Chapter 1:
Introduction –
Transnational Corporations in the Human Rights Paradigm
Importance of Transnational Corporations
Transnational corporations (TNCs) are today ruling the world in terms of business and economic power. These TNCs are today regarded as the money machine for various developed and developing countries. The economic power of transnational corporations (TNCs) is undoubted. They are the driving agents of the global economy, exercising dominant control over global trade, investment, and technology transfers. Flowing directly from such positions of economic influence, TNCs also manage to exercise considerable political leverage in both domestic and international spheres.
Transnational corporations evoke particular concern in relation to recent global trends because they are active in some of the most dynamic sectors of national economies, such as extractive industries, telecommunications, information technology, electronic consumer goods, footwear and apparel, transport, banking and finance, insurance, and securities trading. They bring new jobs, capital, and technology. Some corporations make real efforts to achieve international standards by improving working conditions and raising local living conditions. They certainly are capable of exerting a positive influence in fostering development.
The social power of TNCs is, however, a different matter. For although their social power too is enormous and global, it has been, until recently, far less obvious, little acknowledged, and minimally regulated. TNCs have the ability significantly to affect the nature, form, and extent of social relations. By virtue, specifically, of their economic and political muscle, TNCs are uniquely positioned to affect, positively and negatively, the level of enjoyment of human rights. On these bases there are abundant reasons why the legal regulation of TNCs' activities at all levels of impact is sought, ought to be sought, and is sometimes achieved.
Problem of Violation of Human Rights in TNCs
Some transnational corporations, however, do not respect minimum international human rights standards and can thus be implicated in abuses such as employing child laborers, discriminating against certain groups of employees, failing to provide safe and healthy working conditions, attempting to repress independent trade unions, discouraging the right to bargain collectively, limiting the broad dissemination of appropriate technology and intellectual property, and dumping toxic wastes. Some of these abuses disproportionately affect developing countries, children, minorities, and women who work in unsafe and poorly paid production jobs, as well as indigenous communities and other vulnerable groups.
It must be acknowledged at the outset that foreign direct investment injected by TNCs into developed and developing countries alike can and does bring jobs, capital, and technology, and thereby protects and promotes the rights to work and to adequate living standards, along with such derivative rights as health, education, housing, and even political freedoms. That said, it is equally certain that human rights abuses by TNCs do occur, and do so frequently in the sphere of economic, social, and cultural rights. Many TNCs, including Nike and The Gap, have been accused of violating their workers' rights to just and favorable conditions of work by paying unfair and inadequate wages, requiring unreasonable overtime, and providing unsafe working conditions. Furthermore, there is ample evidence of the involvement of TNCs in suppressing trade unions and thereby denying workers the right to organize. It has been alleged, for instance, that Coca-Cola in Colombia and Phillips-Van Heusen in Guatemala have been associated with, or are directly responsible for, the systematic intimidation, torture, kidnapping, unlawful detention, and murder of trade-unionist employees by paramilitaries operating as both of these corporations' agents.
TNCs in the extractive industries have caused environmental disasters, threatening the right to adequate food and the right to an adequate standard of living. Royal Dutch/Shell's oil production in Nigeria, and BHP Billiton's copper mining in Papua New Guinea, for example, seriously damaged the environment and the livelihood of peoples in local communities, which depended on fishing and farming.
Such instances of corporate responsibility for, or complicity in, human rights abuses are increasingly widely publicized, especially by non-governmental organizations (NGOs) using the immediacy of global communications. Mounting activism by NGOs, workers and consumers in developed countries in the form of protests, product boycotts, and selective purchasing has forced many TNCs to accept some level of human rights responsibility by adopting internal codes of conduct.
Emerging Awareness to curb Human Rights violations by TNCs
It has surely been a challenge to ensure that even non-state actors such as transnational corporations (TNCs) respect human rights, at least within their respective spheres of activity. The UN, in a way, was alive to this when it constituted a Commission on Transnational Corporations in mid-70s. Though the vision of the Commission to draft an agreeable code for TNCs failed to materialise due to various reasons, the UN continued to pursue the issue of social responsibility of TNCs in different forms and forums. The approval of the Norms on Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (UN Norms/Norms) by the Sub-Commission on the Promotion and Protection of Human Rights in August 2003 represents a new vigour on the part of the UN in regulating corporate human rights abuses. This development, together with the launch of Global Compact, clearly reflects the necessity as well as urgency on part of the UN to revive its relevance in a new world order in which states no longer enjoy the monopoly as violators of human rights.
There is also increasing reason to believe that greater respect for human rights by companies leads to greater sustainability in emerging markets and better business performance. For example, observance of human rights aids businesses by protecting and maintaining their corporate reputation, and creating a stable and peaceful society in which they can prosper and attract the best and brightest employees. Moreover, consumers have demonstrated that they are willing to pay attention to standards and practices used by a business that observes human rights and may even boycott products that are produced in violation of human rights standards. Similarly, there is evidence that a growing proportion of investors is seeking to purchase shares in socially responsible companies. All in all, business enterprises have increased their power in the world. International, national, state, and local lawmakers are realizing that this power must be confronted, and that the human rights obligations of business enterprises, in particular, must be addressed.
Chapter 2:
UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights – A Brief Outline
Adoption of the UN Norms
On August 13, 2003, the United Nations Sub-Commission on the Promotion and Protection of Human Rights approved the "Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights" (Norms) in its Resolution 2003/16. The Norms represent a landmark step in holding businesses accountable for their human rights abuses and constitute a succinct, but comprehensive, restatement of the international legal principles applicable to businesses with regard to human rights, humanitarian law, international labor law, environmental law, consumer law, anticorruption law, and so forth.
Throughout the past half century, states and international organizations have continued to expand the codification of international human rights law protecting the rights of individuals against governmental violations. In parallel with increasing attention to the development of international criminal law as a response to war crimes, genocide, and other crimes against humanity, there has been growing attention to individual responsibility for grave human rights abuses. The creators of this ever-larger web of human rights obligations, however, failed to pay sufficient attention to some of the most powerful nonstate actors in the world, that is, transnational corporations and other business enterprises. With power should come responsibility, and international human rights law needs to focus adequately on these extremely potent international nonstate actors.
Issues raised in adoption
Several issues arose during the drafting process of the Norms: (1) how to define transnational corporations; (2) whether to include domestic enterprises and, if so, how to distinguish between domestic and international businesses; (3) how to distinguish between larger and smaller businesses, so as to avoid a one-size-fits-all approach; (4) what human rights concepts to include; and (5) how to characterize the legal status of the Norms after their adoption by the Sub-Commission.
However, for the purpose of this paper we shall limit the scope of analyzation of the issues to only two, namely,
How to define transnational corporations; and
What human rights concepts to include.
(1) Defining Transnational Corporations
Generally, the term "transnational corporation" refers to a corporation with affiliated business operations in more than one country. A more specific definition deems an enterprise a transnational corporation if "it has a certain minimum size, if it owns or controls production or service plants outside its home state and if it incorporates these plants into a unified corporation strategy." According to yet another definition, a transnational corporation is "a cluster of corporations of diverse nationality joined together by ties of common ownership and responsive to a common management strategy."
The Draft UN Code of Conduct on Transnational Corporations defines a transnational corporation as
[… an enterprise, whether of public, private or mixed ownership, comprising entities in two or more countries, regardless of the legal form and fields of activity of these entities, which operates under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centres, in which the entities are so linked, by ownership or otherwise, that one or more of them [may be able to] exercise a significant influence over the activities of others, and, in particular, to share knowledge, resources and responsibilities with the others.]
The Norms specifically define a "transnational corporation" as,
“an economic entity operating in more than one country or a cluster of economic entities operating in two or more countries-- whatever their legal form, whether in their home country or country of activity, and whether taken individually or collectively.”
The Norms, however, do not limit their application to transnational corporations but also include other business enterprises. The working group defines the phrase "other business enterprise" as,
“any business entity, regardless of the international or domestic nature of its activities, including a transnational corporation, contractor, subcontractor, supplier, licensee or distributor; the corporate, partnership, or other legal form used to establish the business entity; and the nature of the ownership of the entity.”
Hence, even though the Norms define transnational corporations and focus some attention on transnationals, they are written to include all business entities, regardless of their stated corporate form or the international or domestic scope of their business. Its breadth de-emphasizes the definition of transnational corporations and does not restrict the Norms' scope of application.
(4) Content of the Norms
The Norms reflect and restate a wide range of human rights, labor, humanitarian, environmental, consumer protection, and anticorruption legal principles, but also incorporate best practices for corporate social responsibility. Further, the Norms do not endeavor to freeze standards by drawing on past drafting efforts and present practices; they incorporate and encourage further evolution.
The Norms appear to be more comprehensive and more focused on human rights than any of the international legal or voluntary codes of conduct drawn up by the ILO, the OECD, the European Parliament, the UN Global Compact, trade groups, individual companies, unions, NGOs, and others. The Norms and Commentary provide for the right to equality of opportunity and treatment; the right to security of persons; the rights of workers, including a safe and healthy work environment and the right to collective bargaining; respect for international, national, and local laws and the rule of law; a balanced approach to intellectual property rights and responsibilities; transparency and avoidance of corruption; respect for the right to health, as well as other economic, social, and cultural rights; other civil and political rights, such as freedom of movement; consumer protection; and environmental protection. With respect to each of those subjects, the Norms largely reflect, restate, and refer to existing international norms, in addition to specifying some basic methods for implementation.
Need for the UN Norms
Before we move on to analyze the efficacy of these norms in view of human rights, it is important to understand the need of the international community for such norms to realize the correct position as to why such norms emerged.
First, since early 90s there is a spur in cases filed against TNCs for human rights abuses all over the world generally and in the US in particular under the Alien Tort
Claims Act. The cases like Wiwa v. Royal Dutch Petroleum Co. , Nike Labour Rights Violation Abroad case , Rangoon Forced Labour case , etc., all showed the need for a norm that would ensure that the TNCs and the international community respected human rights and violations were to face punitive concern.
Transnational companies operating in today's global economy face significant challenges arising from diverse cultural, political and economic contexts. How a company responds to the human rights agenda has a significant impact on its business performance and the public's perception of the company. For example, Shell International faced criticism from human rights groups for its muted response to the Nigerian government's human rights abuses and executions of nine Ogoni leaders, including Ken Saro-Wiwa. Talisman Energy was forced into selling its oil development assets in Sudan as a result of pressure from human rights activists and shareholders.
Examples like the above have always had negative impacts on the companies involved. It was thus realized that is far better however to have a corporate human rights policy in place that is comprehensive, transparent, verifiable and consistently applied. To make sound investment decisions, investors need to know how a company is addressing human rights, since an increasing number of investors are concerned about human rights and the risk posed to a company that neglects its human rights obligations, and thus, arose the need for a comprehensive policy.
However when it comes to big organisations like the TNCs it is difficult to understand all the international human rights agreements and how they apply to business. Though international human rights covenants include business (as an 'organ' of society) they are designed primarily for governments. The UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights (UN Norms) help address this confusion and eliminate any ambiguity about the obligations of private sector actors. The UN Norms are a concise distillation of internationally agreed upon human rights instruments such as the Universal Declaration of Human Rights, the International Labour Organizations' core labor conventions and the wide range of other international agreements related to human rights. The Norms help connect the dots for companies between international human rights agreements and the obligations of companies. UN Norms provide concrete guidance for companies adopting comprehensive human rights policies covering such areas as equal opportunity, security, rights of workers, respect for national sovereignty, consumer and environmental protection and provisions for implementation.
The key impact of the UN Norms for transnational corporations is the clear definition of the role of corporations as promoters of human rights "within their respective spheres of activity and influence" while affirming the primary role of government in promoting human rights and preventing abuses. The commentaries on each provision are especially helpful in providing guidance to companies designing their own policies and practices consistent with the UN Norms.
Comparison to other Norms
A number of existing initiatives for business include respect for human rights, but do not explain and define what this concretely means. A few of the comparable norms and their respective features are set out below.
The United Nations' Global Compact states ten core principles related to human rights, labor rights, the environment and corruption. However, the expectations of how companies are to implement these core principles are not clearly delineated.
The OECD Guidelines for Multinational Enterprises do address corporations specifically on a range of issues including the environment, bribery, employment and industrial relations and although in 2000, the Guidelines were revised to include an explicit reference to human rights, the Guidelines however, do not spell out how companies are to implement this general statement.
The UN Norms provide a clearer framework for companies as they develop and "road test" human rights policies in their "spheres of activity and influence."
Advantages for Investors
Investors are increasingly aware of the potential risks to their portfolios of human rights violations committed by companies in their portfolios. A growing body of research suggests that higher standards of corporate responsibility may be correlated with improved profitability. Risks to shareholders associated with corporate violations of human rights include :
a) damage to firms' reputations;
b) lawsuits;
c) interruptions of operations because of work stoppages; and
d) loss of public trust in corporations.
The UN Norms provide well-defined expectations for corporations in the human rights area, allowing investors to measure the performance of companies against consistent standards and against peer companies. By contrast, because current human rights documents do not apply specifically to companies, their application may be open to diverse interpretations by different stakeholders, leading to confusion and conflict.
A clear set of standards would help reduce risk to investors in a number of ways :
1. A corporation guided by a comprehensive set of human rights standards is less vulnerable to lawsuits.
2. By following a generally accepted set of human rights standards, companies dependent on brand image may be less likely to suffer damage to their reputations as a result of publicized violations of human rights.
3. In bargaining with suppliers, licensees and contractors, companies could avoid disputes over human rights protections by making use of clear standards.
4. Standards create a level playing field, benefiting all companies, especially those willing to take a leadership role in promoting human rights.
Companies that agree to adhere to the UN Norms demonstrate to investors their commitment to human rights, restoring confidence after corporate scandals and highly visible human rights abuses have eroded trust.
Companies that adopt the UN Norms and effective management systems would reduce their exposure to potential legal action under the Alien Tort Claims Act or the International Criminal Court.
5. Companies that promote and protect human rights help to create stable communities and engender economic growth, creating a better environment for business.
Uniqueness of the Norms
What sets the UN norms apart is their uniqueness from other norms and arguably the norms present the most promising human rights norms for TNCs to date because of at least six factors .
i. First, instead of being limited to labour and/or environmental rights, the UN Norms attempt to draw a comprehensive list of human rights obligations. Besides a general obligation “to respect, ensure respect for, prevent abuse of, and promote human rights recognized in international as well as national law”, the specific obligations relate to the right to equal opportunity and non-discriminatory treatment; the right to security of person; the right of workers; the respect for national sovereignty and human rights; and the obligations with regard to consumer and environmental protection. The general obligation to respect “international human rights” becomes a potent provision in view of another provision in paragraph 23 which provides that a reference to “international human rights” in the UN Norms includes all civil, cultural, economic, political and social rights.
ii. Second, the Preamble to the Norms makes a clear, specific and unequivocal reference to the UN Charter, the Universal Declaration of Human Rights (UDHR) and other international treaties to deduce obligations for TNCs. This provides a stronger and more widely accepted basis of human rights responsibility generally, and a jus cogens basis regarding some human rights. Further, the very fact that there is a move towards framing human rights norms “specifically” directed to TNCs also makes it clear there exist certain gaps in the prevailing state-focal international regulatory regime. The UN Norms, therefore, does more than merely stating the existing; they not only formulate obligations directed clearly and directly to TNCs but also lay down the provisions for their implementation.
iii. Third, in terms of the nature of obligations also, the Norms clearly make an encouraging advancement vis-à-vis the prior or existing corresponding instruments. As TNCs could violate human rights in several ways (including by failing to act), it is insufficient to draft obligations in conventional “negative” terms, i.e., that TNCs should/shall not violate human rights. The UN Norms try to overcome this problem by imposing “positive” obligations on TNCs. TNCs shall not only refrain from directly or indirectly contributing to, and benefiting from, human rights violations but also “use their influence in order to promote and ensure respect for human rights.”
iv. Fourth, the Norms substitute the conventional approach of “should” with “shall” in terms of the compliance of the obligation. Although it may be suggested that the change of terminology may not make much difference in terms of the end result and that strictly speaking the Norms are still not binding, it is still a positive and definite shift in approach, and should make a difference when coupled with provisions for implementation of the norms.
v. Fifth, the UN Norms propose specific provisions for implementation of human rights norms. Besides asking states to “establish and reinforce the necessary legal and administrative framework for ensuring that the Norms … are implemented by transnational corporations”, the Norms propose independent and transparent periodic monitoring as well as verification by national and international (including the UN) mechanisms.
vi. Sixth, the scope of the Norms is not limited just to TNCs, but also covers “other business enterprises,” that is, any business entity, regardless of its legal form and/or area of operation, including a partnership, contractor, subcontractor, supplier, licensee or distributor (hereinafter contractors-suppliers et al). The Norms shall apply to such “other business enterprises” if they have any relation with a TNC, the impact of its activities is not entirely local, or the activities involve violations of the right to security outlined in paragraphs 3 and 4 of the Norms. Such a wide amplitude of the UN Norms should be seen as a response to the problem associated in pinning the precise responsibility of a TNC. As in many situations the apparent violator is not a TNC but its subsidiaries, contractors or suppliers, should the concerned TNC be allowed to bypass the liability on technical grounds, e.g., the separation of personality or lack of control? The Norms, thus, try to overcome this problem by directly and squarely placing an obligation, that the contractors-suppliers et al of a TNC respect human rights, on the concerned TNC. The Norms, therefore, send a clear message to TNCs: either ensure that the entities with whom you do business dealings respect human rights or do not deal with them, for failure to act may attract liability.
The UN Norms are therefore, a welcome addition to voluntary corporate codes of conduct. While these codes are important in focusing on factory conditions for workers, many are not built firmly on the internationally recognized human rights standards that make up the UN Norms. Some standards are shaped more by the culture of a company than by human rights conventions. The Norms provide a common template for all companies, establishing the expectations for minimum standards for human rights performance, which can create a level playing field for all companies.
The Norms thus are built on already agreed upon human rights conventions, covenants and treaties, and set out the need for clear articulation of the global community's expectations for corporate behaviour with regards to human rights.
Chapter 3:
The Imperfect Steps –
The UN Norms and The Lacunas in Law
The above analysis makes it manifest that the UN Norms represent a progress (and that too in the right direction) over the prevailing regulatory regimes. At the same time, one should not become unduly optimistic from this progress. Despite the above vital improvements, as compared with previous instruments, the Norms still suffer from serious theoretical and operational shortcomings, both in terms of formulation and implementation of human rights obligations.
Although the Norms revive the hope for establishing a legally binding international regime of corporate responsibility for human rights violations, they represent an imperfect step, albeit in the right direction.
The lacuna in the UN Norms is apparent in the context of (A) Human Rights Obligations and in terms of the (B) Operational Hazards faced by the norms.
(A) Human Rights Obligations
1. General Obligations
The UN Norms begin by laying down general obligations in paragraph 1. The obligations are two-fold: primary responsibility of states and "within their respective spheres of activity and influence" the obligation of TNCs to "promote, secure the fulfillment of, respect, ensure respect of and protect human rights." The general obligations assume more significance because of two reasons. First, all the Norms that follow are to be interpreted in the light of these general obligations. Second, the appended commentary clarifies that the obligations apply to corporations and other business enterprises irrespective of the fact where they operate - whether in home or in the host country. They both thus try to address, at least at theoretical level, an issue which should have been the starting point of any theory of corporate responsibility.
Lacuna
A difficulty may, however, arise in construing what is the "respective spheres of activity and influence" of TNCs, especially when the Norms do not prescribe any guidelines. For example, would it include the entire supply chain, and all the subsidiaries as well as affiliate sister concerns of a TNC? Moreover, whether the spheres of activity of a TNC engaged in, say, construction work would extend to promoting right to education or privacy generally, i.e., outside its activity boundary? As TNCs and human rights activists are likely to plead for opposing interpretations, this aspect requires clarification.
2. Right to Equal Opportunity and Non-Discriminatory Treatment
The UN Norms mandates TNCs to "ensure equality of opportunity and treatment" in order to eliminate discrimination based on race, color, sex, language, religion, political opinion, national or social origin, social status, indigenous status, disability or age. Besides, there is also a diluted obligation to eliminate discrimination on the ground of health status (including HIV/AIDS), marital status, capacity to bear children, pregnancy and sexual orientation. The measures that accord special protection to children, or are "designed to overcome past discrimination against certain groups" are, however, considered not a negation but promotion of equality. TNCs are expected to pay special attention "to the consequences of business activities that may affect the rights of women", especially regarding conditions of work.
Lacuna
Though the list of discriminating factors is appreciably extensive, it is difficult to understand why the obligation is made soft regarding some equally important variables. For example, despite HIV/AIDS and pregnancy being very potential reasons for discrimination practiced by corporations all over the world, the Norms prescribe no mandatory obligation to desist from such practices. Further, although there is an express provision for taking affirmative action measures to rectify past discrimination, it should be noted that the UN Norms do not make it clear whether this is merely an enabling provision, or an obligation requiring taking of positive steps. In the context of corporations, a provision for affirmative action would prove more effective only if it is of the latter category.
3. Right to Security of Person
Paragraph 3 of the UN Norms deals with crimes against the human beings in violation of international human rights and humanitarian law. TNCs, for example, shall neither engage nor benefit from war crimes, crimes against humanity, genocide, torture, forced disappearance, forced or compulsory labor, hostage-taking, and extrajudicial, summary or arbitrary executions. In addition, the appended commentary provides that besides not producing or selling weapons declared illegal under international law, TNCs which produce and/or supply military, security, or police products/services shall also "take stringent measures to prevent those products and services from being used to commit human rights or humanitarian law violations."
Lacuna
The Norms also contain another provision directed at remedying the fallouts of security arrangements made by TNCs on human rights. "Business security arrangements shall be used only for preventive or defensive services," and the force applied by security personnel shall be proportional and only when "strictly necessary." It must also be kept in mind that security personnel do not violate important rights of workers/employees such as the rights to freedom of association and peaceful assembly and to engage in collective bargaining.
Moreover, TNCs shall establish policies to prohibit the hiring of private militias/paramilitary groups, or working with units of state security forces known for human rights violations. Again, we can see clearly the influence of the human rights violating activities of Enron and Unocal on the drafting of these provisions.
4. Rights of Workers
The UN Norms make elaborate provisions regarding workers' rights. TNCs are supposed to provide a safe and healthy working environment, and are mandated not to use forced or compulsory labor as forbidden by the relevant international instruments, national legislations, and international human rights/humanitarian law. A special provision obligates TNCs to respect the right of children to be protected from economic exploitation. TNCs shall not only create and implement a plan to eliminate child labor but also not employ any person under the age of 18 in any type of work that is hazardous, interferes with child's education, or is likely to jeopardize the health, safety or moral of young persons.
Besides the above rights, two more provisions deserve special mention. First, TNCs shall provide workers with remuneration "that ensures an adequate standard of living for them and their families." Second, the TNCs shall ensure freedom of association and effective recognition of the right to collective bargaining of their employees/workers, especially in those countries that do not fully implement international standards concerning those rights.
Lacuna
It is clear from a brief review of workers' rights that the Norms seek to achieve lofty goals and make extensive provisions to attain those goals. Critics, however, argue that the intended results might not be achieved as ambiguity in the provisions affords enough room for corporations not to follow the provisions in spirit. For example, with the reference to the provision for fair and reasonable remuneration it is argued that the Norms "leave it open to anyone to interpret what are an adequate standard of living and a just wage" and "continue to base their wage criteria on the notion of national conditions."
5. Respect for National Sovereignty and Human Rights
Under the umbrella of "respect for national sovereignty and human rights", the Norms stipulate obligations on a wide range of issues-from adherence to rule of law to abstaining from corruption; from promoting right to development to respect for national laws/regulation; from promoting social, economic and cultural rights to positive contribution for human rights realization generally. The most striking feature of these provisions is their treatment of TNCs, together with other state organs, as vehicle of developing a society wedded to rule of law, transparency, accountability and sustainable development and in which people's civil, political, economic, social and cultural rights are realized. Despite the fact that TNCs' obligations are subject to the limitations of "their resources and capabilities," it represents a departure from the traditional role of TNCs in society in at least three respects. First, the human rights obligations of TNCs instead of being limited to mere civil and political rights now also encompass second and third generation human rights, that is, both individual and collective social, economic and cultural rights. Second, the scope of obligations is clearly broadened; TNCs shall be subject to both negative and positive obligations. Third, TNCs are expected to respect/promote human rights not only of those who are affected by their activities directly (workers/consumers) but also of those affected indirectly, invisibly and/or in the longer run (society as such).
Lacuna
The above provisions undoubtedly reflect a paradigmatic shift in terms of the appropriate role and place of corporations in society generally and regarding human rights in particular. But the Norms merely paint this picture with a broad brush; it is not clear how TNCs are expected to put these expectations into practice. Various issues would require clarification or concretization before TNCs actually deliver the desired goods. For example, whether only those TNCs whose activities come in direct contact or conflict with certain human rights are under a positive obligation, or all operating TNCs are under a general obligation to promote all the human rights? It seems that the Norms tend to adopt, in my view rightly, the second option, but in that case it will be necessary that corporate law, which governs the establishment and working of corporations, both at national and international level is amended to provide for taking into account the impact of corporate decisions/activities on human rights in society. The Norms are, however, silent on this issue. Unless it is precisely clear what we want TNCs to do, any further talks about the efficacy of the proposed regime will be premature as well as unsound.
6. Obligations with Regard to Consumer Protection
As the activities of corporations also come in conflict with consumers' various (human) rights, the Norms make specific provision to address this issue. TNCs shall not only act in accordance with fair business, marketing and advertising practices, including relating to competition and anti-trust matters, but also take all necessary steps to ensure safety/quality of the goods and services provided. An important aspect is that TNCs are also expected to observe the precautionary principle, and also disclose, in cases where a product is potentially harmful, all appropriate information on the contents and possible hazardous effects of the products through proper labeling, informative and accurate advertising and other appropriate methods.
Lacuna
Although these provisions will become immensely relevant in the time to come, for example, in the context of genetically modified products, or breast implants technology, they have little implementation now and should have been framed even for existing technologies.
7. Obligations with Regard to Environmental Protection
The UN Norms also respond to the growing concern about corporations' indifference to sustainable development while taking business decisions as well as formulating short/long term policies. Accordingly, TNCs shall carry out their activities in accordance with laws, practices and policies of the country of operation as well as international agreements, principles and standards regarding environmental perseverance in order to contribute to "the wider goal of sustainable development." TNCs are required to assess periodically the impact of their activities on environment and human health, especially of certain groups such as children, older person, women and indigenous people.
Lacuna
As TNCs operate in countries placed at different levels of development and consequently having varying levels of environmental standards, it becomes problematic and often full of business dilemmas as to which standards out of three-home, host or international-should they follow. Though the Norms mandate TNCs to observe both international and host standards, in many situations the host standards are as good as non-existent or are not enforced. As far as the international standards are concerned, they are generally so vague and general that it is quite easy to comply with their words without adhering to their spirit. In such a scenario, it is worth exploring whether TNCs should not follow the higher of home or host standards, irrespective of the fact where they operate and whether or not an uniform systm should be adopted.
(B) Operational Difficulties
Despite making a commendable effort to formulate human rights obligations for TNCs, the UN Norms, there are lacunas in the Norms that may give rise to several operational shortcomings. Two of such possible difficulties are dealt with below.
1. Inadequate and incomplete reference to International Human Rights Law/Instruments?
The Norms make frequent reference to numerous international treaties, which are negotiated as well as signed by states and are directed primarily towards states.
Lacuna
This approach is problematic due to several reasons. At the outset, the approach is circular. Instead of laying down ascertainable and guidable human rights standards, it leads the consumers of the Norms - from TNCs to NGOs, states, and victims-to several national and international instruments. In other words, the questions such as what are the obligations of TNCs in a given case and whether they violated those obligations cannot be determined with reference to the UN Norms. Though at places the appended commentary try to give concrete shape to some of the obligations , on the whole that is highly inadequate.
Need
Though there is no need to redefine human rights especially for corporations and it is perfectly legitimate to rely upon international instruments 'negotiated-signed-applicable' to states to construct human rights obligations for TNCs, it may still be necessary to deduce specific obligations of TNCs with reference to the referred international instruments. This is also required because TNCs cannot not possibly violate certain human rights enumerated in state-focal international treaties. Therefore, it is desirable that the human rights obligations of TNCs are enumerated, as far as possible and in an inclusive manner, in a schedule to the Norms. Doing so will not only bring certainty in terms of what is to be followed and consequent higher rate of compliance, but will also be an economically efficient way of regulation.
2. Operational Hazards of Human Rights Standards
The Norms acknowledge, among others, the universality of human rights, which in the context of TNCs also mean that they should observe the same standards of human rights whether operating in "home" or in the host country.
Lacuna
It needs to be remembered that TNCs, unlike states, operate in more than one country. Agreeing that TNCs shall pay fair and reasonable remuneration, whether fair and reasonable would quantify into 'same' wages, say, at a factory in India and in the US? Again agreeing that TNCs shall contribute to the realization of, say, the right to drinking water (or access to highest attainable standard of health, for that matter), what type of and level of contamination will make the water not suitable for 'drinking' (or in case of right to health, by which yardstick highest attainable standard will be judged)? Such examples, which could be easily multiplied with reference to various provisions in the Norms, demonstrate that there are operational difficulties associated with universal human rights.
Need of the Hour
Even if we assume arguendo that human rights are universal, it seems that in case of many human rights universality is only in terms of aspiration and not regarding the content of aspiration; in fact, a push for pressing universality also regarding the content of rights might result in negation rather than promotion of human rights. Thus, in order to operationalize the abstract universality and/or to ascertain the content of human rights, certain adjustments to local social, political, economic and cultural conditions are to be made.
Chapter 4:
Filling the Gaps –
Looking into the Lacking of the UN Norms
What is still Lacking?
Effective and efficient implementation of the Norms holds the key to the extent of their success in achieving the intended objective. Though the Norms make a sincere attempt in formulating the provisions for implementation, but they fall short of what is required. Essentially the UN Norms suffer from at least following three glaring omissions which might seriously hamper the prospect of their viable enforcement.
1. Multiple Sanctions
As explained above, the Norms stipulate implementation provisions. But which coercive measures could follow if certain TNCs fail to implement the mandate of the Norms? It seems that the response of the Norms to such a situation is two-fold.
First, the expectation is that states will establish the necessary legal framework to ensure that TNCs comply with their human rights standards under the Norms and also otherwise. It is logical to assume that provisions related to sanctions could be part of such legal framework. It can, however, be said that administering sanctions solely or even predominantly through states might not fulfill the desired results.
Second, TNCs which fail to implement the Norms are obligated to pay reparation to those adversely affected. Reparation is undoubtedly an important, and from the perspective of victims also useful, remedy, but it is doubtful whether reparation alone could coerce TNCs to respect the Norms. Ideally, the UN Norms should employ three types of sanctions against TNCs: civil, criminal and social. Reparation under the Norms seems to be used only as a civil remedy as it is unclear whether it is also intended to be utilized as a criminal sanction. It is important that the Norms not only resort to criminal sanctions against TNCs (and their human hands) but also effectively invoke social sanctions-by which it is meant the outcasting of the concerned corporation from the market through blacklisting/ban on commercial dealings, and also pressure emanating from consumers, investors, media and NGOs to enforce the human rights obligations against TNCs.
2. Enforcement Mechanism
A strong enforcement mechanism is sine qua non for effective implementation of the Norms. Being alive to this, the Norms conceive of multiple monitoring and verification mechanisms, both at national and international levels. But it seems that the idea is still undeveloped; no definite and/or viable framework for such a mechanism is ascertainable from the Norms, and the appended commentary invite the Sub-Commission on Human Rights and other UN bodies "to develop additional techniques for implementing and monitoring these Norms." If the Norms are adopted in its present form, that is, without any concrete mechanism to supervise the implementation, it will undoubtedly make a mockery of the Norms, framed admittedly in "non-voluntary" terms and supported for the first time with implementation provisions. Therefore, an enforcement mechanism should be put in place before the Norms being adopted. It is equally critical that the mechanism is both effective and efficient, that is, it could not only preempt human rights violations but also offer speedily an adequate remedy to the victims in cases of violation.
1. Response to (Mis)use of Procedural Issues
The procedural issue of the liability of a parent corporation for human rights violations by its subsidiaries have often been (mis)used by TNCs to avoid or delay their responsibility for human rights violations. The judicial response to these two issues has also, by and large, helped the cause of TNCs rather than the victims. But the UN Norms do not address these important procedural issues, in the absence of which any implementation mechanism, even if equipped with multiple sanctions, can hardly deliver justice to the victims.
The Norms should, therefore, respond to the above procedural challenges by offering principled guidelines to be followed by courts . This will ensure that the courts instead of deciding the issue afresh in each and every case, which is not only time consuming but also leads to inconsistent decisions, may determine the question of liability swiftly and in accordance with a predictable principle rather than wagering between various principles. This will also send a signal to those parent corporations which conduct more hazardous business through financially weaker subsidiaries and then keep distance by design with them in order to exploit a principle of corporate law which is probably out of tune with the present day reality of TNCs.
The Legal Dimension
What is still largely invisible in this picture is the matter of the legal accountability of TNCs, and in particular international legal accountability. To be sure, there is an established corpus of domestic legal regulation of corporate activities that affect human rights, including in such areas as criminal law, anti-discrimination, health and safety at work, environmental protection, and labour rights .
What is to be realized is that there is no transnational regime of human rights law governing the transnational activities of corporations. TNCs have been able to operate in a legal vacuum because international human rights law imposes no direct legal obligations on TNCs. The orthodox vision of international human rights law generally binds only states because it is principally designed to protect individuals from the excesses of state power. Thus, where infringements are caused by abuse of private power, it is still the state that will be held vicariously liable at international law, if any legal entity is to be held liable at all. Despite egregious human rights abuses committed by non-state actors, international law generally, and human rights law in particular, is still undergoing the conceptual and structural evolution required to address their accountability.
Need of the Hour
The invisibility of TNCs' accountability at the international level, especially under international human rights law, has arisen from the combined consequences of two factors. The first is the fact that historically, international human rights law has developed as a tool to protect individuals from the arbitrary use of power by states, not corporations or other private entities. To the extent that international human rights law does embrace non-state actors, it does so very largely by way of holding states indirectly liable for the direct infringements of others, including corporations. Secondly, corporations law traditionally has been almost exclusively a domestic matter. The human rights responsibilities of corporations under domestic law are not usually couched in corporations or commercial laws themselves, but in separate anti-discrimination, workplace health and safety, and labor laws. Moreover, except in certain exceptional circumstances, these domestic human rights laws are designed to operate intra-territorially only. As a result, the extraterritorial operations of TNCs--the very feature that defines them--are substantially regulated neither by international nor domestic (home state) laws with respect to their impact on human rights. Domestic regulation by host states is, of course, theoretically possible.
This apparent legal lacuna is precisely what we argue could and should be filled by the development of international legal obligations imposed on TNCs. The combined force of the inventive use of extraterritorial legislation to restrict the actions of corporations operating overseas and the relaxation of the forum non conveniens doctrine, allowing greater access to home state courts for settlement of disputes over alleged human rights violations, offer potential solutions.
These relatively recent developments are an encouraging sign for the prospect of greater direct international regulation, for they show some recognition of the nature of the problem of human rights abuses by TNCs, and at least some degree of willingness on the part of one state organ--the judiciary--to entertain arguments for new or alternative remedies.
Chapter 5 :
Conclusion –Looking Ahead
Transnational corporations and other large businesses have acquired a significant amount of power since the trends of globalization started to develop. With this increase in power comes an increase in responsibility. The UN Human Rights Norms for Transnational Corporations and Other Businesses help fill a major gap in the international human rights system, which already addresses the responsibilities of governments, individuals, and armed opposition groups, but has not yet focused on one category of powerful nonstate actors, businesses.
Many companies have acknowledged their human rights obligations and the need to restore confidence in corporate social responsibility. The Norms provide companies that want to be socially responsible with an easily understood and comprehensive summary of their obligations under such systems as human rights law, humanitarian law, international labor law, environmental law, consumer law, and anticorruption law. Accordingly, the Norms help to establish a level playing field for competition. Clarifying their duties may actually benefit businesses, as a growing body of evidence is demonstrating that compliance with human rights standards enhances a company's bottom line. Consumers are often willing to take the human rights conduct of a business into account in making their purchasing decisions. Some companies have already expressed support for the Norms and agreed to apply them in their own operations as a way of affirming their commitment to the Universal Declaration of Human Rights.
Further, the Norms can strengthen the will of governments to insist that businesses avoid human rights abuses. Governments faced with the economic power of large companies will be assisted by the Norms in identifying and thus applying the minimum international standards that relate to the conduct of such companies.
Among many actors-from states to international institutions, academia, media and civil society organs are engaged in a search for evolving an effective as well as efficient regulatory framework of TNCs' accountability for human rights violations, the UN initiatives hold a prominent, if not central, place in such a quest ; the Norms being the most recent, and also to date most promising, effort on the part of the UN. The Norms seems to have benefited from the exposure of the infirmities of its predecessor as well as other current regulatory regimes of corporate human rights responsibility, as they apparently seek to remedy some of those infirmities. However, certain lacunae still survive which, might hamper the efficacy of the Norms and neutralize the edge that they claim over their counterparts.
Though the Norms revive the hope for establishing a legally binding international regime of corporate responsibility for human rights violations, they represent an imperfect step, albeit in the right direction. It is critical for the efficacy of the Norms that imperfections related to both formulation and implementation of TNCs' human rights obligations are further deliberated upon thoroughly before any move towards the adoption of the Norms. In sum, it is argued that the Norms should not only deduce human rights obligations of TNCs from state-focal international treaties and maintain a distinction between aspirational and operational standards of human rights, but also establish a robust enforcement mechanism which invokes multiple sanctions. Besides, the Norms should also take the lead in responding to hindrances posed by the procedural issues related to forum non conveniens and the liability of a parent corporation for human rights violations by its subsidiaries.
Thus, there is today an ardent need to review the norms with respect to the afore laid out lacunas and in the scope of forum non conveniens doctrine, so that the Norms achieve the goal it was framed to achieve and merely do not remain a very appropriate initiative implemented in the wrong way – there’s a need to correct the imperfect step in the right direction so that targets are achieved, human rights are protected and the world becomes a better place for you, me and the generations to come.
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