Human Rights and MNCs

Human Rights and MNCs
By: Giuliana, Gjergji, Maxime,
Rachel & Varun
Multinational Corporation (MNC)
• Company has international identity as belonging to a particular
country (country of registration)
• Become 'multinational' by investing in a country other than its
Transnational Corporation (TNC)
Are not registered in a particular country but conduct business
across a number of nations (borderless)
Despite this difference the terms are often used interchangeably ...
- Human Rights law - affirms primacy of state
- Fear against state supremacy reflects context:
Political instability (civil rights, gender equality movements)
BUT globalisation and economic
interdependence have
created a radically different
international context...
The reality of corporate power
Multinational Corporations (MNCs) have assumed
increasing international power:
• Over 889,000 MNCs globally (World Investment Report 2009)
• Largest 100 economies in world - 52 are corporations
• 70% of world trade controlled by just 500 companies
With this power comes the potential for widespread
Reports of health violations, environmental damage, child labour, poor
working conditions, kidnappings, torture, discrimination.
MNCs operate free from state or international
regulation. While there seems to be a
strong argument for imposing corporate
this is not so
simple in practice.
1. ATS - Kiobel
2. Responsibility to protect (Ruggie Report)
3. Video and Debate
4. Remedies
5. Conclusion
The Alien Tort
What is the Alien Tort Statute?
First passed in 1789, to allow
"Aliens" to bring suits for
violations of international
Revived over the last 30
years, leading to numerous
Foreign government officals
Why bother?
Violations usually occur in underdeveloped countries,
who have little or no human rights frameworks.
o Usually States are complicit in these violations.
o Corporations are usually charged with "Aid + abetting"
State - centric model
o The assumption is that the state enforces human rights obligations.
Corporations are usually headquartered in the USA
o The ATS allows the court to issue a federal remedy (i.e. money) for a
international human rights violation.
Kiobel - still in progress
o Group of Nigerians claim they were the
victims of torture, execution and other
crimes against humanity perpetrated by
the Nigerian Government.
Shell accused of "aid+abetting"
Second Circuit decision
o Rejected the idea that "Corporate Liability" was an internationally
recognised norm.
o Based on the Sosa standard - "Specific, universal and obligatory."
U.S. Supreme Court
o Question for the Court is whether Shell is immune from this suit
because it is a corporation, not a person?
Pirates Inc.
What would happen if Pirates were a Corporation? Justice
Breyer in Oral Argument - Kiobel
Responsibility to Protect
The two solitudes
profits while
obeying the
have ethical
and even
International norm setting...
"Recognizing that even though States have the primary
responsibility to promote, secure the fulfilment of,
respect, ensure respect of and protect human rights,
transnational corporations and other business
enterprises, as organs of society, are also responsible
for promoting and securing the human rights set forth
in the Universal Declaration of Human Rights"
UN Norms on the responsibilities of transnational corporations and other
business enterprises with regard to human rights, UN Sub Commission on HR
Or non-binding principles
Protect, respect
and remedy
root cause of the business and human rights predicament today lies
in the governance gaps created by globalization - between the scope
and impact of economic forces and actors, and the capacity of societies to
manage their adverse consequences. These governance gaps provide the
permissive environment for wrongful acts by companies of all kinds
without adequate sanctioning or reparation. How to narrow and
ultimately bridge the gaps in relation to human rights is our
fundamental challenge" John Ruggie, 2008.
What to do with Novartis?
TED talk excerpt on business and
human rights
Fact pattern for Debate
FACTS : Willy Wonka Chocolate Inc., is one of the biggest chocolate company in the world.
All cocoa used by the company comes from Oompaland, a tropical island where 70% of the
world’s cocoa is farmed. An Oompaland statute prohibits child labor but the country is poor
and lacks labor inspectors to make sure that companies such as Wonka comply.
There are 200,000 Oompa Loompa children working in cocoa farms who reportedly endure 16hour days and beatings to pick the cocoa used by Mr Wonka's company.
Stop Bloody Chocolate is an NGO which tries to stop child slavery in the cocoa industry. Earlier
this year, SBC released a video, "Wonka 2012" demanding that the company ensure their own
products aren't produced by children in shocking conditions.
While every other major chocolate company has already taken steps to ensure their cocoa isn't
harvested by children, Mr Wonka refused to produce child labour free product. He argued that
only days before Easter, these companies are desperately competing to maximise profits and
can’t afford a huge increase of cocoa prices by using adults with regular wages.
Wonka says he has no duty to comply with international human rights law. Moreover his young
employees wages are a source of income for many families around the island.
Team 1: You represent Willy Wonka
Team 2: You represent Stop Bloody Chocolate
Using the arguments for and against corporate
obligations under IHRL, each team work for
15 minutes to develop 3 solid arguments to
support its position. 3 different team
members will present each argument in 2
minutes. The opposing team will be given a
1 minute right of reply.
Reality check...
Oompaland does not exist.....these facts are
inspired from Lindt and Ferrero's practice in
MNC, Human Rights & Soft law :
Globalization context :
Race to the bottom for labour framework and
low costs workforce for goods manufacturing.
Apple Computers produces i-devices in China
with Foxconn company, a world wide
subcontracted supplier.
Many labor law infringement had been
reported in Foxconn facilities
Apple started independent investigation by
Fair Labor Association under public pressure
and yearly report
NGO now focuses on MNCs, the more a
company becomes popular the more it will
be under scrutiny
From a public relations point of view MNC
bear a responsibility for their business
Balance of power that may help to develop
human rights under public opinion pressure
Effect of publicity infringements, shaming
The expectation that MNC should respect HR
can itself be seen as an identity and lifestyle choice made through patterns of
The "ethical consumer" has become a target
customer for ethical corporations.
Solutions : Self practice, independent review
Interesting but insufficient standards
Danger of this way to promote HR as soft law,
with no binding commitments, diminishes
State's duty
Public opinion pressure is volatile.
Abuses : controversy false testimonies see
Mike Daisey, The Agony and the Ecstasy of
Remedies in Canada?
Reducing Corporate Responsibility
to Law
To whom is the corporate officers' fiduciary
duty owed?
• Corporations?
• Shareholders?
• Society?
Iacobucci J. – "duty is not simply
owed to the shareholders"
•“Insofar as the statutory fiduciary duty is
concerned, it is clear that the phrase the "best
interests of the corporation" (CBCA s.122(1)(a))
should be read not simply as the "best interests
of the shareholders". From an economic
perspective, the "best interests of the
corporation" means the maximization of the
value of the corporation. How does one
maximize value?
•E. M. Iacobucci, "Directors' Duties in Insolvency: Clarifying What Is at Stake"
(2003), 39(3) Can. Bus. L.J. 398, at pp. 400-1.
Corporate officers have to consider
everyone’s interest.
•However, this is inherently conflictual because
different groups have different interests.
•Therefore, the CBCA does not resolve the
question around corporate responsibility.
•SCC attempts to resolve it by claiming that the
best interest of a corporation is served when it
"acts as a good corporate citizen.”
•“good corporate citizen”?
Business judgment rule
•SCC developed the “business judgment rule”
principle, which means that a corporation should
basically write down the principles that are to
guide its operations.
•Once a corporation implements a code of
conduct and violations of human rights still
occur, can a corporation still be held
responsible? Should corporations be
responsible? If yes, how?
What can we do???
Here are a number of petitions relevant to our discussion
today ...