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Corporate responsibility in (public) international law
Written by Oliver Dörr, University of Osnabrück
Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of the contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.
I. Companies – responsibility
1. As for commercial entities, international law is concerned, above all, with transnational or multinational companies. The term basically describes the conglomerate of commercial entities that are acting separately in at least two different countries and which are tied together by a regime of hierarchical coordination.
2. In times of „global governance“ the international legal concept of responsibility is undergoing a process of de-formalization and, thus, encompasses the violation of social behavioural expectations, which for companies may result from international standards that are not legally binding. The resulting responsibility is a legal one insofar as the law adopts those standards and attaches negative consequences to their violation.
II. Private persons and the law of international responsibility
3. Private companies may be held responsible under international law to the extent that they are either themselves bound by primary legal obligations (direct responsibility), or their business activities are regulated by States which, in doing so, are fulfilling their own international legal obligations (indirect responsibility). A State may just as well impose such regulation without actually being under an obligation to do so (e.g. the US Alien Tort Statute).
Private persons as subjects of international legal obligations
4. Private persons being themselves bound by international legal obligations pertain to the process of de-medatization, which established the legal personality of the individual under international law.
5. Sovereign States can, by concluding international treaties, create legal obligations for private persons, including private companies, directly under international law. The personal scope of this comprehensive law-creating power of States is delimitated by their personal jurisdiction under international law. Whether an individual treaty itself gives rise to legal obligations for private persons, is, just as the creation of individual rights, a matter of treaty interpretation.
6. Genuine legal obligations have evolved for private persons under international criminal law: Here, detailed primary obligations of private persons have developed that are linked to a specific regime of individual responsibility, in particular under the Statute of the International Criminal Court.
7. In contrast, the extension of international human rights obligations to apply directly between private persons is not yet part of the international lex lata. Individual texts pointing in that direction (such as art. 29 para. 1 of the Universal Declaration of Human Rights) are merely of a programmatic nature.
8. Genuine international legal obligations of companies can today be found in the rules regulating deep sea-bed activities (arts. 137, 153 para. 2 UN Convention on the Law of the Sea) and in various treaties establishing regimes of civil liability.
9. Obligations of private persons under international law, including those having direct effect within UN Member States, may also be created by the UN Security Council through resolutions under arts. 39, 41 of the UN Charter.
10. It is fairly uncertain whether the initiative, currently being undertaken within the UN Human Rights Council, to adopt a „legally binding instrument“ encompassing direct human rights liability of private companies, will ever have a chance of becoming binding law.
11. To the extent that there actually are primary obligations of private persons under international law, a general principle of law requires their violation to result in a duty to make reparation. Only in exceptional circumstances could the rules of State responsibility be transferred to private persons.
Obligations to establish the responsibility of private persons
12. An indirect responsibility under international law applies to undertakings via the international legal obligation of States to criminalize certain activities, e.g. in respect of waste disposal, bribery in foreign countries, organized crime and corruption.
Responsibility of private persons under autonomous national law
13. Provisions in national law that autonomously sanction private acts for international law violations bridge with their own binding effect the fact that the private person is not itself bound by the international legal norm.
14. The French Law No. 399-2017 on the plan de vigilance is far too general and vague to serve as an example for an (indirect) international legal reporting responsibility. The same applies to the CSR directive of the European Union of 2014.
III. Responsibility on the basis of non-binding rules of conduct
Behavioural governance without legally binding effects
15. The values contained in certain international law principles shape some social behavioural expectations that are summarized today in concepts of corporate social responsibility (CSR). As a matter of substance, those expectations relate to human rights, the environment, conditions of labour and fighting corruption.
Processes of rule-making
16. The discussion is mainly focused on certain international, cross-sector corporate codes of conduct, such as the OECD Guidelines for Multinational Enterprises (1976), die ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977), the UN Global Compact (2000) and the UN Guiding Principles on Business and Human Rights (2011).
17. In particular, with regard to human rights and environment, those rules are extremely unspecific, which means that here, law merely serves as a backdrop in order to endow social behavioural expectations with moral authority.
Responsibility by reception
18. In order to adopt and implement those business-related standards, basically all instruments of law-making and application can be used, as long as they impose normative requirements on companies and their activities. Legal certainty standards under the rule of law, as well as the rules of international law on the jurisdiction of States, can limit the reception.
19. Non-binding standards could be implemented, for example, via the legal regimes of State aid (in particular with respect to export finance), public procurement, investment protection and the rules on civil liability. So far, however, the international standards on business conduct are rarely being implemented in a legally binding manner.
IV. Conclusion
20. If the distinction of law and non-law is to be maintained, responsibility of companies in international law is a theoretical possibility, but of little practical relevance: Only in very specific circumstances are private companies themselves subjected to international legal obligations; moreover, it is similarly rare that „soft“ international standards of conduct are being adopted by „hard“ law and thereby made into specific legal duties of companies.
21. Behavioural standards that determine the international debate on CSR assign a mere „backdrop function“ to the law, as they neither identify concretely the international legal norms referred to, nor differentiate them properly. In that context, companies are simply required to publicly declare their commitment to „the good cause“, which results in duties to take precautionary measures, to exercise transparency and to publish reports.
22. That is why environmental protection, human rights etc. in relation to the activities of private companies is still mainly the responsibility of States. Tools that exist in international law in this respect, such as the rules of attribution or protective duties, must be adapted and enhanced, in order to achieve adequate solutions for detrimental business conduct on the basis of State responsibility.
Full (German) version: Oliver Dörr, Unternehmensverantwortlichkeit im Völkerrecht, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 133 et seq.
The Private International Law of Virtual Zoom Backgrounds
Written by Tobias Lutzi, University of Cologne
One of the biggest winners of the current pandemic (other than toilet paper producers, conspiracy theorists, and the climate) seems to be the former Silicon Valley startup Zoom, whose videoconferencing solutions have seen its number of daily users increase about thirtyfold since the end of 2019. While the company’s success in a market otherwise dominated by some of the world’s wealthiest corporations has taken many people – including investors – by surprise, it can be attributed to a number of factors – arguably including its software’s highly popular virtual-background feature.
With more and more people using the cockpit of the Millennium Falcon, the couch from The Simpsons, and other iconic stills from movies or TV series as virtual backgrounds in their private and professional Zoom meetings and webinars, the question arises as to whether this may not constitute an infringement of copyright.
Unsurprisingly, this depends on the applicable law. Whereas using a single frame from a movie as a virtual background may often qualify as ‘fair use’ under US copyright law even in a professional setting (and thus require no permission from the copyright holder), no such limitation to copyright will be available in many European legal systems, with any ‘communication to the public’ in the sense of Art 3 of the Information Society Directive 2001/29/EC potentially constituting a copyright infringement under the domestic copyright laws of an EU Member State.
As far as copyright infringements are concerned, the rules of private international law differ significantly less than the rules of substantive law. Under the influence of the Berne Convention, the so-called lex loci protectionis principle has long become the leading approach in most legal systems, allowing copyright holders to seek protection under any domestic law under which they can establish a copyright infringement. For infringements committed through the internet, national courts have given the principle a notoriously wide application, under which the mere accessibility of content from a given country constitutes a sufficient basis for a copyright holder to seek protection under its domestic law. Accordingly, using an image on Zoom without the copyright holder’s permission in a webinar that is streamed to users in numerous countries exposes the user to just as many copyright laws – regardless of whether the image is used by the host or by someone else sharing their video with the other participants.
Interestingly, the fact that the image is only displayed to other users of the same software is unlikely to mitigate this risk. While Zoom’s (confusingly numbered) terms & conditions unsurprisingly prohibit infringements of intellectual property (clause 2.d.(vi)) and – equally unsurprisingly – subject the company’s legal relationship with its users to the laws of California (clause 22/20.1), courts have so far been slow to attach significance to such platform choices of law as with regard to the relationship between individual users. In fact, the EU Court of Justice held in Case C-191/15 Verein für Konsumenteninformation v Amazon (paras. 46–47) that even with regard to a platform host’s own liability in tort,
the fact that [the platform host] provides in its general terms and conditions that the law of the country in which it is established is to apply to the contracts it concludes cannot legitimately constitute […] a manifestly closer connection [in the sense of Art. 4(3) Rome II].
If it were otherwise, a professional […] would de facto be able, by means of such a term, to choose the law to which a non-contractual obligation is subject, and could thereby evade the conditions set out in that respect in Article 14(1)(a) of the Rome II Regulation.
While the escape clause of Art. 4(3) Rome II is not directly applicable to copyright infringements anyway, the decision illustrates how courts will be hesitant to give effect to a platform host’s choice of law as far as the relationship between users – let alone between users and third parties – is concerned. This arguably also applies to other avenues such as Art. 17 Rome II and the concept of ‘local data’.
The liability risks described above are, of course, likely to remain purely theoretic. But they are also easily avoidable by not using images without permission from the copyright holder in any Zoom meeting or webinar that cannot safely be described as private under the copyright laws of all countries from where the meeting can be joined.
Corporate responsibility and private (international) law
Written by Giesela Rühl, University of Jena/Humboldt-University of Berlin
Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of all contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.
1. Corporate social responsibility has been the subject of lively debates in private international law for many years. These debates revolve around the question of whether companies domiciled in countries of the Global North can be held liable for human rights violations committed by foreign subsidiaries or suppliers in countries of the Global South (so-called supply chain liability).
2. According to the majority view in the public international law literature, companies are not, at least not directly bound by human rights. Although numerous international law instruments, including the UN’s 2011 Guidelines for Business and Human Rights (Ruggie Principles), also address companies, liability for human rights violations is, therefore, a matter of domestic law.
3. The domestic law applicable to liability for human rights violations must be determined in accordance with the provisions of (European) private international law. Direct recourse to the lex fori, in contrast, is not possible. The legal situation in Europe is, therefore, different from the United States where actions which are brought on the basis of the Alien Tort Claims Act (ATCA) are governed by US-American federal (common) law.
4. Claims for human rights violations committed abroad will usually be claims in tort. Under (European) private international law it is, therefore, the law of the place where the damage occurs (Article 4(1) Rome II Regulation) and, hence, foreign law which governs these claims. Exceptions apply only within narrow limits, in particular if domestic laws can be classified as overriding mandatory provisions (Article 16 Rome II Regulation) or if application of foreign law violates the ordre public (Article 26 Rome II Regulation).
5. In addition to tort law, claims for human rights violations may also be based on company law, namely when directors are directly held liable for torts committed by a foreign subsidiary. According to the relevant private international law provisions of the Member States these claims are governed by the law of the (administrative or statutory) seat of the foreign subsidiary. As a consequence, claims in company law are also subject to foreign law.
6. The fact that (European) private international law submits liability for human rights violations to foreign law is very often criticized in the private international law literature. Claiming that foreign law does not sufficiently protect the victims of human rights violations, a number of scholars, therefore, attempt to subject liability claims de lege lata to the domestic law of the (European) parent or buyer company.
7. These attempts, however, raise a number of concerns: first, under traditional (European) private international law, substantive law considerations do not inform the determination of the applicable law. Second, the wish to apply the domestic law of a European country is mostly driven by the wish to avoid poorly functioning court systems and lower regulatory standards in countries of the Global South. Neither of these aspects, however, has anything to do with the applicable tort or company law. Regulatory standards, for example, are part of public law and, therefore, excluded from the reach of private international law. Finally, the assumption that the domestic law of the (European) parent or buyer company provides more or better protection to the victims of human rights violations does not hold true de lege lata. Since parent and buyer companies are legally independent from their foreign subsidiaries and suppliers, parent and buyer companies are only in exceptional cases liable to the victims of human rights violations committed abroad by their foreign subsidiaries or suppliers (legal entity principle or principle of entity liability).
8. The difficulties to hold (European) parent and buyer companies de lege lata liable for human rights violations committed by their foreign subsidiaries or suppliers raises the question of whether domestic laws should be reformed and their application ensured via the rules of private international law? Should domestic legislatures, for example, introduce an internationally mandatory human rights due diligence obligation and hold companies liable for violations? Proposals to this end are currently discussed in Germany and in Switzerland. In France, in contrast, they are already a reality. Here, the Law on the monitoring obligations of parent and buyer companies (Loi de vigilance) of 2017 imposes human rights due diligence obligations on bigger French companies and allows victims to sue for damages under the French Civil Code. The situation is similar in England. According to a Supreme Court decision of 2019 English parent companies may, under certain conditions, be held accountable for human rights violations committed by their foreign subsidiaries.
9. The introduction of an internationally mandatory human rights due diligence obligation at the level of national law certainly holds a number of advantages. In particular, it may encourage companies to take measures to prevent human rights violations through their foreign subsidiaries and suppliers. However, it is all but clear whether, under the conditions of globalization, any such obligation will actually contribute to improving the human rights situation in the countries of the Global South. This is because it will induce at least some companies to take strategic measures to avoid the costs associated with compliance. In addition, it will give a competitive advantage to companies which are domiciled in countries that do not impose comparable obligations on their companies.
10. Any human rights due diligence obligations should, therefore, not (only) be established at the national level, but also at the European or – even better – at the international level. In addition, accompanying measures should ensure that the same rules of play apply to all companies operating in the same market. And, finally, it should be clearly communicated that all these measures will increase prices for many products sold in Europe. In an open debate it will then have to be determined how much the Global North is willing to invest in better protection of human rights in the Global South.
Full (German) version: Giesela Rühl, Unternehmensverantwortung und (Internationales) Privatrecht, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 89 et seq.
News
Hybrid conference in Vienna on 12 April 2024: Reforming Brussels Ibis
We are happy to share the following announcement from the organisers.
On 12 April 2024, a hybrid conference will take place at the Skylounge of the University of Vienna to discuss the reform of the Brussels Ibis Regulation; the fundamental reference-instrument of cross-border judicial cooperation in civil matters within the European Union. The reform is expected to begin this year under the new European Commission. The conference is organised by the Institute for Civil Procedure and continues the work already done within the European Association for Private International Law (EAPIL) and the former Max Planck Institute (MPI) Luxembourg.
In 2021, Burkhard Hess wrote a Working Paper on a possible reform of the Brussels Ibis Regulation, identifying problems and suggesting solutions. In the same year, a Working Group was set up within the network of the EAPIL. The members of the Working Group provided information on the application and possible shortcomings of the Brussels Ibis Regulation in their jurisdictions by means of a questionnaire. The results of the questionnaire provided the basis for the conference on the Brussels Ibis reform held at the former MPI Luxembourg on 9 September 2022, where more than 80 participants discussed reform proposals in five panels (report).
Following the 2022 Luxembourg conference, Burkhard Hess and a team of researchers of the MPI prepared a second Working Paper, which put forward 32 proposals for the reforms of the Brussels Ibis Regulation. Members of the EAPIL Working Group were invited to express again their opinion and to vote on these proposals in an online poll. The poll was later opened to the public, as announced on the EAPIL-blog and ConflictofLaws.net. The purpose of this poll was to give the academic public as well as other stakeholders an opportunity to express their view on the proposals. An extensive documentation and analysis of the poll will be published soon, which serves as a basis for discussion at the upcoming conference.
The 2024 Vienna conference features speakers from various parts of the European Union. In the morning, the prospects of the reform process and overarching issues of the Brussels Ibis Regulation are addressed by Andreas Stein (EU Commission), Astrid Stadler (Konstanz), Cristina González Beilfuss (Barcelona), Gilles Cuniberti (Luxembourg), as well as Karol Weitz and Bartosz Wo?odkiewicz (Warsaw). The various proposals for the reform of the Brussels Ibis Regulation will be addressed from a practical perspective in the afternoon during a roundtable featuring, inter alia, Anthony Collins (EU Court of Justice), Georg Kodek (Austrian Supreme Court), Petra Leupold (VKI), Sabine Leupold (Freshfields Bruckhaus Deringer) and Andreas Stein (EU Commission). The full program can be found on the flyer.
Burkhard Hess, Christian Koller and Paul Oberhammer of the Institute of Civil Procedure look forward to your participation in the Vienna conference. Please send your registration to reformingbrussels-Ibis.zvr@univie.ac.at and indicate whether you will participate in person or online.
20th IEAF Call for Papers: Evolution or Revolution of European Insolvency Law
The organisers of the 2024 edition of the INSOL Europe Academic Forum kindly shared with us the following call for papers. Please note the deadline for submission is 1 March 2024:
From Theory to Practice in Private International Law: Gedächtnisschrift for Professor Jonathan Fitchen
Written by Justin Borg-Barthet, Katarina Trimmings, Burcu Yüksel Ripley and Patricia Živkovic
Note: This post is also available via the blog of the European Association of Private International Law.
When our colleague and friend Prof Jonathan Fitchen passed away on 22nd January 2021, we were comforted in our grief by an outpouring of messages of condolence from private international lawyers around the world. We had known, of course, of the impact and importance of Jonathan’s work to the world of private international law scholarship. His monograph on authentic instruments, for example, will remain an essential reference on that subject for many years to come. Jonathan’s impact on the world of private international law scholars was, to a degree, less obvious. He was an unassuming man. He did not seek to command the attention of every gathering he attended, and he might have been surprised to realise how often he did just that. He was tremendously well-liked and well-respected for his wit, his self-deprecating sense of humour, and his empathy.