Freelance Journalist and Editor
Le Monde Diplomatique, July 15, 2014.
NEW YORK In 1994, nine Nigerian environmental and social justice activists were arrested by their government, then tortured and hanged. Throughout the 1990s, they had protested the conditions surrounding oil exploration in their country by the transnational corporation Royal Dutch Shell and its subsidiaries.
In 2002 the widow of one victim, Esther Kiobel, with 11 other relatives of victims, brought a class action lawsuit against the oil giant, alleging that it provided food, money and transportation to Nigerian armed forces and allowed company property to be used for attacks including “torture, extrajudicial executions… and crimes against humanity.” The case, called Kiobel v. Royal Dutch Shell, began in a district court in the state of New York, where the company has a subsidiary. By 2011, it had reached the United States Supreme Court.
US-based human rights legal firms were able to bring the suit using a tool called the Alien Tort Statute (ATS), a 223-year-old statute in US law that gives federal courts jurisdiction over “any civil action by an alien for a tort committed in violation of the law of nations or a treaty of the United States.” Until recently, the ATS was widely considered to be an important legal tool in cases like this one, where human rights abuses happened in a country in which the government was unwilling or unable to pursue justice.
According to Chip Pitts, a Stanford Law expert on corporate responsibility and advisor to the United Nations Global Compact, the ATS was the apex of an “important US-led trend in recent decades of using civil remedies for international human rights violations by non-state actors, including corporations,” says Pitts, adding that it furthermore “cast a significant shadow encouraging internal, normative change in corporate culture and values.” ButKiobel was the first time the ATS was tested in the Supreme Court.
In its April 17, 2013 ruling, the justices decided that the ATS was not intended for settling human rights abuse cases like Kiobel, because it does not “touch and concern the territory of the United States… with sufficient force.”
The exact meaning of “touch and concern” — and what constitutes “sufficient force”— is currently being interpreted by lower U.S. courts. This interpretation is important because it defines how U.S. law can and cannot be used to uphold international human rights norms in the future. Just how much the ATS will be able to help people like Esther Kiobel is now being decided through at least 30 other cases brought using the ATS in district courts across the country. These cases now must be reevaluated under the “touch and concern” imperative before they can proceed. This means the cases may be dismissed, as Kiobel was, for not being sufficiently connected to the U.S.
While it is generally accepted that Kiobel limited the power of the ATS as a tool for enforcing human rights, just how much it did so is a matter of speculation. Some guess that the“touch and concern” imperative will mean that if the accused abuser is a U.S. company or individual, the case will be allowed in U.S. courts, even if the crime happened abroad. However, one of the first such cases to be reconsidered in light of Kiobel was dismissed despite strong U.S. connections. In Al Shimari v. CACI International, inmates at Abu Grahib prison, located on a U.S. base, accused a U.S. corporation of torture and war crimes. Nevertheless, the judge decided in June 2013 that it didn’t sufficiently “touch and concern” the U.S.
Many experts argue that the question prompted by Kiobel — who is responsible for enforcing human rights norms? — is increasingly complicated and important in regards to multinational corporations like Shell. They are increasingly the protagonists of international development in the global south, and yet which legal systems to which they should be beholden remain unclear. The ATS seemed to offer a temporary solution, but given that Kiobel limited its effectiveness, some experts now recommend alternative solutions ranging from domestic legislation that would hold governments responsible for their corporations’ behavior abroad, to corporate self-regulation.
Under international law, only governments have the responsibility to respect, protect and fulfill human rights. (Individuals are bound by national laws — which ideally ensure that human rights are respected — but they cannot be prosecuted for violating international human rights norms. Bodies like the UN and the Inter American Commission on Human Rights hold that governments have the ultimate responsibility to ensure that individuals respect human rights.)
“International law is addressed to governments and not businesses,” says Ursula Wynhoven of the United Nations Global Compact. “Regardless of whether governments are meeting their own duties, corporations must respect human rights; they don’t operate in a law-free zone. However, they don’t have a legal responsibility to do so,” says Wynhoven. “That’s the difficulty of holding companies accountable under international law and through international channels.”
But the “touch and concern” imperative is especially complicated in cases involving transnational corporations, which may be legally incorporated abroad, yet make much of their revenue in the United States.
For instance, although Shell is technically a Dutch company, it present in more than 70 countries, in which it operates more than 44,000 gas stations. Twenty-five thousand of these gas stations are in the United States, and nearly one fourth of its total employees worldwide are US citizens. The company’s 2012 revenue from US sales was $91.5 billion, or nearly 1/4th of its total revenue. Its US subsidiary, Shell Oil Company, is traded on the New York Stock Exchange. Shell drills for oil on the Gulf Coast of the US.
In other words, Shell earns a considerable amount of its annual revenue through its US clients. So, geographical borders don’t offer a fully satisfying answer to the question of who can claim responsibility over Shell when serious questions are raised about the way it uses that money.
An additional reason that legal tools for enforcing human rights are important is that powerful transnational corporations are often present in countries with weak governments, according to Michael Posner, former assistant secretary for democracy, human rights and labor in the Obama administration, and founding director of the Center for Business and Human Rights at New York University’s Stern Business School.
“In a perfect world, we’d have 193 countries with governments that are able and willing to protect human rights within their jurisdiction. But we don’t have that world,” says Posner. “We have a juxtaposition of weak and unwilling states, often in poor parts of the world, and very rich and powerful companies operating in those states because they can produce things cheaply, because there are consumers there, because there’s stuff in the ground they want,” he says. “That’s the challenge.”
Kiobel helps illustrate Posner’s point: the case pitted a wealthy company against in a poor country. In 2012, Shell earned $467.2 billion — $16 billion more than the GDP of Nigeria in the same year. While in theory the Nigerian government has the responsibility to enforce human rights within its territory, in a world where money often translates into power, this wealth disparity makes it difficult for the government to exert authority in practice.
In some cases, the ATS made it possible to overcome the poor government/wealthy multinational conundrum, because it moved the legal battle into the more powerful courtrooms of the United States.
One proposed solution to the gap left by Kiobel is the passage of extraterritorial obligations legislation: domestic laws in transnational corporations’ home countries that hold the governments responsible for the behavior of their corporations abroad. If the Dutch government had extraterritorial obligations legislation and found Shell guilty of rights violations, for instance, the country would be violating its own laws by Shell go unpunished.
The United Nations Global Compact argues that extraterritorial legislation is indeed the best solution. “Given the fact that international laws and conventions address governments and not companies, the most promising way to hold companies accountable where they fail to respect rights is domestic legislation with extraterritorial effect,” says Wynhoven.
Stanford professor Pitts agrees, but argues that this alone is not enough. “Legal solutions are necessary, but not sufficient in and of themselves,” said Pitts. “It’s the combination of law plus values, the state plus self-regulation, usually in a context of highly sensitive and empathic systemic awareness, which produces the best results to these complex challenges.”
NYU’s Posner believes that businesses have made steps toward self-regulation, which he sees evidenced in their reaction to the Rana Plaza factory collapse in Bangladesh earlier this year. However, he argues that progress remains to be done. “My own view is that companies ought to be assuming greater responsibility for their own operations as well as those of their contractors and supply chain…. In a globalized world, companies need to step up and take responsibility. We’re very far from functioning governments in Bangladesh,” he says. “Therefore, companies must step up and work together and work with other stakeholders. It is important to find a way for the discussion to evolve.”