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31 Aug 2021

Antony Crockett & Alisha Matthew, Herbert Smith Freehills LLP

Commentary: UN sharpens draft treaty on business and human rights

The Intergovernmental Working Group on transnational corporations and other enterprises with respect to human rights (“Working Group”) has recently released the third draft of a proposed business and human rights treaty...

The stated purpose of the treaty is to, among other things, "clarify and facilitate effective implementation of the obligation of States to respect, protect, fulfil and promote human rights in the context of business activities, particularly those of transnational character" (art. 2.1).

The draft seeks to achieve this purpose by imposing obligations on State Parties to take certain steps to ensure that businesses respect existing human rights. It does this by foremost requiring State Parties to regulate the activities of businesses “within their territory, jurisdiction, or otherwise under their control, including transnational corporations and other business enterprises that undertake activities of a transnational character” (art. 6.1). This language marks a change from the previous iteration of the draft, which used the term “domiciled within…”...

The draft treaty also envisages an obligation on States to provide victims of business-related human rights abuse with access to remedies in the courts and via non-judicial mechanisms (art. 7.1).

States would be obliged to ensure that their domestic law provides for a comprehensive and adequate system of legal liability for human rights abuses arising out of the business activities or business relationships of legal and natural persons (art. 8.1).

For example, the draft treaty continues a provision which would require States to adopt laws that ensure liability for failing to protect another person with whom they have a business relationship from causing or contributing to human rights abuses, where the former controls, manages or supervises such person or the relevant activity, or should have foreseen risks of human rights abuses (art. 8.6)...

...[T]he latest draft reflects developments which are already seen at domestic level, in particular the introduction of mandatory human rights due diligence obligations for corporations.  Claims by victims of business-related human rights in national courts and via existing non-judicial grievance mechanisms are also increasingly commonplace and there is evidence that courts are more likely to agree to hear these claims than once was the case.