The situation of the Luango River case involves a dispute between the Republic of Ndebele and the Kingdom of Shauna over the transboundary water supply of the Luango River. The Republic of Nbdele has launched the creation of a major bauxite mining and processing industry. To provide energy for this industry, Ndebele has hired Dutch corporation Bello Nedam to construct a hydro-electric dam.
Across the two countries lives the Ido minority indigenous population, who are protesting against the continuation of construction of this dam as a research conducted on the matter proved that the dam will impede their subsistence agriculture by reducing the water flow of the river. Nevertheless, the government of Ndebele has decided to continue with the construction of the dam, thereby fostering increased discontentment within the Ido and the Shaunian population, who have decided to present the case before the Maastricht Panel of Arbitration.
For the scope of this paper, the question of Bello Nedam’s liability in this situation will be solely discussed. This paper will argue that Bello Nedam is not to be held liable for the alleged violation involved in the construction of the dam. The role that Bello Nedam plays in this present situation can otherwise be seen as a question of legal personality of Multinational Enterprises. This question has been highly controversial, as two models of international law exist today.
The classic model argues that only states are awarded legal personality, as recognition is the only mechanism to obtain international rights through, inter alia, customary law derived from membership of the United Nations1. The modern international law model is argued by scholars such as Wolfgang Friedman, who suggests to include private corporations as participants of international law due to their increasing impact in this evolution of globalization2. Nevertheless, the modern international law model has not evolved to such an extent that it has gained legal effect.
Thus, legal personality is exclusively restricted to the states Shauna and Ndebele, who are obliged to implement international conventions into their domestic law once they have ratified it3. This statement is explicitly articulated in the International Labor Organization Convention 169‘s “Question and Answers for IFC clients”, when it states: “ The ILO Convention 169 is directed at governments, not the private sector… ”. It is also of direct relevance to this case since it elaborates on indigenous people’s rights, and has been ratified by both states.
Its most important article for the scope of this case is article 14(1), which speaks of the recognized rights of ownership and possession that the indigenous people conserve over the lands that they traditionally occupy. Furthermore, this article emphasizes on the important right that the indigenous people conserve use over lands that are not exclusively occupied by them, but to which they have traditionally had access for their subsistence and traditional activities4.
Article 18 should also be invoked as it speaks of the penalties applied by the law on people conducting unauthorized intrusion upon or use of the lands of the indigenous people concerned, further articulating that it is the government’s duty to prevent such offenses5. Since the Republic of Ndebele has ratified the International Labor Organization Convention 169, it is under the obligation of article 336 to implement its provisions in its domestic law.
This leads to two possible outcomes which could explain the present situation: either Ndebele has not yet implemented the convention in its domestic law, or it is breaching its own municipal laws. The convention states that implementation must be effected within the “twelve months after the date on which the ratifications (… ) have been registered with the Director-General”, it appears that the Ndebele Republic had signed the convention long before the twelve-month span.
Therefore, a clear breach of International law is present on the behalf of the Ndebele state liability. The ILO Convention 169 explicitly states numerous times that it is mainly directed at governments, and not at the private sector; its impact on the private sector should thereby only be indirect through the authority of the national country’s adapted municipal law7. Therefore, Bello Nedam is in no way liable to the convention, it can only be under state authority through Ndebele’s domestic law.
Furthermore, article 14(1) implies that Ndebele should respect the Ido’s right to access the water supply in order to maintain their traditional way of life. If the research conducted the Indigenous People’s Rights Council concludes that the dam will have a significant effect on the Ido’s subsistence agriculture, then building the dam consists of a breach of a legally binding convention, thereby having important consequences for the state in international law.
However, although the actions that the corporation took are a breach of international law, Bello Nedam is not to be held liable for its actions because it was under the instruction of the state. Article 8 of “Convention on the Responsibility of States for International Acts” states that “the conduct of a person or group of persons shall be considered an act of a State under international law if the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct”8.
Having been hired by the state itself to conduct an operation, one can assuringly affirm that the corporation was acting under state instruction. Although the convention has no legally binding authority on this present situation since it was not signed by Ndebele, it can still be argued that its content has become part of customary law. Customary law can hereby be proven through opinio juris as the convention is a General Assembly Resolution.
Since Ndebele is a member of the United Nations, resolutions adopted by the organization are to be considered as customary law on its member states. State practice can be effectively proven through numerous cases such as the Corfu channel case, whereby the International Court of Justice concluded that: “it is the obligation of every state not to allow knowingly its territory to be used for acts contrary to the rights of other states’9.
Therefore article 8 has an immense impact on the present situation, clearly stating that by no means should Bello Nedam hold any responsibility, since it is merely conducting an operation that it was hired and paid to take out. Nevertheless, Bello Nedam in fact conserves some portion of responsibility in this case, as even though it was under the instruction of the state it could have refused to take out operations that violated the rights of an innocent indigenous population. However, this responsibility is not of legal order, rather of a moral one, known under the concept Corporate Social Responsibility.
The notion takes into account the limitations of international law (essentially its ‘state-centerdeness’) and therefore exercises authority under soft law, meaning that corporations conserve no legally binding authority upon them to act in a certain way, their initiatives are solely based upon voluntary nature, mainly through self-regulation by the industry. The incentives of the corporations are essentially based on influence, wanting to maintain accountability to the public and shareholder demand.
Although it may appear to be of little value, CSR in fact plays a very influential role in corporate international law. This concept involves the theory that using soft law will have the potential to create new customary international obligations, thereby holding companies liable under hard law in the near future10. Furthermore, corporations can only be held accountable for acts breaching jus cogens such as‘genocide, rape, torture, summary execution, war crimes and crimes against humanity’11, for corporations have a duty to ensure that Human Rights are upheld in the works they oversee.
Clearly, Luango river case cannot be categorized as jus cogens as none of these previous situations are hereby present. Therefore, it is incorrect to assert that Bello Nedam is by no means restricted by any sort of obligation. In reality, there are two forms of authority that restricts its liberty to act; the Ndebelian domestic legal system’s authority on Bello Nedam’s actions on its territory, and a moral yet equally important factor of Corporate Social Responsibility, discouraging corporations to act in an immoral way for fear to be discredited and lose public demand.
In this present case, one could argue that although Bello Nedam may not be held liable under legal authority, its reputation could be significantly sullied through Corporate Social Responsibility. Now that the notion of liability and responsibility has been effectively solved, this paper will demonstrate the corporation Bello Nedam’s irreproachable conduct throughout the operation. Article 5 of the International Law Association’s “Convention on the law of Non-navigational uses of International Watercourse” states that international watercourses should be used in an equitable and reasonable manner.
It further expresses the need to attain optimal and sustainable utilization of watercourses. This convention has not been signed by the Ndebele Republic, therefore maintains no direct authority over it, but its content essentially involves the general principle of equity, which conserves authority over all states. Indeed, in the 1937 case Diversion of Water from the Meuse, the appointed judge declared that: “Under article 38 of the Statute, if not independently of that article, the Court has some freedom to consider principles of equity as part of international law which it must apply”.
In this present case, Shauna and the Ido conserve no proof that the dam is built in an inequitable manner. The construction of the dam will in effect result in a weaker flow of the watercourse, but this will not affect the actual quantity of water reaching the indigenous population or the neighboring country. Furthermore, the dam is neither causing environmental hazard, nor breaching Environmental law, which underlines the importance of sustainable development 12. Therefore, the only apparent effect on the Idos is that they may have to wait a little longer to obtain the amount of water needed for their subsistence agriculture.
As mentioned in the ILO Convention c 169 side note13, the respect for Indigenous people’s rights is a “fundamental obligation” that all states must respect. Nevertheless, as Principle 8 of the Stockholm Declaration states, “economic and social development is essential for ensuring a favorable living and working environment for man and for creating conditions on earth that are necessary for the improvement of the quality of life”. Therefore, sometimes it is necessary to consider the greater good of an entire population when dealing with the governance of a state.
Being a less economically developed country, the Republic of Ndebele needs to prioritize its economic development at all costs, before being able to promote the rights of its population. Particularly when the ‘damages’ imposed on a population involve a reduced flow of water course, without reducing the water supply. As mentioned in Principle 3 of the Rio Declaration, “the right to development must be fulfilled so as to equitably meet the developmental and environmental needs of the present and future generations”. This notion is unquestionably customary law, as the right to development is a fundamental notion.
These minor effects on certain populations are a price to be paid for the development of a country, as the dam would also provide electric power for irrigation and for the creation of a new agricultural area in Ndebele. It is the Ido’s right if they do not wish to industrialize, but it is important for them to realize that, as principle 3 exclaims, the state has a duty to “equitably fulfill the developmental needs” of its population. Thus, the Ido have an equal right to the irrigation methods than the rest of the Ndebelian population.
With regards to the Kingdom of Shauna, the water supply will likewise be kept constant, there will just be a difference in the water flow. Therefore, if Shauna will not undergo less favorable conditions as a result of the construction of this dam, then the Rio Declaration’s principle 2, which expresses that “states have the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies” should be respected. To conclude it can be said that Bello Nedam cannot be held liable for the Luango River case.
Firstly it does not conserve legal personality as it is a Multinational Enterprise, thereby conserving no personality in the state-centered international law. The ILO Convention c 169 reinforces this statement through explicit elaboration that it is directed essentially at “governments, not the private sector… ”. This paper acknowledges the violations of indigenous people’s rights present in this case, however argues that they are of the Ndebelian state responsibility as the corporation was acting under state instruction.
Corporations such as Bello Nedam are not to be seen of being absolutely free of any obligations. Firstly they are constrained by governments’ domestic legal system (in this case if the domestic authority was not enforced it is the state’s responsibility, not the corporation’s). Indeed, the concept of Corporate Social Responsibility maintains corporations liable under soft law, such as influence of maintained accountability, as opposed to the legally binding nature of hard law. Thereby, in this present case Bello Nedam may be held responsible under the theory of Corporate Social Responsiblity.
The paper then attempted to illustrate the corporation’s irreporchable operation conduct in this situation, where it has respected the principle of equity of the watercourse,and has optimized sustainable use of the river by creating a hydroelectric dam, whcih will not only provide energy for the indusry, but also provide electric power for irrigation for the creation of a new agricultural area in Ndebele. Thereby it can be argued that in fact Bello Nedam playing a fundamental role in the development of a poor African country. The benefaction that the dam will bring to the country will be of tremendous importance.