PART II: Accountability of Transnational Corporations for Environmental and Human Rights Abuses in Nigeria
Welcome back to the second part on the accountability of transnational corporations for environmental and human rights abuses in Akwa Ibom State, Nigeria. In part one, we delved into the local struggle of holding corporations like Exxon Mobil accountable in Nigeria.
Now, we turn our attention to the international battle for justice. In this article, we explore how transnational corporations can be held accountable beyond national borders, highlighting potential solutions and the chances of success in this ongoing fight for the Ibeno community, in Akwa Ibom.
The claimants intending to pursue their claims against TNCs at the International level may do so in two ways: to either go to the available national court of the country where the parent company ie. the TNCs is headquartered or explore other remedies provided by some international instruments.
1. HEADQUARTERS OF THE TNCs/MNCs
Holding a parent company of a multinational corporation (MNC) directly accountable in its headquartered location for damages caused in a foreign country can be arduous, costly, and complicated. Before getting into the merit of a case, there are jurisdictional issues to consider, such as territorial jurisdiction and the principle of legal separation between parent and subsidiary companies.
The parent company will likely argue that it is a separate entity from its subsidiary and that the event occurred in another country, so it should not be held responsible. In such situations, there are two potential solutions, as identified by Associate Professor of Law, Radu Mares: piercing the corporate veil or invoking direct tort liability.
Piercing the corporate veil means invading the legal separation between the parent and subsidiary companies and holding the parent company directly and vicariously responsible for the subsidiary’s actions based on the factors of control and injustice.
However, this solution has been criticized as unpredictable and uncertain under the law due to the complex management control systems utilized by the MNCs to avoid regulations, compliance, and liability. The direct liability solution, on the other hand, focuses solely on the parent company’s conduct contributing to the harm caused by the subsidiary company.
This solution is based on tort law, particularly negligence, and emphasises the common law duty of care on the parent company established in the precedent-setting case of Caparo Industries Plc v. Dickman. [1990] 2 AC 605 (The court will only look at the elements of proximity, foreseeability, and fairness).
The Dutch-Nigerian case of Eric Barizaa Dooh & Vereniging Milieudefensie V. Royal Dutch Shell Plc illustrates the application of direct liability. In this case, four Nigerian farmers sought compensation from Shell for the damage caused by oil leaks from two underground pipelines and an oil well in Nigeria.
Shell rejected liability, claiming that the leaks were due to sabotage and the pollution had been adequately cleaned. The Dutch parent company and the Nigerian subsidiary were sued.
Shell argued that the claims against the parent company were sure to fail and that the proceedings against the subsidiary should be instituted in Nigeria. However, the court ruled that the parent company could be liable for the subsidiary’s negligence. Shell was found responsible for the pipeline leaks and violating its duty of care to prevent sabotage.
In essence, the direct liability solution may be more effective than piercing the corporate veil, particularly for a country like Nigeria.
The aforecited sections 78 and 78 of CAMA have compounded the problem by requiring another re-incorporation of the subsidiary company which further separated it from its Parent company. Piercing the veil in this circumstance will be challenging, but it may be achieved depending on how convincing the claimant can sound before the court.
Recently, The Guardian reported that a sizable group of over 13,000 individuals hailing from two Nigerian communities called Ogale and Bille are pursuing legal action against Shell in the high court located in London on matters relating to environmental rights. Ibeno Community can also carry out a similar action as a step in the right direction.
Finally, it is essential to note that lawsuits filed in foreign courts can take many years to be resolved, as was the case with the Dutch-Nigerian trial, which lasted 15 years before a verdict was reached in 2021 (in fact, all four farmers already passed away before the verdict was reached).
Nevertheless, this case was considered ground-breaking because it marked the first time that a company’s headquarters was held accountable for the actions of its subsidiary in a different country. Despite Shell’s resistance and insistence that the case be heard in a Nigerian court, the verdict provides hope for others facing similar situations.
Recently, The Guardian reported that a sizable group of over 13,000 individuals hailing from two Nigerian communities called Ogale and Bille are pursuing legal action against Shell in the high court located in London on matters relating to environmental rights. Ibeno Community can also carry out a similar action as a step in the right direction.
Enforce may also prove difficult, but it is not impossible. To enforce foreign judgments in Nigeria, they must first be registered through the Foreign Judgments (Reciprocal Enforcement) Act Cap. F35, before the enforcement procedure can be kick-started. And if this is not possible, a new lawsuit must be filed in Nigeria for the judgment to be enforced.
2. OTHER INTERNATIONAL INSTRUMENTS
Although no treaty applies universally to hold Transnational Corporations (TNCs) directly accountable, numerous international instruments are in place to ensure accountability for TNCs at the international level, using various institutions and soft law mechanisms.
The United Nations
The mention of the United Nations in this context is often associated with the International Court of Justice (ICJ), which is the judicial body of the United Nations. It was reported that the Ibeno community threatened to take legal action against ExxonMobil before the ICJ.
However, in the opinion of this article, only states can strictly bring a case before the ICJ, so the Ibeno community would have to convince the Nigerian government to bring the matter against the government where the parent company of ExxonMobil is incorporated and headquartered.
Moreover, even if they manage to do so, there are still legal obstacles they would have to overcome, such as the matter of attribution. ExxonMobil is a private company, it is therefore legally impossible to attribute its actions to the State under international law.
Other mechanisms for addressing human rights violations exist under the United Nations. These mechanisms can either be charter-based (such as the Human Rights Council) or treaty-based (such as the CCPR and the Committee on Economic, Social and Cultural Rights ie. CESCR etc.). However, they are also limited to complaints against the states and not the corporations.
The treaty-based mechanisms only receive complaints or communications related to the treaty creating them and the states that are parties to the optional protocols. According to the resolution 5/1 of 18 June 2007, the charter-based mechanism i.e., the Human right Council, accepts complaints/ communication from the individual, group of individuals or NGOs for “gross and reliably attested violations of all human rights and fundamental freedoms occurring in any part of the world and under any circumstance”.
One would have expected that the phrase ”under any circumstances” utilized in resolution 5/1 of 18 June 2007 of the Human Rights Council, this complaint can be brought against the transnational corporation, but the procedural guidelines are clear enough, such can only be brought against the state.
The reason is not farfetched looking at the legal basis (i.e., the human rights instrument) upon which the council was created. the duties to protect, respect and fulfil human rights are only addressed to the member states.
An innovative way to make corporations accountable through this mechanism is to bring a complaint against the state, seeking the state to take some measures (such as withdrawal of License) against the TNCs. This can be implicitly deduced from the obligation to protect/fulfil human rights and the Human Rights Council General Comment 31(80) (paragraph 8) which requires the state to act with due diligence to prevent, investigate, punish and provide compensation for the actions of individuals or entities.
However, this may prove challenging as states are often hesitant to take action that could lead to international investment disputes. This explains why this has never been done before. Other limitations are prior exhaustion of local remedies, lengthy duration, and non-effective outcomes.
Despite these limitations, the UN has taken innovative steps to address the issue of human rights infringement by the TNCs, such as the United Nations Global Compact and the UN Guiding Principles on Business and Human Rights.
The former is a non-binding United Nations mechanism that encourages businesses worldwide to adopt sustainable and socially responsible policies, while the latter provides guidelines for states and companies to prevent, address and remedy human rights abuses committed in business operations.
Although these initiatives are not legally binding, for instance, corporations may choose to join or not join the UN Global Compact. This is the reason why some corporations like ExxonMobil as of today are not part of the UNGC). The initiative, however, serves as guidelines for companies and states to follow.
The OECD Guidelines for Multinational Corporations and National Contact Points
The Guidelines for Multinational Enterprises were issued by the Organization for Economic Cooperation and Development (OECD) in 1976 and were updated in 2011. It is the only official corporate responsibility document adopted by governments worldwide.
The OECD Guidelines aim to encourage businesses in OECD countries to adopt responsible practices, including human rights, transparency, corruption, taxes, labour, environmental relations, and consumer protection. One unique feature of the guidelines is the National Contact Points (NCPs), which member states are responsible for establishing to promote the guidelines and provide support for resolving guideline-related issues.
The NCPs are empowered to investigate accusations of guideline violations by companies. In other words, when a company violates these guidelines, the trade union or any affected person or individual can report the violation to the NCP in cooperation with national and international trade unions.
However, the NCP is only applicable to countries that are signatories to the OECD guidelines, which means that the NCP is only available in OECD countries. Any complaint against a company requires the aggrieved to travel to these countries or engage an NGO or lawyers by proxy, which may be expensive.
NCP is an option that can be considered by the claimant, but rather than travelling to OECD countries for a non-binding resolution, which may end up deadlocked, it’s better to opt for other binding options. Radu Mare also argued that the guidelines cannot supersede or substitute for national laws governing corporate liability, and they do not imply an unqualified principle of parent company responsibility.
The only notable case where the NCP has been utilized in Nigeria is that ENI S.p.A., ENI International BV, CWA and ACA. In 2019, the NCP of Italy mediated a settlement between ENI S.p.A and a group of NGOs in Nigeria.
The settlement required the company to construct a drainage system to mitigate the impacts of violent flooding, which was allegedly caused by the company’s construction and road infrastructure development to support its oil drilling operations in 1970. The reason why there have not been many NCP matters about Nigeria could be that it is a non-binding mechanism and the process can be lengthy and costly
Internationational Finance Corporation and the Compliance Advisor Ombudsman
The International Finance Corporation (IFC) focuses on developing the private sector in developing countries to help people escape poverty and improve their living standards. Their Sustainability Framework is an internationally accepted standard for financing projects that consider social and environmental risks.
The framework has policies on the environment, social resilience, environmental and social standards, and access to information. It guarantees that IFC’s investments do not contribute to human rights violations and has specific standards for corporate actions related to stakeholder groups such as communities and marginalized people.
The Office of the Compliance Advisor Ombudsman (CAO) is a mechanism that promotes poverty reduction through private sector development. Anyone affected by a project financed by IFC or Multilateral Investment Guarantee Agency (MIGA) can file a complaint with CAO, which has specific criteria for accepting complaints related to social and environmental issues.
The CAO helps parties identify the problem and determine alternative approaches to resolve disputes, including joint fact-finding, dialogue forums, and mediation. If disputes cannot be resolved, the CAO compliance will take over the case.
A popular example of the use of this option (about Nigeria) is the compliance investigation report on IFC Investments in Indorama Eleme Fertilizer & Chemicals Limited. Indorama Corporation, a global conglomerate in the petrochemical industry, purchased a petrochemical facility in Nigeria in 2007 and established a subsidiary, Indorama Eleme Fertilizer & Chemicals Limited (IEFCL ) in 2010.
IFC provided loans to IEFCL in 2013, 2018, and 2020 to support the construction and expansion of a fertilizer facility. However, in April 2018, 134 IEFCL employees submitted a complaint to CAO about labour and working conditions, freedom to join unions, and the use of security forces.
The complainants expressed concern over reprisals for their complaints about work-related issues. CAO found that IFC did not have sufficient assurance that IEFCL was implementing a worker grievance mechanism (WGM) that complied with PS2 requirements regarding non-retribution.
Moreover, CAO found that IFC’s response was insufficient to assess compliance with PS2 anti-retaliation requirements. An appropriate IFC response would have included engaging with workers alleging instances of reprisals to review their claims and concerns.
The limitation of this option is that it only applies to IFC-funded projects, even though these kinds of mega-projects are usually carried out by TNCs, there are many activities of the TNCs are independent of funding.
In essence, holding transnational corporations accountable at the international level requires a combination of legal frameworks, institutional mechanisms, and advocacy efforts. The case of ExxonMobil and the Ibeno community highlights the challenges of holding transnational corporations accountable for environmental and human rights abuses at the international court.
While there have been some successes in the past, there are still significant legal, political, and practical challenges that need to be overcome. Nevertheless, the Ibeno community’s decision to pursue legal action is a bold move in holding transnational corporations accountable for their actions and ensuring that they are held to the highest standards of environmental and social responsibility.
This will however require significant resources and expertise to navigate the legal complexities involved. Additionally, the community will need to secure the support of a non-governmental organization to assist them in the process.
• 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)
• IP leader, (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)
• Milieudefensie (2021) ‘milieudefensie’s lawsuit against Shell in Nigeria’ available at https://en.milieudefensie.nl/shell-in-nigeria (accessed 20th April 2023)
• The Guardian (2023) ‘Nearly 14,000 Nigerians take Shell to court over devastating impact of pollution’ available at https://www.theguardian.com/world/2023/feb/02/nearly-14000-nigerians-take shell-to-court-over-devastating-impact-of-pollution (accessed 20th April 2023) • Human Rights Council Complaint Procedure available at
https://www.ohchr.org/sites/default/files/Documents/HRBodies/ComplaintProcedure/ComplaintProce durebooklet_E.pdf (accessed 20th April 2023)
• UN Human Rights Committee (HRC), General comment no. 31 [80], The nature of the general legal obligation imposed on States Parties to the Covenant, 26 May 2004, CCPR/C/21/Rev.1/Add.13, available at: https://www.refworld.org/docid/478b26ae2.html (accessed 23 April 2023)
• Exxon Mobil Code of Ethics available at https://corporate.exxonmobil.com/who-we-are/our-global organization/corporate-governance/code-of-ethics#Overview (accessed 20th April 2023) • Prihandono Iman & Andi A. Khairunnisa (2016) ‘Responsibilities of Multinational Corporations in International Human Rights Law’ Airlangga University Press, (1st ed.)
• Cases handled by the National Contact Points for Responsible Business Conduct- available at https://mneguidelines.oecd.org/Flyer-OECD-National-Contact-Points.pdf (accessed 20th April 2023) • Compliance Investigation Report on IFC Investments in Indorama Eleme Fertilizer & Chemicals Limited. Available at https://www.caoombudsman.org/sites/default/files/downloads/CAOInvestigationReportIEFCL_Nigeria_FINAL.pdf (accessed 20th April 2023)
