Publikation Staat / Demokratie - Wirtschafts- / Sozialpolitik - Freihandel Regulating Corporate Impunity

Professor David Bilchitz discusses the United Nations Binding Treaty on Business and Human Rights

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Oktober 2019

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Calls to regulate Transnational Corporations (TNCs) through an international Binding Treaty on Business and Human Rights date back to the early 1970s. In the face of mounting civil-society pressure against the Guiding Principles on Business and Human Rights (UNGPs)—based on their non-binding nature for human rights violations caused by transnational and business enterprises across the globe—Ecuador proposed that the United Nations Human Rights Council (UNHRC) establish an open-ended intergovernmental working group to negotiate such a Treaty in 2013. Together with South Africa, the 26/9 Resolution was then tabled.

The South African government has since become one of the leaders in negotiating the Treaty, and a Treaty Alliance consisting of around 1,000 NGOs subsequently formed to support the Treaty process. The Treaty Alliance includes organizations such as the Dismantling Corporate Power Campaign Southern Africa, ActionAid, the International Federation for Human Rights, Friends of the Earth International, FoodFirst Information and Action Network, Africa Centre for Corporate Accountability and the Transnational Institute. A Zero Draft of the Treaty was released in 2018, and a new Revised Draft was released in July 2019 by Ecuador.

The negotiations for a legally binding Treaty on business and human rights are set to occur at the United Nations in Geneva in the week of the 14–19 October 2019. In the run-up to the negotiations, Sikho Luthango, from the Rosa-Luxemburg-Stiftung’s Southern African Office interviewed David Bilchitz, a Professor of Fundamental Rights and Constitutional Law in the Faculty of Law at the University of Johannesburg and the Director of the South African Institute for Advanced Constitutional, Public, Human Rights and International Law (SAIFAC), to get a better grasp on the state of play and what can be expected from the process in the future.

David Bilchitz is a Professor of Fundamental Rights and Constitutional Law at the University of Johannesburg and Director of the South African Institute for Advanced Constitutional, Public, Human Rights and International Law. He is the author of several publications and co-editor of two books in the field of human rights and business: Human Rights Obligations for Business: Beyond the Corporate Responsibility to Respect?and Building a Business and Human Rights Treaty: Context and Contours. Prof. Bilchitz is also Secretary-General of the International Association of Constitutional Law (IACL). He has a BA (Hons) LLB cum laude from the University of the Witwatersrand and an MPhil and PhD from the University of Cambridge.

SL: How did your engagement with the Binding Treaty on Business and Human Rights get started?

DB: I began writing on business and human rights around 12 years ago. One of the themes of my writing was a recognition that existing frameworks both at the domestic and international level failed to accomplish three crucial tasks: namely, to outline and develop our understanding of what obligations business has in relation to human rights; to provide mechanisms to monitor and verify the accounts business provides of their impact upon human rights; and to ensure victims of any human rights violations are able to gain access to a remedy. I also co-edited “Human Rights Obligations for Business: Beyond the Corporate Responsibility to Respect?” one of the first books to engage critically with the Guiding Principles on Business and Human Rights which recognizes the benefits but also the serious limitations of this instrument. Furthermore, I have also attended three of the four meetings of the Inter-governmental Working Group on Business and Human Rights and twice I have been invited to provide expert verbal input.

How do you analyse the merits of the arguments for and against the UNGPs by both civil society organizations and business?

The critique levelled against UNGPs is that they have no binding status in international law or any law: they are a set of principles that were developed by John Ruggie, the Special Representative of the Secretary-General (SRSG) in terms of a UN mandate which was established by the United Nations Human Rights Commission (now the UN Human Rights Council). These principles themselves do not claim to alter the legal position in international law in any way, but represent an achievement in attaining a rare moment of consensus in a much divided world on the question of business and human rights. They have also helped to advance a discussion in this regard in a more consensual manner. Their major innovative contribution, in my view, was the notion that corporations must conduct a human rights due diligence process in determining their impact upon human rights through their own activities or those of their subsidiaries or sub-contractors. The critics of the UNGPs see the consensus that was achieved as having come at a significant cost: there was a rejection by the mandate that established them of the notion that corporations have legally binding obligations on the part of corporations. There was also a reduction of corporate responsibilities in relation to human rights to simply obligations to avoid harming rights rather than also recognising obligations actively to help promote and fulfil rights.

The UNGPs cannot themselves change international law, and so ultimately seek to provide a framework for thinking about the relationship between business and human rights that builds upon existing concepts and provides a common reference point for those concerned with these matters.

The Treaty initiative, on the other hand, arises precisely to address gaps in international law that allow for impunity of corporations in respect of human rights. The Treaty can also take some of the key features of the UNGPs—such as human rights responsibilities and render them binding on corporations. The Treaty thus can neatly build upon the work of the UNGPs and provide it with more teeth and is thus clearly complementary rather than undermining of them.

Sikho Luthango is a Programme Manager for Labour Relations and Economy at the Rosa-Luxemburg-Stiftung Southern African Office in Johannesburg. She holds a Masters of Philosophy in Public Policy and Administration from the University of Cape Town, South Africa. Her research interests include mineral resource and energy governance from an eco-feminist perspective.

One of the main arguments leveraged against the Binding Treaty on Business and Human Rights is that it seeks to replace the primary role of the state and national laws through the direct enforcement of human rights norms against corporations. This is understood by some scholars as a major departure from the traditional and theoretical role of the state. Do you see the Binding Treaty as seeking to replace the state in protecting the human rights of its citizens?

The starting point for such a Treaty is the notion that business can itself have significant effects on human rights, which need to be regulated. Many examples from around the world illustrate this point: the collapse of the Rana Plaza building in Bangladesh; the daily control that corporations have today over our data and telecommunications; the terrible environmental disaster caused by the Brumadinho Dam’s collapse in Brazil; the ability of corporations to advance or hinder our access to life-saving drugs, education, and much more. If we recognize that these impacts have serious effects on individual lives, then there is an important case for ensuring they are regulated.

The dominant model in international law is to place an obligation on the state to protect individuals from harms caused by corporations. The current Revised Draft of the Treaty on Business and Human Rights largely adopts this model and requires the state to pass measures to prevent violations of human rights by businesses and to enable access to remedies for victims of human rights violations. This approach does not replace the state in any way but seeks to ensure it gives effect to its duty to protect.

A more ambitious approach—which I am in favour of—would in fact recognize that corporations have direct obligations flowing from human rights at the international level. This would mean that there is no need for the state to impose those obligations; corporations in fact have those obligations as a matter of international law. Why is this important?

In the absence of any binding international human rights obligations and where a state fails to impose any human rights obligations upon a corporation within its jurisdiction, the corporation has done nothing wrong and cannot be sued; corporations can thus violate human rights in these circumstances without any consequences for them. However, if an international human right applies directly to a corporation, then it has violated that right no matter where it is and potentially (depending on the rules of jurisdiction) could be held to account in another jurisdiction for these harms. Recognising direct obligations upon corporations, of course, does not remove any obligations from the state.-

Ruggie argues that the current draft of the Treaty excludes national companies and mostly means that the new international legal framework will apply only to TNCs. The exclusion of national companies is seen as a possible governance gap, and opponents of the Binding Treaty argue that such a distinction should not matter if the objective is to prevent human rights violations. In your opinion, what type of companies should be included under the Binding Treaty and why?

Clearly, human rights advocates are not concerned about the technical designation of a company as ‘national’ or ‘multi-national’ but would want all companies to fulfil their obligations in relation to human rights. There are particular reasons, however, why it is justifiable for a Treaty to focus on multinational corporations. Corporations that exist only within one state are supposed to be regulated by that state—it is thus not entirely clear why there would be a need in international law to address such a situation other than to clarify that no entity may violate rights. Yet, corporations that cross boundaries often exploit their multi-national character to avoid liability for human rights violations.

First, it is important to recognize that a corporation in law is regarded as a separate legal person and that if a corporation in one country is a different person from a corporation in another country, it can claim that it does not bear any responsibility for the activities of its subsidiary (or sub-contractor) in a different country as it is a different person.

Secondly, there are a number of countries in which the legal system cannot be trusted or is inhospitable to claims by victims of human rights violations. If justice cannot be attained in the country where the violation took place (what is often referred to as the “host” state), can it be given effect to in the home state of the corporation where, for instance, it has its headquarters? Many states have legal doctrines (one of them is known as the forum non conveniens rule) which lead courts in these cases to deny that they have jurisdiction to hear cases concerning violations of human rights in other states. Moreover, when running a case in a different country from where the violation took place, there are significant difficulties that arise. These include how to conduct a decent investigation as well as difficulties of garnering evidence. There is also the problem of how to enforce any judgment that is obtained in a home state.

One of the chief purposes of a Treaty on Business and Human Rights is to solve some of these legal problems. It is to address the difficulties that arise in holding corporations to account as a result of the globalization of business. In these circumstances, it makes sense to focus on the source of the legal problems in international law which relate specifically to the businesses that cross borders—i.e. multi-nationals.

In my view, the best approach for the Treaty to adopt is what may be termed a hybrid approach (which has been developed by Prof Deva): this would involve, firstly, stating a general principle that all businesses or corporations, no matter their nature or form, have their own obligations to respect, protect and fulfil human rights. Having recognised this widespread human rights responsibility, many of the operational provisions of the Treaty can focus on multi-national corporations and solving the problems of international law that they throw up with respect to human rights.

The Revised Draft of the Treaty appears to have proposed a version of this hybrid approach as it states in article 3(1): “This (Legally Binding Instrument) shall apply, except as stated otherwise, to all business activities including particularly but not limited to those of a transnational character”. However, the provision is confusing given the definition of business activities as involving only transnational corporations and raises the question as to which parts of the Treaty apply to domestic companies and which to multinationals. This is a matter that will need clarification as the Treaty moves into a more final version.

Can you contrast and compare how “human rights violations” are defined by the UNGPs and the Binding Treaty and how this will impact the achievement of corporate accountability?

The UNGPs do not prescribe minimum guidelines as to what human rights violations by businesses entail. It adopts the view that business has a responsibility to respect human rights—or avoid harming those rights. Yet it fails to define what harm is: the GPs often refer to “impacts” businesses have on human rights. But not every negative impact translates into a violation: consider a simple example of employees being prohibited from expressing their personal opinions on the company’s Facebook page. That is an “impact” on an employee’s free speech but most people would regard it as a justifiable one. It is thus not possible to move simply from recognition of an “impact” to an “obligation”. The GPs, however, do not address this gap and prescribe no method of moving from an impact to an obligation.

The Revised Draft of the Treaty also does not aim to create a single interpretation of corporate obligations in relation to human rights. The task is too large and requires reference to a large range of factors. Human rights adjudication will always require some flexibility to adapt universal standards and principles to particular contexts and that is something that both courts and a UN committee could accomplish.

What it can do is set up a mechanism—such as a United Nations Committee—which will issue (relatively) authoritative guidance on the obligations of corporations in relation to specific rights. This is one of the major arguments for a Treaty—that it can create mechanisms which over time develop and build upon our understanding of corporate obligations and create more uniform standards. In the preamble, the Revised Draft does promisingly recognize a responsibility to respect all human rights which fall upon all corporations. Arguably, that provision should be moved to the main text of the Treaty and be extended to obligations to protect and fulfil, which fall upon a corporation insofar as they are fair and reasonable.

Opponents of the Binding Treaty argue that it will necessitate a homogenous hierarchical meta-system that could generate problems for institutional diversity and variation, potentially leading to conflicts of interest and questions of legitimacy across states. What are the necessary international and national institutional arrangements to enforce a Binding Treaty, and what potential problems of legitimacy can arise?

It is not clear what is strange or unusual about trying to solve global problems through a global approach. Some host states may object to cases being brought in a home state rather than in their jurisdiction—but that should be an incentive for states to ensure their legal systems have the confidence of individuals within that jurisdiction. The Revised Draft of the Treaty proposes a United Nations Committee which will consider country reports dealing with the legislative framework relating to business and human rights as well as complaints that have arisen within signatory states. As mentioned above, it will also have the ability to issue general comments, providing guidance on the interpretation of the Treaty in particular areas.

A Draft Optional Protocol was also released last year with the previous draft of the Treaty and provides the United Nations Committee with the ability to hear individual complaints. It also, interestingly, requires each state to develop a national implementation mechanism within that state to give effect to the Treaty. A revised Draft Optional Protocol has not been released as yet. The Revised Draft of the Treaty thus both sets up an international architecture but also requires states to develop the necessary institutional mechanisms to give effect to their obligations under the Treaty.

In 2013, the European Union and the United States voted against the resolution establishing a process for negotiating a Binding Treaty on Business and Human Rights while China, Russia, and India voted in favour of the resolution. What do you make of the current geo-political divide on the Treaty and, looking forward, what it is to be expected from the 2019 UN Open-Ended Intergovernmental Working Group in terms of these formations?

At present, it looks unlikely that the US will join the Treaty initiative and the EU—to its shame—has adopted a relatively hostile attitude towards the process. At the same time, major actors such as China and India in which a large number of corporations are based have been engaging with the process. Is a Treaty still useful in the face of this division? In my view, the answer is unequivocally “yes”.

First, the process of negotiating a Treaty has itself placed significant pressure on hostile countries to consider their laws relating to business and human rights. This pressure has, for instance, seen momentum develop around the passing of due diligence laws in Europe. Thus, the Treaty process has highlighted the need for addressing the legal problems it identifies as its raison d’être.

Secondly, it is possible that a Treaty will be negotiated and adopted mostly initially by developing countries. But we should not underestimate the possibilities of democratic politics eventually leading to the adoption of the Treaty even in the Global North countries currently opposing it. For instance, the current centre-right government in Germany has not supported the Treaty initiative but a centre-left government may.

Thirdly, we should not ignore the changes that are taking place in global power relations and the way in which BRICS countries (Brazil, Russia, India, China, and South Africa) have become much more powerful actors in the global community. If any of the large BRICS countries were to support such a Treaty, this would have a significant effect on global business. The reason why this is so lies in the fact that this Treaty would focus on holding multi-national corporations to account in the signatory countries for violations that take place elsewhere.

What kind of compromises can be made during the Binding Treaty negotiations to ensure that most stakeholders, businesses, and civil society buy into the process to ensure its successful implementation?

The negotiation of any text amongst distinct actors will involve compromises. At the same time, it is the wrong place to start by thinking about which compromises will be necessary. We first need to understand why a Treaty on Business and Human Rights is necessary. Academics such as myself have tried to articulate this need. Non-governmental organizations around the world have also highlighted the problem areas where business is often able to escape responsibility for its violation of human rights. States must take these matters seriously and these questions of principle need to inform the negotiations.

A large number of businesses oppose the international processes that could lead to a Treaty—they have an interest in avoiding any binding regulation of their conduct. Blanket objections of this kind should not be entertained. Since business is the target of such regulation, I also do not believe it should have a role in shaping the contents of the Treaty. It is like asking the coal industry to regulate carbon emissions, or the tobacco industry to regulate the sale of tobacco.

That said, I do think that consultation with business leaders is advisable to understand their fears as well as their possible insights into the nature of the interaction between business and human rights. Such consultations should take place on the assumption that business has obligations in relation to human rights and that their purpose is to understand relevant factors that may help better advance an understanding of business and human rights. The negotiating process will involve finding a way to balance the perspectives of a range of states—though it should never give up on the core principles that render such a Treaty necessary in the first place.

South African President Cyril Ramaphosa refers to that country’s mining industry as a “sunrise industry”. Furthermore, the mining sector is seen as a major driver of growth and development in South Africa. In this context, together with the change in the Department of International Relations and Cooperation’s Minister, how will this potentially affect South African engagement with the Binding Treaty on Business and Human Rights process?

South Africa has thus far been a steadfast supporter of the Treaty Process. It has listened to civil society organizations and adopted progressive positions on the content of the Treaty. It is a matter on which South Africans can be proud. Given South Africa’s history and the role played by business in the past in propping up the Apartheid government, it is to be hoped that South Africa will not easily be swayed from its support for strong accountability for corporations with respect to human rights.

Mining has been of importance to South Africa, but it is also important to remember how government policy was used to force black men to leave their rural homes to provide labour in the mines; how poorly treated miners have been in terms of their housing conditions, healthcare and pay; and how mines were the sites of vicious forms of entrenched racial discrimination and hierarchy. South Africa forgets this history at its peril. This does not mean that all mines must be closed down—what it means is that mining must take place within a framework that respects human rights.

It is critically important to recognize that the Treaty is not anti-business—it simply asserts that business must take place within parameters that respect, protect, and fulfil human rights. South Africa’s constitution and post-Apartheid legislation in many ways already recognize these points, and enshrining these obligations in a Treaty would consequently simply be supporting the development of international law in a manner consistent with domestic law. South Africa thus needs to communicate that its position is strongly pro-business, but that requires ensuring that business operates within the framework of meeting its human rights obligations.

A Revised Draft of the Treaty was released by Ecuador in July 2019. Did it meet your expectations?

The Revised Draft, in my view, appears designed to garner greater consensus around its provisions—this is of course a good thing and hopefully can bring more countries into the process. At the same time, to some extent this has come with a reduction in ambition and an increase of unclarity in certain respects, as well as a number of major concessions to those in the Global North.

Thus, the provision on scope (Article 3) which has been so controversial appears to accept a widening of the scope to include all companies—whether domestic or international. However, the definition of business activities refers to “any economic activity of transnational corporations and other business enterprises” which appears to limit the scope to transnational corporations. These formulations are extremely confusing and compromise has come through obfuscation. This provision has also sought to avoid a complex debate as to which human rights fall within the Treaty’s scope by saying that it “shall cover all human rights”—yet it does so at the cost of significant vagueness about which are “human rights” for purposes of the Treaty.

There has also been a worrying narrowing of some provisions to refer to only those companies with whom the corporation has a contractual relationship. The Revised Draft in many ways narrows the provisions of the Zero Draft by imposing liability only when there is a relationship of control or supervision or where the harm should have been foreseen. However, it limits the scope of companies to which this applies by only referring to those in contractual relationships with the parent company: what about subsidiaries of parent companies where the relationship is one of ownership? The Revised Draft confuses matters by using the terminology ‘contractual relationship’ instead of a wider notion such as ‘business relationship’.

The provisions on jurisdiction in the revised draft are also of great importance in that they will enable courts to hear claims of victims of fundamental human rights violations. While the provisions of the Zero draft were too wide, the provisions (Article 7) have now become narrower and rather unclear.

It is also unclear whether there are two or more jurisdictions where a corporation can be sued or whether only one jurisdiction would be recognized. If there are more than one, courts can avoid exercising jurisdiction by pointing to what they regard as a more appropriate jurisdiction (this is the forumnon conveniens rule which has not been expressly addressed). The point of widening jurisdiction is to allow victims to claim in jurisdictions that are welcoming to human rights claims—the narrowing of jurisdictional provisions in the way the Revised Draft has done is thus undesirable.

A further important technical matter concerns the law—civil, public or private—that will be applied in judging the claims of victims (known as applicable law). The Revised Draft has confused matters suggesting either that the domestic law will determine which law applies or that there are substantive laws from multiple jurisdictions that may be utilized. Instead of such a confusing provision, the principle should be articulated that a victim may choose the law of his/her state or that of where the multi-national corporation is domiciled.

One example of an improvement is in the Preamble, where there is the clear recognition of a responsibility to respect human rights falling on all companies as well as recognizing the positive potential of businesses to achieve sustainable development. Sadly, however, the Preamble reverts to notions such as that the “primary” obligations in relation to human rights fall on states—the language of “primacy” is retrogressive as the concern should be about the impact an agent can have on a right. It is also a missed opportunity that a clear recognition of the obligations of businesses is not included in the operational provisions of the Treaty. However, another important improvement is the clear obligation on State Parties to pass legislation to require all businesses to respect human rights and prevent human rights violations or abuses.

It is also now necessary to think carefully about how the process to ensure a better text is developed. It is a shame that the process of developing a new text has been shrouded in secrecy: it is to be hoped that Ecuador and South Africa draw in a range of legal expertise to ensure that the final draft put to a vote is the best legal text it can be and addresses the very raison d’être for a Treaty.