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22 Okt 2021

Maysa Zorob, Corporate Legal Accountability Programme Manager, Business & Human Rights Resource Centre

The road to corporate accountability: UN business and human rights treaty under scrutiny

Today marks the first day in the negotiations of the 3rd Revised Draft Treaty on Business & Human Rights at the UN Intergovernmental Working Group. The Draft, published earlier this year, is the fourth iteration of this legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and business enterprises. Business & Human Rights Resource Centre has closely followed and analysed this process since the UN Human Rights Council first voted to begin negotiations in 2014.

We have argued elsewhere that for any Treaty to be effective it must pass three key tests: it must (1) meet the needs of vulnerable groups; (2) ensure effective access to remedy and justice; and (3) reinforce mandatory transparency and due diligence. While the negotiations have advanced the debate on each of these key areas, further progress is needed for the Treaty to fulfil its potential to effectively protect individuals and groups from corporate human rights abuse and to provide remedy when things go wrong.

What's new?

The 2021 Draft Treaty does not introduce any significant changes compared with the previous Draft. There are however several amendments worth highlighting:

Vulnerable groups

The Draft Treaty expands the protection for individuals and groups at heightened risk of human rights violations and recognises in its preamble “the distinctive and disproportionate impact of business-related human rights abuses” and the need to account for the “structural obstacles for obtaining remedies for these persons”. Throughout the text, States are required to give “special attention to women, children, persons with disabilities, indigenous peoples, people of African descent, older persons, migrants, refugees, internally displaced persons and protected populations under occupation or conflict areas.”

Access to remedy and justice

Article 4.2. guarantees gender and age responsive reparations, further enhancing access to remedy and justice for those who have faced human rights harm. Furthermore, Article 7.1. compels States to “overcome the specific obstacles which women, vulnerable and marginalised people and groups face” in accessing courts, non-judicial mechanisms and remedies.

These positive developments notwithstanding, the Draft fails to clarify key provisions regarding the rights to collective redress as well as the reversal of the burden of proof. Typically, the responsibility of proving an allegation (burden of proof) lies with the party making that claim; e.g. those whose rights have been violated. Reversing the burden of proof means that instead companies would have to demonstrate they have not caused harm.

Individuals and communities who have suffered human rights harm often do not have the funds, access to information or social capital to obtain the kind of evidence required in legal proceedings. Reversing the burden of proof is a critical precondition to level the playing field and correct the power imbalance between affected communities and businesses, and to fulfilling victims’ access to justice and remedies. Provisions regulating the burden of proof must therefore be strong, clear and actionable. The vaguely-formulated Article 7.5. does not live up to these expectations and would benefit from the addition of rebuttable presumptions. FIDH has for example suggested introducing rebuttable presumption of effective control by the parent company when it has direct or indirect ownership or controlling interest over the entities part of a group.

Due diligence and liability

Importantly, due diligence requirements in Article 6.4 now cover not only human rights, but also labour rights, environmental and climate change impact assessments. At the same time, due diligence language remains too vague, and fails to clarify key questions, as noted by Prof. Doug Cassell in his recent commentary. For example, it remains unclear what degree of human rights due diligence companies must carry out, and/or in which cases due diligence can be used as legal defence that would absolve businesses from liability. In a recent Legal Opinion published by CIDSE, Prof. Markus Krajewski suggests amendments to address these shortcomings.

We have commented elsewhere on the importance of well-designed civil liability mechanisms. These must be complemented by administrative and potentially criminal liability, that incentivise genuine and effective human rights and environmental due diligence and create a true level playing field.

Scope, trade and investment

Importantly, the Draft Treaty widens the scope of “business activities” to include financial institutions and investment funds. This addition paves the way for legal accountability not just of irresponsible companies but also of those who invest in them. Moreover, the Draft introduces a new provision (Article 14.5.b.), which requires States to draft future trade and investment agreements in compliance with the Treaty. This is an important improvement compared with the 2020 Draft, which only required existing agreements to be interpreted in line with the Treaty. This positive development notwithstanding, the text continues to fall short of civil society demands that existing agreements which violate the Binding Treaty be revised to ensure compliance with State’s obligations under the Treaty.

What's next?

Hopes remain high that a Legally Binding Treaty will complement and cement in law the “protect, respect and remedy” framework established by the UN Guiding Principles a decade ago. This week’s negotiations at the Intergovernmental Working Group present a key opportunity to address remaining shortcomings in the Draft Treaty and to reinforce national movements towards mandatory human rights legislation around the globe.

For more information on the ongoing negotiations, as well as key insights in real time, please visit our dedicated portal on the 7th Session of the UN Intergovernmental Working Group.