BHR Symposium: The Business and Human Rights Treaty in 2020–The Draft is “Negotiation-Ready”, but are States Ready?

[Surya Deva is an Associate Professor at the School of Law of City University of Hong Kong. He co-edited Building a Treaty on Business and Human Rights: Context and Contours (CUP, 2017) with David Bilchitz.] 

The Second Revised Draft (2020 Draft) marks an important step in negotiating a business and human rights (BHR) treaty. In comparison to the Zero Draft and the Revised Draft (2019 Draft), the 2020 Draft:

1. is more cohesive (e.g., the hotchpotch provisions of Article 4 of the 2019 Draft have been rearranged under different themes in Articles 4, 5 and 7 of the 2020 Draft);
2. is better aligned with the UN Guiding Principles on Business and Human Rights (UNGPs) (e.g., scope under Article 3(1), and the four-step human rights due diligence (HRDD) process under Article 6(2)); and
3. attempts to strike a fairer balance between competing interests of states, businesses and civil society organisations (CSOs) (e.g., reversal of burden of proof under Article 7(6) and adjudicative jurisdiction under Article 9).    

Because of these and other reasons, the 2020 Draft is more politically feasible without unduly compromising the desirable normative trajectory of the proposed treaty. In this blog, I will analyse selected provisions of the 2020 Draft and assess their suitability to achieve the “four objectives” that a BHR treaty should aim to accomplish in my view.     

Scope

Article 3 tries to overcome serious divisions among states and other actors regarding the scope of the BHR treaty by adopting a middle ground, kind of a “hybrid approach” that I had suggested earlier to resolve the deadlock. In line with the UNGPs, Article 3(1) applies the treaty to all business enterprises, but retains reference to transnational corporations (TNCs) and other business enterprises with activities of a transnational character. More importantly, Article 3(2) gives states a leeway to differentiate businesses enterprises based on “their size, sector, operational context and the severity of impacts on human rights” as to how they discharge their prevention obligations.

Although the BHR treaty should promote business respect for human rights by all enterprises, it is important not to ignore either the unique regulatory challenges posed by TNCs or the limited capacity of small and medium enterprises (SMEs). There are several provisions in Articles 6-9, 10, 12 and 13 that respond to these practical realities. However, the phrase “Unless stated otherwise” in Article 3(1) may be replaced with “Unless the context requires otherwise”.

By deviating from an undefined “all human rights” approach of the 2019 Draft, Article 3(3) extends the scope of the treaty to “all internationally recognized human rights and fundamental freedoms”. In addition to the Universal Declaration of Human Rights and customary international law, the given definition covers human rights emanating from “any core international human rights treaty and fundamental ILO convention to which a state is a party”. Such a tailored extension will provide quite an extensive coverage of human rights. Although all fundamental ILO conventions are widely ratified, the Article 3(3) list should include the ILO Declaration on Fundamental Principles and Rights at Work to decouple the covered labour rights from the ratification requirement. Moreover, considering the increasing relevance of environmental rights to business operations, a reference to the Rio Declaration on Environment and Development will be desirable.     

Rights of victims and states’ obligations   

Article 4 rightly signals that the BHR treaty is neither inventing new rights for victims of corporate human rights abuses nor creating a sharp divide between the rights of victims and non-victims. Rather, it stresses some key rights of “victims”, a term now defined in line with the Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims. Article 4(3) preserves higher protection, if any, of victims’ human rights under international or national law.

Article 5 contains corresponding obligations on states to protect victims’ human rights. Article 5(2) specifically requires states to “take adequate and effective measures to guarantee a safe and enabling environment for” human rights and environmental defenders. Considering continued threats faced by defenders (including directly from businesses), another provision requiring states to ensure that enterprises do not intimidate or harass human rights defenders is required.  

As all victims are not impacted in the same way, the BHR treaty should be responsive to the differentiated impacts of human rights abuses on women, children, LGBTI+ people, persons with disability, migrants, and indigenous peoples etc. Articles 4 and 5 should be strengthened on this front.   

Prevention and legal liability

Article 6(1) requires states to regulate effectively – by taking “all necessary legal and policy measures” – the activities of all business enterprises to prevent human rights abuses. While Article 6 mostly focuses on HRDD, the wide scope of Article 6(1) is worth noting, as states can employ a range of measures to prevent abuses by business. 

Article 6(2) is now better aligned with the four-step HRDD process outlined in the UNGPs. Value is added by two new provisions of Article 6(3) – which mandate integration of a gender perspective and introduce the requirement of indigenous peoples’ “free, prior and informed consent” – and Article 6(6) providing for sanctions for failure to conduct HRDD as per the stipulated requirements. Article 6(3) should also acknowledge the vital role of CSOs and trade unions in businesses conducting meaningful HRDD.

The relationship between Article 6(6) and Article 8 on legal liability would need more clarity. Article 8(1) requires states to put in place “a comprehensive and adequate system” of legal liability for “human rights abuses”, which is much broader than liability for failure to conduct HRDD at all or adequately. Conducting HRDD in itself will not be a defence to potential liability (Article 8(8)), but could there be an obligation of result for certain types of abuses, or for abuses caused by or contributed to by a business enterprise as opposed to it being merely directly linked to such abuses?

Article 8(9) removes the list of criminal offences found in the Article 6(7) of the 2019 Draft. This may be to build a political consensus. Yet, including an illustrative list of widely accepted offences under international law will provide better guidance to states as well as businesses.          

Corporate capture of state agencies and their policies is a major challenge, as many businesses use this strategy to secure “favourable treatment, security and impunity”. Article 6(7), which is inspired by Article 5(3) of the WHO Framework Convention on Tobacco Control, seeks to address this concern. This provision should be strengthened to require states to enact laws to enhance transparency regarding business donations to political parties, corporate lobbying, awarding of licenses, public procurement, and the revolving doors practice.   

Removing barriers to remedy

Several provisions (e.g., Articles 7-11) of the 2020 Draft require states to remove well-documented barriers to effective remedy faced by victims of business-related human rights abuses. Moreover, since victims face additional barriers in seeking remedy for abuses linked to TNCs, mutual legal assistance and international cooperation provisions (Articles 12 and 13) should prove to be vital.

Article 7(1) requiring states to confer jurisdiction on non-judicial mechanisms like national human rights institutions (NHRIs) to provide victims adequate, timely and effective remedy could be a game changer, because many NHRIs lack such an explicit mandate now. However, to be able to fulfil this aspiration, NHRIs would also need resources, independence, and necessary powers to collaborate with peers.

Article 7(2) provision concerning access to information, which is often vital to seek remedy, should be strengthened to ensure that victims are able to seek information both from businesses and state agencies. To implement Article 7(5), states would need to enact or amend laws – in line with the recast Brussels Regulation – to prevent the misuse of the doctrine of forum non conveniens. Similar legal reforms would be required to reverse the burden of proof in appropriate cases as per Article 7(6): the key would be to create a level playing field for victims without creating any unfairness to businesses, e.g., a rebuttable presumption of liability could be raised if victims are able to prove certain facts or make a prima facie case.

Article 9(1) drops victims’ domicile as one of the bases of adjudicatory jurisdiction, while Article 9(2) removes “substantial business interests” as one of the criteria for determining domicile. Taken together, these revisions reduce the chances of vexatious proceedings against businesses. At the same time, Article 9(1)/(3-5) secures legitimate expectations of victims to hold businesses accountable.

Article 13(2) on international cooperation now includes taking measures to raise awareness about victims’ rights and the obligations of states. This welcome addition should also focus on building capacity of affected communities to engage effectively in HRDD processes and to assess the relative efficacy of various remedy mechanisms.         

Human rights compatibility of trade and investment agreements

Article 14(5) obligates states to ensure that any existing or new bilateral/multilateral agreements, “including trade and investment agreements”, are compatible with states’ human rights obligations under the BHR treaty as well as other human rights conventions and instruments. Unlike Article 12(6) of the 2019 Draft, this provision makes an explicit reference to trade and investment agreements. It also differentiates how this compatibility could be achieved differently for existing and new agreements.

However, Article 14(5) does not prescribe any specific tools such as an ex-ante impact assessment of trade and investment agreements to achieve compatibility. Nor does it require states to include investors’ human rights obligations in these agreements. It would be ideal to include such provisions in the BHR treaty. Alternatively, these details could be developed by the Committee established under the treaty.  

Overall assessment vis-à-vis the “four objectives”

The 2020 Draft has the potential to push states to adopt mandatory HRDD legislation, remove barriers to access to remedy, and reform trade and investment agreements. However, it should be strengthened to deal with what I call “hard cases”: where there is no clear business case for respecting human rights and the concerned states are unwilling or incapable to perform their duty to protect against human rights abuses by enterprises. For example, Article 16(4) could give the Committee a mandate to accept complaints and make recommendations about selected emblematic or systemic abuses, while Article 16(5) could be used to develop regional and international monitoring mechanisms.      

While the Zero Draft was “on the right track, but not ready yet” and the 2019 Draft made some progress, the 2020 Draft is “negotiation-ready”. But are states, especially the European Union because of its commitment for mandatory HRDD, ready? Only time will tell. It is clear though that only by taking seriously rights and rights holders, states will be able to promote responsible business conduct and in turn build an equal, inclusive and sustainable society. This BHR treaty will be a critical step as part of this “building back better” process.