MNCs and Human Rights Violation Essay Answer

Globalization is a newly emerging and revolutionary phenomenon that has witnessed the rise of various Multinational Corporations (MNCs) in the world market. Globalization refers to the widespread emergence of industries and their operations all around the world. It has increased the marketplace for various MNCs. These MNCs have brought the world together through the presence of various resources such as technological resources, a widespread market for trade, and huge investment. However, these MNCs are focused on uplifting the global marketplace, and in pursuance of this, they generally tend to give their attention to societal needs and societal developments. Such as there have been instances of MNCs that showcase they have violated human rights. The basic rights that every individual possesses are known as Human Rights. In the Uk, the rights are protected under the Human Rights Act, of 1998 which is based on the rights mentioned under the European Convention on Human Rights. These rights or freedom usually protect the citizens and promote dignity, equality, respect, and fairness in society. MNCs or businesses significantly impact the life of the human around them either their employees, customers, or competitors in the market. For example, think of a workplace where child labor, and unhealthy, or unsafe workplace is a common condition. UK companies have been more evidently noticed to affect and violate the basic right of every individual. Therefore, United Nations Human Rights Council set the guiding principles on human rights and business for respecting the rights of humans and carrying out proper due diligence, with the aim that the companies do not infringe on human rights and if do so they provide adequate remedies to the victims. These guiding principles were known as United Nations Guiding Principles (UNGPs). On 16th June 2011, UNGPs were enforced by United Nations Human Rights Council. Therefore, in this essay, the researcher will legally analyze the responsibility of corporations in maintaining human rights. The researcher will further discuss the various guiding principles set by the United Nations Council for Human Rights to protect the human right of the business. Furthermore, the essay will legally analyze various violations of the guiding principles. It will also contain a detailed discussion of the various remedy given by the businesses in case they violate the human rights of their victims. Moreover, the researcher will also analyze the current scenario of the principle in today’s business.

 Corporations or MNCs are an essential tool of globalization and have made an enormous impact on people's lives because of their multiple operations all over the world. MNCs have been able to increase employment in the nations, create wealth, and improve the lifestyle of the people, therefore, it is important that corporations should protect and take responsibility for the rights of individuals or they should not violate the basic rights of an individual or community. Whereas on the other side, corporations have also negatively impacted society through various sorts of human rights abuse concerning environmental protection, labor rights, and consumer rights. However, it is very difficult for the legislation to hold corporations liable for human rights abuse. Many challenges have been faced in the formation of the laws relating to corporate governance such as the government's consistently unwilling to introduce more strict laws related to multinational corporations, many UN initiatives such as the UN global compact, Corporate Social Responsibility unable to hold the companies accountable, to increase transparency, to engage the corporates in following the strict laws. Another important challenge faced is that the UN initiates are generally, directed towards the protection or prevention of the rights of individuals with the help of the state government, therefore, tend to ignore the rights of the corporations, further, these international laws are non-binding, a regulatory or statutory body is absent, and there is no single law that governs both the parents as well as the subsidiary companies. Human rights are universal rights that should be available to all humans irrespective of the groups to which they belong. These human rights tend to protect the integrity and dignity of the individual. This is an ever-expanding concept, dynamic in nature, associated with individuals as well as groups too. These rights are non-derogatory and include the rights relating to the security and liberty of an individual, the right to life, movement, and expression, and so on. Cultural, economic, and social rights are the rights that are usually violated by MNCs. MNCs are usually established in developing countries and tend to violate various governmental norms such as labor laws and environmental laws. The main problem with MNCs is that they lack accountability. Therefore, there has always been an attempt to regulate the actions of MNCs. Many codes, standards, principles, and guidelines have been formulated to protect the rights of individuals from the MNCs. However, to date, there has been no hard law to regularize the actions of the MNCs. The term soft laws include various agreement, declarations, and principles. These are non-binding principles. Mostly, these soft laws are constituted and used by international organizations. Whereas, hard laws refer to the obligatory laws that create an obligation on the parties to legally enforce the matter before the court. These UNGPs include both sorts of soft and hard laws provisions. Various soft laws have been framed by the UN and European Union to regularize the MNCs such as Extractive Industry Transparency Initiative, UN Global Compact, Voluntary Principles on Security and Human Rights, and the OECD guidelines for multinational enterprises. Soft laws are referred to laws that are not legally binding on any institute. United Kingdom government has been working for the past 27 years to reduce the matter related to human abuse by MNCs. The UK has experienced various litigation related to injury at the workplace, exploitation of children at work, and state security and corruption. Various sort of human rights violation was committed by the subsidiaries companies owned and controlled by the parent companies in America or Africa and involved in the practice of mining, agriculture, and chemical sectors. The subsidiary companies’ functions, policies, and operations were controlled, supervised, and managed by the parent companies operating in other jurisdictions which result in a lack of accountability and arising several criminal, and civil actions against the companies. Therefore, to overcome the jurisdictional barrier the companies adopted the law of tort which is based upon the duty of care and the victim’s right to access justice. The two landmark judgments of the UK apex court confirm the law related to tortious liability and the duty of care imposed on corporations.

There have been many cases in the UK that show that the duty of care is infused in the MNCs and they are obliged to protect the basic rights of humans. In many of the cases of the UK supreme court, it has been seen that duty of care in MNCs is evolving field and the parent companies are made liable for the actions of the subsidiary companies if they do not protect human rights. In the landmark judgment of Vedanta Resources plc v. Lungowe, 2019 a few people of Zambian villagers sued a UK-based mining company named Vedanta Resources for the environmental damage caused by its other owned companies situated in Zambia. The apex court of the UK stated that the parent company situated in the UK can be made a party to the case and be sued. The case also stated that the case can take place in UK jurisdiction as the owing company is situated in the UK. The apex court, in this case, observed that the parent company holds the duty of care toward the parties affected by the acts of the other subordinate companies. Also, in Okpabi v Royal Dutch Shell plc, 2018, a few Nigerian fishermen and farmers sued Royal Dutch Shell for the environmental damages caused by its subsidiary company situated in Nigeria. The appellant court observed that the owing company was controlling and managing the company. Therefore, the court established the principle of duty of care that the owner company has a responsibility towards the affected person by the acts of the subsidiary company. Lubbe v Cape plc, 2000 was the foremost case in which the court observed that the main company can be held accused for the acts of the subordinate company. In this case, a group of former workers of an asbestos factory from South Africa sued Cape plc which was a multinational company situated in the UK for the disease caused in South Africa by various company factors. House of Lords held that the parent company owes responsibility. However, there was also a case where the owner company was not held accountable for the actions of the subsidiary company. In Chandler v Cape plc, 2012  the Supreme Court observed that the parent company does not possess any control over the management of the subsidiary company hence, it does not owe any responsibility towards the employees of the subsidiary company. These landmark judgments show that the parent company must protect human rights and provide remedies to the affected people even if the act done is by the subsidiary company. However, there is an exception that the parent company must be controlling and manage the acts of the subsidiary company. Therefore, there exists a challenge for the judiciary to make sure that corporations do not infringe on their rights. Hence, John Ruggie, a UN Special Representative on Business and human rights, put forward the UN Guiding Principles on Business and Human Rights. These guiding principles were endorsed by the UN Human Rights Council in June 2011.

The lack of any legal framework guiding the acts of the MNCs and the emerging various socio-economic problems in the world leads to the formation of the UN Guiding Principles on Business and Human Rights. International Law related to human rights imposes an obligation on the countries to protect, respect, and fulfill human rights. The UNGPs were the first guiding principles laid down by the Council of human rights. It consists of 31 principles that are all based upon the protection, respect, and remedy of human rights abuse. These guiding principles applied to all the states and businesses either located in a particular location. These guiding principles aim to increase the living standards and practices of the business thereby, achieving an effective result for the individuals and communities. These guiding principles consist of three pillars: the state’s duty to protect human rights, the responsibility of the corporate to respect human rights, and access to remedy for the affected parties of abuse of human rights. UNGPs first pillar states that the state must protect human rights and should take action against human rights abuse within its territory. For this, the state must take necessary steps to investigate, redress, punish, and prevent the accused of human rights infringement with effective regulations, policies, and legislation. Under this pillar, the state is obliged to oversee the actions of the MNCs and prevent human rights abuse and also ensure that adequate remedy is provided to the affected people. According to International Law, a state must protect, respect, and fulfill human rights within its jurisdiction even if the abuse of human rights is done by any third party. They lay down a standard of conduct on the state for the protection of the individual and held the state accountable for the abuse of the rights of humans even if it is done by any private corporations. However, there may be instances when the state may breach this standard of conduct and may fail in taking appropriate steps against the offenders. States are allowed to either follow preventive measures such as the enactment of various legislation and regulations or follow remedial measures such as investigating and punishing private actors for abusing the rights of individuals. They should maintain the rule of law in their jurisdiction. The various measure adopted by the state to promote the rule of law is to ensure equality before the law and maintain accountability, and transparency. According to the UNGPs first pillar, the state must protect human rights, it must set clear boundaries for the corporate, must enforce laws against the business enterprises as went required, ensure that the regulations so framed are consistent with the environment, and should oversee that the laws so formed obey the international human rights obligations.

UNGPs second pillar is dedicated to the corporate duty to respect the rights of individuals in their various supply chains and operations. Businesses should strictly adhere to the policies to prevent, identify and reduce the impact on human rights. The second pillar focused on the role of the parent company in controlling, regulating, and managing the subsidiary company. Many benchmarks have been set in the International Bill of human rights and various laws have been formed such as the International Labor Organization, and International Covenant on Economic, social and cultural rights that act as guiding principles for business enterprises and lays a responsibility for the enterprises to respect the human rights. These laws ensure that every organization irrespective of its size, operations, and location should protect the basic fundamental human rights. However, there have been many instances of the MNCs violating this basic principle. For example, in the case of AAA & Others v Unilever plc & Anor, 2018 Unilever, a UK-based company operating in consumer goods was sued for the charge of human rights abuse in Indonesia's palm oil supply chain. Unilever was found guilty of inadequate due diligence on its supply chain and failing to take adequate legal action against the abuse of human rights. Also, in 2017 a UK-based company name Rio Tinto was charged with the violation of the basic rights of society. The company was operating in Guinea in the sector of mining and it was accused of failing to respect the rights such as the right to prior, free and informed consent. Even, the shell oil company, regarded as the world's largest MNCs has faced several allegations alleging human rights violations. It was alleged that the shell company commits several human rights violations including environmental damage, human rights abuse, and displacement of locally colonized people. The company has faced several issues and criticism in Nigeria due to environmental degradation caused by the operations company. After this Shell has implemented due diligence of all stakeholders, has done a risk assessment, and mitigation measures, and has identified the actual impact of the company on human rights.

UNGP's third pillar is directed towards ensuring the business respects human rights while doing its several operations. This pillar aims to state that while carrying out various operations corporations should effectively provide remedies if they violate human rights. UNGPs have provided a regulatory framework for a corporation to incorporate in their business respect for rights into their operations and for states to make a regulatory body that promotes respect for human rights. The third principle is known as access to remedy it lays the foundation for all the principles as the aim of implementing the UNGPs is to protect basic human rights and provide remedies in case of violation. Even the OECD (Organization for Economic Cooperation and Development) has also played a great role in regularizing the conduct of the cooperations. OECD has recommended that multinational cooperation identify, mitigate, and prevent the conduct of the organization through the process of proper due diligence and to analyze as well as access the potential impact a company can make on the environment, and the other external factors. The six basic principles on which the OECD guidelines are framed are the rights of shareholders, equal treatment to all shareholders and stakeholders, promoting the role of stakeholders, and enhancing transparency, to enhance the accountability of the board members. OECD principles are focused on providing good and sustainable governance by guiding policymakers, and market players however, these guidelines are non-binding.^[22] OECD guidelines cover almost every aspect relating to human rights and corporate governance such as human rights, technology, environment, labor rights, bribery, confidentiality, taxation, and technology. Even a unique mechanism has been set up to handle the cases related to OCED guidelines known as National Contact Points for responsible business conduct.^[23]

Various international guidelines have been laid down for the European Union for the implementation of the UNGPs. These guidelines involve reviews of the National Action Plan (NAP) by the UN working group on human rights and business and the formulation of substantive and procedural guidelines. NAP has been laid down with the objective to achieve a threefold aim that is utilizing the existing state's policies or laws for the effective implementation, and identification of the existing gaps between the prevailing laws within the state and the international laws. The NAP has been directed toward the country-specific objective to assess the challenges possessed by the different MNCs in various geographical locations with diverse cultures. Thirdly, the NAP will make a detailed analysis of the parties affected by the acts of the corporations and will assess the rate of remedies provided to them. Therefore, the NAP will provide an effective measure to curtail the incidence of human rights abuse and also uplift the rights of the corporation in this dynamic environment. Till date, only seven countries listed under European Union have released their National Action Plan. Various recommendations for an effective NAP may constitute a National Action Plan to be prepared by the European Union. Formulation of such a NAP that has an evidence-based approach, which should focus on identifying the priorities of the states, ensuring access to the remedies and rapid justice to the affected parties. A national plan should consist of a mix of various regulatory and voluntary measures to be followed all across the world. Next, provisions related to human rights and due diligence should be made mandatory, and inference should be drawn from the previously laid down OECD guidelines, the UN Global Compact, and the Human resource development department. The European Union policymakers should make focus on going legal developments and case laws arising against the corporations such as conflicts related to the mining companies. Next, non-financial reporting should be made mandatory for corporations. Such as companies in their due diligence report should publish non-financial information means, the impact the company possesses on the environment. Next, the European Union must expand the scope of all the companies either listed or non-listed, and should make stricter laws on the mandatory reporting of risk assessment. Next, the emphasis should be laid down on the victims of human rights abuse. The legal measures adopted by the European Union must include a single provision for both the parent and subsidiary companies, and it should revise the rule of Rome II and its applicability because it hinders the fundamental rights of the affected parties.

The advent of globalization has had a huge impact on the formation of various laws and shaping the lifestyle of the people. It has also resulted in boosting the economy, but it has also resulted in the infringement of various human rights. Many multinational corporations are known for the infringement of human rights for example coca cola, Vedanta, Hindustan Unilever, and various mining-based companies such as shell oil companies. Therefore, the United Nations has been known for implementing various guidelines, laws, and policies for the upliftment of society and reduction in the rate of violation of human rights. One such soft law formed by the United Nations is the United Nations Guiding Principles for Businesses to promote human rights. These UNGPs are farmed on the basis of three pillars such as the duty of the state to reduce human rights, the duty of the corporates to respect human rights, and to provide an adequate remedy to the victims or affected parties. In total the guiding principles consist of 31 principles from which the state duty is described under the first ten principles, the next 12 principles constitute the corporate responsibility to respect human rights, and the rest 7 principles constitute the principles regarding the remedial measure that can be adopted by the government to uplift the status of the corporates and the affected partied, these principles aim to protect the customers, stakeholders, shareholders, and environment from the act of the corporate. principles According to the UNGPs, the corporate should respect human rights and should perform due diligence for the identification, and reduction of human rights violations. However, there have been several instances where the corporations have violated the UNGPs guidelines. The main problem that was witnessed in the various landmark judgments is the different locations of the parent and subsidiary companies which result in a lack of control and proper management of the companies. The UNGPs have formulated three pillars that need to be followed such as the duty to protect and respect human rights, access to remedy, and proper due diligence. Moreover, many of the laws framed under the UNGP s are soft laws that left scope for the companies to disobey them and abuse human rights therefore, hard laws should be implemented by the United Nations to curb human rights violations from the corporate sectors. However, the companies have to strictly adhere to the guidelines laid down in international law. That has resulted in various challenges to the companies such as a lack of transparency, and accountability.

Bibliography

Statues

Human Rights Act 1998. 

Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises 1976

United Nations Guiding Principles (UNGPs) on Business and Human Rights 2011

Cases

 Connelly v Rio Tinto [1997] UKHL 30

 Robinson v. Shell Oil Co. [1995] 519 US 337

AAA & Others v Unilever plc & Anor [2018] EWCA Civ 1532

Chandler v Cape plc [2012] EWHC 951

Lubbe v Cape plc [2000] UKHL 41

Okpabi v Royal Dutch Shell plc [2018] UKSC 3

Vedanta Resources plc v. Lungowe [2019] UKSC 20

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Books

Baumann - Pauly, D. and Nolan, J., Business and human rights: from principles to practice (Routledge) (2016)

Bernaz, N., Business and Human rights: history, law and policy-bridging the accountability gap (first published in 2016) Taylor & Francis

Ruggie, J.G., Just Business: Multinational corporations and human rights (Norton global ethics series) (2013)

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Equality and Human Rights Commission, ‘Human Rights and business’ (16 Aug 2019) <https://www.equalityhumanrights.com/en/advice-and-guidance/human-rights-and-business> accessed 12 April 2023.

European Coalition for corporate justice, ‘5 years of UNGPs: 5 business and human rights issues to focus on’ (10 June 2016) <https://corporatejustice.org/news/5-years-of-ungps-5-business-and-human-rights-issues-to-focus-on/> accessed 12 April 2023.

Fianna Jesover, and Grant Kirkpatrick, ‘The revised OECD principles of corporate governance and their relevance to NON-OECD countries’ (2005) <https://www.oecd.org/corporate/ca/corporategovernanceprinciples/33977036.pdf> accessed 12 April 2023.

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