Corporations Laws
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Corporations Laws
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Relevant International Documents
United Nations Guiding Principles on Business and Human Rights (UNGPs)
The Guiding Principles were adopted by the UN in 2011. They were drafted by the UN Special Representative on Business and Human Rights (see below). The guiding principles are based on three “pillars”:
o The first pillar recognises that countries have international obligations to protect their people from human rights abuses which are committed by corporations and other business enterprises. In that regard, they should, for example, punish corporations that commit human rights abuses.
o The second pillar sets out the responsibility of corporations and other businesses to respect human rights. Businesses should avoid harming human rights and should take measures to prevent adverse human rights impacts that are cause by their operations. This pillar is based on societal expectations, rather than on international law. As noted, international law does not, in general, impose direct obligations on corporations.
o The third pillar provides for access to remedy. Both governments and businesses should provide for remedies, such as access to court and compensation schemes, in order to make sure victims of corporate human rights abuses have remedial options. Grievance mechanisms should include both judicial and non-judicial avenues to resolve disputes.
UN Human Rights Council Resolution, June 2014
The Human Rights Council is the key intergovernmental global human rights body, with 47 elected governmental members. In June 2014, by a vote of 20 to 14, with 13 abstentions, it adopted a resolution to proceed with the drafting of an international treaty to impose human rights obligations on businesses. This is a move that would complement the current UN strategy and its emphasis on national regulation and voluntarism. Some commentary on this initiative may be found here and here.
UN Special Representative on Business and Human Rights
Harvard Professor John Ruggie served as the UN Special Representative on Business and Human Rights from 2005 to 2011. His appointment responded to widespread international concern with the accountability of corporations for human rights abuses. The above link provides access to much of his work, as well as commentaries on his work
UN Working Group on Business and Human Rights
The Working Group was created in 2011 and has followed up Ruggie’s work by disseminating and promoting the Guiding Principles. The mandate of the Group was extended for three further years in 2014.
Draft Norms on Business and Human Rights.
The ‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ were approved by the UN Sub-Commission on the Promotion and Protection of Human Rights in 2003. They were not binding, but they envisaged the creation of binding direct obligations for businesses within their “spheres of influence”. The UN Human Rights Commission chose not to approve the Norms, and instead appointed the Special Representative to his position.
OECD Guidelines for Multinational Enterprises
The guidelines set a range of recommendations for how multinational corporations from OECD countries can operate responsibly around the globe. OECD nations should promote the Guidelines via local National Contact Points. In 2011, the Guidelines were amended to specifically address human rights and are now consistent with the UNGPs.
ILO Tripartite Declaration concerning Multinational Enterprises and Social Policy
These guidelines from the International Labour Organization are recommendations to business, governments, and organisations representing employees and employers about labour standards.
This UN policy initiative requests that companies around the world take on board certain principles and commit to being a partner of the UN. The policy is comprised of ten principles, covering the areas of human rights, labour, the environment, and anti-corruption. With specific regard to corporations and human rights, Principles 1 and 2 state that businesses should respect universal human rights and ensure that they do not commit, and are not complicit in, any human rights abuses.
International Financial Corporation, IFC Performance Standards on Environmental and Social Sustainability (2012).
The IFC is part of the World Bank group. These standards prescribe the responsibilities of its clients (including corporate contractors) with regard to the management of social and environmental risks.
Voluntary Principles on Security and Human Rights
These guidelines are designed specifically for the extractive industry (eg mining, oil). Due to the inevitably large scope and necessary infrastructure of extractive projects, this industry is more likely to encounter serious security issues, for example where their operations are in a conflict zone. These Principles promote responsible security practices so as to minimise the chance of serious human rights abuses associated with such projects.
The Equator Principles provide a framework for participating financial institutions to assist them in working out the environmental and social risks of projects. It sets the minimum standard of due diligence for any decision the company makes.
The Maastricht Principles are a set of non binding principles adopted by international experts in 2011. They represent evolving international law and are aimed at defining a country’s obligations beyond its own borders to realise economic, social and cultural rights in a global economy. Principle 24 obliges countries to regulate corporations to ensure they do not cause human rights abuses when they are “in a position to regulate” such corporations. The Principles are a key tool to assist in addressing complex cross-border human rights challenges.
International Cases
UN Human Rights Committee
Hopu and Bessert v France (1997)
The complainants argued against the construction of a hotel on a plot of land where their ancestors were buried. They claimed that the destruction of the burial site would violate their rights to privacy and family life. The land was owned by a company controlled by the Territory of Polynesia, and leased to another company. The Committee found a violation by France, noting that the hotel’s construction on the burial site was an arbitrary interference with the complainant’s rights.
Regional cases
European Court of Human Rights
Lopez Ostra v Spain (1994)
ECHR held that Spain’s failure to properly regulate high levels of industrial pollution violated Article 8 (right to respect for private and family life).
Tatar v Romania (2009)
The Court confirmed that countries have a duty to protect their people by properly regulating and monitoring industrial activities. Romania was held to have violated the rights to family and private life of the complainants, who lived in the vicinity of a gold mine. Romania had failed to properly regulate that mine, which had released contaminated waste into the environment.
American Court of Human Rights
Claude-Reyes v Chile (2006)
An environmental NGO requested information from a Chilean government authority regarding foreign companies that had been approved to carry out a deforestation project. The Chilean authority failed to provide the requested information. The Court held that this failure was a violation of the right of access to state-held information, despite any claims of commercial confidentiality. For the first time, the Court ruled that this right is protected as part of the right to freedom of expression in Article 13 of American Convention.
African Commission on Human and People’s Rights
The Social and Economic Rights Action Centre and the Centre for Economic and Social Rights v Nigeria (“the Ogoniland case”) (2001)
The Nigerian government entered into an oil production venture with private companies, which exploited oil reserves, deposited toxic waste into the environment and local waterways, and caused oil spills in local villages. As a result, the villagers suffered from skin infections, neurological and reproductive problems, and increased risk of cancer.
The African Commission held that Nigeria had failed to meet its obligation to protect the right to a healthy environment in Article 24 of the African Charter. A state has a duty to take reasonable measures to prevent pollution and ecological degradation, to promote conservation, and to secure ecologically sustainable development and use of natural resources.
Selections national laws and cases
Australia
ASX Corporate Governance Council Principles and Recommendations (2014)
While not mandatory, these recommended corporate governance practices for entities listed on the Australian Stock Exchange (ASX) are designed to achieve good governance outcomes. Recommendation 7.4 provides that listed companies should disclose any material exposure they may have to economic, environmental or social sustainability risks and how they manage or plan on managing such risks.
Victorian Charter of Human Rights and Responsibilities Act 2006 (Vic)
Victoria’s ‘Bill of Rights’ does not discuss corporate responsibility. However it can be argued that it does affect corporations indirectly as government bodies are bound to respect the human rights of others before engaging in certain dealing with corporations. For example, human rights considerations may impact on a government body’s issuing of a license or a lease to a corporation.
Indonesia
In 2007 Indonesia adopted Law No. 40 on Limited Liability Companies and became the first country to mandate Corporate Social Responsibility (CSR). For example, article 74 obliges companies in the natural resources and related sectors to participate in environmental and social responsibility. A government regulation implementing article 74 was passed in 2012 (GR47/2012), which relates to a company’s CSR obligations, incentives and sanctions.
United States
Kiobel v Royal (2013)
The US Supreme Court severely limited the applicability of the Alien Tort Claims Act, a very old statute which gives foreigners a right to sue others for breaches of human rights, in transnational human rights cases. This case severely curtails the ability of victims to seek justice for abuses by corporations in US courts.
United Kingdom
Lubbe v Cape (2000)
A court found that it was legally possible for a UK company to be held liable for a failure to ensure that its subsidiary in South Africa appropriately controlled the risks of asbestos mining. The case ultimately settled.
Motto & Ors v Trafigura Ltd & Anor (2011)
A UK court found that companies could be held liable for the injuries sustained by 30,000 claimants after dumping toxic waste in the Ivory Coast. The case settled before any finding of liability was made.
Updated as of 6 February 2015