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23 Jul 2015

Carlos Lopez, International Commission of Jurists

International talks on a treaty on business & human rights: A good start to a bumpy road

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This blog is part of the debate blog series on the proposed treaty and its complementarity with the UN Guiding Principles. We believe that an inclusive and open debate is crucial to make sure these initiatives deliver for everyone, and that the business & human rights movement continues its 'unity in diversity'.

Nearly two weeks after the first session of the intergovernmental working group (IGWG) on a legally binding instrument on transnational corporations and other business enterprises, States and other stakeholders are still scrambling to correct the details of the report adopted ad referenda. It is a good time to draw a first balance of the session and look at the prospects.

The first thing is that it was not the end of world as we know it or some other sort of catastrophic event as the detractors predicted it would be. Nor was it a messy and low quality discussion with a biased and disoriented chair and without participation by civil society. On the contrary, by all accounts, the discussion was intellectually exciting, participants (States, business and civil society groups alike) were engaging and generally well prepared and the session was ably chaired. If anything, this first session was a good start. It was not the best nor the worse, just a good start.

The high points were marked by the participation of numerous civil society organizations beyond the traditional universe of human rights NGOs based in Geneva. They were diverse and innovative, taking the debate and the whole issue beyond the United Nations diplomatic circles and premises, and showing strength in the square and the streets. The few States who actively participated (a bigger number was present but kept a low profile) had seemingly prepared their statements, although their points were mostly still general. The expert panellists had diverse and thoughtful insights, and some raised fundamental issues of a legal and political nature. The chair showed (unexpected?) diplomatic ability and tolerance. Expert panellists and others from the floor found the discussion informative and unique.

The low points were reached during the diplomatic stalemate created by the EU request to alter the programme of work so as to include a separate panel to discuss the implementation of the Guiding Principles and to include language to the effect that all business enterprises will be addressed in the discussions. The EU demands were partly addressed; while Ecuador itself was open to compromise, its group of supporting States were not ready to entertain what they wrongly saw as "a change in the resolution 26/9." Thus, the second EU proposal was not accepted. The EU delegation and other European States were absent for the remainder of the session, presumably as a result of this decision. Their stance was unnecessary and counterproductive because, in the end, the discussion in the various segments was open and at no time was there any attempt to limit it to only transnational corporations (TNCs), despite initial admonitions by India. The International Commission of Jurists had maintained in a paper released ahead of the meeting that the footnote to the preamble of resolution 26/9 could not possibly limit the scope of the discussions or the outcome of the negotiations. In any event, the discussions were not limited during the session and it remains to be seen whether the outcome of the whole process will be limited. Furthermore, the EU stance proved counterproductive as its absence deprived the debate from some key arguments in relation to the scope of the treaty.

Beyond the political and diplomatic anecdotal episodes that seasoned the session, it is important to look beyond the trees to the whole landscape. This landscape is now uncertain but full of potential. For the first time, and at last, we have on the table some of the basic options for a treaty and we know their proponents. In the months preceding the session, many people had asked about Ecuador's intentions and project. In the session, the delegate from Ecuador spoke: they believe that TNCs and other business enterprises should be the subject of direct human rights obligations under the treaty. How this will be done and in which respects remains unclear, and Ecuador and other States and NGOs who took the same line did not provide details. But addressing non-State actors in international treaties is not infrequent in international practice. Ecuador mentioned one such instance: the Convention on Civil Liability for Oil Pollution Damage of 1992.

In a field closer to the human rights domain, several conventions concluded within the International Labour Organisation directly address the "employer," outlining standards of behaviour and setting obligations in relation to adequate labour conditions. However, all ILO Conventions provide for specific obligations for States, and each Convention clearly states that it "shall be binding only on those Members of the ILO whose ratifications have been registered with the Director-General." The International Convention on Civil Aviation, in a field far detached from human rights, also sets out a series of standards of conduct for civil air carriers, but they are all embedded in obligations for States parties to apply them in respect to the carriers registered under their jurisdiction. These kind of international treaties generally focus on setting standards of behaviour for employers/companies. The 1992 Convention on civil liability for oil pollution damage is different in that it sets out grounds of civil liability for "ship owners" as defined in the Convention, but it then falls in line with other conventions when it comes to the concrete application of those standards and liabilities. Its Article IX provides for the obligation of each Contracting Party to "ensure that its Courts possess the necessary jurisdiction to entertain such actions for compensation."

During the first session of the IGWG, several speakers, in particular Chip Pitts, rightly emphasised that there is no conceptual or legal obstacle for an international treaty concluded by States to create obligations for business enterprises. Business corporations and investors have long enjoyed the benefits of rights and protections established in bilateral investment treaties and other similar treaties concluded by States. Even certain human rights have been interpreted to apply also to legal persons, including business corporations (see the holding by the European Court of Human Rights in Autronic AG v Switzerland, Series A 178 (1990), para. 47). It is thus perfectly possible that a treaty can also create obligations and liabilities for companies, which States will be in charge of applying or enforcing. In this regard, international law has not changed at all. As a 2002 influential study concluded: the international legal system is made by States but is no longer exclusively for States (ICHRP, Beyond Voluntarism: Human Rights and the developing international legal obligations of companies, p. 73). The IGWG will still have to arrive at the same conclusion.

The second issue that re-emerged during the discussions is about the scope: whether the treaty should focus only on TNCs or should also cover "other business enterprises" in the plain sense of the terms and not in the artificial and confusing sense that the footnote to the preamble of resolution 26/9 put it. On this issue, much has been said and written so far, and little can be added to the arguments made at the session and elsewhere (mostly by NGOs as the EU and other countries likely to raise the same points were absent or silent). It is worth noting that, apart from some inflexible positions, there is a growing mood for compromise. Some NGOs spoke of "a focus" on TNCs but without excluding other business enterprises, and States such as Mexico, Uruguay and Switzerland showed their openness to an intermediary option. It will probably be this numerous group of middle-ground states that will tilt the balance in the room in future sessions.

Transnational corporations' operations certainly pose distinct kinds of problems for international regulation and accountability. Their complex, innovative and many times obscure structures and methods allow them to avoid stringent regulations and liabilities. They often take advantage of regulatory differences across jurisdictions, many times playing some states against others. But TNCs are not entities that exist independently from their component parts, comprised of a series of nationally located incorporated or not businesses. To tackle TNCs, the international community must address the wrongful conduct of their components separately and as a whole. After all, it is this wrongful conduct (act or omission) that causes harm to human rights and creates the need for redress. As said often times, victims of abuses do not care much about whether the company that infringed their rights is national or transnational, what they claim and need is justice and redress.

To ensure accountability, existing treaties in the field of human rights and related fields address wrongful conduct, many times regardless of the character or nature of the perpetrator involved. If this future treaty on TNCs and other business enterprises is going to be a tool for increased accountability for TNCs and redress for victims, it should focus on the conduct that causes harm, define the conduct in a distinct and clear manner and attach legal liability to the perpetrators, whether they are small, big, incorporated or unincorporated businesses. Of course, if the business is unincorporated and does not have a separate existence under the law, any liability will fall on its members or managers. And in any case, legal responsibility of the corporate body as a legal entity does not necessarily exclude the individual responsibility of its members or managers.

The intermediate time between now and the commencement of the second session, in the year 2016, will be the time to advance in the collective understanding of the above issues and others that emerged during the first session of the IGWG. Everybody with some fair experience in international affairs knew that this process would be a long and bumpy one. The first session of the intergovernmental body was a good start, but the level of participation and debates needs to improve if it is going to reach the finishing line.


Carlos Lopez is Senior Legal Adviser at the International Commission of Jurists.