Author Archive for
Caroline Kaeb and David Scheffer

The Corporate Joust with Morality

by Caroline Kaeb and David Scheffer

[Caroline Kaeb is Assistant Professor of Business Law and Human Rights at the University of Connecticut.  David Scheffer is the Mayer Brown/Robert A. Helman Professor of Law and Director of the Center for International Human Rights at Northwestern Pritzker School of Law. They are co-chairs of the Working Group on Business and Human Rights of the U.N. Global Compact’s Principles for Responsible Management Education.]

The corporate world is struggling with two competing visions of corporate ethics as the governance gap in national capitals stymies effective responses to global challenges.

The first vision gaining steam in recent years has been a form of corporate activism we call “corporate counterattack.”   Some major multinationals are increasingly challenging and indeed changing poorly conceived government policies or occupying the policy void.

Take the United States. Last year Apple, Angie’s List, Anthem, SalesForce, Roche Diagnostics, Cummins, Eli Lilly, and companies headquartered in Indiana successfully brought heat down on Governor Mike Pence to amend legislation that had allowed businesses, citing religious freedom, to discriminate against gays and lesbians.  The uproar caused the state initially to lose perhaps dozens of conferences and $60 million of anticipated revenue. Walmart similarly counterattacked against discriminatory legislation in Arkansas.

Google and other multinational corporations in the deep South balk at operating in states that glorify the Confederate flag or enact legislation undermining minority rights.  The latest examples are North Carolina and Mississippi, where laws discriminating against gay, lesbian, bisexual and transgender people have prompted strong corporate reactions. PayPal cancelled a $3.6 million investment in North Carolina. Google Ventures froze new investments in the state and other companies are reconsidering their plans. Over 140 CEOs and business leaders of such corporations as Facebook, Bank of America, and Apple signed an open letter to North Carolina Governor Pat McCrory opposing that state’s new law. Such giant corporate employers as Tyson Foods, Nissan, Toyota, and MGM Resorts International have loudly protested Mississippi’s regressive law. These collective business voices challenge state governments to protect human rights while such public authorities seek their corporate investments.

Meanwhile, in Europe some corporations have addressed the humanitarian crisis swamping that continent with philanthropy and commitments to train and employ migrants, including refugees, from the Middle East and North Africa. A newly-formed partnership of companies, including McDonald’s, MasterCard, Facebook, and DreamWorks Animation, generates private funds for the World Food Programme to feed millions of migrants by providing free ad time and access to digital promotion.

This stands in contrast to the chaos that unfolded on the European continent as governments swung further to the right and shut their borders, lacking any “big ideas” as human misery cloaked the endless flow of destitute individuals. The governance gap in Europe, North Africa, and the Middle East shows few signs of narrowing, thus assigning even greater responsibility to corporations that are willing to act boldly and innovatively to address humanitarian needs.

In early 2015 Sony Corporation marketed “The Interview,” not only for revenue but also in defense of freedom of expression after North Korea, or its agents, apparently launched cyber-attacks on the company so as to intimidate it into locking up the comedy critical of Kim Jong-un.

In the wake of recent terrorist attacks in Europe and the United States, internet giants struggle to find the right balance between privacy and security in the face of calls for more government surveillance and information sweeps that would impinge upon privacy rights globally.  For example, Apple recently refused a lower federal court order to reverse engineer a dead terrorist’s locked iPhone in San Bernardino, California, so as to gain password access and thus assist the FBI in its investigation of the deadly terrorist attack in that city. Ultimately the FBI used other means to access the iPhone.

National security concerns are of vital importance. But Washington’s insistence that Apple develop software to unlock the privacy of the iPhone is potentially dangerous. It exposed Apple and other cyberspace companies to comparable demands by repressive governments and even other democracies that will be inspired to compel corporate complicity in undermining human rights protections for spurious national security priorities. Among the victims might be human rights activists and political dissidents seeking to advance principles embodied in the American Bill of Rights and international human rights treaties.

In defense of freedom of expression, Google has fiercely challenged an extension of the European privacy right to be forgotten to non-European Union internet domains (such as google.com), regardless of whether the information was accessed from within the EU or anywhere else in the world. This is an example of competing public policy priorities that need to be weighed and possibly balanced with one another, and business has a vital role to play in that process.

None of these companies perfectly embraces principles of social responsibility and sometimes they overlook human rights or environmental standards in one part of the world while embracing them in other societies.  But there is no shortage of opportunities being seized by multinational corporations to significantly influence the protection of human rights and advance worthy social policy goals.  Fifteen years of growing corporate participation in the United Nations Global Compact, with its pledges on human rights, labor, environment, and anti-corruption, demonstrate a mindset shift that generates constructive societal contributions and a growing body of counterattacks against regressive or failed public policies.

However, there are fierce winds blowing against such initiatives.  The second and darker vision of corporate ethics remains wedded to short-term profits regardless of societal impact and even if fraudulently obtained.  The colossal Volkswagen deceit, where 11 million diesel-fueled and supposedly eco-friendly vehicles were apparently rigged to cheat on emissions tests, blatantly screamed “go to hell” to corporate social responsibility.  Coca-Cola paid scientists to argue that physical exercise is the antidote to high-sugar drinks, so consumers were encouraged to keep chugging and then jogging off the fat while Coke prospers.

General Motors, which settled with the Justice Department for $900 million, ignored and then delayed reacting to an ignition flaw in its vehicles that resulted in 124 deaths and 275 serious injuries. One young tycoon, indicted on securities fraud, shamelessly inflated the price of a 62-year old drug to treat serious infections from $13.50 to $750 and thought that was just fine in a world ruled by hedge funds.  A chief executive was recently sentenced to 28 years in prison for knowingly shipping peanut butter laced with salmonella, killing nine people and inflicting illness on at least 700 others.

Without waiting for government mandates, major corporations are joining a growing global coalition to convert to renewable energy sources.  But for decades Exxon Mobil aggressively funded climate change deniers despite the role of carbon-based fuels in that scientifically proven man-made phenomenon. Over the years, 62 resolutions have been introduced at shareholder meetings to compel the company to confront the reality of climate change in its operations and investments. But management and a majority of shareholders have voted down each of those resolutions, including 11 of them at the last shareholders meeting in May. Divestment campaigns by activists continue to dog Exxon Mobil. At least Rex Tillerson, the company’s chief executive, recently reiterated Exxon Mobil’s support for a carbon tax and further studies of the “risk” of climate change.

Former Massey Energy CEO Don Blankenship is now serving a one-year sentence in federal prison following the deaths of 29 miners he employed. He must have thought, as he managed one of the largest energy companies in America, that he could somehow evade fundamental coal mine safety standards and speak and act as if he was just barely crawling out of the Dark Ages of labor rights, and hence human rights.   If Blankenship took just one refresher course at any leading business school today, could he possibly walk out of that class with the same reckless views he exhibited on the job for years? Perhaps he would, which is why focusing on what business schools, and what they teach business students in core management classes as well as business practitioners in their executive programs, is important to review and get right. This entails teaching the protection, enforcement, and indeed advancement of human rights and other societal imperatives within the corporate world. It is in business schools in particular where it all starts, to shape the students’ minds to do rights-based business in the 21st Century.

This duel between corporate responsibility and corporate deceit and culpability is no small matter.  The fate of human society and of the earth increasingly falls on the shoulders of corporate executives who either embrace society’s challenges and, if necessary, counterattack for worthy aims or they succumb to dangerous gambits for inflated profits, whatever the impact on society.

The fulcrum of risk management must be forged with sophisticated strategies that propel corporations into the great policy debates of our times in order to promote social responsibility and thus strengthen the long-term viability of corporate operations.  We believe that task must begin in business schools and in corporate boardrooms where decisions that shape the world are made every day.

Scottish Independence Insta-Symposium: The Legal Terrain Following a Yes Vote for Scottish Independence

by Caroline Kaeb and David Scheffer

[David Scheffer is the Mayer Brown/Robert A. Helman Professor of Law and Director of the Center for International Human Rights at Northwestern University School of Law.]

If the Scottish people vote in the majority on September 18th to become an independent nation, then a host of legal issues will descend immediately upon Holyrood, where the Scottish Parliament sits in Edinburgh, and Westminster, the legislative center of the United Kingdom Government in London.  Some of these issues can be overcome if there is a willingness to negotiate in good faith.  Otherwise, obstructionist and stubborn negotiating tactics can result in a bitter fight to the end, which will be 24 March 2016 if Holyrood’s schedule stands for Scotland to break away as a newly-minted sovereign state.

The Edinburgh Agreement of 15 October 2012, signed by First Minister Alex Salmond for the Scottish Government and Prime Minister David Cameron for the United Kingdom, provides the legal platform for the September 18th referendum.  Whatever is decided on that day has the legitimacy required under British law to move forward either with the United Kingdom as a unified country (if there is a majority no vote) or with the emergence of an independent Scotland following separation negotiations between Holyrood and Westminster and the necessary parliamentary acts (if there is a majority yes vote).

Section 30 of the Edinburgh Agreement is critical as to the aftermath, stating that the two governments “look forward to a referendum that is legal and fair producing a decisive and respected outcome.  The two governments are committed to continue to work together constructively in the light of the outcome, whatever it is, in the best interests of the people of Scotland and of the rest of the United Kingdom.”  That has long been understood to mean that negotiations between Holyrood and Westminster would commence in the event of a “yes” vote for independence.

Yet for months Westminster and the three main UK political parties (Conservative, Labour, Liberal) have waged their “no” campaign with scare tactics premised, it seems, on there being no meaningful negotiations at all.   Their message is that if there is a “yes” vote, then the protectionist shields will rise at Hadrian’s Wall and the remainder of the United Kingdom (rUK) will simply go its own way as the “continuator state,” leaving Scotland to survive or sink on its own.  Nothing could be further from reality, and Westminster knows that.

It will be in the interests of Westminster and the citizens of rUK to work out how to continue prosperous commercial and social relations with the Scottish people and sustain bonds with Scotland as a close ally.  Alienating Scotland with arrogant posturing now—a raw campaign tactic—as well as later during the inevitable negotiations is an irrational game plan for Westminster.  In fact, the tightening polls in Scotland seem to confirm that the bluff is backfiring.

The first legal issue upon which so much else depends centers on the law of state succession—what will be the legal outcome regarding statehood if Scotland and rUK split?  Westminster and many international lawyers insist that the rUK will be the continuator state, thus continuing the status quo in almost all treaty and international organization relations, while Scotland would be cast off as a new state to initiate its own treaty relations, currency, and membership in international organizations—the “clean slate” approach.  Such a punitive view of Scottish self-determination would force Holyrood onto the most arduous pathway towards statehood and presupposes either unnecessarily complex negotiations with no end in sight or no credible negotiations at all.  Westminster’s tactic is built upon a pyramid of presumptions arising from the initial premise of the continuator theory and yet little of which relates to the sui generis character of the Scottish situation, as I have examined elsewhere.

The unique history of the Scottish and English union of 1707 and the fact that since the 1970s we have seen unfold in Scotland a distinctly modern form of self-determination colors this entire exercise.  Nowhere else are the facts even similar regarding this remarkably peaceful and progressively building process of devolution leading to the renewed independence of a once sovereign nation, including the consent of the UK Government to hold such a referendum.  Legal theories on state succession based upon irrelevant practices of decolonization and stale notions of what constitutes customary international law simply do not work here.

Indeed, the modern formulation of state succession framed in the 1978 Vienna Convention on Succession of States in Respect of Treaties for a situation of this character points towards negotiated co-equal successor state status for both Scotland and the rUK during post-referendum negotiations.  If Holyrood and Westminster cooperate in good faith during the negotiations as co-equal successor states, they can create a pathway of mutually agreed and beneficial continuation of various treaty obligations for both states, Scottish membership in the European Union, continued UK membership as a permanent member of the UN Security Council, and a smooth transition for Scotland to join NATO and other international organizations.

Regarding the European Union, if one theoretically were to design the most judicious and EU-compliant path towards internal enlargement, the Scottish experience would set the gold standard.  Scotland is already part of the European Union because it is part of the United Kingdom.  The Scottish people are EU citizens with important rights under EU law.  Given those realities, transitioning to Scotland and the rUK following a “yes” vote on the referendum should be negotiable with Brussels in order to sustain the membership of both nations in the EU.  Surely that would be to the advantage of the European Union.  Caustic and unsubstantiated statements by EU officials and Westminster politicians in the past that relegate Scotland to new applicant status shorn of any existing rights under EU law have been narrow-minded expressions of insecurity.  I recently argued in Brussels, “[Scotland] is truly a sui generis phenomenon within the European Union and efforts to create false symmetries with other sub-state aspirations on the European continent are misleading.”

Of course, much is complicated by Prime Minister Cameron’s intention, expressed on 23 January 2013, to renegotiate parts of the UK’s relations with the European Union and hold a referendum by 2017 to determine continued membership of the UK in the Union. The anti-EU fervor arising from both Conservative and Labour party ranks and manifested in the United Kingdom Independence Party stands in contrast to the Scottish Government’s strong allegiance to the European Union and for sustained EU membership for an independent Scotland.  For rUK negotiators to threaten their Scottish counterparts with outcast status in the European Union while London plots its own withdrawal would be supremely ironic and not easily overlooked.

Each side has a different take on how to proceed with EU membership for Scotland.  The Scottish Government favors amending the Treaty of the European Union (TEU) under Article 48 to create procedures for continued Scottish membership.  This “continuity of effect” assumes transitioning Scotland’s current status as part of the United Kingdom into a newly sovereign status in a fully integrated way within the European Union’s legal, economic, institutional, political and social frameworks.  But this approach requires Westminster to seek such amendments as a willing partner following a yes vote on the referendum.

Westminster and some European Commission officials insist that Scotland would have to apply for membership in the European Union under Article 49 of the TEU just like other new applicants that have never been part of the European Union, like Croatia recently.  There doubtless would result a significant gap in EU membership for Scotland, which might be forced to delay the process until it achieves sovereign statehood status. A legal nightmare may well ensue. If Westminster intends to punish Holyrood following a yes vote, rather than negotiate in good faith, this would do it.

A negotiated formula, however, that essentially melds together procedures of Articles 48 and 49 of the TEU with the support of Westminster in discussions with EU leaders in Brussels and EU member states could provide a reasonable framework for keeping Scotland in the European Union with the least degree of disruption.  This formula would open the way for Holyrood to negotiate what normally would be required under Article 49 for membership, but to do so during the period prior to Scottish statehood with an Article 48 amendment process.  Westminster can facilitate this by joining with Holyrood in such negotiations and thus be the EU member state at the table.  That would reflect the true spirit of Section 30 of the Edinburgh Agreement already agreed to by the two parties.  Westminster’s role is critical, for under the procedures of either Article 48 or Article 49 of the TEU, the unanimous consent of all 28 EU member states would be required to facilitate Scotland’s membership in the European Union.

Perhaps the most divisive issue in recent months has been over the Scottish Government proposal that a currency union be formed between Scotland and rUK to sustain use of the pound sterling by an independent Scotland. There are considerable complexities to any currency option for an independent Scotland, but Westminster has slammed the door on a currency union prior to any negotiations and taunted First Minister Salmond to state his Plan B.

For Salmond to have put forward any Plan B before the referendum would cave into Westminster’s cynical tactic prior to any serious negotiations on currency that could work to the benefit of both nations.  Such bullying by unionists may have chalked up a  few debate points, but it has stirred anti-UK sentiment in Scotland while ignoring the fact that during post-referendum negotiations the Scots have some trump cards of their own.

One of those cards is that if Westminster insists that UK will be the continuator state of the United Kingdom and refuse a currency deal, Scotland can beg off sharing the UK debt and let Westminster shoulder the entire estimated burden of £1.6 trillion by 2016/17. That would comply with the logic of rUK being a continuator state.  Holyrood has offered to accept partial liability on the UK debt but obviously only after negotiations that settle all issues, including division of assets. The markets likely would respect Scotland’s willingness to pay, but also calculate the punitive character of a refusal by Westminster to negotiate currency issues with the result that Scotland’s economy would be unshackled of UK liabilities.  In an effort to reassure the markets, the UK Treasury agreed earlier this year to cover all UK gilts in the event of Scottish independence, but did so assuming that Holyrood still would shoulder a portion of the UK debt.  Not so fast, as Holyrood will have its own demands in such negotiations.

Whatever the outcome on September 18th, the people of Scotland will have acted democratically and peacefully to determine the fate of their nation.  That itself will be a significant achievement under the rule of law.

Commentary to Boumediene

by Caroline Kaeb and David Scheffer

While I fully agree with Justice Kennedy’s majority opinion and Justice Souter’s concurring opinion in Boumediene v. Bush, I found it significant that neither those opinions nor the two dissenting opinions of Chief Justice Roberts and Justice Scalia found it necessary or desirable to refer to international law despite the relevance of that body of law to the earlier Guantanamo cases of Hamdi, Rasul, and particularly Hamdan. Of course, one should never be surprised or alarmed at sole reliance on U.S. law and precedent in a federal court’s adjudication of a dispute. But in Boumediene the opportunity existed to confirm that even if one were to accept the dissenters’ view that Guantanamo remains outside of U.S. sovereign de jure jurisdiction and thus, in their view, outside the reach of the Constitution’s habeas corpus protection, there are minimal due process rights and fundamental guarantees established in the International Covenant on Civil and Political Rights and in the Geneva Conventions (treaties to which the United States is a State Party) and in customary international law (including Article 75 of Geneva Protocol I, reaffirmed by the plurality in Hamdan) that point to a duty by U.S. officials, wherever they operate in the world, to provide far better access to the legal rights underpinned by habeas corpus (as part of the broader principle of a fair and speedy trial) than has been afforded by the Bush Administration in its detainee policies since 9/11 or by the U.S. Congress (in the Detainee Treatment Act of 2005 and the Military Commissions Act of 2006).

The self-inflicted and increasingly fatal wound of the government and of the dissenters was the original decision to create the novel “unlawful enemy combatant” category for Guantanamo detainees that purported to deny them both prisoner of war status under the Geneva Conventions (and the fair trial rights of POWs) and any terrorist categorization under U.S. federal criminal law compelling prosecution before long-established criminal courts and under the anti-terrorism laws already available in the U.S. Code.

The legal vacuum into which the Bush Administration threw all Guantanamo detainees distanced such individuals from the rationale advanced by Justice Scalia in his dissenting opinion, where he relies so heavily on distinguishing the Johnson v. Eisentrager precedent from the majority’s view of it. The German defendants in Eisentrager were prisoners of war who had been prosecuted before a duly constituted U.S. military commission in China for violating the laws of war during armed conflict (WWII) outside the United States. Their prosecution, and the Supreme Court’s affirmation of the denial of habeas review in Eisentrager, occurred in part because they had prisoner of war status when prosecuted and the procedures under which they were prosecuted were deemed by the Supreme Court to satisfy due process requirements for a U.S. military trial held overseas on territory over which the United States had neither de jure nor de facto sovereignty. In contrast, it is the lack of prisoner of war status for the Guantanamo detainees (even those with strictly Taliban associations) and the insufficient application of necessary due process standards, particularly in a flawed military commission on territory over which the United States exercises de facto sovereignty (namely, Guantanamo), that compels the majority in Boumediene to focus on the habeas corpus right and the necessity of its availability under the circumstances of Guantanamo.

Scalia fumbles within his own reasoning by analogizing the Guantanamo detainees to “the more than 400,000 prisoners of war detained in the United States during World War II. Not a single one was accorded the right to have his detention validated by a habeas corpus action in federal court—and that despite the fact that they were present on U.S. soil.” If only that were the case under these circumstances!

What if, from the beginning of the U.S. military invasion of Afghanistan in 2001, the government had clearly established the constitutional basis for waging a war (and not the rhetorical battle cry of the so-called war on terror) and established two sets of detainees—those classified as prisoners of war and detained at U.S. facilities either on U.S. territory or on foreign soil (including Guantanamo where U.S. de facto sovereignty resides), and those classified as terrorist suspects and arrested for trial as terrorists before U.S. federal courts?

The prisoners of war—who, by the way, need not satisfy every single condition of Article 4 of the Third Geneva Convention to be accorded prisoner of war status or comparable status by the detaining power—could have been held without access to habeas corpus and without trial for the duration of a reasonably-defined state of war. The government could have used its discretion, assuming the war was properly authorized, legitimately to categorize certain terrorist suspects and most if not all of the Taliban soldiers as prisoners of war. That would have satisfied Justice Scalia’s preference for denial of habeas corpus for such alien enemies. There would not have been a legal vacuum of the character the dissenters in Boumediene have so consistently endorsed in the Guantanamo line of cases. Granted, those individuals whom the government desires to classify as international terrorists would have to be indicted, arrested, transported to the United States, and brought to trial in accordance with U.S. requirements of due process, including habeas corpus. The artificially-concocted category of “unlawful enemy combatants,” which has been the gateway to the Bush Administration’s distortion of both the law of war and anti-terrorism law, never would have survived the earliest scrutiny.

“What if?” never trumps reality, but the Supreme Court’s majority opinion in Boumediene invites us to speculate how different this entire mess would have been if only American policy-makers had had greater faith in long-standing federal law and the Constitution. The dissenters are seemingly intimidated by the terrorist suspects and others swept up for detention at Guantanamo, all of whom were labeled as “unlawful enemy combatants.” The dissenters continue propping up the deeply flawed detention procedures and military commission system that were carved out of fear not only of terrorism but of the Constitution, rather than upholding the Founders’ commitment to the rule of law. It is the latter that will best defeat international terrorism directed against the United States and not the Bush Administration’s approach, which was struck down once again by the Supreme Court.