Multinational Enterprises in Indonesia
Access to Justice for Victims in Human Rights and Environmental Violations in the Extractive Industry: The Case of Indonesia
1. Introduction
Multinational Enterprises (MNEs) play important rule in developing extractive industry sector in Indonesia. The sector has contributed for about 30% to the national revenue MNEs may accelerate economic development and fulfil the human rights in the host country. On the other hand, MNEs can also involved in and be liable for human rights abuses. The community may be posed with risks in case of the MNEs in their operation are failing to comply with safety and environmental standards, neglect or compromise the right of people to health, life and adequate standard of living. Some MNEs also may acquire dictatorial regime services for their business interest and security purpose. As a consequence, this leads to allegation of human rights violation against civilians in the host state.
It is argued that Indonesia has been deprived by its political system that is regarded as a reformist autocracy, where the systems lack of transparency and democratic foundation. As a consequence the government is not reliable and accountable to manage the extractive industry sector and to address problems arising from the sector. In the case of Exxon Mobil in Aceh, Indonesian security forces committed human rights abuses. The company hired members of the Indonesian military as security forces in order to protect natural gas extraction facility, pipeline and other infrastructures in which Exxon Mobil was operating. In North Sulawesi, the operation of United States (US) based gold mine company, Newmont Minahasa Raya (NMR), accused for polluting the environment which suffered the villagers. Based on these two cases, since there are social and environmental damages, it is important to consider effective remedy mechanism for the victims.
Adopting an analytical method, the paper aims to discuss access to justice for victims in human rights and environmental violations in the extractive industry by focusing on the case of Indonesia.
Section two of the paper will discuss human rights and environmental violations identified through a study cases of ExxonMobil and Newmont Minahasa Raya. Section three of the paper will examine access to justice, possible mechanisms at national and international level (procedure in host and home countries) for the victims but limited to formal judicial mechanisms which cover civil claims and criminal charge. Section four will conclude the study and provide some recommendations
2. The Human Rights and Environmental Violations Condition, Study Case of Exxon Mobil and Newmont Minahasa Raya
This section will discuss the human rights violations in Exxon Mobil operation and environmental pollution caused by Newmont Minahasa Raya which violated human rights in terms of right to healthy environment, adequate life and health.
2.1. Does Vs Exxon Mobil Case
In 1971, Mobil Oil found one of the world’s largest gas deposits in Arun, North Aceh. Thus Indonesian Government granted exclusive right for the company to exploit the deposit by establishing PT Arun, a join venture which the shares own by 35% of Mobil Oil Indonesia, 55% of Pertamina (Indonesian stated owned company), and 10% of Japanese Liquid Natural Gas (LNG)-Indonesian Company. In 1999, Mobil Oil and Exxon merged into ExxonMobil. ExxonMobil plays significant role in PT Arun for the development of LNG. Despite of great benefit offers from the resource, there has been disappointment with the Indonesian Government for so many years since the Aceh Province had little attention. The benefit sharing between ExxonMobil and Indonesian Government was 30 %: 70%. Nevertheless, from 70% it was only 5% that received by Aceh Province, most of the benefit obtained by the central government. The boom of LNG and the existence of PT Arun in Aceh without the support of good and accountable governance attracted severe corruption.
The Product Sharing Contract (PSC) between ExxonMobil and Pertamina, provides military security protection based on ExxonMobil discretion.Separatist movement in Aceh that is believed as the expression of disenchantment keeps growing. In order to increase the security, up to 2000 the Exxon Mobil has paid more than USD 500.000 per month to Indonesian National Armed Forces (TNI). Unit 113 of TNI specifically has assigned to protect Arun field operation.
During the operation of the project, there have been grave human rights violations, such as assault, wrongful death and battery. On 11 June 2001, ExxonMobil and PT Arun LNG Company sued in US District Court (District of Columbia) by the victims.The plaintiffs seek punitive damages, compensation, equitable relief, attorneys' fees, and an injunction prohibiting the defendants from conducting similar action in the future.
Based on the case above, some international covenants that has been violated among other are:
Universal Declaration of Human Rights, Article 3, Right to life, liberty, and security of person, Article 5, No one shall be subjected to torture or to cruel inhuman or degrading treatment or punishment, Article 9, Right against arbitrary arrest, detention or exile.
Convention on Elimination and Discrimination against Women (UN General Assembly Resolution) for the act of torturing woman and sexual violence against plaintiff Jane Doe I.
Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment for the act of torture, extrajudicial killing, wrongful death against the husband of plaintiffs Jane Does II, III, and IV
Declaration on the Protection of All Persons from Being Subjected to Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment for the act of battery, assault, intentional infliction of emotional distress, negligence infliction of emotional distress against plaintiffs Jane Doe I, II, John Does I, II, III, IV, V, VI, VII
International Covenant on Civil and Political Rights, for the act of, arbitrary arrest, false imprisonment and detention against John Does I, II, III, IV, V, VI and VI
United States is the home state of ExxonMobil. Thus violations against US regulations in which the country is the home state for ExxonMobil are:
.
Tort Act Claim Act (ATCA) 28 USC §1350 for crime against humanity such as genocide, tortures, sexual violence, and kidnapping against the victims
Torture Victim Protection Act (TVPA) 38 U.S.C. § 1350 for the torture and extrajudicial killing committed by Indonesian military. In this action, ExxonMobil et al, are jointly and severally liable for the act of the co ventures in the project that are violation of the law of nations, customary international law, agreements and international law.
Common law of the District of Columbia for the act of wrongful death, assault, battery, kidnapping, false imprisonment, negligence, reckless, intentional of emotional distress, negligent and recklessness.
Indonesia laws that are violated by the actions are:
Indonesian Constitution 1945, Article 28 A for the right to life, Article 28D (1) for protection and guarantee before a just law and equal treatment before the law, Article 28 G (1) the right to protection for individual, family, honour, dignity, property, and the right to feel secure against and receive protection from the threat, 28 G(2) the right to be free from torture or inhumane and degrading treatment,
Indonesian criminal code (KUHP)
Law No. 39 of 1999 on Human Rights, Article 4 the right to life, the right to not to be tortured, the right to freedom of the individual, to freedom of thought and conscience, the right not to be enslaved, the right to be acknowledged as an individual before the law, and the right not to be prosecuted retroactively under the law are human rights that cannot be diminished under any circumstances whatsoever.
2.2. Newmont Minahasa Raya Case
Newmont Minahasa Raya (NMR) operated in North Sulawesi Province from 1996 to 2004. It is 80% owned by the Newmont Mining Corporation based in United States (US). The company applied Submarine Tailing Disposal (STD), a method which is controversial for its safety and environmental impact. Further, with STD method, from 1996 to 2004, each day, the company disposed 2000 tons of tailings which contain Mercury (Hg), Iron (Fe), Manganese (Mg), Arsenic (As), Cyanide (CN), and other metals into Buyat Bay. Such actions was alleged for significant decrease for the amount of fish. It is also reported that fish with tumours are found around location of where the tailings dumped. The local community which are depending on the fishery in the bay were suffering form the great losses. There is also it was reported that Besides of tailings, from 1997 to 2001 the company released 17 tons of mercury to the air.
Local community life in Buyat village is devastated. It is reported that there were various health complaints with the symptoms of arsenic or mercury poisoning. Since the environmental condition in Buyat village is polluted, the local community decided to move from the Buyat village to Duminanga village. The pressures to the company and government got stronger after widespread coverage of media. Finally, in 2005, a year after the company closed the mine; Indonesian Government brought the case to the local court. NMR is alleged for causing pollution in Buyat.
Based on the case above International conventions and standards have been violated among others are:
Covenant on Economic Social and Cultural Rights Article 11 and Article 12 since the pollution caused the people living in not adequate standard of living also not achieve the highest attainable standard of physical and mental health.
Rio Principles Article 15 on Precautionary Principle since the mining practices of NMR applying submarine tailing disposal against
Rio Principles on Sustainable Development, since the company is alleged for causing pollution in Buyat
National human rights standard that have been violated are:
Indonesian Constitution 1945, Article 28 A for the right to life, Article 28H (1) the right to live in physical and spiritual prosperity, to have a home and to enjoy a good and healthy environment, and shall have the right to obtain medical care.
Law No. 39 of 1999 on Human Rights, Article 9 paragraph (3) everyone has the right to a good and healthy environment.
Environmental Management Act No. 23 of 1997, Article 5 everyone has equal rights to a good and healthy environment.
Law No. 23 of 1992 on Health
The paper argues that in developing countries such as Indonesia, the scale and frequency of human rights violation committed by corporations may become greater because the absence of effective system to impose legal accountability. The victims in the two cases above face challenging issues of access to justice and obstacles for their claims to be heard, also fair decision to obtain sufficient and prompt compensation. Thus based on the study cases, possible access to justice for the victims to seek remedy trough formal justice system in host country (national level) and home country (international level) which covers civil claims and criminal charge will be discuss in section 3.
3. Defining Access to Justice for the Human Rights Violation Victims in Extractive Industry
According to World Bank, access to justice refers to “access by the people to fair, accountable and effective mechanism in order to protect their rights, to control abuse of power, and to settle the disputes. This involves the people ability in seeking and attaining remedy through informal and formal justice system, also the ability in seeking and exercising their influence on law making and enforcement process and institutions”
It is argued that the state has main responsibilities to protect, to respect the human rights, and to remedy for corporate-related abuse. As a consequence, states are expected to establish effective complaints mechanism, to minimise the potential negative effects of the extractive companies operation to the community, to provide access remedial mechanism and to ensure that effective remedial processes for abuses by private companies.
3.1. Access to Justice in Host State for Local Victims through Judicial Mechanism
Indonesia is based on civil law system and international law in order to be in effect has to be ratified. Further, after the ratification, the government should formulate the implementing regulation. The country has ratified a number of key human rights instruments such as, Convention on Elimination and Discrimination against Women ratified in 1984, Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment ratified in 1998, Covenant on Economic Social and Cultural Rights ratified in 2005, International Covenant on Civil and Political Rights ratified in 2005. In practical, international law is not a prospective source authority for domestic claims. Furthermore, Indonesian court has been reluctant to rely on international law in the absence of implementing legislation. Thus in Indonesia, in general, the court refers to the existing domestic law and regulations.
3.1.1. Criminal Charge
Criminal charge for the case of Buyat pollution caused by NMR operation has been brought to local court of Manado in 2004. Public prosecutor indictments referred to the violation of Environmental Management Act (EMA) No. 23 of 1997. Pursuant to the EMA, NMR has alleged for criminal action since its operation has created pollution and/or environmental damage, provides that endanger public health or the life of the community Based on EMA, legal liability can be demanded from the corporation, corporation leadership or parties giving instructions. Thus, in Buyat Pollution case, the Defendant I is the NMR as a corporation, and Defendant II is Richard Bruce Ness, the executive of NMR. The Defendant I is charged for Indonesian Rupiah 1 billion, while the Defendant II is charged for Indonesian Rupiah 500 million and 3 years jail. The case has not been settled yet as it still waiting for the decision of the Supreme Court.
3.1.2. Civil Claims
For environmental case, there are several ways for civil claims under EMA No. 23 of 1997 such as:
Individual claims and class action where the community file for collective claim
Environmental organisation standing (non governmental organisation legal standing) to bring legal action. Under this right, the organisation’s are able to demand only limited items such as particular action from the defendant and expenses during legal process.
Mechanism for government, in this case Ministry of Environment is able to file a claim on behalf of the public interest in terms of environmental pollution which caused damage/suffer to the community This mechanism is similar to the concept parens patriae in common law doctrine in which can create the right for standing to sue on behalf of their people.
In case of Buyat pollution, the victims are not yet using both of individual claim and class action due to insufficient legal assistance for the community. However, in 2005, WALHI, Indonesian environmental NGO, use its legal standing to sue the NMR. In its claim, WALHI demands NMR to recover Buyat environment, to conduct 25 years environmental monitoring to observe the impact of tailing disposal in Buyat marine ecosystem and to express their apologise for the pollution in some selected mass media. The case is not settled yet since it still waiting from the high court.
In 2005, the Ministry of Environment on behalf of the victims filed a U$133 million civil suit against NMR as Defendant I and Richard Bruce Ness as Defendant II for the environmental damage in Buyat. The government requested US$117.68 million for damages and a further Indonesian Rupiahs of. 150 billion for non-material damages. However, this suit is ended due to out of court settlement in February 2006. NMR and the Indonesian Government announced they had signed a Goodwill Agreement The Company pays US$30 million to the government. The Goodwill Agreement has two key elements: (1) Extending and establish new community development program and (2) Conducting independent scientific monitoring program for 10 years, in order to assure the safety and healthy environment to the communities in the long term in which NMR mining operations located. Furthermore, there will be a panel in charge for the monitoring program that would announce its result annually. However, since the settlement, public do not well informed for the company’s payment and the monitoring program.
3.1.3.. Existing Problems in Domestic Procedure
It is pointed by the Special Representative of the Secretary-General of the United Nations (‘SRSG’) that some governments at the domestic level may be incapable to take effective measures on their own. The economic power of MNEs, home state investment interest and foreign investment pressures are often prevent the development and the operation of effective system at the domestic level in order to seek the corporate accountability. The paper argues that for Does v ExxonMobil case, domestic procedure may not the best option for the victims to seek remedy since the Indonesian court may not provide favorable judgment due to some reasons as follows:
The involvement of military institutions. In a case where military forces of the host country provides security for MNE and both the state and the MNE are involved in the human rights abuse, it may be ineffective and harmful for the victims to bring claims or to seek prosecution of the case in domestic court. The existence of military in Aceh is based on the Production Sharing Contract. Further, if the victims complain to military authorities, they may get certain retribution from these authorities. Indonesia had underdeveloped legal instruments as before 2007 when the case occurred; the country had no legal protection for witnesses and victims To add this difficulty, under Military Court Law, Indonesian military personnel who commit any act, including crimes of a non military nature is subject to be prosecuted under military court jurisdiction.Thus, it is argued that human right abuses committed by Indonesian military personnel would be brought to the internal military court. In case of ExxonMobil such internal process may result unjust judgment for the victims since the human rights abuse in Aceh is involving military as an institution.
The Indonesian Government protects the ExxonMobil from being held accountable. The reason for protecting foreign investment in Indonesia may cause the ineffective domestic procedure for victims. Although it was recognized that there were human rights abuses in Aceh, there was no political will and action from Indonesian Government to protect the victim’s rights. As the Does v Exxon Mobil case settled in US District Court based on ATCA and PTVA, the Indonesian Government expressed their reluctantly for such trial. Indonesian Ambassador in US stated that the settlement in US court will placate Indonesian Government serious effort to guarantee the safety of foreign investment, including those of US investment that will significantly affect Indonesia’s struggle to secure economic recovery, an endeavour which is supported by US.
Ineffective National Human rights Commission. Indonesian National Human Right Commission can only provide for investigation, research and recommendation to government institution, which is not effective mechanism for victims to seek for remedy.
The selection of the court for Buyat Pollution caused by NMR and Doe v ExxonMobil is based on forum shopping, where the litigants in order to get their legal case heard thought in which court that is most likely provide a favorable judgment. The case of ExxonMobil is settled in US District of Columbia by applying ATCA and PTVA. On the other hand, for Buyat Pollution case it is domestically settled as it is consider for the existence of favorable circumstances e.g. political will for the case to be domestically settled. The judicial mechanism for Buyat Bay pollution victims in home state by applying ATCA and PTVA has not yet been taken. However the possibility of taking that procedure will be discuss in section 3.2.
3.2 .Access to Justice in Home State for Non Nationals through Judicial Mechanism
The case of Does v ExxonMobil and Buyat Pollution resulted from NMR operation are involving US based corporation. Thus, possible judicial mechanisms provided by home state regulations which cover civil claims and criminal charge will be discussed in the following:
3.2.1. Civil Claims
In US, Alien Tort Claim Act and Torture Victim Protection Act provide legal forum from human rights victims. Alien Tort Claim Act (ATCA) grants jurisdiction on the US District Court to hear civil action by aliens for torts committed in violation of the law of nations or treaty of the US..In order to file an ATCA claim, plaintiff must affirm that 1) They are aliens (foreigners), 2) Suing for a tort, (3) The tort violates the treaty of US or the law of nations. Law of nations defined by ATCA as “specific, universal, and obligatory”. For the purposes of ATCA, it has been argued by legal practitioners that violating customary international law may not be considered as a violation of international law. As a consequence, certain international environmental principles, such as the sustainable development and precautionary principle are demonstrating norms that are accepted by international law community but not under ATCA as part of law of nations. Under ATCA, private and state actor may be sued for violations of jus cogens norm. However, it is solely the state actor that may be legally responsible for violations of the law of nations. In general, the private actors are not able to violate international law since most of international laws create duties and obligations for state not private individuals/corporations. In this case, corporations may be sued based on theories of liability: a) a private or a state entity for jus cogens violations, or b) a state actor if the alleged actions violate the law of nations but has not appeared to the status of a jus cogens violation.
TVPA aims to reduce some of the jurisdictional obstacles faced by foreign human rights victims. TVPA grant foreign victims caused by official torture and extrajudicial killings with a private right of action in US court. Thus, based on by TVPA, the defendant should have some contacts with a particular state in US. The act mandates the courts to apply the provision of the United Nation (UN) charter and other international human rights agreements in deciding the merits of TVPA action. The US Congress considered that UN charter as treaty and the Universal Declaration of Human Right as customary law are binding upon US..
The case of ExxonMobil has brought to the court of District Columbia. It has been decided that . plaintiffs have proved sufficient evidence for their allegations on the jus cogens norm abuse. It is argued ExxonMobil should be liable based on ATCA and TVPA since the company by providing logistical support to the Indonesian military in Aceh, involved in violation of jus cogens norm and the law of nations committed by Indonesian military.
The paper argues that, in case of NMR, domestic mechanism is considered better option for victims than judicial mechanism in home state by applying ATCA and PTVA. This argument based on:
Buyat Bay Pollution case might be similar to Bano v. Union Carbide Corp, decided in November, 2001. The court dismissed the environmental claims under the ATCA based on the theory that the plaintiff’s claims were considered to be fully settled and litigated in India. Thus, the case did not reach the issue whether or not the claims failed to allege a violation of norms required by ATCA".
So far, although there were several plaintiffs have made claimed based on ATCA for violation of international environmental law, such cases have not been fully heard on the merits level. ATCA jurisdiction is over crime against humanity whereas environmental pollution is not considered as gross human rights violation. NMR violates international environmental principles where referring to the case of Beneal v Freeport, the court considered that the violation of international environmental principles is not being considered as torts although international community acknowledge such principles for their binding status and their content. In case of Beneal v Freeport, the court also considered that the international environmental principles apply to states, not private corporation. Since the principles solely bind states, it is only state actors that are able to violate them. Thus based on this view, NMR may not be found as a state actor. Furthermore, NMR environmental practices may reflect corporate decision rather than state practices. As a consequence may not be held its responsibility based on ATCA.
TVPA is relevant for the case which involves torture and extrajudicial killings. TVPA only holds individual liable. Referring to the case of Beneal v Freeport the court interprets individual as natural person. Thus, based on this view, NMR as a corporation is not an individual for the purpose of TVPA. Buyat pollution that involves NMR focuses on environmental pollution which violate the right to life and health of the victims not specifically relates to the act of torture and extrajudicial killing as it is regulated under TVPA.
3.2.2. Criminal Charge
Criminal charge would be made based on Foreign Corrupt Practice Act (FCPA). FCPA imposes civil and potentially criminal liability for improper payment made by US Corporation to foreign government officials such as payment or offering a value object directly or indirectly, with knowledge, with aims to influence official act, omission or to secure inappropriate advantage.
Department of Justice is responsible for criminal and civil enforcement of bribery and some criminal enforcement of accounting provision. In addition, Security and exchange commission responsible for criminal and civil enforcement of accounting, civil injective authority, fines and disgorgement of profits. In case of NMR, there has no been investigation for the NMR involvement in bribery practices yet. However, there is a loophole in FPCA since it has exemptions for the corruption act: Firstly, payment is allowed to be made in order to facilitate performance of routine government action. Secondly, a person or firm alleged for the violation of FCPA may defence that assert as a defence due to lawful payment under the written laws of the foreign country. In the case of Does v Exxon Mobil, there are difficulties in enforcing FPCA since the company may argue that the payment for Indonesian Military is a form to facilitate routine government action for security. Besides, the payment is based on PSC between Government of Indonesian and the company, which is lawful.
3.2.3. Existing Problems at the International Procedure
The paper argues that there are some obstacles for the victims of human rights and environmental abuses at the international procedure, such as
a. Long time procedure
b. The limitation of ATCA, PTVA and FCPA. As aforementioned above that ATCA jurisdiction is only for the violation of grave human rights violation (jus cogens norm violation) committed by corporation or state actor or the violation of law of nations by state actor. PTVA jurisdiction is specific to torture and judicial killing. Furthermore corporation is not subject of PTVA. In addition FCPA has weakness due to its exemption for allowing payment to foreign government to assist routine government action and such payment is considered lawful based on written law.
c. The possibility of the home government intervention. In the case of Does v Exxon Mobil, US Government expressed their concern in court for the legal suit. They stated that the lawsuit could interrupt the on going US endeavor to secure their cooperation with Indonesia in fighting against international terrorist activity. Also this claim could prejudice the Indonesian Government and Indonesian business against US firms contracts in extractive and other industries.
Conclusion and Recommendation
The paper argues that effective and prompt access to justice for the victims of human rights and environmental violation is necessary whereas it is the state’s obligation to provide the such mechanism. In the case of Indonesia, there are some improvements required in order to make the access to justice effective such as:
Improvement for the domestic law and regulations such as enacting satisfactory environmental standards for MNE’s operation, revising military law so that military members may able to be prosecuted in public court,
Improvement for domestic legal system, transparency and judiciary independency, capacity building for judges, police and prosecutor in order to be more aware for human rights and environmental issue and able to handle such cases in efficient and in a prompt time
Strengthening the position of National Human Rights Commission so that it can influence and assist the victims to obtain remedy effectively
Capacity building for civil society to be more acknowledged for the human rights and environmental violation issues and able to litigate the abuses.
On the other hand, for international procedure/at the home country level, there are some improvements that may be encouraged:
It is importance to exercise the ATCA jurisdiction so that the international environmental principles violation is possible to be considered as the violation of the law of nations, or environmental violations that impact to human rights e.g. right to life is equal to the grave human right violations.
Reconsider the exemptions of FCPA so that any payment made for foreign government which may result wrongdoing actions e.g. human rights abuses should be prohibited.
Strengthening the role of civil society in order to advocate any human rights and environmental abuses committed by state actor and MNEs.
We provide a professional essay writing service that thousands of our customers use as an effective way of improving their grades, improving their research and saving them lots of time.
