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8 Nov 2019

Lavanga V. Wijekoon, Michael G. Congiu & Stefan J. Marculewicz, Littler

Revised draft of proposed binding treaty faces criticism for broad statements on contractual relationship & extraterritorial jurisdiction

"United Nations Takes Another Step in Developing a Treaty on Business and Human Rights" 5 Nov 2019

At first glance, compared to the first draft, the latest iteration of the Proposed Treaty appears to address some of the concerns the business community and others have articulated in previous sessions. However, closer inspection of the Revised Draft reveals that the scope of the duties and liability imposed upon businesses by the Proposed Treaty continues to be problematic and that many of the same issues and ambiguities remain...

On the whole, the Revised Draft requires ratifying States, through their domestic laws, to both require that “all [legal and natural] persons conducting business activities…undertake human rights due diligence” and to provide for “a comprehensive and adequate system of legal liability for human rights violations…in the context of business activities...

In previous iterations of the Proposed Treaty, it appeared that Multi-National Companies (“MNCs”) were the exclusive target, a focus that failed to acknowledge that domestic companies can and do engage in covered violations. At first glance, the Revised Draft appears to rectify this flaw by mentioning “other business enterprises” in certain provisions. The Revised Draft, however, also makes explicit that ratifying States may shield their domestic small and medium-sized businesses from the Proposed Treaty’s scope “to avoid causing undue additional burdens,” at least with regard to “respect[ing] human rights and prevent[ing] human rights violations or abuses.”