I am very pleased to share this post by Nilsun Gursoy, who is a lawyer qualified to practice in Turkey. She obtained her LL.M. degree from Harvard Law School in 2017. Her main interest is the environmental and human rights impacts of the energy and extractive industry. She is currently working as research fellow in a human rights organization in Ireland.
On 26 June 2014, the UN Human Rights Council, after a deeply divided vote, adopted Ecuador’s proposal to establish an intergovernmental working group “to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises[i].” Ecuador’s proposal to adopt an international legally binding instrument gave rise to a heated debate as to whether a binding treaty is capable of effectively addressing corporate-related human rights abuses. Former Special Representative for Business and Human Rights, John Ruggie, expressed his concern that various complex issues falling under business and human rights cannot be captured by a single international instrument, and such an instrument would have little or no practical impact[ii]. On the other hand, many civil society organizations supported the idea of an international legally binding instrument and called on States to participate in the negotiations[iii]. After 4 years of work and consultations, on 16 July 2018 the first draft of the binding treaty on business and human rights (“Draft Treaty”) was finally released.
It appears to be that the Draft Treaty recognized the difficulty to address many complex issues at once and deliberately chose to focus on particular governance gaps in the field of business and human rights. The main focus of the treaty is access to justice and remedies for victims of corporate abuse and prevention of further human rights violations in the context of business and human rights. The Draft Treaty is definitely a step in the right direction, yet there are many gaps that it fails to address. For instance, contrary to some expectations, the Draft Treaty does not impose any human rights obligations upon corporations. In this respect, the Draft Treaty does not go any further than repeating, in its preamble, the UN Guiding Principles’ corporate duty to respect human rights and reaffirming that all business enterprises have a duty to respect all human rights, including avoiding causing or contributing to adverse human rights impacts through their own activities and addressing such impacts when they occur. The preamble of the Draft Treaty underlines, on the other hand, that the State is the primary duty bearer in promoting, respecting, protecting and fulfilling human rights and fundamental freedoms. This choice to stay clear of controversy is likely to disappoint many supporters of a binding treaty, such as Nadia Bernaz in her recent blog, but it will probably facilitate the acceptance of the Draft Treaty by a larger audience.
Following the traditional approach in international law, the Draft Treaty imposes international obligations on States, who will in turn make the necessary changes in their domestic law to implement and enforce the treaty. Thus, States are required to implement many treaty obligations on areas such as access to justice and remedy for victims, prevention of further violations, mutual legal assistance and international cooperation, which will be assessed in detail below.
Since the adoption of Ecuador’s resolution, one of the major controversies dividing parties has been the scope of the treaty. Ecuador’s resolution, co-sponsored by Bolivia, Cuba, South Africa, and Venezuela, sought to elaborate upon an international legally binding instrument that did not apply to national companies[iv]. Their position triggered strong opposition from the EU, which emphasizes that the treaty should apply to all companies. The Draft Treaty strives to strike a balance between those two approaches, and Article 3 limits the scope to companies with “business activities of a transnational character.” These are defined under Article 4 as “any for profit activity, including but not limited to productive or commercial activity, undertaken by a natural or a legal person, including activities undertaken by electronic means, that take place or involve actions, persons or impact in two or more national jurisdictions.”
It is hard to understand the rationale behind the rule that companies with merely domestic activities should not be subject to the same human rights standards as companies with business activities of a transnational character. The UN Guiding Principles, for instance, don’t make this artificial distinction and apply to all companies. Moreover, from the victims’ point of view, the transnational character of the corporate abuser is irrelevant. However, as mentioned by Doug Cassel, in practice most domestic companies of any significant size are likely to fall within the scope of the Draft Treaty as their activities mostly take place or involve “actions, persons or impact in two or more national jurisdictions” in today’s global economy.
The above stated definition also limits the scope of the Draft Treaty to for profit activities. Thus, the Draft Treaty may not cover state-owned enterprises, whose activities are not necessarily for profit. In fact, the Draft Treaty fails to pay sufficient attention to the State as an economic actor, and to State involvement and complicity in corporate human rights abuses.
In respect to the ratione materiae, the Draft Treaty applies to “all international human rights and those rights recognized under domestic law.” Thus, the Draft Treaty does not limit the scope to certain types of human rights violations. However this formulation does not provide enough clarity on the actual meaning of “all international human rights,” and whether it only includes those rights that are binding upon States under international law. The Draft Treaty needs to bring further clarity in this regard.
Access to Justice and Remedy
One of the main purposes of the Draft Treaty is to ensure access to justice and remedy for victims of corporate-related human rights abuses. To this end, the Draft Treaty includes many provisions on jurisdiction, applicable law, rights of victims and legal liability.
Jurisdiction and Applicable Law
According to Article 5 of the Draft Treaty, for the actions arising from acts or omissions that result in the violation of human rights covered under the treaty, the following courts will have jurisdiction: (i) the court of the State where such acts or omission occurred, and (ii) the court of the State where the plaintiffs are domiciled. Under the same article, the plaintiff is considered to be domiciled at the place where it has its (i) statutory seat, (ii) central administration, (iii) substantial business interest, or (iv) subsidiary, agency, instrumentality, branch, representative office etc.
The issue of forum non conveniens is not addressed in the Draft Treaty although it was included in the Elements for the Draft Legally Binding Instrument (“Draft Elements”) that was released in September 2017. It required States to take adequate measures to limit the use of the doctrine of forum non conveniens. As pointed out by some human rights organizations, the Draft Treaty should ensure that the doctrine of forum non conveniens is not used to defeat remedies for victims where jurisdiction vests in the courts of multiple States[v]. Otherwise, the international community will see more cases similar to the Ecuadorian plaintiffs’ case, who have been struggling to access meaningful remedy against Chevron for over twenty years.
With respect to the applicable law, Article 7 of the Draft Treaty provides victims with the option to request any matter of substance regarding human rights law to be governed by the law of another State party, where the involved person with business activities of a transnational character is domiciled. If there is no such request, all matters of substance and procedure will be governed by the lex fori, unless otherwise provided in the treaty.
Rights of Victims
The Draft Treaty explicitly recognizes victims’ rights to fair, effective and prompt access to justice and remedies, and imposes several obligations on States to ensure that these rights of victims are fulfilled. Under Article 8, States have an obligation to guarantee the victims’ right to present their claims to courts and also to make necessary legislative changes to ensure that their domestic judicial authorities have jurisdiction. The victims’ right to present claims can be guaranteed individually or as a group. Thus, the Draft Treaty does not require States to recognize class action in their domestic law.
States are under an obligation to conduct an effective, prompt, thorough and impartial investigation on all human rights violations, guarantee appropriate access to information relevant to the pursuit of remedies, and provide proper and effective legal assistance to victims. Furthermore, victims must be given access to appropriate diplomatic and consular means to ensure that they can access information required to bring a claim, as well as legal aid and information on the location and competence of the courts and the way in which proceedings are commenced or defended before those courts. If effectively implemented, those provisions can help close the gap in access to information by victims without adequate financial resources. The Draft Treaty also includes detailed provisions on mutual legal assistance and international cooperation to enable and facilitate the implementation of the above stated provisions. Those will be further assessed below.
The Draft Treaty also strives to address the financial barriers in access to justice, and provides several guarantees for victims. In accordance with Article 8.5.d, victims are not responsible for reimbursing any legal expenses of the other party to the claim under any circumstances. Article 8.6 takes it a step further and, provides that inability to cover administrative and other costs is not a barrier to commencing proceedings, and States will assist victims in overcoming such barriers by measures such as waiving costs, where needed. Moreover, victims cannot be required to provide a warranty as a condition to start proceedings. Finally, Article 8.7 requires the parties to establish an international fund to provide legal and financial aid to victims. The functioning of the fund will be defined by the parties at a later stage. These provisions are a significant improvement in terms of removing the disproportionate financial disadvantages suffered by victims vis-a-vis transnational corporations. However, for the same reason, the Draft Treaty may be criticized by some States for being an incentive for baseless lawsuits with little chance of success.
An important issue that is not explicitly addressed under the Draft Treaty is the situation of human rights defenders. This issue is partly covered by the Draft Treaty since most human rights defenders will fall within the category of “victims” widely defined under Article 4. The definition of victims under that article includes not only the ones who suffered harm through acts or omissions in the context of business activities of a transnational character, but also “persons who have suffered harm in intervening to assist victims in distress or to prevent victimization.” Accordingly, the definition of victims will include human rights defenders assisting affected communities as long as the harm occurred in the course of those activities. However, it is unclear which circumstances human rights defenders will be considered to be assisting victims in, and the article may generate different interpretations. Therefore, an explicit provision focused on the specific needs of human rights defenders should be included in the Draft Treaty. These measures should be designed to protect both human rights defenders and their work, including but not limited to measures related to the protection of human rights defenders against any form of criminalization and obstruction of their work, sanctions against the corporate abuse of rights in suing human rights defenders etc.[vi]. Similarly, the Draft Treaty falls short in addressing gender-specific risks, and specific provisions designed to address the heightened risk of violations faced by women, should be included in the text.
This is the first part of a two part post. Part II will be published on Monday 1st September.
[ii] See John Ruggie, “The Past as Prologue? A Moment of Truth for UN Business and Human Rights Treaty”, Institute for Human Rights and Business (July 8, 2914). Available at: https://www.ihrb.org/other/treaty-on-business-human-rights/the-past-as-prologue-a-moment-of-truth-for-un-business-and-human-rights-tre/?#_ednref15
[iii] See Second Joint Statement of Treaty Alliance. Available at: https://businesshumanrightsireland.files.wordpress.com/2018/08/191dc-2ndstatement.pdf
[v] Human Rights Watch, “The Potential of a Binding Treaty on Business and Human Rights to Address Access to Remedy for Corporate-Related Human Rights Abuses” (September 25, 2017). Available at: https://www.hrw.org/news/2017/09/26/potential-binding-treaty-business-and-human-rights-address-access-remedy-corporate#footnoteii_0owfjb3
[vi] See FIDH, “Written Submission to the United Nations’ Open-ended Intergovernmental Working Group in Transnational Corporations and Other Business Enterprises with respect to Human Rights”(October 2017) p.4. Available at: https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session3/FIDH_WrittenSubmission.pdf