Beyond Reports and Promises: Enforcing Universally Accepted Human Rights Standards in the Global Economy
February 6, 2003
Multinational companies and the global economy
Collingsworth described the problems of human rights enforcement with respect to corporations conducting business abroad through a detailed description of the operations of the Unocal oil company. In the early 1990s, Unocal decided to build an oil pipeline in Burma despite warnings from NGOs, governments, and hired consultants that the company would almost certainly be implicated in human rights abuses if it chose to conduct business in Burma, a country with a repressive regime and an abominable human rights record. Collingsworth suggested that Unocal was willing to take such a risk in light of the $1.2 billion in profits that the pipeline construction promised. The fact that human rights abuses occurred during the pipeline construction is not in question (in fact, Unocal has a report from a hired consultant that clearly acknowledges forced labor and executions). Collingsworth suggested that Unocal’s behavior indicates larger defects in the structure of the international economy, namely, that if a company need only perform a cost-benefit analysis in deciding whether to go forward with a project that involves human rights abuses, it will lack sufficient incentive to refrain from undertaking it.
He argued that companies continue to participate in rights abusive projects because of an imbalance between existing mechanisms that enforce companies’ commercial rights and those that protect people’s human rights. While there is currently a well-defined and effectively enforceable set of standards for companies’ rights, standards for people’s human rights protection remain largely unenforceable. Collingsworth pointed out that the WTO has mechanisms that protect the rights of states and companies such as tribunals and the threat of sanctions. Human rights instruments, on the other hand, leave enforcement of human rights up to “competent national tribunals.” This is problematic, Collingsworth argued, because before investing in a country many companies enter contracts with its national government that assure that even official local standards will not be effectively enforced against the company. And while the International Labor Organization is the official international instrument for dealing with labor rights, it lacks enforcement powers, and has subsequently been a rather ineffective tool for protecting labor rights worldwide.
The Alien Tort Claims Act
The lack of binding enforcement mechanisms for labor rights, Collingsworth explained, prompted his organization to “bring legal actions against the worst violators of the human rights standards among the corporate community.” The ILRF has made use of the U.S. Alien Tort Claims Act (ATCA), a long-dormant federal statute created in 1789 to allow foreign nationals to file suits in the United States for crimes such as piracy on the high seas. The ATCA gives U.S. courts jurisdiction over crimes committed abroad that violate the Law of Nations, and, until recently, had been used only to prosecute individual persons. But in 1996 the ILRF interpreted the statute in a new way, using it to file a case against a corporation. The organization’s first case charged Unocal with using slave labor during the construction of its pipeline in Burma. The lawsuit, which is still in process, has undergone a number of appeals and is currently in two courts -- the Ninth Circuit federal court and a California state court.
Arguments in the Unocal Case
Initially, Collingsworth explained, Unocal claimed in its defense that, as an investor, it had no control over decisions related to forced labor and was therefore not responsible for any human rights abuses related to the pipeline project. The ILRF argued, however, that Unocal willingly participated in a contract with the Burmese military; since the military was operating as an agent for the company, Unocal was liable. When the judge granted Unocal’s summary judgment motion and said that “active participation” would have to be proved in order to hold Unocal accountable, the ILRF appealed the decision to the Ninth Circuit. Citing the Nuremberg Principles and the war crime indictments of the tribunals for Rwanda and Yugoslavia, the ILRF claimed that “knowing assistance” is enough to hold one accountable for a crime. Furthermore, the ILRF made the argument, which the court accepted, that the “necessity” defense—the argument used by German industrialists at Nuremberg that they had no choice but to use slave labor—is not applicable to Unocal’s case. As Collingsworth explained, “Unocal made the choice to go into the pipeline and, knowing that forced labor was being used, continued to give money, equipment, and other material supplies to the very military that were rounding up villagers at gunpoint and violating their fundamental human rights.”
While the federal case is pending, the ILRF is simultaneously pursuing a lawsuit against Unocal in the California Superior Court for the County of Los Angeles, using a slightly different argument. In the state case, the ILRF has pursued the theory of vicarious liability, which purports that actors in the same enterprise are mutually liable for each other’s acts. Collingsworth feels fairly confident that one of the two cases against Unocal—either the federal or the state—will achieve a positive ruling for the victims.
Despite the hitherto successful efforts of the ILRF to hold various corporations --Unocal, Drummond Coal, Coca-Cola, DelMonte, Exxon Mobil -- accountable for human rights abuses committed abroad, Collingsworth suggested there are a number of serious challenges that will have to be faced by those who wish to expand the use of the ATCA to promote observance of human rights standards.
First, the Law of Nations standard is a very narrow one. It covers acts such as genocide, war crimes, slavery, torture, executions, crimes against humanity, and unlawful detention. It does not therefore cover traditional concerns related to sweatshop work, such as wages and working conditions. Second, the time and cost that is involved in filing lawsuits against corporations can be prohibitive. Victims of human rights abuses cannot afford to wait several years to see if a corporation will be punished, nor can individuals and organizations such as the ILRF continue to pay for these extremely expensive cases. Third, the personal security of victims is of concern, especially when the company in question is still a presence in their lives during the course of a lawsuit. Finally, even if such lawsuits are fully successful, there is the danger that corporations will simply find creative ways to avoid the problem altogether. They may, for instance, find that creating more offshore corporations will allow them to avoid liability under ATCA.
Despite potential obstacles and dangers, Collingsworth thinks that, apart from winning a case in court, his organization’s approach will bring additional benefits. Indeed, one important outcome of ACTA suits has been an increased interest in human rights issues within the investment community. Investors are showing increasing concern when companies are at risk of facing such lawsuits, since losing (and perhaps even participating in) a court battle can diminish the value of the company’s stock. Although these concerns are motivated by profits and not human rights per se, Collingsworth noted that this unintended consequence of investor interest may end up being the most effective deterrent available. “If Merrill Lynch starts caring about human rights,” he explained, “that will have an effect on the way companies do business.”
Another potential benefit of the ILRF’s legal strategies is their educative effect. For each case, the ILRF tries to engage with local partners such as unions or NGOs that are directly affected by the suspected corporate malfeasance and can learn more about available legal means for holding corporations accountable for severe abuses. Furthermore, Collingsworth suggested that American consumers often view these lawsuits as legitimating their decisions to become involved in campaigns to enhance corporate accountability.
One of the ILRF’s future objectives is to couple each of its cases with a public campaign. The organization did this with its case against Coca-Cola, and intends to use this as a strategy to educate the public and raise people’s awareness of human rights violations engendered by corporate policy. Collingsworth mentioned that his organization has also undertaken initiatives to work with lawyers in other countries so that they can bring cases against the same companies by exploiting their own domestic laws. Finally, the ILRF continues its efforts to help develop a social clause, liked to the world trading system, that would act as a binding enforcement mechanism for holding states accountable for human rights abuses in their territories. Collingsworth concluded by stating: “We’re going to continue our efforts to bring these issues to the door of the corporations, and I certainly hope that the war on terror and these other rationales will not allow us to, in effect, sanction a different form of terrorism which is very real to the people who are working in the factories of the global economy.”
Following Collingsworth’s presentation, participants brought up many interesting questions, several of which are highlighted below.
The Global Compact One participant asked for the presenter’s assessment of the UN Global Compact. Collingsworth suggested that, while the codes of conduct movement began with great potential, the current Global Compact initiative is plagued by several problems. He noted: “When I first saw Kofi Annan’s Global Compact, I read it sort of like a novel, hoping it would have a good ending. You see the list of rights -- it’s fantastic.” But, he concluded, “there was absolutely no mention of enforcement. So, once again, we’re left to hope that the companies will enforce it.” For this reason, Collingsworth does not find the compact a worthwhile effort, and is instead working on a draft model for specific enforcement language that can apply to any code of conduct. Because companies tend to stall negotiations and so they end up taking a long time to resolve, he suggested that energy would be better spent on developing provisions that companies can be forced through pressure to accept or adopt. Collingsworth emphasized the need for a pragmatic approach to codes of conduct—one that clearly addresses enforcement options—that can remedy the current problem of too many different codes of conduct movements.
Another participant raised an additional question regarding the Global Compact, asking Collingsworth if he thought that Europe’s Global Framework Agreements, established twenty years ago, offer a positive model for the international codes of conduct movement. The problem with such an approach, in which companies agree to a binding code of conduct that is monitored by worker representatives at the places of employment, he responded, is that these agreements naively assume that that there exist union representatives and the open political space required in workplaces for the formation of unions. The problem, he argued, is how the space for the formation of unions can be created in the first place. Framework agreements, he argued, can help change corporate attitudes toward human rights standards, but they do not offer a complete or immediately effective solution.
Changing corporate culture
Picking up on the issue of corporate attitudes toward labor rights, a participant wondered whether the presenter felt that corporations would ever become more attentive to the human rights implications of their work. Collingsworth explained that he thought this could happen in two ways. The first would be to win several legal cases against multinational corporations, thus pushing the human rights agenda upon the corporations’ decision-makers, who would then understand the potential liabilities -- financial and otherwise -- involved in ignoring these issues. The second is to affect employees within these corporations—drawing on their desire to feel good about the companies that they work for. If employees begin to grow increasingly concerned with negative images related to their company’s human rights record, they can have a strong influence on the company’s decision-makers. These strategies notwithstanding, Collingsworth cited British Petroleum’s massive public relations campaign and Nike’s efforts to promote its concern for human rights as examples of how corporations will predictably continue to try to escape public scrutiny by paying lip service to human rights concerns while neglecting the real working conditions of those producing their goods and services.
Expanding the Law of Nations definition
One participant asked if Collingsworth envisioned the Law of Nations principle, a key to filing ATCA cases, being expanded to include other kinds of violations. Collingsworth explained that expanding the Law of Nations definition will be a difficult task, likely to take a long time, and success will most likely be incremental. However, there has already been some progress. ILRF argued, for example, that the prohibition of forced labor is universally accepted by states. Despite Unocal’s counterargument that while the prohibition of slave labor is universally accepted, that of forced labor is not, and that the United States is not even a signatory of the ILO Convention 29prohibiting forced labor, the judge accepted the ILRF’s argument that although not every nation has ratified this instrument, there was indeed universal acceptance of the prohibition of forced labor. Collingsworth hopes that the success of this case will encourage other courts to allow the Law of Nations to be interpreted more broadly than has conventionally been the case.
--prepared by Morgan Stoffregen and Christian Barry