International Corporate Human Rights Liability: Distinctions Without A Difference

By Firdaus Mohandas

Introduction

The idea of corporate human rights obligations is heavily at odds with classical conceptions of international law. This is because classical international law suggests only states have international legal personality: viz., only states are capable of holding rights and obligations.

The development of international human rights law post 1945 was a something of a revolution in this respect ­– in so far as it bestowed individuals with rights — but it also reiterated the conventional position by leaving the correlative obligations in the hands of states. None of the prominent human rights treaties of the mid-to-late 20th century, therefore, create rights directly enforceable at a purely horizontal level — I cannot claim a breach of the European or American Conventions on Human Rights by my neighbour, or my employer.

However, obligations for private corporations continue to feature heavily in global human rights discourse. This is a simple result of the fact that corporations, unlike most individuals, are capable of thwarting human rights on a scale similar to or greater than ‘the decisions and activities of some nation-states’¹ — after all, around 70% of the world’s current largest 100 economies are corporations. Though instances of such human rights abuse are wide-ranging, they can be broadly divided into four categories: rights to security of the person (extrajudicial killings, torture), economic and social rights (child labour, exploitative working conditions), environment and community rights (destruction of local ecosystems, displacement of indigenous persons), and rights against discrimination. It is unsurprising, then, that many turn to international law — the torchbearer of modern human rights — to address these issues.

The scholarly consensus on the subject is that corporations do not have obligations of their own under international law. I suggest that while this is broadly accurate, the law has evolved a great deal in recent years, to a point where such obligations are a distinct possibility in the near future. However, I also suggest that the mere existence of these obligations is not enough to make a concrete difference — without a dedicated international enforcement mechanism, they will remain ineffective. This is undesirable, and requires reform.

Some preliminary points must be made about the scope of these observations. First, I restrict the subsequent discussion only to cases of direct obligations. Thus, international treaties which create obligations for states to regulate corporations at a national level will not be considered. As mentioned above, this is the primary way in which international law secures human rights protection. For example, the Convention on the Elimination of Racial Discrimination provides that states must ‘prohibit racial discrimination by any group or organisation’,² but this cannot be labelled an obligation for corporations. Second, I also exclude the vast body of soft law addressing corporate human rights responsibility from my analysis, since it is hard to characterise such instruments as ‘obligatory’. This includes initiatives such as the UN Global Compact and the UN Guiding Principles on Business and Human Rights.

International Criminal Law: A Borderline Case

The one area which comes closest to creating robust, enforceable obligations for corporations to respect human rights is international criminal law. International crimes have long been recognised as having a unique feature — that they involve duties attaching directly to individuals. The International Military Tribunals established after the Second World War can be seen as a significant step in this regard — for example, the Military Court at Hamburg tried and convicted Bruno Tesch, the owner of a firm which arranged for the supply of poisoned gas used in German concentration camps.

The culmination of a long pattern of international tribunals, notably those in Sierra Leona, Rwanda, and the former Yugoslavia, was the creation of the International Criminal Court in 1988. The ICC is special due to its relative permanence — any individuals accused of genocide, war crimes, crimes against humanity, or the crime of aggression may be tried by the ICC, provided the individual is from one of the Rome Statute’s 123 state parties, or the crime takes place in one of these nations³ (or, as in the case of Omar Al-Bashir and the Darfur Genocide, the Security Council refers the matter to the ICC).⁴

The Rome Statute creates obligations to abstain from many human rights violations pertaining to the right to security of the person. Coca-Cola’s leadership, for example, could face liability for allegedly killing trade unionists in Colombia, as could US contractors in Iraqi prisons accused of facilitating acts of torture and rape. However, while these obligations effectively bind corporations (by placing criminal liability on those in leadership positions)⁵, the organisations themselves do not bear any obligations. One important consequence of this is that there is no prospect of civil liability, and therefore no financial compensation for individuals suffering rights abuse. For actual corporate obligations, with the prospect of damages, one must look elsewhere.

International Treaties

While most international treaties direct obligations towards states, there are a few which appear to do so for corporations. In such treaties, any corporation violating the relevant provisions within the territory of a state party may be liable without needing further domestic legislation to create such obligations. The most famous examples of such treaties pertain to humanitarian law: Common Article 3 of the Geneva Conventions, for instance, provides a certain minimum standard that all parties to a non-international armed conflict must follow, wherein the term ‘parties’ encompasses all non-state actors.⁶

The vast majority of these ‘direct obligation’ treaties, though, are focused on environmental degradation. For example, the Convention on Oil Pollution Damage defines those liable within the treaty as ‘any individual…or any public or private body, whether corporate or not’.⁷ The Basel Convention on Hazardous Waste creates strict liability specifically for corporations generating hazardous waste,⁸ while the Paris Convention on Liability in Nuclear Energy⁹ imposes obligations directly on nuclear facilities responsible for damages or loss of life. Together, such instruments help cover many corporate violations of environmental rights, such as the serious degradation caused by Nigeria powerful oil industry’s since its first well was drilled in 1956.

Customary International Law

The subject-matter regulated by treaties of this kind, though, is mostly limited to environmental and humanitarian issues, which leaves customary international law as the last possible source of truly comprehensive obligations. Traditionally, custom would not appear to be fertile ground, since courts have always been reluctant to recognise it as having direct legal application to corporations. For example, in Kiobel v Royal Dutch Petroleum,¹⁰ the US Second Circuit found that corporations could not be held liable under the Alien Tort Statute.¹¹ This decision was justified on the grounds that ‘no corporation has ever been subject to any form of liability under customary international law’¹², with the result that corporate liability could not be an international norm. Although the 2004 UN Norms asserted the existence of some corporate obligations as pre-existing in international law,¹³ such claims have been rejected by numerous ICJ judges, including James Crawford¹⁴ and Cristopher Greenwood.¹⁵ Given this mostly settled position as recently as the early 2010s, to find a change in such a short period of time would require ‘extensive and virtually uniform’ state practice.¹⁶

Although this high bar has not been met, there are increasing indications of a shift. In 2016, the ICSID Tribunal in Urbaser v Argentina¹⁷ stated that all private parties were under an obligation not to destroy certain human rights (specifically, rights to adequate housing and living conditions). Although these remarks were technically obiter, the case was widely celebrated¹⁸ as opening the door to claims by host states against investors for breaches of customary human rights. Following Urbaser, the Canadian Supreme Court delivered a powerful message earlier this year in Nevsun v Araya,¹⁹ allowing for claims to be brought against Canadian corporations for breaches of their human rights obligations abroad under customary international law. The Court was silent as to what kind of legal action this would be, stating that ‘the mechanism for how these claims should proceed is a novel question that must be left to a trial judge’,²⁰ meaning that both tortious or stand-alone claims remain a possibility. What is clear, though, is that there is turn of the tide in favour of recognising some corporate obligations through customary law.

A few different factors may help explain this evolution. The first is, as Abella J noted while delivering the Nevsun majority opinion, the increasingly ‘human-centric’²¹ conception of the international legal order. Areas such as human rights and international criminal law can be seen as key to this, by moving away from the rigid orthodoxy of states being the only international legal persons. The second is the development of investor-state arbitration through various bilateral investment treaties: while claims under such instruments were restricted to states, corporations today frequently take recourse to international dispute settlement mechanisms to sue for breaches. This is significant because recognising corporations as international legal persons with respect to rights makes it easier to justify doing so with respect to obligations as well. A third possible factor is the rising judicial recognition that corporations occupy a special legal position — their scale and influence means treating them the same way as individuals is in many ways untenable. Thus, courts have been forced to show flexibility in this regard: the UK Supreme Court, for example, significantly adapted the negligence doctrine as recently as 2019 to allow victims of human rights violations to bring civil claims against corporations.²²

Standing

The general rule regarding violations of international law is that only countries suffering the violations may enforce the relevant rules²³ — in this context, the countries of the individuals whose rights are breached. However, certain exceptions to this position exist. The first is for mutually beneficial obligations held towards an entire group (environmental treaties, particularly dealing with climate change, often have this character), where the entire group may claim standing.²⁴ The second is for erga omnes obligations, where any member of the international community may bring an action.²⁵ Many human rights, particularly those pertaining to the security of the person, qualify as such.²⁶ Thus, in principle, many of the ‘direct obligations’ corporations bear could be enforced in a wide range of jurisdictions: under criminal law, or even in a tortious suit if the victims personally approach the foreign court in question.

Conclusion

The overview provided here may seem promising — while international corporate human rights liability is by no means well-settled or comprehensive, there are enough signs that this situation is changing fast, whether through international treaties or judicial decisions. There are two notes of caution, though. First, although a wide range of states may have standing to entertain claims, internal jurisdictional rules regarding territoriality would greatly limit their scope. In practice, it is likely that suits would only be allowed in either the country of origin (where the corporation is registered) or in the country where the human rights violation takes place. Second, and more significantly, the lack of an international body for the enforcement of these obligations would restrict their relevance to the domestic plane. In that sense, the ‘direct’ nature of these obligations is of little practical consequence — their applicability remains limited to national courts.

This situation is unsatisfactory. Indirect obligations are problematic specifically because they rely on domestic enforcement in a world where corporations have considerable power and influence. This means that they are often able to create effective impunity within host countries: governments all over the developing world have shown themselves to be willing to go to great lengths not to prosecute corporations for their illegalities. This developing international law landscape, as a result, adds very little to the pre-existing set of treaties that indirectly regulate corporations through governmental action — they remain just as reliant on political will, and just as susceptible to lobbying and pressure. A mechanism for international enforceability, similar to those that exist for state liability, would be the only way to get around this problem of corporate control. This may be somewhat radical, but remains necessary if we are to, in the words of Ronald Dworkin, ‘take rights seriously’.

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[1] Jordan Paust, Human Rights Responsibilities of Private Corporations, 35 Vand. J. Transnat’l L. 801, 802 (2002)

[2] International Convention on the Elimination of All Forms of Racial Discrimination, art. 2(d), Dec. 21, 1965, 660 U.N.T.S 195.

[3] Rome Statute of the International Criminal Court, art. 12, Jul. 1, 2002, 2180 U.N.T.S 90.

[4] Prosecutor v Omar Hassan Ahmad Al Bashir, ICC-02/05–01/09–397-Corr, Judgment, 135 (May 6, 2019)

[5] Rome Statute, supra note 3, art. 25.

[6] See, e.g., Geneva Convention Relative to the Treatment of Prisoners of War, art. 3, Aug. 12, 1949, 75 U.N.T.S. 135.

[7] International Convention on Civil Liability for Oil Pollution Damage, art. 1(2), Dec. 29, 1969, 973 U.N.T.S 3.

[8] Basel Convention on the Control of Transboundary Movements of Hazardous Waste and Their Disposal, art. 6, May 5, 1992, 1673 U.N.T.S 57.

[9] Paris Convention on Third Party Liability in the Field of Nuclear Energy, art.3, Jul. 29, 1960, 956 U.N.T.S 251.

[10] Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2nd Cir. 2010).

[11] The ATS allows for tort claims to be brought in the US under international law, resembling the common law doctrine of adoption.

[12] Kiobel, supra note 10, at 121.

[13] UN Sub-Commission on the Promotion and Protection of Human Rights, Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, 3–4, UN Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003).

[14] Decl. of James Crawford, S.C. Presbyterian Church of Sudan v. Talisman Energy Inc., 244 F.Supp.2d 289 (S.D.N.Y 2003).

[15] Decl. of Christopher Greenwood, S.C. Presbyterian Church of Sudan v. Talisman Energy Inc., 244 F.Supp.2d 289 (S.D.N.Y 2003)

[16] North Sea Continental Shelf (Germany v Denmark), Judgment, 1969 I.C.J. 3, 43 (Feb. 20).

[17] Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07026, Award, 318 (Dec. 8, 2016).

[18] Kevin Crow and Lina Escobar, International Corporate Obligations, Human Rights, and the Urbaser Standard: Breaking New Ground?, 36 B.U. Int’l L.J. 87 (2018).

[19] Nevsun Resources Ltd. v. Araya, 2020 SCC 5.

[20] Id., para. 131.

[21] Id., para. 108.

[22] Vedanta Resources plc. & Anor v Lungowe, [2019] UKSC 20, [2019] 2 WLR 1051.

[23] International Law Commission, Draft Articles on Responsibility of States for International Wrongful Acts, art. 42(a), U.N. Doc. A/56/10/Supp.10 (Nov. 12, 2001).

[24] Id., art. 48(a).

[25] Id., art. 48(b).

[26] Barcelona Traction, Light and Power Company Ltd. (Belgium v Spain), Judgment, 1964 I.C.J. 3, 32 (Feb. 5).

The author is a year III B.A. (Jurisprudence) student of St. John’s College, University of Oxford. His submission secured the 3rd position in the Journal and Seminar Committee National Article Writing Competition 2020 organised in the month of August, 2020.

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