A steel plant belonging to Formosa Plastics Group (FPG) discharged a combination of toxic chemicals along 193km of coastline in central Vietnam, causing a mass fish death in April and poisoning locals.
Last week, Formosa Ha Tinh, an FPG subsidiary, apologized and admitted responsibility for the disastrous leak. It reached an agreement with the Vietnamese government and pledged to pay US$500 million for compensation and environmental restoration.
The company’s steel plant is one of the largest investments by a foreign company in Vietnam, but FPG has a notorious record of environmental scandals around the world. In 2009, the Ethecon Foundation presented FPG with the Black Planet Award — given for actions deemed to be destructive to the world — for its ruthless approaches to ecology, human rights and legal orders.
The toxic spill raised the concerns of Ethecon and triggered protests in Vietnam and in Taiwan calling for regulations to prevent overseas investment scandals and to ensure greater corporate environmental responsibility.
While multinationals wield growing economic and social power, traditionally only states are legally subject to international law. Therefore, international environmental law cannot directly apply to private enterprises, notwithstanding a wide array of initiatives and “soft” laws that attempt to create voluntary and non-voluntary mechanisms.
However, under existing rules, the home states of multinationals have a responsibility to exert control over their corporations operating abroad and to ensure overseas investments do not act to the detriment of host states. This is based on a general duty in international law that requires states not to cause harm to other states, and international environmental obligations can be incorporated into domestic law by states to regulate their corporations abroad.
Examples of treaty acceptance of such responsibility are readily found, especially in the environmental sphere. The treaties controlling the transport of hazardous waste impose a duty on states to prevent such transport to other jurisdictions. Also, in a case regarding pulp mills on the Uruguay River, the International Court of Justice unequivocally recognized the customary status of the requirement to undertake environmental impact assessments whenever there is a risk of pollution that might have trans-boundary effects.
There is also a trend in North American and European jurisdictions, in which certain countries are exploring measures to enshrine notions of “foreign direct liability” and “corporate accountability” for environmental damages or human rights violations in their regulatory regimes. For instance, the recent cases under both the US’ Alien Tort Statute and tort of negligence in the UK clearly demonstrate that corporations and company directors may be held directly liable in domestic courts for violating customary international norms or for tort of negligence.
The Draft Articles on Responsibility of States for Internationally Wrongful Acts of the International Law Commission continues this trend and regards such solutions as a necessary and exciting step forward for sustainable development.
Taiwan’s government should not avoid its regulatory and management responsibilities, as 25 percent of Formosa Ha Tinh is held by China Steel Corp, a largely state-owned company.
As Taiwan is refocusing on a “new southbound policy” and expanding its exchanges with ASEAN members, it needs to work on the integration of environmental and social considerations into economically focused national corporate and foreign investment law regimes.
Yang Chung-han is a doctoral candidate at the University of Cambridge and a member of the Taipei Bar Association.
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