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: Law at the End of the Day

Complicity in Human Rights Violations and Sovereign Wealth Funds--The Norwegian Sovereign Wealth Fund and Myanmar Investments

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Complicity is becoming an important weapon in the "soft law" arsenal, even as its utility as "hard law" is increasing both as applied within the domestic legal orders of states against private entities, and against states themselves (either as sovereigns or market participants) under domestic or international law systems. It was only a matter of time before states, even as market participants, would find that their commercial activities would be subject to scrutiny for human rights abuses under a broadened notion of complicity as both hard and soft law, even second order abuses, through the application of social-norm complicity standards as well as "hard law" standards.

Traditionally, complicity arose out of criminal law and required both a material and a mental element. See Anna Triponel, "Comparative Corporate Responsibility in the United States and France for Human Rights Violations Abroad," Global Labor and Employment Law for the Practicing Lawyer, Proceedings of the New York University 61st Annual Conference on Labor 59-158 (Andrew P. Morriss and Samuel Estreicher, eds., Austin: Wolters Kluwer, 2010). In another study, it was noted that "a corporation will be directly complicit in human rights abuses where it decides to participate through assistance in the commission of human rights abuses and that assistance contributes to the commission of the human rights abuses by another. The primary perpetrator does not necessarily have to have been found responsible in order for the corporate accomplice to be found liable for having contributed to those same human rights abuses. Nor need the corporation actually wish the results, it is enough if the corporation or its agents knew of the likely effects of their assistance." Andrew Clapham and Scott Jerbi, Categories of Corporate Complicity in Human Rights Abuses, Based on a background paper for the Global Compact dialogue on The role of the private sector in zones of conflict (New York, 21-22 March 2001). Still, as a matter of hard law, the precise standard varies depending on the domestic legal order within which complicity is charged under either the civil or criminal law. Triponell, supra., at 126-139 (focusing on France and the United States). Another excellent study of complicity by economic enterprises in human rights violations and judicial recourse was prepared in three volumes by the International Commission of jurists (Commission Internationale de Jurists), an organization dedicated to the primacy, coherence and implementation of international law and principles that advance human rights. See, International Commission of Jurists, Report of the ICJ Expert Legal Panel on Corporate Complicity in International Crimes (2008). (3 volumes in English, French or Spanish).

One of the Report's more important insights concerned the broadening of the meaning of complicity. Complicity has acquired a double set of meanings. One is grounded in the governance framework of the law-state. The other is tied to the social-norm systems of non-state governance regimes--the market, the consumer society, multinational corporations and other governance communities beyond the state. "Just as the concept of impunity in the sphere of human rights has taken on a meaning so much more multi-faceted, sophisticated and colorful than the strict historical legal meaning of impunity, in the context of business and human rights, the concept of complicity is now used in a much richer, deeper and broader fashion than before." (Report of the ICJ Expert Legal Panel on Corporate Complicity in International Crimes, supra, Vol. 1:3).

IWAMURA, Masahiko, Soft Law and the State-Market Relationship, The University of Tokyo Global COE (?Soft law? refers to norms that are not formal laws provided by the state. State enforcement of these norms is not guaranteed, yet people are somehow bound by them in socio-economic society. These norms vary in their form; some are provided by the state (e.g., regulatory guidelines by ministries etc.), some by businesses or the markets themselves (e.g., self-regulation by industry associations or general standards of business ethics and etiquette etc.), and some are established by the international community (e.g., model laws, resolutions or guidelines of international organizations etc.). Contemporary business laws contain many elusively defined soft laws which play an important role, and which have a significant impact on business activities.

This development parallels changes in the understanding of transnational governance regimes--and their essential polycentric character--reflected in current efforts to structure and harmonize the governance framework for business and human rights among public and private actors. These seek to connect the public, law based, duties of states, with the social norm based responsibilities of private actors. See, Business and human rights: Towards operationalizing the ?protect, respect and remedy? framework Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, A/HRC/11/13 (22 April 2009).

Civil society has been especially important in developing the notion that business has a responsibility to avoid becoming complicit in the human rights violations of other companies in which they invest or in the violations of states in which they do business, and that states have a similar obligation in whatever form they act. Larry Cat� Backer, Avoiding Corporate Complicity in the Human Rights Violations of States--Microsoft and Software Licensing, Law at the End of the Day, Nov. 14, 2010; Larry Cat� Backer, Michael Komesaroff on China in Africa--State Duty, Corporate Responsibility and the Changing Face of Economic Globalization, Law at the End of the Day, Dec. 13, 2010. See also Larry Cat� Backer,States, Labor as a Market Commodity, and Human Rights Frameworks--Cuba's Grannacional Programs at the Intersection of Business and Human Rights, Law at the End of the Day, July 17, 2010. Indeed, civil society tends to make no distinction among market participants, irrespective of the ultimate ownership of these economic actors.

One of the more significant emerging group of economic actors are states that have invested their wealth in corporate securities. Larry Cat� Backer, Sovereign Investing in Times of Crisis: Global Regulation of Sovereign Wealth Funds, State Owned Enterprises and the Chinese Experience. Transnational Law & Contemporary Problems, Vol. 19, No. 1, 2009. Operating through sovereign wealth funds and state owned enterprises, usually though not always organized as separate juridical persons, states can participate in markets beyond their national borders.

"The Crown Estate has reached a deal with Norway's sovereign wealth fund to sell a stake in Regent Street, one of the world's most famous shopping sites, for �448m." The Telegraph (4 Nov. 2010).

As shareholders, of course, states have sought to rely on the traditional legal distinction between shareholders and the entities in which they invest. What they may be discovering is that the simultaneously application set of social-norm governance standards may affect even the ability of states to avoid determinations of violation of human rights norms. These determinations may not be founded on the law systems of states, but they may produce reaction strong enough to affect behavior, ven if not compelled through traditional processes and structures of law.

In a recently released report, Broken Ethics: The Norwegian Government's Investment in Oil and Gas Companies Operating in Burma (Myanmar) (December 2010), the civil society organization EarthRights International has now taken another step in that direction, arguing that sovereign wealth funds also have the obligation of avoiding becoming complicit in the human rights violations of the corporations in which they invest or the states in which these corporations operate.

This report finds the Norwegian government complicit in human rights abuses in Burma through investments held by the Norwegian Pension Fund-Global (Fund), including USD $4.7 billion invested in 15 oil and gas companies from eight countries operating in Burma. The report documents human rights conditions associated with these 15 company's projects, finding on-going abuses including forced labor, killings, and land confiscation, and the high likelihood that other projects will result in additional abuses in the coming years. These continued investments put Norway in violation of its own Ethical Guidelines for responsible investment. (EarthRights International, Broken Ethics.)

But EarthRights is doing more than seeking to impose soft law standards on the Norwegian SWF. Rather, it appears ot suggest that because the state is the owner of the investment vehicle, the hard law obligations that bind Norway, also bind its actions as a shareholder of companies, and as the owner of an investment business. In this case, then, the character of the shareholder affects the character of the rules that are binding on it. As a state actor, even in private form, the Kingdom of Norway might find that soft law is quite hard. In Norway's case, moreover, EarthRights appears to suggest that the internal operating rules of the SWF, articulated through the remedial structures of the Ethics Council, have binding effect, not merely as soft law, but as a legal basis binding as the domestic law of Norway.

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