Why do we need a Treaty?
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Today, there is no binding international legal framework to establish the liability of transnational corporations in the area of human rights and environmental protection, nor is there any guaranteed access to justice and remedies for populations affected by the activities of those corporations.
- After 26 years of process, Chevron has been condemned by the Ecuadorian courts to the payment of 9.5 billion USD to 30.000 affected people in the Amazon. But the sentence has not been applied. On the contrary, Chevron attacked Ecuador before the Permanent Court of Arbitration in an ISDS case, obtaining a favourable opinion.
- In the wake of the Rana Plaza collapse in Bangladesh and the Kik factory fire in Pakistan, affected people had extremely limited recourse to obtain damages and reparations commensurate with the harm suffered: contracting companies had no assets in the country and took advantage of instances of legal limbo to escape all liability.
- In Mozambique, agribusiness corporations have been consistently grabbing community land, abusing and violating their human rights, through deliberately poorly conducted community consultation processes, thus depriving local peoples from their access to livelihoods, water sources, schools and markets, while creating social tensions and conflicts. The Norwegian TNC Green Resources has a promiscuous relationship with the government to ensure its interests are safeguarded above all and is backed by influential donor agencies and international financial institutions that help perpetuate its impunity.
- Global Witness revealed that more than three people were murdered each week in 2018 for defending their land and our environment, with countless more criminalised. A pattern that persists unabated, since 212 land and environmental defenders were killed in 2019 – the highest annual death toll ever recorded.
These snapshots into instances of corporate impunity remind us of the need and urgency to move beyond a vision of corporate social responsibility (CSR) and other mechanisms that are based almost solely on voluntary commitments to self-regulation. This is all the more urgent since 3,400 trade and investment agreements protect the interests of transnational corporations through Investor-State Dispute Settlement mechanisms. As Olivier Petitjean puts it, this state of affairs imposes a great burden on municipalities in their quest for justice and environmental protection:
“In theory, cities have the right to defend their interests and end their contractual relations with private companies if they have good reasons to do so. In practice, however, things are not so simple. Even when a contract expires and a local authority exerts its seemingly very normal right not to renew it and take the service back to public management, there are still legal avenues for corporations to challenge the decision or, at least, claim large sums of money in compensation. The most famous (…) of these legal mechanisms are investor-state dispute settlements (ISDS)”.
Olivier Petitjean (The Future is public. Towards democratic ownership of public services)
Right to a safe and clean environment in Germany
Vattenfall, a Swedish energy firm, launched a $1.9 billion ISDS claim against Germany in 2009 to challenge the requests of the German government and Hamburg municipality to better protect the Elbe River while running a coal power plant. Rather than comply with these requirements, Vattenfall launched its ISDS case, claiming that Hamburg’s environmental rules amounted to an expropriation. To avoid the uncertainty of a prospective ISDS ruling ordering payment of a massive amount of compensation, the German government reached a settlement with Vattenfall in 2010. The settlement obliged the Hamburg government to drop its additional environmental requirements and issue the contested permits required for the plant to proceed. The settlement also waived Vattenfall’s earlier commitments to mitigate the coal plant’s impact on the Elbe River.
Access to justice and the right to health and a safe environment in India
In December 1984, a Union Carbide pesticide plant in Bhopal, India, leaked over forty tons of poisonous gas into the community surrounding the plant. Survivors of the tragedy and various rights groups have been demanding better compensation, proper rehabilitation, adequate medical care for gas-victims, remediation of the contaminated site and the city’s soil and groundwater. And, of course, speedy trial and prosecution of the accused. However, little to no progress has been made even 36 years down the line. Dow Chemical, the parent company of Union Carbide, has indeed been constantly avoiding its legal liability ever since it acquired Union Carbide in 1999.
When the country froze its utility rates in response to its 2001-2002 financial crisis, it was hit by over 40 lawsuits from investors, including Suez & Vivendi (France), Sociedad General de Aguas de Barcelona S.A (Spain) and Anglian Water (UK). ISDS courts concluded that Argentina had breached the investors’ right to “fair and equitable treatment” while trying to mitigate one of the country’s worst economic crisis. By 2014, the country had been ordered to pay a total of US$980 million.
In last years, Blackstone purchased properties in the Raval, one of Barcelona’s poorest neighbourhoods, to evict families from these properties to sell or let them at a much higher rate. But the joint mobilisation of the local community and of the Barcelona City Council, under the #RavalVsBlackstone slogan, won. The corporation was forced to negotiate and let the families stay and pay a social rent.
In Chile, private pharmacies supply the vast majority of the population with medication, and the government does not regulate prices. Currently, three pharmaceutical companies dominate 90 per cent of the market. These companies have been investigated and convicted multiple times for crimes of collusion in pricing medicines. Faced with the high price of medications, the local government of Recoleta created the country’s first ‘Popular pharmacy’ in 2015. The pharmacy offers cheap medicines for the residents of the commune who are treated in the public health system. In some cases there have been savings of up to 70 per cent compared to what the residents of Recoleta used to spend each month on medications. Between 2015 and 2018, 40 new public pharmacies were created under the Recoleta mode, and the “Chilean Association of Popular Pharmacies” was created, bringing together 80 municipalities.
In 2017, France adopted a law on the duty of vigilance and became the first country to pass legislation to invoke the civil liability of corporations for violations of human rights and the environment caused by its subsidiaries, suppliers, and business relationships along their value chain, be it in France or abroad. Similar legislative processes and Supreme Court decisions are currently underway across the European Union, Australia, Canada, and elsewhere.
A UN Treaty would enable States to universally agree on the elements regulating the conduct of transnational corporations in international human rights law, and to lay the ground for an effective access to justice for those who suffer from corporate malpractice.
Today, cities and communities are increasingly joining forces through networks and common initiatives, increasing their democratic space and building concrete alternatives.
