Transnational Corporations Liability for environmental Harms

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Contents:

“Transnational Corporations Liability on Environmental Harms”

  • Introduction
  • Norms controlling activities of TNC’s in UDHR and ICESCR
  • Why and how these TNC’s are responsible for environmental damages and harms.
  • Three catastrophic disasters in human history
  • International Guidelines controlling TNC’s activities
  • Are these Norms and guidelines are enough to hold these TNC’s liable
  • Need of international binding regulations
  • Recommendations
  • Concluding remarks

Transnational corporation liability for environmental harm

Before starting my presentation on present topic that is transnational corporation liability for environmental harm, I would like to say that this seminar presentation is only an approach paper presenting set of issues involved which in the course of direction take us to the steps of suggestions as far as the TNC’s liability for environmental harms are concerned. Or I can say that this is the first step of my research work.

To begin with let me first briefly explain to you, what TNC’s or MNC’s basically are?

Transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred to as an international enterprise.

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 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.”

Very large multinationals have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy and play an important role in international relations and globalization. It is beyond dispute that TNC’s are now the leading vehicles for economic globalization. According to UN Conference on Trade And Development (UNCTAD). In 2002, global sales of TNC’s reached $18 trillion for world exports.

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 non state 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.

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.

Some transnational corporations, however, do not respect minimum international human rights standards and can thus be implicated in abuses such as employing child labourers, 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 is no doubt that environmental consequences of TNC’s behaviour are multiple and substantial, and here I am going to discuss these environmental consequences of TNC’s.

To start with, the question came, why and how TNC’s are responsible for transboundary environmental harms and damages? An emerging doctrinal elaboration refers to States as primary holders of human rights obligations , as opposed to the traditional understanding of States as exclusive duty-holders—an understanding that is still supported by those who consider human rights from a strictly state-centric perspective. The new doctrine seems consistent with human rights instruments such as the Universal Declaration of Human Rights (UDHR)  and the International Covenant on Economic, Social and Cultural Rights (ICESCR)  which, even though embedded in the state-centered tradition and focused mainly on the duties of States, specifically refer to “any . . . group or person”  as having duties. In fact, no group or person has any right to engage in activities that would result in the violation of the rights recognized in these instruments. If the UDHR offers a starting point for the liability of transnational corporations (TNCs) under international human rights law, the ICESCR reaffirms this proposition, particularly when involving operations in States that ratified this treaty.

International law has also not been successful in controlling the environmental practices of transnational corporations (TNC). The efforts in the late 1970s and early 1980s to establish a draft Code of Conduct ultimately failed. In 1990 there was another attempt by G-77 and the United Nations Centre on Transnational Corporations (UNCTC) to revive these efforts, but this went nowhere because of opposition from the Organization for Economic Cooperation and Development (OECD) countries and the United States. In 1992, the UNCTC was closed and its activities integrated into the office of the United Nations Conference on Trade and Development (UNCTAD). In addition to these failed efforts internationally, industrialized countries have made little attempt to apply domestic restrictions to the environmental practices of their own corporations operating in other lands. Where there have been some major advances in this area has been with regard to the transportation of hazardous and radioactive materials. Publicity over scandals concerning disposal of toxic chemical wastes in Africa brought this problem to the United Nations’ agenda. Law occupied the forefront of all debates because the lack of international law enabled the evasion of strict national laws by moving the problem, together with the toxic waste, to developing countries that had no protective legislation. The crucial role of law has been described succinctly by the WHO’s Regional Office for Europe: “A comprehensive system for the disposal of hazardous waste will not develop unless its basic requirements are prescribed and enforced by law.” The General Assembly affirmed the importance of law by urging governments to “take the necessary legal and technical measures in order to halt and prevent” illegal international traffic in and dumping of toxic wastes, and recognized “the necessity of developing rules of international law, as early as practicable, on liability and compensation for damage resulting from the transboundary movement and disposal of hazardous wastes.”.

  1. However, when the international community joins together, with each country taking an active part in drafting a code of conduct, the document has a much greater chance of being a success. A healthy environment involves a multitude of private and government actors in many countries, therefore, the mechanism to properly implement the right must be created at the international level.
  2. Considering that prior to the Norms the United Nations had not developed any legal obligations, its actions show it finds binding law is unnecessary.

Four catastrophic disasters in Human History:

Factual settings of disasters:

  1. Unioncarbide, Bhopal(India)

It is true that Indian government to a larger extent is responsible for the Bhopal disaster but the liability of MNC’s incorporated in US also entail some responsibility.

There is no similar attempt to regulate the health, safety and environmental practices of these corporations by US government.  Thus, if the host country does not regulate these areas, U.S. multi corporations are essentially able to operate in a completely lawless manner. What this has lead to, in turn, are allegations that U.S. multinational corporations have engaged in a series of practices that would be illegal under United States law– from systematic environmental degradation to exposing foreign field workers to pesticides known to be harmful; from the use of production plants that emit levels of sulphur dioxide that are fifteen to twenty times above what is permissible under U.S. law to the brazen shipment of leaded paint and glue commonly abused by desperate young children to Central American countries.

Perhaps the most unsettling example of the nonfeasance of U.S. law involved the sale of a nuclear power reactor to the Philippines by the Westinghouse corporation. The plant was to be situated above an earthquake fault line, and below an active volcano. In addition to these logistical considerations, the technical design of the plant did not meet domestic (U.S.) standards. Despite these grave flaws, the Nuclear Regulatory Commission (NRC) voted to issue the plant’s license. The Board took the position that it did not have jurisdiction under domestic statutes to consider the health, safety and environmental impacts on the citizens of a recipient nation, or even to consider the effects of an exported reactor on U.S. interests and U.S. citizens abroad. The District of Columbia Circuit affirmed the NRC licensing decision, holding that the agency had properly approved the exported reactor without evaluating the health, safety, and environmental impacts.

It is ironic that American law bars the “corrupt practices” of U.S. multinational corporations doing business in other countries based on the idea that bribery is immoral, but it somehow refuses to address other actions of U.S. corporations that is every bit as immoral as bribery, if not more so. How does one explain this result? One answer might be that we are able to compartmentalize our morality, and that we are aided in this by the divisions that exist in our law. Another explanation, one that we will address in the next section, is that there is a decided purpose behind the anomalies created by the manner in which U.S. law has been applied extraterritorially, namely, to promote the national interests of the United States and its corporate entities.

Lessons from Bhopal and Seveso Accidents:

Bhopal and Seveso raised entirely different issues about how to effectively regulate, control, and mitigate the effects of an industrial disaster. In the case of Seveso, the subsidiary of a foreign parent company was willing to settle the case by paying damages. In the case of Bhopal, the attack initially focused on the foreign parent corporation to find fault with, and lay claim on, a TNC. This situation highlights the problems faced by developing countries that frequently import hazardous substances and technology for much needed developmental projects.

The Bhopal and Seveso incidents raised a number of issues that need further investigation: how to regulate and subject TNCs operating in foreign countries to a definite regulatory regime; how to establish and enforce international standards on the corporations involved in the export and import of hazardous substances and technology to prevent such accidents in developing countries; and what kind of dispute settlement mechanisms should be developed to find just compensation to redress the damage caused to human victims, state economies, and global ecology. Also, why not inject the sense of a fair social system  and environmental justice  into an international setting?

Perhaps what is required is an attempt to build an international regulatory regime that takes into account the political and economical realities of the contemporary world, including the interdependence of the global economy, the global implications of environmental hazards, the global reach of the activities of TNCs, and the existence of third world countries who need assisted development without the additional cost of environmental damage. The latter half of the twentieth century has seen the disregard of national boundaries with regard to technology and economics. Recent rapid integration of the European and South Asian economies strongly indicates that uniform values, standards, and mechanisms for the control and regulation of TNCs are needed in an increasingly borderless society to develop and sustain a relatively risk-free global community that addresses the need of both the developing and developed countries.

  1. Differences between the two accidents discussed earlier and the Chernobyl explosion are numerous: 1) Chernobyl involved a government-owned operation with no TNC or foreign ownership in question; 2) the plant was subject to the local laws of the former Soviet Union; 3) the former Soviet government ran the operation with no foreign corporate involvement; 4) the accident perfectly demonstrated the concept of the public international law of state responsibility  because the former Soviet Union as a state was responsible for both the ecological and financial damage incurred by injured countries; 5) interestingly, the question of damage compensation was raised by the European Parliament and not by individual countries in any court of law;  6) the transboundary effect of the accident was felt all over Europe;  and 7) the main damages from the accident came in the form of long-term radiation pollution, ecological damage, dislocation of economic activity and long term health problems.

5. Newmount Mining corporation,2005

Recently in Buyat Pantai, one of Indonesia’s most impoverished coastal communities where people live with only a single dirt road and without electricity or running water, something went wrong.  Villagers were afflicted by a variety of illnesses that had never been seen before in this area.  They began complaining of dizziness, breathing difficulties, tumours, skin rashes, and diseases.  Water and air quality tests, conducted to determine the source of the illnesses, revealed a dramatic increase in arsenic and mercury to levels never before seen in the region. What had changed in this tiny, isolated, and autonomous coastal village? The answer is the arrival of Newmont Mining Corporation (Newmont), a U.S.-based multi-billion dollar gold producer, and its gold mine near Buyat Bay.

  1. The company’s executives deny any wrongdoing and insist that everywhere Newmont does business, it adheres to U.S. environmental laws, which are often more stringent than those of developing countries.

Environmental concerns particular to Afghanistan and Iraq that must be addressed:

This land is your land & this land is my land–sure–but the world is run by those that never listen to music anyway.

  1. The presence of foreign nationals in the two States strains the already depleted resources of the environments  and highlights the lack of international environmental law applicable to military and peace keeping forces.

These catastrophes draw attention to larger issues arising in international law. Specifically, there is a lack of certainty regarding what law controls transnational corporations (TNCs), and what regulations are in place to safeguard the people and natural resources of countries hosting TNCs.  Each nation has its own set of laws to protect the environment and the health of its citizens. However, when a TNC exploits a host country’s natural resources and harms its land, developing countries often fail to enforce these laws because they fear the company will leave and take its jobs and dollars with it. Today, developing countries are asked to trade health and safety for the progress and prosperity promised by the economic ventures of TNCs. Presently, without any binding international law to protect host countries, individual nations find themselves in a difficult situation.

International Guidelines controlling Transnational Corporations Activities: an overview:

  1. These various initiatives, however, failed to bind all businesses to follow minimum human rights standards.

There are many declarations, codes, rules, guidelines, principles, resolutions, and other instruments but the main guidelines for purposes of this Article can be found in the Stockholm Declaration, 1972, the Code of Conduct for Transnational Corporations, 1974, Organisation For Economic cooperation And Development adopted on 21 June 1976 the guidelines for Multinational enterprises, the ILO Declaration1977 and the Rio Summit and its declarations 1992, and more recently in 2003, UN norms On The Responsibilities Of TNC’s and other Bussiness Enterprises with Regard to human Rights, 2003. A careful examination of these recommendations and principles will show that they contradict each other and that there has been little progress, if any, between Stockholm to UN norms 2003. The tension between the North and South continues. The only progress is the recognition of new problem areas, and, once again, the nation states have agreed to disagree on the methods and means of resolving the new quagmire.

1) Stockholm Declaration,1972

A glance at the language of the recommendations suggests that the essence of the problem is a fight between the North and the South. Each party is seeking to maintain its freedom from foreign interference while agreeing to protect the environment in principle. Recommendation 103 addresses the North-South conflict and satisfies both by failing to invoke environmental concerns as a pretext for discriminatory trade policies and by failing to develop policies that might lead to restrictive practices in the transfer of technology to developing countries. At the same time, those seeking equality further emphasize that the same environmental concerns should not be permitted to deny or reduce access to developed countries since equality is necessary for the developing economies to sell their products in developed countries. The recommendation further emphasizes that the burden of environmental policies, such as expansive pollution control mechanisms and stricter process-safety standards, should not be transferred along with technology.  This means that ecologically damaging industries should not be relocated to developing countries.  This last scenario appears to be self-contradictory because the objective of equality with developed economies requires that developing countries strive to achieve the same standards as are observed in developed countries. How can the objective of equality be realized when, while seeking the most advanced of technologies, the very features of advancement are denied as part of a technology transfer package? This illogical approach has its roots in a bureaucratic mentality that thrives on minor technical successes rather than seeking practical solutions. The irony is that a guideline that seems to have emerged from an expensive diplomatic exercise on an issue of global significance, in the end, provides everything except a solution. The question of seeking access to markets amounts to asking for the acceptance of inferior goods. The very idea of such a position suggests that the inferior should be accepted as an equal. Inferior and superior can never be equal; the only way to seek and achieve equality is to compete and ask for fair competition. Equality does not follow from charity. If third world countries seek equality, then they must seek partnership on equal footing rather than technical victories at the negotiating table.
This is not to suggest that I support the policies of TNCs. There is enough evidence in the historical literature that multinationals thrive on the idea of maximization of wealth at minimal cost. The exploitative tactics of multinationals are indeed well documented. Multinationals often adopt strategies and means devoid of human values because human input is measured in economic terms rather than by moral and ethical standards.

2) Code of Conduct for TNC’s and ILO Declaration:

The proposed Code of Conduct for Transnational Corporations as proposed by the U.N. General Assembly states the following objectives: 1) the prevention of TNCs’ interference in the internal affairs of the host countries and collaboration with racist regimes; 2) the prohibition of restrictive business practices by TNCs; 3) the transfer of technology and management skills by TNCs to developing countries on equitable and favourable terms; 4) the regulation of repatriation of profits by the TNCs; and 5) the adoption of provisions to promote reinvestment of TNCs’ profits in developing countries. 
The International Labour Organization (ILO) Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy recommends that TNCs should give priority to local personnel in employment and training, use technologies which generate employment, provide workers with information about the firm to allow meaningful negotiations, and work with governments to promote good labour and employment practices.

  1. While the principle helps create more jobs, it certainly fails to introduce local people to better work ethics and professionalism, both of which are needed to compete in the global market. Again, the effect is self-denial of a learning process, which is necessary for achieving technological progress and equality. By asking for technology that generates the maximum number of jobs, the developing countries give up efficient methods of production. A technology that is environmentally responsive is more likely to be one that creates fewer jobs, but is much more efficient in the quality of production.

3) The Earth Summit, 1992:

The Earth Summit was preceded by two meetings: the Tokyo Declaration on Financing Global Environment and Development and the Kuala Lumpur Declaration. At the Tokyo meeting, developed countries emphasized the “need to re-evaluate the thinking which underlies our present society.” They further emphasized that new principles of environmental ethics needed to be established. All that developing countries would have liked to have heard was included in this declaration except for the specifics concerning the transfer of technology. There were commitments for financial assistance and recognition of the need to pass on environmentally safe and sound technology. However, at the Kuala Lumpur meeting, developing countries repeated their positions from the 1972 Stockholm Declaration. They stated:

We call on the developed countries to ensure without further delay a balanced, meaningful, and satisfactory conclusion of the Uruguay Round of Multilateral Trade Negotiations. We further emphasize that developed countries should not attempt to impose unilateral restrictions on international trade, in particular, on natural resource-based and other related products on environmental grounds.The Summit dealt with the issues of transferring environmentally sound technology, cooperation, and capacity building under Chapter 34 of Agenda 21.  Much of what was said in the two prior declarations was agreed to and constituted the substance of Chapter 34. However, one of the thorniest issues that remained unresolved was the expression “transfer of technology. It is clear that while developing countries are anxious to acquire the state-of-the-art, environmentally safe and sound technology, along with everything that accompanies it, they fail to recognize that there is no state-of-the-art technology that is designed for and compatible with nationally determined socio-economic and cultural priorities.  The idea is to keep cleaner areas less polluted. There is only one way to development, and that is to stop converting the technologies to suit developing countries. Developing countries have to understand that such conditions encourage TNCs to move outdated plants and technologies to the Third World. On the contrary, if the developing countries insisted on acquiring the same technology that exists in developed countries, they would then at least be assured of less pollution and improvement of their workforce to the highest levels that are compatible with developed nations.  Even the Rio Summit is a clear example of the duplicity of bureaucratic bungling where persons dissatisfied with UNEP tried to create a parallel institution in the form of UNCED. Of what value are 800 pages of agenda items, full of repetitive and self-contradicting provisions, if in the end they will transfer a watered-down version of state-of-the-art technology? It will be a waste of public funds to argue over the same principles ten years after the grand event at Rio. Instead, the aspirations of the poor and the rich need to be considered, and our priorities need to be examined in realistic terms. An international framework similar to domestic corporate law is needed to cover every aspect of global trading.

4) UN’s Norms on The Responsibilities Of TNC’s And Other Business Enterprises With Regard to Human Rights,2003:

The Norms as adopted are not a voluntary initiative of corporate social responsibility. The many implementation provisions show that they amount to more than aspiration statements of desired conduct. Although not voluntary, the Norms are not a treaty, either. Treaties constitute the primary sources of international human rights law.

TNCs have historically self-regulated their international operations regarding human rights and the                                                            environment. Today, there is little international law that clearly states the human right to a healthy environment. There is even less international law regulating corporations.  Some of the most overlooked and powerful non-governmental actors in the human rights arena are TNCs and other business enterprises.  There is no applicable “hard law” and little “soft law” pertaining to transnational corporate accountability. The most notable “soft law” is the single principle that calls for the promotion of corporate responsibility in the Johannesburg Summit.  Nearly all “non-binding” aspiring declarations are “soft law.”  “Hard law” is what lawyers use at a domestic level.  Skeptics of “soft law” often call it “moralizing without consequences.” Efforts to develop criminal law to punish international war crimes have led to an increased awareness of the need to ensure individual responsibility for violating human rights in other countries.  This awareness has even led to the acknowledgment of the right to a sustainable global environment. An increasing number of human rights activists have requested that the United Nations establish uniform legal obligations for TNCs regarding human rights. Until the U.N. Norms were adopted, the activists’ efforts were unsuccessful. An initiative from Sub-Commission Resolution 1997/11 formed a Working Group on Working Methods and Activities of Transnational Corporations and requested a working document on human rights and TNCs.  The document included both human rights obligations and environmental requirements for TNCs.  With some minor changes, on August 13, 2003, the Sub-Commission approved the Norms on the Responsibilities of Transnational Corporations and Other Business

B. Obligations under the Norms

Some say the Norms represent the opinio juris of the world community, as “soft law” often does. The Norms address the increasing international anxiety about TNCs’ indifference towards sustainable development.  The Norms assert both the primary responsibility of states and the obligation of TNCs to “promote, secure the fulfilment of, respect, ensure respect of and protect human rights.”  This statement is implicit in all the requirements set forth in the Norms.  Further, the commentary explains that the document applies to all TNCs and other business enterprises and their activities in either the home or host country.

  1. This requirement addresses the previous dilemma of which standard should be followed that of the home country, host country, or international standards.

C. Implementation of the Norms:

  1. The Norms take a stance in the middle between strictly voluntary programs like the Global Compact and “hard law” desired by human rights organizations such as Amnesty International.

The direct obligations consist of internal mechanisms meant to develop a corporate culture of respect for the rights of citizens in host countries. The Norms also exhibit external means by proposing independent and transparent periodic monitoring and verification by the United Nations and other international and national mechanisms.  Sub-Commission Resolution 2003/16 called for NGOs and others to adopt a method of reporting corporations’ failure to comply with the standards established in the Norms.  Principle 18 asserts TNCs must issue prompt and adequate damages to persons and communities adversely affected by failure to comply with responsibilities.

  1. Nevertheless, there is no reason the Norms cannot be made more definite and “more binding in the future.”

D. Effect of the Norms

  1. Another major difference between the Norms and previous efforts is its terminology. When discussing compliance, the Norms substitute standard terms like “should” with “shall.”  Therefore, the Norms are not merely a restatement of existing obligations, but rather an effort to fill the voids of previous agreements and mandate certain aspects of international corporate responsibility.
  2. Regardless, the spirit of “soft law” is that while it is not legally binding, it is still significant.
  3. Regional human rights commissions and courts can make use of the Norms and cite them as persuasive authority in determining states’ obligations.
  4. Often “soft law” is the first step to becoming customary international binding law. It is apparent that an extensive part of “soft law,” which makes a substantial impression, often defines what eventually becomes “hard law.”
  5. In light of the case against Newmont, they seem to be correct. “Soft law,” like the Norms, is just not enough to stop corporations from the grave abuse that occurs globally.

Are these present system of Norms sufficient to hold these TNC’s responsible for thier environmental accountability:

Using the Norms in Their Current State:

Whatever the inadequacies may be in the current Norms, countries can still make use of the Norms as persuasive authority when filing suit. Courts and regional human rights commissions can also cite to the Norms.  Although the Norms may not be concrete, countries can reference them just as they are until more binding authority exists. Though binding international law is needed, the Norms can have a considerable effect in their current state. States have been found to view “soft law” as having at least some political significance. Some states even consider it necessary to abide by such obligations, just as if “soft law” were a binding legal requirement.  Furthermore, in the absence of precise legal standards in international cases, there is an increasing trend for national courts to apply international “soft law,” provided it has sufficient state support.

Regional courts can cite to the Norms when determining the requirements of states and encouraging them to scrutinize corporations’ conduct within their jurisdiction.  Often “soft law” is considered too vague to provide any authority when applying these rules to disputes, however, this is not the case with the Norms. They can be cited as persuasive legal authority when a TNC violates the environmental rights of indigenous people in developing countries.

The Norms deal directly with indigenous people and their environment, which could help establish responsibility for TNCs. Principle 12 specifically gives the right to adequate food and drinking water, something citizens of Buyat Pantai no longer have because their fish and drinking water have been contaminated. Principle 12 further asserts that TNCs shall refrain from activities that “obstruct or impede the realization of those rights.” In its current suit against Newmont, Indonesia could use Principle 12 as support when it asserts Newmont was aware of the damage it was causing.

The Norms also compel TNCs to abide by international principles with regard to the environment and human rights and conduct their activities in a way that contributes to sustainable development.  TNCs must conform to national laws and regulations relating to preserving the environment of the states in which they operate.

Two recent decisions [1] of the European Court of Human Rights have held states liable for failing to abide by international regulations.  They also charged states for failing to follow through with inspections, which can often avert corporate misbehaviour.  Both cases involved corporations that polluted the environment, a violation of family and private life under the European Convention on Human Rights.  The courts can refer to the Norms in deciding corporate accountability.  Furthermore, the African Commission on Human and Peoples’ Rights could have cited to the Norms in holding the Nigerian government[2] liable for its involvement with regional oil companies.  The court held the government responsible for “its involvement in, and failure to limit, the activities of oil companies that were violating . . . environmental rights of the Ogoni residents.”

Why there is need for binding international regulations?

Now, at this juncture, one question arises, are these norms, rules, regulations and administrative action is sufficient to hold these TNC’s responsible for thier environmental harms and damages?

Major Drawbacks:

  1. Furthermore, although international standards are becoming more common, most are still “soft law” and developing countries’ standards are less stringent than those regulating industrialized countries.

Companies such as Newmont seem to dismiss even binding national law. Newmont has a record of violating the U.S. Environmental Protection Agency’s standards in its local operations and apparently disregards any sort of voluntary obligations.  The international community should not assume Newmont will quietly acquiesce to “soft law” like the Norms.

This problem is one significant reason why an international set of binding regulations is absolutely necessary. Governments confronting economic power and pressure of multibillion-dollar companies can be assisted by the Norms in identifying and applying the minimum international standards for corporate contact on their land. The major problem with these norms and administrative regulations are that these norms are a step in the right direction, but they are not binding. The Norms do not have adequate monitoring and verifying methods, however, they could easily be, and need to be, strengthened.

Furthermore, there is still no mandatory enforcement other than what states choose. There are multiple mechanisms available to aid in enforcement. Technology such as satellite surveillance can spot illegal activity, which would help countries stop illegal water dumping.  A study of Brazil, Mexico, Indonesia, and the Philippines found that countries need more stringent methods to detect, arrest, prosecute, fine, and convict perpetrators.  The Norms could fill this void by creating stricter monitoring and more severe penalties. In order to protect developing nations from being exploited, a set of international regulations is crucial.

The Norms give state governments a stronger foundation on which to stand when demanding businesses stop harming the environment. However, the Norms cannot protect indigenous people in developing countries when they seldom see their day in court. Many potential plaintiffs never have an opportunity to present their case due to lack of resources–primarily, the finances it takes to go up against a TNC. With economic pressure and threats by TNCs, many plaintiffs never get to present their claims. TNCs are powerful and can coerce citizens to drop any claims against them. The executives at TNCs also have the ability to easily persuade people because they appear to be educated, successful individuals. For the Norms to be most effective, it must be presumed that individual TNCs will adopt the Norms and cases will actually be brought to enforce them. To make such presumptions is not very realistic; therefore, binding law that protects people and enables cases to be pursued is essential.

If every nation is forced to abide by the same laws, investors will not be able to pick and choose a country to invest in based on whether or not that country prosecutes companies who destroy the environment. TNCs would not be able to evaluate which country would allow for the largest profit based on its weak environmental standards, lack of prosecution for polluting the environment, or harm to the health of its people. Countries would no longer be forced into trading health for economic development. Furthermore, it is not reasonable to require non-governmental organizations to file suit. Multibillion-dollar companies have an unfair advantage over non-profit organizations. A uniform set of binding principles is necessary to level the playing field.

Once a set of binding law is available, countries will be alleviated of the pressure to determine whether or not they should prosecute. Such laws would place the responsibility and enforcement in the hands of the international community. Developing countries searching for employment opportunities, development, and better lives for their citizens would no longer be forced to choose jobs and economic development over health and the environment.

Recommendations:

The hazardous activity of these TNC’s poses major threat to the world at large. If certain recommended steps have not been taken in the near future, then the day will come that our whole fabric of environmental set up stand up rooted. If we were to seek solutions based on a few isolated incidents, we would create narrowly conceived remedies. The factors that cause distrust need to be recognized. They are: 1) the domestic laws, practices, and perceptions of the bureaucratic and political elite relating to hazardous activity; 2) international law, codes of conduct, declarations, and the psychological perceptions of the diplomatic elite regarding human welfare, equality, and freedom; 3) the long history of the economic exploitation of developing countries, the history of reluctance to adopt new methods to deal with emerging problems, and the recent escalation of the global activities of TNCs that has made the global economy completely interdependent; and 4) the recent awareness about the ineffectiveness of the fragmented nature of environmental laws that are unlikely to provide protection from hazardous activity, which has created an atmosphere of mutual global distrust. These problems must be addressed to create a trusting environment conducive to result-oriented negotiations. To create such an environment, a global institution based on democratic principles and combining both competence and popular representation must be structured.

  • GLOBALIZATION OF ENVIRONMENTAL RESPONSIBILITY IN

TRANSNATIONAL BUSINESS ACTIVITY

We need a comprehensive global regulatory regime covering all aspects of transnational corporate activity that not only endorses the practice of equality in principle, but voluntarily follows it in practice. First, the plans need to be designed so that international business activities are compatible with the aspirations of the people of the host countries, as well as the objectives of multinationals. Second, these activities should be carried through without severely impinging the legitimate expectations of any party. Third, the execution of these plans should lead to the achievement of the social ends of economic development without sacrificing the ecological sanctity of our planet in ways that are efficient and consistent with global social justice. Fourth, the scheme of international social cooperation must be stable. Fifth, these rules must be regularly complied with and willingly acted upon. If and when infractions occur, the apex organization should act as a stabilizing force to prevent further violations and to restore the arrangement of safe and ecologically sound business practices.
The following objectives in a new transnational legal regime for multinational corporate activity must be pursued. First, the terms and conditions of such activity must promote the cause of global economic and social justice. Second, there must be global standards of process safety for transnational hazardous and nonhazardous business activity. Third, the activity must satisfy the highest standards of environmental protection. Fourth, the activity must observe the highest standards of human rights. Fifth, dilution of technology to a lesser level while operating in developing countries should be banned, even if the importing nation so desires. Sixth, restrictions against foreign capital investment in developing economies should be set, regulated, and reviewed by an impartial committee consisting of the representatives from both developed and developing countries, but excluding the parties in question so that the solutions agreed upon are free from the psychological biases of interested parties. Last, an international dispute resolution mechanism should be established where preference is accorded to arbitration before appealing the decision to a court of binding jurisdiction.
A comprehensive global approach towards liability prevention can go a long way in establishing healthy trade practices. By establishing such principles, not only will the possibility of environmental disasters be reduced, but also liability for observing different standards in different locations will be effectively avoided. Such a scheme will have to go beyond primary environmental concerns because factors such as recycling, health standards, and employees’ rights to know about the hazards associated with particular activities are increasingly being incorporated into national and international standards. However, so long as these standards remain fragmented and scattered, their effectiveness will remain spotty and questionable. The only answer to the quandary lies in the globalization of the issues, concerns, and objectives that fall within the sphere of transnational business activity.

To attain these objectives, we need to structure a treaty that essentially establishes an International Company Law. We can profit by the experience of the European Community. However, we must not fall into the trap that the European Community seems to have fallen into–issuing too many directives and causing an utterly confused state of environmental standards. We need a treaty that provides for a new international organization, similar to the International Civil Aviation Organization, the International Maritime Organisation, or the International Postal Union. The new organization must not only protect the interests of developing countries, but also prevent the bureaucratic mentality from lowering the human rights standards or the pollution standards and risk perceptions simply because the lives of the citizens of developing countries appear to be less significant than their so-called tactical victories in the exercise of liberty. A human is a human and, therefore, must be treated with dignity by both the bureaucratic elite of the developing countries and the TNCs. All this can be achieved by bringing the functions of several United Nations agencies that relate to the activities of TNC’s under one organization. The U.N. Commission on Transnational Corporations can serve as the starting point. Some functions of the U.N. Conference on Trade and Development, especially those relating to the new international economic order, the Code of Conduct for Transnational Corporations, and the ILO standards, need to be brought together and dealt with in a new organization. Such a treaty should create a Board for Multinational Business Activity with both judicial and administrative functions.  All corporations that are involved in transnational business activity must be required to register as TNCs with the Board. The Board, in addition to registering such corporations, should make sure that the technology being transferred is state-of-the-art, safe, and environmentally responsive. There should be one uniform standard for risk perceptions, process safety, environmental health, recycling, packaging, and products liability.  The Board should maintain records of the levels of scientific advancement. Further, all corporations that operate outside the country of their incorporation must convince the Board that the product safety, process safety, and efficiency standards are the same at all of the plants of that corporation regardless of their location, allowing some regard for the older facilities and the time needed to bring them up to the safest standards.
With this approach, a sense of global justice that can be described as fair international law relating to global commerce can be introduced. Extending these norms to cover the behaviour of states vis-a-vis state and corporate entities is not a matter of choice, but a matter of necessity.

Let me conclude by saying that Bhopal and the other accidents should not be treated as grim reminders of destiny and should not be forgotten as still mere episodes of the cost-benefit era. It will be a pity if “we, the people,” who like to call ourselves civilized, fail to realize the priceless beauty of our planet that has sustained our lives, and the lives of our ancestors, and the necessity of uplifting the downtrodden from raw poverty. The ideas expressed in the conclusion are, at best, fragments of a paradigm that has become a necessity in an era eclipsed by Malthusian prophecy. Many learned, informed scholars and pragmatists might find a degree of absurdity in the propositions presented in this discourse. My only suggestion is that we think not as individuals, a nation, or an interest group, but as one who looks at the grim realities of the world while searching from within for a solution that can at least mitigate the sufferings of the poor, if not alleviate them altogether. Besides the business of money-making, multinational corporations also need to realize their responsibility toward global social justice. They need to help reduce the inequity between the haves and have nots while respecting the sanctity of the planet earth. Professor  Borgese wrote in 1953 that “the era of humanity has not begun, but the age of nations has ended.”  Is it not yet the time to start the era of humanity?

The responsibility of states in controlling TNC’s:

Improving the accountability of transnational corporations for human rights violations may be done through four avenues, which are complementary in theory, but are often presented as alternative routes in political and legal discourse. It may be envisaged, first, to impose on the States a responsibility to control corporate actors. The State in which the corporation is domiciled may control its activities even when these are pursued abroad, either directly or through the setting up of a subsidiary corporation (home State responsibility). The ‘receiving’ State where the corporation has its activities also may be said to be under an obligation to protect the human rights of its population (host State responsibility). “As part of their obligations to protect people’s resource base for food, States parties should take appropriate steps to ensure that activities of the private business sector and civil society are in conformity with the right to food. The Inter-American system of human rights, composed by the Inter-American Commission of Human Rights and the Inter-American Court of Human Rights, has consistently indicated that international responsibility may arise from acts by third parties, that is, from acts of individuals, groups of individuals, and corporations that are not attributable to the State, due to the failure of governments to fulfil their positive obligations under international human rights law. Of course, it is also settled doctrine of the Inter-American system that positive obligations should not be interpreted in ways that impose impossible or disproportionate burdens on the States. Governments cannot be held responsible for every situation of risk that arises within their jurisdictions as long as they are in full compliance with their due diligence duties. Among the cases that are worth noting for involving social and economic rights is the case of the Yanomami people in Brazil. One of the issues addressed in this case was the serious harm caused by private mining activities to a community of indigenous people, in large part because of the lack of prior and adequate protection for their safety and health. The Commission found that there had been a violation of the right to the preservation of health and to well-being under the American Declaration of the Rights and Duties of Man. Also, the Commission examined the human rights situation in the Oriente region in Ecuador for several years, “in response to claims that oil exploitation activities in the region were contaminating the water, air, and soil, thereby causing the people of the region to become sick and to have a greatly increased risk of serious illness” and particularly address the negative impact of certain “development activities”  ending its report with several recommendations to the government that are consistent with the content of the obligation to protect and ensure described in the preceding paragraphs. The European Court of Human Rights, although naturally less prolific in addressing this issue in connection with socio-economic rights given that these rights are generally absent from the European Convention on Human Rights and Fundamental Freedoms (ECHR), has clearly adopted a similar approach regarding the responsibility of the States for actions of third parties that affect the enjoyment of recognized human rights.

There have also been important precedents within the African system of human rights protection regarding the interpretation of the duty to protect and attributing international responsibility to States for failing to safeguard persons under their jurisdiction from the damaging actions of private actors, such as TNCs. Particularly remarkable is the case against Nigeria regarding its practices on oil extraction in Ogoniland , which, among other rights, concerned violations of several social and economic rights contained in the African Charter on Human and Peoples’ Rights (ACHPR)—namely the rights to health (art. 16),  to economic, social and cultural development (art. 22),  to housing or shelter, and the right to food (the last two understood as implicit in the ACHPR)—perpetrated by both public and private actors. Both the government of Nigeria and Shell Petroleum Development Corporation had been involved in an oil consortium whose operations caused serious environmental degradation and resulted in serious harm to the Ogoni People. The African Commission on Human and Peoples’ Rights stated that “the State is obliged to protect right-holders against other subjects by legislation and provision of effective remedies” . Regarding the content of this duty to protect, the Commission held that itrequires the State to take measures to protect beneficiaries of the protected rights against political, economic and social interferences” and that it “generally entails the creation and maintenance of an atmosphere or framework by an effective interplay of laws and regulations so that individuals will be able to freely realize their rights and freedoms”.

Despite the emergence of the States’ duty to protect as an indirect way to promote compliance with social and economic rights standards by TNCs, some of the most serious challenges that the human rights regime is facing—particularly regarding the implementation of social and economic rights in the current globalized world—may be to find efficient ways to overcome the difficulties posed by its still state-centric territorial base and the resulting problems of jurisdiction. As some scholars have noted, “international human rights law has not yet evolved so as to hold States responsible for the actions of their non-government citizens, including corporate nationals, abroad.” However, developed countries could eventually enter into a multilateral agreement and accept an “oversight responsibility for the failings of parent companies incorporated in their jurisdictions . . .  that contribute to human rights abuses overseas”  and potentially be held accountable before international monitoring bodies.  Given the increasing relevance of the impact of economic globalization on the traditional concept of state responsibility for human rights violations, many respected scholars now favour the expansion of state responsibility “in specific fields, such as with respect to certain acts committed by corporations abroad” imposing the obligation to the home State of “controlling the activities abroad of the corporations which are incorporated under their jurisdiction . . .  without prejudice of the sovereign rights of the territorial host state..”

This position succeeds by acknowledging the uneven influence and impact of TNCs in the North-South context, while still recognizing the importance of developing a notion of state responsibility for the actions of TNCs which imposes duties on the home States, such as regulating the controlling companies in ways that prevent them from escaping the jurisdiction of host States that are usually burdened and conditioned by the need to attract foreign investments. Nevertheless, as the U.N. Special Representative on the issue of human rights and transnational corporations and other business enterprises noted, there is no agreement among experts “on whether international law requires home States to help prevent human rights abuses abroad by corporations based within their territory.”  However, he also pointed out that “there is greater consensus that those States are not prohibited from doing so where a recognized basis of jurisdiction exists, and the actions of the home State meet an overall reasonableness test.” An essential element of this reasonableness evaluation is the assessment of the extent in which the principle of non-intervention in the internal affairs of other States might be threatened. Although from this perspective “the entire human rights regime may be seen to challenge the classical view of non-intervention”  the issue here revolves around “what is considered coercive.”  In fact, the U.N. Special Representative noted that “there is increasing encouragement at the international level, including from the treaty bodies, for home States to take regulatory action to prevent abuse by their companies overseas.

In summary, not only the possibility, but also the desirability of the expansion of the duty to protect of the States to reach the overseas operations of the TNCs based within their territorial jurisdictions seems limited by the need to allow sufficient respect for state sovereignty consistent with the dignity of the individuals residing in the affected countries. It is likely that such a process will take place gradually but inevitably. It is also likely that it has already begun considering that it is currently an item on the international agenda. The question remains: how voluntary or how coercive will it be for each State to assume or to share responsibility for the behaviour of non-state actors that adversely affects the enjoyment of social and economic rights abroad?

Self-regulation of transnational corporations

How credible is this alternative? This depends on the efficacy of codes of conduct, which are the clearest manifestation of such voluntary initiatives adopted by companies in order to improve their reputation and to answer to the calls for corporate social responsibility. Codes of conduct, however, appear in many different forms: they differ by their content, by the monitoring mechanisms they may or may not include, and by the level (the individual company, the sector, the country or group of countries) at which they are drafted and proposed for adoption. International Framework Agreements are concluded between a transnational corporation and a global union in order to protect the fundamental social rights of the employees of the company concerned in all its operations. Such agreements go beyond most codes of conduct by the active implication of unions in the monitoring of the undertakings of the company having signed the agreement.

Direct liability of transnational corporations under international law

Afourth tool for improving the human rights accountability of corporations is by the direct imposition on corporations of obligations under international law. This, indeed, is how most commentators have interpreted the initiative of the UN Sub-Commission for the Promotion and Protection of Human Rights when it adopted its Draft set of Norms on the Human Rights Responsibilities of Transnational Corporations and Other Business Enterprises in August 2003.

  1. Nothing should prevent TNCs from being seen as subjects of international law. The mere existence of international norms applying directly to them allows us to regard them as international legal subjects. There are certain international instruments in different areas that grant TNCs a range of rights, impose directly on TNCs international obligations (for instance, not to interfere with the internal affairs of a host country), address to regulate the behavior of TNCs on the international level. Hence, the fact that TNCs have international rights and obligations is evidence that TNCs can be considered as subjects of international law, because international subjectivity stems from the fact of enjoying  rights asserted and protected under international law and having obligations imposed on by legal instruments.

Being a subject of international law TNCs can be directly liable for breach of international law.

After the Second Word War, the criminal law of some countries, mainly from the common law system, came to recognize the concept of corporate criminal liability. So, why not recognize such corporate criminal liability under environmental law?

According to the independent research foundation (Fafo), founded by the Norwegian Confederation of Trade Unions in 1982, there are certain provisions of the criminal codes in a number .of countries: Canada, France, the United Kingdom, the United States, and Norway, – that make it possible for a business entity to be prosecuted for war crimes or crimes against humanity committed outside those countries.

One of the sources of international law is “the general principles of law recognized by civilized nations”. If criminal corporate responsibility is recognized within the domestic systems, then it can be recognized on the international level. A starting point for the liability of TNCs under international law is the Universal Declaration of Human Rights (UDHR), where the preamble states that “every organ of society” is bound to abide by its substantive human rights provisions. Furthermore, the existence of such international instruments as ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy(16.11.1977) in International Legal Materials, 1978,15 ;OECD (1997) The OECD Guidelines for Multinational Enterprises mean that they can be useful points of reference for national governments that wish to impose binding domestic duties on TNCs. The most comprehensive proposed outline of human rights duties for TNCs is the “United Nations Norms on Responsibility of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. The current document envisages enforceability of the norms by “national courts or international tribunals, pursuant to national and international law”.

Since TNCs can be regarded as subjects of international law in light of existing international positive norms that are directly regulating their behaviour, taking into consideration recent developments that are changing the concept of the international human rights protection by including non-State actors’ responsibility, customary principle that states individual responsibility for violations of jus cogens norms we can conclude that TNCs  have direct responsibility for breaches ofenvironmental law. At this point it is necessary to answer whe all international legal instruments mentioned above are effective tools for comprehensive protection of individuals from illegal activities of TNCs. The answer is not positive. There are several reasons for that but the main one is the absence of obligatory norms of international law. Treaties and other international instruments analyzed above are considered to be so called “soft” law which has no binding effect on its subjects. Nevertheless, the recent developments of international law and efforts of international community to impose on TNCs legal responsibility are regarded to be the first steps to ensure that human rights are not just ideals but also a reality.

Concluding Remarks:Source by sabaha khan

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