Well, good morning.
First, this talk is not going to be in Spanish, it will be a practical but a bit academic, and it’s the last one before lunch, so I hope that you still be awake during this session.
Anyhow, I’m very honored to take part in this important conference, and thank you for inviting me. I’m excited to be here since this conference brings together and integrates the diverse and insightful minds to discuss highly important and timely topics.
In addition it is also, has a unique meaning for me: First, I’m excited to be here for the first time in this important area of the world, coming all the way from close to Jerusalem, to a friendly country, which only recently moved its Embassy to that city, a place with historical significance to many; secondly, because I feel connected to CUMIPAZ’s theme of creating an international space for dialogue and integration of peace, of sustainable development, and the happiness of the integral human being and of the nations.
This theme is specifically promising with regards to the relatively new Corporate Social Responsibility Session theme and with the role of corporations as universal and dominant institutions that could play a meaningful role in providing help for humans and human harmonization across the globe.
(Oh sorry. Great). This position of corporations in the current era are evident in the statement of professor Aharon Barak, the former president of the Supreme Court of Israel, who said in one of his important decision and I cite: “In modern society, the corporation is the main basis of human activity. There are countries that have more corporations than people.”
As an anecdote, in Hebrew (the language I speak daily), the word ‘company,’ khevereh, and ‘society,’ kehvereh as well, is the same word and this is exactly the essence of my discussion with you today.
So first, let me do something I neglected to do: Say shalom, which is ‘hello’ as well as ‘peace’ in Hebrew, to all and introduce myself: My name is Eli Bukspan and I serve a singular lecturer in the Law School at the Interdisciplinary Center in Herzliya, Israel.
I’m speaking today based on my wearing three hats, which are closer related to the theme of this CSR day. First, wearing my academic hat, I’m researching and teaching corporate law and contract law, the two main legal issues and areas that are regulated in the business sector. Wearing the second hat and perhaps a tad more practical hat, I am a member of the public committee overseeing the CSR index at the Tel Aviv Stock Exchange, Maala, and the chair of the Ethics subcommittee.
CSR is a growing phenomenon among Israeli business, and Maala, a nonprofit CSR standards-setting organization, helps to further underpin and accelerate this process.
Founded in 1998, Maala is producing an annual index, which runs publicly traded, as well as privately held Israeli companies, based on CSR criteria. The index criteria includes: Ethical aspects of business processes, environmental impact, responsible procurement, work relations, health and balance, corporate governance, social environmental management and reporting, social involvement of employees, community contribution, and diversity and inclusion.
Lastly, wearing my third hat: I’m a chair of the Israeli Class Action Funding fund, a highly unique fund that deals with one of the most promising legal practices, in my view, that helps to enforce and improve social responsibility through the corporate and business sectors.
Class actions are very common in the U.S. and Israel, but not very common in Latin America. So, I’ll be more than happy to share with you my observations about this practice and hopefully contribute a bit to the efforts to adopt class action suits in this important part of the world as well.
I’d like to begin by sharing my own experience and observations. As a legal scholar I can attest the 25 years ago, when I completed my doctorate studies at Harvard Law School, I was deeply intrigued with the framework of law and economic structure of corporate law. However, today, where the social and economic environment around us has deeply changed, no doubt that this framework is insufficient to explain what corporate law is all about.
Indeed, though corporations and corporate law are considered to be the main area of private law, traditionally dominated by business and commercial principles, the modern era shows the rise of social and ethical issues in corporate law, due to the growing social and public change experience with the corporations.
This is true also with regards to the issue of human rights in the corporate sector. Although human rights are usually viewed as part of public law, with the goal of achieving effective protection to individuals from any violation of the elemental liberties done by governments, there is a growing aspect that corporations also have a very important role to play with the protection of human rights.
This conclusion is reinforced by the fact that 500 globally operating corporations control about 70 percent of world trade, and each year approximately three million new corporations are registered. The past few decades showed an increase in the privatization of government function; private corporations have increasingly obtain state-like impact and some private entities today such as Google, Amazon, and Apple are larger and more powerful than some countries themselves, and potentially endanger our human rights, mainly our privacy and autonomy, no less than States. These companies, for example, have far more information about U.S. citizens than does the FBI, but far fewer restrictions on how to use it.
The observations about the growing influence of corporations can also be illustrated by the 2011, very famous, Forbes magazine cover page, which flagged the social revolution that started [to] merge in the business sector, which is a big, big wakeup call; and the Time magazine cover page that same year, which chose “The Protestor” as “The Person of the Year.”
Whether it’s worked through the participant in the Arab Spring the United Kingdom riots, or Occupy Wall Street in the United States, the protester’s activism in 2011 reflects the universal power of individuals when their trust in the worldwide principal social institutions and corporations among them erodes.
Actually, I have here also the Fortune magazine from September. I didn’t have the time to include it in my presentation, but this September issue ranked the corporations that combine the best social and [economic] issues, just as we heard beforehand; and look this, is just the current issue of the Fortune magazine. This is a very hot and daily topic.
So, to me, this trend is obvious. I wrote about it in a book in 2007 (but it’s in Hebrew) entitled: The Social Revolution of Business Law. But I think that no one, even people who are not participating in this conference, can ignore that today’s corporate reality has triggered the importance of implementing social responsibility in human rights protections into the corporate reality.
In other words, it is true that the conventional attitude that prevailed in corporate law in the past was focused narrowly on the expected profit of the company and the shareholders. Today, however, this approach is anachronistic and certainly where significant social economically corporations are concerned.
One interesting point, especially for me as a legal scholar, is that CSR is not anymore only a social phenomenon, it’s not only a business phenomenon, it is also a legal one. CSR indeed started as a voluntary and non-legal and beyond compliance phenomenon. However, today it becomes more and more connected to the legal world as well. Therefore, it appears that the phenomena that in the past was regarded predominantly as an ethical obligation of [the] corporation and its directors, is now becoming rooted in the new legal frameworks and disciplines around the world. It could affect the exposure of corporations and their leaders to litigation and similar legal or regulatory exposure in the coming year.
The CSR is a [phenomenon] is slowly but surely assimilated into the law and [influences] the legal perception that the corporation should not only be a profitable tool, but also should be responsible for the social and environmental consequences of its activities and be responsible for the welfare of society. This is mainly because of the reason that the concept of shared value becomes more relevant than sharer’s value, and protecting the stakeholder’s interests [is] becoming not as important as the stockholder’s interest.
Indeed, the interpretation and application of CSR may change according to the context, depending on local factors such as culture, environmental conditions, and legal framework. Still, CSR is an international and universal matter that has been implemented in many countries in different forms. For instance the Eiffel Tower in France uses [a] renewable energy system; in Singapore supermarkets stopped selling shark fin products.
If we would have a look at some countries as an example, deep changes occur in the regulation of corporate law. Such is the case in Israel, the United Kingdom, the United States, with regards to corporate responsibility.
In Israel, for example, both legal courts ruling in legislation increasingly recognize the obligations of company’s officers to take into account the workers, creditors, and other parties of interest. Similarly, the Israeli Companies Law defines in Section 11 that the company’s purpose is to operate according to business consideration, first of all, for the production of profits. But/and a mount of consideration may also be taken into account the interest of its creditors and employees in the public interest.
In addition, a range of Israeli specific [laws] require a [corporations] to consider human rights in their business. The Israeli and other countries’ law books contain many, many laws targeting social environmental challenges such as law regarding the protection of minorities at work, labor, waste of pollution, recycling, and more.
A strong expression of this was given in a ruling rendered in 2009 by Israeli Supreme Court of Justice Ayala Procaccia, who imposed obligations on shareholders in a company who took many loans that gave the company very high leverage and jeopardized its creditors. This ruling was made shortly after the sub-prime crisis in the United States and held that managing a business in this manner constitutes a business disability with legal liability because, and I cite, “The principle of justice and fairness are now an integral part of private law and are deeply planted in both contracts in corporate law.”
Recently the business enterprise [is] characterized by duality. On one end, its business considerations are guided by concerns of efficiency and effectiveness, while on the other it is obligated to fairness and goodness in its relationship with the various groups it comes into contact with as a part of its business, consisting such as customers, employees, creditors; and this is part of the Court opinion, the Supreme Court opinion, not only of the business sector.
[A] similar approach is heard also in English law, in Section 172 to the Companies Act 2006, which states that: “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole,” including the interest of the company’s employee, suppliers, customers, community and the environment.
And this is also the case in the United States corporate law, where most states have Communities Law in which directors, while considering takeover proposals, are obliged to take into account the interest of all parties who are connected to the company, including its workers and customers.
So, since our initiatives are becoming increasingly significant by new market forces and changes in public and legal expectation from the business sector, all these forces work together in creating an organizational environment in which companies give a significant weight to social implications when making business decisions. Moreover, and as this conference perfectly proves, not only corporate social responsibility programs’ reports [on] investment and indexes are extremely popular today, so is the case with the International Discourse on Human Rights and Corporations, led by the Protect, Respect and Remedy Framework dubbed in the United Nations Guiding Principles on Business and Human Rights in 2011.
These guidelines formalize the responsibility of businesses to respect human rights and articulate to society’s expectations that businesses should respect human rights, such as: worker health and safety, damage to people’s health through environmental accidents, use of forced labor, child labor, or underpayment of workers, discrimination against employees, product safety, and data privacy.
The interesting thing is that the guidelines [are] applicable to all States and to all business enterprises, both transnational and others, regardless of their size, sector, location, ownership and structure, and were adopted into numerous international bodies including the OECD, GRI Sustainability Responding Standards, stock market indexes such as the Dow Jones Sustainability Index, FTSE4Good, international corporations, and ISO 26000.
Because of the guidelines importance and close relations with this conference’s theme, I will talk about them in a few minutes, but meanwhile and in order to summarize this introduction, I think that I don’t have to convince you anymore that the business and legal climate is changing towards CSR.
I would, therefore, like to move on and collaborate with CUMIPAZ’s mission to think about effective ways to further address social issues and exchange positive practices in the CSR and business human rights field. Therefore, I’ll turn out to more concrete issues and speak about practical and innovative tools aiming to further substantiate the protection of social responsibility, anti-corruption, and human rights by corporations and business sectors.
The first is suggesting a little model aiming to apply human rights that are usually set in the different State’s constitutions directly on the business sector; and the second is a proposal to use the famous and effective legal process of class sections as a catalyzer for CSR compliance by corporations.
These two issues are well connected to the goals of CUMIPAZ and to the international discourse as reflected in the two important United Nations initiatives. The first is the United Nations Convention against Corruption from 2003, which states in Article 35 that: “Each State Party shall take such measures as may be necessary, in accordance with principles of its domestic law, to ensure that entities or persons who have suffered damage as a result of an act of corruption have the right to initiate legal proceedings against those responsible for that damage in order to obtain compensation.”
And the second is the 2011 United Nations Guiding Principles on Business and Human Rights, which [I’ve] just shown, which emphasizes the State’s duties to protect against business related human rights abuse and take appropriate steps to ensure the effectiveness of domestic judicial mechanisms and remedies, when human rights are breached also by the business. With the same token, these principles state that businesses have a responsibility to respect human rights and should avoid infringing them.
Though these two missions were drafted by the United Nations and, therefore, are in the center of the international playing field, they are directed also to the interior state mechanisms and are deeply connected to CSR issues.
So, my first suggestion deals with the legal mechanism that connects human rights as part of CSR to the business sector. Indeed, CSR and business and human rights are not synonyms; however, no doubt that human rights are included or maybe even serve as a precondition to CSR.
Traditionally, human rights as a political issue has a much longer and more formal history than CSR, which spreads on a much wider range of subjects. Still, the universal declaration of human rights, for example, which was adopted by United Nations General Assembly in 1948, includes civil and political rights, economic and social rights.
Many aspects of corporate activity today might affect those rights. For example, labor rights are affected by the economic aspect, non-discrimination laws are related to the social aspect; how the environmental aspects of corporate activity affects a range basic human rights, such as the right for clean air or clean water, etc.
So, today’s circumstances in which corporations become increasingly more significant, let international communities to significantly advance in examining and clarifying the links between corporations and human rights; and no doubt, that our daily human rights can be affected by corporate activities, not only by state activities.
Therefore, my proposal is that human rights determined in the Constitutions should apply directly to the behaviors of governments and corporations alike. The closeness and the connection of corporations to every individual of day to day life turn corporations into a natural and practical leverage for the incorporation of an approach emphasizing the importance of human right throughout the legal system. In today’s society, corporations serve as the main conduit for executing human activities.
As I indicated previously, in some countries there are more corporations than individuals, and some are larger than states. One statistic holds that among the largest, 100 [economies] in the world measured by the GDP for countries and sales for companies, 69 are corporations and 31 are countries. The business corporations through team contractual activities are multifaceted… (okay, I’ll speak slower) and involve several aspects of society including the realm of capital, environmental, human, including both labor and customers, property products and services.
You can have a look in this table, which shows the hundred largest economies; well most of them are corporations not states. [These are] the new giants today. Not surprisingly, therefore, that human rights are tested in the most private day to day interactions, no less today than in instances of individual’s encounters with governments.
Corporations and their leaders can act, therefore, as mediators in the adoption of ethical norms and externalizing culture of trust. The influence of the corporation, then, is not only local affecting only the human elements adjacent, such as its official employees, but extends also to the broader public as we just heard about Nestlé in the previous discussion, which includes the corporations, clients, suppliers, investors, and many in the communities in large.
Traditionally, however, the law indeed tended to perceive human rights set in the Constitution as the barrier protecting individuals only from the State omnipotent power, somehow easing the imbalance between the individuals and the governments. In this sense, human rights were perceived as part of public law.
Accordingly, comparative law shows that in many places in the world the accepted view is that the application of human rights set in the Constitution on private law and mutual relations is indirect through creative legal techniques; not directly by the Constitutions. But I suggest here that, contrary to this common perception, my main claim is that human rights must apply directly, it’s about time, and explicitly in both public and private law in this era.
To justify my claim, let me give you an example: Let’s assume that an individual privately communicated with a friend via email regarding recent relationship issues with their spouse and the next day [an] unrelated site provides advertisement for a divorce attorney. These things happen. Can this violation of privacy and human dignity throughout the internet be ignored when committed by private corporations, which today are larger and more powerful than some countries? Are the principles that supported a preparedly underlying arrangement for the protection of privacy and human dignity throughout the internet in a democratic state means to distinguish between corporations and the government authorities?
In an article that I wrote with my friend and colleague, professor Asa Kasher from Israel, we hold that there is no justification for this crucial distinction, either from the perspective of democracy’s basic principle or from the individual’s right [that] might be violated, who deserves real protection from any such act. The direct application model is the one that, in appropriate cases, enables and mediates access to the highest legislative normative layer that represents the principles of the country.
Metaphorically, the Constitutions is in the roles of the tablets of stone as it were that one can turn to directly when necessary. The advantage of the direct model is further supported by declaratory and educational advantages. Judges must give expression to human rights in its richest sense in the rulings, so that the public will understand the context of human rights, their conceptual role, also in interactions with corporations; and the United Nations starts to speak about it these days.
As for Latin America, from a short research, I found that today more and more constitutional human rights make their way into private litigation against corporate bodies a well. In this regard, I will refer to the oldest procedure for [the] protection of constitution human rights in Latin America: The Amparo. This is, for instance, in Guatemala, Section 265 to the Guatemalan Constitution; some countries, by the way, refer to it as tutela and I’m probably not pronouncing very well.
This process is significant to business, and I think that business should be aware of it, as it can be filed against corporations in Argentina, Bolivia, Chile, Costa Rica, Uruguay, and Venezuela, not only against government entities as it was in early stages. As an example, it was noted in one of the articles that I read that the Amparo was expanded to allow claims against private manufacturers for failing to provide complete product information or warnings, and so was the case with environmental damages that occurred by companies.
To summarize, the implementation of human rights in the context of corporations transparently broadcasts the message that educationally and effectively structures the place in the importance of human rights in our world. This trend is justified by legal and international justifications, which trigger the possible emerging of corporate judiciary legal duty to consider human rights.
As I mentioned earlier, the most influencing document is the 2011 UN Guiding Principles on Business and Human Rights. As said by Professor John Ruggie… you probably know the Global Compact initiative, so this one is a modern one, is [a] more progressive one. So, Professor John Ruggie, and later rectified numerous international bodies, providing states with the necessary tools to address human rights issues regarding corporations.
By default, Ruggie’s motive was not to create a binding multilateral treaty, rather a non-binding international call for each state individually to protect human rights caused by corporations and to adapt a national action plan to address their specific human rights issues.
The United Nations Guiding Principles on Business and Human Rights provides an international legal platform for the business sector to implement the requirement of respecting human rights, and I think that CUMIPAZ can help with this positive effort.
The guidelines are founded on three pillars. First: State’s duty to protect individuals against human rights abuses by corporation; second: Business’ responsibility to respect human rights by imbedding due diligence in their process to avoid infringing the rights of others and to address adverse impacts that they are involved in; and three: The requirements for parties involved in adverse human rights impacts to facilitate [and] appropriate effective remedies for those affected by business related human rights abuses.
Under the United Nations guidelines, [the] definition of human rights lays those rights contained in the International Bureau of Human Rights and the International Labor (ILO) Organizations Declaration on Fundamental Principles and Rights at Work. And according to United Nations guidelines, companies are required to conduct human rights due diligence in their investment, decision making process to ensure they are not complicit in human rights abuses.
Other legal justifications to implement human rights and business activity exist in many domestic laws, regulation and standards across the world. Such laws should be considered during activities in foreign countries by any multinational corporation in order to prevent any legal consequence.
In addition, as we heard in the previous two talks this morning, there are also business justifications, not only legal ones, to implement human rights by the business sector. Failing to respect human rights will most likely cost money in the longer term, damaging brand value and reputation, and increasing the risk of litigation and non-compliance with the growing body of legislation in this area.
It is also claimed that management of human rights risks is a proxy for management quality. Companies frequently suffer losses as a result of failing to appropriately consider human rights in conducting their business, affecting their share price in the process. Moreover, breaching in human rights may expose companies to financial costs that are related to corporate financial performance.
A meta study that was done by Oxford University and Arabesque Asset Management, showed that 88 percent of the research found that solid environmental, social, and governance practices result in a better operational performance; and 80 percent found that there is a positive influence on stock price performance.
Losses: Many cases are brought against companies worldwide on human rights ground through domestic law on discrimination, privacy, employment rights, or health and safety. Many of those cases end in an expensive settlement.
Fines: By failing to appropriately protect human rights in business, companies risk themselves in being exposed to fines according to domestic laws.
Disruption of operation may be also caused by human rights related issues. For example: in the mining industry, projects have been impeded by protestors or social controversy. These types of disruptions can lead to significant costs for the companies involved, as was the case with Nike child labor, the famous case in the 1990s.
There [is] also reputational damage. A 2009 study done in the United States and the United Kingdom, found that when news items reporting human rights abuses became publicly known, firms experienced significant negative abnormal returns. Some recent examples including the United Express flight 3411 incident, when O’Hare International Airport Aviation security officers forcibly removed [a] passenger from the United Express flight, which caused a significant social response that affected the industry and [was] finally resolved in a lawsuit against United, and later on the parties reached a confidential settlement.
A more positive approach towards [the] implementation of human rights in business might see these cases as opportunities, and not only as duties [involving] sanctions. Some of the benefits that can be caused involve a positive impact upon stakeholder’s relations, including with employees, contractors, trade unions, local communities, non-governmental organizations, local and national governments and others; better opportunities for positive public relationships with society, the press, and other media, a positive impact upon investor confidence and share value, and improving employee morale due to good safety performance.
All these justifications, I think, go hand in hand with my proposal to adapt the direct application of constitutional human rights on corporations, which provide the most effective arrangement that allows the individuals in society to safeguard the human dignity with a direct system of remedies, legal remedies, by utilizing the Constitution, the State’s most fundamental legal document to its end.
The direct application model provides a reminder and incentive for corporations to respect human rights and simplifies the process for individuals to create human rights claims directly against corporations. In other words, there are many justifications [of] why corporations must obey human rights, especially today, protect them and implement them within its business strategy.
It is clear today that any chief executive officer in a successful company that wants to reach high performance, maximize the value of its shares, avoid any disruption of operation, lawsuits or fines, must protect human rights in the corporation activity. And this is not contradicting making profits, [it’s] the other way around; and this is regardless of any moral justification.
The protection of human rights became an integral aspect in business strategy. Those corporations and their senior executives and board members voluntary apply leading practice in identifying and managing human rights issues in their conduct. These companies and executives view doing that as an opportunity rather than a burden, and this is consistent with a strategy and a belief it will lead to a better future to their enterprise, stakeholders, and that of the global business environment.
However, applying constitution human rights directly on corporations is just one proposal that I would like to share with you today. The second deals with the so called “procedural issue,” but one with a very significant potential to improve the implementation of CSR practices by the business sector; and this came from the Israeli experience and the U.S. experience.
My proposal deals with a well-known legal process of class action, which is very common in Israel and the U.S., and less in Latin America, although proposals for convergence towards the American class actions model of group litigations seem to be gaining popularity around this region as well.
My claim is that class actions help to increase the business sector’s social and public responsibility, and to enforce proper norms on corporations. In the economic and social world around us, where in depth social, economic, and legal changes are emerging, and corruption is unfortunately evident, everywhere, class action can serve as one of the strongest and most significant legal instrument that gives power to the people, distinct from the classical trial that brings only two sides together.
Class actions enable citizens to take personal responsibility, to cooperate and collectivize their enormous potential by encouraging them to protect their rights, including Constitutional human rights, and to protect themselves mainly against corporation misconduct and against corruption without resulting to regulators.
In essence, class action allows the aggregation of [a] large number of individuals’ similar claims arising from identical factual circumstances, or which [are] connected through a legal situation common to a group, class, or category of individuals. This is mainly the case with consumer’s rights, employee’s rights, environmental, and human rights issues. These are the classical CSR issues.
Class actions, therefore, not only facilitate access to the court but also their main role is to help [in] substantiating social and public values in the business sector by deterring tools for corporations. In this regard, it is important to remember that most defendants in class actions today are corporations. This is according to an empirical study carried out by the Research Department of the Israeli Judiciary, which found that until 2012, 72 percent of class action motions examined were filed against corporations. And this creates a big legal risk for corporations.
As said before, class action has become a significant instrument of private enforcement in the areas of consumer reason, banking, insurance, and labor. However, it seems that in the modern corporate era it would be correct to go back and harness the tool of class action also for more social and public issues against business corporations, whose relationship to human rights and social issues is often no less significant than that of the government.
As I said before, I read that many Latin American countries still do not allow class actions but more and more stakeholders, scholars, policy makers, [and] consumer protection advocates are discussing it these days; so it might be a good thing to be familiar with.
Saying that, I know that it’s not accurate to talk about the whole region of Latin America as a unit, and it’s obviously oversimplifying a complex reality connected to 20 different countries: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Uruguay and Venezuela; each with its own official legal system, political institutions and distinctive social and economic reality. Still, your countries belong to the same legal tradition and share the Constitutional read of protection known as Amparo, which is an exception to the individual litigation, as I just said before, Article 265 to the Guatemalan Constitution.
So, in recent years, class actions [are] a means to resolve claims for damages in mas claims, mainly against corporations, have become the main topic of law reform in many civil law countries, including Latin America. In this respect, we can refer to the Brazilian model, which created the Public Civil Action Law in 1985, though it’s not exactly the same as the class action in the United States.
According to [the] United States chamber report from 2014, changes in Brazil’s civil justice system, the largest nation in South America, might influence similar changes in neighboring countries. Today, class actions for damages enacted also in Chile, Colombia, in Mexico, and [I’ve] understood that de facto class actions exists or [are] under enactment process, also in Argentina, Costa Rica, Ecuador, and Mexico. Still, Latin American countries are far behind other regions of the world with respect to the implementation of effective collective arms.
However, according to an article that I just read before I came here and I cite: More than a dozen Latin American constitutions contain at least one provision that mentions consumer protection including compensation of harms against defective products, faulty services, poor quality control, deceiving publicity and monopolistic practices. This is for instance Article 119 and 130 to the Guatemalan Constitution, which can also be found in Argentina, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Honduras, Nicaragua, Panama, Paraguay, Peru, and Venezuela.
In addition, and as claimed in some other articles and reports, the tendency in Latin America seems also to be in favor in expanding the procedure, protection of the individuals and collective rights through the establishment of different forms of collective litigation including class section.
The legal read of Amparo, which is again the legal term, and other similar devices, year Top Ten Declaratory and Injunctive Relief, continue to serve as a palliative until the official laws catch up with the needs to those affected with large scaled accidents and other harms including those arising out of the defective products and faulty services.
The legal Amparo Collective Law is perhaps the closest resemblance, though its results [are] declaratory, not monetary judgement, that most Latin American countries have to the notion of representative litigation.
If you would like to learn from the Israel experience, the number of class section motions in Israel today is enormous, with over 1,500 such applications in just the past year. Imagine to yourself, this is almost 5 per day, class sections against corporations.
In Israel we have a relatively young class action law, which was enacted 11 years ago in 2006. The Israeli class action law brought about a dramatic change in class actions in Israel. The number of class action motions is rising dramatically; for example: While in 2007 there were only 28 applications submitted for class action suits in Israel, ten years later, in the past year, there were 1,500 such applications.
Section 1 of the Israeli Law indicates that class actions are intended to promote four main objectives:
To exercise the right of access to the court, including for members of the population who find it difficult to go to court as individuals;
To enforce the law and deter its violation;
To provide the appropriate relief to victims of breach of the law; and
As an efficient ** and comprehensive management of claims.
And remember, most of the class actions were filed against corporations and their claims were divided among the following issues: 41% were consumer related, 12% insurance, 3% banking, 5% antitrust, 6% environment, 1% discrimination, 1% workplace discrimination, 11% equality for people with disabilities, 10% labor law, and 10% reimbursement of fines charged illegally by authorities, which is not connected to corporations.
Moreover, in Israel we also have, in addition to the very developed class action mechanism, a class action fund, which operates under the Ministry of Justice and is intended to finance class actions which hold public and social importance regarding the submission and clarification. The Fund (that I serve as a chair) is almost [of] international precedence and, therefore, can also be seen as a kind of a laboratory for some of the normative issues regarding class actions that can be used in other legal systems.
Since the Class Action Fund was set up under the Ministry of Justice, the State is involved, but only indirectly, by creating a stronger force for individuals to deal with large corporations. This is the State’s softer way, through its budget, to empower and encourage individuals to enforce their own rights. Thus, the State is contributing to social change by corporations but not through direct regulatory intervention, which is compulsory and cumbersome
The following are some examples of requests to the Fund, for which financing was approved and connected to the CSR and this is a good example of how the legal meets the business consideration.
First: A claim of discrimination against women filed against the radio station that refuses to allow women on the air because of religious concerns; second: Assertion that a large food chain does not provide food shipments to Arab communities and therefore discriminates against them; third: A similar claim with respect to banks that don’t open branches in Arab communities; fourth: A claim, also known worldwide, against pollution and deception on the part of [the] Volkswagen company; fifth: A claim in which the plaintiff alleges serious air pollution in the central bus station in Jerusalem affecting tens of thousands of people daily; sixth: A claim of environmental damage caused by the spilled oil, millions of gallons of crude oil, from an oil pipeline into public areas and nature reserves; seventh: An action against one of the health funds that stopped in mid therapy, the use of cholesterol lowering drug and required the insured people to use an alternative generic drug without prior warning and without medical considerations; eight: An action against one of the cellular companies arguing that it does not offer devices for people with disabilities; ninth: A plaintiff’s claim that nursing companies don't pay their caregivers for time spent in transitions from one patient to another; and tenth: A plaintiff who alleges that one of the natural gas partnerships in Israel, declared as a monopoly by the antitrust commissioner, charges an excessive and unfair rate for gas.
However, this does not end the importance of the class action mechanisms. In recent years, the call has gone out to reduce regulatory and State intervention against corporate misbehavior. It seems to me that in this context as well, there is nothing like the tool of class action to strengthen the power of individuals and accordingly this tool reduces the need for the regulators paternalistic intervention, which is usually broad, sweeping, and not focused enough.
In this regard, I would like to refer you to an Israeli Supreme Court decision from last year, which approved hearing one of the largest class actions in Israel so far. The class action was filed against Israeli monopolistic electricity company asking for consumer’s refund of 10 billion dollars, allegedly caused by corruption. This opinion emphasizes the importance of private enforcement against corruption besides the criminal track and the intensive regulatory supervision.
To summarize, class actions as a mass, civil, and public litigation would improve access to justice and improve the CSR implementation that can change the behavior of the business sector. Class actions can supply remedy to private people who suffer direct and indirect losses from corporations and will deter and discourage the business sector. By that class actions promote good public policy.
The class action procedure is also consistent with the United Nations High Commissioner for Human Rights’ mission, which launched the Accountability and Remedy Project in November, 2014, in on order to contribute to a more effective implementation of the Guiding Principles on Business and Human Rights that I showed before.
This project focused on substantial legal and practical issues that have an impact on the effectiveness of judicial mechanisms in achieving corporate accountability and access to justice in cases of business related human rights abuses. By the way, historically, class action created one of the most influential supreme court ruling affecting U.S. human rights law in the 1954 well-known Brown v. Board of Education, which is a very famous constitutional court opinion in the United States. As you probably know this judgment cancelled the discriminatory “separate but equal” policy in the United States public education system, and this important human rights litigation started as a class action.
So in concluding my discussion, I hope that I was successful in convincing you that the modern corporations and their senior executives have growing obligations to be involved and respect human rights.
As the United Nations guidelines declare, this is true with regard to all States and to all business enterprises, both transnationals and others, regardless of their size, sector, location, ownership and structure. No doubt that corporate social responsibility in general and the responsibility of corporations to respect human rights, in particular, are crucial especially today when the social, moral, business, and legal approaches to human rights are maturing quickly.
When our daily life is influenced by corporations there are no better words to describe it than those that were perfectly formulated by Eleanor Roosevelt in a 1958 address to the United Nations and I cite:
“Where, after all, do universal human rights begin? In small places, close to home – so close and so small that they cannot be seen on any maps of the world. Yet, they are the world of the individual person; (...) Unless these rights have meaning there, they have little meaning anywhere.”
I would like to end with a special thanks to the Global Embassy of Activists for Peace for inviting me and creating this forum. No doubt that CUMIPAZ is a supreme mission. I salute and I’m highly impressed and appreciative of its effectiveness to promote CSR and business human rights. This is a crucial component in achieving the goal of creating an international space of dialogue and integration for the development and for sustaining the happiness of the human being and nations.
And of course thank you very much to all of you for spending part of your day with me and discussing this important key issues.
Thank you very much.