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1 Responsible Investment Association Australasia - MEMBER ONLY WEBINAR - Controversial Weapons Screening - a detailed look at the legal, normative and ethical considerations for investors 21 March 2017 Presenters: Dr Nick Grief - University of Kent Mr David Cockburn - Vigeo Eiris
2 Professor Nick Grief Controversial Weapons and the Law
3 Weapon-specific treaties Biological Weapons Convention 1972 Ø in force 1975, 178 States Parties Inhumane Weapons Convention 1980 Ø in force 1983, 115 States Parties vprotocol III on Incendiary Weapons 1980; in force 1983 vprotocol IV on Blinding Laser Weapons 1995; in force 1998 Chemical Weapons Convention 1993 Ø in force 1997, 192 States Parties Landmines Convention 1997 Ø in force 1999, 162 States Parties Cluster Munitions Convention 2008 Ø in force 2015, 100 States Parties Nuclear Weapons Convention - when?? 2
4 Domestic legislation implementing CMC obligations UK Cluster Munitions (Prohibition) Act 2010 Ø Post-legislative scrutiny: Ø The Act does not prohibit indirect financing Ø Legal challenges to the use or transfer of cluster munitions: e.g. R (CAAT) v Secretary of State for Business, Innovation and Skills NZ Cluster Munitions Prohibition Act 2009 Ø KiwiSaver schemes with shares in US companies with links to the arms industry Ø Police and FMA review following complaint by Amnesty International Ø No evidence of illegal activity but many KiwiSaver providers decided to divest client funds from companies making the weapons Ø International norms influencing investor behaviour 3
5 Nuclear weapons Treaties dealing with acquisition, manufacture, possession, testing and deployment (e.g. PTBT, CTPT, Nuclear Free Zones treaties) Ø NZ Nuclear Free Zone, Disarmament, and Arms Control Act 1987 No comprehensive and universal treaty prohibition on use or threat to use Non-Proliferation Treaty 1968 Ø in force 1970, 191 States Parties Ø recognises certain States as nuclear-weapon States (NWS) for NPT purposes but does not legalise possession Ø grand bargain: non-nws have agreed not to acquire nuclear weapons (Arts I & II), whilst Art VI requires good faith negotiations towards and the conclusion of a nuclear disarmament treaty 4
6 A twofold obligation: to pursue and conclude negotiations ICJ, Advisory Opinion, Nuclear Weapons Case, 8 July 1996, para 105, point 2F: Unanimously, There exists an obligation to pursue in good faith and bring to a conclusion negotiations leading to nuclear disarmament in all its aspects under strict and effective international control. 5
7 The Marshall Islands cases in the ICJ Applications against 9 nuclear-armed States on 24 April 2014, alleging breaches of Art VI NPT / customary international law Jurisdiction in contentious cases requires consent, so only 3 cases before the Court: India, Pakistan, UK Preliminary objections to jurisdiction and admissibility Judgments delivered on 5 October 2016 Ø No jurisdiction to consider the merits: no dispute when the Applications were filed new test for dispute Ø 9-7 in the cases against India and Pakistan Ø 8-8 in the case against the UK, so President had a casting vote The UK has amended its Optional Clause Declaration twice to prevent further challenges 6
8 International humanitarian law (IHL) 7 Governs the conduct of armed conflict The right to choose methods or means of warfare is not unlimited Crucially: a use of force that is necessary and proportionate under the law of self-defence (or that is authorised by the UN Security Council) must also comply with IHL All the parties to a conflict must respect IHL
9 Key principles of IHL The principle of distinction: States must never use weapons that cannot distinguish between civilian objects and military targets The prohibition against causing unnecessary suffering to combatants The prohibition against environmental damage 8
10 IHL principles: legal status and effect to be observed by all States whether or not they have ratified the conventions that contain them, because they constitute intransgressible principles of international customary law (ICJ, Advisory Opinion, Nuclear Weapons Case, 8 July 1996, para 79) Ø Jus cogens peremptory norms of general international law Obligations erga omnes: owed to and the concern of all States, so every State has a legal interest in upholding the obligations and protecting the rights involved (ICJ, Advisory Opinion, Wall Case, 9 July 2004, paras ) 9
11 The Martens Clause Article 1(2) of Protocol I of 1977 Additional to the Geneva Conventions 1949: In cases not covered by this Protocol or by other international agreements, civilians and combatants remain under the protection and authority of international law derived from established custom, from the principles of humanity and from the dictates of public conscience 10
12 Controversial Weapons and the Law Professor Nick Grief Kent Law School, University of Kent Tel: + 44 (0) Doughty Street Chambers, London Tel: + 44 (0) n.grief@doughtystreet.co.uk 11
13 Controversial Weapons Research RIAA Webinar 21 March, 2017
14 Controversial weapons what are they? Weapons banned or restricted by Convention 4 e.g. Nuclear, Biological, Chemical, APMs, Cluster Munitions, Laser Blinding, Undetectable Fragments 4 Banned does not imply illegal to produce e.g. Incendiary Weapons where the aim of Convention appears to be to limit usage in World War 2 situations Weapons with significant concern 4 e.g. Depleted Uranium, White Phosphorus, Armed Drones, Autonomous Weapons Controversial Weapons Research 2
15 Convention Process 4 International Conventions give framework 4 Typically apply to states, not companies 4 Countries choose to accede or ratify or ignore 4 Ratification is process of national legislation different in each country what is illegal is different in each country 4 Comes into force when given number of countries have ratified 4 Often applies to usage, rather than production 4 Very rarely tested in courts 4 Not necessarily clear how it applies to companies 4 Conventions do not explicitly ban all activities related to the weapons Controversial Weapons Research 3
16 Possible ways to classify Controversial Weapons 4 Only those items explicitly banned / limited by convention 4 Only the prime contractors for the weapons systems 4 All companies involved with producing key parts or services for the weapons systems 4 Possible additional limitation for each of above by % turnover from controversial weapons 4 Companies financing controversial weapons; note that while finance is necessary to produce controversial weapons, so are electric, water, IT systems etc. 4 If a controversy happened, would investors be embarrassed by their investments? Controversial Weapons Research 4
17 Crucial importance of spares and servicing For example, reported case: 4 British troops being let down by lack of spare parts for helicopters 4 British troops are being supplied with unreliable equipment made worse by the failure of the Ministry of Defence to supply enough spare parts for armoured vehicles and helicopters, MPs have said Spares and servicing transform unusable expensive heaps of junk into weapons systems Spares and servicing are needed throughout the in service life of weapons systems Controversial Weapons Research 5
18 Application to companies Convention and national legislation generally not comprehensive for companies 4 e.g. cluster munition convention bans explosive warheads, submunitions, dispensers or rockets, and assistance; defines all except assistance 4 explosive warheads, submunitions, dispensers or rockets are essential to deliver cluster munitions to battleground but useless without the system to get it there Only meaningful way is to identify involvement with the system; all parts are necessary for it to work at all. Controversial Weapons Research 6
19 How investors can react and engage on issues of controversial weapons Exclusion 4 Exclusion either for any involvement, or for whole weapons etc. Engagement 4 Engagement with company to change involvement generally not very successful e.g. BAE Systems is not going to stop making weapons! 4 Companies can legitimately say that they will make the weapons if their own governments ask them to e.g. Singapore and South Korea for Cluster Munitions / APMs; if companies refused, they may limit their ability to win other weapons contracts 4 Companies may have contractual obligations to supplies spares and servicing for many years after a production contract ends Controversial Weapons Research 7
20 How companies react and engage on controversial weapons - 1 Ignore questions from Research Agencies Answer a different question e.g. asked when last supplied parts for a cluster munition, and if any spares contacts in place, say that they do not make cluster munitions, or they comply with the Convention Obfuscate! e.g. denying evidence which is on their websites 4 One Indian company involved in a cluster munition system denied knowledge of the warhead types, despite this information being publicly available in a government research department publication due diligence should be expected Controversial Weapons Research 8
21 How companies react and engage on controversial weapons - 2 Obfuscate e.g. denying evidence which is on their websites 4 One UK company CSR Director denied involvement, despite information on a company website indicating involvement 4 Then claimed that had never delivered any product despite information in an interim report (legal document) showing that product had been delivered 4 Finally said that product had not gone into production that was accurate Provide useful information We don t expect CSR contacts to know answers to questions, but we expect them to know who to ask Controversial Weapons Research 9
22 Limitations to research 4 Generally relies on publicly available information 4 Difficult to determine when spares and servicing contracts are in place 4 Difficult to determine all companies involved with a weapons system 4 Previously reliable sources of information become out of date despite apparent updates e.g. Landmine monitor / Cluster Munitions monitor reports updated annually, but often sources of info used relate to documents 5 years old or more 4 Some NGOs act as echo chamber, repeating allegations from some time in past, without clear source referencing Controversial Weapons Research 10
23 Real World Challenges UK government supply of BL755 Cluster Munitions to Saudi Arabia decades ago, recently used in Yemen 4 Significant media interest and pressure from MPs 4 Supplied decades before Convention even thought about 4 BL755 produced by Hunting Engineering Insys Lockheed Martin 4 Delivery very likely to have been by Tornado aircraft BAE Systems etc 4 What if relevant systems on Tornados had been updated / maintained since Convention came into effect? Controversial Weapons Research 11
24 Real world challenges - compare Multiple Launch Rocket System - MLRS Cluster munitions system Originally unguided rockets with APMs / Cluster munitions Stockpiles of original cluster munitions rockets in a number of countries including US Now updated to fire guided rockets 4 Most have unitary warheads widely used and sold 4 Guided rockets also produced for cluster munitions production of these has now ceased 4 Launchers can fire both guided and non guided, unitary and cluster munition variants New alternative warhead now in production will replace Cluster munitions for US over time and potentially for other countries Launchers updated for new rocket warhead combination; can still fire other variants Supply / maintenance of launchers by companies now is supply / maintenance of system to fire cluster munitions if the purchaser has existing stockpiles Analogous to supplying / maintaining a gun when the user has problematic ammunition Controversial Weapons Research 12
25 Is a system designed for more than one warhead type specifically designed for cluster munitions? Weapons systems always require specific design e.g. : 4 Each weapons system fit onto aircraft has to have all necessary power, data and control systems, and be acceptable aerodynamically. Significant design time and costs for each of these 4 Specifically designed to operate with each type of warhead Analogy of car : 4 Specifically designed for driver 4 Specifically designed for luggage 4 Specifically designed for passengers Controversial Weapons Research 13
26 David Cockburn Head, Specialised Research T : David.Cockburn@eiris.org Vigeo Eiris The Foundry 17 Oval Way London SE115RR - UK OUR OFFICES: Paris. London. Boston. Brussels. Casablanca. Milan. Montreal. Santiago de Chile. Tokyo OUR PARTNERS : Canberra. Hanover. Jerusalem. Mexico City. Rio de Janeiro. Zaragoza
27 Copyright Vigeo Eiris 2017 Copyright Vigeo Eiris Vigeo Eiris provides its clients with information and/or analyses or opinion on factual, quantitative or statistical, managerial, economic, financial, governance, social, or technical data, in relation to companies, brands, products or services, assessed individually or with respect to sectors, regions, stakeholders or specific themes. Vigeo Eiris is committed to making its best efforts when collecting, organising, consolidating, formatting, making available and/or delivering the aforementioned information, analyses and/or opinion to its clients. Although Vigeo Eiris ensures that it only uses publicly available information, the agency cannot guarantee its accuracy or completeness. The above elements (information, indicators, analyses, scores, and opinion) do not include or imply any approval or disapproval on their content from Vigeo Eiris, its executive officers, or its employees. These elements do not represent in any way a guarantee, or reference of legal, moral, philosophical, ethical or religious nature, supporting or opposing any investment or divestment decision, or any standpoint or opinion expressed in favour of, or against companies, products, services, sectors or regions directly or indirectly mentioned in Vigeo Eiris deliverables. Our deliverables are not, and should not, be considered as a form of financial advice or recommendation. No investment or divestment decision should be attributed to the information or opinion provided by Vigeo Eiris. Our products and services must only be considered as one of the many elements related to the financial decision making process. Vigeo Eiris, its methodology, brand, and employees, shall under no circumstances, be held responsible for any kind of consequence (including economic, financial, or legal) derived from the interpretation of its information, analyses, opinion, scores, and indicators. The terms of use of our products and services and their impacts stem from the sole responsibility of their users. 15
28 Responsible Investment Association Australasia - MEMBER ONLY WEBINAR - Controversial Weapons Screening - a detailed look at the legal, normative and ethical considerations for investors 21 March 2017 Presenters: Dr Nick Grief - University of Kent Mr David Cockburn - Vigeo Eiris
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