Legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises, as well as the zero draft optional protocol annexed to the instrument will be discussed this month in Geneva
Open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights, established by the resolution 26/9 of the Human Rights Councilon its 26th session, on 26 June 2014 will gather this month to discuss the zero draft of the “legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises”, as well as the zero draft optional protocol annexed to the instrument.The treaty on business and human rights is sought to rebalance a profound asymmetry between TNCs’ rights and obligations. The increasing economic power and extensive rights of corporate actors as a consequence of globalization, privatization and liberalized trade and investment have not been paralleled by increasing obligations of corporations under international human rights law, in spite of the fact that corporations can fundamentally impede the enjoyment of human rights.
In addition, the separate legal personality of subsidiaries poses particular challenges in holding a parent company to account for human rights violations committed by its foreign subsidiaries.The LBI attributes the “primary responsibility” to promote, respect and fulfil human rights and fundamental freedoms to national States, and a duty to respect human rights to all business enterprises.
As drafted, the treaty would require state parties to: (i) Guarantee the rights of victims of human rights violations – in the context of business activities with a transnational nature – to access to justice and remedies, including restitution, compensation, rehabilitation and guarantees of non-repetition. States would be required to provide effective mechanisms for enforcement of remedies against any offending persons (including businesses), including foreign judgments and would establish an “International Fund for Victims” to provide legal and financial aid to victims (Article 8); (ii) Ensure that domestic legislation imposes human rights due diligence obligations on persons with business activities of transnational character within a state party’s territory or otherwise under their jurisdiction or control. Proposed due diligence measures include requirements for businesses to: monitor human rights impacts of their business activities, including the activities of subsidiaries and entities under a business’ control or linked to its operations, produces and services; prevent human rights violations within the context of business activities; publically and periodically report on non-financial matters, including environmental and human rights matters; conduct human rights impact assessments; and reflect due diligence requirements in all contractual relationships involving business activities of transnational character.
The UNHRC published the Zero Draft several months ago. The document deserved a serious critics and got labeled as a poor tool for corporate accountability, that requires a lower standard in comparison to non-binding UN Guiding Principles on Business and Human Rights. According to the zero draft, the prospective treaty will not be applicable to domestic companies. This conflicts with the notion set out in the preamble of the draft treaty and recognized under the non-binding UN Guiding Principles on Business and Human Rights(UNGP) that “all business enterprises, regardless of their size, sector, operational context, ownership and structure shall respect all human rights, including by avoiding causing or contributing to adverse human rights impacts through their own activities and addressing such impacts when they occur”. However, there is also a lack of clarity surrounding what rights will be covered under the treaty. The draft refers to “all international human rights” and those recognized by domestic law. It has been argued that this should be defined more clearly, for example by reference to particular treaties. Draft Article 10 attempts to define the boundaries of civil liability broadly. States are required to ensure civil liability where harm has been caused by human rights violations including where a business exhibits a “sufficiently close relation with its subsidiary or entity in its supply chain” or “to the extent risk should have been foreseen” within its supply chain. This is expected to be a hotly contested issue in further negotiations, particularly in light of recent and ongoing case law in several jurisdictions on the subject of parent company liability for alleged human rights violations by subsidiaries or connected businesses.
