"How do companies that sell products that can easily be misused to infringe human rights protect against such misuse, so that that their legitimate sale can continue?"

The globalisation of many multi-national companies' (MNCs) marketing chains means their goods are being sold into an ever-wider spectrum of countries, each with its own political, cultural and human rights context. Whilst this is not necessarily a new phenomenon in itself, MNCs are facing newer challenges in terms of stakeholders (including consumers and investors) increasingly making a link between how these products are used by third parties – and the company itself. This is particularly the case where products are misused to violate human rights. In part, this link is being made due to:

• Better consciousness on the part of business and society more broadly, of violations committed abroad due to increased media coverage and access, and identification of company complicity in the courts
• Enhanced understanding of the concept of complicity, which has been clarified by Professor John Ruggie's work, particularly in his report of 15 May 2008 entitled ‘Clarifying the Concepts of "Sphere of Influence" and "Complicity"'1
• Awareness on the part of business and society more broadly, that companies are expected to "make sure that they are not complicit in human rights abuses" in line with Principle 2 of the UN Global Compact2
• An inability amongst stakeholders (including NGOs, activists etc) to hold the actual perpetrators to account, leading them to focus on the role of (potentially more accountable) MNCs instead
• Growing focus on ‘brand value' amongst many MNCs, making them more vulnerable to negative media coverage of product misuse – even when it is by third parties

Where such a link is made, the company could face allegations of complicity in the wrongdoing of third parties due to selling them the product in the knowledge that it might be misused to violate human rights. This can present a particular challenge to some MNCs, as many products can potentially be misused to abuse human rights, making it extremely hard to guarantee they will only be used for ‘legitimate' purposes. This challenge is being exacerbated by two key issues linked to corporate expansion into new markets:

• The growing range of countries MNCs are selling into means it is increasingly challenging for companies to maintain strong oversight of the human rights and product misuse risks present in any particular remote location
• Many MNCs are becoming increasingly distant from their end-users, due to the expansion of their distribution chains – with an increasing number of ‘intermediaries' between themselves and the final purchasers of their products

To some degree, the ability of companies to prevent the misuse of their products will depend upon the extent to which companies assess the potential impacts of their products, ‘foreseeability' of the risk of misuse – as well as the nature of companies' marketing strategies, which can help to prevent the risk from materialising and/or mitigate it.

The test of ‘foreseeability'

This dilemma focuses only on those products for which the risk of misuse is reasonably foreseeable given the three sets of factors that companies should consider under the UN's "Protect, Respect and Remedy" Framework3 ("the Framework"), to respect all human rights:

• The context of the country where it is being sold (for example, the Chinese government's historical attitude to freedom of expression and the right to privacy makes it relatively more likely that different surveillance and information communication technologies may be misused in a way that undermines citizens' human rights)
• The human rights impacts of the potential alternative use of the product (for example, law enforcement equipment, such as handcuffs, stun guns and riot batons can easily be misused to illegitimately infringe human rights)
• The ‘risk culture' of the partners or intermediaries with whose help the product is sold (for example, evidence (or reasonable suspicion) that the local seller is likely to ignore the risk that third party purchasers may use a product in a way that undermines human rights)

Company control over sales

With regards to marketing strategies, companies may use a number of means to deliver and distribute their products:

• Direct sales
• Joint ventures or partnership with local sellers
• Use of intermediaries (e.g. franchisees and brokers)

If a company uses direct sales, it can use licence agreements or a sales contract to ensure the legitimate use of its product. Where sales are carried out through ‘third-parties', companies may also use service contracts to commit these third parties to take measures to prevent and/or reduce the risk of product misuse.

Nonetheless, where a company has no restrictions in place regarding the use of their products, they face a higher risk of being perceived as complicit with any human rights abuses committed by the purchaser using their product. Likewise, even if restrictions are in place with the primary purchaser, this will not necessarily ensure that the product is not sold to – and misused – by a secondary purchaser (e.g. in a re-sale context).

In some cases, the type of product and the commercial reality faced by companies may also make it impractical to track the continued use of their products and thus address the problem in an effective way. For example, although knives clearly have the potential to be used for illegitimate purposes, the number in which they are produced, their average value, the wide range of legitimate uses make it all but impossible to place restrictions on relevant value chains or to trace their use.

Challenges presented by the country context

In some countries, products may be misused as a result of national laws, government policies and social practices – i.e. latent contextual issues that the company has little prospect of changing. Where this is the case, a responsible company may be faced with a difficult choice. It may:

• Continue legal sales of the product in that country despite the danger that the product may be used to commit human rights violations, or
• Refuse to do business in that country, and so forgo the revenues that would have been generated through the legal sale of its products there

Following the first course of action could imply that companies owe no responsibility for their actions beyond legal liability. The second course of action may be feasible and in line with a company's ethics code, or it may be unrealistic, as it can severely limit the countries and markets in which companies can conduct business. Failure to sell into certain markets could also be ethically wrong if the product in the majority of its use scenarios offers broader human and social benefits when used in the way in which it is intended.

Considering this, the dilemma for a responsible business is how to best ensure that the legitimate products it sells are not used to facilitate human rights violations – particularly given the commercial, political and ethical constraints that they are likely to face in such situations.

Scope of product misuse: military equipment and other controlled goods

In certain cases, companies will not always have a choice as to who they sell to. For example, many products are subject to state export controls for reasons of geopolitics, security and/or human rights. In such cases, human rights violations arising out of the misuse of such products that have been specifically authorised for export arguably places responsibility on the authorising state rather than the company that sells the product. This is especially the case with respect to weaponry and other military equipment, which is often subject to very tight export restrictions. Furthermore, the very nature of weaponry, which can be used both legitimately and illegitimately to inflict serious harm, makes it something of a ‘special case' compared to other products (including non-military products that are otherwise subject to state controls). For these reasons, the trade in arms is excluded from the scope of this dilemma.

Nonetheless, export controls will not necessarily cover all products, and where they do cover a particular product, this will not necessarily be due to the risks it poses to human rights (i.e., it may be controlled for political or other reasons). This being the case, there will be situations where controlled goods are authorised for sale to third parties that do indeed present a risk to human rights.

As a result, this dilemma does cover controlled products that are authorised for sale to potential human rights violators. This is because, in a sense, the ultimate decision making power as to whether to sell to potential human rights violators – or what conditions are imposed on such sales – still lies with the company, allowing latitude for responsible decision making, which is explored in this dilemma.

Real-world examples

The following examples show the types of challenges that companies may face when selling different products into environments in which human rights violations are common.

Change in India's sex ratio puts the focus on the sale of ultrasound technology by General Electric (GE) and other companies

In April 2007, the Wall Street Journal reported that the availability of ultrasound technology in India was changing the country's sex ratio – with reduced numbers of female babies being born. The availability of technology to detect the sex of an unborn baby has reportedly facilitated the practice of female sex-selective abortions. This is despite governmental legislation and action against female feticide. As a result, the Wall Street Journal reported that this raised questions about the impact of sales ultrasound technology in the country – with GE being the largest vendor.4

Despite relevant legal protections, prejudice and discrimination against women is common in India. Males are often viewed as wealth earners during their life. By contrast, having a daughter is often seen as a financial burden due to the practice of dowry payments. GE has previously faced a similar challenge in China.

In its Citizenship Report, particularly with regards to Ethical Product Use,5 GE argues that "given the multiple uses for ultrasound in obstetrics and gynaecology, restricting access to the technology altogether would have conflicted with the human right to reach the highest attainable standards of health." However (and given the specific context), uncontrolled access to the technology could clearly have serious human rights implications, such as encouraging societal discriminatory practices like those mentioned above.

Cisco reportedly selling surveillance technology to China

An internal presentation document by Cisco engineers entitled "Overview of the Public Security Sector"6, leaked to reporters on the eve of a US Senate human rights hearing in 2008, revealed that the company's technology has been used in the building of China's ‘Golden Shield' project. The ‘Golden Shield' Project was developed to monitor and screen Internet usage by all Chinese citizens. As reported by The Epoch Times,7 the Ministry of Public Security claimed the system facilitates police data sharing for criminal matters. However, it is widely believed to be used as part of the Chinese government's extensive censorship system.

The misuse of Cisco's technology puts the company in a difficult position. An internal Cisco presentation showed that the company was aware that one of Golden Shield's stated goals was to "combat ‘Falun Gong' evil religion and other hostilities" (see Dilemma on Freedom of Religion). However, a Cisco statement on the dilemma (contained on its website) refers to the multiple functionality of the technology, which can easily be misused. As Cisco has stated, the functionality of the technology allows for the illegitimate violation of people's rights to privacy, freedom of expression and religion may be the same functionality that allows libraries and corporate network administrators to legitimately block questionable sites.8 Thus, the company has not admitted to knowingly selling the product to intrude on the rights of Chinese citizens, but rather has implied its misuse by the Ministry of Public Security.

A February 2010 list of the Electronic Frontier Foundation (EFF) entitled ‘Seven "Corporations of Interest" in Selling Surveillance Tools to China'9 includes Cisco as one of the companies that continues to sell surveillance technology to the Chinese government and related entities. EFF admitted that there was no absolute evidence that the companies on the list were indeed fostering repression in China. However, EFF believed that news reports on the human rights situation in China, as well as some that include admissions of some level of involvement from company officials – the mentioned internal presentation document by Cisco engineers being an example – gave a sufficient basis to question the company's sales.

Controversy over Caterpillar sales of D-9 bulldozers to the Israeli Defence Forces

US-based company Caterpillar has been criticised on numerous occasions by the international human rights community, including by Human Rights Watch (HRW) in its commentary entitled, "Israel: Caterpillar Should Suspend Bulldozer Sales",10 Amnesty International (AI) – in the report, "Israel and Occupied Territories: Under the Rubble: House Demolition and Destruction of Land and Property",11 and the UN, particularly in the report of the Special Rapporteur of the Commission on Human Rights entitled "The Right to Food".12 Concern has been raised over the company's decision to supply bulldozers to the Israeli Defence Forces (IDF). The D-9 bulldozer is made by Caterpillar in accordance with military specifications and is sold to Israel as weaponry under the US Foreign Military Sales Program, a government-to-government programme for selling US-made defence equipment. Once exported to Israel, the bulldozers are armoured by state-owned Israel Military Industries Ltd and used in house demolitions.

The home demolitions carried out by the IDF have been recognised by the UN as illegal under international law.13 According to AI report, "Israel and the Occupied Territories: Under the Rubble: House Demolition and Destruction of Land and Property",14 some of these demolitions resulted in deaths and injuries to civilians and were conducted without sufficient notice while occupants were still inside the homes. Since 2001, Caterpillar Inc. has faced direct allegations by concerned groups and individuals (including a UN Special Rapporteur on the Right to Food, Jean Ziegler15 and HRW16) claiming it was aiding and abetting human rights violations by supplying the IDF with bulldozers. The case of one of the victims, Rachel Corrie, has spurred a new wave of criticism of company's business actions. In 2003, Corrie, a 23 year old American human rights defender, who had been non-violently demonstrating against Palestinian home demolitions with fellow members of the International Solidarity Movement, was crushed to death by IDF using a Caterpillar D-9 bulldozer.17

In a response to HRW's allegations that Caterpillar was complicit in illegally destroying Palestinian homes, its CEO was reported by HRW to have said that the company "did not have the practical ability or legal rights to determine how our products are used after they are sold."18

Human rights concerns raised over the selling of drones by US companies to domestic and foreign authorities

In April 2012, the meeting of the first international drone summit in Washington DC highlighted the concerns of national and international human rights NGOs over the provision by US companies of drones to domestic and foreign state authorities, particularly regarding the lack of adequate legal and corporate regulation of their use. Particular focus has been place on Texas-based Vanguard Defence Industries, one of leading companies in the area, which has predicted a 25% increase in sales for 2013, at a value of between US$35m and US$40m, predominantly from sales in the overseas market. Vanguard produces both weaponised and surveillance drones that are known to have been used for anti-narcotics and anti-terrorism operations by authorities in the US, South America and the Middle East.

However, several human rights organisations have criticised the use of drones in both military and domestic law enforcement. For example, Washington-based think tank, the Center for International Policy (CIP), along with the American Civil Liberties Union (ACLU), has claimed that US domestic privacy laws are not sufficiently robust and comprehensive to ensure the use of drones in the country in compliance with human rights norms. In April 2012, following a Freedom of Information Act request by the Electronic Frontier Foundation, the US Federal Aviation Administration released data concerning the launching of drones and spy planes from at least 63 locations within the country, raising concerns over the potential for covert surveillance of residential areas.19

In terms of the foreign deployment of drones, the CIP has condemned the use of the technology by the Obama administration in the extra-judicial killing of American-born radical Muslim cleric Anwar al-Awlaki in Yemen. In addition, HRW has highlighted the perpetration of human rights violations, including killings, torture and rape, in the war against the drug trade by Mexican authorities, which are known to use drones in their operations.20

Vodafone ‘forced' to send pro-government text messages to users during 2011 Egyptian revolution

In February 2011, during protests in Egypt against the rule of President Hosni Mubarak, multinational telecommunications company Vodafone claimed it was ‘forced' by the government to send propagandistic text messages to its users in the country, in support of Mubarak and his government. The messages included calls by the Armed Forces for citizens to "…confront the traitors and criminals and protect our people and honour".21

Vodafone, in a statement issued on its website, claimed that the Egyptian government was able to use its emergency powers under the Telecommunications Act to force mobile network providers to disseminate such messages. The company also claimed that it had not written the messages and was unable to engage with the government as to their content. The statement emphasised that all messages sent in this context should be "…transparent and clearly attributable to the originator".22

Companies operating in countries that may be deemed to have an oppressive government must be aware of any schemes of legislation which allow authorities to interfere with or manipulate company services in order to repress opposition. In such scenarios, the risk that companies may be then implicated in human rights abuses linked to political repression will likely be increased.

• For examples of how companies such as GE, Motorola, Nokia Siemens Networks, Honeywell International Inc., Agrium Inc. and others have responsibly addressed the misuse of their products and technologies by developing and implementing end-use policies, changing product designs and tracking sales, see:
• Product misuse case studies
• Please contribute your commentary or suggestions to our online discussion forum:
• Product misuse online discussion forum

Back to top

Some of the most common and relevant examples of product misuse include surveillance technology, policing devices and other security equipment, health products and technology, chemicals (such as fertilisers), information communication technology and dual-use products.

Misuse of Surveillance Technology

The right to life and security implies positive obligations on states to ensure that all reasonable measures have been taken to protect people from possible security threats. In many cases, protection includes a range of surveillance technologies such as CCTV, phone, email and Internet surveillance. These technologies have entered into (relatively) common usage in a range of locations.

When misused, however, such technologies can undermine people's rights to privacy and freedom of expression. They can also facilitate the identification and arrest of political, religious and human rights activists. The misuse of such products and technologies has led to institutions such as the European Parliament to call on the EU in Recommendations on Protecting Human Rights Defenders and Promoting Their Work23 to "systematically denounce and reprimand international companies" that provide "oppressive regimes with surveillance technology."

Examples of the misuse of surveillance technologies include the following:

• In Iran, the standards-based, lawful interception capability of basic 2G/2.5G mobile networks supplied by Nokia Siemens Networks to two local mobile phone operators in 2008 was reportedly used by authorities to illegitimately monitor communications of political dissidents. A ‘monitoring centre' acquired by MCCI from Nokia Siemens Networks in 2008 was used to activate the lawful interception and analysis of intercepted data. Three months prior to this being reported, Nokia Siemens Networks had exited the monitoring centre business. According to the euobserver.com, on 2 June 2010 Nokia Siemens Networks told Members of the European Parliament that the company had learned its "lesson".24 While emphasising that the sale of the monitoring centre was in compliance with legal rules, including export controls, Nokia Siemens Networks publicly acknowledged that prior to providing a monitoring centre to MCCI in 2008, it should have better understood it's possible implications for human rights in Iran
• In the United Arab Emirates (UAE), Blackberry users were prompted by UAE telecoms firm Etisalat to download software that was claimed to improve performance but in fact could allow unauthorised access to private information and e-mails, BBC reported. Blackberry maker Research in Motion said in a statement to customers that "Etisalat appears to have distributed a telecommunications surveillance application". It added that "independent sources have concluded that the Etisalat update is not designed to improve performance of your BlackBerry Handheld, but rather to send received messages back to a central server". The update was subsequently identified as an application developed by American firm SS8. The California-based company described itself as a provider of "lawful electronic intercept and surveillance solutions"25
• In China, a large-scale surveillance system was documented in a report of Citizen Lab researchers entitled "Breaching Trust: An Analysis of Surveillance and Security Practices on China's TOM-Skype Platform".26 Citizen Lab reported on the system which allows the authorities to pick up and store messages sent through the Skype online telephone and text messaging service. The database held more than 150,000 messages, which included politically sensitive words and phrases for China. Skype is operated in China as Tom-Skype, a joint venture involving US-based auction site, eBay and Chinese company TOM-Online. Citizen Lab said it was "clear" that Tom was "engaging in extensive surveillance with seemingly little regard for the security and privacy of Skype users."

Misuse of policing devices and other security implements

As with surveillance technology, a range of equipment is necessary for the legitimate provision of security. Nonetheless, such equipment can be misused, resulting in human rights violations.

In 2004, the UN Special Rapporteur on Torture noted in his report "Trade and Production of Equipment Specifically Designed to Inflict Torture"27 that the vast majority of cases of alleged torture or other forms of ill-treatment have involved the misuse of otherwise legitimate security equipment, such as handcuffs, batons and their variations (sticks, canes, lathis, truncheons), tear gas and pepper sprays.

For example, in a study titled "Europe: From Words to Deeds: Making the EU Ban on the Trade in ‘Tools of Torture' a Reality"28 carried out in March 2010, AIl and Omega Research Foundation alerted the public to the incidents of selling security equipment for law enforcement and detention by European companies to countries whose police and security forces are known offenders against human rights and have made use of such equipment to inflict torture and other ill-treatment.

Thus, the worrying examples included the sale of electric-shock devices to countries, such as Georgia, Mongolia, Pakistan, Moldova, Senegal, Cameroon, and chemical sprays to countries, such as China and India. This has been done despite evidence (particularly from AI Reports) that the police and security forces in these countries had often used the mentioned products for illegitimate purposes.

Misuse of health products and technology

Advanced drugs and medical technology, which on the one hand vital for the realisation of the right to health, also have the potential to be used in ways for which they were not intended to undermine a range of human rights. The following are few examples of misuse which are of concern:

• Drugs: In a 1986 report On Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment,29 the first UN Special Rapporteur on Torture included "administration of drugs, in detention and psychiatric institutions" among the forms of physical torture. The report specified three types of psychotropic drugs, including "neuroleptics" that cause trembling, shivering and contractions, but which also cause a person to become apathetic and "dull his intelligence." Neuroleptics are recognised by some as an appropriate medicament in treating psychosis.30 In a 2002 Report on Bulgaria,31 AI recognised their usefulness for calming behaviour and psychotic thoughts but indicated that in "large doses, as well as prolonged usage, they can have very undesirable side effects". Pharmaceutical companies that legitimately produce neuroleptics include Johnston & Johnston, Lilly and Astrazeneca. In 2010, the BBC reported, that so-called date-rape drugs were on the rise, according to the UN drug control agency's annual report. These drugs were used to reduce people's resistance to unwanted sexual activity and restricted their ability to remember what had happened later. Some of the substances used also have legitimates uses, including for short-term treatment of chronic or severe insomniacs that are not responsive to other hypnotics, which makes it harder to keep them out of the hands of criminals. Rohypnol (Flunitrazepam) has attracted particular media attention for its misuse in this respect. Its primary manufacturer is Roche, a Swiss pharmaceutical company
• Physical restraints: Restraint beds can be legitimately used in mental hospitals to suppress the violent behaviour of mentally disabled patients. They are legitimately produced by different companies specializing in products for healthcare and long-term care. However, their use to inflict ill-treatment on detainees in prisons has also been reported. In its 2003 Report titled "Pain Merchants: Security Equipment and its Use in Torture and other Ill-Treatment"32 AI has attracted attention to the death of a 56-year old Austrian prisoner, Ernst K., who died in Krems Stein prison. Ernst K.'s hands and legs had reportedly been strapped to both sides of the bed and he had been left unable to move
• Ultra-sound technology: As described above, ultrasound technology appears to have been used in India to facilitate female-sex abortions, whereas its principal use is in obstetrics and gynaecology. As already noted, products that allow the detection of the sex of an unborn child in a context where female foetuses are likely to be aborted, can have serious human rights implications.

Misuse of Information Communication Technologies

Information Communication Technologies (ICT) cover a broad range of technologies that can facilitate access to and sharing of information and ideas and make the presentation of information user-friendly. However, when misused, ICT can lead to various human rights violations. This concern was particularly expressed by UNESCO in its Report "Ethical Implications of Emerging Technologies",33 which looks into the ethical, legal and societal implications of different technological choices.

Examples of the misuse of ICT to restrict human rights include:

• Encryption technologies: Data encryption technologies produced by software industry leaders, such as AVG, Cisco Systems, Dell, HP, IBM and others are legitimately used to protect commercially sensitive information and communications. However, the functionality of such technologies can be easily abused, including by criminal groups looking to maintaining privacy of communication. For example, in 2002 BBC reported that the National Hi-Tech Crime Unit and their colleagues in Europol had broken into an Internet paedophile ring known as the Shadows Brotherhood. The group's activities centred on a website, which had an archive of child abuse images. When uploading and downloading images to and from the site, they used sophisticated encryption techniques, often hiding obscene material in apparently innocent picture files.34
• Biometrics: Biometrics is an emerging technology that measures and analyses unique characteristics of individuals, including both physical and behavioural. Examples include DNA, facial patterns and fingerprints recognition software. Industry leaders in advanced fingerprint and palm print technology include companies such as Cogent, L-1, Motorola, NEC and Sagem. On the one hand, this technology can help governments to limit travel by criminals or suspected dangerous persons. On the other, it could enable building a complete profile of a person, which could be used for illegitimate purposes
• Radio frequency identification (RFID): RFID is a technology that enables data exchange from a small wireless device, called an RFID tag, which is equipped with a computer chip and antenna. It could be useful in the area of product tracking to manage supply chain and inventory. However, the use of RFID tags on moving objects – when embedded in the uniforms of employees – can lead to allegations of breach of privacy of employees. For example, in 2005 Cisco began selling RFID servers that work with RFID chips embedded in uniforms to track employee whereabouts. However, according to v3.co.uk, this technology was criticised by Liberty, who claim that "… [it] undermines employee privacy even further and reinforces the slur that workers cannot be trusted".35
• Computer hardware: In January 2010 Voice of America News reported that a US federal district court allowed a claim against IBM and Fujitsu ICL to proceed under the Aliens Tort Claims Act. The companies are accused of supplying technology which the South African authorities used to create "passbooks" for the black population that were used to control their movement, employment and residence.36 According to the legal counsel for the victims, as reported by CorpWatch, "apartheid could not have been maintained in the same manner without the participation of the defendants".37 According to Telegraph, IBM contended that it was not the company's place to tell clients how to use its products.38

Misuse of chemicals and fertiliser

Certain chemical products, including those intended for agricultural use, can – if used in illegal or inappropriate ways, result in human rights violations. Although a wide range of chemicals are subject to legal restrictions, this is by no means always the case.

For example, ammonium nitrate fertiliser is used for raising crops. Nonetheless, it can be easily adapted in order to render it explosive. In 2009, globalsecurity.org reported that ammonium nitrate fertiliser is used to make about 95% of bombs in Afghanistan.39 In 2005 this type of fertiliser was also reported by the National Counter Terrorism Security Office (NaCTSO) of UK to have been used in a number of terrorist bombings, including in Bali in 2002, Oklahoma City in 1995 and New York in 1993.40

In 1996 victims and families of the victims of the April 1995 Oklahoma City bombing initiated legal proceedings against ICI Explosives USA, Inc., alleging that it supplied "explosives grade" ammonium nitrate used in the bombing, and of failing to add an ingredient to render it inert. The company maintained the fertiliser was sold in the less volatile pellet form instead of a powder, and that it would not have been possible to render it inert through the addition of other substances.41 The case was subsequently dismissed by the court.

Misuse of civilian products in a security or conflict context

A range of ostensibly civilian or dual-use products can be used in conflict and security enforcement contexts to violate human rights. Dual-use products are goods, software or technology that can be used for both civil and military applications. Although most developed countries have export controls on certain types of dual-use products, some will not necessarily be subject to any export restrictions (see also Dilemma on Doing business in conflict-affected countries).

Common examples of misuse in this category include:

• Transport equipment (for example the use of civilian-spec vehicles by state actors to assist in security or military operations that result in human rights violations)
• Telecommunications equipment (for example the use of satellite telephone by illegitimate armed groups in remote areas to maintain operational integrity and to assist in operations that result in human rights violations)
• Engineering equipment (for example the use of earth moving equipment to destroy civilian property)
• Other specialised electronic equipment (for example civilian satellite navigation equipment used by military forces to coordinate/enhance operations that result in human rights violations)
• Computer hardware or software used in manufacturing of military goods

Examples of the misuse of ostensibly civilian or dual-use items include the following:

An electrical cattle prod is a handheld device commonly used to make cattle or other livestock move by administering a relatively high-voltage, low-current electric shock. However, there have been a number of reports alleging its use as a tool of torture. For example, on 28 April 2009, HRW sent a letter42 to the attention of the President of the United Arab Emirates, expressing concern about the torture of Mohammed Shah Poor allegedly carried out by a member of the royal family police officials – including the use of an electric cattle prod

• The use of Caterpillar D-9 bulldozers by Israeli military forces for the illegal demolition of houses in Gaza, as described above, is a real example of the misuse of heavy engineering equipment for illegitimate purposes. Caterpillar executive stated that the company "does not sell products to the government of Israel in sales that are not approved by the U.S. government."43 However, according to the Palestinian Center, though the money used to purchase the bulldozers came from the US through Foreign Military Sales Financing, the fact that the sales are direct commercial sales by Caterpillar to the IDF was confirmed by a 23 May 2005 letter from Matthew A. Reynolds, Acting Assistant Secretary for Legislative Affairs to Congressmen Jim McDermott44
• A 2001 report of the International League for Human Rights (ILHR) entitled "Shadow Report on Algeria"45 sheds light on the terrorist activities of the Islamist armed groups in Algeria who for years controlled different parts of Algeria's territory. It is alleged, that the armed terrorist campaign was supported by satellite communication facilities that enabled operational integrity, among other things
• A total of 47 companies based in the US were mentioned in the April 1997 Human Rights Watch (HRW) Report "US Companies and the Production of Antipersonnel Mines"46 as manufacturers of land mines and their component parts. This included companies such as Lockheed Martin, GE and Motorola. Some of the companies, including GE and Motorola, were simply manufacturing components, such as computer chips, integrated circuits and sensors, that another government contractor would then put together to make a mine or cluster weapon. Seventeen companies, including Motorola, informed HRW that they would no longer produce components for anti-personnel land mines
• In its 2007 Citizenship Report, GE noted that despite previous statements to the contrary, one of its recently acquired business units – GE Sensing & Inspection Technologies – had been supplying a sensor for use by a US manufacturer of a ‘next-generation' cluster weapon. These weapons had in turn been supplied to the US military. The sensor had originally been designed for use in cardiac diagnostic and corrective procedures – and is in widespread medical use. GE noted that of more than 250 million sensors produced each year, only 15,000 were used for cluster munitions. In light of the discovery of these sales, GE said it would not accept any new orders for sensors to be used in cluster weapons and would not renew the contract with the customer for this product. GE noted that the discovery of these sales highlighted the data-gathering challenges faced by a company of its size and complexity.47

Back to top

Examples of scenarios companies might face when operating in emerging economies could be different depending on a particular product, its potential uses and the human rights record of a given country. The following are some examples which help to illustrate how to identify the risk of product misuse in a particular country.

Given that product misuse can happen in a very broad range of situations and can affect a wide range of rights, the list of countries analysed below and the risks of product misuse considered under each country headline are exemplary rather than exhaustive.

China: According to the US Department of State's 2011 Human Rights Report, the Chinese government fails to respect the right to privacy, including of correspondence, and freedom of speech. It monitors telephone conversations, fax transmissions, e-mails, text messages, and internet communications. Human rights activists, journalists, unregistered religious figures and former political prisoners are regular targets, particularly in Tibet and the Xinjiang Uyghur Autonomous Region (XUAR).48 During 2009 the government increased its efforts to monitor Internet use, control content, restrict information, and block access to foreign and domestic Web sites. To that end, the government launched the ‘Golden Shield' project that used elaborated firewalls purchased from Cisco. In June 2011, three Chinese political prisoners began legal proceedings against Cisco in the US District Court of Maryland, claiming that the technology provided by the company to the Chinese Communist Party had been used to monitor, censor and suppress the Chinese people.49

Laws and regulations forbid the termination of pregnancies based on the sex of the foetus. Nonetheless, the intersection of official birth limits with the traditional preference for male children, particularly in rural areas, means many families use ultrasound technology to identify female foetuses and terminate these pregnancies. GE has faced this challenge when selling its ultrasound technology to end-users in China.

India: According to the US Department of state, the law prohibits torture and generally does not allow authorities to admit coerced confessions in court. However, NGOs and citizens allege that authorities use torture to extort money, as summary punishment and to coerce confessions.50 The Asian Centre for Human Rights (ACHR) report Torture in India 2011 states that "[t]orture remains endemic, institutionalised and central to the administration of justice and counter-terrorism measures." In addition, the Ministry of Home Affairs reported that in the first 7 months of 2011, there had been 186 cases of custodial death caused by police torture. Considering this, there is a high risk that security equipment intended for law enforcement and detention could be misused to inflict torture.

Indian women are subject to discriminatory practices and customs. In September 2012, the Minister of Health and Family Welfare warned against the violent repercussions for women of the phenomenon of sex-selective abortion. He stated that in the preceding two years, 436 cases of the practice had been registered, in violation of the Pre-Conception & Pre-Natal Diagnostic Techniques Act as amended in 2003. Under the law, 69 ultrasound machines had been decommissioned in the preceding year. GE has faced this challenge when selling its ultrasound technology to end users in India.

Iran: According to the US Department of State's 2011 Human Rights Report, the government's poor human rights record degenerated during 2011. Although the constitution and law prohibit torture there were numerous credible reports that security forces and prison personnel tortured detainees and prisoners, particularly human rights defenders, journalists and activists.51 The use of drugs during interrogations to weaken the mental health of detainees was also reported. Taking this into account, the misuse of security and law enforcement implements and/or neuroleptics for the purpose of inflicting torture or other forms of ill-treatment could be a significant risk in Iran.

The government severely restricts the right to privacy and civil liberties, including freedom of expression. Security forces monitor the social activities of citizens and telephone conversations. The government also monitors Internet communications, especially via social networking sites such as Facebook, Twitter and YouTube.52

Russia: According to the US Department of State and Amnesty International, there are numerous, credible reports that law enforcement personnel engaged in torture, abuse, and violence to coerce confessions from suspects. There were reports of a spate of incidents of police torture in April 2012, including the misuse of handcuffs and other equipment.53 .

The law prohibits arbitrary interference with privacy, including government monitoring of correspondence, telephone conversations and other means of communication without a warrant. However, according to the US Department of State's 2011 Human Rights Report there were allegations that government officials and others engaged in electronic surveillance without judicial permission. Considering the above-mentioned misuse of law enforcement equipment to inflict torture and surveillance technology to intrude on rights to privacy, including freedom of expression and correspondence, the sale of security enforcement products could pose a risk in Russia.

Back to top

Legal risks

In general, MNCs are relatively unlikely to face primary legal liability for human rights violations arising as a result of misuse of their products. This is due, for example, to:

• The fact that any harm will necessarily be committed by a third party
• Basic legal concepts that focus on the perpetrator rather than the objects used to commit violations
• The multiple uses to which different products can be applied (i.e. both legitimate and illegitimate)
• The fact that companies will have generally complied with all legal requirements when selling their products

Where liability can still arise it could be generally one of the two types: civil or tort (for complicity in inflicting damage resulting from a wrongful act) or criminal (where countries recognise the criminal liability of companies, for complicity in the commission of a prohibited crime or an offence).

Where liability is imposed on companies, it can arise under national laws prohibiting the misuse of particular goods, as liability may extend not only to the end-user but also to manufacturers and distributors. For example:

• India and China have both outlawed the use of ultrasound for gender selection abortions. In India, liability potentially extends to manufacturers and distributors. According to the Wall Street Journal, this allowed prosecutors in the city of Hyderabad in India to bring a criminal case against the GE joint venture with Wipro – an Indian outsourcing partner of GE, as well as Erbis Engineering Co., the medical-equipment distributor in India for Japan's Toshiba Corp. The district government alleged that the companies knowingly supplied ultrasound machines to clinics that weren't registered with the government and were illegally performing sex-selection tests. The penalty is up to three months in prison and a fine of 1,000 rupees54

Some states have also committed themselves to imposing liability on sellers of products that can be misused to engage in illegal activity as part of their international obligations. For example:

• Articles 6 and 11 of the Council of Europe Convention on Cybercrime of 2001 call on states to criminalise the sale of devices that can be misused to interfere with confidentiality, integrity and the availability of computer data. Article 12 specifically calls on signatories to adopt legislative measures to provide for corporate liability for committing offences covered by the Convention. It entered into force on 1 July 2004. As of 23 August 2010, 30 countries members of the Council of Europe, among them Denmark, Finland, France, Germany and Norway, and US have ratified it55
• Articles 3, paragraph 1 (c) and 2 of 2002 Optional Protocol (OP) to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography call on each State party to ensure not only that producing, distributing, dissemination, importing, exporting, offering, selling or possessing child pornography are fully covered under its criminal or penal law, but also that the same shall apply to "complicity or participation" in any of this acts. Where a signatory country has reflected this in its laws, it could arguably be possible for courts to impose liability not only on those who engage in child pornography, but also manufacturers and sellers of devices that facilitate access to images of child abuse. 139 countries are parties to the Protocol, including Austria, Belgium, Canada, France, Germany, UK and the US56

Companies can be found complicit in human rights violations committed by others when they knowingly assist or benefit from the human rights violations. The standard for knowledge could both be an actual knowledge or what a company ‘should have known' under the circumstances.

Most cases of complicity in human rights violations as a result of product misuse are likely to require manufactures and sellers of products to anticipate reasonably foreseeable misuses of their products. The degree of knowledge required from manufacturers and/or sellers is both an actual knowledge and what a manufacturer and/or seller should have known under the circumstances given the country context where the products are sold, the business relationships of the company, and the human rights impact of the product itself.

Allegations of complicity will arguably be stronger when the product misused to inflict human rights violations has a limited number of applications or is not widely circulated (but rather subject to a certain export control or licensing criteria). For example, it would arguably be easier for the company to identify the risk of special security equipment being misused to inflict torture rather than plastic pipes or bottles, which are also commonly used by security officers and prison guards in emerging economies as instruments for torture.

The case of Frans Van Anraat is an example where the risk of product misuse was foreseeable given the potential uses of the product and the country to which it was sold. Frans Van Anraat supplied chemicals to the Saddam Hussein regime in Iraq, which used them to produce mustard gas. A former Japanese business partner of Van Anraat told the court that the manufacturers had alerted him to the fact that the substances he was buying could be used to make poison gas. The gas was presumably employed in chemical attacks on Kurdish villages in Iraq during the 1980s. Van Anraat was found guilty of complicity in war crimes in 2005 by the Hague District Court and was sentenced to 15 year imprisonment. In 2007, the Appeal Chamber confirmed the decision of the District Court and condemned Van Anraat to 17 years of imprisonment.57

Although arms are not covered by the scope of this dilemma, the case of Guus Van Kouwenhoven is another good example of foreseeability of product misuse. Van Kouwenhoven, a Dutch timber trader and president of the Oriental Trading Corporation (OTC), was suspected of smuggling arms to former Liberian President Charles Taylor in exchange for logging rights. The arms were allegedly used by Taylor to back militias in Sierra Leone that murdered, raped and tortured civilians during the country's civil war from 1991 to 2001. In 2006, Van Kouwenhoven was convicted by a Dutch court for trading weapons for logging rights in Liberia in breach of a UN arms embargo, but was acquitted for charges of complicity in war crimes. He was sentenced to eight years in jail. His conviction is currently under continued appeal.58

Simply doing business in countries or places with poor human rights record is not generally considered a strong basis for claims of complicity. This is especially due to the lack of the link of causation between a particular business activity and a certain human rights violation.

However, where the company appears to profit from the misuse of its product – i.e. because its misuse creates a significant sales market– and where the violation of the human rights would not be possible without this product (or at least to such an extent), this may substantiate allegations of company complicity in those violations.

Generally, in most of the cases sellers will have neither control nor influence on the end-users or re-sellers. Where business is carried on by means of a contract or a licence, however, there may emerge a relationship of control over the end-user or an actor in a distribution chain. Where companies fail to use this control to ensure against the risk of the product misuse by the purchaser or the risk of the intermediary selling it to a controversial user, this could be used to substantiate the allegations of company's complicity in the wrongdoing.

In addition, companies can engage in sales through their agencies or by operating a branch or a sales subsidiary in a country where the products are sold. The control they have over that entity can make allegations of complicity in the wrongful acts of that actor stronger or weaker. This can also increase or decrease the exposure of the parent company to the legal risks created by the actions of its branch or a sales subsidiary.

For example:

• Where business is carried by means of an agency or a company branch or via a company representative, their actions will be generally directly attributable to the parent company
• Where business is carried on by means of a sales subsidiary with a separate legal personality, a potential wrongdoing on the part of the purchaser would potentially result in the direct liability of the sales subsidiary rather than the parent company

In some cases, however, this legal separation can be ignored to allow the liability of the sales subsidiary to pass to the parent company. The criteria applied to allow for the liability to pass in such way are subject to the practices of the national legal system of the home country of the company.

Though rare, legal liability could extend to cover both corporate liability and personal liability of directors/managers of the company. The criteria applied to allow personal liability of directors are subject to the practices of the national legal system of the home country of the company.

For example, UK courts are generally unwilling to allow liability for the acts of a company to pass to managers or directors. However, in cases where the directors personally control the company and induce its tortious acts, and where the company is really the vehicle for the director's personal acts, the separation between the company as an entity and its directors could be ignored to allow personal liability.59

In the case of Doe v. Unocal60 filed under the US Alien Tort Claim Act case, the court noted as a general principle that both corporations and their executive officers can be held responsible for complicity in human rights violations. The suit was initiated by the Burmese villagers against Unocal who alleged that Unocal was complicit in various human rights violations carried out by the Myanmar Military, including forced labour, murder, rape, and torture, in connection with the Yadana gas pipeline project.

Reputational risks

Even where companies do not face legal action, allegations of complicity can still expose them to a range of negative impacts.

Risks can be of a short-term nature (e.g. operational disruptions as a result of refusals to continue supplying the products to particular countries or end-users due to allegations of their misuse) or cause extended difficulties (e.g. shareholder pressure resulting in the review of the company's strategy or sales policy).

Such risks can include:

• Consumer initiated boycotts resulting in reduced sales
• Divestment by ethical and mainstream investors resulting in reduced access to capital
• Negative press and activist campaigns resulting in brand erosion
• Loss of social licence to operate resulting in community animosity and higher costs
• Loss of political licence to operate resulting in non-cooperation by the government and diminished future business opportunities

A prime example of the risk of legal proceedings spurring bad publicity and consumer boycotts, even when those proceedings are discontinued or get settled out of court, can be found in campaigns launched against US-based company Caterpillar. The company was accused of selling bulldozers to Israel knowing that they were being used to destroy Palestinian homes. According to the report of the Palestinian Center "War Crimes Litigation in U.S. Courts: The Caterpillar Case",61 these home demolitions were in violation of national and international law. The tort claim against Caterpillar in the United States and later another civil lawsuit, this time against the Israeli Defence Ministry, have attracted attention and caused public outrage. The fact that the US government provided funding for the purchase of Caterpillar bulldozers by Israel pre-empted the jurisdiction of the US court to decide on the merits of the case. The civil lawsuit is still in progress.

Different campaigns have been initiated against the company, including those by the Palestinian Grassroots Anti-Apartheid Wall Campaign62 and the HRW and AI supported consumer boycott of Caterpillar goods.63

Likewise, in 2009, Nokia Siemens Network was subject to a consumer boycott in Iran following accusations, including by Nobel prize-winner Shirin Ebadi64, that it supplied the Iranian government with software and technology used to monitor mobile telephone calls and text messages in the aftermath of the contested 2009 election. A press release65 by the company stated that it provided lawful intercept capability solely for the monitoring of local voice calls in Iran.

Activism and adverse publicity campaigns can result in lower share prices, as seems to have happened in the case of Caterpillar, according to the Grassroots Palestinian Anti-Apartheid Wall Campaign.66

Likewise, the case of Cisco's, where it was alleged that the company's software was misused in China to impede the freedom of expression, shows how concern about share value as well as ethical concerns may result in disinvestment by ethical and mainstream investors. Ahead of Cisco System's Annual General Meeting in November 2009, a group of 17 investors representing over 24 million shares (US$580 million) used a shareholder proposal,58 led by Boston Common Asset Management, to urge the company to adequately manage human rights related risks in its operations The move, introduced for a fifth successive year, was partly prompted by the fact that Cisco's general counsel has been called on two occasions to testify before the US Congress to describe the company's alleged role in limiting freedom of expression in China (where it has investments of US$16 billion) and elsewhere.

Back to top

Business has a responsibility, according to the UN's the "Protect, Respect and Remedy" policy framework67 ("the framework"), to respect all human rights. To meet its responsibility to respect human rights, the framework states that a responsible company should engage in human rights due diligence68 to the level commensurate with the risk of infringements posed by the country context in which a company operates, its own business activities and the relationships associated with those activities.69 The UN has further adopted a draft of the Guiding Principles for the Implementation of the UN "Protect, Respect and Remedy" Framework.70 These aim to provide "concrete and practical recommendations" for the framework's implementation. The draft Guiding Principles document has recently been posted for public review until 31 January 2011.

The framework, as clarified by the draft Guiding Principles document specifies the main components of human rights due diligence:

• A statement of policy articulating the company's commitment to respect human rights and providing guidance as to the specific actions to be taken to give this commitment meaning: This policy should be informed by appropriate internal and external expertise and identify what the company expects of its personnel and business partners. The policy should be approved at the most senior level and communicated internally and externally to all personnel, business partners and relevant stakeholders. In addition, it should be reflected in appropriate operational policies and procedures
• Periodic assessment of actual and potential human rights impacts of company activities and relationships: Human rights due diligence will vary in scope and complexity according to the size of a company, the severity of its human rights risks and the context of its operations. Impact assessment must be continuous, recognising that human rights risks may change over time as companies' operations and operating contexts evolve. The process should draw on internal and external human rights experts and resources. Furthermore, it should involve meaningful engagement with potentially affected individuals and groups as well as other relevant stakeholders
• Integration of these commitments into internal control and oversight systems: Effective integration requires responsibility for addressing such impacts to be assigned to the appropriate level and function. It also requires appropriate internal decision-making mechanisms, budget allocation and oversight processes
• Tracking of performance: Tracking of performance should be based on appropriate qualitative and quantitative metrics and should draw on feedback from both internal and external stakeholders. In addition, it should inform and support continuous improvement
• Public and regular reporting on performance: When reporting, companies should take into account the risks the communication of certain information may pose to stakeholders themselves, or to company personnel. In addition the content of the reports should be subject to the legitimate requirements of commercial confidentiality
• Remediation: Where business enterprises identify responsibility for adverse impacts, they should provide for or cooperate in their remediation through legitimate processes

The UN Global Compact has also developed a Self Assessment Tool on Product Stewardship to assist companies to confront the challenges that may arise in process of producing and marketing goods with adverse effects on human rights. The tool consists of a number of questions that companies are invited to answer to improve existing policies and systems, build staff awareness, engage subsidiaries, suppliers or other stakeholders, improve internal and external reporting. This could guide companies as to the actions to be taken to prevent and/or mitigate the risk of the product misuse.

As a result actions for responsible business might include:

1. Adopting a product misuse policy

To prevent or mitigate the risk of product misuse a company could consider establishing a specific product misuse policy committing the company to, for example:

• Abide by relevant national laws
• Where national laws are below international standards to follow higher international standards
• Design products (where practicable) in such a way that their misuse is minimised
• Carry out due diligence on customers to a degree that is commensurate to the risk of misuse
• Where appropriate, carry out an assessment of the impact of the product, the company's commercial relationships and the context in which products are to be used
• Where appropriate, use terms of sale to maintain a degree of control over the use of a product
• Where practicable, provide for ongoing monitoring of the product's use
• Address complaints of the product misuse as they arise
• Regularly review the policy and supporting procedures as prompted by new concerns

As an alternative, companies might consider incorporating clauses to deal with product misuse (as described above), in their pre-existing human rights policy. Any policy aimed at addressing product misuse should be supported by relevant implementation mechanisms to ensure that its provisions are given real effect (see below for further details).

• GE has addressed the misuse of its ultrasound technology by developing an end-use policy, which requires GE, among other things, to refuse to sell the technology to a customer who does not have a specific registration certificate. See:
  General Electric (India) – in depth
• GE decided, after learning that the company's sensors were being supplied by its recently acquired business unit to a US manufacturer of cluster weapons, not to accept any orders for this product and to strengthen company-wide acquisition integration processes. See:
  General Electric (US) – in depth
• Motorola has approached the issue of product misuse by developing a fictional case study addressing the choices faced by a company when its wireless telecommunication products are being misused by oppressive regimes against its citizens. See:
  Motorola Inc. (Global) – in depth
• Motorola, Inc. decided, after learning that some of its electronic components were being used to build land mines, to join other US-based electronic firms in support of an effort by Human Rights Watch to get high-tech companies to stop supplying components for such devices. See:
  Motorola Inc. (Global)
• J.R.Simplot decided to halt production of the ammonium nitrate fertiliser due to concerns over its potential misuse for making explosives used in terrorist bombings – as well as difficulties in controlling its intended use. See:
  J.R.Simplot (US)
• BAE Systems, which produces defence equipment, applies a policy that requires the assessment of products, including their type, intended use, end-users and country of sale, to ensure that the company makes informed and responsible decisions about potential business opportunities. See: BAE Systems (Global)

2. Assess the context in which a product is being sold

To prevent and/or mitigate the risk of product misuse companies might consider the following set of factors:

Impact of the external environment

• Marketing or sales of a product are illegal
• A product may fall into the category of prohibited products because of possible alternative uses
• There are restrictions placed on the sale of particular products to certain countries or end users
• There is a history of product misuse in a country to which the product is being sold by companies or by a certain group of potential end-users

Impact of the product

• The potential impact of the product on different human rights in the country where it is sold, when used as intended
• The potential impact of the product on different human rights in the country where it is sold, if misused

Relationships (business partners, entities in a distribution chain, end-users)

• There is reason to believe that business partners can sell a product to the country or to the end user with a record of having misused it in the past
• Business actors involved in channelling the product to a country of sale or an end-user do not have policies and procedures in place to minimise the risk of product misuse (see below for more detail)
• Where the investigations listed above do not identify any risks, there are still reasons to believe that certain business partners might sell the product to end-users who might misuse the product

Companies can address each of these issues by reviewing the following:

• Relevant laws, regulations and policies of a country to which a product is being sold to establish whether those could lead to the product misuse
• Credible human rights reports on a given country that highlight incidents of misuse of different products for impeding human rights
• Relevant mass media news that could point to incidents of misuse of particular products in certain countries or by certain potential purchasers
• Evidence of a business actor in a distribution chain having management systems in place to mitigate against the risk of product misuse (for details see Procedural measures below)
• Evidence of an end-user being eligible to purchase a product (e.g. a certificate of registration with certain authorities that would prove that the end-user can legitimately use the product)
• Records of past experience of sales to a particular country or an end-user or with a particular business actor in a distribution chain that could point to whether there could be any concerns if the sales to that country or through this particular actor continued

In designing a HRIA, a company may wish to consult existing guidance documents, such as the International Finance Corporation, UN Global Compact and International Business Leaders Forum's Guide to Human Rights Impact Assessment and Management71 This Guide provides companies with a "process to assess their business risks, enhance their due diligence procedures and effectively manage their human rights challenges." It is further supported by their online guide, which guides users through different stages of the impact assessment process, including Preparation, Identification, Engagement, Assessment, Mitigation, Management and Evaluation.

Businesses may consider providing special training to sales personnel. By the end of this training, sales personnel should be able to carry out the necessary assessment of the context in which a product is being sold – and have a clear idea of how this should inform the decision to sell.

• The Voluntary Principles on Security and Human Rights guide companies as to the scope of due diligence they should apply when transferring security equipment in order to minimise the risk of its misuse by other parties. See:
  Voluntary Principles on Security and Human Rights (Global)
• The EU Code of Conduct on Arms Exports, though not directly relevant to businesses, provides an example of a good practice with respect to the due diligence companies should engage in when attempting to mitigate the human rights risks of arms sales or other goods that can potentially be misused. See:
  EU Code of Conduct on Arms Exports (EU)
• The Consolidated EU and national arms export licensing criteria, though not directly relevant to businesses, provides a due diligence checklist for companies aiming to mitigate the human rights risks of arms sales – or other goods that can potentially be misused. See:
  EU and national arms export licensing criteria (EU)

3. Internal control and oversight systems

Know your customer procedures

‘Know your customer' (or ‘know your client') (KYC) procedures can be used to screen potential and existing customers to establish whether they are likely to misuse a product. For example, company data records on a potential or an existing customer could be checked against the reference lists of reputable relevant organisations, like the Dow Jones Watch list, which particularly helps to screen entities and persons against government sanction lists.

In addition, the company may consider developing its own product tailored list of risk entities or countries based on the results of its due diligence which will be constantly updated. Subject to company resources, the level of risk it may be exposed to, and the diversity in its client base, the company may consider using a specialised screening software, like the one offered by Datanomic, which offers to screen against both commercial and regulatory/Government watch lists, sanctions lists and Politically Exposed Persons (PEP) databases. Leading diamond company De Beers uses this software for the systematic screening of its supply chain for sanctioned entities to ensure the traceability of diamonds.

Product tracking

Companies might consider employing measures to track the delivery of sold products until they have reached their intended destination or user, where feasible, such as using radio frequency identification (RFID) technology.

This technology enables data exchange from a small wireless device, called an RFID tag, which is equipped with a computer chip and antenna. It could be useful in the area of product tracking to manage supply chain and inventory.

Another way of tracking could be following up with the purchaser via phone calls or email/post correspondence to get the confirmation of the delivery.

Where appropriate, offering routine installation and technical training on how to use the product as part of a sale package would be another (sensitive) means of tracking the final destination of a product.

Keeping detailed records on the sales at all times could be equally useful to track the product.

• Agrium Inc., a Canadian producer of agricultural goods, decided to track sales of ammonium nitrate to industrial buyers in order to reduce the risk of its criminal misuse. See:
  Agrium Inc. (Canada)

4. External control and oversight systems

Terms of sale

Depending upon the particular circumstances of a company, it may use its terms of sale to maintain a degree of control over the eventual use/distribution of its products.

Where sales are carried out by means of a contract or a licence – or where a company engages actors other than itself in marketing and sales – special contractual provisions can be used to maintain a degree of control over distribution and/or use.

These clauses can be used, for example, to:

• Commit a customer or an intermediary to not use/sell the product, or cause it to be used/sold for purposes other than it was originally intended, if this might result in human rights violations
• Commit a customer not to re-sell the product unless approval is granted and relevant conditions are attached to the re-sale contract
• Enable similar conditions to be imposed on secondary buyers where products are re-sold
• Allow the selling company to refuse to service equipment or upgrade it, if there are reasonable grounds to believe that it has been or could be misused (e.g. if special conditions attached to the licence agreement had been broken)

If products are sold via an agency, a branch, or a sales subsidiary of a company, relevant legal agreements may include special clauses to commit them to take all reasonable measures to ensure products do not end up being misused with negative human rights implications. Evidence that such entities have the necessary skills and capacity to carry out due diligence, and to implement different policies and procedures, would be crucial.

Where a company does not have any control or influence over the end-user it may still consider reviewing whether it is possible to adjust its sales strategy so that the company has stronger control over actors involved in sales and/or end-users. For example, the company may prefer carrying out sales on the basis of a contract/licence or through its own entities rather than untraceable wholesales via intermediaries.

Where sales are facilitated by brokers, companies may find it useful to:

• Employ the KYC procedure to screen brokers/franchisees to establish whether any of them is likely to sell the product to an end-user who may misuse it to commit human rights violations. (for more details on the KYC procedures see above)

• Develop selection criteria for sales transactions that would guide brokers as to the eligibility of a country or an end-user to purchase a product. For example, a history of misuse by a potential customer should result in a company considering refusal of sale or the imposition of strict contractual controls

End-user monitoring

Ongoing monitoring of end-users, where feasible, could help to ensure that they still meet the requirements for the procurement of particular goods. For example, monitoring could be done of the following:

• Whether there have been any complaints about the misuse of a product by a customer (i.e. received through the company's grievance mechanisms)
• Whether there are any media reports suggesting product misuse by a customer
• Whether changes in country context (as reported in the human rights reports by credible organisations) point to the potential of the product misuse

In addition, and where practicable, companies can schedule regular audits to inspect the use of the product on the spot by combining them with visits to service or upgrade equipment.

• Please contribute your commentary or suggestions to our online discussion forum:
  Product misuse online discussion forum

5. Grievance mechanisms

Companies might consider the establishment of a grievance mechanism to address complaints of misuse. Subject to a company's resources, an officer can be appointed to specifically deal with the issue of product misuse. Subject to the nature of the specific problem (and depending on the degree to which a company has control over third-party sellers and/or end-user), remedies could take the form of:

• The enforcement of relevant conditions included in the terms of sale/licence terms (for example, retraction of licence, ending of business contract etc.)
• The tightening of terms of sale/licence terms to mitigate the risk of misuse with future purchasers, where possible (see above for details)
• Alteration of the design of the product to minimise the risk of misuse, where possible (see below for details)
• Refusal of further sales, particularly when there are reasonable grounds to believe that, despite all precautions, goods may still be misused to violate human rights. When making such a decision, it will be important to balance the costs of disengaging from particular markets and users, against the human rights benefits that such products may still deliver

In addition, a telephone ‘hotline' or a complaints box can be supported by companies as mechanisms for receiving grievances.

• Please contribute your commentary or suggestions to our online discussion forum:
  Product misuse online discussion forum

6. Altering product design

Companies might consider altering the design of their products to mitigate the risk of misuse, whilst at the same time preserving its ability to be applied for its intended use. For example, the shutter noise of the camera applications in iPhone 3G phones sold in Japan has been designed so that they cannot be muted. This was done in order to ensure that users could not take sexually intrusive pictures of others without the subjects of such pictures being aware of it.72

• Honeywell International Inc., a US-based industrial manufacturer, has developed a hard to ignite nitrogen-based fertiliser. The new product can still be used to raise crops but is useless as an explosive component. See:
  Honeywell International Inc. (Global)
• Research in Motion (RIM), a Canada-based telecommunications manufacturer, uses encryption technology in its BlackBerry phone devices that makes it difficult for states to monitor users. See:
  RIM (Global)

Back to top

Definition

For the purposes of this dilemma, product misuse is defined as the use of a product for a purpose other than its intended application and that leads to human rights violations.

This is different from the issue of product liability. The latter is the area of law in which manufacturers, distributors, suppliers, retailers and others who make products available to the public are held responsible for the injuries those products cause in the process of their intended (or reasonably foreseeable) use. This is usually due to one of three main reasons: a manufacturing defect, a design defect, or a failure to warn about non-obvious dangers that could arise out of the use of the product.

This dilemma does not cover products that are specifically designed to bring about human rights violations. Nor does it cover situations where the damage done with the use of these products is due to a manufacturing or a design defect – or a failure to warn about the dangers of using it. Instead, it is the functionality inherent in many products that allows their application beyond their intended use, and which is sometimes used by some purchasers to impede human rights. The harm done through the product misuse is usually to third parties and is intentional. This is in contrast to product liability, where the harm is usually sustained by the purchasers/end-users themselves or done to third parties with no such intention.

High risk products

The following examples aim to set out some of the types of products that pose particular risks of misuse by end-users:

Surveillance technology

The positive actions expected of states to protect the rights to life and security73 can justify the lawful surveillance of certain activities or certain people, like terrorist suspects for example, by public authorities – as well as the procurement of the required technology for these purposes. However, when surveillance technology is misused it can impede on particularly, the rights to privacy, and freedom of opinion and expression that are protected under international law.74 Depending on the circumstances of each case the illegitimate use of the equipment could further impact on the right to respect for family life, home and correspondence.75 And if followed by arrests and detentions, it can lead to further violations of the right to liberty.76

Though the right to hold opinions cannot be restricted in any circumstances,77 the rights to privacy and freedom of expression are not absolute: derogations from those rights are allowed in cases of public emergency and to the extent strictly necessary under the circumstances.78 The right to freedom of expression does not extend to cover propaganda for war and advocacy of national, racial and religious hatred, where it constitutes incitement to discrimination, hostility or violence.79 These rights are also subject to certain other limitations, which shall be:

• Provided by law
• Necessary in a democratic society to achieve certain aims
• Proportional to the aim to be achieved80

The HRC Draft General Comment No.34 specifies what is meant by ‘law' for the purposes of Article 19. For instance, ‘law' does not mean to refer to customary law.81 In addition, the fact that the interference is authorised under national law is not enough to justify it, unless it meets other two criteria, i.e. necessity and proportionality. International law specifies the aims that could be claimed to justify the limitations on the rights.

Among the aims listed by different international instruments with regards to the freedom of expression are the following:

• Respect of the rights or reputations of others
• The protection of national security or of public order
• Public health or morals82

The HRC Draft General Comment No. 34 clarifies the limits of justified restrictions to the right to freedom of expression for aims set out above. For instance, it is not generally appropriate for laws intended to protect national security interest to impose restrictions on the release of, or access to commercial, banking and scientific information.83 This may in fact be attempted at by states under the pretext of protecting national security.

Where the first two criteria are met, the fact that the aim (when one of the list) could have been achieved by less extraneous measures, will still lead to finding of the violation of the right.84

The Human Rights Committee has further clarified that although reservations to freedom of expression are allowed in certain cases, a general reservation to this right would be incompatible with the object and purpose of the ICCPR.85 In addition, reservations to this right cannot take any form.86

Policing devices and security implements

As shown above, the rights to life and security impose certain positive obligations on the state. The availability and procurement of legal policing devices and security implements can be incidental to these purposes and thus sales of such products can be justified under international human rights law. However, the absolute prohibition on torture, which applies in all circumstances and to all states and allows no derogations,87 means that law enforcement equipment should never be used for inflicting torture.

Companies need to consider this, including in cases where a loophole in the export control rules (e.g. a vague definition of a ‘torture equipment or product') or their weak enforcement would not prevent the sale of particular goods to the end-user who is most likely to use them to inflict torture.

Health products

Health products can facilitate the fulfilment of the right to health.88 However, their misuse can lead to violations of various human rights, including the right to be free from torture. As discussed above, this right to be free from torture is absolute and allows no derogations or limitations. As a result, this will arguably require a company producing certain health products to carry out intensive due diligence in order to prevent the risk of its product being misused to inflict torture.

Misuse of certain health technology, like ultra-sound, can also impede on the right to be free from discrimination on basis of sex. Non-discrimination rules are laid down and elaborated in various international documents on human rights.89 If companies fail to take reasonable measures against the misuse of technology that facilitates sex-selective abortions, they may be considered complicit in violations of the right of non-discrimination.

Misuse of civilian goods for military purposes

The availability of civilian goods can equally facilitate the fulfilment of various human rights. For example, heavy engineering equipment can be instrumental in the promotion of the right to adequate housing.90 However, the misuse of such equipment can also be used to undermine human rights – including the right to property and the right to life. The example of the misuse of Caterpillar's D-9 bulldozers by the Israeli military (see above) provides an example of this.

Although the rights to life and property are protected under international human rights law,91 they are not absolute. Restrictions on and derogations from these rights are allowed in certain circumstances.92

In times of war, the rights to life and property are specifically protected under international humanitarian law.93 The pre-emptive or indiscriminate destruction of homes, based solely on their location, and where these actions are not required by military necessity, are not justified under international humanitarian law. In addition, international humanitarian law strictly prohibits intentional attacks on civilians.94

Information Communication Technology (ICT)

Advanced ICT technology can facilitate the right to freedom of expression by easing the process of seeking, receiving and imparting information. However, other human rights may be negatively affected in the same process.

The example of encryption technology (see above) brings to light potential infringements of the right of a child to be protected against sexual exploitation that misuse of this technology can lead to. This right of a child is firmly enshrined under international human rights law and allows no derogations.

As the breach of this right is not possible or at least to such an extent without the mentioned software, manufacturers and/or sellers may be asked to engage in an intensive due diligence to ensure that the technology is used for legal and legitimate purposes.

Human rights impact

There are no binding international instruments that oblige companies to protect persons against product misuse per se. Nonetheless, there is a range of international human rights standards that are of potential relevance to this dilemma, including those relating to:

Right to life (UDHR, Article 3 and ICCPR, Article 6): In very serious cases, products can be misused (both in a military and non-military context) to kill or facilitate killings. For example, where communication products enable rebel groups to carry out military campaigns more effectively, they are arguably playing an (indirect) role in undermining this right.

Right to privacy (UDHR, Article 12 and ICCPR, Article 17): In some cases, products can be misused to track peoples' whereabouts, interfere with the privacy of their homes or correspondence even when this is not prompted by the requirements of the job and/or security measures. For example, where tracking technology enables employers to follow employees' every step or where surveillance technology is used to spy on citizens for reasons other than the security concerns, the misuse could give rise to violations of the right to privacy.

Right to freedom of expression (UDHR, Article 19 and ICCPR, Article 19): In countries with oppressive regimes products can be misused to suppress the expression of views and opinions that are not aligned with official ideologies or policy. For example, both surveillance and ICT technology can be used to block broadcasts, articles or other communications – or to block access to information in general.

Right to be free from torture (UNDH, Article 5 and ICCPR, Article 7): In very serious cases, products can be misused to inflict excess pain on people with the purpose of extracting information or simply to punish them. For example, where the policing and security equipment are misused to achieve these aims they are directly undermining this right.

Right to freedom of association (UDHR, Article 20 and ICCPR, Article 22): In countries with oppressive regimes, certain products, such as surveillance or ICT technology, can assist in the identification of people with views different from that of the ruling party. As a result, it can equally undermine the abilities of the activists to meet, communicate and organise as a group.

Right to liberty and freedom from arbitrary arrest (UDHR, Articles 3 and 9 and ICCPR, Article 9): Similarly, in countries with zero or low tolerance to political views other than that of the government, active members of opposition parties may be subject to arrest in order to minimise their chances of spreading their views. In certain cases, electronic surveillance equipment can be misused in order to identify those political activists who the government wishes to detain.

Back to top