Law, Social Justice & Global Development

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Law, Social Justice & Global Development
(An Electronic Law Journal)

The IRENE Report 2000
(International Restructuring Education Network Europe)

Controlling Corporate Wrongs:
The Liability of Multinational Corporations.

Legal Possibilities, Initiatives and
Strategies for Civil Society

This is a Report published on: 21 December 2000

Citation: IRENE, ‘Controlling Corporate Wrongs: The Liability of Multinational Corporations. Legal Possibilities, Initiatives and Strategies for Civil Society’, 2000 (1) Law, Social Justice & Global Development Journal (LGD).


This is a report of the international IRENE Seminar on corporate liability and workers’ rights held at the University of Warwick, Coventry, United Kingdom, 20 and 21 March 2000. The seminar focussed on the Multinational or Transnational corporations (MNCs or TNCs) in the context of the current international economic order of trade liberalisation and economic globalisation. The Seminar explored the matrix within which the workers and environmental rights have been significantly marginalised and the absence of accountability of the MNCs to the constituencies impacted upon by their activities. The Seminar looks at these issues through the various case studies wherein the MNCs have not been found accountable for the adverse impacts of their activities. In the latter half it then moves on to look into the formulation of a new international standard for MNC responsibility.
Keywords: Globalisation, International, Economic Order, Multinational, Corporations, Accountability, Workers, Environmental

1. Introduction

Multinational or transnational corporations (MNCs /TNCs) have been around for many decades, but the current international economic order of trade liberalisation and economic globalisation, in which workers’ rights and environmental considerations are increasingly seen as barriers to free trade, places MNCs in positions of extraordinary power and equally extraordinary lack of accountability to anyone or anything except their shareholders. Whereas in the 1960s and 1970s there was concern about excessive interference by MNCs in the affairs of developing countries, today they are failing even to control bad practice by their overseas affiliates or subsidiaries. Although many of them are more powerful and wealthier than governments, they recognise no moral obligation to use their power and wealth to contribute to improving life for people in the countries where they operate, even those they touch directly such as their employees and consumers. Meanwhile, governments’ space for regulating MNCs is shrinking. The division of accountability between states and MNCs is often unclear, resulting in an accountability vacuum in which neither takes responsibility.
Some key legal rulings on behalf of claimants have been won in recent years (e.g. against Thor Chemical Holdings in South Africa, seeElectronic reader for this Seminar (ER) 1.3, and paper reader (PR) pp 26—8), but they are very few in comparison with the number of cases where companies have escaped scot-free and the even greater number of violations reported to human rights organisations, trade unions and environmental organisations. At the same time, many of the existing international instruments devised to regulate the activities of transnational companies are unenforceable and therefore largely ineffectual in practice. There is a considerable array of these instruments but few if any of them are binding, and corporations have no qualms about flouting them, particularly in Southern countries where national accountability mechanisms are rare, access to justice for ordinary citizens is difficult, and national governments are prepared to collude with corporations for the sake of the perceived benefits to their own economies. In this situation, lawyers, trade unions and human rights organisations working on behalf of workers and others whose rights have been violated find themselves at an impasse.

1.1 The Seminar

In April 1999 the Department of Public International Law at the Erasmus University of Rotterdam organised a colloquium on corporate responsibility, one of the first seminars to address these issues (see brief report, ER 4.1). At the same time IRENE, during its work on codes of conduct, had noticed that lawyers were interested in NGO initiatives around corporate social responsibility, while NGOs were reluctant to undertake legal action against MNCs without first getting information and support from specialists in international law. The present Seminar, therefore, was organised jointly by the Netherlands-based NGO network, IRENE, and the School of Law at the University of Warwick, to enable practitioners of different kinds to build on the theoretical insights of the Rotterdam Seminar and begin to discuss what can be done in practice to increase MNCs’ accountability and ensure implementation of the international instruments for the protection of human and environmental rights.
The aims of the Seminar were:

  • to bring together different groups working to achieve corporate accountability: lawyers, trade unionists, academics/researchers, development NGOs (NGDOs) and campaigning organisations;

  • to review legal initiatives aimed at controlling corporations and examine the legal and pseudo-legal issues raised by some key cases;

  • to suggest future directions and initiatives for civil society in making corporations more accountable to states, citizens and the planet.

About 40 people, representing a very wide range of relevant experience and expertise, attended the Seminar. Lawyers involved in specific cases of legal claims against MNCs, or with institutional initiatives such as the OECD Guidelines Multinational Enterprises or the UN Subcommission for the Promotion and Protection of Human Rights, were joined by academics and researchers from several countries, the international mining and chemical industry trade union ICEM, and members of NGDOs and advocacy and campaigning organisations from several European countries.

The Seminar was held as a roundtable discussion and used a number of short presentations to stimulate debate and brainstorming on strategies, together with exchange of practical experiences. This meant that the discussion was both wide-ranging and intense; occasionally diffuse, but rich in ideas coming from a wide spectrum of perspectives on this increasingly urgent issue of rights, justice and governance.
It is worth emphasising that this Seminar did not pretend to arrive at definitive conclusions or strategies. Active collaboration between lawyers and concerned NGOs on these issues is still in its early stages, and this Seminar should be viewed as work in progress.
‘Laws are created by and for the powerful, but once they are there, they can be used against them.’

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