Corporate due diligence as a tool to respect human rights

Netherlands Quarterly of Human Rights

Volumn 28, Issue 3, 2010, Pages 404-448

  Lambooy, Tineke ^a  

^a UTRECHT UNIVERSITY   (Netherlands)

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EID: 77956464119     PISSN: 01693441     EISSN: None     Source Type: Journal    
DOI: 10.1177/016934411002800304     Document Type: Article

References (213)

1. Lubbers, R., Van Genugten, W. and Lambooy, T.E., Inspiration for Global Governance - The universal Declaration of Human Rights and the Earth Charter, Kluwer, Deventer, 2008, p. 89.
2. John Ruggie is a Professor at Harvard John F. Kennedy School of Government, US.
3. See, for an introduction on this subject, Van Genugten, W. and Lambooy, T.E., "The Universal Declaration of Human Rights: Catalyst for Development of Human Rights Standards", in: Lubbers, Van Genugten and Lambooy, op.cit. (note 1), pp. 55-66, especially para. 14.
4. UNHRC GA, Report of 7 April 2008; UN Doc. A/HRC/8/5.
5. UNHRC GA, Report 18 June 2008; UN Doc A/HRC/Res/8/7, paras 1 and 4;
6. UNHRC GA, Report of 22 April 2009; UN Doc. A/HRC/11/13. See also Shell (www.shell.com/); Akzo Nobel (www. akzonobel.com/); and Amnesty International (www.amnesty.org/).
7. And its predecessor, the UN Commission on Human Rights (UNCHR).
8. For a US law perspective, reference is made to the interesting paper of John Sherman III and Amy Lehr on the same topic. Sherman III, J. and Lehr, A., "Human rights due diligence: is it too risky?, Corporate Social Responsibility", Initiative Working Paper No. 55, February 2010, John F. Kennedy School of Government, Harvard University, Cambridge (www.hks.harvard.edu/m-rcbg/CSRI/ publications/workingpaper_55_shermanlehr.pdf).
9. See The Securities Act of 1933, Sections 5 (registration securities) and 10 (content prospectus). Sections 11 and 12 impose liability on the issuer and underwriters (that is the bank/lead manager) if a prospectus contains incorrect information (of a material nature) or is incomplete. The prospectus, or "offering circular," and the Registration Statement have to be submitted to the Securities and Exchange Commission (SEC). The SEC can object to the ofering, ask for more information, or allow the prospectus to go public. Most jurisdictions regulate listing requirements in a similar way. For example re UK, see the Public Offers of Securities Regulations 1995, Section 4 and Schedule I (content prospectus), Section 8 (liability issuer and offeror); Financial Services Act 2000 (FSA), Listing Rules PR 2.3.1 and 3.1.1 (requirement and minimum content prospectus); Article 90 FSA (compensation for false or misleading particulars); preceding common law jurisprudence-based prospectus liability on deceit or negligent misrepresentation and the assumed duty of care by the issuer towards the investor).
10. nd ed., ABA Publishing, Chicago, 2003, p. 167.
11. In the Netherlands, The EU Prospectus Directive has been incorporated in the Wet op het Financieel Toezicht (Wf, Financial Supervision Act). See Articles 5.13-5.19 (content prospectus); Euronext Rule Book I, Section 6.5 (preparation prospectus).
12. Directive 2003/71/EC, OJ L345/64, and Commission Regulation (EC) 809/2004 of 29 April 2004 implementing Directive 2003/71/EC. See also Franx, J.P., "Inhoudelijke prospectusvereisten" [Requirements regarding the content of prospectuses], in: Busch, D. et al. (ed.), Onderneming en Financieel Toezicht [Company and fnancial supervision], Kluwer, Deventer, 2007.
13. For example approval by the Netherlands Authority for the Financial Markets (AFM) pursuant to Article 5.21 Wf. Subsequently, the prospectus can be used to ofer securities throughout the EU. In the UK, the Financial Services Authority has to approve a prospectus (FSA Listing Rules PR 3.1.7 referring to Article 87(1) FSA).
14. See for example, WOL, DSC, 27 November 2009, JOR 2010/43 (LJN: BH 2162, Dutch only) 4.14.3-5, 4.26.3, 4.32.3, 4.33, 4.36.4, 4.39.1; Amsterdam Court of Appeal (CoA), the Netherlands, 3 May 2007 (LJN: BA4343, Dutch only) 2.12.3-5, 2.24.3. World Online (WOL) was a European Internet Service Provider, which came to prominence in the late 1990s dotcom boom. After the IPO of WOL in March 2000 in the Netherlands, the value of the newly listed shares dropped dramatically. Moreover, the fnancial results of WOL lagged behind the projections communicated in the prospectus, and the internet bubble collapsed. Legal claims were instituted against WOL, and against the Dutch bank ABN-AMRO and the US investment bank Goldman Sachs, the joint lead managers of the IPO. Basically, the claims alleged that WOL and the lead managers had failed to adequately disclose certain information necessary to correctly inform the investors. In 2009, the Dutch Supreme Court (DSC) judged that WOL and the lead managers had misled the investors. The DSC resolved that the diference between the price for which Nina Brink, the incorporator and CEO of WOL, had sold a substantial number of her shares before the IPO, in December 1999 (that is USD 6.04) and the share 12 issue price at the IPO in March 2000 (that is EUR 43) was considered material and should have been disclosed in the prospectus. By the end of 2000 the WOL shares were worth less than EUR 10. Furthermore, the DSC confirmed the Amsterdam CoA's findings that the value and the future results of WOL were presented too optimistically by WOL and the lead managers, and that they had misled the investors. Compare also Baan, Arnhem CoA, the Netherlands, 16 October 2007 (LJN: BB5511), in which case the Appellate Court decided that the fact that statements by the company which - with hindsight - could be considered too optimistic, in itself, alone, could not be qualified as disseminating incorrect or misleading information.
15. Besides WOL (supra note 11), other Dutch case-law on this subject includes: ABN-AMRO CoopAG, DSC 2 December 1994, NJ1996/246 regarding the responsibility of a lead manager for misleading annual accounts prepared and approved by accountants and contained in a prospectus; MeesPierson BoterenBrood, DSC 8 May 1998, JOR98/110 (regarding incomplete information in a private placement memorandum); DAF, The Hague CoA 29 June 2004 (LJN: AP4593) regarding a misleading prospectus on notes issue; TMF Financial Services, DSC 30 May 2008, JOR2008/209 (LJN: BD2820) regarding the standard which is used to identify the capacity of the investor to understand whether the facts presented in a brochure should be considered as misleading or not (vermoedelijke verwachting van een gemiddeld geïnformeerde, omzichtige en oplettende gewone consument tot wie de brochure zich richt of die zij bereikt). The Unfair Trade Practices Directive of 11 June 2005, 2005/29/EG, PbEU L149, paras 22-39, also underlines the responsibility of a seller of fnancial products. Implemented in the Netherlands in the Wet oneerlijke handelspraktijken [Act on unfair trade practices], which introduced articles 6:193a - 193j Dutch Civil Code including a defnition of the "normal consumer" who - according to the Directive and the legislative history will be assumed to be a person who, on average, is prudent and well informed (Stb. 2008, 397).
16. Based on the author's experience as a practitioner. See, for example, Pickard, S., Due Diligence List: www.duediligencelist.com, Writers Club Press, New York, Lincoln, Shanghai, 2002;
17. and see examples of due diligence questionnaires at: www.meritusventures.com/template_assets/pdf/diligence.pdf.
18. For example, the Danish Institute for Human Rights at: www.humanrights.dk/, the consultancy frms Aim for Human Rights, at: www.humanrightsimpact.org/ and AidEnvironment, at: www. aidenvironment.org/landingpage.aspx. See section 6 infra on Human Rights Impact Assessments (HR IAs).
19. Articles 5 (content prospectus) and 13 (approval prospectus).
20. ABN-AMRO CoopAG, supra note 12. For further reading Brink, M., Due diligence. Een beschouwing over het due diligence onderzoek volgens het Nederlandse recht [A refection of due diligence under Dutch law], Boom Juridische Uitgevers, The Hague, 2009, pp. 320-334.
21. Ibidem, on professional liability, pp. 443-482, especially p. 445.
22. Friends of the Earth, Consultation Paper: CESR's Advice on Possible Level II Implementing Measures for the Proposed Prospectus Directive (2003); EU Parliament (Committee on Employment and Social Afairs) "Report on Corporate Social Responsibility: a new partnership" (2006/2133(INI)).
23. That is the Charter of Fundamental Rights of the European Union, 2000/C 364/01-22.
24. Information received from sustainability-rating agencies and institutional investors during interviews in the course of the Nyenrode International Research on Biodiversity and Capital Markets, 2009 - an ongoing project in which the author participates. Please visit www.UNPRI.org to fnd out which institutional investors are signatories to the Principles for Responsible Investment (PRI).
25. Umlas, E., Human Rights and SRI in North America: An Overview, PhD; January 2009, www.reports-and-materials.org/Umlas-Human-Rights-and-SRI-Jan-2009.pdf.
26. nd ed., Kluwer, Deventer, 2005, pp. 3-9.
27. Ofringa/vinck & van Rosberg, DSC 10 April 1998 (NJ1998/666) regarding a seller which had to inform the buyer of any construction faults in the building before the actual transaction; L.E. Beheer/Stijnman, DSC 16 June 2000 (NJ2001/559) concerning the situation in which the buyer had not conducted a due diligence investigation; even so, the seller should have informed the buyer about hidden liabilities related to the company.
28. VDL Shipyards, DSC 21 February 2003 (JOL 2003/111; LJN AF1891) concerning the size of a fuel tank of a new ship and the intention to use the ship as a seagoing vessel; the buyer should have indicated clearly which expectations he had concerning the new ship and the size of the fuel tank.
29. According to vBI/Interchem, DSC 10 October 2003 (LJN AI0306), it can be expected from professional parties that they perform an adequate due diligence investigation and demand sufcient guarantees when buying a business. If the buyer does not do so, he cannot demand a rescission of the contract.
30. See, for scholarly analyses, Kersten, H., "Het due diligence onderzoek" [Te due diligence investigation], Dossier Ondernemingszaken [Journal on corporate law subjects], 2001-47, Elsevier-Te Netherlands, pp. 27-33, p. 28;
31. Van Rossem, M.M., Garanties in de praktijk [Representations and warranties in practice], Kluwer, Deventer, 2002, p. 210;
32. De Kluiver, H.J., "Overnamecontracten, letters of intent en guaranties" [Acquisition agreements, letters of intent and representations and warranties], Dossier Ondernemingszaken, 2001-47, pp. 34-43;
33. De Nijs Bik, W., "Mededelings- en onderzoeksplichten bij (bedrijfs)overname" [Disclosure and enquiry duties in relation to a business acquisition], Ondernemingsrecht [Corporate Law Journal], Kluwer-Te Netherlands, 2003-16, pp. 627-631;
34. nd ed., Kluwer, Deventer, 2005, pp. 51-73.
35. For an analysis of European tort law and the duty of care, see Van Dam, C., European Tort Law, Oxford University Press, Oxford, 2006, p. 502.
36. Articles 6:228 Dutch Civil Code re dwaling [mistake] and 6:265 re rescission. See, for example, ABP/ Hoog Catherijne, DSC 22 December 1995 (NJ1996/300) concerning damages under a representations and warranties claim that were not awarded because the buyer could have performed a more adequate due diligence investigation; VBI/Interchem (supra note 23).
37. Mol/Meyer (Provamo), DSC 4 February 2000 (NJ2000/562) concerning sellers which had not informed the buyer of a potato processing factory about the illegal ways in which the factory obtained water and discharged its polluted water, hence the discovery of the hidden liabilities (tax claims) led to the rescission of the purchase agreement.
38. Pickard, op.cit. (note 13).
39. Van Tulder, R. and Van der Zwart, A., International Business-Society Management. Linking corporate responsibility and globalization, Routledge, London and New York, 2006.
40. Lambooy, T.E. and Rancourt, M-È, 'shell in Nigeria: From Human Rights Abuse to Corporate Social Responsibility", Human Rights & International Legal Discourse, Vol. 2, No. 2, 2008, pp. 255-259.
41. "Conditions precedent" are conditions, which if not fulflled, would lead the contract to be void or would allow the party who has benefited (usually the purchaser) to render the contract void. The completion of a due diligence investigation can be one of such condition precedent to complete the purchase.
42. "Change of Control" clauses allow one or both parties to terminate the agreement on a change in ownership of a controlling interest in the other party. Tey are quite common in debt and lease agreements as well as in substantial supplier contracts.
43. Rankine, D., Bomer, M. and Stedman, G., Due diligence: defnitive steps to successful business combination, Pearson Education Limited, Harlow, 2003, at p. 94.
44. ABP/Hoog Catherijne, supra note 25.
45. Compare OGEM, Amsterdam Enterprise Chamber, 3 December 1987 and DSC, 10 January 1990 (NJ1990/466), concerning mismanagement due to an inadequate preparation of acquisitions; ve r t o, Amsterdam Enterprise Chamber, 7 March 1996 (NJ1997/674) - the fact that the directors had not performed a due diligence investigation in view of a business acquisition was judged not to be diligent; however, special circumstances in this case (that is prior knowledge concerning the target company) led to the judgment that there had been no mismanagement; verto, The Hague CoA, 6 April 1999 (NJ1999/142), concerning the personal liability of the directors (rejected); De vries Robbé, DSC, 13 September 2002 (LJN AE7940), concerning mismanagement by directors and supervisory directors; one of the questions concerned the quality of the due diligence process.
46. nd edition 2003), that is an in-house handbook of which she was the author.
47. Brink op.cit. (note 16), pp. 67-73.
48. nd ed., Boom Juridische Uitgevers, The Hague, 2005, p. 255;
49. Clapham, A., Human Rights Obligations of Non-State Actors, Oxford University Press, Oxford, 2006, pp. 318 and 334, and see pp. 317-436 for a systematic analysis of positive obligations under selected human rights treaties.
50. Nollkaemper, op.cit. (note 34), p. 256;
51. Clapham, op.cit. (note 34), pp. 521-523.
52. For example, ECtHR, X and Y vs the Netherlands, judgment of 26 March 1985, Application No. 8978/80, Series A, No. 91, p. 23, para. 22, regarding Article 8 ECHR "Right to Family Life".
53. Nollkaemper, op.cit. (note 34), p. 180.
54. A classic international law case on due diligence is ICJ, Corfu Channel (united Kingdom vs Albania), ICJ Reports 1949, p. 22.
55. The Court states that States have the duty "not to allow knowingly its territory to be used for acts contrary to the rights of other states". A State should ensure that acts of private parties committed on its territory or are subject to its jurisdiction, do not harm other States nor their citizens.
56. th ed., Cambridge University Press, Cambridge, 2003, pp. 764 and 770.
57. Ibidem, p. 760.
58. See, regarding racial discrimination by a bank, ZIAD Ben Ahmed Habassi vs Denmark, Communication No. 10/1997, UN Doc. CERD/C/54/D/10/1997, 6 April 1999, pp. 10-11.
59. The Committee monitors the implementation of national measures to fulfl this obligation and makes recommendations.
60. General Recommendation No. 19, para. 9, UN Doc. A/47/38, 1992, p. 5.
61. UN Doc. A/RES/48/104, Res. of 20 December 1993.
62. Amnesty International, "Respect, protect, fulfill- Women's human rights. State responsibility for abuses by "non-state actors", AI Index IOR 50/01/00, para. 4.
63. General Comment No. 31, para. 8, 2004, UN Doc. HRI/GEN/1/Rev.8, 2006, "Compilation". Concerning due diligence see also General Comment No. 16, 2005, para. 27.
64. "Observations of the Inter-American Commission on Human Rights upon the conclusion of its April 2007 visit to Haiti", OEA/Ser.L/V/II.131 Doc 36, 2 March 2008, paras 39 and 65; and "The situation of the Rights of women in Ciudad Juárez, Mexico. The right to be free from violence and discrimination", OEA/Ser.L/V/II.117, Doc. 44, 7 March 2003, paras I 7, 9, 10 and IV 103, 104, 131- 137, 154-158 and 165.
65. "Committee of Ministers Recommendation to Member States on the Protection of Women against Violence", 2002, p. 5, see II; and Appendix, paras 34-41 and 45 and Explanatory Memorandum, paras 90-92.
66. UNGA Res. 58/147 of 19 February 2004.
67. Report of 20 January 2006; UN Doc. E/CN.4/2006/61, paras 61-64 and 101-103.
68. IACtHR, velasquez Rodriguez vs Honduras, 29 July 1988, Series C, No. 4, paras 172-175.
69. The Inter- American Commission on Human Rights had submitted this case to the Inter-American Court of Human Rights.
70. Ibidem, paras 173-174.
71. Ibidem, para. 176.
72. Ibidem, para. 177.
73. Ibidem.
74. Shaw, op.cit. (note 38), p. 332, referring to LCB vs the united Kingdom, 9 June 1998.
75. ECtHR, Osman vs the united Kingdom, 28 October 1998, Application No. 23452/94, Reports 1998- vIII, paras 115-122.
76. See the introductory paragraph of section 4.
77. Osman vs the united Kingdom, supra note 56, para. 116.
78. ECtHR, Nahide Opuz vs Turkey, 9 June 2009, Application No. 33401/02, at: www.kahdem.org.tr/?p=232.
79. See legal brief Interights of 21 July 2007, paras 8-22, at: www.interights.org/view-document/index.htm?id=237.
80. Osman vs the united Kingdom, supra note 56, para. 116.
81. Interights legal brief, supra note 59, para. 14,
82. ECtHR, Z and Others vs the united Kingdom, 10 May 2001, Application No. 29392/95, ECHR 2001-v33, para. 73
83. ECtHR, E. and Others vs the united Kingdom, 15 January 2003, Application No. 33218/96, ECHR 763, para. 88. See UN Doc. E/CN.4/2006/61, 20 January 2006, paras 20-23 and 88.
84. ECtHR, 97 Members of the Gldani Congregation of Jehovah's Witnesses and 4 other vs Georg ia, 3 May 2007, Application. No. 71156/01, para. 97.
85. ECtHR, Mahmut Kaya vs Turkey, 28 March 2000, Application No. 22535/93, ECHR 2000-III, para. 127.
86. Inter-American Commission on Human Rights, Maria da Penha vs Brazil, Case 12.051, Report No. 54/01, OEA/Ser./L/V/II.111, doc. 20 rev., at 704 (2000), 16 April 2001, paras 5, 20, 54, 56 and 58.
87. Idem.
88. IACtHR, Ximenes-Lopes vs Brazil, 4 July 2006, Series C, No. 149, para. 85;
89. IACtHR, Pueblo Bello Massacre vs Colombia, 31 January 2006, Series C, No. 140, para. 113;
90. IACtHR, Mapiripán Massacre vs Colombia, 15 September 2005, Series C, No. 134, para. 111.
91. CEDAW Commission, A.T. vs Hungary, Communication No. 2/2003, UN Doc. CEDAW/C/32/D/2/2003, 2005, paras 9.2 and 9.6.
92. Benninger-Budel, C. (ed.), Due Diligence and Its Application to Protect Women from violence, Nijhof Law Specials, Martinus Nijhof Publishers, Dordrecht, 2008, Vol. 73.
93. Boerefjn, I., "De blinddoek opzij. Een mensenrechtenbenadering van geweld tegen vrouwen" [Te blindfold put aside. A human right approach of violence against women], inaugural lecture of 8 December 2006, Maastricht University, the Netherlands, pp. 14-15.
94. Ibidem, pp. 16-17.
95. The same question has been raised in respect of the Ruggie proposal that companies should employ due diligence to avoid human rights abuses. Critical remarks were published after the release of the Ruggie Report (section 5 infra) contending that corporate best eforts are not enough to avoid human rights abuses; it was argued that legal liability is needed to solve this problem.
96. For an overview hereof, see generally, Clapham, op.cit. (note 34); Muchlinsky, P., Human Rights and Multinational Enterprises, Oxford University Press, Oxford, 2007;
97. Jägers, N., Corporate Human Rights Obligations: in Search of Accountability, Intersentia, Antwerpen, 2002;
98. Joseph, S., Corporations and transnational human rights litigation, Hart Publishing, Oxford and Portland Oregon, 2004.
99. Enneking, L., "Crossing the Atlantic? The political and legal feasibility of European Foreign Direct Liability Cases", The George Washington International Law Review, Vol. 40, No. 4, 2009, pp. 903-938.
100. Lambooy and Rancourt, loc.cit. (note 28).
101. African Human Rights Commission, Social and Economic Rights Action Center/Center for Economic and Social Rights vs Nigeria, 27 May 2002, ACHPR/COMM/A044/1, paras 2 and 59-67. The Communication and the decision of the Commission are available on: CESR, Nigeria, http://cesr.org/nigeria.
102. Jägers, op.cit. (note 70), p. 219.
103. Clapham, op.cit. (note 34), p. 434.
104. As Ken Saro Wiwa's family members did not feel safe in Nigeria anymore, they had moved to the US.
105. nd Circuit, Royal Dutch Petroleum Co. vs Wiwa, 14 September 2000, 226 F.3d 88; US Supreme Court, cert. denied, 26 March 2001, 532 US 941. Selected legal documents can be found on: http://wiwavshell.org/resources/legal-documents/.
106. Shell paid USD 15 million to the plaintiffs. The plaintiffs set up a trust for the benefit of the Ogoni people. The Settlement Agreement and Mutual Release and the Kiisi Trust Deed, all dated on 8 June 2009, can be accessed at: http://wiwavshell.org/documents/Wiwa_v_Shell_agreements_and_ orders.pdf. note
107. th Circuit, Doe vs unocal, 18 September 2002, US App LEXIS 19263. The legal documents can be accessed at: www.earthrights.org/legal/doe-v-unocal.
108. Clapham, op.cit. (note 34), pp. 255-261.
109. Earthrights, ibidem, at: www.earthrights.org/print/1362.
110. UNGA Res. A/RES/60/251, 15 March 2006.
111. UN Doc. E/CN.4/Sub.2/RES/2001/3, Resolution of 15 August 2001.
112. Norms, UN Doc. E/CN.4/Sub.2/2003/12Rev., 2003; Commentary, UN Doc. E/CN.4/Sub.2/2003/38/ Rev.2, 2003; and Sub-Commission Res. 2003/16, UN Doc. E/CN.4/Sub.2/2003/L.11, 2003, at p. 52.
113. The Commentary also pointed at the OECD MNE Guidelines and the Global Compact Principles.
114. Commentary, supra note 82.
115. See, for example, Torsen, S.S. and Meisling, A., "Perspectives on the UN Draft Norms", paper discussed at the IBA/AIJA conference on Corporate Social Responsibility, Amsterdam, 2004, www2.ohchr.org/english/issues/globalization/business/docs/lawhouse2.doc.
116. UNHRC GA, "A Survey of the Scope and Pattern of Alleged Corporate-Related Human Rights Abuse", UN Doc A/HRC/8/5, 23 May 2008, para. 58 and Add.2.
117. Ibidem, p. 3.
118. Ruggie Report 2008, supra note 4, para. 3;
119. UN HRC, UN Doc. A/HRC/11/13, 22 April 2009, para. 7.
120. From a human rights law perspective, however, these gaps have ofen been referred to as "accountability gaps", that is that corporate conglomerates need not account for their worldwide activities against the same standards everywhere. For example, presentation by Kamminga, M., "Leidt de benadering van John Ruggie tot het sluiten van de "accountability gap?" [Does the Ruggie approach result in closing the "accountability gap"?], Symposium "Mensenrechten en Bedrijfsleven" [Human rights and business], 23 June 2009, Amsterdam, http://media.leidenuniv. nl/legacy/Voorlopig_Programma_23juni09.pdf.
121. Duruigbo, E., "Corporate Accountability and Liability for International Human Rights Abuses: Recent Changes and Recurring Challenges", Northwestern Journal of International Human Rights, Vol. 6, No. 2, Spring 2008, pp. 222-261, www. law.northwestern.edu/journals/jihr/v6/n2/2/;
122. Broecker, C., "Better the Devil You Know" - Home State Approaches to Promoting Transnational Corporate Accountability", Paper New York University School of Law, 2009, http://works.bepress.com/cgi/viewcontent.cgi?article=1000&context=ch risten_broecker.
123. Presentation by Ruggie, Conference "Business and Human Rights", 1 December 2008, Wassenaar, the Netherlands, www.minbuza.nl/dsresource?objectid=buzabeheer:59586&type=pdf.
124. Criticasters of Ruggie's approach do not agree with him, and allege that his report only encourages "good" companies to use due diligence to avoid human rights abuses but that it will not bring any change in respect of "bad" companies" practices. For example, Misereor/Te Global Policy Forum Europe, "Problematic Pragmatism - The Ruggie Report 2008: Background, Analysis and Perspectives", June 2008, www.cidse.org/uploadedFiles/Publications/Publication_repository/policy_p aper_ Misereor_background_Ruggie_report_june08_EN.pdf.
125. Teir general reaction to the Ruggie Report is: "Tus Ruggie's reports falls way short of the expectations of civil society organizations. With his "principled pragmatism" approach, Ruggie formulates what he feels is politically feasible given the forces that be in society but does not state what would be desirable and necessary to protect human rights. Although John Ruggie repeatedly stressed that he rejects any legally binding instruments to regulate companies at global level, because (i) treaty-making can be "painfully slow" (ii) a treaty-making process "risks undermining effective shorter-term measures to raise business standards (...)", and (iii) serious questions remain "about how treaty obligations would be enforced".
126. Ochoa, C., American Society of International Law, ASIL Insights, Vol. 12, No. 12, 18 June 2008, www.asil.org/insights080618.cfm;
127. Amnesty International, Submission to the Special Representative of the Secretary-General on the issue of Human Rights and Transnational Corporations and other Business enterprises, July 2008, www.amnesty.org/en/library/asset/IOR40/018/2008/en/fa1e737c-6ad9-11dd-8e 5e-43ea85d15a69/ior400182008en.html.
128. Although not very explicit, the same view can be found in the UN Draft Norms and the Commentary, which limit the corporate obligation to protect human rights to "their respective spheres of activity and influence" (section 4.3. supra).
129. Prominent law forms have issued differing legal advices on how to interpreter the legal impact of the Ruggie Report.
130. Lipton, M. and Schwartz, K.S. of Wachtell, Lipton, Rosen & Katz, "A United Nations Proposal Defining Corporate Social Responsibility For Human Rights", 1 May 2008, p. 1; available at: http://amlawdaily.typepad.com/amlawdaily/files/wachtell_lipton_memo_on_g lobal_business_human_rights.pdf;
131. Weil, Gotshal and Manges LLP, "Corporate Social Responsibility for Human Rights: Comments on the UN Special Representative Report Entitled "Protect, Respect and Remedy: a Framework for Business and Human Rights", 22 May 2008, available at: http://amlawdaily.typepad.com/amlawdaily/files/weil_gotshal_response_to_ un_report_on_human_rights_and_business_fnal.pdf.
132. Van Dam, C., "Launch of the Report of the International Commission of Jurists "Corporate Complicity & Legal Accountability", lecture, London, 28 October 2008, rightly points out that although John Ruggie's work does not focus on legally binding rules, his work will inevitably have impact on these rules, particularly in the area of due care: "In this respect, there is no clear line to draw between binding rules of care and voluntary rules of care. The concepts are mutually infuencing each other...
133. Human rights lawyers ofen argue that the norms captured in those treaties do apply. Companies on the other hand, predictably disagree and argue that since companies are not parties to human rights treaties, the obligations set out therein have no direct application to them and are a concern of governments. See on this discussion the following authors. Clapham, op.cit. (note 34), pp. 266- 270 and 317-334, tries to establish direct applicability on the basis of customary international law and human rights treaties" bodies" recommendations;
134. Clapham, A., Human Rights in the Private Sphere, Clarendon Press, Oxford, 1993, pp. 137-138;
135. Jägers, op. cit. (note 70), pp. 36-38 and 47, grounds this view on the doctrine of ius cogens and/or through the horizontal application of human rights obligations, also known as
136. Drittwirkung; Muchlinsky, op.cit. (note 70), pp. 514-518 and 536, bases his standpoint on ethical business practice.
137. Abrisketa, J., "Blackwater: mercenaries and international law", in: Fride Comment, October 2007, available at: www.fride.org/descarga/blackwater.english.pdf;
138. Singer, P.W., "War, Profits, and the Vacuum of Law: Privatized Military Firms and International Law", Columbia Journal of Transnational Law, Vol. 44, No. 2, 2004, pp. 521-549.
139. Doe vs unocal, supra note 78: Unocal argued that the laws of Myanmar were applicable. Also, Shell argued that the Dutch court was incompetent in The Hague District Court, Oguru, Efanga, vereniging Milieudefensie vs Shell (Doc. No. 2009/0579), "Incidentele conclusie houdende exceptie van onbevoegdheid, tevens voorwaardelijke conclusie van antwoord in de hoofdzaak" [writ arguing forum non conveniens and defence by Shell] of 13 May 2009 under IV.7, available at: www. milieudefensie.nl/globalisering/activiteiten/shell/the-people-of-nigeria -versus-shell.
140. Castermans, A.G. and Van der Weide, J.A., "De juridische verantwoordelijkheid van Nederlandse moederbedrijven voor de betrokkenheid van dochters bij schendingen van mensenrechten, arbeids-, of milieunormen in het buitenland" [Te legal responsibility of Dutch holding companies for complicity of subsidiaries in regard of human right abuses, violations of labour and environmental norms], 15 December 2009, available at: www.p-plus.nl/beelden/castermans.pdf (English translation available at: https://openaccess.leidenuniv.nl/bitstream/1887/15699/2/ENG+NL+report+on +legal+liabilityof+parent+companies+(transl+31+May+2010).pdf); and Enneking, loc.cit. (note 70), pp. 910-913.
141. Ruggie Report 2008, supra note 4, para. 55.
142. Ibidem, para. 25.
143. Idem.
144. Ibidem, para. 58.
145. th ed., West Group, United States, 2006.
146. Ibidem, para. 57.
147. Ibidem, para. 79.
148. Ibidem, para. 25.
149. Ibidem, para. 57.
150. UNHRC GA Report of Ruggie of 15 May 2008, UN Doc. A/HRC/8/16, para. 20.
151. Idem.
152. Shell 'security in Nigeria", at: www.shell.com/home/content/nigeria/about_shell/issues/security/security. html. Also see Pepsi -Cola website www.pepsico.com/. Since 2002, safety of employees is a core value "The New Pepsi Challenge: World Class Safety" http://ehstoday.com/safety/ehs_imp_78693.
153. UNHRC GA Ruggie Report of 9 April 2010, UN Doc. A/HRC/14/27, paras 66-67. And see www. srsgconsultation.org/index.php/main/discussion?discussion_id=7.
154. Examples: the operations of Vedanta Resources Plc, a mining corporation in India resulting in the ecological degradation that threatens the livehoods of many Indian tribal people; see Report of the Joint Committee on Human Rights of the UK House of Lords, House of Commons, First Report of Session 2009-10, Vol. II, 16 December 2009, pp. 137-139, 161-164 and 182, at: www.publications. note parliament.uk/pa/jt200910/jtselect/jtrights/5/5ii.pdf;
155. British mining company, Monterrico Metals, started an exploitation project without the proper consent of local communities in Peru that led to violence and torture, see The Indigenous World 2006, para. 175; the operations of Shell Nigeria resulted in misery in the Ogoni Delta; see Lambooy and Rancourt, loc.cit. (note 28); Indigenous people from Talsa village in Northern Jharkhand in India face displacement as a result of nearby open-cast uranium mine - the Uranium Corporation of India Ltd, 25 May 2009; The Indigenous World 2006, para. 397; and the Canadian-based Barrick Gold Corporation was involved in the displacement of more than 1000 people in Papua New Guinea who were forcibly evicted, by police officials, who burnt their homes; see Catalinotto, John, Papua New Guinea's Indigenous people vs Barrick Gold, 6 June 2009, www.workers.org/2009/world/papua_new_guinea_0611/.
156. Coca Cola lost its licence to operate in the Indian state of Kerala for at least a year in 2004/2005 due to the fact that the local communities were suffering droughts and did not allow Coca Cola to use groundwater. See, about this conflict, "The Right to Water under the Right to Life: India", www.righttowater.org.uk/code/legal_7.asp;
157. Coca Cola Company, Sustainability Review, 2006; 2007/2008; 2008/2009, www.thecoca-colacompany.com/citizenship/pdf/2008-2009_sustainability_rev iew.pdf, p. 31;
158. Senge, P., "Unconventional Allies: Coke and WWF Partner for Sustainable Water", in: The Necessary Revolution. How Individuals and Organizations are Working Together to Create a Sustainable World, Doubleday, New York, 2008, pp. 77-95.
159. Ruggie Report 2008, supra note 4, para. 48.
160. Ibidem, para. 47.
161. nd Circuit, 2 October 2009, US Doc No. 07-0016-cv.
162. Kobrin, S.J., "Oil and Politics: Talisman Energy and Sudan", International Law and Politics, Vol. 36, No. 2/3, 2004, pp. 425-456, at p. 426.
163. Kobrin, S.J.,"Who Has the Obligation to Protect and Respect Human Rights: The Problem of Responsibility in a Networked World Economy", Paper summary presented in Workshop III, Hill Conference, available at: www. lawofhefuture.org/assets/693/AC2009_outlines.pdf, pp. 21-24.
164. Presentation Ruggie Wassenaar, supra note 90.
165. Report of Ruggie of 2008, supra note 106, para. 21.
166. Ibidem, paras 60-63;
167. Ruggie Report 2010, supra note 109, paras 85 and 59; and Sherman and Lehr, loc.cit. (note 7).
168. Lambooy, T.E. and Figueroa, V., "Corruption and corporate governance: "in control" requires an anti-corruption programme", submitted for publication to IBOR, an international legal journal by mid-2010. See section 5 of that article.
169. Ibidem, section 2, elaborating on the Dutch Corporate Governance Code (Frijns Code); the UK Corporate Governance Code (Combined Code); and the US Sarbanes-Oxley Act, Sections 302 and 404.
170. Ruggie Report 2010, supra note 109, para. 69, noted that there are situations in which the company harms human rights and, in doing so, it may also be non-compliant with existing securities and corporate governance regulations by failing to disclose and address stakeholder-related risks.
171. Report of Ruggie 2008, supra note 106, para. 22.
172. Ibidem, para. 59.
173. An example thereof has been demonstrated in the G-Star case, where assessments were carried out by professional audit companies.
174. Lambooy, T.E., "Case Study: the International CSR Confict and Mediation", Nederlands-vlaams tijdschrif voor Mediation en conflict management [Dutch-Flemish journal for mediation and confict management], Vol. 13, No. 2, 2009, pp. 5-46, at p. 6.
175. Lambooy, T.E. and Rancourt, M-È., "Private Regulation: Indispensable for Responsible Conduct in a Globalizing World?", in: Law and Globalisation, Bocconi School of Law, Milan and VDM Publishing, Saarbrücken, 2009, pp. 90-133, at pp. 108-110.
176. Knowledge from corporate law practice. See further the "Rabo Annual Sustainability Report 2008" at: www.rabobank.com/content/news/news_archive/053-Annualsustainabilityrepor t2008.jsp; Rabobank "Group's Statement on Human Rights", 2002, updated 2006, at: www.rabobank.com/ content/images/Human_Rights_Statement_tcm43-37344.pdf; and Barclays Bank's "Managing environmental and social risks in lending", at: http://group.barclays.com/Sustainability/Responsible-fnance/Environmenta l-and-social-risk-in-lending. note
177. Final statement by the UK NCP for the OECD MNE Guidelines: Afrimex (uK) Ltd, 28 August 2008, www.berr.gov.uk/files/fle47555.doc.
178. Lambooy and Rancourt, loc.cit. (note 28) and the examples provided in note 110.
179. Report of Ruggie 2008, supra note 106, para. 4.
180. See also International Commission of Jurists, Corporate Complicity and Legal Accountability, Vol. 2, "Criminal Law and International Crimes", 2008, p. 24.
181. In the Ruggie Report 2010, supra note 109, pp. 74-76, Ruggie hinted at various companies that have been implicated in human rights-related international crimes and argues that proper due diligence might prevent such situations.
182. Report of Ruggie of 2008, supra note 106, para. 4.
183. Ibidem, para. 12.
184. For example KPMG International - Forensic Services, at: www.kpmg.com/SG/en/WhatWeDo/Advisory/Transactions_Restructuring/Forensic /Pages/default.aspx and Daylight Accounting, at: www.daylightforensic.com/.
185. Lambooy and Figueroa, loc.cit. (note 118), section 5.2.
186. See supra note 14.
187. For example: Shell cooperated with the Danish Institute for Human Rights concerning the development of this instrument. See Human rights training, tools and guidelines, www.shell.com/home/content/environment_society/society/human_rights/trai ning_tools_guidelines/.
188. It is noted that the G3 connects to the Global Compact Principles and the Earth Charter. For a company that adheres to one or both of these codes, the G3 makes it easy to report on human rights compliance. See two reports of GRI, "A Resource Guide to Corporate Human Rights Reporting" and "Corporate Human Rights Reporting: An analysis of Current Trends", 2009, www.globalreporting.org/CurrentPriorities/HumanRights/.
189. All HRIAs listed have websites explaining their tools. For BLIHR, see www.humanrights-matrix.net/assets/ES%20fnal.pdf. See also supra note 14.
190. Report of Ruggie 2008, supra note 106, para. 23.
191. Ibidem, para. 24.
192. Report 18 May 2009; UN Doc. A/HRC/11/12/Add.2. Various scandals have been reported over the years. See, for example, "Pfzer to Pay 75 Million to Settle Trovan-Testing Suit", Washington Post, 31 July 2009, at: www.washingtonpost.com/wp-dyn/content/article/2009/07/30/AR2009073001847 .html ("Pfzer signed a USD 75 million agreement with Nigerian authorities to settle criminal and civil charges that the pharmaceutical company illegally tested an experimental drug on children during a 1996 meningitis epidemic").
193. GSK and other pharmaceutical companies are also active in establishing public-private partnerships (PPPs) aimed at contributing to the Millennium Development Goals. See GSK "Corporate Social Responsibility Report 2008", at: www.gsk.com/responsibility/downloads/GSK-CR-2009-full.pdf, pp. 37, 59-61, 72 and 73.
194. For example: tuberculosis, malaria, blinding trachoma, buruli ulcers, cholera, dengue/dengue haemorrhagic fever, racunculiasis, fascioliasis and human African trypanosomiasis.
195. Non-exclusive voluntary licences are meant to increase access, in low-income and middle-income countries, to all medicines. Exclusive licences, on the other hand, based on the Western intellectual property regime, hinder access to medicines because the treatment becomes unafordable for the local population in developing and least developed countries. Report 18 May 2009, supra note 138, para. 75.
196. For example, Article 4(2) of SA8000 guidelines suggest to implement human rights grievance committees and employees" representative bodies. See www.sa-intl.org.
197. Voluntary Principles on Security and Human Rights, www.voluntaryprinciples.org; Publish What You Pay, www.publishwhatyoupay.org/;
198. Extracting Industries Transparency Initiative, http:// eitransparency.org/. A number of gold companies have signed up to the Responsible Jewellery Council (RJC). The International Council on Mining and Metals (ICMM) was formed in 2001 to represent the world's leading companies in the mining and metals industry and to advance their commitment to sustainable development, www.icmm.com/about-us/icmm-history.
199. Spinelli, J. (Daylight Forensic & Advisory), "Foreign Corrupt Practices Act Due Diligence in Mergers & Acquisitions", Ethishere TM Institute (online news service), 13 May 2009, at http://ethisphere.com/ foreign-corrupt-practices-act-due-diligence-in-mergers-acquisitions/, illustrating that extensive FCPA due diligence is needed when operating in a high-risk industry (for example oil), in high-risk countries and in deals with government owned organisations.
200. World Bank, "Development Policy Lending 2006", http://siteresources.worldbank.org/PROJECTS/ Resources/DPLretro06f.pdf. IFC, "IFC Environmental and Social Standards", 30 April 2006 www.ifc.org/ifcext/sustainability.nsf/Content/EnvSocStandards; The International Finance Corporation's new environmental and social requirements www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/pr_BackgroundNoteES/FIL E/BackgroundNote-NewESStandards.pdf. Also see Lucy Baker, Bretton Woods Project, May 2007, "The World Bank and human rights. Caution on World Bank developments", www.ifwatchnet.org/sites/ifwatchnet.org/files/Te_World_Bank_and_human_ri ghts-%20at%20issue.pdf.
201. See Forest Stewardship Council at: www.fsc.org/pc.html.
202. There are also other certification labels; however, one should evaluate their legitimacy. A programme supported by all stakeholders (rather than one set up by the industry itself) scores highly on legitimacy. See Lambooy and Rancourt, loc.cit. (note 123), p. 116.
203. Palm oil is one of the key ingredients for Unilever. See the report "Palm Oil: Sustainable Future, 2002", at: www.unilever.com/images/Palm%20Oil%20-%20A%20Sustainable%20Future%202002_tcm13-5315.pdf.
204. Federal Rules of Civil Procedure (2007), Rule 26 (incorporating the revisions that took efect on 1 December 2007).
205. Van Hooijdonk, M. and Eijsvoogel, P., Litigation in the Netherlands. Civil Procedure, Arbitration and Administrative Litigation, Kluwer Law International, The Hague, 2009, pp. 25-26.
206. Uittien, H., "Gedwongen verstrekking van due diligence-rapportages" [Forced provision of due diligence reports], Tijdschrif voor de Rechtspraktijk [Journal for the law practice], Vol. 1, January 2007, pp. 19-23.
207. BvR/Ho-Cla, Den Bosch CoA, 28 September 2004 (JOR2005/23); similarly: verder Holding/ Hagemeijer, Amsterdam District Court, 13 April 2005 (JOR2005/142); and Aegon/Dexia, Amsterdam District Court, 3 November 2004 (JOR2004/326) concerning a request for due-diligence documentation.
208. OGEM, supra note 32; and Ruggie 2009, supra note 5, para. 82.
209. Presentation by Ruggie, supra note 90.
210. Shell, "Black Economic Empowerment", at: www.shell.com/home/content/zaf/aboutshell/who_we_are/our_values_and_prin ciples/bee/.
211. Regarding the operations of Timberland in China, see Ma, M., "The Story of Ying xie - Democratic Workers" Representation in China as a Tool for Better Business", in: Nadgrodkiewicz, A. (ed.), From Words to Action: A Business Case for Implementing Workplace Standards - Experiences from Key Emerging Markets, Center for International Private Enterprise and Social Accountability International, Washington DC/New York, 2009, pp. 6-24, at p. 11.
212. Ruggie Report 2010, supra note 109.
213. A complicated situation occurs when a civil society organisation does not want to identify specific victims, while putting forward the argument that the victims are afraid of repercussions by the company or the State. In a situation like the Shell operations in Nigeria one during the dictator Abache period, this could have been the case; in the G-Star case, the Dutch and Indian campaigners did not disclose the names of victims stating that they were afraid of repercussions by the company such as dismissal. See Lambooy and Rancourt, loc.cit. (note 28); and Lambooy, loc.cit. (note 123).