Business and human rights: The failure of self-regulation 

While no effective international mechanism exists to safeguard human rights, the interests of transnational corporations are assiduously protected through a global web of binding legal frameworks. In light of this unequal state of affairs, a network of social movements and organizations from across the world is steering an initiative to dismantle the corporate-centred “architecture of impunity”.

by Erika González, Juan Hernández Zubizarreta and Mónica Vargas

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“Self-regulation does not work. We need binding regulations. Now.” That was the message of Alfred de Zayas, the United Nations Independent Expert on the promotion of a democratic and equitable international order. He was addressing the Catalan Parliament as part of a day dedicated to the issue of “Transnational corporations and human rights: the road to binding regulations”, referring to the obligation that corporations have to respect human rights wherever they operate.

Surprising as it may seem, given that human rights are now universally recognized, there is a total void in effective protection at international level. This article will explain what this lack of protection means, and how a global process of mobilization can change this situation by putting forward real alternatives.

Asymmetrical relationship

One of the principal characteristics of capitalist globalization is the clearly asymmetrical relationship between transnational corporations and the people. Thus an unequal relationship has been created between corporations, whose interests are reflected in public policy, and the rest of the population, who see their rights being subordinated to the power of the major multinationals. This is the new lex mercatoria; the interests of the transnational corporations are very effectively safeguarded through contracts, trade regulations and multilateral, regional and bilateral investment agreements and by the decisions of international arbitration tribunals such as the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). And yet no mechanisms exist to protect the rights of peoples or of Nature.

At a global level, the United Nations Conference on Trade and Development (UNCTAD) has identified more than 3,400 free trade agreements and treaties to protect investments, which involve binding legal frameworks.¹ In Europe, this issue gained prominence in the media during the controversial negotiation with the United States on the Transatlantic Trade and Investment Partnership (TTIP), and the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada. These highlighted the erosion of democracy inherent in a secret negotiation process. Criticism also focused on specific aspects of the treaties such as regulatory cooperation – promoting downward harmonization of wages and social and environmental standards – and the arbitration mechanisms between investors and states, whereby transnational corporations can sue states if they consider their interests are being undermined.

These are very real issues for the majority of countries in Latin America, Africa and Asia, under pressure from the US and the EU to sign similar treaties. But such agreements would undermine regional dynamics that could potentially strengthen the economies of poorer countries. This was what happened to the Andean Community, which split after signing bilateral treaties with the US and the EU. And yet it is difficult for these countries to say no to such agreements, as illustrated by the ultimatum the EU recently gave to a number of African countries, requesting they sign the Economic Partnership Agreements (EPAs) and approve their provisional entry into force (pending ratification by their parliaments). If countries refuse, they risk an unsustainable increase in customs duties on European imports, which will have immediate and negative consequences for those countries that have specialized in the export of raw materials.² 

We will not go into the profoundly contentious and anti-democratic nature of the trade and investment regime, as there is already extensive literature available on the subject.³ What interests us here is to highlight the contrast between the binding regulations that protect the interests of investors, and the fragile legal framework represented by international human rights law, which is incapable of “resisting” the power of the lex mercatoria. This discrepancy is even more striking when one considers that voluntary standards or “codes of conduct” are the way in which multinationals are being requested to respect human rights.

In addition to the fact that this essentially results in a privatization of justice, through the existence of arbitral tribunals that overrule national legislation or international law, this asymmetry is also evident in the obstacles faced by communities and individuals attempting to assert their rights. That is where there is an inherent and systemic violation of human rights and the rights of peoples and the environment in the operations of transnational corporations. A real “architecture of impunity” is established,⁴ and the dispossession and appropriation of the commons goes on.⁵

Unfortunately, there are countless examples of impunity and many lives have been lost due to “accidents” caused by the unbridled quest for cost-cutting and by repressing the voices of the people: Bhopal in India, Rana Plaza in Bangladesh, the destruction of the Niger Delta by oil companies like Shell, the environmental disaster caused by Chevron-Texaco in the Ecuadorian Amazon and by Vale in Brazil, the Marikana massacre in South Africa ... the list goes on.

Resistance against corporate impunity

However, resistance to this situation has remained strong. It began firmly rooted in the local but has increasingly taken on a regional and international dimension. The Global Campaign to Dismantle Corporate Power and End Impunity⁶ comprises 200 organizations and social movements in Africa, Asia, Europe and the Americas. One of its main precursors is the bi-regional Enlazando Alternativas Network between Europe, Latin America and the Caribbean.⁷

Among the different actions undertaken by the network, it is worth highlighting the Permanent Peoples’ Tribunal, a descendant of the Russell Tribunal. The Tribunal has enabled communities affected by European transnational corporations in Latin America to have their voices heard and denounce violations in coordination with European civil society organizations. The sessions and hearings in Vienna (2006),⁸ Lima (2008),⁹ Madrid (2010)¹⁰ and Geneva (2014)¹¹ exposed the wrongdoings of a whole host of European corporations from a number of different sectors. Companies such as Repsol, BP, Shell, HSBC, Glencore, Suez (today Engie), Rabobank, BBVA, Unilever, Telefónica, Andritz, Benetton, Unión Fenosa-Gaz Natural, Iberdrola, Veolia, ThyssenKrupp, Syngenta, Bayer, Endesa, Louis Dreyfus, Nestlé and others were repeatedly singled out, condemned for systematically violating human rights. Further analysis also led the Tribunal to denounce lobbying within European institutions and governments which actively defend the interests of private European corporations.

The Enlazando Alternativas Network, comprising various organizations and networks, decided to form a global movement to curb the impacts and impunity of multinationals. That is how the Global Campaign to Dismantle Corporate Power and End Impunity came about. Launched in 2012 with the aim of compiling people’s experiences and complaints, and creating spaces for resistance and alternatives, the intention was to extend the network beyond Latin America and Europe to the rest of the world.

As well as focusing on popular mobilization and solidarity, the Global Campaign also developed the International Peoples’ Treaty on the Control of Transnational Corporations¹² as a political instrument that lays the foundations for an alternative vision of the law and justice “from below”. It also aims to provide a context where communities and social movements can join forces and reclaim the public space hitherto occupied by corporate powers. It thus has two dimensions: a legal aspect and a section focused on alternatives. This latter includes a number of relevant experiences, demands and practices that seek to reclaim democracy and re-establish the importance of the public interest, rebuild sovereignties and defend collective rights, and demonstrate that alternative economies can and do exist.

With regard to the legal dimension, the main objective of this initiative is to subordinate the juridical-political architecture that sustains the power of transnational corporations to human rights norms and rules. The Peoples’ Treaty focuses on two main strategies.

Towards a binding UN instrument

The first of these strategies is being put into practice within the UN Human Rights Council, aiming to reclaim the multilateral space that has been taken over by transnational corporations. By asserting that international human rights law is hierarchically superior to national and international trade and investment norms, the campaign aims to establish binding regulations that force transnational corporations to respect human rights.

Since the 1970s, monitoring transnational corporations has been a problematic issue for the United Nations. There have been a number of unsuccessful attempts at establishing mechanisms that would force corporations to respect human rights,¹³ the most recent being that carried out by the Working Group created by the Sub-Commission on the Promotion and Protection of Human Rights – the United Nations Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, approved by the Sub-Commission in 2003.¹⁴ The corporate world’s reaction was to produce a document, signed by the International Chamber of Commerce and the International Organization of Employers, stating that the Sub-Commission’s project undermined both human rights and the rights and legitimate interests of private business. It also stated that human rights obligations were the responsibility of states, not of the private sector, and it called on the then UN Commission on Human Rights to reject the project approved by the Sub-Commission. The Commission abandoned the project in 2005. Voluntary standards were set up instead, requiring companies to self-regulate: the Guiding Principles on Business and Human Rights, endorsed by the Human Rights Council in 2011. What is most striking about the Guiding Principles is that they comprise no legal obligation whatsoever, thus leaving the regime of impunity totally intact.

In light of this, a declaration was made at the UN in 2013, initiated by Ecuador and backed by the African Group, the Arab Group, Pakistan, Kyrgyzstan, Sri Lanka, Bolivia, Cuba, Nicaragua, Venezuela and Peru, which proposed binding regulations. In 2014, thanks to pressure from these governments and civil society, solidly aligned through the Global Campaign and the Alliance for the Treaty,¹⁵ the Human Rights Council took a historic step, adopting Resolution 26/9.¹⁶ The resolution established an open-ended Intergovernmental Working Group whose mandate consisted of the creation of a legally binding instrument for the regulation of transnational corporations and other businesses in international law and human rights.

The resolution was adopted despite strong opposition from the US and the EU, which did everything they could to derail the process, particularly during the Working Group’s first session in 2015. Fortunately, their attempts were unsuccessful, and the Working Group’s second session will take place in October 2016.

The Global Campaign has developed proposals based on the work done for the Peoples’ Treaty. The Treaty’s demands have been submitted to the UN via internal consultation mechanisms, in order to ensure that the binding UN mechanism responds to the specific needs of the communities and collectives affected by major corporations. For example, it proposes that the instrument focus specifically on companies that, precisely because of their transnational nature, are economically and legally adaptable and use their complex structures to evade national and international laws and regulations. It also states that the instrument should include all human rights, detailing specific obligations, as well as regulations that undertake to protect particularly vulnerable or affected groups, including young people, children, women, migrants, indigenous peoples and human rights defenders. Other essential points include: the importance of extra-territorial obligations; reaffirming the hierarchical superiority of human rights regulations over and above trade regulations; and establishing civil and criminal liability of companies and their directors, and the collective responsibility of companies for the activities of their subsidiaries, suppliers, licensees and subcontractors. Establishing obligations for regional and international economic and financial institutions is also among the proposals made, as is protecting the negotiators themselves from any influence from the private sector.

Obviously, the instrument cannot be binding without mechanisms monitoring its implementation. Another key proposal of the Global Campaign is thus to set up a World Court on Business and Human Rights, which will back up national, regional and international mechanisms. The Court would be responsible for hearing, investigating and judging claims made against transnational corporations. A Committee would also be established to ensure that states and corporations are complying with obligations and respecting the treaty. Complementarily, the Campaign also undertakes to set up a Monitoring Centre on Transnational Corporations, which would analyze, investigate, document and investigate companies’ practices and their impact on human rights.

Building from below

The other strategy proposed by the Peoples’ Treaty involves creating a Centre that differs from the UN-based Centre in that it would be managed and run exclusively by social organizations, critical sectors of academia and affected communities. This would represent a step towards reaffirming the sovereignty of peoples. The Global Campaign believes that we can’t simply wait for states to do something about transnational corporations through such channels as the UN; we need to start by putting objectives in the Peoples’ Treaty into action.

Creating the Centre is a collective decision and it should be built “from below”, from the communities and movements involved in the campaign. They need to orchestrate alternatives and actions against the overall system of impunity that allows transnational corporations to get away with so much. An internal consultation process is currently underway in order to lay the foundations for such a space. Its objectives include awareness-raising, providing support for social, political and legal processes, creating tools for training and support, systematizing research and documenting cases, and teaming up with organizations that are already documenting cases.

These are obviously all long-term processes which involve confronting economically powerful players that are facing the potential collapse of the very architecture of impunity that many of them are built on. It is therefore necessary to protect the spaces that have been created through the work of hundreds of organizations, networks and social movements across the planet. This is a very serious endeavour, requiring many hands and much wisdom, bravery and imagination. We owe it to ourselves and to the victims of the transnational corporations. There is no turning back.                                               

Erika González and Juan Hernández Zubizarreta are with Observatorio de Multinacionales en America Latina (OMAL), and Mónica Vargas is with the Transnational Institute (TNI). OMAL and TNI are member organizations of the Global Campaign to Dismantle Corporate Power and End Impunity.

The above article first appeared in Democratic Information in an Age of Corporate Power, which is part of the Passerelle Collection (No. 14, 09/2016) published by Ritimo under the Coredem (Community of Sites of Documentary Resources for a Global Democracy) initiative (www.coredem.info).

Notes

1. See: http://investmentpolicyhub.unctad.org/IIA.

2. See for example: http://aitec.reseau-ipam.org/spip.php?article1554.

3. The site http://bilaterals.org/ monitors all bilateral and multilateral trade agreements and treaties across the world.

4. Hernández Zubizarreta, J. (2015). “The New Global Corporate Law”, State of Power 2015. https://www.tni.org/en/briefing/new-global-corporate-law.

5. See: George, S. (2015). Los usurpadores. Cómo las empresas transnacionales toman el poder. Barcelona, Editorial Icària.

6. See: http://www.stopcorporateimpunity.org.

7. See: http://enlazandoalternativas.org.

8. See: http://www.enlazandoalternativas.org/spip.php?rubrique49.

9. See: http://www.enlazandoalternativas.org/spip.php?rubrique50.

10. See: http://enlazandoalternativas.org/spip.php?article983.

11. See: http://www.stopcorporateimpunity.org/declaration-hearing-of-the-permanent-peoples-tribunal-geneva-june-23rd-2014.

12. See: http://www.stopcorporateimpunity.org/wp-content/uploads/2015/02/PeoplesTreaty-ES-dec2014-1.pdf.

13. See the work of the Europe-Third World Centre (CETIM), which has comprehensively monitored these processes (http://cetim.ch/).

14. See: https://documents-dds-ny.un.org/doc/UNDOC/GEN/G03/164/25/PDF/G0316425.pdf?OpenElement.

15. See: http://www.treatymovement.com/.

16. See: https://documents-dds-ny.un.org/doc/UNDOC/GEN/G14/082/55/PDF/G1408255.pdf?OpenElement.

Third World Economics, Issue No. 626, 1-15 October 2016, pp14-16