The dilemma of business and human rights

Abstract

The cross-border operations of multinational enterprises (MNEs) have resulted in severe violations of human rights. These violations occurred due to the absence of an effective international framework able to hold MNEs liable. This research, in response, examines the role of private law – namely corporate law and tort rules – in enabling the human rights violations, with an emphasis on discussing incorporation and its legal consequences. Moreover, the research questions whether a robust long-standing solution is to use tort litigations and reform the current group liability rules. The research also discusses the role of international human rights law. The dilemma starts when corporate law creates a legal person with limited liability. This action does not necessarily result in violations of large-scale impact on human rights, assuming the state consistently manages and regulates these entities within its jurisdiction. With globalization, however, corporations have attained great power and great flexibility. They can now operate across borders by using the same legal form: an entity with limited liability. The result is MNE impunity. To solve the dilemma, policymakers need to reconsider corporate law and limited liability within the context of this new economic reality.