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Corporate Legal Accountability Quarterly Bulletin - Issue 20, June 2016

Welcome to our Corporate Legal Accountability Quarterly Bulletin -- highlighting a specific topic each quarter, as well as key developments in corporate legal accountability.  The Corporate Legal Accountability hub on our website provides objective, concise information about lawsuits against companies in which human rights abuses are alleged.
This bulletin and previous issues are available in English, Chinese, French, German, Russian and Spanish.

Quarterly Highlight: Holding financial institutions to account for human rights abuse

Money may not be able to buy you love, but the international business community relies on money to buy a lot of other things.  Companies seeking to finance projects or expand their operations rely on access to capital from private banks and multilateral funders like the World Bank Group and new emerging market institutions.  In our corporate legal accountability work, most frequently we see lawsuits against businesses directly engaged in harmful activities.  A recent lawsuit focuses on the role of financial institutions in cases of abuse. 

At the beginning of May, a group of Sudanese refugees sued BNP Paribas in US court alleging that the bank was complicit in human rights abuses committed by the Sudanese Government.  BNP Paribas admitted, in a 2014 US criminal case against the bank, that it had violated US sanctions against Sudan and provided the government with funds that were then used to purchase military equipment.  These weapons were used against its own citizens.  This case and others highlight the role financial institutions play in enabling problematic business activities to move forward.  BNP Paribas and Arab Bank have also faced separate lawsuits over alleged complicity in terrorist activities.

In another case, highlighted in our Annual Briefing earlier this year, in April 2015 Indian fishermen filed a potentially ground-breaking lawsuit against the International Finance Corporation (IFC), the private-lending arm of the World Bank, in Washington, DC.  The plaintiffs alleged that by funding the Tata Mundra coal power plant in Gujarat, India, the IFC impoverished them by reducing fish stocks, damaged the environment and caused health problems.  The IFC’s accountability mechanism, the Compliance Advisor Ombudsman (CAO), found that the project failed to abide by the IFC’s own standards and policies.  Unable to obtain relief through the CAO process, the plaintiffs filed this lawsuit.  The lawsuit sought compensation and asked the court to order the IFC to enforce the loan agreement’s provisions intended to protect local communities and the environment.  The IFC moved to dismiss the case claiming it had absolute immunity from suit in US court.  The judge agreed with the IFC’s immunity claim and dismissed the case in March.  The plaintiffs intend to appeal.  Communities harmed by projects funded by multilateral institutions often have limited access to effective remedy through those institutions’ dispute mechanisms.  If courts accept, as argued by the IFC, that these multilaterals are immune from accountability in court, these communities will have nowhere else to turn.

These cases (and others profiled on our website) demonstrate the negative impacts financial institutions can have if they do not take human rights into account in their investment decisions.  Strategic litigation to hold these institutions to account for their investments when their financing enables human rights abuse will help raise awareness among people in the financial community and encourage them to re-examine how they assess risk for new investments.  If funding sources for projects with negative human rights impacts dry up, companies will be required to pay greater attention to their human rights impacts.

This awareness could be particularly useful for the Asian Infrastructure Investment Bank (AIIB) as it begins its work as a key player in financing development projects throughout Asia.  Following AIIB’s launch, civil society organizations voiced concerns over the adequacy of the bank’s Environmental and Social Framework.  The critics of the Framework say that it lacks detail and firm commitment to sustainable lending, and that the AIIB’s responses to concerns raised in consultations on this Framework have been inadequate.  Taking into account the cases outlined above, the AIIB has a golden opportunity to take on board these critiques to develop and implement a robust policy to protect vulnerable communities from abuse through harmful infrastructure investments in the region.
Legal developments

New case profiles

Gun industry lawsuit (re Sandy Hook shooting in USA):  In February 2014, relatives of victims of the Sandy Hook school shooting filed a lawsuit in the US against the gun manufacturer Bushmaster Firearms, the distributor Camfour, and the gun shop that sold the assault rifle.  In April 2016, a judge ruled that the case could proceed, rejecting the defendants' motions to dismiss.

Lawsuit against Lahmeyer (re dam construction in northern Sudan): In May 2010 the European Center for Constitutional and Human Rights filed a criminal complaint with the public prosecutor in Frankfurt am Main against two executives of Lahmeyer International, a German engineering firm constructing the Merowe Dam in northern Sudan.  The complaint alleges that these executives knowingly flooded an area around the dam construction site and forcibly displaced over 4700 families. The prosecutor accepted the case and began to investigate the matter in April 2011, but proceedings were halted in the spring of 2015.

Philip Morris international arbitration (re Australian plain packaging law): In December 2012  the Australian Tobacco Plain Packaging Act banned tobacco companies from displaying their brand and logos on cigarette packets.  In June 2011, Philip Morris Asia challenged the Australian Government before an international arbitration tribunal.  Philip Morris Asia claimed that the ban on trademarks breached a number of foreign investment provisions contained in an investment agreement. In December 2015 the arbitral tribunal declined to hear the case saying it did not have jurisdiction over the dispute.

Updates to existing case profiles

Lawsuits against BHP Billiton and Vale (re dam collapse in Brazil): In May Brazilian prosecutors filed a USD 44 billion civil lawsuit against Vale, BHP Billiton and Samarco (the operating company) for the damages to the environment from the November 2015 dam collapse.  Previously, in March 2016, Samarco reached a heavily criticized USD 6 billion settlement to restore the severely damaged environment and indemnify the affected communities.

Lawsuits against Chiquita (re killings in Colombia): In June, a US Judge allowed the Colombian victims of paramilitary killings to move forward with their lawsuit against former Chiquita executives under the Torture Victim Protection Act.

Lawsuits against Cisco Systems (re China): In February, Electronic Frontier Foundation filed an amicus brief that urges a US court of appeals to reinstate a lawsuit against Cisco for building a security system allegedly used to track and torture members of the Falun Gong religious minority.

Lawsuit against Global Horizons (re forced labour): On 26 April, a US federal judge ruled that Global Horizons should pay nearly USD 7.7 million in damages to the claimants, Thai guest workers who were subjected to mistreatment, discrimination and harassment.

Gold miner silicosis litigation (re So. Africa): On 13 May 2016, South Africa's High Court allowed the lawsuit filed by thousands of miners who contracted silicosis and tuberculosis in the mines to proceed as a class action.The companies plan to appeal the decision.

Koh Kong sugar plantation lawsuits (re Cambodia): In January, approximately 100 Koh Kong villagers representing 500 families submitted petitions to four commune halls (local authorities) urging the government to resolve a decade long land dispute with two Koh Kong sugar companies over land grabs.

Lawsuit against Nestlé, Cargill, Archer Daniels Midland (re child labour in Côte d'Ivoire): In January, the US Supreme Court declined to hear the companies' appeal against a 2014 court ruling that found the plaintiffs to have standing to bring an Alien Tort case because of the universal prohibition against slavery.

Lawsuits against Trafigura (re dumping of toxic waste in Côte d’Ivoire): In March, thousands of Ivorian victims filed a class-action lawsuit in the Netherlands to claim compensation for the negative health impact of the toxic waste disposal.

Lawsuit against Union Carbide/Dow (re water pollution following Bhopal gas disaster):  On 24 May, a US court ruled that a lawsuit against Union Carbide filed by local communities may not proceed despite strong evidence the company's chemical plant continues to cause water pollution in Bhopal, India. The communities plan to file a petition for rehearing.

Lawsuit against Vedanta Resources (re water contamination in Zambia): On 27 May, an English High Court judge ruled that the lawsuit against Vedanta Resources filed by over 1800 Zambian villagers may proceed.  The plaintiffs claim that Vedanta and its subsidiary KCM are responsible for severe water pollution from the Nchanga copper mine which has caused damage to their health and their land.

Law against Villaggio Mall (re fatal fire, Qatar): In February, Qatar's highest court overturned the court of appeals decision of acquitting the manager of the Villaggio Mall and the co-owners of the Gympanzee nursery.  It ordered a new trial.  In April 2016, a judge jointly fined the defendants 200,000 Qatari Riyals for each of the deceased, but decided none of them will face jail time

Xayaburi dam lawsuit (re Laos & Thailand): On 26 January, the villagers appealed the decision of the Thai Supreme Administrative Court to dismiss the case they brought on the effects of the Xayaburi dam being built in Laos.

Other legal developments

In March, Anglo American South Africa and AngloGold Ashanti settled a lawsuit filed by ex-gold miners suffering from silicosis for over 500 million rand (USD 32 million).

At the end of March, a US judge ruled that Indian fishermen and farmers could not sue the International Finance Corporation over the negative impact of its investment in the power plant on their livelihoods due to immunity.
New blog posts
How should businesses interact with the rule of law, Timothy Hansen, Advocates for International Development (A4ID), 16 Apr 2016

Can a consensus be reached on the French Duty of Care bill?, Anna Triponel, Business & Human Rights Advisor, 16 Mar 2016

Innovative Strategies for Supporting Communities’ Demands for Accountability, Marco Simons, Zamira Djabarova, & Tamara Morgenthau, EarthRights International, 9 Mar 2016

If you are interested in contributing to a guest post on corporate legal accountability, please contact us.
Other news


Video of event on strategic litigation on modern slavery in global value chains (17 May, London)

Video of event - Companies & Climate Change: Legal Liability & Human Rights Challenges After Paris/COP21 (5 May, Washington DC)

Reports, articles & guides

The current state of US Alien Tort litigation in the business & human rights context, Michael Goldhaber, in The American Lawyer, 13 May 2016
    - Examining Alien Tort litigation three years after the Kiobel decision.

OHCHR releases final report on improving accountability and access to remedy for victims of corporate human rights abuse, 12 May 2016

FIDH updates guide on accountability & redress mechanisms for victims of corporate abuse, 11 May 2016

New book: Taking Corporations to Court: Global Struggles for Human Rights (Unternehmen vor Gericht. Globale Kämpfe für Menschenrechte), Wolfgang Kaleck & Miriam Saage-Maaß, European Center for Constitutional and Human Rights (ECCHR), 4 Mar 2016

From Business & Human Rights Resource Centre

In the courtroom and beyond: New strategies to overcome inequality and improve access to justice - Corporate Legal Accountability Annual Briefing

New section on Investor state dispute settlement (ISDS) including case profiles on investor-state disputes
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