An Insight Into Zero Draft On Legally Binding Instrument On Business And Human Rights

“The rights of every man are diminished when the rights of one man are threatened.”- John F. Kennedy

A. INTRODUCTION

Business Activities from time to time have varied depending upon the socio-economic conditions of a state, and often they have led to serious violations of obligations under international law, - both contemporary and conventional. The chances are high that the Corporations from the Developed States or with immense power and strategic position locate or relocate their operations to such states that have the characteristics of ease of doing business- loose or flexible laws or regulations –more often than not for evading taxes, or exploitation of the labor and anti-competitive practices leading to lesser choices for the consumer who in turn to get exploited. That is not to say that the corporate entities are at fault, but it may happen that during its operational, financial, marketing or other process related activities some implications might take place thereby affecting human rights of the community located or present nearby, or may also deliberately carry out direct or indirect acts through intermediaries to escape being accountable.

One hindrance to this was the fact there was a lack of understanding amongst states to provide mutual legal assistance, or as to what constitutes as preventive measures, and lack of flexibility over universal jurisdiction over the infringements. As such the MNCs continued to act arbitrarily without concern for its common citizens as its stakeholders.

Transnational Corporations evaded liabilities, such as, for instance, the Enron case of 2003, in India they escaped from the ambit of being made amenable to the jurisdiction of the courts of the countries where they have operations as such, but not its headquarters. It is, in fact, one of the worlds’ biggest fraudsters and has also broken laws not just in India, but also in the US. The fact that shocked the conscience of the nation and the public at large was that it was able to obtain a sovereign guarantee for the monies it invested in the Dabhol plant, which eventually was a failure. (1) This was undoubtedly a case of gross corruption and red-tapism existing in India.

The UN Guiding Principles on Business and Human Rights (UNGP)(2) continue to be the primary international reference point on business and human rights, over the past four years the Treaty process has consolidated action, spurred cooperation, and stimulated healthy debate among international and local human rights and corporate accountability groups. (3)

For tackling lack of coherence in successful and effective collective action in the light of political backdrop, and to bridge the gap existing in International Law, the UN Human Rights’ Council through its’ open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights (OEIWG) on July 16th, 2018 published a Zero Draft Summary on the Legally Binding Instrument to Regulate, In International Human Rights Law, the Activities of Transnational Corporations and Other Business Enterprises. (4)

The negotiations are still ongoing to finalize the set of obligations that are required India has also participated in the process of negotiations and other OECD nations, including France, Germany, and the UK too, barring exceptions of Canada, which is yet to take a call on that. (5)

Some critics might state that it is obfuscation between apology for current practices and elaborates about utopian ideals which are highly difficult to achieve in terms of obligations’ the Transnational Organisations. (6)

B. OPERATION OF THE TREATY

Another important point of discourse has been how, and what way will this potential treaty operate? This is especially in relation to the statement that human rights cannot be created by one treaty, but by its reference to the rights already affirmed and upheld by the states and which would rather lead to further inequitable outcomes, and moreover, as it is already known by reference to the article titled, ‘Some Remarks on the Third Session of the Business and Human Rights Treaty Process and the ‘Zero Draft’(7) that different treaties have varying ratifications.

Under this Treaty, henceforth, as it is a standalone agreement, simply making reference to other Human Rights Treaties such as- ICCPR and IESCR, and not referring to other international law instruments, the members who ratify it shall or should be allowed to pick and choose the rights and obligations applicable to them, or depending upon ratifications of other instruments make applicable appropriate rights and obligations suitable to their case. (8)

C. APPLICABILITY OF THIS TREATY

As it was decided upon in the Third Session of the Inter-Governmental Meeting, in 2017, the definition of the Transnational Corporations or OBE need not be provided for, as the nature of activities of Transnational nature has been defined under the Treaty.

Furthermore, for the applicability of this Treaty, the character of the acts which cause human rights abuses should be taken into consideration, and not just the transnational nature of the acts. As the concept of Transnational entities is an economic fiction that does not fit within the current legal realities. (9)

Furthermore, under Article 10 the principals, accessories, and accomplices as defined under the domestic legislation will come under this ambit.

D. MAIN FEATURES OF THE DRAFT BILL

The bill has the following characteristics which can briefly state as to the contents:

a) The term “business activities of a transnational character” have been defined or described as any “for-profit economic activity ... that take[s] a place or involve[s] actions, persons or impact in two or more national jurisdictions”. This definition would catch a huge range of businesses and their activities, which were not earlier covered and effectively regulated, distinctly by individual states. This puts an impetus on the States to take collective action; this can be in the form of joint action or an individual action in pursuance of a collective goal.

b) A requirement of ensuring cooperation amongst the States in good faith has been given under the Statute as provided for under Article 11.

c) The States’ future Treaties and Investments should not conflict with its obligations under the Agreement and vice-versa, the interpretation of the Treaty provisions should not be made so as to restrict the implementation. (10)

d) Mutual Assistance

An assurance for mutual assistance to ensure initiation, and carrying out of investigations, prosecutions, and judicial proceedings in relation to the cases covered by this Convention. This would require states signing any new bilateral or multilateral agreements or amending existing ones. To build some consensus over these agreements some broad common templates should be established or defined in its standards. This will ensure uniformity in its applications. Nevertheless, it may be significant to insure mutual legal assistance in other existing agreements or arrangements, including from non-state parties to the BHR Treaty.

e) International Cooperation

Under Article 12 of the Treaty multi-faceted International Cooperation is also envisaged, as not every state shall be well-prepared and would not be having enough infrastructural facilities to implement this Agreement. Thus, it is pertinent to note that under this provision, various ways such as Building capacity, sharing challenges as well as good practices with peers, and collaborating with civil society will lay down the framework for the states to enable them to fulfill collective goals. (11)

f) Introduces Mandatory Human Rights Due Diligence Measures

Nonetheless, there has been a provision of Article 9 in the Treaty that provides for the states to have domestic legislation in place stipulating as to 4-step Human Rights Due Diligence measures that are in consonance with the established Good Practices Recommendations. (12).

Further negotiations in 2019, during the fourth negotiations, as discussed in the third session of the intergovernmental working group indicated a broadening of the concept of human rights to include environmental rights, labor rights, (13), and corruption as well. (14)

g) Crimes Without A Period Of Limitation

It provides that the States should try and not impose excessive limitation period with respect to international crimes and should rather have such legislation in place which reflect the crimes without any period of limitation. This is to enable the completion of investigations, prosecutions, and related judicial proceedings related thereby. Article 10 of the Treaty envisages corporate civil and criminal liability for contravention of human rights. In the same provision it has been explicitly provided that in case of a value chain, the civil liability would be determined on the basis of type and nature of the relationship between the corporate entity and the supplier, the extent of control thus exercised, and the human rights impact and the action of the corporate entity.

E. PROBLEMS EXISTING IN THE DRAFT

Limitation Of Scope

One of the limitations inherent in the applicability of the draft Treaty is that it fails to take into consideration the actions or omissions of the domestic enterprises. It only goes to recognize “business activities of transnational character” as those “for-profit activities” that “take place or involve actions, persons or impact in two or more national jurisdictions” (Art. 4(2)). (15)

The limited scope has a detrimental impact on the reach and consistency of various provisions of the Treaty(16),

Issue Of Jurisdiction

As the Public International Law continues to recognize the full international legal personalities solely to states,(17) and in case of other entities they are bestowed with limited personality- whether functional, as is the case of international organizations or relative as is the case of business entities. So, granting the offenses committed by the business entities as international crimes for all purposes would be contradictory to the existing usages and customs of the Public International Law. Furthermore, as is evident from the circumstances leading to the negotiations of this Treaty that, it is the States that are negotiating and most of them are unwilling to grant full International Legal Personality status to the business entities, so it will be probably unwise decision to grant indirect International Legal Personality status to these entities, through the development of a business and human rights treaty, and especially if the widespread acceptance and ratification are wanted or anticipated.

Some authors have suggested that international law already applies to them it is just that there is a need to ensure that it deals with them directly. However, what benefits would be derived from such an approach is quite unclear. Furthermore, the solution to such a dilemma of fixing responsibility on the corporates can be that the sovereign states be encouraged and induced to transpose the international principles affecting responsibility to their domestic regulations as explained by Vincent Chétai. Moreover, even if we adopt the former approach of legal recognition entirely, we will have to create monitoring and oversight mechanisms; the monitoring to be performed by the Centre. (18)

Issue Of Applicability Of The Doctrine Of Renvoi

The doctrine of Renvoi is a legal doctrine that is applicable to cases whereby the court is faced issues pertaining to conflict of laws, or laws of other countries relevant to issues at hand are considered and applied accordingly as well.

It will only operate in relation to those rights that have already been recognized by the State. The problem with such an issue is that it will limit the objective scope of the future instrument, in a way reservations could potentially do as well. (19)

There Is No Explicit Recognition Of Corporate Responsibility

The preamble to the Treaty under Article 1 instead of including the Corporate Responsibility has included the State’s primary obligation and responsibility to promote, protect, fulfill, and respect fundamental human rights.(20)

This may or may not be inferred as an international obligation, as it is a part of the preamble and there are discourse and dissension amongst the International Lawyers regarding its application and interpretation. A preamble as per Article 31(2) of the Vienna Convention on the Laws of Treaties provides that a preamble may be used for interpretation but may or may not be binding.

This is the only reference about corporate human rights in the entire Draft text of the Treaty.

F. REMEDIES – WHAT OPTIONS AVAILABLE AND HOW IT CAN BE ENFORCED?

For the purposes of ensuring effective and comprehensive implementation of remedies in relation to an alleged breach of human rights, the definition of “victim” has been interpreted broadly, encompassing both individuals and collectives alleged to have suffered harm from transnational business activity. Near kin such as family or close dependents have also been entitled under this definition the right to bring a claim, to prevent victimization.

To bring their claims and to ensure their enforcement, the victims can choose the jurisdiction of an action based on the location where an act or omission occurred, or the court of the state whereby the person who has committed the violation is domiciled. Reversal of burden of proof has been enshrined under Article 10 of the Treaty that ensures access to justice to victims as well.

Article 7 pertaining to the law of the forum is also applicable to both the substantive and procedural aspects of the action concerned, and it is equally applicable to the state’s rules dealing with conflicts of laws.

To further the system of access of justice to the victims, it has been enshrined under Article 8 of the draft Treaty that states provide an effective complaints process and enforcement mechanism, and thereby it also requires the states to participate in an international fund for victims to provide legal and financial relief to victims.

The business entity violating the human rights of the individuals or the collectives shall be liable to pay compensation which shall be adequate to the reparations so caused to the victims.

If the entity commits human rights violations that amount to a civil or criminal offense, including crimes recognized under international law, international human rights instruments, or domestic legislation will that come under this ambit?

G. CONCLUSION

Even though the draft Treaty on Legally Binding Instrument To Regulate, In International Human Rights Law, The Activities Of Transnational Corporations And Other Business Enterprises is a welcome step to consolidate the concerted efforts towards holding multinational corporations as responsible and accountable for the breach of human rights, as a result of their activities, nevertheless, it still has certain drawbacks that need to be fixed, such as jurisdictional issue, direct application to domestic entities, and no explicit recognition of corporate responsibility.

The scope given under the draft Treaty is limited in its application as it does not include the criminal acts committed by the domestic entities evades it from the criminal liability for grave violations as well.

Well, it is too early to predict its acceptance or ready ratification by the member states of the UN, for the fourth round of negotiations are still underway. (21)

For any law to come to force, the ultimate test it must pass is as to what far-reaching implications will it have on the intended stakeholders. If signed and ratified by the required number, it will be a significant departure from the UNGPs, and as it is inferred from above it contains provisions which go beyond what the domestic laws already provide for and imposes on the state to pass far-reaching supply chain due to diligence alike to that of the system existing in France, and stringent labor regulations akin to the California, UK, and Australia.

[The author, Ruchira Bali is a student of Symbiosis Law School, Hyderabad]

Disclaimer: This article is an original submission of the Author. Niti Manthan does not hold any liability arising out of this article. Kindly refer to our Terms of use or write to us in case of any concerns.

1. R.N Bhaskar, From Enron to Goldquest and Ishrat: The many half-truths of P Chidambaram, FirstPost, Apr 25, 2016; https://www.firstpost.com/india/ishrat-jahan-enron-goldquest-p-chidambaram-2747294.html
2. 2011 UN Guiding Principles on Business and Human Rights (UNGPs), HR/PUB/11/04
3. Phil Bloomer and Maysa Zorob, Business & Human Rights Resource Centre, Another Step on the Road? What does the “Zero Draft” Treaty mean for the Business and Human Rights movement? , Business and Human Rights Center,https://www.business-humanrights.org/en/another-step-on-the-road-what-does-the-%E2%80%9Czero-draft%E2%80%9D-treaty-mean-for-the-business-and-human-rights-movement
4. The intergovernmental group was established through Resolution passed by the Human Rights Council, which was sponsored by Ecuador and South Africa- garnering about 20 votes in favor, 13 abstentions, and 14 votes against it. Refer David Bilchitz Moral and Legal Necessity for a Business and Human Rights Treaty; Human Rights Council, ‘Elaboration of an internationally legally binding instrument on transnational corporations and other business enterprises with respect to human rights’ A/HRC/26/L.22/Rev.1 (25 June 2014).
5. https://www.iisd.org/itn/2018/12/21/negotiations-of-a-legally-binding-instrument-on-business-and-human-rights-continue-at-the-united-nations/; Last retrieved on 25-11-2019 at 13:48 PM
6. Birchall, David, Between Apology and Utopia: The Indeterminacies of the Zero Draft Treaty on Business and Human Rights (July 10, 2019). Suffolk Transnational Law Review, Vol. 40, No. 2, 2019. Available at SSRN: https://ssrn.com/abstract=3417521
7. H. Cantú Rivera,’ Some Remarks on the Third Session of the Business and Human Rights Treaty Process and the ‘Zero Draft’, Brazilian Journal of International Law,2018
8. Cf. Forteau, Mathias, “Les renvois inter-conventionnels”, Annuaire français de droit international, Vol. 49, 2003, pp. 100-101, 104, wherein Professor Forteau comprehend as to that while the voluntary approach remains a fundamental parameter of international law, the renvoi between different conventions seeks to ensure a solidary and unified application of different treaty regimes. Thus, he suggests that if a State accepts the norm that generates the renvoi, it implicitly agrees to the application of the second instrument (in this case, the human rights stipulated in the Elements document, which would then cover an important number of conventions and treaties on the subject).
9. Humberto Cantú Rivera Some Remarks on the Third Session on the Business and Human Rights Treaty Process and the “Zero Draft”, Revista de Direito Internacional, v. 15, n. 2 (2018), ISSN 2236-997X (impresso) - ISSN 2237-1036 (on-line), DOI: http://dx.doi.org/10.5102/rdi.v15i2.5696
10. https://www.nortonrosefulbright.com/en/knowledge/publications/0ee77b2f/consultations-open-on-the-un-zero-draft-treaty-on-business-and-human-rightshttps://www.nortonrosefulbright.com/en/knowledge/publications/0ee77b2f/consultations-open-on-the-un-zero-draft-treaty-on-business-and-human-rights
11. https://www.ohchr.org/documents/hrbodies/hrcouncil/wgtranscorp/session3/draftlbi.pdf
12. Key Features Of Mandatory Human Rights Due Diligence Legislation, ECCJ Position Paper, June 2018.
13. https://www.nortonrosefulbright.com/en/knowledge/publications/0ee77b2f/consultations-open-on-the-un-zero-draft-treaty-on-business-and-human-rights
14. https://www.nortonrosefulbright.com/en/knowledge/publications/0ee77b2f/consultations-open-on-the-un-zero-draft-treaty-on-business-and-human-rights
15. Carlos Lopez, Toward an International Convention on Business and Human Rights, INVESTMENT TREATY NEWS, https://www.iisd.org/itn/2018/10/17/toward-an-international-convention-on-business-and-human-rights-carlos-lopez/
16. International Commission of Jurists. (2015, May 30). Submission on the scope of a future treaty on business and human rights. Retrieved from https://www.icj.org/submission-on-scope-of-future-treaty-on-business-and-human-rights
17. Crawford, James, “Chance, Order, Change: The Course of International Law”, Recueil des cours, Vol. 365, 2013, p. 159; Pellet, Alain, Le droit international entre souveraineté et communauté, Paris, Pedone, 2014, pp. 63-66
18. See algo Chétail, Vincent, “The Legal Personality of Multinational Corporations, State Responsibility and Due Diligence: The Way Forward” in Alland, Denis et al. (eds.), Unité et diversité du droit international: écrits en l’honneur du professeur Pierre-Marie Dupuy, Leiden, Brill, 2014, p. 127: “As soon as there is state responsibility in accordance with the notion of due diligence, one may assume that the violation in question has been –or at least will be– committed by private actors which are thus the holder of the relevant international obligation. Otherwise, no breach can be attributed to them and there is no ground for justifying the duty of the state to act in due diligence to prevent, investigate, or redress violations. In other words, as violations are not directly imputable to the state itself, a private actor must be considered the direct bearer of the violated rule.”
19. https://www.pearse-trust.ie/blog/bid/110454/the-rule-of-doctrine-of-renvoi-explained
20. Article 1 further provides, “Underlining that all business enterprises, regardless of their size, sector, operational context, ownership, and structure shall respect all human rights, including by avoiding causing or contributing to adverse human rights impacts through their own activities and addressing such impacts when they occur.”
21. https://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/Session4/Pages/Session4.aspx