Legal, regulatory, and judicial gaps
Stronger enforcement models — beyond much needed transparency — are required to change corporate behavior and regulate their conduct.
- Corporate liability and responsibility:Despite significant legal and normative developments in the field of business and human rights, there is woefully little progress insofar as new criminal liability for corporate-sponsored human rights violations and crimes, extraterritoriality (beyond 5-10 national laws with some extraterritorial applicability), and access to meaningful remedy for rightsholders.
According to Paloma Muñoz of BSR, “Ideologically, and for many years, States did not believe in the concept of corporate responsibility because the private sector cannot violate human rights (an outdated view from the 1980s). That is, there is no human rights culture in State bodies with respect to corporate operations.”
- Customary international law / binding treaty:A report by Open Secrets (South Africa) emphasizes that, “[D]espite the power of global private financial institutions and their persistent role in financial crimes, there remains no customary international law or binding treaty to supervise financial institutions. Legal principles for corporate accountability, particularly for past crimes, lag behind those for holding individual actors to account.” It goes on to explain how, though some activities may be legal, whether by statute or omission, they can still lead to crimes.
“In many of the cases considered in this report, the actions of the corporations do not technically constitute ‘crimes’. Many economic activities (for example, profit-shifting) are legal, and corporations will skirt the lines of lawfulness to extract as much value as possible while escaping legal obligations. However, the fact that a certain activity is ‘lawful’ does not mean that it cannot have unjust outcomes, or that the only economic crimes which exist are those already codified in law. Often, ‘lawful’ economic activity can contribute to heightened poverty and inequality, and can negatively impact [sic] human rights. Civil society groups can play a vital role in advocating for the state to develop the law where new economic crimes are needed, or to increase regulation around a certain economic activity. We must remain vigilant to ensure that the law is able to fulfill and protect constitutionally embedded rights.” (Open Secrets, “Economic and Crime Report: The Bankers)
- Implementation and enforcement of due diligence legislation:There is broad skepticism in the Global South about the implementation and enforceability ofEuropean supply chain due diligence and similar laws,which is twofold.
On one hand, so as to avoid neo-colonial imposition, these laws must authentically adapt to each extraterritorial jurisdiction’s reality. A big gap is the scarcity of due diligence laws in the Global South to mirror those in Europe. A one-size-fits-all approach will not work.
On the other hand, according to ProDESC (Mexico), “[Legal cases] under due diligence laws that bring litigation in the [host countries] can have greater harm prevention impacts and limit the practices of certain industries. For example, in ProDESC’s Électricité de France case in Oaxaca, the company intended to conduct a ‘checklist exercise’ to say that it had complied with France’s due diligence law, but the litigation in Mexico opened Pandora’s box and ensured that the company took it seriously.”
- Judicial interference:When rulings favor communities, corporations interfere to prevent them from being implemented.
A clear example is the case of the Cerrejón company, owned by Glencore, in Colombia. Despite more than ten rulings in favor of water rights, food sovereignty, and other human rights, the company that violated these rights interfered with the judiciary to prevent them from taking effect. Another emblematic case in Colombia is the diversion of the Bruno Creek in La Guajira, a semi-desert area. Despite a court decision favoring the community and the environment, the Cerrejón company pressured the State with a lawsuit, taking it to international tribunals.
Another way that companies exert pressure on court procedures and rules is byindirectly co-opting judges, including corporate sponsorship of judicial events — through which companies fund and actively participate in congresses, seminars, and courses for judges, justices, and ministers — and the payment of fees for speaking engagements at corporate-sponsored events.
- Judicial and procedural delays:In terms of access to justice, the expeditious determination of legal violations of human rights is emerging worldwide. However, important gaps remain, including: the length of judicial processes during which time human rights violations continue to harm rightsholders; the lack of specificity in legislation — for example, how a European judge interprets whether a due diligence violation abroad is even a violation in the host country — often results in rulings favoring companies; and reforms at the federal or national level not being expeditiously codified and enforced at sub-national and local levels.