 2012, the IFC committed itself to
the UN Framework and assured that corporations will in the future be forced to
address adverse impacts their activities have on human rights.767 Therefore if a
financing agreement between the IFC and an MNC includes a provision requiring
that the MNC complies with all findings and recommendations of the BHIO, and
the BHIO determines that the MNC has violated human rights as per the
principles in the UN Framework, the IFC would have enforcement duties under
the contractual agreement. This would represent an appropriate translation of
human rights standards into the business sector as human rights principles “shall
763 Ibid.
764 Regulation of Foreign Military Act 1998 (South Africa), section 7(1) (b); cited in Clapham Note 13, 306-307.
765 Clapham Note 13, 307-308.
766 Kinley Note 140, 33.
767 IFC Performance Standard Note 318, para 12.
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be included in contracts in a manner that would render them legally
enforceable”.768 Moreover, recently, there have been questions on whether there is
sufficient independence and impartiality within the CAO, given that it is located
within the IFC and as such as arguably pre-disposed towards protecting financial
interests rather than human rights.769 It is submitted that involving the proposed
BHIO as per the recommendations above is a sensible measure in addressing these
concerns, at least in part.
It is bears emphasis that the UN Framework is the single most comprehensive
normative initiative to date in the field of business and human rights and as such
provides us an opportunity for collaboration which has no parallel. Therefore, all
accountability mechanisms are urged to make a greater effort to identify an
acceptable modus operandi through which they could collectively and effectively
implement the UN Framework and advance business respect for human rights. To
this end, it is hoped that the proposed office of a BHIO would eventually
harmonize other accountability mechanisms and together achieve greater MNC
accountability for transnational violations of human rights.
5.3.2.9 Funding
It is contended that any BHIO process must be free of charge for those bringing
complaints in order to ensure that the mechanism is accessible to those who need
it the most: victims of MNC transnational human rights violations. Therefore the
BHIO would need independent financial resources to ensure that it can effectively
conduct its core operations. For instance, it will need to fund its fact-finding
investigations, which may possibly involve hiring environmental experts or
technical consultants.770 However, if the BHIO were indeed to address all human
rights concerns in relation to all corporations, the number of complaints would
undoubtedly be enormous. Even if it just covered the operations of MNCs, whose
number is now well over 80,000 with thousands more subsidiaries, the scope for
768 Clapham Note 13, 309.
769 Bretton Woods Project ‘The World Bank and Extractives: a Rich Seam of Controversy’. Available at http://www.brettonwoodsproject.org/art-569560 (Last visited on 30 July 2012).
770 Bridgeman and Hunter Note 96, 231.
161
complaints would remain overwhelming and the related financial costs of running
the mechanism would still be quite high.771
One could argue that given the fact that the BHIO would chiefly operate under the
auspices of the OHCHR, then perhaps the OHCHR itself should provide the
funding to run the mechanism. However, as Kinley and Tadaki pointed out, such
an ambitious agenda would only add to the “demands on the already stretched
resources and the overburdened agenda of the [OHCHR] specifically, and the UN
generally”.772 Alternatively, Bridgeman and Hunter suggest that the key to
funding an accountability mechanism is the understanding that by providing a
credible and independent fact-mediation and/or fact finder service, the
accountability mechanism is essentially providing a service to the MNCs in
question.773 Thus, in addition to obtaining general funding from the UN, the
BHIO could also be supported by fees paid by MNCs whose projects are being
investigated.774 It is submitted that “sharing the overhead costs across a wide
cross-section of industry while bearing only the costs of specific investigations is
a cost-effective response” to the funding dilemma.775 In order to allay fears of
bias, NGOs should also be permitted to participate in the funding of the
mechanism, perhaps through submission of annual fees. NGO involvement in the
funding processes will increase the BHIO’s credibility and provide incentives for
MNCs to join the Mechanism.776
The critical point with respect to both MNC and NGO financial contributions is to
ensure that they are upfront and free of debate over individual controversial 771 Rees Note 707, 36. This is a real hurdle as evidenced by an earlier attempt to create an Ombudsperson for environmental disputes. The 1992 UN Conference on Environment and Development (also known as the Earth Summit) sought to create an international ombuds function for the environment and development. The Earth Council Institute decided to assume that function and created the Ombudsman Center for Environment and Development, which was to be formally launched in 2000. However, there is no evidence that the Ombuds function ever became operative, apparently due to a lack of funding.
772 Kinley and Tadaki Note 119, 998.
773 Bridgeman and Hunter Note 96, 231.
774 Ibid.
775 Bridgeman and Hunter Note 96, 232.
776 Bridgeman and Hunter Note 96, 229.
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projects. Advance agreement in this regard would not only provide credibility to
the process but would also squelch accusations of ‘undue influence’ in and around
the outcomes.777
5.3.3 Perceived Benefits of Adopting the Proposed Mechanism
5.3.3.1 Victims’ Perspectives
One of the primary benefits of the new BHIO will be to provide victims of MNC
human rights violations with an independent avenue to present their complaints
without fear of reprisal from either the MNC or the Host State.778 If located under
the auspices of the UN, it would also help foster the perception among victims
that the protection of human rights is the paramount consideration of the
mechanism. In addition, similar to domestic judicial systems, it is expected that
the mechanism will help motivate companies to engage in mediation and find
mutually compatible solutions rather than submit to a binding investigative
process.779 The mediation process would help foster a general element of trust
among the complainants and the MNCs as well as any government agencies and
NGOs involved in monitoring their activities. Moreover, the BHIO is likely to
greatly reduce some of the more common challenges that victims face in other
accountability mechanisms; for example barriers relating to membership,
financing or limited applicable standards.780
5.3.2.2 MNC Perspective
The proposed accountability mechanism also offers several advantages to MNCs.
To begin with, the mechanism would provide MNCs with a “credible, predictable,
objective and cost effective fact-finding mechanism” through which they can
respond to allegations or concerns of human rights abuses.781 This is particularly
777 Ibid.
778 Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Addendum A/HRC/17/31/Add.1 (2011) 6.
779 Bridgeman and Hunter Note 96, 191.
780 Rees Note 707, 35.
781 Bridgeman and Hunter Note 96, 192.
163
important to MNCs given the extensive global reach that many NGOs have and
their potential to organize international campaigns that could portray a particular
MNC in a negative light.782 The investigative arm of the BHIO would therefore
provide MNCs with a formal way of combating any such public criticisms by
providing an international forum where the MNC’s performance can be
independently evaluated (and vindicated).783 Thus the risk of frivolous claims that
could cause unwarranted publicity would be greatly reduced as NGOs would now
be forced to prove allegations of MNC misconduct before an objective body.
Bridgeman and Hunter add that “where allegations are found to be true, the
[MNC] can act proactively to address the situation; where the allegations are
determined to be false, a credible fact-finder’s report will effectively prevent the
allegations from gaining further momentum in the international community”.784
In addition, it is submitted that the mechanism would help create and entrench an
epistemic community785 on the issue of business respect for human rights, from
which MNCs could draw knowledge from and establish best practices in certain
areas, for example on issues around involuntary settlement, adverse
environmental impact or respect for the rights of indigenous people.786 The
existence of such an epistemic community would help create a body of
jurisprudence that would promote a consistency in the interpretation of the human
rights responsibilities of MNCs across and within industry sectors.787
Furthermore, the BHIO would help “protect the interests of MNCs by reducing
the risks of multiple proceedings and unpredictable outcomes that exist under the 782 The worldwide dissemination of the 2012 Kony video is a prime example of how an NGO can amass rapid global support for a project. As of 28 March 2012, 85 million people had viewed what was only a 3-week old video. See http://www.youtube.com/watch?v=Y4MnpzG5Sqc (Last visited on 20 March 2012).
783 Bridgeman and Hunter Note 96, 192.
784 Bridgeman and Hunter Note 96, 220.
785 Defined as a “network of professionals with recognized expertise and competence in a particular domain and an authoritative claim to policy-relevant knowledge within that domain or issue-area”. See Peter Haas ‘Introduction: Epistemic Communities and International Policy Coordination’ (1992) 46 International Organization Journal 1, 3.
786 Woodroffe Note 753, 136.
787 European Ombudsman Note 703.
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current regimes of accountability”.788 Bridgeman and Hunter assert that if the
BHIO “functions in parallel to existing mechanisms, either during transition or
permanently, the [BHIO] could cite to the reports of other mechanisms in their
interpretation of standards and norms such that a body of jurisprudence could
develop among the institutions. This would increase the predictability of results,
lower risk to [MNCs], and likely improve the overall quality of the interpretation
of standards and norms”.789 Finally, the BHIO would be a cost-effective response
to many MNCs inundated with claims of human rights violations because the
costs could be spread across a wide range of MNCs and other institutions.790
5.3.3.3 Government Perspective
It is submitted that the proposed mechanism would especially assist under-
resourced Host States who are willing, but are unable, to protect and promote their
people’s human rights by providing them with an additional avenue of redress
(particularly given the possibility that parent MNCs will escape the jurisdiction of
local courts).791 Also, the mechanism could put Host States in a stronger
bargaining position regarding their expectations of MNCs to respect human rights
by citing the UN Framework. Finally, it is likely that the impartiality of the new
mechanism would promote international cooperation among States to promote
human rights as it would take into account legitimate cultural and economic
differences between industrialised and developing countries.792
5.3.4 Possible Limitations to the Successful Implementation of the BHIO
The process of successfully creating and implementing the proposed BHIO
accountability mechanism will likely face a number of challenges. The discussion
in this section is intended to highlight the most prominent of these issues.
788 Deva Note 668, 46,
789 Bridgeman and Hunter Note 96, 234.
790 Bridgeman and Hunter Note 96, 193.
791 Bridgeman and Hunter Note 96, 233-4.
792 Sarah Joseph, ‘An Overview of Human Rights Accountability of Multinational Enterprises’ in Kamminga and Zia-Zafiri Note 120, 88.
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5.3.4.1 Political barriers
It is submitted that in order to ensure its success, the BHIO accountability
initiative would need to be championed politically at the highest level: State
governments. There may be a lot of pushback from States who may feel that their
economic interests are threatened by the existence of a binding regulatory body
implementing the UN Framework. For example, some MNCs, wrongly perceiving
the proposed mechanism to be a tool trying to impose binding human rights
standards on MNCs, may lobby their governments (the vast majority of which are
developed countries), to derail the creation of the BHIO.793 This willingness of
Home States to support the economic interests of their corporate nationals, even at
the cost of human rights protections of citizens abroad, cannot be underestimated
and is, indeed, well documented.794
On the other hand, Host States could perceive the proposed accountability
mechanism as an interference with their quest for economic development through
foreign direct investments by MNCs.795 A developing country could argue, for
example, that low environmental standards are necessary to secure their
participation in the global market.796 This eagerness to secure foreign direct
investment may make them vulnerable to the lobbying efforts of MNCs to adopt
policies that are favourable to their business operations (even at the expense of
securing human rights for their people).797
793 Deva Note 87, 34.
794 See, for example, UK Foreign and Commonwealth ‘Strategic International Policy Priorities for the UK’ in UK International Priorities: A Strategy for the FCO ((UK Foreign and Commonwealth Office, 2003), section 4. Available at http://www.fco.gov.uk/Files/k¢le/FCOStrategyFullFinal,0.pdf (Last visited on 5 May 2011). Similar statements have been made by the Australian government at http://www.dfat.gov.au/ani/foreword.html (Last visited on 5 September 2011).
795 Penovic Note 281.
796 Ibid.
797 Ibid.
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5.3.4.2 Financial barriers
A lack of sufficient resources is also capable of undermining the effective
implementation of the proposed accountability mechanism. The BHIO’s financial
needs would certainly add to the demands on the already stretched resources of
the UN. Outside the UN, absent an extremely generous benefactor, the mechanism
would likely require continual fundraising.798 Moreover, allowing MNCs to
become major funders of the BHIO, particularly on a case-by-case basis, would
raise potential conflicts of interest and perceptions of bias surrounding the
mechanism.
5.3.4.3 Contractual barriers
It is submitted that foreign investment contracts between Host States and MNCs
could pose a significant barrier to the effectiveness of the BHIO due to so-called
‘stabilisation clauses’.799 Stabilisation clauses are essentially contractual
undertakings by Host governments intended to address the need by MNCs for
stability when investing in or funding long-term projects by eliminating arbitrary
changes in law and regulation.800 However, stabilisation clauses often have a
deterrent effect on enhancing human rights standards in a Host State as MNCs
would cite the inclusion of such clauses as exempting their projects from
compliance with ‘new’ standards, including those promoting human rights. This is
an issue that could deter some Host States from supporting the processes of the
BHIO as research shows that some companies have willingly taken Host States to
arbitration over the payment of compensation that has impacted on their
798 Rees Note 707, 36.
799 Note, ‘Stabilisation Clauses and Human Rights’ (A Research Project Conducted for IFC and the United Nations Special Representative to the Secretary General on Business and Human Rights, 2009). Available at http://www1.ifc.org/wps/wcm/connect/9feb5b00488555eab8c4fa6a6515bb18/Stabilization%2BPaper.pdf?MOD=AJPERES&CACHEID=9feb5b00488555eab8c4fa6a6515bb18 (Last visited on 1 September 2012).
800 See for example the Host Agreement Between and Among the Government of the Azerbaijan Republic and the State Oil Company of the Azerbaijan Republic, BP Exploration (Caspian Sea) Ltd., Statoil BTC Caspian as Ramco Hazar Energy Limited, Turkiye Petrolleri A.O., Unocal BTC Pipeline, Ltd., Itochu Oil Exploration (Azerbaijan) Inc., Delta Hess (BTC) Limited, 7.2(x) (2000) Available at http://human-rights.unglobalcompact.org/dilemmas/stabilisation-clauses/ (Last visited on 16 March 2012).
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commercial interests – including for State action aimed at protecting and
enhancing the human rights of the general public interest.801
5.3.4.4 Institutional capacity barriers
The BHIO may experience severe capacity constraints in terms of experts in the
business and human rights field to properly gather information on the ground and
adequately assess an MNC’s performance against the UN Framework.
Furthermore, the BHIO may not have sufficient staff to handle complaints in the
quantities that are reasonably expected. This could lead to the BHIO becoming
swamped and experiencing backlogs of complaints, which may lead to frustration
and disillusionment among its users.
5.3.4.5 Jurisdictional barriers
Under the proposed new mechanism, an MNC will first have to accept the
jurisdiction of the BHIO in order to utilize its mediation or investigative
processes. This would affect the objectivity of the BHIO in situations where an
MNC refuses to accept its jurisdiction as it will be forced to make public one-
sided investigation outcomes. Even where a company accepts the BHIO’s
jurisdiction, a different set of issues may arise from efforts by the BHIO to hold
an MNC, as a corporate group, responsible for human rights violations. Presently,
an MNC “is not a legal entity, but a group of legal persons subject to the national
law of the countries in which they operate”.802 Despite my adoption of the
integrated enterprise approach at the beginning of the thesis, which enables us to
attach liability to not only the subsidiary but more importantly the parent
company, the fact still remains that an MNC is scarcely recognized under
international law and the separate legal personalities of entities comprising the
801 UN Global Compact ‘Dilemmas: Stabilisation Clauses’. Available at http://human-rights.unglobalcompact.org/dilemmas/stabilisation-clauses/ (Last visited on 16 March 2012).
802 L. Dubin ‘The Direct Application of Human Rights Standards to, and by, Transnational Corporations’ (1999) 61 The Review of the International Commission of Jurists 35, 38.
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MNC will likely present a formidable obstacle to the BHIO’s jurisdiction as
follows.803
According to international law, a subsidiary is a separate legal entity that is
distinct from its parent corporation and each is subject to the exclusive jurisdiction
of its respective State of incorporation.804 Therefore, each company within a
corporate group is regarded as an individual legal entity, regardless of its
relationship with other companies within the group.805 This allows an MNC to
spread the risk, both financial and legal, of its operations by forming individual
companies interconnected by complex arrangements such as cross-shareholdings,
common directorships and holding-subsidiary relationships, among others.806
On its face, there seems to be nothing objectionable about a business structure that
seeks to isolate financial or legal liability of related entities.807 However, as
Bottomley asserts “corporate abuses of human rights are able to occur not in spite
of the law but because of the law”.808 In most cases, the entity operating in a Host
State where the human rights abuses have occurred is a national of the Host State
and a subsidiary of a parent entity, which is a national of another State
altogether.809 While the enterprise approach would provide the BHIO with some
flexibility in overcoming the strict nationality boundaries imposed by corporate
803 The integrated enterprise approach is based on the presumption that a parent corporation exercises adequate control over the acts of the subsidiary and justifies piercing the corporate veil to attribute the harmful acts of the subsidiary to the parent corporation. Bloomberg Note 35, 298.
804 Case Concerning the Barcelona Traction, Light and Power Co Ltd (Second Phase) (Belgium v Spain) [1970] ICJ Reports 3, 42. See also, F A Mann ‘The Doctrine of International Jurisdiction Revisited After Twenty Years’ Collected Courses of the Hague Academy of International Law (Martinus Nijhoff, 1985), 56.
805 In common law jurisdictions, the usual authority for this principle is the decision in the House of Lords in Salomon v Salomon & Co [1897] AC 22. In Australia for example, this principle was affirmed in Wimborne v Brien (1997) 15 ACLC 793, 797, where Dunford AJA asserted that “there is no such thing as a “group” and each company must be treated as a separate entity”.
806 Richard Meeran ‘The Unveiling of Transnational Corporations: A Direct Approach’ in Addo Note 138, 162.
807 Lucien J. Dhooge ‘A Modest Proposal to Amend the Alien Tort Statute to Provide Guidance to Transnational Corporations’ (2007) 13 U.C. Davis Journal of International Law and Policy 119, 135.
808 Stephen Bottomley ‘Corporations and Human Rights’ in Bottomley and Kinley Note 109, 55.
809 See case studies discussed in Chapter 1.
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law, the general position remains that the parent cannot as a rule be held
accountable for the acts of its subsidiaries.810 From a human rights accountability
perspective, this means that the doctrine of separate legal personality could
impede the effectiveness of the BHIO’s responses to corporate-related human
rights abuses as it is unlikely that the parent corporation (or the corporate group),
will accept the BHIO’s jurisdiction. Only the subsidiary that has allegedly
violated human rights through its operations will likely do so.811 However, it
should be borne in mind that in light of the remedies offered by the BHIO –
mediation and investigative processes – this is unlikely to have a huge impact on
the remedy that victims eventually receive.
To sum up, these practical and conceptual challenges should not discourage us
from implementing the office of a BHIO to enforce corporate human rights
responsibilities, as articulated in the UN Framework, at the international level.
Deva reminds us that “no innovative mechanism ever got off the ground by
focusing on all the challenges in its path”.812 Therefore, my analysis of the
challenges highlighted above should not be taken as suggesting that the new
BHIO accountability mechanism will be impossible to achieve, but rather to spark
discussion and encourage debate on choices and compromises that will have to be
made to ensure its success as an effective accountability mechanism.
5.3.4 Conclusions and Recommended Next Steps
The foregoing discussion illustrates that it is indeed possible for the proposed new
accountability mechanism of a BHIO to play a constructive role at the
international realm in ensuring that international human rights norms are properly
observed by MNCs (and consequently, that individual human rights are
safeguarded against MNC abuses or that victims can obtain effective remedy upon
violations). One of the most immediate tasks would be to bring together a broad
group of stakeholders, including the UN, MNCs, governments and human rights
810 Mann Note 804, 63.
811 Bottomley Note 808, 55.
812 Rees Note 707, 37.
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groups, in order to sensitize them on the mission, procedures and enforcement
measures of the proposed BHIO. It is worth emphasizing that the successful
implementation of the BHIO would need a high level of commitment from
governments and businesses alike, and would need significant resources (both
human and financial) to ensure that it gets off the ground - and soon.
5.4. PROPOSAL NO. 2: HOME STATE EXTRATERRITORIAL
REGULATION
In this section, I shall argue that Home States, through the tool of extraterritorial
regulation, could and should play a key role to improve the human rights
accountability of MNCs.813 The hypothesis is that where the extraterritorial
activities of an MNC violate international human rights principles, and a Host
State is unable or unwilling to prevent or redress MNC human rights violations, it
is left to the Home State to effectively regulate the MNC’s conduct and ensure
that its corporate nationals are held to account for their human rights abuses
overseas.814 Hence, in the current absence of specific international obligations for
MNCs to respect human rights, it is contended that the buck must stop with the
Home State as it has both the capacity to compel MNCs to respect human rights
and the power to impose sanctions on those that refuse to comply.
As we saw in the previous chapter, the UN Framework has propelled dialogue on
the human rights accountability of MNCs to the forefront of the global debate. In
my view, the principles articulated in UN Framework regarding the ‘State duty to
protect human rights’ can provide a foundation for developing a regime of Home
State extraterritorial regulation in the business and human rights area. Briefly, the 813 A range of scholarly articles already exist that explore in detail various issues regarding extraterritorial regulation such as the extent to which Home States have international human rights obligations to regulate the extraterritorial activities of MNCs (Ratner Note 37 and McCorquodale and Simons Note 111); how the regime of extraterritorial regulation may be developed at the international level (De Schutter Note 39); the possibility of developing extraterritorial legislation at the domestic level to address the problem of MNC accountability (Deva Note 87 and Deva Note 668); and also how domestic regimes may revise their internal legal mechanisms to accommodate extraterritorial regulation of MNCs (Seck Note 37 and Anthony Bernard ‘Holding Corporations Liable in the United States for Aiding and Abetting Human Rights Violations Abroad: A Statutory Solution’ (2009-10) 78 George Washington Law Review 615).
814 De Schutter Note 39. 1.
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State duty to protect encompasses an obligation to protect against human rights
violations by third parties, including businesses, through appropriate policies,
regulations, and adjudication.815 Following the endorsement by the HRC of the
UN Framework, several developed States, such as Canada, Norway and the
United States have began to actively encourage their corporate nationals to adopt
and abide by its standards.816
The key challenge presently facing the international community is how to move
Home States beyond mere rhetoric, however well-meaning, towards designing
and implementing a legal regime that governs MNC extraterritorial activities,
which impact negatively upon human rights abroad. My arguments in favour of
legal responsibility for MNC human rights abuses should be considered in light of
the integrated theory of international and legal responsibility posited earlier and
shall proceed in the following three steps.817 The first part will begin by briefly
examining the regime of extraterritorial regulation under international human
rights law in order to determine the existence of specific obligations for Home
States to exercise extraterritorial regulation on MNCs to respect human rights
abroad. Finding that modern developments in international law arguably provide
for such obligations, the second part will focus directly on the adoption of an
international instrument by States, which is aimed at clarifying such emerging
obligations of Home States to protect human rights against MNC violations. This
part shall also look at some of the practical implications and adjustments Home
States will have to make, on an individual basis, to play a useful role in remedying
transnational MNC human rights violations. The third and final part shall
acknowledge and discuss some key difficulties posed by the tool of Home State
extraterritorial regulation. The discussion herein is simply meant to highlight
815 2008 Framework Note 429, para 18.
816 John H Knox ‘The Human Rights Council Endorses “Guiding Principles” for Corporations’ (2011) 15 American Society of International Law. Available at http://www.asil.org/insights110801.cfm (Last visited on 25 April 2012).
817 The theory envisions an integration of different modes of implementation for corporate human rights responsibilities including an international element that seeks to harnesses the apparent willingness by MNCs to respect human rights using guidance from the UN Framework and a legal element that asserts the need for binding obligations and enforcement mechanisms at the domestic level to ensure corporate accountability for human rights violations.
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certain issues that would need to be addressed in order to ensure that the
implementation of the tool is successful.
5.4.1 A Primer on Extraterritorial Regulation and International Human
Rights Law
Under international human rights law, States are required to “take all necessary
steps to protect against [human rights] abuse, including to prevent, investigate,
and punish the abuse, and to provide access to redress”.818 However, the critical
issue that remains unsettled is whether the State duty to protect human rights
extends extraterritorially. In other words, in a situation where a Host State is
unable or unwilling to comply with its duty to protect against corporate human
rights violations, does the Home State have a legal obligation to protect against
these abuses? In this section, I will consider whether such an obligation presently
exists in international human rights law, and whether, even in the absence of an
explicit obligation, a Home State may still exercise extraterritorial regulation (and
if so, under what circumstances).
5.4.1.1 Basis for Extraterritorial Regulation
Generally, international human rights law allows jurisdiction to be used as a basis
for conferring extraterritorial human rights obligations on a State. Article 2(1) of
the ICCPR provides that:
Each State Party to the present Covenant undertakes to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant.819
The distinguishing factor between a State’s territory and its jurisdiction is that
with respect to the latter, a State can exercise its legislative or judicial authority to
go beyond its territorial borders to include acts that are undertaken in another
State’s territory.820 The term ‘extraterritorial regulation’ is usually associated with
this jurisdictional concept and is taken to refer to the capacity of a State to
818 2008 Framework Note 429, para 18.
819 Emphasis added.
820 McCorquodale and Simons Note 111, 620-1.
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regulate the “conduct of persons, acts or property outside of its national
territory”.821
Commentary by some human rights treaty bodies confirms that a State’s human
rights obligations can indeed extend beyond its territorial borders if jurisdiction
can be established. For example, in its General Comment 14, the ESCR
Committee asserted:
To comply with their international obligations in relation to article 12 [of ICESCR], States parties have to respect the enjoyment of the right to health in other countries, and to prevent third parties from violating the right in other countries, if they are able to influence these third parties by way of legal or political means, in accordance with the Charter of the United Nations and applicable international law. Depending on the availability of resources, States should facilitate access to essential health facilities, goods and services in other countries, wherever possible and provide the necessary aid when required.822
The question that now arises is on what jurisdictional basis such potential
extraterritorial human rights obligations could be imposed on States. The principle
of nationality in international human rights law is a well accepted base of
conferring extraterritorial jurisdiction on States.823 In essence, the nationality
principle allows a State to enact binding legislation that will apply to its nationals,
whether natural or legal, as regards their conduct abroad.824 Thus, Home States
may, in part, rely on the principle of nationality to regulate extraterritorially in
order to require their corporate nationals to respect human rights throughout their
global operations.825
821 De Schutter Note 39, 8.
822 UN Committee on Economic, Social and Cultural Rights, General Comment No. 14 The Right to the Highest Attainable Standard of Health, UN Doc No E/C12/2000/4 (2000) para 39.
823 Extraterritorial jurisdiction is also permissible when the relevant activity has a significant impact on the territory of a State and when the activity is so egregious that it warrants universal condemnation and may be prosecuted by any State. See Broecker Note 408, 179.
824 De Schutter Note 39, 23. That is, the State where the parent company is incorporated is considered to have the ‘nationality’ of that State and may seek to regulate the behaviour of the MNC, which the parent controls.
825 Sarah Joseph and Adam McBeth ‘Submission to the Secretary General's Special Representative on Business and Human Rights on Proposed Guiding Principles for Business and Human Rights’ (Castan Centre for Human Rights Law, Monash University). Available at
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The query in establishing whether States have the capacity to regulate
extraterritorially does not simply end with determining a jurisdictional basis. As
Ruggie points out, in addition to establishing a recognized jurisdictional basis,
“the actions of the Home State [must] meet an overall reasonableness test, which
includes non-intervention in the internal affairs of other States”.826 The main issue
of contention here is a legitimate concern that any such interventions, however
laudable, could undermine a Host State’s sovereignty in determining its
investment and economic policies.827 To address this concern, De Schutter asserts
that a State’s extraterritorial regulation shall meet the reasonableness test where it
aims towards “protecting internationally recognized human rights, which all
States are in principle bound to comply with, and which it is in the interest of all
States ... to seek to ensure compliance with”.828 Agreeing with this view, Penovic
states that reasonableness will be established whereby the actors targeted by a
Home State’s extraterritorial regulation are its corporate nationals, not the Host
State.829 Therefore, in my view, if the primary objective is to protect against
violations of international human rights by a State’s corporate national, regardless
of the geographic locale of such abuse, then such extraterritorial regulation by a
Home State should withstand rational analysis.
5.4.1.2 State Extraterritorial Obligations and MNC Human Rights
Violations
The inquiry in this section moves from whether a Home State may
extraterritorially regulate its corporate nationals to whether international human
rights law requires it to do so.
http://www.law.monash.edu.au/castancentre/publications/cc-submission-business-human-rights-principles.pdf (Last visited 21 September 2012). See also, Muchlinski Note 27, 126.
826 2008 Framework Note 429, para 19.
827 Article 2(7) of the UN Charter provides that “nothing contained in this Charter shall authorize the [UN] to intervene in matters which are essentially within the domestic jurisdiction of any State”. However, as discussed elsewhere in the thesis, foreign direct investment has rendered Host States vulnerable to lobbying by MNCs to shape their policies so as to create favourable operating conditions for MNCs.
828 De Schutter Note 39, 29.
829 Penovic Note 281.
175
Under general principles of international law, States have an obligation to
extraterritorially regulate the activities of actors “within the power, effective
control or authority of that State, as well as within an area over which that State
exercises effective control”.830 That is, States will incur only extraterritorial
responsibility for the acts of organs that are in effect “acting under the instructions
of, or under the direction or control of, that State in carrying out the conduct”.831
Hence, notable authors such as De Schutter and McCorquodale have argued that
except as mentioned in these limited circumstances, there is no general obligation
on Home States to extraterritorially regulate MNC activities to ensure that they
comply with international human rights principles.832 It is worth noting that
Ruggie also examined this issue during his mandate and concluded, much to the
consternation of NGOs, that “States are not generally required under international
human rights law to regulate the extraterritorial activities of businesses”.833
However, in direct contrast to this viewpoint stand various provisions of
international human rights instruments and their interpretation by treaty bodies,
which suggest that there is an emerging obligation for Home States to exercise
extraterritorial regulation.834 Arguments brought in favour of these emerging
obligations usually turn to the long standing principle of international cooperation,
which recently seems to be enjoying a revival.835 Article 1(3) of the UN Charter
imposes an obligation on member States “to achieve international cooperation in
… promoting and encouraging respect for human rights and for fundamental
freedoms for all”. Articles 55(c) and 56 of the UN Charter also require member
States to cooperate with the UN to achieve universal respect for, and observance 830 McCorquodale and Simons Note 111, 598. For greater detail, see UN Commission on Human Rights Responsibility of States for Internationally Wrongful Acts GA Res 56/83 (12 December 2001).
831 De Schutter Note 39, 18.
832 Ibid; McCorquodale and Simons Note 111, 605.
833 Guiding Principles Note 432, para 2. For a greater analysis on Ruggie’s viewpoint on extraterritoriality, see State Responsibilities to Regulate and Adjudicate Corporate Activities Under the United Nations Core Human Rights Treaties: An Overview of Treaty Body Commentaries UN Doc. A/HRC/4/35/Add.1 and 2 (2007) para 81-92.
834 Broecker Note 408, 180.
835 De Schutter Note 39, 18.
176
of, human rights and fundamental freedoms for all including higher standards of
living, full employment, and conditions of economic and social progress and
development.836 The principle is further elaborated upon in Article 2(1) of
ICESCR, which expressly provides that States parties to the Covenant undertake:
... to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.837
In essence, the principle imposes an obligation on States to act jointly in the face
of collective problems faced by the broader international community and assist
each other to realize the human rights of individuals regardless of their
geographical locales.838 Article 11(1) of ICESCR reflects this summation in
relation to the right to an adequate standard of living, which states that “States
Parties will take appropriate steps to ensure the realization of this right,
recognizing to this effect the essential importance of international cooperation
based on free consent”. More recently, article 1 of the Vienna Declaration
affirmed that:
... enhancement of international cooperation in the field of human rights is essential for the full achievement of the [State obligation] to promote universal respect for, and observance and protection of, all human rights and fundamental freedoms for all in accordance with the Charter of the United Nations.
Despite its long-term presence in the international law instruments canvassed
above, the principle of international cooperation only seems to have been
revitalised in the last decade or so, especially with respect to corporate-related
human rights violations. Knox points out that “since 1999, almost every one of
836 UN Charter Note 182, chapter IX. This duty is reiterated in the Convention on the Rights of the Child, opened for signature 20 November 1989, A/RES/44/25 (entered into force 2 September 1990) and the Convention on the Rights of Persons with Disabilities, opened for signature 30 March 2007, A/RES/61/106 (entered into force 3 May 2008).
837 Emphasis added.
838 De Schutter Note 39, 18.
177
[the ESCR Committee’s]839 general comments on particular rights, including the
rights to food, health, water, work, social security, and to take part in cultural life,
includes a section on [extraterritorial] obligations” on the basis of the principle of
international cooperation.840
For instance, in its General Comment 15, the ESCR Committee stated that “steps
should be taken by States parties to prevent their own citizens and companies
from violating the right to water of individuals and communities in other
countries”.841 The ESCR Committee also stated “the violations of the obligation
to protect follow from the failure of a State to take all necessary measures to
safeguard persons within their jurisdiction from infringements of the right to
health by third parties … [including] failure to regulate the activities of …
corporations so as to prevent them from violating the right to health of others”.842
Similarly, the Committee on the Elimination of Racial Discrimination, in its
Concluding Observations, strongly encouraged Canada “to take appropriate
legislative or administrative measures to prevent acts of transnational
corporations registered in Canada which negatively impact on the enjoyment of
rights of indigenous peoples in territories outside Canada”.843
It is submitted that even though an explicit obligation for Home States to exercise
extraterritorial regulation has not yet firmly crystallized in international human
rights law, current guidance from treaty bodies suggest that at the very least there
is an emerging obligation on Home States to regulate the transnational activities
of their corporate nationals to protect human rights. Perhaps it is in light of these
persuasive, albeit non-binding, commentaries by treaty bodies that led Ruggie to
839 The Committee on Economic, Social and Cultural Rights is the body charged with overseeing compliance with the ICESCR. For further information, see http://www2.ohchr.org/english/bodies/cescr/ (Last visited on 27 April 2012).
840 Knox Note 816, 33.
841 Committee on Economic, Social and Cultural Rights, General Comment 15: The Right to Water UN Doc E/C.12/2002/11 (2002) para 33. Emphasis added.
842 Committee on Economic, Social and Cultural Rights, General Comment 14: The Right to the Highest Attainable Standard of Health (2000), UN Doc E/C.12/2000/4 (2000) para 51.
843 Conclusions and Recommendations of the Committee on the Elimination of Racial Discrimination Canada, UN Doc CERD/C/CAN/CO/18 (2007) para 17.
178
acknowledge that while international human rights law does not impose an
explicit obligation on Home States to exercise extraterritorial regulation, it also
does not prohibit them from doing so; provided there is a recognized jurisdictional
basis and the exercise of that jurisdiction is reasonable.844 To sum up, these
modern developments at very least illustrate some willingness by the international
community to use the tool of extraterritorial regulation to address the negative
human rights impacts created by the activities of MNCs in their operations
abroad.845 It is in the spirit of these recent developments that the next section
examines how Home States may seek to contribute to the protection of human
rights outside their national territories.
5.4.2 Proposal for a Two-Tiered Design for Home State Extraterritorial
Regulation
In view of the above analysis, it is reasonable to infer that the exercise of
extraterritorial regulation by Home States is not only strongly desirable but also
legitimate and justifiable. To this end, this section offers a two-tiered proposal for
further developing the tool of Home State extraterritorial regulation as follows:
the collective adoption by States of a new international instrument, which
clarifies, and where applicable extends, the emerging extraterritorial obligations of
Home States to protect against MNC human rights violations abroad; followed by
the formulation and enactment of legally binding domestic standards regulating
the extraterritorial activities of their respective corporate nationals, which impact
upon human rights.846 These dimensions will be discussed separately, below.
Before beginning, it should be noted that this section makes no attempt to
ascertain in precise terms the human rights standards that MNCs could follow in
Host States. It only asserts that it is necessary to formulate concrete standards at
the international level, which shall be universal in their application to MNCs
regardless of their places of incorporation. Thus, the scope of my proposal shall 844 2008 Framework Note 429, 7.
845 Van den Herik and Cernic Note 148, 731.
846 The development of extraterritorial regulation as an effective accountability mechanism is usually attributed to international criminal law, where it has been used regularly to impose liability for international crimes. For more discussion on this issue, see De Schutter Note 39, 52.
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be confined to a broad inquiry on the nature and structure of a Home State
extraterritorial regime at the international level followed by proposals of how to
incorporate such standards into legally binding regulatory mechanisms at the
domestic level.
5.4.2.1 The International Dimension
Article 23 of ICESCR stipulates different forms of international action that States
may undertake to evidence their international commitment to cooperate in
advancing human rights principles. These include, inter alia, methods such as the
conclusion of conventions and the adoption of recommendations.847 Therefore,
pursuant to article 23 of ICESCR, I will argue that Home States should adopt an
international instrument, which clarifies the nature and extent of their
extraterritorial obligations. At this juncture, while the tool of extraterritorial
regulation is still controversial, I will suggest that the international instrument be
in the form of an international declaration to clarify circumstances where Home
States may have an obligation to regulate the extraterritorial activities of their
corporate nationals abroad and to provide guidance on how such regulation may
be achieved.848
To be clear, having canvassed the existence of emerging extraterritorial
obligations above, this section will only discuss the ‘how’ and articulate the
preliminary key considerations that drafters of such an instrument should take into
account in order to increase its effectiveness and promote its likelihood of
securing political support. It is submitted that once the notion of Home State
extraterritorial regulation takes root and becomes commonplace, then policy
makers and international advocates can begin the process of devising a more
847 ICESCR Note 137, article 23.
848 An international declaration of the UN General Assembly is not a legally binding instrument; the term is often deliberately chosen to indicate that the States parties do not intend to create binding obligations but merely want to declare certain aspirations. Available at http://www.unicef.org/crc/files/Definitions.pdf (Last visited on 22 April 2012). Readers who may question the proposal of a non-binding international instrument are reminded of the UDHR, which was not originally intended to have binding force but many of its provisions have since been accepted by many scholars as binding international customary law. Moreover, the principles in the UDHR arguably laid the foundation for the creation of binding international human rights instruments such as the ICCPR.
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comprehensive and legally binding document such as a treaty, requiring States to
legislate extraterritorially.
(a) How should Home States hold MNCs liable for their human rights abuses
abroad?
As noted earlier, MNCs are generally organized in a cluster of interrelated entities
and often conduct extraterritorial operations through local subsidiaries
incorporated in Host States.849 The primary issue for consideration is how to
impose liability on the MNC as a whole, and not just the local subsidiaries, which
tend to be based in under-resourced Host States that are unwilling or unable to
protect against MNC human rights abuses. Several authors have examined this
issue in detail and most seem to agree that there are predominantly two ways of
establishing extraterritorial regulation: through foreign direct liability or parent-
based extraterritorial regulation.850 Put succinctly, the former enables a Home
State to hold the parent corporation of the corporate group directly responsible for
the impact on human rights emerging from the separate actions of its foreign
subsidiaries.851 The latter allows a Home State to impose certain due diligence
obligations on the parent company to monitor the conduct of its subsidiaries
abroad on the grounds that these subsidiaries, together with the parent company,
effectively form one single multinational corporate group.852 The merits each of
these options shall be examined in detail below.
From a human rights standpoint, imposing foreign direct liability on the parent
company appears to be more desirable particularly because parent companies,
which have thus far proven to be elusive as far as imposing liability is concerned,
would be held directly accountable for the human rights violations of their foreign
subsidiaries.853 Under this model, a Home State would simply enact legislation
849 An MNC can take a variety of forms, including cross-shareholdings, partnerships and joint ventures, among others. However, as mentioned at the beginning of the thesis, my analysis shall focus mainly on the parent-subsidiary relationship.
850 Broecker Note 408, 196; De Schutter Note 39, 35; Deva Note 258.
851 De Schutter Note 39, 52.
852 Ibid.
853 Muchlinski Note 611, 685-686.
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prohibiting its corporations (broadly defined to include their subsidiaries) from
violating certain human rights principles abroad.854 Thereafter, it is up to the
parent corporation to ensure that neither it nor its foreign subsidiaries violate
human rights principles; otherwise it would automatically incur liability.855
However, closer examination of the foreign direct liability model reveals that it is
susceptible to major procedural and conceptual obstacles that severely limit its
efficacy.
First, this model is more vulnerable to challenges pursuant to the doctrine of
forum non conveniens, which allows domestic courts to refuse to hear claims on
the basis that a more appropriate forum is available.856 Thus, should a Home State
attempt to sanction a parent company for its subsidiary’s failure to comply with
human rights norms abroad, the parent company could challenge the case on the
basis that the Host State’s domestic forum is more appropriate given
circumstances such as location of the alleged abuses, the victims and
incorporation of the foreign subsidiary, among others.857
Second, even if jurisdiction over the parent company is somehow secured,
establishing responsibility of the parent company could still be challenged under
the ‘separate personality doctrine’, which regards a subsidiary as a legal entity
that is separate and distinct from the parent corporation.858 That is, most courts
will not consider the mere existence of a parent-subsidiary relationship to be
enough to ‘pierce the corporate veil’ and attribute the acts of the subsidiary to the
854 See for example, the Corporate Code of Conduct Bill 2000 (Australia), sections 3-4. The Bill was an unsuccessful attempt to introduce extraterritorial legal obligations, using the foreign direct liability approach, with respect to Australian companies that conduct business activities in other countries. A similar result recently occurred in Canada where a Bill using the foreign direct model was rejected by Parliament. See, Liezel Hill ‘Canadian Lawmakers Vote Down Controversial Bill C 300 (20 October 2010). Available at http://www.miningweekly.com/article/canadian-mps-vote-against-bill-c-300-2010-10-28 (Last visited 24 August 2012).
855 De Schutter Note 39, 46.
856 Kinley Note 140, 43.
857 Sarah Joseph ‘Taming the Leviathans: Multinational Enterprises and Human Rights’ (1999) XLVI Netherlands International Review 171, 178.
858 Case Concerning the Barcelona Traction Note 804, 42. Under general rules of international law, parent companies and their subsidiaries are considered to be separate and distinct legal entities each subject to the exclusive jurisdiction of their respective States.
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parent.859 Third, the model may incur contrary results by providing a disincentive
to parent companies to monitor their subsidiaries and instead lead them to form
independent foreign entities for which they can legally incur no responsibility but
that would continue to act with impunity in the Host State.860
For the above reasons, a much more nuanced approach to extraterritorial
regulation is needed so that the above procedural and conceptual obstacles are
minimised. De Schutter advises that the best solution to successfully
operationalise Home State extraterritorial regulation consists of “imposing
directly on the parent corporation an obligation ... to effectively monitor the
behaviour of the subsidiaries which it controls”.861 Put differently, this parent-
based extraterritorial regulation model is easier to justify because a subsidiary’s
behaviour abroad is regulated via the imposition of certain due diligence
obligations on the parent company.862
Ideally, this model overcomes the barriers represented by the forum non
conveniens doctrine, by establishing a connection between the Home State and its
corporate national - the parent company - and imposing direct liability on its own
actions, rather than for those of its overseas subsidiaries.863 It also facilitates
overcoming the problem of the ‘corporate veil’ by imposing due diligence
obligations on the parent company, whose liability could potentially be engaged
once it appears that the subsidiary has committed human rights abuses abroad and
that the parent has not adopted all measures, which could reasonably have
prevented the risk from materializing.864 Therefore, it is submitted that the parent-
859 Parent corporations are usually free to supervise the acts of their subsidiaries, oversee their financial management and create policies and procedures applicable to such entities without risk of incurring liability “through attribution of individual actions taken on behalf of one entity to the other”. Dhooge Note 807, 135.
860 Ibid.
861 De Schutter Note 39, 44. De Schutter argues that to determine ‘control’, it may be sufficient to refer to stock ownership “without there being a need to identify, on a case-to-case basis, whether the parent company has in fact been involved in the policies of the subsidiary or whether the latter has a ‘mind of its own’”.
862 Broecker Note 408, 197.
863 De Schutter Note 39, 43.
864 De Schutter Note 39, 52.
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based regulation model is by and large the better option with which to establish
Home State extraterritorial obligations for MNCs.865
(b) How would the monitoring obligations of the Parent Corporation be
implemented?
As noted earlier, there is an emerging obligation on Homes State to take
reasonable steps to ensure that their corporate nationals, as the parent corporations
of the corporate group, do not violate international human rights principles even
where such operations are conducted through foreign subsidiaries.866 Such steps
may include, but are not be limited to, the enactment of domestic legislation
requiring parent corporations to conduct human rights due diligence procedures
throughout their corporate structure.867 That is, a Home State may impose due
diligence obligations on the parent company to show that: (a) the MNC respects
certain internationally recognized human rights, over and above the locally
applicable legislation, in all its activities including those conducted overseas; and
(b) it monitors the policies and behaviour of its subsidiaries to ensure that they
comply with such international human rights norms and where necessary, acts
proactively to prevent them from engaging in any conduct contrary to this goal.868
It is submitted that in executing these human rights due diligence obligations, the
parent company should, at a minimum, be guided by the following standards
articulated in the UN Framework. First, it should formulate a human rights policy
or statement detailing its commitment to respect human rights.869 Second, it
should conduct human rights impact assessments of its business operations on a
regular basis in order to prevent further negative human rights impacts.870 Third, it
865 The Foreign Corrupt Practices Act 1977 (United States), for example, illustrates the successful establishment of the parent-based regulation model in the field of accounting by a Home State. The statute essentially makes it unlawful for a US person, including legal entities, to make payments to foreign officials abroad for the purpose of obtaining or retaining business.
866 Velasquez Rodriguez v Honduras, Inter-American Court of Human Rights Series C, No. 4, Judgment of 29 July 1988, reprinted (1989) 28 ILM 291, paras 172; 174-175.
867 McCorquodale and Simons Note 111, 623.
868 De Schutter Note 39, 52.
869 2008 Framework Note 429, para 60.
870 2008 Framework Note 429, para 61.
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should integrate its human rights policies throughout the MNC’s operations,
internal functions and processes.871 Finally, it should develop an effective
monitoring mechanism to ensure its subsidiaries continuously comply with
international human rights in their operations.872 Therefore, the liability of the
parent company shall be triggered by its failure to have an adequate monitoring
system in place as described above.873
In these circumstances it is arguable that although the acts of a foreign subsidiary
shall not be directly attributed to the corporate national, the latter exercises
sufficient control over the subsidiary and has constructive knowledge of the
potential for the subsidiary to violate human rights law to justify the imposition of
the above human rights due diligence obligations.874 By contrast, the parent
company will not be held responsible for the acts of its subsidiaries, which violate
the due diligence systems it has introduced (provided such systems are
functioning effectively).875 Home States may wish to provide for a presumption of
liability in favour of abusive acts committed by subsidiaries which are
‘controlled’ by the parent company, although such a presumption could be
rebutted in certain circumstances “where the parent company could demonstrate
that it was unable to effectively avoid the contested behaviour of the subsidiary
company from occurring, despite having exercised due diligence and despite its
best efforts to seek information about such behaviour and to react accordingly”.876
In both cases, liability will only be imposed upon the parent corporation for the
actions of its subsidiary in “limited circumstances” such as are necessary to
prevent injustice to an innocent third party in a corrupt or weak Host State.877
871 2008 Framework Note 429, para 62.
872 2008 Framework Note 429, para 63.
873 Sullivan and Hachez Note 600, footnote 58.
874 McCorquodale and Simons Note 111, 623.
875 Radu Mares ‘Defining the Limits of Corporate Responsibilities against the Concept of Legal Positive Obligations’ (2009) 40 George Washington International Law Review 1157, 1193.
876 De Schutter Note 39, 44.
877 Dhooge Note 807, 135.
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(c) Why should a parent company be liable for the human rights violations of
its subsidiaries?
There are several reasons to support the proposition that the parent corporation of
the corporate group should incur liability for the human rights abuses of its
subsidiaries. First, the complex, amorphous structure of the MNC often
camouflages the ‘real’ perpetrator of human rights abuses: the parent
corporation.878 Although the subsidiaries are established as separate legal entities
in foreign States, their decisions and policies are in fact often controlled by the
parent company.879 Thus, the seemingly separate actions of the subsidiary, which
violate human rights principles abroad, actually stem directly from decisions
made by the parent corporation, which is domiciled in the Home State.880 Second,
subsidiary entities are usually equipped with few assets and thus have no
economic capacity to adequately compensate victims of human rights abuses.881
Deva avers that it would be a miscarriage of justice in these instances if victims
are not allowed to sue the wealthier parent corporation.882
Third, it is a given that the parent corporation derives economic benefit from its
subsidiaries.883 Therefore, by the same token it should also be willing to share in
their losses; especially where the actions of a subsidiary are directly controlled (or
could have been controlled) by the parent corporation.884 Fourth, in light of the
procedural difficulties likely to be encountered by corporate victims, for example
veil piercing, when seeking justice in the domestic courts of the Home States of
the perpetrators, it is submitted that placing liability on parent corporations could
lead to speedy and cost effective dispute resolutions.885
878 De Schutter Note 39, 52.
879 Ibid.
880 Deva Note 668, 97.
881 Deva Note 668, 99.
882 Ibid.
883 Deva Note 668, 108.
884 Ibid.
885 Deva Note 668, 109.
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Finally, from a practical perspective, it is submitted that for a parent company,
complying with the responsibility to respect human rights by monitoring its
subsidiaries “does not come at significantly increased effort and costs, because the
means for acquiring relevant information and exercising control are already in
place”.886 That is, only few structural changes within the corporate group may be
necessary as in most cases, the subsidiary’s directors are usually appointed from
the parent company’s own personnel resulting in some of the leading personnel of
the parent and subsidiary company being identical and serving both companies
simultaneously.887 This enables the parent company to secure a flow of important
information and some control over the foreign subsidiary’s activities, thus
allowing for a monitoring role to safeguard the human rights of third parties as
well.888
(d) What will be the relationship, if any, between Home States and Host States
in the international instrument?
The main purpose of the international instrument will be to assist Home States to
formulate comprehensive legally binding domestic standards for MNCs’
extraterritorial activities; not to create binding international standards for Home
States. This thesis contends that only through clarification of extraterritorial
obligations of States in an international instrument will the lingering surrounding
uncertainty on the nature of Home State duties be resolved in a timely and
effective manner. However, in order to foster and secure political will for the
instrument, it is imperative that the instrument establish a clear division of
responsibilities between the Host State and the Home State in regulation of
MNCs. That is, while the instrument should clarify the nature and extent of the
emerging Home State extraterritorial responsibilities to regulate the conduct of
MNCs abroad, it should also affirm the primary responsibility of the Host State,
on whose territory the MNC conducts its activities, to protect and promote human
886 Grabosch Note 558, 20.
887 Ibid.
888 Ibid.
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rights.889 It is submitted that the instrument is likely to enjoy greater political
success if both Host and Home States are made to understand that they should
buttress each other’s efforts in order to promote human dignity.890
5.4.2.2 The Domestic Dimension
Having clarified the nature and extent of emerging Home State extraterritorial
obligations in an international instrument, the challenge for Home governments
becomes how to reform their domestic regimes to allow for such obligations
promptly and efficiently. The aim in this section is to discuss some of the practical
legal and other considerations that Home States would have to take into account
in order to ensure that their extraterritorial regulation is implemented effectively.
It is submitted that one of the most critical roles that Home governments could
play to advance the goals of the international instrument would be to pass the
necessary domestic legislation cementing the obligations of parent corporations
vis-à-vis the human rights impact of their subsidiaries abroad. The legislation
could impose civil liability on the parent corporation for corporate activities
conducted overseas that negatively impact upon international human rights
standards, for example negligent conduct arising from environmental damage.891
This proposal for Home States to regulate the extraterritorial conduct of business
entities based within their jurisdictions through legislative means is not new. In
the very recent past, there have been several such attempts by developed States,
including countries such as the United States, Australia and the United Kingdom,
to legally regulate the extraterritorial activities of MNCs in conformity with 889 De Schutter Note 39, 52.
890 Penovic Note 281.
891 Readers should note the existence of the Alien Tort Claims Act (1789) (“ATCA”) in the United States, an arcane piece of legislation upon which, since the late 1990s, victims of transnational corporate human rights abuses increasingly rely upon to obtain justice for the negative human rights impacts of US companies abroad; to date however, with little success. In essence, ATCA grants US federal courts jurisdiction over civil actions brought by aliens for torts “committed in violation of the law of nations or a treaty of the United States”. The question of whether US corporations are subject to liability under ATCA for events that took place overseas is extremely controversial and is now on petition for certiorari before the US Supreme Court. See Kiobel v Royal Dutch Petroleum Co 621 F.3d 111 (2d Circ. 2010) Petition for Writ of Certiorari filed 6 June 2011. For a review of recent prominent cases under the statute, see Hugh King ‘Corporate Accountability under the Alien Tort Claims Act’ (2008) 9 Melbourne Journal of International Law 472.
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international human rights principles.892 The objectives, content and enforcement
mechanisms of these proposed legislative schemes are too wide and varied to be
restated in this thesis.893 For present purposes, it suffices to note that the
experience of these failed schemes is instructive in at least three respects. First,
these past efforts focused on the unilateral implementation of extraterritorial
legislation at a time when the corporate responsibility to respect human rights was
hotly contested.894 However, this responsibility has since then been clarified in the
UN Framework as separate and distinct from the State duty to protect human
rights and today enjoys widespread support from businesses and governments
alike.895 It is contended that my suggestion to tailor the proposed Home State
extraterritorial regime in accordance with the UN Framework, as detailed above,
has significant advantages for the credibility and political success of the
prospective legislation. In particular, a Home State’s incorporation of the
standards of the UN Framework in extraterritorial domestic legislation “would not
entail creating new expectations of corporations (but would merely render existing
expectations enforceable) and [are likely] not vulnerable to claims of colonialism
or paternalism since the standards are international and not unilateral”.896
Secondly, these previous schemes constituted attempts to unilaterally implement
extraterritorial obligations of Home States, which prompted legitimate fears of
economic disadvantage relative to other Home States that failed to pass similar
extraterritorial legislation.897 My proposal instead favours a two-tiered approach,
beginning with an international dimension whereby Home States clarify the scope
and content of their emerging extraterritorial obligations in a non-binding
892 Respectively, Corporate Code of Conduct Bill 2000 (United States); Corporate Code of Conduct Bill 2000 (Australia); Corporate Responsibility Bill 2003 (United Kingdom).
893 For an in-depth analysis of the content of each of these Bills, see Adam McBeth ‘A Look at Corporate Code of Conduct Legislation’ (2004) 33 Common Law World Review 222. See also, Deva Note 258 and Deva Note 668.
894 Ibid. At the time, there were no clear roles between the roles of business and States with respect to their engagement with human rights.
895 2008 Framework Note 429, paras 23 and 54; Guiding Principles Note 432, 13-14.
896 Penovic Note 281.
897 Ruggie Note 399, 128.
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international instrument followed by the enactment and implementation of
domestic legislation within their respective jurisdictions. This model would
encourage uniformity of standards across Home States in addressing MNC human
rights abuses as well integrate a sense of collective responsibility as demanded by
the principle of international cooperation.898 Thirdly, despite the fact that these
past extraterritorial legislative schemes were unsuccessful, they nonetheless
demonstrate the existence of an evolving international movement that looks to
extraterritorial regulation as an appropriate legal response to the challenges posed
by MNC transnational operations in today’s global economy.899
Therefore, having negotiated and clarified their extraterritorial obligations
regarding the human rights impacts of their corporate nationals abroad in an
international instrument, it is contended that Home states seeking to design
legislative schemes for their parent corporate nationals could begin by imposing
simple monitoring responsibilities requiring them to perform human rights due
diligence on the operations of their subsidiaries as per the standards of the UN
Framework.900 To ensure compliance, Home States could ask business enterprises
to communicate how they are addressing their negative human rights impacts
including by submitting reports in accordance with certain guidelines.901 In
addition, the legislative scheme could include civil damages provisions that would
allow individuals aggrieved by a violation of any provision of the legislation to
sue the relevant parent corporation violation for damages.902
While there are many more aspects that could be added to the proposed
legislation, this thesis warns against attempting to do too much too soon. That is,
from a human rights standpoint, it may be highly desirable to provide an
898 Article 2(1) of ICESCR requires States parties “to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures”. Emphasis added.
899 Bunn Note 680, 1293; McBeth Note 893, 223.
900 2008 Framework Note 429, pars 60-63.
901 GP 3(d) Note 432.
902 Bernard Note 813, 618.
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ambitious legislative proposal that details how Home States may regulate parent
corporations domiciled within their jurisdictions, for example, stipulating that
businesses should comply with all the international instruments ratified by the
Home State in their extraterritorial operations.903 However, as the experience of
the failed bills in Australia, the US and the UK demonstrate, “ambitious
proposals, while certainly admirable, cannot improve business respect for human
rights if they lack the political support to become law”.904 In other words, at this
early stage where the very notion of Home State extraterritorial regulation remains
contentious, such a path proposing a detailed, not to mention uniform, piece of
legislation among Home States with diverse political, social, economic and legal
ideologies, is not politically feasible. The better approach would be for the content
of such legislation to vary from State to State as would fit each State’s
constitutional, legal and other domestic ethos.
At this point, a few words about the effective implementation of any such
proposed legislative scheme would not be amiss. It is submitted that Home States
will need to make sure that their domestic enforcement systems adjust accordingly
to accommodate the extraterritorial obligations imposed by the new legislation.
Justice Ian Binnie points out, “the State duty to protect means that [States must
make] a concerted effort ... to eliminate barriers to recovery that are unnecessary
or arbitrary in their operation”.905 This means that extraterritorial regulation may
require several reforms to the rules of domestic courts to allow them to play a
useful role in providing effective remedy to victims of international human rights
abuses.906 For example, Home States would need to ensure that the rules of their
domestic courts allow standing to individuals harmed by the MNC’s activities
overseas.907 In addition, domestic statutes of limitations and veil-piercing
903 Broecker Note 408, 214. For example, under the Australian Bill, corporations based in Australia with overseas operations were required to comply with international standards relating to human rights, the environment, health and safety and employment. Corporate Code of Conduct Bill 2000 (Australia), sections 7-10.
904 Broecker Note 408, 215.
905 Justice Ian Binnie ‘Legal redress for Corporate Participation in International Human Rights Abuses: A Progress Report’ (2008-2009) 38 The Brief 44, 50
906 Ibid.
907 Stephens Note 4, 84.
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standards may need to be relaxed to prevent them from shielding parent
companies from liability in respect of their subsidiaries operating abroad that have
violated human rights.908
5.4.3 Possible Challenges
As the previous sections demonstrate, Home State extraterritorial regulation is
legally permissible, arguably obligatory and practically necessary to promote
MNC accountability for their human rights violations. However, Deva aptly
cautions that “we should not lose sight of the inherent limitations faced by any
[domestic] system, whether territorial or extraterritorial, in regulating the
activities of MNCs”.909 In this section, I raise three of the most pressing of these
and suggest ways in which they can be mitigated to ensure the proposed Home
State regulation design is successful.910
5.4.3.1 Lack of Political Will among Home States
Garnering sufficient political support for extraterritorial regulation will
undoubtedly be a formidable challenge. While most States agree that the business
and human rights field should be regulated, most developed countries are wary
about the prospect of applying binding international human rights norms to
corporations.911 The United States, for example, has expressed its enthusiasm for
greater regulation of MNC activities with respect to human rights but has
explicitly stated that such efforts should remain voluntary.912 Their reluctance
908 Binnie Note 905, 50.
909 Deva Note 258, 51.
910 There are, arguably, other foreseeable conceptual and procedural difficulties in addition to the three discussed in this thesis, such as floodgate concerns due to too many potential victims and lack of access to witnesses. Deva Note 258, 91.
911 Broecker Note 408, 190.
912 Letter from the United States of America to John Ruggie (State Responses to the Report By John Ruggie, Special Representative of the UN Secretary-General for Business And Human Rights, United Nations Human Rights Council 16, 2011). Available at http://www.business-humanrights.org/Documents/ RuggieHRC2007 (Last visited on 12 December 2011). The United States asserted that it “remains committed to promoting voluntary corporate social responsibility initiatives in a variety of sectors throughout the world. [It] believe[s] that these voluntary initiatives are a positive complement to rule of law and can also help foster human dignity and improved working conditions, environmental safeguards, and good governance”. Emphasis added.
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could be stemming from the result of intense lobbying by powerful MNCs and
other corporate interest groups in their Home States for the creation of investment
friendly environments.913 Most MNCs alert their Home States to the fact that
extraterritorial legislation could result in a competitive disadvantage for the
companies concerned, which may lead them to disinvest in the legislating State.914
As a result, Home States may fear that adopting such regulations would put them
at an economic disadvantage vis-à-vis other States that failed to pass similar
legislation.915
It is submitted that the proposed two-tiered Home State extraterritorial regime,
which stipulates that extraterritorial regulations first be clarified in an
international instrument in order to encourage uniformity of extraterritorial
standards across Home States, would overcome the political hurdle to a significant
extent.916 It would meet any concerns of MNCs and the broader business
community that the development of extraterritorial regulation on a unilateral basis
would create legal uncertainty.917 In addition, opponents of extraterritoriality are
reminded that Home States have already made use of the tool of extraterritorial
regulation to pass legislation on other business concerns, including problematic
corporate transnational conduct.918 Therefore it is arguable that businesses of such
States are already used to complying with certain dictates of their Home
governments in their overseas operations.919
913 Ruggie Note 399, 128.
914 Ibid.
915 The MNCs domiciled in their jurisdictions would be placed at a relative disadvantage relative to MNCs domiciled elsewhere. See Broecker Note 408, 190.
916 Broecker Note 408, 190.
917 De Schutter Note 39, 52.
918 See, for example, the United Nations Convention against Corruption 43 ILM 37 (entered into force 14 December 2005), which requires States parties to implement domestic laws creating offences for a number of specific acts of corruption. It also encourages States parties to pursue methods of prevention and international cooperation, among others, on fighting corruption. See also Convention on Combating Bribery of Foreign Officials in International Business Transactions C (97)123/FINAL (entered into force on 15 February 1999), which addresses the widespread phenomenon of bribery in international business transactions.
919 Broecker Note 408, 190.
193
5.4.3.2 Infringement of a Host State’s Sovereignty
Another problematic area surrounding Home State extraterritorial regulation is the
potential infringement of the sovereignty of the Host State where the MNC
operates.920 Due to the fact that extraterritorial regulation is likely to emanate
almost exclusively from developed (Western) States, Host States may see such
extraterritorial regulatory efforts as “imperialist challenges” to their
sovereignty.921 In addition, Host States could perceive the extraterritorial efforts
by Home States to impose human rights standards on MNCs as interference on
their internal affairs to regulate activities occurring on their territories, including
by MNCs.922 Such extraterritorial regulatory efforts, so the argument goes, would
deprive Host States of the competitive advantage they have on the global markets
due to their low environmental and social regulatory standards, as they would
raise the costs of production and diminish their attractiveness for foreign direct
investment initiatives.923 Thus, these extraterritorial regulatory standards could
potentially be damaging to their burgeoning economies through a loss of related
jobs and other economic benefits deriving from MNC activities.924
I have argued elsewhere that the source of standards upon which the proposed
regime of extraterritorial regulation shall be based is international human rights
instruments, many of which Host States have already ratified in their domestic
regimes. So long as the extraterritorial regulatory efforts by Home States are
phrased and correspond to international human rights principles and accepted by a
majority of States, sovereignty-related concerns will be mitigated to a significant
degree.925 Moreover, where the objective of a Home State’s extraterritorial
regulation is to force MNCs to uphold international human rights in their
920 Article 2(7) of the UN Charter provides that “nothing contained in this Charter shall authorize the [UN] to intervene in matters which are essentially within the domestic jurisdiction of any State”.
921 Penovic Note 281.
922 Muchlinski Note 27, 116.
923 McCorquodale Note 109, 100- 102.
924 Stephens Note 4, 83.
925 Broecker Note 408, 188.
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operations, it is doubtful that this international objective (rather than a domestic
one) would be objectionable.926
5.4.3.3 Complex Corporate Structures
It is common knowledge that MNCs often conduct their extraterritorial business
operations through a local subsidiary incorporated in a State other than the Home
State of the parent company.927 They may, however, also do so through various
other vehicles, such as cross-shareholdings, common directorships, joint ventures,
partnerships, sub-contractors and affiliates, among others.928 Therefore, a critical
point to be considered in implementing the tool of extraterritorial regulation is this
ability of MNCs to “associate and dissociate themselves from their constituent
parts (subsidiaries, group companies, partners, among others)”, which may serve
to obscure the parent entity of the corporate group.929 In other words, domestic
courts in Home States are more than likely to encounter difficulties in terms of
ascertaining the parent entity of the corporate group on which to impose liability
for the MNC’s negative human rights impacts abroad. Given the remarkably
malleable and flexible form of an MNC, a determination of the nationality of the
MNC - in terms of where the parent corporation is incorporated - is likely to be a
costly and lengthy endeavour once a complaint has been lodged in a Home State’s
domestic court.
A key theme of the thesis thus far has been to make a case for a ‘top-down’ MNC
structure whereby monitoring obligations are placed on the parent corporation to
respect human rights throughout its global operations, including its subsidiaries
abroad.930 This simplified parent-subsidiary approach has been adopted in order to
926 McCorquodale Note 109, 101.
927 It should be noted that the argument here might be extended to other legal forms through which MNCs conduct their business, for example, joint ventures, partnerships etc. However, a detailed consideration of these other forms lies outside the scope of the thesis.
928 Muchlinski Note 27, 45-79. As noted earlier, however, a detailed consideration of these other forms lies outside the scope of the thesis.
929 Kinley Note 140, 44.
930 Indeed, there is growing evidence of some domestic courts in Home States piercing the corporate veil by looking at the whole operation of an MNC including its group structure and the
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advance political consensus on the tool of extraterritorial regulation. In particular,
it would avoid the need for Home States to make extensive regulatory changes to
their internal structures regarding corporate governance.931 In addition, it is
unlikely to deter the business community from supporting a comprehensive legal
regime where their responsibilities towards human rights are clearly delineated.932
For these reasons, my proposed extraterritorial regulation scheme focuses first and
foremost on establishing parent-based monitoring obligations for corporations
domiciled in Home States. Once the notion of extraterritorial corporate human
rights regulation has become firmly entrenched, it is submitted that Home States
should then develop the model to address more complex corporate forms, such as
cross-shareholdings, joint ventures and partnerships, among others.
There is no escaping the fact, however, that determining the point at which an
entity is deemed to be an MNC for the purposes of attaching liability is bound to
be a controversial exercise. Much work remains to be done, at least from an MNC
accountability perspective, to cement the coalition of a variety of entities, which
serve a common economic goal, as a legal unit upon which international legal
obligations to uphold human rights principles may be placed.
5.4.4 Concluding Remarks
The risks canvassed above are real considerations to be taken into account in any
attempt to implement extraterritorial regulations on MNCs. However, these risks
are not insurmountable as to undermine the real potential of the tool of Home
State extraterritorial regulation to significantly improve MNCs’ respect for human
rights. Ultimately, the arguments advanced in this section should be understood in
the context of my quest to formulate an ‘integrated theory of international and
legal responsibility’. The proposal here envisions the clarification of the
extraterritorial regime in an international instrument (whereby States collectively
agree on and commit to imposing international human rights principles on MNCs’
practical reality of the interrelationships in the corporate group. See, for example, Connelly v RTZ Corp plc [1997] 4 All ER 335 and Lubbe v Cape Plc [2000] UKHL 41.
931 Broecker Note 408, 200-201.
932 Ibid.
196
extraterritorial activities) followed by its legal implementation through a Home
State’s domestic laws (whereby each shall have the individual responsibility to
enact domestic legislation in order to promote the accountability for their
corporate nationals) and adjudication mechanisms.
5.5 CONCLUSION
The phenomenon of globalisation has led corporations towards unprecedented
geographical expansion, economic wealth and political influence that often
surpass that of many States in which they operate. Both international and
domestic legal structures have failed to keep up with this growing momentum in
the new global economic landscape and thus, MNCs continue to increase their
prosperity while at the same time evading accountability for the negative impact
of their activities.933 In this chapter, I have proposed two accountability
mechanisms which, together, would provide the most promise for an effective
regulatory regime to address MNC human rights violations. Both proposals have
been structured to advance and be compatible with the principles and goals of the
UN Framework. A key distinction from existing international arrangements is that
MNCs as well as States would have responsibility for complying with the
standards therein. Given the political realities at the international arena, it is
conceded that perhaps these are potentially idealistic mechanisms. However, in
my view, the problem of MNC human rights violations is serious enough to
warrant at least a thorough consideration of both proposals.
933 Sullivan and Hachez Note 600, 933-36.
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CHAPTER 6
CONCLUSION
6.1 OVERVIEW OF THESIS AIMS
The main purpose of the thesis was to offer a detailed consideration and critique
of MNC accountability for human rights violations by exploring the causes,
challenges and possible future remedies. Specifically, the original objectives were
to: (a) appraise the ways in which MNCs affect the human rights of individuals
and posit a theory of corporate accountability embedded in human dignity; (b)
review the newly launched UN Framework as well as other existing international
accountability mechanisms and expose their inadequacy in addressing MNC
human rights violations; and (c) suggest alternative enforcement systems, which
could be used to hold MNCs accountable for their human rights violations and
that are sensitive to MNCs’ diverse structures and modes of operations. These
objectives were reconceptualized through a series of questions labelled as the
‘why’, ‘what’ and ‘how’ of corporate human rights accountability. The findings
are summarized below.
6.2 THE CASE IN FAVOUR OF MNC ACCOUNTABILITY FOR HUMAN
RIGHTS ABUSE
6.2.1 The Why
The first series of questions in the thesis began by inquiring why it is important
for corporations, which are artificial entities designed to maximise profit for the
benefit of their shareholders, to be held accountable at the international level for
their transnational human rights violations. Since examination of this issue
requires an understanding of what human rights MNCs violate and how, Chapter
1 of the thesis began by exploring a variety of case studies in the extractive
industry in order to illustrate the impact on human rights that MNCs can and do
have on the ground, particularly in developing countries. The general findings of
these case studies showed that MNCs facilitate the enjoyment of human rights for
a wide range of people including their employees, consumers and other
stakeholders. That is, their commercial activities stimulate the economy directly
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by providing jobs, goods and services, as well as taxes to enable governments to
provide goods and services etc.934 Therefore, it can be surmised that indirectly,
corporations do support a vast array of human rights, including the rights to work,
food and shelter and adequate standard of living.935 However, the case studies also
uncovered that MNCs contribute to severe human rights problems such as
environmental pollution (which leads to diseases and loss of habitat, among
others), labour rights violations (for example, providing poor working conditions
for the locals including paying poor wages) and in some regions, murders, rapes,
serious physical injury, forced evictions, damage to indigenous land and culture,
among others.936
The case studies proceeded to explore the various strategies that victims in Host
States employed to obtain effective remedy as provided in international human
rights law. It was found that in most Host States, there is a dearth of specialised
legislation that provides victims with a specific cause of action against MNCs for
their violation of human rights.937 Instead, there exists a plethora of other
domestic laws upon which individuals may rely to impose liability on
corporations for violation of international human rights standards. These include
laws covering occupational health and safety at work, employment conditions and
wage levels, non-discrimination, employees’ rights to privacy, sexual harassment,
occupational health and safety and environmental protection etc.938 The key
observation, however, was that whereas developed States utilize their regulatory
frameworks efficiently, developing countries are often laden with administrative,
legal, political and/or economical incapacities to provide access to justice to
corporate victims.939 This factor emphasized that “sole reliance on national
934 Joseph Note 44, 1.
935 Ibid.
936 Kinley Note 3, 148-148; Amnesty International Note 45, 1-2; and McBeth Note 75, 127-131.
937 As of the date of the publication of this thesis, the author is unaware of any such legislation.
938 Bunn Note 680, 1293-1294.
939 Joseph Note 94, 614.
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regulation of MNCs is ... inadequate in delivering justice to the majority of
victims of human rights violations by corporations”.940
This legal gap in human rights protections prompted several calls in the
international community for MNCs to incur legal liability under international
human rights law. In Chapter 2, however, a thorough examination of international
human rights instruments revealed that no such obligations currently exist.941 In
other words, for victims of corporate human rights abuses to obtain redress they
must seek justice within a domestic legal system. This explains why MNCs have
been able to largely operate in a legal vacuum - because international law does not
impose clear, direct obligations on their transnational atrocities, even where the
Host State is unwilling or unable to protect against corporate human rights abuses.
Thus, while MNCs are entities that are certainly capable of bearing international
human rights obligations, they still remain “unaccountable and unrestrained and
those whose rights are violated are [usually] left without an effective remedy”.942
A central proposition in this thesis is that the concept of human dignity provides a
natural philosophical and legal foundation upon which MNCs can (and should)
begin to be held accountable for their human rights violations in the international
realm.943 I showed that the basic minimum content of the meaning of human
dignity, which can be discerned from international human rights instruments, is
that each human being possesses an intrinsic worth that should be respected.944
Therefore any forms of conduct, including by corporations, which are inconsistent
with the respect for this intrinsic worth should incur sanctions, whether legal or
social.945 In other words, corporate accountability should be premised on the idea
940 Deva Note 87, 9.
941 Hessbruegge Note 145, 34-35.
942 McCorquodale and Simons Note 111, 600.
943 Kinley and Tadaki Note 119, 1022.
944 Henry Note 198, 13.
945 Ratner Note 37, 472.
200
that human rights protect the dignity or inherent worth of human beings and
consequently, upon their violation, human beings lose their ‘human character’.946
In my view, the appeal in human dignity as a foundational basis for future MNC
accountability lies not just in the fact that it is an overarching principle in
international human rights law but that it also provides an effective and practical
way forward in dealing with such violations at the global level.947 That is, human
dignity functions as a fundamental source from which new rights may be derived
or existing rights extended to apply to new situations.948 With respect to MNC
human rights violations, I argued that human dignity can play a dual function in
enhancing a victim’s right to effective remedy: one involving a legal dimension
that relates to the ability by victims to bring claims of wrongdoing and seek
reparation; the second involving a moral dimension relating to the substantive
reparation itself, whereby an individual whose rights have been violated is able to
obtain relief from the wrongdoer.949
In sum, despite the lack of clear, binding international obligations for MNCs to
respect human rights, the case studies confirm that MNCs can and do have a
negative impact on human rights. The concept of human dignity demands that
MNCs be held accountable for their human rights violations and provides us with
a sound philosophical concept and legal principle in deducing liability for MNCs
under international human rights law. This hypothesis answers the first of the
thesis sub-questions.
6.2.2 The What
The next series of questions in the thesis were set to determine what kind of
accountability mechanisms, other than under domestic regimes, are currently
946 Deva Note 258, 109.
947 McCrudden Note 167, 721-722.
948 UDHR Note 114, preamble; UN Charter Note 182, preamble; Vienna Declaration Note 185, preamble. See also, Schachter Note 223, 853 and McCrudden Note 167, 721-722.
949 Amnesty International Note 237, 18.
201
available to potential victims of MNC human rights violations and whether they
are effective in providing MNC accountability.
Chapter 3 of the thesis canvassed four existing mechanisms: (a) self regulation by
MNCs through corporate codes, which are voluntary policy frameworks
established by internal management designed to promote the company’s
compliance with global standards; (b) leading extractive industry initiatives such
as the Voluntary Principles on Security and Human Rights, the International
Council on Mining and Minerals Sustainable Development Framework and the
International Finance Corporation Performance Standards on Social and
Environmental Sustainability, which represent steps taken by the extractive
industry to address MNC human rights violations; (c) soft law initiatives under the
auspices of international organizations such as the Organisation for Economic Co-
operation and Development and the International Labour Organisation, which
offer guidelines for their member States to ensure that businesses domiciled in
their jurisdictions respect human rights; and (d) United Nations initiatives such as
the Global Compact, which set new benchmarks against which corporations are
increasingly being held to account. Needless to say, the availability and
effectiveness of these mechanisms varied greatly between locations and across
jurisdictions.
My evaluation of the overall existing mechanisms led to several discouraging
conclusions about their efficacy. First, there is a general lack of consensus among
the initiatives on the applicable human rights standards to be followed, resulting
in piecemeal implementation of international human rights principles that address
different ‘pockets’ of human rights such as labour, security issues and
environmental conservation, among others.950 Second, there is a greater focus
towards pure voluntary or self-monitoring measures as a way to tackle MNC
human rights challenges, rather than towards models that put an emphasis on
independent accountability processes.951 Third, the existing mechanisms critically
fail to provide strong supervisory or enforcement systems through which their
950 McLeay Note 271, 234; Diller Note 404, 24.
951 Ruggie Note 279, 836; Chirwa Note 276, 85.
202
standards may be enforced against abusive MNCs or provide effective remedies to
victims upon their violations.952 These inadequacies are what led Ruggie, the
former UN Special Representative on the issue of business and human rights, to
conclude that the prevailing framework forms nothing more than a “patchwork”
of mechanisms that are not only “incomplete” but also “flawed” and as such must
be improved in part or as a whole.953
Chapter 4 focused exclusively on Ruggie’s landmark ‘Protect, Respect and
Remedy’ framework followed by its Guiding Principles, which this thesis dubbed
the ‘UN Framework’. The UN Framework was launched to improve upon the
existing “patchwork” of accountability mechanisms canvassed above and to
become the “authoritative focal point” for business and human rights
henceforth.954 The UN Framework, which was unanimously endorsed by the
Human Rights Council, consists of three main principles: first, States have a duty
to protect human rights from infringement by third parties, including corporations,
through appropriate policies, regulation, and adjudication; second, corporations
have a responsibility to respect human rights, which means to act with due
diligence to avoid infringing the rights of others and to address adverse impacts
that occur; and, third, victims of corporate human rights abuses should have
greater access to effective remedies, both judicial and non-judicial.955 It is
submitted that the UN Framework makes a substantial contribution to building
our understanding of the nature of the relationship between business and human
rights. For example, the thorny question as to whether corporations should respect
internationally recognized human rights, irrespective of whether domestic systems
provide for effective enforcement of such responsibility, can now be answered
with an unequivocal ‘yes’.956 Moreover, according to the UN Framework, the
corporate responsibility to respect human rights entails more than a passive
responsibility “to do no harm” and in certain circumstances would require 952 Deva Note 87, 21; Hong Note 417, 48.
953 2008 Framework Note 429, para 87.
954 Guiding Principles Note 432, 3.
955 2008 Framework Note 429, paras 19-26.
956 2008 Framework Note 429, para 24.
203
businesses to take positive steps towards honouring human rights.957 In addition,
the UN Framework provides practical, albeit non-binding, guidance on how
business operations can interact and interrelate with human rights principles in a
mutually compatible way.958
However, while these are welcome preventative measures and increase
transparency of corporate activities with respect to human rights, the UN
Framework nonetheless suffers from several shortcomings that undermine its
efficacy as a regulatory framework. These include, among others, failure to
provide guidance to Home States on how they may regulate the extraterritorial
activities of their corporate citizens that adversely impact upon the human rights
of victims abroad; and failure to provide substantive recommendations on how to
deal with MNCs, which tend to operate in a cluster of interrelated entities,
including whether and how parent corporations, which in most cases direct the
actions of their subsidiaries, could be held accountable.
Its chief failing, however, is that it has failed to propose a concrete monitoring or
enforcement mechanism to supervise the implementation of its principles and to
ensure that victims of corporate human rights violations can obtain effective
remedy.959 Put in another way, the UN Framework allows businesses a wide
discretion regarding their compliance with the responsibility to respect human
rights and fails to stipulate specific sanctions that recalcitrant entities may suffer
in the event of non-compliance. As such it maintains the status quo whereby
businesses are encouraged, but not required, to respect human rights. Therefore, I
argued that the UN Framework is of limited value and fails to be a game-changer
as it does not guarantee MNC accountability or victims an effective remedy for
corporate human rights abuses.
In sum, despite the unanimous endorsement of the UN Framework by the Human
Rights Council, it is fair to say that the international community is yet to establish
957 2008 Framework Note 429, para 55.The example Ruggie provides is a situation where a company has a workplace anti-discrimination policy, then it might be required to adopt specific recruitment and training programs that reflect this policy.
958 See generally, Guiding Principles Note 432.
959 Human Rights Watch Note 647.
204
an effective regulatory system of MNC human rights accountability: one that can
not only pre-empt human rights violations but also offer timely and adequate
remedies to victims of corporate human rights abuses. This hypothesis answers
the second of the thesis sub-questions.
6.2.3 The How
The last set of research questions focused on how MNC human rights
accountability may be improved. As I have shown so far, the lack of practical and
effective implementation and enforcement techniques remains the most
problematic aspect of the global search for corporate accountability for human
rights violations. While there is broad agreement among different stakeholders
about the need for an effective accountability regime, there is less agreement
about the form that this should take.
In Chapter 5, I argued that this is a multi-faceted challenge, mired with political
undertones, which is likely to require action on several fronts including a reform
or improvement of existing mechanisms and the creation of new accountability
mechanisms, whether at international, domestic, regional or industrial levels. This
thesis focused on the latter aspect of this broader challenge and argued that
MNCs’ impact on human rights, which is ever-exacerbated by the global
economy, presents a problem of such import and consequence that it is necessary
to take an international approach. However, one must remain cognisant that any
new initiative must offer an improvement on the existing enforcement strategies
in order to justify its existence.960 To this end, the chapter began by proposing a
new theory of international and legal responsibility, which considers how the
international regime and domestic legal processes may effectively deal with
corporate human rights responsibilities as articulated in the UN Framework. The
theory is premised on the twin notions that: international responsibility is critical -
it is necessary but not on its own sufficient - to make sustainable progress on
MNC accountability for human rights violations; but must be accompanied by a
960 Deva Note 668, 55.
205
legal component at the domestic level, which has the ability to impose sanctions
and mandate compensation by businesses to their corporate victims.961
On the basis of the above theory, I proposed a multi-component global regulatory
framework as follows. In the short term, I suggested the creation of a new global
institution to implement the UN Framework in the form of an international
ombudsperson for business and human rights. I proposed that the mechanism
should be structured in such a way as to provide incentives to MNCs to
participate, albeit on voluntary basis, in the resolution of allegations of human
rights violations. Specifically, its mission would be to provide mediation services
between MNCs and potential victims, failing which it would make an impartial,
objective and authoritative finding on whether the MNC has violated international
human rights principles using the guideposts from the UN Framework. This
mechanism – at least in theory – emphasizes the need not just to focus on the
‘carrots’ that would encourage a company to mediate a dispute, but also the
negative results, or ‘sticks’, for them when they choose not to do so.
To supplement what could be perceived as a voluntary model, I proposed, in the
long term, a Home State extraterritorial regulation model, to provide an
alternative legal enforcement mechanism. The Home State extraterritorial
regulation model is a two-tiered regulatory approach involving the adoption by
States of a non-binding international instrument whose sole purpose is to clarify
the emerging extraterritorial Home State obligations to regulate MNCs followed
by the enactment of legislation in such States, which imposes binding obligations
on their corporate nationals to respect the human rights of individuals abroad
while conducting their activities. This innovative two-tiered approach seeks to
exert pressure on Home States to take legal action to complement the voluntary
mechanism of the international ombudsperson discussed above. On the whole, I
argued that the two proposed accountability approaches - international
ombudsperson and Home State extraterritorial regulation - should be viewed as
complementary in that the former could provide motivation to MNCs to
961 Ibid; Ratner Note 37, 449.
206
voluntarily engage with potential victims using the pre-determined standards of
the UN Framework, while the latter would demand legal accountability when
MNCs’ economic activities infringe upon human rights considerations. It is
submitted that my proposal for the development of a multi-component regulatory
regime differs from other previous mechanisms in the following important ways:
(a) it provides incentives, rather than admonishment, for MNCs and governments
alike to participate in, respectively, respecting and protecting international human
rights principles, (b) it offers a unique theory geared towards ensuring that the
interests of diverse groups in the business and human rights realm, including
governments, businesses and corporations, have been accommodated, and (c) it
allows for rigorous and transparent testing of the UN Framework to establish its
long-term viability as a normative instrument in the business and human rights
field.
Nonetheless, it must be acknowledged that creating this new global regulatory
framework will neither be simple nor easy as it takes time to reach political
consensus and build the necessary trust among various stakeholders. I have also
shown that both proposals are likely to meet with resistance from various quarters
as follows: MNCs that fear loss of profits due to the imposition of international
human rights standards on their transnational activities; Host States that fear loss
of economic benefits from a potential reduction in foreign direct investments by
MNCs; Home States that fear competition for economic investments from other
developed States that fail to impose extraterritorial human rights obligations on
their corporate nationals; and even NGOs that fear that these proposals do not go
‘far enough’ to hold MNCs legally accountable for their human rights violations.
Only time will tell whether the divergent interests of governments, MNCs and
NGOs will converge in the near future on the issue of whether, who and how
MNCs should be regulated. However, in my view, if this thesis achieves nothing
else except to simply spark discussion or refine ideas on MNC accountability for
human rights violations, with or without a legal component, amongst scholars and
policy makers, it will have achieved one of its purposes.
In sum, the proposals advanced in this thesis highlight the fact that realisation of
human rights in today’s globalised economy could only be overcome through the
207
innovative use of international human rights law, social mechanisms and domestic
legal institutions. However this has its own set of challenges including ensuring
that MNCs are not only made accountable for human rights violations in an
effective, cost-efficient and speedy manner, but also that victims are accorded
access to justice. These hypotheses answer the third of the thesis sub-questions.
6.3 LOOKING AHEAD: IMPLICATIONS FOR FUTURE RESEARCH
It is acknowledged that the proposals set herein are quite ambitious but also
necessarily rudimentary and will require fleshing out. It is submitted that future
research will particularly need to respond to a number of questions related to the
successful implementation of the new proposed mechanisms. To begin, some
questions would need to address issues of administration: how should the
international community administer and monitor the effectiveness of both
mechanisms? What structures would need to be set in place to carry out these
evaluations? How can sustainability of the mechanisms be achieved? What
stumbling blocks should the international community anticipate and how should
they be addressed? Can these mechanisms be extrapolated to include business
partners and contractors?
With respect to the international ombudsperson, some research questions would
need to assess what is needed to ensure its effective implementation. For example,
what actions are required to achieve sufficient MNC support and participation?
Who will fund the mechanism to ensure its long-term success? Will this new
mechanism require new institutions and laws, and if so, what forms should they
take?
With respect to the proposed tool of Home State extraterritorial regulation, some
questions should focus on roles and responsibilities. For example, who should be
responsible for developing the international instrument for Home State
regulation? What institutions, if any, would be involved? Is there a role for MNCs
in developing the tool of Home State extraterritorial regulation? If so, how?
Overall, as the business and human rights debate continues, the need to ensure
MNC accountability for human rights through international avenues such as those
208
proposed in this thesis is likely to come into greater focus. The questions above
should serve as a starting point for further research in the area.
6.4 CONCLUSION: THE BOTTOM LINE
This thesis was drafted in the spirit of stimulating constructive dialogue on the
future remedies for MNC accountability of their human rights violations.
Therefore, I will end with two thoughts. First, I note and respect the fact that
different authors may have diverse viewpoints on how to address some of the
accountability dilemmas identified throughout the thesis, including whether they
are even dilemmas in the first place. The proposed measures towards ultimately
achieving MNC human rights accountability at the international level remain very
much a work in progress, a fact noted by the SRSG when he remarked: “there is
no single silver bullet solution to business and human rights challenges”.962
Admittedly, the debate on how to improve MNC human rights accountability has
gained further momentum since the recent launch of the UN Framework.
However, a giant leap forward is needed if the UN Framework is to remain
relevant and become truly effective in resolving corporate human rights
grievances.
My second and final point is that although there is broad agreement among
different stakeholders as to the need to define and enforce human rights
responsibilities of corporations, questions still remain as to whether to rely on
legal regulation or social mechanisms to achieve accountability. This thesis has
argued for an integration of both. However, let no one be misled about the
complexity of the issues involved and how much cooperation, especially
politically, is necessary to achieve meaningful progress on either of the proposed
mechanisms. Even with commitment from businesses, in order for corporate
human rights accountability to be effective, there has to be pervasive and
concerted effort at the upper echelon of society - States. Indeed, it has been a
recurring theme of this thesis to show that the greatest hurdle facing the proposed
962 2008 Framework Note 429, para 7.
209
regulatory framework shall be one of political will rather than a question of
technical or financial support.
To conclude, if indeed the international community is serious about making
human rights a reality for all, then we must boldly go beyond mere rhetoric and
actually make MNCs accountable for their human rights violations through robust
legal and other social measures, such as those discussed herein.
210
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212
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International Convention on Economic, Social and Cultural Rights, opened for signature 16 December 1966, 993 UNTS 3 (entered into force 3 January 1976)
International Covenant on Civil Liability for Oil Pollution Damage, opened for signature 20 November 1969 UNTS (entered into force 19 June 1976)
International Convention for the Suppression of the Financing of Terrorism, opened for signature 10 January 2000, GA Res 54/109 (entered into force 10 April 2002)
International Convention on the Elimination of All Forms of Racial Discrimination, opened for signature 21 December 1965, UN Treaty Series vol. 660 (entered into force 4 January 1969)
International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, 2220 UNTS (entered into force18 December 1990)
International Council on Mining and Minerals Sustainable Development Framework (2012)
International Labour Organisation Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (1977)
League of Arab States, ‘Revised Arab Charter on Human Rights’ (2005) 12 International Human Rights Law Journal 893
Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights, UN Doc E/CN4/Sub2/2003/12/Rev2 (2003)
Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises (2011)
Office of the High Commissioner Directory of Special Procedures Mandate Holders HRC/NONE/2012/60 (April-June 2012)
Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, opened for signature 27 November 1992 UNTS (entered into force 30 May 1996)
Report of the Special Rapporteur on the Independence of Judges and Lawyers: Preliminary Note on the Mission to the Democratic Republic of Congo Delivered to the Human Rights Council and General Assembly, UN Doc A/HRC/4/25/Add.3 (24 May 2007)
213
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Interim Report E/CN4/2006/97 (22 February 2006)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Human Rights Impact Assessments - Resolving Key Methodological Questions A/HRC4/74 (5 February 2007)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Protect, Respect and Remedy: A Framework for Business and Human Rights UN Doc A/HRC/8/5 (7 April 2008)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Business and Human Rights: Towards Operationalizing the ‘Protect, Respect and Remedy’ Framework UN Doc No A/HRC/11/13 (22 April 2009)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Business and Human Rights: Further Steps Toward the Operationalisation of the “Protect, Respect and Remedy” Framework A/HRC/14/27 (9 April 2010)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Piloting Principles for Effective Company/Stakeholder Grievance Mechanisms: A Report of Lessons Learned UN Doc A/HRC/17/31/Add.1 (24 May 2011)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework UN Doc A/HRC/17/31 (16 June 2011)
Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises Addendum A/HRC/17/31/Add.1 (16 June 2011)
Rome Statute of the International Criminal Court, 2187 UNTS 7 (entered into force 1 July 2002)
State Responsibilities to Regulate and Adjudicate Corporate Activities Under the United Nations Core Human Rights Treaties: An Overview of Treaty Body Commentaries UN Doc. A/HRC/4/35/Add.1 and 2 (2007)
214
Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery, 226 UNTS 3 (entered into force 7 September 1956)
The Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law, UN Doc A/RES/60/147 (21 March 2006)
UN Global Compact Principles
United Nations Convention against Corruption 43 ILM 37 (entered into force 14 December 2005)
United Nations Report of the World Commission on Environment and Development GA Res 42/187 (11 December 1987)
Universal Declaration of Human Rights, GA Resolution 217A (III), UN Doc A/810 (10 December 1948)
Vienna Declaration and Programme of Action, UN Doc A/CONF 157/24 (12 July 1993)
Voluntary Principles on Security and Human Rights (2000)
Legislation & Case Law
Alien Tort Claims Act 1789 (US)
Corporate Code of Conduct Bill 2000 (Australia)
Corporate Code of Conduct Bill 2000 (US)
Corporate Responsibility Bill 2003 (UK)
Foreign Corrupt Practices Act 1977 (US)
Aguinda v. Texaco, 303 F 3d 470, 473-474 (2d Cir 2002)
Aguinda v Texaco, 93 Civ 7527 (SDNY 1994)
Amoco Cadiz Oil Spill, (1984) 2 Lloyd’s Rep 304, 2123
Case Concerning the Barcelona Traction, Light and Power Co Ltd (Second Phase) (Belgium v Spain), [1970] ICJ Reports 3
Connelly v RTZ Corp plc, [1997] 4 All ER 335
215
Doe v. Exxon Mobil Corp, 654 F 3d 11, 49 (D.C. Cir. 2011)
Legality of the Use by a State of Nuclear Weapons in Armed Conflict (World Health organization) (Advisory Opinion), [1996] ICJ 66
Lubbe v Cape Plc, [2000] UKHL 41
Kasky v. Nike, Inc., 539 US 654 (2003)
Kiobel v Royal Dutch Petroleum, Co 621 F.3d 111 (2d Circ. 2010)
Kiobel v Royal Dutch Petroleum, US Supreme Court Docket No 10-1491 (12 June 2012)
Reparations for Injuries Suffered in the Service of the United Nations (Advisory Opinion), [1949] ICJ Rep 174
Salomon v Salomon & Co, [1897] AC 22 (UK)
Sarei v. Rio Tinto Plc, 221 F. Supp. 2d 1116 (CD Cal 2002)
Sarei v. Rio Tinto Plc, 9th US Circuit Court of Appeals, No 02-56256
Social and Economic Rights Action Center & the Center for Economic and Social Rights v. Nigeria Communication No. 155/96, African Commission on Human and Peoples’ Rights Ref: ACHPR/COMM/A044/1 (27 May 2002)
Velasquez Rodriguez v Honduras, Inter-American Court of Human Rights Series C, No. 4, Judgment of 29 July 1988, reprinted (1989) 28 ILM 291
Wimborne v Brien, (1997) 15 ACLC 793 (Australia)
Wiwa v. Royal Dutch Petroleum Company, 226 F.3d 88, 106 (2d Cir. 2000)
Books
Addo, M K (ed) Human Rights Standards and the Responsibility of Transnational Corporations (Kluwer Law International, 1999)
Blanpain, R (ed) Bulletin of Comparative Labour Relations: Multinational Enterprises and the Social Challenges of the XXIst Century (Kluwer Law International, 2000)
Bottomley, S and Kinley, D (eds) Commercial Law and Human Rights (Dartmouth Publishing, 2002)
Clapham, A Human Rights Obligations of Non-State Actors (Oxford University Press, 2006)
216
De Schutter, O (ed) Transnational Corporations and Human Rights (Hart Publishing, 2006)
Dorden, N and Gifford, P (eds) Democracy and the Rule of Law (Congressional Quarterly Press, 2001)
Duruigbo, E A Multinational Corporations and International Law: Accountability and Compliance Issues in Petroleum Industry (Transnational Publisher, 2003)
Dworkin, R Justice for Hedgehogs (Harvard University Press, 2011)
Dworkin, R Taking Rights Seriously (Harvard University Press, 1977)
Friedman, W, Henkin, L and Lissitzyn, O (eds) Essays in Honor of Phillip C. Jessup (Columbia University Press, 1972)
Frowein, J A and Wolfrum, R (eds) Max Planck Yearbook of United Nations Law (Kluwer International, 2000)
Gregor, M Cambridge Texts in the History of Philosophy (Cambridge University Press, 1996)
Jones, M and Kriesler, P (eds) Globalisation, Human Rights and Civil Society (Prospect Media, 1998)
Joseph, S Corporations and Transnational Human Rights Litigation (Hart Publishing, 2004)
Joseph, S and McBeth, A (eds), Research Handbook on International Human Rights Law (Edward Elgar, 2010)
Kamminga, M and Zia-Zafiri, S ‘(eds), Liability of Multinational Corporations under International Law (Kluwer International, 2000)
Kinley, D Civilizing Globalisation: Human Rights and the Global Economy (Cambridge University Press, 2009)
Kinley, D (ed) Human Rights and Corporations (Ashgate, 2009)
Kretzmer, D and Klein E (eds) The Concept of Human Dignity in Human Rights Discourse (Kluwer Law International, 2002)
Langford, M (ed) Social Rights Jurisprudence: Emerging Trends in International and Comparative Law (Cambridge University Press, 2009)
Malpas, J and Lickiss, N (eds) Perspectives on Human Dignity: A Conversation (Springer, 2007)
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Mann, F A ‘The Doctrine of International Jurisdiction Revisited After Twenty Years’ Collected Courses of the Hague Academy of International Law (Martinus Nijhoff, 1985)
Mares, R The Dynamics of Corporate Social Responsibilities (Martinus Nijhoff Publishers, 2008)
Mares, R (ed) Business and Human Rights: A Compilation of Documents (Martinus Nijhoff Publishers, 2004)
McBeth, A International Economic Actors and Human Rights (Routledge, 2010)
Morgera, E Corporate Accountability in International Environmental Law (Oxford University Press, 2009)
Muchlinski, P T Multinational Enterprises and the Law (Oxford University Press, 2nd Ed, 2007)
Skolgy, S I The Human Rights Obligations of the World Bank and the International Monetary Fund (Cavendish, 2001)
Smith, C and Rees G Economic Development (Macmillan Publishers, 2nd Ed, 1998)
Triggs, G International Law: Contemporary Principles and Practices (LexisNexis Butterworth, 2nd Ed, 2011)
Journal Articles
Alston, P ‘The Myopia of the Handmaidens: International Lawyers and Globalisation’ (1997) 8 European Journal of International Law 435
Amao, O ‘Corporate Social Responsibility, Social Contract, Corporate Personhood and Human Rights Law: Understanding the Emerging Responsibilities of Modern Corporations’ (2008) 33 Australian Journal of Legal Philosophy 100
Anderson, R J ‘Reimagining Human Rights Law: Toward Global Regulation of Transnational Corporations’ (2010) 88 Denver University Law Review 183
Andorno, R ‘Human Dignity and Human Rights as a Common Ground for a Global Bioethics’ (2009) Journal of Medicine and Philosophy 1
Avery, C ‘The Difference between CSR and Human Rights’ (2006) 89 Corporate Citizenship Briefing 4
218
Azize, J ‘Human dignity and Euthanasia Law’ (2007) 9 University of Notre Dame Australia Law Review 47
Backer, L C ‘Multinational Corporations, Transnational Law: The United Nations’ Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility in International Law’ (2006) 37 Columbian Human Rights Law Review 287
Baez, C ‘Multinational Enterprises and Human Rights’ (1999-2000) 8 University of Miami International and Comparative Law Review 183
Bernard, A ‘Holding Corporations Liable in the United States for Aiding and Abetting Human Rights Violations Abroad: A Statutory Solution’ (2009-10) 78 George Washington Law Review 615
Bernhard, A ‘Response to Sarah L. Seck, Home State Responsibility and Local Communities: the Case of Global Mining’ (2008) 11 Yale Human Rights and Development Law Journal 207
Bilchitz, D ‘The Ruggie Framework: An Adequate Rubric for Corporate Human Rights Obligations?’ (2011) http://www.surjournal.org/eng/conteudos/getArtigo12.php?artigo=12,artigo_10.htm
Bloomberg, P ‘The Increasing Recognition of Enterprise Principles in Determining Parent and Subsidiary Corporation Liabilities’ (1996) 28 Connecticut Law Review 295
Bridgeman, N L and Hunter, D B ‘Narrowing the Accountability Gap: Toward a New Foreign Investor Accountability Mechanism’ (2008) 20 Georgetown International Environmental Law Review 187
Broecker, C ‘“Better the Devil You Know”: Home State Approaches to Transnational Corporate Accountability’ (2008) 41 Journal of International Law and Politics 159
Bunn, I ‘Global Advocacy for Corporate Accountability: Transatlantic Perspectives from the NGO Community’ (2004) 19 American University International Law Review 1265
Carmi, G E ‘Dignity-The Enemy from Within: A Theoretical and Comparative Analysis of Human Dignity as a Free Speech Justification’ (2007) 9 University of Pennsylvania Journal of Constitutional Law 957
Carozza, P G ‘Subsidiarity as a Structural Principle of International Human Rights Law’ (2003) 97 American Journal of International Law 38
219
Cassel, D ‘Human Rights and Business Responsibilities in the Global Marketplace’ (2001) 11 Business Ethics Quarterly 261
Chirwa, D ‘The Long March to Binding Obligations of Transnational Corporations in International Human Rights Law’ (2006) 22 South African Journal of Human Rights 76
Chirwa, D ‘The Doctrine of State Responsibility as a Potential Means of Holding Private Actors Accountable for Human Rights’ (2004) 5 Melbourne Journal of International Law 1
Ciulla, J ‘Why is Business Talking about Ethics? Reflections on Foreign Conversations’ (1991) California Management Review 67
Cragg, B T ‘Home is Where the Halt Is: Mandating Corporate Social Responsibility through Home State Regulation and Social Disclosure’ (2010) 24 Emory International Law Review 73
Deva, S ‘The UN Global Compact for Responsible Citizenship: Is it Still Too Compact to be Global?’ (2006) 2 Corporate Governance Law Review 145
Deva, S ‘Acting Extraterritorially to Tame Multinational Corporations for Human Rights Violations: Who Should Bell the Cat?’ (2004) 5 Melbourne Journal of International Law 37
Deva, S ‘Corporate Code of Conduct Bill 2000: Overcoming Hurdles in Enforcing Human Rights Obligations against Overseas Corporate Hands of Local Corporations’ (2004) 8 Newcastle Law Review 87
Deva, S ‘The UN’s Human Rights Norms for Transnational Corporations and Other Business Enterprises: An Imperfect Step in the Right Direction? (2003-2004) 10 ILSA Journal of International and Comparative Law 493
Deva, S ‘Human Rights Violations by Multinational Corporations and International Law: Where From Here?’ (2003-4) 19 Connecticut Journal of International Law 1
Dhooge, L G ‘A Modest Proposal to Amend the Alien Tort Statute to Provide Guidance to Transnational Corporations’ (2007) 13 U.C. Davis Journal of International Law and Policy 119
Dubin, L ‘The Direct Application of Human Rights Standards to, and by, Transnational Corporations’ (1999) 61 The Review of the International Commission of Jurists 35
220
Duke, J ‘Enforcement of Human Rights on Multinational Corporations: Global Climate, Strategies and Trends for Compliance’ (2000) 28 Denver Journal of International Law and Policy 339
Dupuy, P M ‘Dionisio Anzilotti and the Law of International Responsibility of States’ (1992) 3 European Journal of International Law 13
Duruigo, E ‘Corporate Accountability and Liability for International Human Rights Abuses: Recent Changes and Recurring Challenges’ (2008) 6 Northwestern Journal of International Human Rights 222
Feeney, P ‘Business and Human Rights: The Struggle for Accountability in the UN and the Future Direction of the Advocacy Agenda’ (2012) International Journal of Human Rights http://www.surjournal.org/eng/conteudos/getArtigo11.php?artigo=11,artigo_08.htm
Glensy, R D ‘The Right to Dignity’ (2011) 43 Columbia Human Rights Law Review 65
Haas, P ‘Introduction: Epistemic Communities and International Policy Coordination’ (1992) 46 International Organization Journal 1
Hannum, H ‘The Status of the Universal Declaration of Human Rights in National and International Law’ (1995/6) 25 Georgia Journal of International and Comparative Law 287
Heil, J L ‘African Private Security Companies and the Aliens Tort Claims Act: Could Multinational Oil and Mining Companies be Liable?’ (2002) 22 Northwestern Journal of International law and Business 291
Henkin, L ‘The Universal Declaration at 50 and the College of the Global Markets’ (1999) 25 Brooklyn Journal of International Law 17
Henry L M ‘The Jurisprudence of Dignity’ (2011) http://ssrn.com/abstract=1928768
Hessbruegge, J A ‘Human Rights Violations Arising from the Conduct of Non-State Actors’ (2005) 11 Buffalo Human Rights Law Review 21
Hong, J ‘Enforcement of Corporate Codes of Conduct: Finding a Private Right of Action for International Laborers against MNCs for Labor Rights Violations’ (2000) 19 Wisconsin International Law Journal 41
Horton, D ‘Illuminating the Path of Aliens’ Judicial Recourse: Preventing another Bowoto v Chevron by Congressional Legislation’ (2010) 10 Appalachian Journal of Law 27
221
Jerbi, S ‘Business and Human Rights at the UN: What Might Happen Next?’ (2009) 31 Human Rights Quarterly 299
Jochnick, C ‘Confronting the Impunity of Non-State Actors: New Fields for the Promotion of Human Rights’ (1999) 21 Human Rights Quarterly 56
Jochnick, C and Rabbaeus, N ‘Business and Human Rights Revitalized: A New UN Framework Meets Texaco in the Amazon’ (2010) 33 Suffolk Transnational Law Review 1
Joseph, S ‘Taming the Leviathans: Multinational Enterprises and Human Rights’ (1999) XLVI Netherlands International Review 171
Justice Binnie, I ‘Legal redress for Corporate Participation in International Human Rights Abuses: A Progress Report’ (2008-2009) 38 The Brief 44
Kapur, R ‘From Human Tragedy to Human Rights: Multinational Corporate Accountability for Human Rights Violations’ (1990) 10 Boston College Third World Law Journal 1
Kimerling, J ‘The Environmental Audit of Texaco’s Amazon Oil Fields: Environmental Justice of Business as Usual? (1994) 17 Harvard Human Rights Journal 199
Kimerling, J ‘Indigenous Peoples and the Oil Frontier in Amazonia: The Case of Ecuador, Chevron Texaco, and Aguinda v. Texaco’ (2006) 38 New York University Journal of International Law and Policy 413
King, H “Corporate Accountability under the Alien Tort Claims Act” (2008) 9 Melbourne Journal of International Law 472
Kinley, D and Nolan, J ‘Trading and Aiding Human Rights: Corporations in the Global Economy’ (2007) 25 Nordisk Tidsskrift for Menneskerettigheter 353
Kinley, D and Joseph, S ‘Multinational Corporations and Human Rights: Questions about Their Relationship’ (2002) 27 Alternative Law Journal 7
Kinley, D and Tadaki, J ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law’ (2003-04) 44 Virginia Journal of International Law 931
Knox, J H ‘The Human Rights Council Endorses “Guiding Principles” for Corporations’ (2011) 15 American Society of International Law http://www.asil.org/insights110801.cfm
Knox, J H ‘The Ruggie Rules: Applying Human Rights to Corporations’ (2011) http://ssrn.com/abstract=1916664
222
Macklin, R ‘Dignity is a Useless Concept’ (2003) 327 British Medical Journal 1419
Mahlmann, M ‘The Basic Law at 60 - Human Dignity and the Culture of Republicanism’ (2010) 11 German Law Journal 9
Mares, R ‘Defining the Limits of Corporate Responsibilities against the Concept of Legal Positive Obligations’ (2009) 40 George Washington International Law Review 1157
McBeth, A ‘Every Organ of Society: The Responsibility of Non-State Actors for the Realization of Human Rights’ (2008-9) 30 Hamline Journal of Public Law and Policy 37
McBeth, A ‘Crushed by an Anvil: A Case Study on the Responsibility of Human Rights in the Extractive Sector’ (2008) 11 Yale Human Rights and Development Law Journal 127
McBeth, A and Joseph, S ‘Same Words, Different Language: Corporate Perceptions of Human Rights Responsibilities’ (2006) 11 Australian Journal of Human Rights 95
McBeth, A ‘A Look at Corporate Code of Conduct Legislation’ (2004) 33 Common Law World Review 222
McCallion, K F and Sharma, R ‘Environmental Justice Without Borders: The Need for an International Court of the Environment to Protect Fundamental Environmental Rights’ (2000) 32 The George Washington Journal of International Law and Economics 385
McCorquodale, R and Simons, P ‘Responsibility Beyond Borders: State Responsibility for Extraterritorial Violations by Corporations of International Human Rights Law’ (2007) 70 The Modern Law Review 598
McCorquodale, R ‘Overlegalizing Silences: Human Rights and Nonstate Actors’ (2002) 96 American Society International Law Proceedings 381
McCrudden, C ‘Human Dignity and Judicial Interpretation of Human Rights’ (2008) 19 The European Journal of International Law 665
Michalski, J ‘Sairei v. Rio Tinto, PLC’ (2007) 15 Tulane Journal of International and Comparative Law 751
Monshipouri, M et al ‘Multinational Corporations and the Ethics of Global Responsibility’ (2003) 25 Human Rights Quarterly 965
Muchlinski, P ‘The Changing Face of Transnational Business Governance: Private Corporate Law Liability and Accountability of Transnational Groups in a
223
Post Financial Crisis World’ (2011) 18 Indiana Journal of Global Legal Studies 665
Muchlinski, P ‘Human Rights and Multinationals: Is There a Problem?’ (2001) 77 International Affairs 31
Newell, P ‘Civil Society, Corporate Accountability and the Politics of Climate Change’ (2008) 8 Global Environmental Politics 122
Paust, J J ‘The Reality of Private Rights, Duties and Participation in the International Legal Process’ (2004) 25 Michigan Journal of International Law 1229
Penovic, T ‘Undermining Australia’s International Standing: The Failure to Extend Human Rights Protections to Indigenous Peoples Affected by Australian Mining Companies’ Ventures Abroad’ (2005) 11 Australian Journal of Human Rights 3
Ratner, S ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (2001) 111 The Yale Law Journal 443
Rose, C ‘An Emerging Norm: The Duty of States to Provide Reparations for Human Rights Violations by Non-State Actors’ 33 Hastings International and Comparative Law Review 307
Ruggie, J G ‘The Construction of the UN “Protect, Respect and Remedy” Framework for Business and Human Rights: the True Confessions of a Principled Pragmatist’ (2011) 2 European Human Rights Law Review 127
Ruggie, J G ‘Protect, Respect and Remedy: A United Nations Policy Framework for Business and Human Rights’ (2009) ASIL Proceedings 281
Ruggie, J G ‘Current Developments Business and Human Rights: The Evolving International Agenda’ (2007) 101 The American Journal of International Law 819
Schachter, O ‘Human Dignity as a Normative Concept’ (1983) 77 American Journal of International Law 848
Seck, S L ‘Home State Responsibility and Local Communities: The Case of Global Mining’ 11 Yale Human Rights and Development Law Journal 177
Simons, P ‘International Law’s Invisible Hand and the Future of Corporate Accountability for Violations of Human Rights’ (2012) 3 Journal of Human Rights and the Environment 9
Skogly, S I and Gibney, M ‘Transnational Human Rights Obligations’ (2002) 24 Human Rights Quarterly 781
224
Smith, G A ‘An Introduction to Corporate Social Responsibility in the Extractive Industries’ (2008) 11 Yale Human Rights and Development Law Journal 1
Stephens, B ‘The Amorality of Profit: Transnational Corporations and Human Rights’ (2002) 20 Berkeley Journal of International Law 45
Taylor, M ‘The Ruggie Framework: Polycentric Regulation and the Implications for Corporate Social Responsibility’ (2011) 5 Etikk i Praksis. Nordic Journal of Applied Ethics 9
Van den Herik, L and Cernic, J L‘Regulating Corporations under International Law: From Human Rights to International Criminal Law and Back Again’ (2010) 8 Journal of International Criminal Justice 725
Vetter, G A ‘The Forgotten Million: Assessing International Human Rights Abuses in the Artisanal Diamond Mining Industry’ (2007) 16 Transnational law and Contemporary Problems 733
Wahi, N ‘Human Rights Accountability of the IMF and the World Bank: A Critique of Existing Mechanisms and Articulation of a Theory of Horizontal Application’ (2005) 12 UC Davis Journal of International law and Policy 333
Wall, C ‘Human Rights and Economic Sanctions: The New Imperialism’ (1988) 22 Fordham International Law Journal 577
Research Reports
Amnesty International ‘United Nations: A Call for Action to Better Protect the Rights of those Affected by Business-Related Human Rights Abuses’ IOR40/009 (2011)
Amnesty International ‘Comments in Response to the UN Special Representative of the Secretary General on Transnational Corporations and other Business Enterprises: Guiding Principles - Proposed Outline’ Doc IOR 50/001 (2010)
Amnesty International ‘Petroleum, Pollution and Poverty in the Niger Delta’ AFR 44/017 (2009)
Amnesty International ‘Submission to the UN Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ IOR40/018/ (2008)
Amnesty International ‘Oil in Sudan: Deteriorating Human Rights’ AFR 54/01/00ERR (2000)
225
Amnesty International ‘Papua New Guinea Bougainville: The Forgotten Human Rights Tragedy’ ASA/34/01 (1997)
Beatriz Huarte Melga et al ‘The 2011 Update of the OECD Guidelines for Multinational Enterprises: A Balanced Outcome or an Opportunity Missed?’ (Transnational Economic Law Research Center, Martin Luther University Halle-Wittenberg, 2011)
Brief Amici Curiae of the Former UN Special Representative for Business and Human Rights, Professor John Ruggie, Professor Philip Alston and the Global Justice Clinic at NYU School of Law in Support of Neither Party’ submitted to the US Supreme Court in Kiobel v Royal Dutch Petroleum, US Supreme Court Docket No 10-1491 (12 June 2012)
Business Leaders Initiative on Human Rights ‘Building Understanding’ (Report No. 1, 2003)
Canadian Business School ‘CSR Frameworks for the Review of the Extractive Sector’ (Report No 1, Canadian Business School for Social Responsibility, 2009)
Caroline Rees ‘Access to Remedies for Corporate Human Rights Impacts: Improving Non-Judicial Mechanisms’ (John F. Kennedy School of Government, Corporate Social Responsibility Initiative Report No 32, 2008)
Caroline Rees ‘Grievance Mechanisms for Business and Human Rights: Strengths, Weaknesses and Gaps’ (John F. Kennedy School of Government, Corporate Social Responsibility Initiative Report No 40, 2008)
Crude Accountability ‘Karachaganak Project, Kazakhstan: Case of the Residents in the Village of Berezoka’ (Report No 1, 2006)
Erin Daly’ The Constitutional Right to Dignity’ (2009) http://www.ialsnet.org/meetings/constit/papers/DalyErin%28USA%29.pdf
Foreign Policy Practicum Members ‘Canada’s Extractive Industry Ombudsman: Background and Recommendations for an Ombudsperson for Canadian Extractive Companies Operating Abroad’ (Brief Submitted to the Government of Canada Roundtables on Corporate Social Responsibility in the Extractive Sector, University of Ottawa, 2006)
Halifax Initiative ‘Glamis Gold and the IFC: Gross Mismanagement in Guatemala’ (Mining Watch, Report No 1, 2011)
Human Rights Watch ‘UN Human Rights Council: Weak Stance on Business Standards’ (2011)
226
Human Rights Watch ‘Joint NGO Statement to the Eighth Session of the Human Rights Council’ (Human Rights Council, Eighth Session, 2008)
ILO Governing Body Working Party Social Dimensions of the Liberalisation of International Trade ‘Overview of Global Developments and Office Activities Concerning Codes of Conduct, Social Labelling and other Private Sector Initiatives Addressing Labour Issues’ GB 273/WP/SDL/1 (1998)
International Federation of Human Rights et al ‘Joint Civil Society Statement on Business and Human Rights to the 17th Session of the UN Human Rights Council’ (ESCR-NET, 2011)
Jack Donnelly ‘Human Dignity and Human Rights’ (Geneva Academy of International Humanitarian Law and Human Rights, Research Project on Human Dignity, 2009)
John F. Kennedy School of Government ‘Rights-Compatible Grievance Mechanisms: A Guidance Tool for Companies and their Stakeholders’ (Corporate Social Responsibility Initiative, 2008)
John Ruggie ‘Recommendations on Follow-Up to the Mandate of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (2011)
Joint Civil Society Statement ‘Advancing the Global Business and Human Rights Agenda: Follow-up to the Work of the Special Representative of the Secretary-General (SRSG) on Human Rights and Transnational Corporations and Other Business Enterprises’ (International Federation of Human Rights, 2011)
Justice Ian Binnie ‘Confronting Corporate Complicity in International Human Rights Abuses’ (International Commission of Jurists, Conference on Legal Remedies for Human Rights Abuse Involving Corporations, 2010)
Justine Nolan ‘The United Nations’ Compact with Business: Hindering or Helping the Protection of Human Rights?’ (University of New South Wales Faculty of Law Research Series, Research Discussion Paper No 10, 2010)
Niza/Action Aid ‘Government Mining in Africa: African Perspectives, State Initiatives and International Standards’ (Report No 1, 2011)
OECD Watch ‘Statement on the Update of the OECD Guidelines for MNEs: Improved Content and Scope, but Procedural Shortcomings Remain’ (Publication 3675, 2011)
Olivier De Schutter ‘Extraterritorial Jurisdiction as a Tool for Improving the Human Rights Accountability of Transnational Corporations’ (Seminar Paper
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Prepared for the Office of the UN High Commissioner for Human Rights, Brussels, 2006)
Oxford Pro Bono Publico ‘Obstacles to Justice and Redress for Victims of Corporate Human Rights Abuse: A Comparative Submission Prepared for Professor John Ruggie’ (Oxford University, 2008)
Philip Alston ‘A Human Rights Perspective on the Millennium Development Goals’ (Paper Presented as a Contribution to the Work of the Millennium Project Task Force on Poverty and Economic Development, 2004)
Rainbow Insights ‘Evaluating the EITI’s Impact on the Transparency of Natural Resource Revenues’ (Report No 1, 2009)
Report of the International Commission of Jurists Expert Legal Panel on Corporate Complicity in International Crimes Facing the Facts and Charting a Legal Path (Corporate Complicity and Legal Accountability, Vol 1, 2008)
Rights and Accountability in Development ‘Kilwa Trial, A Denial of Justice: A Chronology October 2004 - July 2007’ (2007)
Robert C. Blitt ‘Beyond Ruggie’s Guiding Principles on Business and Human Rights: Charting an Embracive Approach to Corporate Human Rights Compliance’ (University of Tennessee Knoxville, Research Paper No 158, 2012)
Robert Grabosch ‘SRSG John Ruggie’s Draft Guiding Principles for the Implementation of the United Nations ‘Protect, respect and Remedy Framework’ (European Center for Constitutional and Human Rights, Report No 1, 2011)
Rory Sullivan and Nicolas Hachez ‘Human Rights Norms for Business: The Missing Piece of the Ruggie Jigsaw in the Case of Institutional Investors’ (Leuven Centre for Global Governance Studies, Report No 67, 2011)
Sarah Joseph and Adam McBeth ‘Submission to the Secretary General's Special Representative on Business and Human Rights on Proposed Guiding Principles for Business and Human Rights’ (Castan Centre for Human Rights Law, Monash University)
Steven Herz et al ‘The International Finance Corporation’s Performance Standards and The Equator Principles: Respecting Human Rights and Remedying Violations?’ (Submission to the UN Special Representative to the Secretary General on Human Rights and Transnational Corporations and other Business Enterprises, Bank Information Center et al, 2008)
‘Stabilization Clauses and Human Rights’ (A Research Project Conducted for IFC and the United Nations Special Representative to the Secretary General on Business and Human Rights, 2009)
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Susan Park ‘Assessing the Accountability of the World Bank Group’ (Warwick University Centre for the Study of Globalisation and Regionalisation, Workshop Paper No 6, 2007)
Internet Sources
http://www.amnesty.org
http://www.brettonwoodsproject.org/
http://business-humanrights.org/Categories/Lawlawsuits
http://www.business-humanrights.org/SpecialRepPortal/Home
http://www.cao-ombudsman.org/
http://www.chevron.com/ecuador/
http://www.global-businessinitiative.org/SRSGpage/files
https://www.globalreporting.org/Pages/default.aspx
www.globalwitness.org
http://www.goss-online.org
http://harvardhumanrights.wordpress.com/
http://www.hks.harvard.edu/
http://www.hrea.org/
http://www.humanrightsbusiness.org
http://www.iadb.org/en/
http://www.icmm.com/
www.icsid.worldbank.org/
http://www.miningwatch.ca/
http://www.oecd.org
http://oecdwatch.org
http://www.ombudsassociation.org/
http://www.ombudsman.europa.eu
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http://www.ohchr.org
http://www.riotinto.com.au/
http://www.shell.com/
http://www.theirnetworth.com/Businesses/Exxon_Mobil
www.un.globalcompact.org
http://voluntaryprinciples.org/
http://web.worldbank.org/
Other
Ben Smith Principled Pragmatism on Human Rights (Politico, 2009)
Brian Thompson Rio Tinto Caused War: Somare (The Age, 2011)
John G. Ruggie Keynote Remarks at Extraordinary Plenary Voluntary Principles on Security and Human Rights (Department of Foreign Affairs and International Trade, Ottawa, 2011)
John G. Ruggie OECD: On Businesses and Human Rights http://www.youtube.com/watch?v=dVDupBFJiqE (2011)
John G. Ruggie Sir Geoffrey Chandler Speaker Series (The Royal Society for the Encouragement of Arts, Manufacturers and Commerce, London, 2011)
Host Agreement Between and Among the Government of the Azerbaijan Republic and the State Oil Company of the Azerbaijan Republic, BP Exploration (Caspian Sea) Ltd., Statoil BTC Caspian as Ramco Hazar Energy Limited, Turkiye Petrolleri A.O., Unocal BTC Pipeline, Ltd., Itochu Oil Exploration (Azerbaijan) Inc., Delta Hess (BTC) Limited, 7.2(x) (2000)
International Chamber of Commerce and International Organisation of Employers Joint Views of the IOE and ICC on the Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (2004)
Kofi Annan Address to World Economic Forum (Davos, 2001)
Letter from the United States of America to John Ruggie (State Responses to the Report By John Ruggie, Special Representative of the UN Secretary-General for Business And Human Rights, United Nations Human Rights Council 16, 2011)
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M J Morgan DR Congo’s $24 Trillion Fortune (African Business Online, 2009)
Navanethem Pillay Opening Statement: OHCHR Consultation on Business and Human Rights (United Nations High Commissioner for Human Rights, Palais Des Nations Room XVIII, 2009)
Note, Business and Human Rights: The Ruggie Mandate (The Law Society of England and Wales, 2010)
Note, Court Ruling a Major Step Forward for Case against Canadian Mining Company (Global Witness, 2011)
Note, The Ruggie Guiding Principles for Business and Human Rights: Five Predictions (Word Press, 2011)
Salil Tripathi Have the Voluntary Principles Realised their Full Potential? (Submission to Special Representative on the Issue of Business and Human Rights, 2010)
Video Bad Oil: The Amazon’s Toxic Mess Channel 7 News (9 October 2011)
Vincent Trivett Choose between North Sudan, China and the US (Business Insider, 2011)
UK Foreign and Commonwealth ‘Strategic International Policy Priorities for the UK’ in UK International Priorities: A Strategy for the FCO (UK Foreign and Commonwealth Office, 2003)
