Corporations and human rights: a theory of legal responsibility.

• Author: Ratner, Steven R.

The last decade has witnessed a striking new phenomenon in strategies to protect human rights: a shift by global actors concerned about human rights from nearly exclusive attention on the abuses committed by governments to close scrutiny of the activities of business enterprises, in particular multinational corporations. Claims that various kinds of corporate activity have a detrimental impact on human welfare are at least as old as Marxism, and have always been a mantra of the political left worldwide. But today's assertions are different both in their origin and in their content. They emanate not from ideologues with a purportedly redistributive agenda, but from international organizations composed of states both rich and poor; and from respected nongovernmental organizations, such as Amnesty International and Human Rights Watch, whose very credibility turns on avoidance of political affiliation. Equally importantly, these groups do not seek to delegitimize capitalism or corporate economic power itself, but have criticized certain corporate behavior for impinging on clearly accepted norms of human rights law based on widely ratified treaties and customary international law.

Consider the following small set of claims challenging private business activity and the arenas in which they occur:

* The United Nations Security Council condemns illegal trade in diamonds for fueling the civil war in Sierra Leone and asks private diamond trading associations to cooperate in establishing a regime to label diamonds of legitimate origin. (1)

* The European Parliament, concerned about accusations against European companies of involvement in human rights abuses in the developing world, calls upon the European Commission to develop a "European multilateral framework governing companies' operations worldwide" and to include in it a binding code of conduct. (2)

* In response to public concern that American companies and their agents are violating the rights of workers in the developing world, the U.S. government endorses and oversees the creation of a voluntary code of conduct for the apparel industry. (3)

* The South African Truth and Reconciliation Commission, in a searching study of apartheid, devotes three days of hearings and a chapter of its final report to the involvement of the business sector in the practices of apartheid. (4)

* Human Rights Watch establishes a special unit on corporations and human rights; in 1999, it issues two lengthy reports, one accusing the Texas-based Enron Corporation of "corporate complicity in human rights violations" by the Indian government, (5) and another accusing Shell, Mobil, and other international oil companies operating in Nigeria of cooperating with the government in suppressing political opposition. (6)

* Citizens of Burma and Indonesia sue Unocal and Freeport-McMoRan in United States courts under the Alien Tort Claims Act and accuse the companies of violating the human rights of people near their operations. The corporations win both suits without a trial. (7)

* Holocaust survivors sue European banks, insurance companies, and industries for complicity in wartime human rights violations, and, with the aid of the U.S. government, achieve several multimillion-dollar settlements. (8)

The creation of a new target for human rights advocates is a product of various forces encompassed in the term globalization: the dramatic increase in investment by multinational companies in the developing world; the sense that the economic might of some corporations has eroded the power of the state; the global telecommunications revolution, which has brought worldwide attention to the conditions of those living in less developed countries and has increased the capacity of NGOs to mobilize public opinion; the work of the World Trade Organization (WTO) and International Monetary Fund (IMF) in requiring states to be more hospitable to foreign investors; and the well-documented accounts of the activities of a handful of corporations. These advocacy efforts build on earlier attempts by concerned actors to focus attention on private business activity, ranging from the trials of leading German industrialists for war crimes after World War II to campaigns in the United States in the 1970s and 1980s to encourage divestment from corporations doing business in South Africa. All are based on the view that business enterprises should be held accountable for human rights abuses taking place within their sphere of operations. Corporations, for their part, have responded in numerous ways, from denying any duties in the area of human rights to accepting voluntary codes that could constrain their behavior.

But is there an objective standard by which to appraise both the claims that various business activities are illegitimate from the perspective of international human rights and the corresponding responses of business actors? For example, are corporations responsible for human rights abuses if they simply invest in a repressive society? What if they know that the government will violate human rights in order to make an investment project succeed? What if they share with the government information on suspected troublemakers? What if, illegally, but with the tacit consent of the government, they pay a very low wage or provide bad working conditions?

Any answer not depending exclusively on diverse and possibly parochial national visions of human rights and enterprise responsibility must come from international law. International law offers a process for appraising, and in the end resolving, the demands that governments, international organizations, and nongovernmental organizations are now making of private enterprises. Without some international legal standards, we will likely continue to witness both excessive claims made against such actors for their responsibility and counterclaims by corporate actors against such accountability. Decisionmakers considering these claims--whether legislatures or international organizations contemplating regulation, courts facing suits, or officials deciding whether to intervene in a dispute involving business and human rights--will respond in an ad hoc manner, driven by domestic priorities or by legal frameworks that are likely to differ significantly across the planet. The resultant atmosphere of uncertainty will be detrimental to both the protection of human rights and the economic wealth that private business activity has created worldwide. (9)

This Article posits a theory of corporate responsibility for human rights protection. Building upon the traditional paradigm whereby international law generally places duties on states and, more recently, individuals, I consider whether and how the international legal process might provide for human rights obligations directly on corporations. My thesis is that international law should and can provide for such obligations, and that the scope of these obligations must be determined in light of the characteristics of corporate activity. In particular, business enterprises will have duties both insofar as they cooperate with those actors whom international law already sees as the prime sources of abuses--states--and insofar as their activities infringe upon the human dignity of those with whom they have special ties. My approach thus marries principles of international law concerning foreign investment, as well as principles of corporate law more generally, with the theory and practice of human rights law.

This proposal will not be without its detractors. Corporate and governmental leaders might find the idea simply unnecessary, viewing the state as a sufficient guarantor of the human rights of its population. They and others, including those sympathetic to the human rights agenda, might find a philosophical objection to the idea that human rights law should regulate private actors. Some traditional international legal scholars might see corporate duties as unprecedented or even doctrinally prohibited, asserting that only states, and perhaps individuals, are holders of obligations. And still others may find such an approach inherently unworkable given the differences between state and corporate structures. In addressing these concerns, my argument fits within broader academic and policy debates about the power of transnational corporations and nongovernmental organizations, the role of the state in protecting human rights, and the extent to which international law can and should regulate nonstate actors.

I lay out my argument in six Parts. Part I examines the approach international law has taken to corporations as independent actors. It describes a swinging pendulum in the attention that the law has given to the relations between corporations and the states where they undertake their activities. This process will prove critical to understanding international law's views on corporate duties. In light of this historical review, Part II seeks to justify the need for corporate responsibility, rather than state or individual responsibility, as a means for protecting human rights. Given that most human rights abuses continue to be committed by governments, organized insurgencies, and the individuals in them, the answer is by no means obvious. Inherent in this issue is also the tension between the imposition of duties on business enterprises and the conventional view that only violations of human dignity sponsored by governments or quasi-governmental actors engage international responsibility. With the concept of corporate responsibility defended, Part III considers a variety of ways in which key international actors have already accepted duties on corporations, particularly in areas other than human rights. Their actual recognition of corporate responsibility undercuts any conceivable doctrinal bar to such duties.

Part IV launches the theory by examining whether existing international law doctrines, which make states and individuals...