Posted on January 22, 2019 by Robert Percival
Holding multinational companies accountable for environmental degradation resulting from resource extraction in developing countries has proved elusive, despite efforts by the international community. As described below, law students at the University of Maryland are working to address the problem.
At the 1972 UN Conference on Environment and Development the nations of the world pledged to develop “international law regarding liability and compensation for the victims of pollution and other environmental damage caused by activities within the jurisdiction or control of such States to areas beyond their jurisdiction.” But scant progress was made in achieving this pledge as illustrated when no liability was imposed or compensation paid for widespread transboundary damage caused by the 1986 Chernobyl nuclear accident. Despite a pledge in the 1992 Rio Declaration to “co-operate in an expeditious and more determined manner to develop further international law regarding liability and compensation” for transboundary pollution, effective remedies have not been developed.
Developing countries have struggled to develop their own legal remedies for harm caused to their environment by the resource extraction activities of foreign corporations.This is well illustrated by the decades-long litigation over oil pollution in Ecuador allegedly caused by a U.S. company during the 1970s. In 2011 a court in Ecuador held the U.S. company liable for $9 billion in damages and cleanup costs. While this decision was upheld by the Supreme Court of Ecuador, the plaintiffs have yet to be able to collect on the judgment due to manipulation of corporate structures in countries where the oil company holds assets.
A RICO judgment obtained by the oil company against the plaintiffs’ lawyers has been used to promote a narrative that the litigation was a fraudulent shakedown from the start. But the inconvenient truth undermining this narrative is that the litigation initially was filed in federal court in New York and transferred to the courts of Ecuador only at the urging of the U.S. oil company.
The Ecuador litigation initially was brought in the U.S. under the Alien Tort Statute (ATS), a law enacted by the first U.S. Congress in 1789 that expressly authorizes suits in federal court by foreigners for torts committed “in violation of the law of nations.” But in Kiobel v. Royal Dutch Shell a narrowly divided U.S. Supreme Court in 2013 rejected claims by Nigerian environmentalists by adopting a presumption that the ATS does not apply to conduct occurring outside the U.S.
Although the UN Human Rights Council has begun negotiations toward drafting “an international legally binding instrument on transnational corporations and other business entities with respect to human rights,” for now prospects for improving accountability depend largely on developing countries improving their own legal remedies.
As multinational corporations have intensified their efforts to exploit natural resources in developing countries, their activities often have caused severe environmental harm and intense conflicts with local populations. Massive infrastructure projects associated with China’s “Belt and Road” initiative have saddled some of the world’s poorest countries with monumental debt obligations that are exacerbating conflicts between the developed and developing worlds. Although the Chinese government has pledged to promote a “green Belt and Road,” Chinese companies operating in the developing world often do not understand or simply disregard local environmental laws and regulations.
The University of Maryland Carey School of Law’s Environmental Law Program recently launched a Transnational Environmental Accountability (TEA) Project. The project is under the direction of Zhang Jingjing, an award-winning public interest environmental lawyer, who has spent years monitoring the environmental performance of Chinese companies in the developing world. For nearly a decade before moving to the U.S., Zhang was the litigation director of the Beijing-based Center for Legal Assistance to Pollution Victims (CLAPV) where she won several landmark environmental cases in Chinese courts.
Last July Professor Zhang appeared in court in Cuenca, Ecuador to support the efforts of the Kañari-Kichwa indigenous communities to stop a Chinese company from mining in Ecuador’s Cajas Nature Reserve. Zhang argued that Chinese law requires companies to abide by both international treaties signed by China and domestic law in the countries in which they operate. In a historic decision in August the court in Cuenca agreed and upheld an order that the Chinese company halt all mining activities.
Working with Professor Zhang and Professor Seema Kakade, director of Maryland’s Environmental Law Clinic, Maryland law students are helping to assist NGOs in holding multinational corporations accountable for environmental harm they cause in Africa, South America and Southeast Asia. The Africa team is focusing on Chinese investments in Guinea, including a bauxite mine and a proposed oil refinery. One of the poorest countries in the world, Guinea has one third of the global bauxite reserves and is China’s number one bauxite provider. In June 2019 a team of students from the Maryland’s law school and School of Nursing will travel to Guinea to assist NGOs in documenting the impact of mining on local villages.
In many developing countries bribery is a serious problem undermining enforcement of environmental law. In July 2017 I took a group of Maryland students to Malawi to assist the University of Malawi’s new Environmental Justice and Sustainability Clinic. In Blantyre we met with a local NGO whose members complained that officials approving a Chinese company’s construction of a railway arrived at an important hearing in new luxury cars apparently given to them by the company.
Both the U.S. and China have laws that prohibit companies from bribing officials in foreign countries. To its credit, the Trump administration is beefing up enforcement of the Foreign Corrupt Practices Act (FCPA) and targeting Chinese companies who may run afoul of it. China has yet to bring any actions to enforce its laws prohibiting bribery of foreign officials, but Chinese environmentalists are hoping eventually to persuade their government to do so.
Maryland students will participate in a conference in China in summer 2020 to help educate Chinese companies on how to comply with the environmental laws in developing countries. Ultimately transnational accountability will be enhanced when there is greater respect for environmental law and the importance of the rule of law in the developing world.