Observations on the Zero Draft - A Detailed Proposal for a System of Arbitration
Klentiana Mahmutaj, Barrister at Red Lion Chambers*
This blog is part of the Reflections on the Zero Draft blog series on the proposed binding treaty on business and human rights. We present this series as part of our work to highlight key developments and opportunities for change, with the aim of empowering advocates in civil society, governments and businesses with the evidence and guidance to help define their position and engagement in the treaty process. We believe this initiative is complementary to the implementation of the UN Guiding Principles, and that an inclusive and open debate is crucial to ensure these initiatives deliver for everyone, and that the business & human rights movement continues its 'unity in diversity'.
I propose that the “competent court” in Article 7 should include an international arbitral tribunal to increase the Convention’s efficacy and efficiency and to properly capture its transnational character. It is my proposal that this Convention should enjoy, for non-criminal matters, an ICSID (International Centre for Settlement of Investment Disputes)-like model of dispute settlement.
Some of the strengths of this Convention are also likely to be its weaknesses when it comes to its legal enforceability and continuity. Currently the draft Convention provides for the application of the human rights law of one country in the courts of another country (Article 7.2), the application of international human rights law (Article 3.2), extraterritorial State obligations (Preamble, para 4) and the desire to contribute to the development of international law and international human rights law in this field (Preamble, para 8). None of those measures is necessarily incompatible with a robust legal instrument. However, it provides that these provisions will be exclusively adjudicated upon and observed by the domestic courts of the State parties (Article 7.2.). In my view, this could affect the fairness and effectiveness of the proceedings, as follows:
(i) It is likely that the application of international human rights law will produce jurisprudence of varying standards and effect between different competent courts resulting in an inconsistent body of law.
(ii) Financially and politically powerful and unscrupulous defendants may exert undue influence over the domestic judiciary in countries where the justice system lacks sufficient independence and transparency. This would undermine the effectiveness of the draft Convention in seeking to achieve greater protection for victims. A similar issue of undue influence by a State arises when a defendant enterprise is owned by the State in which the competent court is situated.
(iii) Some States’ domestic courts may have a serious lack of resources or such a backlog of cases (or both) that the delays in bringing a claim to its final resolution may make the remedy for the claimant merely illusory.
Based on the model of the ICSID Convention, I propose a system of independent arbitration-based dispute settlement whose main elements would be:
- A victim and defendant would be entitled to consent to arbitrate their dispute.
- State courts would be entitled, at the request of the victim, to compel a defendant to arbitrate the dispute under Human Rights Dispute Settlements (HRDS).
- Each case would be heard by a panel of arbitrators selected by the parties subject to their independence and impartiality, with the possible addition of minimum requirements as to experience and expertise in human rights law or international law.
- The system would be administered by a new International Centre for the Settlement of Human Rights Disputes (“ICSHRD”) funded by the State Parties. ICSHRD would have an administrative council and secretariat.
- ICSHRD would maintain a panel of arbitrators nominated by the State Parties and from which the victims and defendants would be free, but not compelled, to choose.
- Arbitrations under HRDS would have no seat (i.e. no place of arbitration).
- Awards issued by tribunals appointed under HRDS would be enforceable under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the “New York Convention”).
- Arbitration would be an alternative to domestic litigation and so should bar later recourse to domestic courts.
- Awards would be scrutinised by a “court” of the ICSHRD, similar to how the Court of the International Chamber of Commerce (ICC) scrutinises ICC awards before they are dispatched to the parties.
- ICSHRD would publish its own Rules and guidance to ensure, the integrity and fairness of the arbitral proceedings.
- The default position would be that hearings in every arbitration under HRDS would be public, unless decided otherwise.
- All awards of the HRDS tribunals would be published (but redacted if necessary).
- The ICSHRD would be funded by the Contracting States whereas the costs of a particular arbitration would be borne by the defendant privately and by the claimant through the Victim’s Fund.
- If an award is made in favour of the defendant there would be no order for legal costs made against the claimant. If an award is made in favour of the claimant any order for legal costs against the defendant, should be payable to the Victim’s Fund. This does not affect the claimant’s right to compensation.
HRDS would co-exist alongside the recourse to domestic courts and supplant it at the option of the claimant.
The draft Protocol includes a proposal for the creation of the “National Implementation Mechanism”. If my proposal for HRDS is adopted, it would be more efficient for facilitating attempts at conciliation (currently envisaged under Article 6(4) of the draft Protocol) to give the ICSHRD responsibility for administering both arbitration and conciliation, by analogy to the ICSID Convention.
The proposed system would have many benefits, both legal and practical, some of which are listed below:
- The use of experts as arbitrators and the lack of a seat of arbitration of HRDS arbitrations would protect against a potentially corrupt judiciary.
- Tribunals may decide to hold hearings in geographically neutral locations, far removed from the zones of undue influence by powerful defendants.
- It would avoid lengthy delays and backlogs in overburdened domestic jurisdictions, thus providing an incentive for the use of arbitration.
- The independent expert members of the tribunal would be well-versed in dealing with the simultaneous application of laws from different countries as well as the application of international human rights law.
- Designating a single joint institution to deal with disputes, would make it easier for third parties or interested parties to make representations.
- An institutional tribunal would mean that representations from intervening parties would be more meaningful to the continuing development of the jurisprudence arising out of the draft Convention.
- Institutional arbitration is likely to generate consistent jurisprudence and standards that would clarify and develop principles enshrined in the draft Convention.
*This is an entirely personal proposal and does not represent the position of the Albanian Government, which I am currently advising in relation to this draft treaty.