Two members of the Doing Business Right team, Antoine Duval and Catherine Dunmore have just published a policy brief feeding into the current debates on the use (and usefulness) of arbitration in the business and human rights context. More precisely, the brief makes the case for the creation of a single Court of Arbitration for Business and Human Rights. 

Here is the abstract: 

This policy brief makes the case for a single Court of Arbitration for Business and Human Rights (CABHR). It first highlights the challenges faced by victims of human rights violations caused or directly linked to the activities of transnational corporations (TNCs) in accessing effective remedy. It then discusses the opportunities and challenges in using arbitration to provide a remedy in the business and human rights context. If arbitration is to be used, we argue that it should be in the framework of a single CABHR, which could draw some inspiration from the structure and operation of the Court of Arbitration for Sport (CAS). The policy brief concludes by highlighting four core issues which stakeholders should focus on in the process of setting up a CABHR.

You can download the paper for free on SSRN.

Editor's note: Maisie Biggs graduated with a MSc in Global Crime, Justice and Security from the University of Edinburgh and holds a LLB from University College London. She is currently working with the Asser Institute in The Hague. She has previously worked for International Justice Mission in South Asia and the Centre for Research on Multinational Corporations (SOMO) in Amsterdam.

Introduction

This report compiles all relevant news, events and materials on Doing Business Right based on the coverage provided on our twitter feed @DoinBizRight and on various websites. You are invited to contribute to this compilation via the comments section below, feel free to add links to important cases, documents and articles we may have overlooked.

The Headlines

Revised Draft of Treaty on Human Rights and TNCs has been published

The Revised Draft has been released here by the Permanent Mission of Ecuador. The Draft comes ahead of the intergovernmental negotiations to be held at the 5th session of Open-Ended Intergovernmental Working Group on transnational corporations and other business enterprises with respect to human rights (OEIGWG). For further comment and context, see Larry Catá Backer's blog, the BHRRC's debate the treaty section on the revised draft, as well as the BHRJ Blog's series on the revised draft.

Business Roundtable redefined the group’s Purpose of a Corporation 

A prominent group of business leaders has redefined its purpose of a corporation to include stakeholder interests. In a statement signed by 181 CEO members of the Business Roundtable, an American group of business leaders, the statement of “the purpose of a corporation” has been altered from the long-standing commitment to shareholder primacy, to a broader ‘Commitment to All Stakeholders’. The change was announced in an advertisement in the Wall Street Journal and signed by 181 members, including the business leaders of Amazon, American Airlines, Bank of America, Coca-Cola, Marriott, Lockheed Martin, Morgan Stanley, UPS, and Walmart.

Chairman of Business Roundtable and CEO of JPMorgan Chase, Jamie Dimon, explained in the release: “The American dream is alive, but fraying. Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”

This reconceptualisation of the purpose of corporations has been met with cautious enthusiasm; however, the statement has no bearing on the legal obligations of the signatories, and whether this materially alters business conduct by the signatories’ companies is yet to be seen.

The ‘Business Roundtable Statement on the Purpose of a Corporation’ can be found here.

UK Supreme Court to hear Okpabi case against Shell

The Supreme Court has granted permission for Nigerian communities to appeal their case concerning environmental degradation against Royal Dutch Shell. Previously the Court of Appeals rejected jurisdiction for the claimants, however the Court’s reasoning was fundamentally undermined by the subsequent Supreme Court judgement in Vedanta. See our previous post here concerning how these cases are related, and how Vedanta has paved the way for jurisdiction to be found in the Okpabi case. See the statement by Leigh Day, working with the appellants, here.

In another case concerning the liability of a UK parent company for harms perpetrated abroad by a subsidiary that hinged on jurisdiction, the Supreme Court refused permission in AAA v Unilever PLC for Unilever subsidiary employees to appeal. Leigh Day have announced they will now move to file cases with the UN Working Group and the OECD.

Samsung France indicted for deceptive commercial practices for not abiding by CSR statements

NGOs Sherpa and ActionAid France have successfully obtained an indictment against Samsung France for deceptive commercial practices. Preliminary charges were lodged in April by a Paris investigating magistrate in the first French case in which ethical commitments have been recognised as likely to constitute commercial practice.

The organisations argue that public ethical commitments by Samsung to workers' rights were misleading, citing alleged labour abuses and child labour in factories in China, South Korea and Vietnam. The case represents a novel approach to litigating extraterritorial business human rights abuses; even in the aforementioned Vedanta case in the UK, there was a similar (brief) suggestion that CSR-style public commitments could be actionable.

Guatemalan shooting victims announce settlement with Pan American Silver in Canada

It has been announced that landmark 2017 Canadian case Garcia v. Tahoe Resources has been resolved between the parties. The case concerned remedy for 2013 shooting of protesters by Tahoe Resources mine security on April 27, 2013 outside Tahoe’s Escobal Mine in south-east Guatemala. The resolution included a public apology from Pan American Silver, who acquired Tahoe Resources earlier this year, while other terms of the settlement remain confidential. Settlements were reached with three of the claimants earlier, but the remaining four only settled on 30 July when PAS issued a public apology and acknowledgement of the violation of their human rights by Tahoe.

In 2017, the BC Court of Appeal confirmed jurisdiction over the case in Canada, finding that the “highly politicized environment” surrounding the mine meant that there was a “real risk” that the plaintiffs would not obtain justice in Guatemala, permitting the claimants to use the Canadian forum. The head of security for the mine is also facing criminal proceedings in Guatemala.

Remedy being reached has led to celebration from commentators, however no further legal precedent has been set than that from the 2017 appeal, so it might have limited value for future claimants. It has been surmised that settlement was reached because of the overwhelming evidence in the case: video footage from security cameras showed protestors being shot in the back as they fled the mine site.

See also: The Guardian – Brazilian mining company to pay out £86m for disaster that killed almost 300 people and San Francisco Chronicle – Suit alleging US chocolate makers collaborated in slave labor proceeds for US developments.

UN and International Organisations Publications and Statements

• International Law Commission - Protection of the environment in relation to armed conflicts
• OHCHR - Economic interests of the Myanmar military (5 Aug 2019 

NGOs, NHRIs, CSOs and Human Rights Organisations Publications and Statements 

• Article 30, Institute of Human Rights and Peace Studies, Mahidol University –  Navigating a new era of business and human rights
• Business and Human Rights Network Hong Kong – Briefing Note on Human Rights Responsibilities of Business Enterprises concerning Ongoing Protests in Hong Kong
• Business & Human Rights Resource Centre – The Price You Pay: How Purchasing Practices Harm Turkey's Garment Workers
• Canadian Network on Corporate Accountability – News release: Government of Canada turns back on communities harmed by Canadian mining overseas, loses trust of Canadian civil society
• Corporate Accountability Lab – EMPTY PROMISES: THE FAILURE OF VOLUNTARY CORPORATE SOCIAL RESPONSIBILITY INITIATIVES TO IMPROVE FARMER INCOMES IN THE IVORIAN COCOA SECTOR
• Human Rights Watch – Georgia: Worker Rights, Safety at Risk
• Human Rights Watch – ‘No Year without Deaths’: A Decade of Deregulation Puts Georgian Miners at Risk
• Human Rights Watch – ‘We Have to Be Worried’: The Impact of Lead Contamination on Children’s Rights in Kabwe, Zambia
• Michael Windfuhr, German Institute for Human Rights – Implementing the Guiding Principles on Business and Human Rights in Germany
• Syrian Legal Development Programme (SLDP)’s Human Rights and Business Unit – BUSINESS ACTIVITY LINKED TO HUMAN RIGHTS IN SYRIA

Government Press Releases and Publications

• Australia – Australian National Contact Point Final Statement: Specific Instance submitted by Australian Women Without Borders against Mercer PR for its conduct in relation to activity in Nauru.
•  Kenya – Proposed Kenyan National Action Plan on Business and Human Rights (NAP)
• Switzerland – LA COMMISSION CONFIRME LA VOLONTÉ POLITIQUE D’OPPOSER UN CONTRE-PROJET INDIRECT À L’INITIATIVE POUR DES MULTINATIONALES RESPONSABLES (Translation: THE COMMISSION CONFIRMS THE POLITICAL WILL TO OPPOSE AN INDIRECT COUNTER-PROJECT TO THE INITIATIVE FOR RESPONSIBLE MULTINATIONALS)
• United Kingdom – All Party Parliamentary Group on Sport, Modern Slavery and Human Rights - Interim Report, July 2019

In Court

• District Court of Cleveland County: Johnson & Johnson Oklahoma opioids lawsuit
• UK Supreme Court: Cape Intermediate Holdings Ltd v Dring [2019] UKSC 38
• See Leigh Day - Supreme Court rules in favour of asbestos support group in landmark disclosure battle

In the News

• Axios – The first big opioids verdict is both big and small
• BBC Sounds – Bitter Brew: The harrowing story of rape, murder and violence on a Kenyan tea plantation.
• Business Day – Anglo American SA faces class-action lawsuit
• The Conversation – We analysed 101 companies’ statements on modern slavery – here’s what we found
• The Conversation – Modern Slavery Act is having unintended consequences for women’s freedom in Sri Lanka
• The Economist – Big business is beginning to accept broader social responsibilities
• The Financial Times – Africa: Study reveals Chinese companies pay & train workers to similar standards as non-Chinese companies
• Financial Times – Consumers want fair trade, but not its price
• Financial Times – S Korea supreme court orders bribery retrial for Samsung’s Lee Jae-yong
• The Guardian – Is fair trade finished?
• The Guardian – Philippines is deadliest country for defenders of environment
• Human Rights Law Centre – Australia appoints first-ever independent examiner to investigate corporate human rights abuses overseas
• Metro UK – Women in India pay the price for cashew nut demand as vegan diets rise
• The New York Times – European Companies Get Rich in China’s ‘Open Air Prison’
• The New York Times – Miners Kill Indigenous Leader in Brazil During Invasion of Protected Land
• The Progressive – Facebook Settlement Breaks a Record, But Not the Cycle of Exploitation
• Reuters – U.N. urges sanctions on Myanmar army businesses, says foreign partners could be complicit
• South China Morning Post – Cathay Pacific whistle-blowing policy urging staff to ‘speak up’ under spotlight as Hong Kong employees fear possible reprisals for support of anti-government protests
• Washington Post – Mars, Nestle, other food companies face complaints of forced labor at palm oil supplier

Academic Materials

• Amy Sinclair & Justine Nolan – Modern Slavery Laws in Australia: Steps in the Right Direction? – Business and Human Rights Journal
• Dalia Palombo – The Duty of Care of the Parent Company: A Comparison between French Law, UK Precedents and the Swiss Proposals - Business and Human Rights Journal
• Elise Groulx Diggs, Mitt Regan and Beatrice Parance – Business and Human Rights as a Galaxy of Norms – GEORGETOWN JOURNAL OF INTERNATIONAL LAW
• Ciarán O’Kelly – Human Rights and the Grammar of Corporate Social Responsibility – Social & Legal Studies
• Maddalena Neglia – Striking the Right(s) Balance: Conflicts between Human Rights and Freedom to Conduct a Business in the ILVA Case in Italy – Business and Human Rights Journal
• Verfassungsblog and T.M.C. Asser – Online Symposium ‘FIFA and Human Rights’

Blogs           

• Sebastian Smart, BHRJ Blog – Draft Treaty on business and human rights: a digital environment perspective
• Felogene Anumo, BHRJ Blog – Slow Progress in Times of Dynamic Change? Feminist Perspectives on the Road to the Binding Treaty
• Nicolás Carrillo Santarelli, BHRJ Blog – A step in the right direction: corporate responsibility under the 2019 revised draft. Part I: beyond transnational conduct and corporations by means of non-reductionist approaches
• Nicolás Carrillo Santarelli, BHRJ Blog – A step in the right direction: corporate responsibility under the 2019 revised draft. Part II: the recognition of corporate violations and its implications
• Matthew Mullen, Business & Human Rights Resource Centre – Keeping Perspective - Article 30 Commentary on the Revised Draft of the Proposed BHR Treaty
• Business & Human Rights Resource Centre – Reflections on the Revised Draft Treaty
• Marija Jovanovic, EJIL: Talk! – Modern Slavery in the Global Food Market: A Litmus Test for the Proposed Business and Human Rights Treaty
• EJIL: Talk – Why Arbitrate Business and Human Rights Disputes? Public Consultation Period Open for the Draft Hague Rules on Business and Human Rights Arbitration
• Beverley Hall, Ethical Trading Initiative Blog – Supply chain worker rights and climate change – how do we connect the two?
• Sophia Pickles, Global Witness - FAIR EXCHANGE IS NO ROBBERY – UNLESS YOU ARE A COMMODITY EXCHANGE
• Salil Tripathi, IHRB – Agnes Callamard on Corporate Responsibility in Saudi Arabia
• Tara Van Ho, IHRB – The Start of Modern Corporate Accountability Efforts - In Memory of Joel Filártiga
• Angela Mudukuti, Opinio Juris – Chemical weapons in Syria – German and Belgian companies complicit?
• Alison Berthet, Opinio Juris – Emerging Voices: Momentum Builds for Mandatory Human Rights Due Diligence
• Marie Davoise, Opinio Juris – All Roads Lead to Rome: Strengthening Domestic Prosecutions of Businesses through the Inclusion of Corporate Liability in the Rome Statute
•  Marie Davoise, Rights as Usual – Another Star in the BHR Galaxy of Norms? ILC Draft Principles Encourage States to Address Corporate Environmental Harm in Armed Conflict
• Nadia Bernaz, Rights As Usual – Clearer, Stronger, Better? – Unpacking the 2019 Draft Business and Human Rights Treaty
• Simmons & Simmons Elexica - Mass torts case alert: Supreme Court refuses permission to appeal in Unilever case

Call for Papers, Submissions and Abstracts

• Call for contributions – Symposium on the revised draft of the binding treaty – BHRJournal blog, email bhrj.blog@gmail.com
• Call for papers – The Corporate Responsibility to Respect Human Rights in Africa – EthicsLab, short proposals by 30 September.

Upcoming Events

• 9 October 2019 - Workshop: The gender dimension of business and human rights - T.M.C. Asser Institute - The Hague
  
• 6-8 November 2019 - ACCA 2019 General Assembly: impacts, opportunities and accountability in the context of Chinese investments in Africa - Abidjan, Ivory Coast
• 25-27 November 2019 – UN Forum on Business and Human Rights – Geneva, Switzerland
• 19-20 March 2020 – Bringing the “human problem” back into transnational law: The example of corporate (ir)responsibility – Transnational Law Institute, King’s College London
• 27-31 January 2020 - Winter Academy: Due diligence as master key to responsible business conduct - T.M.C. Asser Institute - The Hague
  
• 17-18 March 2020 – The Corporate Responsibility to Respect Human Rights in Africa – EthicsLab, Yaoundé, Cameroon

Editor's Note: Catherine Dunmore is an experienced international lawyer who practised international arbitration for multinational law firms in London and Paris. She recently received her LL.M. from the University of Toronto and her main fields of interest include international criminal law and human rights. Since October 2017, she is part of the team of the Doing Business Right project at the Asser Institute.

Background

At the United Nations Forum on Business and Human Rights from 27-29 November 2017 in Geneva, discussions focused on the central theme of Realizing Access to Effective Remedy. With an increasing focus on this third pillar of the United Nations Guiding Principles on Business and Human Rights, a working group of international law, human rights and conflict management specialists (Claes Cronstedt, Jan Eijsbouts, Adrienne Margolis, Steven Ratner, Martijn Scheltema and Robert C. Thompson) has spent several years exploring the use of arbitration to resolve business and human rights disputes. This culminated in the publication on 13 February 2017 of a proposal for International Business and Human Rights Arbitration. On 17 August 2017, a follow-up Questions and Answers document was published by the working group to address the principal questions raised about the proposal during the three-year consultation with stakeholders. Now, a drafting team is being assembled, chaired by Bruno Simma, to prepare a set of rules designed specifically for international business and human rights arbitration (the Hague International Business and Human Rights Arbitration Rules) in consultation with a wide range of business and human rights stakeholders. Once drafted, the rules will be offered to the Permanent Court of Arbitration and other international arbitration institutions and could be used in arbitration proceedings managed by parties on an ad hoc basis.

Introduction

Part 1 of this three-part blog series gave an overview introduction to the proposal for international business and human rights arbitration. Part 2 focused on the potential advantages of using international arbitration to resolve such disputes, as well as the substantial challenges the proposal will face in practice. This Part 3 now provides a case study of the Accord on Fire and Building Safety in Bangladesh’s binding arbitration process. More particularly, it will provide (1) a brief background to the Accord on Fire and Building Safety in Bangladesh, as well as (2) an analysis of its binding arbitration process, before (3) discussing the arbitrations brought by IndustriALL Global Union and UNI Global Union against two global fashion brands under the Accord on Fire and Building Safety in Bangladesh.

1.     Background to the Accord on Fire and Building Safety in Bangladesh

The Accord on Fire and Building Safety in Bangladesh (the Accord) is a five year independent, legally binding agreement between global brands, retailers and trade unions created in the immediate aftermath of the Rana Plaza building collapse, which led to the death of more than 1,100 people and injured over 2,000. Its purpose is to create a safe and sustainable Bangladeshi Ready Made Garment Industry in which no textile worker need fear fires, building collapses or other accidents that could be prevented with reasonable health and safety measures. The Accord was signed on 15 May 2013 and in June 2013 an implementation plan was agreed, leading to the incorporation of the Bangladesh Accord Foundation in the Netherlands in October 2013. The agreement notably consists of six key components:

• A five year legally binding agreement between brands and trade unions to ensure a safe working environment in the Bangladeshi Ready Made Garment Industry.
• An independent inspection program supported by brands in which workers and trade unions are involved.
• Public disclosure of all factories, inspection reports and corrective action plans.
• A commitment by signatory brands to ensure sufficient funds are available for remediation and to maintain sourcing relationships.
• Democratically elected health and safety committees in all factories to identify and act on health and safety risks.
• Worker empowerment through an extensive training program, complaints mechanism and right to refuse unsafe work.

To date, the Accord has been signed by over 200 apparel brands, retailers and importers from over twenty countries in Europe, North America, Asia and Australia, as well as two global trade unions, eight Bangladesh trade unions and four non-governmental organisation witnesses. As of October 2017, the Accord’s inspectors have identified thousands of safety hazards, but nearly 80% of workplace dangers discovered in the original round of inspections have been remediated whilst over 600 factories have completed 90% or more of the necessary remediation works.

In June 2017, a second term was agreed for the Accord which will enter into effect when the current agreement ends in May 2018 (the 2018 Accord), expiring in 2021. The concept is then for the work to be handed over to a national regulatory body, supported by the International Labor Organization, to be carried forward from that point.

2.     The Accord on Fire and Building Safety in Bangladesh’s binding arbitration process

Article 5 of the Accord contains the agreement’s dispute resolution mechanism, which includes appeal to a final and binding arbitration process. It states that:

“Any dispute between the parties to, and arising under, the terms of this Agreement shall first be presented to and decided by the SC [Steering Committee], which shall decide the dispute by majority vote of the SC within a maximum of 21 days of a petition being filed by one of the parties. Upon request of either party, the decision of the SC may be appealed to a final and binding arbitration process. Any arbitration award shall be enforceable in a court of law of the domicile of the signatory against whom enforcement is sought and shall be subject to The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention), where applicable. The process for binding arbitration, including, but not limited to, the allocation of costs relating to any arbitration and the process for selection of the Arbitrator, shall be governed by the UNCITRAL Model Law on International Commercial Arbitration 1985 (with amendments as adopted in 2006)”.

A number of critiques have been levied of this arbitration mechanism. For instance, Roger Alford highlighted that the mechanism contains no governing law clause and no seat of arbitration. Accordingly, if a party were to refuse to arbitrate then there is no evident national court in which the claimant might file a motion to compel arbitration. Additionally, although reference is made to the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 1985, no specific arbitration rules are selected. Another constraint is that only disputes arising under the terms of the Accord are subject to arbitration, which may restrict the mechanism’s scope to breach of contract and potentially exclude disputes relating to third-party injuries. The article also appears on one reading to limit arbitration to an exclusively appellate function, with the arbitral tribunal only able to review the Steering Committee’s decision for legal or factual errors as opposed to considering the case afresh. Finally, whilst arbitration awards rendered following an appeal of the Steering Committee decision are subject to enforcement under the New York Convention, there is no stated procedure for directly enforcing the Steering Committee decision and creating binding obligations for the parties without recourse to arbitration.

Article 3 of the 2018 Accord contains some notable alterations to the agreement’s dispute resolution mechanism, stating that:

“Any dispute between the parties to, and arising under, the terms of this Agreement shall be presented to and decided by the SC.

The Steering Committee shall adopt a revised Dispute Resolution Process (DRP) to specify the timelines and procedures involved when disputes are presented to the SC, with the aim to 3 establish a fair and efficient process. The decision making process of the SC shall be supported by a member of Accord secretariat who will perform an initial investigation for the parties and present facts and their recommendations.

The DRP will also incorporate the opportunity for parties to participate in a mediation process in order to make arbitration unnecessary where there is no resolution of the dispute by the SC. Upon request of either party, the decision of the SC may be appealed to a final and binding arbitration process. Any arbitration award shall be enforceable in a court of law of the domicile of the signatory against whom enforcement is sought and shall be subject to The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention), where applicable. The process for binding arbitration, including, but not limited to, the allocation of costs relating to any arbitration and the process for selection of the Arbitrator, shall be governed by the UNCITRAL Arbitration Rules (as in its last revision) unless otherwise agreed by the parties. The arbitration shall be seated in The Hague and administered by the Permanent Court of Arbitration”.

By specifying a seat in The Hague and administration by the Permanent Court of Arbitration, the 2018 Accord’s dispute resolution article addresses the previous Accord’s silence on arbitral institution and seat of arbitration. It notably also incorporates a mediation process into the dispute resolution mechanism, providing parties with an alternative to arbitration proceedings. However, a number of lacunas remain in the 2018 Accord’s dispute resolution mechanism, leaving questions as to the practical implementation of its binding arbitration process.

3.     IndustriALL Global Union and UNI Global Union’s arbitrations against two global fashion brands under the Accord on Fire and Building Safety in Bangladesh

In July and October 2016, IndustriALL Global Union and UNI Global Union, non-governmental labour organisations based in Switzerland, commenced arbitrations against two global fashion brands under the Accord and the UNCITRAL Arbitration Rules 2010. The claims include that the fashion brands failed to compel suppliers to remediate facilities within the Accord’s deadline and negotiate commercial terms to make it financially feasible for their suppliers to cover the costs of remediation. The Claimants sought a declaration that the fashion brands violated their Accord obligations alongside a contribution to remediation costs.

Subsequently, the Parties in both PCA Case No. 2016-36 and PCA Case No. 2016-37 agreed that while remaining formally distinct, the two cases would be heard by the same tribunal. The Parties agreed that the seat of the arbitrations would be The Hague, with the Secretary-General of the Permanent Court of Arbitration acting as appointing authority. The Tribunal, composed of Professor Hans Petter Graver, Mr Graham Dunning QC and presiding arbitrator Mr Donald Francis Donovan, was formally constituted on 3 February 2017.

The Tribunal issued its Procedural Order No. 1 on 19 April 2017 which dealt with, amongst other matters, the complex issues of transparency and confidentiality discussed in Part 2 of this blog series. Clause 15 of Procedural Order No. 1 notably cited the UNCITRAL Arbitration Rules 2010 for authority that:

• Any hearing would be held in camera unless the parties agreed otherwise (article 28(3)).
• Any award would be made public only with the consent of all parties or where and to the extent disclosure is required of a party by legal duty, to protect or pursue a legal right or in relation to legal proceedings before a court or other competent authority (article (35(2)).

Accordingly the Tribunal confirmed its direction that all details of the proceedings, including that they were pending, be kept confidential pending an agreement or ruling on confidentiality.

The Respondents raised challenges to the admissibility of the claims on the basis that the pre-conditions to arbitrate under Article 5 of the Accord had not been met, and even questioned the Article’s validity as a mechanism to arbitrate. They further argued that because the deadlocked Steering Committee did not produce a majority decision, there was no final decision which could be appealed to a final and binding arbitration process. The Respondents also argued that the term ‘appealed’ in Article 5 of the Accord expressed a clear and unambiguous intent to limit a tribunal’s role to that of an appellate body, providing simply an additional layer of scrutiny as opposed to a de novo appraisal.

Subsequently on 4 September 2017, the Tribunal issued Procedural Order No. 2 containing its Decision on Admissibility Objection and Directions on Confidentiality and Transparency. The Tribunal unanimously rejected the Respondents’ interpretation, finding that the pre-conditions to arbitrate had indeed been met. It found that the Steering Committee “went through a deliberative process and arrived at a ‘decision’ for each charge within the meaning of Article 5” of the Accord. The Tribunal pointed to the “pointless consequences” that would arise from following the Respondent’s argument that the claims were inadmissible due to the deadlocked Steering Committee, explaining that:

• “At this point, there is nothing further that the Claimants could do to pursue their petition except to refile it with the Steering Committee. But that body has already given it the consideration contemplated by Article 5. Hence, the only way to release the petition from Steering Committee limbo would be for one of the union or brand representatives – presumably here, one of the union representatives – to ‘cross the floor’ and vote to reject it, which would then produce the majority vote that the Respondents contend is the condition to invoking arbitration. The Accord signatories could not have intended to promote that kind of gamesmanship as the only way to access arbitration in the event of an evenly divided Steering Committee. Equally, they could not have intended to deny a claimant access to arbitration in the event of a tie but make it available if the claimant lost by a majority or unanimous vote”.

It also emphasised that the term ‘appealed’ on its own did not bring any limitation to a body’s scope of review. Rather, the Tribunal held that particularly given the “non-legal, industry-based character of the first level of decision-making” by the Steering Committee, “there is every reason to believe that the Accord signatories considered that the ‘arbitration’ to which that initial decision could be ‘appealed’ would involve the full fact-finding and law-deciding authority of standard arbitral processes”.

The Tribunal accordingly held the claims admissible and within its jurisdiction. The Permanent Court of Arbitration’s press release noted that the case would proceed to a merits phase, with hearings scheduled for the first half of 2018.

The Tribunal also issued directions on confidentiality and transparency. It noted the particularity of the case, as neither “a classic ‘public law’ arbitration” involving a State nor a “traditional commercial arbitration” between private parties. In its deliberations, the Tribunal accounted for the interest in the Accord from the public, numerous signatories and other stakeholders, but also the need to protect the business information and reputational interests of the fashion brands. To strike a balance between these competing interests, the Tribunal ordered that some basic information about the arbitration’s existence and progress be disclosed but that the identity of the Respondents be kept confidential. Pursuant to a protocol developed in consultation with the Parties, redacted copies of certain documents might be published, including awards, decisions and orders of the Tribunal.

In relation to one of these two Accord arbitrations, on 15 December 2017 IndustriALL Global Union announced that the Parties had reached a settlement agreement. The settlement will ensure that the fashion brand’s supplier factories are remediated and that substantial funds are available for that remediation work consistent with the Accord.

Conclusions

The Accord on Fire and Building Safety in Bangladesh represents a ground-breaking accountability structure and, despite its notable deficiencies and uncertainties, its arbitration process provides a binding enforcement mechanism unique in its resolution of human rights disputes. The arbitrations brought by IndustriALL Global Union and UNI Global Union under the Accord presented the first tests of this mechanism. The Tribunal’s unanimous decision in holding the claims admissible bolstered its credibility, whilst it also acknowledged the challenges arising when adjudicating on disputes of a hybrid nature involving public interests and private concerns. The Accord’s binding arbitration process, as well as the ongoing arbitration proceedings, will undoubtedly be of significant interest to the business and human rights community as a promising example of an alternate means to resolve business and human rights disputes. The working group and drafting team must both reflect and build upon the Accord’s arbitration process as they seek to create strong, binding rules for arbitrating business and human rights disputes.