Memorandum submitted by the Institute
of Directors
INTRODUCTION
1. The Committee has identified an important
area of concern, and the Institute of Directors is very happy
to contribute to the debate. This evidence is submitted in response
to the call for evidence that the Committee issued on 6 March
2009.
2. Questions of the observation of human
rights by businesses can arise in two very different contexts.
The first context is where a national legislature legislates for
the observation of human rights within that country. In such cases,
the questions are those of the proper extent of such law and of
the extent to which the legislation of human rights is the best
way to achieve policy objectives. The second context is where
the relevant legislature, judiciary and business activities are
not all in the same country. Then there are important questions
as to the legitimacy of extra-national legislation and judicial
process. We tackle each of these two contexts separately in what
follows.
HUMAN RIGHTS
AND BUSINESSES
WITHIN ONE
COUNTRY
3. The call for evidence specifically refers
to business operations within the UK. We here discuss the usefulness
of human rights legislation in this purely national context.
4. There is a serious danger of extending
the language and the legislation of human rights to areas where
they do not belong, and in consequence imposing new burdens on
business that will ultimately harm everyone except those who make
a living out of enforcing or litigating regulations.
5. The main legal point of reference is
the June 2007 House of Lords decision in YL (by her litigation
friend the Official Solicitor) (FC) v Birmingham City Council
and others. This case did however turn on the narrow question
of whether a private care home was performing functions of a public
nature, and there was a 3:2 majority view that it was not.
There was no decision on whether YL's human rights were in fact
violated or at risk of violation, although there were obiter dicta
on the potential for violation of the rights of care home residents,
notably in Baroness Hale's speech (paragraph 58). Baroness Hale
mentioned the risk of inhuman or degrading treatment, of loss
of liberty and of loss of privacy and of family contact. She noted
that it would be possible for rights to be violated without the
crimes of ill-treatment or of neglect being committed.
6. Two main questions arise.
7. Should private contractors providing services
on behalf of the state be brought within the scope of human rights
law as it applies to the state when it provides services directly?
8. An argument in favour is that if this
were not so, the state could evade human rights obligations simply
by contracting out services. An argument against is that one would
lose the opportunity to save money by contracting out on the basis
that the required services were well-defined but the private contractor
was allowed to provide those services in the most efficient way
possible, without being burdened by a civil service mentality.
Another argument against is that subjection to human rights law
could be taken to excuse the state from defining standards of
service properly. That is, it would encourage lazy contracting
by the state.
9. When an action or a failure to act might
be regarded as a violation of a human right, but might also be
regarded as a failure to provide a high enough level of service,
to what extent should human rights law apply?
10. The point here is that a violation of
human rights is naturally taken very seriously, whereas a failure
to provide a high enough level of service would normally merit
an apology, improved service and some modest compensation. The
question is, is there a line to be drawn so that some acts or
omissions, while they could be construed as violating human rights,
should be regarded as not sufficiently grave for human rights
legislation to apply? This is a serious issue because the European
Convention defines rights in such broad terms that minor failings
with modest consequences could be construed as violating human
rights.
11. It is our view that there is a strong
case for drawing such a line. Litigation is unnecessarily encouraged,
and costs are driven up, by the invocation of human rights law.
Human rights law can be a valuable weapon against ministers and
officials who misbehave. But it should not be invoked in disputes
that should be settled by informal compromise.
12. If a line is to be drawn, one must ask
where. One guideline might be that one should identify the sorts
of conduct that a reasonable person might expect to count as criminal
offences, even if they do not actually count as offences and even
thought the Human Rights Act 1998 itself explicitly does
not create criminal offences (section 7(8)). Another guideline
might be that one should identify the sorts of conduct that a
reasonable person who was unaware of the narrow criteria that
were laid down in Rookes v Barnard 1964 (discussed
in Kuddus (AP) v Chief Constable of Leicestershire Constabulary,
[2001] UKHL 29) would think merited the award of exemplary damages.
THE INTERNATIONAL
CONTEXT
13. If it is proposed that there should
be some requirements on business activities in a country that
are imposed from elsewhere, that raises wider issues. It is necessary
to go back to first principles.
14. Liberal democracy has developed on the
basis of a clear division between civil society, government and
business (Habermas, 2001). The specific role of business is to
contribute to the wellbeing of society by generating wealth, creating
jobs and paying taxes. In addition, firms gain legitimacy by operating
within the framework of applicable law and prevailing moral values
(ie hard law and soft law). However, it is not the role of firms
to enforce law or to impose their moral preferences or norms on
the rest of society. The latter are the responsibility of government
and civil society respectively.
15. Considerations of human rights affect
corporate behaviour to the extent that they impose a binding legal
requirement on companies, or provoke a response due to the demands
of widely accepted societal values and moral principles.
16. This model may function in a straightforward
manner in a national context. But beyond the nation state, there
are not yet sufficiently strong global governance institutions
that can define and impose laws and enforcement mechanisms.
17. For example, the existing corpus of
international law has been developed as a legal framework for
the interactions of nation states (Kingsbury 2003). Its direct
application to non-state actors such as corporations is still
underdeveloped. As a result, no specific regulations exist that
can be used to hold corporations responsible for human rights
violations or the support of repressive regimes (Taylor 2004).
International conventions—such as the UN Convention on Human
Rights—may represent a universal normative standard for
corporations, but they cannot be enforced on them.
18. One response to this legal vacuum is
for individual nation states to impose legal restraints in foreign
jurisdictions. For example, in recent years, the US government
and US courts have begun to develop laws or apply existing laws
beyond their own national borders. They have punished US and non-US
companies for corruption via the Foreign Corrupt Practices Act,
for human rights violations via the Alien Tort Claim Act, and
for financial fraud via the Sarbanes-Oxley Act.
19. However, this is not an approach with
which we agree. Such a transnational application of US law serves
to weaken the sovereignty of other national governments. In addition,
it lacks legitimacy in the eyes of non-US citizens. If enforced
by one country (or a few countries), human rights could easily
become seen as an appendage of the foreign policy of that country,
or an attempt to achieve cultural hegemony. There are arguments
that would undermine the objection that is based on cultural hegemony.
One can argue that it is legitimate, from your own standpoint,
to claim that your approach to human rights issues is objectively
superior to the approaches of others, but the validity of such
arguments is debatable except in the most egregious cases of human
rights abuses by, or with the connivance of, foreign regimes.
20. Some global corporations have responded
by entering political domains that have traditionally belonged
to state actors (Walsh, Weber, and Margolis 2003). For example,
corporations have started human rights initiatives, such as the
Business Leaders Initiative on Human Rights of British Petroleum,
ABB and other companies. Furthermore, they have proposed initiatives
of self-regulation in order to fill the described vacuum of global
governance (Scherer, Palazzo, and Baumann 2006).
21. However, the entry of corporations into
the political domain is an equally unsatisfactory solution. Companies
lack the political legitimacy to act in this area. Furthermore,
the firm's primary duty is to promote the success of the company.
Although this will involve incorporating ethical and social responsibility
considerations into the decision-making process, firms should
not seek to become quasi-governmental bodies. Government is the
primary institution concerned with the welfare of society as a
whole. It should also seek to hold a monopoly on the enforcement
of law (as argued by Max Weber), and not rely on companies to
fulfil that function.
22. Consequently, the legitimate enforcement
of human rights at a transnational level is the proper function
of appropriate international governmental bodies that command
a high level of support amongst the community of nations. If these
do not exist, they should be created. Human rights are universal
values that exist independently of nation states. Consequently,
an appropriate global governance framework should be designed
to enforce them. However, it is not the role of companies to undertake
this task, or to act as a trans-national police force for human
rights in the interim.
23. There are also more specific arguments
why enforcement should be a matter for international bodies. International
documents that set out rights do so in general terms, so that
the rights are open to interpretation. It would be fruitless to
seek universal agreement on interpretations, but one should at
least seek interpretations that are widely agreed. Only an international
body would have the authority to say that a right should be interpreted
in such a way that a given course of conduct should be regarded
as a violation of that right. It is particularly clear that interpretations
can differ between countries, and legitimately so, in relation
to environmental rights and labour rights. The international interpretive
body might well be the court that heard specific cases, because
the consensus that could be obtained in the text of interpretations
that were not prepared for specific cases is probably to a large
extent reflected in the documents that have already been published.
Moreover, if one were to say that it was appropriate for a court
of one jurisdiction, rather than an international court, to interpret
human rights, one would have to accept that it was appropriate
for the courts of any jurisdiction to do so, or produce a further
argument why not. Absent such a further argument, the decisions
of courts of oppressive regimes would then come to be accepted
as respectable.
REFERENCES
Habermas, J. (2001). The Postnational Constellation.
Cambridge, Mass.: MIT Press.
Kingsbury, B. (2003). The International Legal Order.
In P. Cane, and M. Tushnet (Eds.), The Oxford Handbook of Legal
Studies: 271-297. Oxford: Oxford University Press.
Scherer, A. G., Palazzo, G., and Baumann, D. (2006).
Global Rules and Private Actors. Towards a New Role of the Transnational
Corporation in Global Governance. Business Ethics Quarterly,
16: 505-532.
Taylor, K. M. (2004). Thicker than Blood: Holding
Exxon Mobil Liable for Human Rights Violations Committed Abroad.
Syracuse Journal of International Law and Commerce, 31(2):
274-297.
Walsh, J. P., Weber, K., and Margolis, J. D. (2003).
Social Issues and Management: Our Lost Cause Found. Journal
of Management, 29: 859-881.
Signed for and on behalf of the Institute of Directors
April 2009
| 
