Doing Business Right Blog

T.M.C. Asser Instituut

Doing Business Right – Monthly Report – December 2018 & January 2019 - By Shamistha Selvaratnam

13. February 2019 Antoine Duval (0)

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 and a contributor to the Doing Business Right project of the Asser Institute. 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.

 

Introduction

This report compiles all relevant news, events and materials on Doing Business Right based on the coverage provided on our twitter feed @DoinBizRight and on various websites. You are invited to contribute to this compilation via the comments section below, feel free to add links to important cases, documents and articles we may have overlooked.

 

The Headlines

German court rejects KiK lawsuit

On 10 January 2019, a regional court in Dortmund, Germany rejected a lawsuit brought by four affected Pakistanis that related to the death of 262 people and injury of 32 people at a Pakistani textile factory in 2012. The factory was a key supplier to German clothing company, KiK. The case was rejected on the basis that the statute of limitations had expired, despite computer simulation evidence demonstrating that inadequate safety measures were in place at the factory at the time, including no stairs and emergency exits, as well as a lack of fire extinguishers and fire alarms. It was argued that KiK ‘knew or should have known about the structural details if, as they claim, their representatives visited the factory several times’. Read more here and here.

Canadian Supreme Court hears Nevsun appeal

On 23 January 2019, the Canadian Supreme Court heard evidence involving a lawsuit involving Nevsun Resources, a Canadian mining company, which is accused of being complicit in using forced labour by one if its sub-contractors at the Bisha mine in Eritrea. The case was initially brought in 2014 by four Eritrean miners.

In 2016, the British Colombian Supreme Court rejected Nevsun’s motion to dismiss the lawsuit, which was upheld by the British Colombian Court of Appeal in 2017. In 2018, the Canadian Supreme Court allowed Nevsun to appeal the decision of the British Colombian Court of Appeal with the trial being heard earlier this year. The Canadian Supreme Court will need to decide, inter alia, whether it has jurisdiction to hear cases involving alleged breaches of customary international law by a Canadian business involving its actions in a foreign country. Read more here.

Canada introduces bill regulating forced labour and child labour within businesses

On 13 December 2018 a private members bill was introduced in Canada titled ‘C-423 – An Act respecting the fight against certain forms of modern slavery through the imposition of certain measures and amending the Customs Tariff’ (the Bill) to regulate forced labour and child labour in businesses. The Bill requires certain entities[1] to provide the Minister with an annual modern slavery report that sets out the steps it has taken to ‘prevent and reduce the risk that forced labour or child labour is used at any step of the manufacture, production, growing, extraction or processing of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity.’ Other criteria that must be included in the report includes the entity’s policies in relation to forced labour and child labour and the training provided to employees on these areas. The Bill carries penalties for non-compliance; namely, the relevant entity may be liable of an offence punishable on summary conviction and liable to a fine of up to $250,000.

UK releases report with recommendations to improve transparency in supply chains provision of Modern Slavery Act

The Independent Review of the UK Modern Slavery Act recently released an interim report. The report notes that the UK Government’s current approach to eradicating modern slavery in supply chains through the transparency in supply chains provision ‘while a step forward, is not sufficient’. Among other things, the report recommends that the UK Government should take the following action to improve its approach to addressing modern slavery in supply chains:

  • Establish an internal list of companies in scope of the transparency in supply chains provision and check with companies whether they are covered by the legislation.
  • Amend the option reporting criteria against which businesses may report, so that they are mandatory criteria against which businesses must report.
  • Set up a central government-run repository to which companies are required to upload their statements and that is easily accessible to the public, free of charge.
  • Empower the Independent Anti-Slavery Commissioner to monitor compliance and report annually.
  • Strengthen the Modern Slavery Act’s approach to tackling non-compliance with the reporting requirement, adopting a gradual approach. For example, initial warnings, fines (as a percentage of turnover), court summons and directors’ disqualification.
  • Introduce sanctions gradually over the next few years so as to give businesses time to adapt to changes in the legislative requirements.
  • Set up or assign an enforcement body to impose sanctions on non-compliant companies.

 

UN and International organisations publications and statements

 

NGO and Law Firm publications and statements

 

In Court

 

In the News


Academic Materials

 

Blogs           

Asser Institute Doing Business Right Blog

Others


Call for Papers and Abstracts

 

Upcoming Events

[1] An ‘entity’ is defined as a corporation or a trust, partnership or other unincorporated organisation that: (a) is listed on a stock exchange in Canada; (b) has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years: (i) it has at least $20 million in assets, (ii) it has generated at least $40 million in revenue, (iii) it employs an average of at least 250 employees.

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Doing Business Right Blog | The Proposed Binding Business and Human Rights Treaty: Summary of the Fourth Session of the Working Group - By Shamistha Selvaratnam

Doing Business Right Blog

T.M.C. Asser Instituut

The Proposed Binding Business and Human Rights Treaty: Summary of the Fourth Session of the Working Group - By Shamistha Selvaratnam

5. November 2018 Antoine Duval (0)

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.


From 15 to 19 October 2018, the fourth session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights took place in Geneva. 92 UN States participated in the session along with a range of stakeholders, including intergovernmental organisations, business organisations, special procedures of the Human Rights Council and national human rights institutions. The focus of the session was on the zero draft of the proposed binding business and human rights treaty (from herein referred to as the ‘treaty’).

This blog sets out the key views and suggestions made by those in attendance with respect to the treaty during the session.[1] Issues and areas of concern raised at the session generally aligned with the critiques raised by commentators on the first draft of the treaty (which are set out in a previous blog).

Key Comments on the Treaty

The UN Deputy Commissioner, Kate Gilmore, opened the session by welcoming the treaty and noting that the draft would form the basis of substantial negotiations. She stated that the ‘treaty should focus on the needs of people affected by business-related human rights abuses and should take into account the differential impacts such abuses have on different groups of rights-holders.’

Both states and business organisations raised the importance of the treaty aligning with the UN Guiding Principles on Business and Human Rights (UNGPs). While the influence of the UNGPs on the treaty was recognised, some states argued that the treaty undermines the UNGPS because ‘provisions of the draft diverged from the accepted approach of the UNGPs.’ For example, with respect to article 9 which imposes obligations on companies to undertake due diligence, it was noted that the article ‘departs from the UNGPs’ as it focuses on ‘results rather than conduct’. Some states further noted that the treaty misses or alters some of the steps in the due diligence process set out in the UNGPs and adds new elements. Accordingly, there were several calls for the treaty to more closely align with the ‘UNGPs and, in particular, for article 9 to align with the ‘concepts and terminology’ of the UNGPs.

With respect to the imposition of human rights obligations on businesses, many states appreciated that the treaty does not impose obligations directly on businesses, but rather recognises that the ‘primary responsibility to promote, respect, protect and fulfill human rights and fundamental freedoms lies with States’. Interestingly, one state and several NGOs considered that it would be ‘unproblematic’ to directly impose obligations on businesses under international law.

The scope of businesses covered by the treaty was subject to scrutiny by many in attendance at the session. The scope was criticised for being ‘too narrow’ in its focus on business activities of a transnational character. It was proposed that all businesses should be covered by the treaty as this would be consistent with the UNGPs and because ‘the structure or nature of a company is irrelevant to victims’ and ‘they should be entitled to access to remedy regardless of the company committing the abuse’. It was also noted that ‘many multinational companies own or have relationships with strictly domestic companies, and that, in practice, it is difficult to differentiate between transnational and national companies’. The issue noted by Professor John Ruggie with the restriction to “for-profit” economic activity arguably excluding state-owned enterprises was also raised by some states.

With respect to the provision on legal liability, there were divergent views raised during the session. Some states and particularly NGOs welcomed the inclusion of civil, criminal and administrative liability in the treaty. Other states raised concerns with the impossibility of criminal liability on businesses in circumstances where such liability was not possible in their jurisdictions. There were several calls for greater clarity of the legal liability provision. For example, as noted in a previous blog, the use of the words and phrases ‘control’, ‘sufficiently close’, ‘strong and direct connection’ and ‘foreseen’ are not defined in the treaty and therefore the meaning of these terms is unclear. Also, there were calls for a clear distinction to be made on aspects of corporate law, such as the notion of separate legal personality, and when the corporate veil can be pierced.

Differing views were raised in relation to the treaty’s interaction with future trade and investment agreements. The report notes that one delegation ‘stressed the importance of affirming the primacy of human rights over such agreements’. The current draft of the treaty requires states to agree that any future trade and investment agreements not contain provisions that conflict with the implementation of the treaty and be interpreted in a manner that is ‘least restrictive on their ability to respect and ensure their obligations under the treaty’ (see sub-articles 13(6) and (7) of the treaty). Some NGOs requested that the primacy of human rights over these agreements be explicitly stated in the statement of purpose of the treaty. However, some states expressed concern that ‘such an affirmation would prioritize one branch of international law over another and could restrict States’ negotiating positions.’

While much of the discussion during the session focused on the specific provisions of the treaty, at a more general level, those in attendance called for ‘more clarity and precision in the language’ of the treaty. Particular attention was given to the lack of clarity of the articles covering scope, definitions, jurisdiction, applicable law, rights of victims, legal liability and international cooperation.

Next Steps

So where to from here? States and other stakeholders have been invited to submit their comments and proposals on the treaty by the end of February 2019. The Chair-Rapporteur will prepare a revised draft of the treaty on the basis of the discussions during the session by the end of December 2018 and present the text by the end of June 2019. Negotiations on the next draft of the treaty will take place during the fifth session of the working group in October 2019 (the dates of the fifth session have not been announced as at the date of this blog). The Asser Institute will continue to report on developments of the treaty as information becomes available.


[1] This blog has been prepared based on the draft report of the fourth session (accessible here).

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