Research Essay Theme

Should Canadian or American multinationals

(MNCs) be held accountable in Canada or the USA

for the human rights violations that they commit

abroad? Why or why not? Illustrate your answer

with examples.

Prepared for -Dr. Connie CarterInstructor –MGM ProgramRoyal Roads University

Table of ContentsTOPIC Page #

Introduction – Purpose 3

Background Relevance of Torts or Human Rights Violations at Foreign Soil

3-4

Related Existing Laws in USA and Canada 4-5

OECD and UN Guidelines on Human Rights & Business

5

Related Cases of Human Right Violation of US & Canadian Companies

5-8

Need for Legal Action in Home Countries- Should Multinational Corporation be held liable?

8-9

Introduction – Purpose

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The purpose of this research essay is to understand the current nature of legal jurisdiction prevalent in countries like USA and Canada over the torts committed by American and Canadian companies when the representatives of tort affected victims bring law suits against these companies in the courts of Canada or USA to seek justice.

Background Relevance of Torts or Human Rights Violations at Foreign Soil

As previously stated in my abstract it is clear that globalization and free trade have created opportunities for strong multinational corporations to go beyond borders and run their businesses. The intention of these companies when they go abroad is to maximize their profit returns as the labour in the developing countries is comparatively low-cost and the natural resources that these companies require are available in abundance at cut-rate prices. The working conditions for labour in these countries are normally not equal to the working conditions for labour in USA or Canada. In fact the working conditions are a lot worse as the workers are forced to work for longer hours and are not paid genuine compensation and health related benefits. On top of it, the labour force is abused and exploited physically, verbally and sexually by managers and supervisors. During their operations, these MNC’s do not take initiative to provide similar working conditions to workers as they are provide to the workers of their home country or any other developed nation. In USA or Canada there are strict laws against human rights violations and the judicial system encourages the corporations to provide high quality working conditions to U.S. and Canadian workers as well. However, in their operations abroad in developing nations where political – legal systems are corrupt and government does not have strict law enforcement on human rights violations, these corporations do not take strong responsibility in offering reasonable working environment to foreign workers. In addition to this, the same system also permits these companies to harm the natural environment due to unsustainable manufacturing procedures. This whole mechanism creates governance gaps that allow a permissive environment to these corporations to harm weak labour force with wrongful acts that challenge the human rights of local individuals.

Since the legal systems are weaker and fragile in host countries, the representatives of people who suffer the brutal atrocities of multinational corporations in their host countries have been often seemed to claim the damages and justice in the courts of countries of corporate presence of the particular multinational companies. There have been numerous law suits against Canadian and American mining companies that have been filed in Canadian and American Courts by representatives of people from different countries who suffered significant human right issues that occurred in their host countries with an expectation to find justice. In recent years such cases of claims and lawsuits against American and Canadian companies in America and Canada have been rejected with a verdict from court that mere corporate presence of these companies in US or Canada is not sufficient to bring a suit in the US or Canada. The court decisions were based on a rationale that the courts cannot practice the jurisdiction in such cases because the actual torts did not occur or American or Canadian soil.

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Related Existing Laws in USA and Canada

In America several cases of such human rights violations have been brought under with reference to Alien Tort Claims Act (ATCA) but the cases have been rejected as the act limits the jurisdiction of US courts because the violations took place at foreign soil and the US courts do not have extraterritorial reach. In Canada, two bills have been debated recently and if passed these bills will be able to expand the jurisdiction of Canadian courts to give ruling on the case of violations committed by Canadian and non-Canadian corporations and persons operating outside Canada. Following is the detailed description of these 2 bills and Alien Tort Claims Act (ATCA):

Alien Torts Act (America) - Alien Tort Claims Act (ATCA) of 1789 which is a section of United States Code of Law defines that “Disputes concerning foreign actors that violate treaties to which the US is a party”.1 This law provided an access to non-US or foreign citizens to pursue justice through the US courts for violation of human rights committed in other countries outside of the US. However, this act was limited to suits against individuals and not corporations which limited the litigation of human rights violation disputes in the US Courts due to no jurisdiction over corporate disputes that occurred at foreign land.

Bill C300 (Canada) - Bill C- 300 is a private members bill introduced in Canada by Liberal MP John McKay on February 9, 2009.2 The bill is to assure that the Canadian mining companies closely follow human rights and best environmental practices on foreign soil.3 The bill was passed as an Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries. Under this Act, Canadian citizens or permanent residents or any victim who is a citizen of a developing country could file a written complaint against Canadian companies engaged in mining, oil or gas activities in Canadian courts. However, this bill was not passed due to the strong opposition of the Canadian companies.

Bill 323 (Canada) - Bill C-323 is an innovative Act to improve the Federal Courts Act (international promotion and protection of human rights) supported by New Democratic Party (NDP) MP Peter Julian of Burnaby, New Westminster.4 This bill is similar to the America’s ACTA and demands for extending the authority of the Federal Court system to compensate all persons including foreign citizens for various human rights violations committed by Canadian and non-Canadian corporations operating outside Canada.5

1 http://jurist.org/paperchase/2013/04/supreme-court-rules-against-extraterritorial-application-of-alien-tort-statute.php2 http://www.miningwatch.ca/bill-c-300-corporate-accountability-activities-mining-oil-or-gas-corporations-developing-countries3 http://www.miningwatch.ca/bill-c-300-corporate-accountability-activities-mining-oil-or-gas-corporations-developing-countries4 http://this.org/blog/2011/11/01/corporate-accountability-bill-c-323/5 http://www.solidarityresponse.net/campaigns/bill-c-323-the-international-promotion-and-protection-of-human-rights-act/

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Currently, the bill is under debate and a decision is yet to be made for this bill to be passed to make it a part of legal framework for the objective it targets.

OECD and UN Guidelines on Human Rights & Business

UN Framework and the OECD Guiding Principles are inadequate as these guidelines request MNC’S to commit to formulate policies that respect human rights on voluntary basis. There are no penalties for non-compliance of such policies.6 These policies and guidelines are currently weak tools to address such uncommon issues.

Related Cases of Human Right Violation of US & Canadian Companies

The cases mentioned under this section depict that currently there is no recourse for the local communities in American and Canadian courts for the vast majority of human right violation abuses. These giant multinationals companies mentioned in these cases have seriously abused locals; environment and communities are not answerable to anyone for their actions which illustrate a strong need for holding these companies liable for any damage they have done in home and host countries:

Kiobel v. Royal Dutch Petroleum Co

Kiobel v. Royal Dutch Petroleum (Also called Shell) is an Alien Tort Claims Act (ATCA) case brought by Nigerians from the Ogoni community against Shell in 2006 in the US court. Shell was accused for playing a role in assisting the Nigerian government in stopping the protest against oil exploration in the Ogoni region.7 It was also accused of aiding the Nigerian government in engaging in human rights violation included crimes like extrajudicial killings, torture and arbitrary detention.8 The case was however dismissed in the Roberts court in April 2013 following the verdict that the ATCA does not apply to violations committed outside the United States territory.9

Conclusion: The U.S. Supreme Court’s decision highlights that the ATCA is week legal instrument that is incapable to act against corporate cruelty across the globe. It also highlights a failure of western countries to come up with effective mechanisms for redress of victims of international human rights violations caused by their own companies from west.

6 http://www.ituc-csi.org/IMG/pdf/12-04-23_ruggie_background_fd.pdf

7 http://www.rnw.nl/africa/article/kiobel-v-shell-ruling-serious-setback-ogoni-niger-delta8 http://en.wikipedia.org/wiki/Kiobel_v._Royal_Dutch_Petroleum_Co.9 http://www.corporatejustice.org/The-decision-released-by-the-U-S.html

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Cambior v. Representatives of Guyana

Cambior v. Representatives of Guyana case was filed against a Canadian gold mining company called Cambior in 1997 in Quebec Superior Court. Cambior was operating in Guyana and in 1995 one of its tailings dam built its mine in Omai failed due to which mine tailing were spilled into the Essequibo river.10 The mine tailing consisted of cyanide, heavy metals and other pollutants which infected the river water on which approximately 23000 relied for drinking water, bathing and fishing. The case was filed by a public interest group as a class action lawsuit against Cambior to seek the damages on behalf of the poor Guyanese victims. At the time of the spill, Cambior owned 65% of Omai Gold Mines Limited and the balance was owned by Golden Star Resources and the Government of Guyana. In 2002, Cambior acquired Golden Star’s interest in Omai Gold Mines Limited, thereby obtaining a 95% ownership interest in the company.11 The Québec Superior Court dismissed the case in August 1998 with a decision that the “courts in Guyana were in a better position to hear the case.”12

Now, when a lawsuit against Cambior was filed in Guyana it was dismissed by the High Court of the Supreme Court of Judicature of Guyana in 2002 and 2003, but, the High Court of the Supreme Court of Judicature of Guyana ordered the dismissal of the 2003 action and ordered the plaintiffs to pay the defendants’ legal costs in 2006.13

Conclusion: The court’s decision in both Guyana and Canada demonstrates that thee 23,000 poor people did not get any justice not only in home country (Canada) of the mine but also in the host country (Guyana) of the mine. At the time of the incident the mine was owned by Cambior in 65% ownership and the government of the Guyana was in solid state to take legal action. However, the reasons that even the Guyanese court could not take legal action is unjustifiable and clearly points towards the corruption and non-ethical domination of political legal system of a host country.

Incidents in Bhopal Gas Tragedy

The Bhopal disaster also referred to as the Bhopal gas tragedy was a gas leak instance in India in December 1984 and is considered as the world's worst industrial disaster.14 Bhopal gas tragedy took place at the Union Carbide India Limited (UCIL) pesticide plant in Bhopal, Madhya Pradesh when the gas called Methyl Isocyanate (MIC) was released in large quantities due to leakage which occurred due to lack of skilled operators, reduction of safety management, insufficient maintenance, and inadequate emergency action plans.15

10 http://www.business-humanrights.org/Categories/Lawlawsuits/Lawsuitsregulatoryaction/LawsuitsSelectedcases/CambiorlawsuitreGuyana11 Ibid12 Ibid13 Ibid14 http://en.wikipedia.org/wiki/Bhopal_disaster#Union_Carbide.27s_defence15 http://en.wikipedia.org/wiki/Bhopal_disaster#Union_Carbide.27s_defence

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The detailed inquiry indicated that the MIC was stored in large tanks that were filled beyond recommended levels.16 The failure of several safety systems due to poor maintenance and other related safety systems being switched off to save money was said to be contributing reasons for the leak. Over 500,000 people were exposed to Methyl Isocyanate gas and other chemicals.17 Official immediate death toll indicate a death figure of 2,259 people and in 1991, 3,928 deaths were officially certified. Others estimate 8,000 died within two weeks and another 8,000 or more died from gas-related diseases. “A government affidavit in 2006 stated the leak caused 558,125 injuries including 38,478 temporary partial injuries and approximately 3,900 severely and permanently disabling injuries.”18 In November 1999, numerous victims filed suit against Union Carbide and its former CEO, Warren Anderson, in federal court in New York. Union Carbide's operational activities violated international human rights law, environmental law, and international criminal law, and the plaintiffs legally intended to hold the corporation liable for these violations. 19The history of the attempts to hold Union Carbide legally accountable for this disaster is long and complex. Several lawsuits were filed in the U.S. as early as 1985, but they were dismissed in favor of litigating the case in Indian courts. Government of India acted as the legal representative for victims of the disaster and the Indian Supreme Court’s estimated that the damage that was done would cost $3.3 billion in compensation which would also include compensation for ongoing pollution and contamination at the Bhopal plant including the clearance of the site. However, after several proceedings, the court finally agreed to a settlement of the claims against Union Carbide in 1989 for a mere $470 million. The court never ruled on whether Union Carbide's actions did, in fact, violate international law norms.

Union Carbide CEO Warren Anderson was arrested and released on bail by the Madhya Pradesh Police in Bhopal on 7 December 1984. He was released six hours later on $2,100 bail and was flown out on a government plane. These actions were allegedly taken under the direction of then chief secretary of the state who was said to be possibly instructed from chief minister's office, who himself flew out of Bhopal immediately.20 It is said by many government officials that Rajiv Gandhi, the acting prime minister was paid a lump sum amount of money by Warren Anderson as it was Rajiv Gandhi’s personal government plane that was used in transferring warren Anderson.21 Later in 1987, the Indian government summoned Anderson, eight other executives and two company affiliates with homicide charges to appear in Indian court. Several other cases like Sahu v. Union Carbide and Bano v. Union Carbide Corporation were filed in US but the cases were dismissed and the subsequent appeals were denied.22

16 Ibid17 ibid18 Ibid19 http://www.earthrights.org/legal/bano-v-union-carbide-case-history20 http://www.thebhopalpost.com/index.php/2012/07/when-the-gas-leaked-arjun-flew-away-to-pray/21 http://blogs.outlookindia.com/default.aspx?ddm=10&pid=224422 http://en.wikipedia.org/wiki/Bhopal_disaster#Union_Carbide.27s_defence

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Conclusion: Many legal proceedings of this case took place in India and in US courts as well; the legal proceeding were not directly filed under ATCA, however, the case is introduced in this report to reflect a light upon the heights of atrocities, legal injustice and undue political influence on this high profile incident that affected the lives of more than half a million people.

Need for Legal Action in Home Countries- Should Multinational Corporation be held liable?

Damages caused by companies acting abroad are significantly large scale and have long-term direct, serious, and disastrous effects on local communities through social exploitation, pollution, toxins, chemical reaction and social disturbance etc. These damages call for the enforcement of strict laws in home countries against the companies committing such brutalities on foreign soil. Also, Victims of such atrocities are challenged with financial constraints and have to suffer from politically dominated corrupt judiciary practices. The political-legal system prevalent in host countries where the violations take place is not capable enough to compensate these poor and affected people and that is why there has to be an austere legal mechanism in home countries of these companies. Canadian or American multinational companies should be held 100% accountable for any human rights violations that they commit on foreign soil. Corporations have their own separate legal entity and this entity must be treated equal to a human entities for litigation purposes which would make these corporations accountable for their negligence that directly cause long term atrocities on human race.

The acts and the bills like ATCA, Bill C300, and Bill C323 must be reprised, refined and restructured to involve strict litigation for actions against MNCs. In my opinion, separate provision must be registered for such cases where the decision timeline is pre-established for specific kind of cases that would facilitate speedy decision making to give justice to the victims. Strict enforcement and punishments for such violations must be established for MNCs to hold them accountable. OECD and UN can voluntary jump in to establish International Governing Organizations to monitor activities of MNC’S to ensure full compliance on human rights protection and environmental sustainability. In addition to this, in my opinion there should be a simple straightforward clause that must be added to World Trade Organization contract for all the member nations that immediately establishes and enforces 100% liability of an individual country in such cases in case the courts of the country dismisses any such case or fail to transparently litigate the case proceedings and not pass justified compensation to the victims of the host country. Strict and immediate enforcement measures are very much required to serve as backbone of the litigation processes and time to time improvement must be registered in these measures to ensure that legal processes are strong enough to safeguard the interest of local and international community.

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