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Business and Human Rights

The Role of the International Community

Two key developments within multilateral institutions highlighted a growing awareness that these institutions must address business and human rights: the launch of the U.N. Global Compact and a decision by the European Bank for Reconstruction and Development (EBRD) to suspend public sector lending to Turkmenistan because of its refusal to move to a multiparty democracy. These efforts sent a strong message that the multilateral institutions supported corporate responsibility and good governance, but they did not show that these institutions would consistently apply strong standards to ensure adherence. At the same time, U.S. courts began to address the parameters of corporate liability for human rights violations.

United Nations Global Compact

On July 26, U.N. Secretary-General Kofi Annan convened a meeting with the heads of U.N. agencies, corporations, labor unions, and NGOs to launch the U.N. Global Compact, a voluntary initiative to promote corporate responsibility and cooperation between companies and the U.N. Comprising a set of nine principles that supporting corporations were required to endorse, coupled with minimal reporting requirements, and supporting guidelines that were intended to ensure that corporations "complicit" in human rights violations would not be allowed to partner with the U.N. The Global Compact was hailed by the U.N. as a major step forward in pushing corporations to respect human rights, including labor rights, and environmental protection, and to promote "partnerships" between the U.N., corporations, labor unions, and NGOs. However, it was criticized by NGOs, including those that participated in the July 26 meeting, because it did not contain any independent monitoring mechanisms to assess the conduct of corporations; the guidelines were too vague and did not adequately ensure that companies complicit in human rights violations would be barred from partnership with the U.N.; and that the weaknesses in the compact could enable companies to garner favorable publicity, or "bluewash" their image by securing the use of the U.N. logo, without having to adequately improve their human rights, labor rights, or environmental performance. In addition to highlighting these shortcomings, Human Rights Watch called on the U.N. to begin the process of developing binding standards on corporations, rather than solely relying on the voluntary Global Compact.

European Bank for Reconstruction and Development and Turkmenistan

In a stunning rebuke of the dictatorship under Turkmenistan's president-for-life, Sapurmurad Niyazov, the European Bank for Reconstruction and Development (EBRD) indefinitely suspended lending to the government on April 19 while continuing private sector lending. The EBRD justified its decision because of the government's failure to implement economic reforms and because "[t]here has been no progress towards a pluralist or democratic political system, as President Niyazov retains a firm grip on power, not properly balanced by the country's legislature or judiciary. Most disturbingly, President Niyazov was made President for life in December 1999."

Events leading up to the EBRD decision were almost comical. Earlier in April, an EBRD delegation tried to meet with Niyazov to discuss economic and political reforms and future lending by the bank. Niyazov rebuffed their requests and then told the media that, "[t]he issue put by the European Bank is as follows: You have to increase the price of petrol and do things as they are done in Europe, and the second issue is to establish a multiparty system in your country and that is one of our conditions. I said that they were bank clerks. I have not received them. I said that I did not want to discuss such things with them." Following this snub, Charles Frank, then acting president of the EBRD, announced that "[t]he President's refusal even to discuss the question of political reform suggests that the Government of Turkmenistan is not committed to one of the basic principles upon which the EBRD was founded," and promptly cut off public sector lending. While the decision sent a clear message that the EBRD could act strongly on the issue of multiparty democracy, it remained to be seen whether the bank would take the same approach with other client governments that were hostile to democracy, such as Azerbaijan and Kazakhstan.

Doe v. Unocal

On August 31, U.S. District Judge Ronald Lew ruled on a summary judgement motion in the closely watched Doe v. Unocal case that was originally filed in 1997. The plaintiffs argued that Unocal, a California-based oil company, was liable under the Alien Tort Claims Act (ATCA) for human rights violations, including forced relocations, forced labor, rape, and torture "perpetrated by the Burmese military in furtherance and for the benefit of the pipeline." This arose from the company's participation in the joint-venture that constructed and operated the Yadana gas pipeline that runs from Burma to Thailand. Security for the project was provided by the Burmese military, who committed human rights abuses while fulfilling their security role. Although Judge Lew found that the "evidence does suggest that Unocal knew that forced labor was being utilized and that the Joint Venturers benefitted from the practice," he dismissed the suit because of insufficient evidence that Unocal had actively participated in or conspired with the Burmese military to commit human rights violations, and because Unocal's joint-venture with the Burmese government did not make it legally liable for human rights violations committed by the Burmese military. At this writing, the plaintiffs planned to appeal the decision to the Ninth Circuit Court of Appeals. The other joint-venture partners: Total of France (now TotalFina-Elf), the Myanma Oil and Gas Enterprise, and the Petroleum Authority of Thailand, were not defendants in this case because the court ruled that it did not have jurisdiction over foreign companies.

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