Info Service on WTO and Trade Issues (Jul19/11)
UN: Three informal consultations held on business and human rights draft treaty
Geneva, 3 July (Kinda Mohamadieh): Three informal consultations have been held in Geneva in preparation for the release of a revised draft text of a legally binding instrument to regulate the activities of transnational corporations and other business enterprises.
As part of this milestone development in international human rights law, the consultations were convened by Ambassador Emilio Rafael Izquierdo Miño of Ecuador to the United Nations in Geneva, in his capacity as Chair-Rapporteur of the treaty proposal process. The consultations took place on 6, 14 and 18 June. They covered issues of scope, jurisdiction, rights of victims, prevention, legal liability, mutual legal assistance and international cooperation. A revised draft text is to be released anytime now
(See more reporting on this issue and the first consultation that dealt with scope and jurisdiction at: http://www.twn.my/title2/wto.info/2019/ti190611.htm).
On the rights of victims, the Chair-Rapporteur explained that the draft text did not propose new rights for victims but attempt to reflect rights and obligations recognized under existing instruments.
These include the Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law (A/RES/60/147), the Optional Protocol to the Convention on the Rights of the Child on the Sale of Children, Child Prostitution and Child Pornography, the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, among others listed in a document titled “Non-exhaustive list of documents consulted during the preparations”, which was released with the draft treaty text in 2018.(1)
The draft treaty text reinforces the rights of victims to information and legal assistance pertaining to administrative and other costs. It provides that “[v]ictims shall have the right to fair, effective and prompt access to justice and remedies in accordance with international law…[including] but not … limited to …[r]estitution, compensation, rehabilitation, satisfaction and guarantees of non-repetition for victims [and] environmental remediation and ecological restoration where applicable…” (Article 8.1).
The article addresses issues related to due process, independence and impartiality of the justice system, protection of victims as well as their representatives, families and witnesses, possibility of bringing collective action, as well as appropriate access to information relevant to the pursuit of remedies, including through international cooperation.
The Chair-Rapporteur explained that, in reviewing the draft text, he is considering proposals on changes in terminology, including using “alleged victims” instead of “victims”, reference to claimants when addressing procedural issues pertaining to presenting claims to courts, as well as using “human rights abuses and violations” instead of “human rights violations”.
He also noted that he had received suggestions concerning the reference to “environmental remediation”, stating that reference to collective rights would help ensure the promotion and protection of all human rights without differentiation.
Among the other issues on which the Chair-Rapporteur received suggestions were the widely recognized barriers that victims face in preparing and following legal proceedings against transnational corporations, the need for the re-enforce protection of victims’ representatives, families and witnesses, the importance of addressing the rights and guarantees of human rights defenders, the insertion of a provision pertaining to ‘free prior and informed consent’ (2), as well as the strengthening of the gender considerations under this Article.
The Chair-Rapporteur clarified that he is also considering whether there is need to develop the details pertaining to the proposed International Fund for Victims under the revised draft text, or whether the details could be left to be deliberated by a future Conference of Parties to the treaty.
The Fund is envisioned as an international entity that would provide legal and financial aid to victims (Article 8.7).
Brazil commended the Chair-Rapporteur on considering reference to “alleged victims” and “human rights violations and abuses”. It reminded the Chair-Rapporteur of its proposal that the treaty scope ought not be limited to transnational corporations. They also underlined the State-led nature of the process.
A representative from the General Confederation of Labor in France, speaking on behalf of a group of trade union representatives from Argentina, Spain, Colombia, Chile, France and the Trade Union Confederation of the Americas commended the process, noting the importance of including the ‘right to truth’ under Article 8.
Knowing precisely how events may have evolved, she explained, is necessary in the process of arriving at restitution and remediation. The trade unions also noted the importance of integrating the notion of ‘value chain’ within the treaty text, referring to the 2017 French law on duty of vigilance that makes companies accountable for their activities not only in France, but throughout the value chain.
Several civil society groups took the floor. Among the issues they underlined were the need to establish special guarantees for human rights defenders and to include measures that address needs of groups that have greater difficulty to access justice, including women, indigenous communities and groups in conflict-affected areas.
One non-governmental organization (NGO) representative noted that all cases involving human rights concerns should be referred to courts with human rights jurisdiction, especially given the inability of international arbitration and non-judicial mechanisms to properly deal with such cases.
Several NGOs addressed the importance of strengthening the provision pertaining to access to information, especially given the challenges that victims usually face in fulfilling the legal requirement of proving the link between the corporate conduct and damages. The reversal of the burden of proof was suggested as one avenue for consideration.
Other issues raised by NGO representatives included the importance of considering the right of victims to demand precautionary measures, such as injunctive measures where necessary, in order to avoid additional irreparable harm during the period of legal proceedings.
It was also noted that non-judicial mechanisms depend on the good will of the involved companies, often pose challenges to victims, and should not be considered a substitute to judicial mechanisms.
Preventing human rights violations
On prevention (Article 9), the Chair-Rapporteur explained that the draft text was modelled along the lines of the Guiding Principles on Business and Human Rights, particularly principles 17 to 21.
In addition, the following documents were considered when drafting this section: the regional agreement on access to information, participation and justice in environmental matters in Latin America and the Caribbean, the UNECE Convention on the Transboundary Effects of Industrial Accidents, Directive 2014/95/EU of the European Parliament and the Council regarding disclosure of non-financial and diversity information by certain large undertakings and groups, as well as the 2017 French law on duty of vigilance.(3)
The draft sets an obligation on State Parties to “ensure in their domestic legislation that all persons with business activities of transnational character”, “within their territory or under their jurisdiction or control”, undertake due diligence obligations in a way that covers “the activities of [their] subsidiaries and that of entities under [their] direct or indirect control or directly linked to their operations, products or services” (Article 9).
The draft explains that due diligence by covered business enterprises is understood to mean, at a minimum, “[m]onitoring the human rights impact of its business activities”, “[i]dentify(ing) and assess(ing) any actual or potential human rights violations”, “[p]revent(ing) human rights violations”, “[r]eporting publicly and periodically on non-financial matters, including at a minimum environmental and human rights matters”, “[u]ndertaking pre and post environmental and human rights impact assessments”, and reflecting these requirements in all contractual relationships which involve business activities of transnational character.
It also provides for a requirement on covered businesses to “carry out meaningful consultations with groups whose human rights are potentially affected by the business activities and other relevant stakeholders…”
These due diligence duties are linked to commensurate liability and compensation in the case of failure to comply.
The Chair-Rapporteur explained that, in revising the draft, he is considering proposals to clarify the reference to “direct and indirect control”, including different views he had received on the scope of application of the principle of due diligence and duty of care. Another issue under consideration is whether the human rights due diligence under the treaty should be a standard of conduct or result. The Chair-Rapporteur is also considering possible exceptions for small and medium enterprises from the scope of this requirement and ways to enhance due diligence in conflict and post-conflict situations.
France intervened recalling that the 2017 French law on duty of vigilance exempts small and medium companies from the law for reasons of administrative burden and capacity considerations, while focusing on big companies. It is worth noting that the zero draft of the treaty provides that “States Parties may elect to exempt certain small and medium-sized undertakings from the purview of selected obligations under [the] article [on prevention] with the aim of not causing undue additional administrative burdens” (See Article 9.5).
This, however, is considered by some NGOs to be negating the overall aim of Article 9.
Several NGOs stressed the importance of human rights due diligence that is enforceable, and noted that due diligence should be a duty of result, not conduct. This is where the interaction between Article 9 on prevention and Article 10 on legal liability is key.
In this regard, some NGOs cautioned that the due diligence requirement should not be a self-assessment process conducted by the business that ends up being a ‘tick the box’ formalistic exercise. They stressed that failure to comply should entail commensurate liability and that compliance should not be a guarantee to escape liability.
One NGO pointed to the importance of accounting for inter-generational justice and inclusion of the ‘right to say no’, along the right to free prior and informed consent, particularly when a project can adversely affect the rights of impacted communities. The importance of ex-ante and ex-poste and continuing human rights and gender impact assessments were noted by few interventions.
A recurring point when due diligence has been discussed calls for alignment between the treaty’s approach and the four stems of due diligence outlined in the Guiding Principles (GP).
It is worth recalling that GP #17 provides that “in order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed”. (4)
The third consultation addressed the zero draft treaty articles on legal liability, mutual legal assistance and international cooperation.
On legal liability (Article 10), the Chair-Rapporteur explained that the objective of this article was to ensure a comprehensive approach that covers civil, criminal and administrative liability and to achieve a level of convergence among jurisdictions in this regard.
The drafters attempted to find a balance between the flexibility States need in order to incorporate legal liability standards under domestic legislation and a prescriptive approach needed to set minimum standards that ought to be adopted when advancing these legislation. The article aims to contribute towards enhancing legal certainty for both alleged victims and business enterprises, the Chair-Rapporteur explained.
In the process of revising the treaty text, the aim remains to keep Article 10 as general as possible to ensure compatibility with domestic systems, the Chair-Rapporteur explained.
Also being considered is the application of the principle of reversal of burden of proof and addressing legal liability in cases of violation of international humanitarian law.
With regard to the basis for establishing civil liability, the proposed text introduce principles commonly recognized in different legal systems, explained the Chair-Rapporteur, including ‘control’ over operations, ‘sufficiently close relation’ of the enterprise with its subsidiary or entity in its supply chain and direct connection between the conduct and the wrongful act, and foreseen risk of human rights violations.
In revising the draft, consideration is given to defining ‘direct control’ and ‘sufficiently close relation’, he noted.
For criminal liability, the zero draft treaty text extends liability to natural and legal persons. It includes the element of intention, and the most common methods of attribution of liability, including direct or indirect participation in the criminal offense, explained the Chair-Rapporteur.
The draft text provides that State Parties “shall … ensure that legal persons held liable … are subject to effective, proportionate and dissuasive criminal or non-criminal sanctions, including monetary sanctions” (Article 10.10).
In reviewing the text, the Chair-Rapporteur explained that he is considering ways to address the difficulty in demonstrating the intention of the offender, concerns pertaining to universal jurisdiction over human rights violations that amount to crimes provided (Article 10.11), and the possibility of identifying categories of crimes that could serve to be covered under the treaty.
Brazil raised concerns in regard to the reference to universal jurisdiction, noting that this issue is being discussed at the UN General Assembly’s 6th Committee in New York and States ought to wait for conclusions from that discussion before proceeding to address it under the treaty.
Peru supported this position. Brazil also raised concerns regarding the reversal of the burden of proof, especially when dealing with individual responsibility, noting that it would be in tension with the presumption of innocence.
Azerbaijan took the floor to note support of the process conducted by the Chair-Rapporteur and to highlight that the treaty should serve the purpose of filling gaps in protection under human rights law, including in conflict and post-conflict situations.
A representative of trade union groups from Latin America and Europe underlined the importance of introducing the notion of criminal liability for legal persons, clarifying liability within the corporate value chain, the inclusion of universal jurisdiction where necessary and the reversal of burden of proof in certain cases.
Generally, input by representatives of civil society groups stressed the importance of this article given that the lack of clarity in rules governing legal liability for damages caused by business enterprises, especially TNCs, often obstructs access to justice and effective remedy.
The representative of the International Commission of Jurists pointed out that Article 10 needs more clarity. He suggested that the Article ought to address general principles on legal liability, referring to legal liability of natural and legal persons, focus on civil liability, including responsibilities in relation of the acts of the business enterprise and responsibilities in relation to acts and conduct by third parties involved with the business enterprise, such as subsidiaries and suppliers, and address liability in relation to gross human rights violations that require special treatment under international law.
He noted that civil liability of a business enterprise for its own conduct is a universally recognized principle.
However, the more challenging aspect of liability is that pertaining to actions of third parties. In this regard, the recent decision by the UK Supreme Court in the Vedanta Resources case (5) is a useful reference, given that the Court recognized an old principle in tort law that persons in control or supervision of another person should prevent the latter from doing harm.
regard to criminal liability of legal persons, it was suggested that,
given several countries do not already recognize such liability in
their legal systems, the treaty could incorporate flexibility as done
in the Optional Protocol to the Convention on the Rights of the Child
on the Sale of Children, Child Prostitution and Child Pornography,
which provides that “[s]ubject to the legal principles of the State
Party… liability of legal persons may be criminal, civil or administrative”.
The current draft treaty text provides in Article 10.12 that “[i]n the event that, under the legal system of a Party, criminal responsibility is not applicable to legal persons, that Party shall ensure that legal persons shall be subject to effective, proportionate and dissuasive non-criminal sanctions, including monetary sanctions or other administrative sanctions…”
This provision, however, was considered by some to be in tension with the attempt to create a uniform international standard in regard to criminal responsibility of legal persons, by indicating to States that they are not obliged to advance their criminal system towards covering such kind of liability.
One NGO questioned whether the terms ‘sufficiently close relation’ used under Article 10.6 is enough to cover the relation between a parent company and related entities in the supply chain. Another suggested that the specific language limiting the responsibilities to the “direct relationship” between a company and its subsidiary (Article 10.6.b), or those that only establish the “strong and direct connection” between the conduct of the companies and the injuries should be eliminated, as it is not always easy to determine the relationship or proximity between subsidiary companies, contractors, or partners along the value chain with parent companies or their investors.
The representative of FIAN International (a well established advocate for the right to food and nutrition) suggested strengthening the reversal of the burden of proof by requiring national legal systems to incorporate a rebuttable presumption of control of the parent company over the operations of its subsidiary.
She also suggested that strict liability is appropriate in cases where businesses are engaged in a hazardous or inherently dangerous industry that poses a potential threat to the health and safety of the persons working for the company as well as others who are affected by the activities of the company.
She further suggested developing administrative responsibility in the draft treaty text, through incorporating a provision on “denial of the awarding of public contracts to companies that have committed a conduct that leads to a violation of a human right” and strong administrative sanctions, such as the suspension and cancellation of operations or licenses, and fines.
On international cooperation and mutual legal assistance (Articles 11 and 12), the Chair-Rapporteur underlined that these present fundamental means to address barriers faced by victims in accessing justice and effective remedy. International cooperation among States and in partnership with relevant international organizations and civil society is a must for an effective operationalization of a future treaty, he stressed.
These sections were drafted with reference to existing international instruments, the Chair-Rapporteur explained. These include the UN Convention against Corruption, the UN Convention against Transnational Organized Crime, the Convention on Civil Liability for Oil Pollution Damage, the Convention on the Protection and Use of Transboundary Watercourses and International Lakes, the European Convention on Mutual Assistance in Criminal Matters Strasbourg, the Convention on the Recognition and Enforcement of Foreign Judgment in Civil and Commercial Matters, and the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, among others. (6)
Among the elements considered by the Chair-Rapporteur in reviewing the draft treaty text are clarification of the grounds for potential refusal of mutual legal assistance and ways to address potential conflict of these provisions with national bank secrecy laws.
In the discussions, Mr. Surya Deva, the Asia-Pacific representative of the United Nations Working Group on the issue of human rights and transnational corporations and other business enterprises, drew attention to the report of Working Group titled “Best practices and how to improve on the effectiveness of cross-border cooperation between States with respect to law enforcement on the issue of business and human rights: Study of the Working Group on the issue of human rights and transnational corporations and other business enterprises” (A/HRC/35/33, April 2017) (7), which highlighted a number of practices in tax evasion, corruption and human trafficking. +
Available at: https://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/Pages/IGWGOnTNC.aspx