Made in Bangladesh: corporations and the common good

By Nicolás Zambrana-Tévar, Professor (Private International Law), University of Navarra

The recent death of over a thousand workers in a textile factory in Bangladesh necessarily poses again the question of the responsibility of multinational businesses, not for the harm they cause –which may indeed be big, in some cases- but because of what they do not do. Delocalization of production, taking it from North-America or Western Europe to developing countries, has ethical implications, for several reasons: in the first place, there are job losses in the “first world” (and also jobs created outside that world); in the second place, one must take into account that that delocalization is made, many times, not by locating factories outside the country of origin of the multinational, where the production is still under the business control of the aforementioned multinational, but by making a commercial agreement with local providers who will manufacture the products or their parts, so they can afterwards be distributed under a Western brand and the well known “Made in Thailand” trademark. This second option is much more profitable sometimes.

The problem lies in the fact that manufacturers-providers, in this case from Bangladesh, are only bound by Bangladeshi laws, which are much less protective of workers or the environment than, for instance, the laws of Canada, France or Germany.

New paper published: “Corporate liability for violations of international human rights: law, international custom or politics?”

The full extent of the 1789 Alien Tort Claims Act (ATCA) which allows non-U.S. citizens to file suits in the U.S. for international human rights violations has been the subject of many debates in recent U.S. cases (Sosa v. Alvarez-Machain,Kiobel, Boimah Flomo I and II, Exxon). This comment looks at the key points relied upon in recent decisions to reject the existence of a corporate liability principle under customary international law. The concurring observations of Judge Leval, who argued that the Kiobel decision might have kept the door open to major corporate abuses and created a precedent of corporate impunity, are especially relevant because they have been confirmed by more recent decisions. This comment also considers the arguments presented in the Kiobel re-hearing rejection regarding the policy impact of the decision and the policy-making role of U.S. tribunals. Finally, this comment questions whether U.S. courts should be expected to get involved in international justice, thereby risking being characterized as imperialist, self-appointed world judges.

The paper is availble here, and as a pdf version

US Supreme Court sceptical on Kiobel hearings

Further arguments in the Kiobel case on the liability of transnational corporations under ATCA were presented yesterday (28th February 2012) before the US Supreme Court. The case was commented a moment ago on this blog (see here as well as the ATCA / ATS tags for more comments)  and it seemed at the time that the Court was reluctant to aknowledge the existence of a principle of corporate liability under international law. Well, it seems that the argument persists.

For those interested in the debate, a very informative post by Lyle Denniston can be found on the SCOTUSblog:

” When Justice Anthony M. Kennedy, in the opening minute of a Supreme Court argument, tells a lawyer that his entire case is in jeopardy, it is extremely difficult for even an experienced counsel to recover.   And, though he tried, Venice, Calif., attorney Paul L. Hoffman did not appear on Tuesday to have resuscitated his argument that foreign corporations should be held to account in U.S. courts for human rights abuses in foreign lands.  At least a majority of the Justices looked notably unconvinced […]”

Doe v Exxon Mobil Corporation, ATS and corporate liability

In line with our previous posts on the evolution of corporate liability under ATS (See the list of the comments here), it is worth noting that the United States Court of Appeals for the District of Columbia Circuit has rendered a decision on the John Doe v Exxon Mobil Corporation on the 8^th of July. The decision interestingly seems to confirm the decision rendered on July 11^th 2011 by the US Court of Appeal for the 7th Circuit in Boimah Flomo (see here).

Contracting with the Indonesian government, Exxon Mobil and its subsidiaries operated a large natural gas extraction and processing facility in in 2000–2001. Eleven villagers filed a complaint in 2001 alleging that murder, torture, sexual assault, battery, and false imprisonment committed by the Indonesian military could be attributed to Exxon under the Alien Tort Statute (“ATS”) and the Torture Victim Protection Act (“TVPA”) because they were committed by a unit dedicated only to Exxon’s facilities and placed under Exxon’s authority (p5).

Corporate liability as a new type of claim (Sosa v Alvarez Machain argument)

The Exxon Court first rejected the Sosa tribunal’s finding that ATS tribunals should not recognize private claims under federal common law for violations of any international law norm which did not exist when paragraph 1350 was enacted (See here). “The fact that the law of nations provides no private right of action to sue corporations”, it held, “addresses the wrong question and does not demonstrate that corporations are immune from liability under the ATS”(p56).

Boimah Flomo v Firestone… continued

A decision on the Boimah Flomo case was reached on July 11th 2011 by the US Court of Appeal for the 7th Circuit (The decision can be found here). It is worth mentioning because it significantly contradicted the findings of the Indiana’s District Court which dismissed the claim on the ground that the plaintiffs had “failed to establish a legally cognizable claim because no corporate liability exists under the ATS” (See my previous note here). The case is also noteworthy because of its conclusions on child labour.

On corporate liability

Establishing corporate liability was a major issue for the tribunal, which nonetheless provided a fairly clear reasoning and achieved a very acceptable conclusion. It overall rejected Firestone’s (the respondent) argument that “conduct by a corporation or any other entity that doesn’t have a heart-beat can never be a violation of customary international law, no matter how heinous the conduct” (p5), and by the same token clearly rejected the analysis of corporate liability provided in Kiobel, which it clearly deemed ‘incorrect’ (p6).

The Court overall suggested that there had to be a first time for litigation to enforce a norm, especially considering that there is no compelling reason to justify that corporations have rarely been prosecuted criminally or civilly for violating customary international law (p7-8)

John Ruggie, Goldilocks and the Three Little Pigs

By Robert Grabosch, Attorney at law

The United Nations Human Rights Council has endorsed the Guiding Principles for Business and Human Rights as they were submitted in March 2011 by the Secretary-General’s Special Representative John Ruggie. Since the Guiding Principles claim to not create but restate international law and ask little of the states of the Global North, the endorsement by the Human Rights Council was foreseeable. It is exactly these low demands what has sparked stark criticism.[1] However, SRSG Ruggie resorted to pragmatism and vagueness rather than clarifying current international law.