Acting Extraterritorially to Tame Multinational Corporations for Human Rights Violations: Who Should 'Bell the Cat'?

By Deva, Surya | Melbourne Journal of International Law, May 2004 | Go to article overview

Acting Extraterritorially to Tame Multinational Corporations for Human Rights Violations: Who Should 'Bell the Cat'?


Deva, Surya, Melbourne Journal of International Law


[The continued impunity of multinational corporations ('MNCs') for human rights violations is driving the search for an effective as well as efficient regulatory model. Regulation of MNCs by home states through extraterritorial laws is a recent addition to the measures under review in this ongoing search. The presentation of a Bill in the United States House of Representatives on 7 June 2000 marked an attempt to adopt the extraterritorial model of regulation. This was soon followed by the introduction of a similar Bill in the Australian Senate on 6 September 2000. Though the fate of the US Bill remains undecided, in the case of the Australian Bill the Parliamentary Committee found it to be impracticable, unworkable, unnecessary and unwarranted. Within a theoretical framework of integrated legal responsibility, and in the context of multiple regulatory dilemmas, this article seeks to examine the provisions and the omissions of the two Bills. It argues that the legislative failures of the above Bills are instructive in at least three respects. Firstly. that it is legitimate for a state to impose and enforce internationally recognised human rights obligations upon the overseas activities of the corporations incorporated within its territory, as well as the overseas subsidiaries of such corporations, by enacting an extraterritorial law. Secondly, the failure of the Bills to become law should not be interpreted as a failure of the proposed model itself; if resort is to be had to any state-centric model of extraterritorial regulation, it is the 'home state' model of regulation which presents greater potential as compared to the "host state' model. Thirdly, extraterritorial regulation of MNCs, essentially being a variation of the municipal regulatory model, is not self-sufficient due to this model's inherent limitations, and therefore needs to be supplemented by an international regulatory mechanism.]

CONTENTS

I   Introduction: Backdrop of the Two Failed Attempts
II  Dilemma of Regulation: Who Should Regulate What, Where and How?
III Extraterritorial Regulation of MNCs: Two Possibilities and
    Two Attempts
      A Basis of Extraterritorial Regulation of MNCs
      B Home State versus Host State Regulation: A Balance Sheet
IV  Two (Failed) Attempts: Comparing the Provisions and Omissions of
    the US and Australian Bills
      A Targeted Objects
      B Subject Matters Covered
      C Intended Beneficiaries
      D Measures for Reporting, Implementation and Enforcement
      E Omissions
V   Encountering the Apprehensions and Objections Raised by the
    Australian
    Parliamentary Committee
      A Unnecessary and Unwarranted
      B Impracticable
          1 Business Disadvantage
          2 Australian Standards
          3 Discriminatory
      C Unworkable
          1 Unworkably Wide Scope
          2 Vague and Generic Standards
          3 Extraterritoriality and the Fear of Friction or Conflict
          4 Disparaging Foreign States and Laws
          5 Reporting and Enforcement
VI  Will Extraterritorial Regulation Alone Prove to be Adequate?
VII Conclusion: Lessons to be Learned

I INTRODUCTION: BACKDROP OF THE TWO FAILED ATTEMPTS

The debate on human rights is no longer confined to the 'individuals--states' matrix as many new actors, either as duty bearers or rights holders, have emerged, and are emerging, as part of the human rights paradigm. (1) In terms of duty bearers, one such addition is of corporations, though it is also suggested that they should be recognised as holders of human rights as well. (2) It is increasingly argued that corporations, though formed primarily to maximise profit, are under a legal as well as a moral obligation to respect and promote human rights. (3) Given that this argument is not always accepted 'in spirit', nor internalised by all corporations, there is a need to regulate those of their activities that have the potential to impinge upon human rights. …

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