Daniel Aguirre Eng

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Multinational Corporations and the Realisation of

Economic and Social Rights

Daniel Aguirre

1.0Introduction

Although the traditional view of human rights law concerns the relationship between

the state and the individual,1 increasing attention has been focused on private actors

and their effect on human rights. Private actors have duties under international law.

This has been confirmed through judicial decisions and treaty interpretation, and

highlighted by academic commentators.2 Concerning the realisation of social and

economic rights, the Multinational Corporation (MNC)3 is the private actor that is

most relevant.

The MNC is an established and adaptable entity. The MNC benefits from the doctrine

of neo-liberal economics as well as the home and host state quagmire, which

combines with limited liability and decentralised decision-making to allow for double

standards in human rights promotion to take place internationally. Furthermore, the

polices of organisations such as the World Bank, the IMF, the OECD and the WTO,

have allowed the MNC to gain a position of considerable influence on economic and

social agendas. The corporate sector is extremely influential with national

governments.4 MNCs use this influence to coerce governments to become more

Irish Centre for human rights1 Humphrey, John P., The International Law of Human Rights in the Middle of the Twentieth Century, in ThePresent State of International Law and Other Essays, 75; International Law Association, 1973. Reprinted inLillich, Richard B.,International Human Rights: Problems of Law, Policy and Practice, Boston, Little, Brown andComp., 1991 (2nd ed.) p.12 Paust, Jordan J., The Other Side of Right: Private Duties Under Human Rights Law, in 5 Harvard HumanRights Journal 1992, p.513 There are various combinations of two sets of terms to refer to this entity: transnational/multinational andcorporation/enterprise. The various combinations of these four terms are then abbreviated as MNCs, MNEs, TNCsand TNEs. See Muchlinski, Peter.,Multinational Enterprises and the Law, Blackwell Publishers; (June 1995)at12-15 (explaining history and content of the disagreements); Menno T. Kamminga & Saman Zia-Zarifi, Liability

of Multinational Corporations Under International Law: An Introduction, inLiability of MultinationalCorporations Under International Law 1, 2-4 (Menno T. Kamminga & Saman Zia-Zarifi eds., 2000) (comparingvarying usages of multinational, transnational, corporation and enterprise)

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competitive by implementing national policy conducive to attracting international

business. Often this means a decline in socio-economic reform.

This article considers the close relationship between the operations of multinational

corporations and the realisation of social and economic rights. 5The MNCs uniquely

powerful and influential position within the international community gives rise to

contradictory capabilities. This position can be used to promote or undermine social

and economic rights, which will either enhance or inhibit the development of an

international community based on stable local communities. This article examines the

obligations of host nations to regulate the activities of all groups and individuals

within their jurisdiction in order to ensure an environment conducive to socio-

economic development and also outlines the obligations of MNCs as emerging

subjects of international human rights law.

Realistically, this article concedes that it makes little difference whether legal

obligations on the part of host governments or MNCs exist or not. With little or no

enforcement and implementation, international law relies heavily on moral and

voluntary reasons for compliance. With this in mind, the article will outline the

business case for the promotion of economic and social rights, appealing to the motive

of profit maximisation in order to demonstrate to international business the

importance of such reinvestment in the development of the societies in which they

conduct operations. This concession is made because it is imperative to harness the

unrivalled abilities of the international business community to promote change in the

international community towards the enjoyment of social and economic rights, and to

counter the negative impact of economic globalisation. MNCs must encourage and at

the very least, not inhibit, the fulfilment of international law commitments by host

national governments.

While MNCs have not replaced the State as the international power, the MNCs

activities hold considerable sway over the nation-states policy-making process.6 This

is not a new phenomenon, but is increasingly visible as the MNCs grow

disproportionately in terms of economic and political might. The MNC must

recognize their influence over domestic policy in the developing world and take a

4 Voon, T., Multinational Enterprises and State Sovereignty Under International Law (1999) 21 Adelaide LawReview 219, 234-41

5 MNCs have similarly strong effects on cultural rights, but this subject is not covered in the article.6 Addo, Michael K., (ed.)Human Rights Standards and the Responsibility of Transnational Corporations. KluwerLaw International, 1999 p.4

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positive approach to a rights based development by contributing to instead of

weakening the governments ability to promote economic, social and cultural rights.

The vast economic and geographic expansion of MNCs has presented a plethora of

difficulties for regulation and accountability. Famously, MNCs have now become

larger economies than many states. One outstanding example is that of General

Motors, which is a larger economy than all but seven nations.7 This economic clout is

reflected across the board and the trend is towards even more expansion. The last ten

years have seen unprecedented growth of multinationals. In 1991, three MNCs were

among the top 28 economies of the world, compared to 15 in 2000.8

Increasing MNC involvement in the public domain has focused the publics attention

on their activities. The public, who are the shareholders, employees, consumers and

local populations, suffer the environmental and social impact of the operations of

MNCs. There is growing support for regulation of MNC responsibilities within the

new role that they have assumed. The world order is now determined by economic

deregulation and the minimisation of governmental responsibilities in the public

domain. This has accentuated the need for regulation as the influence of private

organisations is growing, in order to control policies and fill the gap. This extends to

the traditionally governmental realms of social and political policy, areas in which

MNCs hold particular sway.

Economic Globalisation and the race to be competitive can lead to a reduction of the

states capacity to comply with human rights obligations, particularly concerning

economic, social, and cultural rights.9 To improve competitiveness, the World Bank

and IMF impose economic "reform" that results in deregulation, privatisation, and

export-oriented production. States feel compelled to ease labour standards, modify

tax regulations, and relax other standards to attract foreign investment.10 This

structural adjustment has led to a significant erosion of human rights standards and

the ability of countries to independently determine their development priorities.11

7 Only the economies of the United States, Germany, Italy, the United Kingdom, Japan, France and the Netherlandsare larger than General Motors. See Global Policy Forum, Comparison of Revenues Among States and TNCs, athttp://www.globalpolicy.org/socecon/tncstat2.htm8 Nations v. Corporations, at http://www.ratical.com/corporations/NvC. html9 These include, for example, trade union freedoms, the right to work, and the right to social security. It also mayhave a disproportionate effect on minorities. See Statement by the United Nations Committee on Economic, Socialand Cultural Rights, Globalization and Economic, Social and Cultural Rights (May, 1998),ahttp://www.unhchr.ch/tbs/doc.nsf/385c2ad t. . . a?OpenDocument&Highlight=O, globalization

10See Deborah Spar & David Yoffie, Multinational Enterprises and the Prospects for Justice, 52 J. INT'L AFF.557, 557 (1999).11 Teeple, Gary. Globalisation and the Decline of Social Reform. Garamond Press, 2000 p.87

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Cooperation internationally and from non-state actors is needed in order to ensure the

fulfilment of basic social and economic rights.

The narrow traditional view of international human rights law is being increasingly

challenged as unrealistic in relation to the world in which people live. It is not viable

to merely dismiss human rights law responsibility for corporations simply because it

has not been directly codified within international law and was not traditionally

envisioned. The international community and its laws must adapt to a dynamic world

and create regulation that protects all sectors of society. The reasons for this

challenge are twofold. Firstly, the effects of human rights violations upon the

individual are the same whether perpetrated by states or private actors. Secondly, a

narrow application of human rights law is not conducive to furthering the protection

of human rights, and subtracts from its credibility.12 Nevertheless, it is imperative that

by extending the scope of human rights law to private actors such as MNCs, the

primary responsibility of states for human rights law is not diminished.

2.0 Problems with International Law in relation to MNCs

The international legal system seems completely inadequate to regulate powerful non-

state actors, such as MNCs, as nations battle over sovereignty and are reluctant to give

up power to international regulatory bodies, caring more for the bottom line ofeconomic growth than human rights.

MNCs consist of international entities beyond national jurisdictions in terms of

economic resources and decision-making responsibility. This legal conundrum has

been obvious for at least thirty years, yet there have been only minor improvements in

accountability.13 The outmoded regulation system and the dynamic MNCs

considerable economic and political power combine to create a problematical

regulatory task. The MNC has transcended national legal systems and ignored thefeeble international system to make the imposition of human rights norms nearly

impossible.

The negative impact that the phenomenon of economic globalisation has had on state

regulation and peoples lives is becoming apparent. The move to more competitive

12Addo. Supra. note 6, p.239

13 Over thirty years ago, Professor Vagts pointed out that "the present legal framework has no comfortable, tidyreceptacle for such an institution," producing a tension between the legal theory of independent corporate units,

each "operating as a native within the country of its incorporation," and the reality of the "economicinterdependence" of the multinational corporation. Vagts, Detlev F. The Multinational Enterprise: A NewChallenge for Transnational Law, 83 Harvard Law Revue 739, at 743.

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nations often means moving to states who have reduced regulation or lower tax

incentives in order to attract the fickle eye of multinational corporations. This in turn

means other countries must regulate less in order to attract investment and

employment. It has become impossible for nations, even if they are willing, to impose

any obligations upon MNCs to contribute to the communities from which they are

extracting resources and making vast profits. Any attempt to do so would reduce that

nations competitiveness. The proceeds of economic development are thus denied to

host national governments which are instead extracted as profits for foreign investors.

The nation has been weakened in terms of managing human rights obligations and the

first to be abandoned are social, economic and cultural rights, as the original provision

of these rights directly costs money.

The traditional approach to human rights law dictates that they protect the individual

against the state. This doctrine was developed in a time when international business

was less prominent and international economic interdependence was far less

important. Since international business is now mobile enough to avoid stringent

national regulations,14 or influential enough to persuade against the adoption of such

regulation, international law must move beyond the traditional view towards

regulating all of the organs of the international community.

This historical bias of international law concerning the regulation of interstate

relations has begun to give way to emerging trends conferring rights and duties on

non-state actors such as supranational institutions15 and other actors, including

insurgent or rebel groups,16 individuals and corporations.17 This new type of non-state

actor liability and responsibility under international law is emerging in two ways. The

first entails indirect accountability through the horizontal application of international

law and the other through the application of international law directly to the non-state

actors in question.

The lethargic response regarding social, economic and cultural rights by the

international community has been a failure in its duty to enact laws to regulate for the

14 Blumberg, Phillip I., The Multinational Challenge to Corporation Law: The Search for a New CorporatePersonality (1993) p.20515Reparations for Injuries Case ICJ Reports, 1949, pp.14916 For Example, Common Article 3 to the Geneva Conventions enjoins insurgent groups and state armies to protectprisoners and to respect prohibitions relating to attacks of civilians, hostage taking, terrorist attacksor the use ofstarvation as a mode of combat. The Optional Protocal to the Convention on the Rights of the Child on theInvolvement of Children in Armed Conflict, adopted by the UN General Assembly on November 16 2000 also

places an obligation on armed groups including rebel forces to prevent children from participating in armedconflict. It also prohibits the recruitment of children into their forces.17 For example,Autronic AG v. Switzerland, Eur. Ct. H.R. Series A. 178 (1990); 12 (1990) E.H.R.R. 485, para 47

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good of humanity as a whole. This is in part due to the fact that law-makers consider

this globalisation phenomena to be a socio-economic problem that they are not

capable of dealing with. Politicians are equally loath to alter the status quo, as they

fear discouraging profit-maximisation and growth, and thereby impairing their

nations economic competitiveness. Social and economic rights generally imply

positive obligations on the part of the state and private actors such as MNCs, which

cost money, and therefore reduce profit maximization. Furthermore, multinational

financing, operations and joint-ventures have combined with decreasing national

control over international commerce to weaken corporation-state relations, thereby

making regulation even more difficult.18

Until recently, this gap in international law was increasingly widening. As both cause

and effect of growing corporate economic power, the international and domestic

political systems have increasingly relinquished their control over business. Economic

power holds political influence. The MNCs dominate national planning on issues

such as trade, patent and economic policy. While governments remain divided by

conflicting interests, such as competitiveness versus social reform,19 MNCs have a

clear concise purpose of profit maximization, which speaks loudly and clearly to

influential members of national populations.

Fortunately, international and national laws have begun to adapt in order to regulate

effectively in an increasingly dynamic world. There now exists a wealth of

international regulation that reflects a move away from the traditionalist view of

international law, whereby actions within one states jurisdiction are subject to

domestic sovereignty only.20 Internationally, these include GATT, Draft MAI, Anti-

corruption, Environmental Regulations, the International Criminal Court and

advances concerning individual responsibility for war crimes and crimes against

humanity in the international tribunals for Yugoslavia and Rwanda. Regulations

within domestic systems have advanced as well with the adaptation of the Alien Tort

Claims Act in the US and the relaxation ofForum Non Conveniens rules in Great

Britain, which allow for MNCs to be held liable for actions of their subsidiaries

committed abroad. However, the gap in international law regarding MNCs, as noted

by a plethora of scholars, clearly still exists. It is time to move towards solutions.

Solutions are imperative in this regard due to the enormous impact of MNCs on the

18Claudio Grossman & Daniel D. Bradlow, Are We Being Propelled Towards a People-Centered Transnational

Legal Order? 9 American University Journal of International Law & Policy 1, 8 (1993).19Vagts. Supra note 13, p. 75720 Addo. Supra note 6 p.243

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enjoyment of economic, social and cultural rights.

3.0 Impact of MNCs Operations on Economic and Social Rights

The exploitation of developing countries by MNCs has become intolerable. The

international economic system that emphasizes the free market philosophy,

privatisation and a reduction of the public sector is preventing many poor countries

from enacting a just and equitable development based on human rights. MNCs have

massive budgets, are driven essentially by profit, use the smallest number of workers

possible, move from jurisdiction to jurisdiction with relative ease, import labour to the

detriment of local labour, and they do not always take into account the social needs of

the country in which they are operating. This impacts directly on the enjoyment of

socio-economic rights, which need particular aid in promotion and observance. As a

result of these factors and many other international economic issues such as

insufficient technology transfer, lack of foreign investment and the brain drain, many

developing countries require regulation within the framework of the United Nations in

order to respond effectively to the situation.21

Economic, Social and Cultural rights have habitually taken a back seat to civil and

political rights. Despite this categorization of human rights into civil/political and

social/cultural/economic, all human rights are interdependent and indivisible as the

United Nations consistently stresses.22 However, economic and social rights are

particularly relevant during development. Foreign Direct Investment through MNC

operations has become the most important source of funds for development but has

limited the ability of national governments to fulfil their obligations.

The significance of social and economic rights to the operations of MNCs is clear.

These private actors encounter and occasionally violate ESCR rights during the

course of their operations.23 However, the failure to provide for the realisation of

social and economic rights often initiates a chain of events that cause problems with

21United Nations, COMMISSION ON HUMAN RIGHTS, Sub-Commission on the Promotion and Protection of

Human Rights: Fifty-fourth session. Agenda item 4 , UN Doc. E/CN.4/Sub.2/2002/13, 15 August 2002. p.3para.1222

All human rights are universal, indivisible, interdependent and interrelated. The international community must

treat human rights globally in a fair and equal manner, on the same footing, and with the same emphasis. Whilethe significance of national and regional particularities and various historical, cultural and religious backgroundsmust be borne in mind, it is the duty of States, regardless of their political economic and cultural systems, topromote and protect all human rights and fundamental freedoms. The Vienna Convention and Program of Action,

Section I, para. 5 The United Nations World Conference on Human Rights: Vienna Declaration and Programme ofAction, adopted June 25, 1993.23 Addo Supra. Note 6, p.241

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civil and political rights, as they are interdependent.24 One example is the crisis in

Nigeria in the mid-nineties. Shells failure to enact positive measures promoting

social and economic rights and its complicity with the Nigerian government in failing

to promote the right to a safe environment, the right to food,25 to self-determination, to

minority rights,26 to adequate health,27to education28, to an adequate standard of living

(including adequate social services),29 to work,30 to development, to freedom of

association,31and freedom from discrimination,32 brought about social conditions that

were not in line with the amount of profit that was being made through the extraction

of resources from the local communitys land. These social circumstances are

actually legal circumstances because the Nigerian government had ratified and is

legally bound by the International Covenant on Civil and Political Rights, the

International Covenant on Social, Economic and Cultural Rights as well as the

African Charter of Human and Peoples Rights, thus placing a legal obligation to

prevent this scenario.33

In response to these unfair and inadequate circumstances, the local population

attempted to exercise their civil and political rights. These included freedom of

opinion, association and expression,34 and their right to engage in political

participation.35 These civil and political rights were denied by the Nigerian

government, using techniques that further desecrated human rights law by violating

the right to personal security, freedom from torture,36arbitrary arrest, unfair trials, and

unlawful killing, which caused international outrage.37 Unfortunately, the worlds

focus on the violations of civil and political rights overlooked the root cause of these

violations, namely the failure to provide for the realisation of social, economic and

cultural rights, which Shell, a private actor, was in a uniquely effective position to do.

24 UN Economic and Social Council, Commission on Human Rights. UN Doc. E/CN.4/Sub.2/1999/9 p.5 para.21Available atwww.unhcr.ch25International Covenant on Economic, Social and Cultural Rights, Reprinted in Steiner and Alston (eds.)

International Human Rights in Context. Claredon Press, Oxford, 1996 p. 1175, Art. 11 (ICESCR)26 Guaranteed by the Universal Declaration of Human Rights, G.A. Res. 217 A (III), Dec. 10, 1948,reprinted in Steiner and Alston (eds.)Ibid. p.1156 art. 15(UDHR);International Covenant on Civil and PoliticalRights, Reprinted in Steiner and Alston (eds.)Ibid. p. 1172, Art. 16 (ICCPR); ICSECR Art. 1527 ICESCR, Art.1228 Guaranteed by the UDHR Article 26; ICSECR article 13 and 1429 Guaranteed by the UDHR Article 25; ICSECR article 1130 Guaranteed by the UDHR Article 23; ICSECR article 631 Guaranteed by the UDHR Article 20; ICSECR article 2032 Guaranteed by Article 2(2) of the UDHR, Article 2(2) of the ICESCR, and Articles 2(1) & 3 of the ICCPR33 Addo. Supra note 6 p.24134 Guaranteed by the UDHR Articles 18 and 19; ICCPR Articles 18 and 1935 Guaranteed by the UDHR Article 21; ICCPR Articles 2536 Guaranteed by the UDHR Articles 3 and 4; ICCPR Articles 6 and 737 Amnesty International Nigeria: The Ogoni Trials and Detentions, AI Index: AFR 44/20/95, 15 September 1995;Amnesty International, Nigeria:A Travesty of Justice. Secret Treason Trials and Other Concerns, AI Index: AFR33/23/95, 26 October, 1995

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The international community has a historically based emphasis on civil and political

rights despite the fact that all human rights are universal and interdependent. The

international community was quick to blame the Nigerian government for not

respecting peoples civil and political rights instead of condemning the government

and Shell for environmental degradation, denial of development and lack of revenue

filtering back to the local community from natural resource exploitation. All of the

human rights organisations addressed civil and political rights, including Amnesty

International and Human Rights Watch. 38

Multinational corporations directly inhibit the development of ESCR when they

deliberately avoid or reduce the level of payments to local communities through

taxation. It is common knowledge that MNCs have teams of accountants hired on the

basis of accomplishing this very objective. Whether through semi-legal accounting

strategies or by using their tremendous influence to convince host nations to reduce

their tax burden, MNCs limit the enjoyment of ESCR for millions of people in the

developing world.

The repudiation of social, cultural and economic rights caused the slide towards

violence, miscarriage of justice and killing. MNCs are directly related to the

enjoyment of the rights enshrined in the ICESCR. The chain reaction caused by the

denial of these rights results in wider violations of human rights including the civil

and political rights enshrined in the ICCPR. In turn, the consequence can be political

turmoil and instability, which is clearly injurious or even fatal to the local business

operations of MNCs. In the case of Shell, they have been forced to reduce operations

to a bare minimum, thereby forfeiting vast profits. However, it does not have to be

like this. MNCS are in a unique position to promote the realisation of all human

rights and are especially able to promote a foundation of social, economic and cultural

rights. This can provide the stability they require in order to conduct operations.

4.0 MNC Unique position for Promotion of Economic and Social

Rights

38 Addo Supra note 6, p.243 FIAN addressed the Ogonis right to food, and Environmental Organisationsaddressed issues of the environmental degradation of the land.

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While there is no doubt that the diplomacy and influence of the international

community is fundamental to changing corrupt regimes, MNCs are in a unique

position to promote change and persuade governments to abide by their human

rights obligations. MNCs can and should enact positive influences resulting from

self interest and the pursuit of profits, for example, increasing employment,

increasing available capital, technology, knowledge, improved management and

positive contributions to labour relations and administration. The standards that

MNCs bring to developing nations should be higher than the incumbent ones.

MNCs can further pressure the governments of such nations by threatening to

withdraw their operations. The world has witnessed this powerful negotiation

technique as many nations have been forced to alter national policy-making in

order to privatise deregulate, create tax incentives, lower operating costs and

provide an international system conducive to corporate profit maximisation, and

to be more competitive. If governments, even established developed world

democracies, fail to comply with corporate demands they risk the withdrawal of

corporate activity, which has become increasingly mobile. This results in

increased unemployment and economic woes, which can mean political suicide.

In this way, corporations and their benefactors have demonstrated their immense

ability to influence and even control nations and the international community.

With this sort of power, capable of altering the worlds economic and political

systems, it must be possible to promote human rights in general.

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In particular, the promotion of social and economic rights is within the MNCs reach.

They are present on the ground in developing nations communities and engaged

with the people who live there. The MNCs are often extracting massive profits

either from natural or human resources. In this situation, an obvious moral duty

exists to reinvest some of these profits in order to construct a decent life for the

local communities. Also, local governments are often unable or unwilling to

invest in social and economic rights, which are the foundation of stability. The

MNC is therefore often the only entity able to contribute to this stability building

process resulting from the realisation of social and economic rights by propping

up local governments financially and encouraging them to use this power in line

with their commitments under international law. While this is not the traditional

role of the MNC, this article argues that there exists a sound business case for this

sort of reinvestment in social and economic rights, as it creates a stable and

content society, which is not likely to descend into political instability and

violence that is significantly detrimental to MNC activity.

Furthermore, the revealing spotlight of a developed civil society, which should

accompany MNCs operations in the developing world, can force changes in the

developing host nations. The exploitation by local producers of workers can go

unnoticed, but if high profile MNCs engage in such activities, NGOs and activist

groups will sound alarm bells around the world. MNCs engaged in these

societies have the opportunity to demand adherence to human rights, which local

governments will have little choice but to comply with.

5.0 Responsibility for Economic and Social Rights

It is important to note that the primary responsibility for this development rests with

the national governments. However, for various reasons, such as

competitiveness, host governments are unable or unwilling to do so. MNCs, who

have tremendous influence with these governments, can use this ability to induce

host states to abide by their duties under international law instead of inducing

them to merely deregulate, and conform to the dominant international economic

system of the day.

5.1 Obligation of Governments to Regulate MNCs in accordance with International

Law through Horizontal Application

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The Chairperson of the sessional working group on the working methods and

activities of transnational corporations39 stressed the relationship between

transnational corporations and the State. He recalled the fact that the International

Covenants on Human Rights and the Declaration on the Right to Development

established that States are the primary duty bearers of human rights and that, as a

consequence, each State needed to regulate foreign investment within its jurisdiction.

It is imperative to search for methods of holding MNCs accountable and to regulate

their operations so as to benefit local communities as well as the international

economic system. In this regard, the strategy involves existing international

regulation implemented and enforced either nationally or internationally. Since little

political will exists for international regulation, the domestic regulation is paramount.

The international covenants on civil and political rights as well as the social,

economic and cultural rights are ratified by the majority of states, 40 and impose an

obligation on these governments to regulate the conduct of MNCs within their

jurisdiction in order to uphold the principles contained within them.

With respect to the implementation of economic, social, and cultural rights, the

Maastricht Guidelines on Violations of Economic, Social and Cultural Rights inform

that a state is responsible to ensure that transnational corporations do not deprive

individuals of these rights.41 The UN Committee on Economic Social and Cultural

Rights is clear that the realm of State responsibility extends not only to the actions of

agents of the State, but also to third parties over whom the State has or should have

control.42 International law puts the responsibility on States to guarantee that MNCs

operations do not violate human rights law within their own territory. The duty of

governments is clearly expressed in the preamble and first article of the International

Covenant on Economic, Social and Cultural Rights. The Preamble affirms that all

parties to the Covenant agree to the principles:

Recognizing that, in accordance with the Universal Declaration of Human

Rights, the ideal of free human beings enjoying freedom from fear and want

39United Nations, COMMISSION ON HUMAN RIGHTS, Sub-Commission on the Promotion and Protection of

Human Rights: Fifty-fourth session. Agenda item 4 UN Doc. E/CN.4/Sub.2/2002/13, 15 August 2002. p.3para.1240146 States have ratified the ICESCR as of May 2, 2003. See, http://www.unhchr.ch/pdf/report.pdf41Maastricht Guidelines on Violations of Economic, Social and Cultural Rights, Adopted in Maastricht, January

1997, para 1842 Craven, Mathew, the International Covenant on Economic, Social and Cultural Rights: A Perspective on itsDevelopment(Oxford, Claredon Press) 1995, p.113

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can only be achieved if conditions are created whereby everyone may enjoy

his economic, social and cultural rights, as well as his civil and political rights.

Consideringthe obligation of states under the Charter of the United Nations to

promote universal respect for, and observance of, human rights and freedoms

()

The relationship between this governmental duty to promote human rights and the

regulation of private actors such as MNCs within their sphere is elucidated in Article

1 of the Covenant. MNCs often undermine local communities development of social

economic and cultural rights by exploiting local resources without returning adequate

percentages of the profit. Clearly, according to Article 1, the government is obliged to

temper this situation. Article 1 of the ICSECR states:

1. All peoples have the right to self-determination. By virtue of that right

they freely determine their political status and freely pursue their

economic, social and cultural development.

2. All peoples may, for their own ends, freely dispose of their natural

wealth and resources without prejudice to any obligations arising out

of international economic cooperation, based upon the principle of

mutual benefit, and international law. In no case may a people be

deprived of its own means of subsistence.

Again, the case of Shell and the Nigerian government concerning the plight of the

Ogoni people provides an example of ESCR violation. The Nigerian governments

failure to protect the population from private actors and exploitation resulting in

deprivation of social and economic rights was challenged before the African

Commission of Human and Peoples Rights (The Commission.) In the case of the

Social and Economic Rights Action Centre and the Centre for Economic and Social

Rights v. Nigeria,43 the Commission tendered a landmark ruling, which represents a

step forward in the promotion of social and economic rights in Africa. The case

followed the killing of Ken Saro-Wiwa and eight members of the Movement for the

Survival of the Ogoni People (MOSOP) for the alleged murder of four other youths. 44

The plaintiffs complaints included discrimination, violations of the right to property,

health, to family and the freedom to dispose of their wealth and resources, as well as

43Social and Economic Rights Action Center and the Center for Economic and Social Rights v. Nigeria 155/9644 The charges and trial against the members of MOSOP are widely considered to be contrary to due process and acover-up to implicate them for standing up to the Nigerian government and Shells exploitation of the environmentand the Ogoni people. Human Rights Watch, www.hrw.org/reports/1999/nigeria/Nigew991-08.htm

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degradation of the environment causing health problems to the Ogoni; and condoning

and facilitating violations of human rights by the Nigerian government against the

Ogoni. The allegation was that the Nigerian government had failed to provide for the

realisation of these rights, including social and economic rights.

The Commission came to the important conclusion that the Nigerian government was

in breach of Article 16, which holds that every individual has the right to enjoy the

best attainable state of physical and mental health and that State parties to the present

Charter shall take necessary measures to protect the health of their people and to

ensure that they receive medical attention when they are sick, and Article 24, which

states that all peoples shall have the right to a general satisfactory environment

favourable to their development, of the African Charter,45 and it ruled that:

These rights recognise the importance of a clean and safe environment that is

closely linked to economic and social rights in so far as the environment

affects the quality of life and the safety of the individual. 46

Importantly, Nigeria was held to be in violation of Article 21 of the Charter. This

Article states that:

1. All peoples shall freely dispose of their wealth and natural resources. This

right shall be exercised in the exclusive interest of the people. In no case

shall a people be deprived of it.

2. In case of spoliation the dispossessed people shall have the right to the

lawful recovery of its property as well as to adequate compensation.

3. The free disposal of wealth and natural resources shall be exercised

without prejudice to the obligation of promoting international economic

cooperation based on mutual respect, equitable exchange and the

principles of international law.

4. States Parties to the present Charter shall individually and collectively

exercise the right to free disposal of their wealth and natural resources with

a view to strengthening African unity and solidarity.

5. States Party to the present Charter shall undertake to eliminate all forms of

economic exploitation particularly that practised by international

monopolies so as to enable their peoples to fully benefit from the

45African Charter on Human and Peoples Rights (ACHR), adopted June 26, 1981, O.A.U. Doc.CAB/LEG/67/3Rev.5, reprinted in I.L.M. 5846Nigeria 155/96, para. 51

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advantages derived from their national resources.47

The content of Article 21 of the African Charter clearly resembles the intentions of

Article 1 of the ICSECR. This jurisprudence displays the clear linkage between the

operations of multinational corporations, which can deny the local population its

ability to freely dispose of its natural resources, and the denial of social and economic

rights that can result. Furthermore, it indicates that a government can be held

accountable under international law for failing to ensure that private actors and state

actors together provide a setting in which social and economic rights can be achieved.

To prove this substantive law connection, the plaintiffs cited the cases of Union des

Jeunes Avocats/Chad,48 Velasquez Rodriguez v. Honduras49and X and Y v.

Netherlands.50Significantly, the plaintiffs cited international law in order to prove that

Nigeria violated its duty, not only to protect citizens through appropriate legislation

and effective enforcement, but also by failing to protect them from damaging acts

done by private parties contrary to the minimum conduct expected of governments

and therefore contrary to the African Charter.51

The ICESCR includes measures that imply international obligations as well as

domestic obligations. In Article 2, the Covenant states that:

Each State Party to the present Covenant agrees to take steps individually and

through international assistance and cooperation, 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.

This indicates that governments are obligated to seek binding regulation promoting

the realization of social, economic and cultural rights on an international basis.

Considering the close proximity in which MNCs interact with the attainment of these

rights, it seems appropriate that they would be included in such international technical

and economical cooperation.

47 Art. 21 ACHR48Union des Jeunes Avocats/ChadCommunication 74/9249Velasquez Rodriguez v. Honduras, Inter-American Court of Human Rights, Judgement of July 19, 1988, Series C,

No. 450X and Y v. the Netherlands , 91 ECHR (1985) (Ser. A) at 3251Nigeria 155/96, para. 57-8

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Taken together, this analysis indicates that governments must take action to uphold,

protect and promote social and economic rights. This implies creating an

environment conducive to their fulfilment, which necessitates regulating the activities

of private parties that affect the enjoyment of these rights in order to ensure the

development of society with social, economic and cultural rights as the foundation. If

this regulation is achieved, it will go a long way towards realising such ideals.

5.2 International Law as binding on Non-State Actors such as Legal Persons:

In addition to bestowing the aforementioned responsibilities on national governments

for the regulation of MNCs and their activities affecting social and economic rights,

the international community has devised adequate human rights norms applicable

directly to corporations. While enforcement of these norms, the other pillar of

regulation, remains problematic, the existence of these human rights standards

represents an important foundation for the corporate accountability movement to build

upon. The view that international law binds states only is incorrect and outdated by

developments in international law. In the past, international law has prohibited piracy

and slave trading, which were committed by non-state actors. Today, human rights

law is expanding to take powerful MNCs into its scope.

It is widely accepted that there are international minimum standards for the rights in

this field that are justiciable.52 In fact, considerable international and US precedents

indicate that corporations are potentially liable for violations of international law,

particularly when their actions constitute jus cogens violations. Although this does

not usually imply ESCR, the evolutionary nature of the law and the rise in

prominence of ESCR indicates that liability will eventually reach this group of rights.

Moreover, MNCs would already have policies that conform to such standards but

would not conceptualise these as complying with human rights law. This may cause

difficulty for some MNCs but obeying human rights law is a legal duty. The

following will analyse the direct responsibility for international law of MNCs by

examining international conventions, treaties, tribunal precedents and US

jurisprudence under the Alien Tort Claims Act (ATCA).

5.2.1 Multinational Declarations, Charters, Conventions and Treaties

All individuals within the international community must uphold economic, social, and

cultural rights. The preamble to the ICESCR determines that, the individual, having

52 Addo, Michael K., Justiciability Re-examined, in Beddard and Hill (eds.),Economic, Social and CulturalRights. Progress and Achievement(Macmillan 1992), p.93

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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 rights recognised in

the present covenant.53 Therefore, all individuals, including legal persons such as

MNCs, have the duty to abide by this covenant and promote its fulfilment.

Furthermore, the covenant also contains express recognition that it cannot be

interpreted to imply for any group or person any right to destroy or limit the rights

of others to a greater extent than is provided.54 The Committee on Economic, Social

and Cultural Rights has stated in its general comments that non-state actors such as

those within the private business sector have responsibilities and obligations for the

fulfilment of these rights.55 This line of reasoning seems to indicate a duty of non-

state actors to go beyond respect for the law and into the realm of positive obligations.

Perhaps the most comprehensive explanation of who has human rights responsibility

comes in the preamble of the Universal Declaration of Human Rights itself. That is:

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 and by progressive measures, national and

international, to secure their universal and effective recognition and

observance, both among the peoples of Member States themselves and among

the peoples of territories under their jurisdiction.56

There can be little or no doubt that this statement applies to corporations. 57

MNCs operations are conducted within a complex web of conventions and treaties

that make up international law. MNCs cannot be selectively subject to certain

international laws and not others. Therefore they must respect all basic human rights

principles. The United Nations has set many rules for corporations over the years,

thereby indicating that they are indeed subject to international law. For example,

53ICESCR., Preamble.54ICESCR, Art. 5 (1)55 For example, para 20 of the General Comment No. 12 the Right to Adequate Food (Art.11) 12 May 1999; Para42 of General Comment No. 14 The Right to the Highest Attainable Standard of Health (Art. 12) 4 July 200056 Preamble, UDHR,G.A. Res. 217 A (III), Dec. 10, 194857

[e]very individual includes juridical persons. Every individual and every

organ of society excludes no one, no company, no market, no cyberspace. The UniversalDeclaration applies to them all. Louis Henkin, The Universal Declaration at 50 and theChallenge of Global Markets, 25 Brooking Journal of International Law 17, 25 (1999).

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corporations had to follow certain rules for trading with Iraq during sanctions,58 and

were forbidden from trading with South Africa during the Apartheid.59

Several international declarations support the concept of private-actor responsibility

regarding the realisation of social and economic rights. For example, the UN

Declaration on the Elimination of All Forms of Racial Discrimination,60 theRio

Declaration on Environment and Development61 and the Copenhagen Declaration on

Social Development and Programme of Action62all require active promotion of their

mandate from non-state actors.

The African Charter on Human and Peoples Rights,63 the African

Charter on the Rights and Welfare of the Child64 and the American

Declaration of the Rights and Duties of Man65 impose duties directly

on non-state actors. These actors specifically include individuals

and communities and some duties concern social economic and

cultural rights.66 All of the above mentioned charters and

declarations demonstrate that private actors have duties and

responsibilities within international law.

Numerous treaties impose liability directly upon corporations. For

example, the

58S.C. Res. 986, U.N. SCOR, U.N. Doc. S/RES/986 (1995); Letter dated 26 July 2001 from

the Chairman of the Security Council Committee established by Resolution 661 (1990)Concerning the Situation Between Iraq and Kuwait, Addressed to the President of theSecurity Council, U.N. Doc. S/2001/738.59

The General Assembly passed a resolution deploring the continued cooperation bycertain States and foreign economic interests with South Africa in military, economic,political and other fields, as suchcooperation encourages the Government of South Africa in the pursuit of its inhuman policies. G.A. Res. 2671 F,U.N. GAOR, 25th Sess., Supp. No. 28, at 33-34, U.N. Doc. A/8028 (1970). Thus, [w]hile it may appear thatsanctions obligations are confined to U.N. member states, the reality has suggested otherwise. Steven R. Ratner,Corporations and Human Rights: A Theory of Legal Responsibility, in 111 YALE L.J. 443 (2001).p.48460 Adopted on 20 November 1963 by General Assembly Resolution 1904 (XVIII) Art. 2 states that No State,institution, group or individual shall make any discrimination in matters of human rights61 Adopted by the UN Conference on Environment and Development, Rio De Janeiro, on June 13 1992. UN Doc:A/CONF.151.26 (Vol.1) (1992)62 Adopted by the World Summit for Sustainable Devlopment, Copenhagen on 12 March 1995, UN doc:A/CONF.166/9 (1995)63 Adopted by the OAU on 27 June 1981 and entered into force on 21 October 1986.64 Adopted by the OAU on Jly 11 1990 and entered into force on 29 November 199965 American Declaration of the Rights and Duties of Man, O.A.S. Res. XXX, adopted by the Ninth InternationalConference of American States (1948), reprinted in Basic Documents Pertaining to Human Rights in the Inter-American System, OEA/Ser.L.V/II.82 doc.6 rev.1 at 17 (1992).66 Chirwa, Danwood Mzikenge, Obligations of Non-State Actors in Relation to Economic, Social and Cultural

Rights Under the South African Constitution, in Human Rights and Corporate Social Responsibility, InternationalConference Mediterranean Masters Programme in Human Rights and Democratisation, Malta, November 13-14,2002 p.38

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1960 Paris Convention on Third Party Liability in the Field of Nuclear Energy, 67 The

International Convention on Civil Liability for Oil Pollution Damage68and the 1963

Vienna Convention on Civil Liability for Nuclear Damage69 all impose liability

for breaches. Several treaties similarly impose liability not upon

states, but upon private, often corporate, actors.70 All of these

treaties impose corporate liability for actions or

omissions by companies that have detrimental effects. Presumably, these

Conventions were made applicable to corporations because corporations are capable

of violating them. It has been explained that corporations can violate human rights

and therefore applicable conventions should apply to them as well. Furthermore, if

corporations can be held liable for unintentional torts resulting from contravening the

international law described above, then it would be reasonable for them to be held

liable for torts resulting from intentional violations of international law, such as

complicity in major human rights abuses.71

The application of international law to individuals is established in the modern

system.72 The Apartheid Convention established that the crime of apartheid could be

committed by organisations, institutions and individuals.73 The Genocide

Convention, the Universal Declaration of Human Rights, theInternational Covenant

on Civil and Political Rights and theInternational Covenant on Economic, Social and

Cultural Rights all apply to individuals as well as states.74 While these conventions

67The operator of a nuclear installation shall be liable for, inter alia, damage to or loss of

life of any person and damage to property.Convention on Third Party Liability in the Field of NuclearEnergy of 29th July 1960, as amended by the Additional Protocol of 28th January 1964 and bythe Protocol of 16th November 1982, July 29, 1960, Art. 3(a), 956 U.N.T.S. 251.68

the owner of a ship at the time of an incident [] shall be liable for any pollution damage caused by oil which

has escaped or been discharged from the ship as a result of the incident. International Convention on CivilLiability for Oil Pollution Damage, Nov. 29, 1969, art. 3(1), 26 U.S.T. 765, 973 U.N.T.S. 3.69

the operator of a nuclear installation shall be liable for nuclear damage upon proof thatsuch damage has been caused by a nuclear incident. Vienna Convention on Civil Liabilityfor NuclearDamage, May 21, 1963, art. 2(1), 1063 U.N.T.S. 265. An operator includes any private or public body whethercorporate or not. See id. at Art. 1(a) and (c).70

For example, the Brussels Convention Relating to Civil Liability in the Field of Maritime Carriage of Nuclear

Material, Dec. 17, 1971, 974 U.N.T.S. 255; Convention on Civil Liability for Oil Pollution Damage Resultingfrom Exploration for and Exploitation of Seabed Mineral Resources, Dec. 17, 1976, reprinted at 16 I.L.M.1450.71 The Presbyterian Church of Sudan, Rev. John Sudan Gaduel, Nuer Community Development Services in USA.,Stephen Kuina, Fatuma Nyawang Garbang, and Daniel Wour Cluol, et all. V. Talisman Energy, Inc. and theRepublic of the Sudan., 244 F.Supp. 2d 289; 2003 US Dist. Lexis 4085 March 19, 2003. p.81 section b.ii.72

Stephens, Beth., The Amorality of Profit: Transnational Corporations and Human Rights in 20 Berkeley J.

Int'l L. 45. 2002, p.17

73International Convention on the Suppression and Punishment of the Crime of Apartheid, Art. I (2), U.N. Doc.

A/2645 (1953) (entered into force July 18, 1976).

74 The Genocide Convention Art. 4 states that "persons committing genocide shall be punished, whether they areconstitutionally responsible rulers, public officials or private individuals." The Convention on the Prevention andPunishment of the Crime of Genocide, Adopted by Resolution 260(III)A of the UN General Assembly on

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and covenants do not expressly regulate corporations, they certainly cover the conduct

of corporations, as they do not distinguish between natural and juridical individuals. 75

Corporations have many rights under international and domestic laws, including

limited liability. Therefore, they should also be subject to the corresponding

obligations implied by international law. It is unlikely that a modern interpretation of

the law would protect a corporation that engaged in serious violations of international

law.

International law applies directly to corporations in areas other than human rights.

The United Nations Convention Against Transnational Organized Crime defines the

crimes of participation in an organised criminal group, money laundering, corruption,

and obstruction of justice, all of which apply to corporations as well as natural

persons.76 Many provisions in the treaties that address bribery and corruption apply to

legal as well as natural persons, for example, the Council of Europe Criminal Law

Convention on Corruption,77the Inter-American Convention Against Corruption,78 and

the OECD Convention on Combating Bribery of Foreign Public Officials in

International Business Transactions.79Furthermore, theBasel Convention on the

Control of Transboundary Movements of Hazardous Wastes and Their Disposal,

applies to legal persons.80These conventions do not all expressly concern human

rights but indicate conclusively that MNCs are subject to international law.

These aforementioned conventions do not have international enforcement

mechanisms. Instead, they compel states to enact legislation that ensures domestic

enforcement. This method entails the defining and articulating of the international

December 9, 1948. Entered into Force January 12, 1951. Available at:http://www.preventgenocide.org/law/convention/text.htm. The preamble to the Universal Declaration of HumanRights states that "every individual and every organ of society" should promote respect for basic human rights.Universal Declaration of Human Rights, Preamble, Dec. 10, 1948, U.N. Doc. A/810. Both the ICCPR (Dec. 19,1966, Preamble, para. 5, entered into force Jan. 3, 1976) and the ICESCR (Dec. 19, 1966, Preamble, para. 5,entered into force Jan. 3 1976) recognize private obligations in their preambles, in the following terms: "Realizingthat the individual, having duties to other individuals and to the Community of which he belongs, is under aresponsibility to strive for the promotion and observance of the rights recognized in the present Covenant."75Talisman, Supra. note 71, p. 80, b.ii.76 (Advance copy of the authentic text of the treaty), Arts. 5, 6, 8, 23, available athttp://www.uncjin.org/Documents/Conven tions/dcatoc/final documents 2/convention eng.pdfAs of December 15, 2000, the treaty had been signed by 124 states, including the United States; See U.N. Officefor Drug Control and Crime Prevention, Annexe: United Nations Convention Against Transnational OrganizedCrime and the Protocols Thereto, at http://www.undcp.org/crime cicp signatures.html77Council of Europe Criminal Law Convention on Corruption opened for signature Jan. 27, 1999, art. 18, Europ.T.S. No. 173, at 6, 38 I.L.M. 505, 509 (active bribery, trading in influence and money laundering)78Inter-American Convention Against Corruption, Mar. 29, 1996, art. 8, 35 I.L.M. 724, 730 (prohibiting offeringan article of monetary value to a government official of another state)79OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Dec. 17, 1997, Art. 1, available at http://www.oecd.org/daf/nocorr-uption/ 20nov1e.htm80Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, Mar.22, 1989, Arts. 2, 4, 28 I.L.M. 657, 662.

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standard by an international treaty and leaving the enforcement to national systems.

Therefore, international law is capable of defining norms applicable and enforceable

on corporations.81

5.2.2 Voluntary Guidelines and Corporate Social Responsibility

MNCs are the subject of voluntary international guidelines formulated by

international organisations such as the International Labour Organisation (ILO), the

Organisation for Economic Cooperation and Development (OECD) and the UNs

Global Compact further indicating their recognition within international law. The

ILOs Tripartite Declaration of Principles Concerning Multinational Enterprises and

Social Policy82 requests that MNCs respect the UDHR and corresponding covenants

as well as take positive measures relating to human rights. The OECD Guidelines for

Multinational Enterprises accepts that MNCs have responsibilities concerning social,

economic and cultural rights insofar as upholding the obligations of their host

governments. While these guidelines are not binding, they make up a body of soft

law that serves as an excellent foundation for further regulation. These guidelines

could develop into evidence of a customary rule as they become normal practice.

However, as the evidence of frequent disregard for human rights law suggests, these

guidelines have not been consistently implemented and are often sacrificed in the

name of profit. Furthermore, few if any of these type of iniciatives directly address

ESCR in the context of development and global trade.

Many MNCs, in response to growing pressure from civil society, have nacted codes of

conduct and made commitments to Corporate Social Responsibility (CSR.) This

represents the privatisation of human rights regulation as governments are unable or

unwilling to control MNC activity. While private initiatives such as corporate codes

of conduct and voluntary reporting are definitely steps in the right direction, 83 and

represent a legitimate attempt by the business community to address ethical concerns,

they have serious deficiencies. The primary concern is with the voluntary nature of

such practices. The non-binding nature of such codes means that an organisations

performance does not necessarily correlate with the organisations policy.84

81Clapham, Andrew, The Question of Jurisdiction Under International Criminal Law Over Legal Persons: Lessonsfrom the Rome Conference on an International Criminal Court, in Menno T. Kamminga & Saman Zia-Zarifi(eds.) Supra note 3, p. 178.82 Adopted by the Governing Body of the ILO at the 20 th Session in Geneva 1977.83 Spar, D., The Spotlight inn the Bottom Line: How Multinationals Export Human Rights (1988) 77(2) Foreign

Affairs 7.84 Bart, Kenneth and Baetz, M., The Relationship Between Mission Statements and Firm Performance: AnExploratory Study (1998) 33 (6) Journal of Management Studies 823

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Additionally, the fear is that while they may be adhered to in economical good times,

the voluntary nature of the codes of conduct will allow them to be the first to go

during an economic downturn or times of international instability. Moreover, the lack

of implementation and enforcement procedures monitored by impartial agencies gives

rise to a perception of the codes as public relations exercises by MNCs. It is of

significant concern that self-regulation is designed to avoid government or

international regulation from occurring.85

Many codes of conduct fail to address all of the human and labour rights that are

guaranteed to all of humanity. Many codes volunteer the corporation to adhere to

standards that are mandatory and binding according to international human rights and

labour laws anyway. Enacting a code of conduct that pledges a company not to use

slavery or child labour should not be necessary. MNCs should be abiding by human

rights norms to begin with. However, these non-binding codes of conduct serve as an

acknowledgement by corporations that they are bound by human rights law and that

their activities do affect the enjoyment of human rights within there sphere of

influence. This has caused some corporations great concern as these promises could

become difficult to rescind upon and could create competition between corporations

causing them to concede to external regulation and binding rules. 86 Unfortunately,

none of these voluntary codes directly guarantee commitments by MNCs to the

promotion of ESCR and therefore are not effective.

This voluntary approach to regulating MNCs has been furthered by the United

Nations until recently. The UNs Global compact, which urges corporations to adhere

to nine basic principles of environmental, labour and human rights norms. This

system has been largely criticized as ineffective as there is no independent monitoring

or enforcement. Furthermore, the voluntary nature and basic nature of the norms

recommended, allows companies to sign up to this compact, get there name on the

UN website and benefit from the positive publicity without significantly changing

their practice on the ground.

However, this dependence by the international community on voluntary approaches

seems to be changing. Multinational corporations could be subject to the same

85 Cunnigham, N. and Rees, J., Industry Self-Regulation: An Institutional Perspective (1997) 19(4) Law & Policy363, 370

86 Thusing, Rolf., Codes of Conduct: A Growing Concern for Multinational Enterprises, in Blanpain, Richard(ed.)Bulletin of Comparative Labour Relations: Multinational Enterprises and the Social Challenges of the XXIstCentury. Kluwer Law International, The Hague/London/Boston, 2000. p.95

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oversight by U.N. human rights officials as U.N. member nations under the new,

Norms on the Responsibilities of Transnational Corporations under consideration by

the U.N. Human Rights Commission's Sub-commission on the Promotion and

Protection of Human Rights. This draft calls for companies to be "subject to periodic

monitoring and verification" by the United Nations to ensure compliance with existing

human rights, labor and environmental standards.87 The move is the first step by the

United Nations away from the voluntary approach and towards directly regulating

transnational businesses. Corporations concerned about their future reputations

should immediately promote human rights within their organisations.

5.2.3 International Tribunal Precedent

The Nuremburg Tribunal perhaps best substantiates this notion of applying general

rules of international law to individuals as well as corporations. The Nuremburg

Charter permitted the prosecution of a group or organisation and allowed the

tribunal to declare that an entity is a criminal organisation. The Tribunal became a

foundation of human rights law in stating,

That international law imposes duties and liabilities upon individuals as well

as upon States has long been recognized. ... Crimes against international law

are committed by men, not by abstract entities, and only by punishing

individuals who commit such crimes can the provisions of international law be

enforced.88

In United States v. Flick,89United States v. Krauch90 and United States v. Krupp,91 the

heads of major German corporations were prosecuted for war crimes and crimes

against humanity. While the prosecutions were against individuals, the Tribunal

consistently deliberated in terms of corporate liability. The language used makes it

expressly clear that that the court considered that the corporations had violated

international law. 92 These cases also confirmed that corporations could have the

87UNWIRE, U.N. Rights Committee Considers Monitoring Corporations. Wednesday, August 13, 2003 Available

at: http://www.unwire.org/news/328_426_7479.asp88

The Nuremberg Trial. Judgment of the International Military Tribunal for the Trial of German Major War

Criminals.Nuremberg, Sept. 30 and Oct. 1, 1946, Cmd. 6964 reprinted in 41 A M . J. I NT ' L L. 172, 173 (1947).

44.89United States v. Flick6 Trials of War Criminals Before the Nuremberg Military Tribunals Under Control CouncilLaw No. 10, at 1, 1216-23 (1949). http://motlc.wiesenthal.org/pages/t021/t02194.html90United States v. Krauchet al. (Case VI), 8 Trials of War Criminals, 1081, 1169-72 (1952).91United States v. Krupp Available http://www.ess.uwe.ac.uk/genocide/cntrl10_trials.htm#Krupp92 For example, inKrupp, the court states, The Krupp Firm, through defendents [] voluntarily and withoutduress participated in these violations. Ratner, P.478 Following in this line of jurisprudence, the I. G.Farben (USv. Krauch et. Al.) case states, Such action on the part of Farben constituted a violation of the Hague regulations.

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necessary mens rea for the commission of crimes.93

International human rights law has since developed to be applicable to private

actors.94 The European Court of Human Rights (ECHR) 95 and the US legal system96

have confirmed that duties of private individuals and groups exist under international

law. Humanitarian law has also evolved to include private actors, for example

common article 3 of the Geneva Conventions sets minimal rules applicable to all

parties engaged in combat, including private parties.97 Furthermore, Protocol II also

applies to private parties.98 It is therefore apparent in the aforementioned examples as

well as many other treaties that do not directly express this sentiment, but can be

interpreted in a light favourable to human rights promotion, that individuals as well as

states bare duties under international human rights law.

5.2.4 Complicity

Another method of finding MNCs in violation of international law is through

complicity. This implies that private actors violate international human rights law

when they participate with state actors in acts that are prohibited. The Torture

Convention,99Genocide,100 and Slavery Conventions,101 all prohibit complicity in

certain proscribed acts. Complicity in violations of international law is an evolving

subject, but it is not new. The Criminal Tribunals for Nuremburg, Yugoslavia and

Rwanda have all developed the complicity concept and confirmed its place within

international law. Those who conspire or aid and abet a violation of international law

93Talisman, Supra note 71,. P.80 B i.94 Clapham, Andrew,Human Rights in the Private Sphere, Oxford Monographs in International Law 1996 at 99-10295 Paust, Jordan J., Human Rights Responsibilities of Private Corporations, in Vanderbilt Journal of InternationalLaw, Volume 35, Number 3 May 2002, p.81496Kadic v. Karadzic, 70 F.3d 232 (2d Cir. 1995)97Geneva Convention Relative to the Protection of Civilian Persons in Time of War, Aug. 12, 1949, art. 3, 6 U.S.T.

3516, 3518-3521, 75 U.N.T.S. 287, 288-289; Geneva Convention Relative to the Treatment of Prisoners of War,Aug. 12, 1949, art. 3, 6 U.S.T. 3316, 3318-3321, 75 U.N.T.S. 135, 136; Geneva Convention for the Ameliorationof the Condition of the Wounded, Sick and Shipwrecked Members of Armed Forces at Sea , Aug. 12, 1949, art. 3, 6U.S.T. 3217, 3220-3223, 75 U.N.T.S. 85, 86; Geneva Convention for the Amelioration of the Condition of theWounded and Sick in Armed Forces in the Field, Aug. 12, 1949, art. 3, 6 U.S.T. 3114, 75 U.N.T.S. 31, 32.98Protocol Additional to the Geneva Conventions of 12 August 1949, and Relating to the Protection of Victims ofNon-International Armed Conflicts, June 8, 1977, art. 13, 1125 U.N.T.S. 609.99 The Convention Against Torture prohibits torture "inflicted by or at the instigation of or with the consent oracquiescence of a public official or other person acting in an official capacity." Convention Against Torture andOther Cruel, Inhuman or Degrading Treatment or Punishment, Dec. 10, 1984, art. 1(1), 1465 U.N.T.S. 113, 113(entered into force June 26, 1987) The Torture Convention requires states to criminalize any act "that constitutescomplicity or participation in torture." id. 4(1)100The Genocide Convention, for example, prohibits both complicity and conspiracy to commit genocide, as wellas prohibiting genocide itself. Genocide Convention,supra note 68, art. 3.101 The Supplementary Slavery Convention establishes liability for "being an accessory thereto" of the enslavement

of another person, or "being a party to a conspiracy to accomplish any such acts." Supplementary Convention onthe Abolition of Slavery, the Slave Trade, Institutions and Practices Similar to Slavery, Sept. 7, 1956, art. 6 266U.N.T.S. 3, 43.

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are criminally liable. One of the first cases in the WWII trials was the Zyklon B

case,102 where the industrialists were found guilty because they knew what the

purpose of the gas was. Similarly, the Flick Case103 found the defendant guilty for

financially supporting the Germans and in US v. Krauch,104 pharmaceutical

industrialists were found guilty for knowingly supplying materials for German

medical experiments on prisoners. The ICTY and ICTR have developed this concept

of non-state actor complicity and utilised it, thereby creating an international law

definition of aiding and abetting.105

It is vital for the protection and the promotion of human rights concerning MNCs that

liability is extended beyond the direct violation of international law. Many of the

most serious infringements of human rights norms by MNCs occur in situations where

they are complicit in the violations. Imperatively, these violations, done in the

interests or on the behalf of profit maximisation for corporations, must be regulated.

Regulation must insist that not only should MNCs refrain from being complicit, but

should take positive actions to condemn violations of human rights that take place

within their sphere of influence.106

5.2.5 Domestic Court Jurisprudence.

Multinational Corporations violate international law when they directly violate or are

complicit in contravening international law applicable to individuals.107 Principles

that apply to individuals clearly regulate MNCs. The concepts outlined above apply to

102The Zyklon B Case (Trial of Bruno Tesch and Two Others), 1 Law Reports of Trials of War Criminals 93 (Brit.

Mil. Ct. 1946).103U.S. v. Flick, at 1, 1216-23 (1949).104U.S. v. Krauch et al., 1169-72 (1952).

105See generally Brief of Amici Curiae International Human Rights Organizations and International Law Scholars

in Support of Plaintiffs-Appellants,Doe v. Unocal Corp., 248 F.3d 915 (9th Cir. 2001), at 7-19 (international lawrecognizes concept of complicity and does not require actual participation), available atwww.aclu.org/library/iclr/2000/iclr2000 6.pdf The ICTRactus reus for aiding and abetting is practicalassistance, encouragement, or moral support which has a substantial effect on the perpetration of the crime,"Prosecutor v. Furundzija, IT-95-17/1-PT (Dec. 10, 1998), P 249. with moral support constituting a significantlegitimising or encouraging effect on the principals.Furundzija, id. p.232. Furthermore, the ICTR concluded thatthe mens rea of aiding and abetting is that the accomplice, have knowledge that his actions [would] assist theperpetrator in the commission of the crime"; it required neither intent to commit the crime nor even knowledge ofthe exact crime to be committed.Furundzija, id. p.246. Importantly, the ICTR concluded that this definition andthe practice of trying accomplices separately from the principal offender is compatible with all domestic lawsystems. Furthermore, the Statute of the International Criminal Court maintains this concept by holding liable aperson who, "for the purpose of facilitating the commission" of a crime, "aids, abets or otherwise assists in itscommission. Statute of the International Criminal Court, July 17, 1998, U.N. Doc. A/CONF.183/9 (1998), art.25, 3(c).106 Human Rights Watch, The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria's Oil

Producing Communities, Summary, at http://www.hrw.org/hrw/press/1999/ feb/nigsumm.htm (last visited June 5,2001).107 Paust, Supra. Note 95, p.803

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corporations (legal persons)108 as well as private individuals (natural persons.) 109 This

compliments the widespread recognition of corporate accountability in domestic legal

systems.110 When taken into consideration that international law has been applied to

corporations since the Nuremburg Tribunals,111 the case for corporate regulation as

well as individuals through international law seems solid. Even with reluctance on

the part of the international community to apply international criminal law to

corporations, the concept is firmly established.

The USA has been at the forefront of litigation against MNCs for violations of

international law. The Alien Tort Claims Act (ATCA)112allows for foreign plaintiffs

to seek civil redress for violations of international law committed abroad. A private

corporation is a juridical person and has no per se immunity under

U.S. domestic or international law.113 Given that private individuals

are liable for violations of international law in certain circumstances,

there is no logical reason why corporations should not be held liable

in the same circumstances.

So far, there has not been a single Supreme Court, Second Circuit or even District

Court case holding that a corporation is legally incapable of violating the law of

nations.114 Numerous Second Circuit cases have acknowledged MNC potential

liability for violations that entail individual liability.115Courts outside of the Second

108 Various international and national documents use the terms "juridical person," "legal person," "juristic persons"and "corporations" to refer to the organizations recognized as having legal status. Clapham, Andrew in Addo (ed.),Supra note 6, p. 152, n.24

109Addo, Supra. note 6, p.8-9 (noting the "growing consensus that MNCs are bound by those few rules applicable

to all international actors," including, inter alia, the prohibitions of slavery and forced labour, genocide, torture,extra-judicial murder, piracy, crimes against humanity and apartheid)110 It is a general principle of law that corporations are subject to domestic law. Paust, Supra note 89, p.803111 Clapham in Addo, Supra note 6 p.160-71 (discussing Nuremberg application of international law tocorporations).112 InFilartiga v. Pena-Irala, 630 F.2d 876at 887 (2d. Cir. 1980), it was decided that the US courts were bound bythe law of nations and that subject matter jurisdiction did exist. This allowed the ATCA to become a widely usedtool to vindicate international law violations. InKadic v. Karadzic, 70 F.3d 232 (2d Cir. 1995), the Court held thatindividuals could be held liable for certain violations of international law, whether acting under the auspices of thestate or as private actors.113

Paust, Supra note 95, p.803114Talisman, Supra. Note 71, p.74, 2.a.115 InJota v. Texaco Inc., 157 F.3d 153 (2d Cir. 1998) the Court did not address the jurisdictional questionregarding whether MNCs could be held liable and therefore had no reservations about the ATCA reachingcorporations. Again, in Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d. Cir. 2000), the court did not addressthe question of subject matter jurisdiction over MNCs. This indicates that subject matter does exist. Similarjurisprudence exists inBigio v. Coca-Cola Co., 239 F.3d 440 (2d Cir. 2001) and inAguinda v. Texaco Inc., 303

F.3d 470 (2d Cir.2002.) Both of these cases were dismissed after painstaking efforts involving whether a violationof the law of nations took place andforum non conveniens, which would have been completely unnecessary ifsubject matter jurisdiction had not existed for MNCs.

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Circuit have directly addressed the question and found that MNCs can be held

liable.116 Moreover, the Courts of Great Britain have begun to relax forum non

conveniens rules in order to allow for plaintiffs to bring cases against British

corporations in England rather than in the place where the violation took place. 117

This has opened the door for numerous cases concerning health and labour

standards.118

The result of this litigation seems to be a reduction in the gap that exists in

international law concerning MNCs and liability for human rights violations. The

lawyers for MNCs are at least now confronting their victims in court and

acknowledging that these violations of human rights have occurred. While no

verdicts have been passed in any of these cases, they have drawn international

attention and have permanently damaged some MNCs reputations. The Directors of

MNCs must acknowledge that this situation should be avoided at all costs, even if this

means sacrificing short-term profits in order to build stable local communities that

enjoy human rights.

5.2.6 Customary Law

The norms of customary international law regulate the conduct of private individuals

and corporations.119 Customary international law prohibits certain actions whether the

state consents or not and is binding on all. While the conventions charge the state

with the enforcement of such obligations, international law regulates more than state

116The Ninth Circuit more explicitly recognized that a corporation could be sued under the

ATCA in Doe v. Unocal Corp., Nos. 00-56603, (9th Cir. Sept. 18, 2002).24 According to theDoe court, a threshold question in any ATCA case against a private partysuch as Unocal,is whether the alleged tort requires the private party to engage in state action for ATCAliability to attach, and if so, whether the private party in fact engaged in state action. Thecourt, citing Kadic, held that because the complaint allegedjus cogens violations (including rape, torture, and

summary execution), no state action was necessary and Unocal could be held liable. Other cases that heldcorporations potentially liable are: Beanal v. Freeport-McMoran, Inc., 197 F.3d 161 (5th Cir. 1999);

Abdullahi v. Pfizer, Inc., No. 01 Civ. 8118, 2002 WL 31082956 (S.D.N.Y. Sept. 17, 2002);Wiwa v. Royal Dutch Petroleum Co., No. 96 Civ. 8386, 2002 WL 319887 (S.D.N.Y. Feb.28,2002); Bodner v. Banque Paribas, 114 F. Supp. 2d 117, 127-28 (E.D.N.Y.2000); Iwanowa v.Ford MotorCo., 67 F. Supp. 2d 424, 445 (D.N.J. 1999) (No logical reason exists for allowingprivate individuals and corporations to escape liability for universally condemned violationsof international law merely because they were not acting under color of law.); EastmanKodak Co. v. Kavlin, 978 F. Supp. 1078, 1090-95 (S.D. Fla. 1997) (holding that subjectmatter jurisdiction existed in an ATCA action against a Bolivian corporation)117 Meeran, Richard., The Unveiling of Transnational Corporations: A Direct Approach, in Addo, Supra. Note 6,p. 162118

For example, see:Ngcobo and Others v. Thor Chemical Holdings Ltd., TLR 10 November 1995;

Sithole & Others v. Thor Chemical Holdings Ltd. and Another, TLR 15 February 1999; Connelly v. RTZ[1996] 2

WLR 251;Lubbe & Others v. Cape PLC; Afrika and 1539 Others v. Cape PLC[1999] A no. 40; Mphahlele &336 Others v. Cape PLC[1999] M No. 146119 Paust, Supra note 95, p.811

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actions and is moving to expand the responsibilities and rights of non-state actors.120

The broad, contextual interpretation of treaties and agreements gives rise to an

evolving context where private rights and duties are increasingly recognised. 121 The

International Court of Justice endorses this view. It stated that, "An international

instrument has to be interpreted and applied within the framework of the entire legal

system prevailing at the time of the interpretation,"122 and that interpreters of

international law "must take into consideration the changes which have occurred in

the supervening half century, and its interpretation cannot remain unaffected by the

subsequent development of law."123 This must therefore include customary

international law as well as treaty law.

The doubt expressed about international law covering MNCs is beginning to subside.

Reservation about legal liability was due to the generally restricted and narrow

definition given to the laws, which need not be the conclusive one. There seems to be

improvement in recognition of this fact through criminal law and statutory offences,

as evidenced in US, UK and ECHR jurisprudence, where a measure of dynamism in

interpretation has become evident. Most legal norms, including the general norms of

law and the specialist regimes devoted to corporations, if given a sufficiently dynamic

interpretation, as recommended by the International Court of Justice, should address

the concerns advocated by the corporate governance movement. The main obstacle

remains the fact that the law has not evolved enough to find a basis for corporate

criminal responsibility other than one based on individuals. 124 Dynamic interpretation

has been applied in the field of international human rights law. The ECHR and

UNHRC have interpreted the law in a broad manner concerning a wide range of

subjects and even applied dynamic human rights law norms to a corporation.125

The lack of criminal prosecution in this field does not indicate that these norms do not

bind corporations, just as the lack of enforcement of international law in general does

not mean that states are not bound by it. International law presently must be enforced

through domestic legal systems. For MNCs this will concern its relations with

governments as the government has the duty to secure the rights of everyone by

120Ibid, Paust, p.810121 Clapham, Supra note 81, p.98

122Clapham in, Supra. Note 81 at 99, citing Advisory opinion of the ICJ on the Legal Consequences for States of

the Continued Presence of South Africa in Namibia (South West Africa) [1971] ICJ Rep. 31, P 53.

123Ibid., Clapham 99

124 Addo, Supra note 6, p.21125 UNHRC Allan Singer v. Canada, Communication No.455/1991, UN Doc. CCPR/C/51/D/445?1991, reprintedin 1995 Vol.2 IHRR, p.148; ECHR Observer and Guardian v. United Kingdom, Eur. Ct. H.R. Series A.216; (1992)14 E.H.R.R., p.153

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imposing laws that do so.126 Again, discussion of the enforcement mechanisms, or

lack of them, should not overshadow the fact that the aforementioned actions are

prohibited and corporations, in engaging in or becoming complicit in these actions,

violate international law.

Amnesty International states that a corporation has two areas of responsibility. The

first is to protect human rights within their sphere of influence and the second is to

support human rights protection generally.127 This includes public statements on

human rights issues, government lobbying, assisting tin the activity of NGOs on

human rights protection and the inclusion of human right

Daniel Aguirre Eng

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