Republished Third World Networks UN: Revised business and human rights draft treaty text expected end June





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TWN Info Service on Trade and UN Sustainable Development
17 June 2019
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UN: Revised business and human rights draft treaty text expected end June
Published in SUNS #8925 dated 14 June 2019
Geneva, 13 Jun (Kinda Mohamadieh) – A revised draft text of a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises is to be released by the end of June.
This was announced by Ambassador Emilio Rafael Izquierdo Mino of Ecuador to the United Nations in Geneva, in his capacity as Chair-Rapporteur of the treaty proposal process.
An informal consultation was held on 6 June in a room full of diplomats and civil society representatives, the first in a series of three planned for June.
The mandate for this work is rooted in the UN Human Rights Council Resolution 26/9 titled “Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights”.
This Resolution established an open-ended intergovernmental working group (OEIGW) with an open-ended mandate to elaborate such a legally binding instrument (hereafter referred to as the “Treaty”).
The OEIGW convenes annually for one week, and its next meeting is scheduled for 14-18 October 2019.
The consultation dealt with the proposed articles on scope of the Treaty and related definitions as well as jurisdiction (Articles 3, 4 and 5) as they appear under the “zero” draft treaty text released by the Chair- Rapporteur in 2018.
The second informal consultation will deal with issues pertaining to rights of victims and prevention, while the third will deal with issues pertaining to legal liability and mutual legal assistance and international cooperation.
On the subjective scope of the Treaty (Article 3.1), or whose conduct would be subject to the Treaty rules, the zero draft provides that the “Convention shall apply to human rights violations in the context of any business activities of a transnational character” that “take place or involve actions, persons or impact in two or more national jurisdictions” (Article 4.2 on definitions).
This approach focuses on the nature of the activities rather than the legal form or structure of the enterprise.
During the consultation, the Chair-Rapporteur noted that the legal nature of the entity is less relevant to victims in comparison to the nature of its activities. Yet, there have been suggestions to expand the scope of the Treaty to “all business enterprises”.
This point was reiterated by Brazil, Mexico and Peru during the consultation. Another opinion, expressed by Bolivia, points out that while all businesses must comply with human rights, the objective of the proposed Treaty is to address the ability of multinational corporations to evade liability and accountability through maneuvering jurisdictional limitations and gaps under international and domestic laws.
The Chair-Rapporteur told the meeting that serious attempts are undertaken to overcome the differences in views in this regard.
Adding to this discussion, the representative of the International Commission of Jurists noted that the decision on scope ought to be guided by the original intention and purpose behind this initiative, namely to deal with the phenomena of cross-border abuses by business enterprises.
He added that, despite the focus on the cross-border cases, any substantive obligations to be established under the Treaty, including on rights of victims, prevention, due diligence and legal liability should be applied across the board and not only to those affected by cross-border operations of corporations.
Other scope-related issues raised during the consultation pertain to whether state-owned enterprises ought to be explicitly addressed by the Treaty text, the need for greater precision on what is meant by “transnational activities”, the importance of clarifying the responsibilities of the home states of parent companies as well as strengthening how the proposed Treaty would address abuses and adverse impacts by corporations in conflict and post-conflict situations.
On the scope of human rights to be covered, the zero draft treaty text proposes a wide approach. Article 3.2 provides that the “Convention shall cover all human rights and those rights recognized under domestic law”.
The Chair-Rapporteur noted that, in revising the text, he will seek to bring more clarity to the reference to “all international human rights”.
For example, one of the clarifications that the representative of the Philippines sought was whether Article 3.2 would require future State Parties to the Treaty to ratify all human rights instruments and protocols.
On jurisdiction, the Chair-Rapporteur noted that the relevant Article 5 forms a cornerstone in the proposed Treaty and is essential for its effective operation, including in ensuring access of victims to a forum.
As crafted under the zero draft, this article deals specifically with adjudicative jurisdiction, thus seeking to clarify which domestic courts would be vested with the ability to admit and hear claims brought by victims covered under the Treaty.
The Chair-Rapporteur explained that a broad approach has been proposed under the zero draft, which vests jurisdiction with the courts of the States where “the acts or omissions occurred”, as well as where the legal person or association of natural or legal persons responsible for the violations have a statutory seat, central administration, substantial business interest or subsidiary, agency, instrumentality, branch, representative office or the like.
This approach was inspired by the 2012 European Regulation No. 1215/2012 of the European Parliament and the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, as well as General Comment 24 of the UN Committee on Economic, Social and Cultural Rights and General Comment 16 of the Committee on the Rights of the Child.
According to the Chair-Rapporteur, multiple issues are considered in the process of revising this part of the draft text, including clarifying the term “substantial business interest”, building in the text safeguards pertaining to the possible abuse of the “forum non conveniens” doctrine, and considering the insertion of a “forum necessitatis” doctrine in order to avoid situations where victims would be denied justice.
The “forum non conveniens” doctrine allows a court, whose jurisdiction is established under the applicable rules, the discretion to decline to hear a case if it finds that it is an inappropriate forum or that another forum would be more appropriate.
Following a 2005 ruling by the European Court of Justice, “forum non conveniens” has been considered as no longer available in cases involving European Union defendants, including in the United Kingdom.
“Forum necessitatis” is the doctrine upon which a court hears a case although ordinarily it would lack jurisdiction due to the fact that no other competent forum is available to the claimant, or the court that otherwise would have jurisdiction refuses to permit the action, will provide an unjust judgment, or is unable to adjudicate the claim.
It was pointed out in two interventions by civil society groups participating in the consultation that Article 5 as currently drafted focuses on adjudicatory jurisdiction in civil liability cases and requires further clarification regarding jurisdiction in criminal liability cases, which is covered under Article 10 pertaining to legal liability.
Another point raised is the potential risk of parallel proceedings and conflict of jurisdictions.
Overall, the zero draft of the treaty provides a viable basis for negotiations and a valuable addition to the historical record of discussions on corporate obligations and business and human rights at the United Nations.
A multilateral instrument that focuses on jurisdictional and procedural challenges that victims of corporate human rights abuses face would advance access to remedy and justice.
However, the proposed Treaty will not provide all the answers. National and multilateral processes ought to reinforce each other.
Indeed, a multilateral instrument feeds from the advancement in national practices, such as those pertaining to due diligence obligations of business enterprises, but also addresses issues and gaps that cannot be achieved through unilateral action, but requires international cooperation.
There have been incremental developments in the jurisprudence of multiple courts pertaining to the imposition of “duty of care” upon a parent company for the acts of its subsidiaries.
These developments could facilitate the discussion on aspects of the sought multilateral treaty. At the same time, these cases shed additional light on the added value that a multilateral instrument would provide.
For example, in April 2019, a decision on jurisdictional issues by the UK Supreme Court in a case pertaining to the mining operations of the UK’s Vedanta Resource PLC and its subsidiary in Zambia has provided clarifications regarding the application of the “duty of care” standard to a parent company regarding communities impacted by the subsidiary’s operations.
The Court confirmed that a “duty of care” can exist between a parent company and those affected by the operations of its subsidiaries.
The Court provided that there is no separate category of negligence in tort law when it comes to parent- subsidiary and impacted communities’ relationships.
The Court focused on whether the parent company “exercised a sufficiently high level of supervision and control of activities at the Mines, with sufficient knowledge of the propensity of those activities to cause toxic escapes into surrounding watercourses, as to incur duty of care to the claimants”.
For the purposes of the Treaty discussions, it is noticeable how the UK Court approached the relations within the corporate group, recognizing their changing and dynamic nature.
The Court provided that “there is no limit to the models of management and control which may be put in place within a multinational group of companies”.
The Court’s reasoning pointed out that “duty of care” arises from the level of control that the enterprise exerts on the specific activities under scrutiny, and not from the legal form or the extent of shareholding by the parent in the subsidiary.
The Court provided that “[d]irect or indirect ownership by one company of all or a majority of the shares of another company … may enable the parent to take control of the management of the operations of the business or of land owned by the subsidiary, but it does not impose any duty upon the parent to do so, whether owed to the subsidiary or, a fortiori, to anyone else. Everything depends on the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations (including land use) of the subsidiary…”.
With such an approach, the Court appears to be leaning towards emphasizing the economic reality of transnational corporations, beyond focusing only on legal separateness of entities within a corporate group.
This pragmatic approach recognizes that the relationship in a supply chain may in certain circumstances be as tight as that in parent-subsidiary relation.
Yet, this case is also a reminder of the importance of addressing the jurisdictional hurdles that victims might face in such cases.
For example, the Court’s reasoning resulted in finding that England is not the proper place in which to bring the claim, but that the English courts should take jurisdiction over the claim due to very specific reasons, particularly due to the risk of lack of access to substantial justice in Zambia given the impossibility of funding the claim and the absence of suitably experienced and resourced legal teams.
That led some experts to raise questions pertaining to potential resurgence of the doctrine of “forum non conveniens” in regard to foreign defendants within the UK courts.
These jurisdictional complexities that victims in a case of transnational character may face underline the importance of addressing these issues and seeking more clarity on these matters under the proposed Treaty.

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