Academic journal article American University Law Review

The New Social Contracts in International Supply Chains

Academic journal article American University Law Review

The New Social Contracts in International Supply Chains

Article excerpt

The common law has traditionally eschewed theory and the statement of broad principle, but this does not mean that its instinct for the possible and the practical cannot be justified in terms of principle.1

-Alexander McCall Smith

Introduction

This contribution offers an academic consideration of the Model Contract Clauses (MCCs) published by the ABA Business Law Section Working Group to Draft Human Rights Protections in International Supply Contracts (the "Working Group").2 The Article takes on several different tasks. It explains the impetus, goals, and strategies behind the MCCs and the basic paradigm for which they were designed. It also suggests that international supply chain contracts that attend to the human rights, health, and safety of workers are a new kind of social contract. On a related note, the Article argues that companies bear a moral responsibility to the workers in their supply chains, and that the companies can fulfill that responsibility, in part, through appropriate supply contracts. In short, supply contracts that transform moral duties into legal ones in a globalized, extraterritorial economic world are a new kind of social contract. The legal and policy implications of these arguments are also considered.

This newer social contract provides a necessary supplement to the social contract conceived by the Enlightenment thinkers and their classical predecessors.3 Through the lens of social contract theory, we can see how the privately ordered, contractual structure of a large, complex, and far-reaching supply chain, often involving thousands of people directly or indirectly, takes on the kind of organizational functions of a social contract in order to achieve mutually beneficial cooperative relationships. At the same time, this lens brings into focus some of the moral aspects of contracting, illuminating central and ancient ideas about law and its functions and goals, obligations with their implications and imperfections, and lawyers with their multiple duties and hopes.

Frequently this lawyerly work is technical and obscure, but sometimes, tragically, it blares from the front page. At least since the sweatshop scandals of the 1990s, the problem has flared into Western consciousness every few years, sometimes because of human trafficking, modern slavery, or child labor, and more recently because of catastrophic factory fires and building collapses. Many recall when Tazreen Fashions, a garment factory in Dhaka, Bangladesh, caught fire and killed 112 people, with many more seriously injured. The factory had employed about 1500 workers and produced clothes for retailers such as Walmart and Sears. The building had been found in violation of safety standards, including fire exits.4 A few months later, another Dhaka factory collapsed, resulting in the deaths of 1129 people. The collapse occurred just one day after inspection teams had discovered structural flaws in the building. Some businesses in the building had closed because of the unsafe conditions, but others ordered their employees to work, where they were crushed to death.5 There have been many other disasters, not only in Bangladesh, killing and maiming workers.6 There will be more.

This project is motivated by two crucial ideas: horrifying things happen in international supply chains too often, and lawyers want-and are able-to help. Business lawyers, because they are close to the companies and contracts that animate the supply chain, are uniquely positioned to achieve progress.7 The MCCs are designed to help lawyers in this work- the technical aspects of which are unusually difficult-and to provide a clear value proposition to companies to persuade them to adopt ameliorative policies. The goal is to implement policies that are legally effective and operationally likely to protect the human rights of workers.

The MCCs are simultaneously ambitious and modest. Their ambition is to have a real effect for real people. …

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