I. Introduction
On 16 June 2011, the United Nations Human Rights Council (UNHRC) endorsed the Guiding Principles on Business and Human Rights (UNGPs). The date is insightful as it coincides with one of South Africa’s most observed public holidays – 16 June 1976 – also known as the Soweto Uprising. On that day, thousands of students marched against the apartheid government’s forceful introduction of ‘Bantu’ education laws that would have made it compulsory for black students to be taught in Afrikaans, alongside English. In reaction to peaceful protests, heavily armed security forces responded with live ammunition and tear gas. By the end of that day, scores were injured and a 13-year-old student, Hector Pieterson, was tragically killed. Pieterson’s death became the galvanizing catalyst for subsequent demonstrations and uprisings across South Africa and led to an international outcry and condemnation of the apartheid regime.Footnote 1
The date of 16 June marked yet another defining moment of the apartheid regime’s systemic disregard for the human rights of its majority black population. Sixteen years earlier, on 21 March 1960, security forces responded with lethal force against thousands of peaceful black demonstrators who had demonstrated against the shameful pass laws, killing 69 people. The bloodbath caused international outrage and condemnation with the United Nations Security Council (UNSC), issuing a stern resolution rebuking the apartheid regime for the killings.Footnote 2 Known as the Sharpeville Massacre,Footnote 3 the United Nations has since declared it as the International Day for the Elimination of Racial Discrimination.Footnote 4
Amidst this systemic violation and disregard for human rights, Apartheid South Africa was an extremely lucrative business place for transnational corporations. Koenderman notes that in 1967, ‘the average return on British companies’ investments in South Africa was 12.4%, compared with an average for all areas of 8.3%. US companies earned 19.2% on their South African investments and 10.1% on all their foreign investments.’Footnote 5 About a decade later, more than 1800 foreign corporations were invested in South Africa and by the early 1980s that number had grown to between 2000 and 2500.Footnote 6
This view of Apartheid South Africa being a profitable place was shared by several transnational corporations. The chairman of the largest Swiss bank, UBS, in the aftermath of the Sharpeville Massacre, was asked: ‘Is apartheid necessary or desirable?’. His response was: ‘Not really necessary, but definitely desirable’.Footnote 7 Similarly, in 1976, Barclays Bank acquired the largest single purchase of South African Defence Bonds (about one-eighth of all the bonds sold), directly financing the South African Defence Force.Footnote 8 At the payment and handover ceremony, the bank’s then national managing director, Bob Aldworth, stated that ‘the bank regards the subscription as part of its social responsibility not only to the country at a particular stage in its history, but also to our staff members who have been called up’.Footnote 9 In 1984, research conducted by the Centre for Business Studies at the University of Witwatersrand concluded that private corporate support was largely responsible for the success of the apartheid government’s policies.Footnote 10
The incestuous relationship between the apartheid regime and the international business community has long since been identified by the international community as morally and politically odious. In 1968, for instance, the General Assembly condemned South Africa’s trading partners for their political, military and economic collaboration.Footnote 11 This was followed by several resolutions condemning transnational corporations for strengthening the apartheid regime through their continuous collaboration.Footnote 12
By the mid-1980s, South Africa was in the grip of an international voluntary and mandatory sanctions regime. Yet this did not deter German and Swiss arms corporations like Rheinmetal GroupFootnote 13 and Oerlikon-Contraves GroupFootnote 14 from repeatedly violating the UNSC compulsory arms embargo.Footnote 15 The same transnational corporate violations occurred in other sectors such as oil, banking, technology, transportation and mining as they found deceitful ways of circumventing voluntary embargoes. Notwithstanding, the collective impact sanction, sustained international pressure and increasing revolt in South Africa ultimately resulted in the demise of the apartheid regime in the early 1990s, resulting in the establishment of a new democratic order in 1994.Footnote 16
II. Early Attempts at Corporate Accountability
The distinguishing feature of South Africa’s new democratic dispensation is its human rights-centric Constitution,Footnote 17 with an enshrined Bill of Rights, adopted in 1996. Notable is the direct application of the provisions of the Bill of Rights to corporate entities.Footnote 18
Since 1994, South Africa has implemented a range of policy measures and legislative enactments to address the gross socio-economic imbalances caused by apartheid such as black economic empowerment and employment equity legislation.Footnote 19 Corporations have generally resorted to ‘relatively widespread, systematic implementation of corporate social investment (CSI), or philanthropic initiatives primarily in education and health’.Footnote 20 The concern for human rights due diligence, however, varied across different industry sectors.Footnote 21
Attempts at holding domestic and foreign corporations liable for past human rights violations in South Africa have been fraught with obstacles. The first major litigious attempt was in 2002 when the Khulumani Support Group (Khulumani), a South African grassroots and civil-society organization, representing survivors and dependants of apartheid-era abuses, brought a lawsuit against about two dozen foreign multinational corporations (MNCs) seeking to hold them liable for aiding and abetting the apartheid regime.Footnote 22 Two key considerations for filing the suit in New York instead of South Africa were the absence of an equivalent Alien Tort Statute (ATS)Footnote 23 and the lack of South African common law rules and principles with respect to corporate aiding and abetting.
Although the lawsuit contributed to the body of corporate liability jurisprudence under the ATS,Footnote 24 it was dismissed in the aftermath of the US Supreme Court decision in Kiobel Footnote 25 in 2013 when the court found that causes of action under the ATS do not reach conduct that occurs within the territory of another sovereign.Footnote 26 The dismissal did not deter the attempts at seeking to hold corporate actors liable for socio-economic and human rights abuses occurring in South Africa.
III. The Rise of Targeted Domestic Corporate Human Rights Litigation in South Africa
Over the last decade or so, a few targeted lawsuits in South Africa, principally aimed at domestic corporations, have changed the legal landscape to make enforcement of legal remedies against corporate actors for socio-economic and human rights violations increasingly possible. Areas of law that have been transformed are, amongst others, the expansion of legal standing, recognition of novel causes of action and the generous application of contingency fee arrangements. Each of these are briefly considered below.
A. Expansion of Legal Standing
In South Africa, legal standing under the common law was traditionally limited to a party having personally suffered a legal injury and proving to a court that ‘the litigant has a direct and substantial interest in the subject matter of the litigation’.Footnote 27 Such restrictive standing made it extremely difficult, if not impossible, for marginalized and vulnerable groups, who were often exposed to collective harms under apartheid, from collectively pursuing remedies as they were simply unable to do so individually.Footnote 28
However, under the Bill of Rights, access to courts is a fundamental rightFootnote 29 and its corollary is found in section 38, which provides for expanded standing under the Constitution.Footnote 30 Despite its radical departure from the common standing, this constitutional expansion is limited to an infringement or threatened infringement of a right in the Bill of Rights. The interpretive effect thereof is that that common law violations could potentially be immune for such extended standing.
This issue was recognized in the Children’s Trust case,Footnote 31 when several civil society organizations in 2010, acting on behalf of bread consumers, filed a putative case in the Western Cape High Court against leading South African bread manufacturers for colluding to increase the bread price.Footnote 32 The court recognized that ‘[t]here are certainly strong indications that standing to bring class action also in non-Bill of Rights cases should become part of our law’Footnote 33 but did not decide the issue. On appeal, the Supreme Court of Appeal (SCA) decisively held:
[I]t would be irrational for the court to sanction a class action in cases where a constitutional right is invoked, but to deny it in equally appropriate circumstances, merely because of the claimants’ inability to point to the infringement of a right protected under the Bill of Rights … Class actions are a particularly appropriate way in which to vindicate some types of constitutional rights, but they are equally useful in the context of mass personal injury cases or consumer litigation.Footnote 34
Since then, South African courts have become more receptive to collective actions, particularly those involving poor, vulnerable and marginalized groups.Footnote 35 In 2016, the South-Gauteng High Court in Johannesburg certified a class action of tens of thousands of current and former goldminers who had contracted silicosis and tuberculosis whilst working in South African goldmines. Commonly known as the Nkala lawsuit,Footnote 36 it was instituted in 2012 against leading South African goldmining companies including Anglo American South Africa Limited, AngloGold Ashanti Limited, Gold Fields Limited, Harmony Gold Mining Company Limited (Harmony), AngloGold Ashanti Limited (AngloGold) and Gold Fields Limited.
Whilst the mining companies opposed the lawsuit on several substantive grounds, one of their principal oppositions was the lack of commonality between the miners’ work experiences at different mining companies. Harmony AngloGold for instance pointed out that ‘to the extent that conditions in one mine may have been worse than those in other mines the interests of the mineworkers employed in the former mine may conflict with those of the other mines’.Footnote 37 Such a view is consistent with the opinion of the US Supreme Court in Wal-Mart Stores,Footnote 38 which reconfirmed the opinion of the former Chief Justice of the US Court of Appeals for the Ninth Circuit who opined that members of the class:
held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed… . Some thrived while others did poorly. They have little in common but their sex and this lawsuit.Footnote 39
The US approach did not find favour in Nkala. As most miners were from impoverished rural areas spread across South Africa, Lesotho, Swaziland, Mozambique, Botswana, Zimbabwe and Zambia, the issue of access to court played a pivotal role in the court’s determination to certify the class action. The court held:
[T]he institution of hundreds of thousands of separate individual hearings is not more appropriate than the proposed class action to resolve the disputes between the mineworkers and the mining companies.Footnote 40
The only way justice can prevail in the cases of the individual mineworkers or their dependants is if they are afforded an opportunity to pursue their claims by at least having significant parts of it determined through a class action.Footnote 41
B. Recognition of Novel Causes of Action
Ordinarily, the tort law concept of negligence, as opposed to piercing the corporate veil or customary international law, constitutes the basis upon which legal action against MNCs are pursued.Footnote 42 In the United Kingdom (UK) for instance, most cases focus on the acts or omissions (i.e., duty of care) of the parent company rather than the subsidiary and ‘attempt to establish direct liability of the parent company as a primary tortfeasor through the breach of the duty of care it is said to have owed to the claimant.’Footnote 43
This matter arose in Nkala. Even though South Africa has no settled jurisprudence on the matter, the court recognized the evidence of the goldminers, i.e., that parent companies ‘had authority over, advised and guided their respective employing subsidiary company, and were aware that its subsidiary company would accept its direction, guidance or advice and that that direction, guidance or advice materially impacted upon the health of the mineworkers, especially with regard to them contracting silicosis or TB.’Footnote 44
This unresolved issue is foreshadowed by the SCA in the Children’s Trust when the court laid down the guiding elements for class certification.Footnote 45 One of these is the recognition of novel causes of action for which no legal precedent exists. It is highly likely that should the issue come before trial, South African courts, in line with UK courts, would consider as triable the issue of a parent company’s liability for the negligent acts and/or omissions of its subsidiary.
C. Generous Application of Contingency Fees Arrangements
Prior to 1994, however, South African courts regarded litigation funding as champertous, based on the English law influence, and contrary to public policy and void. Since then, the enactment of the Contingency Fees ActFootnote 46 (CFA) has made it possible for legal practitioners to undertake cases on a contingent-fee basis, making legal representation and access to court more accessible to the majority of South Africans.Footnote 47 The Nkala litigation was made possible by litigation funding.
Notwithstanding the CFA, litigation funding remains a contentious issue. In Nkala, Gold Fields Limited brought an application to join Motley Rice LLC, one of the litigation funders, as co-applicant, seeking a costs order against it in the event of the litigation being unsuccessful.Footnote 48 Gold Fields argued that Motley Rice controlled the litigation and stood to benefit financially from it.Footnote 49 Yet, it acknowledged that without litigation funding the mineworkers’ claims would not get off the ground, and that the workers would be prevented from pursuing their claims. In dismissing the application, the court articulated the undeniably positive impact of the litigation funding in promoting access to justice as ‘the funded litigant is one who, because of poverty and lack of resources, would otherwise not have been able to litigate or access justice.’Footnote 50
IV. Looking Forward
South Africa has come full circle from being an international pariah state to being at the forefront of giving effect to the UNGPs. A recent report from the South African Human Rights Commission states that ‘while the UNGPs are non-binding per se, they do set out existing international law and best practice’ and are ‘a useful tool in determining the extent to which South Africa has domesticated international human rights law principles in the context of business and human rights.’Footnote 51
Notwithstanding their usefulness, the UNGPs have been criticized for being non-binding and weak in substance.Footnote 52 However, in 2014, South Africa co-sponsored a UNHRC resolution ‘to establish an open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights.’Footnote 53 The mandate of the working group (OEIGWG) is ‘to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.’Footnote 54 A second revised draft treaty was discussed during the sixth session of the OEIGWG in October 2020.Footnote 55
Whilst the mandate of the OEIGWG constitutes a significant step in the struggle for greater corporate accountability, the adoption of a final treaty will be a long and engaging process. Hence, the usefulness of the UNGPs and the resourceful, litigious efforts like the Children’s Trust and Nkala, will need to continue to create enabling environments for access to adequate judicial remedies particularly in countries like South Africa, where socio-economic and human rights violations may continue to persist despite a new constitutional dispensation.
Ordinarily, the unavailability or inaccessibility of remedies in host states are often ‘due to the host state’s unwillingness to act against corporations, driven by its desire to protect foreign direct investment (FDI)’ and ‘the constant threat that MNCs will pack up and go, because globalisation and the mobility of capital make it easy for them to switch countries.’Footnote 56 Certain home states in turn afford remedies in the form of ‘private negligence claims brought by the victims of overseas corporate wrongs against parent companies before the courts of the home states.’Footnote 57 While home state jurisdictions serve as important fora in the fight for corporate accountability, they often raise broader social and political issues in respect of the North–South power imbalance. Hence, the South African experience with corporate accountability adjudication could serve as a useful example to other African countries that grapple with the same problems.
