The Revised Draft of a Treaty on Business and Human Rights: Ground-breaking improvements and brighter prospects

The revised draft of an international treaty on the issue of business and human rights[1] released on July 16, 2019 presents important changes and much-needed improvement in relation to the so-called zero draft published in 2018.[2] It is also a far more coherent, well-constructed and mature text than its predecessor. The revised version was prepared by the chairperson of the Open-ended Intergovernmental Working Group (OEIGWG) mandated by the United Nations (UN) Human Rights Council to elaborate such a treaty.[3] The text makes crucial choices aimed at resolving contentious questions that have bedevilled negotiations and hopefully will constitute a turning point in the process. The new draft will form the basis for negotiations at the textual level, beginning with the fifth session of the OEIGWG to be held October 14–18, 2019.

Among the most important changes is that the revised draft affirms that the scope of the proposed treaty encompasses all business enterprises, not just transnational companies, while still emphasizing businesses with transnational activities. In addition, it aligns the provisions on prevention and due diligence with the UN Guiding Principles on Business and Human Rights (UNGP)[4] and proposes a comprehensive article on legal liability of business enterprises that is more in line with prevailing international law and national practice than the respective provisions in the zero draft. The revised draft also brings some novelties such as new articles on implementation (Art. 15) and settlement of disputes (Art. 16), while providing more streamlined and complete language related to access to remedy, justice and reparations. It also presents articles that address the situation of human rights defenders, providing them with special protection in their work promoting business enterprises’ responsibilities for human rights.

Broad scope: An important clarification

The revised draft breaks with the zero draft’s presumption that the scope of the treaty was limited to regulating the transnational activities of business enterprises. Instead, it clarifies that the proposed treaty will cover all business enterprises and all their activities. Nonetheless, the revised draft emphasizes that it addresses particularly those businesses with transnational activities. Art. 3(1) reads:[5]

This (Legally binding instrument) shall apply, except as stated otherwise, to all business activities, including particularly but not limited to those of a transnational character.

In this way, the revised draft attempts to bring a balanced focus on the transnational (or cross-border) activities of business enterprises while also applying its substantive provisions to other businesses that do not have cross-border activities. Many state delegates along with NGO and business observers requested this balanced approach during the IGWG sessions,[6] and some states, including EU members, had even justified their absence from the debates on account of the limited scope proposed in the zero draft and predecessor documents. The revised draft takes away this objection—assuming it was sincere—paving the way for a negotiation focused on the substance of the treaty provisions, leaving behind issues and arguments that are mostly political in nature.

Legal liability

A major improvement can also be seen in the area of legal liability, where some of the zero draft provisions are preserved, but the bulk of the article (currently Art. 6) has been substantially redrafted and streamlined. Standing out, in particular, are certain provisions which aim at creating a comprehensive system of legal liability for human rights abuses committed by business enterprises or with their participation. For instance, Art. 6(1):[7]

States Parties shall ensure that their domestic law provides for a comprehensive and adequate system of legal liability for human rights violations or abuses in the context of business activities, including those of transnational character.

This provision potentially encompasses civil, criminal and administrative liability but also the various modalities and models of civil liability, including torts based on negligence, strict liability and other forms of civil liability. The implementation of this provision, and others, will necessitate adequate guidance that can be provided, among other sources, by the monitoring body to be created under the treaty.

There are several other provisions in Art. 6 that have enormous importance and deserve extensive commentary beyond the present article. For instance, Art. 6(6) posits a standard of legal responsibility of one company in relation to the harm caused by another company, no matter where the latter is located, when the former company controls or supervises the activities that caused the harm. However, the reach of this provision is obscured by the reference to “contractual relationship” between the two companies, which is an unnecessary limitation to the potentially vast ways in which companies relate to one other.

But out of all the provisions it is Art. 6(7) that stands out for its potential reach and impact in terms of legal responsibility and reparations for victims:[8]

Subject to their domestic law, State Parties shall ensure that their domestic legislation provides for criminal, civil or administrative liability of legal persons for the following offences.

These offences include: war crimes, crimes against humanity and genocide; torture; cruel, inhuman or degrading treatment; enforced disappearance; extrajudicial execution; forced labour; forced eviction; slavery; forced displacement of people; human trafficking, including sexual exploitation; and sexual and gender-based violence.

The draft treaty also requires that domestic law provide legal liability for “acts that constitute attempt, participation or complicity in a criminal offence in accordance with Article 6(7)” but controversially also keeps the reference to “criminal offences as defined by their domestic law,”[9] where there is no need to do so.

This article provides, for the first time, a list of well-defined offences that would normally trigger criminal sanctions in accordance with principles of international law. However, in the context of business enterprises that are legal persons, such liability could be civil, administrative or criminal, given the divergent practices and legal systems across jurisdictions. This article follows, in an imperfect way, the formula adopted in the first Optional Protocol to the Convention on the Rights of the Child, on the sale of children and child pornography, which contains a similar provision providing for legal liability of legal entities for their involvement in offences defined in the protocol. That optional protocol requires states to criminalize the commission of a series of offences by natural persons including child pornography and, in Art. 3(4), requires states to create legal liability for legal entities also for the same offences, using the following formula:[10]

Subject to the provisions of its national law, each State Party shall take measures, where appropriate, to establish the liability of legal persons for offences established in paragraph 1 of the present article. Subject to the legal principles of the State Party, such liability of legal persons may be criminal, civil or administrative.

A provision of this type is a welcome addition to the draft treaty because a series of offences catalogued as crimes under international law (or for which international law requires criminalization) had to be given separate treatment in the treaty, given their special gravity. But many states do not recognize in their legal systems the criminal responsibility of business corporations. Several states, including Argentina and Russia, made clear in past sessions of the OEIGWG their opposition to formulas that would require them to adopt legal criminal liability for business enterprises as legal entities. In this context, the revised draft treaty leaves states the choice of what type of liability (criminal, civil or administrative) they will set out in the law, and is probably the most realistic, while, at the same time, effective in achieving the objective of applying sanctions that are commensurate to the gravity of the offences committed. Although it would be better to have a straight requirement for criminal liability in this treaty, practice of states under other treaties with similar provisions shows that states tend to enact some form of criminal liability when serious or grave offences are at stake, or at least, to apply the most severe sanctions against the culprits, to reflect the serious nature of the offence committed.

Although Art. 6 will surely generate some controversy in relation to the list of included offences, their definitions, or even the convenience of having a separate provision for serious offences, its inclusion is a step forward that overcomes previous objections to the language used in the zero draft broadly referring to “crimes under international law,” in breach of the principle of legality, which demands clear definitions of offences for the sake of legal certainty. It is also a positive provision for those states that accept criminal liability of business legal entities, but have only a limited set of offences for which such liability applies. These states would have to expand the realm of offences that business may commit to those listed under the new treaty, as a minimum.

Consistency with international law: Other agreements, including on trade and investment

The revised draft also brings changes with regard to the relationship of the treaty to other international treaties, notably those related to international trade and investment. The zero draft had two provisions that explicitly targeted that relationship:[11]

6. States Parties agree that any future trade and investment agreements they negotiate, whether amongst themselves or with third parties, shall not contain any provisions that conflict with the implementation of this Convention and shall ensure upholding human rights in the context of business activities by parties benefiting from such agreements.
7. States Parties agree that all existing and future trade and investment agreements shall be interpreted in a way that is least restrictive on their ability to respect and ensure their obligations under this Convention, notwithstanding other conflicting rules of conflict resolution arising from customary international law or from existing trade and investment agreements.

Most states targeted these provisions with strong criticism during the 4th session of the OEIGWG in October 2018. Such criticism ranged from stern warnings of possible conflicts between treaty obligations to outright opposition to the presumed superiority of the present treaty obligations over obligations under trade and investment agreements. Only Namibia had a supportive opinion, while South Africa called for clearer language underlining the need to address constraining investment agreements.[12]

To address those concerns, the revised draft treaty replaces the contentious paragraphs for a single paragraph of more limited reach, but one that aims at ensuring compatible interpretation and application of trade and investment agreements with the present treaty on business and human rights:[13]

States Parties agree that any bilateral or multilateral agreements, including regional or sub-regional agreements, on issues relevant to this (Legally Binding Instrument) and its protocols, shall be compatible and shall be interpreted in accordance with their obligations under this (Legally Binding Instrument) and its protocols.

This approach, although arguably less ambitious than the zero draft, may in the end prove to be the most easily acceptable by states and effective given the realities of international law. However, future work may attempt to rescue some of the elements from the zero draft or add some new elements to the draft treaty. For instance, some consideration may be given to the idea that states should “ensure upholding human rights in the context of business activities by parties benefiting from such agreements,”[14] given that an increasing number of trade and investment agreements have provisions on the promotion of responsible business conduct. States may also assume the obligation to subject trade and investment agreements to specific vetting and approval procedures, among others.

Conclusion

The revised draft treaty is a welcome and crucial step forward in the process of establishing a legally binding instrument in the field of business and human rights, overcoming most of the most serious—and even the less serious—objections relating to the scope of the treaty and its complementary character in relation to other instruments. There are still many aspects of the treaty and its provisions that require refinement during the process of negotiation. Others, such as the provision relating to jurisdiction, require further development or completion. The revised draft treaty is sufficiently clear and comprehensive so as to be the subject of serious negotiations.

The changes, particularly those relating to the scope of the treaty and the incorporation of the UNGPs in the preamble and in Art. 5 on prevention, directly address the stated concerns of a substantial block of stakeholders that have so far been reluctant to participate meaningfully in the process, especially the EU and its member states. With these major obstacles removed, all eyes will be on these states to see the extent of movement on their parts. Serious engagement by the EU and similarly situated states would send a strong signal regarding their commitment to human rights in this field and brighten the prospects for an ultimately positive outcome from the negotiation process.

Author

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

Notes

[1] Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises With Respect to Human Rights (IGWG). (2019). Revised draft of a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises. Retrieved from https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/OEIGWG_RevisedDraft_LBI.pdf [“Revised draft”].

[2] IGWG. (2018, July 16). Zero draft of a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises. Retrieved from https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session3/DraftLBI.pdf [“Zero draft”]. See also Lopez, C. (2018). Toward an international convention on business and human rights. Investment Treaty News, 9(3). 13–16. Retrieved from https://stg.ITN.IISD.org/2018/10/17/toward-an-international-convention-on-business-and-human-rights-carlos-lopez

[3] Human Rights Council. (2014, July 14). Resolution 26/9 Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights (A/HRC/RES/26/9). Retrieved from http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/RES/26/9; see also Zhang, J., & Abebe, M. (2017, December). The journey of a binding treaty on human rights: Three years out and where is it heading? Investment Treaty News, 8(4), 3–4. Retrieved from https://stg.itn.IISD.org/2017/12/21/the-journey-of-a-binding-treaty-on-human-rights-three-years-outand-where-is-it-heading-joe-zhang-and-mintewab-abebe; Zhang, J. (2015, November). Negotiations kick off on a binding treaty on business and human rights, Investment Treaty News, 6(4), 10–11. Retrieved from https://stg.itn.IISD.org/2015/11/26/negotiations-kick-off-on-a-binding-treaty-on-business-and-human-rights/

[4] UN OHCHR. (2011). Guiding principles on business and human rights: Implementing the United Nations “Protect, Respect and Remedy” framework. Retrieved from https://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

[5] Revised draft, supra note 1, Art. 3(1).

[6] Human Rights Council. (2019, March 6). Addendum to the report on the fourth session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights, UN Doc A/HRC/40/48/Add.1, pp. 70-78. Retrieved from https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session4/A_HRC_40_48_Add.1.docx

[7] Revised draft, supra note 1, Art. 6(1).

[8] Revised draft, supra note 1, Art. 6(7).

[9] Revised draft, supra note 1, Art. 6(9).

[10] Optional Protocol to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography, New York, May 25, 2000. Retrieved from https://undocs.org/A/RES/54/263

[11] Zero draft, supra note 2, Art. 13(6)–(7).

[12] Human Rights Council, supra note 6, pp. 44–51.

[13] Revised draft, supra note 1, Art. 12(6).

[14] Zero draft, supra note 2, Art. 13(6).