Published online by Cambridge University Press: 24 January 2025
Corporations are undergoing a subtle transformation. Usually regarded as investment vehicles for shareholders, corporations are now assuming an additional identity–as entities which share responsibility for upholding human rights. This new identity does not sit comfortably with conventional wisdom on corporate governance. Traditional corporate governance theory, based on nineteenth century notions of trust, posits that ‘the company’ is a legal entity embodying the members from time to time. Directors, as trustees of corporate assets, owe duties to foster the interests of the shareholders by maximising their investments. Under this view, directors do not owe wider obligations to society.
This traditional understanding, however, is beginning to yield to more recent legal and social pressures. Legal developments in regulatory practice, in combination with an upsurge in social movement activism, is now forcing corporations to accept that they are more than mere economic entities. They are also private ‘governments’–social and political entities with the ability to exercise general powers over themselves and, more importantly, over others.
Christine Parker would like to thank Simson Chu for diligent research assistance, and Angus Corbett for insightful discussions.
Leon Wolff would like to thank Professor Shozo Yamada of Chuo University for his helpful comments on earlier versions of this article.
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52 Other materials include the CCH looseleaf publication, Australian and New Zealand Equal Opportunity Law and Practice which contains a whole section on compliance policies and programs, and E Maston. Sexual Harassment: An Employer's Guide to Cases, Consequences and Remedies (1997).
53 Affirmative Action Agency, Private Sector Facts and Figures (1997) at 19 and 30-33. All organisations with over 100 employees are required to report to the AAA on what steps they have taken to implement EEO in their organisation. By 1992 the AAA had already been successful in getting 95 per cent of organisations required to submit a report: Affirmative Action Agency, Quality and Commitment: 111e Next Steps: The Final Report of the Effectiveness Review of the Afflrmative Action (Equal Employment Opportunity for Women) Act 1986 (1992) at 1.
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65 B Fisse and J Braithwaite, Co1pora0011s, Crime and Accountability (1993). Fisse and Braithwaite demonstrate how regulatory enforcement action should be tailored to catalyse internal corporate justice systems to define who or which groupings are responsible for wrongdoing in the organisation and in what degrees and to rectify the wrong and le<1rn ways to prevent similar wrongdoing in the future.
66 See Y Preston. “Macho Culture of the Dealing Room Floor Taken for Granted”, Age 27 January 1996 at 22; J Curtin, “Sex Banter 'Normal"'. Age 26 January 1996 at 17 and 19; G Haigh, “Taking the Bull by the Horns” Weekend Australian 17-18 August at 53-54.
67 J Curtin. ibid at 19. In fact the evidence from Ashton's witnesses suggested that as a new 20 year old woman employee, Ashton had been targeted for harassment and lewd requests for a “head job” or “to bend over”. But she had gone on performing her work well despite her situation, even after her supervisor ignored her complaint and downgraded her work performance: “BT Traders Targeted Junior Female” Age 25 January 1996 at 17.
68 Interview by Parker with Bankers Trust Vice President for Human Resources, 1997. See Scholz, J, “Enforcement Policy and Corporate Misconduct: The Changing Perspective of Deterrence Theory” (1997) 60(3) Law & Conlemp Probs 253CrossRefGoogle Scholar on the problem of 'bounded rationality' which means that management often do not consider the benefits of implementing internal management systems to ensure compliance with legal and social responsibilities until a disaster brings the potential costs to their attention.
69 Marshall, A, “Closing the Gaps: Plaintiffs in Pivotal Sexual Harassment Cases” (1998) 23(4) Law & Social Inquiry 761CrossRefGoogle Scholar on how women decided to file formal claims in seminal sexual harassment cases in the United States.
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73 Evaluative studies of corporate self-regulation repeatedly show that top management commitment is absolutely essential to effective corporate self-regulation. For example, McCaffrey, D and Hart, D, Wall Street Polices Itself: How Securities Finns Manage the Legal Hazards of Competitive Pressures (1988) at 174Google Scholar find that “the differences among firms reflect, more than any other factor, how strongly top management communicates that complying with the rules is one of the firm's core critical tasks”. From his evaluation of the top 5 coal mine safety performers, John Braithwaite finds that each of the companies, in different ways, exhibited “a corporate message that top management perceives cutting corners on safety to achieve production goals as not in the interests of the corporation”. Braithwaite, J, To Punish or Persuade: Enforcement of Coal Mine Safety (1985) at 61Google Scholar. The studies also make it clear that this does not mean that senior executives merely mouth support for compliance, but that they are actively involved in setting compliance goals and reviewing performance (see Braithwaite, J, Corporate Clime in the Pharmaceutical lndustiy (1984)Google Scholar; cf Clinard, M. Corporate Ethics and Crime: The Role of Middle Management (1983))Google Scholar.
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75 Ibid. Now that Australian women are becoming more familiar with their rights under the Sex Discrimination Act 1984 (Cth), complaints about other matters are becoming more common.
76 These institutions were chosen from information supplied by the Affirmative Action Agency as the institutions with the leading sexual harassment policies in the finance industry. See C Parker. above n 47 at 21-48 for further discussion of the methodology and findings of this research.
77 If a company's annual affirmative action report is failed, it is ineligible for federal government contracts, an issue of some importance to this company.
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82 Compare this with the confused position under US law where it is not clear how the implementation of a sexual harassment policy will affect the legal liability of employers: Harmelink, D, “Employer Sexual Harassment Policies: The Forgotten Key to the Prevention of Supervisor Hostile Environment Harassment” (1999) 84 Iowa L Rev 561Google Scholar.
83 Under s 106 of the Sex Discrimination Act 1984 (Cth), employers (and other persons) are vicariously liable for unlawful acts of sexual harassment and other forms of sex discrimination by employees or agents done in connection with their employment or agency. Liability can only be avoided (under s 106(2)) if the employer establishes that they “took all reasonable steps to prevent the employee or agent” from doing those acts. The State Acts have similar provisions: See Anti-Discrimination Act 1977 (NSW), s 53; Anti - Discrimination Act 1991 (Qld), s 133; Equal Opportunity Act 1995 (Vic), s 34; Equal Opportunity Act 1984 (SA), ss 90 and 91 (I); Equal Opportunity Act 1984 (WA), ss I 60 and 161.
84 (1996) EOC 92-828.
85 Nguyen v Vietnamese Community of Australia (1994) EOC 92-644; Cryn v Civil & Civic Pty Ltd (1994) EOC 92-581; Chambers v ]CU ofNorth Qld (1995) 61 IR 145; Thomas v Westpac (1995) 62 IR 28; Andrew & Anor v Linfox Transport (Aust) P(y Ltd (1996) EOC 92-807.
86 Thomas v Westpac (1995) 62 IR 28 (also summarised at (1995) EOC 92-742).
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90 Studies show that an internal compliance constituency is a crucial lynchpin of effective corporate self-regulation. See J Rees, Reforming the Workplace: A Study of Self-Regulation in Occupational Safety (1988) at 92, 98-99 and 108. Evaluation of the Californian branch of the US Occupational Safety and Health Administration (OSHA) experiment with the Cooperative Compliance Program between 1979 and 1984 found that the growth of safety management professionalism was crucial to compliance with regulatory goals. D Mccaffrey and D Hart, above n 73, concluded from their study of self-regulation in the US securities industry that the institutionalisation of regulatory occupations within industry (in this case financial compliance officers) is one of the main conditions in which self or 'shared' regulation is most likely to be effective so long as the law strengthens the position of the compliance staff.
91 See C Parker, above n 47.
92 V Braithwaite, “The Australian Government's Affirmative Action Legislation: Achieving Social Change through Human Resource Management” (1997) 15(4) Law & Policy 327-354. Braithwaite also used the reports to measure procedural compliance with the eight steps required by the legislation and a more substantive measure of compliance via reported implementation of practices that 'accommodate' women (eg, via career break schemes, women's networks, provision of child care facilities, affirmative action awareness training) from the reports and the AWIRS data set.
93 V Braithwaite, First Steps: Business Reactions to Implementing the Affirmative Action Act, Report to the Affirmative Action Agency, Australian National University, Canberra, 1992).
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102 Trade Practices Commission v CSR (1991) ATPR 41-076; Trade Practices Commission v 1NT (1995) ATPR 41-375. See Fisse, B, “Corporate Compliance Programmes: The Trade Practices Act and Beyond” (1989) 17 ABLR 356Google Scholar.
103 V Braithwaite, above n 92.
104 In April 1997, amendments to the Equal Employment Opportunity Act took effect, including the new section 21 which requires companies to ensure a workplace free of sexual harassment. Kayo no Bunya ni okeru Danjo no Kinto na Kikai oyobi Taigu no Kakuho to ni kansuru Horitsu IAn Act to Promote the Welfare of Female Workers by Providing for Equality of Opprotunity and Treatment in Employment for Women!, Law No 45 of 1985.
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107 Many Japanese academics have argued that Japanese law on sexual harassment is IO to 15 years behind that of the United States. See J Ueda, “Sekushuaru Harasumento—Shiyosha o Meguru Horitsuron o Chushin toshite (To)” [“Sexual Harassment—Employers' Liability (Part l)"] (1994) 1047 Jurisuto 52 at 55; T Akimoto, “Amerika ni Miru Sekusbuaru Harasumento” [“Sexual Harassment in the United States"! (1989) 1228 Rado Holitsu junp8 22; M Kaneko “Sekushuaru Harasumento to wa Nanika” !"What is Sexual Harassment?"! (1989) 1228 Rado Horitsu]junpo 4 at 5.
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110 Wetherfield makes the distinction between Japanese and American legal constructions of sexual harassment by using the Japanese words 'sekushuaru harasumento' to describe the Japanese case and the English words 'sexual harassment' for the American rnse. A Wetherfield, “Arnerikajin Bengoshi no Mita Nihon no Sekushuaru Harasumento Uo)” [A Foreign Lawyer Comments on Japanese Sexual Harassment Law (Part 1)1, 1079 ]urisuto 31 at 31.
111 R Yamakawa, above n 37.
112 M Gibson, “A Centre of Flux: Japan in the Australian Business Press” (1994) 8(2) Continuum: The Australian Journal of Media and Culture <http://kali.murdoch.edu.au/-cntinuum/8.2/Gibson.html>.
113 B S Turner, above n 105 at 32.
114 Survey of sexual harassment by Asahi Television, November 1989 (cited in Y Moronaga, “Sekusharu Harasumento” [“Sexual Harassment"] (1989) 947 Jurisuto 10 at 11).
115 Shokuba in Okeru Sekushuaru Harasumento ni Kansuru Kenkyakai !Research Committee into Sexual Harassment in the Workplace], “Shokuba in Okeru Sekushuaru Harasumento ni Kansuru Kenkyakai Hokoku” [“Report of Research Committee into Sexual Harassment in the Workplace"! in Ministry of Labor, Shokuba ni Okeru Sekushuaru Harasumento Bashi Manuaru [Manual for tlie Prevention of Sexual Harassment in the Workplace] (1998) at 45-89.
116 Rosei Kenkyujo Henshubu !Editorial Staff of the Labour and Politics Research Centre], “Kaisei Kintoho ni Kigyo ha Do Taio-shitaka?” [“How Have Corporations Responded to the Amended Equal Opportunity Act?"] (1999) 3415 Rosei]iho 3 at 6-7.
117 Ibid.
118 Ibid.
119 Ibid.
120 Rodosho Joseikyoku Seisakubu [Policy Section of the Women's Bureau. Ministry of Labor]. “98 Nenndo Jose! Koyo Kanri Kihon Chosa” !"General Survey of Women in Employment and Management (Fiscal Year 1998)"] (1999) 3415 Rc1sei]ih8 59 at 63.
121 M Kaneko, above n 36 at ii.
122 M Fukushima. BengosiJi ga Oshieru Seku Hara—Konna Told Do Naru [Sexual Harassment and What to Do about It: Advice from a Lawyer[ (1999) at 2-3.
123 Ehara explains the 'problematisation' process through which sexual harassment in Japan transformed from a long-standing phenomenon into a recognisable problem. See Y Ehara, “'Sekushuaru Harasumento no Shakai Mondaika' wa Nani o Shite iru koto ni Naru no ka” in T Inoue. C Ueno and Y Ehara (eds), Sekuslwa1iti [Sexuality] {1995) 105.
124 J Ueda, above n 107 at 55; T Akimoto, above n 107 at 22; M Kaneko, above n 107 at 5.
125 M Fukushima, above n 108 at 16.
126 The Japanese language does have the phrase seiteki iyagarase—combining native Japanese words seiteki (sexual) and iyagarase (bullying)—as a coinage denoting sexual harassment. However, some commentators argue that the phrase does not fully convey the seriousness of sexual harassment, since the word yagarase has a lighter connotation of 'pestering' or 'irritating'. See H Sogabe, “Shokuba ni okeru Seiteki Iyagarase no Jittai to Shomondai” [“Sexual Harassment in the Workplace: The Facts and the Issues"], (1990) 41 pyu to Seigi 52 at 52.
127 K Kinjo, “Sekushuaru Harasumento to Danjo Kayo Kikai Kintoho” [“Sexual Harassment under the Equal Employment Opportunity Act"] (1990) 956 ]uisuto 37 at 37.
128 T Akimoto, above n 107 at 22.
129 Y Nakashita et a), Sekushuaru Harasumento I Sexual Harassment] (1987) at i.
130 N Patterson. “No More Naki-Neiri? The State of Japanese Sexual Harassment Law: Judgment of April 16, 1992, Fukuoka Chillo Saibansho, Heisei Gannen (1989) (wa) No 1872, Songai Baisho Jiken 0apan)” (1993) 34 Harv Int'/ LJ1206 at 220.
131 Y Nakashita, above n 129 at 7-8.
132 Ibid at 17.
133 Buckley, S, “A Short History of the Feminist Movement in Japan” in J Gelb and M Lief Palley (eds), Women of]apan and Korea (1994) 169 at 177Google Scholar.
134 Ibid.
135 M Kaneko. above n 36 at ii (translation by Leon Wolff).
136 A Okuyama, above n 10 at 15-16.
137 Y Nakashita et al, above n 129 at i.
138 Rdo Horitsu ]unpo, a leading journal on labour law issues, published a special edition on sexual harassment in 1989 (issue no 1228); in 1990, Jurisuto, a general law journal, foJlowed by publishing its own special issue (issue no 956).
139 For an overview of the legal development of a Japanese sexual harassment law doctrine, see Wolff, L, “Eastern Twists on Western Concepts: Equality Jurisprudence and Sexual Harassment in Japan” (1996) 5 Pac Rim L & Pol'y J 509 at 517-520Google Scholar.
140 For example, Judgment of 16 April 1992, Fukuoka District Court, (1992) 783 Hanrei Taimuzu 60.
141 Judgment of 24 May 1995, Yokohama District Court, (1995) 670 Roda Hanrei 20.
142 Judgment of 11 April 1994, Tokyo District Court (1994) 655 Radii Hanrei 44.
143 Judgment of 29 August 1995. Osaka District Court (1996) 893 Hanrei Taimuzu 203.
144 Nihon Keizai Shimbun (evening edition) 5 February 1996 at 13.
145 5 M Kaneko, above n 36 at 191-202.
146 Parkinson discusses the notion of gradualism in Japan's approach to equal opportunity law. See L Parkinson, “Japan's Equal Employment Opportunity Law: An Alternatlve Approach to Social Change” (1989) 89 Col L Rev 604.
147 The first judicial statement on sexual harassment was by Judge Akimoto of the Shizuoka District Court. Since the defendant in that case did not enter a defence, the judge issued a default judgment upholding the plaintiffs claims. Judgment of 20 December 1990, Shizuoka District Court. {1991) 745 Hanrej Taimuzu 238. The second sexual harassment case—but the first contested case—was decided by the Fukuoka District Court. Judgment of 16 April 1992, Fukuoka District Court. (1992) 783 Hanrei Taimuzu 60. Neither judgment contains the term 'sexual harassment' within its reasoning.
148 A Okuyama (Chair), Report by the Research Committee on the Communication Gap between Female Employees and Management (Ministry of Labor, October 1993).
149 Kayo no Bunya ni okeru Danjo no Kinto na Kikai oyobi Taigu no Kakuho to ni Kansuru Horitsu [Act to Promote the Welfare of Female Workers by Providing for Equality of Opportunity and Treatment in Employment for Women], Law No 45 of 1985.
150 Guidelines issued by the Ministry of Labor under s 21(2) of the Equal Employment Opportunity Act, Law No 45 of 1985, contain a definition of sexual harassment, a classification of sexual harassment into quid pro quo harassment and environmental harassment, and some illustrative examples. See Notification No 20 of the Ministry of Labor.
151 See S Yamada, “Shokuba ni okeru Sekushuaru Harasumento o meguru Saibanrei no Bunseki (l)” [“An Analysis of the Case Law on Sexual Harassment in the Workplace (Part One)"] (1999) 105 Hogaku Shimpo 41 at 42-83; S Yamada, “Shokuba ni okeru Sekushuaru Harasumento o meguru Saibanrei no Bunseki (2 Kan)” [“An Analysis of the Case Law on Sexual Harassment in the Workplace (Part Two)"] (1999) 106 Hogalm Shimpo 87 and 88-146.
152 Judgment of 11 April 1994, Tokyo District Court, (1994) 655 Rado Hanrei 44.
153 See, for example, Judgment of 24 March 1995, Yokohama District Court, (1995) 670 R6do f-lunrei 20.
154 A Wetherfield, “Arnerikajin Bengoshi no Mita Nihon no Sekushuaru Harasumento (Ka)” [“A Foreign Lawyer Comments on Japanese Sexual Harassment Law (Part 2)"]. 1080 Jurisuto 75 at 79. However, note that recent decisions are upholding the plaintiff's claims, even if she did not respond to the alleged acts of sexual harassment in a stereotypical fashion. For example, see Yokohama Sexual Harassment Case (Decision of the Tokyo High Court, 20 November 1997) 728 R6do Hanrei.fiho12.
155 M Fukushima, above n 122 at 1.
156 See generally Yamanouchi, N and Cohen, S J, “Understanding the Incidence of Litigation in Japan: A Structural Analysis” (1991) 26 lnt'J Law 443Google Scholar; Haley, J O, “The Myth of the Reluctant Litigant”, (1978) 4 journal of Japanese Studies 359CrossRefGoogle Scholar.
157 Each January, the feminist journal ]osei ]oho collects media articles about sexual harassment (as well as other issues) which appeared in the press the previous year.
158 Judgment of 16 April 1992, Fukuoka District Court. (1992) 783 Hanrei Taimuzu 60.
159 Nakagawa, J, “Sekushuaru Harasumento” [“Sexual Harassment"], (1992) 45(6) H6rHsu 110 Hiroba 54 at 55Google Scholar.
160 N Patterson, above n 130 at 206 and 220-221.
161 Y Ehara, '"Kaiwa Bunseki' kara Mita Sekushuaru Harasumento” [“Sexual Harassment: Applying a Conversation Analaysis"] (1992) 1426 Toki no Horei 2.
162 M Kaneko, above n 107 at 4.
163 Y Ehara. above n 161 at 4.
164 See J Gelb and M Lief Palley. “Introduction” in J Gelb and M Lief Palley (eds). Women of Japan and Korea: Continui(y and Change (1994) 1 at 69 and F Upham, Law and Social Change in Postwar]apan (1987) at 144.
165 J Gelb and Lief Palley, above n 164 at 69.
166 F Upham, above n 164 at 144.
167 Ibid.
168 Ibid.
169 Chiyo Saito, “Nihonkei no Feminisurnu to Agora”, (1977) 34 Agora 116, quoted in S Buckley, “A Short History of the Feminist Movement in Japan” in J Gelb and M Lief Palley (eds), Women of japan and Korea (1994) 157 at 157.
170 Ibid.
171 Ibid at 158.
172 Asakura, M, “Sekushuaru Harasurnento” [“Sexual Harassment"] 1350 Told no Horei 3 at 4Google Scholar.
173 L Farley, Sexual Shakedown: The Sexual Harassment of Women on the fob (1978)
174 MacKinnon, C, The Sexual Harassment of Working Women (1979)Google Scholar
175 For example, M Hayashi, “Kasanete, Sekushuaru Harasumento” !"Sexual Harassment Over and Over Again"] (1991) 1403 Toki no Horei 64 at 69-70; Matsumoto, K. “Sekushuaru Harasumento ni taisuru lsharyo Seikyii” [“A Civil Suit Claiming Non-Pecuniary Damages for Sexual Harassment"] (1991) 985 ]urisuto 122 at 123-124Google Scholar.
176 M Kaneko et al, above n 107 at 16-17.
177 K Kinjo, above n 127 at 38.
178 H Sogabe, above n 126 at 209.
179 Ibid.
180 M Hayashi, above n 175 at 64.
181 M Fukushima, above n 107.
182 Y Ehara, above n 123.
183 Nibon Keizai Silimbun (evening edition) 5 February 1996 at 13.
184 Rosario, L do, “Petite Lady Lawyer Fights Sex Harassment” (1993) 156(32) Far Eastern Economic Review 86 at 86Google Scholar.
185 Notification No 20 of the Ministry of Labor.
186 Ibid.