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Luke Taylor
The responsibility, and indeed liability, of corporations for
their international operations is an area of increasing concern in human rights discourse. The opprobrious implications of negligent corporate practices are especially apparent in developing nations. While much of the discourse and litigation dealing with corporate (ir)responsibility focuses on civil and political rights, this article considers the liability of transnational corporations (TNC) for contraventions of economic, social and cultural rights (ESCR). It specifically focuses on the manner in which victims of such infringements have invoked private domestic remedies (ostensibly in tort) as a means of seeking redress for the wrongs inflicted against them. The article concludes with a case study of the recently launched litigation in the United States against Occidental Petroleum (Oxy) in which it is alleged that Oxy bears direct responsibility (and liability) for violating the ESCRs of the Achuar minority in Peru.
International human rights law has little to say regarding corporations. The obligations that currently exist ostensibly hold states indirectly liable for the conduct of other non-state actors.[1] Articles 29 and 30 of the Universal Declaration of Human Rights (UDHR) indirectly include corporate entities in providing that ‘everyone has duties to the community’ and in prohibiting ‘any State, group or person’ from undermining the rights contained in the UDHR.[2] It is however, unclear at this stage whether these articles have attained the status of customary international law. Similarly, the International Covenant on Civil and Political Rights[3] (ICCPR) and the International Covenant on Economic, Social and Cultural Rights[4] (ICESCR) do not expressly address the human rights responsibilities of corporations.[5] The UN Human Rights Committee (HRC) has indicated that adherence to the ICCPR implicitly requires that private entities are held accountable for infringements of the rights contained therein. According to the Committee on Economic, Social and Cultural Rights (CESCR), States’ duties to protect citizens from infringements of rights codified in ICESCR encompasses protection from such abuse by business enterprises. According to the CESCR, a State could violate the ICESCR by failing to adequately regulate and/or adjudicate corporate activities.[6] While the provision of an effective remedy for violations of ESCRs is not expressly included in ICESCR, the CESCR stresses that this is an essential element of States’ duties to take steps towards the full realisation of the rights contained in the ICESCR.[7] However, given that corporations are not directly bound by the ICESCR, the ‘legal and practical consequences … for any violation of business responsibilities’ (whether in the form of rights protection or realisation) remains uncertain.[8]
While in theory there is nothing to prevent domestic legal regimes holding miscreant corporations criminally or civilly liable for their human rights infringements, the disproportionate fiscal and political
influence TNCs wield in developing nations makes accountability difficult given the potential economic and legal repercussions.[9] Also, as Joseph notes, ‘there are too many instances where local remedies are simply not available, or are illusory’.[10] This combined lack of domestic and international legal regulation has allowed TNCs to operate in a legal vacuum, accountable only insofar as the protests of the abused manage to reach the world’s media.
Nevertheless, in the past three decades, following the finding of the International Court of Justice in the Barcelona Traction case11 that the nationality of a corporation is to be determined by the state in which it is incorporated, another means for holding TNCs liable for human rights abuses has emerged: the prosecution of civil claims against TNCs, for wrongs committed internationally, in a TNC’s home jurisdiction.12
In Doe v Unocal[13] the District Court for the Central District of California took the momentous step of recognising the liability of domestically-registered TNCs for human rights abuses. In finding that the Alien Tort Claims Act 28 USC § 1350 (ATCA) enables claims by non-citizens against American corporations for complicity or direct involvement in offshore human rights abuses, the Court paved the way for suites of subsequent litigation by international plaintiffs alleging infringements of their human rights by American-based TNCs. However, Unocal dealt with civil and political rights. In Sosa v Alvarez-Mechain[14] it was emphasised that ATCA is only enlivened when contraventions of the law of nations can be established; this essentially requires the establishment of a clear breach of an international jus cogens norm such as torture. ESCRs, therefore, appear at this stage to fall outside of the ambit of ATCA.15
However, a number of cases have established domestic tort law in various jurisdictions as a viable mechanism in seeking relief for corporate human rights abuses. While domestic tort law does not generally invoke the language of human rights, it is clear that cases alleging, for instance, massive environmental degradation leading to wide-scale human suffering, ‘have a qualitatively different human rights dimension to ordinary personal injury cases’ and therefore can be seen as indirectly invoking the standards of international human rights law.[16]
In the infamous Union Carbide Gas Plant Disaster at Bhopal case17 Indian victims of the gas leak sought redress in the US courts. While demonstrating the possibility of transnational tort claims, the case unfortunately also established the ability of defendants to have such claims dismissed on the ground of forum non conveniens (FNC).18 Thus, in Aguinda v Texaco[19] the defendant successfully avoided liability for its irresponsible waste disposal practices in Ecuador by arguing that Ecuador was a more appropriate forum, in spite of class actions being unavailable under Ecuadorian law.[20] Joseph notes that judgments adverse to plaintiffs on FNC grounds tend to dispose of a claim once and for all, claims rarely being ‘re-litigated in the putative available foreign forum after FNC dismissal’.[21] Plaintiffs in Martinez v Dow Chemicals[22] fared better than their counterparts in Aguinda, with the US District Court for the Eastern District of Louisiana finding that no available alternative forum existed in which to litigate the claims by the Costa Rican, Honduran and Filipino workers that chemicals produced by Dow to treat banana plantations had caused their infertility.
The UK has adopted a similar ‘most appropriate forum’ approach, although in Lubbe v Cape Plc Afrika[23] plaintiffs were successful in establishing that England was the most appropriate forum because of the number of plaintiffs joined in the suit and the difficulties in obtaining legal aid in South Africa. It should be noted, though, that the European Court of Justice recently cast doubt on the ability of English courts to refuse to hear claims on FNC grounds because of the operation of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968.[24]
In Australia the doctrine of FNC has been construed more favourably to plaintiffs, defendants being required to prove that Australia is a ‘clearly inappropriate forum’.[25] This test, though criticised by Briggs as ‘naked and open chauvinism’,[26] meant that the plaintiffs in Dagi v BHP[27] did not have to clear the FNC hurdle in bringing an action against BHP because of the determination in Voth v Manildra Flour Mill[28] that Australian courts can (and will, in the right circumstances) hear claims for damages based on the geographical base of the defendant corporation, irrespective of the jurisdiction in which the infringement occurred, unless it can be proved that the impugned defendant would be ‘harassed’ by the case being brought in Australia.[29] However, as Joseph notes, the ‘flipside of Australia’s generosity to plaintiffs regarding FNC is its strictness regarding the issue of choice of law’.[30]
In 2007 Californian law firm Schonbrun, DeSimone, Seplow, Harris & Hoffman lodged a claim against Oxy in the Superior Court of California on behalf of victims of the US-based corporation’s allegedly destructive practices in Peru.[31] Oxy’s putative liability arises from its alleged environmental abuse in the Achuar region,[32] including the apparent dumping of approximately 850,000 barrels of toxic oil byproducts into the Achuar basin every day. On this basis Oxy would appear to bear responsibility for ravaging the local environment and preventing local communities fishing and bathing in, and drinking from, the surrounding rivers.[33] In addition, Earthrights argues that the use of earthen pits (clearly prohibited under US law) to store toxic material has led to such an extreme degradation in the quality of the soil in the region that farming is now a virtual impossibility.[34]
According to the plaintiffs:
Oxy knew that the contamination, which continues today, would cause and has caused severe health problems and other injuries to the Achuar indigenous communities, including death, epidemic lead and cadmium poisoning, exposure to carcinogens and mutagens, substantial harm to their livelihoods, contamination to their streams and fields, and continuing trespass on their lands.35
The prayer for relief includes claims in tort for compensatory and punitive damages, injunctive, declaratory and equitable relief, and restitution and disgorgement of profits.[36]
The plaintiffs contend that the Court has personal jurisdiction over the matter because Oxy’s headquarters are in California. This argument, similar to that which was accepted by the Supreme Court of Victoria in Dagi, clearly delineates the potential for extending domestic remedies beyond state lines to those affected by corporate practices by basing the issue of an appropriate legal forum on the geographical base of the accused, rather than confining it to the national jurisdiction in which the relevant human rights infringement occurred. The plaintiffs have attempted to forestall arguments based on FNC by alleging that the case could not be adequately litigated in the Peruvian courts on the basis of the endemic corruption in the Peruvian judiciary, to which Oxy has allegedly contributed.[37]
While the claim does not invoke the language of ESCRs or international human rights law, it is clear that if the damage alleged by Earthrights and the Achuar people is in fact the responsibility of Oxy, the corporation has contravened the rights of the Achuar people in several ways. The poisoning of the Corrientes and Macusari Rivers and their tributaries has irrevocably infringed the ability of local populations to drink or fish from or bathe in those waters without running the risk of ‘skin rashes, aches and pains, gastrointestinal problems including vomiting blood, harm to the kidneys, and death’.[38] In addition, the ability of the Achuar to sustain themselves from the local environment has been substantially, and in certain areas irrevocably, reduced, with some waters ‘so highly contaminated that all fish and aquatic life have disappeared’. This has also had implications for crop yields because of irrigation with contaminated waters. In addition, agricultural production has been rendered impossible in certain areas because of contamination. These offences arguably contravene articles 11 and 12 of the ICESCR, which respectively recognise ‘the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions’ and ‘the right of everyone to the enjoyment of the highest attainable standard of physical and mental health’. The United Nations Economic, Social and Cultural Committee’s General Comment No 15[39] indicates that implicit in the aforementioned articles is the right to water; if the allegations against Oxy are borne out at trial there can be little doubt that Oxy has therefore fundamentally infringed this right, however nebulous its current form. There is also scope to argue that Oxy’s alleged practices contravene the emerging right to development. While the scope and content of this right remains unclear, it is suggested that potentially irreversible environmental fundamentally inhibits the development potential of communities.
While it appears clear from the assertions made by the CESCR that States’ duties under the ICESCR encompass the provision of frameworks for preventing and remedying corporate infringements of ESCRs, it remains the case that TNCs are not directly liable for their actions under international law. The emergence of litigation challenging TNC impunity for international human rights infringements through domestic causes of action (primarily through the application of tort principles[40] ) suggests that, in spite of this vacuum at international law, mechanisms exist by which human rights-abusing corporations can, to some extent, be held to account. Unfortunately, the ruling in Sosa narrowed the scope for claims under ATCA, which had hitherto been the primary conduit for domestic claims alleging international wrongs. In this context it is to be hoped that the current litigation against Oxy does not end with a further restriction of the ability of international victims of corporate human rights abuses to bring oppressive TNCs to account through the application of common law tort principles, particularly given the absence of an ATCA equivalent in jurisdictions outside the USA.
Luke Taylor is a student at the Faculty of Law, University of New South Wales. He is the student editor and intern for Human Rights Defender and the editor of the Australian Indigenous Law Review.
[1] David Kinley and Junko Tadaki, ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law’ (2003-04) 44 Virginia Journal of International Law 934, 937.
[2] Adopted 10 December 1948, GA Res 217 A (III), UN GAOR,
[3] rd sess, UN Doc A/810 (1948). 3 Opened for signature 16 December 1966, 999 UNTS 171 (entered into force 23 March 1976).
[4] Opened for signature 16 December 1966, 999 UNTS 3 (entered into force 3 January 1976).
[5] See Business and Human Rights: Mapping International Standards of Responsibility and Accountability for Corporate Acts, Report of the Special Representative of the Secretary-General (SRSG) on the issue of human rights and transnational corporations and other business enterprises, UN Doc A/HRC/4/035 (2007) [41] <http://www.business-humanrights.org/Documents/SRSG-report-Human-Rights-Council-19-Feb-2007.pdf> at 30 September 2007.
[6] State Responsibilities to Regulate and Adjudicate Corporate Activities under the United Nations’ core Human Rights Treaties, Individual report on the International Covenant on Economic, Social and Cultural Rights: Report No 2 Prepared for the Special Representative of the Secretary-General on Human Rights and Transnational Corporations and Other Business Enterprises (2007) 4 <http://www.reports-and-materials.org/Ruggie-report-ICESCR-May-2007.pdf> at 25 October 2007.
[7] Ibid 5.
[8] Ibid 10.
[9] For example, in response to the case launched against it in the Australian courts alleging the company had engaged in negligent mining practices in the Ok Tedi mine in Papua New Guinea, the PNG Government (allegedly with the support of BHP) enacted legislation preventing affected PNG citizens joining the class action: see, eg, Aviva Imhof, ‘The Big, Ugly Australian goes to Ok Tedi’, The Multinational Monitor <http://multinationalmonitor.org/hyper/mm0396.05.html> at 25 September 2007.
[10] Sarah Joseph, Corporations and Transnational Human Rights Litigation (2004) 149.
[11] Case concerning the Barcelona Traction, Light and Power Company Ltd (Belgium v Spain) [1970] ICJ Rep 4.
[12] Schutter notes that ‘the limits which public international law is generally considered to impose on States in the exercise of prescriptive territorial jurisdiction generally will not constitute and obstacle to the use of this tool in order to impose that transnational corporations comply with internationally recognized human rights in their operations abroad. Typically, the exercise of the such extraterritorial jurisdiction will take the form of the State where the parent company is incorporated, and which therefore may be considered to have the ‘nationality’ of that State’: Olivier de Schutter, ‘Extraterritorial Jurisdiction as a tool for improving the Human Rights Accountability of Transnational Corporations’, Report prepared as a background paper to the seminar organized in collaboration with the OHCHR on 3-4 November 2006 within the mandate of UN Special Representative to the Secretary-General on the issue of human rights and transnational corporations and other enterprises, John Ruggie <http://www.businesshumanrights.org/Links/Repository/775593/jump> at 1 October 2007.
[13] 963 F Supp 880 (CD Cal 1997).
[14] 2003 US LEXIS 8572 (SCt 2003) (‘Sosa’).
[15] See Aquinda v Texaco 945 F Supp 625 (SDNY 1996). It is worth noting also that claims under ATCA generally require proof of state involvement, although in rare instances corporate involvement in international human rights abuses will be sufficient to ground a case: Joseph, above n 10, 18.
[16] Joseph, above n 10, 76. It is beyond the scope of this article to interrogate whether bringing claims in tort for acts that contravene ESCRs reduces the gravitas of the claim against an offending TNC, or whether such action should simply be viewed as a pragmatic resolution of the issue.
[17] [1987] USCA3 92; 634 F Supp 842 (SDNY 1986)
[18] In this case the District Court for the Southern District of New York found that India was a more appropriate forum than the US for the claim. This finding was affirmed on appeal by the US Court of Appeals for the 2nd Circuit: [1987] USCA3 92; 809 F 2d 195 (2d Cir 1987).
[19] 945 F Supp 625 (SDNY 1996) (‘Aguinda’). See also Aguinda v Texaco 142 F Supp 2d 534 (SDNY 2001) in which the court again refused the plaintiffs’ case on the ground of FNC.
[20] See also Sequihua v Texaco 847 F Supp 61 (SD Texas 1994), in which the plaintiffs’ claim was dismissed for the same reason. Cf Dow Chemicals Co v Castro Alfaro (1990) 786 SW 2d 674, in which the motion to dismiss on grounds of FNC was denied because Texas had abolished the doctrine by statute.
[21] Joseph, above n 10, 88.
[22] 219 F Supp 2d 719 (ED La 2002).
[23] [2000] 1 Lloyd’s Rep 139. See also Lubbe v Cape plc [2000] UKHL 41; [2000] 4 All ER 268 in which the House of Lords dismissed an appeal against the finding in the Court of Appeal that the UK was an appropriate forum to hear the matter.
[24] Andrew Owusu v NB Jackson , trading as ‘Villa Holidays Bal-InnVillas’ and Others (C-281/02) [2005] ECR I-1383. According to the ECJ, the Brussels Convention ‘precludes a court of a Contracting State from declining to exercise jurisdiction on the ground that a court in a non-Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State’: at [37]. This indicates that the ruling applies to all signatories to the Convention, not just the UK. For a strong critique of this and other judgments of the ECJ see Adrian Briggs, ‘The Impact of Recent Judgments of the European Court on English Procedural Law and Practice’ (2005) Zeitschrift fur Schweizerisches Recht 124, 231.
[25] The High Court in Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197 and Voth v Manildra Flour Mill [1990] HCA 55; (1990) 171 CLR 538 established the test of ‘clearly inappropriate forum’.
[26] Adrian Briggs, ‘Wider Still and Wider: The Bounds of Australian Exorbitant Jurisdiction’ (1989) 2 Lloyd’s Maritime and Commercial Law Quarterly 216, 222.
[27] [1995] 1 VR 428 (‘Dagi’).
[28] [1990] HCA 55; (1990) 171 CLR 538 (‘Voth’).
[29] Dagi was eventually settled out of court, foreclosing the possibility of judicial analysis of the liability of BHP for its harmful practices in the region. Nevertheless, the case demonstrates the manner in which domestic law can be invoked by international persons to hold corporations liable for violations of ESCRs:
[30] Joseph, above n 10, 124. See Regie Nationale des Unises Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491in which the High Court held that in cases brought against corporations alleging responsibility for damage or injury which occurred overseas, the law of the forum in which the damage occurred is likely to apply even when heard by an Australian court, meaning that legislation such as that passed by the Government of PNG following allegations of BHP’s liability could potentially prevent the case being heard by Australian courts irrespective of their status as appropriate forums.
[31] Class Action Complaint for Damages, Injunctive and Declaratory Relief, Restitution and Disgorgement of Profits, Tomas Maynas Carijano & Ors v Occidental Petroleum Corporation; Occidental Peruana, Inc (‘Achuar Complaint’). See Earthrights International, Maynas v Occidental Official Complaint <http://www.earthrights.org/legaldocs/maynas_v._occidental_official_ complaint.html> at 28 August 2007.
[32] See especially Earthrights International, Racimos de Ungurahui and Amazon Watch, A Legacy of Harm: Occidental Petroleum in Indigenous Territory in the Peruvian Amazon (2007) (‘A Legacy of Harm’).
[33] In its 2006 Social Responsibility Report, Oxy made the dubious claim that it ‘is committed to conducting its business in a manner that observes the law, respects the cultural values of the communities in which we operate and reflects a high standard of ethics’: <http://www.oxy.com/Social%20Responsibility/sr_annual_ report.htm> at 1 October 2007. In light of the damage willfully inflicted upon the Peruvian environment and local populations, Oxy’s claim that it supports the UDHR, the Voluntary Principles on Security and Human Rights and the Global Sullivan Principles appears somewhat disingenuous.
[34] A Legacy of Harm, above n 32, 19.
[35] Achuar Complaint, above n 31, 1.
[36] Presumably the case was not brought under ATCA because of the restrictive interpretation in Sosa and the requirement of state involvement.
[37] While ‘[a]rguments based on the alleged corruption of alternative forums … have an unsuccessful history in FNC cases in the US’, the Court in Presbyterian Church of Sudan v Talisman Energy 244 F Supp 2d 289 (SDNY 2003) took a common-sense approach to the issue, finding that it would be perverse to hold a trial alleging genocide in the subject State. Whether the alleged corruption in the Peruvian judiciary will provide a sufficient defence to a FNC claim (if raised by Oxy) is yet to be seen, though the finding of Rakoff J in Aguinda does not augur well. In this respect it is apparent that claims under ATCA currently stand a greater chance of withstanding a FNC objection. See Joseph, above n 10, 90-91, 147.
[38] Achuar Complaint, above n 31, 8.
[39] United Nations Committee on Economic Social and Cultural Rights General Comment No 15 The Right to Water (Arts 11 and 12 of the International Covenant on Economic, Social and Cultural Rights) (2002) E/C.12/2002/11.
[40] Joseph notes that abortive attempts have been made in the UK (Al-Adsani v Government of Kuwait (1996) 107 ILR 536) and Canada (Bouzari v Islamic Republic of Iran [2002] OJ No 1624) to bring actions against TNCs based on customary human rights law: Joseph, above n 10, 146.
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