22/09/2011 19:17 BST | Updated 21/11/2011 05:12 GMT

Justice Secretary Clarke Denies Access to Justice for Victims of Corporate Abuse

In questions to the Justice Secretary last week, Ken Clarke accused the UN Committee on the Elimination of Racial Discrimination of being 'disingenuous' for claiming that his proposals would make it more difficult for victims of human rights abuse by British-based multi-nationals to gain access to justice.

These proposals, contained in the Legal Aid, Sentencing and Punishment of Offenders Bill currently before Parliament, reform the 'no win/no fee' regime in a bid to 'level out the playing field' between claimants and defendants.

I can think of few other cases where the playing field is currently more imbalanced than between powerful multi-national corporations and victims of human rights violations, often in the developing world.

In a recent case, brought in the UK courts against the British mining firm Monterrico, allegations were made that the company had been complicit in the torture of Peruvians who objected to the damage wrought by the company's activities on their community and environment.

Very few remedies exist for victims; there are limited options to hold British companies to account when they have committed even the most grievous wrongdoings abroad.

One of the few options that does exist, which is itself unsatisfactory, is to pursue a company like Monterrico on a 'no win/no fee' basis.

Because they are British companies, claims can be taken against them in the British Courts even though the harm was done abroad. Often these are complex cases, involving hundreds of claimants, and costing millions of pounds to bring to court. Few lawyers are willing to take them on due to the difficulties obtaining sufficient proof and the levels of work involved even in the initial investigation stages. In order to compensate lawyers for the level of risk and to encourage them to take on cases that aren't guaranteed to be successful, lawyers can bill the losing company for a 'success fee' on top of their costs if they win the case. There are safeguards to stop this getting out of hand. It has to be approved by the courts and the bill is scrutinised by judges, line by line, to determine whether it is fair.

But Justice Secretary Ken Clarke wants to remove this option for victims. His reforms to the 'no win/no fee' arrangement will abolish the recoverability of the success fee from losing defendants, meaning that if lawyers are to profit from a case, they must take it out of the victims' damages.

In these types of cases the situation is even worse. Because of a recent EU Regulation, damages for victims overseas must be awarded at the local market rate, so even though the costs for pursuing Monterrico were incurred in the UK, the damages are based on rates in countries like Peru where the harm was done.

In one of the most famous cases to date, victims of the British oil company Trafigura were awarded £1000 each. The idea of taking a cut out of £1,000 awarded to a victim of torture or to someone who has lost their home and livelihood is not one that lawyers who are prepared to take on this kind of case would contemplate.

Clarke maintains that the system as it stands has attracted litigation from other countries to the UK. This is a strange argument when you consider that the firms against which litigation has been pursued are British firms; it is only right that they should be held to account by the British Courts.

And since the no win/no fee system was introduced; only nine such cases have been brought in the UK. In the case of Trafigura, in which 100,000 Ivory Coast residents were affected by the dumping of toxic waste, only 30,000 victims received compensation; as far as I'm aware, lawyers are not falling over themselves to represent the other 70,000.

It cannot be right to rebalance the system so far in favour of powerful, multinational companies that victims of human rights and environmental abuse are denied justice altogether. Yet victims are not the only losers. By removing this limited right to remedy, the government is sending a strong signal to the business community that those who heed the social and environmental impacts of their operations will have a competitive disadvantage against those that don't. To coin an over-used phrase, we will see a race to the bottom in terms of corporate responsibility and accountability at precisely the time when standards have to rise.