The EU Parliament’s proposal for a Regulation on Forest and Ecosystem Risk Commodities - Tackling global deforestation though due diligence - By Enrico Partiti

Editor's note: Enrico Partiti is Assistant Professor of Transnational Regulation and Governance at Tilburg University and Associate Fellow at the Asser Institute. His expertise centres on European and international economic law, sustainability and supply chain regulation. In particular, he studies how private standard-setters and corporations regulate globally sustainability and human rights 


Upcoming Event: Fighting global deforestation through due diligence: towards an EU regulation on forest and ecosystem risk commodities? - 4 November 2020 - 16:00 (CET) - Register Here!


The recent vote in the Environment, Public Health and Food Safety (ENVI) Committee of the European Parliament on binding legislation to stop EU-driven global deforestation is a watershed moment in the global fight against deforestation, ecosystem conversion and associated human rights violations. The ENVI Committee report, that will soon be voted by the plenary, requests the Commission (as provided in Art. 225 TFEU) to table a legislative proposal for a measure disciplining the placing on the EU market of products associated to forest and ecosystem conversion and degradation, as well as violations of indigenous communities’ human rights. The Parliament’s initiative takes place in a policy context increasingly concerned with deforestation, in the framework of a Commission Communication on stepping up EU action to protect and restore the world’s forests which left a door open for legislative intervention. 

The proposed measure would aim to severe the economic link between demand of agricultural commodities, especially by large consumers markets, and negative environmental impacts - including on climate change. Beef, soy and palm oil alone are responsible for 80% of tropical deforestation, and consequent CO2 emissions. In 2014, EU demand was responsible for 41% of global imports of beef, 25% of palm oil and 15% of soy, as well as large shares of other commodities at high risk for forests and ecosystems such as such as maize (30%), cocoa (80%), coffee (60%), and rubber (25%). Protecting just forests is not sufficient, as it risks to displace conversion to other non-forests ecosystems such as the Brazilian cerrado. In light of their negative impact on both forests and other natural ecosystems, such commodities have been labeled as forest and ecosystem risks commodities (FERCs). More...





New Event! Fighting global deforestation through due diligence: towards an EU regulation on forest and ecosystem risk commodities? - 4 November 2020 - 16:00 (CET)

Between 2010 and 2015, 7.6 million hectares of forests were lost every year. Deforestation not only causes immense biodiversity loss, but it also has extremely negative repercussions on climate change. Hence, deforestation is one of the world’s most pressing global challenges. 

This online event will discuss the EU Parliament’s new initiative to tackle deforestation. It will examine the initiative’s substance, possible implications for fighting deforestation across the globe, and possible means for enforcement and their challenges, as well as its impact on EU obligations under international (trade) law.

Background

Research has shown that agricultural production is a major driver of deforestation. The majority of global tree cover loss between 2000 and 2015 was caused by agricultural production, and another quarter was due to forestry activities. Furthermore, a large proportion of forest clearance occurs in breach of local legal and administrative requirements. However, only half of the total tropical deforestation between 2000 and 2012 was caused by illegal conversion. Weak enforcement of forest laws in certain countries further compounds the problem of relying on legality as a meaningful threshold to stop conversion for agricultural purposes, especially where political leaders wilfully reduce law enforcement and conservation efforts to favour agribusiness. 

To tackle these closely intertwined concerns, the EU is in the process of enhancing its policies on global deforestation linked to EU imports. In addition to the existent Timber Regulation, assessing the legality of timber origin, and the Renewable Energy Directive, establishing sustainability requirements for biofuel crops, the EU is considering several regulatory and non-regulatory interventions. Among the most profound measures, the EU Parliament is about to approve a ground-breaking Resolution that will require the Commission to propose an EU Regulation ensuring that only agricultural commodities and derived products that are not linked to deforestation, ecosystem conversion and associated human rights violations are marketed in the EU. Building on the Timber Regulation and human rights due diligence responsibilities as prescribed in the United Nation Guiding Principles on Business and Human Rights, the proposal would require economic operators to implement the obligation via non-financial due diligence ensuring that products do not originate from converted forests and ecosystems, regardless of the legality of land-use conversion.

Speakers

  • Delara Burkhardt, European Parliament’s Rapporteur for a Motion for an EU Parliament Resolution with recommendations to the Commission on an EU legal framework to halt and reverse EU-driven global deforestation (her draft report is available here).

  • Andrea Carta, Senior legal strategist at Greenpeace, EU Unit

  • Enrico Partiti, Assistant professor in transnational regulation and governance, Tilburg University

  • Meriam Wortel, Netherlands Food and Consumer Product Safety Authority

The discussion will be moderated by Antoine Duval, Senior researcher at the Asser Institute and coordinator of the ‘Doing business right’ project. 

Click here to register for this online discussion.

Corporate (Ir)Responsibility Made in Germany - Part II: The Unfinished Saga of the Lieferkettengesetz - By Mercedes Hering

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.

In Part II of this blog series, I intend to outline the different proposals for a Lieferkettengesetz. First, the Initiative Lieferkettengesetz’s model law, secondly the proposal submitted by the Ministry for Labour and Social Affairs and the Ministry for Economic Cooperation and Development, and lastly, I will present the amendments pushed by the business sector and the Ministry for Economic Affairs and Energy.More...

New Event! Kiobel in The Hague - Holding Shell Accountable in the Dutch courts - 16 October 2020 - 4-5 Pm (CET)

On Friday, 16 October, from 16.00-17.00, we will organise an online discussion about the Kiobel v. Shell case, currently before Dutch courts in the Hague. The discussion will retrace the trajectory followed by the case in reaching The Hague, explain the arguments raised by both parties in the proceedings, and assess the potential relevance of the future ruling for the wider debate on corporate accountability/liability for human rights violations. 


Background

In 1995, nine local activists from the Ogoniland region of Nigeria (the Ogoni nine) were executed by the Nigerian authorities, then under the military dictatorship of General Sani Abacha. They were protesting against the widespread pollution stemming from the exploitation of local oil resources by a Nigerian subsidiary of Royal Dutch Shell when they were arrested and found guilty of murder in a sham trial. Their deaths led first to a series of complaints against Royal Dutch Shell in the United States on the basis of the alien tort statute (ATS). One of them, lodged by Esther Kiobel, the wife of one of those killed (Dr Barinem Kiobel), reached the US Supreme Court. Famously, the Court decided to curtail the application of the ATS in situations that do not sufficiently 'touch and concern' the territory of the United States.

This ruling put an end to Esther Kiobel's US lawsuit, but it did not stop her, together with three other widows (Victoria Bera, Blessing Eawo and Charity Levula), from seeking to hold the multinational company accountable for its alleged involvement in the deaths of their husbands. Instead, in 2017, they decided to continue their quest for justice on Royal Dutch Shell’s home turf, before Dutch courts in The Hague. 25 years after the death of the Ogoni nine, the court in The Hague just finished hearing the pleas of the parties and will render its much-awaited decision in the coming months.


Confirmed speakers

  • Tom de Boer (Human rights lawyer representing the claimants, Prakken d'Oliveira)  
  • Lucas Roorda (Utrecht University)
  • Tara van Ho (Essex University) 
  • Antoine Duval, Senior researcher at the T.M.C Asser Instituut, will moderate the discussion 


 Register here to join the discussion on Friday.

Corporate (Ir)responsibility made in Germany - Part I: The National (In)Action Plan 2016-2020 - By Mercedes Hering

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.


On the international stage, Germany presents itself as a champion for human rights and the environment. However, as this blog will show, when it comes to holding its own corporations accountable for human rights violations and environmental damage occurring within their global supply chains, it shows quite a different face.

In recent years, German companies were linked to various human rights scandals. The German public debate on corporate accountability kickstarted in earnest in September 2012, when a factory in Karachi, Pakistan, burned down killing almost 300 people. The factory had supplied KiK, Germany’s largest discount textile retailer with cheap garments. Then, over a year and a half ago, a dam broke in Brazil, killing 257 people. The dam had previously been certified to be safe by TÜV Süd Brazil, a subsidiary of TÜV Süd, a German company offering auditing and certification services. There are many more examples of incidents in which German companies were involved in human rights violations occurring within their supply chains, yet eight years after the factory in Pakistan burned down, and nine years after the unanimous endorsement of the UN Guiding Principles on Business and Human Rights by the UN Human Rights Council, there is still no binding German legislation imposing some type of liability onto companies that knowingly, or at least negligently, fail to uphold human and labor rights in their supply chain.

This is despite the fact that Germany, the third-largest importer worldwide, with its economic power and negotiation strength on the international stage, could have a dramatic impact on business practices if it were to embrace a stronger approach to business and human rights.  

In the coming two blogs I am to take a critical look at Germany’s recent policies related to corporate accountability and discuss the current developments (and roadblocks) linked to the potential adoption of a Lieferkettengesetz (Supply Chain Law). In this first post, I focus on the effects of the National Action Plan 2016-2020, building on recently released interim reports. In my second blog, I will then turn to the various proposals and political discussions for mandatory due diligence regulation (Lieferkettengesetz).More...


Tackling Worker Exploitation by ‘Gangmasters’ in the UK and Australia - Part 1: An Overview of Labour Hire Licensing Laws in the UK and Australia – By Katharine Booth

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 at the Asser Institute in The Hague. She previously worked as a lawyer and for a Supreme Court Justice in Australia.

 

This series of blog posts focuses on the regulation of so-called ‘gangmasters’ in the UK and Australia. A ‘gangmaster’ is an old English term for a person (an individual or business) who organises or supplies a worker to do work for another person.[1] Gangmasters have been described as ‘middlemen’ or ‘brokers’ between a worker and a business that needs temporary, and often seasonal, labour. In other countries, including Australia, gangmasters are commonly referred to as labour hire providers or labour market intermediaries.

In recent years, legislation has been implemented in the UK and three Australian States (Queensland, Victoria and South Australia) requiring gangmasters to be licensed. According to Judy Fudge and Kendra Strauss, central to these licensing schemes is the protection of vulnerable workers from forced and unfree labour and exploitation:

“[E]vidence suggests that ‘sweating’ at the bottom end of the labour market (increasingly populated by migrant workers, both documented and undocumented, in many countries) often involves labour intermediaries who exploit the ways in which processes of racialization and the construction of new categories of social difference, instigated by immigration regimes, render some workers extremely vulnerable—including to forced and unfree labour.”

As noted by Kendra Strauss, migrant workers are especially vulnerable to exploitation as they often migrate from less developed economies, have a precarious migrant status, and are employed in poorly-paid positions. They often lack English language skills and have little knowledge of their legal entitlements and pathways for accessing remedies which, according to an Oxfam GB report, makes it unlikely that they will report abuse or exploitation, for fear of losing their jobs. Moreover, as Sayomi Ariyawansa explains, the three-tiered or tripartite arrangement between the worker, gangmaster and host business means that there is no direct contractual relationship between the worker and host business and little oversight of the legal arrangements between the worker and gangmaster. This makes it easy for unscrupulous gangmasters to slip through legal cracks, but also for businesses to unknowingly enter into arrangements with gangmasters that do not comply with the law.

This series of blog posts explores the connection between the regulation of gangmasters and the enactment of modern slavery legislation, namely legislation calling on companies to report on modern slavery and other labour and human rights abuses in their corporate supply chains. It is divided into four main parts. Part 1 of this series explores two main issues. (1) The circumstances that led to the enactment of gangmaster licensing schemes in the UK and Australia, and the laws’ provisions relating to the licensing of workers. (2) The limitations of these laws, particularly the inability of licensing schemes to hold liable companies that enter into business arrangements with gangmasters, as well as companies higher in the supply chain. Part 2 explores reform of these laws in the UK and Australia in view of the relatively recent modern slavery legislation implemented in both countries.More...

Tackling Worker Exploitation by ‘Gangmasters’ in the UK and Australia - Part 2: From Labour Hire Licensing to Modern Slavery Laws – By Katharine Booth

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 at the Asser Institute in The Hague. She previously worked as a lawyer and for a Supreme Court Justice in Australia.


Both the UK and Australia have enacted legislation regulating the activities of ‘gangmasters’ or labour hire providers. Part 1 of this series of blog posts examines the circumstances that led to the enactment of labour hire licensing schemes in both the UK and Australia, and some key limitations of these laws.  Part 2 explores two issues closely connected to the business and human rights context. (1) Reform (in the UK) and potential reform (in Australia) of these laws in light of the increasing national and international recognition of modern slavery, human trafficking, labour exploitation and other human rights violations in corporate supply chains. Both the UK and Australia have enacted ‘modern slavery laws’ requiring certain companies to publish annual statements addressing human rights violations in their operations and supply chains. At the same time as the introduction of the UK Modern Slavery Act, the relevant gangmasters licensing authority (the Gangmasters Licensing Authority (GLA)) was empowered with broad ‘police-like’ powers to investigate offences under that Act. These powers have shifted the authority’s focus from the passive regulation of the gangmasters licensing scheme to the active enforcement of compliance with the Modern Slavery Act. (2) However, as currently enacted, modern slavery laws are not perfect. A key criticism of these laws is that they do not impose strong enforcement mechanisms (particularly financial penalties) on companies that fail to comply with their provisions. The imposition of penalties is central to ensuring that companies take note of the importance of eliminating slavery from their supply chains. More...


A ‘Significant’ and ‘Concrete’ Step Forward? UN Releases Database of Businesses Linked to Israeli Settlements in the OPT - By Katharine Booth

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. More...

New Event! Between National Law(s) and the Binding Treaty: Recent Developments in Business and Human Rights Regulation - 14 November

This event co-organised with FIDH and SOMO aims to provide a detailed overview of the latest developments in the field of BHR regulation. The first part of the afternoon will be dedicated to a comparative review of some national developments in BHR regulation. The speakers have been asked to focus their presentations (max 10 minutes) on outlining the recent (and sometimes future) changes in the various regulatory models introduced by specific European states. They will also discuss the (expected) effects of the different regulatory models based on comparative analyses and empirical data gathered so far.

The second part of the afternoon will then focus on discussing the latest draft of the proposed binding treaty on BHR. The speakers have been asked to prepare short presentations (max 10 minutes) on the strengths and weaknesses of the current draft (with an eye on the changes introduced with regard to the Zero draft). The presentations will be followed by open exchanges with the participants on the various points raised (including concrete proposals for improvement).


Where: Asser Institute in The Hague

When: 14 November from 13:00


Draft programme: 

13:00 – 13:15 Welcome

13:15 – 15:00 - BHR regulation: Recent Developments in Europe – Chair Maddalena Neglia (FIDH)

  • Nadia Bernaz (Wageningen University) – Recent developments in the UK
  • Anna Beckers (Maastricht University) – Recent developments in Germany
  • Antoine Duval (Asser Institute) – Recent developments in France
  • Lucas Roorda (Utrecht University/College voor de Rechten van de Mens) – Recent developments in the Netherlands
  • Irene Pietropaoli (British Institute of International and Comparative Law) – Recent developments in BHR regulation: A comparative perspective

15:00 – 15:15 Coffee Break 

15:15 – 17:00 – Revised Draft of the Binding BHR Treaty: Strengths and weaknesses – Chair Mariëtte van Huijstee (SOMO)

  • Nadia Bernaz (Wageningen University)
  • Anna Beckers (Maastricht University)
  • Antoine Duval (Asser Institute)
  • Irene Pietropaoli (British Institute of International and Comparative Law)
  • Lucas Roorda (Utrecht University/ College voor de Rechten van de Mens)

17:00 -  Closing Reception.


This event is organised with the support of:

undefined    undefined

Doing Business Right – Monthly Report – July & August 2019 - By Maisie Biggs

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 GuardianBrazilian mining company to pay out £86m for disaster that killed almost 300 people and San Francisco ChronicleSuit alleging US chocolate makers collaborated in slave labor proceeds for US developments.

 More...


Doing Business Right Blog | The Proposed Binding Business and Human Rights Treaty: Introducing the Draft - By Shamistha Selvaratnam

The Proposed Binding Business and Human Rights Treaty: Introducing the Draft - By Shamistha Selvaratnam

Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

By resolution, on 26 June 2014 the UN Human Rights Council adopted Ecuador’s proposal to establish an inter-governmental working group mandated ‘to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises’. The proposal was adopted by 20 to 14 votes, with 13 abstentions, and four years later, in July this year, the working group published the first draft of the treaty (from herein referred to as the ‘treaty’). Shortly after, the draft Optional Protocol to the draft treaty was released. The Optional Protocol focuses on access to remedy for victims of human rights abuses by businesses.

This first blog of a series of articles dedicated to the proposed BHR Treaty provides an overview of the main elements of the draft. It will be followed by a review of the reactions to the Draft, and a final piece outlining some recommendations for the upcoming negotiations.

Key Provisions of the Treaty

Preamble (Treaty, Article 1)

The preamble of the treaty makes it clear that it is the primary responsibility of the States to ‘promote, respect and fulfill human rights and fundamental freedoms’, including human rights abuses committed by businesses. Accordingly, the treaty seeks to indirectly impose obligations on businesses by calling on State Parties to adopt legislation that is consistent with the treaty requirements.

Purpose (Treaty, Article 2)

The purpose of the treaty is to ‘strengthen the respect, promotion, protection and fulfillment of human rights’ and to ‘ensure effective access to justice and remedy to victims of human rights violations’ in the context of business activities of transnational character, and to ‘advance international cooperation’ so that States fulfill their obligations under international human rights law.

Scope and jurisdiction (Treaty, Articles 3 to 5)

The treaty will apply to ‘human rights violations in the context of any business activities of a transnational character’. ‘Business activities of a transnational character’ is defined to mean ‘any for-profit economic activity … undertaken by a natural or legal person … that take place or involve actions, persons or impact in two or more natural jurisdictions’. Accordingly, unlike the UN Guiding Principles on Business and Human Rights, the treaty does not apply to and bind businesses that only have domestic activities.

Jurisdiction for acts or omissions arising under the treaty vests in the court of the State where the acts or omissions occurred or where the alleged perpetrator (whether a natural or legal person) is domiciled. The alleged person is considered to be domiciled at the place where it has its: ‘(a) statutory seat; (b) central administration; (c) substantial business interest; or (d) subsidiary, agency, instrumentality, branch, representative office or the like.’

Rights of victims (Treaty, Article 8)

‘Victims’ are defined to mean persons who individually or collectively alleged to have suffered harm, including physical or mental injury. The treaty recognises that victims have the right to ‘fair, effective and prompt access to justice and remedies in accordance with international law’, including restitution, compensation and environmental remediation. It also imposes a number of obligations on State Parties to the treaty, namely, State Parties must:

  • Guarantee the rights of victims to present claims to their court.
  • Investigate all human rights violations effectively, promptly, thoroughly and impartially and take action against alleged perpetrators.
  • Ensure their laws do not unduly limit the right of victims to appropriate access to information relevant to the pursuit of remedies.
  • Provide proper and effective legal assistance to victims throughout the legal process (for example, by informing victims of their procedural rights).
  • Assist victims in overcoming financial barriers to commencing proceedings.
  • Establish an International Fund for Victims to provide legal and financial aid to victims.
  • Provide effective mechanisms for the enforcement of remedies.
  • Protect victims, their representatives, families and witnesses from unlawful interference with their privacy, and from intimidation and retaliation.

The treaty also provides that in no case will victims be required to pay the legal expenses of the other party to a claim.

Human rights due diligence (Treaty, Article 9)

A key article of the treaty requires State Parties to ensure that their domestic legislation requires all businesses to which the treaty applies to undertake due diligence throughout their business activities. The due diligence must take into account ‘the potential impact of human rights resulting from the size, nature, context of and risk associated with the business activities’ (including the activities of its subsidiaries and controlled entities).

The due diligence undertaken by businesses must include:

a)     Preventing human rights violations within the context of its business activities.

b)     Monitoring the human rights impact of its business activities.

c)     Identifying and assessing any actual or potential human rights violations that may arise through its activities.

d)     Reporting publicly and periodically on non-financial matters (for example, environmental and human rights matters).

e)     Undertaking pre and post-environmental and human rights impact assessments covering its activities.

f)      Reflecting the requirements set out in a) to e) above in its contractual relationships.

g)     Carrying out ‘meaningful consultations with groups whose human rights are potentially affected by the business activities and other relevant stakeholders’.

h)     Establishing and maintaining financial security, if required.

Failure to comply with the above requirements will result in commensurate liability and compensation. However, the treaty provides that State Parties can exempt certain small and medium-sized businesses from selected due diligence obligations to avoid imposing undue administrative burdens on those businesses.

Legal liability (Treaty, Article 10)

The treaty requires State Parties to ensure that both natural and legal persons can be held criminally, civilly or administratively liable for human rights violations undertaken in the context of business activities through their domestic law.

The treaty also sets out the principles for civil and criminal liability. With respect to civil liability, businesses to which the treaty applies will be liable for harm caused by human rights violations in the context of their business activities in various circumstances, namely:

a.     to the extent it exercises control over the operations; or

b.     to the extent it exhibits a sufficiently close relation with its subsidiary or entity in its supply chain and where there is strong and direct connection between its conduct and the wrong suffered by the victim; or

c.     to the extent risk have been foreseen or should have been foreseen of human rights violations within its chain of economic activity. 

With respect to criminal liability, States are required to ‘provide measures under domestic law to establish criminal liability for all persons with business activities of a transnational character that intentionally, whether directly or through intermediaries, commit human rights violations that amount to a criminal offence’. Where criminal responsibility is not applicable to legal persons in the legal system of a State Party, that Party must ensure that legal persons are subject to ‘effective, proportionate and dissuasive non-criminal sanctions, including monetary sanctions or other administrative sanctions’.

Mutual legal assistance and international cooperation (Treaty, Articles 11 and 12)

States Parties must ‘cooperate in good faith to enable the implementation of commitments' under the treaty and the fulfilment of the treaty’s purposes. They must afford one another the widest measure of mutual legal assistance in initiating and carrying out investigations, prosecutions and judicial proceedings’. This includes taking evidence from persons, executing searches and seizures and facilitating the freezing and recovery of assets. However, a narrow exception to mutual legal assistance is also provided.

With respect to international cooperation, State Parties must undertake ‘appropriate and effective measures’ to allow for international cooperation among the States. This may include sharing experiences, good practices and challenges.

Enforcement and remedies (Treaty, Article 14; Optional Protocol, Articles 1, 3 to 8, 10 and 11)

The treaty does not contemplate any international enforcement or complaint mechanism. Instead, it establishes a monitoring and oversight mechanism – a Committee of experts. The Committee will perform a number of functions including making general comments on the treaty, considering and providing concluding observations and recommendations on reports submitted by State Parties and providing support to State Parties in order to allow for the implementation of the treaty.

In contrast, State Parties that ratify the Optional Protocol recognise ‘the competence of the Committee … to receive and consider communications from or on behalf of individuals or groups of individuals’. If the Committee receives a communication, it must bring it to the attention of the State Party concern and the involved person conducting business activities who can then submit written explanations or statements clarifying the matter and the remedy within six months. The Committee can then designate its members to carry out a confidential inquiry into the matter and report to the Committee urgently. The findings of the inquiry will then be provided to the State Party and the involved person conducting business activities, together with comments and suggestions.

Further, pursuant to the Optional Protocol, State Parties are required to establish a National Implementation Mechanism (NIM) ‘to promote compliance with, monitor and implement’ the treaty within two years. The functions of the NIM are to: (a) make the treaty content known to the general public, business and victims; (b) cooperation with other national institutions, foreign NIMs and civil society organisations ‘to raise awareness on the implementation’ of the treaty; and (c) make recommendations to a State Party’s competent authorities.

As such, NIMs will have the power to:

  • request necessary information from a State Party in relation to the implementation of the treaty, including financial and non-financial information. It also has the power to request information from other State Parties;
  • conduct reviews on the implementation of a State Party’s due diligence obligations when requested by ‘victims, natural or legal persons conducting business activities of a transnational character or all other persons with a legitimate interest’, or where the NIM deems it necessary;
  • where non-compliance is identified, provide recommendations to natural or legal persons conducting business activities in order for it ‘to bring its operation into compliance, [or] inform the competent authorities about such conduct or omission’;
  • receive, consider and investigate complaints of human rights violations alleged to have been committed by natural or legal persons conducting business activities brought by victims or a group of victims, their representatives or other interested parties’, and assist parties to reach an amicable settlement; and
  • monitor the compliance of parties that have reached an amicable settlement, and, in the event of any non-compliance, communicate the non-compliance to the Committee of experts, ‘without prejudice to the right to institute appropriate judicial or administrative procedures against the non-complying party.’

Implementation (Treaty, Article 15)

In order to implement the treaty, State Parties are required to, inter alia, ‘take all necessary legislative, administrative or other action’ to ensure the effective implementation of the treaty. The treaty does not elaborate on how State Parties are to do this in practice.

Next Steps

So where to from here? The working group’s next session is scheduled for 15 to 19 October 2018 in Geneva during which it will discuss the treaty and Optional Protocol. While the treaty and Optional Protocol are a step in the right direction to imposing human rights obligations on businesses there are still gaps that it needs to address, which will be explored in the next blog post.

Comments are closed