United Nations: Business and human rights treaty negotiations start

The 5th session of the open-ended working group on transnational corporations and other business enterprises with respect to human rights (OEIGWG) met in Geneva on 14 to 18 October 2019.

This marked the beginning of intergovernmental negotiations on the basis of a revised draft legally binding instrument (LBI) published in July 2019.

Kinda Mohamadieh, from Third World Network, says the 5th meeting of the OEIGWG was a success in advancing the discussions and clarity on various elements of the revised text. Yet, some core issues continue to generate different approaches in the working group, including the scope of the proposed treaty, the extent of new obligations that the proposed treaty should impose on States, the possibility and ways of addressing direct obligations of business enterprises, and the scope of human rights law to be covered under the LBI.

The document revised draft legally binding instrument (LBI) was prepared by the OEIGWG Chairmanship led by Ambassador Emilio Rafael Izquierdo Mino of Ecuador to the United Nations in Geneva, in his capacity as Chair-Rapporteur of the process.

[This process is rooted in the mandate of the Human Rights Council Resolution 26/9, which "establish(ed) an open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights... to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises"].

The session witnessed active contributions by a number of countries, civil society groups, scholars and other experts on different elements of the text.

States actively participating in the discussions were mainly from among developing countries, representing various regions.

Few developed countries participated, mainly sharing national experiences and raising questions and points of clarification on the proposed text.

While several delegations noted that they still await detailed instructions from their capitals pertaining to the draft text, there was sharing of concrete and specific suggestions and proposals by many participating countries throughout the week.

[While representatives of the European Union were present in the room and active in raising comments and questions, they noted that they await a negotiation mandate from the next EU Commission to take office, and thus reserve their position on the draft text.]

Generally, the revised text was welcomed by participants, both States and civil society representatives, as a viable basis for negotiations towards fulfilling the mandate of resolution 26/9.

The text presents a clear attempt to accommodate and reconcile different views and proposals shared by States, civil society groups and other stakeholders that have participated in the process thus far.

However, a few participating countries, particularly China and Russia, pointed out that the text requires further development and amendments in order to provide a sufficiently developed and clear basis for negotiations.

It can be noted that the revised text enhances alignment with the Guiding Principles on Business and Human Rights. It was also clear that what is proposed could contribute to clarifying regulations pertaining to business entities.

In this way, it could enhance certainty and predictability (often demanded by business), and address unfair competition practices by some businesses that exploit weakness or lack of regulation in certain jurisdictions.

The 5th meeting of the OEIGWG was a success in advancing the discussions and clarity on various elements of the revised text.

Yet, some core issues continue to generate different approaches in the working group, including the scope of the proposed treaty, the extent of new obligations that the proposed treaty should impose on States, the possibility and ways of addressing direct obligations of business enterprises, and the scope of human rights law to be covered under the LBI.

Overview of content of revised text & related discussions

The purpose of the proposed LBI, as captured under the revised text, focuses on strengthening respect, promotion, protection and fulfilment of human rights, preventing violations and ensuring effective access to justice and remedy, and promoting and strengthening international cooperation (see Article 2 of the revised draft).

Some of the main issues addressed in the negotiations included the scope of the Instrument, rights of victims, the grounds of corporate legal liability, adjudicative jurisdiction and victims' access to a forum to bring legal proceedings, mutual legal assistance including in investigating and enforcing judgments across borders, and issues pertaining to consistency with international law, including interaction of human rights law with international economic law.

Scope (Article 3 of the revised text)

The revised text provides for a scope that covers "all business enterprises ... including particularly... those of transnational character".

Generally, such an approach could allow addressing the challenges pertaining to transnational corporations as long as the operational sections of the proposed treaty, particularly those pertaining to prevention and human rights due diligence, legal liability of corporations, adjudicative jurisdiction, and enforcement are focused on cross-border cases.

For example, David Bilchitz, one of the experts participating in the discussions, proposed that there might be no need to guard a provision on scope, noting that generally human rights treaties do not include such a provision, adding that the focus on transnational corporations and cross-border business activities could actually be achieved through focusing on the operational elements of the proposed treaty.

However, some countries and civil society groups argued that the scope should replicate the language of Resolution 26/9 that established the mandate, which refers specifically to "transnational corporations and other business enterprises" with a clarification that the latter means those entities with a transnational character.

Specific circumstances of groups impacted disproportionately

Participants from among States and civil society generally commended that the revised text mainstreams references to the specific circumstances of groups impacted disproportionately, including women and girls, children, indigenous peoples, persons with disabilities, and migrants and refugees.

The revised text also emphasizes the role and guarantees of human rights defenders, as well as the role of civil society actors.

References to international humanitarian law were included across the revised text, although this was questioned by some States participating in the negotiations.

Rights of Victims (Article 4 of the revised text)

The proposed text includes a section on "rights of victims", which generally reflects rights and obligations recognized under existing international instruments.

Several suggestions on this topic proposed avoiding the use of the term "victims" and replacing it with a more empowering terminology such as "rights holders".

Other suggestions pointed to the need to differentiate between victims and alleged victims.

A core element under this section is the right to access information by claimants, including obtaining the disclosure of evidence held by a corporate defendant.

The reversal of the burden of proof, in certain situations, was also addressed.

Prevention & Human Rights due diligence (Article 5 of the revised text)

In regard to prevention and human rights due diligence, there was a recognition that this element elaborates on an existing State obligation under international human rights law to regulate the activities of business enterprises within its territory or jurisdiction.

It was noted that the revised text aligns more clearly with the approach of the Guiding Principles to human rights due diligence.

The reach of the prevention obligation down the corporate and supply chain was an issue of discussion, especially given the use of "contractual relationships" to define the scope of this obligation.

There was a clear sentiment in the room that the use of the term "contractual relationships" should be reviewed, and potentially replaced.

Another issue discussed was whether fulfilment of obligations under human rights due diligence should form a defense or a mitigating factor in considering the liability of a business enterprise in the case of harm committed by another entity that it sufficiently controls or supervises.

The responsibilities and burdens on small and medium enterprises in this area were discussed, including how these could be distinguished in accordance to the size, nature and risk associated with a business entity and its activities.

Several participants, from among States and civil society organizations, stressed the importance of strengthening the references to the obligation by business to undertake human rights and environmental impact assessments, including publishing these assessments, as well as strengthening the references to the standard of free, prior and informed consent.

Civil society groups highlighted the importance of guarding and strengthening a clause in the revised text providing for an obligation on State Parties to protect the policies undertaken for implementing the future LBI from commercial and other vested interests of persons conducting business activities, particularly those of transnational character.

This provision is inspired by a very similar article under the WHO Framework Convention on Tobacco Control, which has proved to be crucial in the implementation of the Convention.

Legal liability & adjudicative jurisdiction (Art. 6 and 7 of the revised text)

These are two central elements in the proposed LBI. The revised text provides that States shall develop "a comprehensive and adequate system of legal liability for human rights violations and abuses in the context of business activities ..."

It addresses legal liability for acts that a corporation undertakes or participates in, and in relation to international crimes.

In regard to civil liability of a corporation for actions and harms undertaken by another entity, including, for example, the obligations of parent companies towards actions by their subsidiaries, the proposed text seeks to provide alternative grounds to piercing the corporate veil.

It proposes that a corporation shall be liable where it "sufficiently controls and supervises" the specific activities by another entity leading to harm a third party.

The revised text also proposes that liability shall arise where a corporation should have foreseen a risk in the conduct of its business activities.

The proposed approach to liability focuses on the substance of the relationships within a corporate group and is not predicated on the form or ownership relationship among different entities. Under such an approach, liability would not arise by the mere shareholding or equity participation that a company may have in another.

This is an approach that aligns with the latest jurisprudence of some countries, like the United Kingdom, in relation to parent subsidiary liability cases, and with the approach of the Guiding Principles.

The revised text also addresses liability regarding crimes recognized under international law and proposes a closed list of offences to be covered under the future Instrument.

Several States and civil society groups noted that the list should be open and should evolve with international law.

On adjudicative jurisdiction in civil cases, the text provides for a broad approach whereby jurisdiction would be vested with courts where victims are domiciled, acts or omissions have occurred, or those alleged to have committed harm are incorporated, have their statutory seat, or have their central administration or substantial business interest.

It was noted that in the absence of an international forum with jurisdiction to address cases of business and human rights, such broad approach to jurisdiction is essential for advancing access to justice and remedy.

Multiple issues were under discussion including the need to prohibit the application of the forum non conveniens doctrine, which allows a court, whose jurisdiction is established under the applicable rules, the discretion to decline to hear a case if it finds that it is an inappropriate forum or that another forum would be more appropriate.

Another consideration discussed was the possibility of inserting a "forum necessitatis" clause, which would provide that a court hears a case although ordinarily it would lack jurisdiction due to the fact that no other competent forum is available to the claimant, or the court that otherwise would have jurisdiction refuses to permit the action.

Issues pertaining to potential forum shopping, given the broad approach to jurisdiction, were addressed.

Questions on applicable law were raised, including whether victims should be entitled to choose which laws would be applied (i.e. laws of the jurisdiction where harm has occurred, or where the victim is resident, or where the company is domiciled). It was also discussed whether universal jurisdiction for some crimes should be included in the text.

The particularities of the statute of limitations in criminal and civil matters were highlighted, as well as the need to address connected claims or joining claims, where needed.

Other issues

Among other elements that are central to the proposed treaty is mutual legal assistance including in, but not limited to, sharing of information, enforcement of judgements, extradition in criminal cases, and the relation of the proposed LBI to existing bilateral and regional agreements on mutual legal assistance.

The interaction between human rights law and economic law was also part of the discussion.

The proposed text provides that bilateral and multilateral agreements by State Parties to a future instrument shall be "compatible and shall be interpreted in accordance with their obligations under the [instrument]".

The way forward

A 6th session of the OEIGWG is envisioned for the last quarter of 2020. The Chairperson-Rapporteur invited delegations and other stakeholders, including civil society organizations, to provide written versions of their suggestions and positions shared during the 5th meeting of the OEIGWG to the Secretariat of the process, no later than the end of November 2019. Additional proposals could be presented until the end of February 2020.

Regional and political groups as well as intergovernmental organizations and civil society organizations and other relevant stakeholders were invited by the Chairperson-Rapporteur to organize consultations in the run-up to the 6th session in order to contribute to the work of the OEIGWG.

The role of experts from different regions and legal backgrounds was stressed, as a source of independent expertise and advice in relation to the preparation of the second revised draft.

A draft report of the discussions during the 5th OEIGWG will be released soon, with annexes including compilations of the statements and textual suggestions made during the 5th session.

The report will be presented for adoption by the Human Rights Council during its first session of 2020 in February.

During an informal part of the last session of the OEIGWG's meeting, States highlighted the State-led nature of the process.

Much discussion was dedicated to the format of the 6th session of the OEIGWG.
Negotiations in a manner that envisions direct interaction between States on their textual proposals and suggestions were proposed for the 6th session.

By Kinda Mohamadieh.

Source: SUNS - South North Development Monitor, SUNS #9002 Tuesday 22 October 2019.