Sunday, May 06, 2012

Corporate Social Responsibility and the Human Rights Duty of States: IKEA, Cuba, and the Corporate Responsibility to Protect Human Rights

One of the thorniest issues of corporate social responsibility involves  the liability of corporate actors when they engage in activities that may have an adverse human rights impact under international social norms (so-called soft law adopted through internal corporate governance mechanisms) but which may not constitute a breach of the domestic law of the state where the activity occurs.  

(From Kate Connolly, IKEA faces allegations that it used Cuban prisoners to make its products, The Guardian, May 3, 2012)


Even if the corporation is implicit in the actions of the state, can the corporation be found to have violated its obligations under international norms when the state at whose instance the conduct occurred is not deemed to have violated either its domestic or international law obligations? IKEA has recently discovered the difficulties of a global order in which its global normative obligations may be substantially different than those of the states with whom it participated in activity. It may find itself complicit in acts legal when undertaken by a state within its borders but which are breaches of the corporations global human rights obligations elsewhere. In effect, the issue suggests outlines of that space where the obligations of corporations  to avoid  adverse impacts may be greater than those applicable to states.

The Guardian reported:
Ikea is facing allegations that it used Cuban prisoners to make its products in the 1980s.

The claims follow allegations this week that East German political prisoners were forced to make furniture for the Swedish retailer from the 1970s.

According to a report in the Frankfurter Allgemeine Zeitung, a deal to make Ikea furniture in Cuban prisons was hatched using East German trading connections.

The agreement was signed in September 1987, according to files held in the Stasi archivesfiles, after a delegation of East German business representatives went to Havana for talks with the Cuban Interior Ministry.

Talks were held with several government officials, including Enrique Sanchez, the head of the state company Emiat which was responsible for furnishing the homes of the Cuban political elite. According to the files, the production sites discussed were "incorporated in the Interior Ministry's prison facilities".

The contract signed required Cuba to produce 35,000 dining tables, 10,000 children's tables, and 4,000 three-piece suites.

Ikea reacted to the reports, which emerged following an investigation by Swedish television, by saying it had begun its own inquiry and was keen to see the Stasi files to check for evidence and compare them with the company's own records.

A spokeswoman said Ikea "condemned the use of political prisoners" in its production "in the strongest possible terms". She added the company took the claims very seriously, though denied that Ikea knew it had been using prison labour.  (From Kate Connolly, IKEA faces allegations that it used Cuban prisoners to make its products, The Guardian, May 3, 2012).
Ironically, it has been American state officials, usually among the first to except their nation from and the last to wrap themselves in international norms, that have reminded IKEA of both its international obligations and of the autonomy of those obligations from the laws of the states in which they operate or with which they engage in joint ventures.
South Florida Republican Rep. Ileana Ros-Lehtinen, the chairman of the House Foreign Affairs Committee, said Friday that she urges IKEA to continue its investigation of the allegations.

“All entities, including major corporations, have a moral responsibility to assure they are not used by tyrannical regimes to further violate human rights,’’ she said.

In Miami, former political prisoners said forced labor is habitual in Cuba’s correctional system, although none had any information about the alleged collaboration with IKEA.

“Although there was forced labor, political prisoners in Cuba refused to do that type of work,” said Ernesto Díaz, who was a prisoner when the agreements with IKEA were allegedly in place.

The issue of forced labor in Cuba also arose in a different context several years ago when three Cuban men forced to work 16-hour shifts at 3½ cents an hour repairing ships for a Cuban joint venture in Curacao sued in U.S. federal court in Miami. (Alfonso Chardy, Report: IKEA used Cuban prison labor to make furniture in the late 1980s, The Miami Herald, May 5, 2012).
 Of course, what Congressperson Ros-Lehtinen speaks of as a moral responsibility is something substantially more binding beyond the law structures of states. States, including the United States, have recognized the existence of a set of behavior norms grounded in international norms that may bind corporate action.  See, e.g., Backer, Larry Catá, From Institutional Misalignment to Socially Sustainable Governance: The Guiding Principles for the Implementation of the United Nation’s 'Protect, Respect and Remedy' and the Construction of Inter-Systemic Global Governance (September 5, 2011). Pacific McGeorge Global Business & Development Law Journal, 2011. 
The effects of these normative structures, can be substantial.  This should come as no surprise.  I have suggested the exposure of states to new international standards for business and human rights that may produce liability when states engage in economic or commercial transactions beyond their national boundaries.  But I also suggested that companies that engaged in joint venture transactions with states might as well be deemed complicit in the human rights breaches of their state partners. Backer, Larry Catá, Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights Handbook on Contemporary Cuba: Economy, Civil Society, and Globalization (New York: CUNY/Paradigm Press, forthcoming 2012). In that examination I suggested the exposure of states to new international standards for business and human rights that may produce liability when states engage in economic or commercial transactions beyond their national boundaries.  But I also suggested that companies that engaged in joint venture transactions with states might as well be deemed complicit in the human rights breaches of their state partners.  The U.N. Guiding Principles of Business and Human Rights suggests the two aspects of complicity--one legal and the other normative:

Questions of complicity may arise when a business enterprise contributes to, or is seen as contributing to, adverse human rights impacts caused by other parties. Complicity has both non-legal and legal meanings. As a non-legal matter, business enterprises may be perceived as being “complicit” in the acts of another party where, for example, they are seen to benefit from an abuse committed by that party.

As a legal matter, most national jurisdictions prohibit complicity in the commission of a crime, and a number allow for criminal liability of business enterprises in such cases. Typically, civil actions can also be based on an enterprise's alleged contribution to a harm, although these may not be framed in human rights terms. The weight of international criminal law jurisprudence indicates that the relevant standard for aiding and abetting is knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime. (U.N. Guiding Principles of Business and Human Rights, Para. 17 Commentary)
See also Important among these are notions of complicity.  Clapham, Andrew and Scott Jerbi. 2001. “Categories of Corporate Complicity in Human Rights Abuses.” Hastings Int’l & Comp. L. Rev. 24:339; Ramasastry, Anita. 2002. “Corporate Complicity: from Nuremberg to Rangoon.” Berkeley J. Int’l L. 20:91:
liability for violations of human rights under a complicity theory has become more important as a mechanism for enforcing human rights norms, especially against businesses . . . .  The legal basis of complicity remains unsettled as a matter of transnational law but extends to aiding and abetting the violation of human rights or humanitarian law (United Nations 2009). Complicity notions play a significant role in the liability framework under emerging international corporate governance soft law frameworks . . . . The issue of complicity will tend to revolve around a number of factual determinations: whether through action or inaction, a company enabled, exacerbated or facilitated the specific abuses, intent or reckless disregard, and proximity. (From Backer, Larry Catá, Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights, supra).
 The potential breach of human rights norms by IKEA and its use of Cuban prisoners for a joint IKEA-Cuban transaction may take complicity one step farther.   IKEA may be deemed to breach its own obligations under soft law frameworks, like the U.N. Guiding Principles, and may even be liable for violating the laws of the state of its incorporation or those of states where the goods were sold.  However, it may also be possible that Cuba itself may not be in breach of any of its obligations, either under its own domestic law or its legal obligations to which it has bound itself.  The state duty to protect human rights is limited to those obligation sin international law that a state has obligated itself to incorporate into its domestic legal order.   

ad more here: http://www.miamiherald.com/2012/05/04/2784119/report-ikea-used-cuban-prison.html#storylink=cp)

Read more here: http://www.miamiherald.com/2012/05/04/2784119/report-ikea-used-cuban-prison.html#storylink=cpy

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