Editor’s
note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of
European and International Human Rights Law at Leiden University in the
Netherlands. Prior to commencing the LLM, she worked as a business and human
rights solicitor in Australia where she specialised in promoting business
respect for human rights through engagement with policy, law and practice.
Since the release of the first draft of the
BHR Treaty (from herein referred to as the ‘treaty’), a range of views have
been exchanged by commentators in the field in relation to the content of the
treaty (a number of them are available on a dedicated page
of the Business and Human Rights Resource Centre’s website). While many have
stated that the treaty is a step in the right direction to imposing liability
on businesses for human rights violations, there are a number of critiques of
the first draft, which commentators hope will be rectified in the next version.
This second blog of a series of articles
dedicated to the proposed BHR Treaty provides a review of the key critiques of
the treaty. It will be followed by a final blog outlining some recommendations
for the working group’s upcoming negotiations between 15 to 19 October 2018 in
Geneva.
Critiques
of the Treaty
Scope
As stated in the first
blog post, the treaty applies to ‘business activities of a transnational
character’. This aspect of the treaty has been criticised by many for being too
limited as it makes a distinction between businesses that have activities
abroad and those that do not, and it only imposes obligations on States to
implement the treaty requirements with respect to the former.[1]
By doing so, the treaty does not align with the UN Guiding Principles on
Business and Human Rights (UNGPs) and suggests that all businesses should not
be held equally responsible.
Larry Catá Backer, Professor at
Pennsylvania State University, comments that the limitation of the scope of the
treaty detracts from the assertion in the preamble that human rights are
‘universal, indivisible, interdependent and inter-related’ as the scope is
‘defined in a way to effectively protect local business …from effective
compliance with thew high values’. [2]
He notes that cynics may see this as ‘an effort to protect the local economies
of certain states’ and perhaps a confirmation that ‘only certain states and
their citizens [are] mature enough to undertake the burdens of legal
responsibility, in this case for human rights.’[3]
The Business & Human Rights Resource
Centre’s experience has shown that ‘allegations of corporate abuse are made
against both national and international companies and national laws currently
too often provide no adequate protection or remedy from either source of abuse.’[4]
Accordingly, if the scope of the treaty is not altered, it will effectively
deprive victims of human rights violations committed by businesses with exclusively
domestic activities from obtaining redress under the treaty.
With respect to the definition of ‘business
activities of a transnational character’, Professor John Ruggie notes that it
is unclear and unnecessarily narrow such that it will be difficult to operationalise
as it is ‘nowhere defined in the law or the social sciences’.[5]
Accordingly, there may be difficulties in ‘monitoring and attributing legal
liability’, particularly given the complex nature of global supply chains. [6]
He also states that it could ‘exclude state-owned enterprises (SOEs) engaged in
transnational business activity whose mission is not strictly profit-driven’.[7]
As Professor Baker notes, ‘SOEs occupy an increasingly important place in the
global economic order’ and the lack of clarity as to whether covered by the
scope of the treaty is ‘troublesome’.[8]
Scale
The treaty has been criticised for its
scale, that is, ‘the magnitude of the task at hand in seeking to regulate
transnational business enterprises or ‘activities’.’ [9]
Despite the lack of clarity surrounding the definition of ‘business activities
of a transnational character’, it would capture a large number of businesses
and their operations and activities. Professor Ruggie notes that it should be
ensured that the ‘instrumentalities for monitoring and provisions for
attributing legal liability are up to the magnitude of the task.’ [10]
Surya Deva, Associate Professor of the School of Law of the City University of
Hong Kong, notes that the number of entities captured could not be ‘regulated
effectively by each state acting alone’; therefore, he suggests that States
take collective action under the treaty. [11]
Imposition of obligations on businesses
To date, the international legal
personality of corporations and the ability to hold corporations responsible for
human rights violations under international law is not settled. Accordingly, the
treaty does not impose human rights obligations directly on businesses; instead
it seeks to indirectly impose obligations on businesses by providing States
with the primary responsibility to adopt legislation that is consistent with
the treaty requirements.[12]
Professor Nicolás Carrillo-Santarelli, Professor of Law at La Sabana
University, notes that ‘this approach coincides with the archetype of
international law dealing with non-state conduct indirectly, through the
mediation of required domestic law and State action’.[13]
It has been argued that the treaty ‘fail[s] to genuinely innovate beyond
existing principles of public international law’ and, as a result, give corporations
the ability to continue to ‘hide their failure to act behind the alleged
shortcomings of states’.[14]
Associate Professor Deva argues that the treaty ‘should state explicitly the
obligation of businesses to respect of internationally recognised human
rights’, and that the treaty, as currently drafted, ‘will not work’ as the
treaty provides for legal liability but does not clearly impose a corporate
obligation to respect human rights.[15]
Notably, the preamble of the treaty states
that all businesses shall respect human rights, regardless of their ‘size,
sector, operational context, ownership and structure’, which Professor Carrillo-Santarelli
considers could suggest that the direct corporate obligations exist because the
word ‘shall’ has a ‘strong obligation connotation’.[16]
He also points out that it could be read that ‘all corporations … are under binding responsibilities to respect
human rights.’[17]
However, on the face of the treaty, it is unclear. Nonetheless, ratification of
the treaty may be viewed as ‘expression of certain opinio juris on
the existence of corporate duties that are implicitly and indirectly’ in the
treaty.[18]
Intersection with investment law
Another critique of the treaty is how it
deals with trade and investment treaties. Pursuant to article 13(3), the treaty
does not have any primacy over existing State obligations under relevant
treaties.[19]
Accordingly, victims of human rights abuses that arise in the context of those
trade and investment treaties will not be able to rely on the treaty. As noted
by Carlos Lopez, the treaty pays ‘scant attention to the role of the State and
the need for accountability and remedy in that context’.[20]
Nonetheless, pursuant to article 13(6), new trade and investment treaties must
not contain any provisions that conflict with the implementation of the treaty
and should “[uphold] human rights in the context of business activities by
parties benefiting from such agreements.”
Due diligence
The treaty has been praised for including
an article on prevention of human rights violations which imposes a
prescriptive list of measures to be undertaken by businesses in order to
conduct due diligence (for example, reporting publically and periodically on
non-financial matters). Associate Professor Deva argues that, in addition to
ensuring that the due diligence process in the treaty aligns with the UNGPs, it
should also be informed by best practice recommendations, for example, the
European Coalition for Corporate Justice’s Position Paper on the ‘Key Features
of Mandatory Human Rights Due Diligence Legislation’, to ensure that consistent
processes are implemented by businesses.[21]
Nonetheless, the due diligence article
(article 9) have been critiqued because it departs from the human rights due
diligence process set out in the UNGPs. The UNGPs defines the parameters of
human rights due diligence and sets out a four-step process to be carried out
by businesses. Businesses should ‘identify, prevent, mitigate and account for
how they address their adverse human rights impacts’.[22]
While the treaty broadly covers each of these steps (for example, It requires
businesses to identify and assess human rights violations), it goes further
than the UNGPs and requires businesses to undertake a number of other measures,
including reflecting due diligence requirements in their contractual
relationships. In practice, this diversion may cause confusion for businesses
that have implemented due diligence processes that align with the UNGPs.
Further, the ability for State Parties to
exempt small and medium-sized businesses from the due diligence requirements in
the treaty (article 9(5)) has been criticised on the basis that it ‘may be
abusively taken advantage of by developing or other States in order to favor
the “impunity” of abuses perpetrated or assisted by ‘strategic’ corporations or
in ‘strategic sectors’.’ [23]
Separately, Professor Ruggie notes that a
very high standard is imposed with respect to prevention of harm – the treaty
requires businesses “to prevent” harm, which is ‘an extremely tall order for
any due diligence requirement, which typically is expressed as “seek to
prevent,” suggesting a standard of conduct.’[24]
This language is reflected in article 13 of the UNGPs, which calls on
businesses to ‘seek to prevent or mitigate adverse human rights impacts’ and,
accordingly, use of this language in the treaty would align it with the UNGPs.
Legal liability
As stated in the first
blog post, article 10.6 of the treaty provides three grounds upon which
businesses may be held civilly liable for human rights violations in connection
with their activities, namely:
a. to the extent it exercises control over the operations; or
b. to the extent it exhibits a sufficiently close relation with its
subsidiary or entity in its supply chain and where there is strong and direct
connection between its conduct and the wrong suffered by the victim; or
c. to the extent risk have been foreseen or should have been foreseen
of human rights violations within its chain of economic activity.
This article has been criticised due to its
lack of clarity, particularly with the use of the following words and phrases: ‘control’,
‘sufficiently close’, ‘strong and direct connection’ and ‘foreseen’.[25]
None of these words or phrases are defined in the treaty, and no guidance is
provided on how they should be interpreted. Doug Cassel, Professor Emeritus of
Law at the University of Notre Dame, has stated that the language needs to be
‘made more precise … to avoid clashing with entrenched national law doctrines
that limit piercing of the corporate veil.’[26]
With respect to criminal liability, as
Professor Carrillo-Santarelli notes, it is disappointing that State Parties
would only be required, pursuant to article 10(8), to ‘provide measures under
domestic law to establish criminal liability for all persons with business
activities of a transnational character’, as violations of human rights are
violations regardless of whether they are committed through domestic or
transnational business activities. [27]
Further, it is unclear from the face of the treaty as to whether businesses
will be held criminally liable under the treaty, or only individuals. Nadia
Bernaz, Associate Professor of Law of Wageningen University, notes that if the
treaty does not include corporate criminal liability, there is a greater
likelihood that it will be accepted.[28]
However, she also argues that ideally international corporate criminal
liability for international crimes should be included in the treaty,
particularly given that the treaty does not impose direct corporate liability.[29]
Rights of victims
While the treaty’s focus on the rights of
victims is likely to be viewed as its ‘key positive feature’, Professor Backer
argues that the definition of the term ‘victims’ may ‘cause some concern’. [30]
‘Victims’ are defined to mean ‘persons who individually or collectively alleged
to have suffered harm, including physical or mental injury’ (article 4). Professor
Backer claims that this definition could ‘appear to divide the world between
victims … and everyone else’ and that it seems to ‘incapacitate’ victims as a
class because it suggests that they are ‘not individuals who can act but who
must be guided and protected like children’.[31]
He suggests that victims should be identified as ‘individuals to which certain
rights vest’, that is, as rights holders.[32]
Additionally, commentators have also
criticised article 8(5)(d) which states that ‘in no case shall victims be
required to reimburse any legal expenses of the other party to the claim.’
Professor Lopez notes that this article ‘may be seen as an incentive to
frivolous litigation’.[33]
Professor Carrillo-Santarelli agrees with Professor Lopez’s comment and adds
that article 8(5)(d) along with article 8(6) (which states that ‘States shall
not require victims to provide a warranty as a condition for commencing
proceedings’) ‘could be taken advantage of to smear the reputation of some
corporations when there are no grounds.’[34]
Enforcement
The treaty
does not establish any sort of international enforcement or complaint mechanism
to provide victims with redress. However, the absence of such mechanisms is said
to be likely to make the treaty more attractive to State Parties.[35]
Although
there is no international mechanism, the Optional Protocol has attempted to
address concerns relating to lack of enforcement by requiring State Parties to
establish a National Implementation Mechanism ‘to promote compliance with,
monitor and implement’ the treaty. Further details on the role and function of
this mechanism are set out in the first
blog post.
Conclusion
Despite the flaws of the treaty that have been
noted by commentators, overall commentators have welcomed the introduction of a
treaty on business and human rights. The treaty is viewed as a step forward in
addressing critical issues including preventing human rights violations by
businesses and ensuring access to remedy for victims of such violations. However,
it is clear that the treaty will need to be refined and clarified before it has
any chance of being adopted by States.
[25] Doug Cassel, ‘At Last: A Draft UN Treaty on Business and
Human Rights’; John Ruggie, ‘Comments on the “Zero Draft” Treaty on
Business & Human Rights’.
[26] Ibid.
[35] Doug Cassel, ‘At Last: A Draft UN Treaty on Business and
Human Rights’; Surya Deva, ‘The Zero Draft of the Proposed Business and Human Rights Treaty, Part II:
On the Right Track, but Not Ready Yet’.