Constitutional Obligations of Corporations in Europe

Developments in business and human rights in the past decade reveal a division between voluntary and binding approaches to the questions of whether corporations have human rights obligations and whether they should be held accountable for their human rights impacts. Even though the proponents of both sides attempt to demonstrate that these approaches are not mutually exclusive, victims on the ground are today still witnessing the continuation of the status quo, mostly to the benefit of major corporate players. Soft-law guidelines and principles do not create binding international legal obligations, but they merely restate the state-of-the-art in human rights law. Victims of corporate human rights violations have thus often encountered difficulties in enforcing their claims against corporations. They often find hurdles due to the absence of binding human rights obligations of corporate actors. On the other hand, national constitutions often include binding human rights obligations both for individual and legal persons, thereby creating also human rights obligations for corporations. This paper therefore attempts to answer the question whether the constitutional provisions of domestic systems of the European states apply also to corporate actors. In doing so it examines selected ten countries from all regions of Europe in order to establish whether their constitutional documents bind also corporate actors. It further examines what is the nature and scope of such constitutional obligations. In the closing part of the article, conclusions are drawn on how those countries should proceed to reform the enforcement of corporate human rights obligations deriving from their constitutions.    

Invoking Fundamental Rights to Hold Companies Accountable: The Indian Experience

This paper will explore the extent to which fundamental rights (FRs) provisions in Part III of the Indian Constitution could be directly invoked against companies to hold them accountable for human rights abuses. I will examine two issues related to this question: the extent of horizontal application of FRs, and the relevance of corporate law (principles of separate corporate personality and limited liability) to this constitutional law question. The FRs are generally available against the ‘state’ as defined by Article 12 of the Indian Constitution. The definition of ‘state’ includes ‘other authorities within the territory of India or under the control of the Government of India’. The Supreme Court has extended considerably the meaning of ‘other authorities’ by developing an instrumentality test. However, I will argue that the instrumentality test is not suitable to meet the complex challenges posed the privatisation of governance and economy. The solution to achieve an optimal horizontal application of FRs might lie either in an amendment of Article 12 or the judicial enunciation of a new test that focuses more on functions of private non-state actors.  Moreover, even if an optimal horizontal application of FRs is achieved in principle, this might not result companies held accountable for human rights abuses in practice, as companies might plead principles of separate corporate personality and limited liability to deny or limit their liability. The paper will, therefore, also consider the tools that courts could employ to mitigate the negative effect of these corporate law principles on the enjoyment of constitutionally-guaranteed FRs.       

Constitutional Rights, Corporate Persons, and Accountability in the United States

The United States Constitution, as well as those of many of the states in the Union, contain extensive and well known categories of fundamental rights which are protected against the assertion of governmental power. These fundamental protections are derived from the Constitutional documents themselves or are extracted from ancient rights and customs recognized at the time of the founding of the Republic.   They provide substantial protection of property, of life and liberty interests of persons against the state, but have traditionally offered far less well defined protections of economic, social or cultural rights except to the extent they might be extracted from constitutionally derived protections against discrimination against a growing list of recognized categories—among them race, religion, ethnicity, sexual preferences.  At the time of the founding of the Republic there was a near perfect identity between the institutions that exercised governance power and the scope of the “higher law” that constrained such exercise through the interposition of fundamental norms written into or extracted through law. But this ancient system, quite potent and adequate for the age in which it was created and reached its greatest stage of development, might be less responsive to modern forms of the organization of politics, economics and social life within the Republic. The development of the great structures of administrative regulation and organization in the 20th century, and the substantial governmentalization of private enterprises (especially enterprises operating in corporate form), has created certain disjunctions between those who exercise governance authority and the reach of constitutional protection against abuses of the exercise of governance power. This paper considers whether and to what extent—formally or functionally—the traditional constitutional constraints on government might be asserted against non-governmental authorities exercising governmental power. The paper first considers the conventional approach and traditional understandings of the limitations of the application of constitutional constraints against private actors asserting governmental authority. U.S. jurisprudence draws a fairly hard line between public and private actors, whatever the functional effect of their actions.  The law in that respect has been fairly stable. That, combined with the traditional narrow scope of reading fundamental rights protections into the U.S. or state constitutions, makes the possible scope of application of constitutional constraints directly difficult. The paper then considers possible avenues for creating regimes that effectively transpose at least functional constitutional obligations onto private actors. There are several avenues worth considering.  First, either federal or state legislation can transpose constitutional obligation against states into legal obligations that may be asserted against enterprises. Second, corporations could be encouraged to adopt these duties as a matter of internal governance and in their contracts with their stakeholders. Finally, an international law-norm approach will be considered.  The limitations of these approaches will then be considered, including among them the possibility that corporations can challenge such legal regimes as violations of their own constitutional rights against governmental interference, that the complexity and limitations of effective applicable scope may make the approaches unworkable, and lastly that they will have little effective scope of remedy.