Advanced Introduction to Business and Human Rights 1789901278, 9781789901276

Table of contents :
Front Matter
Copyright
Contents
About the author
Preface
Abbreviations
1 Human rights and business: setting the stage
2 Should business have human rights responsibilities?
3 The UN business and human rights framework
4 The state duty to protect
5 The corporate responsibility to respect
6 Access to remedy
7 Beyond the beginning
Select bibliography
Index

Citation preview

Advanced Introduction to Business and Human Rights

Elgar Advanced Introductions are stimulating and thoughtful introductions to major fields in the social sciences, business and law, expertly written by the world’s leading scholars. Designed to be accessible yet rigorous, they offer concise and lucid surveys of the substantive and policy issues associated with discrete subject areas. The aims of the series are two-fold: to pinpoint essential principles of a particular field, and to offer insights that stimulate critical thinking. By distilling the vast and often technical corpus of information on the subject into a concise and meaningful form, the books serve as accessible introductions for undergraduate and graduate students coming to the subject for the first time. Importantly, they also develop well-informed, nuanced critiques of the field that will challenge and extend the understanding of advanced students, scholars and policy-makers. For a full list of titles in the series please see the back of the book. Recent titles in the series include: The Sociology of Peace Processes John D. Brewer Social Protection James Midgley Corporate Finance James A. Brickley and Clifford W. Smith Jr U.S. Federal Securities Law Thomas Lee Hazen Cybersecurity Law David P. Fidler The Sociology of Work Amy S. Wharton

Marketing Strategy George S. Day Scenario Planning Paul Schoemaker Financial Inclusion Robert Lensink, Calumn Hamilton and Charles Adjasi Children’s Rights Gamze Erdem Türkelli and Wouter Vandenhole Sustainable Careers Jeffrey H. Greenhaus and Gerard A. Callanan Business and Human Rights Peter T. Muchlinski

Advanced Introduction to

Business and Human Rights PETER T. MUCHLINSKI

Emeritus Professor of International Commercial Law, The School of Law, The School of Oriental and African Studies (SOAS), University of London, UK

Elgar Advanced Introductions

Cheltenham, UK • Northampton, MA, USA

© Peter T. Muchlinski 2022

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2022937612 This book is available electronically on Elgar Advanced Introductions: Law (www.advancedintros.com)

ISBN 978 1 78990 127 6 (cased) ISBN 978 1 78990 129 0 (paperback) ISBN 978 1 78990 128 3 (eBook)

EEP BoX

Contents

About the authorviii Prefaceix List of abbreviationsxi 1

2

Human rights and business: setting the stage 1.1 The historical development of human rights 1.2 Human rights and the protection of private commercial property 1.3 Business responsibilities for human rights and international economic law 1.4 Origins of contemporary moves towards business responsibilities for human rights Should business have human rights responsibilities? 2.1 Arguments against extending human rights responsibilities to business 2.1.1 Legal arguments 2.1.2 Business ethics arguments 2.1.3 Corporate governance arguments 2.1.4 Political arguments 2.2 Arguments in favour of extending human rights responsibilities to business 2.2.1 Legal arguments 2.2.2 Business ethics arguments 2.2.3 Corporate governance arguments 2.2.4 Political arguments

1 2 12 14 17 25 26 27 30 32 33 35 36 39 41 44

v

vi

ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

3

The UN business and human rights framework 3.1 The first model: the UN Global Compact 3.2 The second model: The UN Norms 3.3 The third model: The UNGPs 3.4 The impact of the UNGPs

47 48 53 60 67

4

The state duty to protect 4.1 The state’s international human rights obligations 4.2 The state duty to protect under the UNGPs 4.3 Territorial nature of the state duty to protect 4.4 Regulating business behaviour 4.4.1 National Action Plans 4.4.2 Corporate and securities laws 4.4.3 Mandatory human rights reporting laws 4.5 The state-business nexus 4.6 Conflict affected areas 4.7 Policy coherence and space for human rights

70 71 75 76 79 79 82 84 87 89 90

5

The corporate responsibility to respect 5.1 Patterns of business abuses 5.2 The legal nature of the responsibility to respect 5.3 HRDD 5.3.1 Risk and impact identification 5.3.2 Human rights risk assessment 5.3.3 Avoidance and/or mitigation of risks 5.3.4 Accounting for and remediation of human rights risks 5.4 Corporate HRDD in practice 5.5 Criticisms of the corporate responsibility to respect

94 95 98 100 102 107 108

Access to remedy 6.1 Legal remedies 6.1.1 Substantive legal obstacles to group and supply chain liability 6.1.2 Causes of action 6.1.3 Financial obstacles

119 120

6

110 112 115

123 126 129

CONTENTS

7

vii

6.1.4 Tactical, political and social obstacles 6.1.5 Recent case-law developments 6.2 Non-judicial state-based remedies 6.3 Corporate level operational grievance mechanisms

130 133 138 142

Beyond the beginning 7.1 Regulatory choices 7.2 National legal liability laws 7.3 The draft UN Binding Legal Instrument on Business and Human Rights 7.3.1 Legally binding obligations for business 7.3.2 Effective access to remedy 7.3.3 Institutional structure 7.3.4 Will the LBI be adopted? 7.4 Non-state initiatives on business and human rights 7.5 The political context for business and human rights

148 149 151 158 161 164 166 168 172 175

Select bibliography179 Index189

About the author

Peter Muchlinski is Emeritus Professor of International Commercial Law at the School of Law, the School of Oriental and African Studies, University of London. He is the author of Multinational Enterprises and the Law (Oxford University Press, 3rd ed, 2021). He specialises in the regulation of multinational enterprises, international investment law and business and human rights. He has worked as a legal consultant for UNCTAD and is a door tenant at Brick Court Chambers, London. He is a member of the Editorial Board of the Business and Human Rights Journal.

viii

Preface

This book is the outcome of a long process. I have been thinking about business and human rights for most of the 40-plus years of my academic legal career. However, it was not until 2001 that I published my first article expressly addressing the subject.1 Prior to that my concerns about responsible business conduct were couched in the language of corporate and commercial law. My main work, Multinational Enterprises and the Law,2 first appeared in 1995 with one chapter relating to labour rights. By the second edition in 2007 the world had changed sufficiently to include three chapters on responsible business conduct covering labour rights, human rights and the environment. The third edition of 2021 continued and deepened that process. This book is, in effect, an extension of that work but one that gives me the space to cover business and human rights in more detail as a self-standing topic. Thanks are due to Oxford University Press for permitting me to draw on material, first published in the recent third edition of Multinational Enterprises and the Law, which is fully referenced here for readers to follow up. The structure of the book owes a massive debt to one person, John Gerald Ruggie, the main author of the UN Guiding Principles on Business and Human Rights (UNGPs). John periodically sought my opinion during the drafting of the UNGPs and on his more recent business and human rights work. Sadly, John passed away on 16 September 2021. Yet he lives on through his views, which are prominent throughout the book. The book is also a testament to the UNGPs as the most significant recent develop-



1



2

Peter T. Muchlinski ‘Human Rights and Multinationals – Is There a Problem?’ 77 International Affairs 31 (2001). Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021). ix

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ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

ment in business and human rights. The UNGPs are not without their critics and I introduce the reader not only to what the UNGPs do and say but what they do not and how that might prompt further developments. The UNGPs represent a massive game changer offering a valuable place from which we can develop the field in the years to come. By way of thanks, I must mention Professor Janet Dine of Queen Mary, University of London, and Dr Yonit Manor Percival, who has taken over teaching my postgraduate course ‘Multinational Enterprises and the Law’ at SOAS, University of London, after my retirement from teaching, both of whom offered valuable comments on the original outline. Thanks too to Dr Claire Methven O’Brien for giving valuable feedback on Chapter 7 and Rae Lindsay for her insightful comments on Chapter 6. Special thanks are due to Andrea Shemberg and to my SOAS colleague, Dr Michelle Staggs Kelsall, both of whom kindly read through the entire manuscript and, as ever, gave me so many valuable insights. Of course responsibility for the text and any errors remains mine alone. No book is written in an intellectual vacuum. I have benefited greatly over many years from discussions and interactions with too many people interested in business and human rights to be able to name everyone. However, I would like to mention and thank, in particular, Ekaterina Aristova, Denis Arnold, Nadia Bernaz, David Bilchitz, Larry Cata Backer, Rachel Chambers, Barnali Choudhury, Andrew Clapham, the late Wesley Cragg, Chara De Lacey, Surya Deva, Beata Faracik, James Harrison, Marcus Krajewski, Sheldon Leader, Olga Martin-Ortega, Robert McCorquodale, Richard Meeran, John Morrison, Anita Ramasastry, Caroline Rees, Virginie Rouas, Andrea Saldarriaga, Michael Santoro, Lise Smit, Florian Wettstein and Jennifer Zerk. I would like to thank my editors, Stephen Harries and Emily Wright, and the production team at Edward Elgar for commissioning this work and for their excellent support throughout its production. Also thanks, as ever, to my partner, Malgosia Lisowska, for her patience and support during the writing of this book, which took out time we would otherwise have spent together cultivating our garden and allotment in true Voltairean style! SOAS, University of London December 2021

Abbreviations

ADR

Alternative dispute resolution

AI

Amnesty International

AJIL

American Journal of International Law

ASIL

Proceedings of the American Society of International Law

ATCA

Alien Tort Claims Act (US)

BAFA

Federal Office for Economic Affairs and Export Control (Germany)

BHRRC

Business and Human Rights Resource Centre

BHRJ

Business and Human Rights Journal

BIICL

British Institute of International and Comparative Law

BIT

Bilateral Investment Treaty

CLJ

Cambridge Law Journal

CoP

Communication on Progress

CORE

Canadian Ombudsperson for Responsible Enterprise

CSR

corporate social responsibility

ECHR

European Convention on Human Rights

ECtHR

European Court of Human Rights

EJIL

European Journal of International Law

ESG

environmental, social and governance

ESHR

environmental, social and human rights

EU

European Union

FCO

Foreign and Commonwealth Office (UK)

FTA

free trade agreement xi

xii

ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

GATT

General Agreement on Trade and Tariffs

GPRF

UN Guiding Principles Reporting Framework

GRI

Global Reporting Initiative

HRC

Human Rights Council of the UN

HRDD

human rights due diligence

ICC

International Chamber of Commerce

ICCPR

International Covenant on Civil and Political Rights

ICESCR

International Covenant on Economic, Social and Cultural Rights

ICJ

International Commission of Jurists

ICLQ

International and Comparative Law Quarterly

IFC

International Finance Corporation

IGO

intergovernmental organisation

IIA

international investment agreement

ILC

International Law Commission

ILM

International Legal Materials

ILO

International Labour Organization

IMF

International Monetary Fund

IOE

International Organisation of Employers

ISDS

investor-state dispute settlement

JIEL

Journal of International Economic Law

KPI

key performance indicators

LBI

Legally binding instrument

MLR

Modern Law Review

MNE

multinational enterprise

MSI

multi-stakeholder initiative

NAP

National Action Plan

NCP

OECD Guidelines National Contact Point

NFRD

Non-Financial Reporting Directive (EU)

NGO

non-governmental organisation

NIEO

New International Economic Order

ABBREVIATIONS

xiii

OECD

Organisation for Economic Cooperation and Development

OECD Guidelines

OECD Guidelines for Multinational Enterprises

OEIGWG

Open-ended Intergovernmental Working Group on transnational corporations and other business enterprises with respect to human rights

OGM

Operational-level grievance mechanism

OHCHR

Office of the UN High Commissioner for Human Rights

RSPO

Roundtable on Sustainable Palm Oil

SDGs

Sustainable Development Goals

SLAPPs

strategic lawsuits against public participation

SLO

social licence to operate

SME

Small- and medium-sized enterprises

SRSG

Special Representative of the UN Secretary-General on Human Rights and Transnational Corporations and other Business Enterprises

TNC

transnational corporation

UDHR

Universal Declaration of Human Rights

UK

United Kingdom

UN

United Nations

UN Norms

UN Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights

UNCTAD

United Nations Conference for Trade and Development

UNGPs

United Nations Guiding Principles on Business and Human Rights

UNWG

UN Working Group on the issue of human rights and transnational corporations and other business enterprises

US

United States

USMT

US Military Tribunal in Germany

WTO

World Trade Organization

1

Human rights and business: setting the stage

In 2011 the United Nations Guiding Principles on Business and Human Rights (UNGPs) were adopted. They introduced the three pillars upon which this book is based: the state duty to protect against business abuses of human rights; the business responsibility to respect human rights through the exercise of human rights due diligence (HRDD); and access to remedy for victims of alleged business human rights abuses.1 Following this model, new national laws, requiring businesses to carry out HRDD assessments, have been adopted by several states. The French Duty of Vigilance Law of 2017 goes further and includes a mandatory duty of care to discharge HRDD.2 Furthermore, the UN is currently negotiating the adoption of a global treaty requiring states to establish binding legal obligations on business to exercise HRDD and liability for failure to observe human rights.3 These developments exhibit a gradual move beyond the original question whether business should owe any human rights responsibilities – which, as will be shown in this chapter and the next, has now been answered in the affirmative – to more complex questions of how to give such responsibilities legal effect.



1



2 3

UN Human Rights Council Seventeenth Session 21 March 2011: ‘Guiding Principles on Business and Human Rights Implementing the United Nations “Protect, Respect and Remedy” Framework’ (UNGPs) at https://​ www​.ohchr​.org/​documents/​publications/​guiding​principles​businesshr​_en​ .pdf. See Chapter 4 Section 4.4.3. Open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights at https://​ www​.ohchr​.org/​en/​hrbodies/​hrc/​wgtranscorp/​pages/​igwgontnc​.aspx. See further Chapter 7 Section 7.3. 1

2

ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

This chapter examines the conceptual and historical context in which business responsibility for human rights has emerged. Section 1.1 describes the origins of the liberal conception of human rights and significant historical antecedents of business responsibility for human rights including the abolition of slavery, introduction of fundamental international labour rights and ideas of corporate responsibility for human rights before war crimes tribunals; Section 1.2 considers the relationship between human rights and the protection of private and commercial property which allows the development of corporate constitutional rights and ‘corporate human rights’; Section 1.3 discusses the interaction between human rights and international economic law given the significant effect that business responsibilities for human rights have upon its development; and, finally, Section 1.4 highlights the most significant developments since the 1980s which helped build contemporary business responsibilities for human rights. Chapter 2 discusses the arguments against, and then for, extending human rights responsibilities for business from the perspectives of legal, business ethics, corporate governance and political theories reflecting the changing perception that business can have human rights responsibilities. The remainder of the book focuses on the UNGPs. Chapter 3 reviews the development of the UN business and human rights framework, Chapter 4 covers the first pillar, the state duty to protect; Chapter 5 the second pillar, the corporate responsibility to respect; and Chapter 6, the third pillar, access to remedies. Chapter 7 focuses on the development of binding legal obligations for human rights violations both at national and international levels and on the development of informal multi-stakeholder initiatives for furthering responsible business conduct. It concludes with an assessment of the political context in which such developments may evolve.

1.1

The historical development of human rights

According to the dominant Western narrative, the first modern ideas of human rights, prompted by Enlightenment values, emerged in the eighteenth century, leading to opposition against absolute monarchic

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

3

government.4 This movement was conducted mostly by white men of property. Wealthy American colonists sought liberation from oppression by the British Crown, including through the imposition of taxes without political representation and the granting of monopoly rights over trade to the Americas for the British East India Company, undermining fledgling American traders.5 Similarly, the emergent French bourgeoisie, and landowners outside the nobility, sought to control the autocratic rule of the Bourbon dynasty and led their country towards the French Revolution.6 The instruments that these movements developed, the American Declaration of Independence and Bill of Rights and the French Declaration of the Rights of Man and Citizen, are commonly identified as the first sources of modern human rights.7 Both Declarations emphasise the protection of the person, political freedoms, rights to procedural fairness and the right to private property. The American Declaration puts it thus: We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the Pursuit of happiness.



4



5



6



7

See for example Lynn Hunt Inventing Human Rights: A History (New York, W.W. Norton & Company Inc, 2007) and Vincenzo Ferrone ‘The Rights of History: Enlightenment and Human Rights’ 39 Human Rights Quarterly 130 (2017); for a critique of the dominant Western narrative see: Joseph R. Slaughter ‘Hijacking Human Rights: Neoliberalism, the New Historiography and the End of the Third World’ 40 Human Rights Quarterly 735 (2018); on the problematic history of human rights see Philip Alston ‘Book Review: Does the Past Matter? On the Origins of Human Rights: Review of Jenny Martinez The Slave Trade and the Origins of International Human Rights Law’ 126 Harvard Law Review 2043 (2013). See Thom Hartmann Unequal Protection: How Corporations became ‘People’ – and How You Can Fight Back (San Francisco, Berrett-Koehler Publishers Inc, 2010) ch 4. See William Doyle The Oxford History of the French Revolution (3rd edn, Oxford, Oxford University Press, 2018) especially ch 17. On the American Declaration of Independence 1776 and the American Bill of Rights 1789 see ‘America’s Founding Documents’ at https://​www​ .archives​.gov/​founding​-docs; for the French Declaration of the Rights of Man and Citizen 1789 in English see https://​www​.conseil​-constitutionnel​.fr/​ sites/​default/​files/​as/​root/​bank​_mm/​anglais/​cst2​.pdf. See too Ilias Bantekas and Lutz Oette International Human Rights Law and Practice (3rd edn, Cambridge, Cambridge University Press, 2020) at 8–10.

4

ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

These ‘unalienable rights’ are elaborated in the Bill of Rights of 1789 with the Fifth Amendment stating: No person shall be … deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

The French Declaration, Article 2 asserts: The aim of every political association is the preservation of the natural and imprescriptible rights of Man. These rights are Liberty, Property, Safety and Resistance to Oppression.

Article 17 adds: Since the right to Property is inviolable and sacred, no one may be deprived thereof, unless public necessity, legally ascertained, obviously requires it, and just and prior indemnity has been paid.

These statements ensure that private property, and the gains associated with it, are not arbitrarily interfered with by the state. The right is not absolute, as the state can deprive the owner of their property, but this must be done with procedural fairness and on payment of ‘just compensation’. The right to property is significant not only as it can help merchants and landowners secure their economic interests but also because in both independent America and revolutionary France, a property-based franchise was adopted.8 Despite claims that human rights were universal, the original notion of ‘the rights of man’ pertained to white, male owners of property and so excluded propertyless men, women, indigenous peoples, people of colour, and slaves.9 The development of modern ‘universal’ human rights occurred at a time when Europeans and Euro-Americans practiced mass slavery and expanded their dominance over the indigenous peoples of the lands they colonised. Thus, it is not easy to fit the past into a continuous

8

9



See Micheline R. Ishay The History of Human Rights: From Ancient Times to the Globalization Era (Berkeley, University of California Press, 2008) at 91–9. See ibid at 107–16. See too Colin Samson The Colonialism of Human Rights (Cambridge, Polity Press, 2020).

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

5

narrative of progressive evolution of human rights.10 That said, slavery, as a lawful practice, was gradually abolished worldwide during the nineteenth century with the UK playing a major role. It is arguably the first historical instance of holding commercial actors to account for violations of fundamental rights, though the precise reasons for, and causes of, abolition remain historically contentious and may not be easily explained by reference to ideas of universal rights.11 Abolition first targeted commercial slave traders and, later, slave owners. In the UK it was led by various bodies which evolved into the Anti-Slavery Society, established in 1839, now Anti-Slavery International.12 The UK Act for the Abolition of the Slave Trade 1807 outlawed the slave trade across the British Empire, but slavery itself was abolished later in the Act for the Abolition of Slavery of 1833.13 Abolition was accompanied by significant sums of compensation from the British government to former slave owners and businesses dependent on slavery.14 None was forthcoming to former slaves, who remained excluded from civil society by reason of race and status. The repercussions are still felt to this day in the treatment of their descendants in former



10 11



12



13 14

See Alston above n 4 and Slaughter above n 4. See further Seymour Drescher Abolition: A History of Slavery and Antislavery (Cambridge, Cambridge University Press, 2009) and Seymour Drescher Econocide: British Slavery in the Era of Abolition (2nd edn, Durham, University of North Carolina Press, 2010); Robin Blackburn The American Crucible: Slavery Emancipation and Human Rights (paperback edn, London, Verso, 2013). See Anti-Slavery International ‘Over 180 Years Fighting Slavery’ at https://​ www​.antislavery​.org/​about​-us/​history/​; Nadia Bernaz Business and Human Rights: History, Law and Policy – Bridging the Accountability Gap (Abingdon, Routledge, 2017) ch 2; and Marcel van der Linden ‘Introduction’ in Marcel van der Linden (ed.) Humanitarian Intervention and Changing Labor Relations: The Long-Term Consequences of the Abolition of the Slave Trade  (Leiden, Brill Publishers, 2010) tracing the course of abolition in a global context. These paragraphs are based on Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 511–12. Van der Linden above n 12 at 22–7. See Nicholas Draper The Price of Emancipation: Slave Ownership, Compensation and British Society at the End of Slavery (Cambridge, Cambridge University Press, 2010).

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ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

slave-owning states and former imperial home countries.15 Nor is it clear that appeals to ‘human rights’ lay at the heart of the movement, though moral concerns about the welfare of slaves were undoubtedly a key motivation.16 Abolition not only gave rise to national laws but also to the adoption of international anti-slavery treaties, concluded principally by Britain and its trading partners.17 Anti-slavery treaties outlawed trade in slaves and permitted the seizure and confiscation of slave ships subject to review by Mixed Commissions established under the treaties. Jenny Martinez maintains that these constituted the first ever international legal mechanism dealing with human rights.18 By the middle of the nineteenth century, abolition was generally accepted, and the first multilateral treaty was signed in 1841 by Austria, Great Britain, Prussia and Russia.19 Slavery in the Western Hemisphere did not end until the outlawing of slavery in the US in 1865 and in Brazil in 1888.20 Sadly, slavery remains an active issue worldwide and has prompted modern slavery laws.21 During the nineteenth century universal male suffrage was achieved in some Western states as was the abolition of child labour.22 However this was also the time when ideas and values inimical to universal human rights emerged.23 These included the rise of nationalism, which denied the universality of humanity, and, allied with the rise of biological theories of racial difference, led to new forms of racism and to modern

17 15 16



18



19



20 21



22 23

See Samson above n 9 especially ch 3. See Alston above n 4 at 2048–52. See van der Linden above n 12, Table 1 at 7 for the main treaties and international conventions between 1817 and 1882. See Bernaz above n 12 at 105–6 and see further Jenny S. Martinez The Slave Trade and the Origins of International Human Rights Law (paperback edn, Oxford, Oxford University Press, 2014). For a critical appraisal of Martinez’s thesis see Alston above n 4. For Martinez’s reply to Alston see Jenny S. Martinez ‘Human Rights and History’ 126 Harvard Law Review 221 (2012). Treaty for the Suppression of the African Slave Trade, 20 December 1841 cited by Bernaz above n 12 at 38. Van der Linden above n 12 ‘Introduction’ at 23–4. See Anti-Slavery International ‘What Is Modern Slavery’ at https://​www​ .antislavery​.org/​slavery​-today/​and see Muchlinski above n 12 at 539–43. Ishay above n 8 at 155. See further Hunt above n 4 ch 5 and Ishay above n 8 at 155–72.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

7

anti-Semitism. Explanations of biological difference also helped fuel sexism and the continued marginalisation of women’s rights. Of further significance was the development of Marxist critiques of ‘bourgeois’ rights, in particular the right to private property, which inspired revolutions in Russia and Mexico in the early twentieth century. Both countries introduced mass nationalisations of land and industry. These were seen by the Western powers as major threats to the international free market order based on legally protected rights to private property that they had constructed. In response, new international legal norms were asserted requiring prompt, adequate and effective compensation for the expropriation of property belonging to aliens.24 The twentieth century both retarded and subsequently furthered the development of modern human rights.25 The end of World War I hastened the destruction of the great European monarchic empires of Germany, Austria-Hungary and Russia, as well as the Ottoman Empire, leading to new independent republics espousing the right to self-determination. While creating new centres of popular self-government, this also created a cauldron in which virulent nationalism could thrive amid fears of renewed war and the threat of Soviet Bolshevism. A further outcome of the Peace Conference, one of direct relevance to the development of business human rights responsibilities, was the establishment of the International Labour Organisation (ILO) under the Treaty of Versailles. Labour rights represent the oldest category of social rights under national and international law and are significant in the rise of international corporate social responsibility (CSR).26 The signatory nations created the ILO recognising that: conditions of labour exist involving such injustice, hardship and privation to large numbers of people as to produce unrest so great that the peace and



24



25 26

See further Kate Miles The Origins of International Investment Law (Cambridge, Cambridge University Press, 2013) chs 1 and 2 especially at 74–6. See generally Ishay above n 8 ch 4. See Bernaz above n 12 at 44–5; Arturo Bronstein International and Comparative Labour Law: Current Challenges (Basingstoke, Palgrave MacMillan/ILO, 2008) at 1–3; and see further Muchlinski above n 12 at 103–6 on which this account draws.

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ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

harmony of the world are imperilled, and an improvement of those conditions is urgently required …27

The Preamble to the ILO Convention adds: ‘the failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve the conditions in their own countries …’.28 Although the language is that of an international treaty aimed at states, the focus on protecting workers’ rights in the interests of humane labour conditions offers an unmistakable message that corporate abuses of workers should not be tolerated. However, these developments must be seen in the context of continuing worker struggles for freedom of association and decent working conditions and the significant opposition that these encountered throughout the nineteenth and twentieth centuries which continues to this day.29 The development of modern human rights was fuelled by the horror of Nazi Germany’s slaughter of millions of white fellow Europeans during World War II, though, as Samson notes, not by the centuries of exploitation and violence meted out to those that Europe had colonised.30 Nazi Germany deliberately set out to exterminate the Jews of Europe through the Holocaust, in the name of European racial purity. Nazi atrocities extended to the extermination of other ‘sub-humans’ including Gypsies, Slavic peoples, and the mentally and physically handicapped, the persecution of gay men and the use of slave labour. Mass expropriations of

ILO Rules of the Game: A Brief Introduction to International Labour Standards (revised edn, Geneva, ILO, 2019) 12 at https://​www​.ilo​.org/​global/​ standards/​information​-resources​-and​-publications/​publications/​WCMS​ _672549/​lang​-​-en/​index​.htm citing the Preamble to the ILO Constitution 1919 available at http://​www​.ilo​.org/​dyn/​normlex/​en/​f​?p​=​1000:​62:​0:​:​No:​62:​ P62​_LISt​_eNtrIe​_ID:​2453907:​No. 28 ibid. 29 See further Ronaldo Munck Rethinking Global Labour (Newcastle, Agenda Publishing, 2018). 30 See Samson above n 9 at 36. See too Samuel Moyn The Last Utopia: Human Rights in History (reprint edn, Cambridge, Harvard University Press, 2012), who argues that only in the 1970s did the modern conception of human rights have real impact through its use at that time by popular movements across the world. 27

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

9

property in the occupied countries, and their reassignment to German nationals and corporations, also occurred.31 These events prompted a renewed international emphasis on human rights. A key result was the inclusion of a commitment to human rights in the UN Charter and the adoption of the UN Universal Declaration of Human Rights 1948 (UDHR). The UDHR lists the key civil, political and economic and social rights, and stresses in Article 2 that: Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.32

The Preamble to the UDHR requires that: every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance, both among the peoples of Member States themselves and among the peoples of territories under their jurisdiction.

The reference to ‘every organ of society’ has been interpreted as including business organisations.33 However, the UNGPs do not use this phrase and take a more functional approach seeing business actors as primarily economic organisations that can abuse human rights but which, as a result, require a different approach to their human rights accountability than states.



31



32



33

See further Mark Mazower Dark Continent: Europe’s Twentieth Century (London, Penguin, 1998) ch 5. Universal Declaration of Human Rights, 10 December 1948 at https://​www​ .un​.org/​en/​universal​-declaration​-human​-rights/​. See Bernaz above n 12 at 82–3; Rebecca Bratspies ‘Organs of Society: A Plea for Human Rights Accountability for Transnational Enterprises and other Business Entities’ 13(9) Michigan State Journal of International Law 9 (2005); Louis Henkin ‘The Universal Declaration at 50 and the Challenge of Global Markets’ 25(1) Brooklyn Journal of International Law 17 (1999) at 24–5.

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ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

A further consequence of World War II was the institution of war crimes tribunals. Some of the cases heard involved the question of responsibility for the exploitation of slave labour by German and Japanese corporations. Although no corporations were indicted, senior executives of these firms were brought before the US Military Tribunal in Germany (USMT) and the British War Crimes Court in Hong Kong.34 These tribunals established that active and willing participation in the use of forced labour could constitute a violation of international humanitarian law. Exceptionally, the defendant could plead the defence of necessity where they would certainly be killed if they refused to use forced labour though the risk of economic ruin was excluded.35 In addition, although corporations were not indictable, the interaction between the corporation and its executives was seen as a system through which mass violations of human rights were enabled. For example, in the case against 23 employees of I.G. Farben the USMT held: While the Farben organization, as a corporation, is not charged under the indictment with committing a crime and is not the subject of prosecution in this case, it is the theory of the prosecution that the defendants individually and collectively used the Farben organization as an instrument and through which they committed the crimes enumerated in the indictment.36

In addition, the USMT found that I.G. Farben and Krupp, through their executives, had violated the prohibition against seizure of private property in occupied lands under the Hague Rules when these corporations acquired confiscated factories in a number of Nazi-occupied countries.37 The UDHR was a starting point for what has become known as the ‘International Bill of Human Rights’. This comprises the UDHR and the two UN human rights covenants: the International Covenant on

34



35



36



37

See further Doreen Lustig Veiled Power: International Law and the Private Corporation, 1886–1981 (Oxford, Oxford University Press, 2020) chs 4–5, who criticises the legal and political reasoning that led to the exclusion of indictments against corporations. See further Antia Ramasastry ‘Corporate Complicity: From Nuremberg to Rangoon – An Examination of Forced Labor Cases and Their Impact on the Liability of Multinational Corporations’ 20(1) Berkeley Journal of International Law 91 (2002). See US v Krauch et al., The I.G. Farben Case, VIII Trials of War Criminals before the Nuremberg Military Tribunals, iii–iv at 1108 (1952). See Ramasastry above n 35 at 107–11.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

11

Economic, Social and Cultural Rights (ICESCR) and the International Covenant on Civil and Political Rights (ICCPR), both of which entered into force in 1976.38 The two UN Covenants reflect post-war ideological divisions between the capitalist, free market-oriented, West centred on the US and Western Europe and the communist, command economy-oriented, Eastern Bloc centred on the Soviet Union and its Central and East European satellite states alongside China as an independent communist power. The Soviet opposition to private property rights ensured that the right to property was not included in the ICCPR while the ICESCR elaborated on the few social rights listed in the UDHR.39 The ideological battle between the West and the East relegated other states to client status and deeply affected their human rights situation.40 Proxy wars in the Middle East and South East Asia, particularly the decades-long struggle for independence in Vietnam, created fertile ground for atrocities. Equally the need for investment made many of the poorer, newly independent, post-colonial states of Asia and Africa beholden to corporate interests from the West and to state-sponsored investment from the East. Their elites could afford to ignore the human rights of their populations in exchange for economic and political support, provided they supported one side or the other in the ‘Cold War’. After the end of the ‘Cold War’ in the late 1980s, the apparent triumph of the West was echoed in the extension of free market-oriented investment policies in increasing numbers of states. This did not necessarily improve local human rights conditions or bring about an end to economic exploitation. Private foreign investors enjoyed the economic opportunities that these countries offered. Some found themselves sucked into local political realities and either deliberately collaborated with regimes that abused human rights or turned a blind eye to those abuses. As will be shown in Section 1.4 below it was out of such situations that the first highly publicised corporate human rights abuse cases emerged in apartheid-era South Africa and, later, in the Niger Delta in the 1990s,



38



39 40

See UN Office of the High Commissioner for Human Rights ‘International Human Rights Law’ at https://​www​.ohchr​.org/​EN/​P​rofessiona​lInterest/​ Pages/​InternationalLaw​.aspx. See Ishay above n 8 at 224. See Ishay above n 8 at 191–9 and 225–9.

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ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

marking the beginning of the contemporary movement towards human rights obligations for businesses. Equally, the desire to protect their investments in post-colonial developing states led foreign investors to demand greater legal protections against arbitrary local government actions. This resulted in the development of international investment agreements (IIAs) whose value as sources of legal rights became highly apparent in the 1990s when large numbers of claims began to be made by investors under their investor-state dispute settlement (ISDS) provisions.41 The interaction between international investor protection norms and the rise of claims that businesses have human rights responsibilities is where the tension between the protection of corporate private property rights and protection against corporate abuses emerges. This tension has its roots in liberal legal reasoning and its prioritisation of private property rights to the status of fundamental corporate rights.

1.2

Human rights and the protection of private commercial property

The liberal conception of rights attributes fundamental rights to the corporate entity and its shareholders. In some Western legal systems corporate actors enjoy certain constitutional rights to facilitate their effective operation. Following the logic of fundamental rights, the US Supreme Court has accepted that, while a corporation is not a ‘citizen’ within the meaning of the US Constitution, corporations can hold certain civil and political rights as there is no reason to distinguish between different classes of legal person for the purposes of protecting rights that belong to ‘persons’.42 The European Court of Human Rights (ECtHR) has also extended the protection of certain rights under the European Convention on Human



41



42

On which see further M. Sornarajah The International Law on Foreign Investment (4th edn, Cambridge, Cambridge University Press, 2017). See Philip I. Blumberg The Multinational Challenge to Corporation Law (Oxford, Oxford University Press, 1993) ch 2. For a critical appraisal see Hartmann above n 5 especially chs 1 and 6.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

13

Rights (ECHR) to corporations and shareholders whose human rights have been infringed through actions taken against the corporation in which they hold shares. This bypasses the legal separation between a corporation and its shareholders, even though the actions leading to this situation are effected upon the company, making violations of the latter’s human rights a reason to ‘lift the corporate veil’ between the company and its shareholders.43 Contrary to the jurisprudence of the ECHR, the Inter-American Court of Human Rights held, in 2016, that corporations do not enjoy human rights protection except when necessary for the realisation of the human rights of the natural persons who are its members.44 Thus even though the Inter-American Court of Human Rights restricts the enjoyment of human rights to natural persons it too allows for a lifting of the ‘corporate veil’ to protect the human rights of the shareholders in the company. In addition, the liberal conception of human rights prioritises civil and political rights over economic, social and cultural rights. The former are said to be real rights, or ‘positive rights’ that can be upheld by legal sanction, while the latter are merely ‘rights to be given things, things such as a decent income, schools and social services’ which cannot be guaranteed in law but by elaborate social and economic programmes.45 By contrast, a socialist conception of rights sees the true source of economic welfare in the value added by the exercise of work and not in the financial profit generated by the sale of the resulting product, whose ownership rests with the producer. Accordingly, in the socialist conception, the right of the worker to employment becomes a fundamental right and this subordinates the right of the producer to their profit. It also underlies the logic of abolishing all private property and vesting productive assets in the state as the political representative of the people. Thus, a socialist approach to human rights emphasises the need for economic and social rights and places these above traditional civil and political rights. This

43



44



45

See further Marius Emberland The Human Rights of Companies: Exploring the Structure of ECHR Protection (Oxford, Oxford University Press, 2006). Opinión Consultiva OC-22/16 de 26 de Febrero de 2016 Solicitada por la República de Panamá at http://​www​.corteidh​.or​.cr/​docs/​opiniones/​seriea​ _22​_esp​.pdf. See Maurice Cranston What are Human Rights (London, The Bodley Head, 1973) at 69.

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resulted in a lack of effective protection for those rights in the Soviet Bloc and, as history shows, offered a ready avenue for undermining the legitimacy of the Soviet system both from outside and from within.46

1.3

Business responsibilities for human rights and international economic law

The evolution of business responsibilities for human rights should be examined in the wider context of its relationship with international economic law.47 This is important as any extension of human rights obligations to businesses operating transnationally will affect the nature and scope of international economic law norms as well. International economic law controls the sovereign right of states to impose restrictions on trade and investment at their border, and within their economy, so as to facilitate the global liberalisation of trade and investment. It is found in numerous international treaties, including IIAs and, most notably, in the agreements founding the legal order of the World Trade Organization (WTO). The liberal conception of the international economic order stems from similar intellectual origins to the liberal conception of human rights. Both aim to restrict the power of the state to control the application of private commercial property for personal and commercial gain. Human rights do this, as seen above, by protecting those rights which ensure personal freedom and security, including the right to peaceful enjoyment of possessions, alongside voice and participation in political life. International economic law does this by constraining a state’s economic regulatory discretion and channelling it into certain procedural pathways that ensure the observance of substantive economic rights. In particular, states must adhere to certain standards of economic governance that ensure: non-discrimination between national and foreign traders and investors

46 47

See Ishay above n 8 at 225–9 and 248–53. See Ilias Bantekas and Michael Ashley Stein (eds) The Cambridge Companion to Business and Human Rights (Cambridge, Cambridge University Press, 2021) especially chs 1–5; Janet Dine Companies, International Trade and Human Rights (Cambridge, Cambridge University Press, 2005); Andrew Lang World Trade Law after Neoliberalism: Re-Imagining the Global Economic Order (Oxford, Oxford University Press, 2011) especially ch 2.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

15

(national treatment), or between different classes of foreign traders and investors (most-favoured-nation treatment); the fair and equitable treatment of foreign investors; the protection of their property, including intellectual property; free movement of capital; market access rights for goods, which include protection against both tariffs at the border and non-tariff barriers; and the right of entry and establishment for investors and their investments. This model emerged from the reconstruction of the post-World War II economy. It involved the partial abandonment of free trade through a managed multilateral international economic system where market forces would be subjected to state intervention aimed at achieving social goals such as full employment, resulting in tolerance for national policies favouring such objectives. This was a form of ‘embedded liberalism’.48 It relied heavily on US leadership, which encouraged continued trade liberalisation negotiations under the General Agreement on Tariffs and Trade (GATT) and coordination of financial policies through the World Bank and International Monetary Fund (IMF) to protect national balance-of-payments and stability. During the 1970s this model was challenged by the emerging post-colonial states of Asia and Africa, who had gained political self-determination but still lacked economic self-determination. These states of the Global South coalesced into the ‘Group of 77’ within the UN. They demanded a New International Economic Order (NIEO) to ensure economic sovereignty and political independence.49 Key was the right to nation-



48



49

See John G. Ruggie ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Post-war Economic Order’ 36(2) International Organization 379 (1982). The principal UN General Assembly Resolutions on the New International Economic Order are: Res.3201 (S-VI) of 9 May 1974 The Declaration on the Establishment of a New International Economic Order; Res.3202 (S-VI) of 16 May 1974 The Programme of Action on the Establishment of a New International Economic Order both reproduced in 13 ILM 715-766 (1974) and https://​digitallibrary​.un​.org/​record/​218450; https://​digitallibrary​.un​ .org/​record/​218451​?ln​=​en. These were followed by Res.3281 (XXIX) of 15 January 1975 The Charter of Economic Rights and Duties of States reproduced in 14 ILM 251-265 (1975) and https://​digitallibrary​.un​.org/​record/​ 190150​?ln​=​en.

16

ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

alise foreign owned property.50 This echoed the earlier UN General Assembly Resolution 3171 of 1973 on Permanent Sovereignty over Natural Resources, which affirmed each state’s inalienable right to exercise sovereignty over their natural resources and the right to nationalise as an expression of sovereignty to safeguard their natural resources.51 In addition, the role of multinational enterprises (MNEs), or transnational corporations (TNCs) in UN language, in the development of these states was debated. The UN established a Centre and a Commission on Transnational Corporations through which negotiations began over a Code of Conduct for TNCs. This included a provision on human rights. By Article 13 of the Draft Code of Conduct: Transnational corporations should/shall respect human rights and fundamental freedoms in the countries in which they operate. In their social and industrial relations, transnational corporations should/shall not discriminate on the basis of race, colour, sex, religion, language, social, national and ethnic origin or political or other opinion. Transnational corporations should/shall conform to government policies designed to extend equality of opportunity and treatment.52

The Draft Code of Conduct was never adopted. However, Article 13 was embedded in an instrument that covered both the obligations of TNCs and their rights, and the rights of states to regulate TNCs. The Draft Code of Conduct thus intertwines human rights responsibilities with wider questions covered by international economic law and public international law, foreseeing contemporary developments discussed in later chapters.



50



51



52

See Article 2 of the Charter of Economic Rights and Duties of States above n 49. UN General Assembly Resolution 3171 (XXVIII) GAOR 28th Sess. Supp.30 p.52 (1973), 68 AJIL 381 (1974). See Draft UN Code of Conduct on Transnational Corporations (1983) at https://​investmentpolicy​.unctad​.org/​international​-investment​-agreements/​ treaty​-files/​2891/​download.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

1.4

17

Origins of contemporary moves towards business responsibilities for human rights

The origins of contemporary moves towards business responsibilities for human rights can be explained as a result of shifts in economic policy that have enhanced corporate power, countervailing instances of activism leading to greater public awareness of the potential that business has to violate human rights and by the acceptance, through human rights non-governmental organisations (NGOs), that this issue should rank alongside traditional concerns involving human rights violations by states. In the 1980s, liberal market policies revived, both at the domestic and international levels, leading to a major shift in thinking, especially in the US and UK, towards what has come to be called ‘neoliberalism’ an ideology that has roots which significantly predate this period.53 ‘Neoliberalism’ promotes an increasingly integrated global economy, where barriers to trade and investment fall, and where the state is reinvented as the ‘market-state’ a source of facilitative rules creating an economic space in which integrated global production chains emerge.54 It assumes that the market allocates resources most efficiently, requiring a facilitative regulatory order leading to an ‘open’ international economy overseen by global rules, promulgated by intergovernmental organisations (IGOs), which constrain state rights to regulate in ways that undermine global market freedom.55 MNEs play a key role by integrating different national economies, with different comparative advantages in skills, labour, raw materials and

53



54



55

See further Lang above n 47; Quinn Slobodian Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge, Harvard University Press, 2018); David Harvey A Brief History of Neoliberalism (paperback edn, Oxford, Oxford University Press, 2007); Stephen Metcalfe ‘Neoliberalism: The Idea That Swallowed the World’ The Guardian, 17 August 2017 at https://​www​ .theguardian​.com/​news/​2017/​aug/​18/​neoliberalism​-the​-idea​-that​-changed​ -the​-world. This paragraph is adapted from Muchlinski above n 12 at 91–2. ‘Market-state’ denotes a state that outsources public functions to private providers, uses public–private partnerships to deliver public services and infrastructure, privatises public enterprises, and liberalises and deregulates markets and firms. See further Slobodian above n 53.

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ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

know‑how, through the international division of labour within the enterprise and through the global production and supply chains that MNEs establish. Crucial to this is a world economy in which MNEs are free to set up affiliates whenever and wherever they wish, to engage in uninhibited intra‑firm trade, and trade with third parties. The establishment of the WTO in 1995 is a direct result of these trends. The linkage between international trade regulation and liberal conceptions of human rights has also been re-emphasised by the debate over whether there should be a ‘human right to free trade’ to protect business interests in internationally liberalised markets.56 The rise of the liberal ‘market-state’ and the shift towards economic globalisation since the 1980s has enhanced corporate power.57 As the state cedes functions hitherto reserved for the public sphere to private undertakings, such as the provision of public services and utilities, the power of private firms to shape the regulatory environment increases. Participating firms will negotiate the contractual forms and institutional structures of the resulting public-private partnerships and privatised firms.58 Corporate power is further enhanced by the possession of technical knowledge and innovative capacity, empowering firms to address specific economic and technological challenges. MNEs, in particular, have a significant degree of political power. According to Stephen Wilks, the political power of a corporation is measured according to the possession of sufficient resources, motivation and opportunity to pursue political goals and capacity to participate in the political process. These factors will favour firms with large

56



57



58

See, in favour, E.-U. Petersmann ‘Human Rights and International Economic Law in the 21st Century: The Need to Clarify their Inter-relationships’ 4 JIEL 3 (2001) and against, P. Alston ‘Resisting the Merger and Acquisition of Human Rights by Trade Law: A Reply to Petersmann’ 13 EJIL 815 (2002) eliciting a rejoinder from Petersmann at 13 EJIL 845 (2002). See further Dine above n 47 at 199–207 and Lang above n 47 at 52–7. This paragraph is adapted from Peter Muchlinski ‘The Changing Nature of Corporate Influence in the Making of International Economic Law: Towards “Multistakeholderism”’ M. Bungenberg, M. Krajewski, C. Tams, J. Terhechte and A Ziegler (eds) (2020) European Yearbook of International Economic Law (Cham, Springer, 2020) https://​doi​.org/​10​.1007/​8165​_2020​ _52. See further Michael Likosky (ed.) (2005) Privatising Development: Transnational Law, Infrastructure and Human Rights (Leiden, Martinus Nijhoff Publishers, 2005) and Michael Likosky Law Infrastructure and Human Rights (Cambridge, Cambridge University Press, 2006).

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

19

size and resources, market share and international reach.59 Small- and medium-sized enterprises and purely domestic corporations are unlikely to share such advantages. The power of large corporations affects the enjoyment of human rights on a number of levels.60 First, firms have direct power over individuals, especially their employees, and how they can enjoy their rights. Secondly, large corporations may control access to certain resources essential to the enjoyment of human rights such as access to housing, finance, land and the environment. Thirdly, given their political power, corporations can influence institutions through lobbying, by the ability to cross borders and threaten disinvestment if their will is not met by local authorities and, as already noted, through the privatisation of public functions. Finally, corporations have the power to form opinions and steer knowledge towards business-friendly outcomes. This does not mean that large corporations always get their way. The vacating of regulatory space to non-state actors through the rise of the ‘market-state’, while favouring the most powerful multinational firms, has also empowered social issue-oriented NGOs as alternative voices to MNEs in the construction of transnational political and regulatory discourse.61 Doris Fuchs notes that corporate resources give an advantage in developing ‘the density of messages, establishing scientific evidence and identifying and communicating persuasive arguments’ but cannot guarantee the maintenance of businesses’ discursive power in the face of possibly changing societal norms and perceptions of business legitimacy.62 It is against this background that calls for increased business responsibility for human rights violations have emerged. The threat of unchecked



59



60



61



62

See Stephen Wilks, The Political Power of the Business Corporation (Cheltenham, Edward Elgar, 2013) at 37–40. See David Birchall ‘Corporate Power over Human Rights: An Analytical Framework’ 6(1) BHRJ 42 (2021), doi:​10​.1017/​bhj​.2020​.23, on which this paragraph draws. See further M. Yaziji and J. Doh NGOs and Corporations: Conflict and Collaboration (Cambridge, Cambridge University Press, 2009). Social issue NGOs should be distinguished from business promoting NGOs established by firms and industry groups to represent business interests. Doris Fuchs, Business Power in Global Governance (Boulder and London, Lynne Reinner Publishers, 2007) at 154.

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corporate power has been countered by NGO claims for greater corporate accountability. These claims go beyond the voluntarism of traditional CSR initiatives that centre on corporate philanthropy, and require a degree of moral and legal accountability for adverse human rights impacts from business operations.63 A significant milestone towards business responsibilities for human rights was the struggle against apartheid in South Africa during the 1970s and 1980s.64 The anti-apartheid movement highlighted the extent to which foreign firms profited from the exploitation of cheap black labour and encouraged them to take an active stance against apartheid. This stance was complicated by the ‘Cold War’, which led to the perception that South Africa, while racist, was a Western ally. By contrast the leading opponent of apartheid, the African National Congress, was in receipt of Soviet funding, had an overtly socialist economic policy agenda and was considered a terrorist organisation by Western security agencies.65 Despite this political context the anti-apartheid movement managed to pressure Western MNEs into engaging against segregation and even to divest from South Africa, as numerous US-based universities, municipalities, pension funds and state legislatures did during the 1970s and 1980s.66



63



64



65



66

See, on the relationship between corporate social responsibility and human rights, Karin Buhmann Changing Sustainability Norms through Communication Processes: The Emergence of the Business and Human Rights Regime as Transnational Law (Cheltenham, Edward Elgar, 2017) ch 2; Anita Ramasastry ‘Corporate Social Responsibility Versus Business and Human Rights: Bridging the Gap Between Responsibility and Accountability’ 14 Journal of Human Rights 237 (2015). This account expands Peter Muchlinski ‘The Impact of the UN Guiding Principles on Business Attitudes to Observing Human Rights’ 6(2) BHRJ 212 (2021) at 216–7, doi:​10​.1017/​bhj​.2021​.14. See Olivia B. Waxman ‘The U.S. Government Had Nelson Mandela on Terrorist Watch Lists Until 2008. Here’s Why’ Time, 18 July 2018 at https://​ time​.com/​5338569/​nelson​-mandela​-terror​-list/​; Andy McSmith ‘Margaret Thatcher Branded ANC “terrorist” While Urging Nelson Mandela’s Release’ The Independent, 9 December 2013 at https://​ www​ .independent​ .co​ .uk/​ news/​uk/​politics/​margaret​-thatcher​-branded​-anc​-terrorist​-while​-urging​ -nelson​-mandela​-s​-release​-8994191​.html. See Gay W. Seidman ‘Monitoring Multinationals: Lessons from the Anti-Apartheid Era’ 31(1) Politics & Society 1 (2003) at 11, doi:​10​.1177/​ 0032329203254861.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

21

A significant development was the 1977 Sullivan Principles, named after their originator, Reverend Leon Sullivan, a highly experienced African American community leader, who became the first ever African American non-executive board member when, in 1971, he was invited to join the board of General Motors.67 The Sullivan Principles represent the first voluntary corporate human rights monitoring instrument. Signatory firms reported on furthering the desegregation of their workplaces and improving the lives of black and other non-white South Africans, in accordance with the requirements of the Principles. These were: 1. Non-segregation of the races in all eating, comfort and work facilities. 2. Equal and fair employment practices for all employees. 3. Equal pay for all employees doing equal or comparable work for the same period of time. 4. Initiation of and development of training programmes that will prepare, in substantial numbers, blacks and other non-whites for supervisory, administrative, clerical and technical jobs. 5. Increasing the number of blacks and other non-whites in management and supervisory positions. 6. Improving the quality of life for blacks and other non-whites outside the work environment in such areas as housing, transportation, school, recreation and health facilities. 7. Working to eliminate laws and customs that impede social, economic and political justice (added in 1984). 68 The implementation of the Sullivan Principles left a lot to be desired. They were administered by a US accountancy firm unfamiliar with social reporting issues and encouraged corporations to prioritise cash donations to good local causes – over workplace improvements and equal pay and conditions – to increase their score in the corporate compliance list drawn up under the Principles.69 The Sullivan Principles were questioned by anti-apartheid activists as they assumed that it was acceptable for firms to continue to invest in South Africa and so uphold the regime. Activists favoured outright divestment and Reverend Sullivan eventually agreed,

67



68



69

See Paul Lewis ‘Leon Sullivan, 78, Dies; Fought Apartheid’ The New York Times, 26 April 2001 at https://​www​.nytimes​.com/​2001/​04/​26/​world/​leon​ -sullivan​-78​-dies​-fought​-apartheid​.html. See Sullivan Principles 1977 available at https://​ www​ .bu​ .edu/​ trustees/​ boardoftrustees/​committees/​acsri/​principles/​. See Seidman above n 66 at 14–17.

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resigning from the board that oversaw the Principles.70 Events overtook the Sullivan Principles. Corporations increasingly pulled out of South Africa in the late 1980s, when the political and security situation deteriorated, and the eventual introduction of democratic government after the election of 1994 brought an end to apartheid.71 It was also during the 1990s that NGOs began to highlight cases of corporate human rights abuses and raise public awareness of the problem through the media. A key case concerned the human rights impacts of oil company operations in the Niger Delta in the 1990s.72 Subsequently, a number of claims arising out of this situation, and other notable cases of business involvement in human rights violations, came before the US courts under the Alien Tort Claims Act (ATCA).73 Other cases included Texaco’s environmental practices in Ecuador between 1964 and 1992, whose operations were taken over by Chevron, which was later implicated in allegations of violent suppression of protests against oil developments in the Niger Delta.74 Shell, in particular, came under scrutiny following the execution of Ogoni author and environmental activist, Ken Saro-Wiwa, and eight others, wrongly accused of murder by the Nigerian authorities.75 A coalition of environmentalists, human rights activists and churches criticised Shell’s failure to intervene in the case. Institutional shareholders in the UK, including public employee pension funds and religious organisations, also called for reforms of the company’s corporate governance. Shell responded with a radical overhaul of its corporate governance systems to ensure that it was more responsive to CSR concerns. The Chief Executive

72 70 71



73



74



75

ibid at 19. ibid at 19–21. A key document is Human Rights Watch The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communities (HRW Index No. 1-56432-225-4 January 1999) at https://​ www​.hrw​.org/​legacy/​reports/​1999/​nigeria/​nigeria0199​.pdf. See further Sarah Joseph Corporations and Transnational Human Rights Litigation (Oxford, Hart Publishing, 2004). On access to legal remedies see further Chapter 6. See Business and Human Rights Resource Centre ‘Texaco/Chevron lawsuits (re Ecuador)’ at https://​www​.business​-humanrights​.org/​en/​latest​-news/​ texacochevron​-lawsuits​-re​-ecuador​-1/​. This account is taken from Muchlinski above n 64 at 217–8.

HUMAN RIGHTS AND BUSINESS: SETTING THE STAGE

23

of Shell at the time, Mark Moody-Stuart, opined that the commercial and social obligations of the company could not be separated: You can’t divorce the two. People sometimes try to do that. They say, all this societal stuff is woolly, we should stick to commerce. The two are absolutely linked … These soft issues are really business issues, because we are part of society, and members of society are our customers. So, our impact on society really matters commercially.76

A key moment was the establishment of the Amnesty International UK Business Group (AI Business Group) under the leadership of the late Sir Geoffrey Chandler, a former Shell executive who was a pioneering voice in the business and human rights movement of the 1990s.77 In the light of the Ogoni case, Shell entered a dialogue on how to reform its social responsibility strategy with Sir Geoffrey and the AI Business Group. The result was, in 1997, the first Shell public statement that it accepted corporate responsibilities for human rights. Shell’s Statement of General Business Principles now included a responsibility to respect the human rights of employees and ‘to express support for fundamental human rights in line with the legitimate role of business’.78 Shell’s current position is to support the UNGPs and the HRDD principle they embody.79 Also significant was the adoption, by Amnesty International, of its International Human Rights Principles for Companies in January 1998.80



76



77



78



79



80

Quoted in Anne T. Lawrence ‘The Drivers of Stakeholder Engagement: Reflections on the Case of Royal Dutch/Shell’ in J. Andriof, S. Waddock, B. Husted, and S.S. Rahman (eds) Unfolding Stakeholder Thinking: Theory, Responsibility and Engagement (Abingdon, Greenleaf Publishers, 2002 republished by Routledge, 2017) 185 at 190. See Sir Geoffrey Chandler ‘The Amnesty International UK Business Group: Putting Human Rights on the Corporate Agenda’ 33 The Journal of Corporate Citizenship 29 (2009) at http://​www​.jstor​.org/​stable/​jcorpciti​.33​ .29. Quoted in ibid at 32. See too Shell General Business Principles (2014 Revision) at https://​www​.shell​.com/​about​-us/​our​-values/​_jcr​_content/​par/​ relatedtopics​.stream/​1643027598209/​6​b4a23c6d8b​47b0fd3e8e​3b9fe955e5​ 9431f9c83/​shell​-general​-business​-principles​-2014​.pdf?. See Shell Global ‘Human Rights’ at https://​www​.shell​.com/​sustainability/​ transparency/​ h uman​ - rights​ . html​ # iframe​ = ​ L 3dlYmFw​ c HMvU3VzdG​ FpbmFiaWxp​dHlfcmVwb3J0XzIwMTkv. Amnesty International Human Rights Principles for Companies (ACT 70/001/1998 1 January 1998) at https://​www​.amnesty​.org/​en/​documents/​

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Until then Amnesty was dedicated to the protection of civil and political rights against state interference.81 The decision to add corporations to Amnesty’s agenda stressed that human rights should no longer be compartmentalised but defended as an integrated whole that included economic, social and cultural rights over which corporate actors have significant impacts. Amnesty’s Principles also mark the inclusion, in addition to the state, of privately owned corporations as bearers of human rights responsibilities. This raises a number of problems. The first concerns whether corporations should have any human rights responsibilities at all, the central question of Chapter 2.



81

act70/​001/​1998/​en/​and see further Amnesty International ‘Corporations’ at https://​www​.amnesty​.org/​en/​what​-we​-do/​corporate​-accountability/​. ibid at 5–6.

2

Should business have human rights responsibilities?

A typical answer of its time to the question raised by this chapter was given by the chair of Anglo-American Tobacco responding, in 1993, to an Amnesty International report on torture in China, circulated to companies doing business in China by the AI Business Group: we operate worldwide, and we do not comment on such matters as human rights violations. It is inappropriate for us to do so, particularly as the environment in which we operate is so variable.1

Today it is generally accepted that businesses have a responsibility to respect human rights. In particular, interrelated arguments from law, business ethics, corporate governance and politics have all shifted towards acceptance. Arguments against extending human rights responsibilities to business will be considered first (Section 2.1) and then the arguments used in favour (Section 2.2). The latter have prevailed to the extent that there now exist international normative instruments covering the issue as well as developing national HRDD laws and some acceptance of human rights-based claims against corporate actors in case-law. That said, the ‘anti’ arguments remain important as a source of limitation over the extension of human rights obligations for businesses, as will be seen below and in later chapters.



1

Quoted in Sir Geoffrey Chandler ‘The Amnesty International UK Business Group: Putting Human Rights on the Corporate Agenda’ 33 The Journal of Corporate Citizenship 29 (2009) at 31, http://​www​.jstor​.org/​stable/​jcorpciti​ .33​.29. 25

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2.1

Arguments against extending human rights responsibilities to business

The main arguments against stem from the legal and commercial position of business associations. In particular, business associations acquire legal form principally as incorporated companies, making them private legal entities.2 Given that human rights laws apply to states, the argument goes that such private actors cannot be bound by the same laws. In addition, as entities created by national laws, corporate business associations have no legal status under international law and so cannot have any obligations based on international law standards. Furthermore, it rests on the state to promote and observe human rights and to provide remedies for their violation. It is not for corporations, which exist for a commercial purpose, to take up such public law functions. As a question of corporate ethics, what right do corporate managers have to determine how, when and where they should act to uphold human rights? Their main purpose is to carry out their commercial functions in the interests of their shareholders and no more. Indeed, the structure of corporate governance emphasises this by making the question of managerial accountability to shareholders the key issue. Moreover, it may not be politically feasible to impose human rights obligations on business actors as it will be a selective, arbitrary and ultimately ineffective way to uphold human rights. It is for the state to protect human rights by legislating in the public interest and for firms to follow the law. It will also open the road for opportunistic campaigning by human rights groups that may not serve the wider public interest, to the weakening of business regulation by using the more general and vague standards of human rights and to calls for business immunities similar to those of states when exercising essentially public functions.



2

Note that, under the UNGPs, human rights responsibilities apply to ‘all business enterprises, both transnational and others, regardless of their size, sector, location, ownership and structure’. However, the second pillar of the UNGPs is entitled ‘The Corporate Responsibility to Respect Human Rights’. The focus in this book is on corporate entities for reasons of space, and because much of the debate has discussed corporations in particular, but it should be remembered that, regardless of legal form, all kinds of business associations may have responsibilities in this area.

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2.1.1 Legal arguments The principal legal arguments against extending human rights obligations to business associations stem from the private law nature of corporations and their lack of international legal personality. To understand this, it is necessary, first, to embark on a brief summary of how the state’s approach to incorporation changed during the nineteenth century and, secondly, to examine why international law traditionally excludes private non-state actors from its subjects. Historically, the process of ‘privatising’ the legal status of corporate actors arose in response to calls for greater commercial autonomy for business actors and less state control. It is tied up with the history of incorporation by the state. Incorporation legitimises the underlying enterprise, gives it a legal form that facilitates its activity and establishes an entity whose lawful existence requires observance of rules upon which incorporation is conditioned.3 Business incorporation originated in the early sixteenth century in response to the rise of long distance inter-continental, predominantly colonial, trade from Western Europe. Groups of traders needed to organise their expeditions effectively and reduce their risks. The answer lay in the royal grant of incorporation, and attendant monopoly trading rights, through a royal corporate charter in return for payments to the Crown. This form of incorporation was recognised in European legal systems until the development of modern general incorporation laws. In practice it was restrictive, limiting the number of incorporated enterprises. It did not survive the pressure, in the nineteenth century, to grant general freedom of incorporation. By 1884, England, France and Germany had all adopted general incorporation laws.4 These introduced automatic incorporation through registration upon the conclusion of a corporate contract, or articles of association, which conformed to standardised legal requirements, with the state withdrawing from direct corporate



3



4

See Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 301–2 on which this account draws. England and France moved towards freedom of incorporation with limited liability under the English Companies Act 1862 and the French Loi sur les Sociétés à Responsabilité Limite of 1863, while Germany followed suit in the Corporate Laws (Aktiengesetze) of 1870 and 1884. See generally Harwell Wells (ed.) Research Handbook on the History of Corporate and Company Law (Cheltenham, Edward Elgar, 2018) Part II ‘Modern Europe’.

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supervision. The corporation had thus become ‘privatised’. Corporate law subsequently developed on the basis of the need to protect the property of shareholders in the corporation, while the control of monopolisation would be achieved through the eventual adoption of competition laws. The public law functions of the corporation effectively ceased to exist. The restriction on corporate actors as subjects of international law arises from the divide between private international law, dealing with the legal implications of private international transactions for national legal systems, and public international law, which deals only with the legal implications of inter-state relations.5 Corporations, including major MNEs, are assimilated to individuals for the purposes of international personality, with the result that they are not subjects of international law that can hold rights and obligations under that law, though not all the rules applicable to individuals will automatically apply to corporate entities.6 MNEs are, in effect, ‘invisible’ to international law.7 As a result, corporations have had to rely on claims for diplomatic protection to protect their rights until the development of international investment protection treaties with international dispute settlement provisions allowing for investor-state arbitration.8



5

6



7



8



This paragraph is taken from Peter Muchlinski ‘Multinational Enterprises as Actors in International Law: Creating “Soft Law” Obligations and “Hard Law” Rights’ in Math Noortmann and Cedric Ryngaert (eds) Non-State Actor Dynamics in International Law: From Law-Takers to Law-Makers (Farnham, Ashgate Publishing, 2010) 9 at 10–11. Barcelona Traction Case [1970] ICJ 3 at para 70: ‘In allocating corporate entities to States for purposes of diplomatic protection, international law is based, but only to a limited extent, on an analogy with the rules governing the nationality of individuals.’ See Fleur Johns ‘The Invisibility of the Transnational Corporation: An Analysis of International Law and Legal Theory’ 19 Melbourne University Law Review 893 (1994). See further Doreen Lustig Veiled Power: International Law and the Private Corporation, 1886–1981 (Oxford, Oxford University Press, 2020). For an overview of the customary international law relating to foreign investment claims see Peter Muchlinski ‘The Diplomatic Protection of Foreign Investors: A Tale of Judicial Caution’ in Christina Binder, Ursula Kriebaum, August Reinisch Stephan Wittich (eds) International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford, Oxford University Press, 2009) 341.

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A further consequence is that corporations cannot hold human rights obligations as a matter of international law.9 The matter was vividly brought to light in the debates surrounding the first UN attempt to codify human rights norms applicable to corporations, the UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (the UN Norms).10 The UN Norms sought to place the human rights obligations of business enterprises on a legal footing by deriving them from the norms applicable to states under existing international human rights instruments and the fact that, in the words of the UN Norms, ‘transnational corporations and other business enterprises, as organs of society, are also responsible for promoting and securing the human rights set forth in the Universal Declaration of Human Rights’. As will be further discussed in Chapter 3, a major reason for the non-adoption of the UN Norms was this conflation of state and corporate human rights obligations. By contrast the UNGPs retained the notion that business enterprises could not hold legally binding obligations under international human rights law and so adopted a legally non-binding corporate ‘responsibility to respect’ human rights, stressing that ‘[n]othing in these Guiding Principles should be read as creating new international law obligations, or as limiting or undermining any legal obligations a State may have undertaken or be subject to under international law with regard to human



9



10

See Nadia Bernaz Business and Human Rights: History, Law and Policy – Bridging the Accountability Gap (Abingdon, Routledge, 2017) at 86. See further Sabina Anne Espinoza Should International Human Rights Law Be Extended to Apply to Multinational Corporations and other Business Entities? PhD Thesis, University College London, September 2014 at https://​ discovery​.ucl​.ac​.uk/​id/​eprint/​1460404/​1/​PhD​%20S​%20A​%20Espinoza​.pdf. Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights (UN Doc. E/CN.4/ Sub.2/2003/12/Rev.2 (13 August 2003) at https://​ digitallibrary​ .un​ .org/​record/​501576​?ln​=​en). See too Commentary on the Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights (hereafter Commentary) (UN Doc.E/CN.4/ Sub.2/2003/38.Rev.2(2003) available at https://​digitallibrary​.un​.org/​record/​ 501578​?ln​=e​ n). See further David Weissbrodt and Muria Kruger ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ 97 AJIL 901 (2003).

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rights’.11 This affirms that states are the primary holders of human rights obligations, a fact reinforced by the inclusion of the first pillar in the UNGPs framework, a legally binding ‘duty to protect’ against business violations of human rights on the part of states, discussed in Chapter 4. Other legal arguments point to the state as the only legitimate holder of human rights obligations.12 Corporations cannot be subject to human rights responsibilities because international human rights law addresses only state responsibilities, which corporations are incapable of observing.13 Examples include protecting rights of asylum, the right to take part in government, rights to nationality and the provision of due process. Equally, states, as public actors, do not themselves enjoy human rights protection, while MNEs, as private actors, can possess rights that may be balanced against those of other non-state actors.14 Accordingly, the development of substantive corporate obligations requires adaptation of existing human rights standards and this is difficult to do in existing international law. 2.1.2 Business ethics arguments Milton Friedman famously asserted that, in a free economy ‘there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game which is to say, engages in open and free competition without deception or fraud’.15 MNEs and other business



11



12 13



14 15

UNGPs ‘General Principles’ at https://​www​.ohchr​.org/​documents/​ publications/​guiding​principles​businesshr​_en​.pdf. Muchlinski above n 3 at 558 on which this paragraph is based. See further David Kinley and Junko Tadaki ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law’ 44 Virginia Journal of International Law 931 (2004) at 966–7; Markos Karavias Corporate Obligations under International Law (Oxford, Oxford University Press, 2013) ch V. Kinley and Tadaki above n 13 at 967; Karavias above n 13. Milton Friedman Capitalism and Freedom (40th anniversary edn, University of Chicago Press, 2002) at 133. See too his article ‘The Social Responsibility of Business is to Increase its Profits’ The New York Times Magazine, 13 September 1970 at http://​umich​.edu/​~thecore/​doc/​Friedman​.pdf. For a detailed critique see Surya Deva Regulating Corporate Human Rights Violations: Humanizing Business (paperback edn, Abingdon, Routledge, 2014) at 119–31. A more recent version of Freidman’s thesis is Elaine

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enterprises are in business and cannot act as moral arbiters in relation to the wider issues arising in the communities in which they operate.16 Indeed, to do so may be seen as unwarranted interference in the internal affairs of those communities, something that MNEs have, in the past, been urged not to do.17 It may also be seen as unfairly subjecting other citizens to the will of corporate decision-makers, undermining the ideal of ‘status egalitarianism’, which posits that ‘all citizens stand as moral equals in relation to one another and that the state has a duty to recognise and protect that equal standing with the force of law, not only in terms of its dealings with citizens but also in their dealings with one another’.18 Thus it is for the state to regulate on matters of social importance and for corporate actors to observe the law. It follows also that MNEs and other business enterprises, as private actors, can only be beneficiaries of human rights protection and not human rights protectors. Furthermore, the extension of human rights obligations to corporate actors will create a ‘free rider’ problem.19 It is predictable that not all states and not all firms will take the same care to observe fundamental human rights. Thus, more conscientious corporations will be at a competitive disadvantage in relation to more unscrupulous corporations that do not undertake human rights responsibilities. They may also lose business opportunities in countries with poor human rights records as the government may not wish to do business with ethically driven corporations and they may not want to do business with it.



16



17



18



19

Sternberg Just Business: Business Ethics in Action (2nd edn, Oxford, Oxford University Press, 2000) also critiqued by Deva at 131–9. See Peter T. Muchlinski ‘Human Rights and Multinationals – Is There a Problem?’ 77 International Affairs 31 (2001) at 35–6. See for example the UN Draft Code of Conduct for Transnational Corporations paras 15–16 at https://​ investmentpolicy​ .unctad​ .org/​ international​-investment​-agreements/​treaty​-files/​2891/​download. See Nien-he Hsieh ‘Should Business Have Human Rights Obligations?’ 14(2) Journal of Human Rights 218 (2015) at 225, doi:​10​.1080/​14754835​ .2015​.1007223. See Ray Vernon in Business and Human Rights (Harvard Law School Human Rights Program, 1999) at 49.

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2.1.3 Corporate governance arguments Freidman’s assertion assumes that the corporation exists to satisfy the contractual entitlement of shareholders, as owners of the corporation, to a share of the profits. Accordingly, the company directors should manage the company in the shareholders best interests. The risk arises that managers will act to further their own interests at the expense of shareholders. This is known as the ‘agency problem’ and it has been the dominant question in the evolution of corporate governance structures in market economies. During the twentieth century the development of large multi-divisional corporations led to the separation of ownership and control between managers and shareholders, the latter remaining nominal owners of the company, while decision-making control lay with managers. This effect of corporate growth led to the development of agency-based theories of corporate governance.20 The main thrust of agency-based theories is the reduction of ‘agency costs’ which arise when managers fail to act in the best interests of the company and hence of the shareholders. Such costs need to be controlled as they misallocate funds away from the shareholders. Based on the initial promise made between managers and shareholders, agency theory develops a contractual analysis of the enterprise and posits that it is a ‘nexus of contracts’ between the managers and the shareholders.21 Those ‘contracts’ protect shareholders as the residual risk bearers of the company and so enhance the ‘shareholder value’ of the corporation. This is justified by the assumption that shareholders take the greatest risks as they have no contractual guarantee of a return on their investment, unlike voluntary creditors who have entered into contracts with the company. An agency approach is likely to see a commitment to observe human rights as a threat to shareholder primacy.22 This posits that managers can only comply with any corporate responsibility to respect human rights



20



21



22

See Peter Muchlinski ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ 22(1) Business Ethics Quarterly 145 (2012) at 163; Muchlinski above n 3 at 338 on which this and the next paragraph draw. See M. C. Jensen and W. H. Meckling ‘Theory of the Firm, Managerial Behaviour, Agency Costs and Ownership Structure’ 3 Journal of Financial Economics 305 (1976). See Muchlinski above n 20 at 164.

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by reason of some contractual commitment to the holders of these rights. The holders of human rights have invested nothing in the company, and so carry no risks in relation to the firm, meaning that managers have no right to exercise their powers, or expend company funds, to meet such third-party claims. This would be illegitimate as it would fall outside the range of actions required to fulfil agency obligations toward shareholders and thus would breach the managers legal duty to act in the best interests of the company. 2.1.4 Political arguments Finally, a number of political arguments can be used to oppose the extension of human rights responsibilities to business enterprises. The most obvious is that business managers are unelected private office holders who are hired to do a specific job for the company. They are politically unaccountable and so should not make political decisions such as becoming involved in the promotion and protection of human rights. In the words of Milton Friedman: Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine. If businessmen do have a social responsibility other than making maximum profits for stockholders, how are they to know what it is? Can self-selected private individuals decide what the social interest is?23

As David Henderson notes, this approach does not advocate unqualified laissez-faire but, rather, ‘it reserves to governments the responsibility for deciding both where the public interest lies and what measures would help to ensure that profit-maximising businesses will serve it’.24 Coupled to this is NGO activism.25 NGOs are tackling the perceived failures of states to regulate the consequences of ‘neoliberal’ globalisation, with its stress on business facilitation at the expense of other values, such

23 24



25

Friedman above n 15 at 133. See David Henderson Misguided Virtue: False Notions of Corporate Social Responsibility (London, Institute of Economic Affairs, 2001) at 21. See Muchlinski above n 3 at 98–100. For a classification of NGOs see Michael Yaziji and Jonathan Doh NGOs and Corporations: Conflict and Collaboration (Cambridge, Cambridge University Press, 2009) ch 1.

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as social cohesion, respect for human rights, democratic accountability and environmental sustainability.26 However, this political position does not make NGOs analogous to democratic public opinion.27 NGOs are private membership organisations that depend on funding through subscriptions and donations. Thus, they may act selectively and with the principal concern of maintaining a high profile for their particular campaigns and not to ensure that all corporations are held equally to account. In addition, NGOs may exaggerate issues to create moral panics and appeal to their constituencies, creating a very unreliable environment for extending obligations to business actors. Furthermore, it is open to debate whether NGOs speak for the whole of ‘civil society’ and whether they have any better rights than business enterprises to set political agendas and demand political change.28 Thus the character of the main advocates of extending human rights to business itself poses questions as to whether such policies are worthy of consideration by business. A further set of political arguments concerns the relationship between states and enterprises in the furtherance of human rights.29 The extension of human rights responsibilities to corporations appears to treat them as quasi-governmental public institutions. This is a status that they neither deserve nor need in order to be useful social actors.30 Also treating corporations as if they were quasi-public institutions risks downplaying the responsibility of states, who remain the prime movers behind most human rights violations. Business actors cannot take the blame alone. Moreover, appeals to corporate responsibilities for human rights must not absolve states from the duty to adopt policies that help foster the well-being of citizens. This requires a system of regulation which gives effect to the aspirations behind human rights standards through the establishment of wider regulatory regimes in areas such as labour rights, health and safety or environmental protection. This may be more signif-



26



27

30 28 29

See Yaziji and Doh above n 25 ch 2. See further Thomas Davies (ed.) Routledge Handbook of NGOs and International Relations (Abingdon, Routledge, 2019). For an early and perceptive analysis see Peter J. Spiro ‘New Global Potentates: Nongovernmental Organizations and the Unregulated Marketplace’ 18(3) Cardozo Law Review 957 (1996). Henderson above n 24 at 122. See Muchlinski above n 16 at 44–5 on which this paragraph draws. See further Hsieh above n 18.

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icant than the institution of wide and general exhortations for firms to observe human rights. Finally, another political objection is that it opens the door to ‘blue washing’ the firm’s reputation. This refers to the use by firms of the UN Global Compact (discussed in the next chapter) as a means of embellishing their reputation as ‘good corporate citizens’ by signing on to the voluntary participation list but then not conforming to the standards it contains.31 While the risk of firms overstating their compliance with human rights and other responsible business standards is real, that would appear to be more a criticism of the design of a programme such as the Global Compact than of the political desirability, or otherwise, of extending human rights responsibilities to business enterprises and so needs no further response.

2.2

Arguments in favour of extending human rights responsibilities to business

The principal arguments in favour of extending human rights responsibilities to businesses stem from an increased acceptance of such responsibilities across the relevant disciplines. Thus, the private law nature of corporations is not an insuperable barrier to the adoption of public law-based responsibilities to avoid or mitigate corporate violations of human rights, especially when viewed through the lens of human dignity, while the strict theory of the subjects of international law can be qualified in practice allowing non-state actors to hold international legal rights and responsibilities on a functional basis. Equally, business ethics theory has evolved to move beyond agency issues and has widened its compass to include the interests of other ‘stakeholders’ by reference to social contract and other principles which see the business enterprise as an organisation rooted in society and with responsibilities outside the narrow confines of the firm and its membership. This, in turn, has affected corporate governance principles, which are increasingly accepting the need for managers to

31

See further Daniel Berliner and Aseem Prakash ‘“Bluewashing” the Firm? Voluntary Regulations, Program Design, and Member Compliance with the United Nations Global Compact’ 43(1) The Policy Studies Journal 115 (2015).

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adopt a wider set of considerations when acting as directors under what is termed an ‘enlightened shareholder’ approach to governance. Finally, the political objections alluded to above have been largely exaggerated and fail to take account of new forms of cooperative governance that are increasingly being used to develop socially responsible business policies. 2.2.1 Legal arguments The private legal status of business enterprises may not be an absolute barrier to their holding human rights responsibilities. Andrew Clapham has argued that changes in the nature and location of power in the contemporary international system, which may bypass traditional state-centred systems of governance, require a reconsideration of the boundaries between the private and the public spheres. As noted in Chapter 1, MNEs in particular have acquired such power. In these circumstances, seeing such corporations as private entities with no social or public obligations makes little sense, with the consequence that they may in principle be subjected to human rights obligations.32 In the words of Stephen Ratner: other entities may also pose a threat to human dignity – either acting with the state or alone – so that any contemporary notion of human rights must contemplate duties on those entities as well. This step does not entail the recognition or development of new human rights … Instead, it requires the identification of new duty holders.33

This position coincides with the fear that these powerful entities may disregard human rights and, thereby, violate human dignity. It follows that corporations, including, in particular, MNEs, should be subjected to human rights responsibilities, notwithstanding their status as creatures of private law, because human dignity must be protected in every circumstance.34

See Andrew Clapham Human Rights in the Private Sphere (Oxford, Clarendon Press, 1993) at 137–8; Andrew Clapham Human Rights Obligations of Non-State Actors (Oxford, Oxford University Press, 2006) at 544–8. 33 Stephen Ratner ‘Corporations and Human Rights: A Theory of Legal Responsibility’ 111 Yale Law Journal 443 (2001) at 469. 34 Clapham Human Rights in the Private Sphere above n 32 at 147. See too David Bilchitz Fundamental Rights and the Legal Obligations of Business (Cambridge, Cambridge University Press, 2022) at 60–4 and 178–9.

32

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37

This approach has been endorsed in English law by the extension of public law obligations to bodies exercising a public function even if they are not a government department or agency. For example, in R v Panel on Take-overs and Mergers, ex parte Datafin plc  the English Court of Appeal held that bodies performing public duties or exercising powers that were public in nature may be subject to judicial review even though those powers were exercised by a body established under private law.35 Similarly, by section 6(1) of the UK Human Rights Act 1998,  ‘[i]t is unlawful for a public authority to act in a way which is incompatible with a [ECHR] right’. By section 6(3)(b) ‘public authority’ includes ‘any person certain of whose functions are functions of a public nature’. This has been interpreted to mean that a private entity which exercises a public function can be subject to human rights obligations under the Act as a ‘hybrid public body’. This has become more significant as more public functions are privatised and outsourced. However, the courts have offered a narrow functional definition of when a private entity can be regarded as a ‘hybrid public body’. As a result, many outsourced public operations have been excluded from the Human Rights Act, leading to calls for its clarification to ensure that all such operations fall within its jurisdiction.36 In addition, the strict positivist view that only states are full subjects of international law, thus leaving out all non-state actors from international obligations, may not represent the true approach taken by international law.37 A functional approach to international personality is taken in practice.38 Following such an approach MNEs and other business actors can be seen as participants in the process of international law. They make claims across state lines with the aim of maximising certain

35



36



37



38

R v Panel on Take-overs and Mergers, ex parte Datafin plc [1987] QB 815 (CA). See further Bilchitz above n 34 ch 4 who calls this approach the ‘expanding state model’ of corporate fundamental rights obligations. See further Paul Craig Administrative Law (8th edn, London, Sweet & Maxwell, 2016) paras 20-023 to 20-032. For a useful discussion see Philip Alston ‘The “Not-a-Cat” Syndrome: Can the International Human Rights Regime Accommodate Non-State Actors?’ in Philip Alston (ed.) Non-State Actors and Human Rights (Oxford, Oxford University Press, 2005) 3. See too Clapham Human Rights Obligations of Non-State Actors above n 32 at 76–80 and generally Lustig above n 7. For discussion see Bernaz above n 9 at 86–92; Peter T. Muchlinski ‘Corporations in International Law’ in Max Planck Encyclopaedia of Public International Law (June 2014) at https://​opil​.ouplaw​.com/​view/​10​.1093/​ law:​epil/​9780199231690/​law​-9780199231690​-e1513.

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values such as, for example, fairness and predictability in international business transactions.39 To that extent, the lack of formal legal personality is irrelevant as the actions of these non-state actors result in real international legal consequences. This is recognised in the fact that, under IIAs, investors have direct rights to invoke claims against host states for breaches of the treatment guarantees that such agreements contain.40 There is also significant indirect recognition of corporate social responsibilities under international instruments ranging from labour law, environmental law, anti-corruption law and economic sanctions.41 More recently, this argument has gained force through the adoption of the UNGPs and the inclusion of express references to business responsibilities for HRDD in the 2011 revision of the OECD Guidelines for Multinational Enterprises (OECD Guidelines) and the 2017 revision of the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, discussed in Chapter 5. A further argument against restricting direct human rights obligations for business under international law comes from the existence of the horizontal effects doctrine in human rights, discussed in detail in Chapter 4. This posits that the state has a duty to ensure that private actors under its jurisdiction do not violate the human rights of other private actors. The existence of such a duty indicates that private actors do indeed have a responsibility at least not to violate the human rights of others. It also means that legal obligations can be imposed to this effect at the national level. If so, then why not at the international level? As Ralph Steinhardt argues, if a corporation can be liable in tort for damages caused by the negligence of its employees, or pay compensation for infringing the property rights of others, or be guilty under criminal law for conspiracy or aiding and abetting a crime then why can it not also have human rights obligations?42

39



40 41



42

See Rosalyn Higgins Problems and Process: International Law and How We Use It (Oxford, Clarendon Press 1994) at 50. See Ratner above n 33 at 487. ibid at 475–88. See too Beth Stephens ‘The Amorality of Profit: Transnational Corporations and Human Rights’ 20(1) Berkeley Journal of International Law 45 (2002); Kinley and Tadaki above n 13; Nicola Jagers Corporate Human Rights Obligations: In Search of Accountability (Antwerp, Intersentia, 2002). Ralph G. Steinhardt ‘Corporate Responsibility and the International Law of Human Rights: The New Lex Mercatoria’ in Alston (ed.) above n 37 177 at 215.

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Finally, the fact that business actors cannot observe all the human rights that states must is not a major obstacle to extending human rights responsibilities to them. Corporate actors can affect the economic and social welfare of the communities in which they operate and, given the indivisibility of human rights, this means that they have a direct impact on the extent that economic and social rights, especially labour rights in the workplace, can be enjoyed.43 As will be shown in Chapter 5, businesses can affect many types of human rights in distinct situations. This is emphasised by the extension of the HRDD standard in the UNGPs to all internationally recognised human rights. 2.2.2 Business ethics arguments The observance of fundamental human rights can be said to lie at the heart of ethical business practice.44 However, corporations, as legal and commercial entities, may lack the capacity for moral decisions and so cannot be responsible for the moral choices that go towards human rights observance. In response Denis Arnold argues that MNEs: are properly understood as corporate moral agents capable of being duty bearers and entities morally responsible for their actions because they have internal decision structures comprised of human agents, including the ethical infrastructure of the firm, corporate intentions understood primarily as plans, and the capacity for reflective assessment of corporate plans and practices.45

Furthermore, corporations are social actors with a role to play in the communities where they operate.46 This can be explained on the basis of a ‘social contract’ between business and society. In return for the right to operate and make profits, businesses must ensure that their activities do not result in harm to the individuals and commu

43



44



45



46

See Muchlinski above n 16 at 43. See further Jagers above n 41 ch IV; Janet Dine Companies, International Trade and Human Rights (Cambridge, Cambridge University Press, 2005) at 178–87. See John M. Kline Ethics for International Business: Decision Making in a Global Political Economy 25 (London, Routledge, 2005); Bernaz above n 9 at 3–8. Denis Arnold ‘Corporations and Human Rights Obligations’1(2) BHRJ 255 (2016) at 262, doi:​10​.1017/​bhj​.2016​.19. This paragraph draws upon Peter T. Muchlinski Multinational Enterprises and the Law (2nd edn, Oxford, Oxford University Press, 2007) at 515–6.

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nities in which they operate. This is especially important in a globalising economy where the capacity of states to control corporate activities is in question and where the failure of regulation may lead to so-called ‘regulatory’ or ‘governance gaps’ that allow the business actor to operate with impunity.47 Social contract ideas have led to the newer concept of the corporation’s ‘social licence to operate’, which will be discussed in Chapter 3 in relation to its application to the UNGPs. Corporations have been expected to observe socially responsible standards of behaviour for a long time.48 This expectation has been expressed in national and regional laws and in numerous codes of conduct drawn up by IGOs. Indeed, corporations themselves have adopted corporate and industry-based codes of conduct.49 In addition, observance of human rights is increasingly being seen as ‘good for business’.50 Business cannot flourish in an environment where fundamental human rights are not respected. Moreover, businesses themselves may justify the adoption of human rights policies by reference to good reputation.51 The benefit to be reaped from espousing a pro human rights stance is seen as outweighing any ‘free rider’ problem, which may in any case be exaggerated.52 Finally, the ‘status egalitarian’ argument can be countered by looking at the situations where businesses are most likely to risk violating human rights. According to Denis Arnold this risk arises in situations where the

47



48



49



50



51 52

See further Peter Muchlinski ‘International Business Regulation: An Ethical Discourse in the Making?’ in Tom Campbell and Seamus Miller (eds) Human Rights and the Moral Responsibilities of Corporate and Public Sector Organisations (Dordrecht, Kluwer Academic Publishers, 2004) 81 especially at 84–6. See too E. Palmer ‘Multinational Corporations and the Social Contract’ 31 Journal of Business Ethics 245 (2001); Wesley Cragg ‘Human Rights and Business Ethics: Fashioning a New Social Contract’ 27 Journal of Business Ethics 205 (2000); Deva above n 15 at 146–50. See UNCTAD The Social Responsibility of Transnational Corporations (New York and Geneva, United Nations, 1999) UNCTAD World Investment Report 1999 (New York and Geneva, United Nations, 1999) ch XII. See for example UNCTAD World Investment Report 1994 (New York and Geneva, United Nations, 1994) ch VIII; UNCTAD The Social Responsibility of Transnational Corporations (New York and Geneva, United Nations, 1999) at 31–42. For a critical assessment of the limits of the ‘business case for human rights’ see Deva above n 15 at 139–43. Deva above n 15 refers to this as ‘goodwill-nomics’. See further Muchlinski above n 16 at 38–9; Deva above n 15 at 143–6.

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state has already failed to act as the upholder of human rights, creating a ‘governance gap’ in which human rights can be flouted with impunity. In such situations a corporate actor would have an ethical duty to uphold human rights especially as the holders of those rights would already have their status equality significantly diminished. The ‘status egalitarian’ argument is in any case concerned with the individual–state dichotomy and does not address the responsibilities of non-state actors in what Arnold describes as the ‘current multi-actor international system’, which ‘requires a different conceptualization of the moral division of labour than has been favoured by political philosophers historically’.53 2.2.3 Corporate governance arguments The ‘shareholder value’ model of corporate governance, described in Section 2.1.3, may be incompatible with business responsibilities for human rights. In particular, it unduly prioritises one special interest group at the expense of other equally deserving groups of ‘stakeholders’ defined as ‘any group or individual that can affect or is affected by the achievement of a corporation’s purpose’.54 Shareholders are special in one sense: they have a proprietary interest in a share of corporate profits. However, shareholders remain simple rentiers having no interest, or involvement, in the management and entrepreneurial functions of the company and, thanks to limited liability and corporate separation, they bear few or no risks, and no legal responsibility, for the company’s activities.55 Equally, the profitability of a corporation cannot be limited to the input of ‘specific capital’ from shareholders but is also dependent on the ‘opportunity capital’ that society provides. Thus, other interests apart



53



54



55

Arnold above n 45 at 274. For a critical response based on the need to accept the primary roles of states as upholders of human rights see Nien-he Hsieh ‘Business Responsibilities for Human Rights: A Commentary on Arnold’ 2(2) BHRJ 297 (2017). See R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks, Bidhan L. Parmar and Simone De Colle Stakeholder Theory: The State of the Art (Cambridge, Cambridge University Press, 2010) ch 2 especially at 52–4. See Paddy Ireland ‘Limited Liability, Shareholder Rights and the Problem of Corporate Irresponsibility’ 34(5) Cambridge Journal of Economics 837 (2010), doi:​10​.1093/​cje/​ben040.

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from shareholders can and should be taken into account to ensure the success of the company.56 Furthermore, the prioritisation of enhancing shareholder value is not a legal requirement but an ideological construct.57 According to Joseph Heath it promotes a cynical, economistic, view of human nature where human conduct is geared towards personal wealth maximisation with little or no moral constraint or consideration for others.58 Joel Bakan goes so far as to assert that the shareholder value obsessed corporation is a pathological force in society.59 In response, the ‘stakeholder’ theory of corporate governance posits that managers should consider the impact of their decision on all groups likely to be affected. The company is better seen as an institution, rather than a bundle of assets, and must consider the needs not only of internal stakeholders, shareholders, managers and employees, but also of external stakeholders customers, suppliers, competitors and other special interest groups.60 This is a socially rooted approach alive to ethical concerns and sustainability.61 Managers of investor-owned corporations must acknowledge that all corporate stakeholders have ‘equal moral status and



56



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58



59



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61

See Muchlinski above n 20 at 164; and see further Eugene Schlossberger ‘A New Model of Business: Dual Investor Theory’ 4(4) Business Ethics Quarterly 459 (1994) at 461. See Lynn Stout The Shareholder Value Myth (San Francisco, Berrett-Koehler Publishers Inc, 2012) especially ch 2. Joseph Heath ‘The Uses and Abuses of Agency Theory’ 19(4) Business Ethics Quarterly 497 (2009) at 499–505. Stout argues that shareholders are not all amoral wealth maximisers and that ‘shareholder conscience’ can lead to more socially useful corporate decision-making: see Stout above n 57 especially ch 8. See Joel Bakan The Corporation: The Pathological Pursuit of Power (London, Constable, 2005) and the film documentary based on the book, available at http://​thecorporation​.com/​film/​about​-film and on YouTube at https://​ www​.youtube​.com/​watch​?v​=​zpQYsk​-8dWg. See Muchlinski above n 3 at 342 from which the following text draws. See further Freeman et al. above n 54 Part III ‘Stakeholder theory, ethics and corporate social responsibility’. See too the Davos Manifesto 2020 at https://​ www​.weforum​.org/​agenda/​2019/​12/​davos​-manifesto​-2020​-the​-universal​ -purpose​-of​-a​-company​-in​-the​-fourth​-industrial​-revolution. Wesley Cragg ‘Business Ethics and Stakeholder Theory’ 12(2) Business Ethics Quarterly 113 (2002) at 115; Simon Deakin ‘The Corporation as Commons: Rethinking Property Rights, Governance and Sustainability in

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acknowledge that status in all their activities’.62 Equally, corporate actors need to engage actively in institution building to ensure that certain core public interests are met. They should not benefit illegitimately from a lack of well-ordered institutions, as encountered in weak governance zones or less developed host countries, or from market failures.63 Adherents to the enhanced shareholder value approach respond with what Ruggie, Rees and Davis call an ‘impossibility theorem’ by ‘arguing that corporate leaders simply are unable to identify ex ante who the relevant stakeholders are, or a formula regarding how to weigh and balance their conflicting interests – let alone how they would be represented on corporate boards’.64 Michael Jensen, the progenitor of the nexus of contracts theory, is concerned that stakeholder approaches undermine rational corporate objectives and politicise the corporation, leaving managers empowered to exercise, without accountability, their own preferences in spending the firm’s resources.65 However, Jensen does not dismiss the need for stakeholder interests to be considered and suggests an ‘enlightened value maximization/enlightened stakeholder theory’ alternative. This would give managers and employees incentives to resist maximising short-term financial performance, devote themselves to long-term value creation and to ‘think more generally and creatively about how the organization’s policies treat all important constituencies of the firm’.66



62 63



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the Business Enterprise’ 37(2) Queen’s Law Journal 339 (2012); Bilchitz above n 34 ch 9. Cragg above n 61. See Nien-he Hsieh ‘Does Global Business Have a Responsibility to Promote Just Institutions?’ 19(2) Business Ethics Quarterly 251 (2009) at 258. See John Gerald Ruggie, Caroline Rees and Rachel Davis. ‘Making “Stakeholder Capitalism” Work: Contributions from Business and Human Rights’ HKS Faculty Research Working Paper Series RWP20-034, November 2020 at https://​www​.hks​.harvard​.edu/​publications/​making​-stakeholder​ -capitalism​-work​-contributions​-business​-and​-human​-rights, referring to Lucian A. Bebchuk, Lucian A. and Roberto Tallarita ‘The Illusory Promise of Stakeholder Governance’ 106 Cornell Law Review 91–178 (2020) and Harvard Law School John M. Olin Center Discussion Paper No. 1052, Harvard Law School Program on Corporate Governance Working Paper 2020-1. Available at SSRN: http://​dx​.doi​.org/​10​.2139/​ssrn​.3544978. Michael. C. Jensen ‘Value Maximization, Stakeholder Theory, and the Corporate Objective Function’ 12(2) Business Ethics Quarterly 235 (2002) at 237. ibid at 245.

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Jensen’s ideas gain support in the G20/OECD Principles of Corporate Governance (G20/OECD Principles), which assert that, by taking an enlightened shareholder approach ‘it is … in the long-term interest of corporations to foster wealth-creating co-operation among stakeholders’.67 An ‘enlightened shareholder value’ principle also appears in section 172 of the UK Companies Act 2006, which requires directors ‘to promote the success of the company’. As will be seen in Chapter 4, this entails a reporting requirement in an annual strategic report covering, among others, information about ‘social, community and human rights issues, including information about any policies of the company in relation to those matters and the effectiveness of those policies’.68 The ‘enlightened shareholder value’ approach assumes a stewardship role for directors, viewing the consideration of such wider interests as part of the process of securing the success of the company.69 Nevertheless, it remains rooted in the primacy of shareholder value and so, while it is an advance on the narrow focus of agency/nexus of contracts theory, its practical value as an effective safeguard for outside stakeholders may be limited.70 2.2.4 Political arguments The argument that business managers should not make ‘political’ decisions has already been answered in large part in the two preceding sub-sections. It may be added that the argument limiting management decisions to those affecting corporate profits is itself a ‘political’ choice to the extent that it privileges shareholder interests. Why should decisions affecting potential victims of corporate human rights infringements be ‘political’ while decisions affecting shareholders be only ‘commercial’? It



67



68



69 70

The G20/OECD Principles of Corporate Governance (September 2015) at 34, and see at 9–11: https://​www​.oecd​.org/​daf/​ca/​Corporate​-Governance​ -Principles​-ENG​.pdf. See further, UK Government Corporate Governance The Companies (Miscellaneous Reporting) Regulations 2018 - Q&A (updated November 2018) at https://​www​.gov​.uk/​government/​publications/​corporate​ -governance​-new​-reporting​-regulations. See Muchlinski above n 3 at 344. See Janet Dine and Marios Koutsias The Nature of Corporate Governance: The Significance of National Cultural Identity (Cheltenham, Edward Elgar, 2013) at 183–4; Bilchitz above n 34 at 379–83.

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is also hard to defend the privileging of shareholder interests given that the law already offers significant protection for those interests.71 The extension of human rights responsibilities may indeed make corporations look akin to states in their observance of what are essentially public law norms, leading some to argue that we should recognise a quasi-governmental role for MNEs and impose public justice duties upon them.72 However, does this matter? Clearly the human rights that businesses may infringe will differ in their context from state violations, as will be more fully discussed in Chapter 5, and, on a practical level, the legal responsibility of corporate actors may be secured under applicable domestic, and, in future, possibly international, laws. The state will remain the primary enforcer of human rights obligations for business, and business will not acquire significant new legal powers or immunities in the process.73 A more important political argument rests with the risk that references to human rights may weaken ordinary business regulation by deflecting attention away from this vital state function. However, this is not a trade-off. Human rights claims are no substitute for effective substantive business regulation. Rather, as Arnold notes, their role is useful in egregious cases of human rights infringements where regulation may have broken down to create a ‘governance gap’. They also have a role to play where the need to classify corporate misconduct as a breach of human rights is justified by the acute moral unacceptability and exceptionally harmful nature of that conduct. Finally, the argument that MNEs may be subjected to arbitrary and selective targeting by NGOs should not be overstated. NGOs, espe-



71



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73

See further John Boatright ‘Fiduciary Duties and the Shareholder-Management Relations: What’s So Special about Shareholders?’ 4(4) Business Ethics Quarterly 393 (1994). See Florian Wettstein Multinational Corporations and Global Justice: Human Rights Obligations of a Quasi-Governmental Institution (Stanford, Stanford University Press, 2009). For a critique see Hsieh above n 18 and Bilchitz above n 34 at 39–47. See for an argument that corporations will need certain legal and political rights of action to meet human rights responsibilities, John D. Bishop ‘The Limits of Corporate Human Rights Obligations and the Rights of for-Profit Corporations’ 22(1) Business Ethics Quarterly 119 (2012).

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cially the more established organisations with a proven track record as researchers, consultants and advisers, are a useful source of knowledge and understanding. NGOs are recognised by states in such roles. Equally, corporations increasingly enter into so-called ‘multi-stakeholder initiatives’ (MSIs) involving NGO partners to develop various business and human rights-oriented initiatives. The core characteristic of MSIs is the involvement of ‘stakeholders’, global actors who have a ‘stake’ in an issue and who come together to work out a collaborative solution to issues of mutual concern.74 MSIs represent new institutional practices that have the capacity to overcome the historical unease surrounding business responsibilities for wider social issues, including human rights. MSIs are further considered in Chapter 7.



74

See Harris Gleckman Multistakeholder Governance and Democracy: A Global Challenge (London, Earthscan, 2018) Preface at xiii. See too M. Raymond and L. Denardis ‘Multistakeholderism: Anatomy of an Inchoate Global Institution’ 7(3) International Theory 572 (2015) at 574: ‘multistakeholderism entails two or more classes of actors engaged in a common governance enterprise concerning issues they regard as public in nature and characterized by polyarchic authority relations constituted by procedural rules’. Polyarchy ‘entails situations where authority is distributed among a number of actors’, ibid at 580.

3

The UN business and human rights framework

The UNGPs are the culmination of many years of UN debate over the impact of TNCs, and other business enterprises, on the economic and social development of less developed states.1 In Chapter 1 it was seen that the first ever UN reference to human rights and business was in the UN Draft Code of Conduct on TNCs.2 Its placement in an instrument covering both the economic and social responsibilities and rights of TNCs indicated that the UN linked economic development with responsible business conduct. This link is also present in the first comprehensive UN instrument to refer to the human rights obligations of business, the UN Global Compact, which stresses voluntary business adherence to, and promotion of, labour and human rights, environmental protection and anti-corruption.3 The link between development and responsible business also visible in the UN Norms, which sought to establish binding legal duties on business to observe human rights, which, as will be shown, went well beyond traditional lists of human rights and covered a number of socio-economic issues.4 In a similar vein the UNGPs expressly state that: These Guiding Principles should be understood as a coherent whole and should be read, individually and collectively, in terms of their objective of

1



2



3



4

United Nations Guiding Principles on Business and Human Rights (New York and Geneva, United Nations, 2011) at https://​ www​ .ohchr​ .org/​ documents/​publications/​guiding​principles​businesshr​_en​.pdf. See Chapter 1 Section 1.3. UN Global Compact at https://​www​.unglobalcompact​.org/​. UN Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights (UN Doc. E/CN.4/ Sub.2/2003/12/Rev.2(2003), 13 August 2003) at https://​ digitallibrary​ .un​ .org/​record/​501576​?ln​=​en. 47

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enhancing standards and practices with regard to business and human rights so as to achieve tangible results for affected individuals and communities, and thereby also contributing to a socially sustainable globalization.5

The reference to ‘socially sustainable globalization’ unmistakably links the UNGPs to wider socio-economic goals. Each of these UN initiatives may be seen as a ‘model’ of how human rights and business should be approached.6 Each model acts as a precursor to the next to varying degrees. While the UN Norms sought to establish a model of legally binding obligations on business, the UNGPs ultimately rejected this approach by adopting the legally non-binding corporate responsibility to respect human rights. However, this is not a simple continuation of the ‘voluntarism’ UN Global Compact approach. As this chapter will show, the reasons for adopting the corporate responsibility to respect are more complex and nuanced than a simple rejection of legally binding corporate duties. The UNGPs go beyond preceding UN instruments by ‘institutionalising’ stronger state- and corporate-based systems for the business observance of human rights. A mix of approaches to implementing business responsibility for human rights is envisioned, based on the power of the state to adopt binding legal duties for business and on the corporate responsibility to respect, which, though not a legal obligation, is rooted in the social norm that business should respect human rights. In this sense the responsibility to respect, while remaining a voluntary standard of conduct in strict legal terms, acquires a degree of normative force.

3.1

The first model: the UN Global Compact

The UN Global Compact of 2000 is the first UN instrument referring to business and human rights within the wider context of sustainable development.7 The UN Global Compact supports companies to:



5 6



7

UNGPs above n 1 ‘General Principles’. On the use of ‘modelling’ as a regulatory device in international business regulation see John Braithwaite and Peter Drahos Global Business Regulation (Cambridge, Cambridge University Press, 2000) especially ch 25. UN Global Compact above n 3.

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1. Do business responsibly by aligning their strategies and operations with Ten Principles on human rights, labour, environment and anti-corruption; and 2. Take strategic actions to advance broader societal goals, such as the UN Sustainable Development Goals, with an emphasis on collaboration and innovation.8

The Global Compact involved a partnership between the UN and business, which contrasted with the suspicion business felt towards the UN Draft Code of Conduct during the 1970s and 1980s.9 Then Secretary-General, the late Kofi Annan, forged a new relationship with business which balanced corporate rights to free trade and investment with a commitment by business to further core UN standards in human rights, the environment, labour rights and anti-corruption.10 The Global Compact is a multi-stakeholder initiative, meaning that, in addition to companies that sign up to the Compact, non-business partners, including academic institutions, business associations, cities/municipalities, civil society organisations/NGOs, labour unions and public sector organisations, are encouraged to get involved.11



UN Global Compact ‘Our Mission’ at https://​www​.unglobalcompact​.org/​ what​-is​-gc/​mission. 9 See Peter Muchlinski ‘The Impact of the UN Guiding Principles on Business Attitudes to Observing Human Rights’ 6(2) BHRJ 212 (2021) at 218–9, doi:​ 10​.1017/​bhj​.2021​.14 on which this section draws and expands. 10 See Karin Buhmann Changing Sustainability Norms through Communication Processes: The Emergence of the Business and Human Rights Regime as Transnational Law (Cheltenham, Edward Elgar, 2017) at 131–42; Jens Martens Corporate Influence on the Business and Human Rights Agenda of the United Nations (Aachen/Berlin/Bonn/New York, Misereor, Brot für die Welt, Global Policy Forum, June 2014) 8–9 at https://​www​.globalpolicy​.org/​ en/​publication/​corporate​-influence​-business​-and​-human​-rights​-agenda​ -united​-nations. See further Georg Kell ‘The Global Compact: Origins, Operations, Progress, Challenges’ 11 The Journal of Corporate Citizenship 35 (Autumn 2003); Georg Kell and John Ruggie ‘Global Markets and Social Legitimacy: The Case of the Global Compact’ 8(3) Transnational Corporations 101 (December 1999). 11 UN Global Compact ‘Non-business Participation’ at https://​ www​ .unglobalcompact​.org/​participation/​join/​who​-should​-join/​non​-business. 8

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The Ten Principles covered by the Global Compact are: Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labour Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.12

The Ten Principles of the Global Compact are derived from the UDHR,13 the  ILO Declaration on Fundamental Principles and Rights at Work 1998,14 the Rio Declaration on Environment and Development of 2012,15 and the United Nations Convention against Corruption of 2003.16 While voluntary, corporate membership of the UN Global Compact does carry the potential sanction of placement on a ‘grey list’. Once enrolled, firms have a duty to make an annual report, the ‘Communication on Progress’ (CoP).17 Failing to provide a CoP results in a downgrading of participant status from active to non-communicating. Participants who



12



13



14



15



16



17

UN Global Compact ‘The Ten Principles of the UN Global Compact’ at https://​www​.unglobalcompact​.org/​what​-is​-gc/​mission/​principles. Available at https://​www​.un​.org/​en/​about​-us/​universal​-declaration​-of​ -human​-rights. Available at https://​www​.ilo​.org/​declaration/​lang​-​-en/​index​.htm. Available at https://​su​stainabled​evelopment​.un​.org/​rio20/​futurewewant. Available at https://​www​.unodc​.org/​unodc/​en/​corruption/​uncac​.html. See UN Global Compact ‘Communication on Progress’ at https://​www​ .unglobalcompact​.org/​participation/​report/​cop.

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do not communicate progress for two years in a row are expelled and the UN Global Compact publishes their name.18 That said the UN Global Compact ‘does not police or enforce the behaviour or actions of companies. Rather, it is designed to stimulate change and to promote corporate sustainability and encourage innovative solutions and partnerships.’19 The Global Compact has been variously criticised as having no ‘teeth’ given the very limited resources and regulatory capacity of its administrative organ, the Global Compact Office; being little more than a minimal list of general commitments that can easily be met through creative corporate reporting; and for the cautious approach adopted by the Global Compact Office when dealing with documented abuses of the Compact’s aims and principles.20 To deal with such criticisms a recent strategy review vowed to make companies more accountable. According to the UN Global Compact Strategy 2021–2023: We believe we have a responsibility to move participant companies faster and farther than the average company in demonstrating progress in corporate sustainability and responsible business practices. This means forging partnerships with our participants, ranging from MNCs [multinational corporations] to national companies to SMEs [small- and medium-sized enterprises], who commit to setting clear priorities across the Ten Principles and have a willingness to do the work, even when it gets uncomfortable, to advance their performance on corporate sustainability and responsible business practice.21

Key to this aim is a ‘Refreshed CoP’, a response to the increased demands for corporate environmental, social and governance (ESG) disclosure and accountability at the national level and in relation to the UN Sustainable



See UN Global Compact ‘FAQs’ at https://​ www​ .unglobalcompact​ .org/​ about/​faq. 19 ibid. 20 See further Surya Deva Regulating Corporate Human Rights Violations: Humanizing Business (paperback edn, Abingdon, Routledge, 2014) at 96–100. 21 UN Global Compact UN Global Compact Strategy 2021–2023 (New York, UN Global Compact, 2021) 12 at https://​ ungc​ -communications​ -assets​.s3​.amazonaws​.com/​docs/​about​_the​_gc/​UN​-GLOBAL​-COMPACT​ -STRATEGY​-2021​-2023​.pdf. 18

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Development Goals (SDGs).22 This requires the development of methods by which the CoP can be used by the reporting company, and other participating companies, to learn about how to effectively report on the Ten Principles and SDGs, track their own progress and identify areas for improvement, publicly showcase progress towards the Ten Principles and SDGs, along with a tiering system, view data of others to identify best practices by industry or sector, and navigate curated content and tools based on their own progress.23

Thus, in addition to determining compliance by individual businesses, the CoP is seen as a learning tool for improved adherence to the Ten Principles and the SDGs, which are effectively now a part of the reporting process.24 Compliance with the UNGPs also constitutes part of the revised reporting system, using the number of companies committed to implementing the UNGPs as an ‘aggregate impact indicator’ of companies with public commitments to human rights.25 These reforms will no doubt improve the CoP. However, the principal weakness, a pre-occupation with process and reporting rather than avoidance of human rights abuses or their remediation, remains. Of course, the UN Global Compact was never intended to be an enforcement mechanism and was based on the belief that voluntary adherence to a reporting system could lead to improved corporate awareness of the risk of human rights violations through ‘constructive engagement’, which could ‘stimulate best practices and … bring about convergence in corporate practices around universally shared values’.26 It may be pointless to expect the Global Compact to do much more than act as a ‘learning network’, and,



See UN Global Compact ‘Revision to the UN Global Compact’s Reporting Framework – the Communication on Progress’ (March 2021) at https://​ ungc ​ - communications ​ - assets ​ . s3 ​ . amazonaws ​ . com/ ​ d ocs/ ​ p ublications/​ UNGC​_CoP​_Revision​_Info​_Note​.pdf. 23 Compact Strategy above n 21 at 12 and 28. 24 The Compact Strategy adds a list of ‘Priority Issue Areas’ for reporting based on key SDGs: above n 21 at 17–19. 25 Compact Strategy above n 21 at 29 and 34. 26 Kell and Ruggie above n 10 at 104. See too Nadia Bernaz Business and Human Rights: History, Law and Policy – Bridging the Accountability Gap (Abingdon, Routledge, 2017) at 176–85. 22

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in this context, the increased sensitivity in the CoP to more precise detail and focus on key issues should be a welcome development.27

3.2

The second model: The UN Norms

The UN Norms have been described as ‘the first nonvoluntary initiative accepted at the international level’.28 David Weissbrodt, one of the principal drafters of the UN Norms, pointed out at the 54th Session of the UN Sub-Commission on Human Rights that the UN Norms applied human rights law under ratified conventions to the activities of TNCs and other business enterprises. Moreover, their language emphasised binding responsibilities through the term ‘shall’ rather than ‘should’ and through the inclusion, in later drafts, of more comprehensive implementation measures.29 In this respect the UN Norms were a radical alternative to the voluntarism of the Global Compact and, it is fair to say, they owed relatively little to the latter in terms of design or purpose, though both refer to norms in international human rights instruments. It should be noted that the UN Norms were welcomed by Global Compact staff as a significant educational effort that might contribute positively to the latter.30 The UN Norms where the culmination of a five-year deliberation before a working group of the UN Human Rights Commission’s Sub-Commission on the Promotion and Protection of Human Rights. Composed of independent experts, the working group was set up to analyse the connection between human rights and the operations of TNCs.31 In the end, the

27



28



29



30 31

On the utility and limitations of ‘learning networks’ as a device for implementing change in business behaviour, see John Gerald Ruggie ‘The Theory and Practice of Learning Networks: Corporate Social Responsibility and the Global Compact’ 5 Journal of Corporate Citizenship 27 (Spring 2002). David Weissbrodt and Muria Kruger ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ 97 AJIL 901 (2003) at 903. Working Group of the UN Sub-Commission on Human Rights Report for 2002 (UN Doc.E/CN.4/Sub.2/2002/13, 15 August 2002) para 14 at https://​ digitallibrary​.un​.org/​record/​472545​?ln​=​en; Weissbrodt and Kruger above n 28 at 913–15. Weissbrodt and Kruger above n 28 at 903 n13. See David Kinley and Rachel Chambers ‘The UN Human Rights Norms for Corporations: The Private Implications of Public International Law

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Commission on Human Rights regarded the UN Norms as a draft proposal that had no legal standing and, ultimately, no legal effect despite being based on existing norms of international human rights law.32 The UN Norms applied to both TNCs and other business enterprises.33 They contained a number of innovative steps regarding how international law could accommodate business responsibilities for human rights.34 The first step was to justify the extension of international human rights norms to private non-state actors. The UN Norms found this in the fact that the UDHR was addressed to governments and ‘other organs of society’. Following this provision, the third recital of the Preamble to the UN Norms recognises that: even though States have the primary responsibility to promote, secure the fulfilment of, respect, ensure respect of and protect human rights, transnational corporations and other business enterprises, as organs of society, are also responsible for promoting and securing the human rights set forth in the Universal Declaration of Human Rights’ (emphasis added).

This accepted that TNCs and other business enterprises have human rights responsibilities based on their social existence, a radical departure from the traditional notion that corporate obligations derive solely from private national laws.



32



33



34

Sydney Law School Research Paper No. 07/06, 2 Human Rights Law Review 10–13 (2006), SSRN:  https://​ssrn​.com/​abstract​=​944153, doi:​10​.1093/​hrlr/​ ngl020; Pini Pavel Miretski and Sascha-Dominik Bachmann ‘The UN Norms on the Responsibility of Transnational Corporations and other Business Enterprises with Regard to Human Rights: A Requiem’ 17(1) Deakin Law Review 5 (2012) at 14–17; Buhmann above n 10 at 116–27. For a detailed historical, political and legal analysis of the UN Norms see Larry Cata Backer ‘Multinational Corporations, Transnational Law: The United Nations Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility in International Law’ 37(2) Columbia Human Rights Law Review 287 (2006). See UN Commission on Human Rights Report on the Sixtieth Session (UN Doc. E/2004/23 E/CN.4/2004/127 2004) Resolution 2004/116 point (c) at 332–3, available at https://​www​.un​.org/​en/​ga/​search/​view​_doc​.asp​?symbol​ =​E/​CN​.4/​2004/​127. For detailed discussion, see Peter T. Muchlinski Multinational Enterprises and the Law (2nd edn, Oxford, Oxford University Press, 2007) at 519–21. See too Weissbrodt and Kruger above n 28 at 907–12. For a more detailed account see Muchlinski above n 33 at 518–24 and 531–6.

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A second step was to clarify the relationship between the human rights obligations of TNCs and other business enterprises and the human rights obligations of states. Paragraph 1 of the UN Norms placed the primary obligation to observe human rights on states while TNCs and other business enterprises had a secondary obligation to do so. In addition, states and businesses were assumed to operate in different spheres of activity and influence, thereby apparently obviating the possibility that business enterprises could supplant the state’s human rights obligations, or that the state could use the UN Norms as an excuse for not taking action to protect human rights.35 Furthermore, Paragraph 19 of the UN Norms made clear that: nothing in these Norms shall be construed as diminishing, restricting, or adversely affecting the human rights obligations of States under national and international law …36

The idea that TNCs and other business enterprises had a secondary obligation to observe human rights was a key element in the opposition of certain states to the UN Norms. For example, the US opposed the adoption of the UN Norms on the ground that ‘human rights obligations apply to states, not non-state actors, and it is incumbent on states when they deem necessary to adopt national laws that address the obligations of private actors’.37 The third step was to transpose existing substantive state obligations in international human rights instruments to the human rights responsibilities of TNCs and other business enterprises. The UN Norms covered all categories of human rights including civil and political rights, economic and social rights and collective rights, including the right to development, and the obligation on TNCs and other business enterprises to promote, respect and protect the rights and interests of indigenous peoples and other vulnerable groups.38 In addition, a number of provisions dealt with

See Commentary on the Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights (hereafter Commentary) (UN Doc.E/CN.4/Sub.2/2003/38.Rev.2(2003)) para 2(b) at https://​digitallibrary​.un​.org/​record/​501578​?ln​=​en. 36 UN Norms above n 4 section H para 19. 37 United States Statement on Item 17 of the Sixty-first Session of the UN Human Rights Commission, 20 April 2005 (on file with author). 38 UN Norms above n 4 section E para 12. 35

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the special problems created by the operations of TNCs including the operation of security arrangements for companies.39 Certain substantive provisions went beyond conventional human rights and addressed more general CSR issues. For example, section F paragraph 13 of the UN Norms introduced general consumer protection standards into the instrument. Other such social responsibility provisions included a prohibition against bribery40 and environmental protection obligations.41 Whether these are truly ‘human rights’ issues is open to debate.42 The fourth step was to provide the UN Norms with implementation and monitoring procedures. The UN Norms were designed with a requirement that TNCs and other business enterprises adopt, disseminate and implement internal rules of operation in compliance with the Norms. In addition, the principles contained in the UN Norms should be incorporated in their contracts or other arrangements and dealings with contractors, sub-contractors, suppliers and licensees in order to ensure their implementation and respect.43 The UN Norms further proposed that TNCs and other business enterprises must monitor and verify their compliance in an independent and transparent manner that included input from relevant stakeholders.44 This could be done by national, international, governmental and/or non-governmental mechanisms in addition to internal review procedures.45 These provisions find echoes in the UNGPs, which, as will be shown in later chapters, also stress the need for internal corporate human rights policies, supply chain responsibilities, stakeholder involvement and independent and transparent monitoring.

41 42

ibid section C para 4. ibid section E para 11. ibid section G para 14. See further Muchlinski above n 33 at 524; ‘In the Matter of the Draft “Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with regard to Human Rights” Opinion of Professor Emeritus Maurice Mendelson QC (4 April 2004) para 14: ‘It would hardly be an exaggeration to say that the Norms tend to treat all aspects of human flourishing as a human right, thus widening the alleged scope of the alleged obligations of TNCs far beyond what are is [sic] generally recognised as human rights law’ (on file with the author). 43 UN Norms above n 4 section H para 15. 44 ibid section H para 16. 45 ibid. 39 40

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Furthermore, by section H paragraph 18 of the UN Norms, TNCs and other business enterprises were required to provide prompt, effective and adequate reparation to persons, entities and communities adversely affected by failures to comply with the Norms. Paragraph 18 envisaged a binding enforcement mechanism, centred on national courts and/or international tribunals, which offered directly effective rights of reparation for the individuals or groups affected as a consequence of a violation of the instrument. The third pillar of the UNGPs, access to remedy, retains the recognition that national courts should offer effective legal remedies for corporate human rights abuses but does not introduce international legal remedies, leaving this issue open to future developments. The UN Norms received mixed reactions. Some business representatives, notably the International Organisation of Employers and the International Chamber of Commerce, opposed an instrument that was, in their view, vague and unfocused, seeking to replace state responsibility for protecting human rights by shifting this to TNCs and other business enterprises, and was an abuse of the Sub-Commission’s mandate as the Member States had not authorised the conclusion of such an instrument.46 By contrast, other businesses were interested in the UN Norms and participated in ‘road-testing’ of the UN Norms in their operations through the Business Leaders Initiative on Human Rights.47 Civil society groups generally supported the UN Norms as a comprehensive list of the main human rights that businesses had to observe and as a reference tool



46



47

See Miretski and Bachmann above n 31 at 27–8; ‘Joint views of the International Organisation of Employers and International Chamber of Commerce on the draft ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ (March 2004) at https://​media​.business​-humanrights​.org/​media/​ documents/​files/​reports​-and​-materials/​IOE​-ICC​-views​-UN​-norms​-March​ -2004​.doc. See too the response of Sir Geoffrey Chandler ‘Response to the joint views of the International Chamber of Commerce (ICC) and International Organisation of Employers (IOE) on the United Nations media​ Human Rights Norms for Companies’ (April 2004) at https://​ .business​-humanrights​.org/​media/​documents/​files/​reports​-and​-materials/​ Chandler​-response​-to​-IOE​-ICC​-April04​.htm, who describes the IOE/ICC objections as ‘a farrago of mis-statements bringing discredit to the ICC/IOE and doing a disservice to business’. See Chandler above n 46 and Kinley and Chambers above n 31 at 15 and 39.

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for NGOs and grassroots campaigners.48 The main home states of TNCs opposed the UN Norms and favoured voluntary international approaches such as the Global Compact and individual state regulation.49 Developing states, apart from Cuba, which supported the UN Norms, were mostly silent.50 There is little doubt that business opposition to the UN Norms was instrumental in their non-adoption.51 Upon taking up the mandate to draft the UNGPs, John Ruggie noted that: the divisive debate over the Norms obscures rather than illuminates promising areas of consensus and cooperation among business, civil society, governments, and international institutions with respect to human rights.52

This created an environment in which progress would be severely hampered. The Special Representative of the Secretary-General (SRSG) sought a new approach beyond the binary mandatory/voluntary debate that resulted out of the UN Norms.53 He added that the lack of international legal personality for corporate actors prevented them having direct international law obligations, and that, apart from certain narrowly drawn responsibilities in international criminal law, corporations had



48



49



50 51



52



53

See Miretski and Bachmann above n 31 at 27; Amnesty International The UN Human Rights Norms For Business: Towards Legal Accountability (London, Amnesty International Publications, 18 January 2004) at https://​ www​.amnesty​.org/​en/​documents/​ior42/​0002/​2004/​en/​. Miretski and Bachmann above n 31 at 32–3 citing views of the UK, Australia, Canada and US. ibid at 31–2. See Martens above n 10 at 10–11. See too Buhmann above n 10 at 127–31. On changing business attitudes to corporate human rights obligations see further Muchlinski above n 9 on which this paragraph draws. See John Gerald Ruggie Just Business: Multinational Corporations and Human Rights (New York, W. W. Norton & Company, 2013) ‘Introduction’ xvii; Justine Nolan ‘Mapping the Movement: The Business and Human Rights Regulatory Framework’ in Dorothée Bauman and Justine Nolan (eds) Business and Human Rights: From Principles to Practice (Abingdon, Routledge, 2016) 32 at 42. See further SRSG Interim Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises (UN Doc. E/ CN.4/2006/97, 2006) para 69 at https://​digitallibrary​.un​.org/​record/​569408​ ?ln​=​en​#record​-files​-collapse​-header. Ruggie above n 52 at 37–8 and 78.

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no existing international human rights obligations as most human rights instruments were voluntary and addressed to states.54 A further objection was that the UN Norms failed to distinguish adequately between state and corporate obligations. This was compounded by the reference to ‘spheres of influence’ as a basis for attributing legal duties to companies given that this concept would effectively attribute responsibility for harms caused by any entity over which the corporation had influence regardless of whether it had any direct involvement in that harm.55 Consequently, the task of analysing the relationship between business and human rights had to start afresh, based on a new evidence-based approach.56 The eventual result was the UNGPs. For political reasons the SRSG felt it necessary to distance himself from the UN Norms. It was abundantly clear that business would never accept binding legal norms and, without business involvement, any UN initiative would be undermined by corporate lobbying of national governments as had happened to the UN Norms.57 The SRSG’s response was initially met with suspicion in the NGO community and drew scathing criticism from David Weissbrodt who accused the SRSG of embarking on: an extremely negative and unproductive critique of the Norms – inspired, if not copied word for word, from the advocacy of the International Chamber of Commerce and the International Organization of Employers.58

However, over time, the multi-stakeholder approach taken by the SRSG, involving wide-ranging consultations with governments, business, civil society and other stakeholders, allowed for the adoption of the UNGPs as a legitimate expression of consensus over the scope of international stand SRSG Interim Report above n 52 at paras 60–5. On the international legal obligations of corporations see further Markos Karavias Corporate Obligations under International Law (Oxford, Oxford University Press, 2013); Peter T. Muchlinski ‘Corporations in International Law’ in Max Planck Encyclopaedia of Public International Law (June 2014) at https://​opil​ .ouplaw​.com/​view/​10​.1093/​law:​epil/​9780199231690/​law​-9780199231690​ -e1513. 55 See further Ruggie above n 52 at 47–55. 56 ibid at 38. 57 ibid at 144–5. 58 David Weissbrodt ‘UN Perspectives on Business and Humanitarian and Human Rights Obligations’ ASIL Proceedings (2006) 135 at 138; Miretski and Bachmann above n 31 at 36 n142. 54

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ards for business and human rights.59 That said, the UNGPs have not escaped NGO criticism for being a voluntary instrument and for failing to include an effective complaints mechanism.60 Such sentiment continues to this day and has motivated calls for a binding international business and human rights instrument containing positive legal obligations on TNCs and other business enterprises, to be discussed in Chapter 7.

3.3

The third model: The UNGPs

Following the non-adoption of the UN Norms by the UN Commission on Human Rights in 2005 it requested the UN Secretary-General to appoint a Special Representative on the issue of human rights, TNCs and other business enterprises to study further the implications of extending such responsibilities to business enterprises.61 In June 2006 the UN Human Rights Council replaced the UN Commission on Human Rights.62 Professor John Ruggie, who had previously worked on the establishment of the UN Global Compact, was appointed as the SRSG to oversee the issue of human rights and TNCs.63 This section charts how the SRSG approached his task and outlines the resulting ‘protect, respect and remedy’ business and human rights framework that was adopted in the UNGPs. The next three chapters will then discuss each of the three pillars in turn.



59 60



61



62



63

See further Ruggie above n 52 ch 4. See for example European Parliament Implementation of the UN Guiding Principles on Business and Human Rights (Policy Department, Directorate-General for External Policies, 2 February 2017) 13 at https://​ www ​ . europarl ​ . europa​ . eu/​ R egData/​ e tudes/​ S TUD/ ​ 2 017/ ​ 5 78031/ ​ E XPO​ _STU(2017)578031​_EN​.pdf. UN Commission on Human Rights Human Rights Resolution 2005/69, 20 April 2005 at https://​www​.ohchr​.org/​en/​issues/​business/​pages/​ srsgtranscorpindex​.aspx. See UN GA Resolution 60/251 ‘Human Rights Council’ 3 April 2006 at https://​www2​.ohchr​.org/​english/​bodies/​hrcouncil/​docs/​A​.RES​.60​.251​_En​ .pdf. Special Representative of the Secretary-General on human rights and transnational corporations and other business enterprises (SRSG) at: https://​ www​.ohchr​.org/​en/​issues/​business/​pages/​srsgtranscorpindex​.aspx. See too Professor John Ruggie ‘In Memoriam’ at https://​www​.hks​.harvard​.edu/​ faculty/​john​-ruggie.

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The task ahead for John Ruggie was formidable. As noted at the end of the previous section, the UN Norms had generated a polarising debate on the extent of business obligations on human rights which ultimately led to their non-adoption. In seeking to avoid a similar failure, the SRSG’s approach may be best understood as a response to three concerns: first, how to avoid the divisions encountered during the UN Norms experience; secondly, how to navigate around the limitations of international law in developing norms applicable to non-state actors; and thirdly, how to understand the changes in regulatory environments that economic globalisation, and the spread of MNEs, had created. The first two issues arise out of the SRSGs above-mentioned critique of the UN Norms while the final element arises out of the belief on the part of the SRSG that: Multinational corporations became the central focus of business and human rights concerns because their scope and power expanded beyond the reach of effective public governance systems, thereby creating permissive environments for wrongful acts by companies without adequate sanctions or reparations. Thus, business and human rights is a microcosm of a larger crisis in contemporary governance: the widening gaps between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences.64

This understanding of changes in the global economy and society led John Ruggie to adopt what he termed a ‘polycentric governance’ approach in the UNGPs. Before turning to this methodology, a preliminary question is how far did the UN Norms act as a ‘model’ for the UNGPs, despite the avowed distance sought by the SRSG from them? In one respect there is an undoubted continuity.65 Both the UN Norms and the UNGPs share normative roots. Both base business responsibilities for human rights on the corpus of existing human rights instruments. Thus the corporate responsibility to respect human rights in the UNGPs, covers ‘all internationally recognised human rights’ initially expressed in the UN International Bill of Human Rights and the ILO Declaration on Fundamental Principles



64 65

Ruggie above n 52 ‘Introduction’ at xxiii. See Miretski and Bachmann above n 31 at 37–8.

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and Rights at Work.66 As enterprises can potentially impact on any human rights this starting point can be supplemented by other standards including ‘the rights of indigenous peoples; women; national or ethnic, religious and linguistic minorities; children; persons with disabilities; and migrant workers and their families’.67 Thus the UNGPs permit the inclusion of new rights as they come to be internationally recognised. The principal difference between the UN Norms and the UNGPs lies in their distinctive methodologies. The UN Norms posited a mandatory, norm-based, system of public legal control over what were seen as bad business impacts on human rights. The UNGPs prefer a multi-perspective, or ‘polycentric’ approach, applying a variety of regulatory methods which tackle the ‘governance gaps’ created by globalisation. These include formal public law regulation; civil governance through which pressure is put on business actors by various stakeholders to alter corporate behaviour; and internal corporate governance, which may respond to these external regulatory methods by altering internal business decision-making practices.68 Accordingly, the first pillar of the UNGPs, the ‘state duty to protect’, is based on traditional public law regulation and attributes legal responsibilities to uphold corporate human rights compliance to states. The second pillar, the ‘corporate responsibility to respect human rights’, instead of imposing doctrinally disputed international legal duties on businesses to comply with human rights, prefers to focus on business decision-making processes. It requires businesses to apply HRDD in assessing the risk of adverse impacts on human rights arising out of their activities or business relationships. The first and second pillars are then reinforced by the third pillar, ‘access to remedy’. This encapsulates both

66 67



68

UNGPs above n 1 Principle 12. ibid Commentary to Principle 12. See further Office of the High Commissioner for Human Rights (OHCHR) ‘Gender lens to the UNGPs’ at https://​www​.ohchr​.org/​EN/​Issues/​Business/​Pages/​GenderLens​.aspx. See John Gerald Ruggie ‘The Social Construction of the UN Guiding Principles on Business and Human Rights’ in Surya Deva and David Birchall (eds) Research Handbook on Human Rights and Business (Cheltenham, Edward Elgar Publishing, 2020) 63 at 74. See too Karin Buhmann ‘Navigating from “Train Wreck” to Being “Welcomed”: Negotiation Strategies and Argumentative Patterns in the Development of the UN Framework’ in Surya Deva and David Bilchitz (eds) Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (Cambridge, Cambridge University Press, 2013) ch 2; Buhmann above n 10 ch 5.

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a legal dimension, through state-based judicial and other legal remedies, and a non-legal dimension, through state- and non-state-based informal remedial methods, including corporate-based grievance mechanisms and other alternative dispute settlement mechanisms based on stakeholder participation and public accountability. The major innovation is the second pillar, and this requires some further elucidation. The scope of the responsibility to respect emerges from the economic functions of corporations.69 The SRSG emphasises that while corporations can be considered ‘organs of society’, they are ‘specialised economic organs, not democratic public interest institutions’.70 Consequently, ‘their responsibilities cannot and should not simply mirror the duties of States’.71 The responsibility to respect is a ‘responsibility’ rather than a ‘duty’ echoing the absence of international legal personality, and hence a binding international duty to observe human rights, for corporate actors. The responsibility to respect is ‘a standard of expected conduct acknowledged in virtually every voluntary and soft law instrument related to corporate responsibility …’.72 However, the UN Framework is not ‘a law-free zone’ to the extent that states can create legal duties for corporations under domestic law.73 The core element of the responsibility to respect, the exercise by business actors of HRDD in the course of their decision-making, permits a learning process to develop which, it is hoped, will lead them towards integrating human rights compliant behaviour into their operations. HRDD is discussed further in Chapter 5. The responsibility to respect only covers the avoidance and mitigation of human rights risks but does not preclude enterprises actively promoting

See Peter T Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 572 on which this paragraph draws. 70 SRSG ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’ (UN Doc. A/HRC/8/5, 7 April 2008) para 53 available at http://​www​ .reports​-and​-materials​.org/​Ruggie​-report​-7​-Apr​-2008​.pdf. 71 ibid. 72 SRSG ‘Business and Human Rights: Further Steps toward the Operationalisation of the “Protect, Respect and Remedy” framework’ (UN Doc. A/HRC/14/27, 9 April 2010) para 55 available at http://​www​.reports​ -and​-materials​.org/​Ruggie​-report​-2010​.pdf. 73 ibid para 66.

69

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human rights. According to Principle 1 of the UN Global Compact, ‘[b]usinesses should support and respect the protection of internationally proclaimed human rights’.74 This requires not only respecting human rights but also taking voluntary action to ‘make a positive contribution towards the protection and fulfilment of human rights … Action to support human rights should be a complement to and not a substitute for action to respect human rights.’75 The positive obligation to promote human rights is also implicit in the UN SDGs, to which businesses can contribute through social development initiatives. However, when engaging in such initiatives, businesses must avoid negative human rights impacts through the use of the standards in the UNGPs.76 A further conceptual contribution to the UNGPs comes from the idea that corporate responsibility to respect human rights arises out of the conviction that corporations have a ‘social licence to operate’ (SLO) in the communities where they do business.77 According to John Morrison, the Chief Executive Officer of the Institute for Human Rights and Business, the SLO emerged as a business term in the mining industry especially in Australia and Canada in the 1990s.78 The SLO has no precise definition but it encompasses an understanding that a business operates in a community on the basis of its social acceptance or approval earned through ‘consistent and trustworthy behaviour and interactions with stakeholders’.79 In this sense the SLO represents a ‘social contract’ between the corporation and community.80 Unlike a legal obligation, the SLO is



UN Global Compact Principle 1 at https://​www​.unglobalcompact​.org/​what​ -is​-gc/​mission/​principles/​principle​-1. 75 ibid. 76 Shift, Oxfam and Global Compact Network Netherlands Doing Business with Respect for Human Rights: A Guidance Tool for Companies (2016) 114–6 at https://​www​.shiftproject​.org/​resources/​publications/​doing​-business​-with​ -respect​-for​-human​-rights/​. 77 SRSG above n 70 para 54. See further John Morrison The Social License: How to Keep Your Organisation Legitimate (Basingstoke, Palgrave MacMillan, 2014); Leeora Black The Social License to Operate: Your Management Framework for Complex Times (Oxford, Do Sustainability, 2013); Kieren Moffat, Justine Lacey, Airong Zhang and Sina Leipold ‘The Social Licence to Operate: A Critical Review’ 89 Forestry 477 (2016), doi:​10​.1093/​forestry/​ cpv044. The following paragraphs draw on Muchlinski above n 69 at 562–4. 78 Morrison above n 77 at 14. 79 Black above n 77 at 18. 80 See further Morrison above n 77 at 23–6. 74

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granted by the community and is based on the values, perceptions and expectations of various local stakeholders. It is thus more socially rooted, and, unlike a legal licence whose terms are settled upon conclusion, it is a continuing process based on dialogue.81 Corporate compliance with human rights is an element of the SLO.82 The UNGPs set out to create a normative consciousness about the need for corporations to become responsible for human rights violations. That consciousness comes about when the corporation and local stakeholders discuss their respective concerns through the institutions that they set up together. Equally, according to John Ruggie, the corporate responsibility to observe human rights is now a ‘transnational social norm’ recognised as such by governments, civil society and businesses in their corporate responsibility commitments.83 This non-legal dimension is central to the nature and overall framework of the UNGPs.84 As noted in the introduction, the objective of the Guiding Principles is to ‘enhance standards and practices with regard to business and human rights so as to achieve tangible results for affected individuals and communities …’.85 While the UNGPs do not create new international law obligations they do have the capacity to create new socially rooted human rights norms for business actors. As Amartya Sen has pointed out, human rights are not a purely legal concept but a predominantly moral and ethical one and translating human rights into legal rights is not the only way to ensure their observance.86

83 84 81 82



85 86

See Moffat et al. above n 77 at 481–2. Muchlinski above n 69 at 563. Ruggie above n 52 at 76. See further Larry Cata Backer ‘On the Evolution of the United Nations’ “Protect-Respect-Remedy” Project: The State, the Corporation and Human Rights in a Global Governance Context’ 9 Santa Clara Journal of International Law 37 (2011) and ‘From Institutional Misalignments to Socially Sustainable Governance: The Guiding Principles for the Implementation of the United Nations’ “Protect, Respect and Remedy” and the Construction of Inter-Systemic Global Governance’ 25 Pacific McGeorge Global Business and Development Law Journal 69 (2012). UNGPs above n 1 Comment to General Principles. See Amartya Sen ‘Elements of a Theory of Human Rights’ 32(4) Philosophy and Public Affairs 315 (2004) and ‘Human Rights and the Limits of the Law’ 27(6) Cardozo Law Review 2913 (2006). For an interdisciplinary approach to business and human rights see further Florian Wettstein Business and

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This idea has proved problematic for lawyers used to working with positive legal duties.87 If the state fails to regulate the corporation’s human rights obligations under domestic law, there is no other source of binding duties. The only fall back is on a ‘horizontal effects’ principle, where, in the case of corporate human rights abuses carried out independently of the state, the state has a legal duty to control and/or remedy such abuses so as to protect the victims.88 This negates the idea that corporations have human rights obligations arising from their very nature and actions in society and maintains the positivist notion that the state is the only holder of legally binding international human rights duties.89 Furthermore, although the social conversation inherent in the SLO should create a new sense of obligation for the corporate actor, that remains contingent on its will to refrain from applying its power in deliberate, or negligent, disregard of what it hears.90 From such perceived contradictions stem the calls for binding national and international corporate human rights obligations and liabilities, examined in Chapter 7.

Human Rights: Ethical, Legal, and Managerial Perspectives (Cambridge, Cambridge University Press, 2022). 87 See Muchlinski above n 69 at 564 on which this paragraph draws; and see further David Bilchitz ‘A Chasm between “Is” and “Ought”? A Critique of the Normative Foundations of the SRSG’s Framework and the Guiding Principles’ in Deva and Bilchitz (eds) above n 68 ch 5. David Bilchitz ‘The Ruggie Framework: An Adequate Rubric for Corporate Human Rights Obligations?’ 12 SUR – International Journal on Human Rights 199 (2010); Penelope Simons ‘International Law’s Invisible Hand and the Future of Corporate Accountability for Violations of Human Rights’ 3(1) Journal of Human Rights and the Environment 5 (2012). 88 On the ‘horizontal effects’ doctrine, see further Andrew Clapham Human Rights Obligations of Non-State Actors (Oxford, Oxford University Press, 2006) at 349–42; Nicola Jagers Corporate Human Rights Obligations: In Search of Accountability (Antwerp, Intersentia, 2002) at 36–44 and ch VI; August Reinisch ‘The Changing International Legal Framework for Dealing with Non-State Actors’ in Phillip Alston (ed.) Non-State Actors and Human Rights (Oxford, Oxford University Press, 2005) 37 at 78–82. See too Chapter 4 Section 4.1. 89 See further Gunther Teubner ‘Transnational Fundamental Rights: Horizontal Effect’ 40 Rechtsfilosofie & Rechtstheorie 191 (2011); Ibrahim Kanalan ‘Horizontal Effect of Human Rights in the Era of Transnational Constellations: On the Accountability of Private Actors for Human Rights Violations’ (1 September 2014) https://​ssrn​.com/​abstract​=​2539110. 90 See Teubner above n 89.

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67

The impact of the UNGPs

In this final section, the impact of the UNGPs will be briefly assessed.91 Undoubtedly, the UNGPs have become a benchmark for business and human rights practice. In particular, HRDD has been adopted by numerous IGO instruments covering business and human rights, by national mandatory due diligence laws and business and human rights National Action Plans, discussed in Chapters 4 and 7, and into corporate human rights programmes. A number of guides on HRDD have been developed since the adoption of the UNGPs.92 Following the UNGPs, the OECD included a new Human Rights Guideline and HRDD in the 2011 revision of the Guidelines for Multinational Enterprises and has developed due diligence guidance for supply chains in a number of sectors.93 The OECD Guidelines go further than the UNGPs in that in the Guidelines due diligence has been adopted as a general principle for the observance of all the main standards, and not only human rights. In 2018, the OECD adopted a comprehensive Due Diligence Guidance for Responsible Business Conduct to help enterprises understand and implement due diligence.94 The EU has also adopted supply chain due diligence requirements in sectoral directives.95 Equally, the EU



See Muchlinski above n 69 at 574–5 on which this section draws and updates. 92 See for example, Shift et al. above n 76; see further Business and Human Rights Resource Centre ‘UNGPs Guidance and Implementation’ at https://​ www​.business​-humanrights​.org/​en/​big​-issues/​un​-guiding​-principles​-on​ -business​-human​-rights/​guidance​-implementation/​. 93 See OECD Guidelines for Multinational Enterprises (Paris, OECD, 2011) at http://​www​.oecd​.org/​daf/​inv/​mne/​48004323​.pdf; OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (Paris, OECD Publishing, 2017) at http://​mneguidelines​.oecd​.org/​ responsible​-supply​-chains​-textile​-garment​-sector​.htm; OECD-FAO Guidance for Responsible Agricultural Supply Chains (Paris OECD Publishing, 2016) at http://​dx​.doi​.org/​10​.1787/​9789264251052​-en. 94 OECD Due Diligence Guidance for Responsible Business Conduct (OECD, Paris, 2018) at http://​www​.oecd​.org/​investment/​due​-diligence​-guidance​ -for​-responsible​-business​-conduct​.htm (OECD Guidance). 95 Regulation (EU) No.  995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market, Text with EEA relevance OJ [2010] L 295/23; and see EU Commission Environment ‘Timber 91

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Non-Financial Reporting Directive may be used by firms to develop due diligence-based reporting for human rights.96 The UNGPs have also had a significant impact on the development of EU CSR policy.97 As will be seen in Chapter 7, the EU is also developing a mandatory HRDD instrument following the UNGPs. In the corporate sector, the precise method of carrying out HRDD will vary from business to business and be dependent on factors such as size and resources.98 The adoption of a specialised human rights-oriented approach can be effective in identifying human rights risks. For example the Anglo-Dutch consumer firm Unilever asserts: We recognise that we must take steps to identify and address any actual or potential adverse impacts with which we may be involved whether directly or indirectly through our own activities or our business relationships. We manage these risks by integrating the responses to our due diligence into our



96



97



98

Regulation’ at http://​ec​.europa​.eu/​environment/​forests/​timber​_regulation​ .htm; and Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas OJ [2017] L 130/1 at https://​eur​-lex​.europa​.eu/​legal​-content/​EN/​TXT/​?uri​=​CELEX​ %3A32017R0821. See Karin Buhmann ‘Neglecting the Proactive Aspect of Human Rights Due Diligence? A Critical Appraisal of the EU’s Non-Financial Reporting Directive as a Pillar One Avenue for Promoting Pillar Two Action’ 3 BHRJ 23 (2018), doi:​10​.1017/​bhj​.2017​.24. See European Commission, A Renewed EU Strategy 2011–2014 for Corporate Social Responsibility COM (2011) 681 at https://​eur​-lex​.europa​ European .eu/​legal​-content/​EN/​TXT/​?uri​=​CELEX:​52011DC0681; Commission Staff Working Document on Implementing the UN Guiding Principles on Business and Human Rights – State of Play (Brussels, 14.7.2015 SWD(2015) 144 final) at https://​ec​.europa​.eu/​anti​-trafficking/​commission​ -staff​-working​-document​-implementing​-un​-guiding​-principles​-business​ -and​-human​-rights​_en. See further Humberto Cantú Rivera ‘The United Nations Guiding Principles on Business and Human Rights in the European Union: From Regional Action to National Implementation’ in Jena Martin and Karen E. Bravo (eds) The Business and Human Rights Landscape: Moving Forward, Looking Back (Cambridge, Cambridge University Press, 2016) ch 17. See for example, on the use of the UNGPs by FIFA, the governing body of world football, Ruggie above n 68 at 82–3.

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policies and internal systems, acting on the findings, tracking our actions, and communicating with our stakeholders about how we address impacts.99

The adoption of HRDD is not confined to Western businesses. A number of developing countries are in the process of introducing National Action Plans based on the UNGPs.100 In particular, China, which expressed its support for the UNGPs on their adoption in 2011, is using the UNGPs as a benchmark for Chinese firms operating internationally.101 Conversely the UNGPs are also being used as a benchmark by the UN Working Group on human rights and business to assess the behaviour of foreign investors in China concerning the treatment of the Uyghur minority in Xinjiang and other provinces.102 In sum, the UNGPs can rightly be seen as a turning point in the history of business and human rights. Not only are they the product of a distinctive methodology, but they have achieved a general acceptance that has allowed them to become a foundational instrument for others to follow. The next three chapters will now examine each of the three pillars of the ‘protect, respect and remedy’ framework in turn.

Unilever Human Rights Policy Statement ‘Addressing Human Rights Impacts’ at https://​www​.unilever​.com/​Images/​unilever​-human​-rights​-policy​ -statement​_tcm244​-422954​_en​.pdf. See further Robert McCorquodale, Lise Smit, Stuart Neely and Robin Brooks ‘Human Rights Due Diligence in Law and Practice: Good Practices and Challenges for Business Enterprises’ 2(2) BHRJ 195 (2017), doi:​10​.1017/​bhj​.2017​.2. 100 See OHCHR ‘State National Action Plans on Business and Human Rights’ at https://​www​.ohchr​.org/​en/​issues/​business/​pages/​nationalactionplans​.aspx. 101 Katryn Wright ‘Corporate Respect for Human Rights in the Chinese Context’ OECD Insights, 18 June 2015 at https://​www​.business​-humanrights​.org/​ en/​latest​-news/​china​-corporate​-respect​-for​-human​-rights​-in​-the​-chinese​ -context/​ ; Ruggie above n 68 at 82. See further Jernej Letnar Černič ‘Reconciling Business and Human Rights in China’ 58(2) Journal of the Indian Law Institute 135 (2016), https://​www​.jstor​.org/​stable/​45163273. 102 See OHCHR ‘China: UN Experts Deeply Concerned by Alleged Detention, Forced Labour of Uyghurs’ (Geneva, 29 March 2021) at https://​www​.ohchr​ .org/​EN/​NewsEvents/​Pages/​DisplayNews​.aspx​?NewsID​=​26957​&​LangID​=​ E. 99

4

The state duty to protect

The state duty to protect arises out of the general international legal obligation of states to respect, protect and fulfil/promote human rights.1 This is examined in Section 4.1. The UNGPs adapt this framework and lay down a programme of work for states to follow.2 By Principle 1 of the UNGPs: States must protect against human rights abuse within their territory and/ or jurisdiction by third parties, including business enterprises. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication.3

The Commentary to Principle 1 clarifies that states are not themselves responsible for human rights abuses by private actors but may breach their international human rights law obligations where such abuses can be attributed to them, or where they fail to take appropriate steps to prevent, investigate, punish and redress them.4 The state duty to protect involves preventive measures, covered under this duty, and adjudication and

1



2



3



4

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This chapter draws on, updates and expands Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 564–72. UNGPs General Principles state: ‘These Guiding Principles are grounded in recognition of: (a) States’ existing obligations to respect, protect and fulfil human rights and fundamental freedoms …’ at https://​www​.ohchr​.org/​ documents/​publications/​guiding​principles​businesshr​_en​.pdf. UNGPs above n 2 Principle 1. UNGPs above n 2 Commentary to Principle 1. See further Dalia Palombo Business and Human Rights: The Obligations of the European Home States (paperback edn, Oxford, Hart Publishing, 2021), who suggests that the European Convention on Human Rights should be invoked against European states parties to the Convention for failure to protect against corporate human rights violations.

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punitive measures, covered under access to remedy.5 Preventive measures encompass a wide range of issues including corporate regulation, relations between business and the state and the conduct of domestic and international governmental policies.6 Each is examined in the ensuing sections of the chapter.

4.1

The state’s international human rights obligations

The ‘respect, protect and fulfil/promote’ formulation originates from earlier debates over the extent of a state’s obligations in relation to economic, social and cultural rights, which usually carry a positive obligation to institute programmes for their fulfilment.7 The UDHR focused on listing the main human rights and, not without controversy, deliberately omitted any mention of state obligations.8 Nonetheless such obligations are implicit in the economic, cultural and social rights enumerated therein.9 Underlying these debates was a misconception that civil and political rights do not require the positive expenditure of state resources, and that economic social and cultural rights do not require states to refrain from actively interfering with their realisation. This reasoning was criticised by



5



6 7



8 9

John Gerald Ruggie Just Business: Multinational Corporations and Human Rights (New York, W. W. Norton & Company, 2013) at 85–6. See UNGPs above n 2 Principles 3–10. See further Adam McBeth International Economic Actors and Human Rights (Abingdon, Routledge, 2010) at 43–51; Olivier De Schutter International Human Rights Law: Cases, Materials, Commentary (3rd edn, Cambridge, Cambridge University Press, 2019) at 292 citing The Right to Adequate Food as a Human Right Report prepared by Mr A. Eide (UN Doc. E/CN.4/ Sub.2/1987/23 (1987)) at https://​digitallibrary​.un​.org/​record/​139080​?ln​=​en. The Right to Adequate Food above n 7 paras 94–9. See Universal Declaration of Human Rights 1948 at https://​www​.ohchr​.org/​ EN/​UDHR/​Documents/​UDHR​_Translations/​eng​.pdf, articles 22 (right to social security); 23 (right to work, to just and favourable remuneration and to form and join a trade union); 24 (right to rest and leisure and to paid holidays); 25 (right to an adequate standard of living); 26 (right to education); 27 (right to participate in cultural life and rights of the author).

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Mr Asbjørn Eide in his landmark 1987 report The Right to Adequate Food as a Human Right as follows: This argument is tenable only in situations where the focus for economic and social rights is on the tertiary level (the obligation to fulfil), while civil and political rights are observed on the primary level (the obligations to respect). This scenario is however arbitrary. Some civil rights require State obligations at all levels – also the obligation to provide direct assistance, when there is a need for it. Economic and social rights can in many cases best be safeguarded through non-interference by the State, by respecting the freedom and use of resources possessed by the individuals.10

There is little to fault in this analysis and, today, few would doubt the applicability of the tripartite obligation of states to all human rights. In the words of the Office of the UN High Commissioner for Human Rights (OHCHR): International human rights law lays down obligations which States are bound to respect. By becoming parties to international treaties, States assume obligations and duties under international law to respect, to protect and to fulfil human rights. The obligation to respect means that States must refrain from interfering with or curtailing the enjoyment of human rights. The obligation to protect requires States to protect individuals and groups against human rights abuses. The obligation to fulfil means that States must take positive action to facilitate the enjoyment of basic human rights.11

Each of these obligations will now be briefly described and related to the issue of business and human rights. The obligation to respect requires the state to avoid conduct or omissions that can result in the violation of human rights by business actors. Adam McBeth offers a useful example: State actions such as forced evictions to make way for a particular development, or the extrajudicial killing or arbitrary arrest of persons opposed to the development, would violate this obligation, as would the procurement of forced labour or the prohibition of legitimate trade union activity.12



10 11



12

The Right to Adequate Food above n 7 para 115. OHCHR ‘International Human Rights Law’ at https://​www​.ohchr​.org/​en/​p​ rofessiona​linterest/​pages/​internationallaw​.aspx. McBeth above n 7 at 44.

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An omission would result in a violation of the obligation to respect in cases where, for example, the state turned a blind eye to corporate abuses of the rights of workers, local citizens or communities. Such omissions are related to the second obligation, the obligation to protect. Under international human rights law the state is bound to avoid causing direct violations of human rights through its own actions or those of its agents, as where a private sub-contractor is hired by the state to discharge its public functions, for example, where the state hires a paramilitary group to carry out activities involving human rights violations.13 In addition the state must ensure that a non-state actor, such as a corporation, does not violate the human rights of another non-state actor whether this is a worker employed by that corporation, its customers, or individuals and the local community more widely. Under the ‘horizontal effects’ doctrine the state may be responsible for its failure to regulate conduct leading to such violations. The Inter-American Court of Human Rights stated, in the case of Velásquez Rodríguez vs. Honduras, that: An illegal act which violates human rights and which is initially not directly imputable to a State (for example, because it is the act of a private person or because the person responsible has not been identified) can lead to international responsibility of the State, not because of the act itself, but because of the lack of due diligence to prevent the violation or to respond to it as required by the Convention.14

This principle has been invoked against states for failure to regulate corporate human rights violations. For example, states have been held liable before the ECtHR and other human rights tribunals for situations where corporations dismissed or victimised employees for joining a trade union, the pollution of air and land by chemical and oil corporations, and the use of indigenous peoples’ land by corporations.15

13



14



15

See further Jan Arno Hessbruegge ‘Human Rights Violations Arising from Conduct of Non-State Actors’ 11 Buffalo Human Rights Law Review 21 (2005); De Schutter above n 7 at 437–48. Velásquez Rodríguez v Honduras Judgment of 29 July 1988, Inter-American Court of Human Rights (Ser. C) No. 4 (1988) para 172 at http://​hrlibrary​ .umn​.edu/​iachr/​b​_11​_12d​.htm. See Robert McCorquodale ‘Spreading Weeds beyond Their Garden: Extraterritorial Responsibility of States for Violations of Human Rights

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The African Commission on Human and Peoples’ Rights has also covered state responsibility for corporate violations of human rights.16 In 1996 a complaint was made to the Commission concerning violations of human rights against the Ogoni People in the Niger Delta.17 The Nigerian military government had been directly involved in oil production through the state-owned Nigerian National Petroleum Company (NNPC), the majority shareholder in a consortium with Shell Petroleum Development Corporation (SPDC). These operations were alleged to have caused environmental degradation and health problems resulting from the contamination of the environment among the Ogoni People in violation of the African Charter on Human and Peoples’ Rights. In 2001 the Commission found that the Nigerian government had failed to protect the rights of the Ogoni People. Following the Velásquez Rodríguez case and its own earlier precedents the Commission held that: Governments have a duty to protect their citizens, not only through appropriate legislation and effective enforcement but also by protecting them from damaging acts that may be perpetrated by private parties (see Union des jeunes avocats c/Chad). This duty calls for positive action on [the] part of governments in fulfilling their obligation under human rights instruments.18

The Nigerian government was ordered to stop continuing human rights violations and establish suitable investigative and remedial measures including against the national oil company.19 In addition, proper environmental and social impact assessments should be made for future conduct of the operations whose safety should be guaranteed through effective and independent oversight bodies for the petroleum industry.20 Ultimately, by Corporate Nationals’ (100) ASIL Proceedings 95 (2006) at 98 and cases cited there. See too for cases under the Inter-American Convention on Human Rights, Jesús Orozco-Henríquez ‘Corporate Accountability and the Inter-American Human Rights System’ 57 Harvard International Law Journal Online Symposium ‘International Jurisdiction for Corporate Atrocity Crimes’ 48 (2016) at https://​harvardilj​.org/​2016/​07/​corporate​ -accountability​-and​-the​-inter​-american​-human​-rights​-system/​. 16 This case study is taken from Muchlinski above n 1 at 587–8. 17 Communication 155/96, The Social and Economic Rights Action Center and the Center for Economic, and Social Rights/Nigeria (27 October 2001) at https://​www​.achpr​.org/​sessions/​descions​?id​=​134. 18 ibid para 57. 19 ibid ‘Holding’. 20 ibid.

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the Nigerian government ignored these requirements, illustrating the limited capacity of regional bodies to affect domestic policy without the active cooperation of Member States.21 Finally, the obligation to promote human rights, as already noted, requires the state ‘to take constant, positive measures to improve the realisation of human rights’.22 This may require a variety of measures designed to improve the capacity of businesses to fulfil this objective. These may range from raising awareness of human rights in the corporate sector through National Action Plans (NAPs) to mandatory rules and regulations requiring businesses to observe human rights through HRDD reporting laws, discussed below in Section 4.4.1, or other regulatory regimes including, for example, labour, consumer, corporate and environmental law.

4.2

The state duty to protect under the UNGPs

The UNGPs organise the state duty to protect around the foundational elements in Principle 1, cited at the beginning of the chapter; a jurisdictional Principle 2, which requires that ‘States should set out clearly the expectation that all business enterprises domiciled in their territory and/ or jurisdiction respect human rights throughout their operations’, and a further set of ‘Operational Principles’ covering: general regulatory and policy functions; the state-business nexus; supporting business respect for human rights in conflict affected areas; and ensuring policy coherence and policy space both at the domestic and international levels.



21



22

See Corporate Accountability Lab ‘Shell in Nigeria: The Case for New Legal Strategies for Corporate Accountability’ (5 July 2018) at https://​legaldesign​ .org/​calblog/​2018/​7/​5/​shell​-in​-nigeria​-the​-case​-for​-new​-legal​-strategies​-for​ -corporate​-accountability. McBeth above n 7 at 48.

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4.3

Territorial nature of the state duty to protect

Principle 2 of the UNGPs restates current international law on jurisdiction by restricting the state duty to protect to the state’s territory.23 According to the Commentary to Principle 2: [a]t present States are not generally required under international human rights law to regulate the extraterritorial activities of businesses domiciled in their territory and/or jurisdiction. Nor are they generally prohibited from doing so, provided there is a recognized jurisdictional basis.24

Thus, the issue is left to states to decide. However, the Commentary ‘nudges’ states towards taking greater responsibility for the overseas activities of their home-based businesses by adding that ‘[t]here are strong policy reasons for home States to set out clearly the expectation that businesses respect human rights abroad, especially where the State itself is involved in or supports those businesses’. These reasons include ‘ensuring predictability for business enterprises by providing coherent and consistent messages, and preserving the State’s own reputation’. Extraterritoriality is a significant issue in international human rights law. Allowing states a measure of extraterritorial jurisdiction over alleged corporate human rights violations may be a way of enhancing effective protection. However, as John Ruggie notes, ‘as a general solution to the overall human rights challenges posed by multinational corporations, extraterritorial jurisdiction remains unacceptable to governments’.25 Therefore a compromise was required in the UNGPs to ensure their widespread acceptance.



23



24 25

For detailed discussion see McBeth above n 7 at 51–6 concluding that there is no binding norm of international human rights law requiring extraterritorial control of corporate human rights abuses. See further Robert McCorquodale and Penelope Simons ‘Responsibility beyond Borders: State Responsibility for Extraterritorial Violations by Corporations of International Human Rights Law’ 70(4) MLR 598 (2007), who assert that the home state may have responsibility for the extraterritorial activities of corporations acting on its behalf. UNGPs above n 2 Commentary to Principle 2 at 4–5. Ruggie above n 5 at 63.

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The Commentary to Principle 2 further distinguishes between ‘domestic measures with extraterritorial implications’ such as ‘requirements on “parent” companies to report on the global operations of the entire enterprise’ and ‘direct extraterritorial legislation and enforcement’, which includes ‘criminal regimes that allow for prosecutions based on the nationality of the perpetrator no matter where the offence occurs’. This distinction owes its origins to a 2010 study commissioned by Professor Ruggie, which noted, additionally, that where a regime of extraterritorial regulation is deemed acceptable depends on the extent to which it is grounded in multilateral agreement.26 The strongest example is the global anti-corruption regime.27 Examples of the types of laws mentioned in the Commentary to Principle 2 include, from the UK, the Bribery Act 2010, which extends the prohibition against bribery extraterritorially, and the Modern Slavery Act 2015, requiring reporting on practices across the corporation’s transnational supply chain.28 The French Law on the Duty of Vigilance offers the most comprehensive example to date of extraterritorial reporting requirements.29 However, no state has so far imposed a statutory civil or criminal sanction operating extraterritorially for overseas violations of human

26



27 28



29

See Jennifer A. Zerk ‘Extraterritorial Jurisdiction: Lessons for the Business and Human Rights Sphere from Six Regulatory Areas’ Corporate Social Responsibility Initiative Working Paper No. 59. Cambridge: John F. Kennedy School of Government, Harvard University (2010) at https://​ www​.hks​.harvard​.edu/​sites/​default/​files/​centers/​mrcbg/​programs/​cri/​files/​ workingpaper​_59​_zerk​.pdf. See further Muchlinski above n 1 ch 4. On which see Zerk above n 26. Bribery Act 2010 (c. 23) ss 7 and 13 at https://​www​.legislation​.gov​.uk/​ ukpga/​2010/​23/​contents; Modern Slavery Act 2015 (ch 30) s 54 at http://​ www​.legislation​.gov​.uk/​ukpga/​2015/​30/​contents/​enacted. Loi no. 2017-399 du 27 Mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donne uses d’ordre, https://​www​.legifrance​.gouv​ .fr/​affichTexte​.do​?cidTexte​=​JORFTEXT000034290626​&​categorieLien​=​ id English translation at: https://​www​.business​-humanrights​.org/​en/​latest​ -news/​french​-duty​-of​-vigilance​-law​-english​-translation/​. For a critical appraisal of the French law see Elsa Savourey and Stéphane Brabant ‘The French Law on the Duty of Vigilance: Theoretical and Practical Challenges Since its Adoption’ 6(1) BHRJ 141 (2021), doi:​10​.1017/​bhj​.2020​.30; Almut Schilling-Vacaflor ‘Putting the French Duty of Vigilance Law in Context: Towards Corporate Accountability for Human Rights Violations in the Global South?’ 22 Human Rights Review 109 (2021), https://​doi​.org/​10​ .1007/​s12142​-020​-00607​-9.

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rights. In Australia the draft Corporate Code of Conduct Bill contained a provision subjecting the overseas subsidiaries of Australian companies to a general obligation to observe human rights and non-discrimination.30 That Bill was never adopted. Similar proposals in the US and the UK also met with little success.31 Today, the focus is on mandatory HRDD reporting laws, which are briefly discussed in Section 4.4.3 below. Finally, it may be noted that a number of IGOs and human rights treaty bodies are moving towards a wider basis for state jurisdiction over international crimes and human rights violations. For example, the Committee of the Rights of the Child, the Committee on Economic Social and Cultural Rights and the Committee on the Convention on the Elimination of All Forms of Discrimination against Women affirm that state parties are bound to regulate the transnational activities of their corporations.32 States also increasingly assert jurisdiction over transnational corporate conduct not only through laws such as those mentioned above, and discussed below, but also in judicial decisions involving human rights-based claims against the parent companies of MNEs, discussed further in Chapter 6. These developments are seen by some scholars as evidence of an emergent state duty to protect against transnational corporate human rights abuses, though this remains a debatable legal conclusion.33

Corporate Code of Conduct Bill 2000 The Parliament of the Commonwealth of Australia draft of 28 August 2000 clause 10. 31 US: Corporate Code of Conduct Act H.R. 4596, 106th Cong. (2000) Corporate Code of Conduct Act H.R. 2782, 107th Cong. (2001); UK: Corporate Responsibility Bill 2003 s 6 at https://​publications​.parliament​.uk/​ pa/​cm200203/​cmbills/​129/​2003129​.pdf. This was a private members bill and concerned only corporate group civil liability for personal and environmental injuries. 32 See further Doug Cassel ‘State Jurisdiction over Transnational Business Activity Affecting Human Rights’ in Surya Deva and David Birchall (eds) Research Handbook on Human Rights and Business (Cheltenham, Edward Elgar Publishing, 2020) ch 10 especially at 216–19. 33 See further, proposing such a duty, Markus Krajewski ‘The State Duty to Protect against Human Rights Violations through Transnational Business Activities’ 23 Deakin Law Review 13 (2018) and, arguing that this does not represent the current state of international law which is accurately represented in Guiding Principle 2 and its Commentary, Claire Methven O’Brien ‘The Home State Duty to Regulate the Human Rights Impacts of TNCs Abroad: A Rebuttal’ 3(1) BHRJ 47 (2018), doi:​10​.1017/​bhj​.2017​.29.

30

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4.4

79

Regulating business behaviour

By Principle 3 of the UNGPs: In meeting their duty to protect, States should: (a) Enforce laws that are aimed at, or have the effect of, requiring business enterprises to respect human rights, and periodically to assess the adequacy of such laws and address any gaps; (b) Ensure that other laws and policies governing the creation and on-going operation of business enterprises, such as corporate law, do not constrain but enable business respect for human rights; (c) Provide effective guidance to business enterprises on how to respect human rights throughout their operations; (d) Encourage, and where appropriate require, business enterprises to communicate how they address their human rights impacts.

This provision potentially covers any law that may impact on the ability of a business to observe human rights. Space prevents a complete survey.34 For present purposes the focus will be on the most significant policy developments to date: the adoption of NAPs, reforms to corporate and securities laws and mandatory corporate HRDD reporting laws. 4.4.1 National Action Plans The NAP has been defined by the UN Working Group on Business and Human Rights (UNWG) as ‘ an evolving policy strategy developed by a State to protect against adverse human rights impacts by business enterprises in conformity with the [UNGPs]’.35 The UNWG lays down four essential criteria for an effective NAP. First, it must be founded on the UNGPs, reflecting ‘the complementarity and interrelatedness of State obligations and business responsibilities in preventing, mitigating and



34



35

See further Stephanie Lagoutte The State Duty to Protect against Business-Related Human Rights Abuses: Unpacking Pillar 1 and 3 of the UN Guiding Principles on Human Rights and Business (15 September 2014). Matters of concern Human rights’ research papers Series No. 2014/1, Available at SSRN: https://​ssrn​.com/​abstract​=​2496355. UN Working Group on Business and Human Rights Guidance on National Action Plans on Business and Human Rights (Geneva, November 2016) 3 at https://​www​.ohchr​.org/​Documents/​Issues/​Business/​UNWG​ _NAPGuidance​.pdf.

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remedying adverse business-related human rights impacts’.36 Secondly, the NAP needs to reflect the relevant country context including whether the state is primarily a home or host state, its key economic sectors and each states capacity and cultural and historic contexts, setting out ‘focused and realistic actions that deliver the most impact possible on prevention, mitigation and remedy of adverse business-related human rights impacts’.37 Thirdly, the NAP processes including NAP development, monitoring and update must be inclusive and transparent taking account of the views and needs of individuals or groups and other relevant stakeholders who may be impacted.38 Finally, NAP processes need to be ‘continuous efforts rather than one-off events’ as states may need to prioritise certain areas over others making it unlikely that an initial NAP will effectively address all the issues relating to business and human rights in a state.39 Regular reviews taking into account ‘changing actual and potential adverse human rights impacts by business, as well as in the international regulatory environment’40 are recommended. The UNWG offers a detailed model for an NAP encompassing these key elements.41 To date 27, mostly developed, states have adopted an NAP or have a business and human rights chapter in their national human rights action plans, while a further 26, mostly but not exclusively developing countries, are developing or have committed to adopting an NAP.42 The UK was

ibid. ibid at 4. 38 ibid. 39 ibid at 5. 40 ibid. 41 ibid Annexes I–III. See too Danish Institute for Human Rights and International Corporate Accountability Roundtable National Action Plans on Business and Human Rights Toolkit (2017 Edition) at https://​ www​ .humanrights ​ . dk/​ p ublications/​ n ational​ - action​ - plans​ - business​ - human​ -rights​-toolkit​-2017​-edition. For a critical appraisal of the NAP strategy, suggesting current NAPs focus too much on corporate responsibility and too little on improving the states capacity to promote business compliance with human rights under its duty to protect, Larry Cata Backer ‘Moving Forward the UN Guiding Principles for Business and Human Rights: Between Enterprise Social Norm, State Domestic Legal Orders, and the Treaty Law That Might Bind Them All’ 38(2) Fordham International Law Journal 457 (2015) at 468–80. 42 See OHCHR ‘National Action Plans on Business and Human Rights’ at https://​www​.ohchr​.org/​en/​issues/​business/​pages/​nationalactionplans​.aspx. 36 37

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the first country to adopt an NAP.43 Responsibility for the NAP was placed with the UK Foreign and Commonwealth Office (FCO now the Foreign Commonwealth and Development Office) in its Human Rights and Democracy Department. The Deputy Chief of the Human Rights and Democracy Department of the FCO led the drafting process.44 The NAP contains a list of government achievements in the field of business and human rights.45 Prominent among these are the above-mentioned Bribery and Modern Slavery Acts. Among other matters, references are made to a number of government initiatives involving awareness raising among business, the dissemination of information on corporate HRDD, and the amendment of the Companies Act to require certain companies as part of their annual reports to report on material human rights impacts where relevant for an understanding of the business (discussed further in the next sub-section). Also mentioned are: funding for the Corporate Human Rights Benchmark Initiative, a private sector initiative that seeks to rank the largest companies in the world on their human rights performance;46 support for the Reporting Framework of the UNGPs, a voluntary comprehensive guide for companies to report on how they respect human rights;47 and continued financial support to the UN Global Compact. The UK NAP is typical of the approach taken in many countries. The emphasis is on support for the UNGPs but without significant sanctions for corporate non-compliance. This is not ruled out but is likely to appear

43



44



45



46



47

The first UK NAP was adopted in 2013 and revised in 2016: see UK Government Good Business Implementing the UN Guiding Principles on Business and Human Rights para 1 at https://​www​.gov​.uk/​government/​ publications/​bhr​-action​-plan. For other states’ NAPs see Danish Institute for Human Rights ‘National Action Plans on Business and Human Rights – Countries’ at https://​globalnaps​.org/​country/​. Danish Institute for Human Rights ‘National Action Plans on Business and Human Rights United Kingdom’ at https://​globalnaps​.org/​country/​united​ -kingdom/​. This approach was taken in the revisions of 2013 and 2016 and see now UK National Action Plan on Implementing the UN Guiding Principles on Business and Human Rights: Progress Update, May 2020 (27 May 2020) at https://​www​.gov​.uk/​government/​publications/​implementing​-the​ -un​-guiding​-principles​-on​-business​-and​-human​-rights​-may​-2020​-update/​ uk​-national​-action​-plan​-on​-implementing​-the​-un​-guiding​-principles​-on​ -business​-and​-human​-rights​-progress​-update​-may​-2020 on which this paragraph draws. Available at https://​www​.corporatebenchmark​.org/​. Available at https://​www​.ungpreporting​.org/​.

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in specific legislative initiatives. NAPs are, in the end, not regulatory but policy development tools aiming to promote consensus over policy and regulatory goals.48 They risk being criticised as little more than public relations exercises that allow governments to avoid hard regulation while appearing to adhere to and enhance the UNGPs. This is not a necessary result. NAPs can be effective policy tools provided they address the issues raised by the UNGPs, have proper stakeholder participation and resourcing, are subject to effective accountability mechanisms and remain open to periodic review and revision.49 4.4.2 Corporate and securities laws Given their central role in regulating corporate governance and operations specific attention is paid in the UNGPs to corporate and securities laws.50 The Commentary to Principle 3 notes that the implications of such laws for human rights remain poorly understood and that: [l]aws and policies in this area should provide sufficient guidance to enable enterprises to respect human rights, with due regard to the role of existing governance structures such as corporate boards.

The SRSG undertook a comprehensive survey of national corporate and securities laws as part of his mandate in 2010.51 This found some progress on specific issues such as non-discrimination, and that a number of states had moved to the ‘enlightened shareholder value’ model of corporate governance, along the lines of section 172 of the UK Companies Act 2006, which allows for social reporting. The main shortcomings found were, as subsequently noted in the Commentary to Principle 3 of the UNGPs, ‘a lack of clarity regarding what companies and their officers are permitted, let alone required, to do regarding human rights’, and a lack of



48

51 49 50

See further C. Methven O’Brien, A. Mehra, S. Blackwell, and C. Poulsen-Hansen ‘National Action Plans: Current Status and Future Prospects for a New Business and Human Rights Governance Tool’ 1(1) BHRJ 117 (2016), doi:​10​.1017/​bhj​.2015​.14. ibid at 122–6. This paragraph is taken from Muchlinski above n 1 at 566. SRSG ‘Corporate Law Project: Overarching Trends and Observations’ (July 2010), available at https://​www​.business​-humanrights​.org/​sites/​default/​ files/​reports​-and​-materials/​Ruggie​-corporate​-law​-project​-Jul​-2010​.pdf.

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coordination among regulators and other public bodies on human rights issues.52 Since then, the UK has amended its corporate law to include a duty to report on human rights issues.53 Under section 414A of the UK Companies Act 2006 (the Act) all companies, other than exempted small companies, must produce an annual strategic report (SR).54 This details how the directors should fulfill their duty to act for the success of the company under section 172 of the Act, and also certain social issues listed in section 414C(7) of the Act, which states that: In the case of a quoted company the strategic report must, to the extent necessary for an understanding of the development, performance or position of the company’s business, include— (a) the main trends and factors likely to affect the future development, performance and position of the company’s business, and (b) information about— (i) environmental matters (including the impact of the company’s business on the environment), (ii) the company’s employees, and (iii) social, community and human rights issues, including information about any policies of the company in relation to those matters and the effectiveness of those policies. If the report does not contain information of each kind mentioned in paragraphs (b)(i), (ii) and (iii), it must state which of those kinds of information it does not contain.55

Similarly, the EU Non-Financial Reporting Directive (NFRD) requires all public interest entities employing over 500 people to report on envi-



52



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55

A lack of coordination between government departments on business and human rights was criticised by the UK Joint Parliamentary Committee on Human Rights Human Rights and Business 2017: Promoting Responsibility and Ensuring Accountability (HL PAPER 153 HC 443, 5 April 2017) (JPHCR Report) paras 61–71 at https://​ publications​ .parliament​ .uk/​ pa/​ jt201617/​jtselect/​jtrights/​443/​443​.pdf. See Muchlinski above n 1 at 378–9. Companies Act 2006 (c 46) s 414A at https://​www​.legislation​.gov​.uk/​ukpga/​ 2006/​46/​section/​414A. ibid s 414C at https://​www​.legislation​.gov​.uk/​ukpga/​2006/​46/​section/​414C. See further, on the revised requirements for the SR, UK Government Corporate Governance: The Companies (Miscellaneous Reporting) Regulations 2018 – Q&A (updated November 2018) at https://​www​.gov​.uk/​government/​ publications/​corporate​-governance​-new​-reporting​-regulations.

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ronmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery and diversity on company boards in terms of age, gender, educational and professional background.56 On 21 April 2021, the Commission adopted a proposal for a Corporate Sustainability Reporting Directive which would amend the existing reporting requirements of the NFRD.57 The proposal: extends the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises); requires the audit (assurance) of reported information; introduces more detailed reporting requirements; and a requirement to report according to mandatory EU sustainability reporting standards requires companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan.58

4.4.3 Mandatory human rights reporting laws The increased use of mandatory human rights reporting laws is the most developed statutory initiative to date. Numerous national examples have now been adopted.59 Among the most prominent are the California Transparency in Supply Chains Act 2010,60 the Dutch Child Labour Due Diligence Law 2019 (‘Wet Zorgplicht Kinderarbeid’),61 the French

Directive 2014/95/EU OJ [2014] L 330/1 and EU Commission ‘Non-financial Reporting’ at https://​ec​.europa​.eu/​info/​business​-economy​-euro/​company​ -reporting​-and​-auditing/​company​-reporting/​non​-financial​-reporting​_en. 57 See European Commission ‘Sustainable Finance Package’ at https://​ ec​ .europa​.eu/​info/​publications/​210421​-sustainable​-finance​-communication​ _en​#csrd. 58 ibid. 59 For detailed analytical materials and country examples see Business and Human Rights Resource Centre ‘Mandatory Due Diligence’ at https://​www​ .business​-humanrights​.org/​en/​big​-issues/​mandatory​-due​-diligence/​ and European Coalition for Corporate Justice ‘Evidence for Mandatory Human Rights and Environmental Due Diligence Legislation’(Background Note, 28 January 2021) at https://​corporatejustice​.org/​publications/​evidence​-for​ -mandatory​-human​-rights​-due​-diligence​-legislation​-5/​. 60 California Civ. Code § 1714.43 (SB 657) see: State of California Department of Justice at https://​oag​.ca​.gov/​SB657. See too s 1502 Dodd-Franck Act 2010, which requires corporate disclosure on conflict minerals use: Galit A. Sarfaty ‘Shining Light on Global Supply Chains’ 56 Harvard International Law Journal 419 (2015). 61 See Law 401 of 13 November 2019 at Eerste Kamer der Staten-Generaal ‘34.506 Initiatiefvoorstel-Kuiken Wet zorgplicht kinderarbeid’ at https://​ www​.eerstekamer​.nl/​wetsvoorstel/​34506​_initiatiefvoorstel​_kuiken​?start​ 56

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Corporate Duty of Vigilance Law 2017,62 the UK Modern Slavery Act 201563 and the Australian Modern Slavery Act 2018.64 These laws use corporate reporting as a tool for ensuring greater transparency and information about possible human rights abuses in corporate global production, retailing and supply chains.65 Typically, the law applies to any business operating within the territory of the state of reporting which does business through such a chain. A duty is imposed on the lead business in the supply chain to implement human rights reporting on possible abuses of human rights in the chain and on its HRDD practices, but undertaking HRDD is not generally a mandatory legal requirement. To be subject to the reporting requirement lead businesses must meet a certain threshold of global receipts or turnover, as in the case of the Californian, UK and Australian laws, or employ a minimum number of domestic and overseas employees, as in the French law. The report is to be issued annually and may be placed in a public register, though this is not the case with the UK law. Sanctions are often minimal. The only exception is the French law, which has given rise to a number of recent lawsuits alleging breach of the duty of care established under the law for drawing up the annual ‘vigilance plan’ (plan de vigilance).66



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_docList​=​0​#p3 unofficial English translation: Ropes and Grey ‘Dutch Child Labor Due Diligence Act Approved by Senate – Implications for Global Companies’ 5 June 2019 at https://​www​.ropesgray​.com/​en/​newsroom/​ alerts/ ​ 2 019/ ​ 0 6/ ​ D utch ​ - Child ​ - Labor ​ - Due ​ - Diligence​ - Act​ - Approved​ - by​ -Senate​ -Implications​ -for​ -Global​ -Companies. A new bill to replace the Child Labour Due Diligence Law with a broad due diligence law is currently under discussion: see Joseph Wilde-Ramsing, Manon Wolfkamp and David Ollivier de Leth ‘The New Bill for Responsible and Sustainable International Business Conduct’ Somo Opinion (18 March 2021) at https://​www​.somo​.nl/​ the​-next​-step​-for​-corporate​-accountability​-in​-the​-netherlands/​#printing​ -The ​ % 20Next​ % 20Step​ % 20for​ % 20Corporate​ % 20Accountability​ % 20in​ %20the​%20Netherlands​%3A. Above n 29. Modern Slavery Act 2015 (ch 30) at http://​www​.legislation​.gov​.uk/​ukpga/​ 2015/​30/​contents/​enacted. Modern Slavery Act 2018 (No. 153, 2018) at https://​www​.legislation​.gov​.au/​ Details/​C2018A00153. For detailed analysis of the above laws see Muchlinski above n 1 at 539–43. See further Business and Human Rights Law ‘France’ at http://​ www​ .bhrinlaw​.org/​key​-developments/​69​-france.

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These laws follow the UNGPs by encouraging the corporation to use information gathering techniques as a means of educating itself about the human rights risks involved in transnational supply chains. Their success depends ultimately on the quality of information that the corporation can obtain and on how seriously the corporation takes its reporting responsibility. In practice corporate due diligence reporting has left many gaps and remains open to disregard.67 Human rights reporting laws have been criticised for emphasising process over outcome with little or no relation between compliance and the avoidance or eradication of human rights abuses in transnational production or supply chains.68 For example, the UK Modern Slavery Act has been criticised for its ineffectiveness in terms of corporate compliance with reporting requirements, bringing about changes in corporate behaviour and, crucially, in reducing the incidence of modern slavery.69 The next step may involve the imposition of more severe sanctions for non-compliance. It is noteworthy that, in January 2021, the British government announced the introduction of financial penalties for firms not complying with their reporting requirements under the Modern Slavery Act, as part of a set of measures designed to help ensure that British organisations, whether public or private sector, are not complicit in, nor profiting from, the human rights violations against the Uyghur Muslims in the Chinese province of Xinjiang.70 In a similar vein, in the Environment Act 2021, the UK government has adopted a prohibition on larger businesses operating in the UK from



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See for example World Benchmarking Alliance Corporate Human Rights Benchmark Report 2020 at https://​assets​.world​benchmarki​ngalliance​.org/​ See app/​uploads/​2020/​11/​WBA​-2020​-CHRB​-Key​-Findings​-Report​.pdf. further Chapter 5 Sections 5.4 and 5.5. See Jena Martin ‘the use of disclosure-based regulation to advance the state’s duty to protect’ in Deva and Birchall (eds) above n 32 ch 9. See The Modern Slavery and Human Rights Policy and Evidence Centre Effectiveness of Section 54 of the Modern Slavery Act (February 2021) at https://​modernslaverypec​.org/​assets/​downloads/​TISC​-effectiveness​-report​ .pdf. UK Foreign Office Press Release ‘UK Government Announces Business Measures over Xinjiang Human Rights Abuses’ 12 January 2021 at https://​ www ​ . gov ​ . uk/ ​ g overnment/ ​ n ews/ ​ u k ​ - government ​ - announces ​ - business​ -measures​-over​-xinjiang​-human​-rights​-abuses.

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using products grown on land that was deforested illegally.71 These businesses would be required to establish and implement a due diligence system to identify, and obtain information about, such practices, assessing the risk that relevant local laws were not complied with, and mitigating that risk.72 Businesses that fail to comply will be subject to fines. Beyond the strengthening of existing laws, a new statutory scheme could establish that involvement in a human rights abuse by a corporation domiciled in the state of reporting, or its overseas affiliates and sub-contractors that are covered by the due diligence obligation, will incur liability to pay damages and, where reasonably practicable, to make other reparations to ensure the restitution of the victim to as close a situation as they were in before suffering the damage.73 Such corporate human rights liability laws will be discussed in Chapter 7.

4.5

The state-business nexus

The UNGPs make a number of specific recommendations in the field of state-business relations. Principle 4 requires states to take ‘additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State’. The activities of a state-owned enterprise (SOE) are not attributable to the state unless these relate to ‘governmental activity and not other private or commercial activity’.74 Thus where the SOE exercises public functions, these may be attributable to the state and so the latter would be directly responsible for any human rights violations by the SOE. This would not be the case in relation to the SOE’s purely commercial functions. Nonetheless the UNGPs expect states



71

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Environment Act 2021 (c 30) Schedule 17 para 2 at https://​www​.legislation​ .gov​.uk/​ukpga/​2021/​30/​schedule/​17/​enacted. ibid para 3. Muchlinski above n 1 at 567. See McCorquodale and Simons above n 23 at 606, citing James Crawford The International Law Commission’s Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge: Cambridge University Press, 2002) Article 5 Commentary 5 at 101.

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to exercise influence over SOE human rights policies even in relation to such commercial functions. As the Commentary to Principle 4 notes: Where States own or control business enterprises, they have greatest means within their powers to ensure that relevant policies, legislation and regulations regarding respect for human rights are implemented. Senior management typically reports to State agencies, and associated government departments have greater scope for scrutiny and oversight, including ensuring that effective human rights due diligence is implemented.75

The Commentary makes clear that the corporate responsibility to respect human rights extends to SOEs as well as private businesses and states must promote human rights observance by SOEs as part of their duty to protect.76 The due diligence obligation also applies to the operations of state agencies such as export credit agencies, official investment insurance or guarantee agencies, development agencies and development finance institutions, which, according to the Commentary, run a number of risks by not explicitly considering the actual and potential adverse impacts on human rights of enterprises benefiting from their support and services including in reputational, financial, political and potentially legal terms.77 Principles 5 and 6 of the UNGPs turn to relations between the state and private enterprises in two areas: the privatisation of public services and public procurement. According to Principle 5, the state should clarify, in the relevant service contracts or enabling legislation, its expectations that enterprises exercising privatised services respect human rights. States should also ensure that they can effectively oversee the enterprises’ activities, including through the provision of adequate independent monitoring and accountability mechanisms.78 Principle 6 then requires states, in the exercise of their procurement activities, to promote awareness of

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UNGPs above n 2 Commentary to Principle 4. See further ‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (UN Doc.A/ HRC/32/45, 4 May 2016) at https://​www​.ohchr​.org/​EN/​NewsEvents/​Pages/​ DisplayNews​.aspx​?NewsID​=​20123​&​LangID​=​E; Larry Cata Backer ‘Human Rights Responsibilities of State-Owned Enterprises’ in Deva and Birchall (eds) above n 32 ch 11. ‘Report of the Working Group’ above n 76. UNGPs above n 2 Commentary to Principle 5.

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and respect for human rights by enterprises, including through the terms of contracts, with due regard to states’ relevant obligations under national and international law.79

4.6

Conflict affected areas

The UNGPs take a particularly strong interest in corporate human rights abuses in conflict affected areas. As John Ruggie points out, ‘the worst forms of human rights abuses involving companies tend to take place in such contexts’.80 Accordingly one of the most detailed Guiding Principles is Principle 7 entitled ‘Supporting business respect for human rights in conflict affected areas’. It proposes a number of steps that states should take to ensure that business enterprises are not involved with abuses in such areas. These include: (a) Engaging at the earliest stage possible with business enterprises to help them identify, prevent and mitigate the human rights-related risks of their activities and business relationships; (b) Providing adequate assistance to business enterprises to assess and address the heightened risks of abuses, paying special attention to both gender-based and sexual violence; (c) Denying access to public support and services for a business enterprise that is involved with gross human rights abuses and refuses to cooperate in addressing the situation; (d) Ensuring that their current policies, legislation, regulations and enforcement measures are effective in addressing the risk of business involvement in gross human rights abuses.81

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ibid Commentary to Principle 6. See further Claire Methven O’Brien and Olga Martin-Ortega ‘Human Rights and Public Procurement of Goods and Services’ in Deva and Birchall (eds) above n 32 ch 12. Ruggie above n 5 at 156. UNGPs above n 2 Principle 7. On the application of the UNGPs to businesses in the light of the Ukraine War, see Business and Human Rights Resource Centre ‘Ukraine: Responsible business conduct in a war of aggression’ 18 March 2022 at https://​www​.business​-humanrights​.org/​en/​ blog/​ukraine​-responsible​-business​-conduct​-in​-a​-war​-of​-aggression/​. See further Geneva Centre for Security Sector Governance and the International Committee of the Red Cross Addressing Security and Human Rights Challenges in Complex Environments Toolkit (Third Edition) at https://​

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Key here is early intervention by the home state of the business before serious abuses arise.82 This requires effective coordinated joint action between government departments and agencies and firms to adhere to recommended actions on pain of loss of public support or services.83 Additional sanctions for enterprises domiciled or operating in their territory and/or jurisdiction that commit or contribute to gross human rights abuses in conflict areas may also be useful.84 The UK government operationalises these principles in a number of ways including through support for a number of international initiatives covering human rights abuses in conflict zones.85 Furthermore, UK Export Finance (UKEF) policy and practice on environmental, social and human rights (ESHR) due diligence and monitoring applies both to conflict areas and non-conflict investment destinations.86 This assesses the financial risks of repayment and also the associated ESHR risks and impacts to be satisfied, that these are ‘identified, managed and mitigated in line with local and international ESHR standards’.87

4.7

Policy coherence and space for human rights

The final element of the state duty to protect under the UNGPs covers policy coherence on business and human rights. This requires ensuring

www​.se​curityhuma​nrightshub​.org/​toolkit. An updated version of the toolkit will be released in Summer 2022. 82 UNGPs above n 2 Commentary to Principle 7. 83 ibid. 84 ibid. 85 See UK Government Good Business: Implementing the UN Guiding Principles on Business and Human Rights (Cm 9255, May 2016) para 17(iii) at https://​www​.gov​.uk/​government/​publications/​bhr​-action​-plan. See too UK Government ‘Overseas Business Risk’ at https://​www​.gov​.uk/​ government/​collections/​overseas​-business​-risk. 86 UK Export Finance (UKEF) ‘Policy and Practice on Environmental, Social and Human Rights Due Diligence and Monitoring’ (updated 5 November 2020) at https://​www​.gov​.uk/​government/​publications/​uk​-export​-finance​ -environmental​-social​-and​-human​-rights​-policy/​policy​-and​-practice​-on​ -environmental​-social​-and​-human​-rights​-due​-diligence​-and​-monitoring​ #fn:​2. 87 ibid.

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policy coherence on business and human rights through governmental departments, agencies and other state-based institutions that shape business practices;88 maintaining adequate policy space for meeting human rights obligations when entering into international agreements such as investment treaties or contracts;89 and ensuring greater policy coherence on business and human rights in multilateral institutions that deal with business-related issues.90 Of these the question of the compatibility between the promotion of adequate policy space for human rights in the context of IIAs has generated perhaps the most concern.91 The Commentary to Principle 9 notes that although state-to-state or investor-state economic agreements, such as Bilateral Investment Treaties (BITs), Free Trade Agreements (FTAs) or contracts for investment projects, create economic opportunities for states they can also affect the domestic policy space of governments. The terms of IIAs may constrain states from fully implementing new human rights legislation or put them at risk of binding international arbitration if they do so. In particular, the interpretation and application of investor protection provisions in IIAs by arbitral tribunals, before which investors can bring claims against host states under the dispute settlement provisions of these treaties, has raised concerns that investor protection may ‘trump’ the state’s duty to protect human rights where the latter has acted to do so, and this results in economic loss to the investor.92 Therefore, 90 91 88 89



92

UNGPs above n 2 Principle 8. ibid Principle 9. ibid Principle 10. See further Muchlinski above n 1 at 569–72 on which this paragraph and the next draw; Eric De Brabandere ‘Human Rights and International Investment Law’ in Markus Krajewski and Rhea Hoffmann (eds), Research Handbook on Foreign Direct Investment (Cheltenham, Edward Elgar, 2019) ch 20; Surya Deva ‘International Investment Agreements and Human Rights: Assessing the Role of the UN’s Business and Human Rights Regulatory Initiatives’ in Julien Chaisse, Leïla Choukroune, and Sufian Jusoh (eds), Handbook of International Investment Law and Policy (Springer Law, Singapore, 2021) ch 66 at https://​link​.springer​.com/​content/​pdf/​10​.1007​%2F978​-981​-13​-3615​ -7​_46​.pdf; Jesse Coleman, Kaitlin Y. Cordes and Lise Johnson ‘Human Rights Law and the Investment Treaty Regime’ in Deva and Birchall (eds) above n 32 ch 14; Barnali Choudhury ‘Investor Obligations for Human Rights’ 35(1-2) ICSID Review 82 (2020), doi:​10​.1093/​icsidreview/​siaa002. See further Jorge E. Viñuales ‘Investor Diligence in Investment Arbitration: Sources and Arguments’ 32(2) ICSID Review 346 (2017), doi:​ 10​.1093/​ icsidreview/​siw041; Peter Muchlinski ‘Can International Investment Law

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states should ‘ensure that they retain adequate policy and regulatory ability to protect human rights under the terms of such agreements, while providing the necessary investor protection’.93 To date IIAs have been highly limited in their treatment of human rights issues. Few, if any, existing IIAs do more than refer to human rights in the Preamble.94 UNCTAD has proposed an investor obligations clause including references to observance of fundamental human rights, a ‘no lowering of standards’ provision covering human rights, and a public policy exception for human rights laws as an option for inclusion into future sustainable development focused IIAs.95 Some of the most recent model agreements, drafted since the adoption of the UNGPs, contain references to human rights. The 2016 Indian Model BIT contains a general corporate responsibility provision that includes a voluntary investor commitment to integrate human rights standards into their practices and internal policies.96 The Morocco–Nigeria BIT of 2016 requires investors to produce an environmental and social impact assessment of the proposed investment and to observe human rights, international labour and international CSR standards.97 In addition Article 20 introduces a novel



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Punish Investor’s Human Rights Violations? Copper Mesa, Contributory Fault and its Alternatives’ ICSID Review, Advance Articles (2022) 1–19 doi:​ 10​.1093/​icsidreview/​siab035. UNGPs above n 2 Commentary to Principle 9. For example Norway Draft Model BIT 2015 Preamble, available at: https://​ investmentpolicy​.unctad​.org/​international​-investment​-agreements/​treaty​ -files/​3350/​download: ‘Reaffirming their commitment to democracy, the rule of law, human rights and fundamental freedoms in accordance with their obligations under international law, including the principles set out in the United Nations Charter and the Universal Declaration of Human Rights’ reproducing the Preamble to its pioneering 2007 Model BIT. See too, for the earliest example of a human rights clause, the Investment Agreement for the COMESA Common Investment Area (23 May 2007) article 7.2.d. at https://​investmentpolicy​.unctad​.org/​international​-investment​-agreements/​ treaty​-files/​3092/​download. See UNCTAD Investment Policy Framework for Sustainable Development (New York and Geneva, United Nations, 2015) respectively: section 7 at 109–10, section 9 at 112 and section 5.1.1 at 103: http://​unctad​.org/​en/​ PublicationsLibrary/​diaepcb2015d5​_en​.pdf. India Model BIT 2016 article 12 at https://​investmentpolicy​.unctad​.org/​ international​-investment​-agreements/​treaty​-files/​3560/​download. Morocco–Nigeria BIT signed 3 December 2016 at https://​investmentpolicy​ .unctad​ . org/​ i nternational ​ - investment ​ - agreements/ ​ t reaty ​ - files/ ​ 5 409/​

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development in IIA practice stating ‘[i]nvestors shall be subject to civil actions for liability in the judicial process of their home state for the acts or decisions made in relation to the investment where such acts or decisions lead to significant damage, personal injuries or loss of life in the host state’. These developments should also be considered in the context of the continuing UN negotiations over a binding international instrument on business and human rights, discussed in Chapter 7.

download. See too the Netherlands Model BIT, 22 March 2019 at https://​ investmentpolicy​.unctad​.org/​international​-investment​-agreements/​treaty​ -files/​5832/​download article 7(1): ‘Investors and their investments shall comply with domestic laws and regulations of the host state, including laws and regulations on human rights, environmental protection and labor laws’. By article 7(4) ‘Investors shall be liable in accordance with the rules concerning jurisdiction of their home state for the acts or decisions made in relation to the investment where such acts or decisions lead to significant damage, personal injuries or loss of life in the host state.’

5

The corporate responsibility to respect

As noted in Chapter 3, the second pillar of the UNGPs, the corporate responsibility to respect human rights, is this instrument’s most innovative feature. The first pillar, the state duty to protect, and the third pillar, access to remedy, essentially restate existing principles of international and domestic human rights law and practice. By contrast the responsibility to respect, while remaining within the limitations of legal responsibility of non-state actors in international law, creates, for the first time, an internationally agreed statement of how business actors should approach their human rights responsibilities. In Chapter 3, the nature of this responsibility was explained as was the scepticism among some legal experts that, in the absence of binding legal duties, this would lead to improved human rights compliance by corporations. As noted there, the second pillar encourages firms to incorporate concern for human rights compliance through the process of HRDD, discussed in Section 5.3 below, leading to appropriate human rights risk avoidance and mitigation strategies. In this way the responsibility to respect is ‘institutionalised’ through business decision-making and corporate policy. The chapter begins, in Section 5.1, with an analysis of the principal patterns of business abuses of human rights, which was the starting point for the SRSG John Ruggie’s evidence-based approach to the UNGPs framework. It updates the evidence he gathered over a decade ago with examples of new business and human rights issues that have arisen since then. Section 5.2 continues with an assessment of the degree of legal authority the responsibility to respect has attained, as expressed through recent judicial decisions in a number of jurisdictions. The core of the chapter, Section 5.3, discusses HRDD in detail, breaking down its component elements. Section 5.4 summarises recent empirical studies on how HRDD is used by businesses and Section 5.5 concludes with an assessment of the main criticisms of the responsibility to respect and HRDD. 94

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5.1

95

Patterns of business abuses

In 2008 the SRSG concluded a study on the incidence of corporate human rights violations.1 It found that such violations can appear across many industries and impact all categories of human rights. In addition, human rights violations can become cumulative as individual abuses easily multiply into patterns of abuse. Linkages between human rights violations and wider social struggles and environmental harms were also outlined. Misconduct is worst in a number of industries, which, by their characteristics and location, are more likely to encounter human rights problems. In particular, light manufacturing dependent on cheap labour, such as apparel and footwear or food and drink, and natural resource extraction industries, that operate in less developed and more remote locations and in politically destabilised countries or regions, are prominent in the documented cases researched for the study.2 There are also cases involving major infrastructure projects that may have serious health and environmental implications such as dams and oil and gas pipeline projects.3 More recently, human rights issues have emerged from the operations of digital platform corporations, creating new concerns over freedom

1



2



3

See SRSG ‘Corporations and Human Rights: A Survey of the Scope and Patterns of Alleged Corporate-Related Human Rights Abuse’ (UN Doc. A/HRC/8/5/Add.2, 23 May 2008) at https://​undocs​.org/​A/​HRC/​8/​5/​ Add​.2, summarised in John Gerald Ruggie Just Business: Multinational Corporations and Human Rights (New York, W. W. Norton & Company, 2013) at 19–27. This summary is based on and updates Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 560–1. Ruggie above n 1 at 29 notes: ‘a negative symbiosis exists between the worst corporate-related human rights abuses and host countries that are characterised by combinations of relatively low national income, current or recent conflict exposure and weak or corrupt governance’. Ruggie cites corporate complicity in human rights abuses in Colombia, Sudan and the Democratic Republic of Congo: ibid at 29–33. Sheldon Leader ‘Human Rights Risks and New Strategies for Global Investment’ 9 JIEL 657 (2006); Rory Sullivan (ed.) Business and Human Rights: Dilemmas and Solutions (Sheffield, Greenleaf Publishing, 2003) Parts 2–4; International Network for Economic, Social & Cultural Rights (ESCR-NET) Corporate Accountability Working Group Joint NGO Submission Consultation on Human Rights and the Extractive Industry (Geneva, 9 December 2005) at https://​earthrights​.org/​wp​-content/​uploads/​ publications/​UNSRSG​-consultation​-on​-human​-rights​.pdf.

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of speech where, as in the case of China, corporations have collaborated with the host government to limit Internet access.4 In addition, corporate control over digital data raises issues of the right to privacy if used without concern for the individual.5 Recently, software developed for military surveillance by Israeli firm NSO, known as ‘Pegasus’, has been used by a number of governments to unveil encrypted phone content, and to listen to conversations, on phones used by journalists, lawyers, political activists and other members of civil society who have no connection with terrorism or organised crime.6 This has led to lawsuits, both in Israel and the US, challenging the legality of these activities and has placed diplomatic pressure on Israel to control sales of the software by denying the required export licences.7 Another recent development concerns the link between global heating and violations of human rights. In Milieudefensie et al. v Royal Dutch Shell, the Hague District Court held that Royal Dutch Shell was obliged to reduce the group’s CO2 emissions by a net 45 per cent by the end of 2030 relative to 2019. Shell was found to have a legal duty of care to do so based on: Book 6 Section 162 Dutch Civil Code on the basis of the relevant facts and circumstances, the best available science on dangerous climate change and how to manage it, and the widespread international consensus that human rights offer protection against the impacts of dangerous climate change and that companies must respect human rights.8



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8

See Muchlinski above n 1 at 561–2 and references there cited. See too Claire Methven O’Brien, Rikke Frank Jørgensen, and Benn Finlay Hogan ‘Tech Giants: Human Rights Risks and Frameworks’ (15 December 2020). Available at SSRN: https://​ssrn​.com/​abstract​=​3768813. Muchlinski above n 1. See further ‘The Pegasus Project’ The Guardian at https://​www​.theguardian​ .com/​news/​series/​pegasus​-project. See Mehul Srivastava ‘How Israel Used NSO Spyware as Diplomatic Calling Card’ FT.Com, 21 July 2021 at https://​www​.ft​.com/​content/​24f22b28​-56d1​ -4d66​-8f76​-c9020b1b5cb1; Business and Human Rights Resource Centre ‘NSO Group lawsuit (re hacking WhatsApp users)’ at https://​www​.business​ -humanrights​.org/​en/​latest​-news/​nso​-group​-lawsuit​-re​-hacking​-whatsapp​ -users/​; Stephanie Kirchgaessner ‘Apple Sues Pegasus Spyware Firm NSO over “attacks” on Its Users’ The Guardian, 24 November 2021 at 2. Milieudefensie et al. v Royal Dutch Shell ECLI:​NL:​RBDHA:​2021:​5339, Rechtbank Den Haag, C/09/571932 / HA ZA 19-379 (English version) para

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This linkage between climate change and human rights is a major step towards acknowledging that fossil fuel-based industries are a significant threat to human rights in the current climate emergency.9 The Covid-19 pandemic crisis has also highlighted new business-related human rights risks.10 Most clearly, businesses may abuse their workers’ rights by requiring them to work in environments with severe risks of contracting the virus, inadequate workplace health and safety measures, lack of protective clothing or insufficient support to work from home where this is feasible. In addition, some workers may be on ‘zero hour’ contracts which compel them to work when called upon and who stand to lose their financial security if they refuse to work even in the face of severe infection risk. More widely, pharmaceutical firms may have a duty not to hoard and/or profit from the high demand for medicines and vaccines they have developed. Equally, such medicines and vaccines need to be distributed without discrimination. Clearly in these circumstances the state has a primary duty to regulate how businesses operate and to support workers who face financial strain during the crisis. However, businesses themselves can do much to alleviate potential harm to their workers, and to the wider community, through observance of their responsibility to respect human rights by taking measures that avoid the above-mentioned risks.



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10

4.1.3. at https://​uitspraken​.rechtspraak​.nl/​inziendocument​?id​=​ECLI:​NL:​ RBDHA:​2021:​5339. See Tessa Khan ‘Shell’s Historic Loss in the Hague Is a Turning Point in the Fight against Big Oil’ The Guardian, 1 June 2021 at https://​www​.theguardian​ .com/​commentisfree/​2021/​jun/​01/​shell​-historic​-loss​-hague​-fight​-big​-oil. See further Institute for Human Rights and Business ‘Respecting Human Rights in the Time of the COVID-19 Pandemic: Examining Companies’ Responsibilities for Workers and Affected Communities’ (April 2020) at https://​www​.ihrb​.org/​uploads/​reports/​Respecting​_Human​_Rights​_in​ _the​_Time​_of​_the​_COVID​-19​_Pandemic​_alternate​_​-​_IHRB​.pdf on which this paragraph draws. at https://​www​.ihrb​.org/​uploads/​reports/​Respecting​ _Human​_Rights​_in​_the​_Time​_of​_the​_COVID​-19​_Pandemic​_alternate​_​-​ _IHRB​.pdf on which this paragraph draws.

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5.2

The legal nature of the responsibility to respect

In 2012, I wrote ‘the notion of human rights due diligence will lead to the creation of binding legal duties and that principles of corporate and tort law can be adapted to this end’.11 Though it is still too early to say that such a general principle of corporate human rights liability has been widely recognised, a number of recent court decisions contain language suggestive that the UNGPs and, in particular, HRDD can promote legally binding duties. For example, the Colombian Constitutional Court held, in 2018, that an oil exploration company had a binding duty under the Colombian Constitution to hold a prior consultation with indigenous groups affected by its exploration project in their lands.12 Private actors were indirectly bound by the individual rights contained in the Constitution and by international human rights based on international treaties ratified by Colombia. This applied to rights of prior consultation and consent derived from the ILO Indigenous and Tribal Peoples Convention No. 169 of 1989, ratified by Colombia in 1991.13 Furthermore, the Court held that it is now a well-established principle both under the Colombian Constitution and international law that businesses have certain human rights obligations, which, though different from those of states, are none-



11



12



13

Peter Muchlinski ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ 22(1) Business Ethics Quarterly 145 abstract at 145 (2012); See further UN Guiding Principles on Business and Human Rights at 10: The Impact of the UNGPs on Courts and Judicial Mechanisms (Debevoise and Plimpton, July 2021) at https://​www​.ohchr​.org/​Documents/​Issues/​Business/​ UNGPsBHRnext10/​ debevoise​ .pdf, suggesting that the UNGPs will be increasingly used in judicial decisions. Sentencia SU123/18 Corte Constitucional, Bogota, 15 November 2018 paras 13.1–13.9 at https://​www​.corteconstitucional​.gov​.co/​relatoria/​ 2018/​SU123​-18​.htm. See further Diana Sanabria and Daniel Schönfelder ‘Recognising Nuances: Mandatory Human Rights Due Diligence in Mexico and Colombia’, VerfBlog, 21 April 2021 at https://​ verfassungsblog​ .de/​ recognising​-nuances/​. Convention 169 is available at https://​www​.ilo​.org/​dyn/​normlex/​en/​f​?p​ = ​ N ORMLEXPUB: ​ 1 2100: ​ 0 : ​ : ​ N O: ​ : ​ P 12100 ​ _ INSTRUMENT ​ _ ID: ​ 3 12314; Columbia’s ratification is at https://​www​.ilo​.org/​dyn/​normlex/​en/​f​?p​=​1000:​ 11200:​0:​:​NO:​11200:​P11200​_COUNTRY​_ID:​102595.

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99

theless far from minor or irrelevant.14 The Court cited the UNGPs and, in particular, the principle of HRDD in support and reinforced its view by reference to General Comment 24 of the UN Committee on Economic, Social and Cultural Rights, which sees prior consultation with indigenous peoples as inherent in the exercise of HRDD by businesses.15 Taking a wider customary international law-based approach the Canadian Supreme Court held, in the 2020 case of Nevsun Resources v Araya, that a group of Eritrean workers who had been forcibly conscripted by state entities to work in a mine controlled by the local subsidiary of a Canadian mining corporation, and who suffered abuse of their fundamental rights while working there, could bring an international human rights-based claim against the Canadian parent before the Canadian courts. The majority was satisfied that Canada had an international obligation to ensure effective remedy to victims of violations of human rights, and there was no law or other procedural bar precluding the Eritrean workers’ claims.16 While not specifically mentioning the UNGPs, the decision asserts a binding legal duty under Canadian law to provide a remedy for corporate violations of human rights committed by the affiliates of Canadian parent companies. A third example comes from the above-mentioned Dutch case of Milieudefensie et al. v Royal Dutch Shell.17 In coming to its decision that Shell owes a legal duty of care to reduce its CO2 emissions, the Hague District Court held that the UNGPs constituted an authoritative and internationally endorsed ‘soft law’ instrument, which sets out the respon

14



15



16



17

‘Esta conclusión deriva no sólo del efecto frente a terceros que tienen los derechos fundamentales en el ordenamiento constitucional colombiano sino también en el reconocimiento por el derecho internacional de los derechos humanos de que las empresas tienen ciertas obligaciones frente a los derechos humanos, que no son equivalentes a las de los Estados pero que distan de ser menores e irrelevantes.’ Sentencia SU123/18 above n 12 para 13.1. See Tara Van Ho ‘General Comment No. 24 (2017) on State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities (CESCR)’ 58(4) ILM 872 (2019), doi:​10​ .1017/​ilm​.2019​.33. Nevsun Resources v Araya 2020 SCC 5 paras 119–122 at https://​www​.canlii​ .org/​en/​ca/​scc/​doc/​2020/​2020scc5/​2020scc5​.html. See further Chapter 6 Section 6.1.2. Above n 8.

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sibilities of states and businesses in relation to human rights.18 The UNGPs reflected current insights but ‘[t]hey do not create any new right nor establish legally binding obligations’. However, the UNGPs were in line with other widely accepted soft law instruments, such as the UN Global Compact and the OECD Guidelines and the European Commission now expects European businesses to meet their responsibilities to respect human rights as formulated in the UNGPs. It followed that ‘for this reason, the UNGP are suitable as a guideline in the interpretation of the unwritten standard of care’. In addition, ‘due to the universally endorsed content of the UNGP, it is irrelevant whether or not [Royal Dutch Shell (RDS)] has committed itself to the UNGP, although RDS states on its website to support the UNGP’. The District Court further observed that ‘[i]t can be deduced from the UNGP and other soft law instruments that it is universally endorsed that companies must respect human rights’. Thus, while the UNGPs remain a legally non-binding instrument, they are capable of guiding the substantive content of a legally determined corporate duty of care to protect human rights endangered by operations that contribute to the global climate emergency. It would not be hard to use the same reasoning in other factual contexts and develop further duties of care where corporate activity endangers fundamental human rights.

5.3 HRDD The key element in the corporate responsibility to respect is HRDD.19 Principle 17 states that due diligence: (a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may



18



19

See further on the relationship between ‘hard’ and ‘soft law’ in the development of corporate human rights obligations, Barnali Choudhury ‘Balancing Soft and Hard Law for Business and Human Rights’ 67 ICLQ 961 (2018). This section draws upon and updates Muchlinski above n 1 at 573–85. For a useful analysis see Mark B. Taylor ‘Human Rights Due Diligence in Theory and Practice’ in Surya Deva and David Birchall (eds) Research Handbook on Human Rights and Business (Cheltenham, Edward Elgar Publishing, 2020) ch 5.

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be directly linked to its operations, products or services by its business relationships; (b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations; (c) Should be on-going, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolve.20

HRDD is an on-going management process that ‘a reasonable and prudent enterprise needs to undertake, in the light of its circumstances (including sector, operating context, size and similar factors) to meet its responsibility to respect human rights’.21 Human rights situations are dynamic and so assessments of human rights impacts should be undertaken at regular intervals.22 Unlike commercial due diligence, which focuses only on risks to the business or its immediate stakeholders, HRDD requires consideration of ‘the risks a company’s activities and associated relationships may pose to the rights of affected individuals and communities’.23 HRDD is to be undertaken in the context of a wider human rights policy adopted by the enterprise which ensures that human rights concerns are fully integrated into the enterprises management system and processes and which allows the enterprise to monitor human rights risks.24 HRDD allows the



20



21



22 23



24

UNGPs Principle 17 at https://​www​.ohchr​.org/​documents/​publications/​ guiding​principles​businesshr​_en​.pdf. Office of the United Nations High Commissioner for Human Rights The Corporate Responsibility to Respect Human Rights: An Interpretative Guide (New York and Geneva, United Nations, 2012) 2 at http://​www​.ohchr​.org/​ Documents/​Publications/​HR​.PUB​.12​.2​_En​.pdf (Interpretative Guide) at 6. UNGPs above n 20 Commentary to Principle 18. See SRSG ‘Business and Human Rights: Further Steps toward the Operationalisation of the “Protect, Respect and Remedy” framework’ (UN Doc. A/HRC/14/27, 9 April 2010) para 81 at http://​ www​ .reports​ -and​ -materials​.org/​Ruggie​-report​-2010​.pdf. See UNGPs above n 20 Principles 15 and 16 and Interpretative Guide above n 21 at 19–26. OECD Guidelines for Multinational Enterprises (Paris, OECD, 2011) at http://​www​.oecd​.org/​daf/​inv/​mne/​48004323​.pdf, Human Rights Guideline para 4 and Commentary to Human Rights Guideline para 44 (OECD Guidelines). OECD Due Diligence Guidance for Responsible Business Conduct (OECD, Paris, 2018) at http://​www​.oecd​.org/​investment/​ due​-diligence​-guidance​-for​-responsible​-business​-conduct​.htm (OECD Guidance) at 22–4. See further UN Global Compact Office and Office of the United Nations High Commissioner for Human Rights A Guide for Business: How to Develop a Human Rights Policy (2nd edn, New York,

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business to ‘know and show’ that it respects human rights.25 The precise method of carrying out HRDD will vary from business to business and be dependent on factors such as its size and resources.26 HRDD has four components: initial identification of human rights risks and impacts; assessment of their seriousness and of those most at risk; avoidance and mitigation of risks; and accounting for and remediation of human rights risks.27 Due diligence covers both potential and actual impacts, the former being addressed through prevention or mitigation, the latter through remediation.28 HRDD needs to be carried out as early as possible in a project or decision to maximise the prevention of adverse impacts.29 In addition, HRDD does not shift responsibility from governments to enterprises or from one enterprise to another in a supply chain especially where an enterprise can exercise leverage over other enterprises to help them avoid or mitigate human rights infringements.30 Furthermore, as noted in the Commentary to Principle 17 of the UNGPs, conducting HRDD appropriately ‘should help business enterprises address the risk of legal claims against them by showing that they took every reasonable step to avoid involvement with an alleged human rights abuse’. However, HRDD will not ‘automatically and fully absolve them from liability for causing or contributing to human rights abuses’.31 5.3.1 Risk and impact identification According to Taylor, risk and impact identification ‘involves self-investigation by a company of its activities and relationships with a focus on how these intersect with society’.32 This requires identification of risks arising United Nations, 2015) available at http://​www​.unglobalcompact​.org/​docs/​ issues​_doc/​human​_rights/​Resources/​HR​_Policy​_Guide​.pdf. 25 Shift, Oxfam and Global Compact Network Netherlands Doing Business with Respect for Human Rights: A Guidance Tool for Companies (2016) 30 at https://​www​.shiftproject​.org/​resources/​publications/​doing​-business​-with​ -respect​-for​-human​-rights/​. 26 Shift et al. above n 25 discusses application of the UNGPs to small and medium sized enterprises at the end of each chapter. 27 See generally OECD Guidance above n 24 ch II ‘The Due Diligence Process’. 28 UNGPs above n 20 Commentary to Principle 17 and Principle 22. 29 OECD Guidance above n 24 at 15–16. 30 ibid at 17. 31 UNGPs above n 20 Commentary to Principle 17. 32 Taylor above n 19 at 93.

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out of production processes or global value chains.33 By Principle 13 of the UNGPs, business enterprises are required to avoid ‘causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur’ and ‘[s]eek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.’34 Thus both direct and indirect impacts are covered. This approach is followed in the OECD Guidelines Human Rights Guideline.35 Indirect impacts will be significant for banks and other financial institutions supplying investment funds to third parties.36 Thus, the Equator Principles state that lenders may carry out HRDD in the projects they finance, though this is not a binding duty.37 In addition, the SRSG

ibid. UNGPs above n 20 Principle 13. 35 OECD Guidelines above n 24 Human Rights Guideline: ‘Enterprises should …: 1. Respect human rights, which means they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved; 2. Within the context of their own activities, avoid causing or contributing to adverse human rights impacts and address such impacts when they occur; 3. Seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they do not contribute to those impacts.’ 36 See further Mary Dowell-Jones and David Kinley ‘The Monster under the Bed: Financial Services and the Ruggie Framework’ in Radu Mares (ed.) The UN Guiding Principles on Business and Human Rights: Foundations and Implementation (Leiden, Martinus Nijhoff, Brill, 2012) ch 8; and Rory Sullivan and Nicolas Hachez ‘Human Rights Norms for Business: The Missing Piece of the Ruggie Jigsaw – The Case of Institutional Investors’ in Mares (ed.) ibid ch 9. 37 Equator Principles (July 2020) Principles 1–3 at https://​equator​-principles​ .com/​wp​-content/​uploads/​2021/​02/​The​-Equator​-Principles​-July​-2020​.pdf. See further Peter T. Muchlinski ‘International Finance and Investment and Human Rights’ in Scott Sheeran and Sir Nigel Rodley (eds) Routledge Handbook of International Human Rights Law (Abingdon, Routledge, 2013) 263; Mary Dowell-Jones ‘Financial Institutions and Human Rights’ in Lara Blecher, Nancy Kaymar Stafford and Gretchen C. Bellamy (eds) Corporate Responsibility for Human Rights Impacts: New Expectations and Paradigms (Chicago, American Bar Association, 2014) ch 14. 33 34

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identified supply chains as a major source of potential human rights infringements.38 Both the UNGPs and the OECD Guidelines extend the scope of indirect risk assessment to global supply chains.39 Enterprises with large numbers of suppliers are encouraged to identify and prioritise due diligence for suppliers in areas of highest human rights risk.40 Where the enterprise identifies a risk of causing an adverse impact it should take the necessary steps to cease or prevent it.41 This requires an enterprise, acting alone or in cooperation with other entities, to use its leverage to influence the entity causing the adverse impact to prevent or mitigate it.42 The concept of ‘leverage’ should be distinguished from ‘influence’. As noted in Chapter 3, the UN Norms used ‘sphere of influence’ as the basis for corporate human rights obligations.43 The SRSG clarified that the ability to influence another entity is insufficient to create a responsibility See SRSG The Corporate Responsibility to Respect Human Rights in Supply Chains (10th OECD Roundtable on Corporate Responsibility Discussion Paper, 30 June 2010) at http://​www​.oecd​.org/​dataoecd/​17/​50/​45535896​.pdf. 39 OECD Guidelines above n 24 Commentary to Guideline on General Policies para 16. For an insightful analysis see Gabrielle Holly, Lise Smit and Robert McCorquodale Making Sense of Managing Human Rights Issues in Supply Chains: 2018 Report and Analysis (British Institute of International and Comparative Law and Norton Rose Fulbright, 2018) at https://​www​.biicl​.org/​documents/​1939​_making​_sense​_of​ _managing​_human​_rights​_issues​_in​_supply​_chains​_​-​_2018​_report​_and​ _analysis​_​-​_full​_text​.pdf​?showdocument​=​1. See too International Chamber of Commerce Commission on Business in Society ICC Guide to Responsible Sourcing: Integrating social and environmental considerations into the supply chain (Paris, International Chamber of Commerce, 2008) at https://​iccwbo​ .org/​publication/​icc​-guide​-to​-responsible​-sourcing/​. 40 OECD Guidelines above n 24 Commentary to Human Rights Guideline at para 16. See too for detailed sectoral approaches: OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (Paris, OECD Publishing, 2017) at http://​mneguidelines​.oecd​.org/​ responsible​-supply​-chains​-textile​-garment​-sector​.htm; OECD-FAO Guidance for Responsible Agricultural Supply Chains (Paris OECD Publishing, 2016) at http://​dx​.doi​.org/​10​.1787/​9789264251052​-en. 41 OECD Guidelines above n 24 Commentary to Human Rights Guideline paras 18–19. See too Principle 19 of the UNGPs above n 20. 42 OECD Guidelines above n 24 Commentary to General Policies Guideline para 20. 43 See Chapter 3 Section 3.2.

38

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to act and prevent human rights infringements by that other entity.44 The enterprise must show that in the course of undertaking HRDD it has identified the risk of contributing to an adverse human rights impact through its relation to the other entity. The enterprise can then use its leverage to stop the other entity from infringing human rights. Leverage is defined in the UN Interpretative Guide on the Responsibility to Respect (Interpretative Guide) as ‘an advantage that gives power to influence’. In the context of the UNGPs, it refers to ‘the ability of a business enterprise to effect change in the wrongful practices of another party that is causing or contributing to an adverse human rights impact’.45 The reference to leverage emphasises that the source of responsibility for indirect human rights infringements rests on actual business relationships, typical of today’s complex MNE-led global production and value chains, and not on an abstract assumption of influence over the other party.46 The Interpretative Guide adds that leverage over another entity, whether a business, governmental or non-governmental entity, may reflect a number of factors.47 The most obvious is commercial leverage arising out of managerial, or contractual, control by the enterprise over the entity. Commercial leverage also comes from the proportion of business the enterprise represents for the entity, the ability of the enterprise to incentivise the entity to improve human rights performance in terms of future business, reputational advantage, or capacity building assistance, and the benefits of working with the enterprise to the entity’s reputation and the harm to its reputation if that relationship is withdrawn. Leverage also emerges from working together with other business partners through business associations and MSIs to shape human rights objectives for business. Leverage may also arise out of bilateral engagement, for example, through a collaborative arrangement with a human rights NGO to monitor the enterprise’s human rights performance in its supply chain, or engagement with local or central government in requiring improved

44

47 45 46

See SRSG ‘Clarifying the Concepts of “Sphere of influence” and “Complicity”’ (UN Doc. A/HRC/8/16, 15 May 2008) paras 13 and 25 at https://​undocs​ .org/​en/​A/​HRC/​8/​16. See too Shift et al. above n 25 ch 3.4 ‘integrating and acting’ especially at 68–75. Interpretative Guide above n 21 at 7. See Taylor above n 19 at 97–9. Interpretative Guide above n 21 at 49 and Shift et al. above n 25 at 70–1 on which this paragraph draws.

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human rights performance by the entity through the implementation of regulations, monitoring or sanctions. Finally, while leverage may reflect the superior power of a lead firm in a global production chain this is not always the case. For example, in the apparel industry, suppliers typically manufacture for a number of retailers and even large brands may constitute a small percentage of the supplier’s output. In addition, suppliers may do so on short-term contracts with brand retailers switching regularly on the basis of price and quality. These factors all give the retailers less leverage than the size of their business, or the success of their brand, may at first suggest.48 Lead firms may need to do more than merely audit what their sub-contractors are doing and take active steps to increase leverage through various commercial means including: pre-assessment of suppliers, longer term contracts, rewards for compliance and purchasing practices that deter fluctuations in, and insecurity of, orders that can create incentives to abuse workers’ rights.49 As the Commentary to Principle 18 of the UNGPs explains, the process of identifying actual and potential adverse human rights impacts typically includes: assessing the human rights context prior to a proposed business activity, where possible; identifying who may be affected; cataloguing the relevant human rights standards and issues; and projecting how the proposed activity and associated business relationships could have adverse human rights impacts on those identified.50

The business should consider, at the very minimum, the risks associated with the country of operation, key business relationships, and the business activity itself; the range of potential and actual stakeholders directly or indirectly affected by the business activity and the nature and level of the risks and impacts, at different key stages of the project’s lifecycle



See Justine Nolan and Nana Frishling ‘Human Rights Due Diligence and the (over) Reliance on Social Auditing in Supply Chains’ in Deva and Birchall (eds) above n 19 108 at 125–9. 49 ibid. 50 UNGPs above n 20. 48

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including, for example, design, construction, operation, decommissioning and closure.51 According to the UN Interpretative Guide, although the probability of an adverse human rights impact is as important as its severity this is not always the case. If a potential human rights impact has low probability but high severity, the former does not offset the latter. Equally, the costs to the enterprise of preventing or mitigating an adverse impact on human rights cannot be weighed against the costs to the enterprise of being held to account.52 Also, companies cannot compensate for human rights infringements through corporate philanthropy.53 5.3.2 Human rights risk assessment Once the main human rights risks facing the enterprise are identified they must be accurately assessed, which in turn requires that the relevant assessment factors are identified and applied to each risk. This part of the HRDD procedure is closely linked to human rights impact assessments, though it differs through its continuing nature.54 The assessment should aim to understand unintended consequential human rights impacts, negative or positive, arising from the business activity and the long-term consequences of loss of rights upon stakeholders. In addition, evidence of patterns of human rights risks in the host country, region, industry sector or business activity should be identified as these may signal likely patterns of human rights impact in the company’s business activity.55

See IFC Guide to Human Rights Impact Assessment and Management (HRIAM) (IFC Guide) at https://​www​.unglobalcompact​.org/​library/​25 at 45–6. 52 Interpretative Guide above n 21 at 40. 53 Shift et al. above n 25 at 28–9 and 30. 54 See the IFC Guide above n 51. See too OECD Guidance above n 24 at 25–8 and Danish Institute of Human Rights Human Rights Impact Assessment Guidance and Toolbox (Copenhagen, Danish Institute of Human Rights, 25 August 2020) at https://​www​.humanrights​.dk/​tools/​human​-rights​-impact​ -assessment​-guidance​-toolbox. On the relationship between human rights impact assessments and HRDD see further James Harrison ‘Establishing a Meaningful Human Rights Due Diligence Process for Corporations: Learning from Experience of Human Rights Impact Assessment’ 31(2) Impact Assessment and Project Appraisal 107 (2013), doi:​10​.1080/​14615517​ .2013​.774718. 55 IFC Guide above n 51 at 45–6.

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The assessment process requires effective engagement with key stakeholders. The UNGPs refer to the need for ‘meaningful consultation with potentially affected groups and other relevant stakeholders, as appropriate to the size of the business enterprise and the nature and context of the operation’.56 If this is not possible then the business should consider reasonable alternatives such as consulting credible, independent expert resources, including human rights defenders and others from civil society.57 It may be necessary for the business to establish clear community-based consultation processes to garner useful information and understanding about the human rights risks, arising out of the proposed or existing operations of the business, to ensure an effective assessment.58 5.3.3 Avoidance and/or mitigation of risks Once a human rights impact assessment has been undertaken, avoidance and/or mitigation strategies should be drawn up in response to potential and/or actual human rights risks. According to the International Finance Corporation’s (IFC’s) Guide to Human Rights Impact Assessment and Management (IFC Guide) this involves balancing the rights of one stakeholder group against another, and/or the needs of the local community and should be done with the engagement of stakeholders.59 The company may be forced to prioritise addressing certain human rights in order to handle the process effectively.60 Equally, a company may develop mitigating and improvement actions through changes to the design, construction, operation, management and the maintenance of the business activity.61 Appropriate mitigation and improvement action plans must be feasible and culturally acceptable to all legitimate stakeholders.62 The IFC Guide explains the factors that should be considered in determining the mitigation approach. First, the severity and magnitude of the human rights risk and impact will determine the approach. Secondly, appropriate measures should be taken to address the human rights risks UNGPs above n 20 Principle 18(b). ibid Commentary to Principle 18. 58 See further Shift et al. above n 25 ch 3.7 ‘Stakeholder Engagement’. 59 IFC Guide above n 51 at 48. See too OECD Guidance above n 24 at 29–31. 60 IFC Guide above n 51. 61 ibid. 62 ibid. 56 57

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and impacts on vulnerable groups and those stakeholders that are, or potentially disproportionately, affected by the business activity. Thirdly, the extent of corporate leverage and control over the identified human rights risk and impacts will be relevant for indirect impacts involving other business entities.63 According to Taylor, ‘leverage is not just something one business has over another, it is also something a business can create or lose in its relationships with other businesses’.64 In this connection, according to the Commentary to Principle 19 of the UNGPs, leverage may be increased by, for example, offering capacity building or other incentives to the related entity, or collaborating with other actors. However, where the enterprise lacks the leverage to prevent or mitigate adverse impacts, and is unable to increase its leverage, it should consider ending the relationship, taking into account credible assessments of any potential adverse human rights impacts of doing so.65 The ending of a relationship is seen as a ‘last resort’ by the OECD Guidance and should arise only after attempts at preventing or mitigating severe impacts have failed, or where such impacts are irremediable and there is no reasonable prospect of change, as where the entity causing the impact does not take immediate action to prevent or mitigate them.66 Disengagement may be difficult if the other entity is ‘crucial’ to the enterprise by providing an essential product or service for which there is no reasonable substitute. Equally, where the local state has compelled the other business entity to act in a way that runs the risk of violating human rights, leverage over that business may be ineffective to prevent this risk from materialising.67 In these situations, if the enterprise continues the relationship, it should continue efforts to mitigate the impact and be prepared to accept any reputational, financial or legal consequences of the continuing connection.68

ibid at 49–50. Taylor above n 19 at 95. 65 UNGPs above n 20. 66 OECD Guidance above n 24 at 31. 67 Taylor above n 19 at 95. 68 OECD Guidance above n 24 at 31. See too Interpretative Guide above n 21 at 40–5. 63 64

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Finally, monetary or other compensation can be considered where appropriate mitigation action is difficult to establish, would not be fully effective in addressing the needs of the affected stakeholders, or does not have their support. Where a significant adverse impact exists compensation may be considered in addition to other mitigation measures.69 5.3.4 Accounting for and remediation of human rights risks HRDD requires the enterprise to account for its procedures, for the outcome of any avoidance or mitigation strategies and allow for continuous improvement in its human rights policies and procedures.70 Principle 20 of the UNGPs states: In order to verify whether adverse human rights impacts are being addressed, business enterprises should track the effectiveness of their response. Tracking should: (a) Be based on appropriate qualitative and quantitative indicators; (b) Draw on feedback from both internal and external sources, including affected stakeholders.

The second element of tracking requires that business enterprises ‘should make particular efforts to track the effectiveness of their responses to impacts on individuals from groups or populations that may be at heightened risk of vulnerability or marginalization’.71 This requires tracking to be integrated into internal reporting processes, which could include ‘performance contracts and reviews as well as surveys and audits, using gender disaggregated data where relevant’.72 The appropriate qualitative and quantitative indicators are elaborated upon by the IFC Guide, which recommends that companies develop relevant Key Performance Indicators (KPIs) defined as ‘quantifiable measurements that are agreed in the initial stages and which reflect the critical success factors of a company in implementing the identified actions and measures’.73 KPIs will differ depending on the company and the business activity. In addition, the KPIs should designate who, within or outside

IFC Guide above n 51 at 49. OECD Guidance above n 24 at 32–3. 71 UNGPs above n 20 Commentary to Principle 20. 72 ibid. 73 IFC Guide above n 51 at 50. 69 70

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the business activity/company, will be responsible for implementing and monitoring the identified actions and measures.74 The IFC Guide elaborates on the development of management systems that integrate human rights assessments into the normal business operations of the company and effective monitoring policies to facilitate tracking.75 A further source of KPIs is the Global Reporting Initiative (GRI).76 It has updated its reporting guidelines to consider the particular problems of human rights reporting in line with the UNGPs and other authoritative business- and human rights-related instruments.77 According to GRI 1, the Foundation Standard, while GRI standards ‘do not set allocations, thresholds, goals, targets, or any other benchmarks for good or bad performance’ they ‘enable an organization to publicly disclose its most significant impacts on the economy, environment, and people, including impacts on their human rights and how the organization manages these impacts’.78 GRI 1 is complemented by specific human rights-oriented standards, for example, GRI 408: Child Labor and GRI 411: Rights of Indigenous Peoples.79 In addition, GRI 414: Supplier Social Assessment focuses on information regarding the number, nature and extent of due diligence assessments made on suppliers, the percentage of negative human rights impacts found and the measures taken to improve performance, including the number of supplier terminations.80 These developments are further informed by the UN Guiding Principles Reporting Framework (GPRF).81 This is integrated with a number of ibid. ibid chs 6 and 7. 76 See GRI Standards at https://​www​.globalreporting​.org/​standards/​standards​ -development/​universal​-standards/​. 77 GRI ‘Topic Standard Project for Human Rights’ at https://​ www​ .globalreporting​.org/​standards/​standards​-development/​topic​-standard​ -project​-for​-human​-rights/​. 78 GRI 1 Foundation 2021 para 1.1 at https://​www​.globalreporting​.org/​how​-to​ -use​-the​-gri​-standards/​gri​-standards​-english​-language/​. 79 Both available at https://​www​.globalreporting​.org/​standards/​gri​-standards​ -download​-center/​. 80 Available at https://​www​.globalreporting​.org/​standards/​gri​-standards​ -download​-center/​. 81 UN Guiding Principles Reporting Framework (GPRF) at https://​ www​ .ungpreporting​.org/​. See further Shift et al. above n 25 ch 3.6 ‘Communicating Performance’. 74 75

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other human rights and social reporting initiatives, including the GRI Standards and the Integrated Reporting Framework.82 The core of the GPRF is a set of ‘smart questions’ an enterprise should ask when reporting on its human rights compliance.83 This leads to a human rights report covering the context in which the company operates (including the company’s business model, organisational structure, governance, strategy and operations) and offering the necessary minimum of information needed to be effective concerning: the company’s human rights policy; the salient human rights issues faced by the company; the policies that the company has evolved to deal with the salient issues including information on stakeholder involvement, assessment methods used to deal with salient issues, how findings are integrated into decision-making procedures, how effective these were in practice and how the company remedied any resulting harms. A growing number of leading corporations are using the GPRF for their human rights reports.84

5.4

Corporate HRDD in practice

This issue has been investigated both on a more general level, focusing on how aware businesses are of human rights responsibilities and, more specifically, on their use of HRDD. According to a number of studies undertaken since the adoption of the UNGPs the general pattern is one of unevenness. In a 2012 survey of 98 UK-based FTSE 100 companies, Preuss and Brown found that 42.8 per cent of the firms did not address human rights at all while 31.6 per cent of the firms had at least one CSR tool in place but did not refer to human rights. They concluded that almost a third of the firms surveyed expressed a desire to engage in socially responsible behaviour but perceived this to be unrelated to human rights. Also the coverage of specific human rights was shallow, the predominant emphasis being on



82



83



84

A full list of cross-references to other initiatives is available at https://​www​ .ungpreporting​.org/​resources/​cross​-references​-to​-other​-initiatives/​. See further GPRF ‘Framework and Guidance’ at https://​www​.ungpreporting​ .org/​framework​-guidance/​. See further ‘Companies’ at https://​www​.ungpreporting​.org/​database​ -analysis/​explore​-disclosures/​companies​-page/​.

THE CORPORATE RESPONSIBILITY TO RESPECT 113

the negative rights to respect human rights rather than the positive rights associated with fulfilling these.85 A more recent UK-focused study by Obara offers a more optimistic analysis to the extent that it finds acceptance of direct human rights responsibilities by most of the 22 companies surveyed, though this is tempered by the limits of the sample to companies already engaged in human rights. However, Obara adds that the finding is encouraging as: some of the most well-known multinational companies are represented in this study. Their influence within the business community, in terms of raising awareness of corporate responsibility for human rights, should not be underestimated.86

Obara further finds that although firms used a moral rationale to justify their engagement in human rights, based mainly on a social contract perspective requiring firms to give something back to their communities, she concludes that: a moral justification was not considered sufficient in itself and a commercial argument was required to make it more believable to others.87

Finally, Obara found that many firms still perceived the primary responsibility for human rights lay with states, not businesses, making the acceptance of direct corporate human rights responsibilities harder, and that firms preferred the use of CSR over human rights-based language to describe their policies.88 Turning to studies focusing on business use of HRDD, in 2018 the UNWG reported that although many businesses still did not undertake HRDD, the early movers offered encouraging examples. The UNWG urged governments to make HRDD a more mandatory process.89 A

Lutz Preuss and Donna Brown ‘Business Policies on Human Rights: An Analysis of Their Content and Prevalence among FTSE 100 Firms’ 109(3) Journal of Business Ethics 289 (2012). 86 Louise J. Obara ‘“What Does This Mean?”: How UK Companies Make Sense of Human Rights’ 2(2) BHRJ 249 (2017) at 269. 87 ibid. 88 ibid at 270–1. 89 The report of the Working Group on the issue of human rights and transnational corporations and other business enterprises ‘Human Rights Due 85

114 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

2017 survey by McCorquodale, Smit, Neeley and Brooks, comprising of 152 corporate respondents, found that the respondents who adopted a specialised HRDD-oriented approach, as opposed to a more general CSR-based assessment, were more effective in identifying human rights risks.90 The avoidance of legal risk and maintaining reputation were particular concerns moving firms towards HRDD, a significant driver of HRDD being the need to comply with regulatory reporting requirements.91 Respondents indicated that using dedicated HRDD processes also made them more confident about dealing with possible legal claims.92 The use of dedicated HRDD processes varied between sectors with over 70 per cent of respondents in mining and pharmaceuticals doing so, while in the energy and technology sectors only around half, and in financial services 57.15 per cent, had never done so.93 Among respondents who had undertaken a dedicated HRDD process over 80 per cent referred to the UNGPs. Among those who undertook more general CSR-oriented processes, only 34.62 per cent referred to the UNGPs. The most commonly referred to instruments were national laws and ILO Conventions, indicating the view that these respondents predominantly saw human rights as part of employment rights-related processes.94 A 2020 survey undertaken for the EU Commission offers some insights into HRDD reporting for global supply chains.95 It found that just over one-third of business respondents undertook due diligence for all human rights and environmental impacts, and a further one-third undertook due diligence limited to certain areas. In addition, the majority that undertook



90

93 94 95 91 92

Diligence in Practice – Building on What Works and Addressing the Gaps’ (UN Doc. A/73/163, 16 July 2018) at https://​www​.penningtonslaw​.com/​ media/​1484137/​un​-working​-group​-report​-on​-human​-rights​.pdf. See further Robert McCorquodale, Lise Smit, Stuart Neely and Robin Brooks ‘Human Rights Due Diligence in Law and Practice: Good Practices and Challenges for Business Enterprises’ 2(2) BHRJ 195 (2017) at 221–2, doi:​10​.1017/​bhj​.2017​.2. ibid at 201. ibid at 223. ibid at 206. ibid at 207. EU Commission Study on Due Diligence Requirements through the Supply Chain: Final Report (Luxembourg: Publications Office of the European Union, 2020) 16, at https://​op​.europa​.eu/​en/​publication​-detail/​-/​ publication/​8ba0a8fd​-4c83​-11ea​-b8b7​-01aa75ed71a1/​language​-en, on which this paragraph draws.

THE CORPORATE RESPONSIBILITY TO RESPECT 115

HRDD focused only on first tier suppliers while leaving out suppliers further down the value chain. The vast majority covered environmental impacts, including climate change, in their due diligence, although human rights and climate change processes often took place in ‘silos’. The most frequently used due diligence actions included contractual clauses, codes of conduct and audits. Divestment was the least selected due diligence action by both business and general respondents. As to motives for undertaking HRDD, the survey found that reputational risks were the main business motive for undertaking HRDD, with regulatory and legal compliance being among the least important motives, in contrast to the findings of McCorquodale et al. above.96 The above surveys suggest that some limited progress has occurred in accepting a general principle that businesses should observe human rights and that they may find undertaking HRDD beneficial. However, much remains to be done. For example, the Corporate Human Rights Benchmark Report for 2020, surveying the human rights disclosures of 229 global companies, concluded that, against the backdrop of the Covid-19 pandemic and the increased risks of corporate human rights violations that this entails ‘only a minority of companies demonstrate the willingness and commitment to take human rights seriously. Looking at the automotive companies assessed for the first time in 2020, the results are unequivocal: with an average total score of 12%, the lowest a sector has achieved since the benchmark was first published in 2017.’97

5.5

Criticisms of the corporate responsibility to respect

That corporate compliance with HRDD still leaves a large margin for improvement should not come as a surprise. HRDD remains a novel process and, given that businesses remain in control of their own HRDD,



96 97

ibid at 89. World Benchmarking Alliance Corporate Human Rights Benchmark Report 2020 Foreword by Camille Le Pors Lead, at https://​assets​.world​benchmarki​ ngalliance​.org/​app/​uploads/​2020/​11/​WBA​-2020​-CHRB​-Key​-Findings​ -Report​.pdf.

116 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

this may result in their overlooking many key human rights questions.98 As legally mandatory HRDD remains the exception, business incentives to undertake HRDD remain largely reputational and sector or firm specific. If a sector or company is not very visible to the public, shareholders are silent and there is little or no campaigning by NGOs on human rights issues pertaining to that sector or company, the incentive to undertake HRDD remains minimal.99 This lack of incentives is enhanced by the dilemmas businesses face when identifying human rights risks.100 Should a business risk sacrificing profits by prioritising human rights and is that possible given the duty on directors to act for the success of the company and their fiduciary duty to protect shareholders interests? As Fasterling asserts, effective HRDD processes entail a significant alteration of corporate purpose which prioritises respect for human rights over value maximisation.101 In such circumstances the corporation may opt to avoid meaningful HRDD processes in favour of a ‘tick-box’ exercise that aims to limit costs, avoid producing a record that could be used against the corporation or require decisions that conflict with financial corporate objectives.102 This problem may be exacerbated by the use of social auditing as the principal tool for implementing HRDD.103 A social audit verifies supplier compliance with human rights standards, usually set out in a code of conduct, involving, typically, a site inspection, review of documents, if available, and interviews with managers and employees.104 This is not always effective at avoiding breaches of human rights by business partners or subsidiaries. In particular, the audit is often no more than a one-off,

98



99



100 101

104 102 103

See further Daniela Chimisso dos Santos and Sara L. Seck ‘Human Rights Due Diligence and Extractive Industries’ in Deva and Birchall (eds) above n 19 ch 8 especially at 166–73. See further Preuss and Brown above n 85 at 294–5. See Taylor above n 19 at 93–4. Björn Fasterling ‘Human Rights Due Diligence as Risk Management: Social Risk Versus Human Rights Risk’ 2(2) BHRJ 225 (2017) at 246. See too David Bilchitz Fundamental Rights and the Legal Obligations of Business (Cambridge, Cambridge University Press, 2022) ch 9, who suggests that a new fiduciary duty of care to uphold fundamental rights should be imposed on company directors. Fasterling ibid at 247. See Nolan and Frishling above n 48. ibid at 118.

THE CORPORATE RESPONSIBILITY TO RESPECT 117

rather than a continuous, exercise; it may be carried out by auditors who face conflicts of interest as they are paid for by the business carrying out the audit; it will not identify all relevant human rights risks and it is often carried out only on first tier suppliers.105 Furthermore, social auditing is as effective as the degree of leverage the auditing business has over the audited business, which, as noted in the previous section, may not always be high enough to effect change.106 A good example of the limitations of this approach arose in the above-mentioned Nevsun case. The Eritrean subsidiary of Nevsun had carried out a social audit of the mine in Eritrea in 2014 and a finalised audit report was issued in 2017. It was based on extensive stakeholder engagement and yet it did not identify, or prevent, major violations of the mineworkers’ human rights.107 A further criticism is that HRDD, as conceived of in the UNGPs, is not a legal norm but it is increasingly being used as a legal standard and this may lead to confusion as to the extent of legal obligations HRDD gives rise to.108 John Ruggie justified the nature of the corporate responsibility to respect on the grounds of ‘principled pragmatism’ involving a commitment to strengthening the promotion and protection of human rights as it related to business with a commitment to what works best to change the lives of the people affected.109 This led to a mix of legal duties for states and voluntary responsibilities for businesses. For the SRSG to have insisted on legally binding norms for businesses would have led, in all probability, to the failure of the UNGPs. However, due diligence connotes the development of a legal duty of care and this can develop, either through statute or case-law, into a binding legal obligation at the level of national law.110 The possibility of a mandatory due diligence law, including severe 107 108

ibid at 121–3. See further ibid at 125–9. See Chimisso dos Santos and Seck above n 98 at 155–6. See Taylor above n 19 at 105–6. See too Bilchitz above n 101 at 192–7, who sees HRDD as requiring assessment of human rights impacts without first identifying corporate human rights obligations, leaving it unclear as to what a corporation must do to be human rights compliant. 109 See SRSG Interim Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, (UN Doc. E/CN.4/2006/97, 2006) paras 69 and 81 at https://​digitallibrary​.un​.org/​record/​569408​?ln​=​en​ #record​-files​-collapse​-header; Ruggie above n 1 at xliii–xlvi. 110 See Muchlinski above n 11; Doug Cassel ‘Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence’ 1(2) BHRJ 179 (2016). 105 106

118 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

penalties for non-compliance, is discussed further in Chapter 7 along with the draft legally binding business and human rights treaty, currently being discussed in the UN, which also seeks to determine the legal scope of binding HRDD requirements.

6

Access to remedy

The third pillar of the UNGPs, access to remedy, is based on ‘[t]he need for rights and obligations to be matched to appropriate and effective remedies when breached’.1 As noted in the previous chapter, corporate respect for human rights, observed through HRDD, may not always prevent human rights abuses. In such cases the need for remediation arises. Remediation connotes legal liability but, importantly, also includes other methods that offer reparation to victims of human rights abuses. Legal liability entails potentially significant legal costs, monetary damages and reputational risks for the business. As discussed in Section 6.1 below, this can help deter human rights abuses provided that liability cannot be avoided or mitigated because of unsustainable litigation costs for claimants or through substantive and/or procedural rules that complicate establishing liability. Human rights remediation raises not only questions of compensation but also of upholding respect for those rights.2 Human rights abuses can be a particularly serious form of misconduct requiring distinct forms of redress. Apart from monetary compensation this should also involve vindication for the victim by bringing the perpetrator to justice as part of a wider remediation process. Accordingly, in some cases, criminal sanctions may be appropriate, raising the difficult question of corporate criminal liability and the liability of individual corporate officers. Equally,



1



2

UNGPs General Principle (c) at https://​ www​ .ohchr​ .org/​ documents/​ publications/​guiding​principles​businesshr​_en​.pdf. See further Gemma Turton ‘Causation and Risk in Negligence and Human Rights Law’ 79(1) CLJ 148 (2020) at 155–6; J. Vives-Gabriel, W. Van Lent and F. Wettstein ‘Moral Repair: Toward a Two-Level Conceptualization’ (2022) Business Ethics Quarterly FirstView Articles, 1–31. doi:​10​.1017/​beq​ .2022​.6. 119

120 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

interim orders and injunctions may be used to stop the alleged breaches from continuing. The remediation process may need to go beyond legal remedies and sanctions and cover what may be termed ‘moral remediation’, which includes, for example, formal apologies, a commitment to the commemoration of victims and other symbolic forms of corporate acceptance of moral responsibility for the harm caused. Remediation strategies must also consider alternative methods of dispute avoidance and resolution so that potential victims can work with the business, either directly or through their representatives, to create an environment in which their rights are respected. These may be state-sponsored mechanisms, such as a state-based Ombudsperson or specialised human rights agency, with authority to intervene in corporate human rights issues. Of significance here is the system of National Contact Points (NCPs) established by states members of the OECD. The NCPs interpret the OECD Guidelines, which, as discussed in earlier chapters, now include HRDD as part of their requirements. Another relevant example is the Canadian Business and Human Rights Ombudsperson. These mechanisms will be discussed in Section 6.2. In addition to state-sponsored mechanisms corporate level grievance mechanisms have been established by many firms to improve their understanding of human rights risks and to create dialogue with groups and individuals whose rights may be potentially, or actually, affected by corporate operations. These are reviewed in Section 6.3.

6.1

Legal remedies

According to Principle 25 of the UNGPs, as part of their duty to protect against business-related human rights abuses, states must ‘take appropriate steps to ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their territory and/or jurisdiction those affected have access to effective remedy’.3 Access to legal remedies is essential because, without it, the state duty to protect

3

UNGPs above n 1.

ACCESS TO REMEDY 121

‘can be rendered weak or even meaningless’.4 It was seen in Chapter 4 that the state has a duty to prevent non-state actors from violating the human rights of other non-state actors within its jurisdiction under the ‘horizontal effects’ doctrine.5 Under this doctrine the state may offer remedies for corporate human rights violations through legislation. In addition, the state creates the system of litigation through which human rights-based claims against businesses may be brought. In recent years such litigation has burgeoned. Initially, the US led the way with claims under the ATCA but a series of US Supreme Court rulings has restricted the Act’s reach.6 More recently the courts of the UK, Canada, the Netherlands and France, among others, have admitted human rights-related claims against parent corporations of MNEs based within these jurisdictions.7 These aim to hold the parent liable for negative environmental, health and safety, labour or human rights impacts associated with the opera­tions of their overseas affiliates and contractors.8 Access to justice can be hard, especially for developing host state-based claimants, due to local factors related to the lack of specialist litigation lawyers, the prohibitive cost of litigation in the absence of legal aid, the risk of judicial corruption and the active discouragement of litigation against foreign investors by the host state.9 Nonetheless human 6 4 5



7



8



9

ibid Commentary to Principle 25. See Chapter 4 Section 4.1. Detailed analysis is found in Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 588–94 and see further Beth Stephens ‘The Rise and Fall of the Alien Tort Statute’ in Surya Deva and David Birchall (eds) Research Handbook on Human Rights and Business (Cheltenham, Edward Elgar Publishing, 2020) ch 3. See further Business and Human Rights Resource Centre ‘Corporate Legal Accountability’ at https://​www​.business​-humanrights​.org/​en/​big​ -issues/​ corporate​ -legal​ -accountability/​ . On the UK see Richard Meeran ‘Multinational Human Rights Litigation in the UK: A Retrospective’ 6(2) BHRJ 255 (2021), doi:​10​.1017/​bhj​.2021​.15. See Halina Ward ‘Governing Multinationals: The Role of Foreign Direct Liability’ 1 (Chatham House Briefing Paper No. 18, 2001), https://​ www​ . chathamhouse ​ . org/ ​ s ites/ ​ d efault/ ​ f iles/ ​ p ublic/​ R esearch/​ E nergy​ ,​ %20Environment​%20and​%20Development/​roleoffdl​.pdf. See Gwynne Skinner, Robert McCorquodale and Olivier De Schutter The Third Pillar: Access to Judicial Remedies for Human Rights Violations by Transnational Business (Core, The International Corporate Accountability Roundtable (ICAR), The European Coalition for Corporate Justice (ECCJ),

122 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

rights-based claims have been brought against corporations in developing host states as well.10 This section discusses the main obstacles faced by claimants in home state-based corporate human rights litigation.11 These relate to: substantive legal obstacles affecting the liability of transnational corporate groups and supply chains; the range of available causes of action and whether new human rights-based remedies must develop; the financial problems faced by claimants; and certain tactical and political obstacles to the facilitation of business and human rights litigation. The section will end by examining some recent judicial developments recognising human rights-based claims against corporate defendants. While this section focuses on barriers to successful litigation it should be borne in mind that litigation can often be an incomplete answer to remediation. Litigation is hard on all parties, can take many years to resolve and may not provide sufficient ‘moral remediation’ for victims.



10



11

December 2013) 24 at http://​corporatejustice​.org/​wp​-content/​uploads/​ 2021/​04/​the​_third​_pillar​_​-access​_to​_judicial​_remedies​_for​_human​_rights​ _violation​.​-1​-2​.pdf; Gwynne Skinner with Rachel Chambers and Sarah McGrath Transnational Corporations and Human Rights: Overcoming Barriers to Judicial Remedy (Cambridge, Cambridge University Press, 2020) ch 3. See for example, Gbemre v Shell Petroleum Development Company of Nigeria Ltd and Others Unreported Suit No. FHC/CS/B/153/2005 delivered on 14 November 2005 at http://​climatecasechart​.com/​non​-us​-case/​ gbemre​-v​-shell​-petroleum​-development​-company​-of​-nigeria​-ltd​-et​-al/​, where a Nigerian federal court ordered oil companies to stop flaring gas in the Niger Delta as this violated the guaranteed fundamental rights of life and dignity of human persons provided in the Federal Constitution and the African Charter on Human and Peoples Rights. The Nigerian government ignored the judgment see: Bukola Faturoti, Godswill Agbaitoro and Obinna Onya ‘Environmental Protection in the Nigerian Oil and Gas Industry and Jonah Gbemre v Shell PDC Nigeria Limited: Let the Plunder Continue?’ 27(2) African Journal of International and Comparative Law 225 (2019). See generally Skinner with Chambers and McGrath above n 9; Richard Meeran (ed.) Human Rights Litigation against Multinationals in Practice (Oxford, Oxford University Press, 2021). For the problems faced by corporate defendants see further Rae Lindsay ‘Multinational Human Rights Litigation from the Perspective of Business’ in Meeran (ed.) ibid ch 11. See for a wider comparative analysis, Ekaterina Aristova and Uglješa Grušić (eds) Civil Remedies and Human Rights in Flux: Key Legal Developments in Selected Jurisdictions (Oxford, Hart Publishing, 2022).

ACCESS TO REMEDY 123

Equally, many cases settle out of court and the sums involved may prove inadequate recompense for the harm suffered. Victims also have limited control over litigation once it is in the hands of their lawyers, especially if it occurs far away from home in a foreign jurisdiction. 6.1.1 Substantive legal obstacles to group and supply chain liability The most important obstacles stemming from established principles of law are: the limitation of a state’s legal jurisdiction to its territory; restrictive corporate group and supply chain liability rules; and the problem of assessing corporate complicity in human rights violations. The territorial nature of legal jurisdiction can limit the reach of a court when considering the responsibility of a parent company located in the court’s jurisdiction for the acts of its subsidiary located in a host country.12 The parent company can argue that it was not present in the host country when the alleged human rights violations arose and so the home jurisdiction has no link to the dispute.13 In common law jurisdictions parent companies have also sought to avoid claims through the so-called forum non conveniens doctrine, whereby the court may vacate proceedings to another jurisdiction on the grounds that it constitutes a more appropriate forum for their resolution. The parent can argue that, as the main facts of the case occurred in the host country and the preponderance of evidence and witnesses is located there, the host country courts ought to have jurisdiction.14

12



13



14

For a detailed analysis and discussion of jurisdictional problems relating to the operations of MNEs see Muchlinski above n 6 ch 4. See for example Adams v Cape Industries plc [1990] Ch 433 where the English Court of Appeal held that the defendant UK parent company need not comply with an order for damages, issued by a Texas court, compensating employees of third parties who had contracted disease after exposure to asbestos sold by the defendant in the US as it had no presence in the US even though it had sold the asbestos through a sales subsidiary that was later turned into an independently owned sales company in anticipation of the litigation. See for example In Re Union Carbide Gas Plant Disaster at Bhopal India (Opinion and Order 12 May 1986) 634 F.Supp.  842 (SDNY 1986), 25 ILM 771 (1986) and P. T. Muchlinski ‘The Bhopal Case: Controlling Ultrahazardous Industrial Activities Undertaken by Foreign Investors’ 50 MLR 545 (1987).

124 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

These jurisdictional arguments are tied up with the legal separation of the parent company from its subsidiary. In a corporate group each company is a separate legal entity even though the enterprise is managed as an integrated economic unit. This permits the parent to deny legal responsibility for the acts of its subsidiary on the basis of their separate legal status.15 In relation to jurisdiction the parent can also argue that the acts of the overseas subsidiary have no connection with the home jurisdiction and, according to the international legal rules on jurisdiction, the court cannot exercise personal jurisdiction over the subsidiary as this would be an impermissible act of extraterritorial jurisdiction. In cases involving a contractually based global supply chain, the home country company may avoid liability on the basis that it does not have any direct legal relation with a sub-contractor further down the chain of contracts and so cannot be held responsible for the latter’s alleged violations of human rights. Even in relation to the actions of a first tier sub-contractor, with which there exists a direct contractual link, home country company liability would be contingent on proof that the sub-contractor acted as the agent or ‘alter ego’ of the former and not as an independent contractor. In such cases the home country court may restrict liability due to the lack of any contractual control on the part of the home country company over the foreign sub-contractor. These obstacles have led courts to avoid a finding that the home country company can be held liable for the human rights violations of sub-contractors in the supply chain. For example, in litigation arising out of the collapse of the Rana Plaza garment factory in Bangladesh in 2013, US and Canadian courts held that defendant garment retailers in the US and Canada were under no duty of care towards employees, and relatives of deceased



15

This should be distinguished from the doctrine of ‘lifting the corporate veil’ which is used to attribute the acts of a company to its shareholders in cases of fraud or abuse of the corporate form: Adams v Cape Industries above n 13. Lifting the veil on the parent as the main shareholder in its subsidiary has been proposed as a solution to group liability but has been largely ineffective. See further Muchlinski above n 6 at 314–6; Barnali Choudhury and Martin Petrin Corporate Duties to the Public (Cambridge, Cambridge University Press, 2019) ch 5; Radu Mares ‘Liability within Corporate Groups: Parent Companies’ Accountability for Subsidiary Human Rights Abuses’ in Deva and Birchall (eds) above n 6 ch 21.

ACCESS TO REMEDY 125

employees, of sub-contractors, nor under any duty to oversee safety at Rana Plaza, over which they had no control.16 A further conceptual obstacle to parent company liability in a group, or home company liability in a global supply chain, is the issue of corporate complicity in human rights violations. In many cases the host state subsidiary, or sub-contractor, may be involved in human rights violations primarily committed by host state authorities. Here the extent of the subsidiary’s complicity in these violations will be key to establishing liability.17 In the landmark case of Doe v Unocal the US Court of Appeal for the Ninth Circuit affirmed that a corporation could be liable for aiding and abetting crimes or torts involving alleged violations of fundamental human rights under the ATCA even if had not directly taken part in the alleged violations but had given practical assistance and encouragement to the commission of the crime or tort (termed the actus reus of aiding and abetting) and had actual or constructive knowledge that its actions would assist the perpetrator in the commission of the crime or tort (termed the mens rea of aiding and abetting).18 This principle has caused inconsistency in judicial decisions under ATCA.19 In Doe v Nestle, the US Court of Appeal for the Ninth Circuit accepted that knowledge of adverse human rights effects was sufficient to ground aiding and abetting liability.20 On appeal to the US Supreme Court, this decision was overturned. The plaintiffs had argued that the US-based respondent corporations had aided and abetted human rights violations, involving abuse of child workers on cocoa plantations in the Ivory Coast, by providing training, equipment and finance to cocoa farmers employing child labour. The Supreme Court rejected these claims. The conduct

Delaware Superior Court, Abdur Rahaman et al. v JCPenney Corp Inc et al., Decided 4 May 2016 C.A. No. N15C-07-174 MMJ at https://​courts​.delaware​ .gov/​Opinions/​Download​.aspx​?id​=​240380; Das v George Weston Limited [2017] ONSC 4129 upheld on appeal: Das v George Weston Limited [2018] ONCA 1053. 17 The following paragraph is taken from Muchlinski above n 6 at 589–90. 18 John Doe v Unocal 395 F.3d 978; 2003 U.S. App. LEXIS 2716. The case settled in December 2004: ‘Unocal Settles Burma Abuse Case’ Financial Times, 14 December 2004 at 12. 19 See further Muchlinski above n 6 at 588–90. 20 See Doe VIII v Exxon Mobil Corp 654 F.3d 11 (DC Circ. 2011) and Doe v Nestle 738 F.3d 1048 (9th Cir, 2013).

16

126 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

relied upon by the plaintiffs all took place outside the US and so could not justify the extraterritorial application of ATCA.21 The Supreme Court added that domestic conduct sufficient to attract ATCA claims had to go beyond general corporate activity common to most corporations and in this case the respondents had done no more than this.22 6.1.2 Causes of action The choice of remedy for human rights violations depends on determining which heads of damage apply. These may involve civil claims and/or criminal claims based on injury to person and/or property. Furthermore, much will depend on whether the claim is decided according to the law of the court’s jurisdiction or by the law applicable where the alleged violations took place. This turns on whether the court will accept that the claims have a sufficient factual connection to the court’s jurisdiction to permit its law to apply. As already noted, the recent US Supreme Court decision in Nestle v Doe shows that US courts will draw that connection very tightly, while cases in other courts, notably those decided before the English, French and Dutch courts, discussed in Section 6.1.5 below, allow more leeway to claimants. An additional question arises as to whether a direct human rights-based claim can be admitted, illustrated by the Canadian Supreme Court decision in Nevsun v Araya.23 Three workers at the Bisha mine in Eritrea, owned by Canadian mining corporation Nevsun Resources Ltd, brought a class action on behalf of over 1,000 workers claiming to have been compelled to work at Bisha between 2008 and 2012. They claimed damages for breaches of domestic torts including: conversion, battery, false imprisonment, conspiracy and negligence. In addition, they claimed damages for breaches of customary international law prohibitions against: forced labour, slavery, cruel, inhuman or degrading treatment and crimes

21



22 23

Nestlé U.S.A. v Doe, 593 U.S. __ (2021) (slip opinion) at https://​www​ .supremecourt​.gov/​opinions/​20pdf/​19​-416​_i4dj​.pdf. ibid at 5. Nevsun Resources v Araya 2020 SCC 5 at https://​www​.canlii​.org/​en/​ca/​scc/​ doc/​2020/​2020scc5/​2020scc5​.html. For detailed analysis see P. Muchlinski ‘Corporate Liability for Breaches of Fundamental Human Rights in Canadian Law: Nevsun Resources Limited v Araya’ Amicus Curiae, Series 2, 1(3), 515–41 (2020) available at https://​journals​.sas​.ac​.uk/​index​.php/​ amicus.

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against humanity.24 The alternative claims were made as it was uncertain whether Canadian law could cover the claims under existing torts or whether new international law claims were admissible. Nevsun had argued that claims based directly on customary international law violations should be struck out as they disclosed no reasonable claim or were unnecessary. The majority rejected this argument as it was not ‘plain and obvious’ that the claims had no reasonable prospect of success, or were unnecessary, adding that Canadian courts were an active participant in the global development of international principles in the fields of human rights and other laws impinging on the individual, that international law not only comes down from the international to the domestic sphere but also ‘bubbles up’ from national courts and that Canadian courts should meaningfully contribute to the ‘choir’ of domestic court judgments around the world shaping the ‘substance of international law’.25 Abella J, for the majority, added: As a result, in my respectful view, it is not ‘plain and obvious’ that corporations today enjoy a blanket exclusion under customary international law from direct liability for violations of ‘obligatory, definable, and universal norms of international law’, or indirect liability for their involvement in what Professor Clapham calls ‘complicity offenses’.26

Furthermore, the majority concluded that Eritrean workers’ allegations encompassed conduct not captured by existing domestic torts as their character was of a more public nature since they ‘shock the conscience of humanity’ and their heinous nature could not be adequately addressed by such torts, even by awarding punitive damages.27 The Nevsun decision ended in an out-of-court settlement leaving unanswered the question whether there was indeed an international law-based Canadian remedy for corporate human rights violations.28 Nonetheless it can be regarded as a landmark in the development of corporate human 26 27 28 24 25

Nevsun above n 23 para 4. ibid paras 70–2. ibid para 113. ibid paras 124–6. Yvette Brend ‘Landmark Settlement Is a Message to Canadian Companies Extracting Resources Overseas: Amnesty International’ CBC News, 23 October 2020 at https://​www​.cbc​.ca/​news/​canada/​british​-columbia/​ settlement​-amnesty​-scoc​-africa​-mine​-nevsun​-1​.5774910.

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rights liability.29 Nevsun permits the framing of claims based on norms of international human rights law that go beyond domestic law torts which have steered decisions in other jurisdictions.30 On the other hand, in their dissent, Justices Brown and Rowe asserted that the courts were not as well suited to make legal change as the legislature which had the institutional competence and the democratic legitimacy to enact major legal reform. By contrast the courts were confined to considering the circumstances of the particular parties before them and so could not anticipate all the consequences of a change.31 This argument has also held sway before the US Supreme Court when considering whether ATCA established a principle of corporate human rights liability. In Jesner v Arab Bank the majority held that neither the language of ATCA nor precedent supported an exception to the general principle that the courts should be reluctant to extend judicially created private rights of action.32 This applied with particular force to the ATCA, which implicates foreign-policy concerns that are the province of the political branches.33 Furthermore, it is not entirely obvious that human rights-based claims are better than tort claims. Human rights claims originate against states not private persons or corporations. In this light the dissenting judges in Nevsun asserted that tort remedies can offer effective relief against a corporate wrongdoer including the award of punitive damages to underscore the seriousness of the breach.34 Indeed, a variety of regulatory standards, in which human rights violations are implicit, are enforced against corporations through tort remedies.35 It has also been argued that the common law of negligence may offer a stronger analytical tool than a claim based on a violation of positive human rights obligations for establishing the

See Upendra Baxi ‘Nevsun: A Ray of Hope in a Darkening Landscape?’ 5(2) BHRJ 241 (2020), doi:​10​.1017/​bhj​.2020​.17. 30 See Beatrice A. Walton ‘International Decisions: Nevsun v Araya’ 115(1) AJIL 107 (2020) at 112, doi:​10​.1017/​ajil​.2020​.103 31 See Nevsun above n 23 para 225 Brown and Rowe JJ. 32 Jesner v Arab Bank 584 U.S. ____, (2018) (Slip Opinion) at https://​www​ .supremecourt​.gov/​opinions/​17pdf/​16​-499​_1a7d​.pdf; 57 ILM 631 (2018). 33 ibid at 19. But see the dissent of Sotomayor, Ginsburg, Breyer and Kagan JJ accepting that tort claims can be brought against corporations for violations of international law and do not raise foreign policy concerns: Jesner ibid. 34 Nevsun above n 23 paras 220–1 Brown and Rowe JJ. See too Meeran above n 7 at 268–9 who sees tort claims as the easiest route to success. 35 See Lisa J. Laplante ‘Human Torts’ 39 Cardozo Law Review 245 (2017). 29

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parameters of, and limits to, liability.36 Accordingly, the use of existing tort claims may not effectively deprive the claimants of redress, though, as a matter of public policy some jurisdictions may develop new torts based directly on breaches of customary international law. Ultimately the choice should be based on what is the best claim to make to ensure effective remediation of victims. 6.1.3 Financial obstacles Principle 26 of the UNGPs expressly requires states to ‘ensure the effectiveness of domestic judicial mechanisms … including considering ways to reduce legal, practical and other relevant barriers that could lead to a denial of access to remedy’. The Commentary to Principle 26 lists examples of substantive and procedural barriers to litigation.37 Among practical and procedural barriers are: costs of bringing claims that go beyond an appropriate deterrent to unmeritorious cases and/or cannot be reduced to reasonable levels either through government support, litigation insurance, legal fee structures or other means; difficulties in securing legal representation or inadequate procedures for class actions and other collective action procedures; and lack of resources for the state to investigate individual and business involvement in human rights-related crimes. Procedural obstacles revolve mainly around the cost of litigation and the inequality of arms between corporations, enjoying expert legal resources and funding, and claimants, who often have few resources and rely on legal aid or other sources of benevolent funding.38 The need for effective legal aid comes to the fore.39



36



37



38 39

Vladislava Stoyanova ‘Common Law Tort of Negligence as a Tool for Deconstructing Positive Obligations under the European Convention on Human Rights’ The International Journal of Human Rights (2019), https://​ doi​.org/​10​.1080/​13642987​.2019​.1663342. UNGPs above n 1. For detailed analysis of obstacles to corporate human rights litigation and recommendations for improvements see Skinner, McCorquodale and De Schutter above n 9; Report of the United Nations High Commissioner for Human Rights ‘Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse’ (UN Doc. A/HRC/32/19, 10 May 2016) at https://​undocs​.org/​A/​HRC/​32/​ 19. See UNGPs above n 1 Commentary to Principle 26. On which see further Muchlinski above n 6 at 595–6.

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6.1.4 Tactical, political and social obstacles Key to an effective judicial remedy is that the court system is free from corruption, political or business influence.40 The Commentary to Principle 26 of the UNGPs highlights, in addition, ‘that the legitimate and peaceful activities of human rights defenders are not obstructed’. Furthermore, societal and cultural factors such as poverty levels, discrimination against women, minorities or other groups, literacy levels and access to legal information all contribute to the environment for remedy in the jurisdiction concerned.41 A further issue concerns access to relevant corporate information, which may be withheld on grounds of commercial confidentiality, without which claimants may find it impossible to found their case.42 On the question of human rights defenders the UNWG has reported that: A large number of human rights defenders are under threat and attack because they raise concerns about adverse human rights impacts of business operations, often in the context of large development projects that affect access to land and livelihoods.43

According to the OHCHR, ‘ ‘human rights defender’ is a term used to describe people who, individually or with others, act to promote or

40 41



42



43

This section draws upon and expands Muchlinski above n 6 at 596–7. See further Julinda Beqiraj and Lawrence McNamara, International Access to Justice: Barriers and Solutions (Bingham Centre for the Rule of Law Report 02/2014), International Bar Association, October 2014 at https://​ www​.biicl​.org/​documents/​485​_iba​_report​_060215​.pdf​?showdocument​=​1; OECD ‘Access to Justice’ at http://​www​.oecd​.org/​gov/​access​-to​-justice​.htm; Ethical Trading Initiative Access to Remedy: Practical Guide for Companies (London, ETI, 2019) at https://​www​.ethicaltrade​.org/​sites/​default/​files/​ shared​_resources/​Access​%20to​%20remedy​_0​.pdf ch 5. For detailed analysis see Nicola Jägers ‘Access to Effective Remedy: The Role of Information’ in Deva and Birchall (eds) above n 6 ch 19. UN Working Group on Business and Human Rights ‘The Guiding Principles on Business and Human Rights: Guidance on Ensuring Respect for Human Rights Defenders’ (UN Doc. A/HRC/47/39/Add.2, 22 June 2021) para 1 at https://​undocs​.org/​A/​HRC/​47/​39/​Add​.2. See further Business and Human Rights Resource Centre ‘Human Rights Defenders and Civic Freedoms’ at https://​www​.business​-humanrights​.org/​en/​big​-issues/​human​-rights​ -defenders​-civic​-freedoms/​; David Birchall ‘The Role of Civil Society and Human Rights Defenders in Corporate Accountability’ in Deva and Birchall (eds) above n 6 ch 20.

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protect human rights in a peaceful manner’.44 Human rights defenders can act anywhere in the world, though mostly on the local or national level, to further and uphold any human rights. Their principal functions include: collecting and disseminating information on violations; supporting victims, including through legal representation and bringing lawsuits; taking action to secure accountability and to end impunity; supporting better governance and government policy through political action; contributing to the implementation of human rights treaties; and playing a significant role in human rights education and training.45 Following the UNGPs, the UNWG recommends that states, in discharging their duty to protect human rights, actively enable human rights defenders to further business and human rights concerns including by protecting their rights and introducing sanctions against businesses that ‘caused or contributed to harm to a defender, or failed to actively take steps to prevent harm to a defender once such a risk is known to the business’.46 Equally, businesses, in furthering their responsibility to respect human rights, should at a minimum ensure that ‘their activities, actions and omissions do not lead to retaliation, violence or stigmatisation against human rights defenders’.47 Respect for human rights defenders must inform business policy on human rights, HRDD must take account of the risk of human rights infringements against human rights defenders and human rights defenders should be treated as an expert resource enabling business enterprises to understand the concerns of affected individuals and communities on the ground.48 Furthermore businesses should use their leverage to ensure that respect for human rights defenders is developed and maintained.49 Finally, in relation to access to remedy, the UNWG recommends states to prevent strategic lawsuits against public participation (SLAPPs) being

UN Office of the High Commissioner on Human Rights ‘About Human Rights Defenders’ at https://​www​.ohchr​.org/​en/​issues/​srhrdefenders/​pages/​ defender​.aspx. 45 ibid. 46 UN Working Group above n 43 para 118. 47 ibid para 123. 48 ibid paras 124, 127. 49 ibid para 126. 44

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used to silence human rights defenders, and to develop ways for courts to stop such lawsuits.50 According to a recent comprehensive study by the Business and Human Rights Resource Centre (BHRRC): SLAPPs are an abuse of the legal system by powerful actors. The tactic can intimidate defenders and drain the resources of community members, environmental advocates, and journalists who speak out in support of human rights and the environment. The impact can have a broad chilling effect, deterring others from speaking out against abuse.51

A SLAPP appears to be a normal lawsuit, and may be difficult to identify, but the BHRRC report offers the following indicators: it is brought or initiated by a private party such as a company, owner of a company, or employees at a company; it targets acts of public participation, from peaceful protest to public criticism or opposition campaigns, related to human rights, social justice, and environmental protection; and the lawsuit came after the defender and/or organisation expressed a critique of the claimant’s economic activities through those acts of public participation.52 The BHRRC report identified 355 SLAPPs since 2015. Within this sample, it found the highest number in Latin America (39 per cent), followed by Asia and the Pacific (25 per cent), Europe and Central Asia (18 per cent), Africa (8.5 per cent), and North America (9 per cent). Nearly three-quarters (73 per cent) of cases were brought in countries in the Global South. Sixty-three per cent of cases involved criminal charges. Most individuals and groups facing SLAPPs (65 per cent of cases) raised concerns about projects in four sectors:  mining (108), agriculture and livestock (76), logging and lumber (29), and palm oil (20).53 Several US states and the Canadian Provinces of Quebec, Ontario and British Columbia have laws to control SLAPPs while Australia defends



ibid para 120. Business and Human Rights Resource Centre (BHRRC) SLAPPed But Not Silenced (June 2021) ‘Executive Summary’ at https://​media​.business​ -humanrights​.org/​media/​documents/​2021​_SLAPPs​_Briefing​_EN​_v51​.pdf. 52 ibid at 29. 53 ‘SLAPPed But Not Silenced: Briefing’ at https://​www​.business​-humanrights​ .org/​en/​from​-us/​briefings/​slapped​-but​-not​-silenced​-defending​-human​ -rights​-in​-the​-face​-of​-legal​-risks/​. 50 51

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public interest litigation through its defamation laws.54 By contrast, protection against SLAPPs is weak in European legal systems and there is evidence that it is on the rise, though cases are not confined to business-based claimants.55 This has prompted a civil society campaign for an EU wide anti-SLAPP law.56 Courts will not always allow a case to proceed if it is seen as a SLAPP. For example, in  Mineral Sands Resources v Reddell the South African High Court held that a series of defamation lawsuits brought by Australian mining company Mineral Commodities Ltd and its local subsidiary, against six environmental activists, was an abuse of the legal process.57 In addition, defendants in SLAPP lawsuits have used the case against them as an opportunity for disseminating their criticisms of the claimant business through their defence and, thereby, discredit the lawsuit and legitimate their critique of the business.58 6.1.5 Recent case-law developments As noted above, Principle 26 of the UNGPs expressly requires states to reduce legal barriers leading to a denial of access to remedy. The Commentary to Principle 26 lists, among such legal barriers, ‘the way in which legal responsibility is attributed among members of a corporate



54 55



56



57



58

BHRRC above n 51 at 22–3. See Nik Williams, Laurens Hueting and Paulina Milewska ‘The Increasing Rise, and Impact, of SLAPPs: Strategic Lawsuits against Public Participation’ The Foreign Policy Centre (9 December 2020) at https://​ fpc​ .org​ .uk/​ the​ -increasing​-rise​-and​-impact​-of​-slapps​-strategic​-lawsuits​-against​-public​ -participation/​. BHRRC above n 53 at 23. See further European Centre for Press and Media Freedom ‘Ending Gag Lawsuits in Europe – Protecting Democracy and Fundamental Rights’ 8 June 2020 at https://​ www​ .ecpmf​ .eu/​ ending​ -gag​ -lawsuits​-in​-europe​-protecting​-democracy​-and​-fundamental​-rights/​. Mineral Sands Resources (Pty) Ltd and Another v Reddell and Others; Mineral Commodities Limited and Another v Dlamini and Another; Mineral Commodities Limited and Another v Clarke (7595/2017; 14658/2016; 12543/2016) [2021] ZAWCHC 22; [2021] 2 All SA 183 (WCC) (9 February 2021) at http://​www​.saflii​.org/​za/​cases/​ZAWCHC/​2021/​22​.html. On which see further Christopher J. Hilson ‘Environmental SLAPPs in the UK: Threat or Opportunity?’ 25(2) Environmental Politics 248 (2016), doi:​ 10​.1080/​09644016​.2015​.1105176.

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group under domestic criminal and civil laws may facilitate the avoidance of appropriate accountability’.59 In England there has been a significant move towards accepting the right to bring claims against parent companies for the acts of their overseas subsidiaries.60 In Vedanta Resources plc and another v Lungowe and others the Supreme Court held that there can be a sufficient connection between the acts of an English-based parent company and its overseas subsidiary to permit the case to go to trial. English law requires an arguable case to be shown against the parent for the court to assert jurisdiction. English law accepts that a parent company can, in appropriate circumstances, be liable for injuries caused by its subsidiary not only where it has sufficient control to direct the subsidiary’s actions but also where it uses its power to influence group policies and the subsidiary, in carrying out those policies, causes harm.61 The parent/subsidiary relationship does not affect the general principles of tort liability which determine whether, on the facts, a parent is liable for the subsidiary’s acts.62 Additionally, the parent may incur responsibility to third parties if, in published materials, it holds itself out as exercising supervision and control of its subsidiaries, even if it does not in fact do so.63 This case has since been followed by the Supreme Court in Okpabi v Royal Dutch Shell plc which established that the claimants had an arguable case against the UK parent for breach of a duty of care arising from numerous oil spills from pipelines operated by its Nigerian subsidiary and so the claim could proceed to trial.64

61 59 60

64 62 63

UNGPs above n 1. See Meeran above n 7. Vedanta Resources PLC and another v Lungowe and others [2019] UKSC 20 para 61. See Meeran ibid; Muchlinski above n 6 at 312. See further Marilyn Croser, Martyn Day, Mariëtte van Huijstee and Channa Samkalden ‘Vedanta v Lungowe and Kiobel v Shell: The Implications for Parent Company Accountability’ 5(1) BHRJ 130 (2020), doi:​10​.1017/​bhj​.2019​.25; Ekaterina Aristova ‘The Future of Tort Litigation against Transnational Corporations in the English Courts: Is Forum [Non] Conveniens Back?’ 6(3) BHRJ 399 (2021), doi:​10​.1017/​bhj​.2021​.11. Vedanta above n 61 para 54. ibid para 53. Okpabi v Royal Dutch Shell Plc [2021] UKSC 3; L. Roorda and D. Leader ‘Okpabi v Shell and Four Nigerian Farmers v Shell: Parent Company Liability Back in Court’ 6(2) BHRJ 368 (2021), doi:​10​.1017/​bhj​.2021​.26.

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Before the Dutch courts, in January 2021, the Hague Court of Appeal held that Shell’s Nigerian subsidiary was liable to compensate the claimants for damage suffered as a result of oil spills from an underground pipeline and oil well while its Anglo-Dutch parent was bound to work with its subsidiary to put in place a system of detection to prevent future spills.65 In the French courts a principle of group liability for human rights abuses has also been considered. In an order issued on 11 February 2021 the Nanterre civil court accepted jurisdiction in a claim brought by 14 local authorities and five associations, including French NGOs Notre Affaire à Tous and Sherpa, against French oil multinational Total based on its major contribution to climate change and the inadequacy of the measures taken by the company to prevent the resulting human rights, health and safety, and environmental damage throughout its transnational group.66 The claimants relied on the Duty of Vigilance Law, but also on the judge’s power to order measures to stop or prevent environmental damage under Article 1252 of the Civil Code. As in a previous claim against it, Total argued that the case should be transferred to a commercial court as it concerned a dispute related to commercial companies.67 However, unlike in the previous claim where

‘Shell Nigeria Liable for Oil Spills in Nigeria’ The Hague, 29 January 2021 at https://​www​.rechtspraak​.nl/​Organisatie​-en​-contact/​Organisatie/​ Gerechtshoven/​Gerechtshof​-Den​-Haag/​Nieuws/​Paginas/​Shell​-Nigeria​ -liable​-for​-oil​-spills​-in​-Nigeria​.aspx. 66 See Lucie Chatelain ‘First Court Decision in the Climate Litigation against Total: A Promising Interpretation of the French Duty of Vigilance Law’ Business and Human Rights Resource Centre ‘Opinion’ (25 March 2021) at https://​www​.business​-humanrights​.org/​en/​blog/​first​-court​-decision​-in​-the​ -climate​-litigation​-against​-total​-a​-promising​-interpretation​-of​-the​-french​ -duty​-of​-vigilance​-law/​on which this summary draws; original French decision: Association Notre Affaire à Tous, et al. v S.A. Total Tribunal Judiciaire de Nanterre 1ère Chambre Ordonnance de Mise en Etat Rendue le 11 Février 2021 available at https://​www​.asso​-sherpa​.org/​wp​-content/​uploads/​ 2021/​02/​110221​-MINUTE​-Total​-climat​-compe​%CC​%81tence​.pdf. 67 See L’Association ‘Les Amis de la Terre France v S.A. Total Tribunal Judiciaire de Nanterre Referes Ordonnance de Refere Rendue le 30 Janvier 2020 summarised in English: Friends of the Earth International ‘Total Abuses in Uganda: French High Court of Justice Declares Itself Incompetent in Favour of the Commercial Court’ 30 January 2020 at https://​ www​ .foei​ .org/​ no​ -category/​total​-abuses​-uganda​-french​-high​-court​-of​-justice​-declares​-itself​ -incompetent​-duty​-vigilance​-law. 65

136 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Total’s argument succeeded, the judge was unpersuaded and accepted that the civil court had jurisdiction. The decision was based on two principal reasons: first, by reason of its legal duty to draw up a vigilance plan, Total was bound to ‘integrate into its strategic orientations the risks of human rights and environmental violations, and, in fact, in view of the nature of its activity, proceed to substantial abandonment or reorientation’ and to do so throughout its relations with affiliates, sub-contractors and suppliers;68 secondly, although the vigilance plan thus undoubtedly affected the operations of Total, its purpose and the risks it was intended to prevent went beyond the strict framework of the management of a commercial company and went to matters that, according to the nature of the duty of vigilance and the legislative intent behind it, required a form of judicial review that was wider than merely commercial. Thus the commercial court could not have exclusive jurisdiction and the claim could proceed in the civil court. On 18 November 2021, the Versailles Court of Appeal confirmed the jurisdiction of the civil court and rejected Total’s argument that the case should go to the commercial court.69 These recent cases represent a revision of earlier scepticism about direct parent company liability for acts of overseas subsidiaries.70 Though they concern environmental damage, and are characterised primarily as personal injury cases, the connection with human rights arises from the threats to human health and life that the corporate activities in question create. The cases accept that there is a functional connection between the operations of a parent and subsidiary in the multinational group enter-



68



69



70

English translation taken from Chatelain above n 66; see, for original French, Association Notre Affaire à Tous, et al. v S.A. Total above n 66 at 8–9. Sherpa ‘Climate litigation against Total: the Versailles Court of Appeal confirms the jurisdiction of the judicial court’ (Paris, 18 November 2021) at https://​www​.asso​-sherpa​.org/​climate​-litigation​-against​-total​-the​-versailles​ On -court​-of​-appeal​-confirms​-the​-jurisdiction​-of​-the​-judicial​-court. the conduct of business and human rights litigation in France and the Netherlands, see further Virginie Rouas Achieving Access to Justice in a Business and Human Rights Context: An Assessment of Litigation and Regulatory Responses in European Civil-Law Countries (London, Institute of Advanced Legal Studies, 2022) available for download at https://​humanities​ -digital ​ - library ​ . org/ ​ i ndex ​ . php/ ​ h dl/ ​ c atalog/ ​ b ook/ ​ a chieving ​ - access ​ - to​ -justice. On which see further Muchlinski above n 6 at 306–14.

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prise and that formal legal separation between individual companies, and their presence in distinct legal jurisdictions, does not bar claims. To date only one English case appears to have accepted UK-based firm liability for the acts of an overseas affiliate. In Rihan v Ernst & Young Global Ltd & Others the High Court held that a UK-based audit firm was under a duty of care towards a whistle-blower employed by their Dubai-based associate firm to ensure that he could carry out an audit on a client firm ethically. The claimant refused to sign off the audit on the grounds that he suspected the client firm of unethical business practices and eventually resigned over the matter after being replaced on the audit.71 The direct involvement by senior managers in the UK firm with the audit led Kerr J to view the UK-based firm and its Dubai-based associate company as acting in concert and of owing a duty of care over the audit carried out by the claimant. However, the unique facts of this case suggest that it is an outlier and that it does not set a general precedent.72 Indeed, the majority of such claims end in a settlement and so final decisions on the merits will be rare.73 Finally, in relation to supply chain liability, the English Court of Appeal in Begum v Maran accepted jurisdiction over a claim alleging the liability of a British shipowner for the death of a Bangladeshi ship breakers’ yard worker who had been killed while working on the break-up of the shipowner’s former vessel.74 Though the British shipowner no longer owned the vessel at the time of its break-up, the vessel having been sold and reflagged through a number of intermediary companies, the claimant, the deceased worker’s widow, argued that the shipowner knew that the vessel would go to Bangladesh to a yard with inferior health and safety practices as compared to yards in China or Turkey. Coulson LJ held that in the circumstances there was an arguable, and not fanciful, case that the shipowner ‘could, and should, have insisted on the sale to a so-called “green yard” where proper working practices were in place’.75 This duty could also arise as a result of the shipowner actively ‘sending the vessel

71 72

75 73 74

Rihan v Ernst & Young Global Ltd & Others [2020] EWHC 901. See Stephenson Harwood ‘A New Duty of Care Emerges on Unusual Facts in an Audit Context’ (12 May 2020) at https://​www​.shlegal​.com/​news/​a​ -new​-duty​-of​-care​-emerges​-on​-unusual​-facts​-in​-an​-audit​-context. See Meeran above n 7 at 267–8. Begum v Maran [2021] EWCA Civ 32. ibid para 67.

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to Bangladesh knowingly exposing workers (such as the claimant) to the significant dangers which working on this large vessel in Chittagong entailed’.76 Whether this duty of care will be established at any eventual trial remains to be seen, but it is clear that the English courts are willing at least to entertain argument on whether it is legitimate for businesses, trading with third parties knowing that they will ignore the safety of their workers, to avoid liability where they fail to take appropriate measures to avoid or mitigate such harm. It is also arguable that if English law establishes a binding duty to this effect stronger efforts will be made by English businesses to seek enforceable guarantees from third parties concerning their treatment of workers.

6.2

Non-judicial state-based remedies

According to Principle 27 of the UNGPs, ‘States should provide effective and appropriate non-judicial grievance mechanisms, alongside judicial mechanisms, as part of a comprehensive State based system for the remedy of business-related human rights abuse’. Human rights remediation requires not only judicial remedies but informal methods of dispute settlement including mediation and conciliation services, informal arbitration and human rights ombudspersons.77 Existing national human rights institutions could have their mandate extended to deal with business and human rights issues.78 Equally specialised business and human rights institutions could be developed. For example, in January 2018 Canada announced the creation of an Ombudsperson and a Multi-stakeholder Advisory Body on Responsible Business Conduct responsible for advising the Canadian government

76 77



78

ibid para 64. See further International Federation for Human Rights (FIDH) Corporate Accountability for Human Rights Abuses: A Guide for Victims and NGOs on Recourse Mechanisms (3rd edn, Paris, FIDH, 2016) at https://​www​.fidh​.org/​ IMG/​pdf/​corporate​_accountability​_guide​_version​_web​.pdf. On national human rights agencies see further Humberto Cantu Rivera ‘National Human Rights Institutions and Their (Extended) Role in the Business and Human Rights Field’ in Deva and Birchall (eds) above n 6 ch 23.

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on business and human rights issues. The Canadian Ombudsperson for Responsible Enterprise (CORE), currently Sheri Meyerhoffer, is the first position of its kind in the world.79 The CORE is: mandated to review allegations of human rights abuses arising from the operations of Canadian companies abroad. Recommendations made by the Ombudsperson will be reported publicly, and companies that do not cooperate could face trade measures, including the withdrawal of trade advocacy services and future Export Development Canada support. While serving in this role, the new Ombudsperson will focus on the mining, oil and gas, and garment sectors and is expected to expand to other sectors in the first year of operation. This appointment underlines the importance of inclusive trade and respect for the fundamental rights of people abroad, as part of Canada’s trade diversification strategy, and reflects Canada’s commitment to responsible business around the world.80

The CORE was originally meant to exercise extensive investigative powers. Their eventual omission led to the resignation of all 14 civil society and labour union representatives of the Multi-Stakeholder Advisory Body.81 Despite these concerns the new Human Rights Responsibility Mechanism came into force on 15 March 2021 amid continuing concerns about the lack of investigative and subpoena powers meaning that corporate executives cannot be compelled to appear or to release evidence to the Ombudsperson.82



79



80



81



82

See CORE website at https://​core​-ombuds​.canada​.ca/​core​_ombuds​ -ocre​_ombuds/​index​.aspx​?lang​=​eng. Global Affairs Canada ‘Minister Carr Announces Appointment of First Canadian Ombudsperson for Responsible Enterprise (CORE)’ News Release (Ottawa, Ontario, 8 April 2019) at https://​www​.canada​.ca/​en/​global​-affairs/​ news/​2019/​04/​minister​-carr​-announces​-appointment​-of​-first​-canadian​ -ombudsperson​-for​-responsible​-enterprise​.html. See Canadian Network on Corporate Accountability ‘Government of Canada Turns Back on Communities Harmed by Canadian Mining Overseas, Loses Trust of Civil Society’(11 July 2019) at https://​aboveground​.ngo/​ government​-of​-canada​-turns​-back​-on​-communities​-harmed​-by​-canadian​ -mining​-overseas​-loses​-trust​-of​-canadian​-civil​-society/​. Bennett Jones LLP ‘Canadian Ombudsperson for Responsible Enterprise Launches Human Rights Complaints Process’ 30 March 2021 at https://​ www​.jdsupra​.com/​legalnews/​canadian​-ombudsperson​-for​-responsible​ -7257586/​. See too ‘Liberal MP Confronts Minister over New Watchdog to Oversee Canadian Companies Abroad’ CBC News, 24 March 2021 at https://​www​.cbc​.ca/​news/​politics/​mckay​-ng​-ombudsperson​-responsible​ -enterprise​-1​.5961607.

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A widely adopted state-based non-judicial method is the NCP system under the OECD Guidelines, which can review the corporate due diligence responsibilities included in the Guidelines since their 2011 revision.83 NCPs interpret the OECD Guidelines through their provision of good offices when dealing with specific issues raised before the NCP by worker organisations, other NGOs, the business community and other interested parties.84 This ‘specific instance’ procedure involves five steps:85 deciding to file a complaint requiring an assessment of whether and how the standards in the OECD Guidelines apply to a given case; preparing and filing the complaint; initial assessment by the NCP in accordance with the required assessment criteria in the OECD Guidelines Procedural Guidance,86 which usually results in a written assessment sent to all the parties to the complaint upon which they can comment; if the complaint is accepted the NCP will provide good offices to help resolve the complaint amicably; after the good offices stage the NCP will draft a final statement explaining why the complaint merits no further consideration, any agreement reached by the parties or, in the absence of such agreement, provide an overview of the issues and procedures followed. Alternatively, the final statement may find that a corporation has not complied with aspects of the OECD Guidelines and make compliance recommendations. Parties may be asked to provide comments on a draft final statement. Where compliance recommendations have been made, there might then be a post-final assessment review of whether these have been followed.



See Mariette van Huijstee and Joseph Wilde-Ramsing ‘Remedy is the Reason: Non-Judicial Grievance Mechanisms and Access To Remedy’ in Deva and Birchall (eds) above n 6 ch 22. 84 See OECD Guidelines for Multinational Enterprises ‘Amendment of the Decision of the Council on the OECD Guidelines for Multinational Enterprises I “National Contact Points”’ para 1 at https://​www​.oecd​.org/​ daf/​inv/​mne/​48004323​.pdf (OECD Guidelines). 85 See OECD Watch ‘How to File a Complaint?’ at https://​www​.oecdwatch​ .org/​how​-to​-file​-a​-complaint/​; UK Government ‘UK NCP Complaint Handling Process’ (7 January 2020) at https://​www​.gov​.uk/​guidance/​uk​ -ncp​-complaint​-handling​-process. 86 OECD Structures and Procedures of National Contact Points for the OECD Guidelines for Multinational Enterprises (Paris, OECD, 2018) at https://​ mneguidelines ​ . oecd​ . org/​ S tructures​ - and​ - procedures ​ - of ​ - NCPs ​ - for ​ - the​ -OECD​-guidelines​-for​-multinational​-enterprises​.pdf. 83

ACCESS TO REMEDY 141

The NCP procedure has been used successfully in some states but it remains a patchy process with NCPs themselves stressing that they are not designed to offer remedies but only to act as mechanisms facilitating dialogue.87 According to OECD Watch, the leading NGO concerned with making the NCPs an effective tool for corporate accountability, in 2020, 14 cases were filed by civil society and communities and were concluded by NCPs.88 Only one case reached agreement. NCPs rejected five cases at the initial assessment phase. The Slovenian NCP concluded its first complaint in 2020 by rejecting it. Seven complaints were accepted but concluded without resolution. One case was withdrawn by the complainants due to concerns with the NCP’s procedures and failures to address security risks for rightsholders. Eight complaints took two or more years to reach a conclusion representing at least double the timeframe prescribed by the OECD Guidelines. OECD Watch believes that gaps in the standards for MNEs and expectations for NCPs generate poor outcomes in NCP complaints.89 It proposes a number of improvements to the existing procedure.90 This approach is preferred to abandonment of NCPs as, in the view of OECD Watch: the Guidelines’ various strengths, their widespread and on-going use by all stakeholders as a leading [responsible business conduct] norm and vital path to remedy, and the fact that they are increasingly being adopted into national laws on corporate accountability, justify civil society and governments taking action to ensure they remain up-to-date and effective.91

OECD Watch proposes a range of substantive reforms to the OECD Guidelines, and a range of procedural reforms to the NCPs, in line with the



87 88



89 90



91

See van Huijstee and Wilde-Ramsing above n 83 at 478–9. OECD Watch State of Remedy 2020 (OECD Watch briefing paper, June 2021) at https://​www​.oecdwatch​.org/​wp​-content/​uploads/​sites/​8/​2021/​06/​ OECD​-W​-State​-of​-Remedy​-2020​.pdf from which these statistics are taken. ibid at 3. See OECD Watch Get Fit. Closing Gaps in the OECD Guidelines to Make Them Fit for Purpose (June 2021) at https://​www​.oecdwatch​.org/​wp​ -content/​uploads/​sites/​8/​2021/​06/​OECD​-Watch​-Get​-Fit​-Closing​-gaps​-in​ -the​-OECD​-Guidelines​-to​-make​-them​-fit​-for​-purpose​-1​.pdf; see further K. Bhatt and G. Erdem Türkelli ‘OECD National Contact Points as Sites of Effective Remedy: New Expressions of the Role and Rule of Law within Market Globalization?’ 6(3) BHRJ 423 (2021), doi:​10​.1017/​bhj​.2021​.30. ibid at 12.

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UNGPs.92 Among the substantive changes, new provisions are proposed for extending MNE responsibility to respect land rights of indigenous peoples and other marginalised and disadvantaged groups and to undertake due diligence tailored to meet their needs. In addition, MNEs should address their carbon impacts by setting and achieving targets in line with the Paris Agreement. The main procedural changes include: proceeding with investigations and findings even when companies refuse to join in good offices; issuing determinations when companies breach the OECD Guidelines; promoting the OECD Guidelines’ applicability to all MNEs, including by accepting all complaints that state a plausible claim against a company; applying the OECD Guidelines to states acting as economic actors, requiring clarification of the definition of MNEs in Chapter I of the Guidelines in this respect; engaging professional mediators or internal mediation training as one of several steps to promoting impartiality in complaint handling; developing procedural rules that prioritise transparency over corporate confidentiality; and adopting policies and procedures to address security risks to human rights defenders.

6.3

Corporate level operational grievance mechanisms

The UNGPs and the OECD Guidelines recommend that where enterprises have identified, through due diligence, any adverse human rights impact that they have caused, or contributed to, they must provide processes to enable remediation.93 In some situations, recourse to judicial or state-based non-judicial mechanisms is preferable, but in many cases



92



93

ibid. For a summary of recommendations see OECD Watch State of Remedy 2020 above n 88 at 3 on which this paragraph draws. UNGPs above n 1 Principle 22; OECD Guidelines above n 84 Guideline IV ‘Human Rights’ para 6. See further Office of the United Nations High Commissioner for Human Rights The Corporate Responsibility to Respect Human Rights: An Interpretative Guide (New York and Geneva, www​ .ohchr​ .org/​ United Nations, 2012) at 63–7 available at http://​ Documents/​Publications/​HR​.PUB​.12​.2​_En​.pdf (Interpretative Guide); Shift, Remediation, Grievance Mechanisms, and the Corporate Responsibility to Respect Human Rights (New York, 2014) at https://​ shiftproject​ .org/​ wp​-content/​uploads/​2014/​05/​Shift​_remediationUNGPs​_2014​.pdf. This section draws upon and updates Muchlinski above n 6 at 597–9.

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an operational-level grievance mechanism (OGM) established by the business enterprise may be effective.94 According to the Commentary to Principle 29 of the UNGPs: [OGMs] make it possible for grievances, once identified, to be addressed and for adverse impacts to be remediated early and directly by the business enterprise, thereby preventing harms from compounding and grievances from escalating.95

The main question raised is whether OGMs will offer functional, fair and effective remediation. This may be true in weak governance zones where legal remedies are non-existent, but in states with effective legal systems OGMs may in fact replace more effective judicial remedies and give the corporation control over remediation to the possible detriment of local communities.96 To avoid this, OGMs should be administered in collaboration with local stakeholders and must focus on their needs and not those of the corporation. Otherwise the OGM may become a process of self-interested local dissent management.97 Equally, states should not rely on OGMs to avoid their regulatory responsibilities for upholding human rights and environmental justice. In addition to the hearing of complaints, OGMs can act as conduits of information through feedback from affected stakeholders.98 According to the UNGPs, they provide a channel to raise concerns when stakeholders believe they are being, or will be, adversely impacted.99 The resulting information supports the identification of adverse human rights impacts as a part of an enterprise’s on-going HRDD and can indicate trends and

Interpretative Guide above n 93 at 68. See too OECD Guidelines above n 84 ‘Human Rights Guideline Commentary para 46. See further Shift above n 93 at 5–6. 95 UNGPs above n 1 Principle 29 and Commentary to Principle 29; Shift above n 93; van Huijstee and Wilde-Ramsing above n 83 at 475. 96 For an instructive study see Rajiv Maher, David Monciardini and Steffen Böhm ‘Torn between Legal Claiming and Privatized Remedy: Rights Mobilization against Gold Mining in Chile’ 31(1) Business Ethics Quarterly 37 (2021), doi:​10​.1017/​beq​.2019​.49. 97 ibid. 98 OECD Guidelines above n 84 Human Rights Guideline Commentary para 46. 99 UNGPs above n 1 Commentary to Principle 29 on which this paragraph draws.

94

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patterns in complaints, allowing business enterprises to identify systemic problems and adapt their practices. OGMs resemble existing company programmes aimed at reducing and resolving workplace conflicts as well as business-to-business conflict resolution including alternative dispute resolution (ADR).100 Of relevance will be existing ‘whistle-blower’ systems within the company, corporate works councils and compliance officers.101 Ensuring that outside stakeholders have adequate access to OGMs is key.102 The Commentary to the OECD Guidelines Human Rights Guideline notes, in addition, that OGMs ‘should not be used to undermine the role of trade unions in addressing labour-related disputes, nor should such mechanisms preclude access to judicial or non-judicial grievance mechanisms, including the NCPs under the Guidelines’.103 Corporate level grievance mechanisms should be distinguished from other forms of non-judicial grievance mechanisms. These can be state-based mechanisms such as the OECD NCPs, discussed above, or industry-level schemes. One example is the complaints mechanism of the Roundtable on Sustainable Palm Oil (RSPO), a multi-stakeholder initiative which ‘unites

Shift, Oxfam and Global Compact Network Netherlands Doing Business with Respect for Human Rights: A Guidance Tool for Companies (2016) 106 at https://​www​.shiftproject​.org/​resources/​publications/​doing​-business​ -with​-respect​-for​-human​-rights/​; and see for detailed discussion ibid ch 3.8 ‘Remediation and grievance mechanisms’. See too John Sherman ‘Embedding a Rights Compatible Grievance Processes for External Stakeholders with Business Culture’ Corporate Social Responsibility Initiative Report No. 36. (Cambridge: John F. Kennedy School of Government, Harvard University, 2009) available at https://​www​.hks​.harvard​.edu/​sites/​default/​files/​centers/​ mrcbg/​programs/​cri/​files/​report​_36​_sherman​_grievance​.pdf. 101 Shift et al. Above n 100 at 105. An illustrative example of such a system is The Siemens ‘Tell Us’ reporting channel: see https://​new​.siemens​.com/​global/​ en/​company/​sustainability/​compliance​.html. See too Katharina Hausler, Karin Lukas and Julia Planitzer ‘Non Judicial Remedies: Company-based Grievance Mechanisms and International Arbitration’ in Juan Jose Alvarez-Rubio and Katerina Yannibas (eds) Human Rights in Business: Removal of Barriers to Access to Justice in the European Union (Abingdon, Routledge, 2017) ch 3 at 86–104 covering Siemens and Statoil’s grievance mechanisms. 102 Shift et al. above n 100 at 107. 103 OECD Guidelines above n 84 Human Rights Guideline Commentary para 46.

100

ACCESS TO REMEDY 145

stakeholders from the seven sectors of the palm oil industry: oil palm producers, processors or traders, consumer goods manufacturers, retailers, banks/investors, and environmental and social NGOs, to develop and implement global standards for sustainable palm oil’.104 To this end the RSPO established its complaints mechanism.105 This follows closely the procedural principles recommended by the UNGPs.106 In this regard the UNGPs require certain core qualities for an effective non-judicial grievance mechanism, whether state-based or non-state-based, grouped around two principles of good practice: due process and accessibility.107 On due process, Principle 31 of the UNGPs requires that the mechanism is legitimate by being accountable for the fair conduct of grievance processes, which enable trust from the stakeholder groups for whose use they are intended. The mechanism must be predictable, by providing ‘a clear and known procedure with an indicative time frame for each stage, and clarity on the types of process and outcome available and means of monitoring implementation’, and equitable, by seeking to ensure that aggrieved parties have ‘reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms’. A third element is transparency, achieved by keeping parties to a grievance informed about its progress, and providing ‘sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake’. Finally, the procedure must be ‘rights-compatible: ensuring that outcomes and remedies accord with internationally recognised human rights’. On accessibility, Principle 31 of the UNGPs requires that the procedure be known to all stakeholder groups for whose use it is intended and provide adequate assistance for those who may face particular barriers to access. Stakeholder groups should be consulted on the design and performance



104 105



106



107

Roundtable on Sustainable Palm Oil ‘About’ at https://​rspo​.org/​about. RSPO ‘Complaints and Appeals Procedures’ (17 September 2019) at https://​ rspo​.org/​resources/​complaints. See further Mark Wielga and James Harrison ‘Assessing the Effectiveness of Non-state-based Grievance Mechanisms in Providing Access to Remedy for Rightsholders: A Case Study of the Roundtable on Sustainable Palm Oil’ 6(1) BHRJ 67 (2021), doi:​10​.1017/​bhj​.2020​.33. UNGPs above n 1 Principle 31 on which the next two paragraphs draw. See too OECD Guidelines above n 84 Human Rights Guideline Commentary para 46.

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of OGMs and the focus should be on dialogue as the means to address and resolve grievances. In this way OGMs should become a source of continuous learning by drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms. The UNGPs approach stresses procedural effectiveness. However, to be useful, an OGM must also offer effective remediation for complainants. This is the subject of a continuing scholarly debate.108 There is evidence showing that such mechanisms do not always offer effective remedies. For example, in a recent study, the RSPO mechanism was found to perform well when judged according to the UNGPs’ effectiveness criteria, but performed poorly when individual cases were assessed to ascertain the outcomes that were achieved for rightsholders. In particular, in a number cases where the complaint against a company was upheld no remedy was forthcoming and the company concerned simply exited the RSPO rendering it outside the complaint mechanism’s reach; in other cases the company used the procedure to delay the provision of any remedy by the complaints panel while the alleged infringement continued and in only one case had the company accepted the ruling and acted upon it.109 The most common criticism of the procedure was that it took an inordinate amount of time.110 The study concluded that non-judicial grievance mechanisms will remain severely limited due to their voluntary nature and the duration of procedures suggests little immediate advantage over judicial proceedings.111 In relation to corporate level OGMs, a study by the International Commission of Jurists (ICJ) echoes these findings.112 This points out the difficulties experienced by stakeholders in accessing OGMs and the dangers of the corporation acting as both defendant and judge in a complaint. In addition, problems arise regarding the transparency and

See further Fiona Haines and Kate Macdonald ‘Nonjudicial Business Regulation and Community Access to Remedy’ 14 Regulation & Governance 840 (2020), doi:​10​.1111/​rego​.12279. 109 See Wielga and Harrison above n 106 at 82–8. 110 ibid. 111 ibid at 88–91. 112 International Commission of Jurists Effective Operational Grievance Mechanisms (Geneva, November 2019) at https://​www​.icj​.org/​wp​-content/​ uploads/​2019/​11/​Universal​-Grievance​-Mechanisms​-Publications​-Reports​ -Thematic​-reports​-2019​-ENG​.pdf. 108

ACCESS TO REMEDY 147

publicity of claims, the imbalance of resources between the corporation and outside stakeholders and the relationship between the procedure and judicial proceedings especially where the complainant is required to waive their right to go to court.113 A further difficulty is that OGMs are not well suited to dealing with egregious violations of human rights, which should be dealt with by the public authorities and courts of the host state. Where this is not possible the OGM will prove to be an unsuitable alternative. In the light of its report the ICJ has issued a guide to performance standards in OGMs.114

On which see further Lindsay above n 11 at 310–11. International Commission of Jurists Proposed Performance Standards for Operational-level Grievance Mechanisms (Geneva, November 2019) at https://​www​.icj​.org/​wp​-content/​uploads/​2020/​01/​Universal​-Proposed​ -performance​-standards​-Publications​-2019​-ENG​.pdf.

113 114

7

Beyond the beginning

This concluding chapter responds to John Ruggie’s assertion that the UNGPs are merely ‘the end of the beginning’ for business and human rights.1 It asks whether, and to what extent, will the corporate responsibility to respect human rights turn into a binding national and international legal liability for corporate human rights abuses. In previous chapters the gradual ‘legalisation’ of this responsibility was seen through the increased adoption of mandatory HRDD reporting laws, culminating with the binding duty of care in the French Duty of Vigilance Law. Equally, some courts have suggested binding corporate duties of care to observe human rights, though this is still far from a universal trend. Furthermore, there is significant support for increased legal liability among those states, civil society groups and academics advocating a binding UN international business and human rights treaty. The development of national liability laws is discussed in Section 7.2, while Section 7.3 covers the proposed UN treaty. Alongside these developments, the movement towards more informal accountability through MSIs that work beyond the formal regulatory tools of national and international law is considered in Section 7.4. By way of introduction, Section

1



148

Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Final Report UN Doc. A/HRC/17/31, 21 March 2011 para 13 at https://​undocs​.org/​en/​A/​HRC/​17/​31: ‘Council endorsement of the Guiding Principles, by itself, will not bring business and human rights challenges to an end. But it will mark the end of the beginning: by establishing a common global platform for action, on which cumulative progress can be built, step-by-step, without foreclosing any other promising longer-term developments.’ For an overview of achievements under the UNGPs see UNWG ‘Guiding Principles on Business and Human Rights at 10: Taking Stock of the First Decade’ (UN Doc. A/HRC/47/39, 22 April 2021) at https://​ undocs​.org/​A/​HRC/​47/​39.

BEYOND THE BEGINNING 149

7.1 considers the ‘regulatory choices’ facing business and human rights ranging from binding legal duties to more informal approaches based on ‘experimental’ or ‘polycentric’ governance models. Section 7.5 ends the chapter with a review of salient political influences that may shape the future evolution of business and human rights standards.

7.1

Regulatory choices

In Chapter 3 the ‘polycentric governance’ approach of the UNGPs was discussed.2 To recap, the UNGPs posit a variety of regulatory methods including formal legal regulation by states, stakeholder pressure on business actors and internal corporate governance through business decision-making based on HRDD. At the end of his term, John Ruggie proposed an international agreement that would: help clarify standards relating to appropriate investigation, punishment and redress where business enterprises cause or contribute to [human rights] abuses, as well as what constitutes effective, proportionate and dissuasive sanctions. It could also address when the extension of jurisdiction abroad may be appropriate, and the acceptable bases for the exercise of such jurisdiction. It could also foster international cooperation, including in resolving jurisdictional disputes and providing for technical assistance.3

Indeed, John Ruggie was well aware that voluntary initiatives by business had to be accompanied by what Ford describes as ‘the political public authority and regulatory legitimacy that only states have’.4 Against this background, Surya Deva argues that corporate human rights violations are best dealt with when intra-firm processes, such as those advocated by the UNGPs, are combined with mandatory legal rules

2 3



4

See Chapter 3 Section 3.3. John Ruggie, SRSG, ‘Recommendations on Follow-Up to the Mandate’ (11 February 2011) 4–5 at https://​harvardhumanrights​.files​.wordpress​.com/​ 2011/​02/​mandate​-follow​-up​-final​.pdf. Jolyon Ford Business and Human Rights: Bridging the Governance Gap (Royal Institute of International Affairs, International Law Programme Research Paper, September 2015) 10 at https://​ www​ .researchgate​ .net/​ publication/ ​ 2 83663635 ​ _ Business ​ _ and ​ _ Human ​ _ Rights ​ _ Bridging ​ _ the​ _Governance​_Gap/​link/​5642d​efe08aeacf​d893885b2/​download.

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making for an ‘integrated’ system of regulation. This requires robust national laws coupled with effective non-legal mechanisms.5 In addition, Deva advocates an international instrument that can: (i) catalogue responsibilities of companies, outline the principles that underpin these responsibilities and propose an international implementation mechanism; and (ii) serve as a model law for states in the area of business and human rights.6

The implementation mechanism would focus on gross violations of fundamental human rights and on cases where the municipal system offered no effective remedies because of weak governance, conflict, oppression, corruption or complicity.7 Both Ruggie’s ‘polycentric governance’ and Deva’s ‘integrated regulation’ approaches accept multi-level regulation. The main issue, therefore, is not whether to have binding rules at national and international levels but what those rules should be. This involves political choices determined by many elements including the relative power of interested actors and stakeholders, assumptions about the extent of business human rights responsibility and about what is realistically achievable. It is also important to understand that legal remedies for business violations of human rights must co-exist with non-legal approaches to compliance and that we are in a world where both national and international law is, as yet, highly underdeveloped on the issue of business and human rights.8 Much of what follows is thus not yet hard law or a clear and final solution to very difficult legal and political problems.



5

8 6 7

Surya Deva Regulating Corporate Human Rights Violations; Humanizing Business (paperback edn, London, Routledge, 2014) at 208–14. See too David Bilchitz ‘The Necessity for a Business and Human Rights Treaty’ 1(2) BHRJ 202 (2016), doi​.org/​10​.1017/​bhj​.2016​.13. Deva above n 5 at 214–5. ibid at 219. Ford above n 4 at 11. On non-legal approaches to corporate accountability see further Erika George Incorporating Rights: Struggles to Advance Corporate Accountability (New York, Oxford University Press, 2021).

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7.2

National legal liability laws

HRDD appears to be shifting from a voluntary practice into a potential normative standard as a result of the legislative and judicial developments seen earlier in the book.9 However, there are notable counter examples among leading corporate home states. In particular, in the US, the Supreme Court has retreated from developing ATCA into a general corporate human rights liability law and legislative initiatives have related to mandatory due diligence reporting but not corporate liability.10 Similarly in Japan there is little momentum towards binding corporate liability rules.11 The Japanese Government’s NAP omits any reference to new legislation on mandatory due diligence reporting let alone corporate liability.12 By contrast, calls for mandatory corporate human rights liability laws have been made in the UK and the EU. In 2017, the UK Joint Parliamentary Committee on Human Rights proposed new legislation ‘to impose a duty on all companies to prevent human rights abuses, as well as an offence of failure to prevent human rights abuses for all companies, including parent companies …’.13 In its

9



10



11



12



13

See further Olga Martin-Ortega ‘Human Rights Due Diligence for Corporations: From Voluntary Standards to Hard Law at Last?’ 31(4) Netherlands Quarterly of Human Rights 44 (2013) and Chapters 4 and 6 above. See for example the California Transparency in Supply Chains Act 2010 referred to in Chapter 4 Section 4.4.3 and the draft Corporate Human Rights Risk Assessment, Prevention, and Mitigation Act of 2019 at https://​ financialservices​.house​.gov/​uploadedfiles/​bills​-116pih​-corphuman​.pdf. Ford above n 4 at 17. In February 2022 the Japanese Government announced the introduction of non-binding HRDD guidelines for companies: Business and Human Rights resource Centre “Japan: Govt. to set human rights due diligence guidelines for companies, hoping to close gaps with US and European countries” at https://​www​.business​-humanrights​.org/​en/​ latest​-news/​japan​-govt​-to​-set​-human​-rights​-due​-diligence​-guidelines​-for​ -companies​-hoping​-to​-close​-gaps​-with​-us​-and​-european​-countries/​. National Action Plan on Business and Human Rights (2020–2025) (Provisional Translation) (Inter-Ministerial Committee on Japan’s National Action Plan for Business and Human Rights, October 2020) at https://​ globalnaps​.org/​wp​-content/​uploads/​2021/​05/​japanese​-bhr​-nap​-english​ .pdf. UK Joint Parliamentary Committee on Human Rights Human Rights and Business 2017: Promoting Responsibility and Ensuring Accountability (HL PAPER 153 HC 443, 5 April 2017) para 193 at https://​publications​

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response, the UK government reiterated its commitment to voluntary due diligence reporting, stating that it had no immediate plans to legislate in this area.14 A report commissioned by law firm Kingsley Napley proposes that a future corporate human rights liability law could be regulated by a special body with powers to conduct investigations and impose penalties on individual businesses alleged to have violated human rights in the course of their operations.15 Recently, a number of leading British-based corporations have called for stronger laws that include access to justice for victims, stressing the need for legal certainty in the area.16 In March 2021, the EU Parliament adopted a resolution to implement a mandatory due diligence directive.17 Article 19(2) of the proposed Directive establishes that Member States: shall ensure that they have a liability regime in place under which undertakings can, in accordance with national law, be held liable and provide remediation for any harm arising out of potential or actual adverse impacts on human



14



15



16



17

.parliament​.uk/​pa/​jt201617/​jtselect/​jtrights/​443/​443​.pdf. See further Irene Pietropaoli, Lise Smit, Julianne Hughes-Jennett and Peter Hood A UK Failure to Prevent Mechanism for Corporate Human Rights Harm (British Institute of International and Comparative Law, BIICL, 11 February 2020) at https://​www​.biicl​.org/​publications/​a​-uk​-failure​-to​-prevent​-mechanism​ -for​-corporate​-human​-rights​-harms. Human Rights and Business 2017: Promoting responsibility and ensuring accountability: Government Response to the Committee’s Sixth Report of Session 2016–17 (HC 686, 12 January 2018) 15 at https://​publications​ .parliament​.uk/​pa/​jt201719/​jtselect/​jtrights/​686/​686​.pdf. Rachel Chambers, Sophie Kemp and Katherine Tyler Report of Research into How a Regulator Could Monitor and Enforce a Proposed UK Human Rights Due Diligence Law (Kingsley Napley, 21 August 2020) at https://​www​ .law​.ox​.ac​.uk/​events/​could​-new​-uk​-regulatory​-body​-monitor​-and​-enforce​ -companies​-compliance​-human​-rights​-due. See BHRRC ‘Leading Businesses and Investors Call for New UK Law to Prevent Human Rights Abuse and Environmental Harm’ 21 October 2021 at https://​www​.business​-humanrights​.org/​en/​from​-us/​media​-centre/​ leading​-businesses​-and​-investors​-call​-for​-new​-uk​-law​-to​-prevent​-human​ -rights​-abuse​-and​-environmental​-harm/​. ‘Corporate due diligence and corporate accountability’ European Parliament Resolution of 10 March 2021 with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL)) P9_ TA(2021)0073) at https://​www​.europarl​.europa​.eu/​doceo/​document/​TA​-9​ -2021​-0073​_EN​.html.

BEYOND THE BEGINNING 153

rights, the environment or good governance that they, or undertakings under their control, have caused or contributed to by acts or omissions.

Article 19(3) offers a defence where the undertaking has taken ‘all due care to avoid the harm in question, or that the harm would have occurred even if all due care had been taken’. The EU Commission, has issued a proposal for a Directive requiring mandatory due diligence which includes, in Article 22, a provision for civil liability in cases where companies meeting the size, turnover and employee number qualifying requirements laid down in the proposal fail to observe the due diligence obligations specified in Articles 7 and 8, leading to otherwise avoidable damage to victims. These obligations include: integrating due diligence into policies; identifying actual or potential adverse human rights and environmental impacts; preventing or mitigating potential impacts; bringing to an end or minimising actual impacts; establishing and maintaining a complaints procedure; monitoring the effectiveness of the due diligence policy and measures; and publicly communicating on due diligence.18 Article 22 offers a procedurally focused remedy, based on obligations that owe much to the wording of HRDD in the UNGPs, and appears narrower in scope than the more general remedy for corporate human rights violations proposed by the EU Parliament. It remains to be seen how the proposal will fare in subsequent discussions.



18

See Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 Brussels, 23.2.2022 COM(2022) 71 final 2022/0051 (COD) at https://​ec​ .europa​.eu/​info/​sites/​default/​files/​1​_1​_183885​_prop​_dir​_susta​_en​.pdf; EU Commission ‘Just and sustainable economy: Commission lays down rules for companies to respect human rights and environment in global value chains’ Press Release (Brussels, 23 February 2022) at https://​ ec​ .europa​ .eu/​commission/​presscorner/​detail/​en/​ip​_22​_1145. The proposal has been criticised for not offering sufficient grounds for supply chain liability; see Business and Human Rights Resource Centre ‘EU corporate accountability draft directive: Driver of business respect for people & planet or missed opportunity?’ (2 March 2022) at https://​www​.business​-humanrights​.org/​ en/​blog/​eu​-corporate​-accountability​-draft​-directive​-driver​-of​-business​ -respect​-for​-people​-planet​-or​-missed​-opportunity/​.

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Proposals for corporate human rights liability laws raise numerous technical questions that go beyond this introductory text.19 Two key questions that must be discussed are why move beyond mandatory due diligence reporting towards corporate liability and can it work? As to the first question, existing mandatory reporting laws do not offer victims significant redress. As Lise Smit poignantly notes: It does not help them at all if we say to them: you cannot get any form of remedy from the company, but great news: the company might be required to report on you as a statistic in their next annual report.20

From the corporate perspective, a mandatory liability law can ensure a level playing field for all companies and help clarify the nature and scope of corporate duties of care, available defences and the scope of liability. Business has expressed support for laws that perform these functions.21 But can such a law work? For a number of operational reasons, businesses may find regulation useful. But that is not the same as saying that businesses accept that they should be legally liable to victims for human rights violations caused by their operations. In particular, businesses are seeking to protect against self-incrimination, and limit corporate exposure to liability, through the inclusion of ‘safe harbour’ rules in new mandatory due diligence laws and in the revised draft of the proposed UN business and human rights treaty.22 These exempt a business from all legal actions upon proof that it had carried out a legally valid HRDD assessment.



19



20



21



22

For detailed technical analysis see Pietropaoli et al. above n 13 and Chambers et al. above n 15. Lise Smit ‘The Importance of Civil Liability for a Corporate Human Rights Duty’ (BIICL Blog, 16 March 2021) at https://​www​.biicl​.org/​blog/​21/​the​ -importance​-of​-civil​-liability​-for​-a​-corporate​-human​-rights​-duty. See Lise Smit, Claire Bright, Irene Pietropaoli, Julianne Hughes-Jennett and Peter Hood ‘Business Views on Mandatory Human Rights Due Diligence Regulation: A Comparative Analysis of Two Recent Studies’ 5(2) BHRJ 261 (2020) and BHRCC above n 16. See further Lise Smit and Claire Bright ‘The Concept of a “Safe Harbour” and Mandatory Human Rights Due Diligence’ CEDIS Working Papers No. 1. December 2020 at https://​research​.unl​.pt/​ws/​files/​43329947/​CEDIS​ _working​_paper​_the​_concept​_of​_safe​_harbour​_1​.pdf; Ingrid Landau ‘Human Rights Due Diligence and the Risk of Cosmetic Compliance’ 20(1) Melbourne Journal of International Law 238 (2019).

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Such a defence could worsen the situation of claimants in jurisdictions where tort-based claims are available for corporate human rights violations. It deflects the legal question from whether, on the facts, the company discharged its duty of care not to infringe the human rights of the victim(s), by taking all reasonable operational steps to avoid human rights violations, to whether it had discharged its due diligence obligation to come within the ‘safe harbour’ and so render any claim against it legally inadmissible, giving companies a new defence against liability.23 Such a defence must be drafted carefully to prevent firms using due diligence as a ‘tick-box’ or ‘cosmetic’ exercise to avoid legal claims as opposed to a means of effectively avoiding human rights violations.24 The risk that business influence will water down proposals for mandatory civil liability is well documented.25 The most advanced law to date, the French Duty of Vigilance Law, falls short of the liability regime envisaged in the draft due to such influence.26 A more recent illustration is offered by the passage of the German mandatory due diligence law.27 This began as a reaction by the governing Grand Coalition to a survey showing that only 13-17 per cent of German companies monitored human rights



23



24



25



26



27

Gabriela Quijano and Carlos Lopez ‘Rise of Mandatory Human Rights Due Diligence: A Beacon of Hope or a Double-Edged Sword?’ 6(2) BHRJ 241 (2021) at 251. Smit and Bright above n 22. See too Nicolas Bueno and Claire Bright ‘Implementing Human Rights Due Diligence through Corporate Civil Liability’ 69 ICLQ 789 (2020), doi:​10​.2017/​S0020589320000305. See further Friends of the Earth Europe, European Coalition for Corporate Justice and Corporate Europe Observatory Off the hook? How Business Lobbies against Liability for Human Rights and Environmental Abuses (June 2021) at https://​corporateeurope​.org/​sites/​default/​files/​2021​-06/​OffThe​ %20Hook​_0​.pdf; Quijano and Lopez above n 23. See Sandra Cossart, Jérôme Chaplier and Tiphaine Beau de Loménie ‘The French Law on Duty of Care: A Historic Step towards Making Globalization Work for All’ 2(2) BHRJ 317 (2017). See too the recent Swiss law which omitted the calls made by civil society for corporate liability on the basis of business and government opposition: Nicolas Bueno and Christine Kaufmann ‘The Swiss Human Rights Due Diligence Legislation: Between Law and Politics’ 6(3) BHRJ 542 (2021), doi:​10​.1017/​bhj​.2021​.42. See Johanna Kusch and Claudia Saller ‘Germany’s Proposed Supply-chain Law—A Glass Half-empty’ (Social Europe, 26 February 2021) at https://​ socialeurope​.eu/​germanys​-proposed​-supply​-chain​-law​-a​-glass​-half​-empty.

156 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

abuses in their supply chains in accordance with the German NAP.28 German civil society responded through the Initiative Lieferkettengesetz alliance, demanding the adoption of a supply chain act before the end of the September 2021 legislative period. The alliance called for a law requiring companies to avoid damage to people and the environment through precautionary measures and offering victims effective redress when damage had occurred.29 German industry groups lobbied hard to avoid an extensive liability regime.30 In the end, the German Supply Chain Due Diligence Act (‘Liefer­ketten­sorgfalts­pflichten­gesetz’) was passed by the Bundestag on 11 June 2021 as a compromise measure which civil society sees as a ‘good start’ but that requires more to be done.31 The New German law has been hailed, with some justification, as ‘the strongest law in Europe’ by then Labour Minister Hubertus Heil.32 Nonetheless, it has a limited focus mainly on corporate due diligence procedures and institutional developments. The first limitation is that the law, which enters into force on 1 January 2023, only applies to companies with a head office, principal place of business, administrative headquarters or registered seat in Germany and which employ more than 3,000 employees.33 In 2024, the threshold will be lowered to 1,000 employees,



BHRCC ‘Germany: Monitoring of the National Action Plan on Business & Human Rights’ (14 August 2020) at https://​www​.business​-humanrights​ .org/​en/​latest​-news/​germany​-monitoring​-of​-the​-national​-action​-plan​-on​ -business​-human​-rights/​. 29 Initiative Lieferkettengesetz ‘What the New Supply Chain Act Delivers – and What It Doesn’t’ (11 June 2021) 2 at https://​germanwatch​.org/​en/​20324. 30 See Kusch and Saller above n 27. 31 ibid. The official German version of the Lieferkettengesetz is available at https://​www​.bgbl​.de/​xaver/​bgbl/​start​.xav​?startbk​=​Bundesanzeiger​ _BGBl​&​jumpTo​=​bgbl121s2959​.pdf​#​_​_bgbl​_​_​%2F​%2F*​%5B​%40attr​_id​ %3D​%27bgbl121s2959​.pdf​%27​%5D​_​_1631273930360. An official English translation is available at BHRCC ‘Germany: Act on Corporate Due Diligence in Supply Chains’ published in Federal Law Gazette at https://​ www​.business​-humanrights​.org/​en/​latest​-news/​germany​-act​-on​-corporate​ -due​-diligence​-in​-supply​-chains​-published​-in​-federal​-law​-gazette/​. 32 See Bundes­ ministerium für wirtschaftliche Zusammen­ arbeit und Entwicklung  ‘Das Liefer­ketten­gesetz ist da’ at https://​www​.bmz​.de/​de/​ entwicklungspolitik/​lieferkettengesetz. 33 Lieferkettengesetz above n 31 s 1. 28

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covering a total of only around 2,900 companies.34 This leaves out many smaller companies in sectors sensitive to human rights risks.35 Secondly, while the German law offers institutional and remedial initiatives that can enhance corporate accountability, it falls short of a fully developed civil liability regime. Specifically, a new regulatory authority over business and human rights has been established in the Federal Office for Economic Affairs and Export Control (BAFA). BAFA has the power to impose substantial fines for business breaches of human rights based on the severity of the offence and the company’s total turnover.36 Companies so fined may, additionally, be excluded from the award of public contracts.37 BAFA can also be approached by parties who allege that their human rights are being violated, or directly threatened, by the company’s failure to observe its due diligence obligations whereupon BAFA must undertake an investigation and, where a breach has occurred, to work with the company to eliminate it.38 Despite these innovative administrative powers, doubts have been raised over whether BAFA is suitable for regulating corporate human rights compliance and accountability. It is supervised by the Federal Ministry for Economic Affairs and Energy, which was opposed to a more comprehensive supply chain law.39 Initiative Lieferkettengesetz argues for better guarantees of BAFA’s independence from political influence by the Federal Ministry, such as through a multi-stakeholder body that could accompany BAFA’s work and act as a supervisory organ.40



See Kusch and Saller  above n 27. A German government estimate puts the total at 4,900 affected firms: see Markus Krajewski, Kristel Tonstad and Franziska Wohltmann ‘Mandatory Human Rights Due Diligence in Germany and Norway: Stepping, or Striding, in the Same Direction?’ 6(3) BHRJ 550 (2021), doi:​10​.1017/​bhj​.2021​.43. 35 Initiative Lieferkettengesetz above n 29 at 5. 36 For the precise content of the due diligence obligations, which closely follow the UNGPs, see Lieferkettengesetz above n 31 s 3. The management and analysis of human rights risks is covered in ss 4–5. Fines are covered by ss 23 and 24. 37 ibid s 22. 38 ibid s 14. 39 Initiative Lieferkettengesetz above n 29 at 5. 40 ibid. 34

158 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Instead of full civil liability the law introduces a representative action on behalf of alleged victims of corporate human rights abuses. By section 11, any person claiming that their human rights have been violated by a corporation covered by the law can authorise a domestic trade union or NGO to raise claims on their behalf directly before German courts. This does not introduce new forms of liability. As section 3(3) makes clear ‘[a] violation of the obligations under this Act does not give rise to any liability under civil law. Any liability under civil law arising independently of this Act remains unaffected.’41 According to Initiative Lieferkettengesetz this perpetuates judicial uncertainty as injured parties ‘continue to have hardly any chance of bringing claims against German companies for human rights violations before German civil courts. Moreover, the lack of a new and improved civil liability provision reduces the deterrent and thus preventive effect on companies.’42 Finally, the German law limits due diligence to the enterprises own activities and those of ‘its direct suppliers’ thus excluding lower tier suppliers from the obligation.43 Initiative Lieferkettengesetz believes that the current law fails to incentivise companies to analyse possible risks at lower tiers of the supply chain, and thereby learn to avoid them, and so is incompatible with the preventive approach of the UNGPs given that many human rights violations occur at the level of indirect suppliers.44

7.3

The draft UN Binding Legal Instrument on Business and Human Rights

After John Ruggie’s mandate ran out in 2011, a working group on the issue of human rights and TNCs and other business enterprises (UNWG) was established to further work on the UNGPs.45 In addition, a multi-stakeholder Forum on Business and Human Rights was estab 43 44 45 41 42

Lieferkettengesetz above n 31. Initiative Lieferkettengesetz above n 29 at 4. Lieferkettengesetz above n 31 ss 5 and 6. Initiative Lieferkettengesetz above n 29 at 4. UNWG at https://​www​.ohchr​.org/​en/​issues/​business/​pages/​wghrandt​ ransnation​alcorporat​ionsandoth​erbusiness​.aspx. See further Peter T. Muchlinski Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021) at 599–601.

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lished under the direction of the UNWG. This meets annually in Geneva to discuss topics relevant to the UNGPs.46 These informal arrangements offer many opportunities for useful discussions. Among these is the question of a binding UN business and human rights treaty.47 In 2013, a number of states, led by Ecuador and supported by NGOs from both the Global North and Global South,48 called for greater accountability for human rights violations by TNCs through an international legally binding instrument (LBI) concluded in the UN.49 In 2014, the Human Rights Council established an Open-Ended Inter-Governmental

46



47



48



49

See ‘United Nations Forum on Business and Human Rights’ at https://​ www​.ohchr​.org/​EN/​Issues/​Business/​Forum/​Pages/​ForumonBu​sinessandH​ umanRights​.aspx. But see Michael A. Santoro ‘Why the United Nations is Not the Ideal Forum for Business and Human Rights: The UNGPs and the Right to COVID-19 Vaccine Access in the Global South’ 6(2) BHRJ 326 (2021) arguing that the UN is ill-suited to this task as its initiatives on business and human rights avoid prioritising state responsibility for human rights violations which remain the most significant types of violations even in cases involving corporate complicity. See Statement to the Human Rights Council in support of the initiative of a group of States for a legally binding instrument on transnational corporations, 13 September 2013, signed by 115 NGOs at https://​www​.s​topcorpora​ teimpunity​.org/​statement​-to​-the​-human​-rights​-council​-in​-support​-of​ -the​-initiative​-of​-a​-group​-of​-states​-for​-a​-legally​-binding​-instrument​-on​ -transnational​-corporations/​. See ‘Statement on behalf of a Group of Countries’ at the 24rd Session of the Human Rights Council General Debate – Item 3 ‘Transnational Corporations and Human Rights’ (Geneva, September 2013) at https://​www​ .business​-humanrights​.org/​sites/​default/​files/​media/​documents/​statement​ -unhrc​-legally​-binding​.pdf. The other states supporting the position were: The African Group; The Arab Group, Pakistan, Sri Lanka, Kyrgyzstan, Cuba, Nicaragua, Bolivia, Venezuela and Peru. The US was opposed seeing it as coming too soon after the adoption of the UNGPs: ‘Explanation of Vote: A/HRC/26/L.22/Rev.1 on BHR Legally-Binding Instrument Statement by the Delegation of the United States of America UN Human Rights Council – 26th Session’ (Delivered by Stephen Townley, Geneva, 26 June 2014) at https://​geneva​.usmission​.gov/​2014/​06/​26/​proposed​-working​-group​-would​ -undermine​-efforts​-to​-implement​-guiding​-principles​-on​-business​-and​ -human​-rights/​. For a useful discussion of these original debates see Larry Cata Backer ‘Moving Forward the UN Guiding Principles for Business and Human Rights: Between Enterprise Social Norm, State Domestic Legal Orders, and the Treaty Law That Might Bind Them All’ 38(2) Fordham International Law Journal 457 (2015) at 517–40.

160 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Working Group (OEIGWG) on Transnational Corporations and other business enterprises with respect to human rights to elaborate ‘an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises’.50 In 2018 after the third session of the OEIGWG, on behalf of the Chairmanship of the Working Group, Ecuador produced a ‘Zero Draft’ of the proposed instrument, discussed at the Fourth Session of the OEIGWG in October 2018.51 In July 2019 this was superseded by a Revised Draft



50



51

HRC Resolution 26/9 Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights (A/HRC/RES/26/9, 14 July 2014) para 1 at https://​ ap​.ohchr​.org/​documents/​dpage​_e​.aspx​?si​=​A/​HRC/​RES/​26/​9. See further Anita Ramasastry and Douglass Cassel ‘White Paper: Options for a Treaty on Business and Human Rights’ 6 Notre Dame Journal of International and Comparative Law 1 (2015); Olivier de Schutter ‘Towards a New Treaty on Business and Human Rights’ 1(1) BHRJ 41 (2016); International Commission of Jurists Needs and Options for a New International Instrument on Business and Human Rights (Geneva, June 2014) at https://​www​.icj​.org/​business​-and​ -human​-rights​-need​-international​-legally​-binding​-instruments​-icj​-report/​ ; Surya Deva and David Bilchitz (eds) Building a Treaty on Business and Human Rights: Context and Contours (Cambridge, Cambridge University Press, 2017); Jernej Letnar Cernic and Nicolas Carillo-Santarelli (eds) The Future of Business and Human Rights: Theoretical and Practical Considerations for a UN Treaty (Antwerp, Intersentia, 2018). Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises Zero Draft (Geneva, OHCHR, 16 July 2018) at https://​www​ .ohchr​.org/​Documents/​HRBodies/​HRCouncil/​WGTransCorp/​Session3/​ DraftLBI​.pdf; and see Permanent Mission of Ecuador to the United Nations, Geneva, Note 4-7-158/2018 at https://​www​.ohchr​.org/​Documents/​ HRBodies/​HRCouncil/​WGTransCorp/​Session3/​NoteVerbaleLBI​.PDF. For OEIGWG discussions see Business and Human Rights Resource Centre ‘Intergovernmental Working Group Sessions’ at https://​ www​ .business​ -humanrights​.org/​en/​binding​-treaty/​intergovernmental​-working​-group​ -sessions.

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LBI.52 This, in turn, has been superseded by a Second Revised LBI in August 2020 and a Third Revised LBI in August 2021.53 The provisions of the Third Revised LBI (Third Draft) require states to adopt obligations, in accordance with the terms of the LBI, grouped around three key themes: legally binding obligations for businesses to protect and promote human rights; devising a scheme for effective access to remedies for victims of business abuses of human rights; and creating an international institutional structure to further the development of human rights norms for business. 7.3.1 Legally binding obligations for business On the initial question of the types of businesses covered, Article 3.1 asserts: ‘[t]his (Legally Binding Instrument) shall apply to all business activities, including business activities of a transnational character’. ‘Business activities of a transnational character’ are covered in Article 1.4 and include: business activities undertaken in more than one jurisdiction or state; activities where a significant part of their ‘preparation, planning, direction, control, design, processing, manufacturing, storage or distribution, takes place through any business relationship in another State or jurisdiction’; or a business activity undertaken in one state but with ‘significant effect in another state or jurisdiction’. Secondly, the Third Draft defines the nature and types of victims as ‘any persons or group of persons, irrespective of nationality or domicile, who individually or collectively have suffered harm that constitute human rights abuse, through acts or omissions in the context of business activi-



Legally Binding Instrument (LBI) to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises (OEIGWG Chairmanship Revised Draft, 16 July 2019) at https://​ www​ . ohchr​ . org/ ​ D ocuments/ ​ H RBodies/ ​ H RCouncil/​ W GTransCorp/​ OEIGWG​_RevisedDraft​_LBI​.pdf. 53 Second Revised LBI (6 August 2020) at https://​ www​ .ohchr​ .org/​ D o c u m e n t s / ​ H R B o d i e s / ​ H R C o u n c i l / ​ W G T r a n s C o r p / ​ S e s s i o n 6 /​ OEIGWG​_Chair​-Rapporteur​_second​_revised​_draft​_LBI​_on​_TNCs​_and​ _OBEs​_with​_respect​_to​_Human​_Rights​.pdf; Third Revised LBI (17 August 2021) at https://​www​.ohchr​.org/​Documents/​HRBodies/​HRCouncil/​ WGTransCorp/​Session6/​LBI3rdDRAFT​.pdf. 52

162 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

ties’. It also includes the immediate family members or dependants of the direct victim.54 Thirdly, the business obligations in question: cover all internationally recognised human rights and fundamental freedoms binding on the States Parties to this (Legally Binding Instrument) including those recognised in the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, all core international human rights treaties and fundamental ILO Conventions to which a State is a Party, and customary international law.55

The Third Draft follows earlier drafts by adopting mandatory HRDD as the basis of obligation.56 The Second Draft added a new gender perspective and ‘free prior and informed consent’ by indigenous peoples to the factors required in exercising HRDD and this is retained in Article 6.4 of the Third Draft. Following the Second Draft, the Third Draft also recognises that SMEs may need to undertake HRDD proportionate to their size, risk of human rights abuse or the nature and context of their business activities and relationships.57 This is reinforced in Article 3.2, which provides that states may establish non-discriminatory legal principles to cover such issues. In line with the UNGPs, direct liability for the human rights abuses of the business and indirect liability for the human rights abuses of business partners are included.58 The conditions for indirect human rights liability are listed in Article 8.6 as: failure to prevent another legal or natural person with whom a business has a business relationship, from causing or contributing to human rights abuses, when the former controls, manages or supervises such person or the relevant activity that caused or contributed to the human rights abuse, or should have foreseen risks of human rights abuses in the conduct of their business activities, including those of transnational character, or in their business relationships, but failed to put adequate measures to prevent the abuse.

56 57 58 54 55

Third Revised LBI above n 53 article 1.1. ibid article 3.3. ibid article 6. ibid article 6.3. ibid article 8.1.

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‘Business relationship’ here refers to: any relationship between natural or legal persons, including State and non-State entities, to conduct business activities, including those activities conducted through affiliates, subsidiaries, agents, suppliers, partnerships, joint venture, beneficial proprietorship, or any other structure or relationship as provided under the domestic law of the State, including activities undertaken by electronic means.59

Is Article 8.6 effective to establish indirect liability?60 The control test it uses is a common method for determining the liability of one entity for the acts of another. However, control is hard to prove, and victims may not possess all the relevant commercial information needed to prove control.61 Future drafts might consider alternative ways of finding responsibility for acts of business partners including a presumption that the parent company controls its subsidiary or sub-contractor in a supply chain, or an express right to lift the corporate veil between parent and subsidiary in corporate group liability cases. However, these principles are not found in many national laws and are likely to be opposed by some states. Joint and several liability, where both the parent and the subsidiary or sub-contractor collectively contributed to the harm, may be another option. Joint and several tort liability lies at the heart of the English cases discussed in Chapter 6.62 Furthermore, the burden of proof could be shifted from the claimant to the respondent corporation, requiring the former only to show that the alleged human rights violation committed by the subsidiary or sub-contractor took place, whereupon the burden shifts to the respondent business to prove that it did not control the subsidiary or sub-contractor.63 A new due diligence defence was included in the Second Draft to mitigate the scope of direct and indirect liability. Article 8.7 of the Third Draft retains this stating that ‘[h]uman rights due diligence shall not automatically absolve a legal or natural person conducting business activities from liability for causing or contributing to human rights abuses or failing to



59 60

63 61 62

ibid article 1.5. See for a useful doctrinal discussion of corporate due diligence liability Bueno and Bright n 24 above. See further Muchlinski above n 45 at 319–24. See Chapter 6 Section 6.1.5. See further Third Revised LBI above n 53 article 7.5.

164 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

prevent such abuses by a natural or legal person as laid down in Article 8.6’. It is for the court or other competent authority to decide the extent of liability after examining compliance with applicable HRDD standards.64 Criminal liability is referred to in Articles 8.8 to 8.10. States shall provide criminal measures under domestic law to ensure corporate liability for human rights abuses that amount to criminal offences under international human rights law binding on the state or in customary international law or the state’s domestic law. 7.3.2 Effective access to remedy Article 5.3 of the Third Draft establishes a general state duty to investigate effectively, promptly, thoroughly and impartially and, where appropriate, to take action against those natural and/or legal persons responsible in accordance with domestic and international law. This extends claims to the corporation and its officers. The states’ obligation to investigate and take action against alleged violators of human rights is reinforced by a guaranteed right for victims to submit claims, including by a representative or through class action, to courts and non-judicial grievance mechanisms of the state parties.65 Furthermore, effective protection against interference with claimants and their defenders is required.66 The Third Draft covers certain issues arising from the territorial nature of legal jurisdiction. According to the Preamble of the Third Draft: ‘States must protect against human rights abuse by third parties, including business enterprises, within their territory or jurisdiction, or otherwise under their control …’.67 Thus, a primarily territorial approach is taken to jurisdiction but extends to cases where the state can control the overseas network of a corporate group through its control over the parent, or the controlling enterprise of a global production chain, that is present within its jurisdiction. This is essentially an exercise of territorial jurisdiction even though it may affect the actions of overseas entities.

66 67 64 65

ibid article 8.7. ibid article 4.2(d). ibid article 5. ibid Preamble PP7.

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Articles 14.1 and 14.2 make clear that states must respect the principles of sovereign equality and territorial integrity of states and that nothing in the LBI entitles a state to exercise jurisdiction within the territory of another state notwithstanding the right under Article 9 to exercise jurisdiction over claims brought by victims from another state against a business domiciled in the forum state. Article 9.1 permits victims of corporate human rights violations covered by the LBI, irrespective of their nationality or place of domicile, to choose from among a number of fora that have a connection to the claim. Jurisdiction can vest in the courts of the state where: the human rights abuse occurred and/or produced effects; or an act or omission contributing to the human rights abuse occurred; or the alleged perpetrator of the abuse is domiciled; or the victim is a national or is domiciled. In addition, some expansion of jurisdiction is included. First, the common law doctrine of forum non conveniens is rejected and may not be used by a court to dismiss legitimate proceedings.68 Secondly, a foreign subsidiary or business partner can be sued in the home state of the defendant business if the claims against the two entities are connected.69 Thirdly, the civil law doctrine of forum necessitatis is included allowing jurisdiction if no other state can provide a fair trial and there is a sufficiently close connection to the forum jurisdiction.70 A further issue concerns the applicable law to transnational human rights claims against corporate actors. By Article 11.1 of the Third Draft all procedural matters regarding claims before the competent court which are not specifically regulated in the LBI ‘shall be governed by the law of that court seized on the matter’. Article 11.2 states that all matters of substance which are not specifically regulated under the LBI may, upon the request of the victim, be governed by the law of another state where either the acts or omissions have occurred or produced effects; or the natural or legal person alleged to have committed the acts or omissions is domiciled.

68



69 70

ibid articles 9.3 and 7.3(d). See further Chapter 6 Section 6.1.1. See too Ekaterina Aristova ‘The Future of Tort Litigation against Transnational Corporations in the English Courts: Is Forum [Non] Conveniens Back?’ 6(3) BHRJ 399 (2021), doi:​org/​10​.1017/​bhj​.2021​.11. Third Revised LBI above n 53 article 9.4. ibid article 9.5. See further Chilenye Nwapi ‘Jurisdiction by Necessity and the Regulation of the Transnational Corporate Actor’ 30(78) Utrecht Journal of International and European Law 24 (2014).

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Accordingly, the victim can choose the body of law most favourable to their case. Another obstacle for victims may arise from the operation of domestic law limitation periods that prohibit claims after a certain period of time. Article 10.1 of the Third Draft states that in cases which ‘constitute the most serious crimes of concern to the international community as a whole’ there can be no limitation. By Article 10.2 all other cases require a reasonable period of time for the commencement of legal proceedings, particularly in cases where the abuses occurred in another state or when the harm may be identifiable only after a long period of time. On costs and legal aid, under Article 7.3(c) of the Third Draft, states must provide adequate and effective legal assistance to victims by avoiding unnecessary costs or delays including during the disposition of cases and execution of orders or decrees granting awards. In addition, states have the power to waive court fees and must guarantee access to information and legal aid relevant to pursue an effective remedy.71 7.3.3 Institutional structure The Third Draft proposes a scheme of limited international cooperation through the establishment of an expert committee elected by states, periodic conferences of signatory states and a general commitment to good faith cooperation.72 The expert committee will be able to make general comments and normative recommendations based on reports and information received from states parties and other stakeholders.73 Mutual legal assistance is promoted for cases involving claims of business violations of human rights by Article 12 of the Third Draft. However, there is no formal complaints mechanism through which a claimant, or their representative(s), could bring an international claim against a natural or legal person for breaches of their obligations under the LBI. Only a state-to-state dispute settlement procedure on matters arising out of the LBI is proposed.74 A model exists for establishing an international business and human rights arbitration procedure, the Hague Rules on

73 74 71 72

Third Revised LBI above n 53 articles 7.4. and 4.2(f). ibid articles 15 and 13. ibid article 15.4. ibid article 18.

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Business and Human Rights Arbitration, but the Third Draft has not considered including it in an annex or other provision.75 A further institutional aspect of the Third Draft concerns its relationship with other international agreements. Much has been said about the need for the LBI to ensure that trade and investment agreements do not undermine states’ capacity to regulate corporate human rights abuses.76 The Third Draft distinguishes between existing and new agreements. For existing agreements, by Article 14.5(a): All existing bilateral or multilateral agreements, including regional or sub-regional agreements, on issues relevant to this (Legally Binding Instrument) and its protocols, including trade and investment agreements, shall be interpreted and implemented in a manner that does not undermine or restrict their capacity to fulfill their obligations under this (Legally Binding Instrument) and its protocols, if any, as well as other relevant human rights conventions and instruments.

For new agreements, Article 14.5(b) requires that: Any new bilateral or multilateral trade and investment agreements shall be compatible with the State Parties’ human rights obligations under this (Legally Binding Instrument) and its protocols, as well as other relevant human rights conventions and instruments.

This provision raises the problem of cases where one party to a trade or investment agreement is a signatory of the LBI and another is not. One solution may be that LBI signatories could be required to add a human rights protocol to existing trade and investment agreements expressly stating that nothing in the agreement shall be interpreted or implemented in a way contrary to the LBI or other human rights conventions and

75



76

See the Hague Rules on Business and Human Rights Arbitration (December 2019) at https://​www​.cilc​.nl/​cms/​wp​-content/​uploads/​2019/​12/​The​-Hague​ -Rules​-on​-Business​-and​-Human​-Rights​-Arbitration​_CILC​-digital​-version​ .pdf. See further Peter Muchlinski ‘The Impact of a Business and Human Rights Treaty on Investment Law and Arbitration’ in Deva and Bilchitz (eds) above n 50 346; Surya Deva ‘International Investment Agreements and Human Rights: Assessing the Role of the UN’s Business and Human Rights Regulatory Initiatives’ in Julien Chaisse, Leïla Choukroune and Sufian Jusoh (eds) Handbook of International Investment Law and Policy (Singapore, Springer, 2021) ch 66 especially 1748–56; see too Chapter 4 Section 4.7.

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instruments while new agreements could have an observance of human rights provision to the same effect. 7.3.4 Will the LBI be adopted? Views remain divided upon the LBI. Some civil society groups feel the Third Draft is too weak and too centred on state obligations. It should go further in articulating clear direct international obligations on TNCs in particular and not on all business enterprises.77 By contrast, the International Chamber of Commerce (ICC) believes that further operationalising the UNGPs through national initiatives is the way forward, remaining unconvinced that a treaty-based approach is more appropriate.78 In response to the Third Draft, the International Organisation of Employers (IOE), Business at OECD (BIAC) and BusinessEurope issued a detailed and strong legal critique of its content, echoing the ICC position by asserting that ‘the Treaty in its current form remains an unnecessary and inappropriate response to the on-going challenges on protection and respect of human rights and access to remedy. We continue to be convinced that States could achieve more by continuing to work within the framework of the UNGPs, jointly with business and other stakeholders, and through their own, existing domestic laws.’ Prior to the 2021 session of the OEIGWG the US had not attended earlier sessions and favoured national approaches based on the UNGPs.79 The



77



78



79

See ‘Statement of the Global Campaign on the Third Revised Draft of the Binding Treaty on Transnational Corporations and Human Rights’ (7 September 2021) at https://​www​.business​-humanrights​.org/​en/​latest​ -news/​statement​-of​-the​-global​-campaign​-on​-the​-third​-revised​-draft​-of​ -the​-binding​-treaty​-on​-transnational​-corporations​-and​-human​-rights/​. ICC Briefing ‘The United Nations Treaty Process on Business and Human Rights’ 26 October 2020 at https://​iccwbo​.org/​content/​uploads/​sites/​3/​ 2019/​10/​icc​-issues​-brief​-on​-un​-treaty​-process​-finalb​.pdf. See too ICC ‘Intervention by the International Chamber of Commerce’ First Meeting, Seventh Session of the OEIGWG, 25 October 2021 at https://​owncloud​ .unog​.ch/​s/​uimBIlpxsyirMpm. See ‘The United States Government’s Continued Opposition to the Business and Human Rights Treaty Process’ (Geneva, 16 October 2019) at https://​geneva​.usmission​.gov/​2019/​10/​16/​the​-united​-states​-governments​ -continued​-opposition​-to​-the​-business​-human​-rights​-treaty​-process/​; ‘The U.S. Government’s Opposition to the Business and Human Rights Treaty Process’ (Geneva, 26 October 2020) at https://​geneva​.usmission​.gov/​2020/​

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UK too favours an informal UNGPs-based approach rather than an LBI, having criticised the Second Draft LBI for being incompatible with international law.80 As noted above, Japan remains uncommitted to mandatory liability rules. The EU was initially opposed to the UN negotiations but in February 2021 the EU released a statement stating that it will participate actively in the UN discussions.81 Were the major home states of TNCs not to adopt an LBI, its normative force and practical effect would be weakened given that, in line with the Third Draft, the burden of obligations falls mainly on these states to discharge. Equally some other key players have expressed doubts. In particular, China and India are concerned that a future LBI should not interfere with developing states pursuing their right to development.82 It appears that many discussions still await. As a way forward, Dr Claire Methven O’Brien advocates a general framework treaty to which a ‘Statement of Guiding Principles’ based on the UNGPs is annexed. This may contain general obligations on states to cooperate in reviews of their national laws and build upon their NAPs.83 Dr Methven O’Brien suggests that provisions on business obligations



80



81



82



83

10/​26/​the​-u​-s​-governments​-opposition​-to​-the​-business​-and​-human​-rights​ -treaty​-process/​?​_ga​=​2​.218876825​.1081705829​.1631708954​-1270975798​ .1631708954. ‘Statement by the Government of the United Kingdom of Great Britain and Northern Ireland’ (26 October 2020) in Annex to the report on the sixth session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights (A/HRC/46/73) 19–20 at https://​www​.ohchr​.org/​Documents/​ HRBodies/​ H RCouncil/​ W GTransCorp/​ S ession6/ ​ i gwg ​ - 6th ​ - statement​ -compilation​-annex​.pdf. EU Council ‘Council Conclusions on EU Priorities in UN Human Rights Fora in 2021, approved by the Council at its 3785th meeting held on 22 February 2021’ para 24 at https://​media​.business​-humanrights​.org/​media/​ documents/​st06326​-en21​.pdf. See Ruwan Subasinghe ‘A Neatly Engineered Stalemate: A Review of the Sixth Session of Negotiations on a Treaty on Business and Human Rights’ 6(2) BHRJ 384 (2021) at 388, doi:​10​.1017/​bhj​.2021​.17. See General Statement of the Indian Representative, Mr. S. Senthil Kumar, First Meeting, Seventh Session of the OEIGWG, 25 October 2021 para 9 at https://​owncloud​.unog​ .ch/​s/​uimBIlpxsyirMpm​?path​=​%2F01​.​%20General​%20statements​%2F1​.​ %20States​#pdfviewer. See Claire Methven O’Brien ‘Transcending the Binary: Linking Hard and Soft Law through a UNGPs-based Framework Convention’ 114 AJIL Unbound 186 (2020), https://​doi​.org/​10​.1017/​aju​.2020​.36; and Claire Methven O’Brien ‘Draft Text for Business and Human Rights Treaty’ (Revised

170 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

should take the form of a restatement, and clarification, of the UNGPs from which future standards may emerge over time based on national developments. This in itself would give the UNGPs greater normative force. At the 2021 session of the OEIGWG the US suggested that it was open to exploring alternative agreements such as a legally binding framework agreement.84 This has been strongly criticised by the Treaty Alliance, a coalition of groups campaigning for a binding agreement, as undermining ‘years of diligent deliberation undertaken by an inclusive global coalition, often lead by Global South nations’ seeing it as ‘a strategic attempt to weaken, dilute, and distract from the existing treaty discourse that has the potential to advance international legal liability for corporate human rights abuses’.85 The debate continues. As seen in earlier chapters and in Section 7.2, a binding duty of care based upon the HRDD principle can evolve in national legislatures and courts without the need for an international treaty. Whether national laws can, or should, be harmonised to the extent required by the Third Draft remains an open question. Every legal system has its own approach to remediating human rights claims. It may prove more useful to work out cooperative ways by which to avoid the problems that claimants regularly face in transnational corporate human rights litigation, rather than seek an all-embracing treaty-based liability regime which may fail to recognise very real, and legitimate, differences among national legal systems and which is unlikely to be accepted by a sufficient number of states to be viable.



84



85

version of 14 July 2021) at https://​discovery​.dundee​.ac​.uk/​ws/​portalfiles/​ portal/​65911936/​DraftUNBH​RtreatyCMe​thvenOBrie​n2021clean​.pdf. See Statement of the US Representative, Catherine Peters, First Meeting, Seventh Session of the OEIGWG, 25 October 2021 at https://​ geneva​ .usmission​.gov/​2021/​10/​25/​u​-s​-statement​-at​-the​-open​-ended​-working​ -group​-on​-transnational​-corporations​-and​-other​-business​-enterprises/​. See Corporate Accountability ‘Shortcomings of the Proposal of a Simplified Framework Convention on Business and Human Rights’ at https://​www​.cor​ porateacco​untability​.org/​wp​-content/​uploads/​2021/​10/​Arguments​-Against​ -a​-Simplified​-Framework​-Convention​-on​-Businesses​-and​-Human​-Rights​ -19​.10​.21​.pdf.

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Finally, there is one area in which agreement over the extent of corporate human rights liability may be settling, pointing to a possible specialised agreement that can be adopted by consensus in the near future. The International Law Commission (ILC) issued Draft Articles on Prevention and Punishment of Crimes against Humanity in 2019.86 By Article 6(8) thereof: Subject to the provisions of its national law, each State shall take measures, where appropriate, to establish the liability of legal persons for the offences referred to in this draft article. Subject to the legal principles of the State, such liability of legal persons may be criminal, civil or administrative.87

The ILC included this provision to reflect the capacity of legal persons to be involved in ‘acts committed as part of a widespread or systematic attack directed against a civilian population’.88 According to the ILC the language used ‘has been widely accepted by states in the context of other crimes and that contains considerable flexibility for States in the implementation of their obligation’.89 Though not a binding instrument, the ILC Draft Articles represent a serious indicator of international consensus on the content of international law. Thus a convention commanding wide consensus, on the criminal liability of corporations for gross violations of human rights, could be a realistic option for the future.



86



87



88 89

International Law Commission (ILC) Draft Articles on Prevention and Punishment of Crimes Against Humanity 2019 (A/74/10) at https://​legal​.un​ .org/​ilc/​texts/​instruments/​english/​draft​_articles/​7​_7​_2019​.pdf. For detailed analysis see ILC Draft Articles on Prevention and Punishment of Crimes against Humanity 2019 with Commentaries (A/74/10) article 6 Commentary paras 41–51 at https://​legal​.un​.org/​ilc/​texts/​instruments/​ english/​commentaries/​7​_7​_2019​.pdf. ibid para 47. ibid. John Ruggie advocated a treaty covering corporate involvement in ‘gross human rights violations’ on the basis that ‘the underlying prohibitions already enjoy widespread consensus among states’. See Third United Nations Forum on Business and Human Rights Closing Plenary Remarks John G. Ruggie Former UN Special Representative for Business and Human Rights (Geneva, 3 December 2014) at https://​www​.ohchr​.org/​Documents/​ Issues/​Business/​ForumSession3/​Submissions/​JohnRuggie​_SR​_SG​_BHR​ .pdf.

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7.4

Non-state initiatives on business and human rights

Alongside the legal developments described in the previous two sections, business and human rights standards have also been furthered through non-state MSIs.90 The core characteristic of MSIs is the involvement of ‘stakeholders’, global actors who have a ‘stake’ in an issue and come together to work out a collaborative solution to issues of mutual concern.91 MSIs have been active in the business and human rights field.92 For example, the Kimberley Process Certification Scheme was established in 2003 as a multilateral trade regime to prevent the flow of ‘conflict diamonds’ – diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments – specifically responding to then contemporary conflicts in Liberia, Sierra Leone and the Democratic Republic of Congo.93 The resulting Kimberley Process Certification Scheme arose from negotiations between a coalition of countries in Southern Africa, the international diamond industry including De Beers, the world’s largest diamond mining company, and human



90



91



92



93

See further Peter Muchlinski ‘The Changing Nature of Corporate Influence in the Making of International Economic Law: Towards “Multistakeholderism”’ M. Bungenberg, M. Krajewski, C. Tams, J. Terhechte and A Ziegler (eds) (2020) European Yearbook of International Economic Law (Cham, Springer, 2020) ch 10 at https://​link​.springer​.com/​ chapter/​10​.1007​%2F8165​_2020​_52 on which this section draws; George above n 8 especially ch 3. See further Harris Gleckman Multistakeholder Governance and Democracy: A Global Challenge (Abingdon, Routledge, 2018); Mark Raymond and Laura DeNardis ‘Multistakeholderism: Anatomy of an Inchoate Global Institution’ 7(3) International Theory 571 (2015), doi:​10​.1017/​S1752971915000081. See further Scott Jerbi ‘Assessing the Roles of Multi-Stakeholder Initiatives in Advancing the Business and Human Rights Agenda’ 94(887) International Review of the Red Cross 1027 (2012). See further J. D. Holmes ‘The Kimberley Process: Evidence of Change in International Law’ 3(2) International Law and Management Review 213 (2007); L. Wexler ‘Regulating Resource Curses: Institutional Design and Evolution of the Blood Diamond Regime’ 31(5) Cardozo Law Review 1717 (2010); A. Howard ‘Blood Diamonds: The Successes and Failures of the Kimberley Process Certification Scheme in Angola, Sierra Leone and Zimbabwe’ 15(1) Washington University Global Studies Law Review 137 (2016).

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rights NGOs. The scheme now has 55 member countries and is backed by UN resolutions.94 Another notable example is the Accord on Fire and Building Safety in Bangladesh of 15 May 2013, renewed in September 2021.95 This is a legally binding agreement between international textile retailing brands and global trade unions to make Ready-Made Garment (RMG) and textile factories safe.96 It was drawn up in the aftermath of the 2013 Rana Plaza building collapse in Bangladesh that caused over 1,100 deaths and 2,000 injuries. The Accord establishes a private enforcement regime imposing binding contractual obligations on sub-contractors, sanctioned by termination of the business relationship between the brand and the sub-contractor where the latter fails to observe adequate health and safety for its workers.97 It contains an independent inspection programme, the Bangladesh-based RMG Sustainability Council, supported by brands and industry in which workers and trade union representatives are involved.98 Public disclosure of all factories, inspection reports and corrective action plans is required.99 Signatory brands are committed to ensure sufficient



94



95



96



97



98 99

See Kimberley Process ‘List of Participants – 2020 Status’ at https://​www​ .kimberleyprocess​.com/​en/​2020​-kp​-participants​-list. See, most recently, UN General Assembly Resolution ‘The Role of Diamonds in Fuelling Conflict: Breaking the Link between the Illicit Transaction of Rough Diamonds and Armed Conflict as a Contribution to Prevention and Settlement of Conflicts’ (UNGA Doc. A/74/L.39, 6 February 2020) at https://​undocs​.org/​ en/​A/​74/​L​.39. Bangladesh Accord Foundation Accord on Fire and Building Safety in Bangladesh (2018 Revision) at https://​bangladesh​.wpengine​.com/​wp​ -content/​uploads/​2020/​11/​2018​-Accord​.pdf; International Accord for Health and Safety in the Textile and Garment Industry (1 September 2021) at https://​bangladesh​.wpengine​.com/​wp​-content/​uploads/​2021/​08/​ 1​-September​-International​-Accord​-on​-Health​-and​-Safety​-in​-the​-Textile​ -and​-Garment​-Industry​-public​-version​.pdf. Bangladesh Accord ‘Building on the Bangladesh Accord’s Progress, Garment Brands and Global Unions Reach Agreement on New, Expanded Worker Safety Pact’ (Press Release Amsterdam/Geneva, 25 August 2021) at https://​ bangladesh​.wpengine​.com/​wp​-content/​uploads/​2021/​08/​Agreement​-on​ -International​-Accord​-press​-release​-FINAL​.pdf. Bangladesh Accord 2021 above n 95 para 30. Brands must also ensure that commercial terms with suppliers make it financially feasible for them to comply with health and safety requirements: ibid para 31. ibid paras 6–16. ibid para 28.

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funds are available for remediation and to maintain sourcing relationships capped at $350,000 per company per year of the Accord.100 The 2021 Accord empowers workers through an extensive training programme, complaints mechanism and right to refuse unsafe work.101 Such MSIs have significant potential for positive action provided they follow a number of design and procedure requirements ensuring effective and legitimate operation.102 The three core issues are how stakeholders are identified and admitted to the arrangement; how power imbalances between various stakeholders are dealt with; and how transparency and accountability is to be achieved. The choice of stakeholders can be a random process dominated by the ‘convener’, the main mover and broker of the MSI.103 A major risk in corporate responsibility MSIs is capture by ‘convening’ corporate interests to ensure low standards.104 Safeguards are needed, including mechanisms for ensuring that relevant stakeholders are aware of the MSI’s existence, and its potential impact on their concerns, requiring clear terms of reference effectively communicated to stakeholders. Due to more limited resources, not-for-profit NGOs and other representatives of ‘grass roots’ interests will have less power relative to large businesses.105 The MSI must ensure that the more powerful actors are prepared to accept equal participation from all relevant stakeholders in return for the advantages of having deci-

ibid para 41. ibid paras 23–7. 102 See Gleckman above n 91 especially chs 4 and 5; Nick Buxton Multistakeholderism: A Critical Look (Amsterdam, Transnational Institute, March 2019) at https://​www​.tni​.org/​files/​publication​-downloads/​ multistakeholderism​-workshop​-report​-tni​.pdf; P. Schleifer ‘Varieties of Multi-stakeholder Governance: Selecting Legitimation Strategies in Transnational Sustainability Politics’ 16(1) Globalizations 50 (2019), doi:​10​ .1080/​14747731​.2018​.1518863. 103 See Gleckman above n 91 at 65–71. 104 See N. McKeon ‘Are Equity and Sustainability a Likely Outcome When Foxes and Chickens Share the Same Coop? Critiquing the Concept of Multistakeholder Governance of Food Security’ 14(3) Globalizations 379 (2017), doi:​10​.1080/​14747731​.2017​.1286168. 105 See N. Molina-Gallart ‘Strange bedfellows? NGO–Corporate Relations in International Development: An NGO Perspective’ 1(1) Development Studies Research. An Open Access Journal 42 (2014), doi:​10​.1080/​21665095​ .2014​.915617 discussing such imbalances in NGO–corporate partnerships. 100 101

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sions carrying greater legitimacy. This requires observance of basic democratic decision-making practices, establishing internal dispute resolution mechanisms and the provision of finance to ensure effective participation for resource-poor stakeholders.106 Financial and operational transparency is essential but, in practice, few MSIs publish detailed budgets or highlight conflicts of interests among participating stakeholders.107 In the absence of external regulatory control, MSIs have a responsibility to ensure they follow basic democratic practices on transparency and accountability or risk being perceived as illegitimate.108 There is a strong case for regulating MSIs. Their members are usually regulated as individual legal entities, whether as corporations, not-for-profit NGOs, trade unions or organised community groups. It seems incongruous not to demand a similar level of legal accountability of the MSI in which they are members. States have an important role to play here, one that may have been conveniently ignored under the banner of ‘deregulating business’. How this is to be done requires further research involving examination of the legal nature of MSIs as organisations and the role of contract, and possibly statute, in giving legal force to their standards and requirements.109

7.5

The political context for business and human rights

By way of conclusion, this section considers the broader political context in which business responsibility for human rights may evolve. The first point to stress is that evolving legal obligations concerning business responsibility for human rights are one of many tools through which responsible business practices can be encouraged. They must never be allowed to substitute for detailed technical regulation whether in health and safety, labour rights, environmental protection, poverty reduction, corporate taxation and governance or any of the myriad forms of regu-

108 109 106 107

See further Gleckman above n 91 at 121–4 and 129–31. ibid at 98. See further ibid at 125–9. See further Muchlinski above n 90.

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latory control that have grown organically over the ages in response to undesirable corporate practices. As Ford notes: lumping business and human rights with climate change and poverty may simply generalize issues to the point of paralysis and further distance any sense that there are ‘doable’ solutions by distinct actors with distinct duties. While the burden of responsibility is shifting beyond the state, it is not obvious that claims based on the human rights responsibilities of business are the most effective vector for addressing state, corporate and community inaction on these wider issues.110

Indeed, despite greater corporate involvement in MSIs and other ‘experimental governance’ processes, the state remains the main source of effective corporate regulation. It is likely to become more active in the face of challenges such as the climate crisis. The recent activism of states in response to the Covid-19 pandemic offers another example.111 A further issue arises from the priority given to protection of private property under the liberal conception of human rights, discussed in Chapter 1. This can weaken human rights-based claims for corporate responsibility. As seen in Chapter 1, given that market-oriented laws protect property rights, often to the extent of giving them the status of fundamental rights, corporations have a ready tool for restricting the extent of state regulation. The human rights claim against the corporation can be inverted into a ‘corporate human rights’ claim against the regulating authority. At the level of international law this can be especially problematic given the uncertainty surrounding the status of corporate human rights responsibility. It is in this atmosphere of uncertainty that the LBI is being discussed. It may well be that, as a result, the aim of full legal liability at international law will not survive the capacity to regard corporate property as itself a fundamental right worthy of protection. It is also likely that corporate lobbying will continue to stress that corporations are not subjects of international law and so cannot have binding international legal duties. A further risk is that appeals to human rights will be little more than a means of legitimating business. Corporate control of the business and



110 111

Ford above n 4 at 33. See further Muchlinski above n 45 ‘Postscript’ at 761–5.

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human rights agenda through MSIs is where this risk is greatest.112 MSI governance remains a relatively hit and miss process, with much depending on the capacity and integrity of the individual body. As suggested in the previous section, what may be needed is greater involvement of traditional lawmakers in the regulation of governance in MSIs to ensure proper legal accountability and, in the interim, the incorporation of good governance standards into contracts binding on MSI members. Furthermore, MSIs are capable of good work but they may, at times, need a steer in the right direction. In this connection the OECD has developed a due diligence alignment process for MSIs to ensure that these bodies follow OECD due diligence requirements in relation to the standards they adopt.113 The previous discussion assumes a commitment towards open and democratic approaches for securing responsible corporate conduct. The future may not follow this path. The recent rise of economic nationalism and protectionism may signal a possible move towards an alternative ‘authoritarian’ model of international law, emphasising state sovereignty and negotiations based on power relations, in which the state is seen as the only legitimate stakeholder.114 Additionally, this development suggests a possible reduction in concern over corporate responsibility.115 The role of MSIs in such a future world order may be one of state-sanctioned corporate domination leading to unintrusive and optional standards of corporate responsibility.116 Corporations from authoritarian states that wish to expand globally will require a degree of social legitimacy and corporate dominated MSIs could offer this, while also offering all corporations ‘soft’ alternatives based on voluntary reporting and the absence of strong liability rules.117 If so, then MSIs could find themselves actively



112 113



114



115 116



117

See Muchlinski above n 90 on which the following paragraphs draw. See OECD ‘Alignment Assessments of Industry and Multi-Stakeholder Programmes’ at https://​www​.oecd​.org/​investment/​industry​-initiatives​ -alignment​-assessment​.htm. On which see further T. Ginsburg ‘Authoritarian International Law?’ 114(2) AJIL 221 (2020) and Buxton above n 102 at 13. See Buxton above n 102. See L. Johns, K. J. Pelc and R. L. Wellhausen ‘How a Retreat from Global Economic Governance May Empower Business Interests’ 81(2) Journal of Politics 731 (2019). Buxton above n 102 at 13.

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participating in the progressive limitation of corporate responsibility. On the other hand, recent developments in national and EU mandatory corporate HRDD requirements, and the LBI discussions, offer an evolving model of corporate human rights accountability, though the legal uncertainty that marks the field leaves considerable room for manoeuvre on all sides. The field of business and human rights has gone a long way in a short time. Before the 1990s few took the idea of business responsibilities for human rights seriously. Now we have an established regime in the UNGPs and national and international trends towards greater corporate legal liability for human rights violations. The road to greater accountability will not be straight and easy because the field is complex and hard. But it is certainly moving ‘beyond the beginning’.

Select bibliography

This selection of sources cited in the book highlights general works on business and human rights that are relevant to numerous chapters and the core references in each chapter. It is offered as a suggested reading list for a business and human rights course.

General works Addo, M. (ed.) Human Rights Standards and the Responsibility of Transnational Corporations (The Hague, Kluwer Law International, 1999). Bantekas, Ilias and Michael Ashley Stein The Cambridge Companion to Business and Human Rights (Cambridge, Cambridge University Press, 2021). Bauman, Dorothée and Justine Nolan (eds) Business and Human Rights: From Principles to Practice (Abingdon, Routledge, 2016). Bernaz, Nadia Business and Human Rights: History, law and policy – Bridging the Accountability Gap (Abingdon, Routledge, 2017). Buhmann, Karin Changing Sustainability Norms through Communication Processes: The Emergence of the Business and Human Rights Regime as Transnational Law (Cheltenham, Edward Elgar, 2017). Deva, Surya Regulating Corporate Human Rights Violations: Humanizing Business (paperback edn, Abingdon, Routledge, 2014). Deva, Surya and David Birchall (eds) Research Handbook on Human Rights and Business (Cheltenham, Edward Elgar Publishing, 2020). Dine, Janet Companies, International Trade and Human Rights (Cambridge, Cambridge University Press, 2005). Jagers, Nicola Corporate Human Rights Obligations: In Search of Accountability (Antwerp, Intersentia, 2002). Martin, Jena and Karen E. Bravo (eds) The Business and Human Rights Landscape: Moving Forward, Looking Back (Cambridge, Cambridge University Press, 2016). McBeth, Adam International Economic Actors and Human Rights (Abingdon, Routledge, 2010). 179

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Muchlinski, Peter T. Multinational Enterprises and the Law (3rd edn, Oxford, Oxford University Press, 2021). Ruggie, John Gerald Just Business: Multinational Corporations and Human Rights (New York, W. W. Norton & Company, 2013). Wettstein, Florian Business and Human Rights: Ethical, Legal, and Managerial Perspectives (Cambridge, Cambridge University Press, 2022).

Chapter 1 Alston, Philip ‘Book Review: Does the Past Matter? On the Origins of Human Rights: Review of Jenny Martinez The Slave Trade and the Origins of International Human Rights Law’ 126 Harvard Law Review 2043 (2013). Chandler, Sir Geoffrey ‘The Amnesty International UK Business Group: Putting Human Rights on the Corporate Agenda’ 33 The Journal of Corporate Citizenship 29 (2009). Hartmann, Thom Unequal Protection: How Corporations became ‘People’ – and How You Can Fight Back (San Francisco, Berrett-Koehler Publishers Inc, 2010). Henkin, Louis ‘The Universal Declaration at 50 and the Challenge of Global Markets’ 25(1) Brooklyn Journal of International Law 17 (1999). Hunt, Lynn Inventing Human Rights: A History (New York, W.W. Norton & Company Inc, 2007). Ishay, Micheline R. The History of Human Rights: From Ancient Times to the Globalization Era (Berkeley, University of California Press, 2008). Lustig, Doreen Veiled Power: International Law and the Private Corporation, 1886–1981 (Oxford, Oxford University Press, 2020). Martinez, Jenny S. ‘Human Rights and History’ 126 Harvard Law Review 221 (2012). Martinez, Jenny S. The Slave Trade and the Origins of International Human Rights Law (paperback edn, Oxford, Oxford University Press, 2014). Ramasastry, Antia ‘Corporate complicity: From Nuremberg to Rangoon – an examination of forced labor cases and their impact on the liability of multinational corporations’ 20(1) Berkeley Journal of International Law 91 (2002). Samson, Colin The Colonialism of Human Rights (Cambridge, Polity Press, 2020). Slaughter, Joseph R. ‘Hijacking Human Rights: Neoliberalism, the New Historiography and the End of the Third World’ 40 Human Rights Quarterly 735 (2018).

Chapter 2 Alston, Philip (ed.) Non-State Actors and Human Rights (Oxford, Oxford University Press, 2005).

SELECT BIBLIOGRAPHY 181

Arnold, Denis ‘Corporations and Human Rights Obligations’ 1(2) BHRJ 255 (2016). Bilchitz, David Fundamental Rights and the Legal Obligations of Business (Cambridge, Cambridge University Press, 2022). Bishop, John D. ‘The Limits of Corporate Human Rights Obligations and the Rights of for-Profit Corporations’ 22(1) Business Ethics Quarterly 119 (2012). Clapham, Andrew Human Rights in the Private Sphere (Oxford, Clarendon Press, 1993). Clapham, Andrew Human Rights Obligations of Non-State Actors (Oxford, Oxford University Press, 2006). Cragg, Wesley ‘Human Rights and Business Ethics: Fashioning a New Social Contract’ 27 Journal of Business Ethics 205 (2000). Cragg, Wesley ‘Business Ethics and Stakeholder Theory’ 12(2) Business Ethics Quarterly 113 (2002). Henderson, David Misguided Virtue: False Notions of Corporate Social Responsibility (London, Institute of Economic Affairs, 2001). Hsieh, Nien-he ‘Does Global Business Have a Responsibility to Promote Just Institutions?’ 19(2) Business Ethics Quarterly 251 (2009) at 258. Hsieh, Nien-he ‘Should Business Have Human Rights Obligations?’ 14(2) Journal of Human Rights 218 (2015). Hsieh, Nien-he ‘Business Responsibilities for Human Rights: A Commentary on Arnold’ 2(2) BHRJ 297 (2017). Kinley, David and Junko Tadaki ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law’ 44 Virginia Journal of International Law 931 (2004). Muchlinski, Peter T. ‘Human Rights and Multinationals – Is There a Problem?’ 77 International Affairs 31 (2001). Ratner, Stephen ‘Corporations and Human Rights: A Theory of Legal Responsibility’ 111 Yale Law Journal 443 (2001). Stephens, Beth ‘The Amorality of Profit: Transnational Corporations and Human Rights’ 20(1) Berkeley Journal of International Law 45 (2002). Wettstein Florian Multinational Corporations and Global Justice: Human Rights Obligations of a Quasi-Governmental Institution (Stanford, Stanford University Press, 2009).

Chapter 3 Backer, Larry Cata ‘Multinational corporations, transnational law: The United Nations’ Norms on the responsibilities of transnational corporations as a harbinger of corporate social responsibility in international law’ 37(2) Columbia Human Rights Law Review 287 (2006). Backer, Larry Cata ‘On the Evolution of the United Nations’ “Protect-Respect-Remedy” Project: The State, the Corporation and Human Rights in a Global Governance Context’ 9 Santa Clara Journal of International Law 37 (2011).

182 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Backer, Larry Cata ‘From Institutional Misalignments to Socially Sustainable Governance: The Guiding Principles for the Implementation of the United Nations’ “Protect, Respect and Remedy” and the Construction of Inter-Systemic Global Governance’ 25 Pacific McGeorge Global Business and Development Law Journal 69 (2012). Bilchitz, David ‘The Ruggie Framework: An Adequate Rubric for Corporate Human Rights Obligations?’ 12 SUR – International Journal on Human Rights 199 (2010). Kell, Georg ‘The Global Compact: Origins, Operations, Progress, Challenges’ 11 The Journal of Corporate Citizenship 35 (Autumn 2003). Kell, Georg and John Ruggie ‘Global Markets and Social Legitimacy: The Case of the Global Compact’ 8(3) Transnational Corporations 101 (December 1999). Mares, Radu (ed.) The UN Guiding Principles on Business and Human Rights: Foundations and Implementation (Leiden, Martinus Nijhoff, Brill, 2012). Miretski, Pini Pavel and Sascha-Dominik Bachmann ‘The UN Norms on the Responsibility of Transnational Corporations and other Business Enterprises with Regard to Human Rights: a Requiem’ 17(1) Deakin Law Review 5 (2012). Ruggie, John Gerald ‘The Theory and Practice of Learning Networks: Corporate Social Responsibility and the Global Compact’ 5 Journal of Corporate Citizenship 27 (Spring 2002). Simons, Penelope ‘International Law’s Invisible Hand and the Future of Corporate Accountability for Violations of Human Rights’ 3(1) Journal of Human Rights and the Environment 5 (2012). Weissbrodt, David and Muria Kruger ‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ 97 AJIL (2003).

Chapter 4 Backer, Larry Cata ‘Moving Forward the UN Guiding Principles for Business and Human Rights: Between Enterprise Social Norm, State Domestic Legal Orders, and the Treaty Law That Might Bind Them All’ 38(2) Fordham International Law Journal 457 (2015). Choudhury, Barnali ‘Investor Obligations for Human Rights’ 35(1-2) ICSID Review 82 (2020). De Brabandere, Eric ‘Human Rights and International Investment Law’ in Markus Krajewski and Rhea Hoffmann (eds), Research Handbook on Foreign Direct Investment (Cheltenham, Edward Elgar, 2019) ch 20. Deva, Surya ‘International Investment Agreements and Human Rights: Assessing the Role of the UN’s Business and Human Rights Regulatory Initiatives’ in Julien Chaisse, Leïla Choukroune, and Sufian Jusoh  (eds), Handbook of International Investment Law and Policy (Springer Law, Singapore, 2021) ch 66. Krajewski, Markus ‘The State Duty to Protect against Human Rights Violations through Transnational Business Activities’ 23 Deakin Law Review 13 (2018).

SELECT BIBLIOGRAPHY 183

McCorquodale, Robert and Penelope Simons ‘Responsibility beyond Borders: State Responsibility for Extraterritorial Violations by Corporations of International Human Rights Law’ 70(4) MLR 598 (2007). Methven O’Brien, Claire ‘The Home State Duty to Regulate the Human Rights Impacts of TNCs Abroad: A Rebuttal’ 3(1) BHRJ 47 (2018). Methven O’Brien, Claire, Amol Mehra, Sara Blackwell, and Catherine Bloch Poulsen-Hansen ‘National Action Plans: Current Status and Future Prospects for a New Business and Human Rights Governance Tool’ 1(1) BHRJ 117 (2016).

Chapter 5 Cassel, Douglass ‘Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence’ 1(2) BHRJ 179 (2016). Danish Institute of Human Rights Human Rights Impact Assessment Guidance and Toolbox (Copenhagen, Danish Institute of Human Rights, 25 August 2020). Debevoise and Plimpton UN Guiding Principles on Business and Human Rights at 10: The Impact of the UNGPs on Courts and Judicial Mechanisms (Debevoise and Plimpton, July 2021). Deva, Surya and David Bilchitz (eds) Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (Cambridge, Cambridge University Press, 2013). EU Commission Study on Due Diligence Requirements through the Supply Chain: Final Report (Luxembourg: Publications Office of the European Union, 2020). Fasterling, Björn ‘Human Rights Due Diligence as Risk Management: Social Risk Versus Human Rights Risk’ 2(2) BHRJ 225 (2017). Harrison, James ‘Establishing a Meaningful Human Rights Due Diligence Process for Corporations: Learning from Experience of Human Rights Impact Assessment’ 31(2) Impact Assessment and Project Appraisal 107 (2013). Holly, Gabrielle, Lise Smit and Robert McCorquodale Making Sense of Managing Human Rights Issues in Supply Chains: 2018 Report and Analysis (British Institute of International and Comparative Law and Norton Rose Fulbright, 2018). McCorquodale, Robert, Lise Smit, Stuart Neely and Robin Brooks ‘Human Rights Due Diligence in Law and Practice: Good Practices and Challenges for Business Enterprises’ 2(2) BHRJ 195 (2017). Muchlinski, Peter ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ 22(1) Business Ethics Quarterly 145 (2012). Obara, Louise J. ‘“What Does This Mean?”: How UK Companies Make Sense of Human Rights’ 2(2) BHRJ 249 (2017). OECD Due Diligence Guidance for Responsible Business Conduct (OECD, Paris, 2018).

184 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Office of the United Nations High Commissioner for Human Rights The Corporate Responsibility to Respect Human Rights: An Interpretative Guide (New York and Geneva, United Nations, 2012). Preuss, Lutz and Donna Brown ‘Business Policies on Human Rights: An Analysis of Their Content and Prevalence among FTSE 100 Firms’ 109(3) Journal of Business Ethics 289 (2012). UN Global Compact Office and Office of the United Nations High Commissioner for Human Rights A Guide for Business: How to Develop a Human Rights Policy (2nd edn, New York, United Nations, 2015). World Benchmarking Alliance Corporate Human Rights Benchmark Report 2020.

Chapter 6 Aristova, Ekaterina ‘The Future of Tort Litigation against Transnational Corporations in the English Courts: Is Forum [Non] Conveniens Back?’ 6(3) BHRJ 399 (2021), doi:​10​.1017/​bhj​.2021​.11. Aristova Ekaterina and Grušić Uglješa (eds) Civil Remedies and Human Rights in Flux: Key Legal Developments in Selected Jurisdictions (Oxford, Hart Publishing, 2022). Baxi, Upendra ‘Nevsun: A Ray of Hope in a Darkening Landscape?’ 5(2) BHRJ 241 (2020). Bhatt, K. and G. Erdem Türkelli ‘OECD National Contact Points as Sites of Effective Remedy: New Expressions of the Role and Rule of Law within Market Globalization?’ 6(3) BHRJ 423 (2021), doi:​10​.1017/​bhj​.2021​.30. Business and Human Rights Resource Centre (BHRRC) SLAPPed but not silenced (June 2021) at https://​www​.business​-humanrights​.org/​en/​from​-us/​briefings/​ slapped​-but​-not​-silenced​-defending​-human​-rights​-in​-the​-face​-of​-legal​-risks/​. Croser, Marilyn, Martyn Day, Mariëtte van Huijstee and Channa Samkalden ‘Vedanta v Lungowe and Kiobel v Shell: The Implications for Parent Company Accountability’ 5 BHRJ 130 (2020). Haines, Fiona and Kate Macdonald ‘Nonjudicial Business Regulation and Community Access to Remedy’ 14 Regulation & Governance 840 (2020). International Commission of Jurists Effective Operational Grievance Mechanisms (Geneva, November 2019) at https://​www​.icj​.org/​wp​-content/​uploads/​2019/​ 11/​Universal​-Grievance​-Mechanisms​-Publications​-Reports​-Thematic​-reports​ -2019​-ENG​.pdf. International Commission of Jurists Proposed Performance Standards for Operational-level Grievance Mechanisms (Geneva, November 2019) at https://​ www​.icj​.org/​wp​-content/​uploads/​2020/​01/​Universal​-Proposed​-performance​ -standards​-Publications​-2019​-ENG​.pdf. International Federation for Human Rights (FIDH) Corporate Accountability for Human Rights Abuses: A Guide for Victims and NGOs on Recourse Mechanisms (3rd edn, Paris, FIDH, 2016) at https://​www​.fidh​.org/​IMG/​pdf/​corporate​ _accountability​_guide​_version​_web​.pdf. Laplante, Lisa J. ‘Human Torts’ 39 Cardozo Law Review 245 (2017).

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Meeran, Richard ‘Multinational Human Rights Litigation in the UK: A Retrospective’ 6(2) BHRJ 255 (2021). Meeran, Richard (ed.) Human Rights Litigation against Multinationals in Practice (Oxford, Oxford University Press, 2021). Muchlinski, Peter ‘Corporate Liability for Breaches of Fundamental Human Rights in Canadian Law: Nevsun Resources Limited v Araya’ Amicus Curiae, Series 2, 1(3), 515–41 (2020) at https://​journals​.sas​.ac​.uk/​index​.php/​amicus. OECD Structures and Procedures of National Contact Points for the OECD Guidelines for Multinational Enterprises (Paris, OECD, 2018) at https://​ mneguidelines​.oecd​.org/​Structures​-and​-procedures​-of​-NCPs​-for​-the​-OECD​ -guidelines​-for​-multinational​-enterprises​.pdf. OECD Watch State of Remedy 2020 (OECD Watch briefing paper, June 2021) at https://​www​.oecdwatch​.org/​wp​-content/​uploads/​sites/​8/​2021/​06/​OECD​-W​ -State​-of​-Remedy​-2020​.pdf from which these statistics are taken. OECD Watch Get Fit. Closing Gaps in the OECD Guidelines to Make Them Fit for Purpose (June 2021) at https://​www​.oecdwatch​.org/​wp​-content/​uploads/​sites/​ 8/​2021/​06/​OECD​-Watch​-Get​-Fit​-Closing​-gaps​-in​-the​-OECD​-Guidelines​-to​ -make​-them​-fit​-for​-purpose​-1​.pdf. Rouas, Virginie Achieving Access to Justice in a Business and Human Rights Context: An Assessment of Litigation and Regulatory Responses in European Civil-Law Countries (London, Institute of Advanced Legal Studies, 2022). Skinner, Gwynne, Robert McCorquodale and Olivier De Schutter The Third Pillar: Access to Judicial Remedies for Human Rights Violations by Transnational Business (Core, The International Corporate Accountability Roundtable (ICAR), The European Coalition for Corporate Justice (ECCJ), December 2013) 24 at http://​corporatejustice​.org/​wp​-content/​uploads/​2021/​04/​the​ _third​_pillar​_​-access​_to​_judicial​_remedies​_for​_human​_rights​_violation​.​-1​-2​ .pdf. Skinner, Gwynne, with Rachel Chambers and Sarah McGrath Transnational Corporations and Human Rights: Overcoming Barriers to Judicial Remedy (Cambridge, Cambridge University Press, 2020). Walton, Beatrice A. ‘International Decisions: Nevsun v Araya’ 115(1) AJIL 107 (2020) at 112. Wielga, Mark and James Harrison ‘Assessing the Effectiveness of Non-State-Based Grievance Mechanisms in Providing Access to Remedy for Rightsholders: A Case Study of the Roundtable on Sustainable Palm Oil’ 6(1) BHRJ 67 (2021).

Chapter 7 Backer, Larry Cata ‘Moving Forward the UN Guiding Principles for Business and Human Rights: Between Enterprise Social Norm, State Domestic Legal Orders, and the Treaty Law That Might Bind Them All’ 38(2) Fordham International Law Journal 457 (2015). Bilchitz, David ‘The Necessity for a Business and Human Rights Treaty’ 1(2) BHRJ 202 (2016).

186 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Bueno, Nicolas and Claire Bright ‘Implementing Human Rights Due Diligence through Corporate Civil Liability’ 69 ICLQ 789 (2020). Bueno, Nicolas and Christine Kaufmann ‘The Swiss Human Rights Due Diligence Legislation: Between Law and Politics’ 6(3) BHRJ 542 (2021), doi:​10​.1017/​bhj​ .2021​.42. Bullock, Susy, Allan Neiland Alexa Romanelli ‘Gibson Dunn Discusses EU Developments in Corporate Human Rights Due Diligence’ (15 February 2021) at https://​clsbluesky​.law​.columbia​.edu/​2021/​02/​15/​gibson​-dunn​-discusses​-eu​ -developments​-in​-corporate​-human​-rights​-due​-diligence/​. Buxton, Nick (2019) Multistakeholderism: A Critical Look (Amsterdam, Transnational Institute, March 2019) at https://​www​.tni​.org/​files/​publication​ -downloads/​multistakeholderism​-workshop​-report​-tni​.pdf. Chambers, Rachel, Sophie Kemp and Katherine Tyler Report of Research into How a Regulator Could Monitor and Enforce a Proposed UK Human Rights Due Diligence Law (Kingsley Napley, 21 August 2020) at https://​www​.law​.ox​.ac​ .uk/​events/​could​-new​-uk​-regulatory​-body​-monitor​-and​-enforce​-companies​ -compliance​-human​-rights​-due. Černič, Jernej Letnar and Nicolas Carillo-Santarelli (eds) The Future of Business and Human Rights: Theoretical and Practical Considerations for a UN Treaty (Antwerp, Intersentia, 2018). Cossart, Sandra, Jérôme Chaplier and Tiphaine Beau de Loménie, ‘The French Law on Duty of Care: A Historic Step Towards Making Globalization Work for All’ 2(2) BHRJ 317 (2017). Crockett, Antony and Sylvia Schenk ‘Mandatory Human Rights and ESG Due Diligence in Europe – A Race to the Top?’ (Herbert Smith Freehills, 12 March 2021) at https://​www​.h​erbertsmit​hfreehills​.com/​latest​-thinking/​mandatory​ -human​-rights​-and​-esg​-due​-diligence​-in​-europe​-​%E2​%80​%93​-a​-race​-to​-the​ -top. De Schutter, Olivier ‘Towards a New Treaty on Business and Human Rights’ 1(1) BHRJ 41 (2016). Deva, Surya and David Bilchitz (eds) Building a Treaty on Business and Human Rights: Context and Contours (Cambridge, Cambridge University Press, 2017). Friends of the Earth Europe, European Coalition for Corporate Justice and Corporate Europe Observatory Off the Hook? How Business Lobbies Against Liability for Human Rights and Environmental Abuses (June 2021) at https://​ corporateeurope​.org/​sites/​default/​files/​2021​-06/​OffThe​%20Hook​_0​.pdf. George, Erika Incorporating Rights: Struggles to Advance Corporate Accountability (New York, Oxford University Press, 2021). Gleckman, Harris Multistakeholder Governance and Democracy: A Global Challenge (Abingdon, Routledge, 2018). Hague Rules on Business and Human Rights Arbitration (December 2019) at https://​www​.cilc​.nl/​cms/​wp​-content/​uploads/​2019/​12/​The​-Hague​-Rules​-on​ -Business​-and​-Human​-Rights​-Arbitration​_CILC​-digital​-version​.pdf. Initiative Lieferkettengesetz ‘What the New Supply Chain Act Delivers – and What It Doesn’t’ (11 June 2021) at https://​germanwatch​.org/​en/​20324. International Commission of Jurists Needs and Options for a New International Instrument on Business and Human Rights (Geneva, June 2014) at https://​

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www​.icj​.org/​business​-and​-human​-rights​-need​-international​-legally​-binding​ -instruments​-icj​-report/​. Jerbi, Scott ‘Assessing the Roles of Multi-Stakeholder Initiatives in Advancing the Business and Human Rights Agenda’ 94(887) International Review of the Red Cross 1027 (2012). Krajewski, Markus, Kristel Tonstad and Franziska Wohltmann ‘Mandatory Human Rights Due Diligence in Germany and Norway: Stepping, or Striding, in the Same Direction?’ 6(3) BHRJ 550 (2021), doi:​10​.1017/​bhj​.2021​.43. Kusch, Johanna and Claudia Saller ‘Germany’s Proposed Supply-Chain Law—A Glass Half-Empty’ (Social Europe, 26 February 2021) at https://​ socialeurope​.eu/​germanys​-proposed​-supply​-chain​-law​-a​-glass​-half​-empty. Landau, Ingrid ‘Human Rights Due Diligence and the Risk of Cosmetic Compliance’ 20(1) Melbourne Journal of International Law 238 (2019). Martin-Ortega, Olga ‘Human Rights Due Diligence for Corporations: From Voluntary Standards to Hard Law at Last?’ 31(4) Netherlands Quarterly of Human Rights 44 (2013). Methven O’Brien, Claire ‘Transcending the Binary: Linking Hard and Soft Law through a UNGPs-based Framework Convention’ 114 AJIL Unbound 186 (2020), doi​.org/​10​.1017/​aju​.2020​.36. Muchlinski, Peter ‘The Changing Nature of Corporate Influence in the Making of International Economic Law: Towards “Multistakeholderism”’ in M. Bungenberg, M. Krajewski, C. Tams, J. Terhechte and A Ziegler (eds) (2020) European Yearbook of International Economic Law (Cham, Springer, 2020) ch 10 at https://​link​.springer​.com/​chapter/​10​.1007​%2F8165​_2020​_52. Nwapi, Chilenye ‘Jurisdiction by Necessity and the Regulation of the Transnational Corporate Actor’ 30(78) Utrecht Journal of International and European Law 24 (2014). Pietropaoli, Irene, Lise Smit, Julianne Hughes-Jennett and Peter Hood A UK Failure to Prevent Mechanism for Corporate Human Rights Harm (British Institute of International and Comparative Law, BIICL, 11 February 2020) at https://​www​.biicl​.org/​publications/​a​-uk​-failure​-to​-prevent​-mechanism​-for​ -corporate​-human​-rights​-harms. Quijano, Gabriela and Carlos Lopez ‘Rise of Mandatory Human Rights Due Diligence: A Beacon of Hope or a Double-Edged Sword?’ 6(2) BHRJ 241 (2021). Ramasastry, Anita and Douglass Cassel ‘White Paper: Options for a Treaty on Business and Human Rights’ 6 Notre Dame Journal of International & Comparative Law 1 (2015). Raymond, Mark and Laura DeNardis ‘Multistakeholderism: anatomy of an inchoate global institution’ 7(3) International Theory 571 (2015), doi:​10​.1017/​ S1752971915000081. Ruggie, John, SRSG, ‘Recommendations on Follow-Up to the Mandate’ (11 February 2011) 4–5 at https://​harvardhumanrights​.files​.wordpress​.com/​2011/​ 02/​mandate​-follow​-up​-final​.pdf. Santoro, Michael A. ‘Why the United Nations is Not the Ideal Forum for Business and Human Rights: The UNGPs and the Right to COVID-19 Vaccine Access in the Global South’ 6(2) BHRJ 326 (2021).

188 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

Schleifer, P. ‘Varieties of Multi-Stakeholder Governance: Selecting Legitimation Strategies in Transnational Sustainability Politics’ 16(1) Globalizations 50 (2019). Smit, Lise, Claire Bright, Irene Pietropaoli, Julianne Hughes-Jennett and Peter Hood ‘Business Views on Mandatory Human Rights Due Diligence Regulation: A Comparative Analysis of Two Recent Studies’ 5(2) BHRJ 261 (2020). UK Joint Parliamentary Committee on Human Rights Human Rights and Business 2017: Promoting Responsibility and Ensuring Accountability (HL PAPER 153 publications​ .parliament​ .uk/​ pa/​ HC 443, 5 April 2017) para 193 at https://​ jt201617/​jtselect/​jtrights/​443/​443​.pdf. UNWG ‘Guiding Principles on Business and Human Rights at 10: Taking Stock of the First Decade’ (UN Doc. A/HRC/47/39 22 April 2021) at https://​undocs​ .org/​A/​HRC/​47/​39.

Index

Abolition of Slavery Act (1833) 5 access to remedy, denial of 1–2, 57, 62, 71, 94, 119, 129–31, 133, 161, 164–6, 168 Accord on Fire and Building Safety (2013), Bangladesh 173 actus reus, of aiding and abetting 125 African Charter on Human and Peoples’ Rights 74 African Commission on Human and Peoples’ Rights 74 agency problem 32 Alien Tort Claims Act (ATCA) 22 alternative dispute resolution (ADR) 144 American Declaration of Independence 3 Amnesty International (AI) report on torture in China 25 UK Business Group 23 Anglo-American Tobacco 25 Annan, Kofi 49 anti-apartheid movement (South Africa) 20 anti-SLAPP law 133 Anti-Slavery International 5 Anti-Slavery Society 5 anti-slavery treaties, adoption of 6 Arnold, Denis 40 Australian Modern Slavery Act (2018) 85 balance-of-payments 15 Begum v Maran 137 Bilateral Investment Treaties (BITs) 91 Morocco–Nigeria BIT 92

Bill of Rights (1789) 3 Fifth Amendment 4 Bourbon dynasty 3 ‘bourgeois’ rights, Marxist critiques of 7 Bribery Act (2010), UK 77 British Crown 3 British East India Company 3 British War Crimes Court in Hong Kong 10 business corporate control of 176–7 decision-making practices 62 ethics 2, 25, 30–31, 39–41 human rights standards, evolution of 149 legally binding obligations for 161–4 non-state initiatives on 172–5 political context for 175–8 relationship 163 between the brand and the sub-contractor 173 transnational character of 161 business abuses, patterns of 95–7 Business and Human Rights Resource Centre (BHRRC) 132 Business at OECD (BIAC) 168 BusinessEurope 168 business human rights responsibilities 2 arguments against extending 26–35 business ethics arguments 30–31

189

190 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

corporate governance arguments 32–3 legal arguments 27–30 political arguments 33–5 arguments in favour of extending 35–46 business ethics arguments 39–41 corporate governance arguments 41–4 legal arguments 36–9 political arguments 44–6 development of 7 evolution of 14 implementation of 48 and international economic law 14–16 legal implications of inter-state relations on 28 obligations of 25–6 origins of contemporary moves towards 17–24 socially responsible business policies. 36 ‘status egalitarian’ argument 40 UN Global Compact model 48–53 UN Norms on 29 Business Leaders Initiative on Human Rights 57 business responsibilities, idea of 178 business-to-business conflict resolution 144 California Transparency in Supply Chains Act (2010) 84 Canadian Ombudsperson for Responsible Enterprise (CORE) 139 capital markets union action plan 84 Chandler, Geoffrey 23 child labour, abolition of 6 child workers, abuse of 125 civil governance 62 Clapham, Andrew 36, 127 codification, of human rights norms 29 Cold War 11, 20 Communication on Progress (CoP) 50 Refreshed CoP 51

Companies Act (2006), UK 44, 82–3 conflict diamonds 172 contracts theory 43 agency/nexus of 44 corporate abuses, protection against 8, 12, 73 corporate accountability 20, 141, 157 corporate and securities laws 79, 82–4 corporate-based grievance mechanisms 63 corporate compliance 21, 65, 86, 115 corporate constitutional rights, development of 2 corporate ethics 26 corporate governance 2, 25, 32–3, 175 agency-based theories of 32 ‘enlightened shareholder value’ principle 44, 82 environmental, social and governance (ESG) disclosure and accountability 51 impossibility theorem 43 principles of 44 ‘shareholder value’ model of 41–4 through business decision-making based on HRDD 149 corporate group liability 163 corporate human rights 2, 176 abuses 11, 22, 57, 66, 78, 89, 148, 158, 167, 170 Benchmark Initiative 81 Benchmark Report for 2020 115 liability laws 87, 151, 152, 154 corporate level operational grievance mechanisms 142–7 corporate leverage and control 109 corporate lobbying 59, 176 corporate obligations 30, 54, 59 corporate philanthropy 20, 107 corporate private property rights 12 corporate reporting 51, 85 corporate social responsibility (CSR) 7, 177 commitments for 65 criticisms of 115–18

INDEX 191

for human rights before war crimes tribunals 2 under international instruments 38 limitation of 178 models of UN Global Compact 48–53 UNGPs 60–66 UN Norms 53–60 to respect human rights 62 corporate taxation 175 corporations economic functions of 63 social licence to operate 40 Covid-19 pandemic 97, 115, 176 criminal liability 119, 164, 171 De Beers 172–3 decision-making processes 62, 94 defamation laws 133 democratic accountability 34 Deva, Surya 149 digital data, corporate control over 96 dispute settlement, methods of 63, 138 division of labour 18, 41 Doe v Nestle 125 Doe v Unocal 125 domestic torts, breaches of 126 due diligence 67, 73, 101, 142 assessment of 111 corporate 86 effectiveness of 153 environmental, social and human rights (ESHR) 90 German law on 155 human rights liability law and legislative initiatives have related to 151 mandatory 67, 117, 151–5 notion of 98 obligations of 87–8, 153, 155 OECD requirements 177 see also human rights due diligence (HRDD) Dutch Child Labour Due Diligence Law (2019) 84 Dutch Civil Code 96 duty of care

breach of 85 corporate 148 economic governance, standards of 14 economic self-determination 15 Eide, Asbjørn 72 embedded liberalism 15 enterprises management system 101 Environment Act (2021), UK 86 environmental degradation 74 environmental impact assessment 74 environmental justice 143 environmental protection 34, 47, 56, 132, 175 environmental, social and governance (ESG) 51 environmental sustainability 34 Equator Principles 103 EU Parliament 152 corporate human rights violations proposed by 153 European Commission 100, 153 Corporate Sustainability Reporting Directive 84 European Convention on Human Rights (ECHR) 12–13 European Court of Human Rights (ECtHR) 12 European Union (EU) Non-Financial Reporting Directive 68, 83 sustainability reporting standards 84 experimental governance 176 Export Development Canada 139 extrajudicial killing 72 Federal Office for Economic Affairs and Export Control (BAFA) 157 forced labour procurement of 72 use of 10 Foreign and Commonwealth Office (FCO), UK 81 forum necessitatis, doctrine of 165 forum non conveniens, doctrine of 123, 165

192 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

fossil fuel-based industries 97 free market-oriented investment 11 ‘free rider’ problem 31, 40 Free Trade Agreements (FTAs) 91 free trade and investment, corporate rights to 49 French Corporate Duty of Vigilance Law (2017) 84–5, 135 French Declaration of the Rights of Man and Citizen 3 Article 2 of 4 Article 17 of 4 French Duty of Vigilance Law (2017) 1, 77, 148, 155 French Revolution 3 Friedman, Milton 30, 32–3 FTSE 100 companies 112 fundamental rights, violations of 5 gender-based violence 89 General Agreement on Tariffs and Trade (GATT) 15 German Supply Chain Due Diligence Act (2021) 156 Germany German NAP 156 New German law 156 global climate emergency 100 global liberalisation, of trade and investment 14 Global North 159 global production chain 17, 106, 164 Global Reporting Initiative (GRI) 111 Global South 15, 132, 159, 170 global value chains 103 governance gap 40–41, 45 created by globalisation 62 Grand Coalition 155 GRI 408: Child Labor 111 GRI 411: Rights of Indigenous Peoples 111 GRI 414: Supplier Social Assessment 111 group and supply chain liability, legal obstacles to 123–6 Group of 77 15 Guidelines for Multinational Enterprises (2011) 67

Hague Rules on Business and Human Rights Arbitration 166–7 Heath, Joseph 42 Heil, Hubertus 156 Henderson, David 33 Holocaust 8 home-based businesses, overseas activities of 76 ‘horizontal effects’ doctrine 73, 121 human dignity 35–6 human rights abuse of 89, 102, 151, 162 in conflict zones 90 corporate 66, 85 remedy of business-related 138 states protection against 70 in supply chain 85 accounting for and remediation of 110–12 African Charter on 74 business breaches of 157 business responsibilities for 14–16 claims against corporate actors 165 in conflict affected areas 75 corporate compliance with 65, 176–7 corporate human rights liability law 152, 176 criminal liability of corporations for gross violations of 171 due diligence-based reporting for 68 Enlightenment values 2 evolution of 5 first sources of 3 historical development of 2–12 ‘horizontal effects’ principle 66 infringements of 44–5, 105, 155 against human rights defenders 131 liability law and legislative initiatives 151 non-state initiatives on 172–5 obligations of TNCs 16, 55

INDEX 193

under UK Human Rights Act (1998) 37 policy coherence and space for 90–93 political context for 175–8 and protection of private commercial property 12–14 remediation of 110–12, 119 strategies for 120 reporting laws 84–7 state and corporate obligations 29 UN binding legal instrument on 158–71 violation of 96 by business actors 72 corporate 52, 99, 155 corporate complicity in 123 extraterritorial jurisdiction of 76 extraterritorially for overseas 77–8 German law on 158 legal remedies for 120–38, 150 remedy for 126 against Uyghur Muslims 86 Human Rights Act (1998), UK 37 Human Rights Council Open-Ended Inter-Governmental Working Group (OEIGWG) on Transnational Corporations 160, 170 human rights defender 130–31 risk of human rights infringements against 131 security risks 142 human rights due diligence (HRDD) 1, 63, 75, 78, 98, 100–12, 143, 151, 164, 170 accounting for and remediation of human rights risks 110–12 adoption of 69 assessment of 154 avoidance and/or mitigation of risks 108–10

business responsibilities for 38 business use of 113 components of 102 corporate compliance with 115 corporate governance through business decision-making based on 149 corporate HRDD in practice 112–15 duty of care 148 Equator Principles 103 human rights risk assessment 107–8 key element of 100 principle of 99, 100 reporting for global supply chains 114 reporting laws 148 risk and impact identification 102–7 ‘tick-box’ exercise 116 human rights risks 104, 109, 117, 120, 157 assessment of 107–8 avoidance and mitigation of 63, 94, 108 business-related 97 identification of 68, 102, 114, 116 involved in transnational supply chains 86 monitoring of 101 remediation of 102, 110–12 individual–state dichotomy 41 information gathering, techniques for 86 Initiative Lieferkettengesetz alliance 156–8 Inter-American Court of Human Rights 13, 73 intergovernmental organisations (IGOs) 17 international business transactions 38 International Chamber of Commerce (ICC) 57, 168 International Commission of Jurists (ICJ) 146–7

194 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

International Covenant on Civil and Political Rights (ICCPR) 11 International Covenant on Economic, Social and Cultural Rights (ICESCR) 10–11 international dispute settlement 28 International Finance Corporation (IFC) Guide to Human Rights Impact Assessment and Management 108, 110–11 international humanitarian law, violation of 10 International Human Rights Principles for Companies 23 international investment agreements (IIAs) 12, 92–3 International Labour Organisation (ILO) 7–8 Declaration on Fundamental Principles and Rights at Work (1998) 50, 61–2, 162 Indigenous and Tribal Peoples Convention No. 169 of 1989 98 Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy 38 international labour rights 2 International Law Commission (ILC) Draft Articles on Prevention and Punishment of Crimes against Humanity 171 International Monetary Fund (IMF) 15 International Organisation of Employers (IOE) 57, 168 international trade 18 inter-state relations 28 intra-firm trade 18 investor-state arbitration 28 investor-state dispute settlement (ISDS) 12 Jensen, Michael 43 Jesner v Arab Bank 128 judicial decisions 78, 94, 125

just compensation, payment of 4 Key Performance Indicators (KPIs) business activity/company 111 defined 110 source of 111 Kimberley Process Certification Scheme 172 Kingsley Napley (law firm) 152 labour-related disputes 144 labour rights 2, 7, 34, 39, 49, 175 legally binding instrument (LBI) 158–71 adoption of 168–71 for effective access to remedy 164–6 human rights violations covered by 165 institutional structure 166–8 obligations for business 161–4 Second Draft 161, 163, 169 signatories of 167 state-to-state dispute settlement procedure 166 Third Draft 161–9 legal obligations 1–2, 29, 38, 60, 117, 175 legal remedies, for protection against human rights abuses 120–38 case-law developments 133–8 causes of action 126–9 financial obstacles 129 substantive legal obstacles to group and supply chain liability 123–6 tactical, political and social obstacles 130–33 leverage, concept of 104–5, 109 liability for human rights abuses 135, 164 liberal ‘market-state,’ rise of 18 mandatory due diligence 67, 117, 151–5 marginalization, risk of 110 Martinez, Jenny 6

INDEX 195

mass expropriations of property 8–9 McBeth, Adam 72 Meyerhoffer, Sheri 139 micro-enterprises 84 Milieudefensie et al. v Royal Dutch Shell 96, 99 Mineral Sands Resources v Reddell 133 modern slavery incidence of 86 Modern Slavery Act (2015), UK 77, 85–6 monopoly rights over trade, granting of 3 Moody-Stuart, Mark 23 Morrison, John 64 multinational corporations (MNCs) 51, 61 multinational enterprises (MNEs) 16 rights-based claims against 78 multi-stakeholder initiatives (MSIs) 46, 174–5, 177 Accord on Fire and Building Safety (2013), Bangladesh 173 characteristic of 172 Kimberley Process Certification Scheme 172 legal nature of 175 role of 177 National Action Plans (NAPs) 75, 79–82, 169 annual strategic report (SR) 83 business-related human rights impacts 80 criteria for an effective 79 defined 79 responsibility for 81 support for the UNGPs 81 National Contact Points (NCPs) 120, 141 nationalism, rise of 6 national legal liability laws 151–8 development of 148 ‘neoliberal’ globalisation, consequences of 33 Nestle v Doe 126

Nevsun Resources v Araya 99, 117, 126–8 New International Economic Order (NIEO) 15 Nigerian National Petroleum Company (NNPC) 74 non-governmental organisations (NGOs) 17, 58 non-judicial grievance mechanisms 138, 144, 164 non-judicial state-based remedies, against human rights violations 138–42 non-state initiatives, on business and human rights 172–5 Notre Affaire à Tous 135 O’Brien, Claire Methven 169 OECD Watch 141 Office of the UN High Commissioner for Human Rights (OHCHR) 72 human rights defender 130–31 Ogoni People, rights of 74 Okpabi v Royal Dutch Shell plc 134 Ombudsperson 120, 139 operational-level grievance mechanism (OGM) 143, 146 opportunity capital 41 Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Business Conduct 67 due diligence requirements 177 Guidelines for Multinational Enterprises 38, 67, 100, 120, 140 Guidelines Procedural Guidance 140 Human Rights Guidelines 103, 144 organised crime 96 Ottoman Empire 7 Paris Agreement 142 Pegasus 96

196 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

personal wealth maximisation 42 polycentric governance 61, 149–50 principled pragmatism 117 Principles of Corporate Governance 44 privacy, right to 96 private property, right to 7, 11 prioritisation of 12 protection of human rights and 12–14 Western legal systems for 12 property, right to 4 public accountability 63 public functions, privatisation of 19 public interest litigation 133 public law obligations 37 public-private partnerships 18 public sector organisations 49 public support/services, loss of 90 racial difference, theories of 6 Rana Plaza building collapse, in Bangladesh 173 Ratner, Stephen 36 Ready-Made Garment (RMG) 173 regulatory gap 40 remedy, for human rights violations 126 responsibility to respect, legal nature of 98–100 responsible business conduct 2, 47, 141 rights of man, notion of 4 Right to Adequate Food as a Human Right (1987) 72 Rihan v Ernst & Young Global Ltd & Others 137 Rio Declaration on Environment and Development (2012) 50 risk, identification of 101–2 RMG Sustainability Council (Bangladesh) 173 Roundtable on Sustainable Palm Oil (RSPO) 144–6 Royal Dutch Shell (RDS) 100 Ruggie, John 58, 60–61, 65, 76–7, 148–9, 158

evidence-based approach to the UNGPs framework 94 R v Panel on Take-overs and Mergers, ex parte Datafin plc 37 Saro-Wiwa, Ken 22 self-determination, right to 7 Sen, Amartya 65 sexual violence 89 ‘shareholder value’ of the corporation 32 Shell Petroleum Development Corporation (SPDC) 74 Sherpa 135 slave labour exploitation of 10 use of 8 slave owners 5 slavery, abolition of 2, 5 slave ships, seizure and confiscation of 6 slave trade 5 slave traders 5 small- and medium-sized enterprises (SMEs) 51 Smit, Lise 154 social auditing 116–17 social contract, between business and society 39 social impact assessment 74, 92 socialist economic policy 20 social justice 132 social licence to operate (SLO) 64 on corporate compliance with human rights 65 social contract between the corporation and community 64 socially responsible business policies. 36 socially sustainable globalization 48 social reporting 21, 82, 112 ‘soft law’ instrument 99–100 sovereign equality, principle of 165 Soviet Bolshevism, threat to 7 Special Representative of the Secretary-General (SRSG) 58, 63

INDEX 197

specific capital 41 sphere of influence 104 stakeholder consultation 59, 108 state-business nexus 75, 87–9 state-centred systems of governance 36 state duty to protect breach of the duty of care 85 against business abuses of human rights 1, 70, 74 conflict affected areas 89–90 international human rights obligations 71–5 obligation of 70 policy coherence and space for human rights 90–93 regulating business behaviour corporate and securities laws 82–4 mandatory human rights reporting laws 84–7 National Action Plans 79–82 in relation to economic, social and cultural rights 71 state-business nexus 87–9 territorial nature of 76–8 against transnational corporate human rights abuses 78 under the UNGPs 62, 75 state-owned enterprise (SOE) 87 human rights observance by 88 state-to-state dispute settlement procedure 166 strategic lawsuits against public participation (SLAPPs) 131, 133 Sullivan, Leon 21 Sullivan Principles (1977) 21 implementation of 21–2 supply chain liability 123, 137 Sustainable Development Goals (SDGs) 49, 51–2 territorial integrity of states, principle of 165 territorial jurisdiction 76, 124, 164 tort-based claims 155 tort liability, principle of 134

transnational corporations (TNCs) 47, 57 accountability for human rights violations by 159 human rights obligations of 16, 55 international obligations on 168 Open-Ended Inter-Governmental Working Group (OEIGWG) on 159–60 operations of 56 opposition to UN Norms 58 UN Draft Code of Conduct on 16, 47 transnational social norm 65 transnational supply chains 77, 86 UN Charter 9 UN General Assembly Resolution 3171 of 1973 on Permanent Sovereignty over Natural Resources 16 UN Global Compact Strategy 2021–2023 51 United Kingdom (UK) Act for the Abolition of the Slave Trade (1807) 5 Export Finance (UKEF) policy 90 Joint Parliamentary Committee on Human Rights 151 United Nations (UN) business and human rights treaty 159 Commission on Human Rights 60 Committee of the Rights of the Child 78 Committee on Economic Social and Cultural Rights 78 General Comment 24 of 99 Committee on the Convention on the Elimination of All Forms of Discrimination against Women 78 Convention against Corruption (2003) 50 Draft Code of Conduct on TNCs 16, 47, 49 Global Compact 35, 47–8

198 ADVANCED INTRODUCTION TO BUSINESS AND HUMAN RIGHTS

business and human rights model 48–53 corporate membership of 50 establishment of 60 Principle 1 of 64 Ten Principles covered by 50, 52 Guiding Principles Reporting Framework (GPRF) 111 Human Rights Council 60 International Bill of Human Rights 61 Interpretative Guide on the Responsibility to Respect 105, 107 legal instrument on business and human rights 158–71 Secretary-General 60 Sub-Commission on Human Rights 53 Sustainable Development Goals (SDGs) 49, 51–2 social development initiatives 64 Universal Declaration of Human Rights 29, 54, 162 Working Group on human rights and business 69 United Nations Guiding Principles on Business and Human Rights (UNGPs) 1, 59, 60–66, 79, 87, 98–9, 142, 148, 158–9 access to remedy 62 adoption of 67 ‘aggregate impact indicator’ of companies with public commitments to human rights 52 difference with UN Norms 62 ‘duty to protect’ against business violations of human rights 30 failure of 117 impact of 67–9 on legal duties for corporations under domestic law 63 as legally non-binding instrument 100

National Action Plans based on 67, 69 national approaches based on 168 Operational Principles 75 pillars of 69 first 62 second 62, 63, 94 third 57, 62–3 polycentric governance approach of 149 Principle 1 of 70, 75 Principle 2 of 76–7 Principle 3 of 79–87 Principle 4 of 87 Principle 5 of 88 Principle 6 of 88 Principle 7 of 89 Principle 13 of 103 Principle 17 of 102 Principle 18 of 106 Principle 19 of 109 Principle 20 of 110 Principle 25 of 120–23 Principle 26 of 129, 133 Principle 27 of 138 Principle 29 of 143 Principle 31 of 145 regulatory choices 149–50 socio-economic goals 48 state duty to protect under 62, 75 ‘universal’ human rights, development of 4 universality of humanity 6 universal male suffrage 6 UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights 29, 48, 53–60 adoption of 55 application to TNCs and other business enterprises 54 business obligations on human rights 61 on consumer protection standards 56 difference with UNGPs 62 non-adoption of 60

INDEX 199

paragraph 1 of 55 paragraph 18 of 57 testing of 57 UN Universal Declaration of Human Rights 1948 (UDHR) 9–10

Preamble to 9

UN Working Group on Business and Human Rights (UNWG) 79, 159 US Military Tribunal in Germany (USMT) 10 Uyghur Muslims, in China human rights violations against 86 treatment of 69 Vedanta Resources plc and another v Lungowe and others 134 Velásquez Rodríguez vs. Honduras 73–4

Versailles, Treaty of 7 vigilance plan (plan de vigilance) 85, 136 vulnerability, risk of 110 war crimes tribunals, institution of 10 Weissbrodt, David 53, 59 welfare of slaves, moral concerns about 6 Wet Zorgplicht Kinderarbeid see Dutch Child Labour Due Diligence Law (2019) ‘whistle-blower’ systems 144 Wilks, Stephen 18 women’s rights, marginalisation of 7 workplace conflicts, resolution of 144 World Bank 15 World Trade Organization (WTO) 14 establishment of 18 ‘zero hour’ contracts 97

Titles in the Elgar Advanced Introductions series include: International Political Economy Benjamin J. Cohen

International Human Rights Law Dinah L. Shelton

The Austrian School of Economics Randall G. Holcombe

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Cultural Economics Ruth Towse

International Tax Law Reuven S. Avi-Yonah

Law and Development Michael J. Trebilcock and Mariana Mota Prado

Public Policy B. Guy Peters

International Humanitarian Law Robert Kolb

The Law of International Organizations Jan Klabbers

International Trade Law Michael J. Trebilcock

International Environmental Law Ellen Hey

Post Keynesian Economics J.E. King

International Sales Law Clayton P. Gillette

International Intellectual Property Susy Frankel and Daniel J. Gervais

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Public Management and Administration Christopher Pollitt

Public Choice Randall G. Holcombe

Organised Crime Leslie Holmes Nationalism Liah Greenfeld Social Policy Daniel Béland and Rianne Mahon Globalisation Jonathan Michie Entrepreneurial Finance Hans Landström International Conflict and Security Law Nigel D. White Comparative Constitutional Law Mark Tushnet

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Ecological Economics Matthias Ruth Private International Law and Procedure Peter Hay Freedom of Expression Mark Tushnet Law and Globalisation Jaakko Husa Regional Innovation Systems Bjørn T. Asheim, Arne Isaksen and Michaela Trippl International Political Economy Second Edition Benjamin J. Cohen International Tax Law Second Edition Reuven S. Avi-Yonah Social Innovation Frank Moulaert and Diana MacCallum

Austrian School of Economics Second Edition Randall G. Holcombe U.S. Criminal Procedure Christopher Slobogin Platform Economics Robin Mansell and W. Edward Steinmueller Public Finance Vito Tanzi Feminist Economics Joyce P. Jacobsen Human Dignity and Law James R. May and Erin Daly Space Law Frans G. von der Dunk National Accounting John M. Hartwick Legal Research Methods Ernst Hirsch Ballin

The Creative City Charles Landry

Privacy Law Megan Richardson

International Trade Law Michael J. Trebilcock and Joel Trachtman

International Human Rights Law Second Edition Dinah L. Shelton

European Union Law Jacques Ziller

Law and Artificial Intelligence Woodrow Barfield and Ugo Pagello

Planning Theory Robert A. Beauregard Tourism Destination Management Chris Ryan International Investment Law August Reinisch Sustainable Tourism David Weaver

Politics of International Human Rights David P. Forsythe Community-based Conservation Fikret Berkes Global Production Networks Neil M. Coe Mental Health Law Michael L. Perlin

Law and Literature Peter Goodrich

Experience Economy Jon Sundbo

Creative Industries John Hartley

Marxism and Human Geography Kevin R. Cox

Global Administration Law Sabino Cassese

Maritime Law Paul Todd

Housing Studies William A.V. Clark

American Foreign Policy Loch K. Johnson

Global Sports Law Stephen F. Ross

Water Politics Ken Conca

Public Policy B. Guy Peters

Business Ethics John Hooker

Empirical Legal Research Herbert M. Kritzer

Employee Engagement Alan M. Saks and Jamie A. Gruman

Cities Peter J. Taylor Law and Entrepreneurship Shubha Ghosh Mobilities Mimi Sheller Technology Policy Albert N. Link and James A. Cunningham Urban Transport Planning Kevin J. Krizek and David A. King Legal Reasoning Larry Alexander and Emily Sherwin

Governance Jon Pierre and B. Guy Peters Demography Wolfgang Lutz Environmental Compliance and Enforcement LeRoy C. Paddock Migration Studies Ronald Skeldon Landmark Criminal Cases George P. Fletcher Comparative Legal Methods Pier Giuseppe Monateri

Sustainable Competitive Advantage in Sales Lawrence B. Chonko

U.S. Environmental Law E. Donald Elliott and Daniel C. Esty

Law and Development Second Edition Mariana Mota Prado and Michael J. Trebilcock

Gentrification Chris Hamnett

Law and Renewable Energy Joel B. Eisen

Family Policy Chiara Saraceno Law and Psychology Tom R. Tyler

Advertising Patrick De Pelsmacker

The Sociology of Work Amy S. Wharton

New Institutional Economics Claude Ménard and Mary M. Shirley

Marketing Strategies George S. Day

The Sociology of Sport Eric Anderson and Rory Magrath

Scenario Planning Paul Schoemaker

The Sociology of Peace Processes John D. Brewer

Financial Inclusion Robert Lensink, Calumn Hamilton and Charles Adjasi

Social Protection James Midgley

Children’s Rights Gamze Erdem Türkelli and Wouter Vandenhole

Corporate Finance James A. Brickley and Clifford W. Smith Jr U.S. Federal Securities Law Thomas Lee Hazen Cybersecurity Law David P. Fidler

Sustainable Careers Jeffrey H. Greenhaus and Gerard A. Callanan Business and Human Rights Peter T. Muchlinski

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