Corporate liability under customary international law

Human rights and business issues are far more complex than is often considered in most scholarly writings on the topic. The following is an example of the complexity, taken from the case of Araya v Nevsun Resources 2017 BCCA 401, which is currently winding its way through the Canadian courts. The company is alleged to have aided and abetted serious human rights abuses, primarily conducted by the government of Eritrea. These abuses consisted of forced labour, torture and slave labour according to the claims of the victims; they say that as military conscripts, they were forced to work to develop the Bisha gold mine by the Eritrean government and this work benefited Nevsun, whose board and management were aware of the situation.

This tugs at the heartstrings of most people, who suggest that the company is obviously liable to the victims for human rights abuses, with reference to the United Nations Guiding Principles on Business and Human Rights (UNGPs) and that this liability is under Customary International Law (CIL)

While it is generally understood that forced labour, slavery, torture are all prohibited by CIL on the basis of jus cogens, the actual extent of their prohibitions is unclear given the complex interplay between the Conventions dealing with these matters with particular emphasis on the exclusions in certain circumstances granted to states, and the development of CIL on these issues.

However, when we begin to unpack the legal issues involved, we see some serious complications that the Canadian courts will have to grapple with. For example:

1. Does this constitute slavery and slave labour, which we know has been outlawed by international law? When we look at the Slavery Convention of 1926, which is still applicable today, we see that the concept of slavery is principally based upon the ownership of another person, such that the owner can sell the person is that the person was a chattel. The work performed, and lack of remuneration, are not essential elements for slavery. Since there is no evidence that the government of Eritrea has ownership interest in these people, slavery is not a component in this case.

Later conventions such as the European Convention on Human Rights of 1950 (ECHR) and the International Convention on Civil and Political Rights (ICCPR) also provide protections against slavery but do not widen the definition of slavery beyond that contained in the Slavery Convention.

The UK Modern Slavery Act of 2015 covers slavery, forced labour, conscription, trafficked labour and exploitation; this is referred to as “modern slavery” and this term has been adopted globally, but does not change the actual meaning of the term “slavery” for legal purposes. Thus, the allegations against Nevsun did not constitute slavery within this legal definition.

2. Forced labour is prohibited internationally under the terms of the ILO Forced Labour Convention of 1930. The exemptions from this prohibition include prisoners held under criminal law convictions, and people who are conscripted by the government. Subsequently, the ECHR of 1950 (Art. 4) and the ICCPR (Art. 8) both provided human rights protection against forced labour; however, both of these contain the same exemptions as the ILO convention. ICCPR also clarifies that this exemption applies both to military service and national service conscription.

3. Torture is defined by Art. 1 of the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. That definition would not cover the situation of forced labour nor any of the other allegations pleaded in Nevsunby the plaintiffs. However, the concept of cruel, inhuman or degrading treatment or punishment, referred to in the aforesaid convention as well as in the UDHR (Art. 5) ICCPR (Art. 7) may be applicable; unfortunately, there is no definition in any of those documents of the meaning of the term.

We therefore approach the question of whether Eritrea was acting contrary to international law because it forced its conscripts to work under terrible conditions for the building of the mine. Since this action appears not constitute an act of slavery, and is exempted from the protections of the human rights conventions dealing with forced labour, perhaps the best legal answer is that Eritrea was not in breach of its international obligations. That being the case, is it legally reasonable to hold Nevsun liable for aiding and abetting actions of the government which in themselves are either legal or not clearly illegal?

As we consider the issues from this perspective, we can look at the following types of situations which are somewhat analogous:

1. Can a company which provides equipment to a state which uses that equipment to kill people, in the context of a war be held liable for human rights abuses, when the state actions are justified on the basis of the laws of war?

2. Can a company which provides equipment or supplies to a state, knowing that the state will use that equipment to execute people convicted of capital crimes under the laws and constitution of that state, be held liable for damages to the families of those who were executed?

3. Should a company operate in a country that is engaged in genocide or crimes against humanity. The company is not directly involved, but pays income taxes to the government, which the government uses for a genocide program.

This raises the question of what level of due diligence is required by the company in investigating the human rights situation in a country. Should the company have to engage in complex legal analysis of whether the acts that the government engages in are legal under international law?

A key issue is whether the liability of the corporation for human rights abuses is under customary international law directly or whether it is liability in tort or delict law, with norms of customary international law forming part of the domestic law. As scholars state, customary international law automatically forms part of the domestic law of the country unless there is law to the contrary existing within the state. In common law countries, CIL enters directly, without the need for transformation by the enacting of statutes in the state, which is the requirement for treaties to become part of domestic law of common law states. Thus, rather than viewing the claim against the company being an international law claim and that the company is liable under CIL, it is preferable to see this as a matter of tort law.

In this way, there is no need to engage with the question of whether companies are liable in international law directly. Also, judges in domestic courts have a much greater ability to expand domestic tort law to encompass CIL based upon their views of what shocks the conscience, without having to engage in the debate as to whether CIL is primarily based upon research into what states actually do and whether they do so based upon opinio juris, or whether it is sufficient to find the conduct shocking to their conscience. As many scholars suggest, if companies are required to comply with international law directly, then they are subjects of international law, on par with states, international organizations. They would then be involved in law making activities, which is not likely a good idea. Thus, if the liability is under tort law, which has accepted the CIL norms, then there is no risk of companies becoming subjects of international law.

The UNGPs are also very relevant to this discussion. They were unanimously approved in June 2011 by the UN Human Rights Council. The UNGPs are referred to as “Implementing the United Nations “Protect, Respect and Remedy Framework”

The UNGPs have been approved of and adopted by other international instruments and consistently referred to in the writings of scholars. The OECD Guidelines for Multinational Enterprises and the UN Global Compact adhere to the UNGPs. As such, based upon the views of such scholars as Onuma, Chimni and Lepard, buttressed by ICJ decisions which have given UN resolutions the force of law, it is reasonable to assume that these principles have moved from merely being “soft law guidance” to the realm of customary norms, accepted globally. Of course, this conclusion may be debated by those looking for more concreate evidence of state practice and opinio juris relating to the UNGPs.

If we accept that the UNPGs are now part of customary international law, then they should be incorporated into domestic tort law of states globally, to determine the obligations that companies owe and the standard of care to measure cases of negligence by. Thus, we bring the CIL concepts into the matrix, without the necessity of making companies subjects of international law, with the attendant risks referred to above.

Alan Franklin writes extensively on topics such as anticorruption, business and human rights, political risk insurance, bilateral investment treaties, rule of law, investor state international arbitration, and international risk. He teaches Executive MBA students at Athabasca University, Canada, and diplomatic and international law to consulates and embassies through Diplo Foundation in Switzerland and the University of Malta.

Cite as: Alan Franklin, “Corporate liability under customary international law”, Völkerrechtsblog, 27 February 2019, doi: 10.17176/20190227-151255-0.