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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

V STRATEGIES AND METHODS TO IMPROVE CORPORATE LIABILITY

Sharing and comparing experiences at the seminar generated some key questions of strategy:

• Can MNCs contribute positively to development, and how can they be encouraged to do so?
• How can lawyers, trade unions, and NGOs work together with and for claimants?
• What are the advantages and disadvantages of different strategies?

1 Strategies

• Continuing and intensifying direct legal challenges
  However murky the corporate smokescreen is, it remains just a smokescreen. All corporations are obliged to have legal existence, so there must be a law-based way of challenging them. The state has the right to revoke a corporation's licence or charter. A useful strategy is to find out what the criteria are for governments to grant corporate licences and then to challenge companies on their compliance with these criteria, while at the same time lobbying governments to sharpen those criteria if they allow companies to violate human rights or destroy the environment.

In the United States, as Ward Morehouse of the UN Program on Corporations, Law and Democracy reported, such challenges are called charter revocation actions. Revocation of a corporation's charter, its basic founding and enabling document, is a very serious sanction. There have been some successes with this strategy in individual US states, where the attorney-general or governor can revoke a company's charter. A petition to revoke UNOCAL's charter is currently under way, as is the attempt to get the government of New York state to start a charter revocation action against Union Carbide, which is incorporated in New York state.

Another basis for claims is that of false advertising. It can be effective and shaming to show that a large and famous corporation is lying. These cases tend to be brought not by victims from the host country but by campaigners in the MNC's home country. For instance, when Nike advertised the high quality of its factories in South-east Asia, a group of activists sued it on the grounds that this statement was misleading to consumers. On this basis it could be possible to sue Shell, which has bought a good deal of space in National Geographic magazine in order to boast of its care for the environment, by bringing conclusive evidence of environmental damage caused by Shell's operations. This kind of argument, however, presupposes a common or consensual definition of a good factory or environmental care. Lack of internationally agreed standards in these respects makes it possible for corporations to make such claims even when it is all too obvious that they care neither for their workers nor the environment.

Several participants argued strongly for further research and testing on bringing criminal charges against MNC management. The law varies from country to country, and in most places criminal charges cannot be brought against a company as such, only against its managers. Some NGOs have tried to bring criminal charges against the directors of MNCs, but so far without success. Richard Meeran pointed out that it is hard to establish criminal responsibility where personal liability has to be proven.

However, the case of Gen. Pinochet, involving a number of countries, has excited interest among lawyers as a possible precedent, showing that an individual, even a former head of state, can be sued for abuses committed in another country. This case has had a big impact in international law, e.g. in the case of a former head of state being brought to trial in Senegal. If a key lawsuit could be brought successfully against a company in one country, e.g. on the basis of crimes against humanity, it would raise interest among lawyers outside those limits and countries, and would also serve as a deterrent against companies. A combination of criminal as well as civil action against the same MNC may be worth exploring.

Meanwhile, the campaign for an International Criminal Court, which would make companies as well as persons accountable under criminal law, continues, and the existing tribunals for trying war criminals in Rwanda or former Yugoslavia may point the way towards developing a similar mechanism applying to companies in relation to corporate violations of human rights.

The law continues to evolve, and fresh regulations are always appearing in the attempt to keep up with fresh abuses (e.g. new rules currently being established on jurisdiction in sex tourism). This makes the possibilities for legal action an ever-open book whose pages are constantly being inscribed with new cases and experiences. However, as Sam Zia-Zarifi warned, it is of the utmost importance to focus always on what the claimants want. As well as the dangers attaching to disclosure of information and its sources, there is the question of whether, if an MNC pulls out of a country under legal pressure, its successor may be even worse, or its departure may leave a disastrously gaping hole in the local economy.

• Work with codes of conduct and standards
  As we have noted above, the key aspect of codes of conduct on which to focus should be implementation. There is no longer much need to develop new codes; the key issues and standards have been defined. The important thing is to get them implemented and enforced.

Codes are only as good as their monitoring mechan-isms, and if they lack these they are little more than public relations exercises. But companies can be called to account on their own promises, particularly if they themselves refer to recognized instruments. Even though the codes are not in themselves legally binding, they can be used in legal procedures, as a secondary source to binding conventions. If, for instance, a company has signed the voluntary industry code called 'Responsible Care', which contains a subcode on 'Product Stewardship', and then exports to Latin America a product banned in the USA and the EU, it cannot be legally challenged on the basis of breaking its own voluntary promises, but could arguably be challenged if the voluntary code referred to ILO Conventions or OECD Guidelines.

Vic Thorpe reported that ICEM, having become frustrated with the toothlessness of unilateral company codes of conduct, has begun to negotiate contracts between itself and some MNCs whereby the companies contract to fulfil certain responsibilities. Under one such contract with the Norwegian company Statoil, for instance, Statoil has agreed not to oppose efforts to unionize by its employees in any country where it operates (e.g. Azerbaijan and China). It is unclear, however, what legal force this kind of contract has in the case of a transgression.

International standard-setting is an area of work which will continue at both 'official' (UN, ILO, EU, etc.) and NGO levels. Systematization and better implementation of existing standards would seem to be the key strategy which NGOs and trade unions should be promoting, including:
· Devising an international set of standards;
· Establishing international implementing/monitoring mechanisms;
· Establishing incentives and sanctions.

Finally, work with codes of conduct and standards is not an alternative to legal approaches but a complement and a support to them. Lawyers, NGOs and trade unions were urged to work together to contribute to raising standards.

• Keeping the issues on the agenda
  Although much of the seminar focused on actual and potential legal approaches to corporate liability, it was clear from the contributions of the NGOs present that campaigning, awareness-raising and North/South linking would continue to be major tools for them, reflecting their specific competence, networks and advocacy capacity. Although campaigning does not generally result in actual redress for the victims or survivors of corporate malpractice, the mobilization of public opinion through publicizing key cases can shame companies into better practice. The value of the glare of publicity to which MNCs are exposed in public hearings has already been mentioned.

Sometimes the media can be a useful ally. Roger Blanpain cited an example concerning the French oil company Total, where public opinion over a large oil spill ran so high that Total, not the ship immediately responsible for the spill, had to pay up. He urged NGOs and trade unions to lobby and get media coverage around key cases. However, a note of caution was sounded about the reliability of the media as a weapon for justice, since media interest is notoriously fickle and short-term, driven by the need to provide ever-fresh news.

Richard Meeran stressed the importance campaigning and direct action can have in terms of solidarity with claimants in particular cases. He acknowledged how heartening it had been both for claimants and for Leigh & Day that, since they started finding it harder to win cases over the last few years, organizations such as AI and WDM had begin to support the claimants with campaigns and demonstrations. This can not only give valuable moral support to the claimants but can have a wider influence. In the Cape case, the increasing influence of the National Union of Miners in organizing demonstrations and lobbying could help explain why the South African government is now thinking of intervening in the case.

2 Collaboration
How can lawyers, trade unions and NGOs work together with/for claimants? Lawyers need cases, in order to accumulate evidence against MNCs. At the same time, NGOs and trade unions working with claimants need lawyers, to get legal redress in specific cases and to reinforce non-enforceable advocacy and public awareness-raising with concrete successes in favour of those whose rights have been violated.

Some NGOs are already working with lawyers, for instance WDM and Amnesty International with Leigh & Day. NGOs of different kinds are also increasingly cooperating with each other: AI UK, for example, is collaborating in its campaign on socially responsible investment with War on Want and Traidcraft in the UK and is considering wider collaboration outwith Britain in order to maximize the channels for change that can be brought into play.

However, the most effective way in which NGOs and others can collaborate is in sharing information and building up a body of evidence. NGOs and trade unions were strongly encouraged to gather cases and to find out from lawyers what specific kinds of information are needed to build solid cases. To build up this body of case law, more research on MNCs' violations of rights is needed. Among specific resources in this respect, AI has much experience in doing research on violations by governments, which are often in collusion with MNCs, and it was suggested that it might consider extending its research to cover corporations. The UN Human Rights Centre (CDR) in Geneva and the UN HCR were also mentioned as valuable sources of well-researched information.

More research needs to be done not just in terms of building up case law but on the applicability of many different areas of national and international law, such as competition law (how much should be regulated at the international level and how much/what should be left to national competence?), international rules on mergers, and criminal law.

Finally, as Willem van Genugten reminded participants, it is important not only to build up case law but also to use instruments such as the OECD guidelines and ILO conventions and declarations. Use of these instruments confirms their value and the need to ensure their effectiveness.

• Which are the best fora for presenting evidence?
  The answer to this question varies according to each specific case. Different fora and instruments are effective in different situations. This is why building up a body of evidence with detailed information on cases is so important: it can give lawyers, NGOs and trade unions an idea of the kinds of argument that do and don't work, the kinds of counter-argument by MNCs that are accepted or rejected by courts, and how this varies with forum and instrument. NGOs are well placed to gather data on violations, which lawyers can then put into the most appropriate legal form in the light of the legal instruments that offer the best chances for a successful action.

NGOs and trade unions expressed the need for more guidance from lawyers on the most useful type of evidence to gather and the most effective way of presenting it. ICEM, for instance, has evidence on hundreds of cases, but it has been collected for the purposes of campaigning rather than legal action - legal initiatives tend to be taken up by ICEM's member unions in their own countries. What would be useful for them, Vic Thorpe pointed out, would be a checklist of criteria indicating what forum or legal instrument, applied at what level, would be most suitable in each case. Kjell Sevón (Green group, European Parliament) suggested that a resource indicating the kinds of argument that could be built up in different situations, supported by accounts of both successful and failed cases, could be valuable for both lawyers and NGOs.

3 Can MNCs contribute positively to development?
Strictly speaking, this question is not a relevant one for lawyers. The law is not interested in anything that exceeds compliance with the law - it is only concerned with whether the law is broken or respected and only actively interested once it is broken. NGOs and trade unions, however, are interested in companies doing more than comply with the law and in the positive contributions they can make. Both approaches are necessary, both to ensure that the law is respected in the strict sense and to promote good practice by companies.

NGOs have a great interest in promoting good practice alongside preventing bad. Sometimes this can be done simply by calling companies to account on their own promises. Bread for the World, for instance, is interested in putting to the test Shell's statements of commitment to sustainable development, and would even be prepared to award it a social/environmental quality label if it really complied. AIBG's Human rights guidelines for companies are a useful set of positive recommendations.

'International companies are likely to operate in countries where there are serious and frequent human rights violations … Companies therefore have a direct self-interest in using their influence to promote respect for human rights.'
(AI UK Business Group, Human rights guidelines for companies, p1)

In terms of standard-setting, positive obligations are more difficult to formulate than negative ones, but can include at the most general level MNCs' obligation to use their influence to improve conditions in the countries where they operate. Examples of good practice as well as bad could be gathered as a contribution to developing standards.

As an immediately material contribution, ICEM is calling for the application of an international tax on international investment, with the proceeds to go to the World Bank for an international development fund. Unfortunately, this call has so far not met with success.