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Published : July 03, 2015 | Author : sunklan Porwal
Category : Company Law | Total Views : 1721 | Rating :

  
sunklan Porwal
I am practicing advocate in Delhi High Court and also pursuing my Doctorate in International Trade Law & Environmental Law
 

Efficacy of Present Legal Framework In Combating Transgression By Transnational Corporation

In the existing scenario, the need for rapid industrial progress has led to the establishment of a number of transnational Corporations. The rationale behind the growing presence of TNCs in the international economic scenario is the competitive advantage of a global network of production. They usually have better access to international capital markets and can therefore, finance huge projects far more efficiently and lucratively. Transnational corporations have surfaced as a powerful economic as well as pecuniary force in present age of globalization. Transnational Corporations in the present day are acknowledged as massive business enterprise which bestride the economic as well as political worlds and fuses the two into one while formulating intercontinental trade transactions.

A UN study defines TNCs as “enterprises irrespective of their country of origin and their ownership, including private, public or mixed, comprising entities in two or more countries, regardless of the legal form and fields of activity of these entities, which operate under a system of decision making, permitting coherent policies and a common strategy through one or more decision-making centres, in which the entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the activities of others and, in particular, to share knowledge, resources and responsibilities with the others.”Thus, on the face of it, a TNC would appear to be a business entity that operates in more than one country through its subsidiaries and has control over the income-generating assets of not just its home country but also of its country of operation, i.e. the host country.

The phenomenon of globalization and the growing trend of liberalization have made it much easier for these TNCs to permeate state borders and establish themselves in countries more than just one or two.

Transnational corporations had strengthened their hold on the natural resources of the planet; they are simply imposing their agendas to the under-developed and developing countries and exploiting their major resources. Directly or indirectly, they bear a massive responsibility for the worsening of the environment and human rights violations. That even though they commit such illegal acts still able to escape from all democratic and judicial control.

Transnational corporations are legal persons in private law with multiple territorial implantations but with a single center for strategic decision making. They can operate through a parent corporation with subsidiaries; can set up groups within a single economic sector, conglomerates, or alliances having diverse activities; can consolidate through mergers or acquisitions or can create financial holding companies. They can segment their activities across various territories, acting through de facto or de jure subsidiaries and/or suppliers, subcontractors or licensees. Transnational corporations are active in production, services, finance, applied research, culture, leisure, and also in the military area. They operate in these areas simultaneously, successively or alternately.

Transnational corporations evoke particular concern in relation to recent global trends because they are active in some of the most dynamic sectors of national economies, such as extractive industries, telecommunications, information technology, electronic consumer goods, footwear and apparel, transport, banking and finance, insurance, and securities trading. They bring new jobs, capital, and technology. Some corporations make real efforts to achieve international standards by improving working conditions and raising local living conditions. They certainly are capable of exerting a positive influence in fostering development. Some transnational corporations, however, do not respect minimum international human rights standards and can thus be implicated in abuses such as employing child laborers, discriminating against certain groups of employees, failing to provide safe and healthy working conditions, attempting to repress independent trade unions, discouraging the right to bargain collectively, limiting the broad dissemination of appropriate technology and intellectual property, and dumping toxic wastes. Some of these abuses disproportionately affect developing countries, children, minorities, and women who work in unsafe and poorly paid production jobs, as well as indigenous communities and other vulnerable groups.

TNCs from developing economies have kept expanding their activities abroad. In 2004, their foreign assets climbed to $337 billion, from $249 billion in 2003. As in 2003, the five largest TNCs accounted for almost half of the foreign assets of the top 50. With foreign assets of $68 billion, Hutchison Whampoa (Hong Kong, China) continued in the leading position, accounting for as much as 20 per cent of the top 50’s foreign assets. Petronas (Malaysia), Singtel (Singapore), Samsung Electronics (the Republic of Korea), CITIC Group (China) and Cemex (Mexico) occupied the following positions, accounting for another 25 per cent. The regions and countries of origin of the top 50 TNCs have changed little over the years, and their geographic representation still favours South, East and South-East Asia. In 2004, Asia strengthened its dominance in the top 50, with 38 enterprises making the list. The other 12 enterprises came from South Africa (five), Mexico (four) and Brazil (three). Hong Kong, China (10) and Singapore (seven) were the most important home economies of the top 50 TNCs and Taiwan Province of China, with five companies in the top 50, was in third place. The top 50 TNCs operate in a wide range of industries. In 2004, the most important was the electrical/electronic equipments and computer industry, with a large number of companies from Asia, and the second most important, the food and beverages industry. Other relatively well represented industries in the top 50 included petroleum, telecommunications and transportation. In 2004, the top five companies in the top 50 list were also part of the world’s 100 largest non-financial TNCs. It is likely that in the future an increasing number of TNCs from developing economies will enter the list of the top 100, since outward FDI from these countries is expanding. For the time being, though, the large gap between TNCs from the developed and developing groups remains. For instance, the total foreign assets of the top 50 TNCs from developing economies in 2003 amounted to roughly the amount of foreign assets of a single firm, General Electric, the world’s largest TNC.

This article examines the efficiency of current legal framework in regulating the working mechanism of transnational corporation and scrutinizes the contribution by Judiciary in combating issues related to TNC’s moreover it focuses on how to counter the negative impact of TNC’s. The transnational corporation’s authoritative and dominant position inside the international community gives rise to conflicting propensity. It is seen that with nix enforcement instrument and implementation, international law relies profoundly on ethical and voluntary reasons for compliance. This article further examines the compulsions of host state to standardize the activities of transnational corporations within their jurisdiction in order to ensure an environment favorable to economic and societal enlargement moreover it also outlines the accountability of transnational corporation as emerging issue in international trade law. These corporations has transformed international trade model, leading to an astonishing intensity of transnationalization of the global economy. There are several issues in respect of legal mechanism concerning transnational corporation, some of them are enumerated below-

I. International framework concerning transnational corporations

The problem of the status of Transnational Corporation under International Law is complex because of the very nature of the functions of TNC’s. The question of TNC’s being subject under International law is important since these TNC’s/MNC’S are engaged in vast and complex international operations, which involve them in manifold contacts with different governments and in many cases with public international financial agencies which have a bearing on the international relations amongst the world community.

Malcolm N.Shaw described transnational corporation or multinational enterprise as another possible candidate for international personality. Various definitions exist of this important phenomenon in international relation. They in essence constitute private business organizations comprising several legal entities linked together by parent corporations and are distinguished by size and multinational spread. In the years following the Barcelona Traction Case, an increasing amount of practice has been evident on the international plane dealing with such corporation. What has been sought is a set of guidelines governing the major elements of the international conduct of these entities. However, progress has been slow and several crucial issues remain to be resolved, including the legal effect, if any, of such guidelines. The question of the international personality of transnational corporations remains an open one.

A multidimensional approach that combines binding rules, incentives and voluntary initiatives offers an alternative vision. The implementation of this approach should be based on the principle of vertical and horizontal subsidiarity: vertical through combining activities at the national, regional and international level; and horizontal by way of including governments, companies and civil society. Binding rules at both the national and international level serve as foundations for such a multidimensional approach. The first pillar is effective regulation at the national level. Bilateral and multilateral donors should offer support for building up national regulation systems. There should be no doubt that developing country governments bear the main responsibility for upholding human rights and the rule of law in their territory. At the same time, industrialized countries should help to set the right incentives for MNCs, for example, by making corruption a crime instead of making it tax deductible. The social and environmental record of companies should also factor into the decisions of export credit agencies. Regulation at the national level is key, but problems arise when effective regulation is not in place and when governments are unable or unwilling to guarantee basic human rights and social standards. This is why binding international rules need to form the second pillar of the multidimensional approach. Which fora could be used to develop such a binding framework? The current efforts to devise a CSR standard under the auspices of the International Organization for Standardization (ISO) are unlikely to suffice because the standard will not be certifiable. Introducing binding social and environmental clauses through the WTO would only overburden the organization politically and institutionally. The OECD Guidelines for Multinational Enterprise can serve as a useful starting point. However, given its limited membership, the OECD is not the right forum for negotiating binding global rules. For the time being, the UN, despite its well-known shortcomings, offers the best available forum for negotiating binding rules. These businesses have realized that without a binding set of rules, allegations will be tried in the court of public opinion where NGOs and critics determine the boundaries of the responsibilities of corporations. Corporations then often discover that the concept of corporate social responsibility is infinitely elastic if the division of responsibilities between the public and private sectors is not spelled out clearly.

Multinational corporations are the driving force behind the global economy. Reining in their unchecked power, imposing regulations that force accountability for human rights abuses, is indeed a challenge to modem capitalism. International law has attempted to develop applicable standards. The task ahead is to find effective mechanisms to enforce those norms, to ensure that the amorality of profit does not permit corporate human rights abuses to fester for another fifty years.

It is being noticed that because of the progression of globalization and speedy economic fruition in the last several years, transnational corporations have become enormously powerful and influential. There is an apparent misbalance between the plentiful rights enjoyed by transnational corporations and the limited obligations undertaken by them. Given their transnational nature, transnational corporations have been successfully avoiding national regulations of both their home and host states, and they are seeking to operate in countries with the lowest standards so as to increase their profits. This has resulted in the violation of International law. As a result, there is an escalating requirement for the creation of international instruments with express and clear obligations having deterrent binding effect in case of any violation of international legal norms including violation of environmental, human rights etc.

The international treaties and conventions relative to the protection and guarantee of human rights do not prevail, in practice, over international trade agreements and guidelines. It is a notorious fact that transnational corporations have acted in order to put economic interests before respect for human rights; this is known as the “new Lex Mercatoria,” or the trumping of international commercial law over international human rights law.

As early as 1970s, the thought of crafting a universal code of conduct for TNCs had come into sight. However, as this venture have the benefit of limited success and was never concluded it was superseded by voluntary initiatives aimed at nurturing corporate social responsibility through non-binding standards, moreover "Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights" were also adopted by the UN Sub-Commission on the Promotion and Protection of Human Rights in 2003. The UN Commission on Human Rights considered the Norms in 2004, but did not approve them and said they had "no legal standing".

II. Jurisdiction to grasp TNC’s

Transnational corporations are subject to a wide range of overlapping and often conflicting regulation in the jurisdictions in which they operate. There is no uniform international rule of law prohibiting successive prosecutions by different sovereigns, and there is often a lack of coordination among international enforcement authorities.

Transnational corporations know how to set up domicile in one or more than one country; the domicile can be in the country of the actual headquarters of the parent company or in the country where its principal activities are located and/or in the country where the company is chartered. To run away from their actions amounting to violations of human rights, labor and environmental legislation, as well as to evade taxes, they set up their own escape route without getting caught of unlawful act.

Transnational corporations are, in theory, subject to the law of a country, to the jurisdiction of its courts, but this elementary function of sovereignty is often abandoned by the governments themselves when dealing with TNCs. In fact, there is currently an international instance for settling disputes between governments and TNCs, which is extremely favorable to the latter: The International Center for Settlement of Investment Disputes (ICSID). Created by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, it has its headquarters within the World Bank, and the president of the World Bank is also chair of the ICSID board of directors. Little known by public opinion, the ICSID “arbitrates” between TNCs and governments. In fact, this means that the governments can no longer bring their disputes with TNCs before their own courts. In instances of free-trade bilateral agreements, it is even worse, for only non-observance by governments can be reported – by transnational’s – while the governments may not file complaints against TNCs. In ICSID’s arbitration tribunals no other judgments, by arbitration tribunals or others, are taken into account, no national laws, constitutions, not even the Universal Declaration of Human Rights or the international covenants on human rights are taken into consideration. The 1965 Washington Convention that created the ICSID and its regulations does not mention human rights at all. Neither do bilateral trade treaties. Therefore, if the rules of ICSID and bilateral trade treaties have been accepted, there is no way to invoke human rights before an arbitration tribunal constituted on the basis of such instruments. Clearly, the tribunals constituted under the auspices of the ICSID lack independence, as two of their three arbitrators represent in fact the company’s interests: the one named by the company and the president of the tribunal who, in case of non-agreement between parties – almost always the case – is appointed by the chairman of the ICSID’s board of directors, who is no other than the president of the World Bank. That the ICSID the biggest international arbitration entity in the world, in which companies and states confront each other. Within the Lex Mercatoria spirit, transnational’s can use the ICSID to prosecute countries which violate Investment agreements, but countries cannot prosecute businesses. It is an institution without any transparency, because the documents for the cases are not made public.

Another allied weighty legal mechanism is the Disputes Settlement Board of the World Trade Organization (WTO). Although this instance is composed of WTO member states and its mandate officially consists of ruling on trade disputes between the parties (member states), its decisions are based on WTO agreements that favor above all TNCs and in no way take into account human rights.

It is imperative to specify herein that International Court of Justice is only accessible to States, which can file complaints against other States, including for environmental problems. Before the International Criminal Court (ICC), founded in Rome in 1998, only individuals, not businesses, can be prosecuted, for violations of fundamental human rights.

Nationally, jurisdictional activity can and should be fully exercised in relation to individuals, including transnational corporations, applying national law and relevant international standards in domestic law. The competent national tribunals for this type of claim can be the location where the damage occurred or the location of the corporate headquarters which caused it, without excluding other possibilities such as where the victims reside, if this is different from where the damage occurred.

When a court lacks territorial jurisdiction to adjudicate a dispute, it may turn to an emerging doctrine in jurisdictional law, which allows the court to assume jurisdiction over the dispute where the court considers that there is no other forum in which the dispute may be adjudicated or in which the plaintiff may reasonably be expected to initiate the suit. A court exercising such jurisdiction is said to be acting as a forum of necessity or, as it is called in civil law parlance, forum necessitatis. Such jurisdiction serves as ‘a safety valve’ to avoid a total denial of access to justice. The enormous power at the disposal of the transnational corporate actor has rendered traditional regulatory mechanisms in developing countries ineffective to police it and to bring justice to those harmed by its activities. In Western countries that are home to most of these corporations, the complex web of subsidiaries with which the corporations operate have also rendered the transnational corporate actor difficult to regulate. Traditional jurisdictional doctrines hardly reach far enough to bring the actions of a corporation’s foreign subsidiaries under the legal watch of the home country. With the emergence of jurisdiction by necessity, however, and its adoption in many legal systems, victims of transnational corporate human rights violations now have a new jurisdictional possibility to assert.

In Llanos Oil Exploration Ltd v Republiek Colombia and Ecopetrol, the plaintiff claimed that it was impossible to obtain fair trial in Columbia, particularly in cases in which the Republic of Columbia was a party, due to pervasive corruption in that country. It furnished documentary evidence showing that Columbia was one of the most corrupt nations in the world where lawyers and judicial officers were frequently under death threats. The case related to an oil concession contract which the plaintiff claimed the defendants – which included the Republic of Columbia and an oil company – illegally terminated. It claimed damages in tort and in contract. In the contract were choice of jurisdiction and choice of law clauses in favour of Columbia. The Hague District Court stated that the plaintiff knew the existence of the alleged circumstances in Columbia when it chose Columbian law as the governing law of the contract and Columbian courts as the court to which they shall turn to in the event of a dispute. The court regarded the circumstances as not so unforeseen or exceptional that trial in Columbia ought reasonably not to be required. The court also found that the case lacked a sufficient connection with the Netherlands. This last finding appeared to be a subsidiary issue in the decision while the plaintiff’s knowledge of corruption in Columbia was the principal issue. The court only read into the text of the adopting statute, the court’s approach raises questions about the integrity of the decision. It was observed that giving negative judicial pronouncements regarding the justice system of other countries can create international relations problems and can destroy inter-judicial cooperation between the courts of different legal systems, courts should avoid venturing into such pronouncements whenever they can.

The approach of providing extraterritorial remedies is adopted by the US in the Alien Tort Claims Act (1789): “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States”

III. Landmark Decision on TNC’s

In Charan Lal Sahu Vs. Union of India Supreme court of India observed that In civil courts, the determination of amount of compensation or damages as well as the liability of the enterprise has been bound by the shackles of conservative principles laid down by the House of Lords in Ryland v. Fletcher. The principles laid therein made it difficult to obtain adequate damages from the enterprise and that too only after the negligence of the enterprise was proved. This continued to be the position of law, till a Constitution Bench of this Court in M.C. Mehta v. Union of India, commonly known as Sriram Oleum Gas Leak case evolved principles and laid down new norms to deal adequately with the new problems arising in a highly industrialized economy.

That the apex court after noting the fact regarding inefficient legal framework related to transnational corporation further stated as below-
“Before we gained independence, on account of our close association with Great Britain, we were governed by the common law principles. In the field of torts, under the common law of England, no action could be laid by the dependants or heirs of a person whose death was brought about by the tortious act of another on the maxim actio personalis moritur cum persona, although a person injured by a similar act could claim damages for the wrong done to him. In England this situation was remedied by the passing of the Fatal Accidents Act, 1846, popularly known as Lord Campell's Act. Soon thereafter the Indian Legislature enacted the Fatal accidents Act, 1855. This Act is fashioned on the lines of the English Act of 1846. Even though the English Act has undergone a substantial change, our law has remained static and seems a trifle archaic. The magnitude of the gas leak disaster in which hundreds lost their lives and thousands were maimed, not to speak of the damage to livestock, flora and fauna, business and property, is an eye opener. The nation must learn a lesson from this traumatic experience and evolve safeguards atleast for the future. We are of the view that the time is ripe to take a fresh look at the outdated century old legislation which is out of tune with modern concepts. After dealing at length with the United Nations Code of Conduct for multi-national Corporations which awaits approval of various countries. We hope that calamities like the one which this country has suffered will serve as catalysts to expedite the acceptance of an international code on such matters in the near future.

The impact of Bhopal went well beyond Union Carbide. It changed views and practices among the entire U.S. chemical industry. It provided impetus to the development and enactment of federal laws requiring companies to notify government and the public about toxic substances they make or use. The EPA's Federal Superfund Reauthorization, spurred by the Bhopal tragedy, helped bring about a network of local emergency planning councils, in which corporate specialists work with their neighboring communities to safely deal with unthinkable environmental disasters. The Chemical Manufacturers Association has established Community Action Emergency Response (CAER), a program to prevent or respond to industrial emergencies. Responsible Care is an industry initiative designed to establish basic standards for safe, healthy, and environmentally sound operations. It is being established in some 22 countries around the world. Union Carbide has been an active participant in these and other programs.

In Dow Chemical Co. v. Alfaro: The court holds that the doctrine of forum non conveniens does not bar a personal injury action brought in Texas by foreign plaintiffs against Delaware corporations authorized to do business in Texas. Employees of a Costa Rican fruit company seek damages for physical and mental injuries arising out of the handling of dibromochloropropane (DBCP), a pesticide manufactured by U.S. corporations and furnished to the fruit company. The corporations contested the state court's jurisdiction and contended that the case should be dismissed under the doctrine of forum non conveniens. The court holds that Texas courts lack the authority to dismiss the claim on the ground of forum non conveniens. The court concludes that in 1913, the Texas Legislature statutorily abolished the doctrine of forum non conveniens for wrongful death and personal injury actions arising out of an incident in a foreign state or country. A concurring justice notes that the court is bound by the statutory enactment opening the courts to foreign plaintiffs, and that the legislature, not the courts, has the privilege of rewriting the statute. Another concurring justice observes that the doctrine of forum non conveniens should be abolished because a forum non conveniens dismissal is often outcome determinative, effectively defeating the claim and denying the plaintiff recovery. The justice further observes that forum non conveniens dismissals are sought by multinational corporations as a shield against litigation for alleged torts causing human injury and environmental harm abroad.

The corporations involved are some of the largest and most profitable in the world. Under the present legal system, thousands of people in developing countries continue to suffer from industrial accidents and other forms of corporate negligence, and they are usually left without a legal remedy. Meanwhile, the parent corporations post billions of dollars in profits and shareholders pocket hefty dividends. This inequity is an undisputed fact of the transnational economy. Economic freedom, broadly defined, is viewed by liberal economists as a necessary precondition for economic growth, and hence, global prosperity. It is a great irony then, that the most wealthy and mobile TNCs hold on to age-old doctrines to block the rare cases where a foreign plaintiff gains the mobility to seek a fair judicial remedy in the corporations home country. While the global economy has evolved very rapidly to support business investment in developing countries, it remains virtually impossible to trace moral and legal accountability for industrial harms back to home-country courts

In United States v. Cordova Chemical Co. of Michigan, the United States Supreme Court defined the direct and indirect liability of parent companies for environmental harm.

In Shell v. Tiebo representatives of a Nigerian community sued Shell for damage from an oil spill in 1987. The oil spill polluted a river, which had previously been used as a source of fresh water and for fishing. Members of the community who drank the water after the spill suffered from waterborne diseases. In addition, the oil spill damaged swampland, streams, fishponds and religious shrines. Shell did not deny the oil spill, but claimed that it had only affected an area of about 2.3 hectares of seasonal swamp and fish flats. It offered the community 5,500 Naira as ‘ fair and adequate compensation’. The Court of Appeal awarded the claimants 6 million Naira in compensation (US$275,000 at the official exchange rate).

In Bowoto v. Chevron a lawsuit against Chevron Nigeria Ltd., a subsidiary of Chevron USA, went to trial in the United States District Court for the Northern District of California. The plaintiffs, Nigerian citizens who had been injured during or who had survived human rights violations perpetrated by Nigerian military personnel, alleged that the Chevron subsidiary backed the military action and that the parent company thus should bear liability in US courts for the resultant fallout. The suit, Bowoto v. Chevron Corp., was decided on December 1, 2008, when nine jurors unanimously agreed Chevron was not liable for any of the numerous allegations. Judgment was entered the next day, officially vindicating Chevron. Bowoto v. Chevron Corp. is an example of the difficulties in suing a multinational corporation for alleged violations of human rights, and perhaps the need for more formal regulation and accountability of multinational corporations.

From a theoretical point of view, the world on International Law belongs to the theories of Friedman, Lauterpacht and Berle who correctly predicted the era of MNCs and here they are, in the 21st Century staring in our face, posing problems that were never encountered and challenging some of the most established notions of law. But should the law change and if yes, in what direction? Our answer would be yes, the law has to change to recognize the growing power of these MNCs but the direction should not belong only to the developed world which are the home of most of these MNCs. In a broader perspective, it is the developing world, which is at the loggerheads with these MNCs for obvious reasons because these are the countries, which are resource rich but are exploited in terms of mass torts and other industrial inconsistencies. There is definitely a considerable improvement in terms of human rights but the issues like Mass Torts remain unresolved. There is a need to recognize MNCs as subject to provide these countries with a forum where the MNCs can be taken up to the task and an effective resolution of disputes can take place as per the established principles of International Law at the same time creating an environment where the value of life of a citizen of developing nation is equal to that of the developed world..

IV. Conclusion
That after looking over the existing scenario and activities of transnational corporation it is been observed herein that transnational corporations sometime even dictates the financial pattern of nation’s economy. It is very important for host to investigate and to keep eye on the pattern of commotions of these corporations. It is very vital for host nation to achieve uniformity with international regulations in order to prevent abuse of human rights, environmental regulations, natural resources and fiscal dent. It can also be said that some time rules and regulations incorporated in international law for transnational corporation becomes futile reason being every nation is not signatory/member of such conventions and their domestic regulations are far distinct from International regulation and such regulations are based on traditional approach, and in some cases nations becomes greedy to enhance their monetary balance in cut throat trade completion and are ready to sacrifice other factors like labour, Human rights, environment etc. hence they fail to achieve balance between trade and humankind.

That the regulation and law governing corporate behavior vary from one national jurisdiction to another, they form part of the decisional criteria on where corporations locate, the type of business they conduct, and the relationships they establish. TNCs are thus able to select from a broad array of regulatory frameworks. Furthermore, they can sometimes avoid what may be perceived as “punitive” government regulation by temporarily going “offshore,” or by forming short-term strategic alliances with other corporations more advantageously placed with regard to regulatory restrictions. Some of the examples where TNC’s have shifted from one place to another or had chosen other option in order to attain high profit margin are:- Coca Cola in Zambia. They have closed their operations there due to disagreements about tax exemptions. Another example is how the tobacco industry is now moving on to Asia as sales in USA and Europe decline and the US settlements do nothing to prevent this. India is one example where there is tremendous increase in smoking, and smoking related illnesses and death. Nike, as mentioned above, as well as many other retail companies, use cheap labor in South East Asia, where they can get away from the tighter enforcement and regulations of USA and Europe. Phillips-Van-Huesen have been criticized for closing a factory in Guatemala because the workers tried to form a union to protect their basic rights. A report by three human rights organizations revealed the details. It reveals how the company closed a factory in order to destroy the union and profit from lower wages by sweatshop contractors in Guatemala. In April 2002, as Alternet.org reports, Levi Strauss & Company, “a brand practically synonymous with the U.S.A., decided to shutter virtually all domestic production and shift its manufacturing overseas.” Earlier, in 1992, the Washington Post had exposed Levi’s exploitation of Chinese prison labor to make jeans and throughout the 90s, various apparel companies had been accused of various forms of exploitation and sweatshop labor in poorer countries. Levis tried to introduce a code of standards, but it seems that Levis too has been feeling the competition pressure and in order to maximize profits and reduce costs, now also feels compelled to join the herd, so to speak, and go for cheaper labor costs.

It is seen that despite the fact that there are specified norms and regulations which are functioning to avoid illegal acts of TNC’s but still efficiency of this kind of legal framework does not reflects potent effectual mechanism. There are certain factors which are need to be looked upon on urgent basis such as firstly at this juncture there is urgent need to achieve uniformity in legal framework, to bring an umbrella legislation comprising of an assortment of statutes regulating, classifying and policing each and every harmful activities done by TNC’s, secondly execution of such rules and regulations should not be cumbersome, it should be straightforward and prompt, adequate procedures for assessing compliance would serve as a legal safeguard from possible claims thirdly TNC’s should be duty bound to exercise reasonable care to maintain proper health and safety standards and preserve the right to bodily integrity of individuals-be they employees, consumers or communities fourthly there should be collective responsibility of TNC’s and local government to prevent human injury and death and to restrict all those acts amounting to violation of human rights, fifthly approach of United Nations should be in a such manner that each and every nation may become signatory/member of all such conventions and treaties that contains provisions relating to levelheaded governance of TNC’s and issues like jurisdiction and accountability of parent and subsidiary companies should be more extensive and visible, sixthly there is requirement to establish independent separate international judicial forum or tribunal adjudicating cases solely related to TNC’s and nothing else and their decision should not only have persuasive effect but should also have binding effect on all TNC’s and lastly national bodies ought to have authority to demand full disclosure from TNCs and adequate monitoring system.

Written by: Advocate at Delhi High Court & Research scholar at Amity Law School, Amity University, Noida

End Notes
# David Weissbrodt and Muria Kruger, “Norms on the responsibilities of transnational corporations and other business enterprises with regard to human rights,” American Journal of International Law, (October, 2003)1.
# United Nations, The Universe of the Largest Transnational Corporations (Geneva, 2007)16-17
# Chris N. Okehe, Controversial Subjects of Contemporary International Law 207 (Rotterdam University Press, 1974)
# ICJ Reports, 1970, pp.3,46-47
# Malcolm N.Shaw. International Law (Cambridge: Cambridge University Press, 2003) 224
# Thorsten Benner and Jan Martin Witte “Rules for Global Players? Governing multinational corporations in developing countries” available at: http://www.gppi.net/fileadmin/gppi/IP_Benner-Whitte.pdf (Last visited on 4 February 2014)
# Beth Stephens, “The Amorality of Profit: Transnational Corporations and Human Rights” Berkeley Journal of International, Vol.20, No.1 (2002) 46
# Latin expression meaning literally “merchant law”, it evolved as a system of customs and practices, which was enforced through merchant courts along the main trade routes in medieval Europe. It functioned so for a long time and has been used recently by many authors to describe the current state of the international law of commerce
# Anton Moiseienko, “Voluntary compliance and obligatory monitoring: Making corporate codes of conduct work,” Cork Online Law Review, Vol.25,No.14 (2014 )3.
# Transnational corporations: what regulations?, available at: www.stopcorporateimpunity.org/?p=2037 (Last Visited on February 28, 2014)
# Alejandro Teitelbaum, “The purpose and limits of litigation against transnational’s” retrieved from http://terradedireitos.org.br/wp-content/uploads/2011/08/Transnacional-em-inglês.pdf> (Last visited on 10 March 2014)
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