Business and Human Rights Legislation and the Enforcement Question
This blog was originally published here by Kingsley Napley on 29 January 2021.
Globally, a trend is taking shape towards legislation that asks more from businesses than the reporting obligations of the UK’s Modern Slavery Act, in the area of business and human rights. The EU is consulting currently around the contours of a proposed mandatory due diligence human rights law to be enacted this year. These proposals are similar to the kinds that were passed in France in 2017 and only very narrowly defeated in a 2020 Swiss referendum. Calls for the UK to follow suit are mounting, and will in due course be difficult to ignore, given the global direction of travel in business and human rights regulation.
How could a compulsory UK human rights due diligence law improve the enforcement and legal landscape for victims of cross-border human rights abuses? And what support and powers would a regulator need to be effective? These questions were asked by a group of inspirational UK civil society organisations – led by the Traidcraft Exchange – in 2020. They commissioned research on the topic, conducted during the summer 2020 by Dr Rachel Chambers, at the Human Rights Institute, University of Connecticut, and Katherine Tyler and Sophie Kemp, Partners at Kingsley Napley.
A proposed UK human rights due diligence law
The UK human rights due diligence law could impose the following duties on subjected organisations (broadly):
- To prevent adverse human rights and environmental impacts of their domestic and international operations, including in their supply and value chains.
- To develop and implement appropriate due diligence procedures to prevent such impacts.
- To publish a forward-looking plan on future procedures to be adopted, and an assessment of the effectiveness past procedures.
The report also proposes liability for organisations that fail to meet these duties to give the duties ‘teeth’ and a gamut of penalties. This would be a civil penalty if organisations fail to meet the due diligence duties. If organisations fail to prevent adverse human rights and environmental impacts from their operations, they would be liable for related harm and loss enforceable both through regulatory civil penalties and civil litigation. It would be a defence for organisations to prove that they acted with due care to prevent human rights and environmental impacts. Organisations and their senior managers would be criminally liable if they failed to prevent serious human rights or environmental impacts.
WHAT ARE THE ISSUES WITH CIVIL OR CRIMINAL LIABILITY IN CORPORATE ACCOUNTABILITY CASES CURRENTLY?
SHOULD WE STILL LOOK AT OPTIONS FOR CRIMINAL LIABILITY?
WHAT WOULD THE KEY FEATURES OF THE BUSINESS AND HUMAN RIGHTS REGULATOR LOOK LIKE?
The report explores the vital but under-researched question of enforcement of mandatory HRDD laws, focusing on the UK. It demonstrates that although UK companies are rarely held accountable for cross-border human rights abuses, the situation need not be this way. An ambitious and dedicated regulator with strong powers could add real value to the enforcement of the proposed human rights due diligence law. Borrowing from the competition law regime – by empowering the regulator with ‘market investigation’ powers which facilitate civil follow-on damages claims – could be a significant consideration. Through heightened awareness and campaigning from civil society, the public and responsible corporates, the system of corporate accountability for extraterritorial environmental and human rights harms could be much improved in due course.