Memorandum submitted by Earthrights
UK BUSINESSES AND ACCESS TO JUSTICE FOR HUMAN
RIGHTS VIOLATIONS
INTRODUCTION AND
SUMMARY
In this submission, EarthRights International
(ERI)[216]
addresses Questions 1, 6, 7 and 8 in the Joint Committee
on Human Rights' 6 March 2009 Call for Evidence.
In Part I, we briefly address the universality
of human rights obligations under international and domestic law.
In Part II, we describe the human rights impacts of the activities
of the UK's Shell Transport and Trading Co. in Nigeria in the
1990s, which have led to litigation in the US. In Part III, we
address potential obstacles to the legal accountability of UK
business entities for human rights abuses. In preparing this submission,
ERI consulted UK human rights and public interest lawyers. In
light of their comments, we draw both positive and negative comparisons
to our experiences with US litigation. Finally, in Part IV, we
suggest ways to enhance the ability of individuals to seek appropriate
remedies for human rights claims against corporations in UK courts.
The United Nations Special Representative on
Human Rights and Transnational Corporations, John Ruggie, has
identified access to remedies as a crucial prong of his mandate.
We strongly believe that "host countries"—the
jurisdictions in which abuses typically take place—should
provide a forum in which people with human rights claims against
companies could seek appropriate remedies. Nonetheless, abuses
often occur in countries with repressive regimes. The governments
of such countries may be involved in the abuses, or their legal
systems may be insufficiently independent or otherwise inadequate
to provide a fair forum. Thus, "home countries"—the
nations in which multinational corporations are headquartered
or otherwise subject to the jurisdiction of courts—have
a key role in ensuring legal accountability for human rights abuses.
We therefore express our support and offer our future assistance
to the Committee in its efforts to provide effective access to
remedies for individuals and groups with human rights claims against
UK businesses.
I. UK businesses' universal responsibility
to respect human rights
Businesses' human rights obligations do not
and should not vary depending on where they operate. This universality
principle arises from the facts that fundamental human rights
principles are part of international law recognized by the community
of nations, and that private actors like businesses are liable
for complicity in human rights violations and, in some cases,
for their direct commission of such violations.
In the UK, this principle also applies to UK
corporations by virtue of statutes like the International Criminal
Court Act and the Human Rights Act, which attach criminal liability
to UK residents no matter where in the world they commit prohibited
acts, and European Community and common law principles of jurisdiction,
venue, and choice of law, which may allow UK courts to hear cases
against UK corporations for claims arising abroad, under UK domestic
law.[217]
II. The negative impacts of UK corporate activities
abroad
The activities of UK companies can have grave
negative effects on populations abroad, and serious implications
for the reputation of those companies at home. On 26 May
2009, the UK's Shell Transport and Trading Co. will stand trial,
along with its partner Royal Dutch Petroleum, in a US federal
court in New York in the case of Wiwa v. Royal Dutch Petroleum
Co. Shell is facing claims that it partnered with the Nigerian
military in violently suppressing community opposition to Shell
oil extraction in territory belonging to the Ogoni tribe in the
mid-1990s. The abuses for which plaintiffs claim Shell is responsible
include the torture, maiming, and violent death of innocent civilians,
as well as the arbitrary detention and extrajudicial execution
of local leaders, including Ken Saro-Wiwa. ERI is co-counsel for
the plaintiffs in this case.
III. Barriers and opportunities for access
to remedies
a. Civil litigation against corporations under
the US Alien Tort Statute (ATS)
In the US, lawyers have invoked the Alien Tort
Statute (ATS) as a jurisdictional and substantive basis for holding
individuals and corporations civilly liable for violations of
internationally recognized human rights. The obstacles to successful
litigation should not be underestimated—to date, not a single
suit has resulted in a jury verdict against a corporate defendant
on human rights claims. Regardless, specific accomplishments include:
— In several cases, settlements have provided
compensation to individual victims.
— US courts have asserted the authority
to hold corporations liable for their direct participation or
complicity in a number of human rights abuses, including torture,
forced labor, extrajudicial execution, denationalization, cruel,
inhuman, or degrading treatment, non-consensual medical testing,
and arbitrary detention.
— Those alleging human rights abuses have
told their story, presented evidence in open court, and confronted
powerful interests whom they accuse of causing harm.
These developments have already put a financial
and reputational cost on abusive behavior by businesses abroad;
the possibility of facing ATS lawsuits has led companies to conduct
human rights trainings and impact assessments, implement codes
of conduct, and devise grievance mechanisms for identifying and
remedying potential human rights abuses before they lead to judicial
proceedings.[218]
b. Lessons for corporate liability for human
rights abuses in the UK
Inadequately defined rules of liability
In many corporate human rights abuses cases,
as in Wiwa, the corporation is accused of having controlled,
requested, or substantially assisted the commission of human rights
by military or paramilitary groups. Typically, such corporations
attempt to cloak their involvement through the corporate form.
Thus, without legal doctrines allowing the attribution of tort
liability to one party for the acts of another, businesses and
individuals may not be held accountable for abuses for which they
properly should be considered responsible.
US courts have announced that principles like
aiding and abetting apply in the civil context, and that they
may be used for human rights torts arising under customary international
law.[219]
They have drawn on international legal instruments and the common
law to elaborate the substantive elements and mens rea standards
for these principles.[220]
In cases like Wiwa, human rights claims have proceeded
on other theories of liability, including conspiracy and agency.
Whether a court looks to the common law or to international law
for authority, theories like aiding and abetting, conspiracy,
and agency are available to attribute liability to third parties
who are responsibile for the commission of grave human rights
abuses.[221]
Because the UK relies on the same common-law
principles and references the same international law sources as
US courts, these principles may be applicable in UK courts. For
example, in Lubbe v. Cape PLC, a UK company was held liable
for failure to oversee the acts of its South African subsidiaries.
Some UK lawyers, however, have suggested that the application
of these principles may be uncertain. Articulating principles
of corporate and secondary liability is critical to the provision
of an effective remedy for human rights abuses in UK courts.
Class action suits
UK lawyers have suggested that limitations on
class action suits frustrate the ability of human rights plaintiffs
to seek justice against UK companies. In a US class action suit,
named plaintiffs who are representative of a group of people whose
claims share common elements can sue on behalf of the "class."[222]
While the US class action system is far from perfect, it can be
a powerful tool to seek justice for people for whom it would otherwise
be too dangerous, expensive, or simply impracticable to pursue
redress in foreign courts.
One important aspect of class action suits in
the US for human rights litigation is the "opt-out"
model, which has also been adopted by the Australian federal courts
and the courts of the Canadian Province of Ontario. Neither the
named plaintiffs nor their lawyers need receive approval from
all members of the class to bring the lawsuit; instead, they must
convince a court that class treatment is appropriate and then
publicize the fact of the lawsuit through a court-approved notice
plan. Any person who falls within the class is included in the
action unless he or she expressly declines. For all class members
who do not opt out, the disposition of the class action is binding.
The victims benefit, as they are automatically included in the
proceedings as class members and bear no up-front legal costs
or personal risks. And as the number of people who opt out is
generally minimal, the system makes it much easier for defendants
to settle cases out of court because their liability for the underlying
incident is capped once the class action suit is resolved.
In human rights cases in the US, however, the
class certification system has sometimes proved an insuperable
barrier. To proceed with a class action lawsuit, a court typically
must be satisfied that the class members' common issues predominate
over any individualized issues. This showing can be difficult
to make in the case of gross human rights abuses, which often
involve a pattern of violations over a period of time, featuring
important common factors but widely varied claims and experiences
between plaintiffs. Thus, class certification has been difficult
in ATS litigation, resulting in individual lawsuits that exclude
large numbers of potential claimants and that do not resolve the
defendant's overall liability.
In the UK, plaintiffs whose claims represent
similar fact patterns may obtain a group litigation order, which
allows them to litigate the common aspects of their cases jointly,
on an opt-in basis. For human rights plaintiffs, this approach
presents some advantages over the US model, as it allows for joint
litigation whenever the interests of justice and judicial economy
support it. Furthermore, UK group litigations move much more quickly
through the judicial system than US class actions. However, we
are concerned that the opt-in system can involve prohibitive up-front
costs, particularly in the international context. It often entails
a low participation rate, most likely excluding disadvantaged
and difficult-to-reach individuals. Furthermore, the lack of a
system by which class representatives or advocacy groups can litigate
private grievances on behalf of large groups discourages litigation
on more risky or experimental claims.[223]
Financial barriers
Some UK lawyers have expressed concerns that
the strict application of the loser-pays system, prohibition on
contingency fee arrangements, and difficulty of obtaining exemplary
damages have had a chilling effect on human rights lawsuits. We
do not question the general logic of these rules, but there may
be good public policy reasons to make exceptions in cases involving
egregious human rights abuses in order to provide financial incentives
for lawyers to take such cases.
Perhaps the most striking example we can provide
to illustrate this point is the case around which ERI was founded,
Doe v. Unocal. In Unocal, which eventually settled
out of court, public interest lawyers with few financial resources
filed suit on behalf of Burmese refugees who had been subject
to torture, forced labor, rape, and other gross violations. It
was the first case to use the ATS against a corporation successfully;
as such it was completely novel and its prospects for success
deeply uncertain. Plaintiffs were protected, however, by the well-established
doctrine that courts will exempt claimants bringing non-frivolous
suits with a significant public interest—especially those
seeking to vindicate civil rights—from paying the costs
of their opposing party, and the general American rule against
payment of the opposing party's legal fees. Furthermore, cases
like Unocal generally could not be brought without the
involvement of experienced private attorneys, who are attracted
by the ability to enter into contingency fee arrangements with
their clients and the possibility of sharing in an award of punitive
damages.
It would have been more difficult to bring a
case like Unocal in the UK because financial incentives
are skewed against human rights claimants. In the UK, protective
cost orders are available in the public sphere to prevent parties
from inflating the costs the losing party may be forced to bear.
This benefit is not available in private litigation, however.
Furthermore, it is difficult for public interest plaintiffs to
obtain after-the-event insurance on high-risk claims—a prerequisite
for conditional fee arrangements. Thus, to bring a case like Unocal
in the UK, plaintiffs would have risked liability for the enormous
costs and fees of the other side. Nor could they easily have attracted
private sector legal assistance; without contingency fees and
punitive damages, the potential reward for winning was unlikely
to outweigh the financial risk.
IV. Recommendations
The legal and financial issues identified above
may obstruct access to civil justice for victims of human rights
abuses by UK corporations operating abroad. We therefore recommend
that the Government:
a. Provide explicit guidance to UK courts on
the theories of liability by which corporations may be held liable
for the acts of subsidiaries and third parties. Amend existing
statutes incorporating international crimes into UK domestic law
to allow the use of international legal sources as interpretive
guides for liability.
b. Adopt the recommendations of the UK Civil
Justice Council on implementing the opt-out model for group litigation
in human rights cases, at least where the affected group is large
and difficult to treach, and where individual notice is impracticable.
c. Review the UK's loser-pays rules, restrictions
on punitive damages, and prohibition on contingency fee arrangements,
with the aim of carving out exceptions or otherwise easing the
financial burden on international human rights plaintiffs from
whom the danger of abuse of the system is low and the value to
the public of permitting litigation is high.
Earthrights International
May 2009
216 EarthRights International (ERI) is a nonprofit,
nongovernmental organization working for the defense of human
rights and the environment. ERI was counsel in the landmark case
Doe v. Unocal, charging the California company with complicity
in abuses on its pipeline project in Burma, and currently represent
victims of environmental and human rights violations in lawsuits
against Chevron, Shell, Chiquita, Union Carbide, and Occidental
Petroleum. Back
217
See FAFO, "United Kingdom: Survey Responses and Questions
(2004)-A Comparative Survey of Private Sector Liability for Grave
Violations of International Law in National Jurisdictions".
Available at http://www.fafo.no/liabilities/UK%20Survey%20standardized%20Nov%202004.pdf. Back
218
See, eg, Jonathan Drimmer, "Five Tips to Avoid the
Human Rights Litigation Trap", 26 March 2009. Available
at http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1202429383515. Back
219
See, eg, Khulumani v. Barclays Nat'l Bank Ltd.,
504 F.3d 254, 260 (2d Cir. 2007). Back
220
See, eg, In re South African Apartheid Litigation, No.
02 MDL 1499 (SAS) at 45-53 (S.D.N.Y. 8 April
2009). Back
221
See, eg, Burlington Indus. v. Ellerth, 524 U.S. 742,
754 (1998) (relying on the "general common law"
of agency); Prosecutor v. Blaskic, No. IT-95-14-A at ¶50 (ICTY
Appeals Chamber, July 29, 2004) (citing knowledge standard for
aiding and abetting); United States v. Flick, 6 Trials
of War Criminals Before the Nuremberg Military Tribunals Under
Control Council Law No. 10 at 1220 (1952) (approving
theory of constructive knowledge for aiding and abetting). Back
222
Other models for class action lawsuits exist in Portugal, Italy,
and Australia, among others. In a different context, the International
Criminal Court allows victims to appear in court on a class representative
basis. Back
223
See generally, Rachel Mulheron, Reform of Collective
Redress in England and Wales: A Perspective of Need. Civil
Justice Council: London (2008). Back
|
