CORPORATE RESPONSIBILITY AND THE MANUS ISLAND CLASS ACTION

Tara Crisp

In June 2017, the Australian Government agreed to settle a class action brought on behalf of 1905 asylum seekers from the Manus Island detention centre, for $70 million plus costs. This averages out to each asylum seeker receiving just under $37,000. While there has been extensive coverage of the responsibilities of the Australian Government on Manus Island, the class action also included several private corporations as co-defendants. Do these corporations have responsibilities under international law?

This article looks at a lead contractor named in the class action, Broadspectrum, who have signalled their intention to withdraw from the Manus Island detention centre before the end of October 2017. It considers Broadspectrum’s responsibilities in light of the internationally accepted corporate human rights framework set out in the UN Guiding Principles on Business and Human Rights (Guiding Principles). It also examines the ‘No Business in Abuse’ campaign which relied on these Guiding Principles to pressure corporations to end their involvement in offshore detention.

Manus Island class action

The defendants to the class action were the Australian Government and the private corporations G4S and Broadspectrum (formerly Transfield). Wilson Security was separately joined to proceedings, as a secondary defendant, by G4S and Broadspectrum. The asylum seekers on Manus Island claimed to have suffered injury due to false imprisonment and negligence in the provision of food and water, shelter, healthcare services and security while detained on Manus Island.

There has been no admission of wrongdoing by the government or finding of fault by the courts. The government maintains it was a financially prudent decision to settle instead of fighting a six-month legal battle. There have been no public statements from the corporate defendants. By agreeing to settle, the defendants have also avoided a highly public trial exposing conditions in the Manus Island detention centre and the risk of a higher compensation award.

Corporate responsibility under the Guiding Principles

The Guiding Principles are the ‘first authoritative global framework’ for applying human rights law to corporations. They rely on principled pragmatism through a ‘Protect, Respect and Remedy’ framework. Governments are responsible for protecting human rights, while corporations are expected to respect human rights. Both are required to provide remedies for breaches of human rights. In order to respect human rights, corporations should ‘avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved’.

The Guiding Principles do not create new legal obligations. Instead, they constitute a persuasive framework for assessing corporate behaviour, premised on a global expectation that businesses will respect human rights. The human rights referred to are those found in the International Bill of Human Rights and the principles concerning fundamental rights in the ILO Declaration on Fundamental Principles and Rights at Work.

Corporations are expected to not only avoid directly causing or contributing to adverse human rights impacts, but also to prevent or mitigate impacts where caused by another corporation directly associated with its operations, products or services.

Corporations can ensure their activities are consistent with these expectations by, for example, conducting appropriate due diligence on their own operations, as well as the operations of potential takeover targets, investment opportunities, clients, suppliers and partners. Should an alleged breach of human rights occur, the expected response should take into account the severity of the human rights impact and the corporation’s circumstances such as size and structure. However, the Guiding Principles lack a binding enforcement mechanism.

The No Business in Abuse campaign

The No Business in Abuse campaign pressures corporations to end involvement in the offshore detention centres on Manus Island and Nauru. Broadspectrum (and later Ferrovial) were the principal targets of the campaign. The Guiding Principles were used to argue that financial or operational involvement in the detention centres amounted to complicity in the perpetration of human rights abuses.

Broadspectrum is the lead contractor for the Australian government providing garrison and welfare services at both the Manus Island and Nauru detention centres. Its responsibilities range from catering and cleaning to welfare and security (subcontracted to Wilson Security). Broadspectrum earns over $71 million per year for these services.

No Business in Abuse claimed that Broadspectrum’s activities directly contributed to adverse human rights impacts. In preparing its reports, No Business in Abuse relied on verifiable findings of international and domestic expert authorities such as Australian Parliamentary committees, the United Nations Special Rapporteur on Torture, the Australian Human Rights Commission and Amnesty International. The reports outlined the alleged breach of at least 47 international norms.

No Business in Abuse recommended that Broadspectrum end its involvement in the offshore detention centres after concluding the very nature of indefinite detention made it impossible to eliminate the adverse human rights impacts in any other way. This recommendation is consistent with the Guiding Principles, the commentary to which states that where a corporation is unable to prevent or mitigate harm, or exert influence to do so, it should consider exiting the business relationship completely.

Broadspectrum publishes a human rights statement on its website setting out its commitment to corporate social responsibility, including to the Guiding Principles. Broadspectrum rejects, however, the suggestion that the Guiding Principles are binding and instead claims it is ‘committed to respecting human rights in its operations even though none of the international Human Rights Standards are binding on or enforceable against it’. Broadspectrum further notes it has limited ‘ability to influence change when it comes to government policy’.

Public statements from Broadspectrum have also included a denial that it is responsible for ‘operating’ or ‘managing’ the centres, and instead merely provides services under contract. While Broadspectrum has recognised the complexity of the detention centre environment, the overall response to the No Business in Abuse campaign was to claim it was a disingenuous, inflammatory and misleading political attack.

No Business in Abuse also targeted Ferrovial, the Spanish multinational that commenced a hostile takeover of Broadspectrum in December 2015 and fully acquired the company in June 2016. The initial focus for No Business in Abuse was on Ferrovial’s failure to conduct adequate due diligence in assessing Broadspectrum as a takeover target. No Business in Abuse argued that appropriate due diligence should have identified the serious adverse human rights impacts of Broadspectrum’s operations and halted the acquisition.

Ferrovial’s corporate responsibility statement contains a commitment to the UN Global Compact, a voluntary sustainability initiative on which the Guiding Principles build, but not the Guiding Principles themselves.

Despite their public commitment to corporate responsibility, Ferrovial limited its interactions with No Business in Abuse in the early stages of the acquisition, arguing that discussions would be more appropriate once the outcome of the takeover bid was known. No Business in Abuse criticised this approach as misunderstanding the very nature of due diligence as a mechanism by which companies can discharge their responsibility to respect human rights under the Guiding Principles. Ferrovial’s approach to due diligence may indicate that industry practices do not encourage a proper consideration of human rights implications, particularly where they conflict with financial motives.

The campaign intensified after the completion of the acquisition in June 2016 with No Business in Abuse demanding that Ferrovial immediately release all persons held in, and cease all involvement with, the detention centres. Ferrovial consistently ‘rejected the factual and juridic allegations’ in the No Business in Abuse reports, but later announced that at the conclusion of the current offshore detention contract, it had no intention of re-tendering for another. Ferrovial claimed ‘these services were not a core part of the valuation and the acquisition rationale of the offer, and it is not a strategic activity in Ferrovial’s portfolio’.

Those services were, however, the most profitable part of the Broadspectrum business. Ferrovial has made no suggestion that it will be exiting from Broadspectrum’s similar contracts, such as for the Department of Defence. It provides support services, including meals, cleaning and site management at secure defence facilities, which have been likened, by Broadspectrum, to the garrison support services provided in the offshore detention centres. This suggests Ferrovial is stepping away specifically from the centres themselves, not the types of services provided in the centres. No Business in Abuse considered Ferrovial’s announcement a ‘win’ for the campaign and an attempt by Ferrovial to ‘back away from the legal and financial liabilities that have been so apparent in the commercial operation of these illegal camps’.

Conclusion

The official rhetoric from both Broadspectrum and Ferrovial suggests that the lack of a strong enforcement mechanism limits the application of the Guiding Principles. However, Broadspectrum is in fact withdrawing from the offshore detention centres in late October 2017 and the defendants to the Manus Island class action agreed to a large settlement rather than facing trial. The No Business in Abuse campaign appears to have not only contributed to the announcement of a withdrawal, but also contributed to the defendants’ willingness to settle the class action. The campaign showed how the Guiding Principles can be used as a tool to influence corporate behaviour, despite the lack of a binding enforcement mechanism.

Tara Crisp has a Master of Laws (Human Rights and Social Justice) and an interest in international refugee law. Tara is currently a Research Assistant at the Australian Human Rights Commission and is Asylum Insight’s explainers editor. The views expressed are her personal views and do not represent the views of her employer.