Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents

Examination of Witnesses (Questions 40 - 51)



  Q40  Chairman: Looking at the US Act and the Shell case, is that pure extraterritoriality or is there some Shell-based link that brought it within the New York jurisdiction?

  Professor Ruggie: There does not need to be in the case of the Alien Torts Claims Act. This was an Act, as I am sure you know, that was adopted by the very first US Congress in 1789, intended to fight piracy on the high seas and to protect ambassadors. It was in the late 1980s that the human rights community discovered that this might be a tool to use against state abuses, and then in the 1990s they had the bright idea that if you can bring a case against a natural person, why not against a legal person, and so it was extended to corporations. The standards that have to be met for an Alien Tort Claims Act are pretty high. It has to violate clearly the laws of nations; it has to be precise; it has to be a universally recognised act like crimes against humanity, torture, slavery, forced labour and the like.

  Q41  Chairman: So it is a bit of mission creep over 200 years?

  Professor Ruggie: It was not mission creep because no-one knew it existed for 200 years!

  Q42  Chairman: We have seen mission creep in our public order laws and mission creep in our counter-terrorism laws and we are now seeing mission creep in piracy to multinationals. Just exploring this a bit further, we certainly know there has been some concern in the UK over extraterritorial jurisdiction exercised by the US courts over UK activities which have got nothing to do with the US, so I can see that it can create some degree of resentment. Your answer is for limited extraterritoriality where you have got a link of some sort through one arm of the company, usually the parent company but presumably also the subsidiary, in the country in which the extraterritorial jurisdiction is going to be exercised in relation to that company's activities in the broadest sense anywhere in the world within a certain threshold of international norms?

  Professor Ruggie: I think, at least in the current situation, that is the most effective and certainly the most permissible form of extraterritoriality, apart from crimes against humanity. Let us put that in a separate category.

  Q43  Mr Sharma: In your latest report, you recommend that "governments give more weight to NCP findings against companies". In your view how should states do this? Is there any existing good practice?

  Professor Ruggie: Again, there are some fairly obvious steps that governments could take that they really have not. An NCP can deliver a finding against a company currently and that company can come back the next morning to apply for support from an export credit agency and there is nothing to prevent their getting support. It seems to me that at a minimum there ought to be a probationary period before they can come back to the public trough having had the NCP deliver a finding against them. There are so many things that, forgive the colloquialism, are "no brainers" that seem so logical to me, and yet they are not being done, and that would be an example. The export credit agency should say, "We want to see evidence that in fact you have taken the finding into account and you have corrected for whatever the defect was that was found in your system and in your activities."

  Q44  Chairman: Have you got a specific example you could give?

  Professor Ruggie: It does not exist now but it should exist.

  Q45  Mr Sharma: You have ruled out the prospect of a new international adjudicatory body for the purposes of providing remedies when home states fail to do so? Have you ruled this option out as it is unworkable or because it is unlikely that a consensus of states and business organisations will accept this approach?

  Professor Ruggie: I think the honest answer is both. I have been hanging around the UN most of my adult life and I find it hard to imagine an effective, neutral, well enough resourced body emerging that would develop trust and confidence. I just do not see that happening very soon. I think the worst outcome would be a body that does not have credibility and is not well enough resourced. I would much rather see us pay attention to, for example, creating a network of mediation services. I find the idea that you can somehow adjudicate out of a single location in Geneva what 77,000 multi-nationals and 800,000 subsidiaries do around the world conceptually as well as politically difficult to grasp.

  Q46  Chairman: So the answer presumably is a network of extraterritorial jurisdiction?

  Professor Ruggie: That might be part of the solution but there are non-traditional remedies as well that we should not ignore. I think, as I said earlier, states need to understand better what their current obligations are and act on them.

  Q47  Mr Sharma: A number of witnesses have recommended the creation of a UK commission for business and human rights, which would have an adjudicative but not judicial function. Are there any practical objections to the operation of a domestic adjudicative body considering complaints against a UK company allegedly infringing human rights standards in a host's state? If so, what are they?

  Professor Ruggie: I would have to know the exact details of the proposal to answer that, but I do not see a principled objection to a country that decides to adopt institutions to more effectively fulfil its human rights obligations and to ensure that companies pay attention to their human rights impact. I certainly have no principled objection to a country doing that. In fact, I would encourage countries to look into those kinds of possibilities.

  Q48  Chairman: Anybody else? We have run out of our questions now. Is there anything else that you want to say to us before we close the formal session?

  Professor Ruggie: If I may, one thought, and it goes back to a question that you asked earlier, I believe Chairman that it was you: do we have to wait for everybody to act simultaneously or are there things that we ourselves as individual countries can do? I would certainly discourage the former. The idea that you cannot solve any problem until you have solved all problems is not an appealing one, and it means that nothing will ever happen. Different countries will have different approaches, fitting their own statutory and cultural experience, but I would encourage individual countries to do what they need to do and what they should be doing to advance the cause of helping to reduce human rights harm of companies, especially when they are operating in weak governance zones abroad, and helping to reduce the risks to companies themselves, to avoid $27 billion lawsuits.

  Q49  Chairman: There is one question I have just thought of and it is to do with the imbalance between developing countries and big developed countries in what are often sovereign wealth fund contracts or big multinational contracts, where basically the lawyers setting up the contracts for the iron ore contract for the next 100 years, or whatever, run rings around the domestic companies and set up the whole thing to their benefit. Is that the sort of thing which you are looking at as well as part of this?

  Professor Ruggie: I think that is certainly an area worthy of investigation. The whole issue of sovereign wealth funds is something that I think deserves investigation. I think some of the provisions of investment agreements do as well. It is an area that we are pushing in the mandate. We say to developing countries in particular, "Well, look, you have the primary responsibility, it is your job to pass laws and regulations to regulate the businesses within your jurisdiction," and then we push them into or encourage them to sign on to investment treaties or investment contracts with individual companies that freeze the current regulatory system in place, in some instances for decades. We have looked at 90 redacted investment contracts that we had access to between companies and host governments. We came across one with a sub-Saharan African country which is not all that of a high risk country for the sub-Saharan African region. It was an aluminium smelter and the regulatory structure of that country was frozen in place in that contract for 50 years, renewable at the discretion of the investor for another 50 years, so for 100 years the investor had the discretion to sue the government for compensation to be compliant with national law. That just makes no sense to me; it is utterly dysfunctional.

  Q50  Chairman: That is exactly the sort of thing I had in mind and having recently been to a sub-Saharan African country which is apparently negotiating with a very large company with a very large sovereign wealth fund for a 99-year ore extraction contract, my real concern is, for example in that case, that the lawyers that are available to the country are probably not going to be as highly skilled as those drafting for the company.

  Professor Ruggie: They are not as highly skilled or as highly paid and they are going to be outgunned every time, unless we become more aware of it and begin to provide some forms of assistance.

  Q51  Chairman: Okay, thank you very much.

  Professor Ruggie: Thank you, I appreciate it.

  Chairman: That is the end of our formal session. Thank you very much. The Committee stands adjourned.

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Prepared 16 December 2009