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Corporate Responsibilities of MNCs: Cases of Human Rights Violation

Shagufta Yasmin1 & Mohd Imran2

Key Words: Human Rights, MNCs, Corporate Responsibility, UNGPs

Abstract

Since the dawn of human civilisation the corporate class has been at very influential position
as far as the framing of law and policies of a nation is concerned. On the one hand, with the
advent of industrialisation in Europe the market economy was boosted, on the other hand
several cases of human right violation came into existence. This gave basis to the hypothesis
of the Karl Marx, who divided the society into two classes i.e., bourgeoisie and proletariat,
that the supressed class will revolt against the violation of its right and will take over the
ruling class.

With the passes of time it has been experienced that various multinational corporations, for
example, Hindustan Unilever, Coca Cola, Vedanta etc. have been indulge in human right
violations of the people of one nation or the other. However with the emerging growth of
liberalisation various laws and policies were framed so as to protect the basic human rights of
the people, for example, United Nation Sustainable Development goals, United Nations
Millennium Goals, voluntarily guidelines, 2013(in case of India). Judiciary has also played a
vital role in making MNC’s liable for violating the human rights, for example, in cases of
Rayland v. fletcher, Bhopal gas tragedy case, Narmada Bachao Andolan case etc.

Even after having ample amount of legislation and judicial precedent, the instances of human
right violation seems inevitable. The authors in this academic venture will focus on the
instances of human rights violation by multinational corporations with the recent case studies
and the reasons that why democratic governments are unable to counter effectively these
problems even after being a sovereign state.

1
Assistant Professor, Aligarh Muslim University, Murshidabad Centre (W.B.), Contact: +91-7895175838,
Email: yasminshagufta8@gmail.com
2
Student of B.A.LLB (Hons.) 5th Year, A.M.U MURSHIDBAD CENTRE, Contact No. 9455971918, Email:
imranmohd288@gmail.com
INTRODUCTION

“Too many companies today put resources into social development initiatives that are
worthy on their face, while ignoring serious negative impacts on people in their own
operations and value chains. So they end up giving with one hand while taking away – or
enabling others to do so – with the other. This is not a pathway to sustainable
development.”

John G. Ruggie, former UN Secretary-General’s Special Representative on Business


and Human Rights

The function of international law is to provide a legal basis for the orderly management of
international relations. The traditional nature of that law was keyed to the actualities of past
centuries in which international relations were inter-state relations. The actualities have
changed; the law is changing.3 The Existence of corporations in any given system is a
concomitant of human co-existence. The Corporations came into existence as a tool of
assistance to human beings in their social, economic, and political activities. Through the
passage of time this basic function of corporations got diluted and took a perverted form.
Instead of assisting human existence, it started simultaneously affecting the lives of the
people and human existence in a negative way as well.

The conventional framework for protection of human rights is state-centric; it obligates


primarily states to promote, and not to violate, human rights. However, the advent of national
and transnational private actors, especially multinational corporations (MNCs), in public
services has posed serious challenges to this model.4 A powerful influence on patterns of
world trade and factor movements is the multinational firm.5

3
Philip C. Jessup, The Subjects of a Modern Law of Nations, 45 MICH. L. REV. 383, 384 (1947); see also
Myres S. McDougal & Gertrude C.K. Leighton, The Rights of Man in the World Community:
Constitutional Illusions Versus Rational Action, 59 YALE L.J. 60, 84 (1949).
4
Surya deva, Human Rights Violations by Multinational corporations and International Laws: Where From
Here?, Available At
http://heinonline.org/HOL/LandingPage?handle=hein.journals/conjil19&div=7&id=&page= (Visited on
December 15, 2017)
5
Samia Rekhi, Multinational Corporations (MNCs): Meaning, Origin and Growth, Available At< 921>
http://www.economicsdiscussion.net/multinational-corporations/multinational-corporations-mncs-meaning-
origin-and-growth/20 (Visited on December 15, 2017)
A multinational corporation (or multinational enterprise or transnational corporation) is a
juristic entity that operates for profit or invests in assets that produce wealth in more than one
country. Engagement in investment can either be direct, in the sense that it gives the MNC
both managerial control over and a financial stake in the income-generating assets; or indirect
by way of portfolio which gives the investing enterprise a financial stake in the foreign
venture but no managerial control. The Organisation for Economic Co-operation and
Development (OECD) Guidelines for corporations offer a more detailed definition of MNCs
by referring to the fact that they ‘comprise companies or other entities established in more
than one country and so linked that they may co-ordinate their operations in various ways’.
Peter Muchlinski highlights that the element of control and coordination of corporations in
different countries by another corporation or enterprise is the decisive characteristic of
MNCs.6 A more completed situation arises when shares of any MNC is owned by the
government (For example, at the time of Bhopal Gas Tragedy UCIL was 50.9% owned
by Union Carbide and Carbon Corporation (UCC) and 49.1% by Indian investors including
the Government of India and government-controlled banks)7 of the State or Country in which
human rights have been violated.

The illusionary promise made by MNCs for infrastructural development and urbanisation for
a civilised society is the same as the Egyptian became great for having pyramids made by
slaves and the British became so called civilised after looting the several countries.
Companies operating across borders are often involved in severe abuses, such as forced
labour or forcibly relocating communities from their lands. Unsurprisingly, abuses are
particularly stark in the extractive sector, with companies racing against each other to mine
scarce and valuable resources. Traditional livelihoods are destroyed as land is contaminated
and water supplies polluted such as in Ogoniland, Nigeria. The impact can be particularly
severe for indigenous people because their way of life and their identity is often closely
related to their land. Affected communities are frequently denied access to information about
the impact of company operations. Meaning they are excluded from participating in decisions

6
John Paul Ongeso, An Exploration of Corporate Criminal Liability in International Law for Aiding and
Abetting International Crimes in Africa, Available At<
http://wiredspace.wits.ac.za/xmlui/bitstream/handle/10539/19482/FINAL%20PhD%20Thesis%202015%20John
%20Paul%20Ongeso%202015.pdf?sequence=1&isAllowed=y> (Visited on December 15, 2017)
7
S. Tamer Cayusgil Gary Knight, John R. Riesenberger, Husain G. Rammal Elizabeth L. Rose, International
Business , Pearson Australia, p.141, available at:
https://books.google.co.in/books?id=KcSaBQAAQBAJ&pg=PA141&redir_esc=y#v=onepage&q&f=false
(Visited on December 20, 2017).
that affect their lives. Although it is now widely accepted that corporations have a
responsibility to respect human rights, too many times profits are built on the back of human
rights abuses. Despite laws in many countries that allow companies to be prosecuted,
governments rarely even investigate corporate wrongdoing. When communities’ attempt to
get justice they are thwarted by ineffective legal systems, a lack of access to information,
corruption and powerful state-corporate alliances. Worryingly, when the poor cannot secure
justice, companies learn that they can exploit poverty without consequences.8

LIABILITIES OF MULTINATIONAL CORPORATIONS

The MNCs are legal persons. Legal persons or entities are capable of possessing international
rights and duties; endowed with the capacity to take certain types of actions on the
international plane. It is a trite fact that the international legal and political system is state-
centric. However, this view is quite entrenched and under its extreme version, individuals,
MNCs, intergovernmental organisations and NGOs all interact with the international system.
The shareholders of the corporations are not personally for the act of the corporation. In Fact
the criminal liability arises only in the cases where any officer of the company commits crime
in his individual capacity by abusing his power and position in a corporation. For the proper
discussion of the liabilities of MNCs can be divided into civil liability and Criminal liability.

Civil Liability
MNC’s by virtue of their global purpose structure, organization, technology, finance and
resources have it within their power to make decision and take actions that can result in
industrial disasters of catastrophic proportion and magnitude. This is particularly true with
respect to those activities of the MNC which are ultra-hazardous or inherently dangerous. A
MNC has a primarily, absolute and non-delegable duty to the persons and country in which it
has in any manners caused to be undertaken any ultra-hazardous or inherently dangerous
activity. This includes a duty to provide that all ultra-hazardous or inherently dangerous
activities be conducted with the highest standards of safety and to provide all necessary
information and warnings regarding the activity involved. Under mass torts, a MNC should
be held liable.9

8
Amnesty International, Available At https://www.amnesty.org/en/what-we-do/corporate-accountability/ ,
(Visited on December 16, 2017)
9
Mukesh Chauhan, Mass Tort and MNC’s Liability, Available At:
For example, the defendant Multinational Union carbide breached this primary absolute and
non-delegable duty through its undertaking of an ultra-hazardous and inherently dangerous
activity causing unacceptable risks at its plant in Bhopal, and the resultant escape of lethal
MIC carbide further failed to provide that its Bhopal plant met the highest standards of safety
and failed to inform the Union of India and its people of the dangers therein. Defendant
Union Carbide is primarily and absolutely liable for any and all damages caused or
contributed to be the escape of lethal MIC from its Bhopal plant.

Criminal Liability
Multinational corporations have come to play a huge role in most aspects of human life
today. Their powers have grown at an astonishing rate over the last couple of centuries, so
much so that they are often compared to entire nations. Therefore, imposing some sort of
means of accountability and control over these multinationals and corporations is of
paramount importance and should be extremely high on the list of priorities for every
nation.10
Historically, a corporation could not be criminally liable in national law because the
corporation was a legal fiction with no independent will.11 Prior to the twentieth century, it
was believed that a corporation lacked the mens rea required for the commission of a
criminal act and hence to attain a criminal conviction. The idea that “A corporation has no
soul to damn and no body to kick” was widely prevalent at that time. 12 Corporate criminal
liability in both the common law and in civil law evolved from recognizing individual
criminal liability for wrongful acts of the corporation (first recognizing liability of directors,
then of officers and finally of employees) until finally recognizing the criminal liability of the
corporation itself. This is an example of the contemporary trend toward a convergence of the
common law and civil law.
The evolution, from a principle of "no criminal liability" to a principle where corporations are
capable of committing crimes under international law is revealed in the war crimes trials at
Nuremberg. In the Krupp trial it is clear that the corporation was implicated in the crimes of

http://www.legalserviceindia.com/article/l184-Mass-Torts-&-MNC-Liability.html, (Visited on: 11 december


2017)
10
Akhil Mahesh, Corporate Criminal Liability, Available at: https://www.lawctopus.com/academike/corporate-
criminal-liability/ (Accessed on: )
11
Eric Engel, Extraterritorial Corporate Criminal Liability: A Remedy for Human Rights Violations?, Available
At: http://scholarship.law.stjohns.edu/jcred/vol20/iss2/1 (Visited on: December 16,2017)
12
Akhil Mahesh, Corporate Criminal Liability, available at: https://www.lawctopus.com/academike/corporate-
criminal-liability/ (Visited on: December 20, 2017)
its directors. Because of the Krupp firm's desire to employ compulsory labor the tribunal
imputed criminal intent to the corporation - although the court did not actually declare the
Krupp Corporation a criminal organization.13

INTERNATIONAL INSTRUMENTS

States have duties to respect, protect and promote human rights under international human
rights law. The duty to protect human rights entails an obligation to protect people from
abuse of their rights by other people, including artificial entities like Multinational
Corporations.14 For example, the UN Committee on Economic, Social and Cultural Rights,
stated in its General Comment 14 on the Right to Health,

Violations of the obligation to protect follow from the failure of a state to take all necessary
measure to safeguard persons within their jurisdiction from infringements of the rights to
health by third parties. This category includes such omissions as the failure to regulate the
activities of individuals, groups or corporations so as to prevent them from violating the right
to health of others15….

The Alien Tort Claims Act, 1789

The States to cover extra-territorial actions may extend their jurisdiction based on the
nationality of the actors.16 One of the oft-used pieces of legislation in relation to transnational
human rights abuses is the Alien Tort Claims Act (ATCA) of the United States (US), for one
of the most common reason that TNCs are usually incorporated in US.
An analysis which is of statutory nature always begins with the text of the statute. The ATCA
states that “The district courts shall have original jurisdiction of any civil action by an alien
for a tort only, committed in violation of the law of nations or a treaty in the United States”.
As late as 1975, a federal judge referred to it as an ‘old but little-used section’, a ‘kind of
legal Lohengrin … no one seems to know whence it came’. 17 The ATCA lay dormant for

13
Ibid.
14
Sarah Joseph, Liability of Multinational Corporations, Available At:
http://web.abo.fi/instut/imr/secret/kurser/ESC%202008/9780521860949c29_p613-627.pdf (Visited on: 10
december,2017).
15
Ibid
16
Eric A Engle, Extraterritorial Corporate Criminal Liability: A Remedy For Human Rights Violations, John's
J. Legal Comment. 20 (2005), Available At Http://Scholarship.Law.Stjohns.Edu/Jcred/Vol20/Iss2/1 (Last
Visited On June 5, 2017).
17
Judge Henry Friendly In Iit V. Vencap Ltd., 519f.2d 1001, 1015 (2d Cir. 1975).
nearly two centuries18 until the 1980 decision in Filartiga v. Pena-Irala.19 'The Second
Circuit's landmark interpretation of the ATCA in this case is viewed by many as opening the
doors to ATCA litigation.20 In Kadic v. Karadzic, the Second Circuit considered a suit by
citizens of Bosnia-Herzegovina involving various atrocities. The defendant claimed immunity
from suit as a private actor, arguing that only state actors were subject to suit under the
ATCA. The court disagreed on the argument presented by the defendant and said that certain
forms of conduct violate the law of nations whether undertaken by those acting under the
auspices of a state or only as private individuals.21
The first case in which court invoked ATCA jurisdiction over a corporate defendant was in
Doe v. Unocal Corp.,22 two years after the Kadic decision. In allowing the action to proceed
against Unocal Corporation, the court held that private actors could be held liable under the
ATCA, relying heavily on the Kadic decision.

International Bills of Human Rights

the wording of the International Bill of Human Rights itself addresses “every individual and
every organ of society” as responsible for the observance and fulfilment of the rights
established therein and also stipulates: “nothing in the present Covenant may be interpreted
as implying for any State, group or person any right to engage in any activity or to perform
any act aimed at the destruction of any of the rights or freedoms recognized herein, or at their
limitation to a greater extent than is provided for in the present Covenant” (UDHR, 1948,
Preamble, and ICCPR and ICESCR, 1966, Art. 5.1). The Universal Declaration along with
the two Covenants, contain normative demonstrating that there are international actors
obliged by human rights laws other than the States. Therefore, we need now to examine what
has been determined to be the role, rights and duties of multinational corporations as non-
State actors of the international community.23

International Labour Organisation

18
Adra V. Clift, 195 F. Supp. 857 (D. Md. 1961).
19
Filartiga V. Pena-Irala, 630 F.2d 876, 887 (2d Cir. 1980).
20
Wiwa V. Royal Dutch Petroleum, 226 F.3d 88, 104 (2d Cir. 2000).
21
Kadic V. Karadzic, 70 F.3d 232 (2d Cir. 1995), At 236-237.
22
Doe V. Unocal Corp., 963 F. Supp. 880 (C.D. Cal. 1997), Aff'd In Part And Rev'd In Part, 395 F.3d 932 (9th
Cir. 2002).
23
Multinational Corporations: Human Rights beyond States’ Responsibility, Available At: http://sas-
space.sas.ac.uk/4773/1/1040731.pdf (Visited on December 10, 2017).
The ILO Conventions establish norms covering all aspects of working conditions and
industrial relations. Some of the most important cover core labour standards (that is, basic
human rights in the workplace). 24

The ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social
Policy is a global instrument designed to provide guidelines to governments, employers and
workers in areas of employment, training, conditions of work and industrial relations. All
core labour standards are covered in the Declaration. Although it is a non-binding instrument,
its implementation is nevertheless the object of regular reviews and there is a procedure for
examining disagreements concerning its application by means of an interpretation of its
provisions.25

United Nations Guiding Principles on Business and Human Rights

The UNGPs, endorsed by UN General Assembly in 2011, provide a framework for a global
standard that applies to all states and businesses. The UNGPs recognise the adverse human
rights impacts of business and the role that business should play in taking reasonable steps to
prevent, monitor and mitigate human rights abuses. This is particularly important in a world
where some multinational actors are wealthier and more influential than many states.26

Whilst the UNGPs recognise the primary role of states in “protecting” human rights, they
impose a responsibility on businesses to “respect” human rights across their operations
including their supply chains, through a standard of “human rights due
diligence”. Accordingly, businesses’ duties are not merely to their shareholders but to any
stakeholders whose human rights could foreseeably be adversely impacted by their
operations. The ambit of the UNGPs covers serious fundamental human violations (for
example forced labour and complicity in torture) and also for example to violations arising
from environmental damage in the extractives sector, and working conditions and practices in
supply chains.27

The Sustainable Development Goals (SDGs)

24
Kathryn Gordon, The OECD Guidelines and Other Corporate Responsibility Instruments, Available At:
https://www.oecd.org/corporate/mne/WP-2001_5.pdf (Visited on december 10, 2017)
25
Ibid
26
Nadia Meeran, The UN Guiding Principles on Business and Human Rights, Available At:
https://blog.realinstitutoelcano.org/en/un-guiding-principles-business-and-human-rights/ (Visited on: December
10, 2017)
27
Ibid
The sustainable development goals are, a new, universal set of goals, targets and indicates
that UN member states will be expected to use to frame their agendas and political policies
over the next 15 years. SDGs are universal call to action to end poverty and protect the planet
and ensure that all people enjoy peace and prosperity.

There are 17 SDGs, are, End Poverty, Zero Hunger, Good Health and Well-Being, Quality
Education, Gender Equality, Clean Water and Sanitation, Affordable and Clean Energy,
Decent Work and Economic Growth, Industry, Innovation and Infrastructure, Reduced
Inequalities, Sustainable Cities and Communities, Responsible Consumption and Production,
Climate Change, Life Below Water, Life on Land, Peace, Justice and Strong Institution, and
Partnerships for the Goals.28

The United Nations’ Sustainable Development Goals (SDGs) offer an inspiring and inclusive
vision of the future: a world free from poverty, injustice and discrimination and a healthy
planet for present and future generations. Compared with their predecessors – the Millennium
Development Goals (MDGs) – the SDGs lay out a more comprehensive approach in terms of
their scope and the actors responsible for delivering them. Most strikingly, the SDGs assume
a substantial role for business and its ability to make contributions to their achievement.29

The elevation of business in the context of the SDGs represents both a significant opportunity
and a significant challenge: an opportunity as it brings the benefits of additional finance,
technology, skills and innovation from the business sector; and a challenge in that it bestows
unprecedented power and expectations on business as a development agent purposely seeking
to deliver sustainable development outcomes.30

As the adopters of the SDGs, governments are responsible for taking the lead in collectively
tackling the world’s most pressing sustainable development challenges. At the same time, the
range of possible contributions by business across SDG areas (infrastructure,
telecommunications, health, labour issues, water, education, food sustainability and security,
access to finance, human rights and security) shows that public and private roles and
responsibilities are increasingly becoming intertwined. This allows for significant access and
influence of business over political decisions relevant to the SDGs and creates a renewed

28
Sustainable Development Goals Available at: http://www.undp.org/content/undp/en/home/sustainable-
development-goals.html (Visited on: December 23, 2017)
29
United Nations (2015). Transforming our World: The 2030 Agenda for Sustainable Development. New York.
30
DP Raising the Bar business SDGs, Available at:
https://www.oxfam.org/sites/www.oxfam.org/files/dp-raising-the-bar-business-sdgs-130217-en_0.pdf (Visited
on: December 23, 2017).
need to discuss the challenges and potential ways forward around these new public-private
interfaces. The most basic role that business should play in the context of the SDGs is to not
obstruct the ability of governments to govern.

However, the growing political role and influence of business represents a direct challenge to
the SDGs. Research has shown that corporations – many of them in the resource extraction,
technology, chemical and pharmaceutical, and food and beverages sectors – have been
involved in multiple UN processes related to the post-2015 agenda, creating a significant
channel for influence.31

An example of the changing political role of business relates to SDG 8 (decent work and
economic growth). On 29 June 2015, the Government of Myanmar announced a minimum
wage of 3,600 kyats (about $3) per day, following a year of consultations between unions,
government and employers. There was strong opposition to this, as many businesses felt that
it would undermine their commercial viability. 120 Several Chinese and South Korean
garment manufacturers threatened to close down their factories if the proposed minimum
wage was introduced.121 On 15 July, the Ethical Trading Initiative (ETI), on behalf of its
member companies (including Gap, H&M, Marks & Spencer and Primark) and the Fair
Labour Association (FLA) and 17 of its affiliated companies (including Adidas), sent a letter
to the Myanmar government supporting international calls for the proposed minimum wage
to apply to the garment sector. 122 On 1 September 2015 the minimum wage of Ks 3,600 per
day came into effect. 123 While many factors played a role in the making of this decision,
business support likely contributed to bolstering government confidence.32

In a new SDG era, where business has underwritten the importance of a sustainable future for
people and the planet, the idea that regulation for the public good is anti-business seems
increasingly anachronistic. While the SDGs are not legally binding, governments are
expected to take ownership and establish national frameworks for the achievement of the 17

31
Pingeot, L. (2014). Corporate influence in the Post-2015 process.
https://www.globalpolicy.org/images/pdfs/GPFEurope/Corporate_influence_in_the_Post-2015_process_web.pd
(Visited on: December 20, 2017).
32
DP Raising the Bar business SDGs, Available at:
https://www.oxfam.org/sites/www.oxfam.org/files/dp-raising-the-bar-business-sdgs-130217-en_0.pdf (Visited
on: December 23, 2017).
Goals. Countries have the primary responsibility for follow-up and review of the progress
made in implementing the Goals.’33

Organisation for Economic Co-operation and Development

In the late 1990s, the UN Sub-Commission on Human Rights, comprising experts acting in
their personal capacity, began to draft a treaty-like document called the “Norms on the
Responsibilities of Transnational Corporations and Other Business Enterprises with regard to
Human Rights.”34

The 2011 OECD Guidelines incorporated two central elements from the GPs. First, it added a
dedicated human rights chapter that replicates the GPs formulation of what it means for
business to respect human rights, as well as stipulating the systems that companies need to
put in place in order to meet their responsibility to respect human rights, centered on human
rights due diligence processes. The corporate responsibility to respect human rights
encompasses not only companies’ own activities but also their business relationships.
Second, the “General Policies” chapter of the Guidelines reiterates the GPs’ formulation of
the corporate responsibility to respect human rights, and it establishes a new due diligence
requirement for all subjects covered by the Guidelines, except for the taxation provisions for
which it was not considered appropriate. The OECD’s NCP system thereby has become a
potential venue to which human rights complaints regarding any and all internationally
recognized rights, including workplace standards, can be brought against multinational
enterprises operating in or from the 46 countries that adhere to the Guidelines, including
several from emerging market countries. Thus, de facto the Guidelines now cover the
majority of multinational enterprises and extend the due diligence requirements to their
business relationships, including supply chains.35

CASE STUDIES

There is plethora of cases in which it has been clearly shown the harmful effects of operations
carried on by these Multinational Corporations and how their activities have violated the
human rights and fundamental rights of large number of people. There is no doubt in saying
33
United Nations. Sustainable Development Goals: 17 Goals to Transform Our World.
http://www.un.org/sustainabledevelopment/development-agenda/
34
Human Rights and the OECD Guidelines for Multinational Enterprises: Normative Innovations and
Implementation Challenges Faculty Research Working Paper Series ,John Ruggie & Tamaryn Nelson, Available
at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2601922 (Visited on 19-12-17)
35
Ibid
that these corporations had done more bad than good and still this process is continuing. The
following cases will make clear the plight of the affected community.

Union Carbide Corporation v. Union of India36

The disaster in Bhopal has been not just an environmental tragedy, nor only an environmental
tragedy, but also a human rights disaster.37 The Bhopal gas tragedy is, till date, the world’s
worst industrial disaster. It occurred in December of 1984 at Bhopal in Madhya Pradesh. The
tragedy was a result of the leak of the methyl isocyanate (MIC) gas from the Union Carbide
India Ltd (UCIL) plant which manufactured pesticides.38 On the night of 2–3 December 1984
methyl isocyanate (MIC) spilled out from Union Carbide India Ltd’s (UCIL’s) pesticide
factory. Estimates on death toll vary, a government affidavit in 2006 stated that the leak
caused 558,125 injuries, including 38,478 temporary partial injuries and approximately 3,900
severely and permanently disabling injuries. Others estimate that 8,000 died within two
weeks, and another 8,000 or more have since died from gas-related diseases. The US-based
multinational company, Union Carbide Corporation (UCC), which owned the plant through
its subsidiary UCIL (and now owned by Dow), did little to help deal with the human
tragedy.39 In the February of 1985, the Indian Government filed a case in the U.S Court for a
claim of $3.3 billons against the Union Carbide Corporation. But by 1986 all of these
litigations in the U.S District were transferred to India on the grounds of forum non
conveniens. It means that the case should be transferred to a more convenient forum so that
the trial proceeds smoothly. Meanwhile in March 1985, the Bhopal Gas Leak Disaster
(Processing of Claims) Act was passed which empowered the Central Government to become
the sole representative of all the victims in all kinds of litigations so that interests of the
victims of the disaster are fully protected and the claims for compensation are pursued
speedily. In the year 1987, cases were filed in the Bhopal District Court which ordered the
Union Carbide Corporation to pay 350 crores as interim compensation. But the interim order

36
1990 AIR 273, 1989 SCC (2) 540.
37
Basic Human Rights for Bhopal Survivors, Available At:
https://www.bhopal.net/old_studentsforbhopal_org/Assets/20HumanRights.pdf ( Visited on: December 10,
2017)
38
Deepikanuals, Legal Aspects of Bhopal Gas Tragedy, Available At:
http://www.legalservicesindia.com/article/article/legal-aspects-of-the-bhopal-gas-tragedy-373-1.html (Visited
on: December 10, 2017)
39
India: Survivors & victims of 1984 Bhopal gas tragedy continue to await justice & fair compensation,
Available At: https://business-humanrights.org/en/india-survivors-victims-of-1984-bhopal-gas-tragedy-
continue-to-await-justice-fair-compensation ( Visited on: December 10, 2017)
could not be decreed and therefore the UCC refused to pay the amount. Later on, at the High
Court, this interim compensation amount was reduced to 250 crores. Both the Union of India
and the UCC preferred appeals by special leave against this High Court's order.40

The Bhopal case has come to a disturbing end in an abrupt and unprecedented manner. The
multinational has won and the people of India have lost. It was difficult to understand how a
landmark judgement disposing of the case for compensation was suddenly delierd by the
Supreme Court when ir was only an appeal against the interim order which was being argued
and even this appeal the arguments had not concluded.

It does not appear that court had any material about the money required for the rehabilitation
of the victims. Nor is there anything in the proceedings to show the offers and counter offer
made by the parties. So it’s difficult to see how the court abruptly concluded that $ 470
million was reasonable. Even more intriguingly the counsel of both parties promptly said yes
to the $470 million without even consulting their respecting clients, as if they knew what the
figure was going to be. What has happened is unfortunate and distressing. The Supreme
Court has lost the opportunity of advancing human rights jurisprudence from the third world
viewpoint and failed to meet the expectations of the people of India.41

Perumatty Grama Panchayat v. State Of Kerala42

In 1999, the Hindustan Coca-Cola Beverages Private Limited, a subsidiary of the Atlanta
based Coca-Cola Company, established a plant in Plachimada, in the Palakkad district of
Kerala, southern India.43 The Perumatty Village Council gave a licence to the company to
commence production in 2000. In March 2000, Coca Cola, under its Indian subsidiary
Hindustan Coca Cola Beverages Private Limited (HCCBPL), commenced operations at its
bottling plant at Plachimada, in the southern state of Kerala.44 Coca Cola drew around
510,000 litres of water each day from boreholes and open wells. For every 3.75 litres of water
used by the plant, it produced one litre of product and a large amount of waste water. Over

40
Supra 60
41
PN Bhagvati, Supreme Court Judgment on Bhopal Gas Tragedy, available at:
http://indiatoday.intoday.in/story/supreme-court-judgement-on-bhopal-gas-tragedy/1/323236.html (Visited on:
December 26, 2017)
42
2004 (1) KLT 731
43
The Right To Water and Sanitation, Available At: http://www.righttowater.info/rights-in-practice/legal-
approach-case-studies/case-against-coca-cola-kerala-state-india/ (visited on: December 10, 2017)
44
Mathews Rohan D., The Plachimada Struggle against Coca Cola in Southern India,
https://www.ritimo.org/The-Plachimada-Struggle-against-Coca-Cola-in-Southern-India (Visited on: December
10, 2017)
the next few years, the area surrounding the plant began to feel the plant’s hazardous effects,
as groundwater was contaminated and toxic waste released. On April 22, 2002, the ‘Coca
Cola Virudha Janakeeya Samara Samithy’ (Anti-Coca Cola Peoples’ Struggle Committee -
henceforth Samithy) began its protest against the plant, with over 1500 people, mostly
adivasis, demanding the immediate shutdown of the plant owing to the severe hazard it was
causing to their daily lives. The protest began in the presence of C.K. Janu, known as the
‘black pearl’ of Kerala, who has vigorously struggled throughout her, life for the rights of
adivasis.45

In 2003, the Perumatty panchayat took matters into its own hands by refusing to renew Coca-
Cola's license on account of the exploitation of natural resources that had deleterious effects
on public health, as well as agricultural yield. The company challenged this order in the
Kerala High Court, which directed the litigants to approach the government's Local Self-
Government Department (LSD). The LSD overruled the panchayat's order banning the
license.46 The panchayat again approached the High Court, which observed this time around
that “groundwater was a public property held in trust by a government and that it had no
right to allow a private party to overexploit the resource to the detriment of the people.”
However, the LSD refused to relent from its earlier position on legal grounds. The company
was allowed to continue operation as long as it found alternative sources of water supply.
Things came to a head when the Supreme Court, in 2005, issued a notice to the company
allowing it to draw 5,00,000 litres of groundwater per day.47

In the intervening years, members of the Coca-Cola Virudha Janakeeya Samara Samithy, as
well as the village committee held awareness programmes to draw public attention to their
struggle for corporate accountability. The factory had been in lock-down since 2004, with the
legal stalemate ensuring that future of the company’s operations in Plachimada remained
uncertain. The 12-year-old case finally reached closure after much wrangling, when Coca-
Cola relinquished its license, stating in the SC that it did not intend to resume production
from Plachimada.48

45
The Plachimada Struggle against Cola-Cola in Southern India, Available at: https://www.ritimo.org/The-
Plachimada-Struggle-against-Coca-Cola-in-Southern-India (Visited on: December 15, 2017)
46
Water wars: Plachimada vs Coca-Cola, The Hindu, Available At: http://www.thehindu.com/sci-tech/energy-
and-environment/water-wars-plachimada-vs-coca-cola/article19284658.ece (Visited on: December 10, 2017)
47
Ibid
48
Water wars: Plachimada vs Coca-Cola, The Hindu, Available At: http://www.thehindu.com/sci-tech/energy-
and-environment/water-wars-plachimada-vs-coca-cola/article19284658.ece (Visited on: December 10, 2017)
Orissa Mining Corporation Ltd v. Ministry of Environment & Forest 49

On 19 March 2003 Vedanta Alumina Limited applied for environmental clearance from the
Indian Ministry of Environment and Forests (MoEF) to construct an alumina refinery project
in the eastern Indian state of Orissa. This clearance was granted on 22 September 2004. 50
The project’s opponents alleged it would destroy the Dongria Kondh tribe’s way of life (due
to their spiritual and cultural attachment to the Niyamgiri hills) and that work on the projects
had begun without the requisite clearances. Further, they alleged that many people had been
forcibly removed from their homes, at times violently, and that the mining has already caused
extensive environmental damage and will cause more.51 The Central Empowered Committee
(CEC) The CEC made recommendations to the Supreme Court, on 21 September 2005, for
the revocation of the environmental clearance for the alumina refinery. On 23 November
2007 the Supreme Court of India barred Vedanta and its subsidiary Sterlite from undertaking
the project. (Vedanta had transferred the project to Sterlite.) However, the court invited
Vedanta to resubmit its proposal in line with certain safeguards. The Supreme Court gave the
formal go-ahead to the project on 8 August 2008.52 As an aftermath of the Supreme Court’s
decision to allow the environmental clearances of both the alumina refinery and the mining
plant, the Dongria Kondh rose together to protest this decision. Around 40 tribesmen blocked
a road leading into the hills with tree trunks and held banners that read ‘We are Dongria
Kondh. Vedanta cannot take our mountain.’53 The movement against Vedanta was not only
lead by the local tribes, but it also gained massive support from international communities.
Organizations like Survival International, Amnesty International and Foil Vedanta visited the
protest site in India regularly and also organized mass rallies outside the company’s London
office. For seven years, Survival International organized demonstrations at the Annual
General Meeting of the company in London. The organization also launched an international
campaign, encouraging major shareholders of Vedanta Resources to disinvest in the company
until it removed its operations from Niyamgiri. Witnessing the company’s atrocious treatment
of the Dongria Kondh and its involvement in the blatant violation of human rights, many

49
(Writ Petition (Civil) No. 180 of 2011), (2013) 6 SCC 476
50
Business and Human Rights Resource Centre, Available At: https://business-humanrights.org/en/vedanta-
resources-lawsuit-re-dongria-kondh-in-orissa ( Visited on: December 10, 2017)
51
Ibid
52
Ibid
53
Intercultural Resources, Claiming Niyamgiri: the Dongria Kondh’s Struggle against Vedanta, Available At:
https://www.ritimo.org/Claiming-Niyamgiri-the-Dongria-Kondh-s-Struggle-against-Vedanta ( Visited on:
December 10. 2017)
international investors like the Norwegian Government Pension Fund, Martin Currie, the
Church of England and Marlborough Ethical Fund sold their stocks in the company.54

The Supreme Court's judgment on the Vedanta mining project in Orissa was delivered on
April 18th, 2013. The Court has linked indigenous rights, the constitutional provisions for
protection of STs (Article 244) and religious rights (Articles 25 and 26), and the FRA. It
reads them as all part of one set of protections, which are intended to protect STs and other
forest dwellers. The central role of the gram sabha is reinforced by PESA: "Gram Sabha has a
role to play in safeguarding the customary and religious rights of the STs and other TFDs
under the Forest Rights Act.55

The Supreme Court has strongly endorsed the role of the gram sabhas as democratic decision-
making fora on issues of individual, community and cultural rights of tribal and traditional
forest dwellers. Its recent ruling in the Niyamgiri bauxite mining case has far-reaching impact
because environmental laws such as the Forest (Conservation) Act, the Forest Rights Act and
the Environment (Protection) Act are given scant respect by industrial project proponents
looking for natural resources.56 The Supreme Court order is a good precedent for all projects
that have environmental and social consequences. Development is a natural aspiration, but it
must be genuine and not result in the loss of even the existing quality of life.57

Hindustan Unilever Limited: KodaiKanal Mercury Poison Case

The mercury thermometer factory was set up in Kodaikanal, Tamil Nadu State, in southern
India in 1983. In 1987, Pond’s India came into the Unilever fold through the larger corporate
acquisition of Chesebrough-Pond's. Pond's India, and with it the thermometer factory, merged
with Hindustan Limited 1 in 1998.58

In early 2001, NGOs called upon Unilever, the Anglo-Dutch firm, to account for the mercury
pollution that was detected in the vicinity of one its mercury factories in India. Hindustan

54
Ibid
55
Supreme Court Judgment on Vedanta Case, Available At:
http://fra.org.in/ASP_Court_Cases_UploadedFIle/%7B55233dc5-b38a-4c53-9228-
00a2b8d19034%7D_Briefing_note_on_vedanta_judgment_April_18_2013.pdf ( Visited On: December 10,
2017)
56
The significance of Niyamgiri, Available At: http://www.thehindu.com/opinion/editorial/The-significance-of-
Niyamgiri/article12120104.ece ( Visited on 10 december, 2017)
57
Ibid
58
Update on Former Kodaikanal Factory, Available At: https://www.hul.co.in/about/our-position-
on/kodaikanal-mercury-factory/update-on-former-kodaikanal-factory/ ( Visited on: December 10,2017)
Lever Limited was a subsidiary of Unilever Plc and manufactured mercury thermometers for
export to the US and Europe, among others. Greenpeace had found dumping sites with
mercury-containing wastes both on the factory premises and beyond. Employees were said to
have been exposed to the toxic metal for years. Environmental organizations Greenpeace and
Tamil Nadu Alliance against Mercury (TAAM) insisted that Unilever clean up the sites, close
down the factory and issue an apology.59
The 15-year-old case, in 2001, Hindustan Unilever had to shut down its factory in Kodaikanal
because of a case of mercury poisoning. The extent of environmental abuse was so much that
it can be compared to the Bhopal tragedy and might stand only second to it. Many families
were affected due to the pollution and workers suffered from illness due to exposure to
mercury.60 In February 2006, some of the ex-employees of the Kodaikanal factory
approached the Madras High Court seeking directions for conducting a fresh health survey
and providing economic rehabilitation. This petition was filed more than four years after
HUL had made a full and final settlement in November 2001. The severance package was
significantly higher than the statutory requirement. The workers had been offered alternative
jobs in another unit of the company. However, they opted out of service. The Ministry of
Labour & Employment (the Ministry) is also a respondent in the matter filed by the ex-
workers of the Kodaikanal factory in the Madras High Court. After almost four years of the
earlier report being put on Court record and without any objections to the report, the Ministry
submitted a report at the end of 2011 to the Honourable Madras High Court.61 In 2011
Government of India study on workers' health concluded that many workers suffered from
illnesses caused by workplace exposure to mercury.

HUL filed its objections to the Ministry's report in January 2012. Hearings were held
subsequently with the last one taking place in February 2013. At this last hearing, the
presiding judge excused himself and directed the matter to be listed before the Chief Justice
of the Madras High Court. The matter has not yet been placed before the Chief Justice and as
such it remains sub judice. HUL signed a settlement on humanitarian grounds with former
workers on March 4, 2016. The Hon’ble High Court of Madras took the settlement agreement

59
Casestudy: DOUBLE STANDARDS FOR MERCURY? Greenpeace and Tamilnadu Alliance Against
Mercury (TAAM) versus ,Unilever, Available At: www.ib-sm.org/CaseUnilever.pdf (Visited on: December 10,
2017)
60
Sanjana Agnihotri, Kodaikanal Mercury Contamination: Why Unilever is paying settlement to its 591
workers, Available At: http://indiatoday.intoday.in/story/kodaikanal-mercury-contamination-unilever-pays-
settlement-workers/1/615992.html (Visited on: December 10, 2017)
61
our-position-on kodaikanal-mercury-factory, available at: https://www.hul.co.in/about/our-position-
on/kodaikanal-mercury-factory/update-on-former-kodaikanal-factory/ (Visited on: December 17, 2017)
on record. As part of the agreement, HUL, with an objective to ensure long term wellbeing of
its former workers, has agreed to provide ex gratia payments to 591 former
workers/association members and their families to be used towards livelihood enhancement
projects & skill enhancement programs.62

Hindustan Unilever Limited (HUL) has finally entered into a settlement to provide
“undisclosed” ex-gratia amount to the victims consisting of future health care benefits.63
However, the activists involved said it was a landmark settlement and the amount was a new
record for India. One activist said the amount far exceeds what the victims of the Bhopal gas
tragedy received.64

The Rana Plaza Disaster


On April 24, 2013, a building called Rana Plaza in Dhaka crashed down on thousands of
workers, killing more than 1,100 and injuring more than 2,500 individuals. Unlike any other
building collapse, this received widespread international attention - and continues to do so
because the building housed factories that sewed garments for many European and American
clothing brands. A chunk of blame for the collapse and deaths was placed on retailers and
brands that outsourced their work to Bangladesh and particularly Rana Plaza.65

This collapse was not a result of national calamity or disaster rather a child of neglect,
transgressions of human rights and gross violations of local laws and building codes- all of
which were to occur because the labour was not in the West but in Bangladesh.66 Since the
collapse of Rana Plaza, a number of initiatives have taken place to provide remuneration to
affected workers and their families, improve factory conditions, and make companies more
liable. However, this has yielded a complex network of reactions, groupings, and bindings
that affect the political economy of outsourcing, laws, and institutions. This complexity goes

62
Ibid
63
Suresh kumar, Kodaikanal mercury poisoning: HUL, ex-staff sign settlement, Available At:
http://www.thehindu.com/news/national/tamil-nadu/kodaikanal-mercury-poisoning-hul-former-employees-sign-
settlement/article8331239.ece (Visited on: December 10, 2017)
64
Kodaikanal won! Activists cheer as HUL settles mercury poisoning dispute, Available At:
http://www.hindustantimes.com/business/hindustan-unilever-settles-with-kodaikanal-workers-affected-by-
mercury-factory/story-5YSS6vb8E2DB9mGGVsculO.html (Visited on 10 December, 2017)
65
Sonia Jawaid Shaikh, Complexities of Reputation Management and Policy Making in a Globalized World:
Bangladesh after Rana Plaza, available at:
http://blogs.worldbank.org/publicsphere/files/bangladesh_ranaplaza_final2.pdf (Visited on: 20-12-17)
66
The Case of Rana Plaza: A precedent or the severe reality? , Radostina Velinova, page no. 14, available at:
https://journals.gre.ac.uk/index.php/beagle/article/download/146/162 (Visited on: December 20, 2017)
beyond the influence a nation-state can exert alone as different types of players enter
negotiations with inherently different interests that vary the power dynamics and ultimately
affect policies around the globe. This very complexity also demonstrates how companies
have evolved such that they impact nation-states in multiple ways.67

Bangladesh has a huge garment industry where many retailers from across the globe
outsource the sewing of their materials. Zara, H&M, Mango, Uniqlo, Walmart, JC Penney,
and GAP are just few of the many retailers who employ labor in Bangladesh. Some of these
companies were directly associated with production at Rana Plaza - but many others were
not.

After the Rana Plaza disaster in April 2013, Primark was forced to respond quickly; its
reputation was at stake. The pressure put on the company to prove it is now operating with
due diligence changed the way it carries out its supply chain responsibilities. Ruggie's
framework for human rights in business transactions prescribes that when there is a
wrongdoing detected within suppliers’ facilities; part of the corporate social responsibility of
a company is to determine whether a supplier entity is crucial. If it is not crucial, then the
company might as well use the service of another supplier. If that particular supplier is
crucial, the company should seek to increase leverage, meaning it should seek ways to
influence the supplier to improve the ethicality of their operations. The implication is that it
doesn't matter whether 2% of 50% of production are being supplied by a problematic
supplier; the outsourcing company must find ways to improve the working situation at that
supplier if they cannot find another supplier. No doubt Primark identifies its Bangladeshi
suppliers as a key part of their supply chain, because they are trying to improve working
conditions there.68

If Primark decides to outsource somewhere else, the amount of harm for Bangladesh would
be significant and arguably greater than the good it causes. Those, who are now working in
the factories, would become unemployed and might starve to death, if they would not provide
products for another clothing brand but under the same conditions. Hence, being among
Primark’s main suppliers gives these workers the opportunity to work, provide for their

67
68
Ruggie, J. 2010. Business and Human Rights: Further steps toward the operationalization of the “protect,
respect and remedy” framework. United Nations. http://198.170.85.29/Ruggie-report2010.pdf
families, and develop. In other words, there is no doubt that Primark causes more happiness
than harm for Bangladesh.69

Right after the Rana Plaza disaster they implemented a policy change and are now assessing
the structural integrity of factories. Butler70 comments that Primark was among the first
companies to take the initiative to make Bangladeshi factories more sustainable workplaces.
Perhaps one of the most significant steps that Primark took was to join the Accord on Fire
and Building Safety. It was one of 7 the 100 international retailers, trade unions and NGOs
who signed the agreement to ensure sustainable improvements in Bangladesh.71 Compared to
others linked to the Rana Plaza disaster, Primark was one of the few who did that, together
with H&M and M&S. Others, such as the US chains GAP and Walmart did not join.

CONCLUSION

The role played by the Multinational Corporations and the position they hold in present is
quite clear. Corporate names are competing amongst themselves, which one will be placed
better and higher than the others. This is about the corporate powers like Samsung, Hitachi,
Phillips, etc. if we will look around corporations has become omnipresent, and they are like
God. As per a report published by Oxfam, there are mainly ten MNCs whose products,
directly or indirectly, we consume on daily basis. One cannot thing anything possible without
corporations. Even, some specialised corporations are offering sex tourism. There are
corporations specialising in human trafficking of sex workers. What we eat today is decided
by corporations and we have false sense of choice. Our basic needs, health, foods, how we do
our banking, internet, privacy issues, telecommunication travel, etc. everything is decided by
corporations. More recently, we can see corporations are fighting wars for us (states).states
do not need to fight anymore. It is not only the kind of activities the corporations are doing, it
is also about the powers they have. Some corporations like Walnuts and McDonalds are

69
Butler, S. 2013. Bangladeshi factory deaths spark action among high-street clothing chains. The Guardian.
http://www.theguardian.com/world/2013/jun/23/rana-plaza-factory-disaster-bangladeshprimark
70
Ibid.
71
Bangladesh Accord 2013. Accord on Fire and Building Safety in Bangladesh.
http://www.bangladeshaccord.org/wp-content/uploads/2013/10/the_accord.pdf
hiring millions of workers and they are among the top ten corporations of the world including
the public sector departments. All these show the power of the Corporation they are having
today. Now it is the time to humanise corporations. The thing that drives Corporations is
profit maximisation. It is said that the only social responsibility of Corporation is to maximise
profits of the shareholders. When we talk about profit maximising it result in serious
consequences for society. It leads to environmental pollutions, labour rights abuses, human
rights violations, etc. What is going on can be illustrated by an example as we all are know
that water is a common good, it does not belong to anyone, one can take as much water as
one needs, but what is happening here is corporations are taking water free of charges,
putting it in the bottles and selling it to all of us. These corporations are taking natural
resources that belong to all of us and making private profits out of this. These are serious
human right violation cases.

Corporations as an institution have been created historically as a public institution. States


used to grant to corporations a very specific task to do a public project. Corporations used to
get a license from state to do that particular task. They had to renew the license from time to
time. The situation at present has become very different. They are no longer controlled by
State. Traditionally they were social institution but today they are not.

What is needed today is that the corporation should look to their past otherwise it will harm
both the corporations as well as the society. Every social institutions, corporations being one
among them have some special goals along with that there are collective goals like respect for
human rights, saving the environment, etc. which has to be balanced. Profit maximisation is
fine, one can earn profit, but should be subject to complying with social responsibility of that
particular institutions. It should be in the blood veins of a corporation. Everything a
corporation does should be consistent with collective goals towards the society.