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Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence

Published online by Cambridge University Press:  21 April 2016

Doug CASSEL
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Abstract

This article outlines the case for a business duty of care to exercise human rights due diligence, judicially enforceable in common law countries by tort suits for negligence brought by persons whose potential injuries were reasonably foreseeable. A parent company’s duty of care would extend to the human rights impacts of all entities in the enterprise, including subsidiaries. A company would not be liable for breach of the duty of care if it proves that it reasonably exercised due diligence as set forth in the Guiding Principles on Business and Human Rights. On the other hand, a company’s failure to exercise due diligence would create a rebuttable presumption of causation and hence liability. A company could then avoid liability only by carrying its burden to prove that the risk of the human rights violations was not reasonably foreseeable, or that the damages would have resulted even if the company had exercised due diligence.

Keywords

common lawdue diligenceduty of carenegligencetorts

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Articles
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Business and Human Rights Journal , Volume 1 , Issue 2 , July 2016 , pp. 179 - 202
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Copyright © Cambridge University Press 

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Footnotes

*

Professor of Law and Notre Dame Presidential Fellow at Notre Dame Law School, Indiana, USA. Views expressed are those of the author and not necessarily of any organization with which he is affiliated.

References

1 Human Rights Council, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework’ (Guiding Principles), A/HRC/17/31 (21 March 2011); Organization for Economic Cooperation and Development, ‘OECD Guidelines for Multinational Enterprises’, 2011 edn., http://www.oecd.org/daf/inv/mne/48004323.pdf (accessed 1 February 2016).

2 Guiding Principles, note 1, Principles 11–24; OECD Guidelines, note 1, paras II.2, II.10, and Chapter IV. For a quite similar proposal, see Amnesty International, Injustice Incorporated: Corporate Abuses and the Human Right to Remedy (London: Amnesty International, 2014) 143–9, 202.

3 See Part II.B below.

4 Guiding Principles, note 1, Principles 1 and 25–6.

5 Ibid, Principles 15–22.

6 Liability, for example, may arise for intentional torts or under statutory or treaty bases of liability; enterprise theory; agency theory; or ‘piercing the corporate veil’. See generally Skinner, Gwynne, ‘Rethinking Limited Liability of Parent Corporations for Foreign Subsidiaries’ Violations of International Human Rights Law’ (2016) 72 Washington & Lee Law Review 1769, 1796–1799 Google Scholar (piercing the corporate veil), 1819–25 (enterprise liability) and 1848–61 (proposed statutory remedy).

7 On shifting the burden of proof, see Amnesty International, note 2, 143–4.

8 See Parts III and IV below.

9 Human Rights Council, ‘Mandate of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’, A/HRC/RES/8/7 (18 June 2008).

10 Human Rights Council, ‘Human Rights and Transnational Corporations and Other Business Enterprises’, A/HRC/RES/17/4 (16 June 2011).

11 OECD Guidelines, note 1, paras II.2, II.10, and Chapter IV.

12 When the HRC adopted a resolution endorsing the Guiding Principles in June 2011, common law members of the HRC at that time included Bangladesh, Ghana, Malaysia, Nigeria, Pakistan, Uganda, the United Kingdom and the United States. UN Human Rights Council, Membership of the Human Rights Council 19 June 2010–18 June 2011 by Regional Groups, http://www.ohchr.org/EN/HRBodies/HRC/Pages/Group20102011.aspx (accessed 1 February 2016). Common law members of the OECD include at least Australia, Canada, Ireland, Israel, New Zealand, the United Kingdom and the United States. OECD, ‘Members and Partners’, http://www.oecd.org/about/membersandpartners/ (accessed 1 February 2016).

13 For example, as of early February 2016, national action plans to implement the Guiding Principles have been adopted by ten states (UK, the Netherlands, Italy, Denmark, Spain, Finland, Lithuania, Sweden, Norway and Colombia), and are in development or committed to be done in 18 other states (Argentina, Azerbaijan, Belgium, Chile, Germany, Guatemala, Greece, Ireland, Jordan, Malaysia, Mauritius, Mexico, Mozambique, Myanmar, Portugal, Slovenia, Switzerland and the US). Office of the High Commissioner for Human Rights, ‘State National Action Plans’, http://www.ohchr.org/EN/Issues/Business/Pages/NationalActionPlans.aspx (accessed 1 February 2016).

14 See, e.g., ‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’, A/HRC/29/28 (28 April 2015), paras 7–8 (listing support from, among others, International Organization for Standardization, International Finance Corporation, UN Global Compact, European Union, Council of Europe, Organization of American States and African Union).

15 World Business Council on Social Development, ‘Scaling Up Action on Human Rights: Operationalizing the UN Guiding Principles on Business and Human Rights’ (2014) (reporting on efforts to implement the Guiding Principles by ABB, Anglo American, ArcelorMittal, Coca-Cola, DSM, Eni, Heineken, Hitachi, Holcim, JPMorgan Chase, Michelin, Nestle, Novartis, RWE, Total, Unilever and Vale), http://www.wbcsd.org/Pages/EDocument/EDocumentDetails.aspx?ID=16382&NoSearchContextKey=true (accessed 1 February 2016).

16 See, e.g., International Organization of Employers, International Chamber of Commerce, and Business and Industry Advisory Committee to the OECD, ‘Joint Statement on Business & Human Rights to the United Nations Human Rights Council’ (30 May 2011), http://www.ioe-emp.org/fileadmin/ioe_documents/publications/Policy%20Areas/business_and_human_rights/EN/%282011-05-30%29%20Business%20Statement%20on%20the%20UN%20Guiding%20Principles.pdf (accessed 1 February 2016).

17 See, e.g., Amnesty International, note 2, 144–5; Global Reporting Initiative, ‘Linking G4 and the UN Guiding Principles’, https://www.globalreporting.org/resourcelibrary/GRI-UNGP_LinkageDoc.pdf (accessed 1 February 2016); International Corporate Accountability Roundtable, ‘ICAR Coalition Letter to President Obama on Implementation of the UN Guiding Principles’, http://icar.ngo/analysis/icar-coalition-letter-to-president-obama-on-implementation-of-the-un-guiding-principles/ (accessed 1 February 2016).

18 See Part II.B below.

19 Guiding Principles, note 1, Principles 15(c), 22 and 25–31.

20 See note 52.

21 Gelman v Uruguay, Inter-American Court of Human Rights (judgment of 24 February 2011) para 193.

22 Guiding Principles, note 1, Principle 22.

23 See generally Zerk, Jennifer, ‘Corporate Liability for Gross Human Rights Abuses: Towards a Fairer and More Effective System of Domestic Law Remedies’ (2014), http://www.ohchr.org/Documents/Issues/Business/DomesticLawRemedies/StudyDomesticeLawRemedies.pdf Google Scholar (accessed 1 February 2016); Skinner, Gwynne, McCorquodale, Robert and De Schutter, Olivier, ‘The Third Pillar: Access to Judicial Remedies for Human Rights Violations by Transnational Business’ (2013), http://icar.ngo/wp-content/uploads/2013/02/The-Third-Pillar-Access-to-Judicial-Remedies-for-Human-Rights-Violation-by-Transnational-Business.pdf Google Scholar (accessed 10 February 2016). The Office of the High Commissioner for Human Rights has commenced a large work plan focused on the access to remedy for gross human rights abuses. Office of the High Commissioner for Human Rights, ‘Initiative on Enhancing Accountability and Access to Remedy in Cases of Business Involvement in Human Rights Abuses’, http://www.ohchr.org/EN/Issues/Business/Pages/OHCHRstudyondomesticlawremedies.aspx (accessed 1 February 2016).

24 See note 139.

25 De Schutter, Olivier, ‘Towards a New Treaty on Business and Human Rights’ (2015) 1 Business and Human Rights Journal 41 CrossRefGoogle Scholar, 51–2; Skinner, note 6, 1828.

26 Skinner, ibid, 1823.

27 According to Fortune’s 2015 Global 2000 report, 850 of the world’s 2,000 largest publicly held companies are based in just the top seven common law countries (579 in the US, 94 in the United Kingdom, 56 in India, 52 in Canada, 34 in Australia, 19 in Ireland and 16 in Malaysia). Forbes, ‘The Global 2000’, http://www.forbes.com/sites/liyanchen/2015/05/06/the-worlds-largest-companies/#1a3993354fe5 (accessed 1 February 2016).

28 Ibid.

29 A similar phenomenon occurred in regard to business bribery of foreign government officials. After the US adopted unilateral legislation, businesses successfully lobbied the OECD to adopt an anti-bribery treaty, so as not to leave US companies at a disadvantage compared to European and other competitors. See Abbott, Kenneth, ‘Rule-Making in the WTO: Lessons from the Case of Bribery and Corruption’ (2001) 4 Journal of International Economic Law 275 CrossRefGoogle Scholar, 282–3.

30 See, e.g., De Schutter, note 25, 53; Skinner, Gwynne, ‘Beyond Kiobel: Providing Remedies for Violations of International Human Rights Norms By Transnational Businesses in a New (Post-Kiobel) World’ (2014) 46 Columbia Human Rights Law Review 158 Google Scholar, 261. But see Skinner, note 6, 1829–31.

31 See, e.g., Anns v Merton London Borough Council [1978] AC 728 (UK House of Lords); Kamloops (City of) v Nielson [1984] 2 SCR 2 (Supreme Court of Canada).

32 Ruggie, John, ‘Interim Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’, E/CN.4/2006/97 (2006)Google Scholar, paras 9–30.

33 See, e.g., Donoghue v Stevenson [1932] AC 562 (UK House of Lords).

34 See, e.g., Odhavji Estate v Woodhouse [2003] 3 SCR 263 (Supreme Court of Canada), para 52.

35 UN Special Representative on Business and Human Rights, ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’, A/HRC/8/5 (7 April 2008).

36 Ibid, 4, para 9.

37 Ibid, 5, para 9.

38 Ibid, 4–5, para 9.

39 Ibid, 16–17, para 54.

40 Human Rights Council, ‘Mandate of the SRSG’, note 9, para 1.

41 Guiding Principles, note 1.

42 Human Rights Council, ‘Human Rights and TNCs’, note 10, para 1.

43 Ibid, 9, para 24.

44 Ibid, para 25.

45 Guiding Principles, note 1, Principle 16(a).

46 Ibid, Principles 11–24 and 29.

47 I am indebted to Professor Surya Deva for suggesting this line of argument.

48 OECD Guidelines, note 1, paras II.2, II.10, and Chapter IV.

49 Ibid, Commentary on General Policies, para 9.

50 Guiding Principles, note 1, Commentary on Guiding Principle 19.

51 Ibid.

52 Velásquez Rodríguez v Honduras, Inter-American Court of Human Rights (judgment of 29 July 1988) para 166. To similar effect, see UN Human Rights Committee, ‘General Comment 31: Nature of the General Legal Obligation on States Parties to the Covenant’, CCPR/C/21/Rev.1/Add.13 (2004); and African Commission on Human and Peoples’ Rights, Social and Economic Rights Action Center v Nigeria, Communication No. 155/96 (2001) paras 43–8.

53 Gelman v Uruguay, note 21.

54 Kunsch, Kelly, ‘The Corners of the Common Law: Creating Causes of Action’ (2012) 2, http://works.bepress.com/kelly_kunsch/1/ Google Scholar (accessed 10 February 2016). I am indebted to Ms Kunsch for much of the analysis and citations in this subsection.

55 See, e.g., Brewbaker III, William S, ‘Found Law, Made Law and Creation: Reconsidering Blackstone’s Declaratory Theory’ (2006) XXII Journal of Law and Religion 255 CrossRefGoogle Scholar.

56 Pound, Roscoe, The Spirit of the Common Law (Francestown, New Hampshire: Marshall Jones Co, 1921) 1 Google Scholar.

57 Ibid, 183.

58 Cardozo, Benjamin N, The Nature of the Judicial Process (New Haven: Yale University Press, 1921) 115 Google Scholar.

59 Ibid, 142–3.

60 This is the characterization by Kunsch, note 54.

61 Glendon, Mary Ann, A Nation Under Lawyers: How the Crisis in the Legal Profession is Transforming American Society (New York: Farrar, Straus and Giroux, 1994) 180–181 Google Scholar.

62 Warren, Samuel D and Brandeis, Louis D, ‘The Right to Privacy’ (1890) 4 Harvard Law Review 193 CrossRefGoogle Scholar.

63 Pavesich v New England Life Insurance Company (1905) 50 SE 68, 69 (Georgia).

64 Ibid, 80.

65 See generally Kunsch, note 54.

66 Cardozo, note 58, 24.

67 Michael and Others v The Chief Constable of South Wales Police and Another Respondent [2015] UKSC 2, para 159 (Lord Kerr, dissenting, citing with approval Lord Browne-Wilkinson in Barrett v Enfield London Borough Council [2001] 2 AC 550, 559).

68 Donoghue v Stevenson, note 33, 599 (Lord Atkin).

69 Ibid, 619 (Lord Macmillan).

70 Ibid.

71 Caparo Industries Plc v Dickman [1990] 2 AC 605, 616 (Lord Bridge).

72 Ibid.

73 [1978] AC 728.

74 Ibid, 751–2.

75 Caparo v Dickman, note 71, 617.

76 [1991] 1 AC 398.

77 Ibid, 461.

78 Michael v The Chief Constable, note 67, paras 102 and 103.

79 Odhavji v Woodhouse, note 34, para 46.

80 Ibid, paras 47–50.

81 Ibid, para 51.

82 Rajkot Municipal Corporation v Manjulben Jayantilal Nakum [1997] 9 SCC 552, slip op. 5.

83 Ibid, slip op. 32–3.

84 See Michael v The Chief Constable, note 67, paras 88–94.

85 Cardi, W Jonathan and Green, Michael D, ‘Duty Wars’ (2008) 81 Southern California Law Review 671 Google Scholar, 677.

86 American Law Institute, Restatement of the Law Second, Torts § 302 comment a (1965).

87 Ibid, Chapter 12, scope note to topic 4. Although the point is debatable, the Restatement (Third) may be read to similar effect. Cardi and Green, note 85, 693–4.

88 Cardi and Green, ibid, 671.

89 Ibid, 671–7, 673–8.

90 Biakanja v Irving 320 P 2d 16, 19 (Cal 1958).

91 Rowland v Christian 69 Cal 2d 108, 113 (1968).

92 Parsons v Crown Disposal Co 15 Cal 4th 456, 473–4, 476 (1997).

93 UK Supreme Court, ‘History’, https://www.supremecourt.uk/about/history.html (accessed 1 February 2016).

94 Caparo v Dickman, note 71, 617–18.

95 Michael v The Chief Constable, note 67, para 106 (Lord Toulson, joined by four other Lords).

96 Note 78.

97 Odhavji Estate v Woodhouse, note 34, para 51.

98 Not all the formulations in UK cases are thus neutral. In Barrett v Enfield London Borough Council [2001] 2 AC 550, 559, Lord Browne-Wilkinson opined:

‘In English law the decision as to whether it is fair, just and reasonable to impose a liability in negligence on a particular class of would-be defendants depends on weighing in the balance the total detriment to the public interest in all cases from holding such class liable in negligence as against the total loss to all would-be plaintiffs if they are not to have a cause of action in respect of the loss they have individually suffered.’

99 Donoghue v Stevenson, note 33.

100 Hedley Byrne and Company Ltd v Heller & Partners Ltd (1964) AC 465, 524 (Lord Devlin).

101 The Home Office v The Dorset Yacht Company [1970] UKHL 2, 28 (Lord Diplock).

102 Donoghue v Stevenson, note 33, 582–3.

103 217 NY 382 (1916).

104 Ibid, 385.

105 Michael v The Chief Constable, note 67, para 102.

106 Ibid, para 124 (Lord Toulson).

107 Chief Constable of the Hertfordshire Police v Van Colle [2009] 1 AC 225, para 58 (Lord Bingham).

108 Ibid.

109 Ibid.

110 See, e.g., Chief Constable v Van Colle, note 107; Michael v The Chief Constable, note 67.

111 Chief Constable v Van Colle, note 107, paras 82 (Lord Hope) and 136 (Lord Brown); Michael v The Chief Constable, note 67, paras 127–8 (Lord Toulson).

112 Michael v The Chief Constable, note 67, para 127 (Lord Toulson), citing Lord Brown in Van Colle.

113 Guiding Principles, note 1, Principles 22, 25 and 26.

114 [2012] EWCA Civ 525.

115 Ibid, para 63.

116 Ibid, para 80.

117 District Court of The Hague, C/09/337050/HA ZA 09-1580 (30 January 2013), reversed in part on appeal (18 December 2015), as noted in text below.

118 Ibid, para 3.22.

119 Ibid, para 3.23.

120 Ibid, paras 4.44–4.46.

121 Ibid, para 3.29.

122 Ibid, para 3.33.

123 See Friends of the Earth, ‘Outcome Appeal against Shell: Victory for the Environment and the Nigerian People’ (18 December 2015), http://foecanada.org/en/2015/12/outcome-appeal-against-shell-victory-for-the-environment-and-the-nigerian-people/ (accessed 1 February 2016). Because this judgment is very recent and in the Dutch language, there was not enough time to analyze it for this article.

124 [2013] 2013 ONSC 1414 (Ontario Superior Court).

125 Ibid, paras 32–9.

126 Ibid, para 38.

127 Ibid, paras 56–7.

128 Ibid, para 55.

129 Ibid, para 75.

130 Ibid, paras 60–1.

131 California and other US factors are not addressed here, because it is assumed that they fit within one or the other of the British and Canadian factors.

132 See text at note 94.

133 Donoghue v Stevenson, note 33, 581 (Lord Atkin).

134 Caparo v Dickman, note 71, 660–2 (Lord Jauncey of Tullichettle).

135 Text at notes 9–17.

136 Skinner, note 6, 1828.

137 Ibid, 1829–31.

138 Ibid, 1838–9.

139 See generally Hoffman, Paul and Stephens, Beth, ‘International Human Rights Cases Under State Law and in State Courts’ (2013) 3 University of California Irvine Law Review 9 Google Scholar, 17–20; Skinner, note 29, text at notes 149–413; Alford, Roger P, ‘The Future of Human Rights Litigation After Kiobel’ (2014) 89 Notre Dame Law Review 1749 Google Scholar, 1761–72; Meeran, Richard, ‘Tort Litigation against Multinational Corporations for Violation of Human Rights: An Overview of the Position Outside the United States’ (2011) 3 City University of Hong Kong Law Review 1 Google Scholar; Amnesty International, note 2.

140 See generally Meeran, note 139.

141 Choe v Hudbay, note 124, paras 17 and 72.

142 Blackstone, William, Commentaries on the Laws of England (Oxford: Clarendon Press, 1765) 23 Google Scholar.