Restoring Liberalism to Transnational Corporate Accountability: from Universal Jurisdiction's Ashes to an Afterlife of Multilateral Avenues

• Jurisdiction: United States,Federal
• Citation: Vol. 31 No. 3
• Publication year: 2017

Restoring Liberalism to Transnational Corporate Accountability: From Universal Jurisdiction's Ashes to an Afterlife of Multilateral Avenues

Steven S. Nam

RESTORING LIBERALISM TO TRANSNATIONAL CORPORATE ACCOUNTABILITY: FROM UNIVERSAL JURISDICTION'S ASHES TO AN AFTERLIFE OF MULTILATERAL AVENUES

Steven S. Nam^*

ABSTRACT

This Article engages in the recurrent debate over effective transnational corporate accountability and offers the first liberalist defense of universal jurisdiction's marginalization in the U.S. court system. Per the U.S. Supreme Court, foreign tortfeasors including corporate human rights violators may no longer be sued in U.S. courts by their foreign victims via the Alien Tort Statute (ATS) without a sufficient nexus to U.S. territory. Insofar as one motivation of ATS defenders was to expand a global human rights regime internalizing liberal values, this Article contends that pursuing transnational corporate accountability unilaterally through the U.S. judiciary is inconsistent with a core tenet of liberalism itself—a state and its constituents should not be subject to the external authority of other states. Liberal states duly have protested universal jurisdiction over their business enterprises, as well as the indefinite long-term "intervention" it poses.

This Article recommends further development of two alternative avenues that encourage multilateral cooperation on transnational corporate accountability. The first is inclusive public-private diplomacy convening all stakeholders, including non-state actors such as victims' legal advocates and culpable companies. Exemplary were wartime forced labor negotiations led by, but hardly restricted to, the American and German governments in 1999, which produced a landmark compensation fund for Nazi-era victims despite the earlier dismissal of related U.S. class action lawsuits. The second avenue

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consists of the widely welcomed U.N. Guiding Principles on Business and Human Rights and their use by a polycentric constellation of corporate accountability NGOs, governments, and business enterprises. The Guiding Principles' legacy remains incomplete, however, as many victims of corporate human rights abuses struggle to access concrete remedy; the Accountability and Remedy Project under Office of the United Nations High Commissioner for Human Rights stewardship is intended to address this gap. Ongoing development and implementation of these above alternatives presage the continuing march towards a coherent global corporate accountability regime reliant on cooperation and coordination between stakeholders, rather than on extraterritorial unilateralism.

Introduction..............................................................................................363

I. Liberalism's Disharmony with Universal Jurisdiction Over Foreign Business Enterprises ............................................366

A. Judicial Unilateralism in an Interdependent Economic Community ................................................................................. 366
B. Judicial Unilateralism as a Mode of Intervention ..................... 370

II. Inclusive Public-Private Diplomacy in Transnational Corporate Accountability..........................................................373

A. The Settlement Process for Nazi-Era Wartime Forced Labor as a Model ................................................................................. 373
B. Restorative Benefits and Caveats Distinct to the New Diplomacy ................................................................................. 377

III. Polycentric Approaches to Transnational Corporate Accountability...............................................................................381

A. Proliferation of the U.N. Guiding Principles on Business & Human Rights ............................................................................ 381
B. Joint Development and Implementation of the Accountability and Remedy Project ................................................................... 386

Conclusion..................................................................................................389

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Introduction

The modern chronicle of transnational corporate accountability begins in the courtrooms of Nuremberg following the international military tribunal of 1946. There, from 1947 to 1948, the United States tried before its military courts dozens of industrialists from the prominent German companies IG Farben, Flick, and Krupp,¹ effectively becoming corporate accountability's postwar progenitor. The historic import of these industrialist trials seemingly has faded to "a footnote or a passing reminder" that the American purge of the Nazi elite went beyond government and military leadership.² At the time, British fears that the industrialist trials would become an ideological boon for Communism,³ coupled with an outpouring of criticism from German society at the resulting convictions,⁴ necessitated a strong sense of direction from Washington.

Despite the political need for German industry's cooperation in reconstruction and for its support against the Soviet Union, American authorities refused to soften their punitive stance⁵ as they strived towards a liberal postwar international order. Liberalism is the influential political philosophy marked by a commitment to the juridical equality and civic rights held by citizens, recognition of private property rights, economic decisions predominantly shaped by market forces against a backdrop of multilateral institutions, and a representative government which derives its authority from a consenting electorate.⁶ It follows that, under liberalism, a state and its constituents are subject neither to the external authority of other states nor to the internal authority of special prerogatives, such as those held by military

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castes.⁷ If "the tight network of factories and industries" in the Ruhr Valley managed by iron and steel magnates could be broken up, "then Germany, it was argued, would be prevented from unleashing another war of aggression."⁸ Accountability and liberalism were found to be intrinsically linked—the notion that "failure of accountability signified the failure of liberalization"⁹ in the First World War's aftermath guarded against U.S. complacency following its sequel.

More than seventy years after World War II's end, the existence today of over one hundred liberal states worldwide¹⁰ is a testament to the longstanding influence of the United States and its liberal allies. But gone are the days when unipolar American dominance could foster liberalization with antithetically minimal regard for the liberal guarantee of respect between states. Chief Justice Roberts' majority opinion in Kiobel v. Royal Dutch Petroleum captured this contemporary reality, referencing "recent objections to extraterritorial applications of the ATS [Alien Tort Statute] by Canada, Germany, Indonesia, Papua New Guinea, South Africa, Switzerland, and the United Kingdom" along with "diplomatic strife" precipitated by excessive jurisdiction.¹¹ Justice Ginsburg, in the opinion for Daimler AG v. Bauman, which was joined by seven other justices, furthermore stressed "risks to international comity" through the "expansive view of general jurisdiction posed. Other nations do not share the uninhibited approach to personal jurisdiction advanced by the Court of Appeals in this case."¹² At first glance, it would appear that realist critics of the ATS had been validated in their criticisms of universal jurisdiction over corporations for being welfare-negative to the United States politically and economically, endangering its foreign relations as well as trade and investment.¹³ Yet scholarship even through realist lenses has pointed out a

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dearth of empirical evidence behind the realist approach.¹⁴ All the same, ATS supporters who sought extraterritorial legal enforcement of human rights norms were set back by the preponderance of Supreme court justices across the ideological spectrum weighing against ATS litigation's judicial overreach.¹⁵

Insofar as one motivation of ATS defenders was to expand a global human rights regime internalizing liberal values,¹⁶ this Article contends that pursuing transnational corporate accountability unilaterally through the U.S. judiciary is inconsistent with a core tenet of liberalism itself—a state and its constituents should not be subject to the external authority of other states.¹⁷ In an era in which both liberal and illiberal states navigate roads of intertwining trade and institutions, transnational companies often function as representative vehicles of their respective home countries and of economic interdependence. Even the most liberal of states (including stalwart U.S. allies) have duly protested the external authority of universal jurisdiction over their business enterprises¹⁸ and the indefinite long-term "intervention" it poses.

This Article identifies and recommends the further development of two alternative avenues that encourage multilateral cooperation on transnational corporate accountability. The first is inclusive public-private diplomacy open to all stakeholders, including culpable companies and legal representatives of the victims themselves. Wartime forced labor negotiations led by the U.S. and German governments in 1999 were exemplary and produced a landmark compensation fund for foreign victims after U.S. district courts had dismissed as non-justiciable a pair of related class action lawsuits.¹⁹ The second avenue

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consists of the widely-welcomed U.N. Guiding Principles on Business and Human Rights (U.N. Guiding Principles or UNGPs)²⁰ and their use by a polycentric constellation of corporate accountability NGOs, governments, and business enterprises.²¹ The Guiding Principles' legacy remains incomplete, however, as many victims of corporate human rights abuses struggle to access concrete remedies due to practical...