The New Social Contracts in International Supply Chains

The New Social Contracts in International Supply Chains

68 Am. U. L. Rev. 1869 (2019).

* Professor of Law and Director, Business Law Program, American University Washington College of Law.  Many thanks to those who have aided my (still evolving) thinking and writing on this subject, including Susan Carle, Muriel Fabre-Magnan, Paul Gaiardo, J.E. Lendon, Jonathan Lipson, Thomas Mackall, Elizabeth Meyer, Brishen Rogers, and Charles Sabel; the members of the American Bar Association Business Law Section Working Group to Draft Human Rights Protections in Supply Contracts, which I have the privilege to chair; the organizers and participants from this symposium, New Perspectives:  A Discussion on Modern Global Supply Chains, of which this paper is a part; other participants in the panel Protecting Human Rights in Supply Chains: Moving from Policy to Action held by the Association of American Law Schools (Jan. 4, 2019); and the participants in the American University Business Law Faculty Workshop and the Atelier des obligations of the Université de Paris II (Panthéon-Assas).  I would like to acknowledge summer research funding from the law school and would like to thank Katherine Borchert, Nicholas Burns, Michael T. Francel, and Chiara Vitiello for research assistance.  Finally, I want to express my particular gratitude to Hans-Wolfgang Micklitz and the participants in the seminar he invited me to give at the European University Institute, a heavenly haven and school for scholars, where I began to see these issues in a new light.  To be clear, though, some who have helped may think me thoroughly misguided, and all mistakes and misjudgments are my own.

This Article considers, from legal, practical, moral, and policy perspectives, Model Contract Clauses (MCCs) to protect the human rights of workers in international supply chains.  The product of the ABA Business Law Section Working Group to Draft Human Rights Protections in International Supply Contracts, the MCCs are an effort to provide companies with carefully researched and well-drafted clauses to incorporate human rights policies into supply contracts (purchase orders, master vendor agreements, and the like).  The Article discusses the impetus, goals, and strategies of the MCCs and explains the paradigm of the corporate, operational, and political landscape for which they are designed, including the seeming lack of emphasis on worker health and safety.  An overview of some of the doctrinal issues and solutions is provided, emphasizing the objective of the MCCs to be legally effective and operationally likely.  On a more theoretical note, it is argued that international supply chain contracts that attend to moral issues like the human rights, health, and safety of workers are a new kind of social contract, supplementing but not supplanting more classical notions of the social contract, with which they share some characteristics.  In particular, the moral nature of these supply chain agreements is likened to the normative goals of the social contract, but these new social contracts necessarily move in more contemporary directions because they are typically constituted by multinational enterprises—corporations quite different from the individuals and states conceived by the classical theorists.  In addition, supply contracts, and the supply chains that they constitute, cross state lines and geographic boundaries, reaching past the nation-state.  After arguing that companies have a moral duty to the workers in their supply chains, the Article suggests that companies should protect them through voluntary contractual undertakings such as those in the MCCs.  The place of public regulation is considered as well, including the possibility of Good Samaritan-style protection for companies that take ameliorative steps.  Finally, the role of experimentalist governance in a possible new version of the MCCs is considered briefly.