Myanmar needs an effective legal system, and so do its foreign investors

AungAn opinion piece by Sam Zarifi, ICJ’s Asia-Pacific Regional Director and Benjamin Zawacki, ICJ Senior Legal Adviser for Southeast Asia.

The controversy surrounding Aung San Suu Kyi (photo) and a joint-venture copper mine project in Myanmar should give prospective foreign investors pause.

It should also prompt the international community to help the country establish a legal regime on which both investors and the people of Myanmar can rely for protection of their rights.

A government-backed investigation into the mine project, chaired by Suu Kyi, concluded that security forces used chemicals against villagers protesting against it.

It also recommended additional impact assessments, and either increased compensation or the return of farmland allegedly taken via fraud and coercion.

But, crucially, it concluded that the project should continue. Villagers vehemently disagreed and vowed to pursue a lawsuit.

Myanmar’s government has a duty to protect workers, consumers, landholders and indigenous people against rights violations.

Despite recent steps, however, there are not enough lawyers, judges and others adequately trained to monitor economic activity and provide accountability for violations of laws governing corporate action.

Corporations have a strong interest in supporting the development of robust accountability mechanisms in Myanmar.

Many now considering investing participate in a global corporate citizenship initiative known as the UN Global Compact, which asks its members to take action prior to investing, such as human rights and environmental impact assessments, and to monitor business activity once under way.

Yet all the compact’s “commitments” are non-binding. And even strict adherence would not serve as a defence for companies accused of committing human rights and environmental violations.

Increasingly, transnational corporations may be held legally responsible for abuses in the country where they occurred, and also in their home country.

Western companies are the most vulnerable, but the copper mine case shows Asian enterprises are not immune: the mine’s other joint-venture partner is the Chinese Wan Bao mining company, a subsidiary of weapons manufacturer Norinco.

The copper mine controversy also shows that the line between “government” and “company” in Myanmar can be blurry; large joint ventures often include the military-owned Union of Myanmar Economic Holdings Company.

Indeed, the army is deeply involved in many companies and has a long record of human rights and humanitarian law violations.

In one landmark case, villagers sued Unocal in a US court for complicity in security forces’ human rights violations during the construction of the Yadana gas pipeline.

The case was settled in 2004 before a final decision on liability was reached. What made it significant – and still relevant – is that the US law used is not limited to US corporations.

The Unocal case was allowed to progress in the US because the courts found that the judicial system in Myanmar was not independent of the military government of the time and therefore could not provide a proper venue for a lawsuit.

Today, despite ongoing legal reform, there is a long way to go to rebut this finding.

The copper mine case presents an opportunity for the judiciary to demonstrate whether it can render just decisions.

Investment in Myanmar, if done lawfully and with reliable legal remedies, can be a strong force for good.

The international community should support Myanmar’s reformers in making this happen.