At Last: A Draft UN Treaty on Business and Human Rights
Posted on August 2, 2018
Longtime guest poster Doug Cassel comments on the recently released draft of a treaty on business and human rights.
Drafting a viable, meaningful, United Nations treaty on business and human rights would be daunting in the best of circumstances. It is even more challenging in the context of the current effort underway in Geneva. The negotiating process began in 2014 when the UN Human Rights Council, split by geography and ideology, voted to initiate the drafting process by a bare plurality of the Council’s 47 member states. Since then, the process has crept along at a snail’s pace, with a first draft of a treaty emerging only now, four years later.
The process has been boycotted by the United States, rebuffed by Russia, and held at arm’s length by even most potentially supportive states (including the European Union). At times the treaty initiative has appeared to be on life support. Nonetheless, a continuing commitment by Ecuador, the principal state sponsor of the process, joined by South Africa and buoyed by the strong support of a broad coalition of civil society organizations, has kept it going.
If there is a realistic hope for a treaty that is both diplomatically viable and meaningful for human rights, the draft treaty text newly released by Ecuador in July 2018 is on the right conceptual track. Unlike the draft “elements” of a treaty Ecuador proposed last year, which largely reflected an NGO wish list, the new text focuses on human rights priorities – prevention and remedy – while ensuring state control of implementation, and jettisoning some elements that most troubled the business community.
The new text zeroes in on what victims need most. To prevent human rights violations, states parties must commit to require their companies to exercise human rights due diligence. Due diligence must include (article 9.2):
- monitoring and preventing the adverse human rights impacts of a company’s activities and those of its subsidiaries and entities it controls or to which it is directly linked [the extent of prevention required will need to be addressed];
- identifying and assessing actual or potential violations;
- reporting publicly and periodically on environmental and human rights, including “policies, risks, outcomes and indicators”;
- conducting pre- and post-environmental and human rights impact assessments and integrating the findings into business operations;
- including the above requirements in “all contractual relationships which involve business activities of transnational character”;
- “meaningful consultations” with potentially affected groups; and, where needed,
- financial guarantees such as insurance bonds to cover potential costs of compensation.
To remedy human rights violations, both home and host states of companies engaged in “business activities of a transnational character” will be required to provide remedies and to cooperate in their enforcement (articles 5.1, 8, 10-11).
Among other remedies, failure to comply with due diligence duties “shall result in commensurate liability and compensation” in accordance with the treaty (article 9.4). [Negotiators will need to address the conditions and extent of such “commensurate” liability.]
The new text also addresses the practical realities of access to justice (article 8). States must guarantee victims “appropriate access to information” relevant to remedies, court costs are to be minimized and waived where necessary to assure access to justice, states must determine needs for legal assistance to victims, and an international fund for legal aid to victims is to be created.
Following the traditional international law pathway, the treaty will be implemented and enforced by States parties. State laws are to mandate human rights due diligence by business and to afford victims access to judicial remedies. This conventional treaty approach – states agreeing on norms and undertaking to implement them by domestic legislation – should make it easier for wary states to join in serious treaty negotiations and, eventually, in a treaty.
Unlike last year’s “elements,” the new text contemplates no binding international enforcement mechanism. The treaty will create no international court where victims can sue companies or where business executives and corporations can be criminally prosecuted. It will not even establish a mechanism for complaints to an international treaty committee.
There will instead be international monitoring, oversight and prodding by a committee of experts (article 14.4). They are to receive and review progress reports by states and to make both general comments and state-specific recommendations for improvements. A conference of states parties will also review implementation — including any “further development” needed to fulfill the purpose of the treaty (article 14.5). International oversight will thus combine the self-reporting and non-binding review characteristic of early human rights treaties governing states, with the more recent innovation of a conference of states parties.
Many advocates for victims will find the absence of robust international enforcement disappointing. But if relying on enforcement by states parties proves to be the price of admission for a critical mass of states to join the treaty, then omitting international enforcement is likely a worthwhile concession. The value of broad state participation should outweigh the value added of an international court – witness the disappointing performance of the International Criminal Court.
States should find the draft treaty text appealing in concept. It puts them in the driver’s seat to adopt legislation of their own choosing to meet broadly stated treaty criteria, with no compulsory international override.
Global business organizations are not likely to welcome any treaty that imposes mandatory human rights due diligence and remedial obligations. Still, the business groups that emphatically rejected last year‘s draft elements should take a fresh look. The preamble of the new text makes explicit, as business rightly insists, that the “primary responsibility” for human rights (including protecting people from abuses by business) remains with states. Gone is the reference in the “elements” to direct imposition of international law obligations on business. Gone also are the international courts or mechanisms for business to be sued or prosecuted. Gone, too, is the reference in the “elements” to the UN Sub-Commission “norms” of 2003 on business and human rights (which were widely rejected by states and business).
In contrast, a newly included provision (article 9.5) authorizes states to exempt small and medium size businesses from selected due diligence obligations, in order to avoid imposing undue administrative burdens.
Another major concern of business has been the relationship between this treaty and trade and investment treaties. The new text drops the claim in the “elements” that this treaty overrides trade and investment treaties. Instead, three more modest claims are made. The first should appeal to business: this treaty is “without prejudice” to state obligations under existing treaties (article 13.3). The second and third provisions (articles 13.6 and 13.7), for their part, are reasonable compromises: new trade and investment treaties should not conflict with this treaty and should “uphold” human rights, and all trade and investment treaties, both existing and new, should be interpreted in a manner “least restrictive” of rights under this treaty.
Not that the new text is ready for signing tomorrow. Issues of both concept and language remain. If not satisfactorily resolved, they could derail the treaty process. Many have been helpfully noted by Carlos Lopez of the International Commission of Jurists in his blog at Opinio Juris.
This brief comment mentions only three. One involves what companies will be covered. Business organizations and most NGO’s argue that any treaty should cover all companies. South Africa advocates a treaty only for transnational corporations. Ecuador proposes a compromise by which application of the treaty would turn, not on the transnational nature of the company, but on the transnational nature of the business activity at issue.
Specifically, the treaty would apply to all “business activities of a transnational character.” These are defined (article 4.2) to include “any for-profit economic activity, including but not limited to productive or commercial activity, undertaken by a natural or legal person, including activities undertaken by electronic means, that take place or involve actions, persons or impact in two or more national jurisdictions.”
Ecuador’s approach has generated both substantive and definitional objections. Substantively, many human rights advocates criticize it for excluding companies whose business activities are exclusively national, but which can and do affect human rights. However, although further analysis is needed, the breadth of the foregoing definition – covering “actions, persons or impact” in two or more nations – may in practical effect cover all national companies of any significant size in today’s globalized economy.
There is also a definitional concern. While Ecuador’s definition may be adequate for purposes of imposing obligations of human rights due diligence, it might lack the precision required for criminal prosecutions under the treaty. This aspect deserves further examination.
A second issue arises from the treaty’s proposed imposition of civil liability (article 10.6) on companies in connection with the actions of their subsidiaries and business partners, depending on factors of control, foreseeable risk, or a “strong and direct connection” between the company’s conduct and the wrong. This language needs to be made more precise, and to make clear that the actionable act or omission must be that of the company itself, and not merely of its business partners, if the treaty is to avoid clashing with entrenched national law doctrines that limit piercing of the corporate veil.
Finally, the new text authorizes reversal of the burden of proof, subject to national law, “where needed” to assure the victim’s access to justice (article 10.4). While many national laws authorize reversal of the burden of proof in defined circumstances, this broad proposal would be less controversial if the circumstances were specifically defined in the treaty.
Overall, the new text seeks to strike a balanced compromise among the interests of human rights claimants, states and business. As a compromise, it will likely provoke significant objections, if not outright opposition, from human rights NGO’s. And it is not likely to persuade business organizations to drop their opposition to an expansive treaty. States, however, may find that it meets their concerns and respects their interests.
Taken as a whole, the preventive and remedial provisions of the new text actually go well beyond most (and perhaps all) current national laws. The treaty’s preventive provisions are broader than the most advanced national legislation today, namely the French loi de vigilance (due diligence law), which was adopted only in 2017. The treaty’s remedial provisions provide broader grounds of liability than current English case law on the business duty of care.
At the same time, although some provisions need to be clarified, the proposed text shows a degree of sensitivity to avoiding the imposition of unreasonable obligations on business.
The proposed treaty’s coming into force would not instantly revolutionize the world of business and human rights. But it would accelerate existing momentum for states to take more seriously their legal obligations to protect human rights from business abuse, and would encourage business to strengthen their human rights due diligence procedures. If widely ratified, the proposed treaty should stimulate a proliferation of national laws imposing reasonable obligations on business to prevent human rights violations and, when violations occur, improving access to justice by victims.