Discussing obligations of States and businesses

A meeting of a UN Human Rights Council working group recently discussed a treaty on the human rights effects of transnational corporations (TNCs) and other business enterprises. Below is the third part of the report on the meeting, focusing on discussions concerning the obligations of States with respect to operations of TNCs and other business enterprises, including extraterritorial obligations, and the obligations of businesses.

By Kinda Mohamadieh and Daniel Uribe

Resolution A/HRC/RES/26/9 adopted by the United Nations Human Rights Council (HRC) on 25 June 2014 established an open-ended intergovernmental working group to “elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises” (Operative paragraph 1, Resolution A/HRC/RES/26/9).

It also recommended that “the first meeting of the open-ended intergovernmental working group serve to collect inputs, including written inputs, from States and relevant stakeholders on possible principles, scope and elements of such an international legally binding instrument” (Operative paragraph 5, Resolution A/HRC/RES/26/9).

On the content of a prospective Instrument, the first meeting of the open-ended intergovernmental working group (OEIWG) included a session entitled “Obligations of States to guarantee the respect of human rights by TNCs and other business enterprises, including extraterritorial obligations” and another entitled “Enhancing the responsibility of TNCs and other business enterprises to respect human rights, including prevention, mitigation and remediation”.

Discussion on the obligations of States

CONTRIBUTIONS FROM PANELLISTS

Professor Hatem Kotrane, Member of the UN Committee on the Rights of the Child, noted that States have obligations to respect, protect and fulfil human rights. The obligation to respect requires States not to hinder the enjoyment of human rights, therefore not to facilitate or otherwise foster abuses of human rights, either directly or indirectly. Professor Kotrane added that States are obliged to ensure that all actors, including corporations, respect human rights.

Speaking from his experience with the UN Committee on the Rights of the Child, Professor Kotrane added that States carry the obligations to “ensure that all political, legislative and administrative decision-making related to transnational corporations and other business enterprises are taken in a public and transparent way, making full and systematic account of the effect that these entities may have on the rights of the child”. In cases where States are commercially involved with private entities, and in cases of public tenders, Professor Kotrane noted that States should allocate these contracts to those companies that respect the rights of the child. Likewise, “State agencies, particularly state law-enforcement agencies, should not be involved in violations of the rights of the child or enable such acts to be committed by third parties”.

In regard to the obligation to fulfil human rights, Professor Kotrane spoke of the importance of awareness measures and dissemination of human rights standards among corporations. He also stressed the importance of a stable and predictable legal and regulatory framework that enables States to protect human rights, inter alia, through well-defined and properly implemented laws on labour, employment, health, occupational safety, the environment, corruption, etc.

Professor Kotrane underlined that “children could be more vulnerable than adults when faced with violations of their rights” since the consequences of this harm could be irreversible and the impact could persist during their entire lives.

On extraterritorial obligations of States, Professor Kotrane made reference to the United Nations Guiding Principles (UNGPs) and recalled that States have the obligation to protect against abuses committed by their enterprises in their territories and in the territory of a third party. He explained that such obligation entails taking appropriate measures to prevent, punish and adjudicate violations through effective policy making, laws, and adjudication mechanisms, including complaint procedures.

Taking an example from the work of the UN Committee on the Rights of the Child, Professor Kotrane emphasised that States should account for violations committed against children by their transnational corporations when operating outside their territory, by way of ensuring that such violations are addressed by the laws of the country in which the corporations are based as well as in the territory in which they function. He gave the example of the application of extraterritoriality in the case of the ‘Optional Protocol to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography’. In this case, “the competence of the courts is broadened to take account of violations when the perpetrator is living in the territory of the relevant state or it is living outside the state but it has the nationality of that State”. When applied to transnational corporations, Professor Kotrane suggested, “States should be competent to exercise extraterritorial jurisdiction when TNCs have their base or their headquarters in a particular country”.

Professor Krotane added that extraterritorial obligations involve both the States of origin and host States in which business enterprises operate, including “where they have branches and also where they develop their economic activities via outsourcing and partner companies”. In order to operationalise this obligation, Professor Kotrane explained that States have an obligation, pursuant to the Convention on the Rights of the Child and its Optional Protocols, to uphold the rights of children in the context of extraterritorial activities of TNCs when there is a ‘reasonable’ link between the state and the activity in question. The term ‘reasonable’ applies when certain circumstances are fulfilled in regard to the location of the enterprise and the location of its activities, Professor Kotrane added.

Kinda Mohamadieh, Associate Researcher at the South Centre, noted that the duty of the States to protect human rights from violations by private entities is well established under international human rights law. She added that a prospective instrument could focus on clarifying the means and measures by which states should fulfil these existing obligations, thus build on the large body of opinion and jurisprudence emerging from universal and regional systems of human rights.

Ms. Mohamadieh indicated that “the identification and clarification of these obligations […] is expected to support States in encountering the current challenges facing the protection of human rights with respect to corporate human rights abuses, particularly when facing an enterprise of transnational character”. These cases cannot be addressed “through the frameworks and mechanisms available to the State on its own, but necessitate international cooperation”, she added.

Ms. Mohamadieh referred to opinions and general comments adopted by the UN Human Rights Treaty Bodies, which recognised that States have obligations vis-à-vis acts committed by private persons or entities that could impair the enjoyment of human rights, and that States also have positive obligations to exercise due diligence to prevent, punish, investigate or redress the harm caused by private entities. She underlined that “in order to meet this duty, States should regulate certain activities of private individuals and bodies by adopting effective measures to prevent future injury and respond to past injury”.

In addition, Ms. Mohamadieh highlighted that “under general international law and specific human rights covenants, States may also be responsible for private acts if they fail to act with due diligence to prevent violations of rights or to investigate and punish such acts”. In this sense, the States’ obligations “vis-à-vis third parties is an obligation of conduct, which entails the duty of the state to comply with the expected conduct as established in its international commitments”. Ms. Mohamadieh explained that “the actions by non-state actors do not have to be attributed to the state; rather the state’s obligation would be part of its due diligence in relation to activities of corporations within their jurisdiction”. This obligation of due diligence by the state “would fall within the three-fold responsibility of States to respect, protect and fulfil human rights”.

She cited examples of opinions by the European Court of Human Rights and the Inter-American Court of Human rights indicating that “states are not directly responsible for human rights abuses committed by third parties, but that they can be responsible for failing to take measures to prevent and punish the occurrence of such violations”. Moreover, Ms. Mohamadieh pointed out that the “UN Guiding Principles on Business and Human Rights could assist in this area, as they provide a basis that recalled the obligations of states in regards to human rights due diligence”.

On international cooperation and extraterritorial obligations, Ms. Mohamadieh affirmed that “extraterritorial jurisdiction under a prospective instrument is a core enabler of a binding treaty to be effective and to fill gaps in the current international legal order, which often hinders victims in terms of accessing effective remedies”. She mentioned different UN Human Rights Treaty Bodies’ comments and observations. In General Comment 14 on the right to health, the Committee on Economic, Social and Cultural rights considered that “To comply with international obligations …. States have to … prevent third parties from violating the rights in other countries, if they are able to influence these third parties by way of legal or political means…”. Specifically in regard to corporations, the Committee on Economic, Social, and Cultural Rights provided that States should take steps to “prevent human rights contraventions abroad by corporations which have their main seat in their jurisdiction, without infringing the sovereignty or diminishing the obligations of host states under the Covenant.” Ms. Mohamadieh also pointed to General Comment 16 (para. 43) by the Committee on the Rights of the Child. Ms. Mohamadieh also recalled that “the Guiding principles have pointed that States should set out clearly the expectation that all business enterprises domiciled in their territory and/or jurisdiction respect human rights throughout their operations”. Overall, there are no controversial perspectives or doubts on the States’ extraterritorial jurisdiction over their own corporations, Ms. Mohamadieh noted.

The application of these extraterritorial obligations could be addressed by imposing on parent corporations an obligation to comply with certain norms wherever they operate and allowing jurisdiction of courts in the home state of transnational corporations over cases brought by victims of human rights abuse done in the host state of the transnational corporation, Ms. Mohamadieh proposed. She pointed that “some States reviewing their approach to investment treaties have also been addressing extra-territoriality under the new models they are adopting”, which in turn will “allow the home state to exercise extraterritorial jurisdiction where this appears necessary in order to avoid impunity and where victims would have no effective remedy before the national court of the host state”, Ms. Mohamadieh concluded.

Dr. Marcos Orellana, Senior Attorney and Director of the Human Rights and Environment Program at the Centre for International Environmental Law, noted that the duty to protect is now firmly established in international law. In the ambit of environmental rights, for example, jurisprudence from the various regional human rights systems of protection clearly articulates positive human rights obligations to address environmental risks posed by third parties, he added.

However, Dr. Orellana noted, some countries share the “idea that their human rights responsibilities end at their territorial borders”. A gap “arises when a home state enables the creation of a corporation under its national legislation, but fails to control it when that corporation engages in transnational activity”, he added. Dr. Orellana stressed that current economic globalization requires “for international cooperation, including the effective articulation and application of extraterritorial obligations”. For these reasons “a global partnership based on extraterritorial obligations is a key building block of the binding instrument”.

Dr. Orellana referred to the UN Guiding Principles, which state that “states are not generally required and not generally prohibited under international human rights law to regulate the extraterritorial activities of businesses domiciled in their territory and, or jurisdiction”. Nevertheless, Dr. Orellana noted that “this conclusion has been heavily criticized for failing to account for the newest jurisdictional frames in key instruments [basic human rights treaties]”, and to adequately reflect the body of work of treaty bodies.

Dr. Marcos Orellana recalled that several treaty bodies have explicitly recognised extraterritorial obligations, but that there are differences with regard to the relevant tests triggering these obligations. While the Human Rights Committee and the Committee against Torture have made use of the test of ‘effective control’ over the actor, the Committee on Economic, Social and Cultural Rights has adopted the ‘influence standard’, he explained. Dr. Orellana added that “the General Comments on the right to food, water and sanitation, health and social security refer to extraterritorial obligations, and while the language used is one of “should” that denotes a non-binding voluntary frame, the statements are however made in the elaboration of the content of obligations of States Parties under the Covenant”. Likewise, “a specific General Comment on business and the right of the child elaborates on extraterritorial obligations on the basis of a ‘reasonable link’ between the corporation and the State”, Dr. Orellana added.

Dr. Orellana argued that while tests for triggering the extraterritorial obligations (ETOs) of States may vary, “the recognition of ETOs is widely affirmed”. He also examined the ‘reasonable linkage’ test, as further articulated and clarified in the Maastricht Principles on Extraterritorial Obligations in the area of Economic, Social and Cultural Rights. The Maastricht Principles “are a restatement of jurisprudence, of the work of the treaty bodies and of the work of the special procedures”, he explained.

Dr. Orellana added that the Maastricht Principles “highlight all throughout that extraterritorial obligations should be discharged in full respect for principles of territorial integrity and non-interference under the UN Charter”. Extraterritorial obligations can be triggered in three specific situations, he added: when there is effective control; when the conduct brings foreseeable effects; and when the state has a position to exercise decisive influence.

Dr. Orellana continued by explaining that “a reasonable connection exists, for example, where the harm originates in a State’s territory, or is in violation of a peremptory norm, or is a crime under international law, or the corporation or its parent or controlling company has its centre of activity, is registered or domiciled or has its main place of business or substantial business activity in the state concerned”. The basis for this approach is reflected in jurisprudence built over “decades of international legal practice. Accordingly all states must take necessary measures to ensure that non-state actors, which they are in a position to regulate, do not nullify or impair the enjoyment of human rights”, Dr. Orellana added.

Dr. Marcos Orellana pointed out that there are various possibilities for operationalising states’ extraterritorial obligations. For example, he mentioned due diligence requirements for prevention purposes, disclosure requirements, and reporting requirements. In the ambit of redress for violation, he mentioned the possibilities for removing obstacles to the exercise of jurisdiction, broad rules of standing, removing the ‘forum non convenience’ doctrine, and mechanisms of assistance to victims to facilitate access to justice. In addition to removing obstacles to the exercise of jurisdiction, there may be cross-border cooperation in the investigation and mutual recognition of national decisions.

Dr. Orellana also addressed the issue of the scope of application of a prospective binding instrument. He noted that when dealing with operationalizing extraterritorial obligations, the concern of scope does not arise because, by necessary implication of the subject matter of extraterritorial obligations, the binding agreement would focus on the transboundary activities of corporations without the need to define what a transnational corporation is.

In conclusion, Dr. Orellana noted that extraterritorial obligations of States are a “necessary step forward in securing a global partnership against corporate impunity”. He observed that “ETOs provide the structure and systemic tool that can help the binding instrument address the imbalances and close the gaps in the current international legal order, and the Maastricht Principles provide legal guidance on how to operationalise these ETOs in the binding agreement”.

Mr. Richard Meeran, partner in Leigh Day, spoke based on his experience with various cases brought on behalf of victims of corporate human rights abuse. At the outset, Mr. Meeran noted the case of Thor chemicals, a UK multinational operating in South Africa. In the 1990s, three workers died and many others were poisoned at its factory. Thor was fined 5,000 USD, but was later sued for substantial damages in UK civil proceedings, he noted. Shell avoided liability for environmental pollution in Nigeria, but recently settled a UK action for 60 million pounds. Mr. Meeran also mentioned the case of British Petroleum, which accepted to pay 18.7 billion USD in settlement made for the US victims of the Gulf of Mexico oil spill.

Mr. Meeran noted the importance of action in host states, including as a deterrent against future violations. But in general, for various reasons, criminal sanctions are inadequately enforced by host states against multinational companies, he noted, and adequate legal representation of victims is rarely available in host states. While significant progress has been achieved in different home states in holding parent companies liable, progress can be replicated and improved upon through a treaty, Mr. Meeran added. At the same time, he spoke of the significant deficiencies in access to remedies, even in home states, including various procedural and practical obstacles. These could also be rectified in a treaty, Mr. Meeran suggested.

There are a number of limitations and challenges that could be addressed in a prospective treaty, according to Mr. Meeran.

The exercise of extraterritorial jurisdiction by home states of transnational corporations raises issues of infringement of sovereignty of host states, Mr. Meeran noted. For example, South Africa initially objected to the apartheid reparation actions in the US. However, he added, this should be weighed against the realization that in cases of violations by multinational companies, the alternative to a case in the home state is in effect a denial of justice to victims. In circumstances where a multinational parent company controls activities from its headquarters, the multinational’s home state has an interest in regulating the conduct of the parent company, Mr. Meeran added.

Mr. Meeran gave an example of European law (The Brussels I regulation), under which suing a defendant in its domicile is mandatory. Thus, irrespective of any sovereignty issue, EU courts must accept jurisdiction in a claim brought against an EU domiciled corporation.

Mr. Meeran addressed the issue of ‘forum non convenience’, a doctrine exercised by the courts of the US, Canada, Australia and the UK, whereby courts that have jurisdiction in certain cases decline to exercise it on the grounds that there is a more appropriate forum in the multinational’s home state. The dramatic effects of this doctrine were seen in the Bhopal case and the Asbestos Miners case where many of the claimants died during the period when jurisdiction was being addressed. Following a 2005 ruling by the European Court of Justice, ‘forum non convenience’ is no longer available in cases involving European Union defendants, including in the UK, Mr. Meeran explained. As a result, since 2005, multinational cases have moved faster in the UK courts. ‘Forum non convenience’ is however alive and kicking in the courts of the US, Canada, and Australia, Mr. Meeran cautioned.

According to Mr. Meeran, proving liability is simpler where the parent company is responsible for alleged harm, citing the Trafigura case, or where the host state subsidiary submits to the jurisdiction of the home state, as happened in the Shell Nigeria case that submitted to the jurisdiction of the English courts.

Mr. Meeran addressed the issues pertaining to ‘corporate veil’. He noted that ‘corporate veil’ have been overcome in the UK cases through applying a tort based approach where it is alleged that the parent company owed a ‘duty of care’ by virtue of its role in relation to the alleged harm, thus in respect to its own acts and omissions. Under this approach, the shareholding of the parent company is not the point; the issue is what role was played by the parent company as a matter of fact. The same principle can thus apply outside the multinational context or group, in a supply chain context, Mr. Meeran suggested. This approach has been so far only positively endorsed by the UK courts. Mr. Meeran explained that under rules of private international law (the Rome II Regulation) it is the law of the host state that will invariably apply, but national laws of many states seem to contain provisions that can be developed in a manner similar to that which has occurred in the UK.

In regard to evidence, Mr. Meeran noted that it is necessary to have access to internal documents in order to establish the relationship between parent company and subsidiary. In the UK and US, he noted, there are effective discovery and disclosure procedures, but elsewhere restrictions on access to documents have severely hampered the lawyers of the victims. To address that, he proposed to reverse the burden of proof, thus to assume that the parent company is liable unless it can prove otherwise by producing the documents that will shed light on what was going on in the internal processes of the company.

In conclusion, Mr. Meeran made three specific propositions: to abolish ‘forum non convenience’ in human rights cases or denial of ‘forum non convenience’ where a claimant can show that they cannot attain justice in the host state, acceptance of the principle of parent company ‘duty of care’ and the delineation of circumstances when that will apply, and reversal of the burden of proof to put the onus on the parent company to prove that it was not in control of the relevant functions.

CONTRIBUTIONS FROM STATES

Mexico posed a question on whether the obligation of States to ensure respect of human rights by businesses includes an obligation to provide an adequate forum under the legal figure of ‘forum necessitates’ or ‘forum by necessity’, including the possibility of using this figure for civil remedies, its feasibility and practicality.

The Russian Federation raised a point in regard to the application of economic sanctions by some States on a unilateral basis, which it considered to be a matter that relates to States’ duties to protect human rights and also the duties of enterprises to uphold human rights. Russia pointed out that economic sanctions, or unilateral coercive measures, have become a very comfortable instrument for achieving political and economic aims in the international context. Despite the fact that the negative impacts of such sanctions are universally recognized when it comes to all areas of human rights, in particular violating social, economic and labour rights, and the rights to health, development, food and work, nevertheless these economic sanctions are still being broadly applied by some countries and some economic groups – including some regional groups, Russia underlined. While states that introduce such economic sanctions are violating human rights, transnational corporations are also being drawn into violating human rights, Russia added. Russia questioned whether corporations that are seeking to uphold human rights should submit to the introduction of unilateral sanctions by States. Russia also questioned whether states have the right to coerce their TNCs into upholding sanctions which they have introduced.

Ecuador referred to the UN Guiding Principles that reaffirm the existence of States’ obligations to protect against all human rights abuses that may be committed by corporations or business enterprises in their territory or within their jurisdiction. This obligation includes the adoption of necessary measures to prevent, investigate, sanction and remedy abuses through policy, legislation, regulation and effective adjudication. States should ensure that policies, regulations and laws promote effective human rights enforcement, offering guidance to TNCs and requiring reporting from TNCs as to how they address human rights throughout their operations, Ecuador noted. In regard to extraterritoriality, Ecuador referred to UN Guiding Principle 2, which recognises that States should set out expectation that all business enterprises domiciled in their territory or jurisdiction should respect human rights throughout their operations. According to Ecuador, this recognition derives from the realization that transnational corporations could make use of the territorial limitations of laws in order to avoid potential prosecution by States, or avoid being sued by victims for human rights violations they might have been responsible for. According to Ecuador, States should also guarantee, within their legal systems, the possibility to bring complaints against enterprises for alleged human rights violations, even if those violations are committed outside their territory. Ecuador also referred to the recognition of extraterritorial obligations of States by the International Court of Justice, the Inter-American Court of Human Rights and the European Court of Human Rights, as well as the United Nations’ thematic experts.

China was of the view that improving the domestic legal system, strengthening the capacity of enforcement, enhancing the awareness of protection of individuals and collective rights, and effectively protecting vulnerable groups fall under obligations of all governments. Due to some historic and present reasons, developing countries may lag behind in this area, particularly when regulating transnational corporations (TNCs), according to China. Developed countries could work jointly with developing countries, particularly the host countries of TNCs, to strengthen their capacity in this regard, China added, in order to reduce the negative impacts of business activities and human rights violations. Moreover, TNCs should comply with the laws, regulations and custom in the host countries, according to China, and fulfil social responsibilities that benefit local people and their livelihoods. On the issue of unilateral coercive measures, China underlined its opposition to such measures, noting that they impede economic and social development and the right to development, and asked the Working Group to give due consideration to this issue.

Cuba considered that a prospective instrument should cover obligations on States, ensuring that their legislation requires transnational corporations (TNCs) to respect all human rights, including when they operate in other states. Cuba noted that States have existing obligations to take necessary measures that address human rights violations by corporations and avoid impunity for human rights violations by TNCs. Derivative companies should abide by human rights obligations and the law of the states where they operate, according to Cuba. Cuba also stressed the importance of addressing extraterritoriality. Human rights treaty bodies accepted that states cannot turn a blind eye to what is happening beyond their borders and that they should adopt measures to prevent violations committed by corporations without infringing on sovereignty of other states, Cuba explained. With regard to unilateral coercive measures, Cuba noted that they represent systematic violations of human rights and jeopardize economic development. Cuba referenced international legal provisions that prohibit such measures, including the Geneva Convention against Genocide.

Ghana addressed the suggestion to reverse the burden of proof and questioned whether it could act as a disincentive for home states of TNCs to join a prospective instrument, as this approach would be violating the fundamental principle that one is innocent until proven guilty. In regard to discovery of documents, Ghana noted that in cases where it is established that a company is a subsidiary or branch of a parent company, then the question of vicarious liability would also be established. Accordingly, the discovery of documents is not directly necessary to establish the responsibility of a parent company in such cases, according to Ghana. If it is a question of civil liability, then vicarious liability would facilitate engaging the liability of the parent company, Ghana explained. Discovery of documents would be important in cases of criminal liability, Ghana added. On the question of definition, Ghana referred to an example from the area of the law of the seas, and particularly the definition of enterprises as addressed by UNCITRAL. Ghana called for reconsidering the inclusion of domestic enterprises under the scope of a prospective treaty. Ghana referred to its practice in regard to establishing a commercial court in order to ensure that cases involving businesses are dealt with expeditiously and with expertise.

Bolivia noted that a prospective binding instrument could reaffirm obligations of states that already exist under international instruments and conventions, such as the protection of human rights against abuses by third parties, including through investigation, adjudication, and redress for such violations. Bolivia underlined the importance of addressing extraterritoriality in order to ensure that victims are able to avoid cases of impunity and address the legal void in which enterprises may escape standing trial. Bolivia called for a framework where enterprises are obliged to respect human rights in all countries where they operate, with full respect of sovereignty. Bolivia also concurred that unilateral coercive measures are violations of human rights.

Venezuela noted the importance of strengthening domestic legislation to regulate enterprises and to ensure preventive mechanisms are in place. Venezuela noted that extraterritoriality requires careful examination, taking into account national sovereignty while focusing on combating impunity. Venezuela also added that unilateral coercive measures are tantamount to human rights violations.

CONTRIBUTIONS FROM CIVIL SOCIETY

Following is a summary of few positions taken by civil society groups during the session.

The International Federation of Human Rights (FIDH) called for a treaty that establishes obligations on States to adopt regulatory measures regarding corporate abuses of human rights. This includes requiring business enterprises to adopt policies and procedures that seek to prevent and redress negative human rights impacts wherever they operate, and to establish enforcement mechanisms. FIDH noted that States’ duty to protect must be interpreted as applying to both home and host States, which is a position consistent with the authoritative interpretation of UN treaty bodies. FIDH noted that extraterritorial obligations are increasingly codified in diverse fields including in human rights, humanitarian, labor and environmental law. Despite the adoption of the UN Guiding Principles, serious obstacles persist in regard to closing accountability gaps, resulting from the lack of legal clarity in regard to States’ duty to protect human rights, in particular regarding States’ extraterritorial human rights obligations. FIDH pointed to their work experience in various regions, which speak to the urgent need to clarify – in law – States’ expectations vis a vis businesses, including to clarify the nature of conduct by a business entity that will give rise to legal liability, and the provision of an adequate and accessible forum to pursue appropriate remedy. FIDH added that companies should be subjected to appropriate sanctions for failing to respect human rights, including for failure to adopt or comply with internal policies and procedures. FIDH referred to the decision of the US Supreme Court in the Kiobel case under the Alien Tort Statute, which is a significant court decision questioning the application of States’ extraterritorial obligations and States’ ability to redress egregious human rights violations even when committed by its own corporations that occur beyond its borders. This is another illustration of the unequal playing field resulting from a patchwork of judicial decision interpreting particular, and sometimes varying national law, according to FIDH.

The Colombian Commission of Jurists pointed out that extraterritorial obligations are a missing link in the protection of human rights. The Maastricht Principles clarify that States must adopt and enforce measures to protect economic, social, and cultural rights with respect to a corporation’s conduct abroad, where that corporation, “or its parent or controlling company, has its centre of activity, is registered or domiciled, or has its main place of business or substantial business activities, in the State concerned”, according to the Colombian Commission of Jurists. The Commission referenced a study on the impact of Canadian mining in Latin America by ‘Due Process of Law Foundation’, which found patterns on home State financial and political support, including by embassies and development agencies, for transnational corporations domiciled in its territory, without requiring that these corporations comply with international human rights standards. The report also noted undue influence by the home state in the domestic legislative processes of the host state, the shielding of home state companies from accountability through free trade agreements, and the persistence of inadequate legal frameworks in home states to prevent and punish human rights violations caused by transnational corporations abroad, despite governmental knowledge of these abuses. Corporate Social Responsibility policies have not, and by definition cannot, solve the problem of a lack of implementation of state extraterritorial obligations, according to the Colombian Commission of Jurists.

FIAN International pointed that a prospective treaty should stipulate that states must adopt and enforce measures to protect human rights through legal and other means in each of the following circumstances: a) when the harm or threat of harm originates or occurs on its territory; b) where the corporation, or its parent or controlling company has its centre of activity, is registered or domiciled, or has its main place of business or substantial business activities in the State concerned; c) where there is a reasonable link between the State concerned and the conduct it seeks to regulate, including where relevant aspects of a company’s activities are carried out in that State’s territory; d) where any conduct impairing human rights constitutes a violation of a peremptory norm of international law. Where such a violation also constitutes a crime under international law, States must exercise universal jurisdiction over the corporations bearing responsibility or lawfully transfer them to appropriate jurisdictions. FIAN noted that the treaty should also stipulate for cooperation of states – including mutual legal assistance, joint investigative bodies, cooperative adjudication and enforcement.

Franciscans International called on States to require companies of a certain size and impact to adopt and periodically report on their policies and procedures and other standards of conduct aimed at preventing, mitigating, monitoring, and accounting for actual or potential adverse human rights impacts they cause or they are complicit with, wherever they operate or cooperate. The group also called for mandatory due diligence, in particular of parent companies in relation to the activities of their subsidiaries. Mandatory due diligence should also apply to major retailers in their entire supply chain process, the group noted. Franciscans International called for States to ensure mandatory and meaningful consultation and participation of potentially affected communities in decision making. Moreover, the group noted that in order to prevent the root causes of human rights abuses, States should ensure respect of human rights in all trade, investment, and other business-related bilateral or multilateral agreements, treaties, and contracts with other states. A human rights based approach should be explicitly mentioned in such agreements and must prevail in case of conflict, according to Franciscans International.

The International Baby Food Action Network, the Pesticide Action Network Asia and the Pacific, Brot für die Welt, Friends of the Earth Europe, the Global Policy Forum, and the Society for International Development pointed that most corporate violations of human rights are occurring outside of their home countries, highlighting the cases of Syngenta and Nestlé based in Switzerland. The groups explained that Syngenta produces a highly hazardous pesticide named “paraquat”, which poisons thousands of plantation workers and farmers who spray it without protection and without having been trained to reduce risks. However, Syngenta continues to produce and sell this product knowing that it seriously endangers health, therefore violating the right to health of exposed communities. The groups added that Nestlé has been violating the WHO Code on the Marketing of Breastmilk Substitutes since decades. The group pointed that Switzerland has failed to appropriately regulate the conduct of corporations domiciled in its territory and/or jurisdiction and thus, has left Syngenta and Nestlé free to perpetrate their abuses abroad.

The International Organization of Employers (IOE) noted the shortcomings of extraterritorial jurisdiction including the higher costs involved in pursuing remedies in foreign courts and sustaining such cases over several years. The IOE pointed to the challenges facing foreign courts when they must rule according to foreign legal principles and the difficulties in obtaining evidence and testimony abroad. The group pointed that extraterritorial jurisdiction is available for allegations against multinationals and not domestic companies, which would continue to leave victims of domestic companies without access to remedy. The group highlighted that the UN Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law identify some important elements which governments should consider with respect to improving access to State-based judicial remedies. They called for improving domestic judicial systems and monitoring of the judicial performance within the UN supervisory machinery.

The International Service for Human Rights focused on protection of human rights defenders. The group noted that given the capacity of human rights defenders to prevent, mitigate and ensure accountability for human rights abuses, it is crucial that States do more to ensure that business, both at home and abroad, do not threaten a safe and enabling environment for human rights defenders, but rather contribute to and protect it. A treaty should enshrine this obligation, according to the group. International Service for Human Rights pointed out that the roots of human rights violations in the context of business are found in the lack of a free, prior, informed and safe consultation with communities, civil society and human rights defenders. The group noted that despite the existence of Guidelines for the protection of human rights defenders – such as those developed by the EU, Norway, Switzerland, the implementation of these guidelines is often weaker when the defender in question is working on alleged abuses in the context of international investment.

Highlights of some elements of discussion and points of view shared during the OEIWG’s session

In regard to obligations of States:

• States have international human rights obligations to respect, protect and fulfil human rights, provided for under several existing human rights conventions. The States’ obligations also include positive obligations to exercise ‘due diligence’ to prevent, punish, investigate and redress the harm caused by private entities;
• Different regional and international courts and tribunals have considered that states are not directly responsible for human rights abuses committed by third parties, but that they can be responsible for failing to take available measures to prevent and punish the occurrence of such conducts;
• Economic globalization requires for international cooperation, including the effective articulation and application of extraterritorial obligations, which would provide for an essential element under a prospective Instrument and enabler in order to effectively fill gaps in the current international legal order;
• Various UN Human Rights Treaty Bodies have recognized the extraterritorial obligations of States, and accepted that States cannot ignore the fact that they may influence situations outside their borders, even in the absence of territorial control, and that with this power comes responsibility;
• These obligations include preventing third parties from violating the rights in other countries, if they are able to influence these third parties by way of legal or political means. Likewise, these obligations include the duty of States to adopt measures to prevent, investigate, adjudicate and redress such violations;
• While the recognition of extraterritorial obligations is widely affirmed, there are differences with regard to the relevant tests triggering extraterritorial obligations; some approaches use the test of ‘effective control’ over the actor, while others adopt the ‘influence standard’ or the ‘reasonable linkage’ test;
• When considering extraterritorial jurisdiction of courts, it is important to address the challenges arising from difficulties in obtaining evidence and testimonies abroad;
• Different obstacles undermine the possibility of holding corporations accountable, leading to significant deficiencies in access to remedies, including various procedural and practical obstacles. These could be addressed under a prospective Instrument, through – for example: removing obstacles to the exercise of jurisdiction of home State courts and broadening rules of standing, abolishing the ‘forum non convenience’ doctrine in human rights cases, accepting the principle of parent company ‘duty of care’ and the delineation of circumstances when that will apply, and reversing the burden of proof to put the onus on the parent company to prove that it was not in control of the relevant functions.

Discussion on the responsibility of TNCs and other business enterprises

CONTRIBUTIONS FROM PANELLISTS

Bonita Meyersfeld, Director of the Centre for Applied Legal Studies and Associate Professor of Law at the University of Witwatersrand in Johannesburg, spoke of three concepts: language of responsibility; integration of human rights standards into a corporate structure; and scope of multinationals’ human rights obligations with respect to free, prior and informed consent.

In regard to language, at the heart of the Guiding Principles is the distinction between the notion of ‘duty’ as applicable to states and the notion of ‘responsibility’ as applicable to corporations, Ms. Meyersfeld explained. The language of ‘responsibility’ in the context of ‘corporate social responsibility’ (CSR) acts as a vehicle that distorts and collapses two very distinct issues: on one hand charity and on the other hand compliance with international human rights law. According to Ms. Meyersfeld, this conflation is problematic for several reasons. CSR is a selection of a set of projects that are voluntary in nature. These projects focus on specific subject matter, such as construction of schools or hospitals. This is distinct from compliance with international human rights law, which implies generic wide ranging obligations, Ms. Meyersfeld explained. International human rights law does not allow for the type of rights’ selection that characterizes CSR. If we are serious about fundamental human rights’ protections, then it is important to recognize that the ‘pick and choose’ approach means that corporations may simultaneously commit grave human rights violations while undertaking public charitable once-off projects, cautioned Ms. Meyersfeld. There is also no way to monitor compliance with the CSR projects articulated by corporations, she stressed.

Regarding integration of human rights throughout a corporate structure, meaningful integration of all human rights can only occur if all entities- including subsidiaries, supply chains and franchises – are all subject to stringent human rights standards, noted Ms. Meyersfeld. These must be implemented by the corporate structures irrespective of the legal distinction between subsidiary and other entities and irrespective of geography, she stressed. She gave the example of appointing a human rights’ specialist who have the same power to decide on investments and project selection as economists, risk specialists, commercial lawyers, and other technical experts. Ms. Meyersfeld underlined the need to be specific in articulating practices to enhance human rights obligations. Human rights lawyers and specialists must delineate how corporate operations and multinational corporations (MNCs) must comply with human rights obligations, she added.

Ms. Meyersfeld pointed out that there are two approaches in order to practically understand what an MNC’s obligations might entail. First is how a corporation ensures its internal operations comply with human rights obligations. This includes how it treats its employees, contractors, and supply chain. Second is how a corporation ensures that its external operations comply with international human rights law, how it treats effected communities, health and wellbeing of those exposed to its operations, and how it addresses consumer protection, environmental considerations and other consequences of its conduct. The first is more clearly articulated in the large body of instruments on labor rights, Ms. Meyersfeld noted. The more difficult aspects rest in the second area in regard to the external operations of MNCs.

According to Ms. Meyersfeld, there is an excellent starting point in the Guiding Principles, including the ‘due diligence’ obligations under pillar 2. She pointed out the challenge of testing the extent to which corporations undertake a thorough investigation into how their operations may compromise human rights, and what happens if their ‘due diligence’ reveals the potential for harm, and whether such a result would lead to a decision not to proceed with the project. This dilemma arises in the cases of free, prior and informed consent (FPIC), she added. For example, FPIC suffers many flaws in regard to consultation, including timing, the methodology, and the objective of consulting versus that of obtaining consent.

In regard to timing, Ms. Meyersfeld noted that community consultation should happen throughout the life span of the project, although it seldom does. It is highly unlikely that a decision to proceed with a project will change as a result of communication with communities. So the consultations take place at a time in the project when the powerful players in the process have taken a decision to proceed.

In regard to methodology of consultation, Ms. Meyersfeld was of the view that it is unlikely that a corporation will give the full range of information about the project to effected communities. There is in addition a serious critique of the extent to which FPIC excludes marginalized subgroups within a community. Some corporations might approach FPIC with a ‘box-ticking’ approach. So the methodology used in FPIC often involves superficial engagement with community leaders of effected communities based on information that is selectively provided, she explained. If an MNC is serious about its commitment to social and economic development, there is no justifiable reason that a corporation should not facilitate legal representation on behalf of effected communities, Ms. Meyersfeld added. It is only through an equal and equivalent bargaining relationship, preconditioned on symmetrical level of information that effective consultation can occur, she stressed.

Surya Deva, Associate Professor in the School of Law in the City University of Hong Kong, noted that the intergovernmental working group should build on the second pillar of the Guiding Principles, while avoiding the temptation of a blind complementarity with the Guiding Principles that ends up adopting their deficits. He highlighted that the Guiding Principles are not an end in itself; rather they are merely one of the means to achieve an end of ensuring that companies comply with their human rights obligations.

On the meaning of the term “responsibility”, Professor Deva noted that while the term under international law may mean liability for breach of legally binding obligations, the Guiding Principles do not use the term in that sense. He noted that it might be preferable to avoid the term “responsibility” in the context of a legally binding international instrument. Or at least a clear definition should be provided to avoid any confusion.

Professor Deva went on to question whether the responsibility of companies be merely to “respect” human rights. He explained that States have tripartite duties in relation to human rights, but the second pillar of the Guiding Principles limits corporate responsibility to “respect” human rights. While respecting human rights is a basic minimum, this might not be enough in certain circumstances. According to Professor Deva, the duty to protect may be useful in the context of parent vs. subsidiary company or in relation to one’s suppliers. Moreover, the responsibility to fulfil may also be relevant in certain circumstances, Professor Deva added.

Professor Deva cautioned against being carried away by the process of ‘due diligence’. He noted that ‘due diligence’ in a corporate/commercial context is very different in nature from how due diligence should be employed in a human rights context. He distinguished between obligations of conduct and obligations of result, questioning whether the former is adequate in relation to one’s own conduct as opposed to the conduct of other entities.

Professor Deva stressed the importance of a treaty that provides for “effective” remedies to the victims to ensure that companies comply with their human rights obligations. In regard to ‘effectiveness’, he made reference to the twin test of preventive and redressive efficacy, including reasonable certainty of redress in a timely manner and at an affordable cost. He added that the treaty should make the violation of human rights a costly business by companies, whereby a number of incentives and disincentives should be offered.

Professor Deva added that non-judicial mechanisms work better in the shadow of strong judicial mechanisms. He also stressed that victims should have a say in what remedies they want to avail in particular situations. He noted the need for public apology for corporate wrongs, pointing to the problems with non-admission of guilt in, and the confidential nature of, settlements with companies.

Professor Deva spoke as well of the importance of preventive remedies like injunctions. Unlike the Guiding Principles, the proposed treaty should suggest concrete ways to overcome procedural, substantive and conceptual obstacles in access to justice, he added. He also pointed to the added value of institutionalizing the role of CSOs in enforcing human rights against companies.

Professor Deva concluded by pointing to the importance of taking into account uncertain future adverse consequences of corporate activities, such as in the case of untested chemicals or technologies. He suggested that all TNCs may be required to contribute to a “victim’s fund” in proportion to their annual turnover or net profit.

Karen Curtis, Deputy Director of the International Labour Standards Department at the ILO, reflected on core ILO labor standards, stressing that it is important for a prospective treaty to build on labor standards in international and national law, and ensure that any results are complementary. Curtis recalled that core labor standards have universal recognition and have attained nearly universal ratification, and that the 1998 ILO Declaration on Fundamental Principles and Rights at Work embodies a constitutional obligation for all member states to respect, promote and realize the principles relating to abolishing forced labor and child labor, freedom of association, effective recognition of collective bargaining and elimination of discrimination.

Ms. Curtis explained that the ILO provides a supervisory mechanism for freedom of association, to promote respect for basic freedom of association and collective bargaining principles. International labor standards have a unique role as standards that have been drafted and adopted with the input of businesses and reflect a consensus between governments, businesses and unions, as the three stakeholders in the ILO, she added. It imposes obligations on businesses via states’ international and national commitments, Ms. Curtis explained. She added that international labor standards bolster action for the protection against rights’ abuses in the labor context and buttress measures for access to justice and availability of remedies for victims of abuse.

In 2014, Ms. Curtis noted, the international labor conference agreed the protocol to the Forced Labor Convention and the recommendation with supplementary measures to protect against forced labor. These two instruments aim to bolster existing instruments recognizing that there were gaps in implementation concerning government and business responsibility. Ms. Curtis explained that the protocol refers to due diligence and calls on governments to support due diligence by both public and private sector to prevent and respond to risks of forced labor. The recommendation refers to obligations of government to provide guidance and support to businesses to take effective measures in order to identify, prevent, mitigate and account for how they address the risk of forced labor in their operations. The recommendation also highlights the critical need for international cooperation in order to have effective mechanisms to combat and eradicate forced labor, including between labor law enforcement institutions, criminal law enforcement institutions, and calls for mutual legal assistance across borders. It also calls for government to mobilize resources for international technical cooperation and assistance and sharing of good practices to realize the full eradication of forced labor.

Ms. Curtis added that the ILO launched the fair migration agenda, including the ‘fair recruitment’ initiative, which addresses transnational cooperation to combat forced labor and trafficking. This initiative, which puts social dialogue at center, includes enhancing global knowledge on recruitment practices, strengthening laws and enforcement mechanisms, promoting fair business practices and providing access to remedies, according to the panelist. This initiative will be implemented in collaboration with the international trade union confederation, organizations of employers, governments, UN agencies, civil society organizations and other stakeholders.

Cross border considerations were also taken into account in the Domestic Workers Convention (2011), added Ms. Curtis, which requires that migrant domestic workers recruited in one country must receive a written job offer that is enforceable in the country that they will be going to. Ms. Curtis also referred to the Maritime Labor Convention, as an example of how the ILO can review the questions related to enterprises and ensure respect by the floating enterprises (or ships). She noted that a critical element in this experience was the involvement of businesses in the standard setting and implementation.

Thomas Mackall, Vice President of Sodexo Group, spoke of evidence emerging from surveys of the business community attitudes. A survey by the WBCSD (World Business Council for Sustainable Development) showed that 95% of respondents are familiar with the UN Guiding Principles on Business and Human Rights; 90% of respondents believe that an organization’s business strategy should include explicit consideration to respecting human rights; 60% of respondents have a standalone public human rights statement or policy in place; two thirds of respondents have in place programs, policies or regulations that explicitly encourage the implementation of UN Guiding Principles or other guidelines; 75% of respondents have processes in place to assess potential human rights impacts; and two thirds of respondents employ measures to monitor and track their human rights performance.

Mr. Mackall noted that the WBCSD results are consistent with a survey conducted by ‘The Economist Intelligence Unit’, which found that 83% of businesses agree that human rights matter for both business and government, and 71% stated that they believed their responsibilities to respect human rights go beyond simple obedience of the law.

Mr. Mackall stressed the importance of equipping individual states to fulfill their duty to protect human rights. He referred to the first pillar of the UN Guiding Principles, noting that Principle 3 provides that countries have to enforce laws that are aimed at, or have the effect of, requiring business enterprises to respect human rights, and periodically to assess the adequacy of such laws and address any gaps. A comprehensive human rights regulatory framework by countries applicable to all societal actors, including all businesses, is critical to enhancing remedies and promoting respect for human rights, he added. He also called for support and resources to enable host states to implement their respective commitments and duties to protect human rights. Mr. Mackall called on states to eliminate the gap between their laws and human rights standards. He added that host states should have clear rules defining what behaviors are expected, what behaviors are unlawful, and what liabilities and penalties are associated with violations, in addition to effective and integral inspection and enforcement capabilities. Mr. Mackall suggested that the supervisory machinery of the UN Human Rights Council could be improved to require governments to take steps to implement their duty and report on progress.

On issues of scope, Mr. Mackall was of the view that any work to promote respect for human rights must include all businesses, not simply transnational corporations or other businesses that may have a transnational character. He noted that simply focusing on transnational companies or companies with a transnational character by definition limits the potential reach of the ‘protect, respect and remedy framework’ embodied in the UN Guiding Principles. Mr. Mackall added that creating what would effectively be two different standards or differing sets of obligations for transnational and domestic businesses also threatens to undermine what the UN Guiding Principles are trying to achieve.

Mr. Mackall underlined that work on a treaty should help to sustain the momentum that is building within the business community in regard to the UN Guiding Principles. He added that the work of the Open-Ended Intergovernmental Working Group should help governments provide support to companies who need guidance and direction about creating appropriate due diligence programs.

CONTRIBUTIONS FROM STATES

Cuba noted that a future binding instrument should clearly set out direct obligations for enterprises, and set out the principle obligations of TNCs when it comes to prevention, mitigation, and compensation for human rights violations that might be committed as a result of corporate operations. Cuba proposed that the working group examines the precedent of UN instruments that include existing duties and responsibilities for legal persons. The Instrument should reflect the principles of transparency and public access to knowledge in order to ensure proper oversight of corporations’ actions and prevention of violations, according to Cuba. Key aspect of the Instrument is to overcome legal gaps and ensure that TNCs can be held responsible for violations and recognize their legal accountability in either home or host state. Cuba sought the panellists’ views on including under the future instrument reliable mechanisms for accessing human rights enforcement and the way in which corporations fulfil human rights obligations.

South Africa noted that transnational corporations and other business enterprises are active in some of the most essential sectors of national economies such as communication, technology, infrastructure development and the extractive industries. They play a significant role in the economy. Nonetheless, development is not only economic; it is also about human development, South Africa stressed. Hence, the increased threat to human rights by the operations of many corporate entities cannot be ignored. The responsibility of the corporate sector is also illustrated under Pillar II of the UNGPs, which indicates that corporations should “address adverse human rights impacts with which they are involved”, South Africa explained. This lays the ground for liability and accountability of these entities in international human rights and humanitarian law. It is therefore imperative to ensure universal application of uniform standards in this area, according to South Africa, which would ensure equal protection and effective remedies for all.

Bolivia noted that under national legislation, all individuals have the duty to protect human rights. There is room for improvement and strengthening of national legislation, Bolivia added. Due to their complex structures and leveraging of economic power, many TNCs can circumvent responsibilities; accordingly this is the gap that should be addressed, Bolivia noted. Bolivia called for establishing clear direct duties and obligations for transnational corporations under a prospective treaty, and to ensure that they would be accountable for any violations of human rights.

Palestine called for a legally binding instrument that addresses the direct obligations of corporations under international law. While States have the primary responsibility to protect human rights, by means of legislative and judicial measures, the responsibility of corporations to respect human rights entails a direct obligation to prevent, mitigate and redress the human rights abuses occasioned by their operations, Palestine explained. Where a business enterprise finds that it causes or contributes to, or that it may cause or contribute to an adverse human rights impact, it should take the necessary steps to end or prevent such impact, according to Palestine. Where an enterprise is unsuccessful in mitigating risks of adverse human rights impacts, it should consider ending the business relationship, Palestine added. The non-fulfilment of these obligations could entail the direct attribution of the violation of human rights by the corporation. Palestine pointed to the increase of risks in conflict-affected areas, where businesses could support or profit from internationally unlawful conduct by States. This is of particular relevance in contexts of occupation, where the occupying State is unwilling to protect human rights effectively within the occupied territory and is in fact itself committing human rights violations within the occupied territory, Palestine explained. As an example, the Palestinian delegate noted that a number of Israeli and multinational corporations have linked their business operations to Israel’s settlements in occupied Palestine, thus facilitating and profiting from the illegal construction and growth of the settlements. This despite clear international laws and standards that require businesses operating in conflict zones to ensure that their activities do not cause or contribute to violations of laws applicable to situations of armed conflict. Palestine stressed the importance that the legally binding instrument includes language aimed at preventing and addressing the heightened risk of abuses by business operating in conflict situations, which includes situations of foreign occupation. Due consideration should be given to principles relating to respect for international humanitarian law and the right to self-determination, Palestine added, including permanent sovereignty over natural resources.

Ecuador noted that TNCs enjoy sufficient legal personality to enjoy direct obligations under international law. Ecuador recalled that placing direct obligations on corporations is not new under international instruments, and referred to the example of the UN Convention against Corruption (2003), UN Convention on Financing of Terrorism (1999), and the international Convention on Civil Liability for Oil Pollution (1992). Ecuador added that the prospective instrument should attach obligations to TNCs and other business enterprises, such as due diligence and due care for human rights, and should provide for remedies when violations take place.

Ghana stressed the importance of prevention, which places emphasis on environmental impact assessments before a company is given the license to operate. Ghana spoke of situations where technologies used by a company could cause harm; compensation means one should establish that the company was aware of these defects to establish liability. Ghana noted that the standard of assessing compensation should take into consideration generational impacts, including liability for destruction of indigenous livelihoods. Ghana posed a question in regard to the possibility of substituting the use of the term ‘multinational corporations’ by ‘foreign and local companies’. The use of the term ‘multinational’ stems from the nature of the companies’ operations, Ghana suggested. So if there is a local company buying goods from a foreign company that uses child or forced labor, that could be an operational conduct of transnational character, but the entity will not be characterized as multinational. Ghana called for carefulness in addressing the scope of enterprises to be covered by a prospective treaty. Ghana added that there should be a lex specialis that deals with activities and conduct of companies in conflict zones, referring to the model of the Kimberley Process in the case of diamonds. In regard to peer pressure, Ghana suggestesreverting back to the Universal Periodic Review (UPR) mechanism until a legally binding instrument is adopted, whereby the UPR could include a section that reviews the extent to which countries under review implement the UNGPs.

China addressed the issues pertaining to corporate social responsibility, and explained that China’s corporate law addresses how businesses operations have effects beyond those on stakeholders, which extend to the larger market and public order. China explained that administrative requirements by the ministry of commerce regulate foreign investments made by Chinese companies and stipulate that these investments shall not undermine the sovereignty, security and social order of China, shall comply with China’s laws and regulations, shall not harm relations with other countries, and shall not violate international treaties that China is a party to. It also stipulates that Chinese businesses shall respect laws, conventions and traditions in the destination country, make positive efforts in the environmental area and seek integration in the local context. China’s foreign company law stipulates that the foreign investments in China shall comply with China’s laws and regulations and shall not undermine China’s social interests, China added.

Venezuela stressed that prior and informed consent is essential and the symmetry of information flows shall be ensured. Venezuela highlighted the importance of holding companies accountable for due diligence and the importance of compensation, including public apology.

CONTRIBUTIONS FROM CIVIL SOCIETY

FIAN International noted that obligations of TNCs and other business enterprises include abstaining from any conduct, project or activity impairing the enjoyment of human rights, or causing ecological harm, or running a real risk of doing so; reporting on policies to prevent harm to the enjoyment of human rights and the ecology; carrying out independent ex-ante and ex-post human rights and environmental impact assessments and adopting the required corrective measures in order to prevent or eliminate harm to the enjoyment of human rights and to the ecology. This obligation can be regulated in different ways depending on the size, nature and capacity of the business legal entity, FIAN noted. Obligations of TNCs and other business enterprises include providing effective and transparent information for individuals and communities potentially affected by their activities, in addition to respecting results of prior and informed consent, and establishing a vigilance plan in order to identify risks to the enjoyment of human rights and the ecology, FIAN added. FIAN pointed to the importance of applying the precautionary principles when there is no certainty if an activity will impair the enjoyment of human rights or will harm the ecology. Moreover, FIAN noted that corporate obligations include abstaining from influencing or impeding previous consultations with affected communities or individuals carried out by states in exercise of their obligation to protect.

The Institute for Policy Studies (IPS) noted that a prospective legally binding instrument must reaffirm the hierarchical superiority of human rights norms over trade and investment treaties. IPS addressed the implications of Investor to State Dispute Settlement (ISDS), which is included in most investment treaties. ISDS is a purely one-sided tool that gives rights to investors without any obligations to respect human rights. According to IPS, ISDS discriminates against communities that are negatively affected by activities of these investors. IPS pointed to several instances where states attempting to protect human rights through public policy have been challenged through ISDS claims and then forced to pay millions from public money to TNCs. IPS noted that if a prospective treaty does not supersede the ISDS provisions, States’ ability to protect human rights will continue to be subverted.

The International Federation for Human Rights (FIDH) noted that the second pillar of the UN Guiding Principles recalls that companies should exercise human rights due diligence “in order to identify, prevent, mitigate and account for how they address their adverse human rights impacts”. FIDH stressed the need to go beyond the old voluntary approach to responsibilities of businesses, and focus instead on proactive strategies for businesses to avoid committing or contributing to adverse human rights impacts. FIDH recommended that States adopt policy and regulatory measures to ensure companies are required to conduct human rights due diligence when operating at home or abroad, including through their business relationships and throughout their supply chains. Parent companies should have a duty to ensure their subsidiaries’ compliance, FIDH added. FIDH stressed also the particular attention needed to conflict prone areas and occupied territories. Legislation should establish appropriate criminal and civil liability to sanction companies that have caused or contributed to human rights abuses, according to FIDH. Current discussions in France and Switzerland regarding the possibility to make ‘due diligence’ mandatory in domestic legal systems are positive steps, according to FIDH.

Highlights of some elements of discussion and points of view shared during the OEIWG’s session

In regard to the responsibility of TNCs and other business enterprises to respect human rights, including prevention, mitigation and remediation:

• Overall, it is agreed that gaps exist in the international legal framework, particularly in regard to responding to complex structures and economic power of transnational corporations, which allow them to circumvent their liability in both home and host States;
• The second pillar of the UN Guiding Principles could provide basis for developing corporate obligations, although the future instrument should go beyond the UN Guiding Principles and contain concrete mechanisms to overcome procedural, substantive and conceptual obstacles to guarantee the right to access to justice;
• The language of ‘responsibility’ as used under the UN Guiding Principles and in the context of ‘corporate social responsibility’ acts as a vehicle that distorts and collapses two very distinct issues: on one hand charity and on the other hand compliance with international human rights law;
• While States have the primary obligation to protect human rights, by means of legislative and judicial measures, the responsibility of corporations to respect human rights entails an obligation to prevent, mitigate and redress the human rights abuses occasioned by their operations;
• Several States are of the opinion that a prospective Instrument should include clear obligations of corporations and should set out their principal obligations when it comes to prevention, mitigation, and compensation for potential human rights violations that might be committed as a result of corporate operations;
• Businesses should conduct human rights impact assessments before and during their operations in order to prevent violations or to stop them. Non-fulfilment of these obligations should entail direct attribution of violations to the corporation;
• A prospective treaty could build on the work of the ILO and the labor standards in international and national laws, and ensure that any results are complementary;
• Several participants called for reaffirming the hierarchical superiority of human rights norms over trade and investment treaties under a prospective Instrument.