6Access to justice
151.In previous chapters, we have outlined different ways to secure business compliance with human right standards, including, but not limited to, appeals to the moral conscience of businesses; pressure brought to bear by consumers and others; government regulation and initiatives; and preferential access to public sector contracts. This chapter will focus on a fifth avenue: accountability in the courts and other forums.
152.The UK has a range of judicial mechanisms that help to support access to remedy for human rights abuses by business enterprises both at home and overseas. These include:
- Employment Tribunals, which provide access to remedy for abuses of labour rights in the UK.
- Avenues to pursue civil law claims in relation to human rights abuses by business enterprises in the UK and overseas.
- Specific criminal law provisions, including under the Bribery Act 2010 (applies in the UK and overseas), Modern Slavery Act 2015 (applies in the UK and overseas), Serious Crime Act 2007 (applies in the UK and in limited circumstances, overseas), Corporate Manslaughter and Corporate Homicide Act 2007 (applies in the UK) and Gangmasters (Licensing) Act 2004 (applies in the UK).
Current barriers to accessing justice
Difficulties for foreign claimants accessing justice in-country
153.Victims of abuses by UK companies can face difficulties in obtaining justice in the country where the abuse occurred. The solicitors Leigh Day told us:
“Victims of human rights abuses by multinational companies operating in developing states frequently find the impediments to accessing local courts insurmountable. The ability to pursue claims in the multinational’s home state (whose courts will have jurisdiction over claims against the MPC [multinational parent company]), such as in the UK, may often be the only feasible avenue for victims to seek access to justice. Nevertheless, there are multiple barriers to accessing the UK courts in such cases.”164
154.This was reinforced by the evidence we heard from Mr John Gbei, a claimant in a large class action case brought against Shell by residents of Bodo, Nigeria. Mr Gbei suffered loss of livelihood and quality of life as a result of an oil spill in the Niger Delta. He told us about the process he and fellow claimants went through in order to obtain justice:
“We decided to give it to a Nigerian lawyer because he was our brother, an Ogoni indigen, and Bodo is part of the Ogoni community. We explained that, being our brother, he could pursue justice for us, but unfortunately the matter was with him for two years. He tried to go into negotiation with Shell rather than instituting the case in the court. There was no outcome, no nothing, so after two years of the matter being with him the Bodo people decided to withdraw the power from him and give it to a London law firm, Leigh Day & Co … Also, given the Nigerian legal system, there would be delay, and it was a matter that needed urgent attention … If you had been to Bodo at that early stage of the spill, you would have discovered that the people were in a bad situation. You would have pitied us. A matter of such magnitude needed not to be delayed in the court.”165
These comments provide a compelling illustration of the difficulties facing individuals in other countries seeking to promote claims against UK companies or their subsidiaries.
Legal aid and the effect of Rome II
155.The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) made significant changes to the legal aid regime. The Business & Human Rights Resource Centre believed that the two most significant changes from a business and human rights perspective were as follows:
“The success fee (still 100% except in cases of personal injury, capped at 25%) must now be paid from the compensation awarded to the victims of abuse;
“the costs incurred by the winning side’s legal team, which are recoverable from the losing side, must now be ‘proportionate’ to the amount awarded in compensation.”166
156.Richard Meeran, a solicitor at Leigh Day, told us that because of the “change in the law on recoverability of success fees”, the company was reluctant to take these out of its clients’ damages “which means the profitability of the cases has decreased.”167
157.On the second point, the proportionality test,168 concern is further exacerbated by the EU Rome II Regulation (Rome II). The Bingham Centre for the Rule of Law told us: “The EU Rome II Regulation provides that for corporate entities domiciled in the EU, the law that applies to claims is the law of the State in which the damage occurred and damages are to be assessed in accordance with that law.”169
158.Leigh Day summarised the cumulative effect of both the LASPO and Rome II provisions:
“Since 2009, Rome II has required damages in tort cases to be assessed by reference to local levels. The effect is that damages in international corporate human rights abuse claims are generally very low compared to the damages awarded for the same torts occurring in the UK.
“Simultaneously, LASPO has caused a tightening of the ‘proportionality’ rule, generally requiring costs to be less than damages. With Rome II resulting in relatively low damages, the proportionality rule has often been relied upon by defendant companies to seek to restrict the incurrence of costs in these complex international cases, most specifically in relation to the costs of disclosure, which is an essential tool for victims’ access to evidence.
“LASPO has also resulted in the removal of recovery of success fees from defendants, such success fees now only being recoverable from the Claimants themselves. LASPO has thereby reduced the levels of compensation available to victims and concurrently, the financial viability of lawyers taking on the financial risk in pursuing the claims.”170
159.When asked about the changes to legal aid and the effect these have had on victims accessing justice, Sir Oliver Heald QC MP, Minister of State for Justice, replied: “The civil legal aid situation is that if there is any question of our international obligations being at stake, which could well apply with human rights, exceptional case funding [ECF] can be made available and the Legal Aid Fund can make that decision.”171 He followed up with supplementary written evidence, in which he clarified the position regarding granting of ECF:
“ECF is available for human rights violations, which relate to the violation of an ECHR or EU law right, subject to the means and merits test, and where the absence of legal aid would constitute, or risk, a violation of that right … I have asked the Legal Aid Agency, and unfortunately there is no way of breaking down the types of case which receive ECF in order to identify which would fall into this category. I can say that in general, over the last year, around half of total ECF applications have been granted.”172
160.However, ECF is limited to an ECHR right or an EU right, whereas most of these type of claims relate to tort claims against companies, rather than to the actions of a public authority (as is required by the Human Rights Act).
161.The Minister also told the Committee that the effects of LASPO would be reviewed over the next two years:
“We are going to produce for the Justice Committee our post-implementation memorandum for the whole of the Act by May [2017]. We are going to do the post-implementation review of legal aid, which is part 1, over the period up to next year. We will produce a Green Paper early in 2018. Part 2 covers conditional fee arrangements, which have been mentioned in evidence to you in this inquiry, and we will review that in 2018.”173
162.On the issue of Rome II, the Minister was clear that the benefits of the provision outweighed the costs:
“The point about Rome II is that it is well accepted across Europe, obviously, and it is useful that we have the same sorts of rules about how cases that are not contractual are dealt with. The effect of it, which is sometimes criticised, is that it basically works on the idea that the case will take place in the country where the damage occurs. That can mean that those rules require a case to be heard elsewhere in Europe rather than here. On the other hand, there is certainty.”174
Employment tribunal fees
163.In July 2013 the Government introduced a scheme of fees for claimants wishing to take a case to an employment tribunal.175 This has led to a fall in the number of cases being taken to employment tribunals. The Equality and Human Rights Commission, which has been monitoring the situation, explained its concerns:
“The Commission is concerned about the substantial drop in workplace discrimination cases following the introduction of employment tribunal fees. This is particularly marked for cases involving discrimination on the basis of sex, disability, race and sexual orientation, and cases on equal pay and unfair dismissal. Given that over four-fifths of claimants for sex discrimination and equal pay cases are women, the introduction of tribunal fees has had a disproportionate impact on this group. Figures from the Ministry of Justice indicate drops of 43 per cent in race discrimination claims and 64 per cent in religion or belief discrimination claims across Great Britain. In Scotland, race discrimination claims have fallen 59 per cent.”176
The TUC described the policy of employment tribunal fees as “a huge victory for Britain’s worst bosses”,177 because employees no longer felt able to access justice.
164.Sir Oliver Heald told us that the Government was consulting on some improvements to the scheme, but that overall the policy had worked well:
“We believe that the policy has worked in the way that we intended it to, which was, first, that we would recover some money to help with the costs of running the tribunals and we recovered about the amount that we expected. Secondly, we wanted to improve the take-up of conciliation.”178
165.In supplementary written evidence, the Minister detailed the numbers of claims to employment tribunals before and after the introduction of tribunal fees; and concurrently the number of referrals to the pre-claim conciliation service. The Government’s view was:
“The introduction of fees in the Employment Tribunals, allied to the introduction of ACAS’s early conciliation service, which became mandatory in May 2014, has led to a dramatic shift in the way that employment related disputes are dealt with, and this is helping many more people to resolve their workplace disputes while avoiding the stress and cost of the tribunal.”179
166.The same assertion was made to the House of Commons Justice Committee during its inquiry into Court and Tribunal Fees. The Justice Committee concluded, however, that the Government’s argument that access to justice had not been affected because of the success of the early conciliation service was “even on the most favourable construction, superficial.”180 It also concluded that fees “have had a significant adverse impact on access to justice for meritorious claims”,181 and recommended that “the overall quantum of fees charged for bringing cases to employment tribunals should be substantially reduced”.182
167.The House of Commons Women and Equalities Committee has endorsed the findings of the Justice Committee, also calling for “a substantial reduction in tribunal fees for discrimination cases”.183
High costs of this type of litigation
168.The circumstances in which victims of human rights abuses by large companies often find themselves tend to mean that they do not have much money with which to pay legal fees. This means that, in order to have legal representation, they need to find a lawyer who will represent them on a no-win, no-fee basis. This significantly reduces the pool of lawyers willing to take on such cases: as the Law Society told us, “For smaller firms, this creates significant cash-flow issues if they take on this type of work, as cases are often protracted, taking years to be resolved.”184
169.Exacerbating this issue is the fact that cases against large multinational companies are invariably very costly. Deighton Pierce Glynn explained some of the factors: “Factual complexities, translation costs, expert costs, travel costs, evidence gathering costs, security costs etc”.185 As a result, case selection can be skewed “towards ‘high quantum’ cases (usually class actions) in order to ensure recovery of the costs invested in the event of success”.186 It can therefore be extremely difficult for individual victims of a human rights abuse outside the UK by a multinational company to find lawyers willing to represent them.
Conclusions
170.Our evidence indicates that the Government’s approach is weakest in the area of access to remedy. There is a lack of engagement from the Ministry of Justice. This was particularly clear to us during our meeting with the Minister, whose answers demonstrated a measure of complacency when confronted with some of the issues we have considered.
171.We heard substantial evidence on the range of obstacles that obstruct access to remedies for victims of human rights abuses by companies. These include the changes to limit legal aid provision, limits on the recovery of legal costs in these types of case, increases in court and tribunal fees, and the otherwise high costs of civil action, especially if the abuse has occurred overseas. In addition, court procedures have made it increasingly difficult to obtain access to corporate documents.
172.We look forward to the results of the Government’s review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and will follow closely any changes made to that Act, in order to assess whether they are sufficient to mitigate these concerns.
173.We join the Commons Justice and Women and Equalities Committees in calling on the Government to reduce employment tribunal fees. These, it is clear to us, are a barrier to victims seeking justice when they have suffered human rights abuses, including discrimination, at the hands of their employers and offer impunity for employers abusing human rights.
Access to remedy under civil and criminal law
Complexity of corporate structures
174.Accessing justice in respect of human rights abuses committed by large UK companies can be further complicated in cases involving Multinational Parent Companies (MPCs), with subsidiaries in other countries. Leigh Day explained how the law currently operates:
“The doctrine of separate corporate personality means that the circumstances in which the ‘corporate veil’ may be pierced so as to make a shareholder liable for the conduct of companies in which it invests [are] very limited. In the UK, the current legal framework for pursuing claims against MPCs has focused on the direct causative acts and omissions of the MPC itself rather than the acts and omissions of its subsidiaries.”187
175.Witnesses cited examples where the doctrine of separate corporate personality had been upheld by UK courts, presenting a barrier to victims seeking remedy. One example was the 1990 case of Adams v Cape Industries Plc,188 which:
“concerned US asbestos workers who sued the US company for damages to their health … They won their case in the US but the US company had no money. It was a subsidiary of the UK company, so they sought to enforce that judgment in the UK courts, which said that they were bound by limited liability and corporate separate personality and could not enforce the judgment against the parent company.”189
176.In 2012, in a ground-breaking judgment, Chandler v Cape plc,190 the Court of Appeal held that, in appropriate circumstances, the law may impose on a parent company responsibility for the health and safety of its subsidiary’s employees. The Court listed four circumstances that should apply:
- first, that the businesses of the parent and subsidiary are the same;
- secondly, that the parent has, or ought to have, superior knowledge of health and safety in the particular industry;
- thirdly, that the subsidiary’s system of work is unsafe as the parent company knew, or ought to have known; and
- fourthly, that the parent company knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees’ protection.
177.In Chandler v Cape plc, the claimant, Mr Chandler, had contracted asbestosis as a result of his employment with the subsidiary of Cape plc. He claimed that Cape plc was liable to him on the basis of the common law concept of assumption of responsibility. Ultimately, the Court of Appeal found that the parent company Cape plc owed a direct duty of care to the employees of its subsidiary Cape Products. Chandler v Cape plc is a landmark judgment, as it is the first legal precedent for holding parent companies accountable in the context of corporate groups’ activities.
178.The effect of Chandler v Cape was qualified in 2014, when the Court of Appeal in Thompson v The Renwick Group Plc191 held that Chandler “required proof that the parent company was better placed, because of its superior knowledge or expertise, to protect the employees of subsidiary companies and that the subsidiary would rely upon the parent deploying its superior knowledge in order to protect its employees from risk of injury”.192
179.While Chandler showed that it is possible for liability to be assigned to the parent company, Richard Meeran told us that companies still used the corporate veil to avoid responsibility for harms done by their subsidiaries:
“I do not think there is any doubt that companies have utilised or attempted to utilise the corporate veil, as they call it, to its full extent. This idea that different corporate entities, even within a multinational group, are separate legal entities, and that the parent company is merely a shareholder which is not liable for the conduct of its subsidiaries, is one that multinationals have relied on very heavily, including in defending the cases that we have brought.”193
Contracting in supply chains
180.This problem also presents itself when human rights harms are committed by businesses which UK companies have contracted with to provide goods or services. We found this is particularly pertinent in Turkey, where Syrian refugees have found themselves at risk of exploitation by unscrupulous factory owners; and in Leicester, where migrant workers in garment factories are paid below the minimum wage and work in unsafe conditions. While UK companies may choose to remediate the situation in which, for instance, a child labourer is found further down their supply chain, as a number of UK companies have done in Turkey, they cannot be held legally accountable for the actions of their suppliers in a UK court.
Importance of access to both civil and criminal remedies
181.It is clear to us that any legal regime for providing access to justice for victims of human rights abuses by businesses must provide for both civil remedies and criminal sanctions.
182.Civil law allows the victim to pursue their claim directly without recourse to prosecuting authorities. It also enables them, should they win the case, to claim reparation from the offending company, to give appropriate remediation to them for the harm they have suffered. Victims are not able to access any remedy directly themselves when a criminal case is brought, and not all human rights abuses are criminal offences, so civil remedies may be suitable for many human rights abuses that are not criminalised (as well as for those that are criminalised). Punitive damages are also a way of deterring companies for behaving similarly in the future and may incentivise victims to come forward.
183.A number of aspects of criminal law make accessing remedy for victims more difficult than in civil law. Criminal offences, unless subject to strict liability or committed through recklessness, require proof of mens rea (criminal intent) by the prosecution. This can be difficult to establish for a business, as the Bingham Centre for the Rule of Law told us: “Intent is based on the intentions of the individuals who direct its mind and will, primarily the directors”. The Centre went on to identify other limitations of the criminal law for victims: “Furthermore, UK criminal law generally only applies to acts committed within the UK, excluding human rights harms committed overseas. Finally, the standard of proof for criminal offences is beyond reasonable doubt, which is higher than for tort, and victims do not receive a direct remedy.”194
184.Witnesses underlined, though, that there were also benefits in prosecuting companies under criminal law. The London Mining Network told us: “Civil cases can be, and often are, settled out of court. Legal precedents are not set and legal responsibility for abuses not made clear. Frequently the terms of the settlement are to be kept secret.”195 The public nature of criminal cases meant that “rather than just get a few thousand pounds for an individual, you might be able to have a river cleaned up or have new procedures introduced”.196
185.Traidcraft, while acknowledging that civil law was important, in enabling victims to obtain compensation, argued that “civil cases do not act as a sufficient deterrent to the business, which can settle out of court under terms which preclude further discussion or publicity about the case. The criminal law is the means by which serious breaches of the standards we expect as a society are punished and companies are subject to criminal law as legal persons, just as individuals are.”197
Duty to Prevent
186.In July 2011 the Bribery Act 2010 came into force. While the Act did not place a strict liability on companies for bribery, it did reverse the burden of proof, and created an offence of failure to prevent bribery for all companies, including parent companies. In the last five years, the Serious Fraud Office has successfully prosecuted three British companies and 10 individuals, nine of whom were British citizens, for bribery or corruption overseas.198
187.It has been suggested to us that the model of the Bribery Act might be an appropriate one to apply to business and human rights, both in civil and criminal law. The Bingham Centre for the Rule of Law focused on civil remedies:
“The civil offences regime could focus on having policies and processes to respect human rights, consistent with the UNGP approach of human rights due diligence. The regime would establish civil penalties for human rights harms arising from negligence by a business enterprise, i.e. failure to take reasonable steps to prevent human rights harms. The proper establishment of a human rights policy and proof of its implementation through processes and procedures that were in fact put into practice could provide evidence of a business enterprise taking reasonable steps to prevent human rights harms.”199
188.This approach was supported by some businesses. Rob Billington from Mulberry stated: “If we all agree that the best way to remove or certainly minimise the risk is to have a more transparent, rigorous due diligence system that we adopt … compliance with and rigour in that system has to be the best answer”.200
189.Professor Peter Muchlinski believed that it would be justifiable to apply this model throughout a company’s supply chain, so that businesses could be held to account under civil law for the actions of their contractors and sub-contractors:
“Regarding sub-contractors, the UNGPs make clear that liability for indirect harm caused by business associates of a corporation should be part of the latter’s due diligence analysis. Thus the issue of indirect liability for foreseeable harm caused by a sub-contractor can arise in line with the UNGPs where due diligence is not carried out, or carried out properly.”201
190.Turning to criminal law measures, the Ministry of Justice has recently launched a consultation on the ‘failure to prevent’ model for economic crimes such as fraud and money laundering.202 CORE argued that the scope of this consultation should be extended to human rights abuses:
“While the identification principle affects prosecutions on economic crimes, it equally affects prosecutions for human rights abuses which would be criminal offences under existing UK law. These include serious crimes such as bodily harm, trafficking offences, sexual exploitation and child labour. To address this, the proposed consultation on corporate economic crime should look at how the ‘failure to prevent’ model could be used in other cases where there is good evidence of corporate crime, including human rights abuses by companies.”203
191.The consensus among all the witnesses who supported the introduction of a criminal offence of failure to prevent human rights abuses was that it should be modelled along the same lines as section 7 of the Bribery Act. This would also seem consistent with the requirement of human rights due diligence on companies under the UNGPs.
Box 3: Comparative Business and Human Rights Legislation
USA
- Dodd-Frank Wall Street Reform and Consumer Protection Act 2010204
This Act contains specific reporting requirements for certain industries in certain localities. S.1502 requires due diligence and supply chain reporting for conflict minerals that have originated in the Democratic Republic of Congo or an adjoining country. This must be independently audited. S.1503 requires mine operators and their parent companies to disclose health and safety violations and any immediate danger notices indicating that a mine potentially violates health and safety standards.
- California Transparency in Supply Chains Act 2010205
California passed legislation requiring companies to disclose their efforts to keep supply chains free from slavery and human trafficking. The obligations apply to corporations doing business in California with annual receipts exceeding $100 million. These companies are required to post reports online setting out how the company assesses risks of slavery and trafficking in supply chains; whether and how suppliers are audited to ensure compliance; and whether staff are trained on spotting and mitigating risks of slavery and trafficking. Failure to comply results in an action being brought for injunctive relief by the Attorney-General of California. There is no possibility of individuals bringing claims for damages, and there is no provision for compensatory orders.
The Netherlands
- Child Labour Due Diligence Act 2017
The law requires companies to examine whether child labour occurs in their production chain. If that is the case they should develop a plan of action to combat child labour and draw up a declaration about their investigation and plan of action. If the Senate gives its approval, the Act will be effective from 1 January 2020. Companies not only have to determine whether there “is a reasonable suspicion” that their first supplier is free from child labour, but also whether child labour occurs further down the production chain. It is yet to be determined which groups of companies - for example, very small companies or companies that are not active in countries or sectors where child labour occurs - are exempted from the Act.
France
- Corporate Duty of Vigilance Law 2017
The law applies to the largest French companies and will make them assess and address the adverse impacts of their activities on people and the planet, by having them publish annual, public vigilance plans (like human rights due diligence assessments). This includes impacts linked to their own activities, those of companies under their control, and those of suppliers and subcontractors, with whom they have an established commercial relationship. When companies default on these obligations, the law empowers victims and other concerned parties to bring the issue before a judge. Judges can apply fines of up to € 10 million when companies fail to publish plans. Fines can go up to € 30 million if this failure resulted in damages that would otherwise have been preventable.
Source: Professor Robert McCorquodale, Dr Virginia Mantouvalou, India Committee of the Netherlands, and the European Coalition for Corporate Justice.
192.We also looked into ways in which companies could be held to account in scenarios where they escape liability for human rights abuses by demonstrating that they have undertaken human rights due diligence. We considered the possibility of introducing strict liability for companies that are found to have abused human rights in their supply chains. This is possible in civil law (such as with some product liability) and would be an inexpensive option for improving access to justice. However, the majority of witnesses felt that ‘failure to prevent’ legislation is a promising option for improving access to justice and should be implemented before resorting to strict liability.
Conclusions
193.We recommend that the Government should bring forward legislation to impose a duty on all companies to prevent human rights abuses, as well as an offence of failure to prevent human rights abuses for all companies, including parent companies, along the lines of the relevant provisions of the Bribery Act 2010. This would require all companies to put in place effective human rights due diligence processes (as recommended by the UN Guiding Principles), both for their subsidiaries and across their whole supply chain. The legislation should enable remedies against the parent company and other companies when abuses do occur, so civil remedies (as well as criminal remedies) must be provided. It should include a defence for companies where they had conducted effective human rights due diligence, and the burden of proof should fall on companies to demonstrate that this has been done.
194.The current criminal law regime makes prosecuting a company for criminal offences, especially those with operations across the world, very difficult, as the focus is on the identification of the directing mind of one individual, which is highly unlikely in many large companies. We welcome the Ministry of Justice’s current consultation on a new ‘failure to prevent’ offence for economic crimes. We regret that a range of other corporate crimes, for example use of child labour, were excluded from the consultation, and we urge the Ministry of Justice to consider a further consultation with a wider remit.
Operation of current criminal law investigations and prosecutions
Resourcing and expertise of investigating authorities
195.Under the current criminal law regime, some human rights abuses by companies can be prosecuted in the UK. Deighton Pierce Glynn told us that despite these provisions, “conviction rates are very low. For example, there have been only a handful of convictions for Corporate Manslaughter in the UK, although the number of cases investigated by the Crown Prosecution Service is greater.” Deighton Pierce Glynn continued: “Cross-border cases are more difficult still. This appears to be, in part, a problem of resourcing of the police”,206 as well as prosecuting authorities such as the Serious Fraud Office (SFO).
196.Amnesty International UK felt that, coupled with a lack of resources, there was a lack of knowledge and expertise within the UK’s investigating agencies, about “how to effectively investigate and prosecute corporate crime particularly across borders”.207
197.The Equality and Human Rights Commission identified the following weaknesses in how criminal justice agencies respond to modern slavery:
- “Training for police officers, investigators and prosecutors is patchy and sometimes absent.
- “Modern slavery crime recording is substandard. In 2015/16, only 884 modern slavery crimes were recorded, compared to 3,146 referrals to the National Referral Mechanism (NRM) during the same period. When NRM referrals are not recorded as crimes, investigations are not launched and victims do not receive the justice that they both need and deserve.
- “Operational responses are hampered by insufficient quality and quantity of intelligence about nature and scale of modern slavery at national, regional and international level.
- “Operational agencies lack a structured approach to identify, investigate, prosecute and prevent slavery.
- “Some victims do not benefit from the vulnerable witness protections during Court process.”208
Sentencing
198.We heard compelling evidence from Margaret Beels, Chair of the GLA, about the lack of deterrent for businesses created by sentencing for gangmasters not in possession of a licence:
“We have regularly been disappointed in cases that we have brought to court in which gangmasters have been successfully prosecuted for not having a licence—these are unlicensed gangmasters—but the fine has been less than they would have to pay to have a licence. One thing that we have been anxious to improve are the sentencing guidelines, so that people who are guilty of these offences feel it in their pockets, because that is where it will hurt them.”209
Conclusions
199.We have heard that criminal prosecuting authorities sometimes lack the skills and resources to investigate human rights abuses by companies, and that, where there has been some action, such as under the GLA, the penalties are too low to be an effective deterrent. The Committee recommends that the prosecuting authorities be better trained and resourced in investigating breaches of human rights which are criminalised, including for cross-border crimes. Sentencing guidelines for these crimes should be created, to ensure that the penalties are high enough to provide an effective deterrent.
Non-judicial access to justice
200.As well as judicial mechanisms, the UK has a number of state-based non-judicial mechanisms for access to remedy, including some which are not directly focused on human rights. These include:
- The UK National Contact Point (NCP), which considers allegations of non-compliance by UK companies with the Organisation for Economic Co-Operation and Development (OECD) Guidelines for Multinational Enterprises. The NCP seeks to determine if there is a dispute and then to mediate an agreement between the parties. Where this is not possible, a determination of whether the enterprise has acted inconsistently with the Guidelines is published and available to the public. The NCP can make recommendations for improvement and can ask companies to provide an update on progress towards implementing these recommendations.
- The Equality and Human Rights Commission, which monitors and promotes human rights compliance and can conduct inquiries.
- The Independent Anti-Slavery Commissioner, who ensures that modern slavery issues are tackled in a coordinated and effective manner across the whole of the UK. He is currently calling for written submissions on how a central repository for modern slavery statements, required under Section 54 of the Modern Slavery Act, can work to help monitor the impact of the Modern Slavery Act.
- A number of Ombudsmen, Regulators and other Government Complaints Offices in industry sectors, which have various mechanisms to hear complaints, impose sanctions and award compensation. For instance, the Health and Safety Executive, Financial Conduct Authority, Financial Ombudsman Service, and Advertising Standards Agency.
- The Groceries Code Adjudicator, who oversees the relationship between supermarkets and their suppliers. She investigates complaints and arbitrates disputes. The Adjudicator is able to impose penalties on large supermarkets of up to 1% of their total annual UK turnover (not just turnover of groceries), if they breach the Groceries Supply Code of Practice.
UK National Contact Point
201.Of the various non-judicial remedy mechanisms just outlined, our main focus has been on the NCP, which features most prominently in the UK’s National Action Plan. The OECD Guidelines for Multinational Enterprises are an annex to the OECD Declaration on International Investment and Multinational Enterprises. They set out principles and standards for responsible business conduct for multinational corporations operating in or from countries that adhere to the Declaration. The Guidelines are legally nonbinding, but 44 governments, including the UK, have agreed to encourage businesses to observe the Guidelines wherever they operate. These recommendations cover different aspects of good practice, including human rights. The Guidelines cover business ethical standards on: employment, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation.
202.The UK NCP is overseen by a Steering Board. Members of the Steering Board include external members and representatives of Government departments. There are currently four external members, who represent business, trade unions, NGOs and Parliament.
203.The Committee visited the NCP on 3 November 2016. The NCP is housed within the Department for International Trade (having moved from the Department for Business, Innovation and Skills), and is staffed by 2.5 full-time equivalent civil servants.
204.In February 2016 Amnesty International UK and CORE published the results of a joint investigation into the NCP. They claimed that the NCP was failing to tackle human rights abuses,210 and that 60% of human rights complaints to the NCP had been rejected before being examined (at the initial assessment stage), while only one complaint had been fully accepted. The report concluded that problems had arisen from: lack of consistency in dealing with complaints; tendency to give undue weight to evidence provided by companies; reluctance to address future threats to human rights from companies’ proposed activities; and the fact that the NCPs’ complaint assessors (the 2.5 FTE staff who run the NCP) were not experts in human rights.
205.The NCP was heavily criticised by a number of witnesses to this inquiry.
Setting the threshold for evidence too high
206.Many complaints to the UK NCP are rejected at the first assessment stage, often because the NCP considers that the evidence presented is not sufficient to merit any further investigation. Deighton Pierce Glynn believed that the NCP set too strict a threshold for claims: “The UK NCP has too often avoided dealing with issues of substantive human rights violation by refusing to find that they are material and substantiated (imposing too high a threshold for the satisfaction of this test) and concentrated on matters of corporate due diligence only.”211
Lack of expertise among NCP staff
207.The staff of the NCP are generalist civil servants, and do not have any particular human rights expertise. Amnesty International UK argued: “The NCP clearly lacks the expertise to address the human rights context of complaints—and it relies too heavily on general policies and information supplied by a company in its defence, even if these have little bearing on the issues raised in the complaint and on the plight of the affected individuals.”212
208.The London Mining Network cited a specific example, where it believed the staff’s lack of expertise led to a poor response from the NCP:
“London Mining Network was involved in assisting Global Justice Now and International Accountability Project in preparing a 2012 complaint to the NCP about the activities of GCM Resources in Bangladesh. The NCP’s findings on the case, published in November 2014, and subsequent statement in September 2015, criticised certain aspects of the company’s behaviour but refrained from passing judgement on the part of the complaint dealing with the company’s plans to remove at least 40,000 people from their rural homes without providing alternative land. This was on the grounds that the removals had not yet taken place. We find it extraordinary that the NCP felt unable to comment on a violation which was openly planned, simply on the grounds that it had not yet taken place.”213
NCP has a low profile and is inaccessible
209.A number of witnesses, including UK companies, were unaware of the NCP and its work. Even those who were aware of it thought that the reason so few labour rights cases had been reported to it was because of its low profile:
“Despite the common occurrence of forced labour and labour exploitation in supply chains of British companies, or British traders trading in commodities that have been produced in forced labour conditions, only a few submissions have been made to the UK NCP on these issues. This raises both the question of how accessible the complaint mechanism is to individual complainants, but also how effectively the NCP operates.”214
210.This was echoed by Debbie Coulter from the Ethical Trading Initiative, who told us that “as regards the labour rights agenda, it is not necessarily seen as the place to take labour disputes. That may be totally wrong, so that is potentially an argument for it to promote the work it does to wider audiences and to make its work more understandable and accessible.”215
211.When asked if they had ever engaged with parliamentarians, staff of the NCP admitted they had not. Since MPs may be the first point of contact for a constituent experiencing a human rights abuse by a business, it would be advisable for the NCP to raise awareness of its work among parliamentarians. However, the NCP must be properly resourced to do so.
No enforcement powers so lack of consequences for businesses
212.If the NCP investigates a complaint and finds that a company has breached the OECD guidelines, it will issue a final statement, which may include a recommendation that the business should take certain actions to comply with the guidelines in the future. The NCP has no powers to enforce its findings, and while the reputational damage may be enough to encourage a company to act on these recommendations, this is not always the case. The Human Rights Centre, Queen’s University Belfast, expressed concern at the lack of enforcement powers: “The value of the NCP seems to lie more in the publicising of the standard as opposed to ensuring compliance or to the enforcement of the remedial aspect of the principles.”216
213.While the NCP is designed to supplement judicial options for access to justice, and therefore should not duplicate legal powers to apply financial or criminal sanctions, there are various ways in which decisions by the NCP could be imbued with more direct consequences for businesses. John Morrison, for instance, told us that “The Canadians—and we could easily do this—have said that, if a company is unwilling to come to a national contact point or even respond, Canada will not provide consular services to that company anywhere in the world.”217
214.Other witnesses, such as the TUC and Lawyers for Palestinian Human Rights, suggested that it was perverse for businesses that have had critical statements made against them by the NCP to be given export finance or awarded lucrative public sector contracts. In particular, Lawyers for Palestinian Human Rights considered that it was inappropriate for G4S to be awarded a contract to run a Government-funded discrimination helpline, when it had not adequately responded to criticisms made by the NCP:
“G4S’ response to the UK NCP’s findings has objectively fallen short of that expected of a company that expresses it is committed to applying the UN Guiding Principles on Business and Human Rights. We believe G4S’ inability to responsibly admit, let alone sufficiently address, its involvement in human rights violations against Palestinians as found by the UK NCP, raises substantial concern over its ability, suitability and credibility to importantly assist others facing discrimination.”218
Lack of resources
215.Much of the criticism levelled against the NCP reflects the limited resources available to it, a fact recognised by a number of witnesses. Andrew Silvester, from the Institute of Directors, acknowledged that “there is certainly a case for things like the National Contact Point to be re-resourced, because it seems it is a little small.”219 The TUC also felt that the NCP’s lack of resourcing was preventing it from fulfilling its potential:
“Despite the OECD’s ‘proactive agenda’ (2011), the NCPs remain essentially reactive organisations, relying on cases and complaints being brought to them. Changing this would require a significant commitment from government to expand its remit and provide the necessary resources to do so. We would welcome increasing the resources of the UK NCP, especially to enable it to conduct in-country investigations and mediations.”220
Conclusions
216.The UK National Contact Point for the OECD Guidelines has the potential to provide meaningful non-judicial access to justice, alongside the more traditional routes of civil and criminal law. The findings of the NCP also have the potential to feed into judicial cases. In its current form, however, the NCP is largely invisible, and lacks the resources and essential human rights expertise necessary to undertake such a role.
217.We urge the Government to address concerns about the NCP as a matter of urgency. It should create an independent steering board for the NCP, with power to review decisions, to lend it greater expertise.
218.In order for the Government to support, and not undermine, decisions of the NCP, we recommend that the Government gives clear guidance to procurement officers that large public sector contracts, export credit, and other financial benefits should not be awarded to companies who have received negative final statements from the NCP and who have not made effective and timely efforts to address any issues raised.
219.We recommend that the Government provide extra resources for the NCP, so that it can raise its profile and be seen as a viable mechanism for victims to gain access justice in a non-legal forum.
220.The Government should itself publicise adverse decisions by the NCP, for instance via written ministerial statements, to assist in raising the profile of decisions.
221.We encourage the NCP to raise its profile by engaging more with parliamentarians, given that MPs in particular often advocate on their constituents’ behalf.
168 “The Legal Aid, Sentencing and Punishment of Offenders Act 2012 introduced a more stringent proportionality test which requires that the expense incurred in running a case should be proportionate to its value. While the proportionality test is more easily met in mass tort claims (where the level of damages is likely to be high), in cases involving a relatively small number of claimants, the costs will often exceed the value of the claim.” (Written evidence from Corporate Responsibility Coalition Ltd (CORE) (HRB0008)
175 https://www.gov.uk/employment-tribunals/make-a-claim [accessed 22 March 2017]
180 House of Commons Justice Committee, Courts and Tribunal Fees, Second Report of Session 2016–17, HC 167, para 69
181 Ibid.
182 Ibid. para 79
183 House of Commons Women and Equalities Committee, Pregnancy and Maternity Discrimination, First Report of Session 2016–17, HC 90, para 146
186 Ibid.
187 Written evidence from Leigh Day (HRB0041). See also written evidence from Professor Peter Muchlinski (HRB0011) and Amnesty International UK (HRB0014); and supplementary written evidence from International Centre for Trade Union Rights and Professor Keith Ewing (HRB0043).
188 Adams v Cape Industries Plc, [1990] Ch 433
190 Chandler v Cape plc, [2012] EWCA Civ 525, http://www.bailii.org/ew/cases/EWCA/Civ/2012/525.html
191 Thompson v The Renwick Group Plc, [2014] EWCA Civ 635, http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2014/635.html&query=(Thompson)+AND+(v)+AND+(The)+AND+(Renwick)+AND+(Group)+AND+(Plc)
198 In addition to this the SFO has secured three Deferred Prosecution Agreements with British companies in the past two years for overseas corruption offences. The first agreement included a financial penalty of $25m, plus SFO’s full costs; the second resulted in financial orders of £6.6m and the most recent one was for £497.25m plus interest, as well as a payment of the SFO’s full costs. (http://www.parliament.uk/written-questions-answers-statements/written-question/lords/2017–01–09/HL4401)
202 Ministry of Justice, Corporate liability for economic crime: call for evidence: https://consult.justice.gov.uk/digital-communications/corporate-liability-for-economic-crime/ [accessed 27 February 2017]. It is also worth noting that the Criminal Finances Bill, currently before Parliament, includes recognition that anyone, including a company, which has benefitted from an abuse of human rights (in the UK and overseas) may have their assets frozen.
203 Written evidence from Corporate Responsibility Coalition Ltd (CORE) (HRB0008). See also written evidence from UNICEF UK (HRB0005), Traidcraft (HRB0009), Amnesty International UK (HRB0014), London Mining Network (HRB0034); as well as Q 8 (Peter Frankental, Amnesty International UK).
204 https://www.sec.gov/about/laws/wallstreetreform-cpa.pdf [accessed 9 March 2017]
205 http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0651-0700/sb_657_bill_20100930_chaptered.pdf [accessed 9 March 2017]
210 Amnesty International UK, Obstacle Course: How the UK’s National Contact Point handles human rights complaints under the OECD Guidelines for Multinational Enterprises (February 2016): https://www.amnesty.org.uk/files/uk_ncp_complaints_handling_full_report_lores_0.pdf [accessed 27 February 2017]
4 April 2017