Transnational corporations and human rights

Conectas • What do you think should be the role of the UN Working Group on Business and Human Rights?²

S.L. • Several possibilities. Definitely it is there to take the principles further in one sense. That is to say, to make the principles fuller and more concrete, to provide more furnished details about how to conduct, for example, a due diligence investigation or how to understand supply-chain obligations. The Working Group serves that function. But should it be seen as an authoritative interpreter in an area where there is ongoing and often intense debate in civil society? I, on the whole, do not think so because at this stage, with the balance of forces between interests being what they are, I could not say that I have enough faith in any single body to give an authoritative interpretation of certain principles. I think we are going to have to live with competing interpretations for some time, and we will have piece-meal steps to begin to see them resolved. But that is going to take a lot of work by human rights advocates to prepare the terrain and push for certain things. It is wrong, at this stage of development of the Guiding Principles to expect the Working Group to come up with this quasi-judicial capacity on its own.

Conectas • But can the Working Group give more concrete meaning to the General Principles?

S.L. • Yes, but that is a different thing. Fleshing out what some of these principles mean is something you can do without necessarily making these value judgments about the weight of the rights at stake as they compete with commercial interests. These judgments about the weights to assign to the competing interests are judgments that have to be made in the various settings of negotiation and dialogue between business and human rights advocates, but it would be premature to create a single body to do it as a supra-national Court of Appeal. If we push too fast on trying to create such a body, the Working Group risks alienating parties to such an extent that it could damage the progress that has been made with the Guiding Principles so far.

Conectas • What is your view of the proposals to enlarge the jurisdiction of the International Criminal Court (ICC) to be able to deal with cases of corporate misconduct?

S.L. • I think it would be good. I cannot claim to be a complete expert on the opposing positions in that debate, but on the whole I very much like breaking the log jam about the status of the obligations of companies in international law.

Conectas • A lot of the discussion has been about access to a remedy, and we have seen several reports of how it is difficult to bring companies to justice, especially in the Global South. Have you seen any innovations or changes in legislation that make it possible to hold companies accountable at the national level?

S.L. • Yes, small things, but important things. Not just access to justice but generally legislation that is strengthening the extra-territorial obligations of companies. An example is the United Kingdom’s Bribery Act of 2010.³ It is potentially very powerful, is now in force, and it places a due diligence requirement on United Kingdom companies for actions their overseas agents and employees take. So, if I now pay a bribe in the Congo in order to obtain business for a company domiciled or otherwise active in the UK, criminal liability immediately arises for the company that permitted this and did not do its best to prevent it. That is a step forward. It is not access to justice for victims, true, but it is a potentially very powerful deterrent. Have I seen analogous things elsewhere in the area that do take, as you put it, innovative steps toward more adequate remedies? No, I can’t say that I have. To me, the problem areas that I am familiar with arise from the need for a more robust attitude toward preventative remedies, injunctions, or a variety of other orders that slow down or stop projects until an abuse has been remedied, as has happened in Brazil quite recently. We need more of that; criteria for making them easier to obtain and more available are very necessary. It is true, unfortunately, that most of the time when you get these injunctions, particularly rapid injunctions, it is a delaying mechanism. You are saying, “Look, you are going to have imminent and irreversible damage if you don´t stop.” But the full order to stop something permanently is rare, despite the fact that such an order would be clearly merited in certain situations. We also need to include the problems of standing for investment contract disputes that are basically between companies and host governments, where the real victims are third parties—local populations—who are often injured when the terms of a contract negotiated between the company and a State are violated. The real victims are not able to complain because they are not formally parties to the contract. That is the big gap. In fact, I would say that arbitration of disputes over these contracts is still too narrow; it does not allow victims enough recourse.

Conectas • How does the North/South divide work when you talk about businesses and human rights?

S.L. • In my limited experience, the North/South divide is really a function of the kind of resource that is being exploited and the way in which populations are being treated while that is happening, especially when one looks to the extractive industries. It seems to me that the damage done in the South to local populations is so much clearer and stronger than it is elsewhere. I am basing this only on two examples from my personal experience: Uganda and Senegal. In both cases, there really is a much greater awareness of the social impact of the extractive industries than occurs elsewhere; you read about it in the papers a lot and you see a lot of debates among local NGOs in the countries. Civil society involvement in the South is greater than in the North because so much more is at stake for societies in places like Uganda or Senegal.

Conectas • In Latin America, some left-wing countries are very much directly involved in promoting the extractive industries. To your knowledge, is that the case elsewhere?

S.L. • How that shift is happening elsewhere is a good question. Take Uganda. I think there is a clear split politically. The executive [branch] definitely sees this kind of connection that you are describing; but, civil society, to which parliament pays some attention, takes a more conditional view of the merits of developing the industry. They want to build in more guarantees for local populations. This has produced different views between certain members of Parliament and the Executive Branch. Overall, you cannot say countries in the South are strongly aligned with one another; it depends on the national context, and the domestic forces that are operating within them to compete with one another for inward investment.

Conectas • What role do universities and NGOs play in this discussion?

S.L. • For us, the most successful relationships have been where there is mutual interaction. First of all, we are at a frontier area in quite a few areas of law. Human rights are pushing into the business agenda in a way that reconfigures certain elements of investment law, trade law, and corporate law; and universities are very well placed to provide new solutions to these problems. You will not find that in consultancies or in the law firms; they do not have time to get into that kind of work. For us, the most successful things have been where we have been able to draw on what we find out from commissions to do projects by getting out into the field with those asking for the work to be done and seeing what is happening and then going back and working at solutions at the level of basic principles. So, I think there is a tremendous role for universities, particularly at this time where classical legal doctrines run out, and it is impossible to rely on a string of established leading court decisions in this area. It is not like classic commercial law where you really do have a very rich field of jurisprudence. Universities are not advocacy bodies. The terrain for each must be clear. Universities are not set up, indeed, to exert pressure via campaigning. They are set up to do field work, and there we can work well and have worked well with NGOs out in the field. Universities have the access, they know what they are looking for, and each group can complement one another quite well. And the NGOs themselves are not passive in this. They often make use of legal arguments, not to litigate, but to frame the arguments to the state or to the employer. So, there is a good two-way movement because when they do that, it feeds back on us being better able to frame what we are after and what we are trying to find. This is also a time, politically, where governments—in Europe, at least—are interested in the impact of their research on wider society. The United Kingdom has become very interested in having each academic show the real-world impact of his or her work. That, I think, can be explained by the fact that the crises—financial, social, and political—are leading governments to think that the university has to do its share in trying to help with some of these problems. So, it is a good time to be doing this work in the university.

Conectas • What do you think are the main cases regarding this debate?

S.L. • Well, I am probably prejudiced, but I think the major legal issue at the moment concerns the duty of care which parent companies must exercise in regulating the affairs of their subsidiaries. The Court of Appeal in England and Wales⁴ has made it clear that these parent companies must, when they issue guidelines for companies in the corporate group over which they have control, take responsibility towards victims if they fail to oversee the implementation of these standards adequately. This could have a very large impact on tightening the impact of human rights standards on multinational companies. Not all countries have followed suit so far. The judiciary in the Netherlands, for example, has recently taken a restrictive approach to the scope of a parent company’s duty of care when the parent fails to oversee implementation of standards set for the subsidiary when the latter is operating abroad.⁵ I expect over time that countries will converge on the English solution, but this outcome would be helped by pressure from civil society in the various relevant countries that are home to the major multinationals.

The Kiobel case⁶ is also important, but I suspect, and I could be totally wrong, that it is going to allow the statute to stay but narrow its scope. At the moment, one radical interpretation of the Alien Tort Statute⁷ is that it would possible for an alien to take a non-American company to court in the US for violations committed abroad. If an alien is suing an alien in a US court, that is bad news for any judiciary in America and the volume of litigation that this promises. So that is going to be chopped down. I am not even certain how realistic it was to begin with anyways. Will the Court totally get rid of Act? They might. It is not the end of the world as other legal developments may well fill the gap.

Conectas • In the United Nations Forum, John Ruggie said there is a need for an inter-governmental conversation regarding a multinational treaty addressing these issues. What do you think should be the scope of that? Are there any possibilities to get a treaty? Do we need it?

S.L. • It would be very useful to have a treaty because at the moment you don´t have a general international obligation to protect. That is to say, a country can watch one of its nationals commit wrongs that s/he would not be able to commit in the home country, and not be, in and of itself, in a position to regulate that wrong beyond its borders. Piece-meal legislation that directly fixes such an extraterritorial power can do this. For example, the United Kingdom’s Bribery Act really is interesting because it provides criminal liability at home for acts [committed] overseas on behalf of the company or indeed by the company itself. The missing piece is the power to regulate overseas activity across a wide range of areas rather than having to wait for legislation to be adopted country-by-country. It would be very helpful. Is it likely? I do not think so. And I do not think so because it is actually creating the possibility that countries will see themselves obliged to regulate their nationals´ activities across a very wide range of activities, and, politically, companies are going to do their best to stop that. I just do not know what is in it politically for a self-interested politician to push for this, but I could be wrong. I would like to see it, but am I optimistic I will see it? No.

Conectas • I think everybody was quite surprised that Ruggie raised that point of the need for inter-government conversation.

S.L. • Yes, I think what is driving it is that, like he said, there is no general obligation for countries now to regulate what their companies do overseas. It would be good, but you are not going to get it unilaterally because a unilateral move like that would frighten states as well as businessmen about being caught out by acting unilaterally – a worry currently expressed by critics of the UK Bribery Act, for example. So it makes sense to have that multilateral discussion.