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TWN Info Service
on WTO and Trade Issues (Nov21/02) Negotiating
a business and human rights treaty: By Kinda Mohamadieh, Third World Network Text-based negotiations of a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises (LBI) xxx The negotiations commenced at the 7th session of the open-ended inter-governmental working group (OEIGWG) entrusted with establishing this instrument based on Human Rights Council resolution 26/9 of 2014 (1). The session was held from 25 to 29 October with very different dynamics in comparison to previous meetings. The 3rd revised draft text of the LBI was projected on the screen and State proposals were captured with proper attribution. About 20 developing countries from Africa, Latin America, and Asia actively participated in the negotiations, although with varying frequency. Among the most active delegations were Palestine, Egypt, Brazil, Panama, China, Iran, Cameroon, Cuba, Namibia, Mexico, South Africa and Pakistan. The negotiations manifest the observations shared by many experts that the draft text of the LBI is a viable basis for negotiations. Overall, the five days could be described as an exercise of negotiation among a subgroup of major developing countries including smaller and larger economies. The United States took the floor for the first time after 7 years of the commencement of the process. They noted that, while they remain to have substantive concerns with the draft text and the process, they want to work with the OEIGWG. Most outstanding in the U.S. submissions was its suggestion that the working group take a step back and explore alternative approaches, binding or non-binding, in the form of a framework convention. The U.S. representative recognized in her speech that this suggestion will be frustrating to those States and stakeholders that have thus far invested so much time and effort in the process. The U.S. refrained from participating in line-by-line negotiations but shared their general comments at on various elements of the text. The European Union continued, as in previous years, to limit its interventions to a reiteration of support for the Guiding Principles on business and human rights (GPs) and sharing of general comments on certain elements of the draft text. The EU also proposed a possible rethink of the approach adopted by the working group and its readiness to explore ideas for what they called ‘a consensus-based instrument aligned with GPs’. Several European NGOs highlighted their concern on how the EU continues to refrain from active constructive participation in the negotiations of the LBI. They noted that ironically the European Commission is able to obtain negotiation mandate from its membership fairly effectively when the matter concerns trade or investment issues but had failed to secure such a mandate for negotiating the LBI even after 7 years of the commencement of process. The idea of an alternative framework convention: an attempted diversion opposed by civil society Civil society groups have been highlighting that talk about taking a step back from the draft text of the LBI and the suggestion of a framework convention based on the GPs is a distraction from effective change that is required to stop corporate impunity and advance access to justice and remedy and will further delay justice for affected people, thus in effect denying them justice. It fundamentally undermines the intent and purpose embodied in Resolution 26/9, which aims at moving the business and human rights framework from the realm of voluntary guidance to enforceable obligations that allow a functioning accountability and remedy regime to be set in place. In effect, such a proposition will waste the work and the resources invested by States, victims, civil society, experts, and business that have been discussing and elaborating the details of the draft text of the LBI. It thus denies the voices and contributions of affected communities, their advocates, human rights and environmental defenders, wide community of scholars, representatives of social movements and grass roots communities that have immensely contributed over the last 6 years to advancing an LBI rooted in the lessons learned from cases and challenges suffered by victims of corporate abuse. Alignment of the LBI with the Guiding Principles States that have opposed the draft LBI thus far, as well as business groups, have repeatedly claimed that the draft text should be aligned with the GPs. Alignment with the GPs does not require copying the GPs but requires an approach that does not undermine the premise on which the GPs has been developed. To give an example, the French duty of vigilance law, which was developed in pursuance of the GPs, did not copy the GPs. It extended the duty of vigilance obligations beyond those relations directly linked to a business enterprise’s operations, unlike the GPs. The GPs limited the concept of human rights due diligence to an entity’s business relationships directly linked to its operations, products or services (GP 17). The French duty of vigilance law referred to company’s business relationships, defined as including relationships of companies among which there is direct or indirect control as well as relationships with subcontractors and suppliers with whom there is ‘established business relationship’. Under the French law, the concept of established business relationship covers all types of relations between professionals, defined as stable, regular relationships, with or without contract, with a certain volume of business, creating a reasonable expectation that such relation will last. Advances in the draft text of the LBI over the years already took important strides in alignment with the approach and language of the GPs, including in matters pertaining to scope and approach to human rights due diligence. This alignment has been acknowledged by the High Commissioner for Human Rights, as well as the members of the Working Group on Business and Human Rights. In a statement they issued with a number of UN special rapporteurs, they stressed that (2) the LBI, “which builds on the UN Guiding Principles, should be seen as part of the “smart mix” of national and international, mandatory and voluntary measures to foster business respect for human rights”. The overstated claim of prescriptiveness of the proposed text The U.S., the EU and business associations participating in the session have repeatedly claimed that the draft text is “over prescriptive” in many areas. Yet, a closer look at the draft text shows multiple instances of deference to domestic law or to language that gives discretion to implementing States to align implementation with the national specificities as well as national legal systems. This is the case in several important areas, including with regard to implementing prevention obligations, setting in place a legal liability regime especially in regard to criminal liability, addressing burden of proof and access to information, mutual legal assistance and international cooperation, enforcement, among other areas. For example, when it comes to fulfilling the obligation pertaining to prevention and mandatory human rights due diligence, Article 3.2 of the draft text which provides that “when imposing prevention obligations on business enterprises …, State Parties may establish in their law, a non-discriminatory basis to differentiate how business enterprises discharge these obligations commensurate with their size, sector, operational context or the severity of impacts on human rights”. This language is aligned with the GP’s approach, manifest a discretionary approach in one of the most central elements of the text, and demonstrates that the LBI is meant to leave a reasonable margin of discretion in operationalizing core aspects of the treaty. Observations on the negotiations of selected elements of the draft LBI text The issue of scope remains one of the main sticky points, upon which a lot in the operational section of the proposed treaty hinges. The question of whether the text should refer to human rights abuses only or ‘abuses’ and ‘violations’ was also open throughout the negotiations. Some countries, like Palestine and Egypt, insisted that both ‘abuses’ and ‘violations’ be streamlined across the text, while other negotiating countries preferred to limit references to ‘abuse’. Under international human rights law, the term ‘violations’ is used to refer to conduct attributable to States. Reinstituting the term ‘violation’ in the draft text would help capture the situations where a State is involved in causing harm in breach of their international law obligation. The reference to the environment and environmental remediation was included in the 3rd draft in the preamble, the definition of human rights abuse, the rights of victims and the content of the human rights due diligence to be required from business. During the negotiations, multiple States supported these inclusions while Russia submitted that ecological rights do not have an internationally-recognized definition and China asked for removal of references to the environment from the definition of human rights abuse. Palestine re-emphasized the reference to the environment, environmental law and environmental harm across various sections of the text. Emphasis was put on gender and child sensitive dimensions, and specificities of indigenous peoples by multiple participating States and civil society organizations throughout the negotiations. Scope The proposed scope in the 3rd revised draft text focuses on all business activities (Article 3.1) in an attempt to avoid the delineation of scope by reference to business entities, which have proven divisive in the discussions thus far. The 3rd draft text puts emphasis on business activities of transnational character in several areas, including statement of purpose. Egypt, Cuba, Iran, China and Pakistan wanted to revert scope to refer to transnational corporations and other busines enterprises of transnational character. Palestine and Namibia suggested keeping the focus on business activities while giving specific emphasis on transnational corporations and other business enterprises that undertake business activities of transnational character. The approach to scope remains one of the core elements of concern for participating States and is crucial for moving the negotiations forward with more clarity. It is clear that the added value of an international instrument is to deal with the limitations that States face when dealing with issues of cross border nature, such as those arising from cases involving corporate groups or value chains. While in the operational section of the treaty many elements focus on such cross-border aspects (e.g. clarifying mutual legal assistance and adjudicative jurisdiction), there are elements (e.g. prevention and mandatory human rights due diligence, and developing a comprehensive rights regime for victims) that ought to be guaranteed in all cases of human rights abuse by business enterprises. The 3rd revised text had advanced with regard to the scope of human rights subject to the treaty by specifying that it covers all internationally recognized human rights and fundamental freedoms binding on the State Parties. Prevention This section witnessed heavy participation from multiple delegations. No views shared during the session contested the principal idea that prevention is not limited to human rights due diligence, and encompasses an obligation on States to take different legal and policy measures to ensure that business enterprises within their territory, jurisdiction, or otherwise under their control respect internationally recognized human rights (Article 6.2). Moreover, no views contested the importance of mandatory human rights due diligence as a requirement for businesses. Important elements of the draft text were retained, including publishing the impact assessments that businesses are required to undertake as part of their human rights due diligence. Palestine stressed the importance of the right to self determination and the right of indigenous peoples to refuse business activity on their land without threats of retaliation. Cameroon suggested that State parties should designate a State authority to monitor the effectiveness of the due diligence measures undertaken by business enterprises. Cameroon also suggested language pertaining to an obligation of international financial institutions to identify and prevent human rights violations by any entity they support financially. Mexico and Panama suggested the removal of reference to mitigation of abuse, arguing that abuse cannot be mitigated like risk, and that any abuse should lead to accountability and remedy. The alignment of the requirement of human rights due diligence in this section with the GPs remain an important issue that is raised by business representatives as well as some civil society organizations, particularly referring to GPs 17, 18 and 19. Access to information The discussions and negotiations reflected a recognition by negotiating States of the importance of access to information for victims of corporate human rights abuse in order to pursue justice. Civil society organizations emphasized on the importance of access to information. Access to information is essential in order to enable litigation against a corporation involved in causing harm. The information gap is greater between an injured person and a corporate entity that is able to structure its activities across multiple jurisdictions. The defendants in these cases have far more knowledge of the involved practices, and how and why they failed to prevent abuse, in comparison to what any plaintiff or plaintiff’s lawyer can ever have. Victims face the challenge to build the evidential thread and to demonstrate the nature of the corporate relationship. Relevant information in these cases include titles, contracts, internal communications, management arrangements or any other information material to legal proceedings pursued by the victims, including electronically stored information. Yet often, corporate defendants refuse to disclose any information, and use the lack of information to claim that plaintiffs cannot make the case and cannot substantiate their claim. In jurisdictions where there is no discovery procedure, complainants often have to rely on publicly available information. Negotiations indicated the interest of participating States in strengthening access to information. For example, under the article pertaining to rights of victims, Cameroon and Namibia proposed specifying the kind of information that should be covered by including information relative to all the different legal entities involved in the transnational business activity alleged to harm human rights, such as property titles, contracts, business ownership and control, communications and other relevant documents, and suggested a rebuttable presumption of control of the controlling or parent companies in case of unavailability of this information. Legal liability No country challenged the provision setting an obligation on States to ensure that their domestic law provides for a comprehensive and adequate system of legal liability of legal and natural persons conducting business activities, within their territory, jurisdiction, or otherwise under their control, for human rights abuses. Yet, some State interventions implied that the liability regime could be civil, criminal or administrative, rather than covering the three together. There was general agreement, by States and civil society, that the article on civil liability is one of the most important within the treaty. However, it was clear that this article requires revision in order to provide more clarity and precision to the grounds for civil liability in cases that involve more than one business entity, or what is sometimes referred to as ‘triangular relationships’ (e.g. parent and subsidiary companies, a lead/buyer and supplier or contractor company, a company and non-commercial actors such as security forces). Mexico proposed merging the elements of control, management or supervision over the legal or natural person or the relevant activity that caused or contributed to the human rights abuse and foreseeability of risk into one standard or basis for civil liability. An alternative provided by the trade unions and the International Commission of Jurists provides for three separate grounds of liability: where the business enterprise has controlled, taken over, supervised, advised, intervened with or otherwise sufficiently influenced the other person’s activity that caused the harm and failed to prevent this person from causing or contributing to the harm; or where the business enterprise (legally or factually) controls another person; or where the business enterprise should have reasonably foreseen the risk of harm in the activity within its business relationships that caused the human rights abuse and that is linked to its operations, products or services. The draft text importantly provides that human rights due diligence shall not automatically absolve a legal or natural person conducting business activities from liability for causing or contributing to human rights abuses, or failing to prevent such abuses by a natural or legal person as laid down under the Article pertaining to civil liability. The discussion on criminal liability was more challenging. Russia and Panama requested to register reservation, while China requested to subject the article to national law and legal principles. Indonesia also noted concerns with the approach to criminal liability. Adjudicative jurisdiction in civil claims The approach to adjudicative jurisdiction proposed in the 3rd draft text was generally not opposed by negotiating States, although others not participating in the negotiations, such as the U.S., opposed what it referred to as ‘extra-territorial jurisdiction’. Under the draft, jurisdiction in civil claims is vested in the courts of the State where the human rights abuse occurred and/or produced effects; or an act or omission contributing to the human rights abuse occurred; or the legal or natural persons alleged to have committed such an act or omission are domiciled; or the victim is a national of or is domiciled (Article 9.1). Domicile is considered to be “the place of incorporation or registration; or place where the principal assets or operations are located; or central administration or management is located; or the principal place of business or activity on a regular basis” (Article 9.2). Palestine suggested the addition of holdings of substantial assets. Article 9 is designed in a way that allows for dealing with cases when the victim is not able to utilize the courts of the home or host State but are in a third State. Such an approach to adjudicative jurisdiction is well suited for an instrument whose primary objectives is to ensure access to justice and remedy by victims of corporate violations and abuse. The draft attempts to address the jurisdictional challenges that victims could face, particularly in bringing cases in the home country courts of a transnational corporation, by providing that courts vested with jurisdiction under the LBI avoid reverting to the doctrine of forum non conveniens (Article 9.3). This doctrine allows a court that has jurisdiction in a case to refuse it on the basis that there is a more appropriate forum, and has been pointed out over the years of discussing the LBI as a major challenge that victims face in accessing a remedy. Generally, States negotiating the LBI wanted to retain this reference while China proposed removing the direct reference while keeping the reference to ‘legal obstacles’ at the jurisdictional phase. The way forward towards the 8th session of the OEIGWG The Chair-Rapporteur of the process, Ambassador Emilio Rafael Izquierdo Miño of Ecuador, will be inviting a group of Ambassadors in Geneva to act as ‘Friends of the Chair’. This group, who are supposed to reflect balanced regional representation, are expected to convene and lead consultations among States on the draft LBI, with a view to facilitate and advance work on the draft LBI during the inter-sessional period. Their work, under the guidance of the Chair-Rapporteur, is expected to lead to language that bridges gaps between negotiating countries. Any language they develop based on their consultations will be included in the textual suggestions to be negotiated during the 8th session of the OEIGWG. In the draft report of the session, the Chair-Rapporteur’s recommendations provided that “civil society organizations, business organizations, trade unions, other observers and relevant stakeholders” are to be consulted by the ‘Friends of the Chair’ and invited to submit written inputs. In their closing statement civil society organizations stressed their strong disagreement with inclusion of businesses in this process, recalling that while the aim of States and civil society is the realization of human rights and the general public interest, the principal aim of businesses is to seek and maintain profit. They asked the OEIGWG that no actors with commercial vested interest participate in this process. 1. See Resolution A/HRC/RES/26/9,
July 2014 and the 3rd revised draft text of the LBI at: https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session6/LBI3rdDRAFT.pdf
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