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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

3 Approaches in the home state

A number of cases in industrialized countries where MNCs are domiciled - principally the UK, the USA, Canada and Australia - are slowly increasing the space within which it is possible for claimants from host countries to hold MNCs legally accountable in their home countries.

In the United States , the most useful instrument to date is the Alien Tort Claims Act (ATCA), a 200-year-old law which gives the US courts jurisdiction to hear cases of human rights abuses (violations of customary international law) occurring anywhere in the world as long as the US courts have jurisdiction over the defendant. This covers a limited range of charges of severe human rights abuses, namely slave labour, collusion in genocide, collusion in torture, and collusion in extrajudicial murder. Several cases in the US are being brought on the basis of the ATCA, notably that of the Burmese people v. UNOCAL of California (see ER 2.2), which has progressed some way partly because of the judge's strong reaction to the idea that a US company could be using slave labour in view of the USA's own history of slavery. It was argued that where a mother company is not US-based, US courts had no jurisdiction, for instance over Total, a French company which is a partner in the same joint venture as UNOCAL in Burma. This argument is being adduced in the case of the murder of Nigerian activist Ken Saro-Wiwa and others of the 'Ogoni 9', brought in New York by their families, where Shell's argument that it bears no responsibility on the grounds that it does not exist in the USA is incredible but legally sound. However an American judge also has jurisdiction in the case of a not-US based company 'doing business' in the USA. A non-American company that has an office in the USA would - for that reason - fall under the jurisdiction of the ATCA. However up till now no case against a non-American company has been accepted by the judge.

But the argument of Shell in the case of Ken Saro-Wiwa that it has no responsibility because it does not exist in the USA, has been overthrown by the District Court because Shell has an agent based in New York.

Another case against a US mining company in Irian Jaya, where the claim is of collusion in genocide of indigenous people through environmental pollution, was not upheld at the first stage.

In England , the legal standard being used under English law is the 'duty of care', which is an obligation applying to everyone in the UK, individuals as well as organizations. Richard Meeran reported on several cases which have been pursued by his firm, Leigh, Day and Co., to get compensation in the English courts for people living in the countries where the abuses have occurred, by holding the UK parent companies liable at home. They include cases against the Kent-based company Thor Chemicals, in which over 28 workers in its South African factory suffered severe mercury poisoning (see PR pp 2-3, 26-8); against Cape plc, brought by over 2,000 South African victims of asbestosis from long-term unsafe practices by Cape and its wholly-owned subsidiaries in South Africa (see PR pp4-5, 31-4); and against Rio Tinto (formerly RTZ), brought by a worker poisoned by uranium dust in Namibia (see PR pp3, 29-30).

The central issue in these cases is whether the MNC parent company has a legal duty of care to people affected by the operations of its subsidiaries overseas. Leigh, Day and Co. argue that it does have such a duty, because :

• The parent company, domiciled in England, exercised control, including financial control, of operations from its home base;
• Practices unacceptable in the country of domicile were exported to other countries (e.g. the Thor case);
• The profits are repatriated to the home country.
  If the parent company was aware of the dangers caused by its practices, but took advantage of lower safety standards in other countries to expose people to greater risks than would be acceptable in the UK, this is a failure of due care on its part.

In Australia , a case has been brought against the mining company BHP for destroying the livelihood of 25,000 people in Papua New Guinea (PNG). But PNG is so poor and economically dependent on BHP that its government would not agree to sue BHP, until it was discovered that BHP had been lobbying the PNG parliament. Australian court argued that the case would be an infringement of the sovereignty of PNG and that the PNG government had colluded in BHP's behaviour. A secret settlement was drawn up after much public outcry, according to which BHP agreed to clear up some of the environmental damage and compensate some of the people.

In Canada , another 25,000 people are mentioned as victims of HRVs in a mine in Guiana, where the company was using methods that had been illegal in Canada for 25 years, with terrible results. The court in Canada said it could hear such a case, theoretically, but that in this case the facts were not clear and the local government was too closely involved.

Different legal systems offer different possibilities and constraints. Saman Zia-Zarifi noted that most of the cases mentioned as being brought under domestic law are happening in common-law countries, and wondered whether similar actions would be possible in the civil-law countries of the European continent. If a court in Holland, France or Germany were to sue a corporation domiciled in their country for its activities abroad, even if such a claim were lost, the case could raise the possibility of the claimants invoking EU mechanisms. The Canadian case mentioned above was from Quebec, which has a civil-law system, and could thus perhaps provide a good model. Philipp Mimkes reported that the Bayerwatch campaign (Because this campaign was sued by Bayer for it's name and lost it is now called Coordination against BAYER-dangers) now calledin Germany had tried to bring criminal charges against the German management of Bayer over workers injured and killed as a result of exposure to chrome dust at a South African mine owned by Bayer, but without success.

As we have seen, MNCs create and exploit ambiguity and vagueness over their identity in order to avoid being called to account, using 'complex and confusing corporate structures … to distance and separate the parent company from the local operating subsidiaries. ( Richard Meeran, 'Liability of multinational corporations: A critical stage', PR p24. ) In particular, in many of the most notable British cases, defendant companies fight bitterly not on the basis of the facts of the case (which usually clearly condemn them) but on the technical questions of duty of care and, particularly, venue and jurisdiction. The Brussels Convention on jurisdiction, which applies to all EU-based companies, stipulates in article 2 that the place of jurisdiction of a case is the country of domicile of the parent company. But, under English law, a defendant company can apply to the court to stay, or prevent, the action on the grounds of forum non conveniens (unavailable venue). Whereas claimants, unable to get redress in the host country, seek to have cases against UK-based companies heard in England and to establish jurisdiction there, the companies use forum non conveniens to get the case returned to the host country, where they will benefit from less adequate legal protection of victims, the compliance or collusion of the government, and lower costs. For NGOs as well as claimants it can be disconcerting and disappointing that the success or failure of a legal action often depends not on the facts of the case but on technicalities of this kind, which distract attention from the actual violations, the relationship between parent and daughter companies, and where the duty of care lies. In the Cape case, for instance, three years have now been spent in argument over where the case should be held.

These differences in national legislation and the loopholes which companies can exploit strengthen the argument for seeking international solutions to the question of corporate accountability.