An intergovernmental working group mandated to draft a new international legal instrument to regulate the activities of transnational corporations in relation to human rights is holding its third meeting in Geneva this week.
Negotiations for a business and human rights treaty have been ongoing since 2014 when the Human Rights Council established an open-ended mandate (discussed in further detail here). The issues that will be discussed in the latest round of negotiations are set out in a working paper published by the Chairperson-Rapporteur Maria Espinosa of Ecuador on 29 September.
The working paper suggests that the proposed treaty would only apply to violations of human rights “resulting from any business activity that has a transnational character“. This is likely to be a point of controversy in the discussions this week and it is doubtful that a consensus will be reached as to how “activity that has a transnational character” might be further defined for these purposes.
In terms of substance, the working paper proposes a number of possible elements for the treaty. These include:
- an obligation on States to introduce laws requiring businesses to respect human rights and to take measures to ban companies from bidding for public contracts if they fail to respect human rights;
- an obligation on States to introduce laws requiring businesses to conduct human rights due diligence to prevent human rights violations;
- an obligation on States to strengthen administrative and civil penalties for business-related human rights violations, including by providing for corporate criminal liability and prosecution of corporate officers; and
- the establishment of a specialist international court or other international tribunals to prosecute transnational corporations which, according to the working paper, are said to be able to exploit the limits of territorial jurisdiction in order escape prosecution.
With the exception of the final proposal, it is unclear why the proponents of the treaty believe a new legal instrument is required in order to impose the obligations described. Indeed recent developments suggest that the problem may be a lack of political will within certain States, rather than a lack of relevant international legislation.
In July this year, the UN Committee on Economic Social and Cultural Rights issued General Comment No. 24 on State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities and which states, among other things, that:
The obligation to protect [human rights] means that States Parties must effectively prevent the infringements of economic, social and cultural rights in the context of business activities. This requires that States Parties adopt legislative, administrative, educational, as well as other appropriate measures, to ensure effective protection against Covenant rights violations linked to business activities; and that they provide victims of such corporate abuses with access to effective remedies.
States Parties should consider imposing criminal or administrative sanctions and penalties as appropriate where business activities result in abuses of Covenant rights or where a failure to act with due diligence to mitigate risks allows such infringements to occur; enable civil suits and other effective means of claiming reparations by victims of rights violations against corporate perpetrators, in particular by lowering the costs to victims, and by allowing forms of collective redress; revoke business licences and subsidies, if and to the extent necessary, from offenders; and revise relevant tax codes, public procurement contracts, export credit and other forms of State support, privileges and advantages in case of human rights violations, thus aligning business incentives with human rights responsibilities. States Parties should regularly review the adequacy of laws and identify and address compliance and information gaps, as well as emerging problems.
Regular readers of our Business and Human Rights Hub will recognise that States are, increasingly, adopting new laws of the nature described here.
For example, in March this year, a new law entered into force in France requiring large companies to establish and implement a “vigilance plan” to identify and prevent the risk of adverse impacts on human rights.
More recently, the Australian Government has announced its intention to introduce a Modern Slavery Act (based on a 2015 UK statute of the same name) and which would require companies to take steps to assess and report on the risks of modern slavery in their operations and supply chains.
Even where States have been slow to act, many corporations have introduced or developed their own policies and processes to avoid adverse human rights impacts.
As far as these developments in domestic law and corporate practice are concerned, the direction of travel was firmly established in 2011 when the United Nations Guiding Principles on Business and Human Rights (UNGPs) were unanimously endorsed by the Human Rights Council. It is unclear if a similar consensus can be reached regarding the content of a new international legal instrument. In the meantime, efforts to implement the UNGPs (by both States and business enterprises) have considerable, and probably unstoppable, momentum.
For more information, please contact Antony Crockett, Senior Associate, Harry C. Edwards, Associate, or your usual Herbert Smith Freehills contact.