Transcript Corporations and Human Rights Dr Joseph Mwaura Corporations and Human Rights Problem I Race to the bottom “To attract companies like yours …we have felled mountains,

Corporations and Human
Rights
Dr Joseph Mwaura
Corporations and Human Rights
Problem I
Race to the bottom
“To attract companies like yours …we have felled
mountains, razed jungles, filled swamps, moved rivers,
relocated towns … all to make it easier for you and your
business to do business here.”
An advert placed in the Fortune magazine
by the Philippine government in 1975.
Corporations and Human Rights
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Union Carbide in India
Shell in the Niger Delta
BAT in Kenya
Ashanti Gold in Ghana
Coca Cola in India
EPZ’s in Developing Countries etc
Task 1
100
90
80
70
60
50
40
30
20
10
0
German
Shareholders
British
US
Company Company Company Company
A
B
C
D
The above companies are all registered
and doing business in the USA. The US
federal government introduces a new tax
for all US companies. Which companies
would be liable to pay the tax.
Corporate Personality
• A company is a distinct legal entity with a separate
•
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existence from its members
Corporate veil separates the corporate entity from its
members
Exceptions
– The veil may be lifted:
– In times of national emergency – a co whose
membership is entirely foreign may be regarded as a
foreign co Daimler v Continental Tyre & Rubber Co
(1916) 2 A.C. 307 – all shareholders were German –
enemy of the state with inability to sue.
– Fraud – where the formation of a co comprises fraud
Corporate Personality
– Economic entity: a group of companies seen as one.
The veil is lifted if:
• Companies are under the dominant control of one
of them
• Where the subsidiary acts as an agent of the
parent co
– A statute may expressly authorise the lifting of the
veil
• Environmental Protection statutes
• Fraudulent or wrongful trading - director or other
officer personally liable for carrying on business
with intent to defraud creditors
Corporate Personality
– Officers are personally liable in tort where they
exercise personal, rather than corporate, competence
for directing a wrongful act e.g. personally writing to
the plaintiff rather than using company note paper –
conducting negotiations on a personal as opposed to
a corporate footing Airline Shipping Corp v Adamson
Corporations and Human Rights
Problem II
• International Law
• International law imposes direct obligations on the
state
– Some duties imposed indirectly through the host
state
– “…makes a mockery of a system which claimed
to embody international law but didn't cover the
behaviour of actors whose role in international
transactions- commercial, cultural, social- already
rivalled that of States…”(Kamminga, Zia Zarifi
2000 p.1)
Corporations and Human Rights
Problem III
• Host State Regulation
• Problems
– high cost of litigation
– delays in litigation
– corruption, influential TNCs, lack of judicial
impartiality
– Strict regulations lead to loss of investment – TNCs
relocate to less strict countries
– lack of legal resources
– difficulties in piercing the corporate veil to hold a
parent company liable when the subsidiary cannot
offer redress
– Strict regulation leads to loss of investment – TNCs
relocate to less strict countries - race to the bottom
Corporations and Human Rights
Problem IV
• Home state regulation
• reluctant to enforce breaches
– Unwillingness to give extraterritorial effect to
domestic laws
– Forum non Conveniens
– USA Legal System ‘Alien Torts Claims Act 1798’ which
permits cases from non American nationals against
American TNC’s. (Doe V. Unocal).
– Limited usefulness
– Conduct complained of has to violate the law of
nations.
• Environmental degradation held not to be a
violation of the law of nations.
Forum non Conveniens – inconvenient/inappropriate forum
• The more the factors that connect a case to a certain
jurisdiction the more appropriate that jurisdiction is:
– The location where the violation took place
– the location of potential witnesses
– The location of other relevant evidence
– the choice of law applicable to the dispute
– possible undue hardship for the defendant – courts
discretion
– the most expeditious use of judicial resources –
discretionary
– questions of public policy and other similar factors discretionary
See International campaign for Justice in Bhopal
http://www.bhopal.net/index1.html
Corporations and Human Rights
Problem V
• Corporate Social Responsibility
• Corporate Social responsibility – voluntary
– Unenforceable rules set the standards - soft law
(codes of conduct, norms, guidelines)
– Pressure from shareholders, investors, consumers,
community etc
– Useful but effectiveness in protecting human rights
limited
– Spin – a proactive way of deflecting criticism
• Task 2: Do corporations have any legal duties
regarding human rights?
Legal Duties
Companies Legislation
Common Law
Labour Laws
Anti-Corruption Legislation
Environmental Laws
Constitutions
II
International HR Instruments
Companies Statutes
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A number of Commonwealth African Countries
still base theirs on the English Companies Act
1948.
– Silent on obligations
– Different interpretations
• A variety of theories applicable
In Whose Interests do Directors Act?
Company Directors’
Duties
Corporate Entity
Corporate Entity +
Shareholders
Corporate Entity,
Shareholders,
Stakeholders (Employees,
Creditors, Consumers,
Environment, Community,
Human rights etc)
Common Law
• Assuming social responsibilities whose benefits
to the company are clear – intra vires
• social responsibilities whose benefits to
the company are too speculative or too
remote – breach of duty (Evans v Brunner
Mond & Co [1921] 1 Ch 359)
• Need for Corporate Law Reform
– Correct defects in the present law
• extend the scope of social responsibility
• subscribe to recent international developments
regarding human rights e.g. UN Norms on TNCs)
– Codify the common law
– Make the law accessible
– Raise standards of corporate governance, CSR, and
human rights
Human Rights
Universal Declaration of Human Rights 1948
• The Preamble:
– “The General Assembly proclaims this Universal
Declaration of Human Rights as a common standard
of achievement for all peoples and all nations, to the
end that every individual and every organ of
society, keeping this Declaration constantly in mind,
shall strive by teaching and education to promote
respect for these rights and freedoms.”
UN Norms on Transnational Corporations
Preamble:
“ Recognizing that even though States have the primary
responsibility to promote, secure the fulfillment of,
respect, ensure respect of and protect human rights,
transnational corporations and other business
enterprises, as organs of society, are also
responsible for promoting and securing the human
rights set forth in the Universal Declaration of Human
Rights.”
African Charter on Human and Peoples’
Rights
The Preamble to the African Charter on Human
and Peoples’ Rights
“the enjoyment of rights and freedoms also implies
the performance of duties on the part of
everyone (including legal persons?).”
• How enforceable is the preamble?
• The substantive provisions of the charter impose
responsibility on the states.
Constitutions
• Constitutional Reforms in Africa
–All fundamental rights being made applicable against
companies
– South African Constitution of 1996, Section 8 (2):
“A provision of the Bill of Rights binds a natural or a
juristic person if, and to the extent that, it is
applicable, taking into account the nature of the right
and the nature of any duty imposed by the right.”
– Ghanaian Constitution of 1992, Section 12:
“the fundamental human rights and freedoms
enshrined in this chapter shall be respected and
upheld by the Executive, Legislature, and Judiciary
and all other organs of the government and its
agencies and, where applicable to them, by all
natural and legal persons in Ghana, and shall be
enforced by the courts as provided for in this
constitution.”
– Kenyan Draft Constitution, Section 29 (1):
“the Bill of Rights applies to all laws and binds all state
organs and all persons”
Constitutions
Constitutions Reforms in Africa
–All fundamental rights applicable against companies
- Is there a need to identify a boundary between the
responsibility of states and companies (sphere of
influence)?
– Should companies be liable for:
• benefiting directly or indirectly from human rights
violations by others (state, subsidiaries, suppliers,
business partners, joint ventures, sub-contractors)
• exploiting weak national legislation;
• remaining silent whilst human rights violations
occur;
• paying taxes to governments that use taxpayer’s
International Human Rights
Instrument
 Is there a need for a binding international human
rights Instrument to regulate corporations
 International court for enforcing corporate liability
 Lessons from Rome Statute/ICC.
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The Future
Corporate lawyers becoming proactive
• Ethical companies are succeeding
• Technology makes abuses harder to hide
• Debate may lead to strong legislation
– Possibility of having a binding international
human rights instrument
Pressure groups
• CorpWatch
• Human Rights First
• Amnesty International UK
• International Labour Organisation
• Columbia Solidarity Campaign
• EarthRights International
• Christian Aid …….
Can you make a difference?
• Letters
• Pressure groups e.g. Amnesty take action
• Socially responsible investing/jobs/consumption