09 Sep BHR Symposium: The Business and Human Rights Treaty and Private International Law
[Sarah Joseph is Professor of Human Rights Law and Mary Keyes is Director of the Law Futures Centre at Griffith University.]
The draft treaty on business and human rights signals an intention to facilitate cross-border human rights litigation against businesses and associated cross-border cooperation. To date, most instances of such litigation have been characterised by protracted procedural battles regarding matters of private international law (especially in relation to jurisdiction), which have often culminated in termination of the case without litigation of the substance of the claim. At the least, lengthy arguments over procedure can exhaust the resources and resilience of plaintiffs. Unfortunately, anomalies within the draft treaty might facilitate new types of protracted proceedings, again frustrating the attempts of human rights victims to attain remedies against businesses.
Transnational Human Rights Litigation Against Companies
There have been many cases in which human rights abuses by multinational enterprises (“MNEs”) have arisen in developing states, and been litigated in developed states. For example, relevant civil litigation has been brought in the United States, the United Kingdom, Canada, and the Netherlands.
Such cases may arise for a variety of reasons. Remedies can be difficult to attain in states where the alleged abuser is more economically powerful than the developing state in which it is conducting operations: the host state in some cases is economically vulnerable and perhaps susceptible to influence, if not coercion and corruption. The relevant human rights abuse has sometimes involved the complicity of the host state: litigation within that state could be futile and even attract reprisals. Furthermore, a host state may lack the technological, environmental or legal expertise to properly hold an MNE to account. An MNE can also limit its liability by allocating assets across jurisdictions to minimise risk. Hence, a judgment may be sought in or have to be enforced in a particular jurisdiction due to the location of assets: such applications are not always successful.
Despite numerous transnational human rights cases having been brought against companies, few have led to the provision of meaningful remedies to plaintiffs. Commonly, cases have stalled or been halted by protracted procedural arguments, for example over the exercise of jurisdiction in the forum state. Indeed, most cases settle if a defendant company ultimately fails with its procedural challenges, indicating that procedure rather than substance have dominated this field of litigation.
The BHR Treaty and transnational Human Rights Litigation
A key concern of the draft treaty seems to be to protect the right of victims to bring legitimate judicial proceedings against companies for human rights abuses, rather than be tangled up and thwarted by lengthy procedural arguments. The current draft addresses the three issues that arise in cross-border civil litigation – jurisdiction, applicable law, and the recognition and enforcement of judgments.
Below we explain these provisions, especially those relating to jurisdiction and applicable law. We also note that there are unresolved issues and anomalies in this draft, which could frustrate the apparent goal of clearing hurdles for legitimate transnational human rights litigation against MNEs.
Grounds of Jurisdiction
Article 9.1 creates three grounds of jurisdiction. It provides that the courts of state parties have jurisdiction over claims for human rights abuses if the relevant abuse occurred in the state, if a relevant act or omission contributing to the abuse occurred in the state, or if the legal or natural persons alleged to have committed the abuse are domiciled in the state. A broad definition of “domicile” is contained in Article 9.2.
There are two additional grounds of jurisdiction in Article 9. Article 9.4 states that courts have jurisdiction over non-domiciled legal or natural persons “if the claim is closely connected with a claim against” a domiciled entity: this provision will facilitate joint litigation against parent and subsidiary companies. Article 9.5 enshrines forum necessitas, providing that a court shall have jurisdiction over non-domiciled entities “if no other effective forum guaranteeing a fair trial is available and there is a sufficiently close connection” to the forum.
Forum non Conveniens
The most important jurisdictional provision of this draft is Article 9.3, which characterises the jurisdiction established by Article 9.1 as “obligatory”, and therefore stipulates that the courts designated in Article 9.1 “shall not decline [jurisdiction] on the basis of forum non conveniens(“FNC”), a common law doctrine which permits courts to dismiss claims if another jurisdiction is a more appropriate forum for the litigation. It is often raised by MNEs in litigation of this kind.
Article 9.3 explicitly applies only to the cases brought under Article 9.1, rather than Articles 9.4 or 9.5. This preserves room for courtroom battles over the application of FNC where jurisdiction arises under Article 9.4, for example in the context of different entities within corporate groups, or Article 9.5 (even though jurisdiction on the basis of 9.5 is a last resort indicating that no suitable alternative forum exists). The issue may be resolved by Article 7.5, which prohibits the courts of states parties from dismissing “legitimate judicial proceedings” on the basis of FNC. This provision seems to apply to all of the Article 9 grounds of jurisdiction, but its application is qualified by the word “legitimate”. The true scope of the rule excluding FNC must be clarified, or else extensive FNC arguments will continue to plague this field of litigation.
The five different grounds of jurisdiction established by Article 9 mean that in most cases the courts of more than one country will be competent to hear the same claim, creating the possibility of parallel proceedings. Parallel proceedings may arise for many reasons, including possible counterclaims, different class action claims by members of the same class and the possibility of corporations seeking declarations of non-liability. Parallel proceedings can lead to contradictory decisions and a waste of resources for both parties and states.
Generally, common law courts deal with parallel proceedings by resort to the FNC doctrine, a possibility largely (or totally) excluded by the draft treaty. Civil law courts deal with the matter by resort to the lis pendens doctrine, deferring to the court where proceedings are first filed. There is no mention of this principle in the treaty. Indeed, the word “obligatory” in Article 9.3 (regarding exercises of jurisdiction under Article 9.1) suggests that there is no other basis on which the court might decline to exercise jurisdiction on those grounds, including in cases where proceedings involving the same or closely related claims have already commenced in the courts of another state party.
The only acknowledgment of the possibility of parallel proceedings arises in Article 12.9, which generally requires the courts of a state to recognise and enforce foreign judgments which are made “in accordance with” the treaty (Article 12.8), with very limited exceptions. One of these exceptions arises in Article 12.9.b: a judgment might be refused recognition and enforcement if it is “irreconcilable with an earlier judgment…with regard to the same cause of action and the same parties” given by a court in the state of in which recognition is sought. Hence, the only priority accorded in the treaty, which is unmentioned in its jurisdictional rules, concerns an earlier judgment of the courts of the state in which recognition of a foreign judgment is sought. Therefore, a bizarre situation could arise where a state must recognise another forum’s judgment even though it might be about to deliver a contradictory judgment. Furthermore, the speed at which a case proceeds dictates when a judgment can be delivered, which is clearly relevant to the recognition provision, is manipulable by defendants.
It would be desirable to have a more complete principle addressing parallel proceedings, whilst also ensuring that victims are not deprived of their entitlement to bring legitimate proceedings.
Article 11.1 provides that the applicable law is that of the forum, including its conflict of law rules. The application of forum law to procedural issues is unremarkable. The application of forum law as such to matters of substance is controversial, because of its propensity to encourage forum shopping. Such a rule certainly depends on the jurisdictional principles ensuring that proceedings are heard in an appropriate forum. This is even more important given that the scope of a state’s treaty obligations under the amended Article 3.3 will vary according to the human rights treaties that it has ratified, which will generate different substantive laws in this regard.
The explicit requirement of the application of the forum’s conflict of law rules to matters of substance is problematic for two reasons. First, it is circular: the forum’s conflict of law rule relevant to this issue is Article 11.1, which refers back to the forum’s conflict of law rule. In that case, a court would probably apply the forum’s residual national choice of law rule. Hence, the applicable law will vary according to domestic choice of law rules – this is a disappointing outcome in a treaty which is aimed at harmonising rules regarding cross-border litigation. Second, while referring to the forum’s conflict of laws rules can be justified in principle, it adds a further layer of complexity to what are already complicated proceedings.
Under article 11.2 a court “may”, at the request of the victim, for matters of “substance regarding human rights laws relevant to the claim”, apply the law of “another State”, being the place where the violation of human rights occurred (11.2.a), or the place of the defendant’s domicile (11.2.b). Article 11.2 provides no guidance as to how a court determines whether to accede to a victim’s 11.2 request. Greater certainty is required for such a critical provision, the application of which is sure to be hotly contested, especially with differing obligations and differing domestic human rights laws arising from article 3.3.
Transnational human rights litigation is an important means of ensuring accountability for MNEs for human rights abuses. One of the key aims of the proposed BHR treaty is to ease the path for victims to access justice in appropriate courts, whether in host, home or occasionally other countries. While the draft treaty has made significant progress in that regard, more work must be done in future drafts in order for the treaty to ultimately achieve the goal of facilitating global access to justice for victims of business-related human rights abuses.