MD. TANZIMUL HAQUE
Research Paper 2
14 September, 2018
Word Count: 1502
Responsibility of States for Environmental Degradation by Corporations
The law of state responsibility is customary international law, developed by state practice and international judgments. Principles of state responsibility constituted a baseline enforcement system at the time when public international law begun to engage with the environmental concerns by applying general rules to situation involving environmental harm. An action attributable to a state constitutes a breach of treaty or customary law when a wrong has been committed. Even though the rules and principles of state responsibility in international law offer only a narrow window to use the adjudication and the litigation to promote the environmental responsibility of the corporate actors, from the perspective of international environmental law, the issue of corporate liability with regard to state responsibility for environmental degradation has been of great concern to the international community due to the growing nature and expansion of corporations both nationally and internationally as well as their impact on the environment.
International Law and State Responsibility for Environmental Degradation by Corporations:
State responsibility basically refers to the alleged system of the civil liability law in public international law. In order to ascertain state responsibility, some criteria are followed: 1. International wrong committed, 2. Attributable to a state, 3. Exhaustion of local remedies. The standing of the Final State Responsibility Articles was confirmed by the International Court of Justice (ICJ) in the case of Prevention and Punishment of the Crime of Genocide (Bosnia case). Article 8 of the draft articles states that the conduct of a group or persons shall be considered an act of state under public international law only if they are in fact acting under the direction or control of the state in carrying out the impugned conduct. In the commentaries to the Final State Responsibility Articles, The ILC concluded that as a general rule the conduct of private persons and corporations is not attributable to the state under public international law. In dealing with Article 8, the ILC considered the example of a state owned and controlled enterprise and argued that prima facie the conduct of even such an enterprise is not attributable to the state. In the Bosnia case the court concluded that the state will be responsible for non-state actors to the extent that ‘they acted in accordance with that state’s instructions or under its effective control.’ Therefore, effective control must be proved to make state liable for the act of any corporation. The decision of the ICJ, followed the reasoning as well and ‘effective control’ test it used in the earlier case of the Military and Paramilitary Activities (Nicaragua case). The court further explained that, ‘effective control’ or the State’s instructions were given, in respect of such operation must be proved to make state liable.
To invoke a Trans National Corporation (hereinafter mentioned as ‘TNC’) responsible for the degradation of environment, can be done in accordance with Articles 4 and 5 of the Draft Articles of State Responsibility. Under these articles, state responsibility could arise for the conduct of a state organ exercising legislative, executive and judicial or any other functions, or the conduct of a person or entity, which is not an organ of state but is empowered by the state to exercise elements of government authority.
The Trail Smelter Arbitration, one of the most popular ICJ cases concerning environment, is an example of trans-boundary environment harm. Moreover, there are many other international instruments which deal with trans-boundary environmental harm in different forms of actions or omissions, such as- use of nuclear energy, operation of nuclear ships, maritime carriage of nuclear materials, oil pollution, carriage of dangerous goods by road, rail and inland navigation vessels, dumping of hazardous materials in the ocean etc. UNCLOS, which is emerging as the constitution for the oceans, requires states to ‘ensure that recourse is available in accordance with their legal systems for prompt and adequate compensation or other relief in respect of damage caused by pollution of the marine environment by natural or juridical persons under their jurisdiction.’
The Deepwater Horizon Litigation is another very well-known incident in the history which gave rise to several lawsuits because of a huge oil spill in the Gulf of Mexico resulting in the death of hundreds of people and marine animals and birds. From these environmental disasters, two types of liability can be classified- one which gives rise to State Responsibility and the second giving rise to Civil Liability. In both the circumstances, the liability for the damage caused to the environment rests upon the offender.
Now, in most cases, the responsibility of States for environmental degradation by Corporations is to somewhat restricted. The reason behind this is that usually TNCs operate as a separate legal entity as they are of private and corporate nature and thus, there accrues individual civil liability on part of the corporation itself. The 1960 Paris Convention on Third Party Liability in the Field of Nuclear Energy, the 1963 Vienna Convention on Civil Liability for Nuclear Damage, the 1997 Protocol to Amend the Vienna Convention on Civil Liability for Nuclear Damage and the 1997 Convention on Supplementary Compensation for Nuclear Damage etc. are some of the international treaties which promotes Civil Liability for environmental degradation by corporations. The Lugano Convention on Civil Liability for damage resulting from activities dangerous to the environment (1993) is a very significant convention in this regard; in Article 1, it says, among other things, to ensure ‘adequate compensation for damage resulting from activities dangerous to the environment…’ and he ability of corporations to strategically mitigate their exposure to damages is tackled by the requirement that States Parties for them obtain insurance, as per Article 12 of the said Convention.
On the contrary, when the actor itself is a State owned corporation, the nature of the liability changes and shifts to the state as State Responsibility. Article 2 of the Draft Articles on State Responsibility states that there is an internationally wrongful act of a State when conduct consisting of an action or omission: (a) is attributable to the State under international law; and (b) constitutes a breach of an international obligation of the State. In the Metalclad Corporation v.Mexicocase, Mexico was held responsible for the conduct of its state and local government in accordance with the established position in customary international law, and in particular with draft article 10 adopted by the ILC.
Furthermore, in the case concerning the Gabcikovo-Nagymarosproject,the ICJ held that each state had an obligation to compensate the other. Additionally, In SGS v. Pakistan, it was upheld that each time you violate a provision of the contract… you also violate norms of international law, you violate the treaty by the same token and that it elevates breaches of contract as breaches of a treaty. Therefore, the protection of environment being a part of customary international law, each state is liable for the violation or breach of international law if there is any environmental degradation, especially of a trans-boundary nature.
Moreover, the Draft Articles of State Responsibility through its different articles imposes State Responsibility in State Actors, such as- Article 1, which states, ‘Every internationally wrongful act of a State entails the international responsibility of that State.’ The same principle has been upheld in the Phosphates in Morocco case, where PCIJ affirmed that when a State commits an internationally wrongful act against another State international responsibility is established ‘immediately as between the two States’.
In line with these Articles, ILC further codified the Draft articles on the Prevention of Trans-boundary Harm from Hazardous Activities, 2001 and Draft Principles on the Allocation of Loss in the Case of Trans-boundary Harm Arising out of Hazardous Activities, 2006. Together, these form a part of international customary law and strengthens the responsibility of state for the protection of environment as well a as liability for responsibility for environmental damage.
On 2 February 2018 the ICJ rendered its first decision on environmental damage and compensation in the case concerning Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v. Nicaragua) Compensation Owed by The Republic of Nicaragua To The Republic Of Costa Rica. This paves a new way in international environmental law to seek damages for environmental degradation.
The emerging concept of corporate responsibility towards the environment goes beyond charity and requires the company to act ethically in the affairs of society. The triple approach to corporate social responsibility emphasizes the company’s commitment to operating in a sustainable manner from an economic, social and environmental point of view. Corporate Social Responsibility(CSR) has moved far beyond the traditional system of one time philanthropy and has instead become an all year round responsibility that companies accept for the environment around them the best working practices and for their local communities.It is significant to note that the corporate capacity is an important factor to determine the extent to which it can share the social responsibility for environmental control. However, there should be constant interaction between government and companies to deal with pollution problems of the industrial society.