Guest Post: On Business and Human Rights in Illegal Territorial Regimes

by Valentina Azarova

[Valentina Azarova is a Research Fellow in the Institute of Law, Birzeit University. She has assisted and advised in the suits filed by Al-Haq against foreign corporations for involvement in abuses in occupied Palestinian territory and is a member of the legal committee, Global Legal Action Network (GLAN)].

On 19 January 2016, Human Rights Watch (HRW) released Occupation, Inc.: How Settlement Businesses Contribute to Israel’s Violations of Palestinian Rights, a report detailing the involvement of foreign and Israeli business in settlements and their support for unlawful Israeli acts. The report is an important piece of one-stop-shop documentation that brings together the work of Who Profits and others on the involvement of foreign businesses in the occupation through financing, servicing, or trading with Israeli settlements. As HRW argues, any business operations in settlements are associated with the human rights abuses and international law violations that ensue from Israeli settlement activity. However, the legal basis of HRW’s claims merit further consideration. The report takes the position that “to comply with their own human rights responsibilities” all companies should “stop working with and in Israeli settlements.” This responsibility derives, the report asserts, from the UN Guiding Principles on Business and Human Rights, which requires businesses to mitigate their involvement in abuses. According to HRW, businesses operating in the settlements cannot “mitigate,” and therefore must pull out to comply with these obligations.

Yet states, companies and scholars have argued that the UN Guiding Principles prescribe only a duty of due diligence on businesses and states (an obligation of means, not result, to reflect on how to mitigate involvement in abuses). In practice, this duty has been understood by even the most law-abiding states as having the purpose of warning business of the risks they incur to their reputation and economic integrity, rather than as being a positive obligation to firmly prohibit all business operations. Businesses’ involvement with the system of abuses underlying and ensuing from Israeli settlement activity has prompted some state measures – such as the recommendatory government advisories that have now been issued by 18 EU Member States (see e.g. the UK advisory). But home-states have stopped short of enforcing international law-based obligations by adopting measures that could redress the immitigable business involvement in the harm resulting from operations under the auspice of Israel’s illegal legislative and administrative regime in settlements – where all legislative acts are predicated on the entitlement of Israel to exercise sovereign authority in occupied territory.

Moreover, states perceive their obligations under the business and human rights framework in international law (set out in the UN Guiding Principles and the OECD Guidelines) as voluntary and politically discretionary. Home-states legal machinery to enforce human rights and other international law obligations against business has in practice been limited to the gravest forms of complicity in abuses that could result in civil or even criminal suits. As with other transnational enforcement actions, the success of such lawsuits is hinged on foreign policy concerns and considerations of non-interference in the domestic affairs of another state, even though the state’s own corporate nationals are involved. Home-states are unlikely to crack down on their corporate nationals abroad if their involvement in violations lacks sufficient proximity to the principal perpetrator or is not sufficiently substantial. Cases that meet these criteria are allowed to go forward only when they are meticulously evidenced and deemed politically prudent. Yet the track record on lawsuits for foreign business involvement in Israeli wrongdoing is dismal: French, Canadian and Dutch courts succumbed, to different degrees, to political and procedural barriers and brought an end to several straightforward claims against their corporate nationals’ involvement in wrongdoing.

While the HRW report focuses on businesses’ human rights responsibilities in international law, it also addresses demands to third states. Yet given the nascent nature of state practice on the enforcement of business and human rights, the following three issues (or caveats) are of note in relation to the report’s claims concerning the definition of the scope of corporate wrongdoing and the prescription of legal consequences under international and domestic law for business involvement in Israeli unlawful acts in relation to the settlements:

1) The report does not capture the scope or the nature of wrongdoing by business in settlements. The report’s case studies document settlement quarries that benefit from financial incentives while Palestinian quarries are subject to “discriminatory” restrictions; a bank that finances construction and a real estate company that sells properties in settlements, which profit from land confiscation; a company that supports settlement infrastructure by collecting garbage and operating a landfill; and a textile company that contributes to labor abuses against Palestinian employees. But not only are there types of less direct foreign business involvement in settlements that are not captured by this list – e.g. investment in Israeli companies operating in settlements, or procurement of products originating from settlements – it does not address the key underlying form of wrongdoing in international law resulting from the administrative and territorial regime that Israel maintains in occupied Palestinian territory.

What unifies all companies that have any kind of activity in the settlements is that they operate under the auspices of Israel’s illegal extension of its domestic administrative and legal jurisdiction in occupied territory, which is premised on its sovereign claims and the extension of Israeli sovereignty into occupied territory.

The report notes that Israel’s actions create a duty for third states not to recognise Israel’s illegal acts as lawful, but it appears to limit this duty to the specific types of wrongdoing on which the report focuses. Yet the duty of non-recognition is instead triggered by the simple, but crucial fact that all activities in settlements are conducted under Israeli domestic jurisdiction, which Israel extended into occupied territory (legislative and executive) — a state of affairs that constitutes an illegal territorial regime no state recognises as lawful. Since the report does not address per se the illegal territorial regime maintained by Israel in occupied Palestinian territory when it defines the scope of corporate wrongdoing, the report fails to substantiate its claim that “the only way settlement businesses can avoid or mitigate contributing to abuses is by stopping to operate in settlements or engage in settlement-related commercial activity.” The report’s claim that all business should cease and desist from all settlement activities risks appearing ambitious, given the lower-level demand of to exercise due diligence in international law.

2) The report makes the unfounded, aspirational claim that the duty of non-recognition requires states to stop or prevent their corporate nationals from becoming involved in settlements. The duty of non-recognition in international law addresses states, not businesses. A state has horizontal obligations to protect individuals from private abusers under human rights law, but the reality is that the legal force of these obligations is weak: most states consider them obligations of means and not result, and only a few states have developed national action plans to implement them (see 3). Moreover, the duty of non-recognition – which states interpret, as discussed above, as a mere ‘due diligence’ responsibility of means – does not have concrete content in terms of what it requires states to do. The duty of non-recognition does not require states to prevent their businesses from conducting any activities in a conflict zone. This claim (like arguments that base the demand that states ban trade with settlements on the duty of non-recognition) is aspirational, given the minimalist view that is reflected in state practice recorded in ILA recognition/non-recognition committee reports (.pdf) and in scholarly works. The duty of non-recognition – which Talmon calls a “hollow shell,” and is a “soap bubble” for Focarelli – can mean anything and nothing.

The most effective way to regulate the conduct of businesses and make sure they are not involved in settlements is based on states’ need to ensure consistency between their domestic public policy positions on the illegality of settlements, and the implementation of their domestic laws on corporate governance (intended to protect consumers, procurers, and investors). Since the application of Israeli domestic laws in the occupied territory is considered unlawful by all states, to uphold the integrity of their domestic rule of law, state authorities must ensure that their domestic law does not give legal effect to the basis for business activities in Israeli settlements. All business activities carried out under Israel’s illegal regime by the corporate nationals of law-abiding states would entail concrete legal risks under the company’s home-state law, insofar as those activities oblige the state to give legal effect to Israel’s internationally unlawful acts as though they were lawful.

3) The report’s recommendations to states fall short of adequately addressing foreign corporate involvement in extraterritorial wrongdoing. The report calls for states, in accordance with the UN Guiding Principles, to issue “guidelines” to prevent business from conducting activities in settlements. Many states continue to consider their UNGP obligations as soft norms and recommendatory standards, and do not enforce them as exigently as domestic law (most have not even initiated the implementation of a “national action plan”). Since the government advisories issued by foreign ministries and trade departments of EU countries are non-binding recommendations (suggesting compliance with human rights), they are insufficient to trigger exigent enforcement action.

However, if the home-state line ministries were to transpose and streamline these standards through specific domestic law provisions (e.g. procurement, consumer protections, proceeds of crimes laws), they would become as enforceable as any other domestic laws regulating corporate actors to business operations in a settlement (in whatever capacity or manner) by virtue of the legal basis for any activity, transaction or title there being Israeli domestic law. Such measures, intended to guarantee the consistent application of domestic law with public policy by ensuring non-recognition of Israeli unlawful acts as lawful, first require state authorities to provide their nationals with guidance to enable their ‘informed compliance’ with specific domestic law provisions.

While the HRW report should become a reference point for its case studies of business involvement in Israeli abuses, its recommendations to third states merit further consideration. The measures that can actually trigger vigorous domestic enforcement action to ensure the protection of consumers, procurers and investors from wrongdoing, are premised on the need to uphold the integrity of the home-state’s legal order by excluding internationally unlawful acts from their internal domain. Indeed, the wave of divestment from the settlements by European private actors, following EU’s ‘differentiation’ measures, coupled with a series of government advisories waiting to be operationalized, signals that this process is already underway.

http://opiniojuris.org/2016/01/26/guest-post-on-business-and-human-rights-in-illegal-territorial-regimes/

13 Responses

  1. Thanks for the post . It is good , and natural for human rights watch , to deal with human rights , yet :

    The post states over and over , the term : occupied territories , yet , as I presume , the respectable author of the post , is aware of the retreat or evacuation of Gaza strip . So , we are left with the : west bank .

    The west bank , is not made of one consistent territory ( see link ) but , three zones ( Oslo accord ) :

    Zone A : self Palestinian government or ruling , Zone B : mixed administration ( Israeli / Palestinians ) while , security in the hands of Israelis , and finally : Zone C , which is , under civil and military Israeli ruling .

    The description , of the law ruling all over , is very complicated , and not at all , far from being , so simplified as presented , yet :

    When dealing with humans , one needs sometimes , to observe the implications on them , not on general issues . There are around 400,000 settlers in the west bank (very roughly) and , many factories, providing the livelihood of many Palestinians (roughly 100 ,000) any damage to Israeli factories and business activity, shall damage, shall cause harm to many Palestinians, and the Palestinian authority itself , without any possible compensation , increasing so tensions already high .

    In Zone C for example , Israeli labor laws , protect Palestinians , and Israelis as equal almost .

    All that :

    While problem has to do rather , with peace negotiations , not with people ( generally speaking of course ) .

    Leaders on both sides should manifest more determination and creativity . Hurting the delicate fabric of the integrated economy , won’t do .

    Link :

    See map of the zones in west bank , red is A and B , while the Beige is C , observe the mixed complication :

    http://he.wikipedia.org/wiki/הרשות_הפלסטינית#/media/File:Zones_A_and_B_in_the_occupied_palestinian_territories.svg

    Thanks

  2. Just negligible demonstration , of the correlation , between economy in the integrated area of west bank ( economically integrated ) and the tensions and unrest , as I have presented above , see the link ,recently a meeting between finance minister of Israel , and Palestinians officials , here :

    http://english.palinfo.com/site/pages/details.aspx?itemid=76226

    Thanks

  3. Please identify the government funders for the organization that you represent and that pay your salary so that you can write this.

  4. Response…Hey Steinberg, how much money does YOUR organization get from frier American jews as opposed to Israeli ones. What is YOUR salary for NGO monitoring? Why do you beg for donations from American jews? What about all the Israeli charities like KKL with billions n the bank that ask for money for trees? What about hadassah hospital where they admitted the doctors looted the money and fundraisers take expensive trips to ask American jews for donations? Israel is a wealthy nation all the nonsense about millions going hungry – meanwhile Israelis vacation abroad like crazy, invest in real estate all over and have a top tier per capita wealth rank (in the top 10 up there with Qatar and Singapore). Lets face it all this media advocacy is a big money game.

  5. Mr Steinberg, why not expanding the issue to Israel as well. From Al-Monitor:

    Israeli Justice Minister Ayelet Shaked says funding by European states to NGOs advances foreign interests; yet millions of euros have also been transferred from the EU to Israeli government agencies.
    […]
    In response to the criticism of the Transparency Bill, Shaked quoted former US Secretary of State Henry Kissinger, who said, “America has no permanent friends or enemies, only interests.” Therefore, Shaked argues, Europe would not support Israeli entities for no reason, simply out of friendship. She believes the proposed legislation “labels the foreign interest of various countries in the world that wish to operate NGOs here and funnel hundreds of millions of shekels to them for that purpose.” Among those organizations are those that are interested in promoting coexistence between Jews and Arabs living in Israel.

    The list of NGOs receiving funds from foreign governments will not include organizations affiliated with the right or its ideology. Enlightened countries do not encourage entities that support the occupation of another people, the Jerusalem Temple reconstruction or discrimination on the basis of religion and nationality. Nevertheless, according to an official European Union document made public by Al-Monitor, if one is to tag people and entities receiving millions of shekels from “foreign interests,” it is only fitting that Prime Minister Benjamin Netanyahu and Environmental Protection Minister Avi Gabai receive tags as well. Former President Shimon Peres also deserves a “Shaked tag.” It turns out that even the Ministry of Agriculture and Rural Development, headed by Minister Uri Ariel, a member of Shaked’s party (HaBayit HaYehudi), is committing the sin of accepting money from a foreign entity. And not just any foreign entity — a European government.

    Among the bodies mentioned in the document is the Central Bureau of Statistics (CBS) — an independent agency in the prime minister’s office — which received 1.2 million euros in 2015 from the government of an EU member state. The money, provided by the government of Denmark, was designed to help the CBS “improve the quality of official statistics.”

    The Cameron Veterinary Institute in the Ministry of Agriculture was given a contribution by the German taxpayer of 1.03 million euros. And what was the real reason for the generous grant of 2.08 million euros that Germany gave the Ministry of Environmental Protection? The document states that the funds are meant for “upgrading of regulatory tools and improving the environment for the inhabitants of the state.”

    Germany’s interests also lie in its support for Comet-ME that helps Palestinians living in West Bank Area C (under complete Israeli control) enjoy such luxuries as electricity, and health and education services. The Israeli Civil Administration claims that the solar panels funded by Comet-ME were built for the Palestinians in the Hebron Hills without authorization and issued an order for their demolition. The Israeli interest, according to HaBayit HaYehudi, is to make the lives of the Palestinians miserable until they pack their bags and leave Area C for good, enabling the annexation to Israel of 60% of the area of the West Bank. Thus, it is clear that Germany, which wishes to slightly improve quality of life, is “tainted” by having a “foreign interest.” It is therefore only fitting that anyone touching the German funds be required to bear that same badge of shame, without exception, including the minister of defense and military chief of staff, too, for signing the submarine deal with Germany.

    The European document reveals that the Peres Center for Peace is also sinning by accepting money from the EU. In 2015, the center received some 500,000 euros from the EU to support Israeli-Palestinian cooperation in the medical field. Even the national religious Bar-Ilan University is tainted by EU funding. In 2014, it received 240,000 euros for a project advancing the rights of women in Israel. The Knesset ushers should check whether former President Shimon Peres and the president of Bar-Ilan University are sporting the Shaked tag on their lapels.

    The US administration, Israel’s great friend, is not content with providing $3 billion in annual defense assistance. The US Agency of International Development supports, for instance, Sadaka Reut Arab-Jewish Youth Partnership, an organization that boasts that more than 5,000 Palestinian and Jewish youths from 20 Israeli communities have participated over the past decade in a project that brings together Jewish and Palestinian teens, encouraging them to form political and social partnerships. For these youths, a romantic liaison is obviously the next stop.

    Hunting down human rights organizations and NGOs dedicated to scrutiny and censoring books damages Israel’s reputation as a liberal democracy. These initiatives harm the interests of the state, but at the same time also fail to accomplish the goals of Shaked and Bennett. The tagging decree has actually increased the reputation of those NGOs that promote universal values, and has not deterred their foreign contributors. On the contrary. Similarly, the extensive coverage given to the banning of “Borderlife” — yes, abroad as well — actually increased sales manifold.

    On the other hand — and this is the decisive element in the Israeli political scene of 2016 — social networks and talkbacks are flooded with positive reactions to both moves by the government. The same is true for other anti-democratic moves that the Israeli government is currently contemplating.

  6. El Roam, according to Oslo, the Gaza Strip and the West Bank are and must be 1 single unit. To refer to Area A-B-C but not to all the proviso contained in what was an interim agreement might be considered as a cherry-picking approach.
    On top of this, Israel controls and makes military operation also in area A. The occupation is a 24/7 form of violence that any moral person should oppose.

  7. Shmuel ,

    Thanks for your comment , I didn’t claim nothing which may even apparently , prima facie , be read as ” cherry – picking approach ” . For I was only describing reality , as it is . Arguing so , that he who push for ban , and in favor of human rights at the same time , should understand the situation on the ground , and understand the dependence of palestinians in the israeli economy , and understand the consequences of such ban ( increased tension and hostility , the described is only the tip of the ice …. ) .

    Not so simple as an apple , that is all !!

    Thanks

  8. Prof Gerald Steinberg ,
    In case (only in case) you were referring the question to me ( identifying myself ) then:
    I am not affiliated, with any organization, nor represent no one, but my pure knowledge and consciousness.
    However, The imperative phrasing , folding the assumption, that I work and paid at first place, is very offending , far from being polite, for , you could ask, first, whether I ” work ” for myself, or for third parties.

    Please , in case of ( even not , for being addressed finally to someone ) improve your attitude and manners with all due respect .

    Thanks

  9. Question of funder/enabler referred to author of post, Valentina Azarova. Anonymous posts are irrelevant.

  10. Response…Corporations have had duties under customary and treaty-based human rights law ( e.g., http://ssrn.com/abstract=1548112 And http://ssrn.com/abstract=1701992 With many U.S. S.Ct. Cases)

  11. Thank you for the references, Jordan. I certainly agree with your work from a cursory glance and look forward to engage with it more closely. BHR, based on positivist view that companies are direct duty-bearers under HRL and other IL (e.g. IHL, ICL) — as one of your article’s seems to argue (in 2010 and I think it is largely applicable today) — remains a law and practice in the making. Regulation and enforcement of BHR is likely to increase, but only if more states implement ‘national action plans’ to incorporate the UNGP in a manner that provides real teeth to obligations of due diligence with consequences for non-compliance. Extraterritorial enforcement of domestic or international law is its own challenge.

    A veridical view of the enforcement machinery available in many countries is based on the ability of existing domestic law provisions to vigorously enforce certain human rights-based obligations against offending corporate actors. This post was intended to shed light on this paradigm by considering the legal risks companies incur from involvement in an illegal territorial regime. The same paradigm of domestic law-based enforcement could however be extended to other unlawful administrative acts of foreign authorities.

    Given the present limits of the operational scope of both the UNGP and customary IHRL obligations of business, the effects of internationally unlawful acts — and the involvement therein by third state-based entities (private and public) — on states’ domestic legal orders provide a real opportunity to both explore and exploit in terms of furthering IL enforcement. The same process that can activate the domestic law based consequences of businesses’ involvement in IL violations — the same law that regulates corporate actors (and protects consumers, procurers and investors) — provides the rationale and necessity to ensure that the UNGP are vigorously internalised by domestic law.

  12. So Steinberg, you refuse to disclose YOUR salary…but you attack others for “funding”…

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