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20 Feb 2023

Tara Van Ho, co-director, Essex Business & Human Rights Project

Not all parties are equal: understanding the responsibility for reparations in conflict-affected areas

Unfortunately, numerous businesses remain in Russia without good cause. Some suggest the matter is a political choice. Others claim they meet an “essential goods exception” (a claim that rarely withstands real scrutiny), and others argue they need to do this to support local workers (without recognizing a responsible exit should address this concern). In this blog, I explain why businesses that stay are incurring a responsibility to provide reparations to Ukraine and Ukrainians.

Understanding “cause, contribute and directly linked to”

Under the UN Guiding Principles on Business and Human Rights (UNGPs), companies that “cause or contribute to” negative human rights impacts should cease damaging activities and provide remedies and reparation for those harmed. Where a business is only “directly linked to” the harm, the business is expected to use “leverage” to affect change in its “business relationships”. Businesses can also something less than a “direct link.”

The three levels of responsibility sit on a sliding scale, and a business can move between the levels as facts on the ground or the business’s own conduct change. Where a business is normally only “directly linked to” a harm, it can start “contributing to” the harm by failing to take adequate action or by maintaining relationships when its leverage is insufficient.

When determining a business’s responsibility, it’s necessary to think about:

  1. The business’s power to stop the harm.

Power can manifest in three different ways: power directly over the circumstances; power in a relationship with another actor; and power over the environmental or social conditions that lead to harm.

2. The business’s independence in starting or stopping the harm, including their ability to cease their own participation even if it does not directly end the harm.

Where a business has ultimate power and independence – i.e., where it is directly creating a harm or could stop the harm on its own– the business is “causing” the harm. Businesses like private military security companies which (through their employees) commit war crimes therefore cause the harm and owe reparations. Where a business has no power or independence, the business will (at most) be “directly linked to” the harm.

International and national tribunals have distinguished between local and trans- or multinational businesses. The former are dependent on operating within a state and may have no choice but to do what the government tells them. They have low power and independence. The latter generally can leave the state, even if doing so is financially uncomfortable. They enjoy power and independence over their own involvement in the abuses. As such, determining their level of responsibility will depend on a confluence of three additional factors:

3. The severity of the harm

The more severe a harm, the more urgently the business needs to act, and the quicker it needs to see results if it wishes to stay in the conflict-affected area. Severity can be measured either by the nature of the harm (international crimes are amongst the most severe) or by the number of people harmed.

4. The predictability of the harm

Sometimes, past practice indicates a business should be more vigilant with a particular relationship or situation. For example, responsibility cannot be ascribed to a business for selling supplies to a client it has no reason to believe would use those supplies to harm human rights. But, when selling to customers that have a history of problematic conduct, businesses should exercise greater scrutiny and faster action.

5. The business’s effort to mitigate harm through exercising its leverage

Mitigation efforts should be a natural part of all human rights due diligence plans, and legitimate steps might include training for staff on the ground and including contractual provisions that address the business’s limits in an armed conflict.

Responsibility for staying

Russia’s mobilisation order requires businesses to contribute to its war efforts. Businesses which stay in Russia are therefore at risk of contributing to the conflict, and applying the five factors suggest they are doing that and will owe reparations.

Most transnational businesses will have the power and independence to decide whether they stay in Russia. They may suffer financial losses, but they are not typically hostages of the Russia government.

Russia’s war efforts have included widespread and systematic war crimes, including the targeting of civilians. As such, Russia’s human rights violations are amongst the most severe, both in terms of the nature of the harm and the number of people harmed.

The current harms were also predictable. Russia’s history of unlawful invasions and occupation, and its (relatively) recent history of widespread and systematic violations of the laws of armed conflict should have prompted businesses to structure their operations with mitigations plans to address the need to responsibly exit Russia. This is a crucial difference with Ukraine, which has no international responsibility for the war, and which seems to have carried out military operations largely in line with international law.

The only unknown variable is whether a specific business has taken adequate mitigation measures.

Businesses which choose to stay should know they are incurring a responsibility to provide remedies for their contributions to war crimes – a responsibility Ukraine is likely to hold them to. During its reconstruction process, Ukraine can draw on a number of previous examples of states using process like truth commissions and reparations programmes to hold businesses’ accountable for their past abuses.

By Tara Van Ho, co-director, Essex Business & Human Rights Project

Rights under fire: A business & human rights lens one year after Russia’s military aggressions in Ukraine

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