business and human rights in conflict

Business and Human Rights inConflictOlga Martin-Ortega*

With respect to the social role of business, companies were traditionally

held to be responsible only to their shareholders. Their duty was to

generate profit while complying with the laws of the countries in

which they operate. A given company may contribute to the well-being of individ-

uals or groups, or even prevent harm, but such deeds were generally interpreted as

acts of charity. Under the maxim that a good business minimizes costs and maxi-

mizes profits, inevitably businesses have been portrayed as being ‘‘in conflict’’ with

human rights. The challenge of how to balance the pursuit of profit and the protec-

tion of human rights is particularly formidable in the context of wars and other

armed conflicts.

Over the last couple of decades the question of the responsibilities of busi-

nesses operating in conflict environments has risen to greater prominence, both

in academic and policy circles and in the wider public discussion. On the one

hand, the political economy of internal armed conflicts has become central to

analyses of the causes of conflict and to the design of prevention and resolution

policies. On the other, the impact of business activities and working methods on

human rights has become a new focus of widespread discussion—not only

within companies, but also within and among NGOs, states, and international

bodies—following a series of highly publicized campaigns and lawsuits against

companies, such as Unocal and Freeport McMoRan. These two developments

have encouraged a broad examination of the ways in which businesses can aggra-

vate or even perpetuate armed conflict and thereby contribute to human suffer-

ing, as well as of what businesses might do to contribute to conflict resolution

and thus of mitigate that suffering. Can current policy and legal responses make

businesses part of the solution rather than part of the problem? And can

* I am grateful to Chandra Lekha Sriram and Johanna Herman for their invaluable comments.

� 2008 Carnegie Council for Ethics in International Affairs

273

companies be held accountable—socially, legally, or by some other means—for

whatever negative actions they might have taken in situations of armed conflict?1

The Economic Dimension

Many of today’s armed conflicts have close links to the exploitation and trade of

natural resources. Combatant activities are increasingly self-financed through the

exploitation and trade of locally available assets, such as coltan and casseterite in

the Democratic Republic of Congo (DRC), diamonds in Sierra Leone and

Angola, timber in Liberia, and coca in Colombia.

Although the majority of modern conflicts are not fought over natural resour-

ces, once the fighting starts all parties tend to consolidate their positions by ex-

ploiting the financial opportunities that resource access provides. War generates

dynamics that become ‘‘economies’’—in which the majority of the economic

activities spin around the financing of war—based on the savage exploitation of

resources and their quick placement in the marketplace to obtain immediate

returns. These dynamics have been referred to as ‘‘the business of war.’’2

Different resources require different levels of expertise and infrastructure to be

extracted and channeled into the marketplace. Some primary goods, such as

agricultural crops (including drugs), easy-access minerals, and rough gemstones

are more readily extractable and traded, requiring a relatively unskilled labor

force. Others, such as oil, gas, and deep shaft materials require expertise, infra-

structure, and a large commercial network of support. This is where private

foreign investors enter into the dynamics of conflicts. A range of businesses—

including multinational financial institutions, private lenders, and insurers—

become key actors in specific conflicts.

Companies that operate in conflict zones may contribute, directly or indi-

rectly, to the aggravation and perpetuation of hostilities through the financing of

oppressive regimes or armed groups, through the provision of infrastructure or

materials, through taxes or royalty payments, or even through such corrupt

practices as bribery to maintain or protect their business operations. They can

also participate, intentionally or not, in actual abuses of human rights.

In order to guarantee their investments, companies, especially those whose

business is based on the extraction of natural resources or agricultural produc-

tion, need open access and stable conditions to operate in a particular territory.

In situations of instability and conflict, some companies opt to negotiate access

274 Olga Martin-Ortega

with whomever happens to have control over a particular territory—be it the

government or a rebel or militia group—while ignoring the political repercus-

sions of their commercial ties. Such disregard for the political consequences of

their decisions suggests that companies behaving in this manner ought to be im-

plicated in the activities of their local partners, whatever these actors’ level of

legitimacy. Some high-profile cases have helped to publicize allegations of

human and environmental rights violations, including the forced displacement

of people, abusive labor practices, and the pollution of land and water resources.

These have included allegations of complicity with state militias and other armed

groups in forced disappearances, extrajudicial killings, and the torture of politi-

cal dissidents or those opposed to certain corporate investments.

In the Unocal case, for example, the oil company was accused of colluding

with the repressive Burmese military regime in acts of murder, torture, and rape;

and, moreover, of benefiting from forced labor provided by the government for

the laying out of the Yadana pipeline.3

Similarly, it is commonly acknowledged

that the relationship of the diamonds trader De Beers with UNITA rebel groups

in Angola contributed to the perpetuation of that country’s twenty-seven-year

civil war, and was directly linked to atrocities and civilian deaths. Coca-Cola,4

Drummond,5

and Chiquita6

face lawsuits in the United States on accusations

of colluding with the Colombian paramilitary—the Autodefensas Unidas de

Colombia—to gain access to resource-rich land. These companies are accused of

taking measures to maintain the security of their infrastructure against pressures

from local populations, human rights activists, and trade unions; specifically,

they are accused of colluding in acts of intimidation, forced displacement, and

even torture and assassination.

Managing security arrangements is a priority for firms doing business in con-

flict situations. In this regard certain companies have been accused of providing

equipment and even training to governmental security forces to protect their in-

frastructure and interests—in effect providing support for the persecution of po-

litical opponents or communities critical of government policies or of their

investment. The operations of petroleum industries in the Niger Delta are salient

examples of this problem, with companies such as Chevron and Shell facing law-

suits for alleged collusion with the Nigerian police in the suppression of political

opposition.7

Freeport McMoRan, one of the world’s largest copper and gold

producers, allegedly employed security forces that performed surveillance oper-

ations, applied mental torture, issued death threats, and made house arrests,

business and human rights in conflict 275

a range of acts that harmed the interests and well-being of Indonesia’s Amungme

people. The plaintiffs in the case also claim that the company was complicit in

the government’s attempt to destroy the indigenous environment and habitat,

which amounted, they claim, to ‘‘cultural genocide.’’8

Ethical Dilemmas

The ‘‘business of war’’ raises important ethical dilemmas for a variety of agents.

For consumers, the moral question relates to how our choices contribute to the

perpetuation of violence. For NGOs and human rights campaigners, the ques-

tion is whether the best way to help local populations is by pressuring companies

to pull out or by working with them to improve human rights standards. At the

beginning of this decade, for example, a considerable number of Western com-

panies disinvested in Burma due to a vocal campaign of ‘‘naming and shaming,’’

only to witness less scrupulous companies move in, with little or no net benefit

for the local population.

Of course, companies and their directors also face ethical dilemmas in this

context. Multinationals operating in conflict zones are not necessarily evil enti-

ties, in it for the money regardless of the consequences. Business leaders do face

important management decisions, for which they are provided with insufficient

guidance regarding the social and legal consequences. As will be argued later, the

legal thresholds affecting such decisions are not entirely clear, and they are being

continuously shaped by international and national practices—often through law-

suits that prove to be lengthy, costly, and painful in terms of businesses’ reputa-

tions. Companies, therefore, have to make hard choices in conditions of

incomplete information, choices that might jeopardize their competitiveness or

even their existence. In making these difficult decisions, companies not only have

to determine the extent to which they can or should benefit from war economies

and war resources, but also how to deal with repressive governments or militias;

moreover, they have to manage their own security to protect workers and invest-

ments. In balancing business priorities and the protection of human rights, evi-

dence suggests that business leaders do not always make the right choices.

The old argument that a company’s primary responsibility is to produce

wealth is increasingly being challenged. The fact that the private sector can have

an impact on the enjoyment of human rights and contribute to their abuse raises

the question of what sort of responsibility comes attached to corporate power.


Today demands for responsible corporate behavior are not only the domain of

human rights organizations but also of the informed public and consumers.

Policy Responses

Currently the constraints on corporate behavior are mainly voluntary. Voluntary

approaches are based on the premise that businesses’ responsibility toward indi-

viduals other than their employees and consumers is a social rather than a legal

form of constraint. Voluntary initiatives have been favored by governments and

intergovernmental organizations, and have been shaped particularly by corporate

priorities, as companies have fiercely lobbied for self-regulation in order to avoid

tighter normative standards. NGOs have also supported such initiatives in an at-

tempt to push forward the corporate responsibility debate and to change the

practices of businesses in ways that alleviate their impact on human rights.

For a significant period, voluntary schemes were designed and implemented

nearly exclusively by companies themselves. During the 1990s a plethora of cor-

porate codes of conduct, social reporting schemes, and corporate labeling initia-

tives flourished, and by the end of the decade governments and international

institutions did publicly acknowledge a general link between business and hu-

man rights. This acknowledgment amounted to the acceptance at the interna-

tional level of companies’ ethical responsibility for their actions; that is, the

existence of a ‘‘corporate social responsibility,’’ even if the content of the concept

was not agreed upon.

A sign of the changing normative environment was the inclusion of a refer-

ence to the role of the private sector in the United Nations’ goals for the new

millennium, as stated in the 2000 Millennium Declaration. UN Secretary-

General Kofi Annan engineered the Global Compact, the world’s largest global

corporate citizen initiative, which was launched in 1999; and in 2005 he ap-

pointed Professor John Ruggie as Special Representative on the Issue of Human

Rights and Transnational Corporations and other Business Enterprises.

As corporate behavior started to attract more critical attention, the role of

multinationals in armed conflicts became a subject of intense scrutiny. Various

issues, such as the participation of companies in the illegal exploitation of natu-

ral resources in the DRC, or the impact of the Liberian diamond trade in fueling

the conflict in Sierra Leone, have been considered at the UN Security Council

level. Different organizations have developed different policy instruments to


deal with this issue. Since 2001 the UN Global Compact has hosted a policy dia-

logue on ‘‘The Role of the Private Sector in Conflict Zones’’; as important as the

dialogue is, it does not provide specific measures for changing corporate prac-

tice, nor does it establish common-ground principles for corporate behavior.

In June 2006 the Organisation for Economic Co-operation and Development

(OECD) launched its ‘‘Risk Awareness Tool for Multinational Enterprises in

Weak Governance Zones’’ as a complement to the general Guidelines on Multi-

national Enterprises (1976, revised 2000). A lack of implementation and moni-

toring mechanisms, however, means that the success of the OECD scheme

depends on what individual companies make of it.

Certain multi-stakeholder initiatives developed for specific sectors have shown

more promise. They have different rates of success and degrees of legitimacy, but

some such programs have in fact been able to shape standards of business behav-

ior. Multi-stakeholder initiatives are hybrid schemes in which states (home and

host), companies, and NGOs work together in the framework of an agreed set of

principles, with specific implementation and accountability mechanisms. Such

initiatives as the Kimberley Process for the certification of rough diamonds, the

Extractive Industries Transparency Initiative (EITI), and the Voluntary Princi-

ples on Security and Human Rights are opening important avenues for stand-

ard-setting and monitoring in very sensitive areas directly related to the way

business is conducted in conflict-prone zones.

Collectively, these policies and initiatives play an important role in raising

awareness and contributing to the general acceptance of a social responsibility to-

ward human rights. Most important, they help change business sensibilities and

corporate culture, and have a real impact on the actual human rights situations of

those affected by the activities of business enterprises. These policy initiatives also

contribute to the creation of regulatory frameworks that shape practice and con-

strain harmful action. In fact, it can be argued that by defining specific obligations,

their content and scope, and by shaping international practice, voluntary and

multi-stakeholder initiatives are the first step toward the development of norma-

tive standards that can define a common legal framework. It is important to bear

in mind, however, that these instruments focus on the promotion of good practi-

ces but not on accountability mechanisms, nor on mechanisms through which

victims of human rights abuses may seek redress. Existing policy frameworks do

not sanction wrongdoing in a way that brings justice to the victims of corporate

participation in human rights abuses. This means that those companies less


affected by public opinion, less interested in public image, or whose home coun-

tries put little or no pressure on them, will continue to operate with impunity.

Legal Accountability

The international legal framework that governs the relationship between business

and human rights has been explored by legal scholars for over a decade now.

However, the framework that governs this relationship in the specific context of

armed conflict is a relatively new focus for academic specialists. Scholars working

in this field have tended to draw a strong distinction between the moral and legal

obligations of businesses active in conflict zones. It is now commonly accepted

that businesses have a moral responsibility not to engage in human rights viola-

tions and to avoid benefiting from situations in which other actors conduct or

collude in abuses. Moral obligation, however, is difficult to delimit, compliance is

difficult to measure, and sanctions for noncompliance normally rely on informed

and responsive public opinion, which in turn depends upon concerted cam-

paigns by NGOs or the media. Determining clearly specified and enforceable

legal obligations under international law is therefore a necessary next step in

holding businesses to account.

The majority of the companies involved in war economies conduct legitimate

business. Further, in itself, investing and carrying out business in conflict coun-

tries is not an illegal activity. Nonetheless, certain provisions in international law

may be applicable to situations in which doing business in a conflict zone results

in the violation of human rights. Their precise application, however, is a matter

of disagreement among legal scholars.

As a formal legal matter, defining obligations for nonstate actors in general

and companies in particular encounters the challenge that, with certain excep-

tions, states are the only subjects of international legal obligations. For some time

the debate over the legal responsibilities of corporations and other nonstate actors

in relation to human rights stagnated in the technical debate over international

legal personality. This hurdle seems to be surmountable if we limit our considera-

tion of businesses as ‘‘participants’’ in international life, able to be recipients of in-

ternational legal norms without the need to be classed as ‘‘subjects’’—with full

international legal personality, as states have—in the international legal order.

This being said, we cannot avoid first discussing state obligations. Under in-

ternational law, states have the obligation to respect, protect, and promote


human rights. This means that they have a negative duty not to violate human

rights and a positive duty to take all appropriate measures to guarantee that

others do not do so. If other actors do violate human rights, states are obligated

by international law to ensure that they are appropriately and adequately sanc-

tioned. This duty to protect extends to abuses perpetrated by companies, as has

been acknowledged by several UN treaty bodies.

There are, however, a number of specific challenges to creating and imple-

menting strong legal regulations for corporate behavior in conflict zones. The

main difficulty is to identify which state is responsible for protecting a given set

of individuals. On the one hand, an obligation relying on the home state of a

corporation would require an extraterritorial application of the international in-

strument containing the obligation—a move that is still controversial in inter-

national law, even in theoretical terms. On the other hand, relying on the obligation

of host states to protect their own populations presents two problems: first,

whether the state in question actually has such an obligation—that is, whether or

not it has signed the relevant instruments—except when the violations relate to

ius cogens norms; and second, the fact that the adoption of protection measures,

including sanctions of corporate actors, may be impeded by (a) the host state’s

lack of will (for instance, its economy might depend on the corporate activities

and revenues); (b) a lack of capacity, whether due to deficient legal systems and

means of enforcement or because of a de facto lack of control over the relevant

zone (more likely to be the case in conflict situations); and (c) the fact that the

host state itself may be the actual perpetrator of the abuses.

Therefore, relying exclusively on the obligations of states proves insufficient

and leaves a lacuna that only contributes to the confusion over how to allocate

responsibility for rights violations.

It has been far more difficult to define the direct obligations of businesses.

As mentioned above, it is not illegal for companies to do business in war zones,

or to profit from war zone trade and production. It is true that international

sanctions regimes prohibit trade in several commodities that directly relate to

the fueling of conflicts, and these regimes therefore imply an obligation for busi-

nesses not to engage in such trade. Yet there is no international instrument that

actually defines direct obligations for multinational corporations not to engage

in human rights abuses or contribute to the perpetration of conflicts. In the draft

document ‘‘UN Norms on the Responsibilities of Transnational Corporations

and Other Business Enterprises with Regard to Human Rights’’ (2003), the UN


Sub-Commission on the Promotion and Protection of Human Rights attempted

to draw direct obligations for companies, including in the context of armed con-

flicts, but was ultimately unsuccessful. The Sub-Commission sought to establish

direct obligations on companies, within their respective spheres of activity and

influence, to respect, protect, and promote human rights, and to make compa-

nies accountable for failing to do so. The draft stated that corporations must not

engage in or benefit from violations of international humanitarian law (IHL), in-

cluding war crimes, crimes against humanity, genocide, torture, forced disap-

pearance, forced or compulsory labor, hostage-taking, or extrajudicial, summary,

or arbitrary executions. However, the document was ultimately abandoned due

both to important technical difficulties and strong opposition from the business

community (and even some NGOs), as well as Ruggie’s decision not to consider

this instrument as a basis for his work.9

The available international legal instruments that do address the responsibil-

ities of companies are primarily soft law, lacking appropriate implementation

mechanisms. They generally approach the issue of human rights from a labor-

rights perspective. The two principal legal instruments are the International

Labor Organization (ILO) Tripartite Declaration of Principles Concerning Mul-

tinational Enterprises and Social Policy (1976) and the already mentioned OECD

Guidelines on Multinational Enterprises. The former does not make any specific

reference to conflicts, not even in a provision that enterprises are not to benefit

from forced labor, a common occurrence in conflict zones. And the latter instru-

ment, as has been pointed out, has approached the issue of ‘‘weak governance

zones’’ only through an ‘‘assessment tool.’’

If international human rights law does not prove to provide a satisfactory nor-

mative framework for the regulation of businesses’ conduct, can international

criminal law help? Not only does this body of international law apply to entities

other than states, but some of the offenses that amount to war crimes, such as

pillage and plunder, are economic by definition and have been condemned by

customary international law for centuries. On the other hand, the notion of

‘‘complicity’’ in international crimes, which entails criminal responsibility, is po-

tentially a useful and still underused instrument for determining the responsibil-

ity of corporations when their actions enable international crimes.

The International Committee of the Red Cross (ICRC) supports the idea of

developing a definition of the direct human rights obligations of businesses en-

gaged in conflict zones. In its report Business and International Humanitarian


Law (2006), the ICRC makes it clear that ‘‘business enterprises carrying out ac-

tivities that are closely linked to an armed conflict must also respect applicable

rules of IHL.’’ The ICRC considers that IHL applies to businesses in such sit-

uations as: their response to attacks by parties to an armed conflict; the behav-

ior of their security forces when they engage in surrounding conflicts; the

acquisitions of assets without the freely given consent of the owner (which

amounts to pillage in IHL); benefiting from the labor of civilians, prisoners of

war, or concentration camp detainees; displacement of civilian populations

when gaining access to resources and establishing transport routes; their in-

volvement in forms of warfare that may be expected to cause widespread, long-

term, and severe damage to the environment; and, last, the ICRC holds that

businesses have obligations under IHL not to develop, produce, or transfer spe-

cific types of weapons.

These are wide-ranging statements, which are not likely to go down well with

purist interpreters of international law; indeed, ultimately they have insufficient

grounding in common international practice to support consensus. In addition,

even if we could define and agree on international legal obligations for corpora-

tions, there are no relevant enforcement mechanisms at the international level.

The initial threats of the International Criminal Court (ICC) prosecutor to open

the door of the Rome Statute to crimes involving economic entities have not

been reflected by the first indictments by the Court. Nor have the rest of the

international tribunals shown particular interest in this path.

Some national courts have been more proactive in their consideration of

companies’ responsibilities for human rights abuses, as demonstrated by the

cases in the United States under the Alien Tort Claims Act. This domestic route

is of considerable importance for the attempt to identify the legal sources of

responsibility, and therefore to define such obligations. So far, however, juris-

prudence is not consistent among, or even within, countries; and courts are in

the situation of having to navigate with little guidance on what the responsibil-

ities of their states or their companies are, and what international laws are

applicable.

Conclusion

If policy responses cover only part of the spectrum, and international law is

inadequate, is the answer in a new international legal instrument, such as an


international treaty? And should such an instrument be addressed to companies,

to states, or to both? UN Special Representative John Ruggie, in a report

submitted to the Human Rights Council in 2008, draws a framework for business

and human rights based on three core principles: the duty of states to protect

against human rights abuses by third parties; the responsibility of corporations to

protect human rights; and the need for more effective access to remedies. An in-

ternational instrument comprising these three dimensions would not only clarify

the scope of responsibilities and provide a clear sense of who needs to do what, but

would also provide victims with adequate tools for vindicating their rights in the ap-

propriate forum. The main obstacle remains political will rather than the capability

of international law.

Other related international issues, such as environmental protection and fight-

ing corruption, have already overcome the barrier of political will, and have been

promoted from the level of policy documents to that of international law, with

states assuming obligations to establish national legal and administrative meas-

ures to regulate and sanction corporate behavior, or even to criminalize it. The

development of international discussion on business, human rights, and conflict,

and the inclusion of all concerned actors, is moving the debate forward. We are

now past arguments over whether businesses should regard the safeguarding of

human rights as a cost on the balance sheet or as a minimum requirement for

action. The question now is not so much whether to regulate the behavior of

businesses in conflict zones, but rather how to regulate it.

NOTES1

This essay does not deal with the rise in the use of private military and security companies as combat-ants in internal conflicts. These companies are not only operating within war zones, but their businessis war; therefore their case demands a specialized and dedicated debate as well as an urgent policy re-sponse. For a similar reason I have preferred not to include arms producers and traders in this analysis.

2

William Reno adopted this term in the early 1990s; see in particular William Reno, Warlord Politics andAfrican States (Boulder, Colo.: Lynne Rienner, 1999).

3

Doe v. Unocal Corp., 395 F 3d 93d (9th Cir. 2002).4

The case against Coca-Cola, Sinaltrainal v. Coca Cola Co., 256 F. Supp. 2d 1345, 1358-59 (S.D. Fla. 2003),was dismissed in 2006 and is awaiting appeal.

5

For the cases against Drummond, see Romero v. Drummond Company, Inc., 430 F.3d 1234, 1243 (11 Cir.2007); and Estate of Rodriguez v. Drummond, 256 F Supp 2d 1250, 1257 (N.D. Ala. 2003).

6

In the case of Chiquita, three lawsuits were filed in 2007 in Colombia and the District Courts of Floridaand New York. In 2008 they were consolidated to be filed only in New York; see In re: Chiquita BrandsInternational, Inc., Alien Tort Statute and Shareholders Derivative Litigation, Transfer Order, Feb. 20, 2008.

7

Bowoto v. Chevron Corp., 557 F Supp 2d 108c (N. D. Cal. 2008); Wiwa v. Royal Dutch Petroleum Co.,226 F 3d 88 (2nd Cir. 2000).

8

Baenal v. Freeport McMoRan, Inc., 197 F 3d 161 (5th Cir. 1999).9

In his Interim Report, John Ruggie expressed the view that the norms did more harm than good,maintaining that ‘‘the Norms exercise became engulfed by its own doctrinal excess’’ and that ‘‘its ex-aggerated legal claims and conceptual ambiguities created confusion and doubt’’; UN Doc. E/CN.4/2006/97, February 22, 2006, para. 60.


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