Beyond the Guiding Principles? Examining new calls for a legally binding instrument on business and

In the two years since the UN Human Rights Council unanimously adopted the UN Guiding Principles on Business and Human Rights (the UNGPs), which operationalized the 2008 “Protect, Respect and Remedy” Framework (the UN Framework), questions about the need for stronger international legal accountability for corporate involvement in rights violations continue to be heard. Corporations are creatures of national law – meaning that binding obligations for corporate actors arise at the level of national law.

The UNGPs do not rule out future binding international obligations on corporate actors, but the current situation falls short of this because of the absence of “legal personality” for corporations under international law.

Last month, before the UN Human Rights Council, Ecuador led a group of states in questioning whether the UN Framework and UN Working Group on Business and Human Rights can be truly effective unless an element of international legal obligation extends to corporations that fail to uphold human rights standards.

Supported by a significant number of NGOs from both the developed and developing world, the call is for greater accountability for human rights violations by transnational corporations (TNCs)¹:

“The undersigned social movements and civil society organisations welcome and support the initiative taken by a number of States in the Human Rights Council towards establishing an international legally binding instrument, concluded within the UN system, clarifying the human rights obligations of transnational corporations, in particular in relation to human rights violations, economic and ecological crimes, and abuses, and establishing an effective mechanism to provide remedies and access to justice for all affected people in cases where such remedies are de facto not provided in domestic jurisdictions”.

The initiative covers two sets of questions: clarifying the human rights obligations of TNCs and establishing a remedial mechanism. The latter is a more problematic idea and will be covered first. Regarding any remedial mechanism, it is not clear from the proposal whether this should be a full judicial tribunal or something more like the existing UN Human Rights Committee monitoring state implementation of civil and political rights. This Committee does not have the power to make legally binding decisions on individual cases. It can take a “view” on whether a breach of human rights has occurred in relation to an individual communication made to it, but it is less than a judicial decision.² More importantly, the Committee is empowered to review communications made against respondent States only. Thus an international tribunal that can make legally binding determinations concerning breaches of human rights by private non-state actors such as corporations is simply unprecedented. The call for the provision of remedies connotes a judicial procedure capable of establishing liability and awarding remedies. Further clarification of the precise scope of the proposal in this regard would be welcome.

That said, a case could be made for a new body.³ In particular, given the territorial limits of national law jurisdiction, which creates an obstacle to effective regulation and litigation, especially in relation to cases brought in the home country of the TNC parent for the overseas acts of its subsidiaries, an international body could exercise universal jurisdiction where alleged violations of fundamental human rights by TNC networks are involved. The extraterritorial application of national law in such cases is a major problem that John Ruggie, the UN Special Representative on Business and Human Rights (SRSG), recognized in his 2010 Report to the Human Rights Council,⁴ and which the UNGPs effectively left to States to resolve in their national laws.⁵ It has been given greater weight by significant restriction of the extraterritorial reach of the US Alien Tort Claims Act (ATCA) by the US Supreme Court in the Kiobel case.⁶

However, this argument assumes that jurisdictional barriers cannot be sidestepped under home State national law. Yet States can and do distinguish between a) cases in which a parent company of the TNC domiciled in the State’s jurisdiction is sufficiently involved in the human rights abuses of its overseas subsidiaries that the case is in effect a domestic case and b) cases where such a link is absent, which may be harder to justify as a legitimate exercise of the State’s legal jurisdiction. Indeed it is possible that cases of the first type could still be brought under ATCA and other US laws.⁷ Equally, under European law, EU based and non-EU claimants have the right to sue EU parent companies in their home jurisdiction. Indeed increasing numbers of cases are being brought on the grounds of the negligence of the parent in not supervising the activities of its overseas subsidiaries – an act that takes place in the domicile of the parent and so comes within the jurisdiction of its home courts.⁸ Furthermore, the UNGPs due diligence standard for businesses, if breached, could be the basis of a national law based claim for negligent disregard of human rights, allowing for the organic development of new liability rules.⁹

On the other hand, a future international tribunal could remedy procedural deficiencies in the legal systems of developing host countries which may currently inhibit the bringing of human rights based claims against TNCs in these host country jurisdictions. While this may seem an attractive argument at first, it fails to take into account that an international mechanism is unlikely in practice to offer easy access to claimants, or offer effective and swift procedures and remedies. Moreover, it could hinder the development of local litigation processes that may be more responsive and effective in dealing with the needs of local claimants and which could, over time, supersede home country litigation as the main remedy for such claimants.

Enhancing national legal remedies would appear to be the more useful avenue for now, given the virtual impossibility of the Ecuadorian proposal being successful in the absence of consensus with the main home countries of TNCs. Indeed, it is arguable that such an approach is “anachronistic” in that it tries to fit the TNC into a State-centric international law which would require a significant transfer of State powers in the regulation of transnational business to the international level, to which States are unlikely to consent.¹⁰

Regarding the second issue within the Ecuadorian-led calls for greater corporate accountability – around clarifying the nature and scope of human rights obligations for corporate actors – an international instrument that sets down corporate responsibilities and liabilities in a more authoritative manner would be a genuine advance. Indeed John Ruggie suggested the eventual adoption of such an instrument, modeled on the UN Convention Against Corruption, in one of his final acts as SRSG. In his words:

“Any such effort should help to clarify standards relating to appropriate investigation, punishment and redress where business enterprises cause or contribute to such abuses, as well as what constitutes effective, proportionate and dissuasive sanctions. It would also address when the extension of jurisdictions abroad may be appropriate, and the acceptable bases for the exercise of such jurisdiction.”¹¹

The emphasis remains on national law based remedies and rights of legal action that can respond effectively to the transnational practices of global businesses. As already noted, nothing rules out a future international tribunal or committee, should States agree. However, a more achievable immediate aim might be to start the process of deliberation towards an international consensus-based instrument on what States can do through existing laws and procedures to bring corporate actors to book for human rights abuses in line with the UNGPs.

Footnotes:

1 It should be noted that while the focus is on TNCs in this initiative, the UNGPs apply to all business enterprises.

1 See D.J.Harris Cases and Materials on International Law (London, Sweet & Maxwell, 7th ed, 2010) at 565.

3 See further Claes Cronstedt and David Ronnegard “International Tribunal on Business and Human Rights – Reshaping the Judiciary” (September 2013) available at http://www.l4bb.org/news/tribunal.pdf; Jan Eijsbouts “Corporate Responsibility, Beyond Voluntarism: Regulatory Options to Reinforce the Licence to Operate” Inaugural Lecture, Faculty of Law, University of Maastricht at 54-55 available at http://www.l4bb.org/articles/OBS_7885_-_Eijsbouts_digitale-1.pdf

4 See John Gerard Ruggie Just Business: Multinational Corporations and Human Rights (New York and London, W.W.Norton & Co, 2013) at 140-141.

5 See UNGPs, Principle 2.

6 See Cronstedt and Ronnegard above.

7 See further the articles available at http://www.business-humanrights.org/Documents/SupremeCourtATCAReview

8 See Peter Muchlinski and Virginie Rouas “Foreign Direct Liability Litigation: Towards the Transnationalisation of Corporate Legal Responsibility” in Lara Blecher, Nancy Kaymar Stafford and Gretchen Bellamy (eds) Corporate Accountability for Human Rights Impacts: New Expectations and Paradigms (American Bar Association, 2013, forthcoming)

9 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)

10 Muchlinski previous note at 155. See further Stephen J. Kobrin “Private Political Authority and Public Responsibility: Transnational Politics, Transnational Firms, and Human Rights,” 19(3) Business Ethics Quarterly 349 (2009).

11 Ruggie above at 200. See further Jennifer Zerk, Multinationals and Corporate Social Responsibility (Cambridge, Cambridge University Press, 2006) ch.6.