respecting human rights: multinational corporations strike out

RESPECTING HUMAN RIGHTS: MULTINATIONALCORPORATIONS STRIKE OUT

John Christopher Andersont

The Burmese military government has forced entire villages towork on the railroad [for Unocal's pipeline] without pay whileunder armed guard by Burmese troops .... People in the regionhave named the railroad the 'New Death Railway.' Thegovernment has burned villages in the pipeline path.'

Rather than sitting there taking snipes at us, these activist groups

should be embracing what [Unocal is] doing [in Burma]. 2

Human rights abuses are common in Burma.3 In September 1988, theBurmese military seized control of Burma and changed its name toMyanmar.4 To "ensure peace and tranquillity," the military established aruling body known as the State Law and Order Restoration Council

t J.D., The John Marshall Law School; B.S., Illinois State University. The authorcurrently works as a judicial clerk. The author thanks Lora for her love and inspiration,Professor Karen Halverson of the John Marshall Law School for her guidance, and ShirleyK. Wilgenbusch for her "brutal editing."

1. Unocal Sued over Burma Pipeline Job, S.F. EXAINMqER, Sept. 4, 1996, at A16,available in 1996 WL 3716951 (quoting the Center for Human Rights and ConstitutionalLaw).

2. Evelyn Iritani, U.S. Bolsters Labor Charge Against Unocal, L.A. TIMEs, Oct. 23,1998, at CI.

3. See, e.g., U.S. Dep't of State, Burma Country Report on Human Rights Practicesfor 1997 (visited Jan. 19, 1999) <http:/lwww.usia.gov/regionallealburmalburmhr97.htm>[hereinafter Burma Country Report]. See generally LAWYERS COMM. FOR HUMAN RIGHTS,

BuRMA: THE INTERNATIONAL RESPONSE TO CONTINUING HUMAN RIGHTS VIOLATIONS (1992)[hereinafter ButRm,: INTERNATIONAL RESPONSE].

4. The name Burma was changed to Myanmar after the State Law and OrderRestoration Council (SLORC) seized control of the country, but it is commonly referred toby either name, see, e.g., BUiA: INTERNATIONAL REsPoNsE, supra note 3. For simplicity,this Article will refer to it as Burma. Others offer vastly different reasons for referring to itas Burma: "I love my country even more since I came to America .... Please call it Burma,not Myanmar. That's the name the military gave to try to fool the world." K. Connie Kang,Burmese Pressing Their Cause in Southland, L.A. TimEs, Mar. 31, 1996, at 32 (quoting anexpatriate Burmese activist in Southern California). Ironically, SLORC maintains a website promoting Burmese culture to attract tourists. See The Golden Pages of Myanmar(visited Jan. 19, 1999) <http:/vww.myanmar.com>.

463

464 U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW [Vol. 2:3

(SLORC),5 which promptly outlawed pro-democracy demonstrations.Additionally, SLORC's agents reportedly shoot protesters on a routine

6basis. Of the protestors who are not shot, many are held under housearrest without trial,7 while others are arrested and tried before a militarytribunal! Defendants rarely have legal counsel and are expected to admittheir guilt or face a more severe sentence. 9 Reports indicate that the

military tribunal has never acquitted anyone.' ° The United States

Department of State recently examined human rights abuses in Burma,

finding acts of torture, extrajudicial killings, mysterious disappearances,

arbitrary arrests, rapes, destruction of homes and use of forced labor.1'

Unfortunately, several groups have implicated American companies in

these atrocities.

In 1993, Unocal,' 2 a California-based oil company, entered into a jointventure gas drilling project in Burma. Under that agreement, SLORCacted as the agent of Unocal, its French partner, Total S.A., and the

SLORC-run Myanma Oil and Gas Enterprise. 14 SLORC undertook to

"clear forest, level ground, and provide labor, materials and security for the

Yadana pipeline project," and its operations were subsidized by Unocal and

Total. 15 SLORC reportedly began forcibly removing villagers from their

homes by burning villages in the pipeline's path.16 Rebel groups stagedattacks and ambushes, seeking to disrupt the pipeline project.' 7 To help

secure the pipeline area, SLORC ordered work to begin on what many

villagers and human rights activists call the "Second Death Railway" or the

5. See BURMA: INTERNATIONAL RESPONSE, supra note 3, at 1.6. See id. In 1990 SLORC allowed multiparty elections. SLORC's opposition, the

National League for Democracy, won 392 of the 485 contested parliamentary seats in theNational Assembly, but, SLORC refused to relinquish control over the government. See id.at 2.

7. See id.8. See LAWYERS COMMITrEE FOR HUMAN RIGHTS, SuMMARY INJUSTICE: MILITARY

TRrnuNALSiNBURMA(MYANMAR) 1 (1991).9. See id.

10. See id.11. See Burma Country Report, supra note 3.12. Unocal, based in El Segundo, California, develops energy projects and produces

and sells chemical fertilizers, specialty minerals, and other energy resources. See Unocal76, A New Breed of Energy Company (visited Jan. 19, 1999) <http://www.unocal.com>.

13. See Doe v. Unocal Corp., 963 F. Supp. 880, 885 (C.D. Cal. 1997) (describing thejoint venture), dismissed iz part, 27 F. Supp. 2d 1174 (C.D. Cal. 1998) (dismissing claimagainst one of the defendants for lack of personal jurisdiction, but not the claim againstUnocal).

14. See id. Myanma Oil and Gas Enterprise is a state-owned, SLORC-controlled,company that sells and produces energy products. See id. at 883.

15. Id. at 885.16. See Unocal Sued Over Burma Pipeline Job, supra note 1.17. See More Troops to Guard Pipeline, S. CHINA MORNING POST, Mar. 30, 1995,

available in 1995 WL 7523080.

RESPECTING HUMAN RIGHTS

"Second Railway of Death,"' which refers to a notorious rail lineconstructed by Allied prisoners to transport Japanese supplies betweenBurma and Thailand during World War II.'9 Some 16,000 prisoners of warand over 100,000 Asian slave laborers died of disease, malnutrition, and

20torture while constructing the original railway.Human Rights Watch Asia testified before Congress that "there are

numerous credible reports of thousands of people conscripted to buildrailway lines and roads in violation of Burma's commitment to upholdinternational conventions against forced labor."2' Workers escaping fromthe railway project spoke of ten and a half hour workdays, beatings,hunger, and disease.22 When confronted with such accusations, SLORCdeclared that "contributing labor" is "a noble Burmese tradition," and manyworkers are convicted criminals who "volunteered to work in the openair.,2

3

While Unocal denies a connection between the 100-mile-long railwayand the pipeline project, the State Department reports that SLORCroutinely uses forced labor and "will use the new railway to transportsoldiers and construction supplies to the pipeline area."24 Unocal's denialsare further called into question by a group of Burmese nationals who aresuing Unocal for its role in these atrocities.5 Unocal's involvement inBurma has met with strong criticism not only from the general public butfrom its own shareholders as well. 6

Concern over the role of multinational corporations("multinationals") 27 in human rights violations has prompted severalproposals. For example, many multinationals have adopted codes of

18. See, e.g., Dominic Faulder, Inside Story: Myanmar, AsIAWEEK, May 9, 1997,available in 1997 WL 10819172; Denis D. Gray, Reports: Slaves Building Railvay-U.S.Finn Denies Track in Burma Part of Pipeline, SEATTLE TImEs, July 20, 1994, at A12,available in 1994 WL 3630415; Unocal Sued Over Burma Pipeline Job, supra note 1.

19. See New "Bridge on the River Kivai," BALTnORE SUN, Aug. 27, 1996, at 7A,available in 1996 WL 6634471.

20. See id.21. Gray, supra note 18, at A12.22. See id.23. John Pilger, "Death Railway" Revisited, Rebuilding with Slave Labor, WORLD

PRESS REv., Sept. 1996, at 10, available in 1996 WL 839907.24. Id. at 11; see also Paul M. Sherer, Pact Is Signed for $1 Billion Pipeline, WALL ST.

J., Sept. 12, 1994, at All.25. See Doe v. Unocal, 963 F. Supp. 880, 883 (C.D. Cal. 1997), dismissed in part, 27 F.

Supp. 2d 1174 (C.D. Cal. 1998) (dismissing claim against one of the defendants for lack ofpersonal jurisdiction, but not the claim against Unocal).

26. See infra, note 87 and accompanying text.27. "In a strict sense [the term 'multinational corporation'] is descriptive of a firm

which has centers of operation in many countries in contrast to an 'international' firm whichdoes business in many countries but is based in only one country, though the terms are oftenused interchangeably." BLACK'S LAW DICTnONARY 1015-16 (6th ed. 1990).

20001 465


conduct. A corporate code of conduct is generally a statement delineating acompany's ethical policies.28 While the tendency to adopt corporate codesis increasing, their effectiveness remains subject to question. Otherpossible methods of compelling corporations to respect human rightsinclude legislative or judicial action. Yet to date, no federal statute existsthat directly and adequately addresses this problem. Because standardsremain underdeveloped in this area of human rights law, victims of humanrights abuse are forced to cope with unpredictable results.

This Article argues that multinationals should have a responsibility torespect human rights. Part I provides a basic review of the concept ofhuman rights. Part II discusses multinationals' obligations regardinghuman rights. Then, Part Ill analyzes efforts to encourage respect forhuman rights through codes of conduct. Part IV examines efforts to forcemultinationals to respect human rights through existing legislation. Part Vdiscusses Unocal's involvement in Burma and illustrates how codes andexisting laws are insufficient to force multinationals to respect humanrights. Finally, Part VI proposes that Congress adopt federal legislationimposing a duty on multinationals to respect human rights, and that statesrevoke the corporate charters of multinationals that routinely fail to do so.This Article concludes that multinationals, given their enormous economicand political power, should have a legal duty to respect human rights thatshould be enforced by federal legislation and, if necessary, corporatecharter revocation.

I. HUMAN RIGHTS

While international human rights is a broad and difficult concept todefine, several international agreements enumerate specific standards.29 Inparticular, the United Nations sets forth the most prominent example ofcurrent human rights standards, the Universal Declaration of Human Rights("Universal Declaration").30 The Universal Declaration provides standardsfor various human rights issues, including the rights of life, liberty, securityof person,31 assembly and association, 32 freedom of movement,33 and the

28. This Article uses the terms "corporate code of conduct, .... corporate codes," and"codes" interchangeably.

29. See Barbara A. Frey, The Legal and Ethical Responsibilities of TransnationalCorporations in the Protection of International Human Rights, 6 MiNN. J. GLOBAL TRADE

153, 160 (1997).30. See Universal Declaration of Human Rights, U.N.Y.B. 535, U.N. Doc. A/810, U.N.

Sales No. 1950.1.11 (1948-49) [hereinafter Universal Declaration].31. Seeid. art. 3.32. See id. art. 20.33. See id. art. 13.


right to vote or take part in government. 4 The Universal Declaration alsopromotes freedom from torture, cruel and inhuman punishment,35 arbitraryarrest,36 unjust labor practices, 37 and slavery.38 These rights are universaland restrict both individuals and corporations from infringing on humanrights.39 Other United Nations directives consider environmental protectiona vital human right.40 The United Nations also has examined corporateinvolvement in human rights issues and asserted that "[t]ransnationalcorporations should/shall respect the social and cultural objectives, valuesand traditions of the countries in which they operate"4' and "shall respecthuman rights and fundamental freedoms in the countries in which theyoperate."4

2

For the purposes of this Article, an important distinction existsbetween respecting and promoting human rights. Corporations alreadyhave a moral duty to promote human rights. This Article considerspromoting human rights in the context of such activities as corporatephilanthropy and humanitarianism. Today, promoting human rights isgood business,43 and corporations are fortunate to be in a unique position tobe able to do so.44 Multinationals in particular, as opposed to businessenterprises in general, have an ability to exercise market power andinfluence in host countries through a kind of remote control.45 As many as35,000 multinationals exist in the world;46 the largest of these controlroughly one-fourth of the world's assets.47 International trade accounts for

34. See id. art. 21.35. See id. art. 5.36. See id. art. 9.37. See id. arts. 23, 24.38. See id. art. 4.39. See id. art. 30.40. See, e.g., Report of the United Nations Conference on the Human Environment,

U.N. GAOR, 27th Sess., 21st mtg., at 2-7, U.N. Doc. A/CONF.48/14 (1972), revised byU.N. Doc. A/CONF.48/14/Corr. 1 (1973).

41. Development and International Economic Cooperation: TransnationalCorporations, U.N. ESCOR, 2d Sess., Agenda Item 7(d), para. 13, U.N. Doc E/1990194(1990) [hereinafter Draft U.N. Code].

42. Id. I 14.43. See Douglass Cassel, Corporate Initiatives: A Second Human Rights Revohltion?,

19 FORDHAm INT'L L.J. 1963, 1977 (1996) (discussing the evolving nature of multinationalcorporations' human rights responsibilities).

44. See Diane F. Orentlicher & Timothy A. Gelatt, Public Law, Private Actors: TheImpact of Human Rights on Business Investors in China, 14 Nw. J. INT'L L.* & Bus. 66, 68-69 (1993) (discussing the companies' abilities to promote human rights in China).

45. See Hans W. Baade, The Legal Effects of Codes of Conduct for MNE's, in LEGALPROBLEMS OF CODES OF CONDucT FOR MULTINATIONAL ENTERPRiSEs 4 (Robert Horn ed.1980).

46. See Cassel, supra note 43, at 1979.47. See id.

2000]


as much as one-fourth of the U.S. economy,4 and the Internet will causethat percentage to increase dramatically. 49 As international trade continuesto grow, the real power of multinationals continues to increase, while the

50real power of some national governments continues to decrease. Withthis degree of influence, multinationals have a tremendous opportunity toimprove conditions around the world. The fact remains, however, that amoral duty cannot be forced upon a corporation.

By contrast, corporations should have a legal duty to respect humanrights. In other words, they should not be permitted to profit from humanrights abuse. Currently, no clear affirmative legal duty exists. While theUniversal Declaration discourages persons from engaging in activities thatviolate the human rights of others,51 it lacks the necessary enforcementmechanisms to effectively impose such a duty. Moreover, the practicalityof using the Universal Declaration by itself to force corporations to respecthuman rights is severely limited. If corporations are allowed to enjoy thebenefits of existing as legally recognized "persons" with individual rightsunder the law, it is appropriate and reasonable to expect, and even demand,that they conduct themselves accordingly. 2

The situation in Burma exemplifies one of the most pervasiveproblems of multinationals benefiting from human rights abuse. In 1996,the United States Senate considered imposing a ban on all investments inBurma.53 Several American companies, led by the oil company Unocal,lobbied against such a measure because they feared a ban on Americaninvestments would not improve conditions in Burma.54 Rather, a banwould merely create an opportunity for foreign rivals to take advantage ofthe absence of American companies. 55 Despite extensive lobbying,President Clinton issued an executive order banning business operations in

48. See id.49. Some predict business-to-business on-line transactions could reach $300 billion by

2002. See John C. Anderson & Michael L. Closen, Document Authentication in ElectronicCommerce: The Misleading Notary Public Analog for the Digital Signature CertificationAuthority, 17 . MARsaAJ. I COMPTER & INFo. L. 833, 835 n.9 (1999) (citing InternetTraJfic Booming, DAILY SouTHTowN, Apr. 4, 1998, at 1 (discussing the growth of Internetbusiness transactions)).

50. See Cassel, supra note 43, at 1984.51. See Universal Declaration, supra note 30, art. 30.52. See Margaret M. Blair, A Contractarian Defense of Corporate Philanthropy, 28

STETSON L. REv. 27, 28 (1998). In some countries, like Japan, corporations have majorresponsibilities for the protection of economic and social rights. See Jack Donnelly,Unfinished Business: Failure of Imagination Preserves Inequality and Jeopardizes theUniversality of Human Rights. (The Universal Declaration of Human Rights at Fifty), 31PS: POL. SCI. & POL. 530, available in 1998 WL 12877068.

53. See Laurie Lande, Senate Votes Limited Sanctions Against Burma After Lobbying,WALL ST. J., July 26, 1996, at A9A.

54. See id.55. See id.


Burma in 1997.56 Since the ban restricts only new investments and notexisting ones, however, it does not affect Unocal's pipeline project . 7

Human rights abuses do not exist solely in Burma, and Unocal is notthe only corporation ever accused of profiting from such atrocities.5 8

Pharmaceutical company, Bayer A.G., admits to having used slave labordrafted from World War II concentration camps, while other companies,including BMW, Volkswagen, and Siemens, have been accused of similaracts. 59 While many companies, including Levi Strauss & Company, haveceased all operations in Burma, critics complain that Unocal continues to

60profit from SLORC abuse. Unocal disavows all involvement and61responsibility for such abuses. In a statement to its shareholders, Unocal

stated that "if there were any possibility that our project was connected

56. See Exec. Order No. 13,047,2 C.F.R. 202 (1997).57. See id.58. In 1996, a congressional subcommittee heard the testimony of a 15 year-old girl

who worked 12 hours or more per day making Liz Claibome sweaters, earning a mere 38cents per hour. See Child Labor and the New Global Marketplace: Reaping Profits at theExpense of Children: Hearing Before the Subcomn. on Labor of the Senate Comm. onLabor and Human Resources, 103d Cong. 5-7 (1994) (statement of Lesly MargothRodriguez Solorzano, garment worker, San Pedro Sula, Honduras). In India, diamondtrading companies profit as thousands of children as young as six years old work in diamondmines. See Julie Wolf, Children "Slave for Gem Trade," GuARD.Nu, Oct. 24, 1997, at 14,available in 1997 WL 14737032. In Nepal, bonded labor is common, with bonds beingpassed from parent to child until the bond is satisfied. See Suman Pradhan, Rights-Nepal:Bonded Labor Thrives Despite Laws, Inter Press Serv., Sept. 8, 1998, available in 1998 WL5989164. Clothing manufacturer Guess has been connected to sweatshop labor. In 1992Guess settled a claim with the U.S. Department of Labor for overtime and minimum-wageviolations. See Robin Farmer, Protesters Cite Labor Practices, RICHMoND TINIES-DISPATCH, Nov. 10, 1996, at BI, available in 1996 WL 2316167. Many people recall thesight of sports announcer Frank Gifford handing out envelopes of money to sweatshopworkers who made clothes bearing his wife Kathy Lee's name for Wal-Mart. See GiffordsHand Out Cash to Sweatshop Workers, REc. N. N.J., May 24, 1996, at A4, available in1996 WL 6091073. Just a few years ago, a Nigerian minority ethnic group known as theOgani allegedly sabotaged equipment belonging to oil company Shell in response to Shellpolluting the Ogani's waters and land, ruining not only their environment but theirlivelihoods as well. Shell allegedly responded by calling in a Nigerian military securityforce which murdered approximately 2000 people and razed thirty villages. Further, reportsindicate that Shell actively involved itself in the operation by transporting troops in Shellboats and helicopters and even paying bonuses to troops participating in the massacre. SeeCassel, supra note 43, at 1964-66.

59. See Henry Weinstein, Suit Alleges Bayer Role in Holocaust Experiments, L.A.TIMEs, Feb. 18, 1999, at A3.

60. See Gray, supra note 18, at A12.61. In 1994, at the company's urging, Unocal's stockholders rejected a proxy resolution

calling on the company to compile a comprehensive report on conditions in Burma despite"credible reports" of forced labor. See Karl Schoenberger, The Human Rights PipelineCharges of Slave Labor in Myanmar Lead to Ballot at Unocal, L.A. TniEs, Apr. 11, 1994,at D.

2000]

U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW [Vol. 2:3

with human-rights abuses, this would be absolutely unacceptable to us. 62

When asked about the human rights record of Burma, however, Unocalspokesman David Garcia stated: "[t]hat is the job of internationaldiplomacy, of the United Nations and so on. International companiescannot afford to assume that mantle, and we will not.' 63

II. THE CORPORATION'S EVOLVING DUTY TO RESPECT HUMAN RIGHTS

The business of America is business.64

-President Calvin Coolidge

We demand that business give people a square deal.65

-President Theodore Roosevelt

The sentiments of Calvin Coolidge's famous quotation above wereechoed in 1970 by Milton Friedman, a Nobel Prize-winning economist atthe University of Chicago. Friedman calls social/corporate responsibility a

66"fundamentally subversive doctrine" in a free society. Friedman believesthat protecting human rights is the responsibility of governments, not ofindustry.67 The responsibility of a corporation is to "make as much moneyas possible," and anything less is "pure and unadulterated socialism. 61

"There is one and only one social responsibility of business... to increaseits profits ... without deception or fraud."69 Despite his stance againstmultinational corporations' social responsibility, Friedman qualifies hisviews by calling for businesses to seek profits while conforming "to thebasic rules of the society."70

While profit and social responsibility are sometimes viewed asopposite ends of the spectrum, society is slowly demanding greater

62. Gray, supra note 18, at A12.63. Controversy Surrounds Myanmar Gas Pipeline; French, U.S. Companies Distance

Themselves from Alleged Rights Abuses, BALTiMORE SUN, Dec. 8, 1996, at 27A, available in1996 WL 6651083.

64. Calvin Coolidge, Speech to the American Society of Newspaper Editors (Jan. 17,1925).

65. Theodore Roosevelt, Letter, in THE POCKET BOOK OF QUOTATIONS 25 (1952).66. Milton Friedman, Social Responsibility of Business, N.Y. THvMs, Sept. 13, 1970, § 6

at 32 [hereinafter Social Responsibility of Business]. Friedman also published a bookreiterating these views. MILTON FRiDMAN, CAPrrAuSM AND FREEDOM (1962). Friedmanonce admitted that he would never puichase stock in a company that attempts to stoppollution out of a sense of social responsibility. See Michael Laurence & Geoffrey NormanPlayboy Izterview: Milton Friedman, PLAYBOY MAG., Feb. 1973, at 51, 59.

67. See Friedman, Social Responsibility of Business, supra note 66.68. Id.69. Id.70. Id.

470


responsibility on the part of corporations. Some corporations are takingnotice of the financial gains that may come from environmental and socialresponsibility.7 ' They are finding it more profitable and less problematic toavoid environmentally or socially irresponsible conduct.72 Thus, these twoseemingly separate concepts are moving closer together.

Generally, corporations are legally bound only to their corporatecharters, their shareholders, and existing statutes. The American LawInstitute's Principles of Corporate Governance state that a corporation:

1. Is obliged, to the same extent as a natural person, to act withinthe boundaries set by law;

2. May take into account ethical considerations that arereasonably regarded as appropriate to the responsible conduct ofbusiness; and3. May devote a reasonable amount of resources to public

welfare, humanitarian, educational and philanthropic purposes. 73

However, both commentators and corporations are beginning to realize that"there are particular moral and ethical duties that multinationals mustrecognize."

74

Historically, corporations attempted to distance themselves fromhuman rights issues. Calls for human rights came from relatively small,not-for-profit organizations with relatively little clout. Today, however,calls for corporate social responsibility come not only from third parties butfrom within a corporation. Moreover, investors, financial institutions, andmutual funds are demanding more socially conscious business practices. 75

The economic repercussions of severing business ties with countries likeBurma are often negligible. In fact, a termination of these ties may even bemore advantageous than continuing operations. 76 "A world community that

71. See Cassel, supra note 43, at 1977.72. The monetary advantages of conducting business may be offset by negative

publicity and lost sales over such operations, as well as by the rising costs of defendinglawsuits.

73. PRINCnPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMiMENDATIONS §2.01(b) (Tentative Draft No. 11, 1991) (emphasis added).

74. Frey, supra note 29, at 164.75. See id.; see also Albert B. Crenshaw, Where Responsibility Meets Accountability,

WASH. POsT, Nov. 28, 1994 (Washington Business), at 5; Carole Gould, A SocialResponsibility Shake-Up, N.Y. TviMEs, June 12, 1994, § 3, at 14. For a discussion on ethicalinvesting, see Elizabeth Glass Geltman & Andrew E. Skroback, Environmental Activismand the Ethical Investor, 22 J. CORP. L. 465, 472 (1997).

76. Fara Warner, Pepsi Leaves Burma Market to Others, ASIAN WAIL ST. J., Jan. 29,1997, at 6, available in 1997 WL-WSJA 3795951. "Burma is a backwater to mostmultinational companies," said one analyst. "On the public-relations front, Pepsi's move isviewed as smart," said another analyst. "Boycotts work on perception," said public relationsexpert Thomas Bell, Jr. "The Pepsi brand has huge value so they've weighed the risk versus

2000]


respects democracy and human rights will provide a more hospitableclimate for American trade and commerce .... Repression fostersinstability in the long run and puts investment at greater risk ofexpropriation or loss. ' 77 As multinationals continue conducting businesson a global scale, it becomes increasingly critical that they do so in aresponsible manner.78

In today's marketplace, many consumers shop for products that areproduced in a "socially responsible" manner.79 Problems withenvironmental misconduct, sweatshop labor, and other human rights abuseshave been exposed and corporations have felt the strain from negativeconsumer backlash.80 For example, many shoppers boycotted particularbrands of tuna trapped in the same nets as those used to kill dolphins,putting a significant squeeze on sales.81 Similarly, when Shell Oilannounced its plans to dump the Brent Spar oil platform into the sea, aconsumer boycott caused sales to drop as much as fifty percent.8 2 WhileExxon's size helped it survive a consumer boycott, the Valdez oil spill leftsome independent dealers suffering.83 Public outcry over human rightsabuses (such as the use of forced, child, or prison labor) is making socialresponsibility a growing concern for companies and their bottom linesY4

Negative publicity regarding human rights violations may have adetrimental effect on relations with employees and impede relations withgovernments in foreign states where companies conduct business.85 Media

the reward." Management consultant Bob O'Meara notes: "[t]here's no value-or possiblyeven negative value-in being No. I in Burma... I doubt whether Pepsi will be hurt byleaving." Id.

77. Cassel, supra note 43, at 1978 (citing John J. Keller, Multinational Business andHuman Rights, ASIL PROC. 271, 277 (1994) (quoting Joan Spero, Under Secretary of Statefor Economic Affairs)).

78. Corporate responsibility is particularly important where business is conductedinternationally because most human rights abuses occur overseas. Such companies arefaced with more challenging and complex cultural issues than are companies limiting theiroperations to a domestic level.

79. See Orentlicher & Gelatt, supra note 44, at 97.80. See id.81. See Shannon Brownlee et al., A Political Casserole of Tuna and Greens but What

Happened to the Environmental Activists' Hunger to Save the Dolphin?, U.S. NEws &WORLD REP., Aug. 11, 1997, available in 1997 WL 8332503; see also Kathleen Deveny,Tuna Firms Hope New Bait Hooks Buyers, WALL ST. J., Apr. 22, 1993, at B 1, available in1993 WL-WSJ 703547.

82. See Companies Make the Transition from 3Ds to SD, Eco-Loo WK., Mar. 7, 1997,available in 1997 WL 9031234.

83. See Carol Acree, Some Exxon Dealers Taking Beating over Huge Spill, Bus. J.-JACKSONVLLE, May 8, 1989, at 1, available i 1989 WL 2520335.

84. See Orentlicher & Gelatt, supra note 44, at 97; see also Frey, supra note 29, at 157-58 (discussing the impact of consumer pressure on exportation of products).

85. See Lance Compa & Tashia Hinchliffe-Darricarrere, Enforcing International LaborRights Through Corporate Codes of Conduct, 33 CoLuM. J. TRANSNAT'L L. 663, 674

472


coverage of environmentally dangerous activities or inhumane laborconditions often acts as a catalyst for changes in corporate policy.8 6 Thesechanges are most commonly a response to angry protesters8 7 and negativereactions from consumers 8 and governmental entities.8 9 Companies thatrely heavily on image and goodwill for marketing success are especially atrisk to such attacks.9° For example, soft-drink company PepsiCo'ssubstantial ties to Burma prompted college students to mount a nationalboycott against Pepsi and its subsidiaries. 91 'We don't want to do businesswith anyone who does business with Burma," declared one student.92 Theboycott benefited competitor Coca-Cola, which has received praise foravoiding business dealings in Burma.93 As a result of this intensifying

(1995).86. See Human Rights: Ethical Shopping, EcoNoMIsT, June 3, 1995, at 58 (discussing a

1993 NBC newscast that depicted young children making clothing for Wal-Mart in aBangladesh factory; the progam prompted Wal-Mart to alter its policies).

87. Unocal has been the target of countless protests. See Bill Walker, Protesters ChainThemselves to Unocal Tanker Truck in LA., LAS VEGAS REv.-J., Dec. 13, 1996, at 2B,available in 1996 WI, 2355736. At the company's 1996 annual meeting, a group ofshareholders persistently called for changes to Unocal's international conduct code, inreaction to human rights violations in Burma. See Cathy Taylor, Unocal's Role in MyanmarBrings Protest, ORANGE CouNTY REG., June 4, 1996, at Cl, available in 1996 WL 7031234.At the same meeting, dozens of protesters gathered outside, carrying signs that read "Stopthe bloody pipeline!" Protesters Picket Shareholders' Meeting Over Joint Venture,AssociATED PRESS, June 3, 1996, available in 1996 WL 4426099. Unocal Chief ExecutiveOfficer Roger Beach has ignored such pleas. He responded to similar protests the precedingyear by stating, "We intend to be a major player in supplying this growing [gas] market."David Ivanovich, Signs of Disapproval: Protesters Crash Unocal Meeting, Hous. CHRON.,May 23, 1995, at 1, available in 1995 WL 5904671.

88. "I don't want your toy," wrote a ten-year-old boy to retailer Wal-Mart. The boyreturned a Power Ranger toy that was made in a Thailand factory, likely by a child laborerearning just a few dollars in exchange for working a 14-hour day. See Haider Rizui Toyingwith Workers, MULTINAT'L MONITOR, Apr. 1996 (visited Jan 19, 1999)<http://wvv.essential.org/monitor/hyper/mmO496.03.html>.

89. For example, San Francisco, Oakland, and Alameda Counties in California haveeach proposed legislative measures to discourage companies from doing business in Burma.See Jonathan Marshall, Bay Area May Join Boycott of Burna, S.F. CHRON., Apr. 19, 1996,at BI, available in 1996 WL 3218006. Such measures include a ban on city contracts withcompanies that have employees or investments in Burma and an ordinance that requires cityfunds to be withdrawn from all financial institutions having ties to Burma. See id.

90. See Compa & Hinchliffe-Darricarrere, supra, note 85, at 674-75. One analystpointed out that the media "will expose inconsistency and irresponsibility in corporatebehavior, and vigilant consumers will respond." Id. (citing Martha Nichols, Third-WorldFamilies at Work: Child Labor or Child Care?, HARv. Bus. REv. 22 (Jan.-Feb. 1993)).

91. See Jay Mathews, Student Critics of Burma Tying to Put Pepsi on Ice: Company'sPresence in Nation Protested, WASH. POsT, Apr. 4, 1996, at D9, available in 1996 WL3072438. Students at Stanford petitioned to prevent PepsiCo's then subsidiary, Taco BellCorp., from opening a restaurant on campus. See id.

92. Id. At one protest, a student held up a sign that parodied Pepsi's slogan. It read,"The Choice of a New Genocide." Id.

93. See id.

20001


criticism, Pepsi ceased all of its Burmese operations in May of 1997.94

Other companies pulling out of Burma include Federated DepartmentStores (which owns Macy's), Liz Claiborne, Eddie Bauer, Levi Strauss,Reebok, and Amoco.95 The actions of these companies represent a growingtrend toward multinationals recognizing their social obligations.

III. RESPECTING HUMAN RIGHTS THROUGH CODES OF CONDUCT

Government and world organizations seeking to address human rights96abuse are calling for multinationals to adopt codes of corporate conduct,

of which two basic types exist. First, "external" codes are those drafted by

entities such as international labor organizations and environmental and

human rights groups in the hope that they will be adopted by corporations.

Second, corporations may draft and adopt their own "internal" codes.

A. External Codes

1. International Organization Initiatives

In 1977, The United Nations began drafting the United Nations Code

of Conduct on Transnational Companies ("Draft U.N. Code"). Afterseveral drafts, the most recent of which was completed in 1990, work on

the Draft U.N. Code stalled.97 Its provisions addressed many issues

relating to the conduct of multinationals, including good faith negotiation

of contracts and respect for tradition, fundamental freedoms, and

international standards of human rights.98 The Draft U.N. Code balanced

94. See Pepsi Plans to End Product Distribution and Output in Burma, WALL ST. J.,Jan. 28, 1997, at B4.

95. See Human Rights: Ethical Shopping, supra note 86, at 58; see also DubiousHonors: Nike Inc. Joins Nine Other, PORTLAND OREGONIAN, Apr. 10, 1995, at B9, availablein 1995 WL 3588208.

96. See, e.g., Hon. John Shattuck, 1997 State Dept. Report on Human Rights Practices,CONG. TESTmONY, Feb. 3, 1998, available in 1998 WL 8991492 ("We encourage U.S.companies to adopt labor codes of conduct."); Dipankar De Sarkar, Britain-Colombia:Ethical Foreign Policy Under a Colombian Cloud, Inter Press Serv., May 13, 1997,available in 1997 WL 7075325 (British Foreign Secretary calling for a global code ofconduct for multinational corporations); Mark Schwartz, Heat's on to Get an EffectiveCode, GLOBE & MAiL, Nov. 27, 1997, at B2 ("The Canadian Competition Bureau advisescorporations to implement and support a code of conduct.").

97. See generally Draft U.N. Code, supra note 41. For an earlier version of the DraftU.N. Code, see United Nations Commission on Transnational Corporations: Report of theSecretariat on the Outstanding Issues in the Draft Code of Conduct on TransnationalCorporations, 23 I.L.M. 602, 626-40 (1984).

98. See Draft U.N. Code, supra note 41, UI] 7-20.


regulating multinationals' activities against standardizing the hostgovernment's behavior toward multinationals.99

According to the Draft U.N. Code's preamble, one of its principalpurposes was to minimize the harmful effects of multinationals'activities. °° It made explicit reference to human rights, requiring that"[t]ransnational corporations should/shall respect human rights andfundamental freedoms in the countries in which they operate. In theirsocial and industrial relations, transnational corporations should/shall notdiscriminate on the basis of race, color, sex, language, social, national andethnic origin or political or other opinion."' 01 Unfortunately, because theDraft U.N. Code was never formally adopted by the U.N. GeneralAssembly, it exists today as little more than a model for other codes.

Also in 1977, the International Labor Organization ([LO)'02 adoptedthe Tripartite Declaration of Principles Concerning MultinationalEnterprises and Social Policy.'03 The ILO intended the TripartiteDeclaration to "encourage the positive contribution which multinationalenterprises can make to economic and social progress ... ."04 TheTripartite Declaration provides guidance to governments, companies, andworker organizations in such areas as equal opportunity and treatment,working conditions, safety and health, and freedom of association.0 5

Effectiveness is limited, however, because the primary method of enforcingthe Tripartite Declaration is through "discrete persuasion by OECD or ILOofficials" and "public embarrassment through the media."1' 6

In 1998, the ILO recognized the Tripartite Declaration's shortcomingsand introduced a new initiative called the ILO Declaration on FundamentalPrinciples and Rights at Work.'0 7 This declaration aims to ensure that

99. See Frey, supra note 29, at 166 (citing SIDNEY DELL, THE UNrrED NATIONS &INTERNATIONAL BUSINESS 24-26 (1990)).

100. See Draft U.N. Code, supra note 41, preamble. The Draft U.N. Code alsodemanded that "[t]ransnational corporations shall refrain, in their transactions, from theoffering, promising or giving of any payment, gift or other advantage to or for the benefit ofa public official as consideration for performing or refraining from the performance of hisduties in connection with those transactions." Id. 20.

101. Id. R 13-14.102. The International Labor Organization (ILO) has 174 member countries and seeks to

set labor standards by furthering social and economic stability through promotion ofdemocracy, human rights, job creation, and worker protection. See International LaborOrganization Homepage (visited Jan. 19, 1999) <http://www. ilo.org>.

103. See International Labor Organization, Tripartite Declaration of PrinciplesConcerning Multinational Enterprises and Social Policy (visited Jan. 28, 2000)<http:l/wxvw.ilo.orglpubic/english/standards/normlsources/mnex.htm> [hereinafterTripartite Declaration].

104. Id. 2.105. See id.106. Compa & Hinchliffe-Darricarrere, supra note 85, at 671.107. International Labor Organization, Declaration on Fundamental Principles and

2000]


national efforts to foster economic progress go hand in hand with socialprogress by calling for:

a. freedom of association and the effective recognition of theright to collective bargaining;

b. the elimination of all forms of forced or compulsory labour[sic];

c. the effective abolition of child labour; and

d. the elimination of discrimination in respect of employment and

occupation.'03

To promote the new Declaration, the ILO implemented a four-part follow-up of which only the second and third parts outline substantiveprescriptions. The second part calls for an annual review of countries notratifying one or more of the conventions addressing the four areas of fightsmentioned above. 1°9 The third part establishes an annual global review ofone of the four categories of fundamental principles and rights."10 Becausethe Declaration on Fundamental Principles is fairly new, its effectivenesscannot yet be evaluated.

2. Private Initiatives

Perhaps the most notable private initiative for promoting corporateresponsibility through a code of conduct came from Reverend Leon H.Sullivan, who served on the General Motors board of directors." 1 Aftermaling repeated efforts to convince the board to withdraw its operationsfrom South Africa, he formulated a new plan of action: If General Motorsand other companies would not leave South Africa, they should at leastattempt to improve conditions there by helping to end apartheid.'12 In1977, he drafted a document aimed at meeting this challenge.113 Sullivan's

Rights at Work (visited Jan. 28, 2000)<http:l/www.ilo.org/public/english/standardslrelmlilclilc86/com-dtxt.htm> [hereinafterDeclaration on Fundamental Principles].

108. Id. (12.109. See id. Annex.110. See id. Annex.111. See generally Daniel H. Pink, The Valdez Principles: Is What's Good for America

Good for General Motors?, 8 YALE L. & PoL'Y REv. 180, 182 (1990).112. See id.113. See id.; see also Leon H. Sullivan, The Sullivan Principles and Change in South

Africa, in BusNEss iN THE CONTEmPORARY WORLD 175 (Herbert L. Sawyer ed., 1988);Leon H. Sullivan, Agents for Change: The Mobilization of Multinational Companies inSouth Africa, 15 LAW & POL'Y INT'L Bus. 427, 428 (1983) (explaining the backdrop leadingup to the drafting of his principles); Leon H. Sullivan, The Sullivan Principles and Changein South Africa, AFR. REP., May-June 1984, at 48 (discussing both the success of the


original "Statement of Principles" for U.S. companies doing business inSouth Africa consisted of six elements:

1. Non-segregation of the races in all eating, comfort and workfacilities.

2. Equal and fair employment practices for all employees.

3. Equal pay for all employees doing equal or comparable workfor the same period of time.

4. Initiation and development of training programs that willprepare in substantial numbers Blacks, and other non-whites forsupervisory, administrative, clerical and technical jobs.

5. Increasing the number of Blacks and other non-whites inmanagement and supervisory positions.

6. Improving the quality of employees' lives outside the workenvironment in such areas as housing, transportation, schooling,recreation and health facilities."

4

Over time the principles evolved and were expanded or amplified." 5 Theprinciples also included the following system of evaluation:

The Signatory Companies of the Statement of Principles willproceed immediately to:

Sullivan Principles and the further need for mandatory compliance by all or mostmultinationals).

114. Sullivan Principles for U.S. Corporations Operating in South Africa, 24 I.L.M.1464, 1496-98 (1985).

115. See id. One such amplification called for the following:

Increased Dimensions of Activities Outside the Workplace

1. Use influence and support the unrestricted rights of Black businesses tolocate in the Urban areas of the nation.

2. Influence other companies in South Africa to follow the standards ofequal rights principles.

3. Support the freedom of mobility of Black workers to seek employmentopportunities wherever they exist, and make possible provisions foradequate housing for families of employees within the proximity ofworkers employment.

4. Support the ending of all apartheid laws.

With all the foregoing in mind, it is the objective of the companies to involveand assist in the education and training of large and telling numbers of Blacksand other non-whites as quickly as possible. The ultimate impact of this effort isintended to be of massive proportion, reaching and helping millions.

Id. at 1498-99.

2000]


1. Report progress on an annual basis to Reverend Sullivanthrough the independent administrative unit he hasestablished.

2. Have all areas specified by Reverend Sullivan audited bya certified public accounting firm.

3. Inform all employees of the company's annual periodicreport rating and invite their input on ways to improve therating.

There will be a continuing review and assessment of theseguidelines in light of changing social circumstances in SouthAfrica as well as the results of Progress Report evaluations, andperiodic on-site monitoring in South Africa.116

Auditors reviewed detailed questionnaires prepared by companies andassigned companies one of four grades. 7 The auditors published theresults, thereby subjecting companies performing poorly to public scrutiny.

In 1977, only twelve companies, including General Motors, adoptedthe principles." 8 By 1982, however, nearly 150 companies becamesignatories.119 The Sullivan Principles did not put an end to apartheid asReverend Sullivan had hoped, but they did make a significant impact.' 20

They made corporations "aware of the injustices in the South Africanemployment system, by providing a focus for company programs, and byteaching the companies to have a sense of strength in numbers as theyconfronted social issues in South Africa."' 2' Finally, the SullivanPrinciples provided investors with information they could use in evaluatingcompanies they considered investing in as well and providing informationon which companies were concerned with international human rights.122

Inspired by this success, other external codes began to emerge.In the mid-1980s an American group of advocates introduced the

MacBride Principles, named for the late Sean MacBride, a founder ofAmnesty International.'2 The MacBride Principles set forth

116. Id.117. See Frey, supra note 29, at 175. Arthur D. Little Inc., a Massachusetts consulting

firm, graded the companies on a curve, failing as many as one third annually. "Little gavecompanies one of three grades: (I) Making good progress; (II) Making progress; and (Ill-A)Needs to be more active/received low point rating; and (Ill-B) Needs to be more active/didnot meet basic requirements." Pink, supra note 111, at 183.

118. See id.119. See Kevin McManus, Being There, FoRBEs, Nov. 8, 1982, at 218.120. See Geltman & Skroback, supra note 75, at 472.121. Id.122. See id.123. The MacBride Principles called for:

1. Increasing the representation of individuals from underrepresented religious


nondiscrimination standards to combat the political and social strife inNorthern Ireland. 124 While the Sullivan Principles sought to alleviate racialdiscrimination, the MacBride Principles attempted to ease sectariantensions, calling for a ban on all "provocative, sectarian, or politicalemblems from the workplace," as well as enforcing security measures toprotect workers from sectarian practices. 25 The MacBride Principles notonly called for the personal safety of employees while at work, but alsowhile traveling between work and home.126 Unfortunately, the MacBridePrinciples did not duplicate the success of the Sullivan Principles, due inpart to a conflicting provision of British law. 27

Other groups have proposed external codes with varying levels of

groups in the work force including managerial, supervisory, administrative,clerical and technical jobs.

2. Adequate security for the protection of minority employees both at theworkplace and while traveling to and from work.

3. The banning of provocative religious or political emblems from theworkplace.

4. All job openings should be publicly advertised and special recruitmentefforts should be made to attract applicants from underrepresented religiousgroups.

5. Layoff, recall and termination procedures should not in practice favorparticular religious groupings.

6. The abolition of job reservations, apprenticeship restrictions, and differentialemployment criteria, which discriminate on the basis of religion or ethnicorigin.

7. The development of training programs that will prepare substantial numbersof current minority employees for skilled jobs, including the expansion ofexisting programs and the creation of new programs to train, upgrade andimprove the skills of minority employees.

8. The establishment of procedures to assess, identify and actively recruitminority employees with potential for further advancement.

9. The appointment of a senior management staff member to oversee thecompany's affirmative action efforts and the setting up of timetables to carryout affirmative action principles.

HELEN E. BOOTH & KENNTH A. BERTSCH, INVESTOR RESPONSIBILITY AND RESEARCH

CENTER, TnE MACBRiDE PRINCIPLES & U.S. CoMPAINms IN NORTHERN IRELAND 62-63(1991) [hereinafter THE MACBRIDE PRINCIPLES] (listing the amplified version of theMacBride Principles).

124. See Frey, supra note 29, at 175.125. Id. at 176, (citing THE MACBRIDE PRINCIPLES, supra note 123, n.128).126. See Ariadne K. Sacharoff, Note, Multinationals in Host Countries: Can They Be

Held Liable Under the Alien Tort Claims Act for Human Rights Violations?, 23 BROOK. J.INT'LL. 927, 936 (1998).

127. The MacBride Principles may conflict with the British Fair Employment Act. SeeTHE MACBRIDE PRINCIPLES, supra note 123, at 61-63.

2000)


success. In 1991, the Coalition for Justice in the Maquiladoras, an allianceof religious, labor, environmental, and human rights activists from theUnited States and Mexico, introduced the Maquiladora Standard ofConduct.1 Containing twenty-nine principles, the Maquiladora Standardsought "to promote socially responsible practices that ensure a safeenvironment on both sides of the border, safe work conditions... and anadequate standard of living .... ,12 9 Similarly, a coalition of investors andenvironmental organizations known as the Coalition for Environmentally

130Responsible Economies proposed the Valdez Principles. The coalitionintended the Valdez Principles to "create a voluntary mechanism ofcorporate self-governance that will maintain business practices consistentwith the goals of sustaining our fragile environment for future generations,within a culture that respects all life and honors its independence.' '131

Finally, the Slepak Foundation, a Philadelphia-based non-profitorganization, introduced the Slepak Principles.132 The Slepak Principles

128. See Jorge F. Perez-Lopez, Promoting International Respect for Workers RightsThrough Business Codes of Conduct, 17 FORDHAM INT'L L.J. 1, 19-20 (1993).

129. Id. at 20 (quoting COALTION FOR JUSTICE IN THE MAQULHADORAS, INTRODUCTION TO

MAQtM.ADORA STANDARDS OF CONDUCT § 1 (1991)).

130. The Valdez Principles call for:

1. Protection of the Biosphere

2. Sustainable Use of Natural Resources

3. Reduction and Disposal of Waste

4. Wise Use of Energy

5. Risk Reduction

6. Marketing of Safe Products and Services

7. Damage Compensation

8. Disclosure

9. Environmental Directors and Managers

10. Assessment and Annual Audit

Pink, supra note 111, at 186-88 (citing The Social Investment Forum, C.E.R.E.S. Project,Valdez Principles) (descriptive language within each principle omitted).

131. Id. at 186 (citing The Social Investment Forum, C.E.R.E.S. Project, ValdezPrinciples Statement of Intent (Sept. 7, 1989)).

132. Under the Slepak Principles, American companies:

1. Will not produce goods or provide services that replenish the Soviet military.

2. Will not use goods or products manufactured by forced labor in the SovietUnion.

3. Will safeguard Soviet employees prone to dismissal based upon politics,religion, or ethnic background.

4. Will decline to participate in a commercial transaction if the place of work is


attempted to give guidance to "American companies doing business in theformer Soviet Union.'' 133 The Slepak Principles' primary purpose was to"make human rights a priority issue that must be placed at the forefront ofany exchange between the United States and the Soviet Union."'134

However, when the Soviet Union dissolved, support for the SlepakPrinciples also eroded, "revealing the ephemeral nature of corporatecodes.' 35

3. Government Initiatives

In 1991, Congressman John Miller introduced legislation similar tothe Slepak Principles. 36 Inspired by the Sullivan Principles, the MillerPrinciples sought to encourage liberalization and political freedom in Tibetand the People's Republic of China. 137 The Miller Principles, however,

a Soviet-confiscated religious edifice.

5. Will ensure that methods of production do not pose an irresponsible physicaldanger to Soviet workers, neighboring populations, and property.

6. Will refrain from making untied loans to the Soviet government-loanswhich may be used to subsidize Soviet non-peaceful activities.

7. Will attempt to engage in joint ventures with private co-operatives ratherthan institutions connected directly to the Soviet state.

Perez-Lopez, supra note 128, at 13-15 (quoting SLEPAK FOUNDATION, 1 THE SLEPAK

REPORT No. 1, at 1 (Mar. 1989)) [hereinafter Statement of Purpose].133. Perez-Lopez, supra note 128, at 13.134. Statement of Purpose, supra note 132.135. Sacharoff, supra note 126, at 936.136. See H.R. 1571, 102d Cong., 1st Sess. (1991).137. See Perez-Lopez, supra note 128, at 16. The Miller Principles called for

participants in business dealings with the People's Republic of China or Tibet to:

1. Suspend the use of all goods, wares, articles, and merchandise that aremined, produced, or manufactured, in whole or in part, by convict labor orforced labor... and refuse to use forced labor in the industrial cooperationprojects.

2. Seek to ensure that political or religious views, sex, ethnic, or nationalbackground, involvement in political activities or nonviolent demonstrations, orassociation with suspected or known dissidents will not prohibit hiring, lead toharassment, demotion, or dismissal, or in any way affect the status or terms ofemployment in the industrial cooperation project ....

3. Ensure that methods of production. .. do not pose an unnecessary physicaldanger to workers and neighboring populations and property and.., to thesurrounding environment ....

4. Strive to use business enterprises that are not controlled by the People'sRepublic of China or its authorized agents and departments as potentialpartners ....

20001


were never enacted into law.138 Senator Edward Kennedy andRepresentative Jolene Unsoeld considered sponsoring a new, similar bill,but decided against it when President Clinton promised to propose his owncode of conduct.

139

In 1994, amid intensifying criticism, President Clinton separatedhuman rights issues from American trade policy toward China.'4° As analternative to an official U.S. Government policy on human rights, Clintonpromised to devise a human rights code for corporations. 141One year later,President Clinton unveiled his own set of voluntary ethical standards formultinationals, known as the "Model Business Principles.' ' 142 Theprinciples encourage businesses to adopt voluntary codes that, at aminimum, address:

1. Provision of a safe and healthy workplace;

2. Fair employment practices, including avoidance of child andforced labor and avoidance of discrimination based on race,gender, national origin, or religious beliefs; and respect for theright of association and the right to organize and bargaincollectively;

3. Responsible environmental protection and environmentalpractices;

5. Prohibit any military presence on the premises of the industrial cooperationproject.

6. Undertake to promote freedom of association and assembly among theemployees ....

7. Use every possible channel of communication with the Chinese Governmentto urge that government to disclose publicly a complete list of all thoseindividuals arrested since March 1989, to end incommunicado detention andtorture, and to provide international observers access to all places ofdetention.., and to trials of prisoners arrested in connection with... pro-democracy events ....

8. Discourage or undertake to prevent compulsory indoctrination programsfrom taking place on the premises of the operations of the industrial cooperationproject.

9. Promote freedom of expression, including the freedom to seek, receive, andimpact information and ideas of all kinds, regardless of frontiers, either orally,in writing or in print, in the form of art, or through any media ....

H.R. 1571, 102d Cong. § 1 (1991).138. See Frey, supra note 29, at 171.139. See id.; see also Orentlicher & Gelatt, supra note 44, at 82-95 (discussing and

analyzing the Kennedy-Unsoeld Proposal).140. See Cassel, supra note 43, at 1974.141. See id.142. Id.


4. Compliance with U.S. and local laws promoting good businesspractices, including laws prohibiting illicit payments andensuring fair competition;

5. Maintenance, through leadership at all levels, of a corporateculture that respects free expression consistent with legitimatebusiness concerns, and does not condone political coercion in theworkplace; that encourages good corporate citizenship and makesa positive contribution to the communities in which the companyoperates; and where ethical conduct is recognized, valued andexemplified by all employees. 43

Both human rights and business leaders have sharply criticized theModel Business Principles.' 44 Critics complain the proposal is too vague tohave an impact on human rights atrocities in China or that it is merelyduplicative of the existing laws. 45 "We're quite disappointed. This fallsfar short of what is needed," says a representative from Human RightsWatch Asia, echoing the sentiments of spokespeople for Amnesty

146International and other human rights groups. Carol Richards, aspokeswoman for the activist group, Burma Forum, complains "[t]his kindof code would be useless in Burma."' 47 Perhaps the main problemsassociated with the Model Business Principles are the identical flaws inmost other existing corporate codes-lack of mandatory conformity orenforceability. 14 As one commentator notes, "[i]t is a toothless, clawless,and, arguably, a comatose tiger."' 49

The Model Business Principles are intended to be used as a model forother companies to draft their own codes. 150 Several large corporationshave expressed support for Clinton's plan, including General Electric,Kodak, Boeing, Digital Electric, Loral, Rockwell, and Honeywell.' 5' While

143. Model Business Principles (visited Oct. 19, 1999)<http://wwwv.ita.doc.gov/bgp/model.html>.

144. See Frey, supra note 29, at 172-73.145. See Cassel, supra note 43, at 1975; see also Frey, supra note 29, at 173.146. Evelyn Iritani, White House Unveils Its Overseas Code of Corporate Conduct, L.A.

Tm ws, Mar. 28, 1995, at Dl; see also Beverley Earle, The United States Foreign CorruptPractices Act and the OECD Anti-Bribey Recommendation: When Moral Suasion Won'tWork, Try the Money Argument, 14 DICK. J. rt'L L. 207, 229 (1996) (discussingdisappointment among human rights groups).

147. Iritani, supra note 146, at DI.148. See Frey, supra note 29, at 173.149. Earle, supra note 146, at 229.150. See Philip M. Berkowitz, Avoiding Perils of Overseas Employment Practices, in

CORPORATE COMPLIANCE: CAR/MARK AND THE GLOBALIZATION OF GOOD CORPORATECoNDuCT 1998, at 1213, 1217 (PLI Corp. & Practice Course Handbook Series No. B-1057,1998) (discussing the increased concern of U.S. employers in their overseas businesspractices and recommending steps for preventing such liability).

151. See Cassel, supra note 43, at 1975.

20001


the Model Business Principles could certainly be more forceful, they atleast represent a positive step toward encouraging multinationals torecognize their social responsibilities. 2

B. Internal Corporate Codes

Some corporations are responding to calls for corporate responsibilityby voluntarily imposing such codes upon themselves. These internal codesserve several functions, some substantive and some symbolic. Forexample, mission statements set forth by coffee seller, Starbucks, addressboth general corporate matters153 and environmental concerns.15 Internalcorporate codes and similar policy statements purport to serve as a "generalmoral statement" and may have force, although in other instances they arecriticized as little more than a public relations strategy.55

Some multinationals' codes expressly address human rights issues. 56

For example, athletic apparel company Reebok's code includes a promiseto withdraw operations from countries violating human rights and activelyencourages human rights protection.157 Many multinationals are adoptingminimum standards regarding employment conditions for their workers.Other multinationals are refusing to accept business partners unless thosecompanies adhere to the same principles.' 5' For example, in 1993, retailerWal-Mart responded to an embarrassing television expos6 of childrenmaking shirts in a Bangladesh factory 5 9 by adopting a policy requiringvendors to:

comply with applicable U.S. import laws (including forced laborproducts prohibition)... meet conditions of employment thatinclude appropriate compensation for employees, maintainreasonable hours, refrain from engaging in forced or prison laborpractices, refrain from using child labor, [and] demonstrate acommitment to basic human rights (allowing for cultural

152. See id.153. Starbucks' mission statement sets forth six guiding principles in its business

operations. See Mission Statement (visited Oct. 19, 1999)<http:llwww.starbucks.comlcompany/mission.asp?nav=lc>.

154. Starbucks has a separate Environmental Mission Statement. See EnvironmentalMission Statement (visited Oct. 19, 1999)<http:llwww.starbucks.com/company/environment.asp?nav=ld>.

155. See Mark B. Baker, Private Codes of Conduct: Should the Fox Guard theHenhouse?, 24 U. INAM INrM-AM. L. REv. 399, 414-17 (1993) (discussing private codesof corporate conduct).

156. See Frey, supra note 29, at 179.157. See id.158. See id. at 177-78.159. See Human Rights: Ethical Shopping, supra note 86, at 58.


differences).'6

Similarly, Levi Strauss' code flatly restricts the company from doingbusiness in countries where pervasive human rights abuses exist. 161

160. Frey, supra note 29, at 177-78, (citing Memorandum from Wal-Mart Stores, Inc.Regarding Standards for Vendor Partners (undated)).

161. Levi Strauss' "Terms of Engagement" require:

1. Ethical Standards: We will seek to identify and utilize business partners whoaspire as individuals and in the conduct of all their businesses to a set of ethicalstandards not incompatible with our own.

2. Legal Requirements: We expect our business partners to be law abiding asindividuals and to comply with legal requirements relevant to the conduct of alltheir businesses.

3. Environmental Requirements: We will only do business with partners whoshare our commitment to the environment and who conduct their business in away that is consistent with Levi Strauss & Co.'s Environmental Philosophy andGuiding Principles.

4. Community Involvement: We will favor business partners who share ourcommitment to contribute to improving community conditions.

5. Employment Standards: We will only do business with partners whoseworkers are in all cases present voluntarily, not put at risk of physical harm,fairly compensated, allowed the right of free association and not exploited inany way. In addition, the following specific guidelines will be followed:

Wages and Benefits: We will only do business with partners who provide wagesand benefits that comply with any applicable law and match the prevailing localmanufacturing or finishing industry practices.

Working Hours: While permitting flexibility in scheduling, we will identifyprevailing local work hours and seek business partners who do not exceed themexcept for appropriately compensated overtime .... [W]e will not usecontractors who, on a regular basis, require in excess of a sixty-hour week.Employees should be allowed at least one day off in seven.

Child Labor: Use of child labor is not permissible. Workers can be no less than14 years of age and not younger than the compulsory age to be in school. Wewill not utilize partners who use child labor in any of their facilities.

Prison Labor/Forced Labor. We will not utilize prison or forced labor incontracting relationships in the manufacture and finishing of our products. Wewill not utilize or purchase materials from a business partner utilizing prison orforced labor.

Health & Safety: We will only utilize business partners who provide workerswith a safe and healthy work environment. Business partners who provideresidential facilities for their workers must provide safe and healthy facilities.

Discrimination: While we recognize and respect cultural differences, we believethat workers should be employed on the basis of their ability to do the job,rather than on the basis of personal characteristics or beliefs. We will favorbusiness partners who share this value.

2000]


Internal codes demonstrate a company's societal views.162 They aredevices for companies trying to increase public approval for multinationalaction.1

13 However, the company is likely not seeking approval exclusively

from the general public. Often, implementing a code of conduct maydemonstrate to a host country that the corporation is interested in protectingthat country's citizens and environment.' 64 Internal codes also serve as a

tool for policy reviews and a "measuring stick" against which corporations

may compare themselves.16 Codes implemented by upper management

may also keep employees abreast of the company's objectives.

A few corporations have enforced their codes very seriously byinstaling166installing strict internal controls to deter illegal or unethical activity. For

example, Levi Strauss created an elaborate system of enforcing its codethrogh rgula . - 167through regular monitonng. Also, toy manufacturer Mattel banned theuse of child labor in its factories and implemented an independentmonitoring system. 168 Some multinationals are appointing "ethics officers"

12.Disciplinary Practices: We will not utilize business partners who usecorporal punishment or other forms of mental or physical coercion.

Terms of Engagement (visited Oct. 18, 1999)<http://www.levistrauss.com/about/code.html>.

162. See Baker, supra note 155, at 415.163. See JoHNM. KLNw INTERNATIONAL CODES & MULTINATIONAL BUSINESS 6 (1985).164. See Baker, supra note 155, at 414-15.165. See generally KINE, supra note 163, at 6.166. See John Gruner, Confidentiality: Striking the Right Balance, Accr. TODAY, Aug.

24, 1998, at 16.167. Levi's code further states that:

All new and existing factories involved in the cutting, sewing, or finishing ofproducts for Levi Strauss & Co. must comply with our Terms of Engagement.These facilities are continuously evaluated to ensure compliance. We work on-site with our contractors to develop strong alliances dedicated to responsiblebusiness practices and continuous improvement.

If Levi Strauss & Co. determines that a business partner is in violation of ourTerms of Engagement, the company may withdraw production from that factoryor require that a contractor implement a corrective action plan within a specifiedtime period. If a contractor fails to meet the corrective action plan commitment,Levi Strauss & Co. will terminate the business relationship.

About Levi Strauss & Co.-Code of Conduct (visited Jan. 19, 1999)<http://www.levistrauss.com/about/code.html>.

168. See Steve James, Mattel Bans Child Labor at Sites Making Its Toys, ORANGECOUNTY REG., Nov. 21, 1997, at C03, available il 1997 WL 14885766. Mattel's coderequires that its manufacturing facilities:

1. Set working hours, wages, and overtime pay rates that meet the requirementsof governing laws. Wages must match the minimum legal wage or localindustry standards, whichever is greater.

2. Hire no one under the age of 16 or the local legal age limit, whichever ishigher.


S 169to serve as their consciences. Athletic apparel company Nike demandsthat its business partners, in addition to adhering to Nike's own code,adhere to an additional set of guiding principles. 70 Nike also sought to

3. Never use forced or prison labor of any kind, nor work with anymanufacturer or supplier who does.

4. Not tolerate discrimination of any kind.

5. Abide by all the laws and regulations of the country in which they operateand recognize all employees' rights to choose (or not) to affiliate with legallysanctioned organizations or associations without unlawful interference.

6. Provide a safe working environment for employees.

7. Favor business partners who are committed to ethical standards that arecompatible with Mattel's.

8. Only work with those manufacturers and suppliers who comply with allapplicable laws and regulations and share Mattel's commitment to theenvironment.

9. Insist that business partners maintain a strict adherence to all local andinternational customs laws.

10. Meet or exceed all requirements in the company's "Global ManufacturingPrinciples."

Mattel Global Manufacturing Principals (visited Oct. 25, 1999)<http:llwww.mattel.comilcorporate/company/responsibility/gmp.asp? chapter=gmp>. Seealso Mattel, Inc. Launches Global Code of Conduct Intended to Improve Workplace,Workers' Standard of Living, PR NwswIRE, Nov. 20, 1997, at 07:16:00 (describingbackground of Mattel's code implementation).

169. See id.170. Nike's code of conduct for its business partners states:

While these principles establish the spirit of our partnerships, we also bind thesepartners to specific standards of conduct. These standards are set forth below.

I. Forced Labor: The manufacturer does not use forced labor in any form--prison, indentured, bonded or otherwise.

2. Child labor. The manufacturer does not employ any person below theage of 18 to produce footwear... [or] any person below the age of 16 toproduce apparel, accessories or equipment.

3. Compensation: The manufacturer [pays] ... at least the minimumwage, or the prevailing industry wage, whichever is higher ....

4. Benefits: The manufacturer provides each employee all legallymandated benefits.

5. Hours of Work/Overtime: The manufacturer complies with legallymandated work hours; uses overtime only when each employee is fullycompensated according to local law; informs each employee at the time ofhiring if mandatory overtime is a condition of employment; and, on aregularly scheduled basis, provides one day off in seven, and requires nomore than 60 hours of work per week, or complies with local limits ifthey are lower.

20001


remedy its involvement in past human rights abuses by hiring formerUnited Nations Ambassador Andrew Young and his company, GoodWorksInternational, to investigate Nike's international plants and ensure that itscode of conduct was being followed. 17' Nike allowed Young's findings tobe released to the public.172 In a letter to Young, Nike CEO Philip H.Knight wrote the following:

Simply put, you should consider this letter as blanket authorityfrom me to go anywhere, see anything and talk with anybody inthe Nike family about this issue. Your goal is to seek the truth.Our obligation to you is to help you in every way possible to findthe truth. 73

6. Management of Environment, Safety and Health (MESH): Themanufacturer has written health and safety guidelines, including thoseapplying to employee residential facilities, where applicable; has a factorysafety committee; complies with Nike's environmental, safety and healthstandards; limits organic vapor concentrations ....

7. Documentation and Inspection: The manufacturer maintains on fie alldocumentation needed to diemonstrate compliance with this Code ofConduct [and] agrees to make these documents available for Nike or itsdesignated auditor to inspect upon request ....

Nike Code of Conduct (visited Jan. 19, 1999) <http://www.nikebiz.com/labor/code.html>.171. See Maria Saporta, Young Insisted Nike Give Hinz Full Access to Plants, ATLANTA

J. & ATLANTA CoNsT., June 24, 1997, at E03, available in 1997 WL 3978042. The NikeCode of Conduct states in part:

Nike designs, manufactures and markets products for sports and fitnessconsumers. At every step in that process, we are driven to achieve not onlywhat is required, but also what is expected of a leader. We expect our businesspartners to do the same. Specifically, Nike seeks partners that share ourcommitment to the promotion of best practices and continuous improvement in:

1. Occupational safety and health, compensation, hours of work and

benefits standards.

2. Minimizing our impact on the environment.

3. Management practices that recognize the dignity of the individual, therights of free association and collective bargaining, and the right to awork place free of harassment, abuse or corporal punishment.

4. The principle that decisions on hiring, salary, benefits, advancement,termination or retirement are based solely on the ability of an individualto do the job. There shall be no discrimination based on race, creed,gender, marital or maternity status, religious or political beliefs, age orsexual orientation.

Nike Code of Conduct (visited Jan. 20, 1999) <http:l/www.nikebiz.com/labor/code.html>.172. See Saporta, supra note 171, at E03. Young found that the factories were

satisfactorily adhering to Nike's code of conduct, but that room for improvement existed.Upon Young's finding, Nike insisted that conditions be improved. See id.

173. Id.


C. Limitations of Codes

The truth is, corporations are no more capable of acting ethicallythan they are of acting lovingly. 74

The chief criticism of corporate codes is that they are mere publicS •- 175

relations gimmicks. Some commentators argue Nike's hiring of AndrewYoung was just that.' 76 Nike critics condemned Young's work, calling it"superficial," because it failed to address key issues such as wages.'77 Nikealso faced criticism after a 1997 internal audit, conducted by accountingfirm Ernst & Young, found that many plants were not complying withNike's code. 17 Whereas Nike encouraged Andrew Young to publicize hisfindings, the Ernst & Young audit was not made public by Nike but wasinstead leaked to the New York Times.179 Critics further called Nike'scredibility into question when a lawsuit arose alleging Nike's advertisingmisrepresented employment conditions in its overseas factories. 80 Inaddition to being used as public relations gimmicks, codes might also beused as a tool for corporate managers to protect themselves and theircompanies by claiming that the existence of a corporate code demonstratestheir company's good faith or lack of complicity.

Other commentators complain that corporate codes lackenforceability; even when multinationals adopt a code, they are free todepart from or circumvent their self-imposed code with little trouble. 18'Few codes contain internal enforcement provisions, and even fewer provide

174. GERRY SPENCE, W1TH JUSTICE FOR NONE 277 (1989).175. See id.176. Some contend Nike appointed Young for mere publicity reasons, and that he was

little more than a spokesman for Nike. See Dana Canedy, Nike's Inzage-Polishing EffortMay Face Some Tough Obstacles, DENv. PosT, Mar. 31, 1997, at C02.

177. See Jim Lobe, Labor-U.S.: Nike Brought to Court over False Ads, Inter Press Serv.,Apr. 21, 1998, available in 1998 WL 5986783. A Chicago newspaper quipped: "Nikeannounces layoffs of 2,700 overseas workers. What will that save, $12?" Zay N. Smith,Quick Takes: Nikenomics in Action, Cm. SuN-Tms, Sept. 22, 1998, at 30.

178. See Lobe, supra note 177.179. See id.180. See id.181. See ROBERT KLITGAARD, CONTROLUNG CoRRUnTION 36-48 (1988) (discussing

negative impact of corruption on market transactions' efficiency, resource distributionamong market actors, motives of government actors, and political stability of hostgovernment); Baker, supra note 155, at 403-05; Robert H. Sutton, Controlling CorruptionThrough Collective Means: Advocating the Inter-American Convention Against Corruption,20 FoRDHA i INT'L L.J. 1427, 1464 (1997) (discussing negative impact of governmentalcorruption on local economies and corporations that do business with corrupt governments)(citing NEiL H. JACOBY ET AL., BRIBERY AND EXTORTION IN WoRLD BusINEsS: A STUDY OF

CORPORATE PoLrTcAL PAYMENTS ABROAD 183-85 (1977)); Transnational Bribery, Bus.Am., Oct. 1996, at 112, 112-14 (analyzing effects of corrupt environments on businessesand economies).

2000]


an internal remedy for code violations. Although a few companies, such astoy manufacturer Mattel, have taken steps to ensure enforceability throughindependent monitoring, most multinationals have not taken this step.1 2

Without enforceability, compliance with corporate codes cannot be verifiedor assured.

18 3

Another problem with corporate codes is that they lack uniformity andconsistency. For example, Oil Company A might adopt a code prohibitingbusiness activities in a country such as Burma, while Oil Company Bsimply promises to meet the highest ethical standards in all of its businessactivities. This situation allows Oil Company B to profit despite Burmeseatrocities, while placing Oil Company A at a competitive disadvantage, andaccomplishing little with respect to furthering human rights.

Adhering to a code may also be confusing to company employeesbecause a single factory might have more than one code.18 The apparelindustry has sought to overcome this inconsistency problem by enacting anindustry-wide code.185 While an industry-wide effort is a positive step,human rights abuse is such a serious problem that an industry-wide solutionis simply insufficient.

Since codes are strictly voluntary, multinationals may simply choosenot to adopt or adhere to such a code. Moreover, many codes act only asguiding principles rather than as a definitive statement of policy. The resultis a blurred line between acts that employees cannot and should notcommit. 186 Also, codes often do not generally afford injured parties aremedy. Finally, the costs of developing an internal code may causecorporations to either adopt those that are not comprehensive, or fail toadopt one at all.

While corporate codes are not without value, they are sometimesinsufficient to prevent multinationals from profiting from human rightsabuse. In response to the inadequacies of corporate codes, some humanrights abuse victims have sought refuge through the court system.

182. See Paul Knox, Corporations Not Likely to Have Codes of Conduct, Few FinnsAllow Independent Monitoring, Study by Canadian Rights Centre Reveals, GLOBE & MAIL,May 14, 1997, at A17. Of the 98 Canadian companies surveyed, only 21 had codes ofconduct. Of those 21, only six addressed business dealings with oppressive governmentsand only six allowed for independent monitoring. See id.

183. See Nomi Morris & Suzanne Goldenberg, Kids At Work, MAcLEANs, Dec. 11,1995, at 28 (illustrating the problem with voluntary compliance).

184. For example, a clothing factory might have one code for tailors, another for packers,and another for managers.

185. See A Modest Start on Sweatshops, N.Y. TIMEs, Apr. 16, 1997, at A22 (discussingpositive and negative aspects of the industry-wide code).

186. See Seymour J. Rubin, Transnational Corporations and International Codes ofConduct, 10 AM. U. I. INT'L L. & POL'Y 1275, 1286 (1995).


IV. USING EXISTING LAW TO FORCE CORPORATIONS TO RESPECT HUMANRIGHTS

Corporations currently do not have a clear legal duty to respect humanrights. Neither existing external nor internal codes are adequate to imposesuch a duty. Human rights abuse victims have turned to the courts toimpose such a duty, but have met with little success.

A. Labor Laws

In the area of labor law, plaintiffs have failed in their attempts to haveAmerican law applied extraterritorially. Courts follow a presumption thatU.S. laws do not apply extraterritorially absent an express intent by

187Congress to have them do so. Accordingly, courts have steadfastlyrefused jurisdiction of claims under the National Labor Relations Act,'8s theLabor Management Relations Act,"' and Title VII of the Civil Rights Actof 1964.'90 Even the Fair Labor Standards Act, which sets labor standardsthat directly protect workers' human rights, has been of little help toworkers seeking to apply the statute extraterritorially."9'

B. Alien Tort Claims Act

The Alien Tort Claims Act (ATCA)192 expressly provides courts with

187. See, e.g., EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) (refusing toapply Title VII of the Civil Rights Act of 1964 extraterritorially, holding that legislation ofCongress, absent a contrary intent, is meant to apply only within the territorial jurisdictionof the United States); Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949). See also PAUL

B. STEPHAN, I ET AL., INTERNATIONAL BusINEss AND EcoNoMIcs: LAW & PoLIcY 243 (2ded. 1996) (discussing a "general, and rather strong, presumption that regulatory legislationnot on its face limited to domestic transactions will be so limited").

188. 29 U.S.C. §§ 151-169 (1994). The National Labor Relations Act protects workers'rights with regard to freedom to associate, organize, and collectively bargain. See id.; seealso McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10 (1963)(refusing to apply the National Labor Relations Act extraterritorially).

189. 29 U.S.C. §§ 141-144 (1994). See, e.g., Labor Union of Pico Korea v. Pico Prod.,968 F.2d 191 (2d Cir. 1992) (refusing to apply the Labor Management Relations Act of1947 extraterritorially).

190. 42 U.S.C. §§ 2000e-1 to -17 (1994). See, e.g., Arabian Am. Oil Co., 499 U.S. at250 (holding that petitioners did not overcome the presumption against extraterritoriality).This case has been partially superseded by Congress. See Civil Rights Act of 1991, Pub. L.No. 102-166, 105 Stat. 1071 (codified as amended in scattered sections 6f 29 U.S.C. §§2000e-1 to -17 (1994)). Nevertheless, the case represents the courts' continued reluctanceto apply such laws extraterritorially.

191. See 29 U.S.C. §§ 201-219 (1994). See, e.g., Cruzv. Chesapeake Shipping, Inc., 932F.2d 218 (3d Cir. 1991).

192. Alien Tort Claims Act (ATCA), 28 U.S.C. § 1350 (1994). The Alien Tort ClaimsAct reads in relevant part, "Alien's action for tort: The district courts shall have original

2000]


jurisdiction over alien tort claims arising from a "violation of the law ofnations or a treaty of the United States.' 93 The law of nations is a vagueconcept and may include "norm[s] of international law so fundamental that[they are] binding on all members of the world community,"''94 including"such basic rights as the right not to be murdered, tortured, or otherwisesubjected to cruel, inhuman or degrading punishment; the right not to be aslave; and the right not to be arbitrarily detained."' 95

Courts are divided as to whether an ATCA claim may be based uponpurely private action or whether state action is required. 96 In Tel-Oren v.

jurisdiction of any civil action by an alien for a tort only, committed in violation of the lawof nations or a treaty of the United States." Id.

193. Id. The law of nations "may be ascertained by consulting the works of jurists,writing professedly on public law; or by the general usage and practice of nations; or byjudicial decisions recognizing and enforcing that law." United States v. Smith, 18 U.S. (5Wheat.) 153, 160-61 (1820).

194. Alejandre v. Republic of Cuba, 996 F. Supp. 1239, 1252 (S.D. Fla. 1997).195. De Sanchez v. Banco Cent. de Nicar., 770 F.2d 1385, 1397 (5th Cir. 1985).196. The fact that some courts have imposed a state action requirement in an ATCA

claim may be somewhat paradoxical. State actors are rarely amenable to an ATCA claimbecause of two defenses.

First, the Foreign Sovereign Immunities Act (FSIA) provides foreign states withimmunity except under narrow exceptions. See Foreign Sovereign Immunities Act (FSIA),28 U.S.C. § 1605 (1994 & Supp. II 1997); see also Argentine Republic v. Amerada HessShipping Corp., 488 U.S. 428, 443 (1989) (finding that the legislative intent behind theFSIA was not to contradict the international law of sovereign immunity). One way thatATCA plaintiffs may overcome this immunity is by showing that the allegations constitute acommercial activity under FSIA. This is possible where:

1. [T]he action is based upon a commercial activity carried on in the UnitedStates by the foreign state;

2. or upon an act performed in the United States in connection with acommercial activity of the foreign state elsewhere;

3. or upon an act outside the territory of the United States in connection with acommercial activity of the foreign state elsewhere and that act causes a directeffect in the United States.

28 U.S.C. § 1605(a)(2) (1994 & Supp. II 1997). "A 'commercial activity' means either aregular course of commercial conduct or a particular commercial transaction or act. Thecommercial character of an activity shall be determined by reference to the nature of thecourse of conduct or particular transaction or act, rather than by reference to its purpose."28 U.S.C. § 1603(d) (1994). "A 'commercial activity carried on in the United States by aforeign state' means commercial activity carried on by such state and having substantialcontact with the United States." 28 U.S.C. § 1603(e) (1994).

Second, an ATCA action against a foreign state may be further stalled by the Act ofState doctrine. This judicially created doctrine restricts federal courts from second-guessingthe validity of a foreign sovereign's actions inside its boundaries, regardless of whether thealleged acts violate international law. See Banco Nacional de Cuba v. Sabbatino 376 U.S.398, 424 (1964). The act of state doctrine operates to preserve separation of powers byprohibiting the judiciary, in general, from interfering with the executive's role in foreign anddiplomatic relations. Id. at 423-25.

492


Libyan Arab Republic, 97 the D.C. Circuit rejected plaintiffs' claim due tothe lack of subject matter jurisdiction and running of the statute oflimitations.! Courts have looked to § 1983 jurisprudence for guidance indetermining whether state action exists in an ATCA claim.' 99 Courts havearticulated four separate approaches to finding state action for purposes of§ 1983: 1) Public function; 20 2) State compulsion;20' 3) Nexus; 2°2 and 4)Joint action.203

Other courts have allowed plaintiffs' claims to proceed in the absenceof state action. In Kadic v. Karadzic,2 the Second Circuit held that, due tothe existence of international treaties and law condemning and outlawinggenocide and war crimes, such acts by private actors could be brought

205under the ATCA without state action. In a recent development, Burmesetorture victims have sued Unocal under the ATCA for its role in human

2'06rights violations.: While the ATCA has been successfully used to sue207dictators such as Ferdinand Marcos for human rights violations, the

ATCA has never yet successfully been used against an American companyin this type of situation.208

In 1997, a federal judge allowed the lawsuit Doe v. Unocal to

197. 726 F.2d 774 (D.C. Cir. 1984).198. See id.199. See Doe v. Unocal, 963 F. Supp. 880, 890 (C.D. Cal. 1997), dismissed in part, 27 F.

Supp. 2d 1174 (C.D. Cal. 1998) (dismissing claim against one of the defendants for lack ofpersonal jurisdiction, but not the claim against Unocal).

200. The public function doctrine finds state action where the actor performs what istraditionally an exclusive public function. See, e.g., Flagg Bros., Inc. v. Brooks, 436 U.S.149, 157-64 (1978).

201. See, e.g., Shelley v. Kraemer, 334 U.S. 1 (1948).202. State action may be found under the nexus approach where the government is

sufficiently involved in the actor's conduct that it benefits from the conduct or encouragesthe conduct. See, e.g., id. at 14-18.

203. The joint action theory satisfies state action where the private actor and state jointlyparticipated in the challenged activity. See, e.g., Lugar v. Edmondson Oil Co., 457 U.S. 922(1982).

204. 70 F.3d 232, 241-43 (2d Cir. 1995).205. See id. at 241-43 (stating that "instances of inflicting death, torture, and degrading

treatment" may be actionable under the ATCA when committed in the pursuit of genocideor war crimes).

206. See Doe v. Unocal, 963 F. Supp. 880 (C.D. Cal. 1997), dismissed in part, 27 F.Supp. 2d 1174 (C.D. Cal. 1998) (dismissing claim against one of the defendants for lack ofpersonal jurisdiction, but not the claim against Unocal).

207. See In re Estate of Ferdinand Marcos, Human Rights Litig., 25 F.3d 1467 (9th Cir.1994).

208. See Gregory J. Wallance, Linked to Slavery Doe v. Unocal Asks Whether AmericanCompanies Should Be Held Responsible for the Human Rights Abuses of the ForeignGovernments that Are Their Business Partners, in CORPORATE COMPLIANCE: CAREMARK ANDTHE GLOBALIZATION OF GOOD CORPORATE CONDUCT 1998, at 1207, 1210 (PLI Corp. Law &Practice Course Handbook Series No. B-1057, 1998).

209. 963 F. Supp. at 880.

2000)


proceed against Unocal for its role in Burmese atrocities.210 The lawsuitwas brought by citizens of Burma as a class action against Unocal, two ofits top executives, its partner Total S.A., SLORC, and SLORC-runMyanma Oil and Gas Enterprise.1 The plaintiffs sought injunctive,declaratory, and compensatory relief for human rights violations arisingfrom the Yadana pipeline project.212 According to the plaintiffs, SLORCsoldiers secured the pipeline area through "violence and intimidation...forc[ing] farmers to relocate... confiscat[ing] property and forc[ing]inhabitants to clear forest, level the pipeline route, build headquarters forpipeline employees, prepare military outposts and carry supplies andequipment."213 Reports were made of rape and gang-rape by SLORCsoldiers.

214

Alleging atrocities such as "assault, rape and other torture, forcedlabor, and the loss of their homes and property,, 215 the plaintiffs brought

2'16their claim, in part, under the ATCA. The district court held thatallegations that Unocal "paid and continue[s] to pay SLORC to providelabor and security for the pipeline.., accepting the benefit of andapproving the use of forced labor" were sufficient to establish a cause ofaction under the ATCA.217 The court based ATCA jurisdiction overUnocal by finding that the Burmese atrocities violated a "jus cogens norm"of the law of nations. The court premised its state action finding on a §1983 analysis, relying on the joint action theory. 219 Doe v. Unocal may

eventually be recognized as a legal milestone, because it could mark thefirst time an American corporation is held liable under the ATCA forbenefiting from human rights abuses.

210. See id.211. See id. at 883. The district court dismissed SLORC and Myanma Oil and Gas

Enterprise for lack of subject matter jurisdiction under the doctrine of sovereign immunity.See id. at 884. The court rejected plaintiff's claim that these actions fell under thecommercial activity exception to the Foreign Sovereign Immunity Act. See id.

212. See id.213. Id. at 885.214. See id.215. Id.216. See id. at 884; see also 28 U.S.C. § 1350 (1994).217. Unocal, 963 F. Supp. at 892.218. See id. at 890. A "jus cogens norm," also known as a "peremptory norm," is "'a

norm accepted and recognized by the international community of states as a whole as anorm from which no derogation is permitted and which can be modified only by asubsequent norm of general international law having the same character."' Id. at 890 n.7(quoting the Vienna Convention on the Law of Treaties).

219. See id. at 890-91.

494


C. Torture Victims Protection Act

In 1992, Congress attempted to expand the ATCA by passing theTorture Victims Protection Act (TVPA).22 ° The TVPA creates a statutorycause of action for crimes such as torture or extrajudicial killing committedunder the authority or color of law of any foreign nation.- The TVPA isbroader than the ATCA insofar as it affords Americans as well as aliens theright to bring a cause of action for human rights violations.- However,plaintiffs relying upon the TVPA in actions against corporations have met

with little success. In Beanal v. Freeport-McMoRan, Inc.,2 an Indonesiancitizen brought suit, in part, under the TVPA against Americancorporations owning mining operations in Indonesia.224 Plaintiffs allegedenvironmental torts, cultural genocide, torture, and other human rightsabuses. 225 However, the court rejected Beanal's claim, holding in part that

220. The Torture Victim Protection Act provides in relevant part:

Sec. 2. Establishment of Civil Action

(a)Liability.-An individual who, under actual or apparent authority, or color oflaw, of any foreign nation-

1. subjects an individual to torture shall, in a civil action, be liable fordamages to that individual; or

2. subjects an individual to extrajudicial killing shall, in a civil action, beliable for damages to the individual's legal representative, or to anyperson who may be a claimant in an action for wrongful death.

(b) Exhaustion of Remedies.-A court shall decline to hear a claim under thissection if the claimant has not exhausted adequate and available remedies in theplace in which the conduct giving rise to the claim occurred.

Torture Victim Protection Act of 1991, Pub. L. No. 102-256, 106 Stat. 73 (1992) (codifiedas amended at 28 U.S.C. § 1350 (1994)).

221. See id.222. See id. For further discussion of the scope of the Torture Victim Protection Act, see

H.R. Rep. No. 102-367, pt. 1, at 4 (1991), reprinted in 1992 U.S.C.C.A.N. 84 ("TheTVPA... enhance[s] the remedy already available under [§] 1350 in an important respect:While the Alien Tort Claims Act provides a remedy to aliens only, the TVPA ... extend[s]a civil remedy also to U.S. citizens who may have been tortured abroad. Official torture andsummary executions merit special attention in a statute expressly addressed to thosepractices.").

223. 969 F. Supp. 362 (E.D. La. 1997).224. See id.225. See id. The complaint alleged that defendants committed human rights abuses

through its security staff "in conjunction with third parties." The following illustrates thehuman rights abuses committed:

1. Repeated acts of torture have occurred at Freeport security stations andFreeport containers, which conduct includes kicking with military boots,beating with fists, sticks, rifle butts, stones; starvation, standing with heavyweights on the subject's heads, shackling of thumbs, wrists and legs.

2000]


a corporation is not "an individual" under the TVPA, and therefore notamenable to suit under the TVPA.22 6

V. UNOCAL: AN ILLUSTRATION OF How CORPORATE CODES ALONE

ARE INSUFFICIENT TO RESPECT HUMAN RIGHTS

While other companies are pulling their operations out of Burma,

Unocal has continued its involvement in the pipeline project. Unocal

asserts that its involvement in Burma will improve conditions in the

country, in accordance with its mission "to improve the lives of people

wherever we work. '227 Unocal argues that through its involvement in the

pipeline project, the company is taking a leadership role in ensuring that no

human rights violations occur on the project with which Unocal is

involved.2 Unocal also states that its "record on human rights is as good

or better than any other company. 229 In reality, however, allegations of

Unocal's involvement in human rights abuse are lengthy and well

documented. 230

Despite the atrocities from which Unocal is accused of profiting,23'

Unocal asserts that it protects human rights by adhering to its code of

2. Security surveillance of Plaintiff and others resulting in fear and mentalstress.

3. Torture victims were forced to stand in Freeport containers in water calf-highwhich reeked of human feces.

4. Indigenous people have been detained with their eyes taped shut, thumbstied, subject to repeated beatings by Freeport security personnel and thirdparties acting in conjunction with said personnel.

Id. at 369 (citations omitted).226. See id. at 381-82. The court reasoned that "To give the term 'individual' its plain

meaning under the TVPA means that the Act does not apply to corporate entities." Id. at382.

227. Unocal, Our Position (visited Jan. 19, 1999)<http://www.unocal.com/responsibility/humanrightsihrl.htm>.

228. See Unocal, Human Rights and Economic Management(visited Jan. 19, 1999) <http://www.unocal.com/responsibility/humanrights/hr5.htn>.

229. Karl Schoenberger, Unocal Report on Myanmar Rejected Energy: ShareholdersDefeat Proxy Resolution Calling for Study on Alleged Human Rights Violations Related toPipeline Project, L.A. TIMEs, Apr. 26, 1994, at 3.

230. See Doe v. Unocal, 963 F. Supp. 880, 883; see also infra note 235. Unocal's formerPresident and current Vice Chairman impliedly conceded the existence of a connectionbetween forced labor and the pipeline project, but attempted to lay blame for such atrocitieson the victims. "If you threaten the pipeline there's going to be more military .... If forcedlabor goes hand and glove with the military, yes there will be forced labor. For every threatto the pipeline, there will be a reaction." R. Strider, Blood in the Pipeline, MULTNATIONALMONrrOR, Jan. 1, 1995, at 22.

231. See Doe v. Unocal, 963 F. Supp 880, 885 (C.D. Cal. 1997).


conduct.~2 Unocal's "Code of Conduct for Doing BusinessInternationally" requires the company to "meet the highest ethicalstandards in all of our business activities.' '233 Unocal's code also providesthat the company "[b]e a good corporate citizen and a good friend of thepeople of our host country." 234 Nevertheless, in September 1998 petitionersasked that California's Attorney General revoke Unocal's corporate

232. See Code of Conduct for Doing Business Internationally (visited Jan. 19, 1999)<http://www.unocal.com/responsibility/princip.htm>.

233. See id. Unocal's complete code calls for the company to:

1. Meet the highest ethical standards in all of our business activities.

* Conduct business in a way that engenders pride in our employeesand respect from the world community.

2. Treat everyone fairly and with respect.

* Offer equal employment opportunity for all host country nationalsregardless of race, ethnic group or sex.

" Make sure that a very high percentage of the work force is made upof nationals.

* Train and develop national employees so they have fuli access toopportunities for professional advancement and positions at higherlevels in the organization.

3. Maintain a safe and healthful work place.

* As employees, value and protect each other's health and safety ashighly as we do our own.

4. Use local goods and services as much as practical, whenever they'recompetitive and fit our needs.

5. Improve the quality of life in the communities where we do business.

* Contribute-and not just economically-to local communities sothat our presence enhances people's lives in long-lasting, meaningfulways.

6. Protect the environment.

• Take our environmental responsibilities seriously and abide by allenvironmental laws of our host country, as we do in the UnitedStates.

7. Communicate openly and honestly.

* Maintain our policy of encouraging meaningful dialogue withconcerned shareholders, employees, the media and members of thepublic.

8. Be a good corporate citizen and a good friend of the people of our hostcountry.

Unocal Code of Corporate Responsibility (visited June 5, 1999)<http:l/wvw.unocal.comlresponsibility/princip.htm>.

234. Id.

20001 497


charter.235 According to the petition's allegations, "Unocal's record...involve[s] hundreds of incidents and many thousands of victims-18,000alone in one incident in the San Francisco Bay Area-not to mention thevast numbers of women, villagers and ethnic minorities suffering severehuman rights harms" in various parts of the world. 36 Dozens of parties, infact, support the petition to revoke on these grounds. 37

Unocal's code also requires that Unocal "[p]rotect theenvironment."'23 A few years ago, however, Unocal pled no-contest tothree criminal misdemeanor counts after leaking a diesel-like thinningagent at its Guadalupe oil field in San Luis Obispo County2 9 Thecompany agreed to pay a $1.5 million fine and clean the 200,000 barrels oftoxin that were dumped over the past forty years.24° In 1997, a federaljudge found that Unocal could be liable for as much as $50 million indamages after it ignored environmental laws and dumped toxic chemicalsinto San Francisco Bay.241

While Unocal strives to "improve the quality of life in thecommunities where it do[es] business,'2 2 it currently defends itself againstallegations of profiting from slavery, torture, and rape.243 With respect to

235. For the Petition to Revoke the Corporate Charter of the Union Oil Company ofCalifornia, see Unocal Corporate Charter Revocation Action Center (visited Feb. 3, 1999)<http://www.heed.net/revoke.html> [hereinafter Petition].

236. Id.237. Petitioners include: Action Resource Center; Alliance for Democracy of U.S.A.;

Alliance for Democracy of Austin, Texas; Alliance for Democracy of San Fernando Valley,California; Gloria Allred (individual); Amazon Watch; Asian/Pacific Gays and Friends;Burma Forum Los Angeles; Democracy Unlimited of Humboldt County, California; EarthIsland Institute; Michael Feinstein, City Council Member, Santa Monica, California(individual); Feminist Majority Foundation; Free Burma Coalition; Free Burma- No Petro-dollars for SLORC; Global Exchange; Randall Hayes (individual); National Lawyers Guildof U.S.A.; National Lawyers Guild of Los Angeles, San Diego, Santa Clara Valley and SanFrancisco; National Organization for Women (NOW); National Organization for Women(NOW) of California; Program on Corporations, Law; and Democracy; Project Maje;Project Underground; Rainforest Action Network; Harvey Rosenfield (individual); Surfers'Environmental Alliance; and Transnational Resource and Action Center. See id.

238. See Unocal Code of Corporate Responsibility, supra note 233.239. See Schoenberger, supra note 229, at 3. More recently, the California Coastal

Commission approved a plan to dig up a Pacific beach to remove roughly 20 million gallonsof oil that seeped from oil wells over a 44-year period. Approximately 2300 acres of the3000-acre site were contaminated. See Tribune News Services, State to Bulldoze Oil-Tainted Beach, CHICAGO TRmuNE, Nov. 4, 1999, at 4 [hereinafter State to Bulldoze].

240. See State to Bulldoze, supra note 239, at 4.241. Citizens for a Better Environment v. Union Oil (Unocal), 996 F. Supp. 934 (N.D.

Cal. 1997); see also Alex Barnum, Unocal Violated Environmental Laws, U.S. JudgeSays/Selenium from Rodeo Plant Seeps into Bay, S.F. CHRON., Apr. 17, 1997, at A15.

242. Unocal, Statement of Principles (visited Jan. 19, 1999)<http:llwww.unocal.com/responsibility/princip.htm>.

243. See Doe v. Unocal, 963 F. Supp. 880 (C.D. Cal. 1997), dismissed in part, 27 F.Supp. 2d 1174 (C.D. Cal. 1998) (dismissing claim against one of the defendants for lack of


the pipeline project alone, a recent Department of Labor report citesevidence that is "consistent with and lends substantial credibility"244 toallegations of the use of slave labor on the Yadana pipeline project.245

Unocal's activities in Burma and elsewhere indicate thatmultinationals' actions are not always consistent with the actions mandatedby their codes. The allegations set forth in government reports and lawsuitssuch as Doe v. Unocal suggest that corporate codes and existing laws aresimply insufficient to effectively impose a duty upon multinationals torespect human rights.

VI. IMPOSING AND ENFORCING A LEGAL DUTY TO RESPECT HUMANRIGHTS

Corporations like Unocal claim legal rights as 'persons' under thelaw, yet if they actually were real persons they'd be 'out.'Baseball players and convicted individuals in California get only3 strikes. Unocal, the California oil giant, has many strikes ...and it's still playing.246

Despite the proliferation of corporate codes, some multinationalscontinue to profit from human rights abuse. While positive corporateinvolvement is important, significant measures should be taken at federaland state levels to effectively combat this problem.247

While this Article attempts to illustrate the limitations of codes ofconduct, it does not take the position that codes are completely useless. Inspite of their limitations, codes do serve laudable functions and haveseveral valuable characteristics. Further, private initiatives are often morefavorable than governmental intervention. Therefore, multinationalsshould adopt codes of conduct given that codes have successfully elevatedor maintained ethical standards in many professions and industries.

The track records of some multinationals, however, indicate that codesalone are insufficient. Private initiatives must have proper guidance, andwhere such guidance is lacking, or where private initiatives fall short,governmental intervention becomes necessary. Codes must be based upona solid foundation of minimum standards that are uniform and enforceable.

Yet, whereas many such codes are based upon legislated minimum

personal jurisdiction, but not the claim against Unocal).244. Total, Unocal May Have Used Forced Labor in Myanmar: U.S. Report, Agence

Fr.-Presse, Oct. 9, 1998, available in 1998 WL 16615017.245. See Iritani, supra note 2, at Cl.246. National Lawyers Guild, Int'l L. Project for Human, Econ. & Envtl. Def., How

Many Strikes Do Big Corporations Get? (visited Feb. 3, 1999)<http://wwwv.heed.net/doc3.html> [hereinafter How Many Strikes].

247. See Orentlicher & Gelatt, supra note 44, at 69.

2000]


'248 glbsst sals

standards, corporate codes have no such clear legal basis to establishminimum standards. Legislatively mandating minimum standards wouldbe a fairly limited type of involvement and would allow multinationals orindustries to adopt their own codes that can improve upon, or "wraparound," the legislated minimum standard.

A. A Call to Congress: The Foreign Human Rights Abuse Act

Doe v. Unoca149 represents a substantial victory for human rightsabuse victims by recognizing a "knew or should have known" theoryagainst a corporation that "looked the other way" and benefited fromatrocious acts.250 However, some commentators argue that the Unocaldoctrine is too vague and offers little guidance to multinationals wishing toavoid such a lawsuit.25' In particular, questions remain as to how direct thebenefit may be, the degree of knowledge required, and the types of humanrights abuses included.52 Moreover, the final outcome of the case is yet tobe determined, leaving the future in doubt for human rights abuse plaintiffs.To answer these questions and avoid similar ambiguities, the Unocaldoctrine should be formalized by. the legislature. 53

Congress has the authority to pass legislation making it unlawful tobenefit from human rights abuse. In passing the Foreign Corrupt PracticesAct (FCPA),2 4 Congress set forth ethical standards for Americancompanies and in doing so relieved the courts of having to "defineprohibited behavior on a case-by-case basis without any statutoryguidelines. ' 255 Congress could similarly set forth human rights standardsby enacting a "Foreign Human Rights Abuse Act" (Act).26 To be

248. An example is the National Notary Association's recently completed code. NAT'LNOTARY Ass'N, THE NOTARY PUBLIC CODE OF PROFESSIONAL RESPONSIBILrTY (1998). Thiscode regulates the ethical conduct of notaries and has a strong foundational basis in bothmodel acts and state statutes. See, e.g., MODEL NOTARY ACT §§ 3-102 to -06 (1984)(regulating ethical conduct of notaries); FLA. STAT. ANN. § 117.105 (West 1996 & Supp.1999); 5 ILL. Comp. STAT. ANN. 312/7-104 (West 1999) (imposing penalties for notarialmisconduct).

249. 963 F. Supp. 880 (C.D. Cal. 1997).250. Wallance, supra note 208, at 1210.251. See id.252. See id.253. See id.254. 15 U.S.C. § 78dd-1 (1994). The Foreign Corrupt Practices Act, in part, prohibits

corporations from bribing foreign officials in order to gain financial advantage. Id.255. Wallance, supra note 208, at 1210.256. Id. "The Unocal decision is important in its own right because it draws a line

against American companies benefiting from slavery. But it will prove far more importantif it ultimately inspires a Foreign Human Rights Abuse Act." Id. Congress has moved toprotect human rights in some other areas. See, e.g., The United States InternationalFinancial Institutions Act, 22 U.S.C. § 262d(f) (1994) (instructing U.S. Executive Directors


comprehensive, the Act should make it unlawful for any company or itsagent to induce, authorize, participate, assist, utilize, engage in, or acceptthe benefits of human rights abuse. The Act should also adequately definehuman rights abuse, including acts of torture, rape, child or forced labor,sweat-shop practices, genocide, and ecocide.

Moreover, like the FCPA, the Act could require that the AttorneyGeneral set forth guidelines describing specific types of conduct whichwould enhance the business community while conforming with the Act,and set forth general precautionary procedures that may be used to conformconduct to the Department of Justice's present enforcement policyregarding the Act. Noncompliance with the Act could include bothsignificant civil and criminal penalties. Finally, the Act could provide acause of action for foreign nationals aggrieved with the conduct ofmultinationals.

Federal legislation is necessary to adequately overcome the limitationsof voluntary codes, but legislation alone is not enough. The governmentshould aggressively punish those corporations that disregard theirobligations.

B. A Call to States: Corporate Charter Revocation

In addition to federal enforcement of the Act, states should reconsidermultinationals' privilege to do business under the corporate form. There isa growing movement to revoke the corporate charters of corporationsrefusing to satisfy their obligations.257 Although revoking a corporation's

of the World Bank to "to oppose any loan, any extension of financial assistance, or anytechnical assistance to any country" engaging in a pattern of gross violations ofinternationally recognized human rights except where such assistance "is directedspecifically to programs which serve the basic human needs of the citizens of suchcountry"). The International Financial Institutions Act further provides, in part:

The United States Government, in connection with its voice and vote in theInternational Bank for Reconstruction and Development, the InternationalDevelopment Association, the International Finance Corporation, the Inter-American Development Bank, the African Development Fund, the AsianDevelopment Bank, the African Development Bank, the European Bank forReconstruction and Development, and the International Monetary Fund, shalladvance the cause of human rights, including by seeking to channel assistancetoward countries other than those whose governments engage in... a pattern ofgross violations of internationally recognized human rights, such as torture orcruel, inhumane, or degrading treatment or punishment, prolonged detentionwithout charges, or other flagrant denial to life, liberty, and the security ofperson.

22 U.S.C. § 262d(a) (1994).257. For further discussion of this movement, see Thomas Linzey, Awakening a Sleeping

Giant: Creating a Quasi-Private Cause of Action for Revoking Corporate Charters inResponse to Environmental Violations, 13 PAcE ENvTL. L. REv. 219 (1995) [hereinafter

2000]


ability to do business and liquidating its assets may seem radical, suchmeasures actually are well-founded in American and English law. BothEngland and the American colonies granted corporate charters with theunderstanding that the special benefits attached to incorporation wereconferred for purposes of serving the public.25- Corporate status wasregarded as a grant of privilege from the state, conditioned uponperforming a valuable public service.259 As Justice Byron R. White

recognized in First National Bank of Boston v. Bellotti, "[c]orporations...are created by the [s]tate as a means of furthering the public welfare."260

Thus, a corporate charter can be viewed as a social as well as legal261contract, which makes each corporation a trustee of the public good.

Accordingly, when a company fails to satisfy its obligations, its privilege toconduct business should be reconsidered.

In September 1998, dozens of groups petitioned the Attorney General212of California to revoke Unocal's corporate charter. 6- The petition alleged

ten counts of Unocal atrocities:

1. Ecocide: Environmental Devastation.

2. Unfair and Unethical Treatment of Workers.

3. Complicity in Crimes Against Humanity: Aiding Oppressionof Women.

4. Complicity in Crimes Against Humanity: Aiding Oppressionof Homosexuals.

5. Complicity in Crimes Against Humanity: Enslavement andForced Labor.

6. Complicity in Crimes Against Humanity: Forced Relocation ofBurmese Villages and Villagers.

Sleeping Giant] (explaining that the states retain ultimate control over corporations becauseof their ability to revoke charters) ; see also Thomas Linzey, Killing Goliath: DefendingOur Sovereignty and Environmental Sustainability Through Corporate Charter Revocationin Pennsylvania and Delaware, 6 DICK J. ENvTL. L. & PoL'Y. 31 (1997) [hereinafterKilling Goliath].

258. See Ralph Estes, What You Count, You Get, IN CONTEXT, No. 41, Summer 1995.259. See RALPH NADER Er. AL., CONSTrruTONAuZING THE CORPORATION: THE CASE FOR

FEDERAL CHARTERiNG OF GRANT CORPORATIONS 26 (1976).260. 435 U.S. 765, 818 (1978) (White, J., dissenting).261. See Doug Bandow, What Business Owes to Cure Society's Woes, Bus. & SoC'Y

REV. 94 (Spring 1992) (quoting James A. Joseph, President of the Council on Foundations).262. See How Many Strikes Do Big Corporations Get? (visited May 3, 1999)

<http://www.heed.net/doc3.html> (providing a summary of the facts substantiating eachcount of the 120 page petition).


7. Complicity in Crimes Against Humanity: Killings, Torture andRape.

8. Complicity in Gradual Cultural Genocide of Tribal and

Indigenous Peoples.

9. Usurpation of Political Power.

10. Deception of the Courts, Shareholders and the Public.263

The petition has received strong support from members of the Californialegislature, city council members from several major cities, and theenvironmental group Greenpeace.2 4 If Unocal's charter is revoked, it willnot mark the first time a corporation lost its privilege to conduct business asa result of ignoring public duties.

For example, in Standard Oil of New Jersey v. United States,26' theSupreme Court upheld the revocation of an oil trust's charter.266 At thattime, American corporations had acquired more capital than any othercountry. Justice Harlan juxtaposed the danger of unchecked corporateactivity to slavery:

All who recall the condition of the country in 1890 willremember that there was everywhere, among the peoplegenerally, a deep feeling of unrest. The nation had been rid ofhuman slavery-fortunately, as all now feel-but the convictionwas universal that the country was in real danger from anotherkind of slavery sought to be fastened on the American people,namely, the slavery that would result from aggregations of capitalin the hands of a few individuals and corporations controlling, fortheir own profit and advantage exclusively, the entire business ofthe country, including the production and sale of the necessariesof life.

26 7

The Court reasoned that the preservation of freedom depends upon theexistence of a democracy free from economic and political domination bythe elite. Some commentators have praised the Court's reasoning,deeming "unchecked corporate power... inherently undemocratic. 269

263. How Many Strikes, supra note 246 (recounting the ten allegations of abuse byUnocal).

264. See Legislators, Greenpeace, and Celebrated Authors Endorse Revocation ofUnocal's Charter (visited Feb. 3, 1999) <http://vww.heed.netupdatel2.html> (discussingthe influential groups that support the revocation of Unocal's charter).

265. 221 U.S. 1 (1911).266. See id.267. Id. at 83 (Harlan, J., concurring in part and dissenting in part).268. See How Many Strikes, supra note 246, at 17 (discussing Supreme Court reasoning

for revoking corporate charter in Standard Oil of New Jersey v. United States).269. Id.

2000]


All fifty states and the District of Columbia have statutes providing forrevocation of corporate charters.27° Although states once regularly

271exercised their power to revoke corporate status, they may now bereluctant to do so because of increasing reliance on the corporate structureto provide economic income and growth.272 Further, the trickle ofcharitable gifts and community reinvestment combined with enormouscorporate marketing campaigns has created the perception that charterrevocation is unreasonable.273

Multinationals are in a position to have an enormous impact on humanrights and have the option to choose whether to make such an impactpositive or negative. Yet, the act of granting corporate charters has becomea mere administrative process.274 Over the last few decades, both

270. See Sleeping Giant, supra note 257, at 223 & n.15 (citing ALA. CODE § 6 - 6 -590(1994); ARrz. REv. STAT. ANN. § 10 -1430 (effective 1/1/96) (1994); ARK. CODE ANN. § 4 -75 - 205 (Michie 1993); CAL. CIv. PRoc. CODE § 803 (Deering 1994); CAL. Bus. & PROF.CODE § 18410 (Deering 1993); CAL. CORP. CODE § 1801 (Deering 1994); COLO. REv. STAT.§ 7-114 -301 (1994); CONN. GEN. STAT. § 35 - 36a (1993); DEL. CODE ANN. tit. 8, § 284(1993); D.C. CODE ANN. § 29 - 419 (1995); FLA. STAT. ANN. § 607.1430 (West 1994); GA.CODE ANN. §§ 7- 1- 92, 14 - 4 -160 (Michie 1994); HAw. REv. STAT. § 842-5 (1993); IDAHOCODE § 490.1430 (1994); ILL. REV. STAT. ch. 805, 20/1 (1994); IND. CODE ANN. § 23 -1-47-1 (Bums 1994); IOWA CODE ANN. § 490.1430 (West 1995); KAN. STAT. ANN. § 17- 6812(1993); Ky. REv. STAT. ANN. § 271B.14 -300 (Baldwin 1993); LA. REV. STAT. ANN. §12:163 (West 1993); ME. REv. STAT. ANN. tit. 13 -A, § 1111 (West 1994); MD. CORPS. &Ass'NS CODE ANN. § 3 -513 (1993); MASS. ANN. LAWS ch. 155, § 11 (Law. Co-op. 1994);MICH. COMP. LAWS § 600.4521 (1994); MINN. STAT. ANN. § 556.07 (West 1993); MIss.CODE ANN. §§ 11-39 -1, 11-39 - 3 (1993); Mo. REV. STAT. § 355.255 (1993); MONT. CODEANN. § 35 - 6 -102 (1994); NEB. REV. STAT. § 25 -21,121 (1994); NEv. REv. STAT. ANN. §598A.180 (Michie 1993); N.H. REv. STAT. ANN. § 293 -A: 14.30 (1994); N.J. REV. STAT. §14A: 12- 6 (1993); N.M. STAT. ANN. § 53 - 16 -13 (Michie 1994); N.Y. Bus. CORP. LAW §1101 (McKinney 1994); N.C. GEN. STAT. § 55 -14 -30 (1994); N.D. CENT. CODE § 10 -19.1-118 (1994); Omo REv. CODE ANN. § 2733.02 (Baldwin 1994); OKLA. STAT. tit. 15 § 567(1994); OKLA. STAT. tit. 12, § 1532 (1994); OR. REv. STAT. § 30.580 (1993); PA. STAT.ANN. tit. 71, § 824 (1994); R.I. GEIN. LAWS § 7-1.1- 87 (1993); S.C. CODE ANN. § 33 -14 -300 (Law. Co-op. 1993); S.D. CODIFE LAWS ANN. § 21-28 -12 (1994); TENN. CODE ANN.§ 48 -24 -301 (1994); TENN. CODE ANN. § 29 -35 -101 (1994); TEx. CORPS. & Ass'NS CODEANN. § 3A-Art.7.01 (West 1994); UTAH CODEANN. § 16 -lOa-1430 (1994); VT. STAT. ANN.tit. 11A, § 14.30 (1994); VA. CODE ANN. § 8.01- 636 (Michie 1994); WASH. REV. CODEANN. § 7.56.010 (West 1995); W. VA. CODE § 53 -2-1 (1994); Wis. STAT. ANN. § 180.1430(West 1994); Wyo. STAT. § 17-16 -1430 (1994)); see also ALASKA STAT. § 10.06.635(Lexis 1998).

271. See, e.g., People v. Equity Gaslight Co., 36 N.E. 194 (N.Y. 1894); People v. BuffaloStone & Cement Co., 29 N.E. 947 (N.Y. 1892); People v. Ulster & D.R. Co., 28 N.E. 635(N.Y. 1891); People v. Broadway R.R. Co., 26 N.E. 961 (N.Y. 1891); People v. North RiverSugar Refining Co., 24 N.E. 834 (N.Y. 1890); People v. Westchester Traction Co., 108N.Y.S. 59 (App. Div. 1908); People v. Abbott Maintenance Corp. & Installment Dept., Inc.,200 N.Y.S.2d 210 (Sup. Ct. 1960).

272. See Sleeping Giant, supra note 257, at 224.273. See id. at 278.274. See id. at 222.


multinationals and states have largely ignored the fact that corporate formis a privilege and not a right. They forget that "[c]orporations... arecreated by the [s]tate as a means of furthering the public welfare"27 andthat "[t]he [s]tate need not permit its own creation to consume it. '276 Thetime has come for states to aggressively enforce multinationals' behaviorby revoking their corporate charters. Of course, states should not exercisethis power recklessly or whimsically. However, like physicians, lawyers,accountants, and other professionals, when multinationals such as Unocalcontinuously ignore their legal duties, their privilege to do business shouldbe questioned.

VII. CONCLUSION

In response to media attention and public outcry over abuses of humanrights, many organizations and companies have drafted or adopted codes ofconduct; however, such codes are voluntary and have minimal enforcementmechanisms. To date, existing laws have also not effectively imposed orenforced a duty upon multinationals to respect human rights. For example,the Clinton administration banned American companies from conductingnew business in Burma,277 but did not require the cessation of existingbusiness operations. Also, the ban does not address similar atrocities thatcould occur in other countries. Such approaches are not only limited, butare also reactive rather than proactive because they allow human rightsabuses to continue until Congress or the President takes notice.

Large multinationals may have more economic power than that ofsmall countries. One-half of the world's largest economies belong not tonations but to corporations.278 Moreover, seventy percent of global trade iscontrolled by only 500 corporations. 2

'9 Their strength can make them

quasi-governmental in nature and as powerful as some nation-states.8 Itwould be difficult to imagine a single type of entity that has had a greaterimpact on American society and economics than the modem corporation.281

At the same time, however, multinationals are sometimes considered thelargest violators of environmental and labor statutes.282

275. First Nat'1 Bank of Boston v. Bellotti, 435 U.S. 765, 818 (1978) (White, J.,dissenting).

276. Id. at 809.277. See Exec. Order No. 13,047, 3 C.F.R. 202 (1997).278. See TONY CLARKE, INTERNATIONAL FORUM ON GLOBALIzATION, Tiig EMERGENCE OF

CoPOPATE RULE AND WHAT TO Do ABoUT IT 5(1996).279. See id.280. See Petition, supra note 235, at 15.281. See Killing Goliath, supra note 257, at 32.282. See id. (citing ERNEST CALLENBACH ET AL., EcOMANAGEMENT: THE ELMVOOD

GUIDE TO ECOLoGICAL AuDrNG AND SUSTAINABLE BusINEsS (1993)).

2000]


The ability of multinationals to profit from human rights abuses can besignificantly limited by federal initiative and by states revisiting corporateprivileges. Multinationals must be expected to respect human rights, andgovernment should intervene to demand that they do so. Every year, statespermanently revoke the privilege of hundreds of accountants, doctors,

283lawyers and others to do business. There is no reason to treatcorporations differently.

283. See Petition, supra note 235, at 4.

506

respecting human rights: multinational corporations strike out

Documents