Uniquely unaccountable: multinational corporations and human rights

Abstract

FOCUS □ BUSINESSAND HUMANRIGHTS Uniquely unaccountable: multinational corporations and human rights I companies and national jurisdiction civil accountable entity the Courts or corporate effective is criminal borders across barely over lack law to effective jurisdictionover companies across nationalborders and the corporate entity is barely accountable to civilorcriminal law DANIEL BLACKBURN isDirector off ICTUR in London. Daniel is aUK-qualified lawyer and was awarded adistinction and academic prize for his MA thesis on the legal history off business and human rights The Shell accused stories in of Nigeria; were complicity everywhere: a host inhuman of Bhopal multinationals rights inIndia; violaShell in Nigeria;a host of multinationals accusedofcomplicity inhumanrights violationsinColombia ;yetfurther companies that left workforcesand even whole communities wrackedwithasbestosis. Itwas wellknownthat corporationswere having these impacts. A panoplyof environmental degradation, poverty, disease,and death. Attempts tosecurejustice incourts oflawoften failed on 'technical' grounds. Itisuseful toexaminewhythelegalactionsfailed , as thelegalbarriers arenotall that wellunderstood, despitethe huge circusof consultancy 'expertise' thatnow surrounds anything bearingthe name 'business and humanrights'. They are rathertechnical, bringing in elementsof normally quite distinct fieldsof legal practice, but it is notdifficult to identify themajorproblems thatexist. Courtsand theirjurisdictions Thereare,broadly speaking, threeissuesrelated tocourts and their jurisdictions: WHomeStatecourts lackjurisdiction over companies operating abroad B HostStatecourts maybe ineffective or inaccessible ■ International courts lackdirect jurisdiction overprivate actors Underthe international humanrights treaties adoptedin themid-20th Century thereare clear linesofresponsibility placeduponratifying States to ensurethat, within their jurisdictions, corporationsrespect humanrights law. Butthelinesof responsibility placedon corporations orother privateactors arelessclear.Evenwheretreaties seem to addressas duty-bearers 'all organsof society' (as is thecase withtheUniversal Declaration of Human Rights)such responsibilities are not matchedby enforcement systems. While there exist complaintsproceduresand international courtsthatmonitor complianceby Stateswith human rights treaties, there areno courts andfew procedures that specifically addresscorporations. The State-centric enforcement mechanisms of theinternational humanrights instruments are a product oftheir time.Sixty yearsago theworld was a very different place:theSecondWorld War andtheColdWaremphasised theroleofStates as themajorpowerbrokers, whileStatesplayeda larger roleinmostaspectsofthelivesoftheir citizens ,forexamplebyproviding services directly. Sincethe1980sdramatic changeshavere-configuredtherelative powerofprivate business. In all regions oftheworldthere has been privatisation on a massivescalesincethen.The idea thatcorporationshave human rightsobligationshas becomemoreurgent, andmorewidely accepted. But the international legal machinery has not changed.The human rightstreatieshave not establishedeffective enforcement processesto supervisenon-State actors.International human rights lawas itstands does notcreatean effective regime forholding corporations toaccount. To bridge theregulatory gapordinary domestic law concepts of crime and torthave been employedby humanrights lawyersas mechanisms tosecureaccountability. Actions havebeen commencedin nationalcourts,and in these courts a further setofchallenges applied. The company as an entityinlaw Thereare threeissuesrelatedto thelegalconceptualisation ofthecompany as an entity: MLegalpersonality V Limited liability Corporate groupstructures Beforethemid-19th Century itwas somewhat easiertofixcivilliability on corporations. Inmost casesanydamageswouldbe metbythefunds of thecompany. Ifthecompany didnothavesufficientfundsthe shareholders would have been personally liable.Mostofthoseinvesting incommercial operations therefore hada strong personal incentive to be waryofthebusinessincurring liabilities. An exception came in theform ofthe East India Company,which receivedan early form oflimitation ofliability toencourage investment initspioneering proto-Empire building, perceivedas an activity carrying exceptional risk. Themodern Company Lawframework changed allthis. Separation ofthecorporate entity as a legal persondistinct from itsshareholders and,shortly thereafter, theintroduction oflimited liability transformed therelationship betweenrisk andresponsibility . Fromthismoment onwardsshareholders bore no financial responsibility, otherthanthe valueoftheir shares, for thedebts ofthecompany. A 19th Century edition ofTheLawTimes described the newlycreatedlimited liability as a 'Rogues Charter'. This dubious principle is now firmly embedded throughout globalcapitalism. Corporations use businessseparation andlimited liability to thefullest extent and deftly avoid manycivillaw actionsbased on principles such as negligence.Companiesinvolvedwithhazardoussubstances chose legalstructures specificallyto shieldhigher tiercompanies from liabilitiesincurred by lowertiercompanies(such as thosearising from exposureto hazardsofworkersand third parties). Although lawyers insome cases manage to build complexarguments to INTERNATIONAL limon rights Pa9e 22Volume 19Issue 4201 2 overcomethisobstacle,the highestUK courts haveexplicitly stated thattheuse ofsuchcorporatestructures willnormally serveas an effective barrier to liability untilsuch timeas thelaw is changedbyParliament. Theability ofthecriminal lawtoholdcorporationsto accountis similarly restricted by absurd legal problems dating back centuries.17th Century English lawcharacterised corporations as 'persons' lacking a 'soul'.Criminal lawrequired a 'soul'(oratleast,a 'mind', sincemental culpability was,and remains, a keyingredient ofoverall criminal responsibility formanyoffences). Asthe corporation literally could not formcriminal intentit was thus untouchableby the law. Through themediumof theBritish Empirethis legal muddlewas perpetuated aroundhalfthe globe. Eventually some criminalliability was introduced as thecourts, plainlyfrustrated with the'souls'and 'minds' question, foundthatcompanies could commitnon-intentional crimes, suchas theold criminal tort ofmisfeasance. But evenin2012pinning criminal liability on a companyintheUKcanbe difficult due tothelackof a...