Human Rights and MNCsBy: Giuliana, Gjergji, Maxime,

Rachel & Varun

TerminologyMultinational 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 base

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 ...

Introduction- Human Rights law - affirms primacy of state- Fear against state supremacy reflects context:

• WWI, WWII• Decolonisation • 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 abuse:• Reports of health violations, environmental damage, child labour,

poor working conditions, kidnappings, torture, discrimination.

ObjectiveMNCs operate free from state or

international regulation. While there seems to be a strong argument for imposing corporate responsibility,

this is not so simple in practice.

1. ATS - Kiobel 2. Responsibility to protect (Ruggie

Report) 3. Video and Debate4. Remedies5. Conclusion

Contents

The Alien Tort Statute

What is the Alien Tort Statute?• First passed in 1789, to

allow "Aliens" to bring suits for violations of international norms.

• Revived over the last 30

years, leading to numerous suits. o Foreign government officalso Corporations

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 modelo The assumption is that the state enforces human rights

obligations.

• Corporations are usually headquartered in the USAo The ATS allows the court to issue a federal remedy (i.e.

money) for a international human rights violation.

Kiobel - still in progress

• Second Circuit decisiono Rejected the idea that "Corporate Liability" was an

internationally recognised norm. o Based on the Sosa standard - "Specific, universal and

obligatory."

• U.S. Supreme Courto Question for the Court is whether Shell is immune from this

suit because it is a corporation, not a person?

• Factso Group of Nigerians claim they were the

victims of torture, execution and other crimes against humanity perpetrated by the Nigerian Government.

o Shell accused of "aid+abetting"

What would happen if Pirates were a Corporation? Justice Breyer in Oral Argument - Kiobel

Pirates Inc.

Responsibility to Protect

The two solitudes

"Companies have ethical and even philanthropic obligations"

"Maximise profits while obeying the law"

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 2003

Or non-binding principles

"The 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.

Protect, respect and remedy

What to do with Novartis?

Debate

TED talk excerpt on business and human rights

Fact pattern for DebateFACTS : 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 16-hour 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.

DebateTeam 1: You represent Willy WonkaTeam 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 Africa.

MNC, Human Rights & Soft law : AppleGlobalization context : Race to the bottom for labour framework and low costs workforce for goods manufacturing.

Facts

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

Cont'dNGO 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 partners

Balance of power that may help to develop human rights under public opinion pressure

Effect of publicity infringements, shaming mechanism

The expectation that MNC should respect HR can itself be seen as an identity and life-style choice made through patterns of consumption.

The "ethical consumer" has become a target customer for ethical corporations.

Solutions : Self practice, independent review

WeaknessInteresting 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 Steve Jobs

Remedies in Canada?

Reducing Corporate Responsibility to LawTo 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 ...

https://www.change.org/petitions/lindt-and-ferrero-end-child-slave-labour-in-your-chocolate-this-easter-childslavery?utm_campaign=LfcwvQoPnc&utm_medium=email&utm_source=action_alert

http://www.ethicaltrade.org/

http://www.msfaccess.org/STOPnovartis/