RESPECTING HUMAN RIGHTS: MULTINATIONAL
CORPORATIONS STRIKE OUT
John Christopher Andersont
The Burmese military government has forced entire villages to
work on the railroad [for Unocal's pipeline] without pay while
under armed guard by Burmese troops .... People in the region
have named the railroad the 'New Death Railway.'
The
government has burned villages in the pipeline path.'
Rather than sitting there taking snipes at us, these activist groups
2
should be embracing what [Unocal is] doing [in Burma].
Human rights abuses are common in Burma.3 In September 1988, the
Burmese military seized control of Burma and changed its name to
Myanmar.4 To "ensure peace and tranquillity," the military established a
ruling body known as the State Law and Order Restoration Council
t J.D., The John Marshall Law School; B.S., Illinois State University. The author
currently 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 Shirley
K. 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 Constitutional
Law).
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 Practices
for 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 Order
Restoration Council (SLORC) seized control of the country, but it is commonly referred to
by 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 it
as 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 an
expatriate Burmese activist in Southern California). Ironically, SLORC maintains a web
site 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
basis. 6 Of the protestors who are not shot, many are held under house
arrest without trial,7 while others are arrested and tried before a military
tribunal! Defendants rarely have legal counsel and are expected to admit
their 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 joint
venture gas drilling project in Burma.
Under that agreement, SLORC
acted 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 staged
attacks 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 the
National 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 Unocal
76, 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 the
joint venture), dismissed iz part, 27 F. Supp. 2d 1174 (C.D. Cal. 1998) (dismissing claim
against one of the defendants for lack of personal jurisdiction, but not the claim against
Unocal).
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 OverBurma PipelineJob, supra note 1.
17. See More Troops to Guard Pipeline, S. CHINA MORNING POST, Mar. 30, 1995,
available in 1995 WL 7523080.
20001
RESPECTING HUMAN RIGHTS
465
"Second Railway of Death,"' which refers to a notorious rail line
constructed by Allied prisoners to transport Japanese supplies between
Burma and Thailand during World War II.'9 Some 16,000 prisoners of war
and over 100,000 Asian slave laborers died of disease, malnutrition, and
torture while constructing the original railway. 20
Human Rights Watch Asia testified before Congress that "there are
numerous credible reports of thousands of people conscripted to build
railway lines and roads in violation of Burma's commitment to uphold
international conventions against forced labor."2 ' Workers escaping from
the railway project spoke of ten and a half hour workdays, beatings,
hunger, and disease.22 When confronted with such accusations, SLORC
declared that "contributing labor" is "a noble Burmese tradition," and many
workers are convicted criminals who "volunteered to work in the open
3
air.,2
While Unocal denies a connection between the 100-mile-long railway
and the pipeline project, the State Department reports that SLORC
routinely uses forced labor and "will use the new railway to transport
soldiers and construction supplies to the pipeline area." 24 Unocal's denials
are further called into question by a group of Burmese nationals who are
suing Unocal for its role in these atrocities.5 Unocal's involvement in
Burma has met with strong criticism not only from the general public but
from its own shareholders as well. 6
Concern
over
the
role
of
multinational
corporations
("multinationals") 27 in human rights violations has prompted several
proposals. 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,
availablein 1994 WL 3630415; Unocal Sued OverBurma Pipeline Job, supra note 1.
19. See New "Bridge on the River Kivai," BALTnORE SUN, Aug. 27, 1996, at 7A,
availablein 1996 WL 6634471.
20. See id.
21. Gray, supranote 18, at A12.
22. See id.
23. John Pilger, "Death Railway" Revisited, Rebuilding with Slave Labor, WORLD
PRESS REv., Sept. 1996, at 10, availablein 1996 WL 839907.
24. Id. at 11; see also Paul M. Sherer, Pact Is Signedfor $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 of
personal 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 which
does business in many countries but is based in only one country, though the terms are often
used interchangeably." BLACK'S LAW DICTnONARY 1015-16 (6th ed. 1990).
466
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
conduct. A corporate code of conduct is generally a statement delineating a
company's ethical policies. 28 While the tendency to adopt corporate codes
is increasing, their effectiveness remains subject to question. Other
possible methods of compelling corporations to respect human rights
include legislative or judicial action. Yet to date, no federal statute exists
that directly and adequately addresses this problem. Because standards
remain underdeveloped in this area of human rights law, victims of human
rights abuse are forced to cope with unpredictable results.
This Article argues that multinationals should have a responsibility to
respect human rights. Part I provides a basic review of the concept of
human rights. Part II discusses multinationals' obligations regarding
human rights. Then, Part Ill analyzes efforts to encourage respect for
human rights through codes of conduct. Part IV examines efforts to force
multinationals to respect human rights through existing legislation. Part V
discusses Unocal's involvement in Burma and illustrates how codes and
existing laws are insufficient to force multinationals to respect human
rights. Finally, Part VI proposes that Congress adopt federal legislation
imposing a duty on multinationals to respect human rights, and that states
revoke the corporate charters of multinationals that routinely fail to do so.
This Article concludes that multinationals, given their enormous economic
and political power, should have a legal duty to respect human rights that
should be enforced by federal legislation and, if necessary, corporate
charter revocation.
I.
HUMAN RIGHTS
While international human rights is a broad and difficult concept to
define, several international agreements enumerate specific standards.29 In
particular, the United Nations sets forth the most prominent example of
current human rights standards, the Universal Declaration of Human Rights
("Universal Declaration"). 30 The Universal Declaration provides standards
for various human rights issues, including the rights of life, liberty, security
of 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 Transnational
Corporationsin the Protection of InternationalHuman Rights, 6 MiNN. J. GLOBAL TRADE
153, 160 (1997).
30. See UniversalDeclarationof Human Rights, U.N.Y.B. 535, U.N. Doc. A/810, U.N.
Sales No. 1950.1.11 (1948-49) [hereinafter UniversalDeclaration].
31. Seeid. art.3.
32. See id. art. 20.
33. See id. art. 13.
2000]
RESPECTING HUMAN RIGHTS
right to vote or take part in government. 4 The Universal Declaration also
promotes freedom from torture, cruel and inhuman punishment, 35 arbitrary
arrest,36 unjust labor practices, 37 and slavery.3 8 These rights are universal
and restrict both individuals and corporations from infringing on human
rights.39 Other United Nations directives consider environmental protection
a vital human right.40 The United Nations also has examined corporate
involvement in human rights issues and asserted that "[t]ransnational
corporations should/shall respect the social and cultural objectives, values
and traditions of the countries in which they operate" 4' and "shall respect
human rights
and fundamental freedoms in the countries in which they
2
operate."4
For the purposes of this Article, an important distinction exists
between respecting and promoting human rights. Corporations already
have a moral duty to promote human rights. This Article considers
promoting human rights in the context of such activities as corporate
philanthropy and humanitarianism. Today, promoting human rights is
good business, 43 and corporations are fortunate to be in a unique position to
be able to do so.44 Multinationals in particular, as opposed to business
enterprises in general, have an ability to exercise market power and
influence in host countries through a kind of remote control.45 As many as
35,000 multinationals exist in the world;46 the largest of these control
roughly 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 by
U.N. Doc. A/CONF.48/14/Corr. 1 (1973).
41. Development and International Economic Cooperation: Transnational
Corporations,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 multinational
corporations' human rights responsibilities).
44. See Diane F. Orentlicher & Timothy A. Gelatt, Public Law, Private Actors: The
Impact of Human Rights on Business Investors in China, 14 Nw. J. INT'L L.*& Bus. 66, 6869 (1993) (discussing the companies' abilities to promote human rights in China).
45. See Hans W. Baade, The Legal Effects of Codes of Conductfor MNE's, in LEGAL
PROBLEMS OF CODES OF CONDucT FOR MULTINATIONAL ENTERPRiSEs 4 (Robert Horn ed.
1980).
46. See Cassel, supranote 43, at 1979.
47. See id.
468
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
as much as one-fourth of the U.S. economy,4 and the Internet will cause
that percentage to increase dramatically. 49 As international trade continues
to grow, the real power of multinationals continues to increase, while the
50
real power of some national governments continues to decrease. With
this degree of influence, multinationals have a tremendous opportunity to
improve conditions around the world. The fact remains, however, that a
moral duty cannot be forced upon a corporation.
By contrast, corporations should have a legal duty to respect human
rights. In other words, they should not be permitted to profit from human
rights abuse. Currently, no clear affirmative legal duty exists. While the
Universal Declaration discourages persons from engaging in activities that
violate the human rights of others,51 it lacks the necessary enforcement
mechanisms to effectively impose such a duty. Moreover, the practicality
of using the Universal Declaration by itself to force corporations to respect
human rights is severely limited. If corporations are allowed to enjoy the
benefits of existing as legally recognized "persons" with individual rights
under 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 pervasive
problems of multinationals benefiting from human rights abuse. In 1996,
the United States Senate considered imposing a ban on all investments in
Burma.53 Several American companies, led by the oil company Unocal,
lobbied against such a measure because they feared a ban on American
investments would not improve conditions in Burma.54 Rather, a ban
would merely create an opportunity for foreign rivals to take advantage of
the 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, DocumentAuthentication in Electronic
Commerce: The Misleading Notary Public Analog for the Digital Signature Certification
Authority, 17 . MARsaAJ. I COMPTER & INFo. L. 833, 835 n.9 (1999) (citing Internet
TraJfic Booming, DAILY SouTHTowN, Apr. 4, 1998, at 1 (discussing the growth of Internet
business transactions)).
50. See Cassel, supra note 43, at 1984.
51. See UniversalDeclaration,supranote 30, art. 30.
52. See Margaret M. Blair, A ContractarianDefense of Corporate Philanthropy, 28
STETSON L. REv. 27, 28 (1998). In some countries, like Japan, corporations have major
responsibilities for the protection of economic and social rights. See Jack Donnelly,
Unfinished Business: Failure of Imagination Preserves Inequality and Jeopardizes the
Universality of Human Rights. (The Universal Declarationof Human Rights at Fifty), 31
PS: 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.
2000]
RESPECTING HUMAN RIGHTS
Burma in 1997.56 Since the ban restricts only new investments and
not
7
existing ones, however, it does not affect Unocal's pipeline project.
Human rights abuses do not exist solely in Burma, and Unocal is not
the only corporation ever accused of profiting from such atrocities.5 8
Pharmaceutical company, Bayer A.G., admits to having used slave labor
drafted from World War II concentration camps, while other companies,
including BMW, Volkswagen, and Siemens, have been accused of similar
acts. 59 While many companies, including Levi Strauss & Company, have
ceased all operations in Burma, critics complain that Unocal continues to
profit from SLORC abuse. 60 Unocal disavows all involvement and
responsibility for such abuses. 61 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 38
cents per hour. See Child Labor and the New Global Marketplace: Reaping Profits at the
Expense of Children: Hearing Before the Subcomn. on Labor of the Senate Comm. on
Labor and Human Resources, 103d Cong. 5-7 (1994) (statement of Lesly Margoth
Rodriguez Solorzano, garment worker, San Pedro Sula, Honduras). In India, diamond
trading companies profit as thousands of children as young as six years old work in diamond
mines. See Julie Wolf, Children "Slavefor Gem Trade," GuARD.Nu, Oct. 24, 1997, at 14,
available in 1997 WL 14737032. In Nepal, bonded labor is common, with bonds being
passed 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 WL
5989164. Clothing manufacturer Guess has been connected to sweatshop labor. In 1992
Guess settled a claim with the U.S. Department of Labor for overtime and minimum-wage
violations. See Robin Farmer, Protesters Cite Labor Practices, RICHMoND TINIESDISPATCH, Nov. 10, 1996, at BI, available in 1996 WL 2316167. Many people recall the
sight of sports announcer Frank Gifford handing out envelopes of money to sweatshop
workers who made clothes bearing his wife Kathy Lee's name for Wal-Mart. See Giffords
Hand Out Cash to Sweatshop Workers, REc. N. N.J., May 24, 1996, at A4, available in
1996 WL 6091073. Just a few years ago, a Nigerian minority ethnic group known as the
Ogani allegedly sabotaged equipment belonging to oil company Shell in response to Shell
polluting the Ogani's waters and land, ruining not only their environment but their
livelihoods as well. Shell allegedly responded by calling in a Nigerian military security
force which murdered approximately 2000 people and razed thirty villages. Further, reports
indicate that Shell actively involved itself in the operation by transporting troops in Shell
boats and helicopters and even paying bonuses to troops participating in the massacre. See
Cassel, 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 Pipeline
Charges of Slave Labor in Myanmar Lead to Ballot at Unocal, L.A. TniEs, Apr. 11, 1994,
at D.
470
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, Unocal
spokesman David Garcia stated: "[t]hat is the job of international
companies
diplomacy, of the United Nations and so on. International
' 63
cannot afford to assume that mantle, and we will not.
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 were
echoed in 1970 by Milton Friedman, a Nobel Prize-winning economist at
the University of Chicago. Friedman calls social/corporate responsibility a
"fundamentally subversive doctrine" in a free society. 66 Friedman believes
that protecting human rights is the responsibility of governments, not of
industry. 67 The responsibility of a corporation is to "make as much money6
as possible," and anything less is "pure and unadulterated socialism. 1
"There is one and only one social responsibility of business... to increase
its profits ...without deception or fraud." 69 Despite his stance against
multinational corporations' social responsibility, Friedman qualifies his
to seek profits while conforming "to the
views by calling for businesses
70
basic rules of the society."
While profit and social responsibility are sometimes viewed as
opposite ends of the spectrum, society is slowly demanding greater
62. Gray, supra note 18, at A12.
63. Controversy SurroundsMyanmar Gas Pipeline;French, U.S. Companies Distance
Themselves from Alleged RightsAbuses, BALTiMORE SUN, Dec. 8, 1996, at 27A, availablein
1996 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 ofBusiness, N.Y. THvMs, Sept. 13, 1970, § 6
at 32 [hereinafter Social Responsibility of Business]. Friedman also published a book
reiterating these views. MILTON FRiDMAN, CAPrrAuSM AND FREEDOM (1962). Friedman
once admitted that he would never puichase stock in a company that attempts to stop
pollution out of a sense of social responsibility. See Michael Laurence & Geoffrey Norman
Playboy Izterview: Milton Friedman,PLAYBOY MAG., Feb. 1973, at 51, 59.
67. See Friedman, Social Responsibility of Business, supranote 66.
68. Id.
69. Id.
70. Id.
2000]
RESPECTING HUMAN RIGHTS
responsibility on the part of corporations. Some corporations are taking
notice of the financial gains that may come from environmental and social
responsibility. 7 ' They are finding it more profitable and less problematic to
avoid environmentally or socially irresponsible conduct. 72 Thus, these two
seemingly separate concepts are moving closer together.
Generally, corporations are legally bound only to their corporate
charters, their shareholders, and existing statutes. The American Law
Institute's Principles of Corporate Governance state that a corporation:
1. Is obliged, to the same extent as a natural person, to act within
the boundaries set by law;
2. May take into account ethical considerations that are
reasonably regarded as appropriate to the responsible conduct of
business; and
3. 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 74
particular moral and ethical duties that multinationals must
recognize."
Historically, corporations attempted to distance themselves from
human 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 but
from within a corporation. Moreover, investors, financial institutions, and
mutual funds are demanding more socially conscious business practices. 75
The economic repercussions of severing business ties with countries like
Burma are often negligible. In fact, a termination of these ties may even be
more 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 defending
lawsuits.
73. PRINCnPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMiMENDATIONS §
2.01(b) (Tentative Draft No. 11, 1991) (emphasis added).
74. Frey, supranote 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 Social
Responsibility Shake-Up, N.Y. TviMEs, June 12, 1994, § 3, at 14. For a discussion on ethical
investing, see Elizabeth Glass Geltman & Andrew E. Skroback, Environmental Activism
and the EthicalInvestor,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 most
multinational companies," said one analyst. "On the public-relations front, Pepsi's move is
viewed as smart," said another analyst. "Boycotts work on perception," said public relations
expert Thomas Bell, Jr. "The Pepsi brand has huge value so they've weighed the risk versus
472
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
respects democracy and human rights will provide a more hospitable
climate for American trade and commerce .... Repression fosters
instability in the long run and puts investment at greater risk of
expropriation or loss. ' 77 As multinationals continue conducting business
on a global scale, it becomes increasingly critical that they do so in a
responsible manner.78
In today's marketplace, many consumers shop for products that are
produced in a "socially responsible" manner.79
Problems with
environmental misconduct, sweatshop labor, and other human rights abuses
have been exposed and corporations have felt the strain from negative
consumer backlash.80 For example, many shoppers boycotted particular
brands of tuna trapped in the same nets as those used to kill dolphins,
putting a significant squeeze on sales.81 Similarly, when Shell Oil
announced its plans to dump the Brent Spar oil platform into the sea, a
consumer boycott caused sales to drop as much as fifty percent.8 2 While
Exxon's size helped it survive a consumer boycott, the Valdez oil spill left
some independent dealers suffering.83 Public outcry over human rights
abuses (such as the use of forced, child, or prison labor) is making social
responsibility a growing concern for companies and their bottom linesY4
Negative publicity regarding human rights violations may have a
detrimental effect on relations with employees and impede relations with
governments in foreign states where companies conduct business.85 Media
the reward." Management consultant Bob O'Meara notes: "[t]here's no value-or possibly
even negative value-in being No. I in Burma... I doubt whether Pepsi will be hurt by
leaving." Id.
77. Cassel, supra note 43, at 1978 (citing John J. Keller, Multinational Business and
Human Rights, ASIL PROC. 271, 277 (1994) (quoting Joan Spero, Under Secretary of State
for Economic Affairs)).
78. Corporate responsibility is particularly important where business is conducted
internationally because most human rights abuses occur overseas. Such companies are
faced with more challenging and complex cultural issues than are companies limiting their
operations to a domestic level.
79. See Orentlicher & Gelatt, supra note 44, at 97.
80. See id.
81. See Shannon Brownlee et al.,
A PoliticalCasserole 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,availablein
1993 WL-WSJ 703547.
82. See CompaniesMake the Transitionfrom 3Ds to SD, Eco-Loo WK., Mar. 7, 1997,
availablein 1997 WL 9031234.
83. See Carol Acree, Some Exxon Dealers Taking Beating over Huge Spill, Bus. J.JACKSONVLLE, May 8, 1989, at 1, availablei 1989 WL 2520335.
84. See Orentlicher & Gelatt, supra note 44, at 97; see also Frey, supra note 29, at 15758 (discussing the impact of consumer pressure on exportation of products).
85. See Lance Compa & Tashia Hinchliffe-Darricarrere, Enforcing InternationalLabor
Rights Through Corporate Codes of Conduct, 33 CoLuM. J. TRANSNAT'L L. 663, 674
20001
RESPECTING HUMAN RIGHTS
coverage of environmentally dangerous activities or inhumane labor
conditions often acts as a catalyst for changes in corporate policy.8 6 These
changes are most commonly a response to angry protesters8 7 and negative
reactions from consumers 8 and governmental entities.8 9 Companies that
rely heavily on image and goodwill for marketing success are especially at
risk to such attacks. 9° For example, soft-drink company PepsiCo's
substantial ties to Burma prompted college students to mount a national
boycott against Pepsi and its subsidiaries. 91 'We don't want to do business
with anyone who does business with Burma," declared one student. 92 The
boycott benefited competitor Coca-Cola, which has received praise for
avoiding 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 a
Bangladesh factory; the progam prompted Wal-Mart to alter its policies).
87. Unocal has been the target of countless protests. See Bill Walker, Protesters Chain
Themselves 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 of
shareholders persistently called for changes to Unocal's international conduct code, in
reaction to human rights violations in Burma. See Cathy Taylor, Unocal'sRole in Myanmar
Brings Protest,ORANGE CouNTY REG., June 4, 1996, at Cl, availablein 1996 WL 7031234.
At the same meeting, dozens of protesters gathered outside, carrying signs that read "Stop
the bloody pipeline!"
Protesters Picket Shareholders' Meeting Over Joint Venture,
AssociATED PRESS, June 3, 1996, availablein 1996 WL 4426099. Unocal Chief Executive
Officer Roger Beach has ignored such pleas. He responded to similar protests the preceding
year 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, availablein 1995 WL 5904671.
88. "I don't want your toy," wrote a ten-year-old boy to retailer Wal-Mart. The boy
returned a Power Ranger toy that was made in a Thailand factory, likely by a child laborer
earning just a few dollars in exchange for working a 14-hour day. See Haider Rizui Toying
with 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 have
each 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, availablein 1996 WL 3218006. Such measures include a ban on city contracts with
companies that have employees or investments in Burma and an ordinance that requires city
funds 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 analyst
pointed out that the media "will expose inconsistency and irresponsibility in corporate
behavior, and vigilant consumers will respond." Id. (citing Martha Nichols, Third-World
Families at Work: ChildLabor 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's
Presence in Nation Protested, WASH. POsT, Apr. 4, 1996, at D9, available in 1996 WL
3072438. Students at Stanford petitioned to prevent PepsiCo's then subsidiary, Taco Bell
Corp., 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.
474
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
94
criticism, Pepsi ceased all of its Burmese operations in May of 1997.
Other companies pulling out of Burma include Federated Department
Stores (which owns Macy's), Liz Claiborne, Eddie Bauer, Levi Strauss,
Reebok, and Amoco.95 The actions of these companies represent a growing
trend toward multinationals recognizing their social obligations.
III. RESPECTING HUMAN RIGHTS THROUGH CODES OF CONDUCT
Government and world organizations seeking to address human rights
96
abuse 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"). After
several 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 Distributionand Output in Burma, WALL ST. J.,
Jan. 28, 1997, at B4.
95. See Human Rights: Ethical Shopping, supra note 86, at 58; see also Dubious
Honors:Nike Inc. Joins Nine Other, PORTLAND OREGONIAN, Apr. 10, 1995, at B9, available
in 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 of
conduct for multinational corporations); Mark Schwartz, Heat's on to Get an Effective
Code, GLOBE & MAiL, Nov. 27, 1997, at B2 ("The Canadian Competition Bureau advises
corporations to implement and support a code of conduct.").
97. See generally Draft U.N. Code, supra note 41. For an earlier version of the Draft
U.N. Code, see United Nations Commission on TransnationalCorporations: Report of the
Secretariat on the Outstanding Issues in the Draft Code of Conduct on Transnational
Corporations,23 I.L.M. 602, 626-40 (1984).
98. See Draft U.N. Code, supra note 41, UI]7-20.
2000]
RESPECTING HUMAN RIGHTS
regulating multinationals' activities against standardizing the host
government's behavior toward multinationals.9 9
According to the Draft U.N. Code's preamble, one of its principal
purposes 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 and
fundamental freedoms in the countries in which they operate. In their
social and industrial relations, transnational corporations should/shall not
discriminate on the basis of race, color, sex, language, social, national and
ethnic origin or political or other opinion."' 01 Unfortunately, because the
Draft U.N. Code was never formally adopted by the U.N. General
Assembly, it exists today as little more than a model for other codes.
Also in 1977, the International Labor Organization ([LO)'0 2 adopted
the Tripartite Declaration of Principles Concerning Multinational
Enterprises and Social Policy.'0 3 The ILO intended the Tripartite
Declaration to "encourage the positive contribution which multinational
enterprises can make to economic and social progress ... ."04 The
Tripartite Declaration provides guidance to governments, companies, and
worker 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 enforcing
the Tripartite Declaration is through "discrete persuasion by OECD or ILO
officials" and "public embarrassment through the media."1' 6
In 1998, the ILO recognized the Tripartite Declaration's shortcomings
and introduced a new initiative called the ILO Declaration on Fundamental
Principles and Rights at Work.'0 7 This declaration aims to ensure that
99. See Frey, supra note 29, at 166
INTERNATIONAL BUSINESS 24-26 (1990)).
(citing SIDNEY DELL, THE UNrrED NATIONS &
100. See Draft U.N. Code, supra note 41, preamble. The Draft U.N. Code also
demanded that "[t]ransnational corporations shall refrain, in their transactions, from the
offering, promising or giving of any payment, gift or other advantage to or for the benefit of
a public official as consideration for performing or refraining from the performance of his
duties 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 of
democracy, human rights, job creation, and worker protection. See International Labor
OrganizationHomepage (visited Jan. 19, 1999) <http://www. ilo.org>.
103. See International Labor Organization, Tripartite Declaration of Principles
Concerning Multinational Enterprises and Social Policy (visited Jan. 28, 2000)
<http:l/wxvw.ilo.orglpubic/english/standards/normlsources/mnex.htm>
TripartiteDeclaration].
104. Id. 2.
105. See id.
106. Compa & Hinchliffe-Darricarrere, supra note 85, at 671.
[hereinafter
107. International Labor Organization, Declaration on Fundamental Principles and
476
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
national efforts to foster economic progress go hand in hand with social
progress by calling for:
a. freedom of association and the effective recognition of the
right 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 followup of which only the second and third parts outline substantive
prescriptions. The second part calls for an annual review of countries not
ratifying one or more of the conventions addressing the four areas of fights
mentioned above. 1°9 The third part establishes an annual global review of
one of the four categories of fundamental principles and rights."10 Because
the Declaration on Fundamental Principles is fairly new, its effectiveness
cannot yet be evaluated.
2.
Private Initiatives
Perhaps the most notable private initiative for promoting corporate
responsibility through a code of conduct came from Reverend Leon H.
Sullivan, who served on the General Motors board of directors." 1 After
maling repeated efforts to convince the board to withdraw its operations
from South Africa, he formulated a new plan of action: If General Motors
and other companies would not leave South Africa, they should at least
attempt to improve conditions there by helping to end apartheid.'12 In
1977, he drafted a document aimed at meeting this challenge. 113 Sullivan's
28,
2000)
Rights
at
Work
(visited
Jan.
<http:l/www.ilo.org/public/english/standardslrelmlilclilc86/com-dtxt.htm> [hereinafter
Declarationon FundamentalPrinciples].
108. Id. (12.
109. See id. Annex.
110. See id. Annex.
111. See generally Daniel H. Pink, The Valdez Principles:Is What's Goodfor America
Goodfor GeneralMotors?, 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 in
South Africa, 15 LAW & POL'Y INT'L Bus. 427, 428 (1983) (explaining the backdrop leading
up to the drafting of his principles); Leon H. Sullivan, The Sullivan Principlesand Change
in South Africa, AFR. REP., May-June 1984, at 48 (discussing both the success of the
2000]
RESPECTING HUMAN RIGHTS
original "Statement of Principles" for U.S. companies doing business in
South Africa consisted of six elements:
1. Non-segregation of the races in all eating, comfort and work
facilities.
2. Equal and fair employment practices for all employees.
3. Equal pay for all employees doing equal or comparable work
for the same period of time.
4. Initiation and development of training programs that will
prepare in substantial numbers Blacks, and other non-whites for
supervisory, administrative, clerical and technical jobs.
5. Increasing the number of Blacks and other non-whites in
management and supervisory positions.
6. Improving the quality of employees' lives outside the work
environment in such areas as housing,
transportation, schooling,
4
recreation and health facilities."
Over time the principles evolved and were expanded or amplified." 5 The
principles also included the following system of evaluation:
The Signatory Companies of the Statement of Principles will
proceed immediately to:
Sullivan Principles and the further need for mandatory compliance by all or most
multinationals).
114. Sullivan Principlesfor 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 to
locate in the Urban areas of the nation.
2. Influence other companies in South Africa to follow the standards of
equal rights principles.
3. Support the freedom of mobility of Black workers to seek employment
opportunities wherever they exist, and make possible provisions for
adequate housing for families of employees within the proximity of
workers employment.
4. Support the ending of all apartheid laws.
With all the foregoing in mind, it is the objective of the companies to involve
and assist in the education and training of large and telling numbers of Blacks
and other non-whites as quickly as possible. The ultimate impact of this effort is
intended to be of massive proportion, reaching and helping millions.
Id. at 1498-99.
478
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
1. Report progress on an annual basis to Reverend Sullivan
through the independent administrative unit he has
established.
2. Have all areas specified by Reverend Sullivan audited by
a certified public accounting firm.
3. Inform all employees of the company's annual periodic
report rating and invite their input on ways to improve the
rating.
There will be a continuing review and assessment of these
guidelines in light of changing social circumstances in South
Africa as well as the results of Progress Report
evaluations, and
1
periodic on-site monitoring in South Africa. 16
Auditors reviewed detailed questionnaires prepared by companies and
assigned companies one of four grades. 7 The auditors published the
results, thereby subjecting companies performing poorly to public scrutiny.
In 1977, only twelve companies, including General Motors, adopted
the principles." 8
By 1982, however, nearly 150 companies became
signatories.119 The Sullivan Principles did not put an end to apartheid as
Reverend Sullivan had hoped, but they did make a significant impact.' 20
They made corporations "aware of the injustices in the South African
employment system, by providing a focus for company programs, and by
teaching the companies to have a sense of strength in numbers as they
confronted social issues in South Africa."' 2'
Finally, the Sullivan
Principles provided investors with information they could use in evaluating
companies they considered investing in as well and providing information
22
on which companies were concerned with international human rights.1
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 of
Amnesty 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 gave
companies 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/did
not 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, supranote 75, at 472.
121. Id.
122. See id.
123. The MacBride Principles called for:
1. Increasing the representation of individuals from underrepresented religious
2000)
RESPECTING HUMAN RIGHTS
nondiscrimination standards to combat the political and social strife in
Northern Ireland. 12 4 While the Sullivan Principles sought to alleviate racial
discrimination, the MacBride Principles attempted to ease sectarian
tensions, calling for a ban on all "provocative, sectarian, or political
emblems from the workplace," as well as enforcing security measures to
protect workers from sectarian practices. 25 The MacBride Principles not
only called for the personal safety of employees while at work, but also
while traveling between work and home. 126 Unfortunately, the MacBride
Principles did not duplicate the success of the Sullivan Principles, due in
part 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 the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from underrepresented religious
groups.
5. Layoff, recall and termination procedures should not in practice favor
particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and differential
employment criteria, which discriminate on the basis of religion or ethnic
origin.
7. The development of training programs that will prepare substantial numbers
of current minority employees for skilled jobs, including the expansion of
existing programs and the creation of new programs to train, upgrade and
improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively recruit
minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables to carry
out 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 the
MacBride 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. See
THE MACBRIDE PRINCIPLES, supra note 123, at 61-63.
480
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
success. In 1991, the Coalition for Justice in the Maquiladoras, an alliance
of religious, labor, environmental, and human rights activists from the
United States and Mexico, introduced the Maquiladora Standard of
Conduct.1 Containing twenty-nine principles, the Maquiladora Standard
sought "to promote socially responsible practices that ensure a safe
environment on both sides of the border, safe work conditions... and an
adequate standard of living .... ,12 9 Similarly, a coalition of investors and
environmental organizations known as the Coalition for Environmentally
Responsible Economies proposed the Valdez Principles. 130 The coalition
intended the Valdez Principles to "create a voluntary mechanism of
corporate self-governance that will maintain business practices consistent
with the goals of sustaining our fragile environment for future generations,
' 31
within a culture that respects all life and honors its independence.' 1
Finally, the Slepak Foundation, a Philadelphia-based non-profit
organization, introduced the Slepak Principles.132 The Slepak Principles
128. See Jorge F. Perez-Lopez, Promoting International Respect for Workers Rights
ThroughBusiness 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, Valdez
Principles 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 Soviet
Union.
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
20001
RESPECTING HUMAN RIGHTS
attempted to give guidance to "American companies doing business in the
former Soviet Union.' ' 133 The Slepak Principles' primary purpose was to
"make human rights a priority issue that must be placed at the forefront of
any exchange between the United States and the Soviet Union."'134
However, when the Soviet Union dissolved, support for the Slepak
Principles also eroded, "revealing the ephemeral nature of corporate
codes.' 35
3.
Government Initiatives
In 1991, Congressman John Miller introduced legislation similar to
the Slepak Principles. 36 Inspired by the Sullivan Principles, the Miller
Principles sought to encourage liberalization and political freedom in Tibet
and 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 physical
danger to Soviet workers, neighboring populations, and property.
6. Will refrain from making untied loans to the Soviet government-loans
which may be used to subsidize Soviet non-peaceful activities.
7. Will attempt to engage in joint ventures with private co-operatives rather
than 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, supranote 132.
135. Sacharoff, supranote 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 are
mined, produced, or manufactured, in whole or in part, by convict labor or
forced labor... and refuse to use forced labor in the industrial cooperation
projects.
2. Seek to ensure that political or religious views, sex, ethnic, or national
background, involvement in political activities or nonviolent demonstrations, or
association with suspected or known dissidents will not prohibit hiring, lead to
harassment, demotion, or dismissal, or in any way affect the status or terms of
employment in the industrial cooperation project ....
3. Ensure that methods of production. .. do not pose an unnecessary physical
danger to workers and neighboring populations and property and.., to the
surrounding environment ....
4. Strive to use business enterprises that are not controlled by the People's
Republic of China or its authorized agents and departments as potential
partners ....
482
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
Senator Edward Kennedy and
were never enacted into law.138
Representative Jolene Unsoeld considered sponsoring a new, similar bill,
but decided against
it when President Clinton promised to propose his own
139
conduct.
of
code
In 1994, amid intensifying criticism, President Clinton separated
human rights issues from American trade policy toward China.' 4° As an
alternative to an official U.S. Government policy on human rights, Clinton
promised to devise a human rights code for corporations. 141One year later,
President Clinton unveiled his own set of voluntary ethical standards for
multinationals, known as the "Model Business Principles.' ' 142
The
principles encourage businesses to adopt voluntary codes that, at a
minimum, address:
1. Provision of a safe and healthy workplace;
2. Fair employment practices, including avoidance of child and
forced labor and avoidance of discrimination based on race,
gender, national origin, or religious beliefs; and respect for the
right of association and the right to organize and bargain
collectively;
3. Responsible
practices;
environmental
protection
and environmental
5. Prohibit any military presence on the premises of the industrial cooperation
project.
6. Undertake to promote freedom of association and assembly among the
employees ....
7. Use every possible channel of communication with the Chinese Government
to urge that government to disclose publicly a complete list of all those
individuals arrested since March 1989, to end incommunicado detention and
torture, and to provide international observers access to all places of
detention.., and to trials of prisoners arrested in connection with... prodemocracy events ....
8. Discourage or undertake to prevent compulsory indoctrination programs
from taking place on the premises of the operations of the industrial cooperation
project.
9. Promote freedom of expression, including the freedom to seek, receive, and
impact 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, supranote 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.
20001
RESPECTING HUMAN RIGHTS
4. Compliance with U.S. and local laws promoting good business
practices, including laws prohibiting illicit payments and
ensuring fair competition;
5. Maintenance, through leadership at all levels, of a corporate
culture that respects free expression consistent with legitimate
business concerns, and does not condone political coercion in the
workplace; that encourages good corporate citizenship and makes
a positive contribution to the communities in which the company
operates; and where ethical conduct is recognized, valued and
exemplified by all employees. 43
Both human rights and business leaders have sharply criticized the
Model Business Principles.' 44 Critics complain the proposal is too vague to
have an impact on human rights atrocities in China or that it is merely
duplicative of the existing laws. 45 "We're quite disappointed. This falls
far short of what is needed," says a representative from Human Rights
Watch Asia, echoing the sentiments of spokespeople for Amnesty
International and other human rights groups. 146 Carol Richards, a
spokeswoman for the activist group, Burma Forum, complains "[t]his kind
of code would be useless in Burma."' 47 Perhaps the main problems
associated with the Model Business Principles are the identical flaws in
most other existing corporate codes-lack of mandatory conformity or
enforceability. 14 As one commentator
notes, "[i]t is a toothless, clawless,
49
and, arguably, a comatose tiger."'
The Model Business Principles are intended to be used as a model for
other companies to draft their own codes. 150 Several large corporations
have 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, supranote 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 CorporateConduct, L.A.
Tm ws, Mar. 28, 1995, at Dl; see also Beverley Earle, The United States Foreign Corrupt
PracticesAct and the OECD Anti-Bribey Recommendation: When Moral Suasion Won't
Work, Try the Money Argument, 14 DICK. J. rt'L L. 207, 229 (1996) (discussing
disappointment among human rights groups).
147. Iritani, supra note 146, at DI.
148. See Frey, supranote 29, at 173.
149. Earle, supranote 146, at 229.
150. See Philip M. Berkowitz, Avoiding Perils of Overseas Employment Practices, in
CORPORATE COMPLIANCE: CAR/MARK AND THE GLOBALIZATION OF GOOD CORPORATE
CoNDuCT 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 business
practices and recommending steps for preventing such liability).
151. See Cassel, supra note 43, at 1975.
484
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
the Model Business Principles could certainly be more forceful, they at
least represent a positive step toward encouraging multinationals to
recognize their social responsibilities. 2
B.
Internal Corporate Codes
Some corporations are responding to calls for corporate responsibility
by voluntarily imposing such codes upon themselves. These internal codes
serve several functions, some substantive and some symbolic. For
example, mission statements set forth by coffee seller, Starbucks, address
both general corporate matters153 and environmental concerns. 15 Internal
corporate codes and similar policy statements purport to serve as a "general
moral statement" and may have force, although in other instances they are
criticized as little more than a public relations strategy. 55
56
Some multinationals' codes expressly address human rights issues.
For example, athletic apparel company Reebok's code includes a promise
to withdraw operations from countries violating human rights and actively
encourages human rights protection.157 Many multinationals are adopting
minimum standards regarding employment conditions for their workers.
Other multinationals are refusing to accept business partners unless those
companies adhere to the same principles.' 5' For example, in 1993, retailer
Wal-Mart responded to an embarrassing television expos6 of children
making shirts in a Bangladesh factory 5 9 by adopting a policy requiring
vendors to:
comply with applicable U.S. import laws (including forced labor
products prohibition)... meet conditions of employment that
include appropriate compensation for employees, maintain
reasonable hours, refrain from engaging in forced or prison labor
practices, refrain from using child labor, [and] demonstrate a
commitment 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 Environmental
Mission
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 the
Henhouse?, 24 U. INAM INrM-AM. L. REv. 399, 414-17 (1993) (discussing private codes
of corporate conduct).
156. See Frey, supranote 29, at 179.
157. See id.
158. See id. at 177-78.
159. See Human Rights: EthicalShopping, supra note 86, at 58.
2000]
RESPECTING HUMAN RIGHTS
differences).'6
Similarly, Levi Strauss' code flatly restricts the company from
doing
exist. 161
abuses
rights
human
pervasive
where
countries
in
business
160. Frey, supra note 29, at 177-78, (citing Memorandum from Wal-Mart Stores, Inc.
Regarding Standardsfor Vendor Partners(undated)).
161. Levi Strauss' "Terms of Engagement" require:
1. Ethical Standards: We will seek to identify and utilize business partners who
aspire as individuals and in the conduct of all their businesses to a set of ethical
standards not incompatible with our own.
2. Legal Requirements: We expect our business partners to be law abiding as
individuals and to comply with legal requirements relevant to the conduct of all
their businesses.
3. Environmental Requirements: We will only do business with partners who
share our commitment to the environment and who conduct their business in a
way that is consistent with Levi Strauss & Co.'s Environmental Philosophy and
Guiding Principles.
4. Community Involvement: We will favor business partners who share our
commitment to contribute to improving community conditions.
5. Employment Standards: We will only do business with partners whose
workers are in all cases present voluntarily, not put at risk of physical harm,
fairly compensated, allowed the right of free association and not exploited in
any way. In addition, the following specific guidelines will be followed:
Wages and Benefits: We will only do business with partners who provide wages
and benefits that comply with any applicable law and match the prevailing local
manufacturing or finishing industry practices.
Working Hours: While permitting flexibility in scheduling, we will identify
prevailing local work hours and seek business partners who do not exceed them
except for appropriately compensated overtime .... [W]e will not use
contractors 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 than
14 years of age and not younger than the compulsory age to be in school. We
will not utilize partners who use child labor in any of their facilities.
Prison Labor/Forced Labor. We will not utilize prison or forced labor in
contracting relationships in the manufacture and finishing of our products. We
will not utilize or purchase materials from a business partner utilizing prison or
forced labor.
Health & Safety: We will only utilize business partners who provide workers
with a safe and healthy work environment. Business partners who provide
residential facilities for their workers must provide safe and healthy facilities.
Discrimination: While we recognize and respect cultural differences, we believe
that 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 favor
business partners who share this value.
486
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
Internal codes demonstrate a company's societal views. 162 They are
devices for companies trying to increase public approval for multinational
action. 113 However, the company is likely not seeking approval exclusively
from the general public. Often, implementing a code of conduct may
demonstrate to a host country that the corporation is interested in protecting
that 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.1 6 Codes implemented by upper management
may also keep employees abreast of the company's objectives.
A few corporations have enforced their codes very seriously by
instaling166
installing strict internal
controls to deter illegal or unethical activity.
For
example,
Levi Strauss
throgh
rgula
. created
167 an elaborate system of enforcing its code
through regular monitonng.
Also, toy manufacturer Mattel banned the
use of child labor in its factories and implemented an independent
monitoring system. 168 Some multinationals are appointing "ethics officers"
12.Disciplinary Practices: We will not utilize business partners who use
corporal 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, supranote 155, at 415.
163. See JoHNM. KLNw INTERNATIONAL CODES & MULTINATIONAL BUSINESS 6 (1985).
164. See Baker, supranote 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 of
products for Levi Strauss & Co. must comply with our Terms of Engagement.
These facilities are continuously evaluated to ensure compliance. We work onsite with our contractors to develop strong alliances dedicated to responsible
business practices and continuous improvement.
If Levi Strauss & Co. determines that a business partner is in violation of our
Terms of Engagement, the company may withdraw production from that factory
or require that a contractor implement a corrective action plan within a specified
time 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, ORANGE
COUNTY REG., Nov. 21, 1997, at C03, available il 1997 WL 14885766. Mattel's code
requires that its manufacturing facilities:
1. Set working hours, wages, and overtime pay rates that meet the requirements
of governing laws. Wages must match the minimum legal wage or local
industry standards, whichever is greater.
2. Hire no one under the age of 16 or the local legal age limit, whichever is
higher.
20001
RESPECTING HUMAN RIGHTS
S
169
to serve as their consciences.
Athletic apparel company Nike demands
that 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 any
manufacturer 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 operate
and recognize all employees' rights to choose (or not) to affiliate with legally
sanctioned 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 are
compatible with Mattel's.
8. Only work with those manufacturers and suppliers who comply with all
applicable laws and regulations and share Mattel's commitment to the
environment.
9. Insist that business partners maintain a strict adherence to all local and
international customs laws.
10. Meet or exceed all requirements in the company's "Global Manufacturing
Principles."
Mattel
Global
Manufacturing
Principals
(visited
Oct.
25,
1999)
<http:llwww.mattel.comilcorporate/company/responsibility/gmp.asp? chapter=gmp>. See
also Mattel, Inc. Launches Global Code of Conduct Intended to Improve Workplace,
Workers' Standard of Living, PR NwswIRE, Nov. 20, 1997, at 07:16:00 (describing
background 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 these
partners 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 the
age of 18 to produce footwear... [or] any person below the age of 16 to
produce apparel, accessories or equipment.
3. Compensation: The manufacturer [pays] ... at least the minimum
wage, or the prevailing industry wage, whichever is higher ....
4. Benefits: The manufacturer provides each employee all legally
mandated benefits.
5. Hours of Work/Overtime: The manufacturer complies with legally
mandated work hours; uses overtime only when each employee is fully
compensated according to local law; informs each employee at the time of
hiring if mandatory overtime is a condition of employment; and, on a
regularly scheduled basis, provides one day off in seven, and requires no
more than 60 hours of work per week, or complies with local limits if
they are lower.
488
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
remedy its involvement in past human rights abuses by hiring former
United Nations Ambassador Andrew Young and his company, GoodWorks
International, to investigate Nike's international plants and ensure that its
code of conduct was being followed. 17 ' Nike allowed Young's findings to
be 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 authority
from me to go anywhere, see anything and talk with anybody in
the 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 find
the truth.
73
6. Management of Environment, Safety and Health (MESH): The
manufacturer has written health and safety guidelines, including those
applying to employee residential facilities, where applicable; has a factory
safety committee; complies with Nike's environmental, safety and health
standards; limits organic vapor concentrations ....
7. Documentation and Inspection: The manufacturer maintains on fie all
documentation needed to diemonstrate compliance with this Code of
Conduct [and] agrees to make these documents available for Nike or its
designated 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 Nike
Code of Conduct states in part:
Nike designs, manufactures and markets products for sports and fitness
consumers. At every step in that process, we are driven to achieve not only
what is required, but also what is expected of a leader. We expect our business
partners to do the same. Specifically, Nike seeks partners that share our
commitment 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, the
rights of free association and collective bargaining, and the right to a
work 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 individual
to do the job. There shall be no discrimination based on race, creed,
gender, marital or maternity status, religious or political beliefs, age or
sexual 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.
2000]
C.
RESPECTING HUMAN RIGHTS
Limitations of Codes
The truth is, corporations are no more capable of acting ethically
than they are of acting lovingly. 74
The chief Scriticism
of corporate codes is that they are mere public
•- 175
relations gimmicks.
Some commentators argue Nike's hiring of Andrew
Young was just that.' 76 Nike critics condemned Young's work, calling it
"superficial," because it failed to address key issues such as wages.'77 Nike
also faced criticism after a 1997 internal audit, conducted by accounting
firm Ernst & Young, found that many plants were not complying with
Nike's code. 17 Whereas Nike encouraged Andrew Young to publicize his
findings, the Ernst & Young audit was not made public by Nike but was
instead leaked to the New York Times.179 Critics further called Nike's
credibility into question when a lawsuit arose alleging Nike's advertising
misrepresented employment conditions in its overseas factories. 80 In
addition to being used as public relations gimmicks, codes might also be
used as a tool for corporate managers to protect themselves and their
companies by claiming that the existence of a corporate code demonstrates
their company's good faith or lack of complicity.
Other commentators complain that corporate codes lack
enforceability; even when multinationals adopt a code, they are free to
depart 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-PolishingEffort
May Face Some Tough Obstacles, DENv.PosT, Mar. 31, 1997, at C02.
177. See Jim Lobe, Labor-U.S.:Nike Brought to Court over FalseAds, Inter Press Serv.,
Apr. 21, 1998, available in 1998 WL 5986783. A Chicago newspaper quipped: "Nike
announces 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 distribution
among market actors, motives of government actors, and political stability of host
government); Baker, supra note 155, at 403-05; Robert H. Sutton, Controlling Corruption
Through Collective Means: Advocating the Inter-American Convention Against Corruption,
20 FoRDHA i INT'L L.J. 1427, 1464 (1997) (discussing negative impact of governmental
corruption 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 businesses
and economies).
490
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
an internal remedy for code violations. Although a few companies, such as
toy manufacturer Mattel, have taken steps to ensure enforceability through2
independent monitoring, most multinationals have not taken this step.1
Without enforceability,
compliance with corporate codes cannot be verified
18 3
assured.
or
Another problem with corporate codes is that they lack uniformity and
consistency. For example, Oil Company A might adopt a code prohibiting
business activities in a country such as Burma, while Oil Company B
simply promises to meet the highest ethical standards in all of its business
activities. This situation allows Oil Company B to profit despite Burmese
atrocities, while placing Oil Company A at a competitive disadvantage, and
accomplishing little with respect to furthering human rights.
Adhering to a code may also be confusing to company employees
because a single factory might have more than one code. 18 The apparel
industry has sought to overcome this inconsistency problem by enacting an
industry-wide code.185 While an industry-wide effort is a positive step,
human rights abuse is such a serious problem that an industry-wide solution
is simply insufficient.
Since codes are strictly voluntary, multinationals may simply choose
not to adopt or adhere to such a code. Moreover, many codes act only as
guiding principles rather than as a definitive statement of policy. The result
is a blurred line between acts that employees cannot and should not
commit. 186 Also, codes often do not generally afford injured parties a
remedy. Finally, the costs of developing an internal code may cause
corporations to either adopt those that are not comprehensive, or fail to
adopt one at all.
While corporate codes are not without value, they are sometimes
insufficient to prevent multinationals from profiting from human rights
abuse. In response to the inadequacies of corporate codes, some human
rights abuse victims have sought refuge through the court system.
182. See Paul Knox, CorporationsNot Likely to Have Codes of Conduct, Few Finns
Allow Independent Monitoring, Study by CanadianRights Centre Reveals, GLOBE & MAIL,
May 14, 1997, at A17. Of the 98 Canadian companies surveyed, only 21 had codes of
conduct. Of those 21, only six addressed business dealings with oppressive governments
and 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 (discussing
positive and negative aspects of the industry-wide code).
186. See Seymour J. Rubin, Transnational Corporations and International Codes of
Conduct, 10 AM. U. I. INT'L L. & POL'Y 1275, 1286 (1995).
2000]
IV.
RESPECTING HUMAN RIGHTS
USING EXISTING LAW TO FORCE CORPORATIONS TO RESPECT HUMAN
RIGHTS
Corporations currently do not have a clear legal duty to respect human
rights. Neither existing external nor internal codes are adequate to impose
such a duty. Human rights abuse victims have turned to the courts to
impose such a duty, but have met with little success.
A.
LaborLaws
In the area of labor law, plaintiffs have failed in their attempts to have
American law applied extraterritorially. Courts follow a presumption that
U.S. laws do not apply extraterritorially absent an express intent by
Congress to have them do so. 187 Accordingly, courts have steadfastly
refused jurisdiction of claims under the National Labor Relations Act,'8s the
Labor Management Relations Act,"' and Title VII of the Civil Rights Act
of 1964.'90 Even the Fair Labor Standards Act, which sets labor standards
that directly protect workers' human rights, has been of little help to
workers seeking to apply the statute extraterritorially."9'
B.
Alien Tort ClaimsAct
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 to
apply Title VII of the Civil Rights Act of 1964 extraterritorially, holding that legislation of
Congress, absent a contrary intent, is meant to apply only within the territorial jurisdiction
of the United States); Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949). See also PAUL
B. STEPHAN, IET AL., INTERNATIONAL BusINEss AND EcoNoMIcs: LAW & PoLIcY 243 (2d
ed. 1996) (discussing a "general, and rather strong, presumption that regulatory legislation
not 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.; see
also 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 of
1947 extraterritorially).
190. 42 U.S.C. §§ 2000e-1 to -17 (1994). See, e.g., Arabian Am. Oil Co., 499 U.S. at
250 (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 reluctance
to apply such laws extraterritorially.
191. See 29 U.S.C. §§ 201-219 (1994). See, e.g., Cruzv. Chesapeake Shipping, Inc., 932
F.2d 218 (3d Cir. 1991).
192. Alien Tort Claims Act (ATCA), 28 U.S.C. § 1350 (1994). The Alien Tort Claims
Act reads in relevant part, "Alien's action for tort: The district courts shall have original
492
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
jurisdiction over alien tort claims arising from a "violation of the law of
nations or a treaty of the United States.' 93 The law of nations is a vague
concept 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 otherwise
subjected to cruel, inhuman or degrading punishment; the right not to be a
slave; and the right not to be arbitrarily detained."' 95
Courts are divided as to whether an ATCA claim may be based upon
purely 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 law
of 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 by
judicial decisions recognizing and enforcing that law." United States v. Smith, 18 U.S. (5
Wheat.) 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 claim
because of two defenses.
First, the Foreign Sovereign Immunities Act (FSIA) provides foreign states with
immunity 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 Hess
Shipping Corp., 488 U.S. 428, 443 (1989) (finding that the legislative intent behind the
FSIA was not to contradict the international law of sovereign immunity). One way that
ATCA plaintiffs may overcome this immunity is by showing that the allegations constitute a
commercial activity under FSIA. This is possible where:
1. [T]he action is based upon a commercial activity carried on in the United
States by the foreign state;
2. or upon an act performed in the United States in connection with a
commercial activity of the foreign state elsewhere;
3. or upon an act outside the territory of the United States in connection with a
commercial activity of the foreign state elsewhere and that act causes a direct
effect in the United States.
28 U.S.C. § 1605(a)(2) (1994 & Supp. II 1997). "A 'commercial activity' means either a
regular course of commercial conduct or a particular commercial transaction or act. The
commercial character of an activity shall be determined by reference to the nature of the
course 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 a
foreign state' means commercial activity carried on by such state and having substantial
contact 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 of
State doctrine. This judicially created doctrine restricts federal courts from second-guessing
the validity of a foreign sovereign's actions inside its boundaries, regardless of whether the
alleged 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 by
prohibiting the judiciary, in general, from interfering with the executive's role in foreign and
diplomatic relations. Id. at 423-25.
2000)
RESPECTING HUMAN RIGHTS
Libyan Arab Republic, 97 the D.C. Circuit rejected plaintiffs' claim due to
the lack of subject matter jurisdiction and running of the statute of
limitations.! Courts have looked to § 1983 jurisprudence for guidance in
determining whether state action exists in an ATCA claim.' 99 Courts have
articulated 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 absence
of state action. In Kadic v. Karadzic,2 the Second Circuit held that, due to
the existence of international treaties and law condemning and outlawing
genocide and war crimes, such acts by private actors could be brought
under the ATCA without state action.205 In a recent development, Burmese
torture victims have sued Unocal under the ATCA for its role in human
2'06
rights violations.:
While the ATCA has been successfully used to sue
207
dictators such as Ferdinand Marcos for human rights violations,
the
ATCA has never yet successfully been used against an American company
in 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 of
personal jurisdiction, but not the claim against Unocal).
200. The public function doctrine finds state action where the actor performs what is
traditionally 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 encourages
the conduct. See, e.g., id. at 14-18.
203. The joint action theory satisfies state action where the private actor and state jointly
participated 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 genocide
or 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 of
personal jurisdiction, but not the claim against Unocal).
207. See In re Estate of FerdinandMarcos, Human Rights Litig., 25 F.3d 1467 (9th Cir.
1994).
208. See Gregory J. Wallance, Linked to Slavery Doe v. Unocal Asks WhetherAmerican
Companies Should Be Held Responsible for the Human Rights Abuses of the Foreign
Governments thatAre TheirBusiness Partners,in CORPORATE COMPLIANCE:
THE GLOBALIZATION OF GOOD CORPORATE CONDUCT
Practice Course Handbook Series No. B-1057, 1998).
209. 963 F. Supp. at 880.
CAREMARK AND
1998, at 1207, 1210 (PLI Corp. Law &
494
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
proceed against Unocal for its role in Burmese atrocities. 210 The lawsuit
was brought by citizens of Burma as a class action against Unocal, two of
its top executives, its partner Total S.A., SLORC, and SLORC-run
Myanma Oil and Gas Enterprise.1
The plaintiffs sought injunctive,
declaratory, and compensatory relief for human rights violations arising
from the Yadana pipeline project. 212 According to the plaintiffs, SLORC
soldiers 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 for
pipeline employees, prepare military outposts and carry supplies and
2 13 Reports were
equipment."
made of rape and gang-rape by SLORC
214
soldiers.
Alleging atrocities such as "assault, rape and other torture, forced
labor, and the loss of their homes and property,, 215 the plaintiffs brought
their claim, in part, under the ATCA. 2'16 The district court held that
allegations that Unocal "paid and continue[s] to pay SLORC to provide
labor and security for the pipeline.., accepting the benefit of and
approving the use of forced labor" were sufficient to establish a cause of
action under the ATCA.2 17 The court based ATCA jurisdiction over
Unocal 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 the
first time an American corporation is held liable under the ATCA for
benefiting 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 the
commercial 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 a
norm from which no derogation is permitted and which can be modified only by a
subsequent 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.
2000]
C.
RESPECTING HUMAN RIGHTS
Torture Victims ProtectionAct
In 1992, Congress attempted to expand the ATCA by passing the
Torture Victims Protection Act (TVPA).22 ° The TVPA creates a statutory
cause of action for crimes such as torture or extrajudicial killing committed
under the authority or color of law of any foreign nation.- The TVPA is
broader than the ATCA insofar as it affords Americans as well as aliens the
right 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 Indonesian
citizen brought suit, in part, under the TVPA against American
corporations owning mining operations in Indonesia. 224 Plaintiffs alleged
environmental torts, cultural genocide, torture, and other human rights
abuses. 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 of
law, of any foreign nation1. subjects an individual to torture shall, in a civil action, be liable for
damages to that individual; or
2. subjects an individual to extrajudicial killing shall, in a civil action, be
liable for damages to the individual's legal representative, or to any
person who may be a claimant in an action for wrongful death.
(b) Exhaustion of Remedies.-A court shall decline to hear a claim under this
section if the claimant has not exhausted adequate and available remedies in the
place 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) (codified
as 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 ("The
TVPA... 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 and
summary executions merit special attention in a statute expressly addressed to those
practices.").
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 the
human rights abuses committed:
1. Repeated acts of torture have occurred at Freeport security stations and
Freeport containers, which conduct includes kicking with military boots,
beating with fists, sticks, rifle butts, stones; starvation, standing with heavy
weights on the subject's heads, shackling of thumbs, wrists and legs.
496
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
a corporation is not "an individual" under the TVPA, and therefore not
amenable 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
Unocal also states that its "record on human rights is as good
involved.2
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 mental
stress.
3. Torture victims were forced to stand in Freeport containers in water calf-high
which reeked of human feces.
4. Indigenous people have been detained with their eyes taped shut, thumbs
tied, subject to repeated beatings by Freeport security personnel and third
parties 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. at
382.
19,
1999)
(visited
Jan.
Our
Position
227. Unocal,
<http://www.unocal.com/responsibility/humanrightsihrl.htm>.
228. See Unocal, Human Rights and EconomicManagement
(visited Jan. 19, 1999) <http://www.unocal.com/responsibility/humanrights/hr5.htn>.
229. Karl Schoenberger, Unocal Report on Myanmar Rejected Energy: Shareholders
Defeat Proxy Resolution Calling for Study on Alleged Human Rights Violations Related to
PipelineProject,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 former
President and current Vice Chairman impliedly conceded the existence of a connection
between forced labor and the pipeline project, but attempted to lay blame for such atrocities
on the victims. "If you threaten the pipeline there's going to be more military .... If forced
labor goes hand and glove with the military, yes there will be forced labor. For every threat
to the pipeline, there will be a reaction." R. Strider, Blood in the Pipeline, MULTNATIONAL
MONrrOR, Jan. 1, 1995, at 22.
231. See Doe v. Unocal, 963 F. Supp 880, 885 (C.D. Cal. 1997).
20001
RESPECTING HUMAN RIGHTS
497
conduct.~2
Unocal's "Code of Conduct for Doing Business
Internationally" requires the company to "meet the highest ethical
standards in all of our business activities. ' '233 Unocal's code also provides
that the company "[b]e a good corporate citizen and a good friend of the
people of our host country." 234 Nevertheless, in September 1998 petitioners
asked 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 employees
and respect from the world community.
2. Treat everyone fairly and with respect.
*
Offer equal employment opportunity for all host country nationals
regardless of race, ethnic group or sex.
"
Make sure that a very high percentage of the work force is made up
of nationals.
*
Train and develop national employees so they have fuli access to
opportunities for professional advancement and positions at higher
levels in the organization.
3. Maintain a safe and healthful work place.
*
As employees, value and protect each other's health and safety as
highly as we do our own.
4. Use local goods and services as much as practical, whenever they're
competitive 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 so
that our presence enhances people's lives in long-lasting, meaningful
ways.
6. Protect the environment.
•
Take our environmental responsibilities seriously and abide by all
environmental laws of our host country, as we do in the United
States.
7. Communicate openly and honestly.
*
Maintain our policy of encouraging meaningful dialogue with
concerned shareholders, employees, the media and members of the
public.
8. Be a good corporate citizen and a good friend of the people of our host
country.
Unocal Code
of
Corporate Responsibility
(visited
June
5,
1999)
<http:l/wvw.unocal.comlresponsibility/princip.htm>.
234. Id.
498
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
charter.235 According to the petition's allegations, "Unocal's record...
involve[s] hundreds of incidents and many thousands of victims-18,000
alone in one incident in the San Francisco Bay Area-not to mention the
vast numbers of women, villagers and ethnic minorities suffering severe
human rights harms" in various parts of the world. 3 637Dozens of parties, in
fact, support the petition to revoke on these grounds.
Unocal's code also requires that Unocal "[p]rotect the
environment."'23 A few years ago, however, Unocal pled no-contest to
three criminal misdemeanor counts after leaking a diesel-like thinning
agent at its Guadalupe oil field in San Luis Obispo County2 9 The
company agreed to pay a $1.5 million fine and clean the 200,000 barrels of
toxin that were dumped over the past forty years. 24° In 1997, a federal
judge found that Unocal could be liable for as much as $50 million in
damages after it ignored environmental laws and dumped toxic chemicals
into San Francisco Bay.241
While Unocal strives to "improve the quality of life in the
communities where it do[es] business,'2 2 it currently defends itself against
allegations 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 of
California,see Unocal CorporateCharterRevocation 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; Earth
Island Institute; Michael Feinstein, City Council Member, Santa Monica, California
(individual); Feminist Majority Foundation; Free Burma Coalition; Free Burma- No Petrodollars for SLORC; Global Exchange; Randall Hayes (individual); National Lawyers Guild
of U.S.A.; National Lawyers Guild of Los Angeles, San Diego, Santa Clara Valley and San
Francisco; 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 CorporateResponsibility, 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 gallons
of oil that seeped from oil wells over a 44-year period. Approximately 2300 acres of the
3000-acre site were contaminated. See Tribune News Services, State to Bulldoze OilTainted 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. Judge
Says/Selenium from Rodeo PlantSeeps 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
2000]
RESPECTING HUMAN RIGHTS
the pipeline project alone, a recent Department of Labor report cites
244 to
evidence that is "consistent with and lends substantial credibility"
245
project.
pipeline
Yadana
the
on
labor
slave
of
allegations of the use
Unocal's activities in Burma and elsewhere indicate that
multinationals' actions are not always consistent with the actions mandated
by their codes. The allegations set forth in government reports and lawsuits
such as Doe v. Unocal suggest that corporate codes and existing laws are
simply insufficient to effectively impose a duty upon multinationals to
respect human rights.
VI. IMPOSING AND ENFORCING A LEGAL DUTY TO RESPECT HUMAN
RIGHTS
Corporations like Unocal claim legal rights as 'persons' under the
law, yet if they actually were real persons they'd be 'out.'
Baseball players and convicted individuals in California get only
3 strikes. Unocal, the
246 California oil giant, has many strikes ...
and it's still playing.
Despite the proliferation of corporate codes, some multinationals
continue to profit from human rights abuse. While positive corporate
involvement is important, significant measures should be taken at federal
and state levels to effectively combat this problem. 247
While this Article attempts to illustrate the limitations of codes of
conduct, it does not take the position that codes are completely useless. In
spite of their limitations, codes do serve laudable functions and have
several valuable characteristics. Further, private initiatives are often more
favorable than governmental intervention.
Therefore, multinationals
should adopt codes of conduct given that codes have successfully elevated
or maintained ethical standards in many professions and industries.
The track records of some multinationals, however, indicate that codes
alone are insufficient. Private initiatives must have proper guidance, and
where such guidance is lacking, or where private initiatives fall short,
governmental intervention becomes necessary. Codes must be based upon
a 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, availablein 1998 WL 16615017.
245. See Iritani, supranote 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, supranote 44, at 69.
500
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
glbsst
'248
sals
standards, corporate codes have no such clear legal basis to establish
minimum standards. Legislatively mandating minimum standards would
be a fairly limited type of involvement and would allow multinationals or
industries to adopt their own codes that can improve upon, or "wrap
around," the legislated minimum standard.
A.
A Call to Congress: The ForeignHuman Rights Abuse Act
Doe v. Unoca149 represents a substantial victory for human rights
abuse victims by recognizing a "knew or should have known" theory
against a corporation that "looked the other way" and benefited from
atrocious acts.250 However, some commentators argue that the Unocal
doctrine is too vague and offers little guidance to multinationals wishing to
avoid such a lawsuit.25' In particular, questions remain as to how direct the
benefit may be, the degree of knowledge required, and the types of human
rights abuses included.5 2 Moreover, the final outcome of the case is yet to
be determined, leaving the future in doubt for human rights abuse plaintiffs.
To answer these questions and avoid similar 53ambiguities, the Unocal
doctrine should be formalized by. the legislature.
Congress has the authority to pass legislation making it unlawful to
benefit from human rights abuse. In passing the Foreign Corrupt Practices
Act (FCPA),2 4 Congress set forth ethical standards for American
companies and in doing so relieved the courts of having to "define
prohibited behavior on a case-by-case basis without any statutory
guidelines. ' 255 Congress could similarly set forth human rights standards
by enacting a "Foreign Human Rights Abuse Act" (Act).2 6 To be
248. An example is the National Notary Association's recently completed code. NAT'L
NOTARY Ass'N, THE NOTARY
PUBLIC
CODE OF PROFESSIONAL RESPONSIBILrTY (1998). This
code regulates the ethical conduct of notaries and has a strong foundational basis in both
model 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 notarial
misconduct).
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 important
if it ultimately inspires a Foreign Human Rights Abuse Act." Id. Congress has moved to
protect human rights in some other areas. See, e.g., The United States International
Financial Institutions Act, 22 U.S.C. § 262d(f) (1994) (instructing U.S. Executive Directors
2000]
RESPECTING HUMAN RIGHTS
comprehensive, the Act should make it unlawful for any company or its
agent to induce, authorize, participate, assist, utilize, engage in, or accept
the benefits of human rights abuse. The Act should also adequately define
human 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 Attorney
General set forth guidelines describing specific types of conduct which
would enhance the business community while conforming with the Act,
and set forth general precautionary procedures that may be used to conform
conduct to the Department of Justice's present enforcement policy
regarding the Act. Noncompliance with the Act could include both
significant civil and criminal penalties. Finally, the Act could provide a
cause of action for foreign nationals aggrieved with the conduct of
multinationals.
Federal legislation is necessary to adequately overcome the limitations
of voluntary codes, but legislation alone is not enough. The government
should aggressively punish those corporations that disregard their
obligations.
B.
A Call to States: Corporate CharterRevocation
In addition to federal enforcement of the Act, states should reconsider
multinationals' privilege to do business under the corporate form. There is
a growing movement to revoke the corporate charters of corporations
refusing 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 any
technical assistance to any country" engaging in a pattern of gross violations of
internationally recognized human rights except where such assistance "is directed
specifically to programs which serve the basic human needs of the citizens of such
country"). The International Financial Institutions Act further provides, in part:
The United States Government, in connection with its voice and vote in the
International Bank for Reconstruction and Development, the International
Development Association, the International Finance Corporation, the InterAmerican Development Bank, the African Development Fund, the Asian
Development Bank, the African Development Bank, the European Bank for
Reconstruction and Development, and the International Monetary Fund, shall
advance the cause of human rights, including by seeking to channel assistance
toward countries other than those whose governments engage in... a pattern of
gross violations of internationally recognized human rights, such as torture or
cruel, inhumane, or degrading treatment or punishment, prolonged detention
without charges, or other flagrant denial to life, liberty, and the security of
person.
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 in
Response to Environmental Violations, 13 PAcE ENvTL. L. REv. 219 (1995) [hereinafter
502
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
ability to do business and liquidating its assets may seem radical, such
measures actually are well-founded in American and English law. Both
England and the American colonies granted corporate charters with the
understanding that the special benefits attached to incorporation were
conferred for purposes of serving the public.2-5 Corporate status was
regarded as a grant of privilege from
the state, conditioned upon
performing a valuable public service.259 As Justice Byron R. White
recognized in FirstNationalBank of Boston v. Bellotti, "[c]orporations...260
are created by the [s]tate as a means of furthering the public welfare."
Thus, a corporate charter can be viewed as a social as well as legal
contract, which makes each corporation a trustee of the public good. 261
Accordingly, when a company fails to satisfy its obligations, its privilege to
conduct business should be reconsidered.
In September 1998, dozens of groups petitioned the Attorney General
6- The petition alleged
of California to revoke Unocal's corporate charter.212
ten counts of Unocal atrocities:
1. Ecocide: Environmental Devastation.
2. Unfair and Unethical Treatment of Workers.
3. Complicity in Crimes Against Humanity: Aiding Oppression
of Women.
4. Complicity in Crimes Against Humanity: Aiding Oppression
of Homosexuals.
5. Complicity in Crimes Against Humanity: Enslavement and
Forced Labor.
6. Complicity in Crimes Against Humanity: Forced Relocation of
Burmese Villages and Villagers.
Sleeping Giant] (explaining that the states retain ultimate control over corporations because
of their ability to revoke charters) ; see also Thomas Linzey, Killing Goliath: Defending
Our Sovereignty and EnvironmentalSustainability Through CorporateCharterRevocation
in Pennsylvania and Delaware, 6 DICK J. ENvTL. L. & PoL'Y. 31 (1997) [hereinafter
Killing 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 each
count of the 120 page petition).
2000]
RESPECTING HUMAN RIGHTS
7. Complicity in Crimes Against Humanity: Killings, Torture and
Rape.
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 California
legislature, city council members from several major cities, and the
environmental group Greenpeace.2 4 If Unocal's charter is revoked, it will
not mark the first time a corporation lost its privilege to conduct business as
a result of ignoring public duties.
For example, in Standard Oil of New Jersey v. United States,26' the
Supreme Court upheld the revocation of an oil trust's charter.266 At that
time, American corporations had acquired more capital than any other
country. Justice Harlan juxtaposed the danger of unchecked corporate
activity to slavery:
All who recall the condition of the country in 1890 will
remember that there was everywhere, among the people
generally, a deep feeling of unrest. The nation had been rid of
human slavery-fortunately, as all now feel-but the conviction
was universal that the country was in real danger from another
kind of slavery sought to be fastened on the American people,
namely, the slavery that would result from aggregations of capital
in the hands of a few individuals and corporations controlling, for
their own profit and advantage exclusively, the entire business of
including the production and sale of the necessaries
the country,
26 7
of life.
The Court reasoned that the preservation of freedom depends upon the
existence of a democracy free from economic and political domination by
Some commentators have praised the Court's reasoning,
the elite.
269
corporate power... inherently undemocratic.
"unchecked
deeming
263. How Many Strikes, supra note 246 (recounting the ten allegations of abuse by
Unocal).
264. See Legislators, Greenpeace, and Celebrated Authors Endorse Revocation of
Unocal's Charter (visited Feb. 3, 1999) <http://vww.heed.netupdatel2.html> (discussing
the influential groups that support the revocation of Unocal's charter).
265. 221 U.S. 1 (1911).
266. See id.
concurring in part and dissenting in part).
267. Id. at 83 (Harlan, J.,
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.
504
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
All fifty states and the District of Columbia have statutes providing for
revocation of corporate charters.27 ° Although states once regularly
271
exercised their power to revoke corporate status, they may now be
reluctant to do so because of increasing reliance on the corporate structure
to provide economic income and growth. 272 Further, the trickle of
charitable gifts and community reinvestment combined with enormous
corporate marketing campaigns has created the perception that charter
revocation is unreasonable.273
Multinationals are in a position to have an enormous impact on human
rights and have the option to choose whether to make such an impact
positive or negative. Yet, the act of granting corporate charters has become
a 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); IDAHO
CODE § 490.1430 (1994); ILL. REV. STAT. ch. 805, 20/1 (1994); IND. CODE ANN. § 23 -147-1 (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. CODE
ANN. § 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 -19.1118 (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 CODE
ANN. § 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. CODE
ANN. § 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. Buffalo
Stone & 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 River
Sugar Refining Co., 24 N.E. 834 (N.Y. 1890); People v. Westchester Traction Co., 108
N.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.
2000]
RESPECTING HUMAN RIGHTS
multinationals and states have largely ignored the fact that corporate form
is a privilege and not a right. They forget that "[c]orporations... are
created by the [s]tate as a means of furthering the public welfare" 27 and
that "[t]he [s]tate need not permit its own creation to consume it. ' 276 The
time has come for states to aggressively enforce multinationals' behavior
by revoking their corporate charters. Of course, states should not exercise
this power recklessly or whimsically. However, like physicians, lawyers,
accountants, and other professionals, when multinationals such as Unocal
continuously ignore their legal duties, their privilege to do business should
be questioned.
VII. CONCLUSION
In response to media attention and public outcry over abuses of human
rights, many organizations and companies have drafted or adopted codes of
conduct; however, such codes are voluntary and have minimal enforcement
mechanisms. To date, existing laws have also not effectively imposed or
enforced a duty upon multinationals to respect human rights. For example,
the Clinton administration banned American companies from conducting
new business in Burma, 277 but did not require the cessation of existing
business operations. Also, the ban does not address similar atrocities that
could occur in other countries. Such approaches are not only limited, but
are also reactive rather than proactive because they allow human rights
abuses to continue until Congress or the President takes notice.
Large multinationals may have more economic power than that of
small countries. One-half of the world's largest economies belong not to
nations but to corporations.278 Moreover, seventy percent of global trade is
controlled by only 500 corporations. 2' 9 Their strength can make them
quasi-governmental in nature and as powerful as some nation-states.8 It
would be difficult to imagine a single type of entity that has had a greater
impact on American society and economics than the modem corporation.2 81
At the same time, however, multinationals are sometimes considered the
largest 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.
280.
281.
282.
See id.
See Petition,supra note 235, at 15.
See Killing Goliath, supra note 257, at 32.
See id. (citing ERNEST CALLENBACH ET AL., EcOMANAGEMENT: THE ELMVOOD
GUIDE TO ECOLoGICAL AuDrNG AND SUSTAINABLE BusINEsS (1993)).
506
U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW
[Vol. 2:3
The ability of multinationals to profit from human rights abuses can be
significantly limited by federal initiative and by states revisiting corporate
privileges. Multinationals must be expected to respect human rights, and
government should intervene to demand that they do so. Every year, states
permanently revoke the privilege of hundreds of accountants, doctors,
283
lawyers and others to do business.
There is no reason to treat
corporations differently.
283. See Petition,supra note 235, at 4.