Can Foreign Investors Be Held Liable for Human Rights Violations? International Human Rights Law and Beyond

It is not unrealistic to consider that multinationals can violate human rights. In Ecuador, for example, Chevron’s oil extraction and mismanagement of toxic waste harmed the country’s natural environment and the health and integrity of Ecuadorian communities.

In reaction to the damage caused by multinationals, host states have had the challenge to protect their citizens and have developed legal instruments to establish the responsibility of foreign entities for human rights violations. Some states, like Ecuador, have legally established that any private entity, including foreign companies, can be held responsible for human rights violations under domestic law and in national courts.[1] More recently, states have been discussing a potential human rights instrument directly applicable to private entities.

This paper explains the bases of states’ obligations under international human rights law and how foreign investors—including multinationals and other private entities—may be held responsible for human rights violations.

1. What obligations do states have under international human rights treaties?

Constitutions grant rights that the state must enforce. Many of these rights result from the ratification of multilateral human rights treaties concluded under the auspices of the United Nations, such as the International Covenant on Civil and Political Rights (ICCPR), and other treaties concluded in regional frameworks, such as the African Charter of Human and People’s Rights (ACHPR), the American Convention for Human Rights (ACHR) and the European Convention of Human Rights (ECHR). Through these international instruments, states assume the obligations to respect and guarantee people’s human rights in its territories, as well as to adapt their legal systems and not to discriminate.

The obligation to respect human rights requires the state and its agents not to violate human rights,[2] “directly or indirectly, by any action or omission.”[3] On the other hand, the obligation to guarantee human rights “requires the State to take the necessary actions to ensure that all persons subject to the jurisdiction of the State are in a position to exercise and enjoy them.” [3] As explained by the judges of the Inter-American Court of Human Rights, this obligation implies states’ duty to organize the entire governmental apparatus and, in general, all the structures through which the exercise of public power is manifested, so that they are able to legally secure the free and full exercise of human rights.[4]

When international human rights instruments enter into force in a state’s territory, they become part of the state’s domestic law. Therefore, the state has to develop the content of each right in its domestic legislation, complying with its legal adaptation obligation. In doing so, states have a margin of discretion to choose the appropriate mechanisms for the guarantee of human rights.[5] Given that the international protection of human rights reflects “a conventional nature or a complementary protection to the one offered by the domestic law of States,”[6] the margin of appreciation also works as a connection system between domestic and international law, applied for the fulfillment of the obligations assumed under the treaty.

The non-discrimination obligation is linked to the respect and guarantee obligation: each state must respect and guarantee the rights of persons subject to its jurisdiction “without discrimination on the grounds of race, color, sex, language, religion, political or other opinion, national or social origin, birth or other status.”[7]

2. What happens when states fail to comply with their human rights obligations?

If a human rights violation occurs in a state that has committed to respect and guarantee human rights within one of the regional human rights regimes or the UN regime, the affected person could present her case before an international forum—such as the Human Rights Commission of the United Nations, the Inter-American Court of Human Rights, the African Court of Human and People’s Rights or the European Court of Human Rights—which could declare the international responsibility of the state for that violation. After the legal process is carried out, the competent international human rights authority would be able to sanction the state. Under the Inter-American regime, for example, the state could be sanctioned for not “preventing, investigating and punishing any violation of the rights recognized by the Convention.”[4]

As states are the ones that conclude international human rights instruments, they are the ones obligated to enforce these instruments, assuming the role of human rights guarantors, and are the ones responsible in case of human rights violations. This also explains why, among other considerations, one could conclude that private entities cannot be held responsible for human rights violations under existing international human rights law.

3. Under international human rights law, what happens if a private entity violates human rights?

States’ human rights obligations mentioned above are the bases on which states can be held responsible for acts committed by private entities. Under the obligation to guarantee human rights, states must prevent, investigate and sanction any human rights violation within their territories to avoid international responsibility. When national law establishes human rights obligations for private entities, any human rights violation by a private entity implies that if there’s an absence of sanction or reparation, the state is going to be responsible for the lack of protection of those human rights.[8] This also relates to states’ legal adaptation obligation.[9]

Therefore, in the presence of actions or omissions of private individuals, human rights violations “can also be considered as ‘acts of the State’ capable of generating international responsibility if they constitute a breach of an international obligation.”[10] Human rights treaties allow for certain decisions to be taken at a national level, one of which is the definition of the responsibility of individuals for violations of human rights.

4. How can states ensure that foreign investors are held liable for human rights violations?

To establish their business abroad, investors need to formalize their operation in the host country. They must comply with legal processes like the domiciliation or establishment of the company under host state laws. As a result, the company acquires rights and obligations under the domestic law of the host country, especially under the constitution of the state.

In order to comply with the obligation to respect and guarantee human rights, states have a margin of discretion that allows them to decide how they are going to guarantee them. Based on their obligations under human rights treaties, states can adopt legislation that ensures private entities, whether domestic or foreign, are held responsible for their human rights violations.

5. Are those measures enough?

Although ensuring that private entities can be held responsible for human rights violations under domestic law is a very important step taken by states, it is necessary to consider whether this measure is enough to stop foreign investors from violating human rights. Corrupt practices by economically powerful multinationals can undermine the legal systems in many countries. Multinationals can escape liability through their corporate structures and removal of assets from the country. There may also be risks resulting from the economic imbalance between multinationals and the victims, often poor individuals and communities. This is why other initiatives are now being considered in order to enforce human rights protection. In this sense, some countries from the Global South presented to the UN Human Rights Council an initiative to create a binding international instrument on human rights violations by multinationals, which is currently under negotiation.[11]

It is not yet clear what approach states will take in establishing the international responsibility of multinationals in this instrument. If successful, this instrument could advance international human rights protection and extend responsibility from states to private companies, and take the types of domestic initiatives adopted in Ecuador’s to an international scale. It could also establish a new relation between foreign direct investment and human rights protection, creating new standards and imperative rules of conduct for multinationals.

Author

Carlos Andrés Sevilla Albornoz is an Ecuadorian lawyer and legal adviser at the Normativity and International Disputes Settlement Division of the Foreign Trade Ministry of Ecuador. This article represents the author’s opinion only and does not represent the views of any government.

Notes

[1] Article 41 of Ecuador’s Organic Law on Jurisdictional Guarantees and Constitutional Control allows any person to initiate a constitutional action against a private entity under circumstances including the causation of a serious injury and a state of subordination or defenselessness of the affected person against an economic, social, cultural or religious or any other power. Retrieved from http://www.justicia.gob.EC/wp-content/uploads/2015/05/LEY-ORGANICA-DE-GARANTIAS-JURISDICCIONALES-Y-CONTROL-CONSTITUCIONAL.pdf.

[2] Gross, H. (1991). La Convención Americana y la Convención Europea de Derechos Humanos. Santiago: Editorial Jurídica de Chile, p. 16.

[3] Id., p. 65.

[4] Velásquez Rodríguez vs. Honduras Case, 1989 Inter-American Court of Human Rights (ser. C) No. 4 (July 29, 1988). Retrieved from http://www.corteidh.or.cr/docs/casos/articulos/seriec_04_ing.pdf.

[5] Contreras, P. (2014). Control de convencionalidad, deferencia internacional y discreción nacional en la jurisprudencia de la Corte Interamericana de Derechos Humanos. Ius et Praxis Año 20, No. 2. Retrieved from http://www.scielo.cl/pdf/iusetp/v20n2/art07.pdf.

[6] Universal Declaration of Human Rights, G.A. Res. 217A, U.N. GAOR, 3rd Sess., 1st plen. mtg., U.N. Doc. A/RES/47/135/Annex (Dec. 12, 1948). Retrieved from http://www.un.org/en/ga/search/view_doc.asp?symbol=A/RES/217(III).

[7] American Convention on Human Rights (Pact of San José, Costa Rica), November 22, 1969. Retrieved from https://www.oas.org/dil/treaties_B-32_American_Convention_on_Human_Rights.pdf.

[8] Courtis, C. (2005). La eficacia de los derechos humanos en las relaciones entre particulares. Baigún, D., & Argibay, C. (Coords.). Estudios sobre justicia penal. Buenos Aires: Editores del Puerto, p. 817.

[9] Medina, C. (2005). La Convención Americana: Vida, integridad personal, libertad personal, debido proceso y recurso judicial. Santiago: Centro de DDHH de la Facultad de Derecho de la Universidad de Chile. p. 18.

[10] United Nations International Law Commission. (1971). Third report on state responsibility, by Mr. Roberto Ago, special rapporteur: The internationally wrongful act of the state, source of international responsibility. U.N. Doc. A/CN.4/246 and Add.1-3, para. 186. Retrieved from http://legal.un.org/ilc/documentation/english/a_cn4_246.pdf.

[11] U.N. HRC Res. 26/9, Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights, U.N. Doc. A/HRC/RES/26/9 (July 14, 2014). Retrieved from http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/RES/26/9. See also: United Nations Human Rights Council. (2017). ​Open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights. Retrieved from http://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/Pages/IGWGOnTNC.aspx; Statement on behalf of a group of countries at the 24th session of the Human Rights Council regarding Transnational Corporations and Human Rights, Geneva, September 2013. Retrieved from: http://www.cancilleria.gob.ec/wp-content/uploads/2013/09/DECLARACION.pdf.