Tuesday, July 27, 2010

The 18th International Congress of Comparative Law--Workshop on Private Law Theory

This week individuals from all over the world participated in the 18th International Congress of Comparative Law. The program agenda is rich and varied. Equally interesting are the general and national reports produced for the Congress. These reports are available for download and are worth reading.  Of particular interest to some may be the general reports on international law in domestic legal systems, complexity of transnational sources, corporate governance, and  Religion and the Secular State - Interim Reports.pdf.

National reports mirror the major areas covered in the general reports, including complexity of transnational sources, the role and practice of legal education, consumer protection, recent private international law codifications,  corporate governance, age discrimination, protection of foreign investment, internet crimes and corporate criminal liability. The reports considering national approaches to the question of whether human rights are universal and binding are worth considering.  They include the following reports:
 A very exciting portion of the Congress was the Workshop on Private Law Theory, organized by Ralf Michaels and Fernanda Nicola, which took place Wednesday July 28, 2010, The Workshop Program follows:
XVIIIth International Congress of Comparative Law
Private Law Theory - A Workshop

Wednesday, July 28, 2010
9:00 am – 5:00 pm
American University Washington College of Law,
4801 Massachusetts Avenue, NW, Washington, DC 20016, Room 603

The current crisis of public law, and of the state, has reinvigorated interest in private law and its theory. Scholars from all over the world are invited to share their views and perspectives, so debates that have often been national or regional can be linked and a global perspective may be possible. We would like to thank participants to provide us with “scraps” to facilitate our conversations. Most of the participants will have a chance to briefly present their ideas in one of the various panels. Participation in the workshop is CLOSED and please note that you can participate in this event ONLY if you have been included in the program or received permission by the organizers. We envisage a maximum of 50 participants selected on the basis of the work submitted. The meeting will include breakfast, lunch and a small closing reception, please check the program online. For any other detail please contact Cleo Magwaro. . . . Organizers: Ralf Michaels, Duke University School of Law/ University of Pennsylvania, USA . . . ; and Fernanda Nicola, American University Washington College of Law, Washington D.C. . . .

8:30-9:00 am Registration and Continental Breakfast
9:00 am Opening Remarks
     Ralf Michaels (Duke University School of Law/ University of Pennsylvania, USA)
     Fernanda Nicola (American University Washington College of Law, USA)

9:10-10:20 am “Can there be private law?”
The realist and post-realist critique suggests that the idea of private law is incoherent. What then could still qualify as private law, as opposed to public law on the one hand, mere custom on the other?
     Aditi Bagchi (University of Pennsylvania Law School, USA)
     Bénédicte Fauvarque-Cosson (University Panthéon-Assas, Paris II, France)
     Bianca Gardella Tedeschi (University of Piemonte Oriental, Italy)
     Sylvia Kang’ara (University of Washington, Seattle, USA)
     Souichirou Kozuka (Gakushuin University, Japan)
     Luke Nottage (Sydney University, Australia)
     Chair: Dan Wielsch (University of Cologne, Germany)

10:20-11:30 am, “Private Law Reasoning”
Is there something specific about private law reasoning? And what is it? What are challenges for private law reasoning today?
     Jorge Esquirol (Florida International University College of Law, USA)
     Patricia Kameri Mbote (University of Nairobi, Kenya)
     Peter Oh (University of Pittsburg, School of Law)
     Sjef van Erp (Maastricht University, Netherlands)
     Richard Wright (Illinois Institute of Technology Chicago-Kent College of Law, USA)
     Chair: Daniela Caruso (Boston University Law School, USA)

11:30-11:50 Coffee Break

11:50-1:00 “Private Lawmaking”
Can private actors make law? What role do the rules play that they create? How do they relate to the official law of the state?
     Richard Buxbaum (UC Berkeley School of Law, USA)
     Amy Cohen (Ohio State University, Moritz College of Law, USA)
     Kathleen Gutman (Catholic University of Leuven, Belgium)
     Jeff Redding (Saint Louis University School of Law, USA)
     David Snyder (American University Washington College of Law, USA)
     Dan Wei (University of Macau, School of Law, Macau)
     Chair: Franz Werro (Georgetown University Law School, USA)

1:00 Lunch

1:20- 2:20 Keynote Speech
      Keynote speaker: Ernest Weinrib (University of Toronto, Canada)
     Commentators: Michele Graziadei (University of Turin, Italy)
     Isabel Jaramillo Sierra (Los Andes University, Colombia)

2:20-3:30 “Private Law and Globalization”
If all law was once public state law, does decline of the state signify the rise of private law? How does private law relate to globalization?
     Larry Catá Backer (Penn State University, USA)
     Anna Gelpern (American University Washington College of Law, Washington D.C.)
     Lukas Heckendorn Urscheler (Swiss Institute of Comparative Law, Lausanne, CH)
     Luca C.M. Melchionna (St. John’s School of Law)
     Florian Rödl (Frankfurt University, Germany)
     Dai Yokomizo (Nagoya University, Japan)
     Chair: Teemu Ruskola (Emory University School of Law, USA)

3:30- 3:50 Coffee Break

3:50-5:00 “Where do we go from here?”
     Yuki Asano (Gakushuin University Law School, Japan)
     Donald Earl Childress III (Pepperdine University, USA)
     Cally Jordan (Duke Law School, USA & University of Melbourne, Australia)
     Amr Shalakany (The American University in Cairo, Egypt)
     Markus Wagner (Miami University School of Law, USA)
     Dan Wielsch (University of Cologne, Germany)
     Chair: Susan Carle (American University, Washington College of Law, USA)


The "scraps" produced for the Workshop provide a fascinating glimpse at the cutting edge of academic movements in private law theory.  They point to the likely scope and character of policy issues that will shape legal and political discourse for the coming decades.  It is not surprising that many scraps touched on integration and pluralism in private law.  For example, there was a suggestion of a double question built into pluralism and private law touching on the realization of plural values in people's lives and the activation and control of plural actors to private law making.   Another suggested the opposite movement in European codification of private law as it moved from an economic tool for the internal market to a method for constructing a European demos. Another looks to the ideological underpinnings of the standard definition of Islamic law as a disciplinary field and arguing that the traditional position  was based on a dominant historiography that was a modern invention--an argument that has substantial implications for the movements for return to indigenous law in Africa, among indigenous people and in Latin America. 

Another group of scraps focused on the public/private divide in law.  One suggested the difficulties of insulating private law from moral and policy objectives usually reserved for public law.  Another looked to the consequences of the privatization of public law in dispute resolution, and its impact on theoretical reformulations of the concept of private law.  Another focused on the revolution in legal harmonization as it moved from a  focus on simple horizontal harmonization among states, to consensus of norms among the community of states to its current phase of harmonization between public and non-state governance actors.  Another considered movements toward straddling the public/private divide through non-judicial dispute resolution mechanisms. Still another considered the "public" inherent in private law, suggesting private law as a place where conflicts of values are encountered.  Another suggested that the character of private law must be changing as public actors become more aggressively involved in private market activities as non-sovereigns, and that the increasing importance of public actors making private law raises a distinct set of challenges. Another looks at the public-private divide in the context of constitutional protection of property in Africa.  Another looks at internal legal pluralism within a domestic legal order by suggesting its scope in policy debates about law between legislature and courts in Japan.  Another argues that legal globalization, based on the comparative method, pits incentives toward convergence against national resistance to protect identity.  Another looks to the phenomenon of privatization of traditional government functions and its effects on the role of private law, the legitimacy of its use, problems of accountability and emerging institutional models that proceed from private law regimes.

Another group considered questions of theory. One suggested the death of private law theory in one of its great sources--judicial decisions--and the anemic effort to transpose private law theoretical foundations to non-judicial dispute resolution venues. Another looked at private law theory through the lens of the soft law-hard law debate, suggesting that some of the assumptions underlying soft law discourse undermine its usefulness, and looking back to the notion of law before the state.   Another looks to the under development of theory reflecting differences in the legal epistemologies of the self under the foundational norm structures of different legal and religious traditions.  Another approaches theory from the perspective of traditional categorical distinctions in law  among property, contract, torts and unjust enrichment, positing interdisciplinarity as a means of yielding superior functional results  for private law considered as an integrated set of related disciplines.  Another looks to the return of a pure private law as a formalist, non-political, and non-contextual enterprise, as a basis for the retention of the rationality of private law even as its contemporary moorings in the nation-state and democratic legitimacy are abandoned in favor of transnationalization.  Still another considers issues of legitimacy of private law making in the absence of the democratic legitimacy conferred by public law frameworks.  Another posits that the common private core of private international law theory is its trans cultural aspect of self organization, the common legal core of private international law theory is its reflection on legal forms and concepts, and its common theoretical core must necessary be meta-theoretical.  Another seeks the moral foundations of private law and an interactive justice that must necessarily animate both public and private law. 

Still another group considered private law in the context of development issues.  One suggested the difficulties for development where the ideologies of private law are carried over to developing states.  Another looked to the influence of Anglo-American legal thought on the doctrinal development in Africa and its effects on the constriction of an African private law. Another considers private law as a mechanism for corrective justice and a break on state power, illustrating its effects with a look to alternative dispute resolution in China.

Others looked at the implications of challenges to classical private law theory for specific substantive areas of law.  One focused on the Europeanization of contract law, its coherence, relation to private lawmaking and connection to globalization.  Another looked at the contract-tort divide in Western and non-Western legal traditions as a source for further development of private law theory. Another explores consumer law in Australia to suggest that the policy implications of public law have effectively expropriated significant portions of the private element in consumer law. Another looks to tax law as a basis for the position that law ought to be more collaborative as it becomes more hybrid in character.  Another looks to movements in European property law harmonization as a conflict point for common and civil law conceptions of property.  Another starts from the ideology of conflicts of law to suggest that the "law" element of private law must be emphasized in order to retain the internal coherence of the system of law unalterably tied to nation states; beyond law might be governance, but it ought not to be considered a welcome immigrant into the terrain of law.

These approaches suggest the extent of dynamism in private international law.  A complex interweaving of globalization, migration, and changes in patterns of human organization has produced a change in the foundations on which both law and the state have sat comfortably for a century or so.  The rise of contracts with regulatory effect--the transformation of the private relations of individuals from object of territorially based law systems to subject, that is, to governance system in its own right has played a large role in the production of this dynamic state.  So has the rise of neo-medievalism, a shift not seen in law for centuries, in whcih law (or governance) shifts out of the state and reacquires its autonomous character.  But that autonomous character is now polycentric--it exits quite vigorously in law-state systems and also now in social norm systems. What clearly emerges is that though the state is far from finished, and though private law--or its social norm cousins (governance residing outside of state based law systems)--is far from acquiring a definitive form and framework, the old established consensus of the nature and legitimacy of power, and the constitution of governance collectives, has been fatally destabilized.  What will emerge remains to be seen, but whatever its form it is likely to be far more fractured institutionally (that is, as formally constituted) than it was before, though perhaps far more likely to harmonize and converge within new "families", not of law  but of governance.   

The workshop also served as a  forum for the work of the private law theory initiative.
The PLT initiative aims to constitute a network of scholars reflecting the theoretical foundations and future developments of private law. The idea was born spontaneously in 2009 among a transnational group of scholars. PLT will build a forum for cross-cultural brainstorming what private law could mean in the 21st century. PLT embraces different theoretical backgrounds (liberal theory, social justice theory, deliberative theory, systems theory, economic analysis, critical theory, deconstruction, etc.) and different fields of law (contract law, property law, comparative law, competition law, corporate law, IP law, etc.).
Private Law Theory, What is PLT?

Thursday, July 22, 2010

Corporate Social Responsibility and Charity--An American Law/Policy Connection Worth Reconsidering

A recent opinion piece published by the Washington Post reminds us that, for some important political-legal cultures, the connection between corporate social responsibility and charity is quite strong. Chrystia Freeland, What's BP's Social Responsibility?, The Washington Post, July 18, 2010.
As crude poured into the Gulf of Mexico and the world economy struggled to recover from the financial crisis, corporate social responsibility might seem a perverse target. Surely we need more corporate responsibility, not less. But many of the business disasters of the past 24 months have been facilitated by the mini-industry of corporate social responsibility -- known as CSR by those in the trade -- a fetish encouraged by the philanthropies that feed off it and funded by the corporate executives who have found that it serves their bottom line. Id.
Ms.Freeland focuses on the character of the problem: "But the gulf oil spill and the financial crisis have taught us, rather brutally, that the heart of the relationship between business and society doesn't lie with the charitable deeds that companies do in their off-hours but whether they are doing their day jobs in ways that help -- or hurt -- the rest of us."  Id.  The character of the problem suggests the solution. 
The problem with CSR is that it muddies the waters. Goldman's purpose isn't to educate women; BP's isn't to lead the green revolution. The job of business is to make money -- in BP's case by producing energy, particularly fossil fuels; in Goldman's case through finance. Even the most cuddly, caring chief executive is ultimately charged with a selfish central mission: to generate profit for her shareholders.  Id.
Thus, within a shareholder (or entity) welfare maximization model of corporate organization, corporate social responsibility presents an incompatible intrusion.  Worse, corporate CSR might be understood as necessarily subverted by the welfare maximization model itself.  Because welfare maximization is the principal task of business, CSR "and the communitarian philosophy behind it, asks us to believe that the interests of an individual company and those of the wider community are fully aligned. They aren't -- a truth too many regulators forgot in recent years." Id. Corporations should embrace the business of profit maximization, and government ought to shoulder its burden of providing for the public welfare, including the regulation of business. 
Freeland's views were criticized for suggesting an incompatibility between welfare maximization and CSR, for ignoring differences between long term and short term business decision making, and for confusing marketing with strategy. Alice Korngold, Freeland's Washington Post Op-Ed Is Wrong: CSR Does Maximize Corporate Profitability, Fast Company, July 19, 2010.  Another suggested that "the failings of Goldman Sachs and BP underscore the need for firms to take their engagement with society more seriously, and to put being on the right side of social progress at the core of their long-term profit-making strategy." Matthew Bishop,  Is CSR Evil?, Philanthrocapitalism, July 20, 2010 (short term welfare maximization a cause of failure). 

Freeland's point is a venerable one within American political and legal culture. Professor Milton Friedman argued that corporate shareholder benefit maximization is the only possible position consistent with American notions of democracy. (Milton Friedman, Capitalism and Freedom 133–36 (1962). Shareholder benefit theory is the most efficient manner for maximizing corporate utility and general wealth maximization (free markets and the invisible hand theory applied). If corporations were to be granted social or public policy obligations, then corporations would be acting in the place of the state. But corporations are not legitimate state actors; their directors were not elected by or accountable to the people. Conversely, if corporations with social policy functions would be legitimate only if fully accountable and responsible to the political community, they would have to be chosen by the political community and serve them. Essentially, corporations would become governmental units. To avoid this, regulation ought to facilitate the operation of the market and limit market inefficiencies and fraud. This position has proven very influential since the 1960s. For a more recent defense of these arguments see, for example, Stephen M. Bainbridge, "In Defense of the Shareholder Wealth Maximization Norm: A Reply to Professor Green," Wash. & Lee L. Rev. 50:1423 (1993).  This view reflected a longer conceptual tradition within American business and legal culture:

Early on, however, the American bench and Bar seemed to reach an uneasy stalemate about the contours of the debate regarding corporate social responsibility. . . . The most important points of agreement, at least among members of the American bench and Bar, were these: Corporations were understood as enterprises engaged solely in an economic role and the ultimate object of corporate existence was maximizing shareholder wealth. Corporate boards were permitted some flexibility with respect to compliance with this latter requirement. This flexibility took three principle forms. First, corporations were permitted to distribute corporate property for charitable or other eleemosynary purposes within certain clearly defined limits. Second, corporate boards of directors were given some flexibility when they sought to serve other constituencies, to the extent that such service was consonant with their primary missions. After the merger manias of the 1970s and 1980s, such flexibility was sometimes memorialized in so-called “other constituency” statutes. [e.g., Ohio Rev. Code Ann. § 1701.59(E) (West 2005) (allowing directors the discretion to consider, in determining the best interests of the corporation, factors such as employee interest, the state economy, and community considerations).] Third, boards of directors were accorded some flexibility in determining the factors, including time frame, which might be considered in maximizing shareholder value.
Backer, Larry Catá, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law. Columbia Human Rights Law Review, 37:287-389 (2006).

Corporate statutes usually empower corporations to “make donations for the public welfare or for charitable, scientific or educational purposes, and in time of war or other national emergency in aid thereof.” Del. Gen. Corp. L. tit. 8 § 122(9) (2005). Courts have developed standards for determining the validity of such giving in individual cases. See Theodora Holding Corp. v. Henderson, 257 A.2d 398 (Del. Ch. 1969); see also A.P. Smith Mfg. Co. v. Barlow, 98 A.2d 581 (N.J. 1953), appeal dismissed 346 U.S. 861 (1953) (upholding corporate gift to Princeton University because the gift arguably advanced the long run business interest of the company even in the absence of a statute permitting such gifts). Corporate charity has been both praised and criticized because of its character as advancing the corporate donor’s economic interests. See Hayden W. Smith, If Not Corporate Charity, Then What?, 41 N.Y.L. Sch. L. Rev. 757 (1997). It has also been criticized or as a front for the satisfaction of the directors’ personal interests. See Faith Stevelman Kahn, Pandora’s Box: Managerial Discretion and the Problem of Corporate Philanthropy, 44 U.C.L.A. L. Rev. 579 (1997). See generally Victor Brudney & Allen Ferrell, Corporate Charitable Giving, 69 U. Chi. L. Rev. 1191 (2002) (discussing different rationales for corporate charity).

As such, the real issue for American law and policy makers is not so much the fundamental character of CSR, but the division that American law and culture makes between two kinds of corporate expenditures--one is called charity and is deemed exogenous to corporate activity, and the other is deemed endogenous.  Part of what CSR theorists have been attempting over the last decade or so is to make the case that, like expenses for labor,  materials, advertising and investor relations, expenditures for the relationships between corporate actors and the communities within which it operates and from which the value of its economic activities are maximized, are also endogenous.  More importantly, perhaps, the insistence of American policymakers to continue to embrace the traditional conceptual model has tended to force the issue of corporate CSR both out of the field of corporate law--and into that of administrative or international law--and directed attention to transnational corporations rather than to all enterprises operating in corporate form.  In addition, the focus on the profit maximization premise as the foundation of the "problem" tends to blind policymakers to the realities that all bodies corporate have human rights and social responsibilities to people they affect.   Like the profit/charity binary, the profit/nonprofit division ignores commonalities and provides room for strategic behavior among corporate actors.

As a consequence, the great movements of constructing governance systems affecting the responsibilities of corporations have moved from the national to the international law,  with a focus, for the moment on soft law frameworks.  At the same time, law has increasingly assumed a secondary role in the construction and implementaiton of such governance systems. Backer, Larry Catá, On the Evolution of the United Nations’ 'Protect-Respect-Remedy' Project: The State, the Corporation and Human Rights in a Global Governance Context (June 3, 2010). Santa Clara Journal of International Law, Vol. 9, No.1, 2010.What Ms. Freeland really appears to suggest is that the current insistence on embracing a profit-charity model for CSR will make American law and policy increasingly irrelevant to the development of global CSR standards.  This is a not an area of leadership that Americans lawyers, judges, policymakers and academics ought to cede lightly. 

Tuesday, July 20, 2010

And Speaking of Labor Markets: Labor Market Equity for the Disabled in Hong Kong, Report of the Community Development Initiative

While free movement of capital tends to mark the approach to capital and capital markets within the emerging global economic architecture, the same does not hold true for labor markets.  Labor markets  have tended to remain mired in protectionism, paternalism, and management by a host of actors.  While capital has tended to see the elimination of borders and impediments to its use, labor has tended to be more tightly bound by  these very same borders.  Both Cuba and the United States, for example, tend to assert control over labor markets which, at least in the case of the United States, is substantially more restrictive than those applicable to capital. These restrictions might have human rights impacts for both states.  See Larry Catá Backer, States, Labor as a Market Commodity, and Human Rights Frameworks--Cuba's Grannacional Programs at the Intersection of Business and Human Rights, Law at the End of the Day, July 17, 2010 (Cuba); Inter-American Court of Human Rights, Advisory Opinion OC-18/03 Inter-Am. Ct. H.R. (Ser. A) No. 18 (2003) (Sept. 17, 2003) Requested by the United Mexican States against the United States of America  (Juridical Condition and rights of the Undocumented Migrants).  

But the micro picture within labor markets is no less troublesome.  Especially problematic remains the treatment of the disabled within labor markets.  This is as true in the developed as in the developing world.  See, e.g., Mor, Sagit,  "Between Hope and Evil: Reframing Disability Allowances" (Paper, 2009). One gets a good sense of the issues involved in the incorporation of the disabled within labor markets in Hong Kong from reports recently circulated by a Hong Kong NGO, the Community Development Initiative.

最低工資研 究調查發佈

最低工資立法在 即,為了使法案能夠更全面地真正地保障了所有勞動者尊嚴,使他們能夠透過勞力繼而得到合理的生活質素及報酬,社區發展動力培育特別開展了兩項研究調查: 《為殘疾人士創造就業機會及落實最低工資》及《2010年零售業薪酬調查報告》。研究已經完成並先後於 5月2日及7月12日作發佈,隨函 為上述之完整報告。


簡介:經勞工界和基層團體多年的爭取,最低 工資已開始展開立法程序,但對於殘疾人士,政府最初之主張是不把他們納入保障範圍,結果在響應團體爭取後才改變初衷。但把殘疾僱員納入最低工資,卻要引入 對他們的生產力評估機制,若現在僱員被評為生產力低於「正常」,會根據其相應生產力的最低工資打折。我們認為此舉實違反最低工資的精神。

《2010年零售業薪酬調查報告》 (暫時只有中文版本)

簡介:是項調查是與民間爭取最低工資聯盟共同進行。是次調查的對象是本港 最具規模及有代表性的零售業連鎖店,包括︰7–11便利店、OK便利店、惠康超級市場、百佳超級市場、華潤超級市場、萬寧藥房和屈臣氏個 人護理商店。調查形式為工作人員假扮應徵者親身到店舖詢問,查詢內容包括工作的時薪及數額。結果發現,零售業工資仍然嚴重偏低,臨時最低工資委員會成員麥 瑞琼,其屬下的7-11更蟬聯「最刻薄僱主」。聯盟要求最低工資應訂於時薪33元,並要求連 鎖零售集團要負企業社會責任,給予員工合理的工資水平。

The CDI announced the release of a Minimum Wage Research Surveys in conjunction with the consideration by the Hing Kong government released of a labor bill.  The first study, "Creating Employment Opportunities & Realizing of Minimum Wage for Disabled," focused on employment opportunities and implementation of minimum wage regime for disabled workers.  The second is a " Pay Retail Survey 2010. " The first report attacks efforts to tie minimum wages to productivity--especially when productivity is measured against the disabled to their detriment. The second report reflected information gathering by CDI staff posing as job candidates and seeks to make a case to apply global principles of corporate social responsibility to support a "reasonable wages" regime. 

The Executive Summary of "Creating Employment Opportunities" is reproduced below:

I. After years of battle by the labour sector and grass-root groups, the issue of minimum wage is already in the process of legislation. However, if the capability assessment mechanism is introduced to the disabled employees, according to their below “normal” productivity, their wages will be discounted. We believe allowing the disabled to receive wages below the minimum wage violates the spirit of minimum wage.

II. Currently, among the 347,000 disabled (excluding the Intellectual Disabled) aged above 15, 45,800 (13.2%) disabled engage in paid employment. For the other 302,100 disabled who are unemployed, most of them are forced to retire due to the lack of work opportunities. Thus we can conclude that, the disabled are not widely accepted by the market.

III. Because of many different reasons, most of the employed disabled are currently employed in Non-Government Organizations (“NGOs”). A majority of them are working at sheltered workshops and social enterprises which could only provide comparatively lower salaries to maintain their competitiveness in the market. Hence, the income of the disabled is generally lower than the work force .Almost 30% of the employed disabled are making below $4,000 per month. Obviously, even the disabled could become self-reliant, they could not “rehabilitate their lives”.

IV. As the current mechanism cannot solve the disabled’s employment problems comprehensively, we would like to suggest the HKSAR government to impose a “Voluntary First, Mandatory Second” Disabled Employee Quota System to provide a larger and more user-friendly employment space for the disabled, our suggestions are as follow:

 Gradual enforcement of the disabled employment quotas system. At the beginning, only the government divisions, public sectors and subsidized organizations are required to employ 2% of disabled employees, and the results are reported every year. Departments which meet the target are rewarded financially.
 Encouraging the business sector and other organizations to impose their own voluntary quota system. Small and Medium Enterprises with less than 50 people are exempted
 Buying products and services from social enterprises to replace direct employment of the disabled is also allowed.
 May provide tax concessions and other support to reward the organizations that meet the target.
 Finally, institutionalizing the above measures through the legislative system when the society has a common consent on employing the disabled.

V. Apart from the above mentioned, for the improvement of livelihood of the disabled, it is not enough by simply providing them with employment opportunities alone. If the disabled could only make low incomes, they could not even support their own daily livings, and their difficulties are not resolved. Hence, both the legislation of minimum wages and the creation of employment opportunities for the disabled are indispensable and should be carried out at the same time.

VI. Nevertheless, the legislation of minimum wage is to guarantee each labour is paid with adequate income for making a living and to ensure he labour could lead a decent life. If the meaning of “labour” is those who contribute their effort in production, it is not justifiable that the disabled are to be exempted. In order to make sure the operational cost of enterprises will not soar, governments in different countries usually set the minimum wage at a comparatively low level. If the disabled are to be paid at a discount of the minimum wage according to their capability assessment, what is the ultimate meaning for protecting them in accordance with the minimum wages?

VII. The arrangement for the disabled to call for a voluntary capability assessment is an acceptable solution to protect the employment opportunities of the disabled from negative impact. In this case the employer will not need to bear the cost of the enforcement of minimum wage, but since there is no disability social security in Hong Kong, if the disabled take the discounted wage, they cannot even maintain their basic livings. Therefore the government is responsible to fill the gap between the discounted wage rate and the minimum wage. If the disabled are evaluated as possessing half of productivity of an able-bodied worker, that particular employer may give 50% of the minimum wages to that employee, while the remaining 50% should be paid by the government.

Estado de SATS: Creating a Space for the Confluence of Art and Thought in Cuba

Cuba continues to play a disproportionally large role in the development of arts and ideas.  Much of it remains confined to the Island.  But some of it is reaching out.  One such recent effort worth substantial consideration are the efforts of the Estado de SATS. Thier web site is worth visiting.  The organizers of this group are putting on a conference in Cuba that will seek to continue the exploration of the frontiers of the confluence of art and thought.  The preliminary program can be accessed here. Summaries of some of the very interesting work to be presented can be access here (all in Spanish): Programa del Encuentro "Estado de SATS".

The event was well attended. A record of the proceedings may be found at the website of Estado de SATS.  SATS: UN ESTADO DIFERENTE. TRES DIAS DE ARTE, PENSAMIENTO Y EXPRESIÓN LIBRES. EL ESTADO MÁS NECESARIO.23, 24 Y 25 DE JULIO DEL 2010.    Here is a taste:
Un evento de tres días donde pudieran debatirse libremente a partir de conferencias, paneles, y presentaciones artísticas las cuestiones más acuciantes de nuestra sociedad, pero donde predominara la actitud y el espíritu del diálogo, sin jerarquía de modos de pensamientos políticos o filosóficos o religiosos o de modos de interpretar la sociedad civil real.

Cuba presente-futuro.

Sats Sats Sats Sats Sats SatsSats Sats

Ha sido un evento organizado por jóvenes.
Se sumaron muchos a su realización, que luego no continuaron, y así especialmente la dirección artística general del evento fue a parar a manos de OMNI-ZONAFRANCA, especialmente a OMNI-EXPRESS: la parte de este grupo que está dedicada a la producción artística y a la creación de espectáculos.

El último encuentro en la Casa Templo OMNI del Arte Cubano en Alamar definió todo el diseño del evento, el cual marcó su espíritu y propició a los que asistimos un gran placer y la creencia de que estábamos en un evento de primer nivel. Como en efecto se demostró.


Sunday, July 18, 2010

Hearings on U.S. Cuba Policy: Testimony of Michael Kelly on Property Claims and More on Labor and Human Rights

Yesterday I posted my conference paper on Cuba's engagement with global trade, and the repercussions in the context of business and human rights.  The focus was on one of the practices of Cuba's commercial activities--barter transactions in which the Cuban state trades labor for services or cash--and its potential incompatibility with global human rights norms.  Larry Catá Backer, States, Labor as a Market Commodity, and Human Rights Frameworks--Cuba's Grannacional Programs at the Intersection of Business and Human Rights, Law at the End of the Day, July 17, 2010.

For its own reasons, the Legislative organs of American federal government have also considered these issues in the context of its stormy political relations with  the Cuban state apparatus.     


Thursday, April 29, 2010
U.S. House of Representatives
Subcommittee on Trade
Committee on Ways and Means
Washington, D.C.

The subcommittee met, pursuant to notice, at 10:04 a.m., in Room 1100 Longworth House Office Building, Hon. John S. Tanner [chairman of the subcommittee] presiding.

[The advisory of the hearing follows:]

*Chairman Tanner. Well, good morning and welcome. We'll get started. I understand that Secretary Block is caught in traffic, which comes as no surprise to those of us who fought the traffic here in the D.C. area.

So we'll get started and, if he appears by the time we get through with our opening statements, we can recognize him at that point, or when he gets here. But we'll go ahead.

Today's hearing is first to spotlight and emphasize our engagement in our hemisphere.

American business and job growth is, I think, in many respects dependent on our ability to export and to engage with countries.

And for some time now, I have watched with great interest our relationships in our own hemisphere. Cuba is a part of that. And as you know, there's a bill moving in the Agriculture Committee in this regard.

As I was thinking about Cuba, I got to thinking about what Coach Osborne said. You all remember Tom Osborne, a former football coach at Nebraska, who was here as a member one time. And he was asked what he thought about Cuba. And he said, "Well,'' -- and I'll paraphrase what he said -- he said, "I don't know much about Cuba, but if I call the same play in football 39 times in a row and it failed to gain, I'd try another play.''

This is about exploring the interest of this country, the United States of America, as it relates to our very complicated relationship with Cuba.

[The statement of Mr. Tanner follows:]

Before I recognize our Ranking Member, let me do some housekeeping here. Chris Van Hollen called me last night, and he's unable to be here today, because he's attending Dorothy Height's funeral, because she will be interred in his district. He wanted me to read this letter, and to put another letter in the record. And without objection, I'll do that.

It goes as follows: "Dear Chairman Tanner, Thank you and Ranking Member Brady for holding today's hearing on U.S./Cuba policy. I am attending the funeral of Civil Rights Leader, Dorothy Height and regret that I cannot be there in person.

As you know, a constituent of mine, Allen Gross, was arrested and imprisoned without charge by the Cuban government on December 3, 2009. For the last five months, Mr. Gross has only been permitted to communicate with his family a handful of times. He is 60 years old and suffers from chronic physical ailments and we are concerned about how the conditions of his confinement may be impacting his health. Additionally, his 86-year-old mother's health has begun to deteriorate in the wake of her son's incarceration.

Mr. Gross visited Cuba as part of a USAID contract to help Cuba's Jewish community improve its ability to communicate with other Jews - both in and outside of Cuba. He has worked on international development issues for over 25 years, and has devoted his career to helping thousands of people around the world.

Mr. Gross' incarceration is a matter of the greatest concern to the U.S. government, including Members of Congress. Attached is a letter from a bipartisan group of members to the Cuban government calling for his immediate and unconditional release. The letter further states that Mr. Gross' arrest has caused many to doubt the Cuban government's expressed desire to improve relations with the United States.

I welcome any suggestions of the witnesses, either on or off the record, as to the best way to resolve this urgent matter. I appreciate your assistance in this matter and ask that this letter, and the accompanying letter to the Cuban government, be entered into the record. [The information follows:]

And without objection, we'll so do.

I'm now pleased to recognize our Ranking Member, Mr. Brady, for his opening statement.

*Mr. Brady. Well, thank you.

I want to take this opportunity to publicly congratulate my friend and colleague, Mr. Tanner, on his becoming Chairman of the Trade Subcommittee. I look forward to working with you in your new capacity.

Today we're exploring the possibility of expanded trade with Cuba. I support sales of food, medicine to Cuba, as well as normal financing and travel arrangements to accommodate that. I suspect other members have different views, some willing to go farther, some unwilling to consider any liberalization whatsoever.

Where I think we all agree, however, is that we must resolve the other $6 billion in expropriation claims that our Federal Settlement Claim Commission certified before developing a more robust economic relationship with the post-Castro democratic government in Cuba. How these claims will be addressed is critical, not only because it makes policy sense, but because it is the law.

We're fortunate one of our witnesses today is a principal author or a USAID-funded report that analyzes the outstanding claims and proposes a mechanism for their resolution. I'm eagerly anticipating Professor Kelly's testimony.

More broadly, however, I admit I'm frustrated to be talking about Cuba, while we appear to be unable to have an open public discussion on exploring the possibility of expanding trade with democratic allies in the region, like Colombia.

President Obama and democratic leaders have argued the time is not right for the Colombia Trade Promotion Agreement, because Colombia's not made enough progress on labor and humans rights issues. They have said we need benchmarks. But here, after over a year in office, neither the Administration or the Congress, which has had even more time, has developed those benchmarks.

I would welcome an opportunity to focus on them, against which Colombia's progress on stamping out violence will be measured.

Let's look at the facts on the ground in both countries. The International Labor Organization has reported on Cuba's labor policies. In fact, several of the text witnesses today will talk about that. And it is not pretty.

Cuban labor law violates basic ILO principles with respect to the right to strike and bargain collectively. And Cuba has not even ratified the ILO core convention on the prohibition of the worst forms of child labor.

By contrast, Colombia has ratified all eight ILO core conventions. Moreover, the ILO recently commended Colombia for its progress in protecting labor rights. While U.S. trade policy should create incentives for countries to improve their policies, I worry about a possible double standard being promoted -- that trade with Cuba could be fine, but trade with Colombia is a problem. I'm concerned about the geopolitical signals we send, when we devote time and resources beyond food and medicine toward the consideration of overtures towards Chavez' ally, Cuba, while at the same time we continue to allow U.S. ally, Colombia, to twist in the wind.

Many say the increased trade with Cuba makes sense, because it represents a big market in our own back yard. It does. However, Cuba's economy is one-fourth that of Colombia's as well as the population.

Furthermore, the independent nonpartisan U.S. International Trade Commission found the United States is already Cuba's more competitive Ag supplier, in terms of price, quality, and delivery of items.

Finally -- and this may actually be the most important point -- at times it is hard not to question Cuba's interest in trading with us. Even in sectors in which America's allowed to trade, like agriculture, distortions abound as a result of politically motivated import practices of Cuba's estate-trading enterprise.

And although President Obama liberalized telecommunications trade with Cuba, our U.S. telecom companies haven't yet rushed in, because in their view, the costs and risks of dealing with the Cuban regime outweigh any marginal economic benefit.

The economic climate in Cuba is in many ways intolerant. In fact, Cuba is ranked virtually dead last in the 2010 Index of Economic Freedom.

And as our Secretary of State said earlier this month, the Castros "do not want to see an end to the embargo, do not want to see normalization with the United States, because they would then lose all their excuses for what hasn't happened in Cuba over the last 50 years.''

So it looks to me like we may be flirting with an unwilling dance partner. If we're looking for new customers, it would seem to me that beyond food and agriculture, in Cuba, that we should direct our attention to other, bigger, nearby markets with governments like Colombia, that have extended themselves to us.

That being said, Mr. Chairman, I appreciate you calling this hearing today. I think this is going to be interesting testimony.

Thank you, Chairman.

The ideas presented here suggest the extent to which the status quo remains intractable when it comes to relations between Cuba and the United States.  But it also suggests one of the consequences of Cuba's active efforts to challenge the conventional (and dominant) framework for global economic organization.  In this case, it is clear that the United States stands ready to use the arsenal of weapons developed to protect the rights of individuals and others within the ideological framework of dominant economic globalization to subvert efforts to undermine that system.  The reaction is not surprising.  The willingness of the United States to pay more attention to ALBA-zone economic activity, especially those pioneered by Cuba, suggests an acknowledgment of the importance of this challenge to the current global economic order.  

The proceedings were also notable for the testimony of Michael Kelly, Professor of Law and Associate Dean for Faculty Research and International Programs at Creighton University School of Law, a principal author or a USAID-funded report that analyzes the outstanding claims and proposes a mechanism for their resolution.  (The Resolution of Outstanding Property Claims Between Cuba & the United States (Creighton University Press 2007)).  Professor Kelly suggests  the complexities involved in any sort of settlement of property and damage claims between Cuba and the United States.  The discussion highlights the difficulties of applying a legal and judicial overlay to the remedial  issues between individuals, entities and states to this conflict.  It is true enough that the juridicficaiton of conflict has become increasingly established as a  method  of managing  conflict and legitimating the  political settlements that bring closure to these conflicts.  But Professor Kelly's discussion reminds us of the difficulties of using judicial process instrumentally.   Professor's Kelly's  formal testimony are worth reading and are reproduced below. 


Mr. Chairman, thank you for the opportunity to provide testimony today regarding U.S.-Cuba Policy. This is an important concern for everyone on both sides of the strait and for generations to come. Normalizing relations between our two countries is a goal that we all share, but the path to achieving that goal remains in some dispute. On behalf of the academic team that studied the property claims issue with respect to Cuba, we would counsel against immediately and unconditionally lifting the embargo without first addressing the property claims that U.S. citizens have against the Cuban government stemming from the first nationalization actions of Fidel Castro in 1959. To do so would
be to invite the nationalization of other U.S. assets by other regimes if they perceive that the U.S. government is not willing to legally fight for the rights of its citizens abroad.

By way of background, on October 1, 2005, Creighton University was awarded a grant from USAID to develop a model for a property claims settlement mechanism between Cuba and the United States. Three law faculty were joined by three political science faculty to form a team of experts supported by graduate students at both schools to investigate and report on the best outcome for such a mechanism. The model provides a template to be utilized by the United States Government in future negotiations with a post-Castro democratic regime in Havana.
As a central feature in the U.S. Government’s proactive planning for Cuba’s transition to democracy, this model responds to the intent of Congress in the Cuban Liberty and Democratic Solidarity Act of 1996 (the “Libertad Act”), Pub. L. 104-11422, 110 Stat. 785, U.S.C. § 6021-6091, that property claims be resolved as a precondition to the USG lifting the economic embargo against Cuba. Lifting the embargo is required to normalize Cuba-U.S. relations. Consequently, resolving the property claims issue is one of the early criteria which must be met in that process, after the president has certified to Congress that a democratically elected government has achieved power in Cuba.
Our Report proposes creates a dual-track property claims settlement mechanism.1 The first track is a bilateral Cuba-U.S. Tribunal (the “Tribunal”) established by treaty or executive agreement between a new Cuban government and the U.S. The jurisdiction of the Tribunal would be over property claims of U.S. nationals which have been certified by the Federal Claims Settlement Commission. The second track is a Cuban Special Claims Court (the “Court”) constituted as an independent chamber of the Cuban national judiciary. The jurisdiction of this Special Court would be over property claims from the
Cuban-American exile community.
The Cuban government has paid lump sum amounts to settle outstanding property claims to several foreign states, including Canada, France, Spain and Switzerland.  Consequently, the main universe of property claimants against the Cuban government consists largely of three groups:
1. U.S. National Claimants
2. Cuban Exile Community Claimants
3. Cuban Claimants Still in Cuba
There may also be some claims by Cubans against the U.S. Government for property such as frozen accounts or income proceeds. The Tribunal provides a forum for resolution of any cognizable property claims between the two respective governments.
The first group of property claims are held by U.S. national claimants. These are American individuals and corporations who were Americans at the time of the unlawful expropriation (mostly in 1959 and the early 1960). They have certified their claims through the Federal Claims Settlement Commission (the “FCSC”). According to the FCSC estimates, their property claims with interest amount to approximately $6 billion. Their claims have not been satisfied with frozen Cuban assets in the United States. However, their claims are protected legislatively and are linked directly with the lifting of the U.S. embargo against Cuba. §207(d) of the Libertad Act states:
It is the sense of the Congress that the satisfactory resolution of property claims by a Cuban Government recognized by the United States remains an essential condition for the full resumption of economic and diplomatic relations between the United States and Cuba.
Moreover, international law generally recognizes the right of American claimants to be compensated. See, Shahin Shane Ebrahimi v. Government of the Islamic Republic of  Iran, Award 560-44/46/47-3, Iran-U.S. Claims Tribunal (Oct. 12, 1994). Consequently, a bilateral system to resolve property claims between foreign claimants and the government of Cuba would be supported by international law.
The second group of property claims is held by Cuban-American exiles. Members of this group were Cuban at the time of the expropriation of their property. The exile community claimants were not part of the certification process undertaken by the Federal Claims Settlement Commission, and thus are not protected under U.S. law to the same extent as U.S. national claimants.
Although the Libertad Act allows them the right to proceed, §304 specifically excludes their property claims from the high level of legislative protection accorded to the FCSC certified claimants:
[N]either any national of the United States who was eligible to file a claim under section 503 but did not timely file such claim under that section, nor any national of the United States (on the date of the enactment of this section) who was not eligible to file a claim under that section, nor any national of Cuba, including any agency, instrumentality, subdivision, or enterprise of the Government of Cuba or any local government of Cuba in place on the date of the enactment of this section, nor any successor claim to, participate in, or otherwise have an interest in, the compensation proceeds or other nonmonetary compensation paid or allocated to a national of the United States by virtue of a claim certified by the Commission under section 507, nor shall any court of the United States or any State court have jurisdiction to adjudicate any such claim.
Moreover, because members of this claimant group were nationals of Cuba when their property was expropriated, international law generally does not recognize a right of recovery. Consequently, a bilateral system to resolve property claims between this group and the government of Cuba would not be supported by international law. Jurisdiction over their claims would reside within the Cuban judiciary.
While the claims by this group are not supported specifically by either domestic or international law, politically and economically their claims should not be ignored. Politically, their influence in Washington brought about the Libertad Act (codifying the U.S. embargo against Cuba), achieved special immigration status for Cubans leaving the island, sustained Radio Marti programming, and leveraged millions of dollars in federal money to support democracy programming for Cuba.
Economically, this group will be among the first investors in an open Cuban market. Even before direct foreign investment by multinational corporations, who may prove more cautious and wait to see how the markets emerge on the island, the enthusiasm and wealth of the Cuban-American community will help to jump-start the Cuban economy at the outset of regime change and could do much to spark the suppressed but ever-present entrepreneurial spirit of the Cuban people.
However, if the property claims of the Cuban-American exile community are left unresolved, their political and economic power could be turned against stabilizing a new government in Cuba, much to the detriment not only of the island, but also to potentially fruitful Cuba-U.S. relations. Thus, from the perspective of elemental justice and reason, the positive aspects of including this group in a broader property claims settlement policy far outweigh the general lack of domestic or international legal justification for doing so.
The third group of property claims is held by Cubans against the Cuban government. These claims are wholly an internal matter for Cuba to resolve. There is no international dimension to them. Nevertheless, an important principle of this property claims settlement mechanism is that it does not negatively impact the Cuban population. If Cubans in Cuba, who may have their own claims against the government, view the settlement process as a venue for capital flight from the island, then they will not support it.
Moreover, to the extent that Cubans in Cuba are innocent third party owners of property that is the subject of a claim by U.S. national or exile community claimants, their property interest must be protected. Essentially, to eject people from their homes would needlessly destabilize the island further, prove to the Cubans that Castro was right about the property issue when he warned that Cubans would be thrown out on the streets by foreign and exile claimants, and engender unnecessary anger toward the United States.
The Castro government asserts that Cubans have over $100 billion in claims against the U.S. based on harm flowing from the American embargo. These claims are a mixture of economic losses and tort claims. It is difficult to distinguish between harm done by the embargo and that done by the Cuban government, and it is impossible to verify the claims and claim amounts. Nevertheless, a lawsuit went forward in Cuban court in May 1999 asserting massive tort claims against the U.S. for losses and hardships flowing from the embargo. The prosecution presented evidence for thirteen days. The U.S. did not respond. The court awarded damages of $181.1 billion and ordered the U.S. to apologize.
The judicial bodies sought to be established here should not be overrun by Cuban claimants seeking redress against the U.S. To the extent that Cuban claims are allowed, making the claim settlement process a two-way street, only valid property-based claims should be considered under the jurisdiction of the bilateral Tribunal. These could involve, for instance, the remaining frozen assets of the Cuban government. Other Cuban claims, including tort claims, should be undertaken within the domestic Cuban judicial system and treated as normal litigation. The instruments establishing the Tribunal and
the Special Cuban Court contain language only allowing for property-based claims. Cases alleging other bases for compensation fall outside the jurisdiction of the judicial bodies recommended for establishment.
The Cuba-U.S. Claims Tribunal will be established by bilateral treaty or executive agreement between a successor government to the Castro regime and the U.S. The Tribunal will have international legal capacity as an arbitral body; its sole purpose will be to resolve outstanding property dispute issues between Cuba and the United States and the respective nationals thereof.
 The Tribunal will consist of a minimum of nine members – one third appointed each by the governments of Cuba and the U.S. and the remaining third appointed by agreement among the two thirds who have been selected.
 The Tribunal will have interpretive jurisdiction necessary to accomplish its purpose,
      authority to promulgate rules of procedure,
      the power to order interim measures of relief,
      apply international law to resolve the claims before it.
 Valuation of claims certified by the FCSC are to be given due weight by the Tribunal.
      Small claims are to be compensated monetarily through a streamlined process.
      Medium and large claims may be compensated monetarily, by specific restitution (under limited circumstances), or by alternative remedy awarded by the Government against which the claim is brought in the form of development rights, tax credits, rights in Government-owned property, or other remedies designed to promote foreign investment if the claimant agrees. Large claims must undergo a period of mandatory good faith mediation prior to seeking resolution by the Tribunal.
 The Tribunal’s awards shall be final, binding and fully enforceable within Cuba and the United States.
 No claims may be filed more than one year after the Tribunal is established.
 The Tribunal’s expenses shall be borne equally by the two governments.
 The seat of the Tribunal shall be selected by the President of the Tribunal.
The U.S. may find it necessary to assist a new government in Cuba in meeting Cuban obligations in the form of a loan on favorable terms or assistance in obtaining loans from international financial institutions.
The Cuban Special Claims Court will be established by bilateral treaty or executive agreement between a successor government to the Castro regime and the U.S. The Court will be an independent chamber with in the Cuban judicial system.
 The Court will consist of twelve judges appointed by the Cuban government in consultation with the U.S. No more than half of these judges may be of the same nationality.
 The sole purpose of the Court will be to resolve claims by Cuban-American exile claimants against Cuba.
 The Court shall have authority to promulgate its rules of procedure, and will conduct business according to the arbitration rules promulgated in 1976 by the United Nations Commission on International Trade Law.
 All cases shall be decided on the basis of civil law, particularly as derived by from the Spanish Civil Code of 1889.
 Small claims shall be compensated monetarily through a streamlined process.
 Medium and large claims may be compensated monetarily, by specific restitution (again under limited circumstances), or by alternative remedy offered by Cuba in the form of development rights, tax credits, rights in Government-owned property, or other remedies designed to promote foreign investment if the claimant agrees.
 Large claims must undergo a period of mandatory good faith mediation prior to seeking resolution by the Special Court.
 The Court’s awards shall be final, binding and fully enforceable within Cuba and the United States.
 No claims may be filed more than two years after the Court is established.
 The Court’s expenses shall be borne by Cuba.
 The seat of the Cuban Special Court shall be selected by the Chief Judge, but the location of the seat shall not prejudice the ability of the Court to sit at locations outside of Cuba if it so desires.
The U.S. may find it necessary to assist a new government in Cuba in meeting Cuban obligations in the form of a loan on favorable terms or assistance in obtaining loans from international financial institutions.
The Libertad Act prohibits normalized relations between Cuba and the U.S. so long as the regimes of Fidel or Raul Castro remain in power. Moreover, sections 205 and 206 of the law contain a long list of criteria which must be met for a transitional government in Cuba to be considered democratic. Once those criteria are met, normalized relations are possible.
Cuba has undergone a succession. Fidel Castro ceded power to his brother Raul on August 1, 2006 to undergo surgery and has not returned to power. Raul Castro has been in control since that date. Consequently, while a succession has occurred in Cuba, a transition has not. Many experts believe that a slow transition is the most likely scenario for Cuba beginning toward the end of the Raul Castro regime and then moving cautiously forward under a new socialist regime. Thus, a quick transition to full-blown democracy, wherein most of the Libertad Act requirements are met, is not likely.

If the U.S. desires to enter into more normalized relations with Cuba, including resolving outstanding property claims issues between the two countries, before the criteria of the Libertad Act are met (especially those related to a democratic government), then legislative adjustments will be necessary. Congress must alter some or all of the criteria, thereby allowing the President to enter into negotiations with a new government in Cuba or the successor regime to Fidel Castro. This could take the form of specific amendments or entirely new legislation establishing a new framework for dealing with Cuba.
Moreover, the nature of the agreements establishing the Tribunal and the Court (i.e. whether they are treaties or executive agreements) would determine the degree of legislative adjustments required by the U.S. Subsequent Article II treaties effectively modify earlier statutes, and specifically so if implementing legislation is passed. The Libertad Act is the controlling legislation on Cuba-U.S. relations, and its provisions establish both process and substance governing what relations the U.S. has with the current and future Cuban governments and how those relations may be effectuated. However, if the instruments are adopted as executive agreements, then more extensive legislative adjustments would be necessary.
That said, it is not our recommendation that Congress seek to lift the embargo against Cuba before addressing the property claims issue. Indeed, the embargo is widely seen as the key point of pressure to move the Cuban government into negotiations over the property issues. If the U.S. is seen to walk away from forcefully asserting the internationally recognized legal rights of its citizens, the signal to other regimes would amount to a green light for confiscation of U.S. assets in their countries as well.
Economically, while multinational corporations are not as likely to move as fast as Cuban-American investors in Cuba, they will want to get into Cuba fairly quickly as the government stabilizes and the market opens up. U.S. corporations will want to move in before foreign multinational corporations seeking to invest in Cuba, this reality will motivate them to take much less on their FCSC certified claims because their claims would be worth far less than the business opportunities that will present themselves. The mediation opportunity for medium and large claims within the Tribunal instrument seeks to meet this challenge.
Nevertheless, socially and politically, the racial disconnect between the populations in Cuban and the exile community could be problematic. The exile community is mainly Caucasian, contrasted with the population in Cuba which is 62% Afro-Cuban. This ethno-social disconnect has the potential to create friction between the two populations.  Under the Batista regime, Caucasian Cubans held power, but were also an ethnic majority on the island. Under the Raul Castro regime, Caucasian Cubans remain in power, but constitute a minority of the population on the island. The current system of political and economic power distribution in Cuba has been characterized as a quasi-Apartheid system.
The four major pillars of the Cuban economy are tourism, Venezuelan subsidies, Cuban health care to foreign patients, and nickel mining. Oil drilling has not yet beenexploited by the government as a fifth pillar of the economy, although significant reserves have been discovered in the Gulf of Mexico. Afro-Cubans are allowed to mine nickel and only participate in a limited way in the other sectors, but do not control them. Moreover, aid sent from the exile community goes to Caucasian Cubans, not Afro-
Cubans. Early members of the exile community were the wealthy Caucasian supporters of the corrupt land-regime under Batista which similarly held back Afro-Cubans. To the Afro-Cuban population on the island, then, a fight over property settlement is a fight amongst the Caucasians and the Afro-Cubans continue to lose either way.

If Afro-Cubans come to power in a democratic government (which by definition they might since they are the majority), the second instrument advocating a special Cuban court for exile claims could be seen as nothing more than a give-away to a wealthy Caucasian exile community that abandoned the struggle on the island and failed to support Afro-Cubans even during the Castro regime.
Consequently, several elements have been built into the instrument creating the Special Cuban Claims Court to mitigate this view. First, investment in the Cuban economy is encouraged instead of monetary compensation or property restitution. Second, innocent third parties currently occupying confiscated property are protected in their property rights – restitution will not occur in those instances. Third, financial assistance to the Cuban government specifically earmarked for this process is called for to come either directly from the USG or foreign financial institutions; thus, Cuban assets will not be diverted from assistance to the Cuban people to meeting property claim awards.
While predicting the exact course of any transition is impossible, we have tried to take into account the complex social and economic realities that will influence the course of a new Cuba.
The team of scholars at Creighton University who were entrusted by USAID with the Cuba-U.S. property claims project are among the top experts in their respective fields. They brought unique qualifications to undertake this work, and have succeeded in producing a blueprint for property claims settlement between Cuba and the United States that will not only resolve the outstanding claims of Americans and Cuban-Americans, but also contribute to the economic recovery of the island.
The team was comprised of Patrick J. Borchers, Vice President for Academic Affairs and Professor of Law, Michael J. Kelly, Associate Dean for Faculty Research and Professor of Law, Erika Moreno, Assistant Professor of Political Science, Richard C. Witmer, Associate Professor of Political Science, James S. Wunsch, Professor and Chair of the Department of Political Science, Arthur B. Pearlstein, Professor of Law and Director of the Werner Institute for Negotiation and Dispute Resolution. Many groups and group members participated at several levels of formal and informal discussion and development of the claims settlement instruments, including the leadership of the Cuban American Bar Association (CABA), the leadership of the Association for the Study of the Cuban Economy (ASCE), United States Southern Command, the Cuba Study Group, and the Cuba Transition Project at the University of Miami.
The model for property claims settlement between Cuba and the United States that we devised is one in which the short-term interests of the Claimants are addressed  simultaneously with the long-term interests of normalized Cuba-U.S. relations, stabilized post-embargo circumstances in Cuba, sustainable foreign investment in the Cuban economy, and direct and indirect benefit to the Cuban people. Moreover, the interests of all Claimant classes are addressed in furtherance of decreasing cross-strait turmoil and mending Cuban-American/Cuban relations.
Additionally, property interests of Claimant parties are recognized and addressed with compensatory, restitution, or mediated investment awards while the property interests of innocent third parties in Cuba are also recognized and protected. Nobody on the island will be turned out of their homes. Yet nobody with a verifiable claim of property confiscation will come away empty-handed. Our models for property claims settlement are the best, most legitimate, and most


1 The full Report is available at http://law.creighton.edu/cubareport/index.pdf. The Report fulfillsCreighton University’s commitment under its agreement with USAID’s Cuba Transition to Democracy Program, completed pursuant to the grant awarded in response to RFA# M/OAA/GRO/LMA-05-LAC/CUBA. The views expressed in the Report are those of the investigators, not USAID, Creighton University, nor the U.S. Government.

Saturday, July 17, 2010

States, Labor as a Market Commodity, and Human Rights Frameworks--Cuba's Grannacional Programs at the Intersection of Business and Human Rights

The Association for the Study of the Cuban Economy (ASCE) will beholding its 20th annual meeting this coming July 28-Aug. 1, 2010 in Miami, Florida. As usual, the program is varied and informative, combining representatives from a broader spectrum of opinion than is common in meetings associated with the study of Cuba. "The main theme for the meeting will be “Cuba at the Crossroads in the 21st Century" focusing on Cuba's existing economic and social conditions, recent Cuban policies to address the impact of the world economic and financial crises, Cuban policy shortcomings, and needed structural reforms. " ASCE XXth Annual Meeting.

I have provided below a preliminary draft of the paper I will be presenting at the conference, as part of a panel discussing issues of Human Rights in Cuba.  The paper can also be downloaded by clicking  here.

Thursday, July 15, 2010

Corporate Law and Obligation to Respect Human Rights--Report of the Corporate Law Project

Vanessa Zimmerman, Legal Adviser to John Ruggie, the UN Special Representative on Business and Human Rights recently shared the results of a research project prepared under the mandate of the Special Representative of the UN Secretary-General on Business and Human Rights that examined whether and how corporate and securities law in more than 40 jurisdictions around the world currently foster corporate respect for human rights.  UN Special Representative John Ruggie: “Corporate Law Project: Overarching trends and observations” 
Ms. Zimmerman noted that, to her knowledge, this is the first in-depth, comparative study of the links between human rights and corporate and securities law. More than 20 leading corporate law firms from around the world participated in the research on a pro bono basis.  The Report starts with a brief Executive Summary (pages 1-3) and Annexes B and C set out the participating firms as well as the jurisdictions covered. Annex A provides the common research template upon which the firms were asked to base jurisdiction‐specific surveys. The template explores subjects such as incorporation and listing; directors’ duties; reporting; and stakeholder engagement. Ms. Zimmerman reminds us that  the report is strictly informational, it does not present views on legal and policy reform options in this area, nor does it independently assess the firms’ interpretation of existing law.

The conclusions are modestly heartening.  First, corporate law does recognize a limited obligation to take into account the human rights impacts of corporate activity.  But usually that obligation is derivative of the primary obligation to report all activity that might have a material impact on the financial condition of the company.  Since the focus of corporate law remains shareholder (or entity) wealth maximization, the focus of reporting is on financial impact rather than on the character of the actions themselves.  The Report provides a vivid reminder of the universality, power, and impact of the often ignored fundamental premise of corporate organization--the obligation maximize the welfare of the entity and its principal stakeholders (the providers of capital).  There have been modest movement to privilege the reporting of human rights specific actions, but those tend to be in a very early stage of development and hardly effective as a foundation for changes in corporate behavior.  

Second, the Report confirms the great implementation impediment--regulatory incoherence. See, Larry Catá Backer, On Challenges to Operationalizing a Transnational Framework for Business and Human Rights--the View From Geneva, Law at the End of the Day, Oct. 13, 2009. The Report describes the extent of ambiguity in corporate and securities law regarding not only what companies or their officers are required to do regarding human rights, but in some cases even what they are permitted to do. It also focuses on the anemic coordination between corporate regulators and government agencies tasked with implementing human rights obligations. The resulting regulatory incoherence--with multiple governmental organs failing to coordinate, communicate and sometimes act in a coordinated manner, provides significant opportunities to avoid any movement to address the issue of the legal obligations of business to take the human rights consequences of their activities into account.  This, in turn, strengthens the case for the further development of an autonomous  governance framework for  corporate behavior.

The Executive Summary is reproduced below:

Mandate of the Special Representative of the Secretary-General (SRSG) on the Issue of Human Rights and Transnational Corporations and other Business Enterprises
July 2010
This paper is based on surveys of over 40 individual jurisdictions conducted with the pro bono assistance of more than 20 leading corporate law firms from around the world, using a common research template provided by the SRSG.
Corporate and securities law directly shapes what companies do and how they do it. Yet its implications for human rights remain poorly understood. The two are often viewed as distinct legal and policy spheres, populated by different communities of practice.

Accordingly, in early 2009, the Special Representative of the UN Secretary‐General (SRSG) on Business and Human Rights announced his Corporate Law Project (CL Project). It involved more than 20 leading corporate law firms from around the world helping on a pro bono basis to identify whether and how corporate and securities law in over 40 jurisdictions currently encourages companies to respect human rights. The firms were asked to prepare jurisdiction‐specific surveys based on a research template provided by the SRSG, exploring subjects such as incorporation and listing; directors’ duties; reporting; and stakeholder engagement. Several expert consultations have been held to discuss the firms’ work and options for, as well as challenges to, legal and policy reform in this area.

To the SRSG’s knowledge this project is the first in‐depth, multi‐jurisdictional exploration of the links between corporate and securities law and human rights.

The CL Project forms part of the SRSG’s work to operationalize what is now commonly known as the UN Protect, Respect and Remedy Framework for business and human rights. The Framework was welcomed unanimously by the UN Human Rights Council in 2008 and it enjoys broad support from all stakeholder groups. It rests on three differentiated yet complementary pillars: the state duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation, and adjudication; the corporate responsibility to respect human rights, which in essence means to act with due diligence to avoid infringing on the rights of others; and greater access by victims to effective remedy, judicial and non‐judicial. The CL Project focuses on the role of states regarding corporate and securities law and policy, but it is also relevant to the concerns of the other two pillars.

This paper outlines the overarching trends that emerged from the participating firms’ surveys on individual jurisdictions. It does not present views on legal and policy reform options in this area, nor does it independently assess the firms’ interpretation of existing law.

The surveys indicate that current corporate and securities law does recognize human rights to a limited extent. Put simply, where human rights impacts may harm the company’s short or long term interests if they are not adequately identified, managed and reported, companies and their officers may risk non‐compliance with a variety of rules promoting corporate governance, risk management and market safeguards. And even where the company itself is not at risk, several states recognize through their corporate and securities laws that responsible corporate practice should not entail negative social or environmental consequences, including for human rights.

Yet despite these links, the CL Project also highlights two other patterns. One is a lack of clarity in corporate and securities law regarding not only what companies or their officers are required to do regarding human rights, but in some cases even what they are permitted to do. The other is the limited (to non‐existent) coordination between corporate regulators and government agencies tasked with implementing human rights obligations. As a result, companies and their officers appear to get little if any guidance on how best to oversee their company’s respect for human rights.

The following is a brief summary of the main trends from each section of this paper:

Incorporation and listing: The surveys suggest that most jurisdictions bestow some form of limited liability and separate legal personality on companies at incorporation. Exceptions to the applicability of these concepts are rare, with regulators and courts extremely reluctant to “pierce the corporate veil” except in limited situations, such as fraud. Moreover, none of the surveys indicate that incorporation laws expressly require companies to recognize a duty to society at the point of incorporation, although some contend that this could be implied from obligations to incorporate for a proper or lawful purpose, especially where the state has strong laws guaranteeing human rights protection. The act of listing is also generally not linked to any recognition of a duty to society, although some listing rules are starting to encourage companies to consider and act on human rights‐related impacts, mainly using environmental, social and governance language.

Directors’ Duties: The surveys indicate that in most jurisdictions directors owe their duties to the company and have an over‐arching duty to act in the company’s best interests, which generally means the shareholders’ interests as a whole. Some jurisdictions are moving towards the “enlightened shareholder value” approach, which means incorporating sustainability concerns into assessments of the company’s best interests, given the potential legal and reputational risks to its’ long term success of not doing so.

The surveys suggest that directors are rarely expressly required to consider non‐shareholders’ interests, such as those of employees, customers or community members impacted by the company’s activities. Nevertheless, most surveys contend that if not considering human rights impacts could lead to the company breaching the law or encountering reputational risk, and thus potentially damaging the company’s long‐term interests, directors should consider them as part of their ordinary duties to act with due care and diligence. Most surveys also say that directors are permitted to consider such impacts provided that their consideration of these risks accords with the company’s best interests. But they also highlight that regulators generally provide little guidance as to how to make such balancing decisions, even where states have express legislative provisions allowing directors to consider social or environmental issues.

In instances where directors should consider non‐shareholder impacts, including human rights impacts, such duties appear to remain at the oversight level and subject to wide directorial discretion. For example, to fulfill these duties directors might be expected to help develop processes and policies to prevent and address negative human rights impacts, but they would not be responsible for implementing those policies and practices on a day‐to‐day basis.

Reporting: The law firms’ surveys indicate that in most jurisdictions companies must disclose all information that is “material” or “significant” to their operations and financial condition. Where a human rights impact reaches that threshold, the companies generally would be required to disclose it. But the surveys also confirm that there is limited regulatory guidance on when a human rights impact might reach that threshold.

The surveys highlight that some countries are starting to require separate corporate social responsibility (CSR) reports for particular types of companies, typically listed companies and state‐owned enterprises. Such provisions tend to focus on reporting of policies rather than impacts, and they are not subject to the same accessibility and verification requirements as financial reports. Stock exchanges and voluntary corporate governance guidelines are increasingly encouraging companies to report on their environmental and social policies but again, express references to human rights are rare.
Stakeholder Engagement: The surveys suggest that there are generally few substantive impediments to shareholders including human rights concerns in shareholder proposals for annual general meetings. Moreover, in some jurisdictions there appears to have been a recent shift of regulators being less likely to agree to the requests made by some companies to block such proposals. But there are procedural barriers. For example, share quotas to circulate proxy proposals may be a constraining factor for minority shareholders wishing to raise human rights concerns (such as socially responsible investors, employees and community members impacted by the company’s activities).

The law firms’ surveys indicate that pension fund trustees are rarely expressly required to consider the human rights impacts of their investments, although some are asked to say whether they have a socially responsible investment policy. Nevertheless, most surveys say that if not considering such impacts could expose the fund to legal or reputational risk, then a trustee would need to consider them. While it is rare for legislation to expressly allow trustees to consider such impacts, there has been some governmental encouragement to do so.

Other Corporate Governance Issues: The surveys suggest that while there is variation in the ways in which corporate governance codes and guidelines address CSR issues, there is also a commonality in that they are starting to deal with these issues; they are rarely entirely “voluntary” in practice; and they increasingly rely on international CSR initiatives to help frame any relevant guidance. Nevertheless, direct references to human rights in relevant codes and guidelines remain rare.

According to the surveys, it is rare to require representation of any constituencies on boards apart from shareholders. Where such requirements exist, typically they involve employees or, in the case of state‐owned enterprises, the government. It is also rare to see requirements for gender or racial representation on company boards, although it is common for general non‐discrimination laws to apply to board appointments. In states where mandatory gender representation has been considered there have been some constitutional challenges on the basis that such requirements represent impermissible positive discrimination.

The SRSG hopes that the Corporate Law Project will encourage further scholarship moving beyond the 40‐plus jurisdictions considered in this project, as well as stimulate discussion among the key, although often disparate, actors involved, including human rights lawyers and advocates, corporate and securities law experts, company representatives and government regulators.

The SRSG is exploring what guidance he might provide on the issues considered in the CL Project in his final Guiding Principles to be presented to the UN Human Rights Council in June 2011.