Editor’s note: Katharine Booth holds a LLM,
Advanced Programme in European and International Human Rights Law from Leiden
University, Netherlands and a LLB and BA from the University of New South
Wales, Australia. She is currently working with the Asser Institute in The
Hague. She previously worked for a Supreme Court Justice and as lawyer in
Australia.
Overview
On 12 February 2020, the United Nations High
Commissioner for Human Rights (Commissioner) issued a report on all business
enterprises involved in certain activities relating to Israeli settlements in
the Occupied Palestinian Territory (OPT) (Report). The Report contains a database of
112 businesses that the Commissioner has reasonable grounds to conclude have
been involved in certain activities in Israeli settlements in the West Bank. Of
the businesses listed, 94 are domiciled in Israel and the remaining 18 in 6
other countries: France, Luxembourg, the Netherlands, Thailand, the UK and the US.
Many of the latter are household names in digital tourism, such as Airbnb,
Booking, Expedia, Opodo and TripAdvisor, as well as Motorola.
Swift and Mixed Reactions
The drafting and publication of the Report has
been much delayed and hugely controversial. The UN has repeatedly been criticised for its “disproportionate focus and
unending hostility” as well as political bias towards Israel. In the press release accompanying the publication of the
Report, the current Commissioner, Michelle Bachelet, acknowledged its controversial
nature: “I am conscious this issue has been, and will continue to be, highly
contentious”.
Unsurprisingly, reactions to the Report have
been swift and mixed. Within hours of its publication, Israel’s Ministry of
Foreign Affairs denounced the Report as a “blacklist” of
companies and, as a self-described “exceptional and harsh measure” in
retaliation for its publication, suspended its ties with the United Nations
Human Rights Council (Council). By contrast, the Palestinian Foreign Minister praised the Report as a “victory for
international law”, and the Prime Minister entreated companies in the database to
immediately cease their operations in the Israeli settlements, stating that his
government would “pursue the companies listed in the report legally through
international legal institutions and through the courts in their countries for
their role in violating human rights”.[1]
Closer to home, a spokesperson for the Dutch Ministry for Foreign Affairs criticised the Council’s one-sided focus on
Israel, as well as the UN’s involvement in the issue of companies operating in
the OPT, which in the opinion of the Dutch government is not primarily the
responsibility of the UN but of states.
NGOs focused on responsible business conduct (RBC)
have welcomed the Report as an important step to holding listed businesses to
account under national and international law. Al-Haq, an NGO based in the West
Bank, commented on Wafa, the Palestinian newsagency, that the database was “integral
to ending corporate complicity in human rights violations” and emphasised the
importance of the database being updated annually: “Adding and removing
companies from the long-awaited database creates a necessary incentive and
deterrent against engaging with Israel’s illegal settlement industry.”[2]
Moreover, Human Rights Watch commented, “The long awaited release of the
UN settlement business database should put all companies on notice: to do
business with illegal settlements is to aid in the commission of war crimes.”
Scope and Purpose of
the Report
The Council mandated the production of the Report
in Resolution 31/36 on “Israeli settlements in the
Occupied Palestinian Territory, including East Jerusalem, and in the occupied
Syrian Golan”, adopted in March 2016. Paragraph 17 of the Resolution required
the Commissioner, in “close consultation” with the UN Working Group on Business
and Human Rights, to produce a database of all business enterprises involved in
activities contained in paragraph 96 of the Report of the independent
international fact-finding mission to investigate the implications of the
Israeli settlements on the rights of Palestinians in the OPT (Fact-Finding Mission Report). In particular, the drafting of
the list involved interpreting and applying three cumulative elements: (a)
“business enterprises”; (b) “involved”; (c) in one or more “listed activities”.
(a)
“Business Enterprises”
The Commissioner construed “business
enterprises” to mean “all relevant entities” of concern, “including parent
companies and their subsidiaries, franchisors and franchisees, local
distributors of international companies, partners and other entities in relevant
business relationships.” The nature and substance of the functions and
activities of the businesses’ entities, irrespective of the corporate structure
or characterisation of the business under national law, was taken into account for
the purpose of the Report. Notably, the broad construction of “business
enterprises” in the Report reflects the equally broad meaning of “business
relationships” in the United Nations Guiding Principles (UNGPs), namely “relationships
with business partners, entities in its value chain, and any other non-state or
state entity directly linked to its business operations, products or services.”
(b)
“Involved”
Similarly, the Commissioner construed
“involved” very broadly to include “substantial and material business activity
that had a clear and direct link to one or more of the listed activities”, namely
a business enterprise itself engaged, or
a parent company owning a majority share of a subsidiary engaged, or a
business enterprise granting a relevant franchise or license to a franchisee or
licensee engaged, in a listed company in the OPT. Again, this construction
mirrors the UNGPs which provide that the responsibility of businesses to
respect human rights requires that they seek to prevent or mitigate adverse
human rights impacts that are directly linked to their operations, products or
services by business relationships, even if they have not contributed to those
impacts.
Only activities between the period 1 January
2018 to 1 August 2019 fell within the scope of the Report.
(c)
“Listed activities”
In contrast to the broad understanding of the
first two cumulative elements, the Commissioner construed the meaning of
“listed activities” narrowly. The database only captures the activities listed
in paragraph 96 of the Fact-Finding Mission Report. These activities generally
relate to the supply or support of Israeli settlements in the West Bank.
However, for clarity, paragraph 96 is set out in its entirety:
Information gathered by the mission
showed that business enterprises have, directly and indirectly, enabled,
facilitated and profited from the construction and growth of the settlements.
In addition to the previously mentioned violations of Palestinian worker
rights, the mission identified a number of business activities and related issues
that raise particular human rights violations concerns. They include:
(a) The supply of equipment and
materials facilitating the construction and the expansion of settlements and
the wall, and associated infrastructures
(b) The supply of surveillance and
identification equipment for settlements, the wall and checkpoints directly
linked with settlements
(c) The supply of equipment for the
demolition of housing and property, the destruction of agricultural farms,
greenhouses, olives groves and crops
(d) The supply of security services,
equipment and materials to enterprises operating in settlements
(e) The provision of services and
utilities supporting the maintenance and existence of settlements, including
transport
(f) Banking and financial operations
helping to develop, expand or maintain settlements and their activities,
including loans for housing and the development of businesses
(g) The use of natural resources, in
particular water and land, for business purposes
(h) Pollution, and the dumping of
waste in or its transfer to Palestinian villages
(i) Captivity of the Palestinian
financial and economic markets, as well as practices that disadvantage
Palestinian enterprises, including through restrictions on movement, administrative
and legal constraints
(j) Use of benefits and
reinvestments of enterprises owned totally or partially by settlers for
developing, expanding and maintaining the settlements
The scope of the
activities that may cause a business enterprise to be listed in the database is
therefore restricted. As the Report notes, the database does not cover all
business activity in the settlements, nor business activity in the OPT that may
raise human rights concerns. Indeed, several
high-profile companies known to be operating in the Israeli settlements by key
NGOs have not been named.
The restricted scope
of the database assists to identify the purpose of the report, namely:
Private companies must assess the
human rights impact of their activities and take all necessary steps –
including by terminating their business interests in the settlements – to
ensure that they do not have an adverse impact on the human rights of the
Palestinian people, in conformity with international law as well as the Guiding
Principles on Business and Human Rights. The mission calls upon all Member
States to take appropriate measures to ensure that business enterprises
domiciled in their territory and/or under their jurisdiction, including those
owned or controlled by them, that conduct activities in or related to the
settlements respect human rights throughout their operations.[3]
At the heart of the Report are the UNGPs,
including the binding obligation on states to protect human rights, and the
corporate responsibility to respect human rights in business operations. In the
absence of the Israeli government’s compliance with its obligation to protect
the human rights of Palestinians in relation to the unlawful Israeli
settlements in the OPT, and the inability of the UN to enforce such compliance,
the focus of the Council has instead shifted to what other Member States and
businesses can do to remediate the harm caused by these settlements. Such states
can implement legislation in accordance with the UNGPs, requiring companies to
conduct human rights due diligence (HRDD) regarding their operations, thereby
effectively ensuring legal accountability for companies that operate in and
assist the Israeli settlements. As powerfully stated by the Commissioner in the
preliminary report on the database published in
February 2018:
… considering the weight of the
international legal consensus concerning the illegal nature of the settlements
themselves, and the systemic and pervasive nature of the negative human rights
impact caused by them, it is difficult to imagine a scenario in which a company
could engage in listed activities in a way that is consistent with the Guiding
Principles and international law. This view was reinforced in Human Rights
Council resolution 34/31 on the Israeli settlements, in which the Council
referred to the immitigable nature of the adverse impact of businesses’
activities on human rights.
Businesses have been warned.
The Direct and Indirect Effects
of the Report
The Report has no direct legal effect on
businesses listed in the database. Indeed, the Report notes that the database “is
not, and does not purport to constitute, a judicial or quasi-judicial process
of any kind or legal characterization of the listed activities or business
enterprises’ involvement therein.” The database is merely a list of business
enterprises that the Commissioner has factually determined as being involved in
the listed activities. Accordingly, the Report is not in any sense a
“blacklist” of listed businesses, nor is it intended to brand such businesses
as ‘illegal’ or operating in an illegal manner.
Nonetheless, the Report may have indirect
non-legal and quasi-legal effects for listed business enterprises, particularly
well-known businesses domiciled outside of Israel that operate in markets in
which consumers and stakeholders are concerned about RBC and sustainable
investment. In relation to potential, non-legal effects of the database, listed
businesses may experience a backlash as a result of public mobilisation. As
pointed out in the Ruggie Framework, failure to meet the “baseline
responsibility” of companies to respect human rights “can subject companies to
the courts of public opinion - comprising employees, communities, consumers,
civil society, as well as investors”. The ‘courts of public opinion’ (better
known as bad press) may encourage businesses listed on the database to,
ultimately, divest from or cease their activities in the Israeli settlements.
Indeed, the Report provides a mechanism for
listed businesses to be removed from the database, which is not static but
rather is updated annually. Listed businesses may provide information to the
Commissioner indicating that they are no longer involved in a listed activity
and, if the Commissioner has reasonable grounds to believe that this is the
case, the business can be removed from the database. Similarly, businesses that
commence one or more listed activities may be subsequently added to the
database. Accordingly, business activity in the OPT is and will continue to be
closely monitored by the Commissioner and civil society.
Perhaps the Report will add fuel to the fire of
the Boycott, Divest and Sanctions (BDS) movement, which aims to
discourage companies (and other stakeholders) from supporting the Israeli
government and investing in the Israeli settlements in the OPT. Certainly, the
identification of specific companies by the UN, the most influential
intergovernmental organisation in the world, has been heralded by the BDS movement as “a first
significant and concrete step by any UN entity towards holding to account Israeli
and international corporations that enable and profit from Israel’s grave
violations of Palestinian rights.” Only time will tell if or how states and
stakeholders (including consumers, shareholders, institutional shareholders and
civil society) will utilise the database for their own ends.
Proactive governments may also put pressure on
companies operating in the OPT to cease their operations. Government may
leverage their considerable economic power to encourage companies to engage in RBC,
including HRDD. For example, states can implement policies requiring businesses
to have in place satisfactory HRDD processes to be eligible for public
procurement contracts. However, the effectiveness of such policies in the case
of businesses operating in the OPT may be limited, for the simple reason that
the majority of listed businesses in the database are domiciled in Israel and
therefore in all probability less likely to bid for European or US procurement
contracts. However, requiring HRDD processes may be an effective strategy in
relation to businesses listed in the database operating in the infrastructure
and construction industries, such as those domiciled in France (Egis Rail), the
Netherlands (Tahal Group International B.V., Altice Europe N.V., Kardan N.V.) and
the UK (JC Bamford Excavators Ltd, Greenkote P.L.C.). Interestingly, these
jurisdictions have been at the forefront of the push towards incorporating
corporate social responsibility, including HRDD, into national legislation.
Additionally, the Report may have indirect quasi-legal
effects for listed businesses. In jurisdictions that have implemented
legislation in accordance with the UNGPs and OECD’s Guidelines for Multinational Enterprises (OECD Guidelines), it is possible
that quasi-legal action may be commenced against businesses listed in the
database. For example, a complaint may be made by a NGO to a National Contact
Point (NCP) that a listed business operating in the OPT has not complied with
the OECD Guidelines. NCPs are not legal entities in the strictest sense – they
rarely issue final determinations and cannot sanction companies for
non-compliance with national and international law – but they are quasi-legal
in that that they are empowered to issue persuasive, albeit non-binding,
recommendations to businesses. In fact, in 2013 a Palestinian NGO successfully complained to the UK NCP that G4S, a global
security company contracted by the Israeli government and operating in the West
Bank, had not met its obligation to
address the impacts of its business relationship with that government,
inconsistent with G4S’s duty to respect human rights under the OECD Guidelines.
Successful claims such as these may inspire similar claims in other countries. As
such, the Report may not have any legal effect, but it may indirectly support
any quasi-legal claim made against a listed business in relation to their
operations in the OPT.
A ‘Significant’ and ‘Concrete’ Step Forward
The Council will consider the Report during its
43rd Regular Session, from 24 February to 20 March 2020. Hopefully the Council
will provide some guidance to states and listed businesses concerning their
responsibilities and obligations under international law, as a result of the
Report. Such guidance has been sought by Valentina Azarova in order to clarify the law as it
stands for all concerned parties, as well as to ensure the effectiveness, integrity
and transparency of the Council. It is essential for the responsibilities and
duties of states and businesses to be crystal clear if the UNGPs are to be
effectively incorporated into national law and, most importantly, if businesses
are to comply with that law. The theory of the UNGPs and the rhetoric contained
in the Report must be translated into practical guidance for companies to
follow, in order that they may comply with and hopefully exceed their duty to
respect human rights.
It has been almost 12 years since the release
of the Ruggie Framework and 9 years since the adoption of the UNGPs by the
Council. While the Guiding Principles remain just that – non-binding principles
that seek to shape national and international legal developments – each year
their persuasive influence increases. Slowly but surely, the UNGPs are
permeating into the international legal framework – the Report is the most
recent example of the normalisation of the notion of RBC. The release of the database
is also indicative of what may be described as a shift away from the traditional
focus of international law of holding states to account, to the focus on
companies and their duties and responsibilities under international human rights law. In the absence of concrete
and effective action by the so-called ‘international community’ to
long-standing and ongoing human rights violations, human rights advocates are
seeking new mechanisms to hold states and businesses accountable. While these
mechanisms are certainly not perfect, it is important to keep in mind that we
are in the very early stages of a monumental shift in international law.
The Report is indeed a significant and concrete
step towards holding businesses to account for their complicity in human rights
violations. While the direct legal effects of the database are indeed limited, its
potential indirect effects should be of serious concern for companies operating
in the OPT. Listed businesses have been put on notice – on the international
stage no less – that their actions are being monitored and may be contrary to
national (and perhaps someday international) law.