Legal teams rally to defend the rule of law
When US President Donald Trump first tried to implement a travel ban on citizens from seven Muslim-majority countries in January, the reaction from corporate leaders was swift.
Amazon chief executive Jeff Bezos said the online retailer would support legal challenges to the ban, including the Washington state attorney-general’s lawsuit against the executive order. Google co-founder Sergey Brin showed up at San Francisco international airport to protest, and the company pledged to match employees’ donations to non-profit groups supporting refugees.
Dozens more put out statements, wrote letters to their employees making their opposition clear or pledged to hire more refugees.
Neal Katyal, a former acting solicitor general under President Barack Obama and now a partner at Hogan Lovells, says the “groundswell of opposition” then and since shows how important the rule of law has become to companies around the world.
The impetus is part moral obligation, but there is also a business imperative to ensure investments will be protected and that, as in the case of the so-called Muslim travel ban, the law is not jeopardising the rights of their workers.
“The [challenges] in these types of cases are about fundamental values and constitutional rights, but also lurking there is a corporate perspective that says, ‘Mr President, if you do this, it’s terrible for business’,” says Mr Katyal.
It is not just in the US that support for the rule of law is being championed by multinationals. Around the world, businesses are hunting for ways to use their influence to support the rule of law in the countries in which they operate.
This year, the Bingham Centre for the Rule of Law, part of the British Institute of International and Comparative Law, a non-profit organisation, created a business network to bring together companies that can wield greater influence as a group. The network has so far been joined by Diageo, HSBC, Nestlé, Shell, Unilever, BT Group and several other multinationals.
The companies share common goals, such as upholding human rights around the world, which includes eradicating forced and child labour from supply chains and preserving lesbian, gay, bisexual and transgender rights.
Others are more specific to companies’ businesses. At Nestlé, the world’s biggest food group by revenue, priorities include intellectual property and contracts, fast and efficient competition law and food labelling. At BT Group, the telecommunications company, privacy, surveillance and online censorship are more relevant concerns.
At Shell, rule of law challenges can be even more extensive because of its wide footprint in emerging markets. Michael Coates, the oil and gas company’s associate general counsel, says they include “forced divestment of assets; expropriation of property; cancellation or forced renegotiation of contract rights; additional taxes, including windfall taxes, restrictions on deductions and retroactive tax claims”.
“The main onus on establishing respect for the rule of law, or establishing the rule of law in a country, is with the politicians,” says Graham Vinter, chairman of the Bingham Centre business network. “It’s too difficult to expect business to bring about change in a particular country. I think that’s too ambitious.”
But there is “a direct correlation between levels of foreign direct investment into countries and whether countries have respect for the rule of law,” he adds. “It’s really trying to establish in the mind of politicians that if you want business to prosper, and you want more overseas investment in your country, having a robust respect for the rule of law makes sense for them as well,” says Mr Vinter, who is also chair of the global project finance practice at US-based global law firm Covington & Burling.
Companies are starting to see strength in numbers, and the Bingham Centre network is one of the latest opportunities for joining them up. “We think we’re more likely to have a positive impact on the rule of law by working collaboratively with other corporates across different industries,” says Mr Coates at Shell.
“Companies are often at the forefrontof investment in countries, particularly developing countries,” he says. “Strong rule of law helps us protect our investments and our people. As a result, it can encourage companies to invest in a country, which obviously has important benefits in terms of economic development.”
While a growing number of big businesses are hoping to influence and uphold the rule of law in countries around the world where they do business, there are few concrete examples of big changes. One may be in Bangladesh, where international retailers lobbied the government for greater protections for workers after the eight-storey Rana Plaza factory collapsed, killing more than 1,100 people.
Moira Oliver, head of policy and chief counsel for human and digital rights at BT, points to work by the Global Network Initiative, an alliance of communication companies and human rights organisations, to come up with a common framework for dealing with government requests for data from telecom companies.
At Nestlé, group general counsel Ricardo Cortés-Monroy says the company is particularly vigilant about modern slavery after it uncovered incidents of forced labour in its supply chain in Thailand. The company quickly disclosed the problem and set about ensuring the workers were paid and the problem eradicated, Mr Cortés-Monroy says.
Nestlé has been working with the UN on its Global Compacts, a set of principles that encourage businesses to adopt sustainable and socially responsible policies. It has focused on rule of law questions for at least 15 years, he says. In 2014, through partnerships with law firms, Mr Cortés-Monroy became even more involved in such work. The Bingham Centre’s network “makes so much business sense”, he says. “It is a key factor to get our own company involved in this topic, but also to get smaller companies involved, as well.”
Mr Vinter says some of the most effective work done by the Bingham Centre has been in Africa, where it has worked with young business leaders to show them how the rule of law is good for their companies. “But you can’t approach the rule of law in a way where it’s perceived by a developing market as being almost the imposition of western values — that’s the sensitivity that’s there at the moment,” he says. “The goal is to get the young leaders to be advocates.”
While much of the focus on the rule of law centres on emerging markets, many corporate executives are also concerned with upholding those principles in the western world.
In the US, another case that garnered a fierce response from companies followed the terrorist mass shooting in San Bernardino, California, in late 2015, which killed 14 and injured many others. US authorities sought to force Apple to unlock an iPhone used by one of the attackers, in order to read his messages, but the technology company argued that such a move would set a dangerous precedent and was an example of the federal government going too far. A group of tech companies filed legal papers to support Apple.
According to Mr Katyal, who was involved in the case, the willingness of companies to take a stance on legal matters provides an influential voice. “It’s important that our federal courts, which are after all generalist courts, hear from a variety of perspectives on the issues,” Mr Katyal says. “If companies stay silent, then the courts are really deprived of that important voice, which is generally a centrist voice.”
Chubb’s Rule of Law Fund: Juveniles in prison, refugees and victims of crime
Nine years ago the legal department at US-based insurance group Chubb created a Rule of Law Fund to take on projects that would support the development of new laws and the judiciary, combat corruption and enhance legal access around the world.
The project was funded by donations from Chubb employees, the company, its charitable foundation and partner law firms. It has so far awarded more than $780,000 in grants to support 34 rule-of-law projects.
Chubb “enters into important contractual commitments every business day in more than 50 countries,” the company says. “The reliability of those commitments depends upon the maintenance of strong legal systems.”
The fund was founded by the company’s legal department, which wanted a way to unite and galvanise its network of lawyers, stretching around the globe.
In some countries, Chubb has only a single lawyer, says Nicola Port, international counsel for Chubb’s global operations. “It was an ideal vehicle for us to bring together a scattered legal department.”
So far, it has funded projects that include: the US Juvenile Law Center’s attempts to end solitary confinement for young people; the Cyrus R Vance Center for International Justice’s work advising victims of crimes committed by Farc, the Revolutionary Armed Forces of Colombia; and the Urban Justice Center’s International Refugee Assistance Project’s efforts to provide legal aid and advice.
Joseph Wayland, Chubb’s general counsel, says the growing interest from business in the rule of law may be a response to global tumult. “There’s a number of countries that are experiencing breakdowns, from Ukraine to Venezuela. It may be that it’s a time where people are wishing for the rule of law,” he says.