The Case for an ILO
Convention on Supply Chain
Responsibility
Brishen Rogers
Temple University Beasley School of Law
July 10, 2015
Presentation at RDW 2015 Conference
Common Law Backdrop (1)
No Duty to Rescue
• In U.S. & many other nations’ tort law, A
usually has no duty to protect B against
harms that A has not caused
• Classic example: if A sees B drowning in a
public space, A need not help even if doing
so would cost A nothing. In fact, A may “sit
and smoke his cigar” while B drowns.
• (Some exceptions)
Common Law Backdrop (2)
Boundaries of Firm & Employment
• Firms are “Islands of
conscious power in this ocean
of unconscious co-operation
like lumps of butter
coagulating in a pail of
buttermilk.” (Coase 1937)
• Optimal scope of a firm is
determined by transaction
costs of utilizing market
sourcing rather than
command structures
Fast food chain or
major retailer
(“purchasing
firm”)
Farm or garment
manufacturer
(“user Firm”)
Labor-only
subcontractor
hired to pick
produce or sew
garments
Workers
• “It is the fact of direction with
is the essence of the legal
concept of “employer and
employee”
just as
it was
in the
FLSA’s capacious
definition
of employment
does not reach
the fast food
chains
or retailers
economic
concept
[of
the
who may enjoy the greatest power to prevent
downstream
violations.
firm]”
(Coase
1937)
Of course,
a farm
or manufacturer may
sell to
• Generally
no
employment
law
multiple parties at once, and may hire multiple
duties
toward In
non-employees,
subcontractors.
order to determine the
stringency of their duties to prevent downstream
which
creates incentives to
violations, my proposal would thus explicitly
considergoods
the parties’rather
relative economic
purchase
than power.
produce
in house.
Such supply
chains can also be even longer.
Purchasing agents or other intermediaries such
• Partial
solution
US:
as food
processing in
firms
may “joint
stand between user
firms and purchasing firms. But the same
employer”
doctrine
(in FLSA)
principles would
govern liability,
as outlined in
Section IV.
can occasionally
reach user
firms (like farms) but not food
chains or retailers
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Wal-Mart’s Supply Chain Management
http://courses.ischool.berkeley.edu/i290-4/s02/readings/line56supplychain.gif
Summary
• In contemporary global supply chains,
MNCs have power w’o responsibilities
– Regulations based on employment relationship
within one state can’t ensure decent work
• But norms of supply chain responsibility
now well-developed in civil society, and are
beginning to take root in positive law
• Tort law as promising site for development
of supply chain liability
• Possibilities/impediments to this now –
especially jurisdictional questions
• Potential for ILO to help process along
The Emergence of
Supply Chain
Responsibility?
The Emergence of
Supply Chain Responsibility?
•
•
•
•
Civil society practice (MNCs and NGOs)
Private lawmaking (Bangladesh Accord)
International legal regimes (Ruggie etc.)
Public lawmaking (various examples)
Civil Society Practice
• NGOs and consumers very often call on
brands to exert their market power to ensure
decent work in their supply chains.
• Basically all MNCs now have CSR policies.
Many commit brands to ensuring decent
working conditions at suppliers.
Wintek worker Jia Jingchan, injured
by use of n-hexane to clean iPhone:
“We hope Apple will heed to its
corporate social responsibility”
SACOM Report, May 2011
(Following Chengdu explosion)
• “Foxconn has primary responsibility in labour
rights abuses. The clients, including Apple and
HP, which declare decent working conditions at
their suppliers have indispensible obligations to
put their promise into practice.”
2012 Dhaka Fire & 2013 Rana
Plaza Collapse
Over 1200 killed –
leads to pervasive
calls for brand
responsibility,
eventually to Accord
Import of this Norm
• Not yet a significant constraint on MNCs.
• But:
• (1) Shows public consensus around brands’
duties, so important backdrop to lawmaking
• (2) “Soft law” norms can be adopted into
“hard law” regimes via adjudication
• (3) Has been incorporated into binding
agreements such as Bangladesh Accord, and
multi-stakeholder efforts like Better Work
• Key provisions:
– (a) Brands commit to source from compliant
factories for at least two years;
– (b) Brands include sufficient resources in
contracts to fund health/safety upgrading
– (c) Enforcement via arbitration, with awards
enforceable in domestic courts.
• Other regime, “Alliance,” also involves
alleged commitments to enable factory
safety – but no contractual commitments
Unpacking the Norm
• “Shared responsibility” among:
– MNC & supplier/employer
– Home states of MNC & supplier/employer
• Axes of “shared responsibility”
– Direct causation of a harm
– Benefit from a harm
– Special capacity to mitigate or eliminate harm
– Special connection to those who suffer the harm
• Key works: Iris Marion Young,
Responsibility for Justice (2011); various by
Dahan, Lerner & Milman-Sivan.
Norm of SCR in Int’l Legal
Instruments
• Ruggie Principles: “...responsibility
to respect applies across its
business activities and through its
relationships with third
parties…such as business partners,
entities in its value chain, and other
non-State actors”
• OECD Guidelines for Multinational
Enterprises (2011): require firms to
“avoid causing or contributing to
adverse impacts” and to engage in
“social dialogue on responsible
supply chain management”
Recent Proliferation of State
Laws Reflecting SCR
• United States:
– Alien Tort Statute
– Dodd-Frank Provisions on conflict minerals
– (FLSA’s expansive definition of “employer”)
– (NLRA’s garment & construction industry
provisos, and proposed joint employer standard)
• California Transparency in Supply Chains
Act (2012)
• California “Brother’s Keeper” Law
– Good caselaw developing
State Laws Reflecting SCR
• Netherlands: joint liability common for
harms to contracted workers in the country
• U.K., France, Denmark require large
companies to report on CSR initiatives
• Proposal in French Parliament to create
statutory “duty of care” of companies
toward supply chain workers
• Many in trafficking: Gordon (ILO 2015) and
Andrees, Nasri, Swiniarski (ILO 2015
Toward Supply Chain
Liability in Tort Law
Substantive
Impediments/Possibilities Under
U.S. Tort Law
• In U.S. tort law, usually no duty to protect others
against harms by third parties.
• Exceptions:
• (1) Duty of reasonable care where one has agreed
to protect another against particular harms
• (2) Duty to warn or protect where one has nonnegligently created a risk of harm
• (3) Duties to protect arising out of “special
relationships” – limited cases where D has
substantial/exclusive power to protect P
Key Cases
• Doe v. Wal-Mart, 572 F.3d 677 (9th Cir. 2009)
(no duty to monitor suppliers where D made no
binding contractual commitment to do so)
– Holds open possibility of such liability where an
MNC does make such a commitment
• Kasky v. Nike, 27 Ca. 4th 939 (2002)
(possible liability under state consumer
protection laws for misleading statements
re: supply chain labor conditions)
– But constitutional status of decision is unclear.
• Rana Plaza litigation, (filed 2015, D.D.C.)
Procedural Impediments to Supply
Chain Liability Under U.S. Tort Law
• (Treaties generally have no direct effect on
MNCs – instead bind states to regulate
employment relationships)
• Jurisdiction & venue questions
• Judicial aversion to “foreign” claims
• Choice of law questions
– Substantive: which state’s tort law?
– Procedural: jury trial? Punitives? Class action?
The Case for ILO
Standard-Setting
Why the ILO?
• Transnational rulemaking necessary to
resolve procedural Qs
• ILO is the recognized site for definition and
promulgation of int’l labor standards
– Employer participation enhances legitimacy
• Strategic advantages of ILO
– Can solve “assurance game” problem
– Can negotiate north/south conflicts
– ILO’s monitoring & technical assistance
capacity may be helpful for any new regime
Precedents at ILO
• Better Work
– Supply-chain governance; Shared responsibility
• Declaration on MNEs (1977, 2000, 2006)
– Defines duties for MNEs, though limited to
their direct employees
• Maritime Convention (2006)
– Shared jurisdiction -- flag states & port states
• ILO Rec. 203 on Forced Labor (2014)
– Supply chain due diligence
Key Elements (I)
• **Ensuring jurisdiction
– Member states’ courts shall have jurisdiction to
hear claims by supply chain workers against
home state MNCs
• Defining duty
– “Member states shall hold MNCs to duties of
reasonable care to prevent (defined harms) to
workers within their supply chains”
– OR: “Member states shall ensure that MNCs
establish transnational industrial relations
systems to cover supply chain workers”
Key Elements (II)
• Defining harms:
– Pervasive & severe violation of core labor
standards (Hyde 2012)?
– Unacceptable forms of work?
– Failure to establish transnational bargaining?
• Defining breach/defenses:
– Financial commitments that enable labor
standard compliance?
– Monitoring protocols?
– Safe harbor for use of ILO monitoring?