Another Star in the BHR Galaxy of Norms? ILC Draft Principles Encourage States to Address Corporate Environmental Harm in Armed Conflict
It is a pleasure to welcome Marie Davoise as a guest poster on “Rights as Usual”. Marie Davoise is an English-qualified solicitor specialising in international criminal law and business and human rights, with experience in private practice and at the International Criminal Court. She tweets about international law and human rights at @micawberist. This post is hers.
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On 20 August 2019, the International Law Commission (“ILC”) published an advance copy of its 2019 Report to the UN General Assembly. The report contains texts and commentaries on various topics of international law. It will also be of interest to business and human rights (“BHR”) enthusiasts for its inclusion of BHR-related Draft Principles on Protection of the Environment in Relation to Armed Conflict.
Draft Principle 10 discusses the concept of corporate due diligence. It recommends that States take appropriate measures to ensure that corporations operating in or from their territories exercise due diligence with respect to the protection of the environment, including in relation to human health, in areas of armed conflict or in post-conflict situations. The due diligence described at Draft Principle 10 is identical in content to the “human rights due diligence” as understood in the UN Guiding Principles on Business and Human Rights. Draft Principle 11 invites States to take appropriate measures to ensure corporate liability for environmental harm caused by companies operating in or from the State’s territory.
Although not binding, the Draft Principles reflect and consolidate a growing set of norms which can be used to tackle environment-related corporate wrongs in the context of armed conflict. Three features of this set of norms are made clear in the ILC report: the variety and fluidity of existing frameworks; the expansion of parent company liability in various jurisdictions; and the added layer of complexity when seeking to hold companies accountable for harm occurring in armed conflict.
A Cautious, Flexible Approach to Due Diligence and Corporate Liability
Both draft principles generated extensive comments in the plenary session, with some ILC members expressing concerns over the legal and political reach of the text under discussion. The original wording of Draft Principle 11, for example, was changed from requiring that States take “necessary measures” to requiring them to take “appropriate… measures aimed at ensuring” business accountability (see here). This is reflected in the latest report, which acknowledges that the measures taken at the national level may differ from one country to another, and may not always consist of legislative measures. The report also specifies that Draft Principle 10 “does not reflect a generally binding legal obligation and has been phrased accordingly as a recommendation.”
This flexibility does not merely reflect a reluctance to go too far, too fast – it is also a reflection of the BHR “galaxy of norms”, which takes many forms, and operates in fluid ways on various jurisdictional and geographical levels. The wide network of normative frameworks is evident throughout the report, which describes a broad range of initiatives, from the most well-known (e.g. the UN Guiding Principles and OECD Guidelines) to the industry-specific or niche (e.g. the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains or the Lusaka Protocol of the International Conference on the Great Lakes Regions).
Parent Company Liability: a Central Concept in the Search for Accountability
Another noteworthy feature of the report is its discussion of parent company liability. Draft Principle 11 invites States to take measures aimed at ensuring that businesses can be held liable for harm caused by their subsidiaries acting under their de facto control. To illustrate the importance of this concept, the report points to one of the most important BHR cases of 2019: Vedanta v Lungowe, which Lucas Roorda reviewed on this blog. The case concerned the possible liability of the British multinational group Vedanta Resources for the release of toxic substances to a watercourse in Zambia by its subsidiary. The United Kingdom Supreme Court found that “[e]verything depends on the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations (including land use) of the subsidiary.”
This is in line with the growing body of transnational tort cases on parent company liability, in which courts are increasingly willing to consider the existence of a duty of care owed by parent companies for certain actions of their subsidiaries. Recent high-profile cases in the United Kingdom include Unilever, in which the Court of Appeal set out certain scenarios in which such duty of care could arise (e.g. if the parent company has in substance taken over the management of the subsidiary’s relevant activity) and Okpabi, which is following a trajectory similar to Vedanta and for which the Supreme Court granted the claimants leave to appeal on 24 July 2019. Canadian cases include Choc v Hudbay Minerals, Garcia v Tahoe Resources and Araya v Nevsun Resources, in which various courts looked at the responsibility of mining companies for actions of their subsidiaries in Guatemala and Eritrea. Similar discussions are being held in the context of claims against Shell before the Dutch courts (the Eric Dooh litigation regarding spills in the Niger Delta, and the Kiobel litigation regarding the execution of the ‘Ogoni Nine’). As is clear from the ILC report’s discussion of the importance of de facto control, the BHR galaxy is witnessing a convergence of legal systems which could ultimately lead to a more expansive application of parent company liability.
BHR in the Context of Armed Conflict
Finally, it’s worth remembering that the Draft Principles seek to address environmental harm in a specific context, i.e. armed conflict. This adds a layer of complexity to the search for corporate compliance and accountability. This is acknowledged in UN Guiding Principle 7, which recognises that some of the worst human rights abuses involving business occur in armed conflict situations “where the human rights regime cannot be expected to function as intended.” This heightened risk, and the resulting expanded web of liability for businesses, is also reflected in the commentary to UN Guiding Principle 23.
Armed conflict can therefore turn the national jurisdiction in which the environmental harm occurs into what Skinner refers to as a “high-risk host country”, i.e. one that has a weak, ineffective, or corrupt judicial system. This is where the notion of parent company liability could improve access to remedy for victims of harm by multinational businesses, especially as courts have shown sympathy for forum necessitatis arguments (which allows domestic courts to assert jurisdiction when there is no other forum available in which the plaintiffs could pursue their claim). The lack of available justice in Zambia was a key factor in Vedanta. Similarly, in Araya v Nevsun the Court of Appeal for British Columbia endorsed the first instance judge’s finding that it would be difficult for the claimants to have a fair trial in Eritrea, particularly “if they chose to commence legal proceedings in which they make the most unpatriotic allegations against the State and its military, and call into question the actions of a commercial enterprise which is the primary economic generator in one of the poorest countries in the world.”
The ILC report itself acknowledges that the collapse of State and local institutions “is a common consequence of armed conflict and one that often casts a long shadow in the aftermath of conflict, undermining law enforcement and the protection of rights as well as the integrity of justice.”
Conclusion
The legal conversation is increasingly concerned with both corporate accountability and the protection of the environment. On 23 July 2019, in response to the publication of the ILC Draft Principles, a group of scientists published an open letter in Nature, calling for a Fifth Geneva Convention that would make environmental damage a war crime. On 25-27 November 2019, the United Nations is due to hold its annual Forum on Business and Human Rights. Topics for discussion will include, inter alia, “Lessons from other relevant fields, such as environmental protection” and “Building sustainable peace and reconstruction in countries emerging from conflict and fragility and address corporate crimes”. Draft Principles 10 and 11 have clearly captured the legal zeitgeist.
The ILC report draws on various existing frameworks and legal principles to offer avenues to address wrongs situated at the intersection of three circles: business, the environment, and armed conflict. It draws attention to this Venn diagram rather than seeking to reinvent the wheel. It reflects existing conceptual tools rather than creating new ones. In that sense, the Draft Principles do not add a new ‘star’ to the BHR galaxy, but rather offer a helpful telescope to examine the existing firmament. They also represent a chance to galvanise discussions of protection of the environment in armed conflict when negotiating binding instruments, such as the draft business and human rights treaty, for which the latest round of negotiations is due to take place on 14-18 October 2019.
Clearer, Stronger, Better? – Unpacking the 2019 Draft Business and Human Rights Treaty
(1) Clearer language and structure
Overall, the 2019 draft is clearer and more precise than the previous version. I have picked a few examples but a close reading of the text should reveal many more. Drafters fleshed out the definitions article, and polished up the language. For instance, under Article 8 on Statute of Limitations, the previous text stated that “[d]omestic statutes of limitations (…) should not be unduly restrictive and shall allow an adequate period of time for the investigation and prosecution of the violation” (Article 6, 2018 Zero Draft). In the new text, this becomes: those statutes of limitation “shall allow for a reasonable period of time for investigation and prosecution of the violation”. “Unduly restrictive”, a subjective requirement likely to cause problems, was dropped; and “adequate” was replaced by a more precise term, “reasonable”. Similarly, the necessity for States Parties to “protect the[...] policies and actions” they adopt/take “from commercial and other vested interests of the [business sector]” (Article 15(3), Zero Draft), which was likely to antagonize certain states, is now gone.
In terms of structure, the text is also clearer. For example, the requirement that “States Parties shall cooperate in good faith” is now located in the opening paragraph of Article 11 on International Cooperation, where it belongs, rather than in the opening paragraph of the article on Mutual Legal Assistance, where it was in the previous draft (Article 11, 2018 Zero Draft). In a similar vein, the International Fund for Victims is now mentioned in Article 13 on Institutional Arrangements, rather than buried within the article on the rights of victims (Article 8(7), 2018 Zero Draft). Those are significant improvements.
(2) Stronger provisions
The new text also contains stronger provisions from a human rights perspective, as well as key additions. In the preamble, a new paragraph recognizes “the distinctive and disproportionate impact of certain business-related human rights abuses on women and girls, children, indigenous peoples, persons with disabilities, migrants and refugees, and the need for a perspective that takes into account their specific circumstances and vulnerabilities.” Under Article 31(2) of the Vienna Convention on the Law of Treaties, preambles may be used to provide context in treaty interpretation. Therefore, this paragraph could have important consequences on how operative provisions of the treaty are interpreted in the future.
The 2019 draft treaty includes a new Article 15 titled Relation with protocols, which paves the way for the adoption of an optional protocol to the future treaty. Last year a Draft Optional Protocol was released, which I discussed here. The first reading of the Draft Optional Protocol is scheduled for October 2019.
The 2019 draft treaty also includes a rather interesting optional compromissory clause (Article 16(2)). Under this provision, States Parties can declare they “accept (…) as compulsory” the “submission of the dispute to the International Court of Justice” and/or “arbitration in accordance with the procedure and organization mutually agreed by both state parties”. Although oddly phrased, I suppose this means that states may consent to the compulsory jurisdiction of the International Court of Justice or to arbitration in case of a dispute between State Parties that could not be resolved by non-judicial means. This opt-in mechanism is different from that of existing UN human rights treaties which either include a general compromissory clause (CERD), or a compromissory clause with the possibility to opt out (CEDAW, CAT, ICPRAMW, and ICPPED). The fact that it requires states to opt in makes it weaker, but it is a positive development that it is in there at all.
The preamble of the 2018 Zero Draft contained a paragraph that said: “all business enterprises, regardless of their size, sector, operational context, ownership and structure shall respect all human rights, including by avoiding causing or contributing to adverse human rights impacts through their own activities and addressing such impacts when they occur.” At the time I wrote that this was “the only mention in the Draft of something resembling corporate human rights obligations under international law”. I also made the point that being in the preamble and not in the operative part of the draft, this statement was actually quite weak. The preamble of the 2019 draft treaty contains a similar provision. It says that business enterprises “have the responsibility to respect all human rights”. I am struggling with how to interpret this change. On the one hand, “shall respect” was pretty strong, possibly stronger than “have the responsibility”. On the other hand, replicating the language of the UN Guiding Principles, whose second pillar is titled the “corporate responsibility to respect human rights”, ties the draft treaty to the already widely accepted UNGPs. I see this as a clever, strategic move. And it does not end there. The paragraph then uses similar language to that of Guiding Principle 13 (which defines the corporate responsibility to respect human rights), almost word for word. I suspect there will be some discussion about this, but my initial feeling is that this strengthens the text.
Finally, I am of course delighted to see references to international crimes in Article 6 of the 2019 draft treaty (Legal Liability). In 2015 I argued that the negotiation of a business and human rights treaty provided a golden opportunity to establish corporate criminal liability under international law. I still believe this is the case. The 2019 draft falls short of this but still, it asks States Parties to establish liability under domestic law for a series of core crimes. This is in line with recent developments at the International Law Commission (ILC). Article 6(8) of the ILC Draft Convention on Crimes against Humanity requires states to establish the liability of legal persons for the offences covered in the Draft Convention. Draft Principle 10 of the 2019 ILC Draft Principles on the Protection of the Environment in Relation to Armed Conflicts also provides for corporate liability under domestic law.
I look forward to following debates on this at the next session of the Open Ended Intergovernmental Working Group. I hope this part of the draft treaty stays in the final text, and states and other stakeholders understand its symbolic importance. Criminalizing the involvement of corporate actors in international crimes is not a mere technical issue, it’s a necessity. Corporate interests of the Global North are central to many armed conflicts around the world, and this needs addressing. As Jelena Aparac recently argued in relation to the ICC and its controversial focus on Africa, “by excluding corporate liability, the Court implicitly assumes that violence is indigenous to the Third World and overlooks external factors that contribute to local conditions of violence. As a result, the Court, through international criminal law, places crimes as specific to third world countries and reproduces the neo-colonial narrative”. Obviously, the future business and human rights treaty is not going to fix the ICC, nor is it meant to do so. However, by acknowledging corporate involvement in international crimes, the 2019 draft treaty is a step in the right direction, even if we are only talking about domestic prosecutions.
(3) Better text, better chances of success?
In light of all this, I am convinced we are now working with a better text, which is both clearer and stronger. Moreover, strategic decisions were made, which should improve the treaty’s chances of success.
As mentioned already, the text mirrors the language of the UNGPs. What is more, the preamble mentions them explicitly and notes “the role” they “have played”. This wasn’t in the Zero Draft, and is important given concerns about the UNGPs and the treaty process being on two parallel tracks. Instead, the treaty now links itself to the UNGPs, which is likely to please States of the Global North who generally support them. At the same time, the preamble suggests to “take into account all the work undertaken by the Commission on Human Rights” (and the Human Rights Council) on business and human rights. I guess this is meant to be a non-confrontational way of saying that the 2003 Draft Norms designed at the time when the Commission on Human Rights was still in existence, might be relevant after all. This is remarkable when one considers that Professor Ruggie’s self-confessed “Normicide” took place almost 15 years ago. I confess I don’t understand why this provision is there. While mentioning the UNGPs is certainly a nice gesture towards those States who don’t particularly like the idea of the treaty, reviving the Norms really isn’t.
But the clearest move towards EU States is to be found in revised Article 3 on Scope. The new text mentions that the treaty “shall apply, except as stated otherwise, to all business activities including particularly but not limited to those of a transnational character.” By contrast, the 2018 Zero Draft was to apply to human rights violations in the context of any business activities of a transnational character, and only those. The new scope is aligned with the position the EU delegation had defended in the negotiation. This clearly improves the treaty’s chances of success and is a welcome development.
On the whole, the 2019 draft treaty should be easier to sell to reluctant states than the 2018 Zero Draft. Let’s see what happens in October, at the fifth session of the Open-Ended Intergovernmental Working Group.
Best Human Rights Books of all Time – Business and Human Rights
My book, “Business and Human Rights: History, Law and Policy – Bridging the Accountability Gap”, made it to BookAuthority’s Best Human Rights Books of All Time. It is ranked 5th. According to their website, “BookAuthority use a proprietary technology to identify and rate the best nonfiction books, using dozens of different signals, including public mentions, recommendations, ratings, sentiment, popularity and sales history.”
My book has done reasonably well in terms of sales for an academic book. For those not familiar with the world of academic publishing, this means it has sold several hundred copies. I have no idea how they collect information about the other criteria listed above.
You can buy the book directly from my publisher, Routledge.
Business and Human Rights Practitioners’ Network – Event on Vedanta v Lungowe in London
· Richard Hermer QC (Matrix Chambers)
· Moira Oliver (BT Group)
· Ekaterina Aristova (University of Cambridge)
· Peter Hood (Hogan Lovells)
The discussion will be followed by drinks and networking. If you would like to attend please email admin@bhrpn.org with Parent Company Liability Event in the title.
The event will start at 6pm with registration from 5.30pm at Hogan Lovells International LLP, Atlantic House, Holborn Viaduct, London EC1A 2FG.
Not quite ‘beating your head against a brick wall’: the Supreme Court’s decision in Vedanta v. Lungowe
It is a pleasure to welcome back Lucas Roorda as a guest poster on “Rights as Usual”. M. Roorda is a Ph.D. candidate at Utrecht University, in the Institute of International, Social and Economic Public Law. He specializes in extraterritorial jurisdiction over corporate human rights violations. This post is his.
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On 10 April 2019, the Supreme Court of the United Kingdom delivered its highly-anticipated decision in the case of Vedanta v. Lungowe (Lungowe v. Vedanta in the lower courts). The Supreme Court unanimously decided the case should proceed in English courts, dismissing the appellants’ arguments against English courts assuming jurisdiction. This marks an important next step in an ongoing series of cases, wherein foreign victims of human rights and environmental harms sue corporations and their foreign subsidiaries in the domestic courts of the companies’ European home States. Next to Lungowe, the series includes Okpabi v. Shell that I discussed previously on this blog, AAA v. Unilever and Akpan v. Shell, discussed here.
This post examines how the Supreme Court has provided some important clarifications on both the substantive and jurisdictional rules that govern these cases, thus making it somewhat easier for claimants to argue duties of care on parent companies. It also shows the Court’s emphasis on access to justice compared to the lower courts may be laudable in the abstract, but is unlikely to increase access to justice in practice.
Background
Lungowe concerns a lawsuit brought by over 1,800 Zambians who allege that toxic discharge from the Nchanga copper mine into nearby rivers has damaged their health and livelihood. They have brought their case against Kongola Copper Mines, Ltd (KCM) which is the owner and operator of the mine, and its UK-registered parent company Vedanta Resources Plc. The main thrust of the claim is that Vedanta had a large degree of control over KCM, and committed a common law tort of negligence against the claimants by failing to take precautions against the toxic runoff; KCM was argued to be a ‘necessary and proper party’ to that claim. The defendant companies disputed the claims, as well as the jurisdiction of English courts to deal with the case. They argued that the claimants had no arguable claim against parent company Vedanta to which KCM could be ‘anchored’. Even if there was such a claim, the case should be continued in Zambia as this was the more natural forum.
The High Court and the Court of Appeal sided with the claimants on the jurisdiction issue, as detailed more extensively here. Both courts found that the claimants had sufficiently argued their case that Vedanta may have committed a tort of negligence with regard to the claimants, pursuant to the degree of control it had exercised over its subsidiary KCM. According to both courts, that degree of control may be sufficient to satisfy the Chandler v. Cape criteria for proximity, necessary to incur a duty of care. The courts also agreed with the claimants that KCM should be joined with that claim through the ‘proper party’ gateway, in order to avoid the risk of irreconcilable judgments.
The Supreme Court’s decision
The Supreme Court was asked to deal with a number of questions relating to both the substantive legal basis for the claim, and jurisdiction. The case was argued extensively over two days, and subject to two interventions. The Supreme Court’s decision delivered by Lord Briggs focused primarily on the jurisdiction issue and the appropriateness of England as a forum. As a preliminary point, Lord Briggs commented unfavorably on the size of the parties’ submissions and the disproportionate engagement with the jurisdiction issue, which he argued should be dealt with in summary judgment (paras. 12-14).
On the question of whether the claimants had committed abuse of EU law by solely filing a claim against Vedanta to anchor jurisdiction against KCM, Lord Briggs answered negatively (para. 31 ff). He did so on the assumption that there was a real triable issue against Vedanta and a genuine desire of the claimants to have a judgment issued against Vedanta. This was a factual finding of the lower courts which should not be overturned by the Supreme Court, even if it was clear that the claim against Vedanta was also filed to get KCM within the jurisdiction of English courts (paras. 26-27).
The case against Vedanta could however still be summarily dismissed if the Supreme Court had found that there was no ‘real issue to be tried’. This boiled down to the question of whether the claimants had convincingly argued that Vedanta was under a duty of care. On this issue, Lord Briggs also sided with the lower courts, with two points standing out. First, he confirmed that parent company liability for acts of subsidiaries is not a new category of negligence liability, as the claimants had argued (para. 49); second, a duty of care can exist when a parent company intervened with its subsidiary’s operations as in Chandler, but that may also be the case if it proclaims itself to exercise supervision without actually doing so (para. 53).
These findings implied that the lower court’s analysis for finding whether the claimants had demonstrated an arguable case was done on the correct legal basis. That the claimants indeed had such an arguable case was again a finding of fact by the lower courts which the Supreme Court did not wish to revisit; it restricted itself to concluding that the lower courts had applied the correct principles and the right level of scrutiny (paras. 60-62).
The main issue of the case, however, was the jurisdiction of English courts over foreign subsidiary KCM, through the ‘necessary and proper party’ gateway. The main issue here was whether England was the ‘proper place to bring the claim’, as per the third part of the necessary and proper party test (para. 66). This requires Courts to balance the factors that connect the case with England – i.e., the case against the parent company over which English courts have mandatory jurisdiction – against the factors that connect the case to Zambia – i.e., the domicile of the claimants, the defendants and the locality of the harmful acts.
In the lower courts, that balance was tipped in favor of England as the place to bring both claims, to prevent parallel proceedings with the risk of irreconcilable judgments, especially considering that there was no room to stay the entire case in favor of Zambia (paras. 71-72). Lord Briggs was however not persuaded that this risk was a decisive factor in deciding that England was the appropriate forum, in particular as Vedanta had agreed to submit to the jurisdiction of Zambian courts (para. 75). Thus, the claimants could avoid irreconcilable judgments by bringing the entire case there, where it was evidently more strongly connected; according to Lord Briggs, the risk of parallel proceedings and conflicting judgments thus existed mostly as a consequence of the claimants’ choices, and this could not be the deciding factor in favor of English jurisdiction (para. 87). This meant that in principle, England was not the proper place to try the case against KCM.
However, Lord Briggs also noted that such considerations could be set aside if it was found that there is a real risk that no substantial justice can be done in the foreign forum (para. 88). In this case, he found that lower courts had identified the main risk in bringing the case in Zambia as the unavailability of legal aid, and of proper legal representation (paras. 90-92). Given the ‘unavoidable complexity’ of the case, Lord Briggs asserted that the lower courts were entitled to conclude that these factors would stand in the way of the claimants obtaining substantial justice in Zambia (para. 100). The Court thus concluded that in spite of the stronger connections with Zambia, the risk of no substantial justice meant that the case should continue in England (para. 102).
Discussion
There is a lot to unpack in this decision, and here I will focus on the issues of particular relevance to establishing jurisdiction. The first point, however, is of substantive law: duty of care litigation based on Chandler is still very much alive in English courts. In para. 53 the Court even appears to extend the situations where a parent company may be under a duty of care. Whereas under Chandler claimants need to demonstrate that parent companies actually exercised control over their subsidiaries, Lord Briggs mentions that duties of care can also exist when parent companies claim they have control, but do not exercise it in practice. This is also easier to argue in a preliminary stage of the proceedings, before disclosure proceedings give claimants access to internal company documents. Such statements of control could for example be derived from company statements to shareholders.
This is important, as the two other main duty of care cases (Okpabi v. Shell and AAA v. Unilever) failed on the basis that claimants could not convincingly make a case that the respective parent companies exercised sufficient control, and that foreign subsidiaries relied on that control. Similarly, had the Supreme Court restricted duty of care litigation, this would also have impacted the Dutch case of Akpan v. Shell, where common law forms part of the applicable law and the claimants’ arguments are also based on Chandler. Had it become harder to argue the existence of a duty of care, it would also have become correspondingly harder to argue cases against foreign subsidiaries. After all, the feasibility of these cases taking place in home State domestic courts still depends on an arguable claim against the parent under the ‘necessary and proper party’ doctrine.
On that aspect of the case, however, the decision of the Supreme Court is a double-edged sword. Of course, it is positive news for the claimants and their representatives that the case is allowed to continue and that they still have the prospect of getting access to remedy. But the Court also erects a new hurdle in the ‘necessary and proper party’ test that may affect future cases. Previously, courts had generally assumed that avoiding conflicting judgments was a strong, if not decisive factor in deciding that England was the appropriate forum for a joint claim against parent and subsidiary companies, but no more. Instead, claimants will have to argue either that there are more factors that link the case to the home state or that a fair trial is not possible in the more natural forum. As also mentioned by the Court, this makes the test akin to how forum non conveniens was applied in early English foreign direct liability cases such as Connelly v. RTZ and Lubbe v. Cape. Not coincidentally, the relevant factors for deciding whether substantial justice can take place in the alternate forum are comparable: financial hurdles and inadequate legal representation.
From an academic perspective, more emphasis on access to justice as a relevant issue in these cases is positive. At the end of the day, inadequate access to justice in host states is what drives cases like Lungowe to European domestic courts. It makes sense that this gets emphasized in jurisdictional decisions – even if the Court stops short of actually mentioning access to justice as a human right, or the UN Guiding Principles. In practice, claimants may face an uphill battle in convincing courts that there is no substantial justice in the alternate forum. Moreover, the access to justice question is still only the final part of a long and elaborate test to determine whether cases can proceed in English courts, which still predominantly hinges on the existence of an arguable case against the parent company. In that respect, the Court may complain of disproportionate litigation on jurisdiction, but it has itself made this litigation only more complex.
Instead of doing this balancing act at the very end of what is still a meaty jurisdiction test, English courts could in future cases go one of two ways. Either a more marginal test for assessing a ‘good, arguable case’ of parental negligence could be adopted, such as argued by Sales LJ in his dissent in Okpabi; that case has also been appealed to the Supreme Court, which might choose to engage more extensively with this test. Or, access to justice could be put front and center, and jurisdiction should be asserted on the basis of forum necessitatis.
Conclusion
It remains to be seen how Lungowe will proceed from now. From the perspective of an academic observer, it would be good to finally see another case litigated on the merits. The case may also get settled before it moves on to the merits. Even if that happens, the Supreme Court decision in Lungowe will remain important for future foreign direct liability cases.
Companies Operating in a Conflict or Post-Conflict Country: Exercise Leverage or Stand Ready for Litigation
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A few weeks after Qadhafi was killed, I was one of a handful of passengers, and the only woman, on a flight into Tripoli. I had been asked by Nobel Peace Prize nominee PILPG to coordinate strategies with civil society for how human rights could be placed front and centre of the planned constitutional dialogue process. I was solemnly greeted by members of a militia group at the bottom of the airstair. This militia group proceeded to escort me to a checkpoint where I was handed over to another militia group, who then handed me over to a third militia group just as I entered my hotel. My belongings were subject to an in-depth search by several men with guns. As I was waiting, one of the men with a rifle slung over his back informed me that he was a sniper and that he wanted my full name so that we could become Facebook friends. Sitting in the comfort of my office in New York, would I have thought that being friends with a Libyan sniper was a good idea? Standing there, in this bullet-scarred city, with no functioning government in sight and this sniper representing the last obstacle between me and my hotel room, my Facebook etiquette quickly changed. I was Facebook friends with a sniper for over a year before the images posted were too gruesome and I bore the courage to unfriend this man, hoping I would never bump into him in the hotel lobby again.
Decisions that are obviously not a good idea when sitting in the safety of our offices may not seem like such a bad idea when surrounded by guns in a state vacuum. For businesses, just as for people, it is incredibly difficult to operate responsibly in a conflict or post-conflict setting. But make no mistake, this difficulty has never served as an extenuating factor for companies that have faced challenges to their business conduct: quite the contrary, companies who continue to operate in these environments are held to a higher standard, by virtue of how their choices and actions can further harm already-suffering civilians.
Companies’ experiences highlight that decisions and actions that take place in these difficult contexts will most likely be investigated, and prosecuted – even years later. Let’s take the example of Colombia where companies were caught for years between left-wing guerrillas and right-wing paramilitary groups.
- American banana company Chiquita admitted to paying close to $2 million protection money to a paramilitary group to enable it to continue operating its banana farms. The company has since been subject to numerous civil law suits, has paid a $25 million fine to the US Government, and – in a recent twist – 13 of its executives are now being prosecuted by the Colombian Prosecutor General’s Office (as discussed in a post on this blog).
- British oil and gas company BP chose to settle with farmers requesting £15 million compensation for the harassment and intimidation they suffered at the hands of the paramilitaries guarding BP’s Ocensa oil pipeline. More recently, BP has been sued by a Colombian trade union leader for failing to halt his kidnapping and torture by paramilitaries.
- American coal company Drummond has also undergone numerous lawsuits, with claims that the company hired Colombian paramilitaries to kill and torture trade union leaders and paid a paramilitary group to protect its mine operations. In another recent twist, the Colombian Prosecutor General’s Office announced it was reopening an investigation into Drummond’s activities during the conflict and has called upon company officials to testify.
In more recent conflicts, the judicial fall out for companies has started to unravel more rapidly. In the ongoing civil war of Syria, triggered by 2011 protests against Syrian leader Bashar al‐Assad, French cement company Lafarge decided to continue operating while the majority of its peers opted to withdraw their operations. Lafarge has now been placed under a formal criminal investigation in France for providing over $5 million to Syrian terrorist groups (including the Islamic State) and aiding and abetting crimes against humanity (as discussed in a post on this blog). It is also facing a lawsuit by 11 former employees for placing their lives in danger. French software company Qosmos is also under investigation in France for providing mass surveillance and interception capabilities to the Syrian regime which allegedly helped the regime track, torture, and execute its opponents. The French court has named Qosmos an ‘assisted witness’, which means that it could formally charge the company for the crime of complicity in acts of torture. The company has responded that it withdrew from Syria before the capabilities were usable, because of concerns of supporting the regime.
While there will never be an easy answer for companies operating in these challenging contexts, there is increasingly a spectrum of possible actions in between the ‘should I stay or should I go.’ All of these entail the careful consideration of a range of questions, as well as consideration of how leverage can best be built with relevant stakeholders. How could continuing to operate in this context harm people (e.g., local workers, expats, specific groups in the workforce, surrounding communities)? How could my decision to leave lead to harming people? How could my company’s presence and operations further enable, contribute to or entrench the conflict? If I choose to stay, what role might I feasibly play to help the country move from conflict to post-conflict and from post-conflict to peace, security and stability? Who else should I be seeking to combine forces with (e.g., other companies, international organisations, embassies, local/ international civil society groups)? Do I have a role to play in pushing for accountability and the creation of transitional justice mechanisms? Do I have a role to play in supporting the socio-economic reintegration of former combatants through employment?
Companies are not expected to take on the role of the United Nations, neither are they expected to become negotiators of peace agreements, campaign organisations or experts in disarmament, demobilization and reintegration. But they are expected to ask themselves tough questions to continually assess whether their efforts are effective in this challenging environment and how they can create new and innovative ways to reduce harm to people through their operations.
While the vast majority of the sensitive conversations companies are having – internally and with other actors – in conflict and post-conflict settings are not in the public domain, due to understandable sensitivities, some examples from challenging environments are.
- Consider the example of Kenya’s largest mobile operator Safaricom. Seeking to avoid the use of its network for sending mass text messages (a major contributing factor in the 2007-2008 post-election violence), Safaricom took an early stand in the run-up to the 2013 election to issue guidance limiting how messages with political content could be sent. Recognising the limitations of unilateral guidance, the company further worked with the regulatory body for the Kenyan communications sector to ensure that similar guidelines were issued on a country-wide basis for all mobile network operators.
- Apparel companies H&M and Tchibo decided not to source local cotton from the Omo Valley region in Ethiopia when local communities alleged discrimination and impacts on their livelihoods resulting from land displacement and inadequate compensation on the part of the government. In parallel to implementing this ban, these companies also engaged with relevant stakeholders, including the government, on what community consultation would look like moving forward to avoid future conflict in cotton-producing areas.
- The Swiss football governing body FIFA took a stand when the Chechnyan authorities jailed one of Russia’s most prominent human rights defender, Oyub Titiev. Although the jailing of Titiev may not have been linked to the Egyptian football team’s decision to train in Chechnya in the run up to the 2018 World Cup, FIFA decided to have a number of conversations on this point, which included the Secretary General taking a strong public position that all human rights defenders should be able perform their work freely without fear of reprisals (FIFA’s work in the area of human rights is discussed in a post on this blog).
Where companies are being called out for decisions taken in times of crisis, some have decided to take a forward-looking approach. Dutch brewing company Heineken had an OECD complaint lodged against it for firing workers at the height of the civil war in the Democratic Republic of Congo. The company resolved to sit down and listen to the complaints voiced by the workers, including their deep disappointment that the last bastion of stability that they felt they had (their employer) had let them down. This resulted in productive negotiations and a successful OECD outcome, both for the complainants and the company.
We see that the environments companies operate in are subject to rapid change. A country that may be viewed as post-conflict, may remain very fragile and/or rapidly back track into full blown conflict; a country that is perceived as stable may suddenly be faced with conflict in one region. Companies are expected to be prepared for these possibilities. They are expected to consider their impact and build their leverage with stakeholders before it is too late: as the burgeoning of civil and criminal law suits against companies in these contexts demonstrate, it is the right thing to do for both people and the business.
My name is Nadia Bernaz and I am Associate Professor of Law and Governance at Wageningen University in the Netherlands.
My main area of research is business and human rights. I look at how corporations and businesspeople can be held accountable for their human rights impact through international, domestic and transnational processes.