Canadian
or American multinationals’ accountability in Canada or the USA for the human rights violations
that they commit abroad
Shirley
Li
MGMT
563 International Law and Global Trade Organizations
Dr.
Connie Carter
June
12, 2013
Introduction:
In the process of
globalization multinational corporations (MNCs) have substantial economic and
political influence. The crucial presence in many national economies makes MNCs
in a historical position to influence economic development and government
policies and also enables them to contribute in both positive and negative ways
to basic human rights issues, among which some MNCs that are solely pursuing
profits are implicated in many human rights abuses.
Whether Canadian or
American MNCs should be held accountable in Canada or the USA for the human
rights violations that they commit abroad? My answer is YES.I will explain this
answer by using legal principles and embed legislations like C-323 bills, Alien
Tort Statute1789 with real case analysis with each principle. Also, there are
substantial obstacles existing against enforcing the justice in the current
Canadian and American legal systems, which should also try to be improved and
conquered.
Principles:
1. State Responsibility
Respect
to human rights is one of the general principles recognized by civilized
nations. Ten human rights principles of UN (August, Mayer
and Michael 2013, 44)
require companies to respect human rights and labor standards. The UN Human
Rights Council recently also endorsed a set of Guiding Principles that regulate
the state duty and corporate responsibility to protect human rights. The
foundational principles are “countries must protect against human rights abuse
within their territory and/or jurisdiction by third parties, including business
enterprises” and “Business enterprises should respect human rights.” (United Nations Human Rights 2013).
However,
these principles have defects. For example each country are only responsible
for the human rights violations within its sovereign territory, companies are
encouraged but not obliged to respect human rights. There is no clause talking
about MNCs’ accountability in its home country if it violated human rights in
other countries. Because of the lack of regulation from international institution,
there is a high chance that MNCs will continue to perform its violation provided
neither there are national enforcement to regulate their behavior.
This
explains international institutions do not have scrutiny and sanctions
mechanism to regulate the corporate behavior and as a result leaves the
obligation to each country to use its domestic legal system to regulate these
corporation and to protect global human rights and justice. Canada and USA
should keep aligning their legal practice with international law to regulate
its own MNCs and address the benefit for all the human beings without bias in
order to achieve international justice.
2. Victims’ difficulty
to get justice in local court
MNCs
usually have a parent corporation in home country (usually developed countries)
and subsidiaries in other host countries (usually underdeveloped countries). The
host countries that people suffer from harms, tortures and other abuses are either
labor or natural resource intensive regions with serious governmental
corruption or they are giving priority to economy development. They either have
poor legal system or do not have sufficient enforcement of laws. Hence it
becomes very difficult for the victims in host countries to seek redress
through their own legal system. While home countries usually have sophisticated
legal system and sufficient law enforcement.
There
is a lawsuit called Somji v Somji
about a dispute over matrimonial property in Tanzania, a judge in Alberta
decided that Alberta was the better forum for a dispute involving Tanzanian law
because “Tanzania presently faces significant governance issues” (Meeran 2011)
At
the same time, acts and legislations like C-323 bills (pending to be law) in
Canada and Alien Tort Statute1789 (ATS) in USA are means to seek justice for
protecting basic human rights of people in other countries.
3. Parent company’s
duty of care and negligence
Although
we justified the motivation why victims search remedy from the head quarter of
MNCs in their home court, another question is raised for discussion whether
parent company is responsible for the local operation of its subsidiaries.
Based
on the “corporate veil”, corporations have separate corporate personalities,
which means a parent company as a separate legal person could not be held
accountable for the conduct of its subsidiaries although it invest as a
shareholder to its subsidiaries (Salmon v A Salmon & Co Ltd
1897).
However there are also exceptional situations. For instance when the subsidiary
is operated by its parent company and the parent company misconducted on its
behalf because of the wrong doings like fraud or “direct negligence” (Meeran 2011), then the parent
company is held accountable.
In
most of the real world practices, MNCs parent companies usually have an
integral involvement in the process management in its subsidiaries abroad.
Moreover, there are general understanding about that corporations (as they have
breached) have a “moral obligation” to its subsidiaries companies and the local
communities, employees and environment, MNCs parent companies hence could not
avoid “duty of care” and “negligence” in managing its subsidiaries’ conduct.
4. Alien Tort Statute
The
Alien Tort Statute (ATS) is a U.S. federal law which was first adopted in 1789.
This law gives the federal courts jurisdiction to hear lawsuits filed by aliens
(non-U.S. citizens) for violation of international law. Nowadays non-U.S.
citizens use ATS to bring lawsuits in U.S. federal courts for the violations of
international law which have expanded to human rights abuse such as arbitrary
arrest, torture, killing, war crimes, and other crimes against humanity. For a
long time since the first case that used ATS, victims of human rights
violations in other countries have used it as an effective means to seek
justice in the United States. (The centre for justice and accountability n.d.)
In
the case of Wang Xiaoning v. Yahoo! for
example, Wang (victim) sued the Chinese subsidiary of Yahoo! company
(defendant) under the ATS. The Chinese Yahoo! gave the Chinese government
Wang’s identity information which allowed the government authorities to arrest
him and Wang was subjected to various human right abuse like torture arbitrary
arrest and forced labor and other cruel treatment and punishment. In the year
2007, World Organization for Human Rights USA filed a lawsuit against Yahoo! on
behalf of Wang Xiaoning under the ATS. (Diaz and Cha 2007)
In
November 2007 Yahoo! settled the case for an undisclosed amount of money, and
it agreed to cover the plaintiff's legal costs as well. In a statement released
by Yahoo! after the settlement was made, this company promise that it will
provide “financial, humanitarian and legal support to these families” and
create a separate “humanitarian relief fund' for other dissidents and their
families.” (Diaz and Cha 2007)
This
is a good example that foreign citizens defend their human rights against
American companies outside of US (a subsidiary) under the ATS there are more
successful cases. However it is also critical that most of them get settled
outside of the court.
Obstacles
1. Procedural factors
and “Comity”
Although
there are obvious reasons for Canada and USA courts to hold its own MNCs (head
office in their countries) accountable for its oversea misconduct, the way to
get justice in Canada and USA is not easy.
There
are jurisdiction over a claim against a parent company, but there are several procedural
factors will depend whether the court will accept or not. In particular the
following ones: a, The extent to which
the MNC home courts are able to decline to exercise jurisdiction; b, The law by
reference to which the liability of the parent company is to be determined; c,
Other procedural and practical factors affecting the
financial viability of litigation and victims’ lawyers’ ability and willingness
to act. (Meeran 2011).
So
the essential question for Canadian court is whether Canada is “an appropriate
forum” or is there a “more appropriate forum” for the trial than Canadian court
that the application could be served which is called “The forum non conveniens”
principle.
For
example in the law case of Recherches
Internationales Quebec v Cambior Inc, as many as 23,000 victims affected by
the spill of toxic effluents into Guyana’s main waterway because of a gold mine
burst. One shareholder is Cambior Inc. of Quebec. During the proceeding
process, the Quebec court were especially concerned and emphasized to the comity
and respect for the courts of Guyana by focusing on the evidence of how
effectively Guyanese court works, which finally lead to the dismiss proceedings (Lee 2005).
2. Unbalanced power
Although
victims from host countries could sometimes get help from NGOs, they can mostly
not afford of harm and usually at the lowest social hierarchy while the MNCs
have abundant of resource and interest of the state and sometimes these
industries are strong enough to avoid the laws or influence to change the rules
or treaties (Eisenberg 2013).
Canada
for example, as a home to 75% of the world’s mining companies, its global
mining industry (majority overseas) are consisted of corporations who are “the
worst human rights and environmental offenders in the world” (Whittington 2010) Some investment treaties that the
Canadian government made allow companies to challenge environmental, public
health or other resource-related policies that affect mining profits so that the
mining industries can enjoy impunity. The way to do that is by not offering
legal resources to the impacted victims. These conditions have made Canada a
“heaven” for the global mining industry. (Karunananthan 2013)
The
human right violation happened in the mining industries outside of Canada
include Anti-mining activists are brutally attacked and killed for opposition
and tremendous consumption and contamination of precious local water resource (Earthworks and miningWatch canada 2012).However, even when Canadian
corporations are found in violation of human right, very few of the victims
could get justice to hold them accountable in a Canadian court.
3. ATS and effect of
Kiobel v. Shell for future claims
The
ATS in US gives federal courts the power to hear suits by aliens for torts. In
the case of John Doe v. Unocal Corp,
the Burmese plaintiffs sued the American oil company Unocal in California court
under the ATS, for the various human rights abuse including forced labor, false
imprisonment assault and brutal oppression of people living near a pipeline
project in Myanmar, formerly known as Burma. In the same year, a U.S. federal
district court agreed to hear the case and the result they gave was that Unocal
can be held accountable under ATS for the violation of human rights overseas
and that U.S. courts have the authority to do such claims. Although eventually the
case was voluntarily dismissed because the parties announced that they had
reached a settlement but it becomes a landmark case that ATS is a very useful
tool for victims oversea to bring a lawsuit to United States and hold US
companies accountable. (Wikipedia n.d.)
However,
the lawsuit brought by Nigerian citizens against Royal Dutch Shell Corporation didn’t
get a satisfying result. Shell, the defendant who executed the military
dictatorship in the torture, rape, and killing of unarmed protesters to the
Nigerian citizens in the 1990s. The plaintiffs were not able to sue the
defendant due to the domestic legal and political situation hence sued in the
United States by using ATS. At the same time the defendant argued that
corporations are not bound by human right law so US court should not rule the
activities companies whose head quarter in other country outside of US commit
human rights violation in the third country. (Kiobel v. Shell n.d.)
The
end result from US Supreme Court was plaintiffs’ failure which brought
significant impact as a precedent that in any in cases like this one, where a
foreign (instead of US) corporation acted overseas, the defendant cannot be
held liable in U.S. federal courts.
Conclusion
From
the above analysis, we can get a conclusion that Canadian and US corporations
should be held accountable in their home countries for their human right
violation committed abroad because of international requirement, unbalanced
legal resource in and out their
countries, their own responsibilities and capabilities (ATS). There are
sufficient evidence that social justice could be obtained in Canada and USA as
long as they could positively proceed the lawsuits.
However
at the same time, Canada and US’s legal system also set a lot of obstacles and
hurdles for foreign victims. As stated above, complicated procedural factors
and “Comity” to other sovereign countries might just turn out to be a good
excuse not to perform their responsibility. The deeper root of this is the big
influence from profitable industries and egocentrism to protect national
interest. From the cases that foreign plaintiffs accuse US companies for
violation of human rights under Alien Tort Statute, only very few companies
were finally held accountable while most of them were settled outside of the
court. This might be a good example that the legal system in Canada and US
needs to be more efficient to regulate their MNCs behavior outside their
territory.
Although
there are pros and cons for the execution to hold Canadian or American MNCs
accountable in Canada or the USA for the human rights violations that they
commit abroad, I would like to conclude that it is necessary, beneficial and
possible to because this can keep universal justice, in order to realize which need
more improvement instead of excuses.
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