Tort as Meta-Regulation: The Liability of Private Transnational Regulators

Abstract

Consumers in developed countries regularly voice concerns regarding the working conditions under which goods, especially clothing and electronics, are manufactured in developing countries. Nobody wants slavery sneakers or a sweatshop iPhone; we all want to purchase fair trade goods. But how do we know we can trust a fair-trade label? Such certificates are given by private transnational organizations, which fill a regulatory vacuum created by the persisting weakness of international organizations such as the International Labor Organization (ILO), the United Nations Environment Programme (UNEP), and the World Health Organization (WHO). Absent any global oversight framework that supervises the work of such private regulators, it is unclear whether these certificates can be trusted, or whether they represent a mere whitewashing/greenwashing strategy, which allows multinational enterprises to turn a blind eye to manufacturing conditions across the less visible tiers of their global supply chains. To increase the accountability of this system, we propose holding private transnational regulators liable in tort if their actions (or omissions) generated harms. We support this proposal through a comparative legal analysis and discuss the practicalities of its implementation. We argue that this proposal will support and facilitate positive network effects in the global private regulation system.

Keywords: private transnational regulators, tort liability, CSR, transnational litigation, global supply chain

JEL Classification: K13