Accountability of Transnational Corporations for Environmental and Human Rights Abuses in Akwa Ibom State, NigeriaOn April 18, 2023 by Abdurrahaman Ahmad Yahaya
ExxonMobil, one of the world’s largest oil and gas companies, is facing potential legal action from the Ibeno community in Nigeria for its alleged failure to remediate environmental damage caused by its extractive activities.
The community has accused ExxonMobil of flouting Nigerian court orders and ignoring repeated requests to conduct a comprehensive audit of the environmental, social, health, and economic damage caused by its extractive activities in the region. In response, the community is considering taking the company to an international court.
This move raises some critical questions: Is ExxonMobil under any national or international obligation to provide these reports? Can transnational corporations like ExxonMobil be held accountable for environmental and human rights abuses at the international court?
If so, how can the aggrieved effectively institute their case internationally? And what are the chances of holding transnational corporations/ Multinational corporations (TNCs/MNCs) accountable? Does ExxonMobil’s plan to sell its assets to Seplat Energy in 2022, following 62 years of crude extraction from the community, mean they are no longer liable? The response to these inquiries is intricate and reliant on various factors, such as the court’s jurisdiction, the existing legal frameworks, and the government’s readiness to implement rulings (i.e. enforcement).
Notable Challenges Concerning TNCs/MNCs
For decades, International human rights laws have placed the obligation to protect and respect human rights on the States. Thanks to the efforts of international organizations, NGOs, and the media, trade sanctions are now in place for states that fail to uphold human rights.
The responsibility of the state to protect human rights extends to businesses and holding corporations accountable. This is why it is easy for citizens or victims to drag corporations to the national courts of the host country for violating human rights provisions. But the same cannot be said for corporations that have outgrown national laws, like the TNCs/MNCs. The rise of TNCs has brought a new focus on their impact on human rights.
One of the primary challenges of holding transnational corporations accountable for environmental and human rights abuses is jurisdiction. Transnational corporations operate across multiple jurisdictions, so determining which court has jurisdiction over a particular case is difficult. In the case of ExxonMobil, the company operates in over 50 countries, making it difficult to establish a clear legal framework for holding the company accountable for its actions. In other words, it’s easy for corporations to avoid
liability when their subsidiary causes harm in another country, as plaintiffs cannot sue the parent company. The parent company often claims to be a separate entity and hides behind the corporate veil to escape accountability.
Furthermore, they may move assets or operations around in response to regulatory pressure or public scrutiny, making them a moving target that is difficult to regulate effectively. According to the Business and Human Rights Resources Centre reports, “ExxonMobil announced plans to sell its assets to Seplat Energy in 2022, after extracting crude from the community for about 62 years”
This could affect the victim because Radu Mares has remarked that one of the main reasons claimants turn to parent companies is that the transnational corporate system promotes risky and socially irresponsible business decisions, which often lead to the externalization of risks to workers, communities, and consumers.
This is due to the legal separation between businesses, which allows them to avoid taking responsibility for their actions. Since the parent company may have more resources to put a stop to infringements and better compensate for any harm caused by their subsidiaries, it is only fair to go after them as the subsidiary may not usually have sufficient assets to pay damages or compensation, making it necessary to pursue the parent company instead.
Another challenge is the legal frameworks in place. The law or legal regimes are relatively ineffective because, while victims are expected to seek redress in national courts, weak regulations allow these corporations to escape accountability. TNCs can be very difficult to regulate because they are often structured in complex ways, making it hard to determine who is responsible for what.
This can make it challenging for regulators and other stakeholders to hold companies accountable for any human rights abuses perpetrated by their subsidiaries. A radical policy could lead to a vast international investment dispute between the TNCs and the States, which the latter will try as much as possible to avoid.
Also, despite the existence of international laws and regulations aimed at safeguarding the environment and human rights, their enforcement is often challenging, and numerous countries require more legal systems to prosecute transnational corporations effectively for their deeds.
Additionally, many countries have different legal systems and laws, making it difficult to establish a universal legal framework for holding transnational corporations accountable. Some countries like Nigeria have made its law and regulation flexible to attract foreign investment, resulting in loopholes that businesses can exploit. This is often due to the need to compete for investments in the global market.
Response to The Challenges and Possible Solutions
The response and solutions to the aforementioned challenges can be viewed nationally and internationally.
1. National Response
In the context of Nigeria, generally, the State is a signatory to many international human rights instruments (such as the UDHR, ICCPR, ICESCR, CEDAW, CRC, African Charter, and ILO, etc.), has a duty or obligation to fulfill, protect and respect, its citizens’ rights, including their right to work, education, health, environment, life, liberty, and fair hearing. According to Busayo, Human rights issues involving TNCs are usually intertwined with environmental concerns.
To fulfill this duty, the Constitution, by the provision of section 20, requires the State to protect and enhance the environment, including air, land, water, forest, and wildlife. However, Section 6(6)(c) renders these environmental rights non-justiciable. This problem is further compounded by Section 12, which suggests that international treaties ratified by the National Assembly must be domesticated before they can have any force of law in Nigeria.
Also, by the provision of section 20(4) of the Companies and Allied Matter Act (CAMA) 2020, an alien or a foreign company may join in forming a company “subject to the provisions of any enactment regulating the rights and capacity of aliens to undertake or participate in trade or business.
” With this, sections 78 and 788 of the CAMA require every foreign company and limited liability partnership incorporated outside Nigeria to take “all steps necessary to obtain incorporation as a separate entity in Nigeria.” This section is unclear regarding the type of ‘separate entity ’ it refers to. Is it a subsidiary or a parent/holding company?
Section 381, which defines a subsidiary or holding company, mentions nothing about a foreign company. Even though Section 20, Part IV, of the Second Schedule to CAMA requires that a subsidiary company identify its ultimate holding company at the end of its fiscal year, except if the Minister believes that doing so would be detrimental to or endanger national interests.
However, what makes the whole section unrealistic can simply be deduced from Section 359(1), describing the powers vested in an Inspector to investigate the subsidiary or holding company upon a petition concerning the company’s affairs.
So, the question is how could the inspector possibly and effectively investigate a parent company outside Nigeria for an event that occurred in Nigeria? It is submitted that except if the TNC incorporates its parents’ company in Nigeria, the claimant can (for a national remedy) only sue TNC’s subsidiary company as registered and incorporated in Nigeria. (see section 84 of the CAMA).
Probable Legal Solutions at the National Level
Despite the provisions of section 6(6)(c) of the Constitution, which has rendered matters of environmental concern to be non-justiciable, there are several other ways to institute actions (including human rights actions) against the MNCs (albeit their subsidiaries).
The claimant can simply bring his claims under Chapter IV of the Constitution, which contains justiciable rights (such as sections 33 and 34 on the rights to life and the dignity of the human person), as they are intertwined with environmental rights. One can also invoke Article 24 of the already domesticated treaty of the African Charter, which guarantees the people’s right to a generally satisfactory environment favorable to their development. (see the Supreme Court case of Centre for Oil Pollution Watch v. NNPC (2019) 5 NWLR (Pt. 1666) 518).
The problem often encountered while invoking the justiciable right concerning the environment is the nature of the rights under Chapter IV, which the court has held to be personal. (see Opara v. S.P.D.C.N. Ltd (2015) 14 NWLR (Pt. 1479) 307). Therefore, a group may only be allowed to bring claims in a representative capacity if the claim is brought as a public interest litigation. The words of the Supreme Court, per his lordship AKHAS JSC., in the case of Centre for Oil Pollution Watch v. NNPC is worth reproducing ipsi ssima verba:
“There is no gain in saying in the fact that there is increasing concern about climate change, depletion of the ozone layer, waste management, flooding, global warming, a decline of wildlife, air, land, and water pollution. Both nationally and internationally, countries and organizations are adopting stronger measures to protect and safeguard the environment for the benefit of the present and future generations.
The issue of environmental protection against degradation has become a contemporary issue. The plaintiff/appellant being in the vanguard of protecting the environment should be encouraged to ensure that actions or omissions by government agencies or multi-national oil companies that tend to pollute the environment are checked. Since other commonwealth countries such as England, Australia, and India have relaxed their rigidity in the application of the concept of locus standi in public interest litigations, Nigeria
should follow suit. The communities affected by the spillage leading to the environmental degradation may not muster the financial muscle to sue and if good-spirited organizations such as the plaintiff are denied access to sue, it is the affected communities that stand to lose.” (Underlined mine for emphasis)
Therefore, human rights activists, advocates or groups, and Non-governmental organizations can bring a fundamental right suit of representative capacity as public interest litigation. In the above case, An NGO called ‘Centre for Oil Pollution Watch’ filed a lawsuit on behalf of the Acha Community regarding the harmful effects caused by oil spillage from old pipelines constructed by a Statutory Corporation.
The court ruled that the Acha Community and those living near Ineh and Aku streams, who rely on the rivers for drinking water, fishing, and economic activities, have the right to a safe environment conducive to their development. The State and the defendant have a duty to protect them against harmful pollutants and to ensure the safety of the water, air, land, forest, and wildlife they depend on.
In addition to the African Charter, one can also invoke the customary and jus cogens nature of human rights, in that those rights are enforceable anywhere and anytime whether or not they are domesticated. The same can also be said for labor-related treaties, which have been considered self-executing under section 254 C (2) of the 1999 Constitution (As Amended), allowing the National Industrial Court to explore them, notwithstanding the provision of section 12 of the CFRN. An aggrieved employee can bring his claims against TNCs directly to the National Court under any provisions contained in any relevant labor treaties they have been ratified so far.
A claimant can also bring a suit against the TNCs under the common law tort, particularly, Nuisance. The court regards Nuisance as a category of tort law that focuses on safeguarding the environment. It encompasses issues such as oil spills, unpleasant odors emanating from buildings, pollution caused by toxic fumes, industrial noise, and obstruction of public roads. (see the case of Regt. T.T.L.B.C.C. v. Olubobokun(2017) 1 NWLR (Pt. 1545)). Private Nuisance is easy and possible against the MNCs.
In the case of Shell Pet. Dev. Co. (Nig.) Ltd. v. Isaiah  11 NWLR (Part 723) 168 A tree fell on the pipeline belonging to Shell (a multinational Oil Company), causing a dent in the pipeline. While repairing the pipeline, pollution and damage occurred to the claimant’s dry land, swamps, and streams due to oil spillage.
The claimant asserted that the company failed to construct an oil trap or take other measures to prevent spillage. Consequently, all activities on the land, swamps, and streams were permanently halted. The two lower courts ruled in favor of the claimant. The judgment was only set aside on appeal to the Supreme Court because the matter was instituted before the wrong trial court.
The above case demonstrated that a claimant could have succeeded in his action against the MNC/TNC if not for the jurisdictional error of instituting the matter at the State High Court instead of the Federal High Court.
However, for a private individual to have a right of action regarding public Nuisance, he must prove that he has sustained special and direct damage other than and beyond the general inconvenience and injury suffered by the Public. Otherwise, public nuisance cases are best handled as public interest litigation or by persons with public duty. (See Adediran v. Interland Transport Ltd (1991) 9 NWLR (Pt. 214) 155)
It should be noted that some additional laws and regulations can hold TNCs accountable at the national level concerning human and Environmental rights. Section 20(4) of the CAMA that allows foreigners to establish a company in Nigeria is subject to other laws governing the participation of foreigners in trade or business, such as the Oil Pipelines Act. Section 17(4) of the Act requires license holders to comply with public safety regulations, avoid interference with public utilities, and prevent pollution of land or water bodies.
The Petroleum Act also grants the Minister the power to issue oil exploration and mining licenses to incorporated companies in Nigeria, including TNCs, subject to subsidiary legislation regarding the conservation of petroleum resources and prevention of pollution. The subsidiary legislation includes regulations such as the Petroleum (Drilling and Production) Regulations, Minerals Oils (Safety) Regulations, and Petrol (Refining) Regulations, which require licensees to take measures
to prevent pollution and notify authorities of unprogrammed spillage. Other relevant Acts include the Environmental Impact Assessment Act, the National Human Rights Commission Act, and the National Environmental Standards and Regulations Enforcement Agency (NESREA) Act of 2007
Essentially, claimants have various legal options available to seek redress against TNCs. Suppose a claimant(s) wants an environmental report on a TNC’s business activities. He/She/They can petition the Minister/Director under relevant regulations to compel the company to provide it. Alternatively, the claimant can sue both the Minister/Director and the TNC for proper redress. Remedies granted by national courts are enforceable based on relevant enforcement laws.
However, the criminal fines and sentence durations provided by oil and petroleum laws are inadequate and must be updated. The NESREA Act of 2007 partially addresses this problem. However, the specialized Acts on Oil mining and drilling should also be updated. Finally, if the claimant is unsatisfied with the result at the national level, they may explore other legal options at the international level.
We shall address the International response, the chances, and solutions in part two of this Article.
- Business and Human Right Resources Centre (2023) ‘Nigeria: Local community to consider legal action against ExxonMobil before the International Court of Justice available at https://www.business-humanrights.org/en/latest-news/nigeria-local-community-may-take-action against-ExxonMobil-at-the-international-court-of-justice/ (accessed 10th of April, 2023)
- Igbayiloye, O., Ojibara, H., & Ugowe, A. (2015). Legal Response to Human Rights Challenges of Multinational Corporations in Nigeria. Nnamdi Azikiwe University Journal of International Law and Jurisprudence, 6, 106-119.
- Encyclopedia.Com, ‘ExxonMobil Corporation’ available at https://www.encyclopedia.com/economics/economics-magazines/exxonmobil-corporation (accessed 10th of April, 2023)
- IPleader, (2021) ‘Human rights abuse by subsidiaries and controlled supply chains to pierce the corporate veil’ available at https://blog.ipleaders.in/human-rights-abuse-subsidiaries-controlled supply-chains-pierce-corporate-veil/ (accessed 10th of April, 2023)
- Mares, Radu. (2019). Liability within corporate groups: Parent company’s accountability for subsidiary human rights abuses. available at https://www.researchgate.net/publication/337022663_Liability_within_corporate_groups_Parent_com pany%27s_accountability_for_subsidiary_human_rights_abuses (accessed 10th of April, 2023) • Okebukola (2020) The Application of International Law In Nigeria And The Façade Of Dualism, 11 (1) NAUJILJ
- The 1999 Constitution of the Federal Republic of Nigeria (CFRN) As Amended • The Companies and Allied Matters Act (CAMA) 2020
- The Oil Pipeline Act
- The Petroleum Act and Regulations The National Environmental Standards and Regulations Enforcement Agency (NESREA) Act of 2007 • The Nigerian Weekly Law Reports (NWLR)
- Eric Barizaa Dooh & Vereniging Milieudefensie V. Royal Dutch Shell Plc & Shell Petroleum N.V. ECLI:NL: GHDHA:2021:133 (delivered January 29, 2021) available at https://uitspraken.rechtspraak.nl/#!/details?id=ECLI:NL:GHDHA:2021:133 (accessed 10th of April, 2023)
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