Examination of Witnesses (Questions 40
- 51)
WEDNESDAY 3 JUNE 2009
PROFESSOR JOHN
RUGGIE
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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