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  • Multinational corporations can be really big

  • bigger even than some countries.

  • But does that mean they're more powerful than a country?

  • We'll show you how the law keeps things balanced.

  • How can countries stop multinational companies if they break the law?

  • And why do they end up fighting each other in court?

  • And... let's find out how companies structure themselves

  • to limit the power of a state.

  • They're used to getting away with it.

  • For decades, no one's held them to account.

  • They've never been subject to any serious pressure.

  • So, as these companies grow, is the law keeping up?

  • Do countries or companies have more power, legally?

  • Let's look at Canada, one of the most sued countries in the world.

  • Canada has been sued lots, because of something called

  • the North American Free Trade Agreement: NAFTA.

  • NAFTA was the free trade deal between Canada, the USA and Mexico.

  • But, it also made it easier for investors to sue governments

  • if they thought the deal was broken.

  •   Canada soon became the most sued developed country in the world

  • with 35 claims against it.

  • Foreign companies forced changes in Canadian law on toxic waste imports

  • and sued for millions of dollars over oil drilling regulations.

  • Campaigners were unhappy and it was eventually replaced

  • by the United States-Mexico-Canada agreement,

  • which limited the power of multinational companies

  • to take countries to court.

  • Maude Barlow campaigned against the trade agreement,

  • which she saw as deeply unfair.

  • She explained how she thinks companies got to be so powerful.

  • These corporations just expanded out

  • so that their production is in this country,

  • and their tax haven's in this country,

  • and their administration's here, and so on...

  • their head office might be somewhere else.

  • And so they truly are global corporations:

  • they really don't belong to nations... nation states.

  • And they want to influence law

  • both nation-state law, but international law,

  • or lack of international lawso that they can do what they want.

  • Maude thinks some multinational companies use their size and spread

  • to influence and avoid the law.

  • She explained whether she thought laws

  • helped countries or companies more.

  • And here's the important thing: that what...

  • the kind of laws that corporations get, in free trade agreements,

  • give them legal right to sue governments

  • if they don't like their laws, if they can...

  • if they show that their laws can... are affecting their...

  • their right to profitnegatively affecting their right to make money.

  • Whereas there's nothing currently internationally, at the...

  • at the treaty level, at the UN level,

  • that really does impose restrictions on these corporations.

  • Maude says corporations can get rights from trade agreements,

  • but aren't limited as much by treaties.

  • She thinks companies have ended up with more power than countries.

  • She explained how:

  • That's the interesting thing: it's not that all the countries got together

  • and said, 'Let's give these corporations legal rights that we don't have.'

  • It happened piece by piece by piece.

  • It started with this North American Free Trade Agreement,

  • but since then there are more than 3,000 bilateral investment agreements

  • between countriesso, that's between any two countries and they...

  • then the corporation of this country can sue that government,

  • and the corporations of that country can sue that government.

  • Maude says companies have gradually gained power

  • through lots of trade agreements.

  • So, some strong opinions there from the campaigner, Maude Barlow.

  • States and multinationals often disagree.

  • Does the way the companies are made protect them from the law?

  • For instance, a company is based in the United States,

  • but it owns several 'subsidiary companies' in another country,

  • like China and Russia, that are registered in those countries.

  • This kind of structure means the main company is protected from being sued

  • because it's harder to sue a parent company

  • for the actions of a subsidiary in another country.

  • So, what does that actually mean in reality?

  • Daniel Leader has taken major companies to court.

  • He explains how hard it is to punish a parent company

  • for the actions of a subsidiary.

  • It is hard. We've had long legal battles

  • that have gone all the way to the Supreme Court,

  • where parent companies try to limit

  • the principle of parent company liability.

  • But, happily, the Supreme Court now has twice rejected

  • the company's attempt to narrow parent company liability,

  • and has in fact unanimously expanded the scope

  • of parent company liability,

  • and gone so far as to say if a parent company makes a public commitment

  • about supervising or assisting its subsidiary and it fails to do so,

  • that in itself can give rise to legal liability.

  • It is hard to punish a parent company, but some courts,

  • like the UK Supreme Court,

  • are doing more to hold parent companies responsible.

  • How effective is the law in dealing with companies that break the rules?

  • It's getting more effective. It's...

  • the fundamental problem is you've had corporate impunity for decades,

  • if not longer: corporations have not been held to account

  • for very serious human rights and environmental abuses.

  • But what's increasingly happening is the courts in many jurisdictions

  • are saying this is no longer acceptable and they are indicating that

  • they are willing to hold parent companies to account

  • for the harms that their subsidiaries have caused.

  • Daniel thinks for many years companies have avoided being punished

  • for very serious things, but that is changing.

  • So, how does a company use its structure to avoid legal responsibility?

  • Well, historically what they've done is

  • they've hidden behind what's called the 'corporate veil'.

  • They've said that the subsidiary is the one that's legally responsible

  • and the parent company should have no legal liability

  • at all for what happened.

  • But that is what we were unable...

  • we were able to unpick with the Supreme Court,

  • where the Supreme Court said, 'Absolutely not.

  • We are not going to allow corporations

  • to hide behind their structures,

  • if the parent company itself has been involved

  • in the harm that has been committed.'

  • Something called the 'corporate veil'

  • meant subsidiary companies were the only ones responsible

  • if they broke the law and were the only ones punished.

  • How is this actually changing?

  • Historically, companies have sat back:

  • they haven't really concerned themselves too much

  • about what the working conditions are in factories or in...

  • within their subsidiaries. They've just let it happen.

  • And they've certainly never felt that they could be held to account.

  • But what we are seeing is a real change in attitude:

  • you're getting more and more lawyers willing to take cases,

  • more and more organisations that are monitoring compliance.

  • He says where once companies felt they could do what they liked,

  • now more and more lawyers are willing to fight for your rights

  • against these big companies.

  • We've seen how multinational companies can try to use the law

  • to force countries to do what they want.

  • But this episode has also shown the power of the law

  • and the determination of lawyers

  • to make sure even these huge corporations follow the rules

  • that keep us all safe.

Multinational corporations can be really big

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