Should Canadian or American multinationals (MNCs) be held accountable in Canada or the USA for the human rights violations that they commit abroad? Why or why not? Illustrate your answer with examples.

1. Canadian or American multinationals’accountability
in Canada or the USA for the human rights violations
that they commit abroad
Shirley Li
MGMT 563 International Law and Global Trade Organizations
Dr.Connie Carter
June 12, 2013

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Introduction:
In the process of globalization multinational corporations (MNCs) have substantial
economic and political influence. The crucial presence in many national economies
makes MNCs in a historical position to influence economic development and
government policies and also enables them to contribute in both positive and negative
ways to basic human rights issues, among which some MNCs that are solely pursuing
profits are implicated in many human rights abuses.
WhetherCanadian or American MNCs should be held accountable in Canada or the
USA for the human rights violations that they commit abroad? My answeris YES.I
will explain this answer by using legal principlesand embed legislations like C-323
bills, Alien Tort Statute1789with real case analysis with each principle.Also, there are
substantial obstacles existing against enabling justice in the current Canadian and
American legal systems, which should also try to be improved and conquered.
Principles:
1. State Responsibility
Respect for human rights is one of the general principles recognized by civilized
nations. Ten human rights principles of UN (August, Mayer and Michael 2013, 44)
require companies to respect human rights and labor standards. The UN Human
Rights Council recently also endorsed a set of Guiding Principlesthat regulate the
state duty and corporate responsibility to protect human rights.The foundational
principles are “countries must protect against human rights abuse within their territory
and/or jurisdiction by third parties, including business enterprises” and “Business
enterprises should respect human rights.” (United Nations Human Rights 2013).
However,these principles have defects.For example each country are only responsible
for the human rights violations within its sovereign territory, companies are
encouraged but not obliged to respect human rights.There is no clause talking about

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MNCs’ accountability in its home country if it violated human rights in other
countries.Because of the lack of regulation from international institution, there is a
high chance that MNCs will continue to perform their violationsprovided there areno
national enforcementmechanisms to regulate their behavior.
This explains international institutions do not have scrutiny and sanctions mechanism
to regulate the corporate behavior and as a result leaves the obligation to each country
to use its domestic legal system to regulate these corporations and to protect global
human rights and justice.Canada and USA should keep aligning their legal practice
with international law to regulate their own MNCs and address the benefits for all the
human beings without bias in order to achieve international justice.
2. Victims’ difficulty to get justice in local court
MNCs usually have a parent corporation in home country (usually developed
countries) and subsidiaries in other host countries (usually underdeveloped countries).
The host countries that people suffer from harms, tortures and other abuses are either
labor or natural resource intensive regions with serious governmental corruptionor
they are giving priority to economy development.They either have poor legal system
or do not have sufficient enforcement of laws. Hence it becomes very difficult for the
victims in host countries to seek redress through their own legal system. While home
countries usually have sophisticated legal system and sufficient law enforcement.
There is a lawsuit called Somji v Somji about a dispute over matrimonial property in
Tanzania, a judge in Alberta decided that Alberta was the better forum for a dispute
involving Tanzanian law because “Tanzania presently faces significant governance
issues” (Meeran 2011)
At the same time, acts and legislations like C-323 bill (pending to be law) in Canada
and Alien Tort Statute1789 (ATS) in USA are means to seek justice for protecting
basic human rights of people in other countries.

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3. Parent company’s duty of care and negligence
Although we justified the motivation why victims seek remedy from the headquarters
of MNCs in their home court, another question is raised for discussion whether parent
company is responsible for the local operation of its subsidiaries.
Based on the “corporate veil”, corporations have separate corporate personalities,
which means a parent company as a separate legal person could not be held
accountable for the conduct of its subsidiaries although it invest as a shareholder to its
subsidiaries (Salmon v A Salmon & Co Ltd 1897). However there are also exceptional
situations. For instance when the subsidiary is operated by its parent company and the
parent company misconducted on its behalf because of the wrong doings like fraud or
“direct negligence” (Meeran 2011), then the parent company is held accountable.
In most of the real world practices, MNCs’ parent companies usually have an integral
involvement in the process management in its subsidiaries abroad.Moreover, there are
general understanding about that corporations (as they have breached) have a “moral
obligation” to its subsidiaries companies and the local communities, employees and
environment, MNCs parent companies hence could not avoid “duty of care” and
“negligence” in managing its subsidiaries’ conduct.
4. Alien Tort Statute
The Alien Tort Statute (ATS) is a U.S. federal law which was first adopted in 1789.
This law gives the federal courts jurisdiction to hear lawsuits filed by aliens (non-U.S.
citizens) for violation of international law.Nowadays non-U.S. citizens use ATS to
bring lawsuits in U.S. federal courts for the violations of international law which have
expanded to human rights abuse such as arbitrary arrest, torture, killing, war crimes,
and other crimes against humanity.For a long time since the first case that used ATS,
victims ofhuman rights violations in other countries have used itas aneffective means
to seek justice in the United States.(The centre for justice and accountability n.d.)

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In the case of Wang Xiaoning v. Yahoo!for example, Wang (victim) sued the Chinese
subsidiary of Yahoo! company (defendant)under the ATS. The Chinese Yahoo! gave
the Chinese government Wang’s identity information which allowed the government
authorities to arrest him and Wang was subjected to various human right abuse like
torture arbitrary arrest and forced labor and other cruel treatment and punishment. In
the year 2007, World Organization for Human Rights USA filed a lawsuit against
Yahoo! on behalf of Wang Xiaoning under the ATS. (Diaz and Cha 2007)
In November 2007 Yahoo! settled the case for an undisclosed amount of money, and it
agreed to cover the plaintiff's legal costs as well. In a statement released by Yahoo!
after the settlement was made, this company promise that it will provide “financial,
humanitarian and legal support to these families” and create a separate “humanitarian
relief fund' for other dissidents and their families.” (Diaz and Cha 2007)
This is a good example that foreign citizens defend their human rights against
American companies outside of US (a subsidiary) under the ATS there are more
successful cases. However it is also critical that most of them get settled outside of the
court.
Obstacles
1. Procedural factors and “Comity”
Although there are obvious reasons for Canada and USA courts to hold its own MNCs
(head office in their countries) accountable for their overseas misconduct, the way to
get justice in Canada and USA is not easy.
There are jurisdiction over a claim against a parent company, but there are several
procedural factors will depend whether the court will accept or not. In particular the
following ones: a, The extent to which the MNC home courts are able to decline to
exercise jurisdiction; b, The law by reference to which the liability of the parent
company is to be determined; c, Otherprocedural and practical factors affecting the

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financial viability of litigation and victims’lawyers’ability and willingness to act.
(Meeran 2011).
So the essential question for Canadian court is whether Canada is “an appropriate
forum” or is there a “more appropriate forum” for the trial than Canadian court that
the application could be served which is called “The forum non conveniens”
principle.
For example in the law case of Recherches Internationales Quebec v Cambior Inc,as
many as 23,000 victims affected by the spill of toxic effluents into Guyana’s main
waterway because of a gold mine burst. One shareholder is Cambior Inc. of Quebec.
During the proceeding process, the Quebec court wasespecially concerned and
emphasized comityand respect for the courts of Guyana by focusing on the evidence
of how effectively Guyanese courts work, which finally lead to the dismissal of the
proceedings (Lee 2005).
2. Unbalanced power
Although victims from host countries could sometimes get help from NGOs, they can
mostly not afford of harm and usually at the lowest social hierarchy while the MNCs
have abundant of resource and interest of the state and sometimes these industries are
strong enough to avoid the laws or influence to change the rules or treaties (Eisenberg
2013).
Canada for example, as a home to 75% of the world’s mining companies, its global
mining industry (majority overseas) consists of corporations which are “the worst
human rights and environmental offenders in the world” (Whittington 2010)Some
investment treaties that the Canadian government made allow companies to challenge
environmental, public health or other resource-related policies that affect mining
profits so that the mining industries can enjoy impunity. ?? The way to do that is by
not offering legal resources to the impacted victims. These conditions have made
Canada a “heaven” for the global mining industry. (Karunananthan 2013)

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The human right violations happened in the mining industries outside of Canada
includeAnti-mining activists are brutally attacked and killed for opposition and
tremendous consumption and contamination of precious local water resource
(Earthworks and miningWatch canada 2012).However, even when Canadian
corporations are found in violation of human rights, very few of the victims could get
justice to hold them accountable in a Canadian court.
3. ATS and effect of Kiobel v. Shell for future claims
The ATS in US gives federal courts the power to hear suits by aliens for torts. In the
case of John Doe v. Unocal Corp, the Burmese plaintiffssued the American oil
company Unocal in California court under the ATS, for the various human rights
abuse including forced labor, false imprisonment assault and brutal oppression of
people living near a pipeline project in Myanmar, formerly known as Burma. In the
same year, a U.S. federal district court agreed to hear the case and the result they gave
was that Unocal can be held accountable under ATS for the violation of human rights
overseas and that U.S. courts have the authority to do such claims.Although
eventually the case was voluntarily dismissed because the parties announced that they
had reached a settlement but it becomes a landmark case that ATS is a very useful tool
for victims overseas to bring a lawsuit to United States and hold US companies
accountable. (Wikipedia n.d.)
However, the lawsuit brought by Nigerian citizens against Royal Dutch Shell
Corporation didn’t get a satisfying result. Shell, the defendant, allegedly assisted the
military dictatorship in the torture, rape, and killing of unarmed protesters and
Nigerian citizens in the 1990s. The plaintiffs were not able to sue the defendant due to
the domestic legal and political situation hence sued in the United States by using ATS.
At the same time the defendant argued that corporations are not bound by human right
law so US court should not rule the activities companies whose head quarter in other
country outside of US commit human rights violation in the third country. (Kiobel v.
Shell n.d.)

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The end result fromUS Supreme Court was plaintiffs’ failure.This brought significant
impact as a precedent was set so that in any cases like this one, where a foreign
(instead of US) corporation acted overseas, the defendant cannot be held liable in U.S.
federal courts.
Conclusion
From the above analysis, we can get a conclusion that Canadian and US corporations
should be held accountable in their home countries for their human rights violations
committed abroad because of international requirement, unbalanced legal resource in
and out their countries, their own responsibilities and capabilities (ATS). There are
sufficient evidence that social justice could be obtained in Canada and USA as long as
they could positively proceed the lawsuits.
However at the same time, Canada and US’s legal system also set a lot of obstacles
and hurdles for foreign victims. X As stated above, complicated procedural factors
and “Comity” to other sovereign countries might just turn out to be a good excuse not
to perform their responsibility. The deeper root of this is the big influence from
profitable industries and egocentrism to protect national interest. From the cases that
foreign plaintiffs accuse US companies for violation of human rights under Alien Tort
Statute, only very few companies were finally held accountable while most of them
were settled outside of the court.This might be a good example that the legal system
in Canada and US needs to be more efficient to regulate their MNCs behavior outside
their territory.
Although there are pros and cons for the execution to hold Canadian or American
MNCs accountable in Canada or the USA for the human rights violations that they
commit abroad, I would like to conclude that it is necessary, beneficial and possible to
because this can keep universal justice, in order to realize which need more
improvement instead of excuses.

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