Introduction

The previous chapter looked at the shift away from public and toward privatized international infrastructure projects. Privatized projects are carried out through transnational public-private partnerships (PPPs), involving a mix of public and private actors, domestic, foreign, and international. This chapter turns to the relationship between this shift toward PPPs, on the one hand, and human rights, on the other. Did human rights strategists play a role in driving this shift away from public and toward privatized projects? Are human rights handled differently by PPPs than by public projects? What types of strategies do nongovernmental organizations (NGOs) and community groups pursue to have human rights respected by PPPs? Do transnational corporations (TNCs) and governments respond to human rights advocates with strategies of their own? Do they at times initiate human rights strategies unprovoked?

By way of example, dam projects traditionally have been publicly financed and carried out. However, they are increasingly undertaken as transnational PPPs. With this shift to privatization, human rights express themselves in new and legally innovative ways in the context of specific projects. We see this in the case of the Kotopanjang Dam in the Indonesian provinces of Rau and Western Sumatra. When this dam flooded the Tanjung Pau village, community members did not seek redress from Indonesian public corporations, as might have been done during the heyday of state-financed and carried-out projects. Instead, the human rights strategies pursued reflected a changed landscape.

Introduction

During the life of a major international infrastructure project, large numbers of public and private actors may enter and exit the scene. This poses a challenge for human rights groups. If social change is the goal and the project is sprawling, then who should be targeted? This is further compounded by the shift away from public projects and toward privatized ones. As we saw in Chapter 3, when projects were public, investment in strategies targeting governments and the World Bank paid dividends. However, under the privatization approach, nongovernmental organizations (NGOs) and community groups are still experimenting with targets and strategies. At present, the aim of prominent NGOs is to identify major players with the power to impact on the human rights practices of projects and to convince them to legalize human rights commitments. Furthermore, the aim is to make sure that the major players not only legally commit to sound human rights practices, but also that they translate their public minded pronouncements into practice.

Major campaigns targeting private financiers and constructors of privatized infrastructure projects are underway. One of the most high profile campaigns targets the Camisea natural gas pipeline in Peru. It runs through the land of several indigenous communities in the Amazon rain forest and is the largest natural gas project in South America. NGOs and community groups have mounted campaigns to prevent the project from going forward in its present form. Student protestors, Hollywood actors and actresses, and high-profile musicians have joined them.

Introduction

Infrastructure projects stand on the frontline of U.S. attempts to maintain influence over Iraqi political and commercial affairs. If, as many commentators assert, the war was in part about oil, then it is unsurprising that the postwar reconstruction is also in part about safeguarding oil supplies and laying the infrastructure necessary to bring them to international markets. Controlling the country's strategic assets also involves winning the peace, delivering on wartime promises to the Iraqi public. The United States here is attempting to power the country, supply vital water supplies, build bridges, lay railway and telecommunications lines, and also ensure safe travel. It is doing this through transnational public-private partnerships (PPPs); the financing is public and foreign, whereas the rehabilitation and building of projects is domestic and foreign, public and private. Realizing the importance of infrastructure in postwar plans, insurgents in Iraq have targeted projects, blowing up pipelines, disabling power, and exploding roads.

Are insurgents signaling with attacks that the infrastructure projects are impediments to their own brand of self-determination, an expression of human rights freed from foreign intervention? Or does the application of a human rights framework to understand the insurgent attacks obscure another set of intentions? Instead, do human rights figure into Iraq solely by reference to U.S. attempts to deliver on human rights promises to Iraqis through an international financial aid-based infrastructure program carried out by private companies?

In this chapter we examine what the various compensation systems we have considered cost, and how those costs are paid. The Pearson Commission provided a lot of information about the costs of the tort system in particular. There are two different types of costs, private costs and social costs. The main function of compensation systems is to transfer money from some people to others; the sums so transferred are a (private) cost to those who have to pay them, but they are not a social cost. They do not reduce society's resources as a whole. In economic terms, they are transfer payments. So far as transfer payments are concerned, the questions of interest concern the total value of the payments and the way the burden is distributed. In the context of compensation for personal injuries, social costs are, in essence, the administrative costs of making transfer payments. Administrative costs are social costs because they are the measure of the administrative resources consumed in making the transfer payments. The question of how much ought to be paid out in compensation is answered by reference to the goals of the compensation system in question; but the question of how much ought to be spent in making the compensation payments is purely a matter of efficiency. The lower the administrative costs of a system as a proportion of compensation paid out under the system, the more efficient the system is as a compensation system, whatever its goals.

Foundations of the social security system

Workers' compensation

Although the origins of the modern social security system have been traced to the poor law of the Elizabethan age, it is sufficient for our purposes (since we are concerned primarily with disability) to look no further back than 1897 when the first Workmen's Compensation Act was passed. In the nineteenth century the tort system rarely provided any compensation to the victim of an industrial injury because of the three defences which the courts had evolved for the protection of employers – namely common employment, denying liability for the negligence of a fellow worker; contributory negligence, denying liability where the worker was partly responsible for their own injuries; and volenti non fit injuria (assumption of risk) which (as then interpreted) denied liability for injuries occurring from a known and obvious risk. However, in 1880 Parliament passed the Employers' Liability Act, which restricted the scope of the doctrine of common employment; and in 1891 the House of Lords limited the availability of the defence of volenti. Furthermore, between 1878 and 1901 a stream of new factory legislation emerged dealing with the health and safety of workers, and the common law responded with the creation of the action for breach of statutory duty.

But these developments were dwarfed in significance by the enactment in 1897 of the Workmen's Compensation Act, which broke away entirely from the common law principle that liability must be based on fault, and conferred on a worker (orthe worker's dependants) a right to compensation for any accident ‘arising out of and in the course of employment’.

The concept of over-compensation

The question we must now ask is how the various systems for providing compensation and monetary benefits to disabled people fit together. Where a person is entitled to payments from two different sources (or‘compensation systems’), three principal alternatives present themselves. First, the person may be allowed to receive and keep money from both systems so that in the result they receive more than either system alone allows. This is sometimes called ‘cumulation’. Secondly, the person maybe allowed to receive compensation from one source only, and in this case it will be necessary to decide which that source will be. Thirdly, the person may be entitled to receive a particular amount (perhaps the larger of the two amounts on offer) partly from one source and partly from the other.

Where a person receives money payments from more than one source, they may receive more than is necessary to achieve the purpose that either of the payments is designed to serve. For example, if both payments are designed to replace lost income, a person who receives a payment from both sources may receive more in compensation than has been lost in earnings. Such over-compensation, as we might call it, appears, prima facie, to be a wasteful use of resources. Although there are some circumstances – discussed below – in which over-compensation may appear unobjectionable, it seems a reasonable starting point to assume that money spent on over-compensating people could be better spent on other things.

Types of first-party insurance

Under a ‘third-party’ or ‘liability’ insurance policy one person (the ‘first party’ we might say) is insured by the insurer (the ‘second party’) against the risk of being held legally liable to another (the ‘third party’). Under a ‘first-party’ or ‘loss’ insurance policy the policy holder (the first party) is insured against the risk of suffering loss specified in the policy by causes defined therein. Nearly all accident risks can be covered by first-party insurance of one kind or another. Life insurance, which usually covers death from any cause except (in some cases) sane suicide, is by far the most common form of first-party insurance against risks to the person (i.e. death from personal injury and other causes). In 1996–7, 61% of UK households were paying for some life insurance. A significant proportion of life insurance is mortgage-related – that is, it provides security against the death of the mortgagor. Total UK premium income in 1997 for life insurance was about £28 billion. The popularity of life insurance is partly attributable to the fact that it is used as a form of investment, not merely as a protection against risks; but also partly to the fact that premiums for this type of insurance are low relative to the benefits provided.

So far we have considered the main sources of what might loosely be called ‘compensation’ for personal injury, and physical and mental disability; or, in other words, monetary payments designed to give financial support to the injured and sick on account of their disabilities. There are some other forms of assistance, not in the form of money payments, which also deserve to be considered briefly.

To provide some context for the discussion, we can note a recent estimate that there are 11 million disabled people1 aged 16 or over in Britain. Of these, 45% (compared with 15% of non-disabled people) are over State pension age (SPA). The majority of disabled people over SPA become disabled later in life. Amongst disabled people under 45, around 20% were disabled from birth and another 20% from childhood. Disabled people tend to be less qualified than non-disabled, and are more likely to be in skilled or unskilled, as opposed to professional, jobs. Overall, 44% of disabled people (as opposed to 79% of non-disabled people) are economically active. About a quarter of disabled people surveyed said they could work and expect to do so in the future. Only 13% of disabled working people have special working arrangements because of their disability.

The taxation system

The tax system as a whole is, of course, designed to raise revenue. But, by exempting some people from tax liability to which they would otherwise be liable, financial assistance of a negative sort can be provided to victims of accidents, disease and disability.

Where we are now and how we got here

Serious dissatisfaction with the operation of the tort system, as a mechanism of compensating for personal injury and death, first received widespread expression in the late 1960s. Terence Ison's book, The Forensic Lottery, was published in 1967, followed by D.W. Elliot and H. Street's Road Accidents in 1968, and the first edition of this book in 1970. At about the same time, the famous Thalidomide affair was coming to a head. In the late 1950s and early 1960s, a large number of children around the world were born with disabilities of varying degrees of severity as a result of their mothers'having taken the drug Thalidomide during pregnancy. Tort actions mounted against manufacturers of the drug came to the attention of the public in 1972 when The Sunday Times ran a series of articles in which one of the manufacturers, the Distillers Company, was heavily criticised for the way in which it was defending the actions. As a result, the proprietors of The Sunday Times were prosecuted for contempt of court, and the case eventually found its way to the European Court of Human Rights. By the early 1970s, then, there was a vigorous public debate in the UK about the shortcomings of the tort system as a compensation mechanism. Fuel was added to this debate by the enactment in New Zealand in 1972 of a general accident compensation scheme.

Defendants

In legal theory, the victim of personal injury who wishes to make a tort claim can sue either the person whose negligence actually caused the accident; or, where that person was acting in the course of employment at the time the tort was committed, the victim may sue the employer who is vicariously liable for the employee's tort; or both may be sued. As a matter of law, the tort victim (except in limited circumstances: 9.3) cannot sue the insurance company that has agreed to indemnify the tortfeasor or the employer against the tort liability. The insurer has committed no tort, and the only person with legal rights against the insurer is the insured. But if we look at the matter from a more practical and realistic viewpoint, we can see certain similarities between employers who are vicariously liable and liability insurers. Both may be legally liable for tort damages in the ultimate result; neither of them is (usually) in any way personally to blame for the victim's loss; both of them can act as ‘loss distributors’ in the sense that they can pass the cost of paying damages on to others, namely premium payers (in the case of insurers) and customers, employees and shareholders (in the case of employers). From this perspective, the fact that the employer can be sued by the tort victim while the other cannot is a technicality.