Automotive Industry: General Motors

Automotive Industry: General Motors General motors Introduction Since, from the industrial revolution the automotive industry has been playing an important role in the growth of economies throughout the world. In the 21st century, greater challenges were face by the industry. During this time, the industry undergoes fundamental changes. GM is one of the largest automotive corporations operating in over 70 countries with a presence in more than 200 countries, they have more than 260 major subsidiaries, and they have 395,000 employees working with them in worldwide that translate in to global opportunities that span the planet. On 1908, General motors was founded since then 1931 it has been the global automotive sales leader. Its founder was William c. Durant, James whiting promoted his automobile in 1904. In the present time, GM is having its manufacturing operations in 32 countries and their vehicles are selling in more than 190 countries. General Motors, is also involved in telecommunication, Aerospace, financial and insurance service, Defence, locomotives, automotive systems and Heavy Duty Automotive Transmissions. Here are some of the popular brands of GM such as Buick, Cadillac, Chevrolet, GMC, HUMMER, Opel and some more. The vision of Generals Motors is to be the world leader in transportation products and related services. In addition, to earn customers enthusiasm through continuous improvement driven by integrity, teamwork and the innovation of GM people. The General Motors company officially became general motors corporation on October 13, 1916. During the Second World War, for helping the allies to victory GM manufacture trucks, tanks, aircrafts and a variety of other military supplies. GM became a dominant force, in the post-war period, a position it would maintain for decades. The post -second war was the golden period for the GM, with a variety of innovations that continually boosted sales. During the 1950s, Chevrolet and Pontiac introduces V8 engine. The CHEV small block V8, it has become one of the longest-lived engine designs in automotive history. By the year 2015, GM is deciding to launch near about nine Hybrid models for sale in the U.S. The Automobile industry has to cope with many unpredictable changes over the next coming years and they can only survived by appropriate strategic planning and implementing them in most suitable way. Analysing the micro economic factors in GM General Motor is an American multinational corporation and is one of the worlds largest automobile companies. According to the NADA, GM total revenue in 2006 was 207.349 billion and in 2008, 182.347 billion and currently employs 284,000 people and their average sales per dealership is 31.9 billion. Key macroeconomic factors that affect GM and the automobile industry are as following Gross domestic products (GDP), Automobile manufacturers policies and prices, Weather peaks Recessions, and Telecommunications and technology Gross domestic product Thegross domestic product(GDP) orgross domestic income(GDI) is a basic measure of a countrys overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. The automobile manufacturing industry is one of the largest industries within the U.S., and is a vital engine for the U.S. economy contributing greatly to employment and productivity. Reports indicate that motor vehicle production represents over 5 % of the U.S. private sector GDP.The U.S. is the worlds largest producer and consumer of motor vehicles with production reaching 12.2 million units in 2002.The U.S. automotive industry continues to experience on-going organizational and technological change, and have taken steps to increase its global presence by expanding global alliances and seeking greater collaboration with other U.S. automakers. The Big Three U.S. automakers makeup approximately 76 % of U.S. passenger vehicle production, while Japanese automakers, Toyota, Honda, Nissan, Mitsubishi, Subaru, Isuzu represents 18 %, and European automakers, BMW and Mercedes (division of Daimler-Chrysler) make up nearly 2 %. If they stay off the job to the end of the month, then automotive output, instead of adding 0.1% to third quarter GDP, will subtract 0.2%. If automakers stick to their previously planned reduction in assemblies for the fourth quarter, that quarters GDP will be reduced by 0.5% (at an annual rate). If the UAW stays out through the first week of October, that drag becomes 0.8%. If theyre out for all of October, that drag becomes 1.7%. If UAW members at Ford and Chrysler also walk out and stay out through all of October, fourth quarter GDP would probably shrink. (Economists currently project GDP to grow 2.2% in the current quarter and 1.9% in the fourth, according to a survey by WSJ.com.) According to a Reuters report over 3-thousand U.S. car dealerships could fail this fall and into 2009. All this because of weak sales and customers unable to get the credit they need. However, on a local level one car dealer says things are different. Gross domestic product includes all goods and services produced by either citizen-supplied or foreign-supplied resources employed within the country. The automobile manufacturing industry is one of the largest industries within the U.S. and is a vital engine for the U.S. economy contributing greatly to employment and productivity. Reports indicate that motor vehicle production represents over 5% of the U.S. private sector GDP. Automotive dealerships like GM are required to make profits in order to support their operations. Automobile manufacturers policies and prices The policies and pricing strategy help automobile dealers to create the operating environment for their business. From the 2008 to 2010 we have seen a lot of fluctuation in policies and price due to global financial downturn. The crises have mostly affected the American automobile manufacturing industry. Energy crises from 2003 have lead to the higher price for the automotive fuels discouraging customers to buy sport utility vehicle (SUV) and pickup trucks, which have low fuel economy. As SUV and pickup trucks was the main focus of big American automobile companies like General Motors which have few fuel efficient models to offer to customs due to which sales began to slide and with the beginning of 2008 situation had turned critical as thecredit crunchplaced pressure on the prices ofraw materials. Most of the American turned to Japanese car more fuel-efficient creating competition and prices war making huge loss for the GM. GMs most of the production line had SUVs and large pickup truck which were more profitable than smaller cars, they would have 15% to 20% profit margin on SUVs and pickup trucks , compared to 3% or less on small fuel efficient cars. Gasoline price rose above $4 per gallon in 2008 most of the Americans stop buying big vehicles that collapse the sales and profitability of the GM.Robert Samuelsonhas advocated a more consistent energy policy, arguing, Wild swings between low and high fuel prices have crippled the U.S. industry by erratically shifting buyer preferences to and from SUVs. In 2008, financial crisis was playing its role stock prices were fallowing down and people were less interested in buying new cars, GM shares fell below 1946 levels creating a panic situation for all the major car manufactures. There was a ray of hope when oil prices fall to $33.87 per barrel on December 19, 2008, but that could help them recover as financial crisis continues even after that. The graph below is showing gasoline prices from January/ 03/ 2003 to November/03/ 2008. We can see how it was steadily going upwards from Jan 2008 when it was $ 28 per barrel until it reached $135 per barrel on July 2008 then going steeply down to$33.87 per barrel on December 2008. Oil prices has a invertible effect on the car sales if oil price is cheaper then sales of big cars will go up and if oil gets expensive sales of cars goes down, though there are also other factors responsible for that but oil prices is definitely one of the major factor. Polices Pension and Health Care Issues A report issued on behalf of the GM stated that an average cost of per car would increase by $1200 per vehicle because of their aging work forces, increase number of retirees and old age benefits and healthcare. This will indirectly affect the sales and prices of the vehicles. Currency Exchange Rates Exchange rate highly affects the automobile industry as many automobile suppliers are from china or any other country. GM have complained to Automotive Trade Policy Council that exchange market intervention by Japanese monetary authorities has frequently prevented market forces from appreciating the yen and thus make difficult for GM to compete against Imports from Japan. Fuel Economy and Emission Standards U.S government has develop higher fuel economy standards and emission standard for carbon dioxide and other green house gases that has highly effected the GM as it mostly produces SUV and other light trucks as it needs to change the design and to introduces new technology which is more clean and reliable. Broader Issues of Automotive Trade Policy As most of the foreign government has trade restrictions and polices that prevent the GM to enter in those country effecting its growth and expansition.GM with the help of the U.S government they are being trying to be active in WTO aimed in removing trade restrictions and policies. Such countries are Brazil, India, Indonesia and the Philippines as they have discriminatory policies so that they are able to promote domestic vehicle and develop national automotive development strategies. Weather peaks The highest selling seasons for automobile dealers are spring and summer. During the spring and summer, the optimism index rises 141% from the downfall incurred during the fall and winter months Recessions From the begin of the 2008 automobile industry was hit hard by the credit crunch specifically U.S market. There was a panic situation people were losing jobs, stocks were going down and customers would not prefer to buy cars on credit or loans even if would buy car that would be more of fuel efficient rather than the GM pickup trucks. According to the John Fleming, president and chief executive of Ford Europe Sales are going down and markets are softening. Means that they are not able to control the market and they cannot predict where it will lead them. SWOT ANALYSIS OF THE GENERAL MOTOR SWOT analysis will help to analysis market positioning and identifying the internal and external factors that are favourable and unfavourable for the GM to achieving its objective. Strengths Large market share The market share of GM in the US is plummeting, rather than shrink; it has expected that global car industry will grow radically in the end. Sales growth is expected to come from Middle East, Russia, China and India. While in US and Europe, manufacturing is currently strong. After what happen with the GM, China gave them a good market. The year of 2009 was very successful in China for GM. Plant and equipment The GM has its plants almost all over the world; some of them are US, China, India, Russia, Europe and so many. The US plant was the one of the largest vehicle seller in the world until 2008. They adapt change according to the market and situation, they uses some latest technologies to give the people what they want. One of the technologies that they are using now days for their plants is 3D laser scanning, it can commonly seen in construction sites, GM use it to reduce the development plant layout and design. 3D laser helps them to scan the whole facility, from the roof trusses down to the plant floor. It gives us a complete 3D image, which can be viewed by the automakers throughout the world. According to Bill Campbell, they have scanned an average of 2million ft.2 per facility. The most recent projects was in Oshawa, Ontario, Canada. They also believes that using of layout data derived from 3D scanning reduced travel cost and less time wasted. Innovative According to the BCG- business week 2008 survey, GM was ranked in top 20 Innovations Company in the world. Onstar satellite technology, was developed in 1996 it have 3 million subscribers and is standard on all GM vehicles. This is the technology, which helps us while in emergency and theft. Weakness Behind on Alternative Energy Movement This is GMs one of the biggest weakness. Because, in the market GM was one-step behind from the competition of alternative energy/hybrid vehicles. This create many problems for GM, includes loss of market share and the companies profit was affected by this also. Organisational structure In GM, there was a lack of information between employees from top to bottom, and this was one of the causes of falling behind of the alternative energy movement. There was a communication problem between the employees and employer. Stagnant profitability As we know GM is struggling now a days to get back in to the position where the GM was. The ROE has significantly decreased over the recent years it is now 10% and the margin of the company is 1.5%. This is also one of the falling point of GM , because the shareholders was thinking about their shares so they were not pleased with this situation. US market dependent GM became too dependent on US market. This was one of the causes of the failure. GM has been ignoring the competition in 1960s GM controlled half of the North American vehicle market and the latest figure shows its only now 19%. Poor credit The US auto industry is in a big slump. GM bank account is shrinking by $1 billion a month. The issue is can general motor will be their where it was. Since from 1992, the market share has fallen from 34% that year to 19%. The company wasted around $2 billion on an investment of Fiat and many billions on the Delphi. The management also wrecked GMAC its car loan subsidiary, by lending money to people who could not pay it back. Opportunity Globally expanding GM is the strong company with high quality production and has a range of new exciting products, which they can represent internationally. They need to inflate into the new markets and expand internationally. Many new countries have started free trade policies GM needs to explore these countries such as India and china, as its been assumed that within coming years Asia will be the biggest market for the car industries. Along the way, they need to continue to focus on there on home market. Available Governmental support GM has an immense support from the government. U.S government has supportive and encouraging polices for the American companies .GM can use government policies support to promote its growth outside the American continent. Development of the new models GM had worlds one of the first RD centre .They have scientific skills and expertise to develop new technological vehicle which are more fuel efficient and uses green technology. It is necessary for them to develop hybrid cars to protect them from enormous competition from japans car industry .the new government regulations tough and against high consumption cars which is the expertise of GM so they need to change the table round and change weakness into opportunity. They have the resources as well as technical skills all they need is the motivation and ability to do it. Threats Competition from foreign markets The slow death of GM, in the 1970 it had nearly 60% of automobile market and foreign share was only 10% that time in the US. Now the foreign brands dominate the GM market in the US and the GM shares little more than 20%. Reasons for GMs decline: GM major cost disadvantages was their production sites, which were in the U.S making their labour costly, then there competitor. Then strike threat came from sites around the country. They were threatened walkouts at plants in Parma, OH; Mansfield, OH; Grand Rapids, MI; Kansas City, KS; Flint MI and Arlington. Due to which they agreed to the demands of United Auto Workers (UAW) union that lead to increase in costs leaving GM to suffer higher loses.0 Financial slowdown From the year 2003 it has been a difficult times for GM firstly increased prices of the oil made it difficult for them to increase their sale and it decrease their profit margin, and years after they were hit by recession in 2008 that tumbled there whole industrial structure. The reason they were not able to cope up with the recession was there high cost of operation and over expansion that lead to disintegration leaving higher losses than ever. Secondly, high competition from japans companies made it difficult for the GM survival. GM and organisational development Organisational development is a soft methodology intended for use in complex situations to provide intervention strategy for the change management. GM has developed organisational strategy so that they have the ability to deal with organisational problems, cultural diversity, stability and political bargaining. Methodology for the OD was to develop unified system for the employees. However, one of the reasons it was introduce as employees of GM are quite inflexible and they could not cope with such pressure from the change. Change is never easy, especially in a vast, global organization like GM, which has been struggling with a change agenda for years and they have to change as shares are going down as last year it weathered an 18% dip in its U.S. market. GM finally understands that keeping its leadership position in the worldwide auto business demands deep-seated change. GM wants to develop the change management so that they are able to- Create a care work place in professional practice environment that promotes a high quality service, equality of opportunity, and political and public accountability. Making best use of money, people and other resources for and with the users of services to achieve the agreed objectives; Supporting best qualities direct and public services; Given clear messages to everybody about everything we do GM needs to diagnose the issue by theOrganisational Design Wheel that they are able to build momentum for change. Organisational tool gives us insight that for any organisational success its focus should be Mission and vision, which need to be align with organisation, process, people and direction setting and it should be backed up by the its organisational structure ,strategy,leadership,processes,culture and performances. This is the kind of the structure, which GM needs to develops but to reach here they need to go through a lot change management. For the development of the OD and change management, GM needs to Connect OD initiatives to strategic business models and Use the action research process to diagnose opportunities for improving the organisation. Define critical success factors and target specific interventions for hard-hitting, bottom-line OD. Articulate their role as an internal OD consultant. Leave with practical tools and advice that are immediately applicable to the companys OD initiatives. Organisational Analysis and Design The design of an organisation can affect everything as for the GM has gone through over expansion creating disintegration in controlling the organisation effectively. They will need to change the structure from the top to bottom so that they are able to develop proper workflow that will lead to ultimate success at the bottom line. GM needs to develop a change management program that targets GM employees that will help them to learn the dynamics, processes, and challenges inherent in analysing and designing an organisation to achieve business results. These applications of a systematic approach for guiding an organisational design effort, from problem identification, and planning the transformation, will ensure these efforts are align with the organisations mission and values. Organisational Culture and Change In todays worlds, Organisations today experience change in faster cycles than ever before. This is due to the mergers and acquisitions, turnaround situations, and organisational restructuring place pressure on strategy and performance. General motor has over expanded through merger and acquisition making them difficult to restructure their organisation. If they want to be able to deliver positive business results they need to competent internal change agents and access them, test their reliability. During the change management employees are most affected by it so GM needs to change in most appropriate way so that they are able to adopt it. According to the Bennis in his early work Organizational Development: nature, origins prospects defines OD as: a response to change, a complex educational strategy intended to change the beliefs, attitudes, values and structure of organizations so that they can better adapt to new technologies, markets and challenges. According to the change, curve employees go through five stages shock and denial, anger, depression and detachment, dialogue and bargaining and acceptances. Shock and denial- when organisation implements change management in the company employees at first avoid and as well, as get confused with it. Anger with the new regulation and rules make employees frustrated and irritated against the change, which for any organisation is difficult, and they need to overcome from it very quickly. Depression and dialogue are interrelated stage, which lead to the acceptances. Acceptances is when employees are able to understand and explore new system how is it more efficient and beneficial for employees and organisation. Best Practices in Succession Management Succession management is a critical determinant of marketplace longevity for organisations. To develop best practices that will help to sustain competitive edge. For the GM employees and HR managers have to develop skills of succession management such as- Select options for assessing the core talent pool, and identifying and supporting high potentials Set up and execute effective succession planning review meetings Integrate succession management within the broader human resource system Utilise techniques for knowledge transfer of critical intellectual property Implement new models for both technical and management succession planning Drill down into succession management beyond the top management layer Design and Implement Leadership Development Systems When it comes to developing the leaders within an organisation, the stakes are high and the potential payoff is enormous. How to create a rationale for developing leaders in the organisation Identifying the leadership capabilities required in the near future, and assess talent gaps Determine the most efficient and effective means of developing the talent to meet the organisations needs Incorporate action learning into leadership development initiatives Understand how to create a system that aligns the organisational leadership programs with elements of strategy, culture, and business initiatives Model for Change Management There are numerous well-organized models that can help in change management in the organisation and for the GM will be The McKinsey 7S Framework. Some of the approaches have been around for many years. For example, many organizations undertake strategic planning. The implementation of strategic planning, when done in a systematic, cyclical and explicit approach, is strategic management. Strategic management is also one model for ensuring the success of change efforts. The McKinsey 7S Framework There are many models for the analysis of the organisations position and its objects some of them will analysis internal factors, others will analysis external ones, some of them combines these perspectives, and others look for congruence between various aspects of the organization. At the end it comes down to which factors that will affect the organisation. Tom Peters and Robert Waterman developed the McKinsey 7S framework in the early 1980s while working at the McKinsey Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful. The 7S model has a ability to be used in variety of situations where an alignment perspective is useful. It will help the company to develop better strategic planning process. It is used to analysis four basic things- Improve the performance of a company. Examine the likely effects of future changes within a company. Align departments and processes during a merger or acquisition. Determine how best to implement a proposed strategy. The McKinsey 7S model involves seven either interdependent factors, which are categorized as hard, or soft elements: Hard elements are easier to identify and it directly influences management. These processes are strategy statements; organization charts and reporting lines; and formal processes and IT systems. On the other hand, soft elements are much more difficult to describe, as they are less tangible and more influenced by culture of the organisation. However, these soft elements are as important as the hard elements if the organization is going to be successful. Figure 1 below the model is representing in a way that change in one element will create a change in other .in this way it shows how these are linked other. If these new model is added in the GM organisational structure it will give them the stability they need to regain their number one marketing position. Each element represent an organisational structure and it is very important to understand how it will affect the organisation as a whole. Strategy:the plan devised to maintain and build competitive advantage over the competition. Structure:the way the organization is structured and who reports to whom. Systems:the daily activities and procedures that staff members engage in to get the job done. Shared Values:called super ordinate goals when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style:the style of leadership adopted. Staff:the employees and their general capabilities. Skills:the actual skills and competencies of the employees working for the company. This model will help and analysis GM performances. The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change. Whatever the type of change restructuring, new processes, organizational merger, new systems, change of leadership, and so on the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration. You can use the 7S model to help analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. Its then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint. Sounds simple? Well, of course not: Changing your organization probably will not be simple at all! Whole books and methodologies are dedicated to analyzing organizational strategy, improving performance and managing change. The 7S model is a good framework to help you ask the right questions but it wont give you all the answers. For that youll need to bring together the right knowledge, skills and experience. When it comes to asking the right questions, weve developed a Mind Tools checklist and a matrix to keep track of how the seven elements align with each other. Supplement these with your own questions, based on your organizations specific circumstances and accumulated wisdom.

Independant Study Program Essay

It is not the pedigree or the school that is the mark of success but rather the ability of an individual to use the training and the education. This is something that I have always believed all my life. I have never been intimidated by those who come from private schools and neither have I been intimidated by those who go to conventional high schools. I have been firm in my belief that there is so much more that I can gain from an independent study program. The best education is one that is flexible and can adapt to the necessities of today’s world. Oftentimes, education in conventional high schools is strict and rigid. There is no room for creativity and very little room for self-discovery as one is limited by the confines of the classroom. This limitation stifles one’s personal intellectual and psychological growth not to mention the contamination that comes from other sources a child is exposed to. There is no room for growth over and above what is uttered by teachers and instructors who are not so much motivated by the child’s educational development as they are by their next paycheck. This is the advantage that an independent study program provides. It is flexible enough to adjust to the needs of the student. It also allows those who are fast paced to explore other avenues that they wish to explore and learn about. It allows talented individuals to push the limits of their talents and fully achieve their potential. The manner by which independent study programs allow students to tailor fit their study programs is a definite advantage because it allows them to grow at a pace that is more comfortable to them. An education is something that is not fixed. It is not something that is forced on anyone. It is a partnership, a relationship between the teacher and the student that comes from an understanding of the limits of the student and the goals of the teacher. Education is about being the best that one can be.

Get the Scoop on Essay Music Topics Before Youre Too Late

Get the Scoop on Essay Music Topics Before You're Too Late The Supreme Strategy for Essay Music Topics Proposal essays are typical in company and science classes and professions, but are also practical for a variety of distinct disciplines. Because they are a type of argumentative essay, you want to be sure the essay is worthy of an argument. Persuasive essays are a really good approach to encourage the reader to check at a particular topic in a different light. All persuasive essays are like argumentative essays. Knowing or understanding the structure of a paper is the very first step to compose a very good essay. Some discussion of particulars are essential to determine if a more expensive platform is necessary. There are many intriguing topics that could be become a persuasive essay if you take the opportunity to think about doing it. Essay Music Topics Help! The school is a significant institution of socialization which has an important part in a kid's development and lots of times Educators are often those that identify strengths and weaknesses in children since they're given the chance to witness the developmental changes in their lives. Thus music essays have come to be a portion of students as students are requested to compose essays regarding the concepts of music and associated subjects. Students are accustomed to the simple fact which their professors give them with the assignment's topic. Many students think that it is a waste of time. There are lots of stories you will h ear from people, and plenty of unique methods you'll be told to go about doing it. Rather than focusing on yourself, you can concentrate on finding out the answer. If you're in need of any sort of music essays and don't want to have a chance then don't hesitate to stop by ProfEssays.com. There's no need to recount all them. Music is easily the most inspirational phenomena I can think of for a large number of reasons. It is like yoga, it makes us happy and helps in keeping hormonal balance in the body, relief our body and mind and thus keeps us physically and mentally healthy. Without a doubt, it is a necessity. Sometimes, it is a way to hide from everything and everyone. Essay Music Topics Options Normally, these sorts of essays aren't a timed, in-class writing assignment where you're attempting to win against the clock. Developing a title is among the hardest things that student might deal with. For instance, you might desire to produce a list of words and basic ideas r egarding music, which you may then incorporate into various spider diagrams, in order to expand upon and develop great suggestions for the title of your paper. What should and ought not to be in your essay. It's important to understand that essay topics are just basic ideas that leave you pondering a notion that might be a huge deal to another person. It's always cooler to get an exhaustive debate. To put it simply, a proposal essay identifies an issue and suggests a remedy to that issue. Most academic essay topics usually ask you to select a side in an argument or maybe to defend a specific side against criticism. The Essay Music Topics Trap Many questions have a very clear undertaking. Therefore, conduct thorough research on this issue and ensure you stay away from confusing it with a different genre. The topic has to be interesting, the topic has to be essential and finally the topic has to be informative. All you will need is the proper topic. What You Don't Know Abo ut Essay Music Topics You can be totally sure your paper is going to be delivered in time and be of the maximum quality. When you're creating the item, among the things you should put in mind is that the printing fee is the same whether you receive something big or little. After seeking a precise number of the way the artists are compensated, I was not able to locate any trustworthy information regarding how the business truly operates. When you could be main things you ought to note is that you want to conserve money whenever you're getting the merchandise. The Pain of Essay Music Topics Poor people are comfortable provided that they are in the middle of people of their strata. Interdisciplinary research is the main focus. Music writing felt the same as a passion project which I spent a great deal of time on. Scale is a string of stepwise pitches. There are lots of music lovers found all around the universe. If it's necessary to compose an essay on music, you can concent rate on several subjects, like the works of a specific composer, the historical evolution of music, ethnomusicology, or music theory. Different types of music instruments linked with pop music the instruments related to a particular genre of music also speaks a great deal of about music. The manners of music may vary greatly.

Domestic Law Approaches to Multinational Corporation Accountability - Free Essay Example

Sample details Pages: 33 Words: 10013 Downloads: 7 Date added: 2017/06/26 Category Law Essay Type Narrative essay Did you like this example? VII. Domestic Law Approaches to Multinational Corporation Accountability Although frequently noted that MNCs should abide by host country laws it is obvious that MNCs must do that, if they broke local laws they would not be allowed to conduct business (that is notwithstanding that in some cases local laws are not enforced), however this does not prevent MNCs from abiding by better standards, such as those of their home countries, nor does it absolve them from legal liability outside of host countries, which is regardless of host state policies that permit human rights violation because where those policies violate the human rights norms of customary international law, reliance on those policies and applicable host country laws will constitute connivance, collusion or complicity for which MNCs will bare the cost (in regard to cost it is important to consider the à ¢Ã¢â€š ¬Ã‹Å"limited liabilityà ¢Ã¢â€š ¬Ã¢â€ž ¢ of some corporate entities). Courts of MNCsà ¢Ã¢â €š ¬Ã¢â€ž ¢ home states, and particularly courts in the US, have jurisdiction, recognise human rights issues as justiciable and the plaintiffs as having standing, and MNCs have not argued against these points. Don’t waste time! Our writers will create an original "Domestic Law Approaches to Multinational Corporation Accountability" essay for you Create order At the time of writing none of the cases have run full course, (recalling that BHP settled before the court made its decision), but there are relevant precedents in each jurisdiction which bide for the plaintiffsà ¢Ã¢â€š ¬Ã¢â€ž ¢ success. Furthermore, though the cases may be drawn out through processes of appeals by each party, there is also the likelihood, as occurred with BHP, that MNCs will offer compensation settlements before judicial decisions are ultimately made. On that point Cape is reported to be considering settling compensation with the victims of its asbestos operations[1]. Though such suits have not yet been initiated against the clothing industry, there is scope for them to proceed. Although discussion of these cases warrants comprehensive attention, the following overview is sufficient to show that MNCs are currently accountable to legal standards which protect human rights and are common to many legal jurisdictions. Additionally, in assessing MNCsà ¢Ã¢â€š ¬Ã¢â€ž ¢ accountability to domestic laws it should be borne in mind that these are a method of redress, not of preventative action. And while domestic laws outside of the countries where abuse has been sustained may provide some deterrence to MNCs, some MNCs can financially afford to bare the costs (which would be much better spent otherwise) and furthermore, some domestic laws, such as those of à ¢Ã¢â€š ¬Ã‹Å"inconvenient forumà ¢Ã¢â€š ¬Ã¢â€ž ¢ may incapacitate some victims in their ability to receive justice, because while MNCs can afford to travel the globe and access courts in different jurisdictions, the victims cannot, and even if they could, delays may benefit MNCs by reducing their costs because, as has occurred in the Cape litigation some 100 plaintiffs have died during the proceedings[2], and therefore, whereas preventative action is best achieved internationally through the WTO, justice to victims would also best be served by the recognition of their standing and causes of act ion in one international judicial forum. In this connection, United Statesà ¢Ã¢â€š ¬Ã¢â€ž ¢ courts are presently capable of deciding many of the relevant complaints of human rights abuse against MNCs. A. Deceptive Advertising Law Writing in the US context, Lu has suggested that one possible way to hold MNCs legally accountable for breaches of human rights is to apply deceptive advertising law to corporate codes[3]. Though his suggestion is for use of the United Statesà ¢Ã¢â€š ¬Ã¢â€ž ¢ Federal Trade Commission Act I S U. S. C. S 45 1999, his proposal is valid for other jurisdictions with laws protecting consumers from misleading or deceptive conduct, such as the Australian Trade Practices Act 1974 (Cth). Lu suggests that actions could be brought by consumers and NGOs seeking the remedy of à ¢Ã¢â€š ¬Ã‹Å"cease and desistà ¢Ã¢â€š ¬Ã¢â€ž ¢, to prevent the illegal conduct, among other available remedies[4]. Although this approach has not been tested, it may be a method consumers and NGOs could use especially against the apparel industry, because of its popular publication of corporate codes and the breadth of evidence establishing that they are not implemented[5]. One example of the use of deceptive advertising law to take action against an MNC is the case in the California Supreme Court of Kasky v Nike 2 C.D.O.S. 3790 (2002). This case revolved around Nikeà ¢Ã¢â€š ¬Ã¢â€ž ¢s possible liability for false statements made in relation to labour practices and working conditions, which were argued to be in violation of Californiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s deceptive advertising laws. Throughout the appeals process of this case, it was consistently held that the remarks made by Nike in relation to these matters should be classified as noncommercial speech, and thus should not fall within the scope of Californiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s deceptive advertising laws. The California Supreme Court did not agree. Rather, it classified the remarks made by Nike as being coincidenta l in doing business, and thus could not be afforded the constitutional protection of free speech under the First Amendment. Essentially the court applied the test of Bolger v Youngs Drug Products Corporation (1983) 463 U.S. 60, which held that Nike may not à ¢Ã¢â€š ¬Ã…“immunize false or misleading product information from government regulation simply by including references to public issuesà ¢Ã¢â€š ¬Ã‚ . The main issue that arose in this case was the fact that Nike had made these false and misleading statements while also referring to commercial matters, thus creating the problem of having to separate the commercial speech from the non-commercial speech. Non-commercial speech is generally regulated by the Constitution, through the First Amendment and its subsequent elaborations in the courts. Commercial speech is much less regulated in rigid terms, and falls within the jurisdiction of the individual states to regulate (or so it seems in the United States at least). However, the guidance given by this decision makes it clear that it is quite possible to commence an action against an MNC for deceptive advertising, particularly where that deception involves false or misleading representations made by that company. Nike sought to dismiss the allegations made by a number of media outlets that highlighted Nikeà ¢Ã¢â€š ¬Ã¢â€ž ¢s alleged mistreatment of its overseas subcontractors involved in manufacturing Nikeà ¢Ã¢â€š ¬Ã¢â€ž ¢s sporting apparel through press releases and promotional campaigns claiming that these allegations were false. It was this response by Nike that triggered the plaintiffs to commence an action pursuant to Californian state advertising laws. The US Supreme Court eventually heard the case, where the majority decided to dismiss the writ of certiorari on the basis of jurisdictional issues. This was mainly due to procedural issues, such as the California Supreme Court not entering a final judgement at that time. However, Breyer J (in his disse nting argument at 76) held that the threat of constructing state deceptive advertising laws in such a manner meant that a commercial speaker now had to take à ¢Ã¢â€š ¬Ã…“great careà ¢Ã¢â€š ¬Ã‚  when addressing matters of public concern, and had to exercise a great deal more care than his or her non-commercial opponents. The premise is that it would not foster debate between informed and knowledgeable parties, who were more than qualified to speak on the issue, as there was a substantial risk that one could be held liable under state laws if a statement was found to be à ¢Ã¢â€š ¬Ã‹Å"misleadingà ¢Ã¢â€š ¬Ã¢â€ž ¢ pursuant to them. However, it is important to remember that this is a dissenting judgment, and does not reflect the legally binding decision of the majority in the case. It does signify the attitude of the United States Supreme Court, however, should a writ of certiorari be granted in subsequent cases. It reflects the need for a balanced debate on an issue of public conc ern, and that the protection of freedom of speech is paramount in order to ensure this. As a result of the Nike case, it would appear that there is a cause that exists (in California, at least) that may allow an interested party to bring an action against an MNC on the basis of deceptive advertising. The attitude of the courts in relation to this course of action needs to be considered, however. While Nike lost its appeal to the Supreme Court in this issue, it was based solely on jurisdictional issues, and not on the merits of the case. Unfortunately the case did not proceed to be argued beyond procedural grounds, thus denying the possibility of clarifying the law in an authoritative sense. However, Breyer Jà ¢Ã¢â€š ¬Ã¢â€ž ¢s dictum indicates an attitude for the perseverance of debate and free speech, which may be reflected by the courts in jurisdictions where such a freedom is highly regarded. This course of action, therefore, is unreliable in the sense that the law is unclear and may be subject to review of a superior court on constitutional grounds. However, it does demonstrate that such an action can be commenced, and can succeed given the right circumstances. If a plaintiff can prove that the statements made by the MNC were motivated by commercial means, then it may well be the will of the court to uphold the claim, as such speech is not as highly governed by constitutional means as what non-commercial speech is. It is widely held that the constitutional protection of free speech exists to preserve democracy and debate, however if it can be proven that the speech was motivated by other means, an action may be able to commence against the company, pursuant to issues of jurisdiction and so forth, to be discussed in later chapters. B. Tort law In the cases against BHP and Cape, plaintiffs whose human rights were assaulted, have asserted negligence in breach of the law of tort, resulting in personal injuries giving rise to a right of compensatory, e xemplary, and punitive damages. Tort law imposes duties of care to protect people who can foreseeably be harmed by a party or parties activities. In regard to all the cases described here there is substantial support to found suits asserting that the injuries suffered by workers, victims of à ¢Ã¢â€š ¬Ã‹Å"securityà ¢Ã¢â€š ¬Ã¢â€ž ¢ forces, and residents local to hazardous facilities as the case may be, are reasonably foreseeable consequences of MNC activities, which are reasonably foreseeable by MNCs, giving rise to duties of care which have been breached, and for which MNCs are liable for compensatory, punitive and exemplary damages. Actions founded in tort law are being argued in the cases against Cape in the UK, and Shell, Unocal and Total and ExxonMobil in the US. While clear examples exist of parties undertaking claims through the tort law systems of various jurisdictions, it is important to understand if such a method of recourse is actually efficient enough to effect chang e on a global scale. David Howarth, a scholar on this topic, identifies three key issues with this type of claim, at least from the English perspective. They are: the content of the law, the nature of private law claims, and the effectiveness of common law principles as opposed to a more codified, legislative measure.[6] These, of course, can be carried over and adapted to most common law jurisdictions, thus these problems are typically uniform throughout these forums. These arguments appear to be relatively unfounded. The argument could be tendered that the common law is quite flexible, as is able to be applicable to a vast majority of cases, and is able to reach into areas where legislation would not dare to reach. The significant problem with tort law claims is the private nature of these actions, meaning that the plaintiff exercises a great deal of control over the matter, and would be permitted to exercise this authority where the matter was subject to a more codified criminal law. Tort claims are civil in nature, meaning that one can only sue for damages in relation to an injury caused by the defendant. This raises the issue of who should bear the liability in relation to the MNC: the director(s) or the company itself? This will be further explored in more detail in the following sections. Essentially, in a tort law action, the plaintiff is able to control when the action should commence, and whether or not to settle the matter out of court, which means that the plaintiff does wield a great deal of control over the proceedings. A criminal action would not present such problems, as an action would normally derive from the state concerned, and would not be a matter for private resolution. Additionally, one must question the ability of a monetary penalty to effect any long term change in the way the company is going to go about its business. Given that an MNC is effectively a capitalist juggernaut, and deals strictly in monetary terms, a mere damages settle ment may in fact be more beneficial to the company than criminal charges. It may also allow the company to negotiate some form of confidential settlement with the plaintiff, which may then serve to allow the company to avoid much of the media attention that would have otherwise been generated by criminal charges. It needs to be considered, then, whether an action in tort is perhaps the best method for pursuing an action against an MNC. While it may well be that an action in tort may be the only avenue open to a private indidivual or group, it needs to be considered whether such an action will be able to evoke any change in the MNCà ¢Ã¢â€š ¬Ã¢â€ž ¢s conduct. Tort law can become quite flexible in its ability to be applied to a variety of cases, especially in common law jurisdictions, however given its private nature it can only be argued that it protects private interests more so than public interests.[7] There is little disputing its effectivness in these private cases, as was de monstrated by the cases mentioned above. However, an action in tort law would lack the impact of a criminal trial, given its private (and contractual, in the event of a settlement) nature. Additionally, the common law tort system operates essentially as a fault-based system, punishing those where a breach of a duty occurs. With regards to environmental law principles at least, this would be an inefficient method of pursuing such an action, as most pollution incidents occur as a result of a number of unforeseeable circumstances, but give rise to damage.[8] The ability to apportion fault upon a party for these circumstances becomes difficult, and thus it is upon the plaintiff to prove that the law in relation to this area is not fault-based, which is near impossible given the established legal principles and doctrines in most common law jurisdictions. In any event, tort law does not serve to protect the interests of the public as a whole, rather it serves to compensate a private party for the damage or injury it has suffered as a result of the actions of the other party. While the law is flexible in tort, it is not flexible enough, or public enough, to amount to protecting the interests of the public as a whole. It is impratical to use this method of recourse where a plaintiff would be seeking to protect the public interest, and rather should leave such a decision up to the state to pursue criminal charges where available. Of course, if the plaintiff has suffered a loss in some way, then tort would become significantly more appealing, and understandably so. C. Principles of the à ¢Ã¢â€š ¬Ã‹Å"Colour of State Authorityà ¢Ã¢â€š ¬Ã¢â€ž ¢ and the United States Alien Tort Claims Act The current cases against Shell, Chevron, ExxonMobil, and Unocal and Total are based in the US Alien Tort Claims Act (28 USC 1350) as supplemented by the Torture Victim Prevention Act (28, U. S. C. ~ 1350 App)[9]. The ATCA has been interpreted to mean that torture and other tortiou s violations of human rights, and violations of the law of nations or of a treaty of the United States, perpetrated under the à ¢Ã¢â€š ¬Ã‹Å"colour of official authorityà ¢Ã¢â€š ¬Ã¢â€ž ¢, violate universally accepted norms of international human rights law, and that such violation constitutes a violation of the domestic law of the United States, giving rise to claims under the ATCA whenever the perpetrator is properly served within the borders of the United States, and that the ATCA reaches the conduct of private parties when their conduct is undertaken under the colour of state authority, or violates a norm of international law that is recognised in the conduct of private parties[10]. The à ¢Ã¢â€š ¬Ã‹Å"colour of state authorityà ¢Ã¢â€š ¬Ã¢â€ž ¢ principle has many precedents in United States law, and it particularly lends itself particularly in describing MNC contracts for employment of state military forces, as well as slave labour, and this argument is being made in the case s against, Shell, Chevron, ExxonMobil, Unocal and Total. In addition it is worth noting that other MNC actions also have the à ¢Ã¢â€š ¬Ã‹Å"colour of state authorityà ¢Ã¢â€š ¬Ã¢â€ž ¢, for instance, in regard to BHP, where in its efforts to avoid liability under Australian law, BHP instructed its lawyers Allens Arthur Robinsons, to draft legislation for the Papua New Guinea (PNG) Government, which they did and the PNG Government enacted as law, declaring that suing BHP, in PNG and elsewhere, or giving evidence against it was a new criminal offence for which the Plaintiffs and their lawyers could be gaoled, that the new law was prohibited from being challenged as being contrary to the PNG constitution, and, if somehow someone was successful in obtaining a judgement against BHP this constituted them as a debtor to BHP of the sum of the judgement[11]. Furthermore, where host states leave human rights to the private sphere, and MNCsà ¢Ã¢â€š ¬Ã¢â€ž ¢ operations, or the actions of MNC s directors or other staff affect those public rights, those actions may also be considered à ¢Ã¢â€š ¬Ã‹Å"coloured by official authorityà ¢Ã¢â€š ¬Ã¢â€ž ¢. Additionally, the governments of the United States and the United Kingdom together with relevant participants, have, in the Voluntary Principles on Security and Human Rights significantly recognised that MNCs act under the colour of state authority by directing companies to be mindful of the best standards embodied in the UN Code of Conduct for Enforcement Officials and UN Basic Principles on the Use of Force and Firearms by Law Enforcement Officials, which were previously applicable only to states. And furthermore participation by MNCs in The Global Compact, and adoption of Voluntary Codes of Conduct shows that MNCs themselves acknowledge that they sometimes act under the colour of state authority. The US Alien Tort Claims Act initially formed part of the Judiciary Act 1789, and remained in a state of disuse for much of the following two centuries. It is argued that the limits of the Alien Tort Claims Act were not tested very extensively until the case of Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980), which served to extend the jurisdiction of the United States courts to a more global scale. Essentially, this case involved a seventeen-year old Paraguayan boy (Filartiga) being kidnapped and tortured by a Paraguayan police official (Pena-Irala), and murder charges were brought against Pena-Irala, but the case did not progress far. The appellants argued that the US courts has original jurisdiction over the matter as the claim of wrongful death was argued to violate numerous international treaties, such as the UN Charter, the UN Declaration on Human Rights, the American Declaration of the Rights and Duties of Man, among others. These customary international laws were argued to fall within the scope of the à ¢Ã¢â€š ¬Ã…“law of nationsà ¢Ã¢â€š ¬Ã‚  provision in the Alien Tort Claims Act for the pu rpose of bringing a claim pursuant to it. The court held that it did have jurisdiction over the issue as, not only did it violate international law, the complaint was also served while both parties were inside the United States. Eventually, the Court held that Pena-Irala was guilty of such breaches of international law, and accordingly awarded the Filartiga family damages of approximately US$10.4 million. This case was one that broadened the scope of the US Alien Tort Claims Act to an extent that it may allow for a reasonable method of pursuing an action against a company for breaches of human rights. However, in the years since the Filartiga case, the US courts have handed down a number of decisions that have implemented a number of obstacles for plaintiffs to overcome. These were best highlighted by Sukanya Pillay, an academic on this very subject, who contended that: Notwithstanding Filartiga and initially positive judicial interpretation of plaintiffs rights and jurisdiction under the ATCA, the ATCA decisions began creating a pattern of high threshold obstacles for plaintiffs to overcome. First of all, U.S. courts narrowly interpreted their jurisdiction to hear claims of torts which violated jus cogens norms; however, this is problematic because in the context of human rights, very few rights have been recognized as attaining jus cogens status.[12] This means that international law on human rights has not reached the status where it is deemed to be compelling law; rather it would appear that the courts have merely used these as a form of guideline when deciding these cases. Pillay went on to say: Secondly, the torts needed to be committed as part of state action, and if against an individual, the individual needed to have been acting on behalf of the State. A third high threshold obstacle is the defendants arguments of forum non conveniens which have been successful in avoiding jurisdiction for ATCA claims for violations of economic, social and cu ltural rights.[13] Forum non conveniens will be covered in more detail in a later chapter, however it essentially means that the forum (i.e. the court and the jurisdiction) is simply not à ¢Ã¢â€š ¬Ã‹Å"convenientà ¢Ã¢â€š ¬Ã¢â€ž ¢ to hear the matter. For example, in the Filartiga case, the defendantà ¢Ã¢â€š ¬Ã¢â€ž ¢s argument of forum non conveniens was rejected on the basis that Paraguay was not more appropriate to hear the matter than the United States, given that the procedures of the Alien Tort Claims Act had been held to have been satisfied. While it was rejected in the Filartiga case, there have been some decisions where this argument has been upheld.[14] It is the case of Aguinda v Texaco, 303 F.3d 470 (1997), among others, that has determined that the Alien Tort Claims Act does not present an effective means of pursuing an action against an MNC for violations of human rights. While the procedure required for commencing an action against an MNC may be easy to satisfy ( perhaps more so than other domestic courts), the factors that need to be considered in relation to a tort claim in the United States by a foreign party are enormous. There is every chance that a US court may seek to dismiss the action based either upon grounds of non-compelling law, or even on the grounds of forum non conveniens. Additionally, as mentioned in other chapters, a civil suit may not be the best way to pursue a claim against a corporation in any event, due to the monetary nature of the penalties imposed, thus questioning the effect of any judgment handed down. A loss in a civil suit for a corporation does not have the same condemnatory effect of being found guilty under criminal charges. The Aguinda case held that environmental torts are of less significance, and of less legal value, than a civil or political tort, thus also questioning whether such an action would succeed in the case of mass pollution or environmental damage. The precedent has been set by the American c ourts, and it is one that is virtually assured of being considered if a similar case is found before them in the future, thus questioning the ability of such a claim to be won. D. à ¢Ã¢â€š ¬Ã‹Å"Joint Enterpriseà ¢Ã¢â€š ¬Ã¢â€ž ¢ or à ¢Ã¢â€š ¬Ã‹Å"Joint Ventureà ¢Ã¢â€š ¬Ã¢â€ž ¢ Liability A proposal which is similar to the principles of colour of state authority is made by Muchlinski, who suggests that the principles of à ¢Ã¢â€š ¬Ã‹Å"Joint Enterpriseà ¢Ã¢â€š ¬Ã¢â€ž ¢ or à ¢Ã¢â€š ¬Ã‹Å"Joint Ventureà ¢Ã¢â€š ¬Ã¢â€ž ¢ liability could be applied in cases where à ¢Ã¢â€š ¬Ã…“it can be shown that an MNC obtains material economic benefit from operating in an environment where it knows that the business venture in which it is engaged involves, state-sponsored violations of human rights, or where, in extreme cases, the firm itself engages in such violations in the course of operating the venture, that firm will be directly liable for those violations on a joint and several basis w ith the host state, irrespective of the private legal status of the firm, or of the formal relationship between the host state and the firm, so long as it can be shown that the two were collaborating in the conduct of the venture.à ¢Ã¢â€š ¬Ã‚ [15] While this is a valid suggestion, and is being argued in the cases against Unocal and Total and ExxonMobil, there is no reason for inclusion of a requirement that the MNC be shown to obtain à ¢Ã¢â€š ¬Ã‹Å"material economic benefità ¢Ã¢â€š ¬Ã¢â€ž ¢ or any benefit at all, what is pertinent is that the MNC was collaborating with the state. Perhaps the most illustrative example of a joint venture between the state and an MNC would be the continuing growth of natural resources exploration in developing countries. The allowance of MNCs to use developing nations to further their capital growth also provides an attractive financial gain to the host government, as academic Michelle Flores comments: Large multinational companies are eager t o accept these opportunities, and are aided by their respective industrialized countries. Billions of dollars are being poured into the depleted coffers of developing nations. This infusion of capital and increased exploration and development have [sic] coincided with an increase in environmental consequences.[16] She went on to add: Most developing nations lack an environmental regulatory program and/or the enforcement capability to ensure adequate protection of their environment and natural resource reserves. Postponing exploration and development of these resources until environmental controls are in place is not an option. One of the few realistic opportunities a developing country has to improve its standard of living lies in the development of its natural resources. Creation and implementation of competent environmental regulatory programs would take years and delay desperately needed revenue.[17] In other words, the main problem confronting MNCs is the ever-changing climate of environmental regulation, thus an MNC generally assumes some risk when co-operating with a developing country. Flores also contends that the main rationale of a joint venture with a host government is to à ¢Ã¢â€š ¬Ã…“share all profits and liabilityà ¢Ã¢â€š ¬Ã‚ .[18] This means that the two parties normally share the burden associated with such a rapidly changing and developing socio-economic climate, and thus are not necessarily able to hold each other accountable if environmental changes were not within the comprehension of the two parties at the time the joint venture agreement was formed. Joint venture agreements between a company and a state are often usually contractual in nature, and thus normally specify the remedies available to each party, and the obligations of each. Given the rapidly changing environment of a developing nation, it could be contended that a change in environmental law or policy within that jurisdiction was outside the comprehension of th e parties at the time the contract was formed, given the political uncertainty that is provided by a developing nation. Thus, it would be difficult to maintain a case against an MNC for a breach of a joint venture agreement. The basic principles of contract law also make it difficult for third parties to commence an action against either party as a result of the agreement, as one of the key requirements of a contract is privity between the two parties. Essentially, if the state felt that the MNC was not complying with the requirements of the joint venture agreement, it may be able to pursue remedies available to it within the terms of the joint venture contract, such as domestic or international courts, or even arbitration.[19] The loss of such a lucrative contract (or a threat thereof) may be enough to force an MNC to rethink its corporate strategy; however as for a broad change across the MNC community, this remains to be seen. Joint venture agreements are effectively contracts between two parties, and thus the remedies are limited to those two parties. There is little scope for someone to bring an action against an MNC unless they represent some position of authority from within the state concerned. Thus, other affected parties need to turn to other domestic law options in order to seek relief from any human rights breaches of an MNC. E. Revoking Corporate Charters Human rights lawyers together with NGOs in the US are petitioning the Californian Attorney-General to ask the District Court to revoke Unocalà ¢Ã¢â€š ¬Ã¢â€ž ¢s corporate charter, asserting a MNCteenth century US legal precedent permitting the revocation of corporate charters for socially irresponsible conduct. They assert that Unocal has through exploiting slave labour, participating in human rights abuse, and repeated environmental destruction, lost the state concession to do business, that its charter should therefore be revoked and corporate assets sold to more ethical business manag ers[20]. This legal principle operates on the premise that à ¢Ã¢â€š ¬Ã…“the citizens of every state, acting through their attorney general, have, and have always had, the legal authority to go to court to revoke the charters of corporations that violate the lawà ¢Ã¢â€š ¬Ã‚ .[21] There is little case law to suggest that such a principle may be successful, as the concept of a duty existing for a corporation to protect the environment is not very well established. It is clear, however, that a corporationà ¢Ã¢â€š ¬Ã¢â€ž ¢s charters can be revoked for administrative reasons, such as a criminal offence, or the failure to pay taxes.[22] The principle that a corporationà ¢Ã¢â€š ¬Ã¢â€ž ¢s charters can be revoked if they commit illegal acts can be construed to mean that it will have effect if the corporation breaches a statutory or common law principle that applies alike to corporations and natural persons.[23] As mentioned, there is little case law to support the theory of such law ex tending its scope to include environmental damages and actions, however it could be concluded that it may extended to labour practices and other similar corporate activities that are enforced by statute. This may lead to the ability of the state to commence an action against a company to revoke its corporate charters in these circumstances, but otherwise this concept remains somewhat untested and underdeveloped. However, there is nothing to suggest that a court would not uphold an administrative decision by the attorney-general to revoke corporate charters on such grounds either, making this a quite interesting area of law to keep an eye on for the future. It is apparent that the decision to revoke a corporationà ¢Ã¢â€š ¬Ã¢â€ž ¢s charters is one that is purely administrative in nature, and not one that can be discovered by reference to statute or case law. It is clear that the attorney-general most certainly retains the regulatory power over corporations in relation to their cha rters, and may revoke or suspend them when there is good cause to do so. The case law does show examples of corporate charters being revoked in relation to illegal acts; however it is unclear whether the law will extend far enough to include environmental damages as illegal acts for the purposes of the common law principles. If one could substantiate the fact that environmental damage is enforceable as an illegal act through relevant state or federal laws, then one may have a case to put to the appropriate attorney-general to revoke those corporate charters. One of the main issues is that, in the United States at least, each state maintains control over its own corporations, and cannot assume control over corporations that are not incorporated and organised pursuant to the laws in that state.[24] What this essentially means is that it is difficult to establish a universal standard with which corporations must abide by, as it differs considerably amongst the fifty different jurisdict ions within the United States. While there is no law to suggest that the state has the power to do this, one must compare the US system with that of, say, Australia, which draws its corporate governance from the Corporations Act 2001 (Cth), thus creating a federal standard for corporations to abide by in this jurisdiction. In summary, it is clear that the power to revoke corporate charters may exist in law but, in any event, this is more an administrative decision which may be subject to judicial review than a legal decision. It is one that can be made in the United States by the individual stateà ¢Ã¢â€š ¬Ã¢â€ž ¢s attorney-general, who obviously must be convinced of the idea. The main advantage of this method is that one may avoid the possibility of long and arduous legal proceedings in order to achieve a desired result against an MNC, but it may well be the will of the courts to overturn this decision if that believe it was not applied according to law. The lack of rigidity of such a course of action is a cause for concern, as it may not effect any long-term permanent change in a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s behaviour. However, it is certainly an avenue worth considering, and is very much dependant on two factors. Firstly, it needs to be established in state law that the act was illegal. Secondly, the state needs to be willing to take action against the company. It is quite a drastic step for a state to revoke a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s license to trade in that jurisdiction, and it may be met by political opposition. Such is the problematic nature of administrative power in a democracy. F. à ¢Ã¢â€š ¬Ã‹Å"Lifting the Corporate Veilà ¢Ã¢â€š ¬Ã¢â€ž ¢ Lifting the corporate veil is a phrase used to describe the legal process of discerning the true nature of control over corporate entities, which lies with human beings, such as executive officers, directors and managers and other corporate officials. When the à ¢Ã¢â€š ¬Ã‹Å"corporate veil is liftedà ¢Ã¢ ‚ ¬Ã¢â€ž ¢ the responsibility of those people for the conduct of the corporation is revealed[25]. One current case against Brian Anderson, a former Managing Director of the Nigerian subsidiary of Royal Dutch Petroleum Company and Shell Transport and Trading Company, p.l.c., is asserting his personal liability to account for the wrongs committed by Shell in Nigeria. The allegations include: execution; crimes against humanity; torture; cruel, inhuman or degrading treatment; arbitrary arrest and detention; violation of the rights to life, liberty and security of person and peaceful assembly and association; wrongful death; assault and battery; intentional infliction of emotional distress; negligent infliction of emotional distress; and negligence, as part of a pattern of collaboration and/or conspiracy between Shell and the Nigerian Military to violently and ruthlessly suppress any opposition to Shellà ¢Ã¢â€š ¬Ã¢â€ž ¢s Nigerian Operations[26]. Similar charges can apply to other MNC staff where they have exercised their authority in ways which have resulted in wrongs. The concept of the corporate veil is two pronged. Firstly, it is used to protect the members of the company (i.e. the shareholders, directors and creditors/debtors) from becoming personally liable for the conduct of the company as an entity. Secondly, it can also be used by an MNC to avoid liability for the conduct of one of its subsidiary companies (possibly in another jurisdiction), unless the veil can be lifted by way of a plaintiff proving some sort of agency-type connection between the two companies. In addressing the first aspect of this principle, an incorporated company is treated (from a legal perspective) as a separate legal entity, which absolves its members from personal liability in relation to the company, beyond their share price contributions. The most illustrative example of this occurs in the UK jurisdiction, and is commonly cited by many common law authorities. The case of Sa lomon v Salomon and Co [1897] AC 22 effectively gave rise to the notion of a limited liability company, which is treated as distinctly and legally separate from its members. In other words, unless there is some pressing need to lift the corporate veil and hold the members or directors of the company liable, the court will generally be reluctant to look toward apportioning liability beyond that of the separate legal identity of the company. However, the law has developed to such an extent that the courts now do realise some instances where the veil of incorporation needs to be lifted in order to hold the members of the company liable. For example, in New Zealand, the court held that the veil may be lifted in such circumstances that would require a à ¢Ã¢â€š ¬Ã‹Å"substantial injusticeà ¢Ã¢â€š ¬Ã¢â€ž ¢ to be avoided (Chen v Butterfield (1996) 7 NZCLC 261,086), as well as Australia (Briggs v James Hardie Co Pty Ltd (1989) 7 ACLC 841). Australia demonstrates far more reluctance to lift the corporate veil then what the English or American courts do, and only tend to do so in circumstances where an advantage would be obtained by the court to do so (Repatriation Commission v Harrison (1997) 148 ALR 590). The English courts demonstrate a willingness to lift the corporate veil in order for the directors or members of the company to be held accountable for a criminal offence, such as the avoidance of excise duty (Re H Others (restraint order) [1996] 2 All ER 391). This essentially gives light to an argument that would suggest that the corporate veil could be lifted in times where the directors needed to be held personally liable for criminal conduct, even though there is a reluctance by some other Commonwealth jurisdiction to follow this lead. Nevertheless, this means that one could pursue the directors of a company for a breach of a human rights convention or protocol, where this has formed part of the relevant jurisdictionà ¢Ã¢â€š ¬Ã¢â€ž ¢s criminal code. It shows that jurisdictions are willing to lift the corporate veil for such events and, while this may not carry much weight in a non-Commonwealth court, it does show that there is a possible argument for this to occur. This would probably be the most practical way for one to seek recourse against the director of a company who has committed a criminal breach and, provided that the veil of incorporation can be lifted in regards to corporate groups (as discussed below), there is an ability to bring criminal charges against the director of a parent company for the conduct of a subsidiary. This would then support, in principle, the case involving Brian Anderson and Shell Nigeria, which was discussed above. Of course, one would need to establish jurisdiction of the forum in order to consider this option, which will be discussed in sections to follow. While the corporate veil can certainly be lifted in order to pursue liability for offences against the directors and officers of the company, it also tends to create problems for those pursuing a claim against an MNC in its home jurisdiction due to the uncertainty of the corporate structure itself. In other words, should a parent company become liable for the conduct of its subsidiary company, or should the two be treated as completely and legally separate, thus granting the benefits of the corporate veil? This is a difficult question to answer, and more often than not it can cross jurisdictional borders in order to be answered, making it even more difficult. In the Commonwealth jurisdiction, thus affecting the United Kingdom and Australia as two examples, there is an English case that would suggest that the corporate veil could be lifted where one company is simply acting as an agent for another (Smith, Stone Knight Ltd v Birmingham Corporation [1939] 4 All ER 116). This case involved the compulsory acquisition of a property where a subsidiary company was trading, yet the parent company owned, and the argument was tendered that because the parent company wholly owned and controlled the subsidiary company, it had suffered the loss as a result of the action by the local authority. It is important to note that this case does not ignore the separate legal status of the two companies in its entirety, rather it gives rise to certain circumstances where this legal separation could be waived. Essentially then, this case means that where the two companies demonstrating an agency-like relationship, the two companies can be treated, for legal purposes to be one. This principle has been further distinguished in Australian law by the case of Spreag v Paeson Pty Ltd (1990) 94 ALR 679, thus confirming its place as an accurate representation of the circumstances that need to arise in order for the corporate veil to be lifted. If one succeeds in lifting the corporate veil, one then allows the entire MNC group to be subject to the law of the home state of the subsidiary company, thus allowing a claim to be brought aga inst the entire corporate group.[27] It makes the parent company liable for the conduct of the subsidiary company in the jurisdiction in question, which may be able to affect some form of direct redress against the company responible in a more direct fashion. For example, if a company was to commit an act that was in breach of criminal law in Australia, and the parent company was based in the United States, one may be able to seek to commence an action against the US parent company for the actions of the Australian company, provided that the plaintiff could establish a certain amount of control and influence exerted by the parent over the subsidiary. This may make it easier to affect a direct change against the parent company, as otherwise the two companies could be treated as distinctly separate and thus the MNC in its entirety would not be held accountable for the subsidiaryà ¢Ã¢â€š ¬Ã¢â€ž ¢s actions. G. à ¢Ã¢â€š ¬Ã‹Å"Corporate Criminal Liabilityà ¢Ã¢â€š ¬Ã¢â€ž ¢ The OHCH R has pointed out that à ¢Ã¢â€š ¬Ã…“anyone who commits acts of genocide, war crimes, crimes against humanity, piracy, or engages in slave trade will be violating international law and there could be individual criminal liability and punishment. Although corporate criminal responsibility is a notion which finds a place only in some legal systems, few would disagree that such acts need to be both prevented and punished.à ¢Ã¢â€š ¬Ã‚ [28] However, like most of the other domestic law approaches covered in this chapter, the effectiveness of corporate criminal liability is severely hampered upon the subject matter crossing national and jurisdictional borders. Additionally, the international law on corporate criminal liability is incredibly vague, if existent at all. This section seeks to explore these approaches to corporate criminal liability inside and outside jurisdictional borders, and consider the effectiveness of possibly invoking some long-term change in relation to MNC conduct . The International Criminal Court does not currently retain jurisdiction over legal persons (i.e. corporations) in an express sense. Rather, the ICC retains jurisdiction only over natural persons insofar as they relate to corporations. The proposed statute adopted by the ICC at the 1998 Rome Convention reads as follows: The Court shall also have jurisdiction over legal persons, with the exception of States, when the crimes committed were committed on behalf of such legal persons or by their agencies or representatives. The criminal responsibility of legal persons shall not exclude the criminal responsibility of natural persons who are perpetrators or accomplices in the same crimes.[29] In other words, the ICC only holds jurisdiction over a corporation where a director of that corporation has committed a breach on behalf of it, and not if the company as a whole has committed an offence. It is this gap in the international criminal law that makes it incredibly difficult f or one to pursue criminal charges against an MNC in international law for breaches of human rights, for example. Essentially, there is no enforcement mechanism against an MNC in international law where that company has committed an offence, unless it can be substantively determined that the offence occurred as a result of the actions of a natural person on behalf of the company. It is this gap in the international law that directs affected persons to seek remedy through the domestic law system and, because of the diversity and individuality, the standards for corporate criminal liability differ considerably depending on the jurisdiction concerned. Some general points need to be made about domestic criminal law, and even criminal law in general. Firstly, it needs to be considered that one must satisfy a higher burden of proof in a criminal case to secure a conviction than they would have to if the case was a civil matter. One must satisfy beyond reasonable doubt that the legal or natural person committed the offence, as opposed to the balance of probablity (i.e. 51%) in civil matters. However, the results that come with securing a criminal conviction are significantly more rewarding. For example, a criminal case may serve to attract more worldwide media attention to the issue at hand, and a conviction may send a condemnatory message to other companies on behalf of the state concerned, relaying the fact that the state has little tolerance of such actions. This may be more effective than a civil case as, while being easier to prove, they generally only deal in monetary terms, which is something that an MNC would have an abundance of. This means that an MNC may regard a civil settlement as the cost of doing business, which is effectively tax deductible. It may then adjust its budgets accordingly, thus compensating for that monetary loss. The point is that criminal law can be an extremely effective method of effecting change to an MNCà ¢Ã¢â€š ¬Ã¢â€ž ¢s conduct or attitude to issues of human rights, more so than the civil laws. If a state is confident that it can satisfy the higher burden of proof required in a criminal case, then it would be foolish not to pursue this course of action. The United States perhaps has one of the best structures for corporate criminal liability. It has established, among other things, the à ¢Ã¢â€š ¬Ã‹Å"aggregationà ¢Ã¢â€š ¬Ã¢â€ž ¢ test for corporate criminal liability. In the case of United States v Bank of New England (1987) 821 F2d 844 it was determined that the mens rea and actus reus was able to be constructed out of the knowledge and and conduct of several individuals. This effectively avoids directors of a company being able to fragment various aspects of conduct amongst several individuals in the hope of possibly avoiding liability. This is in start contrast to the English test of à ¢Ã¢â€š ¬Ã‹Å"identificationà ¢Ã¢â€š ¬Ã¢â€ž ¢, which determines that à ¢Ã¢â€š ¬Ã…“the person who acts is not spea king or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. If it is a guilty mind then that guilt is the guilt of the companyà ¢Ã¢â€š ¬Ã‚  (Tesco Supermarkets Ltd v Nattrass [1972] AC 153). The problem with this common law principle is that it can unfairly favour large corporations, as it will only hold accountable those members of the company who are directors and high-level management, and will not reach to any conduct that may have been delegated by these people to the lower members of the corporate hierarchy. However, in both jurisdictions, it is clear that some form of corporate criminal liability is recognised, and is enforceable. It is impratical at this point to go through the ways in which corporations can be held accountable at criminal law, and the individual provisions of the relevant laws, rather it is the intention to recognise an ability for a corporation to be held accountable in the same way a natura l person can be punished through the criminal justice system. The differing standards of corporate criminal liability is a significant problem, and one that really does express a need to be addressed on an international level. For example, a multilateral treaty could be drafted that established certain standards of corporate criminal liability and enforcement mechanisms, thus creating a universal standard for such offences.[30] This would bring into line any jurisdiction that may be lacking an effective method of pursuing criminal charges against a corporation, and make it more effective to hold MNCà ¢Ã¢â€š ¬Ã¢â€ž ¢s accountable for their breaches of domestic criminal laws, especially those in relation to human rights. It would also avoid the need for messy and expensive proceedings to be carried out in the International Criminal Court, as it would be a redundant step in the process. Domestic criminal law appears to be the most efficient means of pursuing an action against a com pany, and thus this avenue should be explored in its entirety before a civil suit is commenced as a last resort. H. Fiduciary Obligations Corporate officers have fiduciary obligations to the corporation, and where they commit human rights abuses, which also jeopardise corporate wealth, or the charter of the corporation, or commit false or misleading conduct, or criminal acts, this may amount to breaches of fiduciary duties for which they can also be held personally liable to account. Perhaps the most pertinent example of this is the recent codification of directorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ duties in the United Kingdom, through the implementation of the Companies Act 2006. Prior to this, there existed an abundance of common law principles that governed the conduct of company directors. Sections 171 to 171 specifically codify these principles into a simpler format, which does not require one to be proficient in the procedures of legal research in order to determine them. They include t he following: A duty to act within their powers as a director of the company; To promote the success of the company, through considering all aspects of the business in the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s interests; A requirement to act in independent judgement when considering business matters, without undue collusion of coercion outside of the charters of the company; A requirement to undertake their role with due care, skill and diligence; A duty to avoid any conflicts between personal and business interests; A duty to not accept benefits from third parties; and A requirement to declare an interest in a prosposed business transaction. Upon considering these duties in relation to the question of MNC accountability for human rights breaches, it would be difficult to maintain a claim if it was brought about pursuant to these terms. Perhaps the only duty that could be argued in this way would be that of due care, skill and diligence; it could be argued that a director who was negligent in exercising his powers in that role by causing pollution, or some other breach of human rights code, may have breached this duty. However, there is little case law to support this theory and, in any event, the standard of corporate governance in relation to directorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ duties differs considerable between jurisdictions. For example, a director who is subject to more permissive rules in relation to fiduciary obligations may be less concerned about a business transaction involving a risk to the environment than they would be if they were subject to a much higher standard of corporate scrutiny and accountability.[31] The se new provisions in the Companies Act 2006 make no attempt to review or reconstruct the definitions of the individual general duties that have been presented by the courts;[32] rather the definitions are still left to the courtà ¢Ã¢â€š ¬Ã¢â€ž ¢s discretion. However, it would appear that the codification of these duties in legislation has made it significantly easier for a director to find out their duties, or at least basic guidance of them from the legislation, therefore now making it inexcusable for a director to not know their responsibilities in their position as director. The Act also makes it clear that the penalties that apply for breaches of these duties are still identical to those that were imposed at common law prior to the commencement of the Act. In other words, while the duties of directors have been codified beyond an excusable level of doubt and ambiguity, one must still resort to the common law in order to have a penalty imposed. This may work effectively in the e vent of one wanting to bring an action against an MNCà ¢Ã¢â€š ¬Ã¢â€ž ¢s director for a breach of their duty to the company, as the law still maintains the flexibility to apply and reach to a number of circumstances, whereas a codified format of these duties in a civil law jurisdiction may not be granted such elasticity. Essentially then, if a court does find that a director is in breach of their duties under the Companies Act 2006, then a director may be held criminally liable for their actions, or liable in a civil suit where that action has injured the company as a whole. This does seem to bear some similarity to lifting the corporate veil, which was discussed in an earlier chapter. The difficulty associated with pursuing such an action against a director can often vary from jurisdiction to jurisdiction, making it sometimes legally impossible to pursue a claim against a director. The Australian jurisdiction also specifies a number of key directorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ duties in i ts Corporations Act 2001 (Cth), in sections 180à ¢Ã¢â€š ¬Ã¢â‚¬Å"184. This bears a great deal of resemblance to the newly implemented UK system of enforcing directorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ duties in a way that the defence of mistake or misunderstanding of law is no longer maintainable. However, the fact remains that the Australian jurisdiction makes it difficult for one to sue a director for a breach of that duty unless the company has been duly incorporated in Australia, which differs considerably from the approach of the United States and Germany (which will be further discussed in the à ¢Ã¢â€š ¬Ã‹Å"forum non conveniensà ¢Ã¢â€š ¬Ã¢â€ž ¢ section to follow). The best way to approach this question of fiduciary duty is to consider it as a relationship similar to that of a trust. The members of the company act as the trustees (which act as the common law property owners of the company), conferring their property rights and similar upon the directors to exercise in good faith. The directo rs then have a fiduciary duty to protect the interests of this trust, as the Australian common law recognised through the case of Woolworths Ltd v Kelly [1982] WAR 1. A breach of this duty is a breach of the trust, and thus may be subject to some form of punitive or compensatory recourse. Directorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ duties can be an effective method of pursuing a claim against the director of a company, but the scope of the changing laws between jurisdictions can make it difficult for such a claim to proceed. In order to bring a claim in Australia, the company must be incorporated in Australia, for example. The same scope can apply to UK companies, as well as those in other states. This creates a problematic approach where a subsidiary company operates as an agent of the parent company in another jurisdiction, raising the question as to who should bear liability for a breach of these duties. All in all, it is generally an unreliable avenue to pursue, and other options really do n eed to be considered where they are available. A breach of directorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ duty may be an appealing one for civil suits involving injury to another party, however the chances of criminal charges being laid as a result of such a breach is questionable. In that regard, one must question the effect that such an action would actually have on changing the attitude of the MNC. If the civil suit was dealing strictly in money terms, MNCà ¢Ã¢â€š ¬Ã¢â€ž ¢s will generally have a great deal of cash flow and can make these settlements without injuring their bottom line so much. The same goes for company directors, who may also be bankrolled by the company. The only effective measure of invoking long term change may lie in criminal charges. I. Forum Non Conveniens It is also critical to recognise that suits in domestic courts encounter, among other things, challenges by defendants based on principles of forum non conveniens (inconvenient forum), and while this argument was not attempted by BHP, Australia being its country of incorporation, it has been argued in the other cases. Australias test for forum non conveniens has broad scope for allowing suits to go ahead in Australia[33]. But whereas Australia is not presently an open forum for suing all MNCs who do business here if Australia is not their home country of incorporation (and in regard to determining the home country, the place of incorporation is only one indication, whereas there are other concepts about this)[34], the United Statesà ¢Ã¢â€š ¬Ã¢â€ž ¢ and Germanyà ¢Ã¢â€š ¬Ã¢â€ž ¢s laws apply Enterprise Theory which binds MNCs to the laws of the country where they do business, hold assets, or where the à ¢Ã¢â€š ¬Ã‹Å"brainà ¢Ã¢â€š ¬Ã¢â€ž ¢ of their business is found to exist. Considering that, together with the ATCA and other relevant legal principles, if the United States applies à ¢Ã¢â€š ¬Ã‹Å"inconvenient forumà ¢Ã¢â€š ¬Ã¢â€ž ¢ laws appropriately[35] according to its own laws or by applying t he Australian test[36], it has the capacity to decide complaints of human rights abuse by MNCs wherever they have occurred because most MNCs conduct significant business operations from the United States. Given that a great number of MNCs tend to house themselves, or at the very least maintain an office or branch, in the United States jurisdiction it is important to consider the possible challenges that may face a party attempting to bring a claim against a foreign defendant within the jurisdiction of the United States judicial system. Fortunately, the United States is blessed with lucrative provisions when one is considering a choice of forum for international disputes and claims, such as the existence of civil juries and a very high level of pre-trial discovery that seems to be absent from most other judicial systems globally. The existence of these principles in the United States system obviously makes the possibility of having a claim heard there significantly attractive. But what if a defendant raises the issue of forum non conveniens? The United States has a quite liberal approach to establishing jurisdiction in relation to absent defendants, and is derived from the Fourteenth Amendment of the United States Constitution. This approach was adopted by the US Supreme Court in the case of International Shoe Co v Washington 326 U.S. 310 (1945), in which it was held that à ¢Ã¢â€š ¬Ã‹Å"minimal contactsà ¢Ã¢â€š ¬Ã¢â€ž ¢ were required in order to establish jurisdiction over a foreign party. Additionally, the Court held (at 316) in this case that the use of this extraterratorial power would not violate the rules of due process if it complied with à ¢Ã¢â€š ¬Ã‹Å"traditional notions of fair play and substantial justiceà ¢Ã¢â€š ¬Ã¢â€ž ¢. Essentially then, the test provided for in the International Shoe case holds that provided there is some form of minimal contact with the jurisdiction of the United States, and it was in the spirit of justice for this jurisdict ion to be established, then a United States federal court was able to be granted jurisdictional power to hear the matter, thus defeating a possible argument of forum non conveniens by a defendant. This common law test was further elaborated upon by the later case of Asashi Metal Industry Co v Superior Court of California 480 U.S. 102 (1987) in relation to a foreign defendant, and consists of two limbs (with the second limb comprising five key factors to be taken into consideration by the court). The test in relation to contact with the United States remains as the first limb, however the second limb in relation to reasonableness was elaborated upon by the court (at 113, citing Worldwide Volkswagen Corp v Woodson 444 U.S. 286, 292 (1980)), as needing to satisfy the following five tests: The burden on the defendant; The interests of the forum state in adjudicating on the matter; The plaintiffà ¢Ã¢â€š ¬Ã¢â€ž ¢s interest in obtaining convenient and effective relief; à ¢Ã¢â€š ¬Ã‹Å"The interstate judicial systemà ¢Ã¢â€š ¬Ã¢â€ž ¢s interest in obtaining convenient and effective reliefà ¢Ã¢â€š ¬Ã¢â€ž ¢; and à ¢Ã¢â€š ¬Ã‹Å"The shared interest of the several states in furthering fundamental substantive social policiesà ¢Ã¢â€š ¬Ã¢â€ž ¢. Essentially, these five tests comprise the grounds for reasoanbleness for the United States federal court system to be granted jurisdiction to hear the matter. These criteria serve to provide a balance between the interests of the two parties, as well as the interest of the United States in adjudicating on the matter, and provide a rigid formula that can be relied upon in current times to establish jurisdiction in the United States, and thus defeat a challenge of forum non conveniens. Of course, the argument of forum non conveniens cannot be relied upon where the United States is the sole judicial system granted jurisdiction to hear the matter, and no other forum is able to adjudicate (Gulf Oil Corp v Gilbert 330 U.S. 501, 507 (1947)). The United States, as previously mentioned, has quite a liberal approach to the notion of estblishing jurisdiction, however it does recognise the possibility that parties may tend to engage in a method of à ¢Ã¢â€š ¬Ã‹Å"forum shoppingà ¢Ã¢â€š ¬Ã¢â€ž ¢, which allows a plaintiff or defendant to select a forum on the basis of of more favourable provisions (Piper Aircraft Co v Reyno 454 U.S. 235, 252 (1981)). Ho