24 April 2013, Dhaka, Bangladesh. A commercial building hosting several European and American garment and textile factories literally collapsed. 17 days of incessant search, 2,438 people evacuated. 1,129 victims, 2,500 injured, many of them with permanent impairments. Judicial charges currently pending, no victim has been compensated so far.
At the fifth anniversary of the Rana Plaza tragedy – known as the deadliest disaster in the garment industry – the question of whether multinational corporations should be held accountable for human rights violations is one of the most controversial debates within the international community. Indeed, only states are traditionally bound by international norms, which include human rights obligations. As a result, corporations’ activities remain one of the most illustrative examples of the constant clash between private and public interests.
Why does it seem urgent to bind corporations to respect human rights? Do we need human rights norms to have justice in the corporate world? After all, corporations can be held accountable before a national judicial body just by framing a claim for tort or criminal offences. This is absolutely correct and is the main function of domestic legal orders.
The problems arose, nonetheless, when companies started spreading their activities worldwide: terms such as “transnational corporations”, “parent companies”, “subsidiaries”, “place of incorporation” entered into common vocabulary. As a consequence, the adjudicative process by domestic courts was rendered complex, unpredictable and mutually conflicting. In many cases, courts rejected jurisdiction by evoking the bugbear of non-interference in sovereign states’ internal affairs. They did so precisely because they were unable to establish the link between the company, the abuses perpetrated and the court’s judicial competences (traditionally circumscribed within the borders of individual states). The result? No remedy for human rights victims.
After several attempts to expand the reach of corporate regulations beyond states’ borders, the French Parliament enacted the Corporate Duty of Vigilance Law in March 2017. The law is considered one of the most advanced instruments to grasp some fundamental issues on corporate responsibility: following this law, parent companies must establish a Vigilance Plan “to identify and assess their existing and potential adverse impacts, to prevent or mitigate these impacts, and to track and report on the outcomes of their actions in a transparent way”. Corporations must also demonstrate effective implementation of the plan.
Individuals and communities are empowered to go before French civil courts in cases where corporations do not comply with these two fundamental requirements or when there are damages that could have been avoided with an effective plan. Hence, this legal instrument operates both as an ex-post judicial mean and – more importantly – as a deterrent against negligent or harmful behaviors that may expose the company to legal, financial and reputational risks.
This preventive function is deemed a considerable step to meet the requirements of the United Nations Guiding Principles on Business and Human Rights (UNGP), which is a soft law instrument that has been developed by the UN Special Representative of the Secretary-General, John Ruggie, and obtained wide endorsement in the international community. The second pillar of the principles states that corporations have “direct corporate responsibility to prevent and mitigate human rights impacts through their own activities and as a result of their business relationships”. Interestingly, principle 14 of the UNGP’s second pillar offers a sort of “loophole” for corporations, stating that their responsibility may vary according to their “size, sector, operational context, ownership and structure”. In this sense, the French Law is more stringent, as it explicitly covers directly or indirectly controlled subsidiaries, subcontractors and suppliers. This may put an end to complex corporate structures that are created ad hoc to minimize liabilities, but it also imposes the obligation to constantly monitor the entire company’s supply chain.
So, what if the Corporate Duty of Vigilance Law had existed before the Rana Plaza tragedy occurred? French companies whose suppliers or subcontractors were located in the Rana Plaza building would probably have had a Vigilance Plan for detecting existing or potential human rights impacts in their supply chain. Through this plan, they would have mapped the human rights risks, formalized monitoring and alert mechanisms, developed partnerships with relevant stakeholders (for example, trade unions) and implemented actions to prevent injuries, as mandated by Article 1 of the law.
Although some issues still need to be tackled according to business and human rights experts (especially the effective access to French courts by foreign individuals), the Corporate Duty of Vigilance Law certainly provides a good legal framework for corporate self-assessment over their entire supply chain. Monitoring both positive and negative consequences connected to corporate activities is the first step for preventing future tragedies. The French law offers a chink of light five years later the Rana Plaza collapse.
 The Law covers companies established in France that at the end of two consecutive financial year employ 5 thousand employees in their head office and in its direct or indirect subsidiaries whose head office is located in France; OR companies which employ ten thousand employees within the company and in their direct or indirect subsidiaries whose head office is located in France or abroad.
Image courtesy of Flickr. Originally published by S&S on May 24, 2018.