Deconstructing engagement: corporate self-regulation in conflict zones – implications for human rights and Canadian public policy

This paper examines the existing governance gap in the accountability of TNCs for violations of international human rights and humanitarian law associated with their extraterritorial operations. It assesses the adequacy of efforts at self-regulation that involves the development and implementation of voluntary standards and self-assessment and verification techniques. The examination is provided with context provided by a case study analysis of Talisman Energy’s operations in Sudan and through a comparative assessment of international and corporate self-regulation regimes.

The paper advocates state accountability for the regulation of TNCs operating in conflict zones and proposes a comprehensive Canadian regulatory regime capable of addressing the “governance gap”.

The case study demonstrates that self-regulation by Talisman Energy of its operations in the context of Sudan’s civil war proved ineffective. Numerous credible reports have found that oil development in Upper Nile has exacerbated civil conflict and assisted the war aims of the Government of Sudan, facilitating violations of human rights by government forces, government-backed forces and rebel groups. The case study shows there is little prospect of local regulation by the Government of Sudan of the activities of foreign oil companies. The willingness of a corporation’s home state to exercise regulatory power is also complicated by the presumed absence of any legal obligation toward extra-territorial non-citizens, i.e. Sudanese inhabitants of the oil zone.

The authors identify the major features of the governance gap in international corporate obligation as:

• International law imposes no direct obligations on TNCs to respect and ensure respect for human rights within their sphere of influence. Similarly, home states have no international legal duty to ensure that their corporate nationals engaged in extraterritorial activities are not complicit in, or perpetrators of, violations of international human rights and humanitarian law
• At a national level, the patchwork of legal mechanisms available to governments and private actors provides limited capacity to effectively modify or challenge corporate behaviour. The resulting regulatory void permits TNCs active in conflict zones to disregard international human rights and humanitarian law standards with minimal legal repercussions
• analysis of models of self-regulation developed by international organizations and companies raises serious concerns about the adequacy and effectiveness of those models to address fundamental human rights issues