Unit 7, Lecture 3 - Legal approaches to hold transnational corporations accountable
International treaties (i.e. ILO conventions) are only binding for states, which ratified the respective conventions, not for companies. A principle of international law says that only states are subject to international conventions or treaties not companies. Current legal framework does not hold companies accountable if their cheap prices come at the cost of labor rights violations. Neither the UN guidelines on business and human rights or the OECD-Guidelines for MNEs are legally binding for TNCs.
Tort law – has been an avenue for claims of human rights violations. Unclear whether freedom of association and protection from excessive overtime is covered under tort law.
Another challenge: most TNC do production facilities but source from suppliers, which are legally completely independent. Therefore the supplier is held liable under the jurisdiction of the producing country.
In order to align themselves with the UN Guiding Principles, state would have to develop clear standards of responsibilities of the parent company for human and labor rights abuses as well as supplier and subsidiary firms. Such legal acts would increase the effectiveness of legal remedies in tort law.
French draft law on the “duty of care” of MNEs:
- elected representatives are considering draft legislation that would provide for identifying the responsibilities of French MNEs in terms of due diligence and duty of care
- MNEs will have develop a plan through which they intend to meet their social obligations including with regard to their subcontractors … provides for the involvement of representatives of trade unions and other organizations in the elaboration of the plan. The plan will be an obligation. If they fail to develop plan they will be liable to legal action if they are found to violate ILO Conventions.
Australian Model of Supply Chain Regulation
- imposes enforceable legal obligations on all business throughout the supply chain
- trade unions have access to all key contracts throughout the supply chain to track flow of work
- this system has been in operation for over a decade
- permits trade unions to enforce obligations for companies to know exactly how / where their work is performed.
- Accountability for the top of the supply chain is critical