Thursday, June 13, 2013

MNCs' accountability for Human Right violation abroad---Canada and USA

Canadian or American multinationalsaccountability 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

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.
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.
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.
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.
August, Ray, Don Mayer, and Bixby Michael. 2013. "International Business Law." Pearson.
Diaz, Sam, and Ariana Eunjung Cha. 2007. "Advocates Sue Yahoo In Chinese Torture Case." washingtonpost. Apr 19. Accessed June 12, 2013.
Earthworks and miningWatch canada. 2012. "troubled waters." Feb. Accessed June 12, 2013.
Eisenberg, Matt. 2013. "CCIJ."
Karunananthan, Meera. 2013. "UN must challenge Canada's complicity in mining's human rights abuses." Apr 24. Accessed June 12, 2013.
n.d. "Kiobel v. Shell: Supreme Court Limits Courts’ Ability to Hear Claims of Human Rights Abuses Committed Abroad." Accessed June 12, 2013.
Lee, Robert Gregory. 2005. "Compendium of Summaries of Judicial Decisions in Environment Related Cases." UNEP. Accessed June 12, 2013.
Meeran, Richard. 2011. "Tort Litigation against Multinational corporation for vilation of human rights: an overview of the postion outside the united states." Accessed June 12, 2013.
Salmon v A Salmon & Co Ltd. 1897. AC22 (UK).
Statute, Alien Tort. 2013. Alien Tort Statute. Accessed May 18, 2013.
United Nations Human Rights. 2013. "Guiding principles on business and human rights." United Nations Human Right. Jan 22. Accessed June 12, 2013.
Whittington, Les. 2010. "Canadian mining firms worst for environment, rights: Report." Oct 19. Accessed June 12, 2013.
Wikipedia. n.d. "Doe v. Unocal." Accessed June 12, 2013.

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