1

Reinforcing CSR instruments by the language of law

By Samantha Welagedara ( th is i s t e mp o r ari l y p ub l i s hed fo r a l i mi ted p ur p o s e o f t he
Au t ho r a nd no t p er mi tt e d to u se fo r a n y u ni n te n d ed p ur p o s es )

Abstracts of Thesis

I nternational business activities are becoming more complicated and many new

concepts are added as it grows; Corporate Social Responsibilit y is one of such

concept that is worth stud ying in order to understand what improvements are

required in CSR to make the full use of this instrument . It is important for

Attorneys, Business Managers, Researchers, and NGO activists to anal yze the

fundamental shortcomings of CSR since the objective o f CSR is not successfull y

achievable until such fundamental weaknesses are not eliminated. It is clear that

fundamental shortcomings should be studies in the first priorit y. This study will

provide useful insight to the stakeholders to determine real placement and

capabilities of CSR as a business and legal tool in international business activities.

The Objective of this work is to provide comparative anal ysis of CSR with attention

to the bottom level problems apparent in day -to-day business activities enabling the

readers to comprehend the unseen side of CSR. Problems of CSR is anal yzed in

work, in general, so as to choose the problems which can be labeled as primar y

shortcomings.

The Methodology of this exercise is basicall y setup by gathering information from

Cases, CSR documents and Criticisms and Practices in order to evaluate the gravit y

of CSR problems apparent in such information which are ranging from the

definitions & theories to practice.

Each problem is subdivided towards its root-cause until it cannot be further divided
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and final form of the problem is identified as the fundamental problem on the

hypothesis that ―unavailability of any prevalent judicial infrastructure that binds the

international business organizations to their social responsibi lities and the poor

codification of CSR policies as the fundamental shortcoming in the theories and

practice of CSR ‖. The international business organizations are mostl y represented by

Wal-mart Inc. which is known as one of the biggest transnational compan ies and CSR

policies are basicall y represented by the Code of Conduct .

Conclusion of this thesis is to establish that all the problems visible in the surface of

CSR can be summarized into two major problems which are identified by thesis as

the fundamental problems of CSR but these two problems cannot be simplified

further and therefore, these two problems have to be eliminated simultaneously if

CSR is to be successful as a reliable international business instrument .

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Introduction

Contemporary business activities are demanding a new legal culture that will orient

the conventional laws into more user -friendl y forms which can convey the sense of

law into bottom level business relations. Corporate Social Responsibilit y (CSR) is

one of leading concept that endeavors to share the mission of traditional law in order

to hold the business organizations responsible for their business activities. The

approach of traditional laws at holding the business responsible for its behavior is

rather rigid and institutional; it‘s an extremel y formal process which is administrated

by legal professionals.

The approach of CSR is more voluntary and its fundamentals are elaborated in CSR

policies which are introduced in deferent names according to their contents. T he

objective of CSR , to hold the business responsible for its activities , is not evidently

achievable due to certain deficiencies which are identical to the flexible and

voluntary approach of CSR .

Therefore, this study is to evaluate belief that “unavailability of any prevalent

judicial infrastructure that binds the international business organizations to

their social responsibilities and the poor codification of CSR policies as the

fundamental shortcoming in the theories and practice of CSR”

Attempts to define CSR

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Studying the definitions of CSR helps to understand how the inconsistencies are

growing from theoretical level to practical issues. Many organizations have

attempted to d efine CSR, however, none of such definitions is claiming a wide

recognition and every organization has tried to define CSR according to the main

objective of that organization or institution. However, ―most definitions emphasize the

interrelationship between economic, environmental and social aspects and impacts of an

organization‘s activities‖i UNEP Finance Initiative tries to introduce ―Principles for Responsible

Investment‖ii without talking a single word about CSR. It is a fatal shortcoming of definitions that

none of them emphasizes the legal aspects of ‗social responsibility‘.

International super Organizations such as UN or ILO have not developed any

comprehensive definition for CSR and this has become the foremost deficiency

apparent at conceptual level. The UN‘s concept about 'Global Compact' 1 is just to

keep the social duo logue on; as the most prominent international body it doesn‘t

seem to clear the definitional and theoretical bottlenecks in a comprehensive way.

World Businesses Council

World Business Council for Sustainable Development defines Corporate Social

Responsibilit y as ―the continuing commitment by business to behave ethicall y and

contribute to economic development while improving the qualit y of life of the

workforce and their families as well as of the local communit y and societ y at

large‖. The critical factor, according to this definition, is the ethical behavior of the

business and it raises many other uncertainties which should not be observable in a

definition: What is the ethical behavior? What are the parameters of ‗ethical

behavior‘? How to be clear that the behavior of any given organization is ethical ?

The most important thing is what is the next step if it is found that the behavior of a
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business body is not ethical?

European Union

The definition of European Union is not straight enou gh and we have to derive the

definition from scattered CSR literature: Their definition -like statements just

stresses the requirement of the ―business to behave fairl y and responsibl y‖ 3 . The

concept of Corporate Social Responsibilit y is always led by voluntary 4 participation

of the Business Organizations for maintaining of the 'ethical standards' set up by

deferent organizations 5 working for the enhancement of social benefits in the global

business activities; the mission of Corporate Social Responsibil it y is to "advance

responsible corporate citizenship so that business can be part of the solution to the

challenges of globalization" 6 ,such ethical standards are well known as the

commitment of global business organizations to compl y with global standers with

regard to Forced Labor, Child Labor, Working Hour Limitations, Minimum Wage,

Harassment & Abuse, Discrimination, etc. This definition is void of a solution to the

question that what is the action when found that business is not ‗behaving fairl y and

responsibl y‘?

Interpretation of Forced L abor

The subject of CSR has proliferated into many forms since there is no particular

frame of tradition established by any international body. Therefore the anal ysis of

the hypothesis of this work is somewhat a complicated challenge unless it is

narrowed into specific SCR concern. The forced labor is widely prevalent practice in

international business activities; Anal yzing the deficiencies of CSR through ‗forced -

labor‘ can help to highlight the unachieveabilit y of C SR objectives without

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interference of an international convention.

The observation of forced labor in the industry is not a new phenomenon but until it

is well defined it is not possible to establish that forced labor is occurred. In simple

terms we should know exactl y what ‗forced labor‘ means if we are to anal yze it.

It is well evident that onl y ILO has almost defined ―Forced Labor‖ and there is no

other alternative definitions invented by any other organization since the issuance o f

Convention 29 in 1930 and Convention 105 in 1957.

According to the Convention 29 of 1930, Forced or Compulsory Labor "shall mean

all work or service which is exacted from any person under the menace of any

penalt y and for which the said person has not offered himself voluntaril y‖. If we try

to understand the Forced Labor issues apparent in the contemporary global business

through this definition, submitted in 1930, we have to interpret word ―penalty‖in

detail. The meaning of 'penalt y', if limited to the ―monetary penalti es‖, it covers

onl y certain t ype of Forced Labor which were very common in the time this

convention was drafted. Confiscation of a Passport of a n immigrant worker by an

international business organization is not fallen into this category. Therefore, the

Abolition of Forced Labor Convention produced by ILO in 1957 seems to detail the

matter of forced labor under five titles, indicating some incomplete admittance to

CSR parameters such as economic and social factors of forced labor: ―Each

Member of the International Labor Organization which ratifies this Convention

undertakes to suppress and not to make use of any form of forced or compulsory

labor:

(i) As a means of political coercion or education or as a punishment for holding or

expressing political views or views ideologicall y opposed to the established

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political, social or economic system;

(ii) As a method of mobilizes and using labor for purposes of economic development;

(iii) As a means of labor discipline

(iv) As a punishment for hav ing participated in strikes;

(v) As a means of racial, social, national or religious discrimination‖.

All these parameters are unable to successfull y explain the modern forms of forced

labor that has clear contradiction with the realit y of SCR objectives.

It is a considerable omission by ILO and all the CSR activist organization to add up

any clear convention or declaration about Bonded and Indentured Labor which

have close relation to the modern forms of forced labor that is widel y occu rred

in global business activities. Many international organizations have discussed the

matter of Bonded and Indentured Labor in their programs but it is not put into an y

global pact, therefore, all the Business Organizations are still precisel y quot ing the

convention 29 and 105, which are not adequate to identify the complicated forms of

Forced Labor.

Proliferation of Forced labor practices

International business has no clear geographical region and it deals with many

countries and legal systems. Th e business can migrate freel y to the countries where

the labor cost is low and the laws are not rigorous and supporting the labor

exploitation. The workers are migrated to the counters where jobs are available and

lucrative. Therefore the opportunities for forced labor is much wider than before.

Consequentl y, CSR policies of business organizations are much concerned about the

conventional forms of forced labor (slavery) described in ILO treat y; the monitory

penalties and corporal punishments are not accept ed in the CSR policies but the
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other complicated forms of forced labor, if not detailed in the CSR handbooks, are

kept unattended. In many companies the workers are underpaid and the payment for

the 'overtime work' is not dul y made, it can be established that non payment of

overtime can constitute forced labor as the employee cannot vacate the employment

as the payment is outstanding. If the company holds the Passport, Identity

Card or Originals of the Educational Documents, the employee can not freel y

vacate the employm ent. Compulsory work of overtime 7 can be against the will of the

employee, besides, in some countries overtime is compulsory by the law. A loan

taken by an immigrant worker to find an employment in another country has to be

settled, and the worker cannot leave the job until s/he settles the loan; global

business chain is fully twisted with such cases. Therefore such gaps in definitions

has left a considerable opportunit y for Forced Labor especiall y in the global

business.

CSR policies are adequatel y talk about such factors as Environmental Protection,

Health & Safet y as well as Suppl y chain Securit y. However, for the study of the

successfulness of CSR litigation, it is more helpful to select Forced labor since there

are considerable number of cases being examined in courts ; contribution of

judgments thereof has indicated serious limitations of CSR

Unavailabilit y of standardization for CSR policies has led to the biggest confusion in

CSR. The stakeholders are unable to identif y a certain document as the CSR

declaration of a business organization. In some cases the Code of conduct of an

organization is considered as the fundamental CSR policy. However, in some cases

even a ‗public speech‘ or a letter can be considered as a part of CSR policies.

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CSR Documents

CSR Policies

The local labor laws established in many countries are guided by ILO conventions

but the subject of corporate social responsibilit y is not required to have any

compliance to any common set of standards establis hed by any multinational body

like labor laws are regulated by ILO standards.

According to the practice of CSR it is not well defined that what kind of documents can

be considered as CSR Policies, however, it freely means all types of documents which

have certain reference to the social aspects of business activities. The Handbooks,

Manuals, Guide lines, Agreements, code of conducts, Brochure are widely considered as

CSR policies. The workers of the business organizations cannot identify certain set of

document as the index of corporate social respons ibility of the employer. Consequently

such CSR commitments are presented as a part of the Employment Contract as well.

Therefore, due to the lack of standardization, it is not possible to decide which

documents can be used in CSR litigation. In J AM ES W . LY NN v. W AL - M ART ST O R ES,

INC, the ―Global Assignment Letter‖ which can be considered as a CSR document

was not interpreted as a serious document related to CSR: as Wal-mart says, ―It is

understood that this lette r is not to be construed as an employment agreement nor a

contract for employment and that each of these terms is described in detail in the

Wal-Mart Global Assignment Policy Manual‖ 8 . On what basis Wal -mart thinks that

―it is understood‖; does this mean that stakeholders have to understand what the CSR

documents are, by using general-knowledge?

Codes of Conduct
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If we are compelled to decide on ‗general -knowledge‘ what the CSR documents are,

the Code of Conduct is known as the most fundamental declaratio n of the social

responsibilities of the business , among the other documents circulated in CSR

literature; because Code of Conduct is the onl y CSR document that mostl y based on

the guidelines of international treaties and international standards such as ILO

Conventions, OSHA 9 Standards, ISO Standers 1 0 etc.

Most of the global business organizations have their own CSR concerns which are

mostl y published for the glory of the Brands they produce; the source document of

the CSR can be recognized as the Codes of Conduct (COC) which used to express the

company's acceptance to the principles set forth in Global Charters. It is expressed in

the Code of Conduct, otherwise called 'Standers for Suppliers 1 1 ' of Wal-Mart, that

―Forced or prison labor will not be tolera ted by Wal -mart‖ which is the onl y

statement about the 'Forced Labor' therein. Levi Strauss & Co 1 2 says in its Code of

Conduct, that ―We will not utilize prison or forced labor in contracting relationships

in the manufacture and finishing of our products. We will not utilize or purchase

materials from a business partner utilizing prison or forced labor‖ 1 3 . These

declarations are directl y referred to the 'ILO Conventions' rather than to the

statutory promulgations in the local laws of deferent c ountries or in the host county

of global sourcing agent.

Therefore it is clear that the fundamental declaration of CSR (whatever the

differences in name of the document) is known as 'Code of Ethics', Code of Conduct'

or ' Ethical Standards' 1 4 . Code of Con duct is the document to express the business

organizations' accept ance and also the request to it s suppliers to follow the same

principles at global sourcing.

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The ILO Convention as an international treat y that solel y shapes the CSR, defines

Forced Labor as ―work or service which is exacted from any person under the menace

of any penalt y and for which the said person has not offered himself

voluntaril y 1 5 ‖.When Wal-Mart says in its Code of Conduct that Forced Labor will not

be tolerated by them without havin g own definition about ' Forced Labor' it seems

Wal-mart refers the definition of 'Forced Labor‘ which is invented by ILO in 1930s.

According to the ―Standards for Vendor Partners 1 6 ‖ Wal-mart ''will not accept

products from Vendor Partners who utilize in any manner forced labor'' and they also

clearl y mention that ―conduct of its Vendor Partners 1 7 can be transferred to Wal -Mart

and affect its reputation ‖ but Wal-mart seems to be careful not to say directl y that
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they will also held corporatel y responsible for the business conducts of their

Suppliers 1 9 .

The whole literature of CSR ‗decorativel y‘ communicates the vision, mission and the

concerns of the Global Business Organizations but is not clear what is the lawsuit

when it is found that a Business Organi zation has worked against its own CSR

declaration. If Wal -mart writes that they ―will not accept products from Vendor

Partners who utilize in any manner forced labor‖ what is the status if it is found

that Wal-mart continues the business with Vend ors who are using Forced

Labor at manufacturing?. To accept product from the human rights violating

Suppliers is not prohibited by certain traditional law ; the decision whether to

terminate the services of such a Supplier seems to be an ethical issue.

Elements of Code of Conduct

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The onl y ‗standardized‘ CSR document , the Code of Conduct of an organization 2 0

usuall y describes the organization's standpoints about following matters:

(a) Compliance with acceptable laws & practices,

(b) Hours of l abor,

(c) Forced labor,

(d) Child labor,

(e) Discrimination,

(f) Freedom of association

(g) Immigration law and compliance,

(h) Workplace environment

(i) Right of Inspection

(j) Confidentialit y.

The content of CSR is communicated to the employees by pos ting the COC in the

workstation (where they are working) in the Language of the workers. If an agent of

the Wal-mart (Global Agent 2 1 ) will visit its Suppliers manufacturing plant located in

Bangladesh, the agent will observe that their COC is posted in the factory wall in

Bangla (local language of the workers in Bangladesh) but how many of them can read

and understand the legal benefits of this poster which is posted onl y for the sake of

fulfilling of a formalit y.

Access to Codes of Conduct

If the workers are going for lawsuits or a class action (strike), they should first be

clear about the Suppliers binding to its the CSR policies set up by the Global Buyers;

litigation against the violation of CSR by Business organizations is very rigorous and
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vague; Youngone is a, Supplier for Nike, operating seven factories in Bangladesh of

20,000 workers. According to Nike CSR objectives, they are thorough with Health &

Safet y; Child Labor; Independent Monitoring; Worker Education; Micro - enterprise

Credit; and Funding for Research on Responsible Business Practices but they found

the achievement of CSR objective is difficult as 20% of the workers cannot read and

write 2 2 . Therefore, the workers' poor understanding about CSR issues has blocked

many violations being sued in Courts and unavailabilit y of established mechanism

to report such violations to the Law enforcement Agencies has been a good

protection for the global ‗sweetshop‘ administrators. Most of the reported cases

related to the Code of Conduct or the Forced labor issues (in international

business 2 3 ) were brought into courts by an assisting part y and not directl y by the

workers. Therefore it is not possible for the workers to confer the responsibilit y of

CSR violations on the host global agents such as Wal - mart as the workers have no

vehicle to the US federal laws unless some third part y may help them to litigate

against the employers.

Language of CSR

Drafting of CSR Standards

Companies are free to drafts their CSR policies and standards as they will not have

serious legal responsibilit y over such commitments set forth in Codes of

Conduct or hand books. The argu ment here is that CSR will legall y bind to the

obligations if such commitments, set out in CSR lit erature, are drafted in form of

written agreements and in clear unambiguous promissory language.

The meaning of ‗responsibilit y‘ in CSR should mean a contractual binding if it is to

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be legall y addressed . The mission of CSR will not be succeeded if it is d rafted in a

language suitable only for Global Marketing or Advertising. The Codes of Conduct,

the Employment Policies, CSR Handbooks etc should be written in the language of

law in order to constitute certain enforceable contractual rights; in simple ter ms, the

language of the CSR policies must meet the traditional requirements of contract

formation, otherwise CSR will be public relation strategy to deceive the employees,

customers and all the stakeholders connected to the global suppl y chain.

In Weber Shandwick Worldwide v. Reid, United States District Judge, Suzanne B.

Conlon, says that ―Code of Conduct expresses in general terms the standards of

conduct that have always been and continue to be expected of all Company

employees in their day-to-day activities and in their relationships with those

with whom the Company does business. . . . The Code of Conduct is not a

comprehensive document intended to address every legal or ethical issue that you

might face, nor is it a description of all l aws and policies that appl y to Company

businesses. It should be used as a guide and a resource to alert you to significant

legal and ethical issues that frequentl y arise‖ 24

If this is the legal validit y of Code of Conduct as the most fundamental document of

CSR, how to assure the social benefits of International Business when such CSR

declarations which are not drafted in 'promissory language' 2 5 which constitutes

certain binding to a contract. The only convincing strategy to strengthen the

Corporate Social Responsibilit y is to enrich the contemporary CSR literature with

traditional legal language, clearl y deviating from the 'advertising' language.

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Status of Forced L abor in Code of Conduct

Let us anal yze the language Wal -mart used to elaborate their CSR s cripting about

Forced labor in the Code of Conduct, it says ‖Forced or prison labor will not be

tolerated by Wal -Mart‖, is this enough to contain some serious meaning enough to

be successful when any Supplier of Wal -mart may use Forced Labor?.If this is

written in the traditional language of law, it will look like the following statement

―Wal-mart or any Supplier producing any goods or services to Wal -mart shall not use

Forced Labor or any form thereof ; if any part y is found to have directl y or indirectl y

used any form of Forced Labor, the employees who are subject such Forced Labor

shall have the rights to claim, individually, as a group or through a third part y, in the

country of employment or in the host country of Wal -mart, against the

Supplier and Wal-mart considering both parties as to be responsible

corporatel y for using of Forced Labor in accordance with its interpretation in

International Charters whichever more beneficial for the employee/s, and in such a

case, the employee/s shall h ave full access and rights to use all the CSR

publications of Wal -mart as to have constituted a corporate undertaking for the

contextual commitments, promises, visions, objectives, etc implied or expressed

thereunder‖ 2 6 .

If the CSR draft is structurall y sound, in terms of being successful at litigations by

the employees, most of the International Business will be having problems at

'Global Sourcing' 2 7 . Therefore, the Global Sourcing companies like Wal -mart

don't seem to drafting their CSR publ ications in the language of law. In CSR

publications, the theoretical margin between the matters granted with defense under
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Right of Expression (First Amendment Rights 2 8 ) and the contractual terms which

are not covered under the Right of Expre ssion are not clear. If Wal -mart says that

they ''don't encourage forced labor'' in their Handbook, in general, it will be

customary statement which is not binding any contract; Wal -mart will have the rights

under their Freedom of Expression to write such things, and nobody can use such

things in a lawsuit against Wal -mart for using forced labor, as violation of

contractual term. How the employee can distinguish what statement binds contract

and what is not?.

Adherence to Code of Conduct

The compliance to code of conduct is not evaluated by any standard system though it

is posted in the factories of the Suppliers and being a brief statement the Code of

Conduct doesn't elaborate what is the action against the forced labor, if Wal -mart

doesn't tolerate forced labor what is the action the workers can take against the

Suppliers?. Therefore the code of conduct itself is not capable of assuring the

prevention of Forced labor.

Linking Law and CSR

ILO recommends in depth anal ysis about the lack of links betw een the Law and CSR:

―least two factors may well explain the lack of a link between CSR and the law.

First, the very conception of law, which everyone cannot but translate (albeit
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unconsciousl y) according to their experience and culture, and second, the very

definition of CSR which has some repercussions in the field of law. In this respect,

however, anal ysis has to be very cautious 2 9 ‖: The CSR usuall y talks about

corporate culture 3 0 which cannot always express all about its concerns considering

the technicalit y of legal drafting as the target of such publications are average

workers, stakeholders and customers; in contrary, it is lack of CSR not to be

drafted in the language of law as the matter of CSR is not something totall y deviated

from the concerns of law.

Concept of Soft Law

The terms set forth in the CSR literature, therefore, is known as 'soft law' which

have no judiciary advantage in the process of litigation. The contemporary challenge

in CSR is to transform this 'soft law' i nto certain dialect which can be coupled to the

language of the traditional law. The purposeful negligence of the Global

organizations to communicate the Corporate Responsibilities clearl y indicate the

ulterior motive of avoiding the Corporate Responsibili ties of sharing unfavorable

impacts of the global businesses, in other wards, the global business

organizations don't want to share the responsibilit y of the violations by

Suppliers, by writing such CSR documents in the language of law offeri ng a contract

which can be taken against in lawsuits.―the relationship between "hard" and "soft"

laws; and actors' appropriation of international norms, including the link

between ethics and sustainable development in the social domain‖ 3 1 are not defined

by any authorit y and from Judicial Perspectives.

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Reality and practice of CSR

The global business don't seem to admit to the CSR with bona fide effort; the y

always use CSR tool to terminate the transactions with global Suppliers who are not

cost effective in the global marketing. The Suppliers who are using Forced Labor, if

profitable and competitive in terms of 'costing', can be continued in the 'Certification

System' of Wal -mart and ,if not ,they can drop the Supplier for the reason of

violating the 'Standards for Suppliers'. Such 'Standards' invented by International

Business Organizations in elaborating the CSR can also be produced in forms of

voluntary codes of corporate conduct, declarations, Memorandum of Understanding

(MOU), Good Neighb or Agreements (GNAs), Norms which are known as 'soft law' 3 2

that has little or no binding effect, and therefore attracts no sanction when

breached 3 3

Voluntarism of Stakeholdership

The participation of the Suppliers and employees to assure the results of CSR is not

mandatory under any CSR policy and the stakeholders are just encouraged to

participate in their CSR programs; when it is not mandatory, the workers are unable

to get the benefits of the CSR programs and cannot claim any compensation for the

violation for CSR principles. Moreover, in some countries, working after normal

dut y is mandatory 3 4 (in certain cases), in such cases, the workers cannot force the

employers to work onl y for normal dut y hours which is eight hours since the

employers adherence to the CSR policies are not mandatory by the policies of
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Global Sourcing Companies whereas the adherence to the local labor laws are

mandatory by the Local Laws. In such cases, if the worker is forced to work more

than normal working hours, it constitute Forced Labor;but such Forced Labor

will be in accordance with the Labor Law as well. The employer will select the

option to work mandatory

'overtime' 3 5 neglecting CSR principles which simpl y encourage 'voluntary overtime

working' 3 6 instead of mandatory overtime. How the workers can go for any lawsuit

against the employer for the reason of neglecting the CSR principles which are not

mandatory as Local Laws do?.

Accept and Offer in CSR

The concept of Corporate Social Responsibilit y is not indicating any in depth

relations among the parties in the international business transactions with relation

to any legal background which is binding the parties to the CSR responsibilities. The

word 'corporate' seems to be used in its lexical mean ing 3 7 and not in any

meaning or reference to the Corporate Law which constitute legal relationships

among shareholders, directors, employees, creditors. According to the outgoing

meaning of the word 'corporate' in CSR, it doesn't contain a ny of five defining

characteristics 3 8 of the modern

'corporation' in Corporate Law. The business entities linked to the global suppl y

chain are binding by the Contracts which contains an accept and offer between:
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• Global Sourcing Company and Sourcing Ag ent

• Sourcing Agent and Oversea Supplier

• Supplier and Subcontractor

• Subcontractor and manufacture

• manufacturer and employees

Each part y is having contract with other part y; the bottom layer, the employees are

working under employment contracts entere d into with the Suppliers. In Doe 3 9 v.

Wal-mart Inc 4 0 , the Employer is identified as a 'Private Actor' and the Wal -mart was

not held responsible for the forced labor practices of the foreign Employer who was

operating under deferent jurisdiction. US Ali en Tort Claims Act (ACTA)of 1789,

practicall y allows people from other countries to sue in the United States for

violations of ―certain international laws‖ 4 1 .

The ATCA is practicall y meant for certain violations of international laws:in Kadi c

v. Karadzic 4 2 , the defendant

.
could have been liable as a private individual since it

was an act of Genocide, war crimes, torture, and summary execution were

against international law. Acts such as genocide, war crimes, slavery and forced

labor may be alleged against 'private actors' because their commission provokes a

universal concern‖ 4 3 However, when the CSR violations sued under ATCA, it is not

that eas y to confer the responsibilit y of violations take place outside the US under

the governance of Global Sourcing Companies based in US unless such violations

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having some criminal aspects of Forced Labor. In Doe v. Unocal 4 4 , the US oil

company Unocal was sued by the villages 4 5 in Burma for leaving them for rape,

murder and Forced Labo r by Burmese Military Forces while they were working for

Unocal Company, conferring the responsibilit y on Unocal for rape, and murder and

forced labor committed by Burmese Military Forces. Although the case was settled

with Unocal's agreement to compen sate the plaintiff in historical settlement, it

was not eas y to to confer the corporate responsibilit y on the Unocal under ACTA.

Ethical Responsibility

Everything with regard to the working conditions are not decided by the laws in such

cases the global sourcing agents are holding certain opportunit y in their hand to

make decision regarding the business relations:

Carroll's CSR Model

According to the Carroll's ―Construct of Responsibilities Module‖ 4 6 CSR has

(i) Discretionary responsibiliti es;

(ii) Ethical responsibilities;

(iii) Legal responsibilities , and

(iv) Economic responsibilities

the International business organizations have 'legal responsibilities'; if such a legal

responsibilit y is not fulfilled, the violations can be clearl y r eferred to written law

enacted with regard to the matter : if an employee is working for a global Supplier is

paid with a salary which is lower than the 'legal minimum wage' of that country,
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the written labor laws can simpl y resolve the problem as it cl ears mentioned in the

law in 'black & white'. Therefore, the Corporate Social Responsibilit y has clear

focus at fulfilling 'legal responsibilities' elaborated in Carroll's Module as the

Corporate Social Responsibilities drafted by the business organization s cant violate

the minimum standards assured by the written laws. The CSR is rather clear in the

cases where the law has clear definitions: if any country law says the minimum age

of an employee should not be less than 18 years, there is no ambiguit y, th erefore, the

employer cannot recruit the worker under the age of 18 years. In case of such factors

which can quantitativel y measured, the business organizations cannot avoid the

'Legal Responsibility' if so avoided, the employees or any stakehol der can go for law

suits as the labor law supersedes the policies set forth in the Code of Conduct.

Ethical Decisions in CSR

The problems are mostl y apparent with regard to the qualitative factors such

as Forced Labor, Harassment & Abuse, D iscrimination etc. Wal -mart says ―Forced

or Prison Labor will not be tolerated by Wal -mart‖ 4 7 , however they don't successfull y

elaborate or define what kind of business activities can constitute forced labor 4 8 .

Holding of a passport by a Supplier producing for Wal-mart is directl y engaging in

the Forced Labor as such confiscation of passport can prevent the ―freedom

of movement‖ enforcing the employee to work only for that particular

company. It is not clearl y mentioned in local labor what kind of actions can cause

Forced Labor; the ethical responsibilit y comes to the decisive point in such cases.
 23

The confusion here is that it is not recognized under CSR document of Wal -mart as

holding of Passport as a factor of Forced Labor. The Supplier can has the rights to

decide whether he will hold the passports of employee or not; the employer is given

the opportunit y to decide whether it is ethical to hold passport as it is not prevented

by CSR documents or not?.This is a clear exa mple of the insufficient proficiency at

drafting CSR policies.

Alien Tort Claims Act usuall y consider the foreign Supplier as a ―Private Actor‖ 4 9

who is operating the business activities under deferent jurisdiction out the United

States. The worker can f ile lawsuit against the Supplier in the country of origin but

the worker cannot get hold of Walmart which is a Global Supplier based in the US

jurisdiction. According to the 'Ethicals Responsibilit y' discussed in Carroll's Module,

Wal-mart or the Global So urcing Company cannot ethicall y deny its responsibilit y to

assure the rights of the worker's freedom of movement: if the employee is not willing

to work with a certain employer he / she should be free to join another employer

without any disturbance. Wal -mart doesn't use the term 'Code of Conduct' for their

fundamental declaration of CSR and they name it as 'Standards for Suppliers'; the

Standards for Suppliers is objectivel y a 'Code of Conduct'.

If we compare Wal-mart's Standards for Suppliers to the Cod es of Conduct of 'Sears /

Kmart or Gap Inc, it is clear that 'Standards for Suppliers' is nothing but same Code

of Conduct. Therefore Wal -mart cannot ethicall y neglect their Social Responsibility
 24

encoded in 'Standards for Suppliers'. When and Supplier is using forced labor for

manufacturing goods for Wal -mart, the action should be clear in terms of law. What

is the meaning of Corporate Social Responsibilit y expressed in the 'Standards for

Suppliers' in terms of taking any action if Supplier is working aga inst the 'Standards

for Suppliers'? How the employees working under the oversea Supplier can claim

against Wal -mart for continuing the business with a Supplier who uses Forced Labor.

The workers can look into the law suits in two directions by:

1. Conferring the Responsibilit y on Wal -mart as the Global Business Organization

for using Forced labor indirectl y through the foreign Suppler.

2. Conferring the Responsibilit y for taking no action to discontinue the

Subcontracting Agreement with the Supplier fo r using Forced Labor according to the

Code of Conduct.

Procedural Weaknesses in CSR

'Standards for Suppliers' says ―Prison Labor or Forced Labor will not be tolerated by

Wal-mart‖, is there any promissory value in this statement? does it bind any contrac t

which can be consider by the Courts?. If we go through the whole CSR

literature, it is very clear that the Global Business Organizations are not

writing their CSR commitments in the language of law so as to avoid the corporate

responsibi lit y; for instance, whenever Wal -mart hire any Subcontractor, they just

send the 'Standards for Suppliers' which is required to be signed in the bottom (in the
 25

place for the signature of Subcontractor) and send back to Wal -mart for the purpose

of 'record -keeping'. There is no place for Wal -mart to sign in this document and

neither they provide any copy of this document to the Supplier with the

endorsement of Wal -mart Corporate Governance. Therefore, somebody can

rationall y question the legal or co ntractual commitment of Wal -mart to adhere to the

Standards for Suppliers but none can ethicall y question whether Wal -mart has any

responsibilit y over 'Standards for Suppliers'?. Wal -mart is continuing the business

globall y with many Business 'partners ' who are using forced labor at manufacturing;

Supplier Certification S ystem

According to Wal -mart's business 'Certification S ystem' 5 0 , they can terminate any

Supplier for using Forced labor, however, the decision is in the hand of the

Corporate Governance of Wal -mart. Therefore, there is no serious meaning that

they will not 'tolerate' Forced Labor as there is certain contradictory opportunity in

their 'Certification S ystem' to continue the international business transactions

with a Supplier who is using Forced Labor.

Third Part y Jurisdiction

Statutory international body of law -experts can evaluate the legal advantages and

disadvantages of the policies set up by international organization to make sure such

CSR policies can lega ll y be challenged. The voluntary certification systems such as
 26

SA8000, AA1000, Fair Labor Association, WRAP 5 1 etc are optional certifications

which can be obtained upon the results of a Social Audit performed by third party

Auditors nominated by the G lobal Business Organizations to assure the CSR

policies are succeeded and to identify the violations of such policies. There are

numerous Suppliers working for the global business organizations and the CSR goals

set up at the corporate governance o f Wal-mart are communicated to such

Suppliers mostl y as guide lines, and the bottom level manufacturing

organizations working for Suppliers are the actual employers who are having

employment contracts with the bottom level employees; the tot al role of the CSR

can be minimize to the mission of protecting the environment and the labor and

human rights of these employees. The employers who employ these workers are

having deferent company policies which are drafted for the purpose of

'displaying' them in the notice boards of the factors for the notice of the Auditors.

The Audit reports are a propert y of the business organizations; the workers or Trade

Unions are not required by any CSR policy to know about the CSR violations

found by th e Third Part y Auditors, therefore, the opportunities for taking any

legal actions against the Global Suppliers are hindered for the paucit y of information

required at lawsuits.

Lack of Standardizing

Deferent Business Organizations are promoting defe rent competitive declarations as

their written commitment t o social contribution; however, the summary of theoretical

 27

objectives of Corporate Responsibilit y can be framed as to contribute to the societ y

for a sustainable development which can assure that t he stockholders and employees

connected to the suppl y chain, are humanl y treated with attention to the standards

established by the laws and ethics. The Standards can be based on the

internationall y (and domesticall y 5 2 ) recognized norms and con ventions: such

standards are communicated freel y down the global suppl y chain as policies,

contracts, manuals, handbooks etc.

This risky opportunity available in the global business to draft any policy as the

company desired, is to be administere d and monitored by an international body of

legal experts in order to assure the objective of CSR is granted to the bottom level

individuals who are the employees of the global business organizations.

CSR Litigations

Alien Torts Claims Act (ATCA)

The Alien Tort Statute (28 U.S.C. § 1350; ATS, also called the Alien Tort Claims

Act and Alien Torts

Claim Act) is a federal law of the United States that states: "The district courts shall

have original jurisdiction of any civil action by an alien for a tort onl y, committed in

violation of the law of nations or a treat y of the United States. 5 3 ". This can be

considered as the onl y statue that allows American government, military, and

corporate leaders to be held responsible in a court of law for the human rights
 28

abuses committed as a result of their presence in a foreign country. This is regardless

of whether the abuses were committed by someone within an American organization,

or whether the abuses were committed by a local group empowered by the presence

of the American organization. The objectives of this statute become parallel to the

objectives of CSR as far as such CSR violations are interpreted as human rights

violations. However, the phrase ―tort only‖ in this in this acts prevent other minor

CSR violations being considered under this Act. The Forced labor cases which have

serious human right violations such as Human Trafficking 5 4 will be considered but

minor Forced Labor cases such as working on 'Overtime' without the consent of the

employee don 't seem to have considerable response for the reason of ―tort

onl y"limitation but it ―generall y left the door opened to ATS based Human Rights

Lawsuits‖ 5 5 . ACTA directl y covers onl y violation of safe conducts, infringement of

the rights of ambassadors, an d piracy 5 6 .

First Amendment Protection

In the case of Doe v Wal -Mart Stores, Inc the court urged to uphold the business'

rights to speak on the issues of public importance. Under the protection of First

Amendment Rights, Wal -mart held rights to communica te their conceptions about

CSR issues such as prevention and abolition of Forced Labor but could not have any

promissory valve in such public addressing and media publishing as such view points

have not been included in any written agreements. The general publications about

CSR could not abide Wal -mart to be responsible for bad repercussions for using
 29

Forced Labor by their oversea suppliers. WLF 5 7 argued that speech on issues of

public importance is entitled to full First Amendment protection regardless o f

whether it is uttered by an individual or by a corporation that offers products for

sale: this prevent the whole suppl y chain of being responsible, whether corporatel y

or individuall y,for the speeches (written or verbal) of public interests. As all the

CSR issues are always of 'public interest', lawsuits will be impossible against such

CSR 'promises' unless it is transformed in to 'private interest' with written

agreements in order to claim certain legal protection under common laws. The

Business organizations can be covered to the principles of 'public interest'

impressing the oversea Suppliers and their employees to believe that such

declarations to be genuine CSR obligations and as the policies of the business

organization: whatever they publish in web sites and handouts, brochures will be of

'public interest' and they are not anything 'serious' about CSR from legal point of

view.

In Nike v. Kasky 5 8 the Supreme Court reverse the decision as it was a misleading

―Commercial Speech‖ with what Nike e ntered into 'unfair completion', but the

Global Business organizations, in many cases, are craft y enough to manipulate the

language to be in 'safer side': at using the language for CSR, they don't directly

mislead the employees and neither they provide a c ertain legal assurance about CSR.

The pathways to for CSR litigation are restricted by such statutory aids as Rights of

Expression established by first Amendment. Therefore, ATCA cannot be considered

as an exclusive reliable platform in CSR litigations i n global business transactions.

 30

Private Actor's Liability

On April 2, 2007, the U.S. District Court in Los Angeles dismissed a lawsuit 5 9

brought against Wal - Mart by activists filing suit against Wal -Mart under

California's infamous "unfair competition " law 6 0 for purchasing products produced

under 'sweatshop' conditions and also the Court accepted that Wal - mart cannot be

considered under Alain Torts Statute as ATS does not recognize such claims when

they involve 'Private Actors' 6 1 , such as Wal-Mart, who are not alleged to have

acted under the authorit y of a country's laws 6 2 . The whole mission of CSR is frozen

in such cases as the existing laws are incapable to frame the contemporary violations

of CSR into certain category under which the case s will be examined with attention

to the elements of CSR objectives of public interest.

Case law about CSR

The vehicle for the lawsuits in CSR is Code of Conduct; in order to determine

whether Wal -Mart's Code of Conduct could be interpreted as a documen t which

establishes a contractual obligation to employees of foreign suppliers or not, it is

necessary to evaluate how codes of conduct are interpreted in the case law. Recently,

a Federal District Court in the Northern District of Illinois laid out a fra mework

under which employer's codes of conduct would be considered contractuall y binding.

The court held in Weber Shandwick Worldwide v. Reid ― First, the language of the

policy statement must contain a promise clear enough that an employee would

reasonabl y believe that an offer has been made. Second, the statement must be

disseminated to the employee in such a manner that the employee is aware of

 31

its contents and reasonabl y believes it to be an offer. Third, the employee must

accept the offe r by commencing or continuing to work after learning of the policy

statement. When these conditions are present, then the employee's continued

employment constitutes consideration for the promises contained in the statement 6 3 .

The international business o rganizations are not publishing 'clearl y' their CSR

documents in such form that employees of the Suppliers will understand that 'an

offer has been made'.The Wal -mart Code of Conduct is just required to be posted in

a public place of the Supplier's manufac turing plant in the languages of the workers,

but the employees working for Wal -mart through the Suppliers are not required to

sign and accept a copy of the Code of Conduct that is endorsed by the

Corporate Governance.

The court furthe r determined that in order for an employee handbook or other

employment policies, such as a code of conduct, to create enforceable contractual

rights 6 4 , the language of the policy must conform to the traditional requirements

of contract formation. This confirms the fundamental argument in this research

that CSR cannot stand alone as an accountable tool unless it is clearl y upgraded and

standardized so that Courts (law) can hold the international business organizations

be responsible for what the y deceptivel y communicate in the 'commercial speeches' 6 5

in order to impress the customers as well as the employees working for Suppliers.

Carl Tobias, professor at the Universit y of Richmond specializing in civil

litigation says ―The exposur e is gigantic, but maybe the worst part is the bad
 32

publicit y. Every time one of these proceeds to trial and they (Wal -Mart) lose, it‘s not

helpful to their reputation.‖. There are 80 lawsuits 66

currentl y pending with US

Courts onl y against Wal -mart and onl y with regard to the violation of working hours

and non-payment of wages which also constitute 6 7 the Forced Labor. The cases filed

under Alien Tort Claims Act by foreign employees are very rare and there is nor

accessible legal -mechanism for the global employees to go for lawsuits against

international businesses organizations.

Chamber of Commerce US about ATCA

The Chamber of Commerce in US, producing Amicus Curiae with regard to

Doe v. Wal-mart questioned about the abilit y of the state law to influence the law

of the other countries and they commented the lawsuits of the plaintiff as an attempt

to request the US Courts to influence the UD foreign Policy 6 8 . The main focus of the

ATCA was not found to be the matter of CSR and it confir med the inabilit y to

litigate the Global Business organizations under US law for the violations of Labor

Rights unless they are violating the Human Rights considerable under Criminal Law.

Mechanism for lawsuits

The major drawback in CSR is the unavailabi lit y of identical mechanism for the

workers to file lawsuits with regard to the finding of CSR violations:The employees

who were subjected to Forced Labor in Doe -I, could not find any way to go for
 33

lawsuit until the violations were found by Human Right Act ivities. In the June 2003

hearing, Judge Victoria Chaney heard argument and evidence regarding two choice

of law motions filed on behalf of Unocal. The first motion asked her to apply

Bermudan law to the issues in the case (since Bermuda was where the joi nt venture

documents were signed). Written declarations by two experts on Bermudan law were

before the court. The second motion asked her, in the alternative, to appl y

M yanmarese law. Three experts on Myanmarese law gave written and oral evidence.

In a reserved judgment, Judge Chaney denied both motions and undertook to appl y

Californian law to the issues. The victims of Forced labor in Unocal were

represented by Earth Rights International (ER I) 6 9 . The plaintiffs were simpl y lucky to

be found by the NGO; if not it was to be consecrated by course of time.

In Doe v.Wal -mart, the plaintiffs were from China, Bangladesh, Indonesia,

Switzerland and Nicaragua and they were working for Suppliers producing

exports for Wal -mart. The workers went for class actions through NGO's support

which resulted in group lawsuit submitted by H AD SE LL & ST O R ME R, I NC 7 0 .

The workers have always to be organized by an NGO, if not they didn't have any

established international avenue for litigations. In Doe v. Wal-mart, the plaintiffs

and their families were having grievance about the threats of reprisal, possibilit y for

dismissals, there were also under the rational impression that government would

retaliate if the claims were made in their home countri es. Accordingl y, Plaintiffs

also bring their claims using pseudonym s, in lieu of their true identities, to protect

themselves and their families from such harm and retaliation. When the Global
 34

Sourcing Agents are freel y migrating the business to the count ries where the labor

laws are exploitable, the workers should have secured opportunities to file the

lawsuits against Global Business entities in the countries where the Law is sound

enough for productive (CSR) litigation 7 1 . However,international charters and treaties

are silent on this elementary step which is mandatory to ensure the gains of CSR

slogans.

Doe v.Wal -mart 4 0

The plaintiffs of five countries sued Wal -mart for subjecting them to oppressive

working conditions (forced overtime, pay below min imum wage, and denial of full

overtime pay) and that they were ―effectivel y prevented‖ from leaving their jobs

during the first three months of employment because their wages were withheld

during that period. Plaintiffs do not allege that Wal -Mart engaged directl y in the

―forced labor‖ practices. They quoted some other reasons for which Wal -Mart should

be held responsible for the (forced) labor practices of its Suppliers. The main point

was that Wal -mart misled California consumers that low prices products (apparels &

toys) were legitimately obtained through adherence to Wal -Mart‘s Code of Conduct.

The Plaintiffs held the onus to prove 7 2 the relativit y between the damages

consequent by the Suppliers and the misleading (CSR) statements (in Code of

Conduct).The appellant's argument was that UC L (Unfair Competition Law)

restitution is designed to ―restore the status quo by returning to the plaintiff funds in

which he or she has an ownership interest,‖ 7 3 not to compensate plaintiffs for their
 35

damages. Th erefore, the onl y possible claim under UCL was an 'injunctive relief' as

plaintiff were not having any ―ownership of interest‖ irrespective of the plaintiff's

inabilit y to establish the connectivit y between misleading statements and damages.

The District Court dismissed all 11 claims for relief, however, granting the

opportunit y for plaintiffs to amend their complaints; the plaintiffs chose instead to

appeal. This case and the court holding thereof demand a certain change in the

claims to be fit into the r eceptors of the available Law (UCL/ATS) which is not

meant for CSR claims. The CSR violations have no any particular stream of law to be

guided by.

International Treaties

ILO Convention

The global CSR stakeholders have great mission in international busi ness

transactions for defining the statutory documents which have legal recognition: the

Subcontractors' Manufacturing Agreements 7 4 , Codes of Conducts, Employee Hand

Books are drafted freel y by deferent organizations and they are not full y

based on international principals. At drafting of Wal -mart's Code of Conduct,

the policymakers have not considered the ILO convention. The international ILO

treat y defines 7 5 the maximum working hours a day as 8 hours 7 6 and it can be

extended for 10 hours. This means the employer can propose the employee to work

maximum of 60 hours a week (10 hours X 6 days ( one day rest)).In this convention

ILO doesn't discuss the importance of the worker's consent or voluntary preparation
 36

to work more than 8 hours a day, it just say 'hours of work in any day do not exceed

ten hours' 7 7 as granted under Article 05 of the Hours of Work Convention -1930.

However, doesn't define its position if the employer may violate the dail y

working hour limit of 10 hour s. The most fundamental CSR document of Wal -

mart, ”STANDARDS FOR SUPPLIERS” says ''Suppliers‘ employees shall not work more than

72 hours per 6 days or work more than a maximum total working hours of 14

hours‖ 7 8 ; this means Wal-mart grants permission to its Suppliers to employ the

workers for more than

10 hours against the international ILO treat y and Macy's Inc, is practicing the same

policy 7 9 of Wal- mart granting the permission to the Suppliers to work for 72 hours a

week, exceeding the 60 hours limit established by ILO convention. This practices

well documented in Wal -mart's Handbooks and Codes of Conduct which seriousl y

questions the supremacy of ILO treat y. Therefore, global business organizations'

adherence to the such a brief conventions li ke Vienna CSR Treat y 8 0 cannot

be considered as potential documents which can convincingl y sustain the

credibilit y of CSR. This situation can be worsen when it is not clear ―what role

could and should international organizations, such as t he ILO and its secretariat,

play, and whether it is necessary to formulate and adopt new international judicial

norms with regard to CSR‖ 8 1 .

The entire Capacity Building project -discussions of ILO about CSR are

focused on enhancing working conditions, environment protection, corporate

citizenship etc. On the finding of any CSR nonconformit y such as practicing of

 37

Forced Labor, the 'action' is decided at the sole discretion of the Global Sourcing

Companies (Buyers) by ―Corrective Action Plan s‖(CSPs). It doesn't seem to be a

requirement of CSR to make sure that employee's claims are always compensated

according to a certain established law of a certain Judiciary System and adjudicated

by legal professionals who claim the jurisdiction thereupo n.

Interviews with legal professionals

Interview -I, with a Government Legal Professional

PLEASE N OT E T HA T I A M S T I L L T O T A KE P E R M I S S I ON FR OM T H I S P R OF E S S I O NA L T O

PUB L I S H T HI S P A R T I N T HI S W OR K ; I H AV E DE C O DE D T HE D I S C US S I O N U NT I L T HE

PE RM I S S I O N I S GR A N T E D A N D T HE E DI T I N G O F T HE RE S T I S CO M PL E T E D .

The opinions and conceptions of legal professionals working closely with CSR issues will

be highly conclusive at enriching the hypothesis of this work. The interview taken with

Dr. Amin Wreidat , the Director Labor Inspections-Ministry of Labor-Jordan clears the

approach of a government of Jordan that is deeply studying the contemporary CSR issues

related to the industries operated under Jordan US FTA, as a parallel exercise to the

labor law reforms demanded in th e country .

What is your understanding about the contemporary CSR concerns in the country?

Dr.Amin: The concept of CSR was new to our country in this form, we have been working

for the welfare of the workers since the beginning of the industries but our framework

about labor relation was rather local and more domestic ; we had relation to the

internationally recognized standards only through ILO parameters and to the

 38

extent we had ratified them. The main force of CSR instruments were identified with the

business activities of global business organizations who established in our country;

especially with the apparel manufacturing companies setup under US -Jordan FTA because

the entire production of these companies are exported to the USA and basically its US

companies that brought the CSR to Jordan in this form. We believe in the strength of this

instrument at contributing to the social development in the country, however, it has to be

standardized and shaped to the aspirations of the stakeholders interested in the concept.

What kind of changes you expect in the practice of CSR ?

Dr.Amin: We have migrant workers from more than 10 countries; most of workers who are

from Bangladesh, India, Pakistan, Sri Lanka, Nepal and China are working under US -

Jordan FTA; this is an international environment. These workers have worked under

deferent legal systems and enjoyed deferent labor benefits in their countries . Our labor

laws, I mean labor laws of any other country may not satisfy their requirements alone, for

example the level of freedom of association in our country may be more than one country

and less than another country as so are the other aspects. On the other hand, the buyers,

like Wal-

common and some standards are identical to the Buyer. Sometimes one factory may work for

5 Buyers and implementing 5 types of Codes of conduct; some allow to work 72 hours a

week and some Buyers allow only 60 hours . We need some uniformed one system that can be

followed by all the manufactures and works will be enjoying similar benefits regardless

of the Buyer to whom they produce for. They have to talk in one voice and
 39

it should be clear, unambiguous and lasting.

Ok, what is the approach of your legal sys tem to the issues related to CSR?

Dr.Amin: Basically the issues related to CSR are cases of violation of

Environmental, Labor, Health and Safety standards and Customs regulations ; therefore,

whatever the violation it has to come through the related laws es tablished in the country,

law. However, when CSR comes as a part of a contract it can be considered as a contract or

agreement between employer and employee but for tha t consideration, the contract or

agreement should be clear, unambiguous ; and then country law can adjudicate them.

standards?

Dr.Amin: Again, we have to understand that the CSR is not like a convention or Treaty

or at least like an MOU . For hiring of workers from other countries, yes, we have some

bilateral agreements with other states but terms or standards in CSR is not like that

they are optional if worker want to sue the Buyer they can do that under local laws, but

if CSR has granted more benefits above the local laws, it is open case in front of the

judiciary to decide upon the agreements and contracts. The courts will assure the

benefits defined by local laws are del ivered. Litigation quoting the rights established

by CSR itself is a complicated matter unless the content of CSR may come to an

international charter ; but again, it has to be accepted by the inde pendent states and,
 40

further, the country laws has to be modi fied to cater the new conventions and it is far

beyond the current practice of CSR.

Do you think such changes are impossible?

Dr.Amin: possibility for such changes depends on

how much we want to do it. First the objecti ves of CSR have to be sustainable and it is

not enough only to express their desire to grant more than the benefits set up by local

labor laws. Second there should be multiparty dialog under the supervision of an
iii
ter Work project that we implement in

Jordan with ILO & IFC will be of greater help in this direction. Third, CSR has to be

coupled with international law or local laws with a mechanism which is monitored by an

international body. The international treat ies are the only instrument from which we can

have some insight in doing this and also CSR practices in European Union has indicated

very considerable development in this way but still they are not close to the bottom level

problems as much as local laws d o.

Interview -II, with Legal a Professional of an International Business

Organization

PLEASE N OT E T HA T I A M S T I L L T O T A KE P E R M I S S I ON FR OM T H I S P R OF E S S I O NA L T O

PUB L I S H T HI S P A R T I N T HI S W OR K ; I H AV E DE C O DE D T HE D I S C US S I O N U NT I L T HE

PE RM I S S I O N I S GR A N T E D A N D T HE E DI T I N G O F T HE RE S T I S CO M PL E T E D .

It is equally important to know about the ideas of CSR promoters to conclude the

hypothesis of this work and the following interview was taken with Vendor compliance
 41

specialist of Jones Apparel Group, Mr.Kesava Mural i who represents the conceptions of

International Buyers.

Why do think your role is important for your organization?

Mr.Kesava: It is clear that we are very concerned about the reputation of our brand names;

my legal department is always alert about malpra ctices, sweatshop conditions and entire

business relations with thorough commitment to avoid possible damages to our objectives.

Is that the only importance, to protect your brand name?

Mr.Kesava: name is important and

also we have certain social responsibility to the society and we have set our policies to

make sure our business gives very favorable impact on the society wherever it operates. So

we have both of the responsibilities.

Every organization talks about CSR; is that just a competition to have sophisticated

set of policies just to impress the customers?

Mr.Kesava: Not at all, I am talking about our brands and I hope nobody is having CSR for

the glory of their brand. Sometime s you may not understand, if they have good CSR

practices, why such violations are frequent and that feeling may have made you to think

so, any way, Corporate Social Responsibility is for everybody who is sharing the

business.

What are the main challenges you face at draf ting CSR policies?
 42

Mr.Kesava: I appreciate this question . The parties involved in the business are deferent

and are from deferent countries and systems ; they are heavily business oriented. Some are

not hesitant to sacrifice the business for money; we are t rying to disqualify such

companies from our chain. For that, we need very strong policies, practice and a

monitoring system. Basic challenge is how to make them to implement our CSR policies

voluntarily without our close monitoring and then how to sustain the results are the two

major challenges I would see and other are not challenges of that scale.

Do you really taking the responsibility of bad practices or violations of CSR policies

by your Suppliers?

Mr.Kesava: The concept that does matter here is shar ing of objectives; we select the

Suppliers who promise to work towards our CSR objectives and it is their responsibility

to make sure that the business operations are complied with out CSR objectives,

procedures and standards. We take the responsibility of standards that we provide are

complied with international standards. If any Supplier violates the law, then the workers

or the interested party can take legal action against them and we have established that

right in our policies. In any case of litigatio n against our Suppliers we can clear that

Suppliers are obliged to us implement our Standards. There for when they violate any law,

they violate the agreement they entered into with us.

the agreeme nt between you and

your Suppliers ,
 43

Mr.Kesava:

but what we do instead is to terminate the contract with the Supplier, and that is a legal

action we have predetermined in our agree ment.

How the workers or stakeholders can find your CSR standards are they in one manual?

Yes, you can find them in our manual issued to the Suppliers in detail and also we want

them to post our Code of Conduct in factory for the attention of the workers and it is in

their language.

Do you think that workers can understand such policies and violations?

Mr.Kesava: We have simplified them as much as possible and have setup certain grievance

that is those council members are

employees who can help the workers understanding such standards. In addition we have

Monitoring team which visits the factories for auditing and conducting interviews with

workers to extract the information about nonconformities.

What international standards your CSR policies are based on?

Mr.Kesava: Obviously, those are the standards established by internationally recognized

bodies like ILO, OHSHA, SA8000, FLA, WRAP etc.

How do you select the language at drafting your CSR policies and Code s of Conduct?

Mr.Kesava: We draft them in English and then translated to other languages.

 44

legal document?

Mr.Kesava: This is why, you know, you are a law student; so you all have to propose

specifically what is the problem in our Codes of Conduct when written in this way. I

at the

international level. I hope your researches have to be directed in this direction to find

the actual

the chances for violations with voluntary but corporate efforts. The advantage of

on

and that is not our focus. Anyway, if any party wants to use these policies at

litigation it is up to the judiciary to interpret them and find the applicability. We

ure

that following these standards by understanding and not just because of the enforceable

terms you may mean to be in such documents.

Do you think that CSR has to be uniformed and should be presented in form of an

international convention?

Mr.Kesava: We all have to carefully study this idea, because the way of CSR is like this,

if you want to bring it into the path of enforceability, then you have to deviate CSR from

that that is

where we want to be. CSR deserves its own culture we have to develop CSR with the help of

soft-tools, because the law is always there to help when needed.

 45

in a disputed industry nor can we talk about CSR when there is no profitable business or

industry; we have to sustain the balance by sharing the objectives.

Recommendations

The main contradiction is that CSR is rather a business instrument that is base on the

principle of voluntarism and it is difficult to expect the duty of traditional law by

CSR terms. However the stakeholders recognize the businesses when more complied

with CSR standards, therefore the problem arises when CSR terms are violated.

Where to go?. The following recommendations are proposed to eliminate this

disagreement according to the outcome of this work:

 An ‗international subcommittee ‘ has to be established under a supervision of

internationall y recognized institution to f acilitate the social dialogue to determine

the way of CSR. Is that towards to the Law or self-regulations based on voluntarism?

o It should be cleared in such exercise that, what stakeholders can expect

and what cannot be expected by CSR if CSR is to stand self -regulations

based on voluntarism.
 46

o How to take up the legal issues which are neglecte d by CSR, by the

traditional law.

o Well defined set of fundamental principles have to be introduced to use

as guidance at drafting CSR policies.

o The business organizations whoever draft CSR policies should submit

such CSR policies to the ‗international subcommittee‘ for approval.

 Violations of Laws, Ethics and Standards are quite possible when industry is

migrated to the countries where the products can be manufactured for low cost;

bilateral agreements and FTAs are such sources that make the background for

international business. Therefore, the stand point about the CSR of the business

should be well defined in such Agreements, with the consultation of the

‗international subcommittee‘ described above.

 The local laws should have been updated to define how it deals with CSR

issues; new laws or amendments to the excising laws have to be made in accordance

with bilateral negotiations between sovering states and ‗international subcommittee‘ .

 47

Conclusion

The CSR issues related to international bus iness operations are not as simple as we

believe and most of its weaknesses are possible due to the lack or codification in

documentation. On the one hand CSR shows that it has its own way that matches with

international business objectives and it has defe rent approach to ensure the rights of

the stakeholders by voluntary efforts using self -regulations and on the other hand

there is a question that CSR enters into some promissory obligations which cannot

avoid being questioned by the traditional law. Theref ore, regardless of the fact that

CSR has its own way, it has to be obliged by the existing laws and there is no

question about it. However, the basic problem arises related to the structure and

language of the CSR documentation: the problem related to the structure is basicall y

related to the matter of omitting to include all the parties (stakeholders) in CSR
 48

agreements; beneficiaries are to be included in agreements. The language of CSR

documents have to compl y with ‗contract formations‘ and if these two t hings are

succeeded it can enter to the judiciary.

If above two conditions, which related to the language is solved CSR litigation can

be successful onl y through an existing traditional laws such as ‗Unfair Competition

Law or Alien Torts Acts and to the e xtent that violation is related to the provisions

of such Laws. However, as it is proven in this study, such laws which are not

fundamentall y focused on CSR issues cannot guarantee that the litigation is

successful until CSR will bring out some identical j udiciary infra structure that will

particularl y care for the CSR obligations to which the business should be bound.

Therefore, these two requirements have to be accomplished all together and if the

litigation in CSR is to be successful. It is proven in thi s work that there is a serious

problem about the codification and it is highlighted when there is no some law to

cater the CSR issues. Consequentl y, the argument in the thesis is realized as logical

to believe that ―t he unavailabilit y of any pr evalent j udicial infrastructure which binds t he

international business organi zations to their social responsibilities and poor codification as

the fundamental shortcoming of CSR.

 49

.
 50

Bibliography

Publications

1. International Dimensions of Corporate Social Responsibility: Vol.I by David Crowther; ILO,Bureau

of Workers Activities 'Corporate Codes of Conduct' CH-1211 Geneva 22

2. Corporate Social Responsibility in the Mining Industries by Natalia Yakovleva, Published by Ashgate
Publishing, Ltd., 2005.

3. An Introduction to Quality Assurance for the Retailers by Pradip Mehta ,2004.

4. The Debate Over Corporate Social Responsibility By Steve Kent May, George Cheney, Juliet Roper
Contributor Steve Kent May, George Cheney, Juliet Roper Published by Oxford University Press US,
2007.

5. "Corporate Social Responsibility in a Comparative Perspective", in Crane, A., et.al.by Williams,

Cynthia A.; Ruth V. Aguilera (2008). The Oxford Handbook of Corporate Social Responsibility,
Oxford: Oxford University Press.

6. Business and Society: Environment and Responsibility by Davis, K.; R. Blomstrom

(1975). New York: McGraw-Hill.

**********************************************************************************

InternationalTreaties

• ILO Conceptions of C-29 Forced Labor Convention, 1930.C-105 Abolition of Forced - Labor
Convention, 1957

• Vienna CSR Treaty of 2005

**********************************************************************************

Journals

• American Journal of International Law, 2004, Vol.98

• Georgetown Law Journal (2001) Vol. 89
• German Law Journal No. 4 (1 April 2007)
• Journal Business Ethics, Vol.45, No.1
**********************************************************************************

Documentary (Movie)

''Total Denial'' (Doe v. Unocal) – by Milena Kaneva (2007), available at www.totaldenialfilm.com

 51

1Compact, Published by the Global Compact Office, United Nations 50761— May 2007, available at
http://www.unglobalcompact.org/docs/about_the_gc/gc_brochure_final.pdf
2 Corporate Social Responsibility in the Mining Industries by Natalia Yakovleva, Published by
Ashgate Publishing, Ltd., 2005 , pg 35
3 Pradip Mehta ,An Introduction to Quality Assurance for the Retailers pg.239 , 2004
4 Social Affairs-31, International Dimensions of Corporate Social Responsibility: Vol.I by David Crowther; ILO,Bureau of
Workers Activities 'Corporate Codes of Conduct' CH-1211 Geneva 22, available at www-old.itcilo.org/actrav/actrav-
english/telearn/global/ilo/code/main.htm
5 Fair Labor Association (FLA), Social Accountability International (SAI), World Responsible
Apparel Production (WRAP), ILO etc.
6 Global Compact, pg-04,Published by the Global Compact Office, United Nations 50761— May 2007.
7In Doe v. Wal-mart, Jane Doe I was forced to do Overtime against the will; available at
http://lshr.blogspot.com/2005/09/walmart-complaint.html
8 JAMES W. LYNN v. WAL-MART STORES, INC;CIV-2005-1067-2, available at
http://courts.arkansas.gov/opinions/2008a/20080319/ca07-384.pdf
9 Occupational Health & Safety Administration is the main federal agency charged with the enforcement of safety and
health legislation in US.
10 ISO (International Organization for Standardization) is the world's largest developer and publisher of International
Standards. ISO is a network of the national standards institutes of 157 countries, one member per country, with a Central
Secretariat in Geneva, Switzerland, that coordinates the system
11 http://walmartstores.com/download/2727.pdf
12 Near competitor of Wal-mart
13 www1.umn.edu/humanrts/links/levicode.html
14 These names are used interchangeably in CSR Literature to mean the same document,Code of Conduct.
15 Forced Labour Convention Convention (No. 29) Concerning Forced Labour Adopted on 28 June
1930 by the General Conference of the International Labour Organisation at its fourteenth session entry into force 1 May
1932
16 www-old.itcilo.org/actrav/actrav-english/telearn/global/ilo/code/walmart.htm
17 Supplier can also be a Vendor according to their businesses affinities.
18 id
19 To complete the Social Responsibility down the entire supply chain, Wal-mart should be responsible for the business
conduct of its Suppliers who should correspondingly be responsible for the employees working under him; this doesn't
ethically deny that Wal-mart's direct responsibility over the workers employed under the Suppliers.
20 The contents of Wal-mart's Code of Conduct (COC) is elaborated here as an example but some organizations may have
additional points in COC as External Environmental protection (in Wal-mart COC, they talk only about 'Workplace
Environment'), Product Security, Social Security etc,.
21 Wal-mart has its own Global Procurement Department for selecting Suppliers and Ethical Standards Devision for
monitoring the Suppliers adherent to Wal-mart Code of Conduct.
22 DVV International, Adult Education and Development, Vol.61/2004; available at www.iiz-dvv.de/index.php
article_id=333&clang=1
23 Forced Labor violations sued in local courts in Supplier's country will refer the local labor laws; the court will penalize
the worker's immediate employer (Supplier) and not the Global Company against the objective of Corporate Social
Responsibility which puts the weight of such violations on the Global company as well.
24 Weber Shandwick Worldwide v. Reid, 2005 U.S. Dist. LEXIS 14482
25 id
26 This clause was drafted by the writer of this research as an example to elaborate the expected way of drafting CSR
policies if the society (employees) is to be successful at CSR litigation.
27 The process of outsourcing the business activities to the countries where the labor costs and material cost are cheaper.
28 The First Amendment brought the Freedom of Speech, press,assembly, rights of petition and freedom of religion in
1791, to the US Constitution.
 52

29 Governance, International Law & Corporate Social Responsibility- Research Series 116 pg-42 by Rémi Clavet -
Gregorio de Castro - Isabelle Daugareilh, Isabelle Duplessis - Eric Gravel – Hagen Henrÿ,Jean-Claude Javillier – Marianna
Linnik,Sune Skadegaard Thorsen - Yun Gao - Arnold M. Zack
30 Corporate culture refers to the shared values, attitudes, standards, and beliefs that characterize members of an
organization and define its nature – Legal Definitions available at http://definitions.uslegal.com/c/corporate-culture/
31 Governance, international law and corporate social responsibility by Rémi Clavet; Gregorio de Castro; Isabelle
Daugareilh; Isabelle Duplessis; Eric Gravel; Hagen Henrÿ; Jean-Claude Javillier; Marianna Linnik; Sune Skadegaard
Thorsen; Yun Gao; Arnold M. Zack, available at
ww.ilo.org/global/What_we_do/Publications/ILOBookstore/Orderonline/Books/lang—en/docName-
WCMS_092584/index.htm
32 The Debate Over Corporate Social Responsibility By Steve Kent May, George Cheney, Juliet Roper Contributor Steve
Kent May, George Cheney, Juliet Roper Published by Oxford University Press US, 2007
33 German Law Journal No. 4 (1 April 2007) - Corporate Social Responsibility and Transparency in the
34 Jordan Labor law No (08), 1996; Article 57-Compulsory Overtime.
35 The ILO has decided the normal working hour per a day as 8 hours, working after this 8 hours is known as Overtime
36 Working on Overtime with the consent of the employee is known as Voluntary Overtime work.
37 The literal meaning and not the technical meaning defined in laws.
38 Hansmann and Kraakman, 'The End of History for Corporate Law?' (2001) 89 Georgetown Law
Journal 439, 443; see also, Anatomy of Corporate Law (2004) Ch.1 (Separate legal personality, limited
39 The name "John Doe" is used as a placeholder name for a male party, in a legal action, case or discussion, whose true
identity is either unknown or must be withheld for legal reasons (Jane Doe is female plaintiff/s of the same)
40 Doe v. Wal-Mart Stores, Inc., No. CV 05-7307 GPS (C.D. Cal. 2005)
41 Northeastern Law Magazine winter 2007 | vol. 6 • no. 1, pg 32, available at www.slaw.neu.edu/
magazine/07winter/07w-nuslmag.pdf
42 Kadic v. Karadzic 70 F.3d 232
43 Corporate Liability for Human Rights Abuses goes on trial by Eric A. Savage & Michael G.
Congiu-23-July-2007 available at www.mondaq.com/article?article id=50612
44 Doe I v. Unocal Corp., 395 F.3d 932 (C.A.9 (Cal.),2002)
45 In September 1996, lawyers representing several Burmese citizens known under the pseudonym "John Doe"--as well as
two human-rights advocate organizations--filed a lawsuit in US District Court in Los Angeles, accusing Unocal Corporation
of human-rights violations in Burma. The charge was that Unocal's participation in the $1.2-billion Yadana gas pipeline
project through Burma to Thailand has involved slave labor, the forced relocation of entire villages, and, in some cases,
torture, rape, and murder by Burmese soldiers of people in the Tenasserim region of the country
46 Carroll, A., 1991. The Pyramid of Corporate Social Responsibility: Toward the Moral
47 Wal-mart Standards for Suppliers available at walmartstores.com/download/2727.pdf
48 Wal-mart's Ethical Standards Program – January, 2005 says that Forced Labor can be constituted by Involuntary labor,
Excessive Recruitment Fees, Purchasing Supplies from entities using Forced Labor, Terminating or Discriminating of
workers who will not work Overtime- pg-05.
49 Doe v. Wal-Mart Stores, Inc., No. CV 05-7307 GPS (C.D. Cal. 2005)
50 Wal-mart rates Factories of Suppliers according to the Risk Levels , ―Green factories‖ are known as the low risk
factories and ―Red‖ factories are known as high risk factories, available at
www.laborrights.org/files/WMEthicalSourcing102407.pdf
51 These are Third Party organizations which conduct Audits in the Factories to evaluate the Risk Levels to quantify the
violations of CSR standards established by uniformed CSR standards. A certification is granted according to the Risk levels
observed in the Audits. The employees of the Suppliers are interviewed by the Third Party Auditors in order to get
information about practices of Forced labor etc..
52 H.R.5377 Corporate Code of Conduct Act (Introduced in House),SEC. 3. RESPONSIBLE BUSINESS PRACTICES OF UNITED
STATES NATIONALS IN FOREIGN COUNTRIES, Available at http://thomas.loc.gov/cgi-bin/query/F
c109:1:./temp/~c109sfzir6:e4743:
53 Sec. 1350. Alien's action for tort
 53

54 Trafficking in persons shall mean the recruitment, transportation, transfer, harbouring or receipt of persons, by means of
the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a
position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having
control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the
prostitution of others or other forms of sexual exploitation, forced labor or services, slavery or practices similar to slavery,
servitude or the removal of organs – Article 03 of PROTOCOL TO PREVENT, SUPPRESS AND PUNISH TRAFFICKING IN PERSONS, ESPECIALLY
WOMEN AND CHILDREN, SUPPLEMENTING THE UNITED NATIONS CONVENTION AGAINST TRANSNATIONAL ORGANIZED CRIME
55 American Journal of International Law, 2004, Vol.98,pg 798.
56 Sosa v. Alvarez-Machain, 542 U.S. at 715, 720, 724
57 Washington Legal Foundation
58 No. 02-575 available at http://reclaimdemocracy.org/nike/nike_kasky_oral_arguments.pdf
59 Doe v. Wal-mart CV 05-7307 GPS (C.D. Cal. 2005)
60 Calif. Bus. & Prof. Code § 17200 et seq., which prohibits unfair competition – including unlawful,
unfair, and fraudulent business acts and unfair, deceptive, untrue, or misleading advertising
61 Profit organizations, including corporations, business organizations and private foundations closely associated with Multi
national organizations are known as 'Private Actors'; Bull, B, M. Bøås and D. McNeill (2004), Private Sector Influence in
the Multilateral System: A Changing Structure of World Governance?. Global Governance
2004;10(4):481-498.
62 www.wlf.org/upload/DOEWMTBR.pdf
63 Weber Shandwick Worldwide v. Reid, No. 05 C 709, 2005 U.S. Dist LEXIS 14482, at 1-13,8 (N.D. Ill. May 12, 2005)
64 id
65 Nike, Inc. v. Kasky, 539 U.S. 654, 123 S. Ct. 2554 app. at 2570-71 (Breyer, J., dissenting) (2003)
66 walmartwatch.com/img/blog/wage_and_hour.pdf
67 Background paper prepared for conference on "Engaging Business: Addressing Forced Labor", Atlanta, Georgia,
February 20, 2008. Written by Roger Plant, Special Action Program to Combat Forced Labour, ILO, Geneva, Switzerland,
available at www.ilo.org/sapfl/Events/ILOevents/lang--en/WCMS_092176/index.htm
68 Amicus Curiae for Doe v. Wal-mart, by Chamber of Commerce US
69 ERI is a 501(c)(3) nonprofit group of activists, organizers, and lawyers with expertise in human rights, the environment,
and corporate and government accountability. ERI has offices in the U.S. and Southeast Asia. Available at:
www.earthrights.org/about_us.html
70 HADSELL & STORMER, INCT appealed this dismissed case which used a new and innovative theory that Wal-Mart‘s code
of conduct created a contract, and the workers at the supplier factories are third party beneficiaries of the contract. The
company‘s dismissal motion was heard on December 4, 2006, and on March 30, 2007, Judge Guillford, a recent Bush
appointee.
71 The global workers currently have access only to ATCA in US. Corporate Responsibility Bill adopted as a private
members ballot in the House of Commons in UK,with an aim of foreign Direct Liability, however, having no clear conveyor
from Workers to Law.
72 This is an elementary requirement to claim under UCL (Unfair Competition Law – California)
73 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1149 (2003),
74 www.ilo.org/public/english/employment/gems/eeo/code_98/walmart.htm
75 C30 Hours of Work (Commerce and Offices) Convention, 1930
76 Id, Article 03
77 Id, Article 04
78 walmartstores.com/download/2727.pdf
79 www.macysinc.com/AboutUs/Policies/minc_code_of_conduct.pdf
80 www.jci.cc/members/jcidocs/gladys/CSR%20Treaty%20EN.pdf
81 Governance, international law and corporate social responsibility by Rémi Clavet; Gregorio de Castro; Isabelle
Daugareilh; Isabelle Duplessis; Eric Gravel; Hagen Henrÿ; Jean-Claude Javillier; Marianna Linnik; Sune Skadegaard
Thorsen; Yun Gao; Arnold M. Zack.

i
The ISO and Corporate Social Responsibility: Issue briefing note, May-2004; Aavailable at
http://inni.pacinst.org/inni/corporate_social_responsibility/standards_definitions.pdf
ii
Principles of Responsible Investment by UNEP Finance Initiative, Available at http://www.unpri.org/files/pri.pdf
 54

iii
Available at http://www.betterwork.org/internal/geneva/communications/information-sheets/jordan