On the initiative of Ecuador, supported by South Africa and others, a plurality of the United Nations Human Rights Council in 2014 established an open-ended intergovernmental working group (Working Group) with a mandate ‘to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises’.Footnote 1 In essence, the Council launched a process to draft a treaty on business and human rights.
The first two sessions of the Working Group, held in 2015 and 2016, were merely informational: presentations by panels of experts and stakeholders, followed by questions and comments posed by States, civil society, and a few business representatives.
The resolution creating the process contemplated that the third session, which convened in Geneva during 23–27 October 2017, would be different. The resolution directed that the Chair of the Working Group, who since the outset has been Ecuador’s Ambassador to the United Nations (UN) in Geneva, ‘should prepare elements for the draft legally binding instrument for substantive negotiations at the commencement of the third session …, taking into consideration the discussions held at its first two sessions’.Footnote 2
The Chair of the third session was Ecuador’s Ambassador Guillaume Long. He replaced the prior Chair, Ambassador María Fernanda Espinosa, who in turn replaced him as Ecuador’s Foreign Minister. Their exchange of posts followed the election of Ecuador’s new President, Lenín Moreno, who assumed office in May 2017.
I. Promising Draft Elements
The ministerial changes did not prevent Ecuador from presenting draft elements for a treaty,Footnote 3 as called for, prior to the third session of the Working Group. The following highlights the major proposals in Ecuador’s 14-page, single spaced document:
∙ Framework: the treaty will begin with a preamble and a statement of principles, purposes and objectives;
∙ Application: the treaty will apply to:
o protection of all human rights,
o violations ‘resulting from any business activity that has a transnational character’,Footnote 4 and
o certain actors: states, regional economic integration organizations, transnational corporations and other business enterprises, and natural persons;
∙ General Obligations: the treaty will require:
o S tates : to respect, promote and protect human rights against violations by business, and to remedy such violations,
o B usiness : to ‘comply with all applicable laws and respect internationally recognized human rights, wherever they operate, and throughout their supply chains’,Footnote 5 and
o S tates Parties to international organizations : to strive to ensure that the organizations do not harm the objectives of the treaty or the capacity of states to carry out the treaty;
∙ Preventive Measures: states must require business to engage in human rights due diligence, must promote consultation by business with ‘all relevant actors’,Footnote 6 and must ensure public reporting by business;
∙ Legal Liability: states must provide legal liability for violations or abuses of human rights by transnational corporations and other business enterprises in their territory or under their jurisdiction, including civil liability for violations that occur ‘throughout the activities’ of those businesses;Footnote 7
∙ Access to Justice and Effective Remedies: states shall adopt adequate measures to ensure a range of remedies for business violations of human rights in a range of situations;
∙ Transnational Jurisdiction: states shall adopt measures to facilitate jurisdiction by their courts over violations committed by business entities throughout their activities, and throughout their supply chains, including suppliers domiciled outside the state’s jurisdiction;
∙ International Cooperation: mutual legal assistance to ensure access to justice and effective remedies;
∙ Implementation: mechanisms that ‘could be considered’ by states include national ombudspersons and international courts and committees;Footnote 8
∙ General Treaty Provisions: could include dispute settlement mechanisms, and the ‘primacy’ of the treaty ‘over other obligations from trade and investment legal regimes’.Footnote 9
The draft elements, as the present author wrote at the time, were ‘an excellent point of departure for negotiations. The broad-ranging draft addresses nearly all the points a treaty should cover. But it is deliberately imprecise; each element is flexibly worded. This leaves room to relax points, where needed, to attract states during the negotiations, or conversely to tighten points where needed to ensure an effective treaty’.Footnote 10
II. Problematic Delay
Unfortunately, the May 2017 governmental turnover in Ecuador apparently led to what proved to be a problematic delay and lack of prior consultation on the elements: instead of publishing them in June 2017, as anticipated, Ecuador did not disclose them until late September, barely three weeks before the Working Group session began.
The delay adversely affected the productivity of the session. Few, if any, states had time to formulate substantive negotiating positions. China, for example, which had sent a large and active delegation to the first session of the Working Group, sent only one young delegate, who announced that he had no position because his government had not had time to study the draft.
Much less did the 28 member states of another key player – the European Union (EU) – have time to develop a common negotiating position. The EU representative was reduced to stating repeatedly that the EU had no position on each element of the draft, and to posing sceptical questions, most of which might well have been resolved in advance, had there been prior consultations between the EU and Ecuador on the draft elements.
Nor was the format of the third session conducive to serious negotiations. It mirrored that of the first two sessions. Expert presentations were followed by questions and comments from states, civil society and business, all in public and streamed live on the internet. The only difference was that the discussion now centred on the draft elements, section by section, rather than on issues of business and human rights generally.
Although this kind of public forum may have been useful as a sort of initial consultation on the draft elements, it could not achieve the ‘substantive negotiations’ originally contemplated for the third session. Ecuador advised that it had engaged in more than ‘200 meetings held since 2014 involving multiple stakeholders’,Footnote 11 but few, if any, of those encounters were conducted on the basis of a draft text of the elements.
The delay and lack of prior consultation may have contributed to provoke a strong negative reaction by global business organizations. Objecting that they had not had sufficient time for meaningful consultation, the Business and Industry Advisory Committee to the Organisation for Economic Co-operation and Development (OECD), the Foreign Trade Association, the International Organization of Employers, and the International Chamber of Commerce denounced the draft elements as a ‘big step backwards’. They warned that the Working Group process, in which they had previously participated in a constructive way, ‘runs the risk of taking the business and human rights agenda back into a period of political stalemate’.Footnote 12
Of course, transnational business would be expected in any event to resist aspects of a treaty to regulate their activities. However, some of their more strident objections might have been avoided by prior consultation, thereby narrowing the task for negotiation on areas of real difference.
III. Selected Controversies
Space does not permit a treatment of all issues debated at the third session. The following are among the more contentious issues.
A. Companies Covered
Most stakeholders argue that any treaty should cover not only transnational corporations, but all business enterprises. However, South Africa, with support by some other states, has consistently argued that the treaty should cover only transnational corporations, and that states should be left free to regulate their own companies as they choose. A footnote in the original resolution supported South Africa’s position. Nonetheless, at the Working Group’s second session in 2016, a footnote in the programme of work document allowed for discussion of the issue.
In the programme of work for the third session, that footnote was removed on the eve of the session. The EU and others strenuously objected. After lengthy debate, the footnote was not reinstated, but discussion of the issue was in fact allowed by the Chair.
Attempting to bridge the gap, the draft elements propose that the application of the treaty turn, not on the company, but on the business activity. The treaty would apply to any ‘business activity that has a transnational character’, regardless of whether the company involved is transnational or local.Footnote 13 This formulation, as yet undefined, seemed to satisfy neither side. The issue – critical to achieving a treaty – remains unresolved.
B. Direct Treaty Obligations on Business
Most operative sections of the draft elements obligate states to regulate business.Footnote 14 Section 3.3, however, generally obligates business to respect human rights, without specifying whether that obligation arises directly under the treaty or only through its implementation by national law. Moreover, a clause in the proposed preamble invokes the draft Norms on business and human rights – proposed by the UN Sub-Commission on Human Rights in 2003, but not accepted by the Commission on Human Rights – which purported to impose international human rights law obligations directly on business.Footnote 15
The possibility that the treaty would impose direct obligations on business provoked a sharp protest by business organizations,Footnote 16 as well as by some states. While much the same obligations could be imposed through state regulation, some civil society advocates call for imposing direct obligations, both on principle and for practical reasons. The ambiguous treatment of this issue by the draft elements was not resolved at the third session.Footnote 17
C. Parent Company Liability for Supply Chains and Transnational Jurisdiction
The draft elements impose legal liability and require states to exercise jurisdiction over parent companies for the activities of their subsidiaries and suppliers, including those domiciled outside the parent company’s home jurisdiction.Footnote 18 These measures can and should be taken in appropriate circumstances. However, if imposed without regard to knowledge, control or fault by the parent company, or to the sovereignty interests of the foreign state, this sort of global legal liability regime could be overbroad and might even violate international law.Footnote 19
The draft elements do not significantly address these necessary qualifications. Business organizations objected.Footnote 20 The issue was debated but not clarified at the third session.Footnote 21 In future, negotiators might consider, for example, the recommendation of the UN Committee on Economic, Social and Cultural Rights, that States Parties should require corporations to use their ‘best efforts’ over entities they ‘may influence’, such as foreign subsidiaries or business partners, to respect human rights.Footnote 22
D. State-Owned Enterprises
Business argued that subjecting private transnational corporations to suit in foreign courts would result in an inequitable ‘two-tiered’ system, because state-owned enterprises enjoy immunity from suit in foreign national courts.Footnote 23 This argument overlooks the customary international law exception to jurisdictional immunity for states when they engage in commercial activities.Footnote 24 The argument did not attract noticeable support by states at the third session.
E. International Courts and Committees
The draft elements approach the possibilities of treaty implementation by international courts and committees gingerly: such measures ‘could be considered’ and states ‘shall decide’ whether to create them.Footnote 25 These possibilities were debated but not resolved at the third session.Footnote 26
F. Reversal of Burden of Proof
The draft elements mention reversal of the burden of proof as one technique to overcome obstacles to the provision of effective remedies for victims of business-related human rights abuses.Footnote 27 Business organizations vigorously objected to this as a denial of due process of law.Footnote 28 Prior consultation might have avoided this misunderstanding. No one suggests that a defendant bear the burden of proof from the outset. Rather, state laws,Footnote 29 and civil society recommendations,Footnote 30 agree with UN experts that, once a complainant makes out a prima facie case, ‘[s]hifting the burden of proof may be justified where the facts and events relevant for resolving a claim lie wholly or in part within the exclusive knowledge of the corporate defendant’.Footnote 31
G. Priority of a Human Rights Treaty
The draft elements propose the ‘primacy’ of the business and human rights treaty ‘over other obligations from trade and investment legal regimes’.Footnote 32 Not surprisingly, this was contested by some states,Footnote 33 as well as by business.Footnote 34 Objectors argued that the proposal lacks a legal basis and that, with the exception of jus cogens norms, there is no relevant hierarchy in international law.Footnote 35 The issue remains unresolved.
IV. Contentious Conclusion
The session ended on a contentious note. The Working Group declined to endorse the Chair’s recommendations that he should:
(1) Invite States and stakeholders to submit comments on the draft elements by February 2018;
(2) Present a draft treaty at least four months before the fourth session of the Working Group, for substantive negotiations during its fourth and subsequent annual sessions; and
(3) Convene a fourth session of the Working Group in 2018.Footnote 36
Instead, the Working Group merely ‘took note’ of the draft elements, and requested the Chair to undertake ‘informal consultations’ with states and other stakeholders on the way forward in elaborating a treaty.Footnote 37
The third session thus fell short of a resounding success. By the time the session ended, while many states said they support a treaty to regulate business and human rights and welcomed the ‘comprehensive’ nature of the draft elements,Footnote 38 it was not apparent that any state supported a treaty as outlined in the draft elements. At least two powerful states – the United States and Russia – openly oppose any treaty on business and human rights.
Nonetheless, it appears that the process will move forward. An assertion on the last day of the session by opponents, that there could be no further sessions without a new UN budgetary authorization, was rebuffed by the secretariat of the UN High Commissioner for Human Rights, which interpreted the mandate of the Working Group as not limited to the first three sessions.
Moreover, in February 2018, following the resignation of Ambassador Long (over internal disputes with his government), Ecuador named Ambassador Luis Gallegos Chiriboga as its new Permanent Representative to the UN in Geneva.Footnote 39 Ambassador Gallegos is an experienced diplomat. As Ecuador’s Permanent Representative to the UN in Geneva in 2014, he led the adoption of the resolution establishing the treaty process. Perhaps 2018 will see improved progress in drafting and attracting diplomatic support for a treaty on business and human rights.
