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ABSTRACT
Restricted by economic and social development conditions and the construction level of the domestic regulatory system, the traditional host country-centered approach makes it challenging to ensure that multinational enterprises fulfil their human rights obligations. The jury is still out on whether international law can directly impose obligations and responsibilities on enterprises. Therefore, the home countries could regulate human rights violations in enterprises' outbound investments. However, in the domestic regulatory system of the home country, there is often a problem of no regulation or ineffective regulation of enterprises' outbound investments. Taking China as an example, this article explores how to enhance the home country's regulation on multinational corporations' fulfilment of human rights obligations,by comparing and drawing on the experience of other jurisdictions in dealing with similar issues and combining with the regulatory practice of China's outbound-invested enterprises, which will better promote China's full implementation of the commitment to the UNGP as stated in the National Human Rights Action Plan, and help Chinese multinational companies go global better, highlighting the value concept of community with a shared future for mankind that China has always advocated as a responsible major country.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 In this article, the ‘outbound investment’ and ‘outbound-invested enterprises’ refer to the investment and the investor that flow out of the home country and into the host country. Multinational corporations are the main organisational form of home country outbound investment.
2 Research relevant to host country supervision of multinational corporation's fulfilment of human rights obligations includes Başak Bağlayan, ‘Searching for Human Rights Norms for Corporate Conduct in Domestic Jurisprudence: A Bottom-Up Approach to International Law’ Nordic Journal of Human Rights 36, no. 4 (2018): 371–89. Amrei Müller, ‘Domestic Authorities’ Obligations to Co-develop the Rights of the European Convention on Human Rights’, The International Journal of Human Rights 20, no.8 (2016): 1058–76.
3 Olufemi O. Amao, ‘The African Regional Human Rights System and Multinational Corporations: Strengthening Host State Responsibility for the Control of Multinational Corporations’, The International Journal of Human Rights 12, no. 5 (2008): 761–88.
4 Olubayo Oluduro and Ebenezer Durojaye, ‘The Implications of Oil Pollution for the Enjoyment of Sexual and Reproductive Rights of Women in Niger Delta area of Nigeria’, The International Journal of Human Rights 17, no. 17 (2013): 7–8, 772–95.
5 Dan Danielsen, ‘Chapter 11. Situating Human Rights Approaches to Corporate Accountability in the Political Economy of Supply Chain Capitalism’, in Power, Participation, and Private Regulatory Initiatives: Human Rights under Supply Chain Capitalism, ed. Daniel Brinks, Julia Dehm, Karen Engle and Kate Taylor (Philadelphia: University of Pennsylvania Press, 2021), 224–41.
6 Christopher Adolph et al., ‘The Shanghai Effect: Do Exports to China Affect Labor Practices in Africa?’ World Development 89 (2017): 1–18.
7 Amao, ‘The African Regional Human Rights System and Multinational Corporations’.
8 Ministry of Commerce of the People’s Republic of China, National Bureau of Statistics, State Administration of Foreign Exchange, 2022 Statistical Bulletin of China's Outward Foreign Direct Investment.
9 Irna Hofman and Peter Ho, ‘China's “Developmental Outsourcing”: A Critical Examination of Chinese Global “Land Grabs” discourse’, Journal of Peasant Studies 30, no. 1 (2012): 1–48.
10 OHCHR, Report of the Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, A/ HRC/17/31, 2011, 3.
11 HRC, Report on the first session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights, with the mandate of elaborating an international legally binding instrument, A/HRC/31/50, 2016; Report on the second session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights, A HRC/34/47, 2017.
12 HRC, Guiding Principles on Business and Human Rights at 10: taking stock of the first decade: Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, A/HRC/47/39, 2011.
13 Relevant Studies include Paust J. J., ‘Human Rights Responsibilities of Private Corporations’, Vanderbilt Journal of Transnational Law, no. 35 (2002): 801. N.M.C.P. Jägers, ‘Corporate Human Rights Obligations: In Search of Accountability’, School of Human Rights Research, no.17 (2002). Duruigbo Emeka, ‘Corporate Accountability and Liability for International Human Rights Abuses: Recent Changes and Recurring Challenges’, Northwestern Journal of Human Rights 6, no. 2 (2007): 222. Bernaz Nadia, ‘Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?’Journal of Business Ethics 117, no.3 (2013): 493–511. Isabel Daum, ‘A Future Treaty on Business and Human Rights: Its Main Functions’, https://voelkerrechtsblog.org/a-future-treaty-on-business-and-human-rights-its-main-functions/.
14 A. Schilling-Vacaflor, ‘Putting the French Duty of Vigilance Law in Context: Towards Corporate Accountability for Human Rights Violations in the Global South?’ Human Rights Review 22 (2021): 109–27.
15 Bernaz Nadia, ‘Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?’ Journal of Business Ethics 117, no. 3 (2013): 493–511.
16 Relevant Studies include David H. Shinn, ‘The Environmental Impact of China's Investment in Africa’, Cornell International Law Journal 49 (2016): 25, 67. Sophie Wintgens and Thierry Kellner, ‘China, Latin America, and Human Rights: A Worrying Equation?’ Shifting Power and Human Rights Diplomacy–China 1 (2020): 71–83.
17 Relevant Studies include: Jernej Letnar Cernic, ‘Reconciling Business and Human Rights in China’, Journal of the Indian Law Institute 58, no. 2 (2016): 135–59. M. Zou, ‘China and the Belt and Road Initiative: Transnational Labor Law under State Capitalism 4.0’, American Journal of International Law 113 (2019): 418–23. Adaora Osondu-Oti, ‘China and Africa: Human Rights Perspective’, Africa Development 41, no. 1 (2017): 49–80. A. Halegua, Where is the Belt and Road Initiative Taking International Labor Rights? An Examination of Worker Abuse by Chinese firms in Saipan (Cheltenham: Edward Elgar Publishing, 2020), 225.
18 John Ruggie, ‘Report of the Special Representative of the Secretary-general on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises: Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework’, Netherlands Quarter of Human Rights 29, no. 2 (2011): 224–53.
19 S.S. Lotus (Fr. v. Turk.), 1927 P.C.I.J. (ser. A) No. 10 (September 7), https://www.worldcourts.com/pcij/eng/decisions/1927.09.07_lotus.htm.
20 HRC, Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework, https://www.ohchr.org/en/publications/reference-publications/guiding-principles-business-and-human-rights.
21 HRC, Report on the First Session of the Open-ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises with Respect to Human Rights, with the Mandate of Elaborating an International Legally Binding Instrument, A/HRC/31/50, 2016; Report on the Second Session of the Open-ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises with Respect to Human Rights, A HRC/34/47, 2017.
22 See CCPR, General Comment No. 31 on the Nature of the General Legal Obligation Imposed on Stated Parties to the Govenant, CCPR/C/21/Rev.a/Add.13, 2004, para.10.
23 See CESCR, General Comment No. 15 on The right to water, E/C.12/2002/11, 2002, para. 33–34.
24 See CESCR; General Comment No. 24 on State obligations under the International Covenant on Economic, Social and Cultural Rights in the context of business activities, E/C.12/GC/24, 2017, para. 26–37.
25 See Committee on the Elimination of Racial Discrimination (CERD), Concluding Observations for Canada, UN Doc. CERD/C/CAN/CO/18 (May 25, 2007), at 4, para 17.
26 International Court of Justice, Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, A/ES-10/273. https://www.icj-cij.org/public/files/advisory-opinions/advisory-opinions-2004-ch.pdf.
27 OECD, Guidelines for Multinational Enterprises on Responsible Business Conduct, Paris: OECD Publishing, https://doi:10.1787/81f92357-en.
28 HRC, general statements from State and non-state stakeholders were compiled during the eighth session, A/HRC/40/48/Add.1.
29 S.C. Berning, ‘The Role of Multinational Enterprises in Achieving Sustainable Development-the Case of Huawei’, European Journal of Sustainable Development 8 no. 3 (2019): 194.
30 Halegua, Where is the Belt and Road Initiative Taking International Labor Rights?
31 Business and Human Rights Resource Centre, ‘“Going Out” Responsibly: The Human Rights Impact of China's Global Investments’ (2021), https://media.business-humanrights.org/media/documents/SC_China_Briefing_Aug_2021_.pdf.
32 Maria Carrai and Jean-Christophe Defraigne, eds., The Belt and Road Initiative and Global Governance (Cheltenham: Edward Elgar Publishing, 2020).
33 UNDP, ‘2017: Report on the Sustainable Development of Chinese Enterprises Overseas: Supporting the Belt and Road Regions to Achieve the 2030 Agenda for Sustainable Development, Beijing: UNDP China’, http://www.cn.undp.org/content/china/en/home/library/south-south-cooperation/2017-report-on-the-sustainable-development-of-chinese-enterprise.html.
34 AMNESTY, ‘The Truth is that the Global Cobalt Trade is Driven by Human Rights Violations in the Democratic Republic of the Congo’ [刚果民主共和国：不惜卖命的真相，全球钴矿贸易的策动力来自刚果金境内的人权侵犯] (2016), https://www.amnesty.org/download/Documents/AFR6231832016.
35 Zhejiang Huayou Cobalt Co., Ltd., ‘Labor Practices and Human Rights’ [华友钴业：劳工实践与人权] (2018), http://www.huayouholding.com/news/44/.
36 Business and Human Rights Resource Centre, ‘“Going Out” Responsibly’.
37 Corporate Responsibility Resource Center, ‘Peru: Indigenous Peoples and Civil Organizations Express Concerns About Chinese Investment Projects’ Compliance with Human Rights Commitments’ (2022), https://www.business-humanrights.org/en/latest-news/per%C3%BA-comunidades-ind%C3%ADgenas-y-ong-se%C3%B1alan-preocupaciones-sobre-el-compromiso-con-los-derechos-humanos-de-las-inversiones-chinas/.
38 Halegua, Where is the Belt and Road Initiative Taking International Labor Rights?
39 Black’s Law Dictionary 1311 (9th ed. 2009)
40 Philip Selznick, ‘Focusing Organizational Research on Regulation’, in Regulatory Science and the Social Sciences (California: University of California Press, 1985), 363.
41 R. O’keefe, ‘Universal Jurisdiction: Clarifying the Basic Concept’, Journal of International Criminal Justice 3 (2004): 735–60.
42 Corporate Responsibility Resource Center, ‘Peru’.
43 J. Huang, ‘Legal Definition and Effect of “Normative Documents”’ [规范性文件’的法律界定及其效力], Law [法学], no. 7 (2014): 10–20.
44 For details, see Articles 5–6 and 8–9 of the 2012 Regulations on the Safety Management of Institutions and Personnel of Overseas Chinese-funded Enterprises; Article 21 of the 2012 Green Credit Guidelines; Article 20 of the 2014 Measures for the Administration of Overseas Investment; Articles 4–6 of the 2017 Code of Conduct for Private Enterprises Overseas Investment and Operation; and Article 9 of the 2018 Guidelines for the Compliance Management of Enterprises Overseas Operations.
45 For details, see Articles 5 and 8 of the 2012 Regulations on the Safety Management of Institutions and Personnel of Overseas Chinese-funded Enterprises; Article 7 of the 2013 Regulations on Regulating Competitive Behavior in the Field of Overseas Investment and Cooperation; Article 22 of the 2014 Measures for the Administration of Overseas Investments; and Article 6 of the 2017 Code of Conduct for Private Enterprises Overseas Investment and Operation.
46 For details, see Article 28 of the 2012 Regulations on the Safety Management of Institutions and Personnel of Overseas Chinese-funded Enterprises.
47 For details, see Article 32 of the 2014 Measures for the Administration of Overseas Investments and Article 11 of the 2013 Regulations on Regulating Competitive Behaviors in the Field of Overseas Investment and Cooperation.
48 For details, see Article 16 of the 2021 Double Random and One Disclosure Supervision Work Rules for Outbound Investment and Cooperation (for Trial Implementation).
49 S. Sun, ‘Jurisdiction Rule System from the Perspective of Extraterritorial Application of Domestic Law’ [内国法域外适用视域下的管辖权规则体系], Social Science Journal [社会科学辑刊], no. 4 (2021): 90–8.
50 See Aguinda v. Texaco, Inc. 945F. Supp.625(S.D.N.Y.1996); Aguinda v. Texaco, Inc.175F.R.D.50,51. (S.D.N.Y.1997); Jota v. Texaco, Inc., 157F.3D159 (2d Cir.1998); Aguinda, 142F.Supp.2d,554 (S.D.N.Y.2001).
51 Chevron Corporation, ‘Chevron Corporation Statement on U.S. Federal Court RICO and Fraud Decision’ (2014), https://chevroncorp.gcs-web.com/news-releases/news-release-details/chevron-corporation-statement-us-federal-court-rico-and-fraud.
52 OHCHR, ‘Human Rights Impact Must be Addressed in Vulture Fund Litigation – UN Experts’ (2014), https://www.ohchr.org/zh/press-releases/2014/11/human-rights-impact-must-be-addressed-vulture-fund-litigation-un-experts.
53 See Doe I v. Unocal Corp., 963 F. Supp. 880 (C.D. Cal. 1997).
54 Earth Rights International, ‘Final Settlement Reached in Doe v. Unocal’ (2005), http://earthrights.org/news/unocalsettlefinal.shtml; Unocal News Release Archive, ‘Settlement Reached in Yadana Pipeline Lawsuit’ (2005), http://www.unocal.com/uclnews/2005news/032105.htm.
55 See Article 33 of the 2004 Amendment to the Constitution of the People's Republic of China.
56 See China National Petroleum Corporation: 2020 Corporate Social Responsibility Report, http://csr.cnpc.com.cn/cnpccsr/xhtml/PageAssets/2020csr_cn.pdf (last visited August 22, 2022).
57 R. Jin, ‘Analysis and Enlightenment of China's Corporate Social Responsibility Policy’ [中国企业社会责任政策的分析及启示], Beijing Social Sciences [北京社会科学] 8 (2019): 27.
58 Shift, ‘Human Rights Reporting in France: Two Years In: Has the Duty of Vigilance Law Led to More Meaningful Disclosure?’ (2018), https://shiftproject.org/resource/human-rights-reporting-in-france-series-2/human-rights-reporting-in-france-two-years-in-has-the-duty-of-vigilance-law-led-to-more-meaningful-disclosure/.
59 Christophe Clerc, ‘The French “Duty of Vigilance” Law: Lessons for an E.U. Directive on Due Diligence in Multinational Supply Chains’ (2021), https://ssrn.com/abstract=3765288.
OHCHR, Guiding Principles on Business and Human Rights at 10: taking stock of the first decade, A/HRC/47/39, 2021, 9.
60 HRC, Updated draft legally binding instrument (clean version) (2023), https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/igwg-transcorp/session9/igwg-9th-updated-draft-lbi-clean.pdf.
61 R. Dai, ‘Legal Protection of Foreigners’ Rights—An Investigation from International Law to Chinese Law’ [外国人权利的法律保护——从国际法到中国法的考察], Human Rights 人权 5 (2014): 35–40.
62 For example, Article 1198 of the Civil Code stipulates that operators and managers of hotels, shopping malls, banks, stations, airports, and other business premises and public places or organisers of mass activities shall bear safety guarantee obligations and shall bear tort liability if they cause damage to others responsibility. The security obligor shall be liable for the infringement of the third party due to his control over the site. Relevant studies include L. Wang, ‘Has China's Tort Liability Law Adopted the Illegality Elements?’ [我国侵权责任法采纳违法性要件了吗？], Chinese and Foreign Legal Studies [中外法学], no. 1 (2012): 7. L. Wang, ‘Chinese Characteristics of Tort Liability Law’ [侵权责任法的中国特色], Jurisprudence [法学家] 2 (2010): 89.
63 See Cour de Cassation [Cass.] [Supreme Court for Judicial Matters] crim., September 25, 2012, No.10-82.938.
64 See Vedanta Resources PLC and another v. Lungowe and others, UKSC 2017/0185, 32 (The Supreme Court of the United Kingdom 2019).
65 V.H. Ho, ‘Of Enterprise Principles and Corporate Groups: Does Corporate Law Reach Human Rights’, Columbia Journal of Transnational Law 52 (2013):113.
66 See Vedanta Resources PLC and another v. Lungowe and others, UKSC 2017/0185, 32 (The Supreme Court of the United Kingdom 2019).
67 G. Vivian, ‘Curran, Harmonizing Multinational Parent Company Liability for Foreign Subsidiary Human Rights Violations’, Chicago Journal of International Law 17(2016): 403–46.
68 Kurt A. Strasser, ‘Piercing the Veil in Corporate Groups’, Connecticut Law Review 37 (2004): 637.
69 Vivian, ‘Curran, Harmonizing Multinational Parent Company Liability for Foreign Subsidiary Human Rights Violations’.
70 Choc v. HudBay Minerals, Inc., CV-11-435841, 20 (the Ontario Superior Court of Justice 2013).
71 P.I. Blumberg, The Multinational Challenge to Corporation Law: The Search for a New Corporate Personality (London: Oxford University Press 1993), 25.
72 N.A. Mendelson, ‘Control-based Approach to Shareholder Liability for Corporate Torts’, Connecticut Law Review 102 (2002): 1203.
73 Ho, ‘Of Enterprise Principles and Corporate Groups’.
74 Nevsun Resources Ltd. v. Araya, https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/18169/index.do.
75 Jolane T. Lauzon, ‘Araya v. Nevsun Resources: Remedies for Victims of Human Rights Violations Committed by Canadian Mining Companies Abroad’, Quebec Journal of International Law/Revista quebequense de derecho internacional 31 (2018): 143–69.
76 Edward H. Levi, An Introduction to Legal Reasoning (Chicago: University of Chicago Press 2013).
77 For details on the basis for establishment, please refer to the ‘Implementation Guidelines’ section of Part II Implementation Procedures of the OECD Guidelines for Multinational Enterprises issued by the OECD in 2011. Obtained from the official website of the Organization for Economic Cooperation and Development: OECD Guidelines for Multinational Enterprises, http://mneguidelines.oecd.org/guidelines/MNEGuidelines-Chinese.pdf.
78 OECD, ‘National Contact Points for the OECD Guidelines for Multinational Enterprises’ (2017), https://mneguidelines.oecd.org/OECD-Guidelines-for-MNEs-NCP-FAQ.pdf.
79 Foreign and Commonwealth Office of U.K., Business and Human Rights Toolkit (2011), https://www.gov.uk/government/publications/business-and-human-rights-toolkit.
80 U.S. State Department, Secretary of State’s Award for Corporate Excellence (2023), https://www.state.gov/secretary-of-states-award-for-corporate-excellence/.
81 Norwegian Ministry of Foreign Affairs, ‘National Action Plan for the Implementation of the U.N. Guiding Principles’, https://www.regjeringen.no/globalassets/departementene/ud/vedlegg/mr/business_hr_b.pdf.
Additional information
Notes on contributors
Wanqiang Li
Wanqiang Li, professor of Law School of Xi'an Jiaotong University, with research interests in international investment law and transnational corporation regulation.
Wei He
Wei He, PhD candidate of Law School of Xi'an Jiaotong University, with research interests in the regulation of transnational corporation and digital trade.
Caiting Yang
Caiting Yang, PhD candidate of Law School of Xi'an Jiaotong University, with research interests in international human rights law.