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LGD 2001 (1) - PPT - Appendix 1

Permanent Peoples' Tribunal on Global Corporations and Human Wrongs, University of Warwick, 22-25 March 2000, Findings and Recommended Action

Appendix 1

Controlling Corporate Wrongs: The Liability of Multinational Corporations:
Legal possibilities, Initiatives and Strategies for Civil Society

The IRENE (International Restructuring Education Network Europe) Seminar on corporate liability and workers' rights was held at the University of Warwick, Coventry, UK on 20th and 21st March 2000. The full report is available in the first edition of Law, Social Justice and Global Development. A brief extract with the conclusions and strategies for action is included here.

The Seminar

In April 1999 the Department of Public International Law at the Erasmus University of Rotterdam organised a colloquium on corporate responsibility – one of the first seminars to address these issues (see brief report, ER 4.1). At the same time IRENE, during its work on codes of conduct, had noticed that lawyers were interested in NGO initiatives around corporate social responsibility, while NGOs were reluctant to undertake legal action against MNCs without first getting information and support from specialists in international law. The present seminar, therefore, was organised jointly by the Netherlands-based NGO network IRENE and the School of Law at the University of Warwick to enable practitioners of different kinds to build on the theoretical insights of the Rotterdam seminar and begin to discuss what can be done in practice to increase MNCs' accountability and ensure implementation of the international instruments for the protection of human and environmental rights.

The aims of the seminar were:

  • to bring together different groups working to achieve corporate accountability: lawyers, trade unionists, academics/researchers, development NGOs (NGDOs) and campaigning organisations;
     
  • to review legal initiatives aimed at controlling corporations and examine the legal and pseudo-legal issues raised by some key cases;
     
  • to suggest future directions and initiatives for civil society in making corporations more accountable to states, citizens and the planet.

About 40 people, representing a very wide range of relevant experience and expertise, attended the seminar. Lawyers involved in specific cases of legal claims against MNCs, or with institutional initiatives such as the OECD Guidelines Multinational Enterprises or the UN Subcommission for the Promotion and Protection of Human Rights, were joined by academics and researchers from several countries, the international mining and chemical industry trade union ICEM, and members of NGDOs and advocacy and campaigning organisations from several European countries.

The seminar was held as a roundtable and used a number of short presentations to stimulate debate and brainstorming on strategies, together with exchange of practical experiences. This meant that the discussion was both wide-ranging and intense; occasionally diffuse, but rich in ideas coming from a wide spectrum of perspectives on this increasingly urgent issue of rights, justice and governance.

It is worth emphasising that this seminar did not pretend to arrive at definitive conclusions or strategies. Active collaboration between lawyers and concerned NGOs on these issues is still in its early stages, and this seminar should be viewed as work in progress.

'Laws are created by and for the powerful, but once they are there, they can be used against them.'

Strategies and Methods to Improve Corporate Liability

Sharing and comparing experiences at the seminar generated some key questions of strategy:

  • Can MNCs contribute positively to development, and how can they be encouraged to do so?
     
  • How can lawyers, trade unions, and NGOs work together with and for claimants?
     
  • What are the advantages and disadvantages of different strategies?

Strategies

Continuing and Intensifying Direct Legal Challenges

However murky the corporate smokescreen is, it remains just a smokescreen. All corporations are obliged to have legal existence, so there must be a law-based way of challenging them. The state has the right to revoke a corporation's licence or charter. A useful strategy is to find out what the criteria are for governments to grant corporate licences and then to challenge companies on their compliance with these criteria, while at the same time lobbying governments to sharpen those criteria if they allow companies to violate human rights or destroy the environment.

In the United States, as Ward Morehouse of the US Program on Corporations, Law and Democracy reported, such challenges are called charter revocation actions. Revocation of a corporation's charter, its basic founding and enabling document, is a very serious sanction. There have been several attempts to pursue this strategy in individual US states, where the attorney-general or governor has the power to revoke a company's charter, even though the power has been rarely used in recent decades. A petition to revoke UNOCAL's charter has been prepared[7], and attempts to get the Attorney General of New York state to initiate charter revocation actions against Union Carbide and General Election corporations are being explored.

Another basis for claims is that of false advertising. It can be effective and shaming to show that a large and famous corporation is lying. These cases tend to be brought not by victims from the host country but by campaigners in the MNC's home country. For instance, when Nike advertised the high quality of its factories in South-east Asia, a group of activists sued it on the grounds that this statement was misleading to consumers. On this basis it could be possible to sue Shell, which has bought a good deal of space in National Geographic magazine in order to boast of its care for the environment, by bringing conclusive evidence of environmental damage caused by Shell's operations. This kind of argument, however, presupposes a common or consensual definition of a good factory or environmental care. Lack of internationally agreed standards in these respects makes it possible for corporations to make such claims even when it is all too obvious that they care neither for their workers nor the environment.

Several participants argued strongly for further research and testing on bringing criminal charges against MNC management. The law varies from country to country, and in most places criminal charges cannot be brought against a company as such, only against its managers. Some NGOs have tried to bring criminal charges against the directors of MNCs, but so far without success. Richard Meeran pointed out that it is hard to establish criminal responsibility where personal liability has to be proven.

However, the case of Gen. Pinochet, involving a number of countries, has excited interest among lawyers as a possible precedent, showing that an individual, even a former head of state, can be sued for abuses committed in another country. This case has had a big impact in international law, e.g. in the case of a former head of state being brought to trial in Senegal. If a key lawsuit could be brought successfully against a company in one country, e.g. on the basis of crimes against humanity, it would raise interest among lawyers outside those limits and countries, and would also serve as a deterrent against companies. A combination of criminal as well as civil action against the same MNC may be worth exploring.

Meanwhile, the campaign for an International Criminal Court, which would make companies as well as persons accountable under criminal law, continues, and the existing tribunals for trying war criminals in Rwanda or former Yugoslavia may point the way towards developing a similar mechanism applying to companies in relation to corporate violations of human rights.

The law continues to evolve, and fresh regulations are always appearing in the attempt to keep up with fresh abuses (e.g. new rules currently being established on jurisdiction in sex tourism). This makes the possibilities for legal action an ever-open book whose pages are constantly being inscribed with new cases and experiences. However, as Sam Zia-Zarifi warned, it is of the utmost importance to focus always on what the claimants want. As well as the dangers attaching to disclosure of information and its sources, there is the question of whether, if an MNC pulls out of a country under legal pressure, its successor may be even worse, or its departure may leave a disastrously gaping hole in the local economy.

Factors to Consider When Contemplating Bringing a Suit Against a Company

Evidence – must be solid, correct, watertight; an NGO bringing a case needs to show its own interest in the case, e.g. as part of an affected population or on the grounds of public interest;

Confidentiality and disclosure of information – will the disclosure of sources put informants at risk?

Corporate structures – the cases discussed illustrate clearly how the corporate veil or smokescreen obscures and obfuscates their activities;

Proper legal advice – vital for NGOs and trade unions supporting complainants or contemplating action of their own;

Money – taking legal action is not cheap! And NGOs will probably find that once they start a lawsuit, the corporation will promptly mount a counteroffensive, e.g. a libel case, putting a heavy strain on the NGO's capacity;

Image – consider the credibility costs of losing – although even a failed case can bring good publicity, if the campaign has been good and the facts of the case well publicized;

Constituency – NGOs and trade unions need to verify that their members agree with the proposed strategy.

Work With Codes of Conduct and Standards

As we have noted above, the key aspect of codes of conduct on which to focus should be implementation. There is no longer much need to develop new codes; the key issues and standards have been defined. The important thing is to get them implemented and enforced.

Codes are only as good as their monitoring mechan-isms, and if they lack these they are little more than public relations exercises. But companies can be called to account on their own promises, particularly if they themselves refer to recognized instruments. Even though the codes are not in themselves legally binding, they can be used in legal procedures, as a secondary source to binding conventions. If, for instance, a company has signed the voluntary industry code called 'Responsible Care', which contains a subcode on 'Product Stewardship', and then exports to Latin America a product banned in the USA and the EU, it cannot be legally challenged on the basis of breaking its own voluntary promises, but could arguably be challenged if the voluntary code referred to ILO Conventions or OECD Guidelines.

Vic Thorpe reported that ICEM, having become frustrated with the toothlessness of unilateral company codes of conduct, has begun to negotiate contracts between itself and some MNCs whereby the companies contract to fulfil certain responsibilities. Under one such contract with the Norwegian company Statoil, for instance, Statoil has agreed not to oppose efforts to unionize by its employees in any country where it operates (e.g. Azerbaijan and China). It is unclear, however, what legal force this kind of contract has in the case of a transgression.

International standard-setting is an area of work which will continue at both 'official' (UN, ILO, EU, etc.) and NGO levels. Systematization and better implementation of existing standards would seem to be the key strategy which NGOs and trade unions should be promoting, including:

  • Devising an international set of standards;
     
  • Establishing international implementing/monitoring mechanisms;
     
  • Establishing incentives and sanctions.

Finally, work with codes of conduct and standards is not an alternative to legal approaches but a complement and a support to them. Lawyers, NGOs and trade unions were urged to work together to contribute to raising standards.

Keeping the Issues on the Agenda

Although much of the seminar focused on actual and potential legal approaches to corporate liability, it was clear from the contributions of the NGOs present that campaigning, awareness-raising and North/South linking would continue to be major tools for them, reflecting their specific competence, networks and advocacy capacity. Although campaigning does not generally result in actual redress for the victims or survivors of corporate malpractice, the mobilization of public opinion through publicizing key cases can shame companies into better practice. The value of the glare of publicity to which MNCs are exposed in public hearings has already been mentioned.

Sometimes the media can be a useful ally. Roger Blanpain cited an example concerning the French oil company Total, where public opinion over a large oil spill ran so high that Total, not the ship immediately responsible for the spill, had to pay up. He urged NGOs and trade unions to lobby and get media coverage around key cases. However, a note of caution was sounded about the reliability of the media as a weapon for justice, since media interest is notoriously fickle and short-term, driven by the need to provide ever-fresh news.

Richard Meeran stressed the importance campaigning and direct action can have in terms of solidarity with claimants in particular cases. He acknowledged how heartening it had been both for claimants and for Leigh & Day that, since they started finding it harder to win cases over the last few years, organisations such as AI and WDM had begin to support the claimants with campaigns and demonstrations. This can not only give valuable moral support to the claimants but can have a wider influence. In the Cape case, the increasing influence of the National Union of Miners in organizing demonstrations and lobbying could help explain why the South African government is now thinking of intervening in the case.

2 Collaboration

How can lawyers, trade unions and NGOs work together with/for claimants? Lawyers need cases, in order to accumulate evidence against MNCs. At the same time, NGOs and trade unions working with claimants need lawyers, to get legal redress in specific cases and to reinforce non-enforceable advocacy and public awareness-raising with concrete successes in favour of those whose rights have been violated.

Some NGOs are already working with lawyers, for instance WDM and Amnesty International with Leigh & Day. NGOs of different kinds are also increasingly cooperating with each other: AI UK, for example, is collaborating in its campaign on socially responsible investment with War on Want and Traidcraft in the UK and is considering wider collaboration outwith Britain in order to maximize the channels for change that can be brought into play.

However, the most effective way in which NGOs and others can collaborate is in sharing information and building up a body of evidence. NGOs and trade unions were strongly encouraged to gather cases and to find out from lawyers what specific kinds of information are needed to build solid cases. To build up this body of case law, more research on MNCs' violations of rights is needed. Among specific resources in this respect, AI has much experience in doing research on violations by governments, which are often in collusion with MNCs, and it was suggested that it might consider extending its research to cover corporations. The UN Human Rights Centre (CDR) in Geneva and the UN HCR were also mentioned as valuable sources of well-researched information.

More research needs to be done not just in terms of building up case law but on the applicability of many different areas of national and international law, such as competition law (how much should be regulated at the international level and how much/what should be left to national competence?), international rules on mergers, and criminal law.

Finally, as Willem van Genugten reminded participants, it is important not only to build up case law but also to use instruments such as the OECD guidelines and ILO conventions and declarations. Use of these instruments confirms their value and the need to ensure their effectiveness.

Which are the Best Fora for Presenting Evidence?

The answer to this question varies according to each specific case. Different fora and instruments are effective in different situations. This is why building up a body of evidence with detailed information on cases is so important: it can give lawyers, NGOs and trade unions an idea of the kinds of argument that do and don't work, the kinds of counter-argument by MNCs that are accepted or rejected by courts, and how this varies with forum and instrument. NGOs are well placed to gather data on violations, which lawyers can then put into the most appropriate legal form in the light of the legal instruments that offer the best chances for a successful action.

NGOs and trade unions expressed the need for more guidance from lawyers on the most useful type of evidence to gather and the most effective way of presenting it. ICEM, for instance, has evidence on hundreds of cases, but it has been collected for the purposes of campaigning rather than legal action – legal initiatives tend to be taken up by ICEM's member unions in their own countries. What would be useful for them, Vic Thorpe pointed out, would be a checklist of criteria indicating what forum or legal instrument, applied at what level, would be most suitable in each case. Kjell Sevón (Green group, European Parliament) suggested that a resource indicating the kinds of argument that could be built up in different situations, supported by accounts of both successful and failed cases, could be valuable for both lawyers and NGOs.

Can MNCs Contribute Positively to Development?

Strictly speaking, this question is not a relevant one for lawyers. The law is not interested in anything that exceeds compliance with the law – it is only concerned with whether the law is broken or respected and only actively interested once it is broken. NGOs and trade unions, however, are interested in companies doing more than comply with the law and in the positive contributions they can make. Both approaches are necessary, both to ensure that the law is respected in the strict sense and to promote good practice by companies.

NGOs have a great interest in promoting good practice alongside preventing bad. Sometimes this can be done simply by calling companies to account on their own promises. Bread for the World, for instance, is interested in putting to the test Shell's statements of commitment to sustainable development, and would even be prepared to award it a social/environmental quality label if it really complied. AIBG's Human rights guidelines for companies are a useful set of positive recommendations.

'International companies are likely to operate in countries where there are serious and frequent human rights violations … Companies therefore have a direct self-interest in using their influence to promote respect for human rights' (AI UK Business Group, Human rights guidelines for companies, p1).

In terms of standard-setting, positive obligations are more difficult to formulate than negative ones, but can include at the most general level MNCs' obligation to use their influence to improve conditions in the countries where they operate. Examples of good practice as well as bad could be gathered as a contribution to developing standards.

As an immediately material contribution, ICEM is calling for the application of an international tax on international investment, with the proceeds to go to the World Bank for an international development fund. Unfortunately, this call has so far not met with success.

Conclusions and Proposals

Conclusions

The current focus on MNCs is very new. But the issue of corporate accountability is now 'in the air' – people in general are starting to assume that corporations should bear responsibility for what they do abroad.

The growth of rules and regulations that has accompanied the globalization of institutions means that people, and companies, are more familiar and comfortable with rules and with ideas of transboundary accountability. In fact, corporations prefer the law, because it is clear, everyone knows where they stand. MNCs can be regulated, should be regulated, and ultimately want to be regulated.

MNC accountability can be demanded either directly from the corporations involved, or indirectly from the states where they operate and especially from those where they are domiciled. Such accountability can be demanded via legal action at the domestic, regional or international level.
 

However, there are a number of constraints on winning either redress for past or ongoing abuses by MNCs or greater accountability in the future. These include:

  • Collusion between MNCs and states which are not willing to enforce existing laws or which actively exempt MNCs from their national legal systems, often under pressure from their own economic needs;
     
  • Laws, and models of legal system, emanating from the North, where the companies have their HQs, thus weighting the system towards the already powerful;
     
  • 'Reverse forum-shopping', where the accused corporation fights to have a case refused in a country favourable to the complainants (usually the home country) and to get it returned to a location favourable to itself (usually the host country);
     
  • The 'corporate veil' or smokescreen – ambiguities in the nationality of MNCs and the separation of identities of the parent company and the subsidiaries, created by MNCs to enable them to escape legal responsibility in any country where they operate;
     
  • WTO rules, which have little help to offer claimants and are not really interested in labour issues;
     
  • Limited access of civil society to WTO and other international institutions;
     
  • Internal codes of conduct, which allow corporations to feel good while not imposing any legal obligations on them, and which also do not address the claims of victims;
     
  • Poor implementation mechanisms in most international regulatory instruments;
     
  • Counteroffensives by MNCs, e.g. libel cases against campaigners;
     
  • The expense of legal actions, which can sometimes be crippling even in the case of a victory, particularly where an NGO is defending itself against a corporate counteroffensive.

Lawyers, trade unionists and NGOs have a common goal – to minimize the impunity of MNCs as their power increases with globalization. Organisations don't have to take on MNCs on their own, but can do it in coalition or collaboration, to optimize the use of funding and the specific competences of different sectors, organisations and people.

Ultimately, what is needed is binding and enforceable legislation at the international level to regulate MNCs' activities, and effective international institutions to enforce it. The road to this goal is long and fraught with difficulty and conflict, but there are a number of steps on the way which are useful and practicable. The following proposals indicate some of these.

Proposals

  • Pool resources and knowledge to come up with ways of getting evidence from victims or claimants and ways of applying them where it matters most. Put resources into gathering evidence.
     
  • Build coalitions; share information among victims/claimants and experts in Northern legal systems, and systematize this into written materials.
     
  • Develop, with the help of lawyers, economists and accountants, tools for analysing MNCs' activities and their impact, and for keeping track of changes in corporate practice and structure.
     
  • Research into applicable national and international legal instruments, including competition law, law on mergers, and criminal liability of MNC management.
     
  • NGOs and academics shd work harder on getting more test cases going in Europe.
     
  • Build up a body of evidence around case law. This could be facilitated by a reporting and advisory body where evidence could be accumulated, taken with a common set of standards as a measure.
     
  • Use the development of a body of norms as contained in codes of conduct as a basis for reporting and cooperation with the UN Subcommission on Promotion and Protection on Human Rights.
     
  • Implementation, implementation, and implementation! Existing international instruments will remain toothless and invisible if they are not used. Write to local OECD NCPs, and if they do nothing, this can be used to demonstrate that NCPs are incompetent and press for reform of the system.
     
  • Develop a different type of cooperation between Northern and Southern NGOs, one in which Northern NGOs could advise Southern ones on how to complain.
     
  • Finally, get everyone talking to each other and sharing information. As an initial step, a website on these issues has been set up, and GLODIS/Department of International Law, SOMO and IRENE can serve as a clearinghouse for information.

Colophon

Report written by Mandy Macdonald.

Organisers of the seminar: Hilke Molenaar, Peter Pennartz, IRENE

This seminar is part of a series of development education activities of IRENE on corporate social responsibility and workers' rights and has been made possible with the support of the Fondation des Droits de l'Homme au Travail, Oxfam-Magasins du Monde, the Scurrah Wainwright Charity and the European Commission.

An electronic reader for this seminar has been produced by IRENE available on request.

IRENE, Stations straat 39, 5038 EC Tilburg, The Netherlands,
Tel. + 31.13.535.15.23, Fax: + 31.13.535.02.53., E-mail: peterpennartz@irene-network.nl.

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Appendix 2 - Witnesses

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