July 2015

WORK ON UN TREATY BEGINS

The UN body to elaborate a treaty on transnational corporations and human rights holds first session.

By Kanaga Raja
Third World Network Features

            The UN working group tasked with drawing up an international legally binding instrument on transnational corporations (TNCs) and other business enterprises with respect to human rights convened its first session in Geneva on 7 July.

            In a resolution (26/9) adopted on 26 June 2014, the United Nations Human Rights Council decided to establish "an open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights; whose mandate shall be to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises."

            It also decided that the first two sessions of the open-ended intergovernmental working group shall be dedicated "to conducting constructive deliberations on the content, scope, nature and form of the future international instrument, in this regard."

            The Council further decided that the Chairperson-Rapporteur of the working group "should prepare elements for the draft legally binding instrument for substantive negotiations at the commencement of the third session of the working group on the subject, taking into consideration the discussions held at its first two sessions."

            The working group will be holding a series of panel discussions on related issues as well as several side events during its week-long first session.

            According to a Concept Note proposed under the responsibility of the designated Chairperson-Rapporteur, resolution 26/9 stresses that the obligation and primary responsibility to promote and protect human rights and fundamental freedoms lies with the State, and that States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including transnational corporations (TNCs).

            It noted that while the obligation of States to regulate business activities within their territorial jurisdiction is clear, on the other hand, States' obligations regarding corporate conduct acting abroad remain unclear.

            "Member States' discussions during the process of preparation of the resolution underlined that there are gaps in the international legal framework related to the duty to protect human rights in respect of business activities, and that related instruments are concentrated in soft law."

            Furthermore, said the Concept Note, the international legal system reflects an asymmetry between rights and obligations of TNCs.

            While TNCs are granted rights through hard law instruments, such as bilateral investment treaties and investment rules in free trade agreements, and have access to a system of investor-State dispute settlement, there are no hard law instruments that address the obligations of corporations to respect human rights.

            Noting that the role of TNCs has exponentially expanded over the last few decades and that value chains are shaped by TNCs that account for around 80% of global trade, the Note said that it is clear that the role of corporations has evolved in a way that transcends national laws.

            Yet, TNCs still lack international legal responsibility commensurate with their role and influence in international and domestic affairs.

            While it is important to strengthen national legal frameworks and mechanisms for access to remedy in cases of human rights violations, there is an increasing need for international cooperation between States to ensure that victims of corporate human rights abuse have access to remedy, it said.

            The inaugural session also heard from its keynote speaker, Ms Victoria Tauli-Corpuz, the United Nations Special Rapporteur on the rights of indigenous peoples, who told the delegates that an international legally binding instrument on business and human rights could contribute to redressing gaps and imbalances in the international legal order that undermine human rights, and could help victims of corporate human rights abuse access remedy.

            Ms Tauli-Corpuz noted that indigenous peoples have been at the forefront of discussions regarding the human rights abuses committed by corporations since the 1970s.

            For decades, indigenous peoples have been victims of corporate activities in or near their traditional territories, which have depleted and polluted their traditional territories without their consent, putting many peoples at the verge of cultural or physical extinction.

            "Today, little has changed in relation to this situation," she said, pointing out that indigenous peoples and other local communities continue to suffer disproportionately the negative impact of corporate activities, while community leaders and activists suffer a true escalation of violence at the hands of government forces and private security companies.

            "Many of the displacements of indigenous peoples from their ancestral territories and the extrajudicial killings of indigenous activists usually happen in communities where there are ongoing struggles against corporations."

            The Special Rapporteur recalled her predecessor in the mandate, Professor James Anaya, as concluding that extractive and other large-scale corporate activities constitute today "one of the most important sources of abuse of the rights of indigenous peoples' in virtually all parts of the world."

            The adoption by the Human Rights Council of resolution 26/9, establishing this Working Group, represents a significant development, said Ms Tauli-Corpuz.

            The United Nations responded to calls from around the world, including the persistent appeals of indigenous peoples, to strengthen the architecture of international human rights law in order to adapt further to the challenges posed by corporate-related human rights abuses.

            "While the global economic trends are increasingly characterized by dominance of corporations, their role extends beyond the capacities of any one national system to effectively regulate their operations. The issues at stake are global, and so should be the response."

            Too often those whose human rights are affected by the operations of businesses
(for too long considered the externalities of business activity) are left without any real access to effective remedies, and often States themselves are without the requisite tools to hold corporations' accountability where needed.

            According to the Special Rapporteur, this is a matter which concerns her the most because the weaknesses of States, corporations and the United Nations in providing effective remedies creates desperation and hopelessness, which provide a fertile ground for the operations of criminal transnational syndicates.

            "An international legally binding instrument on business and human rights could contribute to redressing gaps and imbalances in the international legal order that undermine human rights, and could help victims of corporate human rights abuse access remedy."

            The rights expert acknowledged that some progress has been achieved in the area of human rights and business in recent years.

            Notably, the adoption by the Human Rights Council in 2011 of the UN Guiding Principles on Business and Human Rights marked a significant step forward, particularly by clarifying many elements of the State's duty to protect human rights from business-related human rights violations, and acknowledging also that businesses themselves have responsibilities to respect human rights.

            The rights expert underlined that the search for a new international legal instrument and the implementation of the Guiding Principles should not be seen as contradictory, but rather complementary objectives.

            Corporations are key actors in shaping and influencing economic, as well as political, social and cultural issues, activities and frameworks all over the world. While global economic trends are increasingly characterized by the dominance of corporations, their role extends beyond the capacities of any one national system to effectively regulate their operations.

            As foreign investors, corporations are benefiting from an international protection regime that is consolidated through rules under bilateral investment treaties and/or free trade agreements and other regional arrangements.

            This system is enabled through an investor-State dispute settlement mechanism and far-reaching rules for recognition and enforcement of arbitral awards.

            According to the Special Rapporteur, reform of the international investment protection regime, including the substance of the treaties and the investor-State dispute settlement mechanism, is emerging as an issue of concern for both developing and developed countries.

            "What we see more and more is that foreign investors and transnational corporations are provided with very strong rights and extremely strong enforcement mechanisms. On the other hand, global and national rules dealing with the responsibilities of corporations and other forms of businesses are characterized by the form of soft law."

            They fall short of legally binding instruments that allow for achieving balance in the rights and responsibilities of these actors.

            The rights expert said: "We face a context where corporations still lack international legal responsibility commensurate with their role and influence in international and domestic affairs. At the same time, there are gaps in the international legal framework in regard to the duty to protect human rights and access to remedy."

            An international legally binding Instrument would significantly help in establishing the much needed balance in the international system of rights and obligations with regard to corporations and host governments, she added.

            Resolution 26/9 takes us one step further along the pathway toward strengthening the system of human rights law, and this opportunity for the Intergovernmental Working Group must be seized upon to address two urgent global realities - the first being access to remedies and the second relating to the need to uphold the primacy of human rights in the context of business activities.

            At the present time, said the rights expert, the ability for communities and people affected by corporate human rights violations to access remedies is very weak and such remedies do not even cut across all jurisdictions.

            At the same time, in many cases corporate human rights violations touch upon the interests of more than one country's jurisdiction.

            "In this sense, for the Intergovernmental Working Group to make real advances in providing access to effective remedies, the future legal instrument must clarify the extraterritorial obligations of states to ensure access to effective remedies within all states that are connected to the corporations in question."

            Fortunately, the Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights go a long way to clarifying the application of law in this context, and will provide a powerful resource for the Intergovernmental Working Group to call upon for guidance.

            Ms Tauli-Corpuz said that a second key opportunity for the Intergovernmental Working Group concerns the possibility for a new international instrument, within the context of business activities, to reinforce the fundamental principle of international law which recognizes the primacy of human rights above all other systems of law.

            As recognized by the Committee on Economic, Social and Cultural Rights in its
1998 Statement on Globalisation "the realms of trade, finance and investment are in no way exempt from these general [human rights] principles".

            The global reality for many communities, as well as States from all parts of the world, is that corporations today have the ability under international trade and investment law to sue States when they pass laws that aim to improve human rights and environmental protections.

            In this context, said the rights expert, the international community is failing to realise the guarantees of the international human rights regime.

            The work of the Intergovernmental Working Group can also benefit corporations by producing a level playing field for investment across all States.

            In this sense, the Working Group has the opportunity to develop standards for all States that codify within international law the regulatory advances being made within some jurisdictions on a piecemeal basis.

            "Providing this type of regulatory clarity and certainty, within international human rights law, provides a uniform approach which will benefit all corporations."

            This advance would also undermine the practice of some corporations to seek out investment jurisdictions with weak regulatory environments, thereby creating negative incentives for other corporations to do likewise, resulting in what some refer to as the race to the bottom.

            "Similarly, for States, this advance in international law would also undermine the ability of their counterpart States weakening their regulations, at the same time exposing their populations to human rights violations, in the process of attracting investment."

            The Special Rapporteur underlined that any discussion on an international legal instrument regulating the responsibility of corporate actors in relation to human rights should not divert the attention of the important responsibilities that pertain to States in fulfilling their obligation to protect their own citizens against corporate activities.

            Unfortunately, more often than ever, States are silent witnesses or victims of corporate abuse, but they are all also, either by action or by omission, responsible to a certain extent in these abuses.

            The rights expert said that an international legally binding instrument would go some way to establish balance in the international system of rights and obligations with regard to corporations and host governments. It would benefit States in their human rights obligations in relation to corporate activities. – Third World Network Features.

-ends-

About the author: Kanaga Raja is the Editor of the South-North Development Monitor (SUNS) in Geneva, Switzerland,

The above article is reproduced from SUNS #8058, 8 July2015.

When reproducing this feature, please credit Third World Network Features and (if applicable) the cooperating magazine or agency involved in the article, and give the byline. Please send us cuttings. And if reproduced on the internet, please send the web link where the article appears to twn@twnetwork.org.

4257/15