Index
CONTROLLING CORPORATE WRONGS: THE LIABILITY OF MULTINATIONAL CORPORATIONS Legal possibilities, initiatives and strategies for civil society Report of the international IRENE seminar on corporate liability and workers' rights held at the University of Warwick, Coventry, United Kingdom, 20 and 21 March 2000

2 Holding MNCs to account directly

Although it removes the spotlight from states' responsibilities to provide an adequate regulatory framework for MNC operations, the shift of attention away from dealing with states towards dealing with corporations, calling corporations directly to account, offers greater possibilities for winning actual redress for victims of abuses by MNCs. Here, however, MNCs use their ephemeral and shifting legal nature, existing in many countries at once, to argue that they exist in none and are therefore free from regulation by any government other than that of the country they happen to be in - the host country. When approaches in the host country are fruitless - which is usually the case - approaches can be made under either domestic or international law:
(a) at the level of the MNC's home state;
(b) at the regional level;
(c) at the international level.

Home or host state?

There were differences of opinion over whether cases should be put forward in the home or the host state. Existing experiences suggest that claims are less likely to succeed in host states, for a variety of reasons. Access to justice for victims/claimants may be more difficult in their own countries. In South Africa, for instance, employees are banned by law from suing employers, this right being replaced with 'no-fault compensation', and the relatives of claimants who have died cannot bring a claim at all in South Africa, though they can do so in the UK against a UK-domiciled company. Collusion is likely to be greater, partly because developing countries, which are usually host states, need MNCs in the globalized economy. Many small, weak national economies are dependent on MNCs, and it is understandable, if regrettable, that they fear alienating them.

On the other hand, having recourse to MNCs' home states raises the question of sovereignty. In the past, home states have exercised diplomatic protection on behalf of corporations against the host state, but this became seen as a colonial practice and an infringement of the host state's sovereignty. Arguments on the grounds of sovereignty, however, are double-edged. Companies often use (or abuse) sovereignty as a pretext for devolving responsibility to host states, hoping to benefit from less adequate legal protection of victims, lower costs, or less judicial rigour. In many cases, claimants have insisted on bringing their cases in the offending MNC's home country.

Yet host governments' laws should not be ignored out of hand. One participant mentioned that hundreds of cases involving oil spills have been brought successfully against Shell in Nigeria, resulting in damages payouts of about $0.5 million. With the arrival of the civilian government in Nigeria there are hopes that the judiciary will be more independent; but even under Gen. Abacha judges were prepared to rule against oil companies, often because they were themselves from communities affected by the companies' operations. However, it was pointed out that these cases resulted from a very specific contract signed between Shell and the former Nigerian government granting Nigerians the right to sue Shell only on oil spills, so human rights violations cannot be addressed.

Subcontractors and suppliers

If control of MNCs' affiliates and subsidiaries in other countries is difficult, control of their subcontractors and suppliers, which are at a further remove from the central sphere of influence of the parent company, is even more so. Could UNOCAL, for instance, itself be accused of forced labour in Burma, or would that responsibility belong to the Burmese subcontractors involved? And how far down the line does the responsibility of the mother company apply to more remote 'generations' of subcontractors? The OECD Guidelines for Multinational Enterprises recommend that subcontractors and suppliers should be 'encouraged' to comply with the guidelines; but it was felt that this text could be stronger, and most participants were emphatic that the mother companies should be responsible for the actions of their subcontractors and suppliers and should put in place, or improve, their mechanisms for monitoring their subcontractors and suppliers.