General Principles for Business and Human Rights in International Law [1 ed.] 9789004440036, 9789004440029

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General Principles for Business and Human Rights in International Law

Queen Mary Studies in International Law Edited by Malgosia Fitzmaurice

VOLUME 43

The titles published in this series are listed at brill.com/qmil

General Principles for Business and Human Rights in International Law By

Ludovica Chiussi Curzi

leiden | boston

The Library of Congress Cataloging-in-Publication Data is available online at http://catalog.loc.gov

Typeface for the Latin, Greek, and Cyrillic scripts: “Brill”. See and download: brill.com/brill-typeface. issn 1877-4822 isbn 978-90-04-44002-9 (hardback) isbn 978-90-04-44003-6 (e-book) Copyright 2020 by Koninklijke Brill NV, Leiden, The Netherlands. Koninklijke Brill NV incorporates the imprints Brill, Brill Hes & De Graaf, Brill Nijhoff, Brill Rodopi, Brill Sense, Hotei Publishing, mentis Verlag, Verlag Ferdinand Schöningh and Wilhelm Fink Verlag. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Requests for re-use and/or translations must be addressed to Koninklijke Brill NV via brill.com or copyright.com. This book is printed on acid-free paper and produced in a sustainable manner.

To Zeila, my grandmother

In law we must beware of petrifying the rules of yesterday and thereby halting progress in the name of process. If one consolidates the past and calls it law, he may find himself outlawing the future. – Judge Manfred Lachs – Former President of the ICJ ‘The Twenty-Fifth Anniversary of the International Law Commission’, Speech delivered at the UN General Assembly’ (12 October 1973)

Quelles que soient les modalités de l’avenir, une chose est certaine, les droits fondamentaux de l’être humain ne seront connus, et effectivement protégés, que si, dans le monde entier, un vaste mouvement s’établit en leur faveur. Pour cela, il faut des hommes et des femmes de pensée, de raison, de science. Mais il faut aussi des gens de cœur. M’adressant à mes auditeurs, non comme à des étudiants, mais à des hommes et des femmes qui entrent dans la vie, avec la mission de contribuer à améliorer le sort de leurs semblables, je fais appel à tous. Vous augmentez votre science : vous faites œuvre de pensée. Je suis assuré que vous donnerez aussi, à cette grande œuvre, votre cœur. – René Cassin ‘Les droits de l’homme’ (1974) 140 RdC de l’Académie des droit international 323, 331

Table of Contents Prefacexiii Acknowledgmentsxv Abbreviationsxvii Table of Treaties

xix

Other International Instruments

xxiii

Table of Cases

xxxv

General Introduction The Heart of the Matter 1 Research Question and Outline of the Book 2 Note on Terminology  2.1 Corporations 2.2 General Principles of Law 2.3 Responsibility, Liability and Accountability 2.4 Corporate Social Responsibility and Business and Human Rights

1 1 7 14 15 16 17 21

PART I A Public International Law Framework for Business and Human Rights 23 Introduction 23 1 Business-Related International Human Rights Standards  23 1.1 The OECD Guidelines for Multinational Enterprises 24 1.2 The ILO Tripartite Declaration  32 1.3 The UN Global Compact 35 1.4 The UN Guiding Principles on Business and Human Rights 38 1.5 Non-Legally Binding Instruments (per se) 47 2 Corporations and Human Rights under Treaty Law 53 2.1 The Search for Corporate Obligations under Existing Human Rights Treaties56 2.1.1 The Two UN Covenants  63 2.1.2 The ILO Core Labour Conventions 69 2.1.3 Regional Human Rights Treaties 71 2.2 The Drive for Corporate Obligations through a New Treaty  80 2.2.1 The UN International Code of Conduct for Transnational Corporations80 2.2.2 The UN Draft Norms on Transnational Corporations  85 2.2.3 The Current Negotiations of a Treaty on Business and Human Rights  94

x

table of contents

3 Corporations and Human Rights under Customary International Law  99 3.1 Human Rights as Customary International Law 100 3.2 Corporations as Addressees of Customary Human Rights Rules  102 3.3 The Plausibility of a Customary Rule on Corporate Liability 112 3.4 Corporations and the Making of Customary International Law 117 4 General Principles of Law: A Forgotten Source 120 4.1 The History of Article 38(1)(c) of the ICJ Statute 120 4.2 The Legal Nature of Principles 123 4.3 The Multiple Origins of General Principles of Law 125 4.4 The Normative Functions of General Principles of Law 129 4.5 In Search of a Methodology: Distillation and Transposition of Principles 132 4.6 General Principles of Law and Customary International Law 135 4.7 A Role for General Principles in Business and Human Rights  138 4.7.1 General Principles as a Tool to Interpret the State Obligations 138 4.7.2 General Principles and the Development of Corporate Obligations  139 4.7.3 The Development of a Principle on Corporate Liability 139 PART II General Principles and the Human Rights Obligations of States 141 Introduction 141 5 Jurisdiction: The Contours of the State Entitlement and Duty to Act 142 5.1 A Public International Law Perspective on Jurisdiction 142 5.2 A Private International Law Perspective on Jurisdiction 148 6 The State Duty to Protect Human Rights and General Principles of Law 150 6.1 The Principle of Good Faith and the Effectiveness of Human Rights Treaties151 6.1.1 Good Faith as a Universal Principle of Law 153 6.1.2 State Positive Obligations to Prevent Corporate Violations  155 6.1.3 Good Faith and Policy Coherence in Drafting Investment Agreements165 6.2 The Principle of No-Harm and Parent-Based Extraterritorial Regulation 173 6.2.1 No-Harm: From Geographical Proximity to Community Interests 174 6.2.2 Extraterritorial Regulation of Corporate Activities under the UNGPs  179 6.2.3 The UN Treaty Bodies’ Approach to Extraterritorial Regulation  181 6.2.4 No-Harm and the Home State Duty to Prevent Corporate Violations  184 6.3 Access to Remedy and Extraterritorial Adjudication  188 6.3.1 The Right to Remedy as a General Principle of Law 190 6.3.2 Foreign Policy Concerns and the Uncertain Fate of the Alien Tort Statute  194 6.3.3 Parent-Company Liability: When Remedy Depends on the Duty of Care 203 6.3.4 Access to Justice as a Limit to Forum non Conveniens and a Legal Basis for Forum Necessitatis  209

general principles for business and human rights in international law PART III General Principles of Law and the Development of Corporate Obligations Introduction 7 Corporate Limited Liability and the Principle of Abuse of Rights 7.1 The Rationale of Limited Liability and the Purpose of the Corporation 7.2 Abuse of Rights as a General Principle of Law 7.3 The Prohibition of Abuse of the Corporate Structure 8 Corporate Human Rights Due Diligence: From the Process to the Principle 8.1 Due Diligence as a General Principle of Law 8.2 Corporate Human Rights Due Diligence 8.3 Mandatory Human Rights Due Diligence in Domestic Legal Systems 8.4 Due Diligence of Investors in International Investment Law 9 Corporate Conduct through the Principles of Good Faith and Estoppel 9.1 Good Faith and Estoppel  9.2 Good Faith Obligations of Investors in International Investment Law  9.3 Corporate-based Codes of Conduct

xi 225 225 225 226 231 236 240 241 245 250 256 261 263 265 270

PART IV A General Principle on Corporate Liability in International Law 279 Introduction 279 10 Corporate Liability as a General Principle of Law 279 10.1 Corporate Liability in Domestic Legal Systems 279 10.2 Transposing the Principle into International Law: Overcoming Legal Clichés286 Concluding Remarks 303 Bibliography307 Index355

Preface In the last decades, the relationship between business practices and human rights has increasingly come to the fore in international law. While states remain the ultimate duty bearers in the protection of human rights, it is generally recognised that corporations are expected to comply with international human rights law. A general consensus exists over a baseline responsibility to respect human rights, yet no agreement is to be found on whether a legally binding obligation of the same content exists. This book seeks to provide a legal analysis of the role of general principles of law in the business and human rights field. The inclusion of ‘general principles of law’ in Article 38(1)(c) of the Statute of the International Court of Justice, provides for an interpretative legal technique and a source of international law. Following these two functions, this study adopts a three-tier approach. First, it focuses on the role of general principles as an interpretive tool of the human rights obligations bearing on states with regard to corporate activities. Second, it considers whether and to what extent principles can contribute to develop corporate obligations. Third, it asks whether a principle on corporate liability has emerged or is emerging in international law. The objective is not to provide a “silver bullet” for addressing corporate human rights violations, but rather to explore legal arguments based on existing norms of international law. The overall aim of the study is to contribute to current efforts to assess the existence, content and enforceability of corporate obligations under international human rights law.

Acknowledgments I owe a debt of gratitude to the University of Oslo for believing that my PhD research project deserved a chance, and to the University of Bologna, my Alma Mater, for planting the seed of international law. At the Norwegian Centre for Human Rights, I have been able to develop my research in a warm and welcoming environment. The Lauterpacht Centre for International Law at the University of Cambridge and the Columbia Center on Sustainable Investment at Columbia University have also allowed me to share my ideas within nurturing intellectual communities. I wish to thank wholeheartedly my PhD supervisors, Professors Mads Andenas and Attila Tanzi for being an unceasing source of advice, support and patience throughout the years. Special thanks are also due to the members of the PhD Committee, Professors Freya Baetens, Ludovic Hennebel, Anna Maria Lundberg, Makane Mbengue and Alessandra Pietrobon, for their stimulating comments on the PhD thesis. The anonymous peer review has also provided extremely useful suggestions. Special thanks should also go to Brill’s Assistant Editor, Ingeborg van der Laan and to Professor Malgosia Fitzmaurice for their precious support. Over the last years, I have been lucky enough to discuss earlier versions of this work with many talented international lawyers, including Professors Andrew Clapham, Malgosia Fitzmaurice and Gentian Zyberi, as well as Doctors Daniel Costelloe, Gian Maria Farnelli, Lawrence Hill-Cawthorne and Martins Paparinskis. All the above contributions notwithstanding, the full and sole responsibility for the content of the present manuscript, including errors of fact and analysis, rests with the author. When walking the steepest roads, a number of friends have constantly made sure I would not run out of breath. These people include Adriana, Domenico, Emilio, Giulia, Giuseppe, Johann, Khaled and Natalia. Lastly, I am most grateful to my Family. You have taught me to hold on to myself.

Abbreviations ACHR – ACHPR – ACmHPR – ACtHPR – AJIL – ARSIWA –

American Convention on Human Rights African Charter on Human and Peoples’ Rights African Commission on Human and Peoples’ Rights African Court on Human and Peoples’ Rights American Journal of International Law Articles on Responsibility of States for International Wrongful Acts ATS – Alien Tort Statute BIT – Bilateral Investment Treaty BHR – Business and Human Rights CAT – Convention against Torture CEDAW – Committee on the Elimination of all Forms of Discrimination against Women CERD – Committee on the Elimination of all Forms of Racial Discrimination CESCR – Committee on Economic, Social and Cultural Rights CRC – Convention on the Rights of the Child CSR – Corporate Social Responsibility ECHR – European Convention on Human Rights ECtHR – European Court of Human Rights ECJ – European Court of Justice ECOSOC – United Nations Economic and Social Council EJIL – European Journal of International Law EU – European Union EWCA – England and Wales Court of Appeal FDI – Foreign Direct Investment HRC – Human Rights Council IACmHR – Inter-American Commission on Human Rights IACtHR – Inter-American Court on Human Rights ICC – International Criminal Court ICCPR – International Covenant on Civil and Political Rights ICERD – International Convention on the Elimination of All Forms of Racial Discrimination ICESCR – International Covenant on Economic, Social and Cultural Rights ICJ – International Court of Justice ICLQ – International & Comparative Law Quarterly

xviii abbreviations

ICSID – ICTY – IIA – ILC – ILO – JIDS – LPICT – MPEPIL – MPEiPRO – NAP – NCP – OECD – OUP – PCIJ – RdC – RIAA – SDGs – STL – TNC – UN – UNGA – UNGPs – WTO –

International Centre for Settlement of Investment Disputes International Criminal Tribunal for the former Yugoslavia International Investment Agreement International Law Commission International Labour Organisation Journal of International Dispute Settlement Law and Practice of International Courts and Tribunals Max Planck Encyclopedia of Public International Law Max Planck Encyclopedia of International Procedural Law National Action Plan National Contact Point Organisation for Economic Cooperation and Development Oxford University Press Permanent Court of International Justice Recueil des Cours de l’Académie de droit international Reports of International Arbitral Awards Sustainable Development Goals Special Tribunal for Lebanon Transnational Corporation United Nations United Nations General Assembly United Nations Guiding Principles on Business and Human Rights World Trade Organisation

Table of Treaties African Charter on Human and Peoples’ Rights (adopted 27 June 1981, entered into force 21 October 1986) 21 ILM 58 African Union Convention on Preventing and Combating Corruption (adopted 1 July 2003, entered into force 5 August 2006) 43 ILM 5 American Convention on Human Rights (adopted 22 November 1969, entered into force 18 July 1978) 1144 UNTS 123 Charter of the International Military Tribunal – Annex to the Agreement for the Prosecution and Punishment of the Major War Criminals of the European Axis (“London Agreement”) (8 August 1945) 82 UNTC 280 Charter of the United Nations (adopted 26 June 1945, entered into force 24 October 1945) 1 UNTS 16 Convention against Torture and other Cruel, Inhuman and Degrading Treatment or Punishment (adopted 10 December 1984, entered into force 26 June 1987) 1465 UNTS 85 Convention against Transnational Organized Crime (adopted 15 November 2000, entered into force 29 September 2003) 2225 UNTS 209 Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (adopted 30 October 2007, entered into force 1 January 2010) Convention on the Elimination of All Forms of Discrimination against Women (adopted 1 March 1980, entered into force 3 September 1981) 1249 UNTS 13 Convention on the Organisation for Economic Co-operation and Development (adopted 14 December 1960, entered into force 30 September 1961) 888 UNTS 179 Convention on the Prevention and Punishment of Genocide (adopted 9 December 1948, entered into force 12 January 1951) 78 UNTS 277 Convention on the Rights of the Child (adopted 20 November 1989, entered into force 2 September 1990) 1577 UNTS 3 Convention on the Settlement of Investment Disputes between States and Nationals of other States (adopted 18 March 1965, entered into force 14 October 1966) 575 UNTS 159 Convention concerning Minimum Age for Admission to Employment (adopted 26 June 1973, entered into force 19 June 1976) C138 Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour’ (adopted 17 June 1999, entered into force 19 November 2000) C182 European Convention for the Protection of Human Rights and Fundamental Freedoms (adopted 4 November 1950, entered into force 3 September 1953) 213 UNTS 221 European Social Charter (adopted 18 October 1961, entered into force 26 February 1965) CoE Treaty No 35

xx

table of treaties

Forced Labour Convention (adopted 28 June 1930, entered into force 1 May 1932) C29 Geneva Convention Relative to the Protection of Civilian Persons in Time of War (adopted 12 August 1949, entered into force 21 October 1950) 75 UNTS 287 International Covenant on Civil and Political Rights (adopted 19 December 1966, entered into force 23 March 1976) 999 UNTS 171 International Covenant on Economic, Social and Cultural Rights (adopted 19 December 1966, entered into force 3 January 1976) 993 UNTS 3 International Convention on Civil Liability for Oil Pollution Damage (adopted 1969, entered into force 30 May 1996) 973 UNTS 3 International Convention on the Elimination of all Forms of Racial Discrimination, (adopted 21 December 1965, entered into force 4 January 1969) 660 UNTS 195 International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (adopted 18 December 1990, entered into force 1 July 2003) 2220 UNTS 93 International Convention on the Suppression and Punishment of the Crime of Apartheid (adopted 30 November 1973, entered into force 18 July 1976) 1015 UNTS 243 International Convention on the Suppression of the Financing of Terrorism (adopted 9 December 1999, entered into force 10 April 2002) 2178 UNTS 197 OECD Convention on Combating Bribery of Public Officials in International Business Transactions (signed 17 December 1997, entered into force 15 February 1999) 37 ILM 1 Protocol to the African Charter on Human and Peoples’ Rights on the Establishment of the African Court on Human and Peoples’ Rights (adopted 10 June 1998, entered into force on 25 January 2004) Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002) 2187 UNTS 3 Statute of the International Court of Justice (26 June 1945) 33 UNTS 993 United Nations Convention against Corruption (adopted 31 October 2003, entered into force 14 December 2005) 2349 UNTS 41 United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3 United Nations Framework Convention on Climate Change (adopted 9 May 1992, entered into force 21 March 1994) 1771 UNTS 107 Vienna Convention for the Protection of the Ozone Layer (adopted 22 March 1985, entered into force 22 September 1988) 1513 UNTS 293 Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 311



Bilateral Investment Treaties

Bilateral Investment Treaty Argentine-Qatar (signed 6 November 2016) Bilateral Investment Treaty Morocco-Nigeria (3 December 2016) Bilateral Investment Treaty Brazil-Ethiopia (11 April 2018)

general principles for business and human rights in international law

xxi

Bilateral Investment Treaty Brazil –Suriname (2 May 2018) Bilateral Investment Treaty Brazil-Guyana (13 December 2018) Bilateral Investment Treaty Cameroon-Turkey (signed 24 April 2012) Bilateral Investment Treaty Austria-Nigeria (signed 8 April 2013) Bilateral Investment Treaty Canada-Guinea (signed 27 May 2015, entered into force 27 March 2017) Bilateral Investment Treaty Canada-Burkina Faso (signed 20 April 2015, entered into force 11 April 2017) Bilateral Investment Treaty Canada-Côte d’Ivoire (signed 30 November 2014, entered into force 14 December 2015)

Other International Instruments

United Nations



Commission on Human Rights

‘Human Rights and Transnational Corporations and other Business Enterprises’ (20 April 2005) UN Doc E/CN.4/RES/2005/69 ‘Interim Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John G Ruggie’ (22 February 2006) UN Doc E/CN.4/2006/97 ‘Report of The United Nations High Commissioner on Human Rights on the Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to Human Rights’ (15 February 2005) UN Doc E/CN.4/2005/91 ‘Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to Human Rights’ (20 April 2004) Decision 2004/116 ‘Second Interim Report on the Question of the Impunity of Perpetrators of Human Rights Violations, by Mr El Hadji Guissé, Special Rapporteur’ (3 July 1996) UN Doc E/CN.4/Sub.2/1996/15



Committee on the Elimination of All forms of Discriminations against Women

‘General Recommendation 19: Violence against Women’ (30 January 1992) UN Doc A/47/38



Committee on the Elimination of Racial Discrimination

‘Concluding Observations: Canada’ (9 March 2012) UN Doc CERD/C/CAN/CO/19-20



Committee on Economic, Social and Cultural Rights

‘Climate change and the International Covenant on Economic, Social and Cultural Rights: Statement of the Committee on Economic, Social and Cultural Rights’ ‘Concluding Observations: Australia’ (11 July 2017) UN Doc. E/C.12/AUS/CO/5 ‘Concluding Observations: New Zealand (1 May 2018) UN Doc E/C.12/NZL/CO/4 ‘Concluding Observations: Norway’ (13 December 2013) UN Doc E/C.12/NOR/CO/5 ‘Concluding Observations: United Kingdom’ (14 July 2016), UN Doc E/C.12/GBR/CO/6 ‘General Comment No 3: The Nature of States Parties’ Obligations’ (14 December 1990) UN Doc E/1991/23 ‘General Comment No 12: The Right to Adequate Food (Article 11)’ (12 May 1999) UN Doc E/C.12/1999/5

xxiv

other international instruments

‘General Comment No 14: The Right to Highest Attainable Standard of Health (Article 12)’ (11 August 2000) UN Doc E/C.12/2000/4 ‘General Comment No 15: The Right to Water (Articles 11 and 12)’ (20 January 2003) UN Doc E/C.12/2002/11 ‘General Comment No 18: The Right to Work (Article 6)’ (6 February 2006) UN Doc E/C.12/GC/18 ‘General Comment 19: The Right to Social Security’ (4 February 2008) UN Doc E/C.12/GC/19 ‘General Comment No 23: The Right to Just and Favourable Conditions of Work (Article 7)’ (7 April 2016) UN Doc E/C.12/GC/23 ‘General Comment No 24: State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities’ (10 August 2017) UN Doc E/C.12/GC/24 ‘Globalization and its Impact on the Enjoyment of Economic, Social and Cultural Rights’ (1998) UN Doc E/C.12/1998/26, Chapter VI ‘Statement on the Obligations of States Parties Regarding the Corporate Sector and Economic, Social and Cultural Rights’ (12 July 2011) UN Doc E/C.12/2011/1



Committee on the Rights of the Child

‘Concluding Observations: Iceland’ (2 June 2006) UN Doc CRC/C/OPSC/ISL/CO/1 ‘General comment No 16 on State Obligations Regarding the Impact of the Business Sector on Children’s Rights’ (17 April 2013) UN Doc CRC/C/GC/1



Commission on Transnational Corporations

‘Draft UN Code of Conduct on Transnational Corporations (‘Chairman’s text’)’ (12 June 1990) UN Doc E/1990/94 ‘Draft UN Code of Conduct on Transnational Corporations’ (1983) UN Docs E/1983/17/ Rev.1, E/1988/39/Add 1(1988) ‘Information Paper on the Negotiations to Complete the Code of Conduct on Transnational Corporations’ (4 January 1983) UN Doc E/C.10/1983/S/1 ‘Report on First Session 17–28 March 1975’ (1975) UN Docs E/5655 and E/C.10/6



Centre on Transnational Corporations

‘Issues Involved in the Formulation of a Code of Conduct’ (20 July 1976) UN Doc E/C.10/17 ‘The New Code Environment’ (April 1990) UN Doc ST/CTC/SER.A/16



Department of Economic and Social Affairs

‘Report of the Group of Eminent Persons on the Impact of Multinational Corporations on Development and International Relations’ (24 May 1974) Res 1974/1721 UN Doc E/5500/Rev.1

general principles for business and human rights in international law



xxv

Economic and Social Council

‘The Impact of Multinational Corporations on the Development Process and on International Relations’(28 June 1972) Res 1721 (LIII) UN Doc E/5209 ‘The Impact of Transnational Corporations on the Development Process and on International Relations’ (1974) Res 1913 UN E/5570/Add.1 ‘Resolutions Adopted by the Council during its Fifty-Third Session’ (3–28 July 1972) Res 1721(LII) UN Doc E/5209



General Assembly

‘Access to Effective Remedies under the Guiding Principles on Business and Human Rights: Implementing the United Nations Protect, Respect and Remedy Framework, Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (18 July 2017) UN Doc A/72/162 ‘Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law’ (21 March 2006) UN Doc A/RES/60/147 ‘Charter of Economic Rights and Duties of States’ (12 December 1974) UN Doc A/RES/29/3281 ‘Declaration of the High-level Meeting of the General Assembly on the Rule of Law at the National and International Levels (30 November 2012) UN Doc A/RES/67/1 ‘Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in Accordance with the Charter of the United Nations’ (24 October 1970) UN Doc A/RES/25/2625. ‘Declaration on Social Progress and Development’ (11 December 1969) UN Doc A/ RES/24/2542 ‘Declaration on the Establishment of a New International Economic Order’ (1 May 1974) UN Doc A/Res/S-6/3201 (S-VI) ‘Declaration on the Right and Responsibility of Individuals, Groups and Organs of Society to Promote and Protect Universally Recognized Human Rights and Fundamental Freedoms’ (9 December 1998) UN Doc Res 53/144 ‘Draft Declaration on Rights and Duties of States’ (6 December 1949) UN Doc Res 375 (IV) ‘Final Act of the International Conference on Human Rights, Proclamation of Teheran’ (22 April – 13 May 1968) UN Doc A/CONF. 32/41 ‘Globalisation and its Impact on the Full Enjoyment of All Human Rights’ (6 April 2011) UN Doc A/RES/65/216 ‘Globalization and its Impact on the Full Enjoyment of all Human Rights’ (16 December 2005) UN Doc A/RES/60/152 ‘Report of the President of the Forty-Sixth Session of the General Assembly’ (15 September 1992) UN Doc A/47/446 Annex ‘Report of the Special Rapporteur on Trafficking in Persons, Especially Women and Children, Maria Grazia Giammarinaro’ (3 August 2015) UN Doc A/70/260

xxvi

other international instruments

‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises: ‘Corporate Human Rights Due Diligence – Emerging Practices, Challenges and Ways Forward’ (16 July 2018) UN Doc A/73/163 ‘Rio Declaration on Environment and Development’ (12 August 1992) UN Doc A/CONF.151/26 ‘The Vienna Declaration and Programme of Action (25 June 1993) UN Doc A/CONF.157/23 ‘Towards Global Partnerships’ (24 January 2002) UN Doc A/RES/56/76. ‘Transforming our World: The 2030 Agenda for Sustainable Development’ (21 October 2015) UN Doc A/RES/70/1 ‘Twentieth Anniversary and Promotion of the Declaration on the Right and Responsibility of Individuals, Groups and Organs of Society to Promote and Protect Universally Recognized Human Rights and Fundamental Freedoms’ (25 January 2018) UN Doc A/RES/72/247 ‘United Nations Conference on the Human Environment’ (15 December 1972) UN Doc A/RES/27/2994 ‘Universal Declaration of Human Rights’ (10 December 1948) Res 217A (III) ‘Vienna Declaration and Programme of Action, World Conference on Human Rights’ (14–25 June 1993), UN Doc A/CONF.157/24 (Part I)



Human Rights Committee

‘Concluding Observations: Canada’ (13 August 2015) UN Doc CCPR/C/CAN/CO/ ‘Concluding Observations: Germany’ (12 November 2012) UN Doc CCPR/C/DEU/CO/6 ‘General Comment No 31: The Nature of the General Legal Obligation Imposed on States Parties to the Covenant’ (26 May 2004) UN Doc CCPR/C/21/Rev.1/Add. 13 ‘General Comment No 36: The Right to Life’ (31 October 2018) UN Doc CCPR/C/GC/36



Human Rights Council

‘Best Practices and How to Improve on the Effectiveness of Cross-Border Cooperation Between States with Respect to Law Enforcement on the Issue of Business and Human Rights: Study of the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’ (25 April 2017) UN Doc A/HRC/35/33 ‘Business and Human Rights: Further Steps Toward the Operationalization of the “Protect, Respect and Remedy” Framework, Report of the Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie (9 April 2010) UN Doc A/HRC/14/27 ‘Business and Human Rights: Improving Accountability and Access to Remedy’ (29 June 2016) UN Doc A/HRC/32/L.19 ‘Business and Human Rights: Mapping International Standards of Responsibility and Accountability for Corporate Acts: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (9 February 2007) UN Doc A/HRC/4/35

general principles for business and human rights in international law

xxvii

‘Elaboration of an International Legally Binding Instrument on Transnational Corporations and other Business Enterprises with Respect to Human Rights’ (14 July 2014) UN Doc A/HRC/Res/26/9 ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (21 March 2011) UN Doc A/HRC/17/31 ‘Guiding Principles on Extreme Poverty and Human Rights submitted by the Special Rapporteur on Extreme Poverty and Human rights’ (18 October 2012) UN Doc A/ HRC/RES/21/11 ‘Human rights and Corporate Law: Trends and Observations from a Crossnational Study Conducted by the Special Representative, Addendum 2 to the Report’ (23 May 2011) A/HRC/17/31/Add.2 ‘Human Rights and the Environment’ (20 March 2012) UN Doc A/HRC/19/L.8/Rev.1 ‘Human Rights and Transnational Corporations and other Business Enterprises’ (6 July 2011) UN Doc A/HRC/RES/17/4 ‘Human Rights and Transnational Corporations and other Business Enterprises’ (15 July 2014) UN Doc A/HRC/Res/26/22 ‘Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse, Report of the UN High Commissioner for Human Rights’ (10 May 2016) UN Doc A/HRC/32/19 ‘Mandate of the Special Representative of the Secretary-general on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (18 June 2008) UN Doc A/HRC/RES/8/7 ‘Promotion of All Human Rights, Civil, Political, Economic, Social and Cultural Rights, Including the Right to Development: Business and human rights: Towards operationalizing the “protect, respect and remedy” framework’ (22 April 2009) UN Doc A/HRC/11/13 ‘Protect, Respect and Remedy: A Framework for Business and Human Rights: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (7 April 2008) UN Doc A/ HRC/8/5 ‘Report of the Independent Expert on the Promotion of a Democratic and Equitable International Order, Alfred-Maurice de Zayas’ (14 July 2015) UN Doc A/HRC/30/44 ‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (4 May 2016) UN Doc A/HRC/32/45 ‘Report on The First Session of the Open-Ended Intergovernmental Working Group on Transnational Corporations and other Business Enterprises with Respect to Human Rights, with the Mandate of Elaborating an International Legally Binding Instrument’ (5 February 2016) UN Doc A/HRC/31/50 ‘State responsibilities to Regulate and Adjudicate Corporate Activities under the United Nations Core Human Rights Treaties: An Overview of Treaty Bodies Commentaries,

xxviii

other international instruments

Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations’ (13 February 2007) A/HRC/4/35/Add.1 ‘The Adverse Human Rights Impact of International Investment Agreements and Multilateral Free Trade Agreements, Including the Human Rights Impacts of WTO and Practice, Report of the Independent Expert on the Promotion of a Democratic and Equitable International Order, Alfred-Maurice De Zayas’ (14 July 2015) UN Doc A/ HRC/30/44 ‘The State, State-owned Enterprises, and Human Rights: Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (4 May 2016) UN Doc A/HRC/32/45



International Law Commission

‘Draft Articles on Prevention of Transboundary Harm from Hazardous Activities, with Commentaries’ (2001) Yearbook of the International Law Commission, Vol II, Part II ‘Draft Conclusions on Identification of Customary International Law, with Commentaries’ (2018) UN Doc A/73/10 Yearbook of the International Law Commission Vol II, Part II ‘Fifth Report on Identification of Customary International Law by Michael Wood, Special Rapporteur’ (14 March 2018) UN Doc A/CN.4/717 ‘First Report on Formation and Evidence of Customary International Law by Michael Wood, Special Rapporteur’ (17 May 2013) UN Doc A/CN.4/663 ‘First Report on General Principles of Law, by Marcelo Vázquez Bermúdez, Special Rapporteur’ (5 April 2019) UN Doc A/CN.4/732. ‘First Report on Jus Cogens, by Dire Tladi, Special Rapporteur’ (8 March 2016) UN Doc A/CN.4/693 ‘Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission, Finalised by Martti Koskenniemi’ (13 April 2006) UN Doc A/CN.4/L.682 ‘International Liability for Injurious Consequences Arising out of Acts not Prohibited by International Law’ (2001) Yearbook of the International Law Commission, Vol II, Part II ‘International Responsibility. Fifth Report by García-Amador, Special Rapporteur’ (1960) UN Doc A/CN.4/125, Yearbook of the International Law Commission, Vol II ‘Preliminary Report on International Liability for Injurious Consequences Arising out of Acts not Prohibited by International Law, by Robert Q Quentin-Baxter’ (24 June 1980) UN Doc A/ CN.4/334 ‘Report of the International Law Commission Covering the Work of its Fifth Session’ (1 June – 14 August 1953) UN Doc A/2456 ‘Report of the International Law Commission, Fifty-eighth session’ (1 May-9 June and 3 July-11 August 2006) ‘Report of the Sixty-ninth Session (1 May-2 June and 3 July-4 August 2017)’, Annexes UN Doc A/72/10

general principles for business and human rights in international law

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‘Report on the Law of Treaties by Sir Hersch Lauterpacht, Special Rapporteur’ (24 March 1953) UN Doc A/CN.4/63 ‘Second Report on General Principles of Law, by Marcelo Vázquez Bermúdez’ (9 April 2020) UN Doc A/CN.4/74 ‘Second Report on Identification of Customary International Law by Michael Wood, Special Rapporteur’ (22 May 2014) UN Doc A/CN.4/672 ‘Second Report on Jus Cogens by Dire Tladi, Special Rapporteur’ (16 March 2017) UN Doc A/CN.4/706 ‘Second Report on State Responsibility, by F.V. García Amador, Special Rapporteur’ (15 February 1957) UN Doc A/CN.4/106 Yearbook of the International Law Commission, Vol II, Part II



Office of the High Commissioner for Human Rights

‘Corporations and Human Rights: A Survey of the Scope and Patterns of Alleged Corporate-Related Human Rights Abuse’ (23 May 2008) UN Doc A/HRC/8/5/Add.2. ‘Statement by UN High Commissioner for Human Rights Michelle Bachelet’ (25 October 2018) World Investment Forum available at https://www.ohchr.org/EN/NewsEvents/ Pages/DisplayNews.aspx?NewsID=23773&LangID=E ‘The Corporate Responsibility to Respect Human Rights: An Interpretive Guide’ (2012) UN Doc HR/PUB/12/02 ‘The Responsibilities of Transnational Corporations and other Business Enterprises, Report of the United Nations High Commission on Human Rights’ (15 February 2005) UN Doc E/CN.4/2005/91.



Open-Ended Intergovernmental Working Group on Transnational Corporations and other Business Enterprises with Respect to Human Rights

‘Draft Optional Protocol to the Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises’ ‘Elements for the Draft Legally Binding Instrument on Transnational Corporations and other Business Enterprises’ (29 September 2017) ‘Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises, Revised Draft’ (16 July 2019)



Sub-Commission on the Promotion and Protection of Human Rights

‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ (26 August 2003) UN Doc E/CN.4/ Sub.2/2003/12/Rev.2 ‘Report of the Sessional Working Group on the Working Methods and Activities of Transnational Corporation’ UN Doc E/CN.4/Sub.2/1999/9

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other international instruments

‘Report of the Sessional Working Group on the Working Methods and Activities of Transnational Corporations on its Fourth Session’ (15 August 2002) UN Doc E/ CN.4/Sub.2/2002/13 ‘Report of the Sessional Working Group on the Working Methods and Activities of Transnational Corporations’ (6 August 2003) UN Doc E/CN.4/Sub.2/2003/13 ‘The Relationship Between the Enjoyment of Economic, Social and Cultural Rights and the Right to Development, and the Working Methods and Activities of Transnational Corporations’ (20 August 1998) UN Doc E/CN.4/Sub.2/RES/1998/8



Security Council

‘Security Council Resolution 310 (1972) [Namibia]’ (4 February 1972) UN Doc S/RES/310



UN Global Compact

‘After the Signature: A Guide to Engagement in the United Nations Global Compact’ (2008), available at https://www.unglobalcompact.org/library/241 ‘Integrity Measures, Dialogue Facilitation’, available at https://www.unglobalcompact. org/about/integrity-measures Secretary-general Proposes Global Compact on Human Rights, Labour, Environment, in Address to World Economic Forum in Davos’ (1 February 1999) SG/SM/6881



Working Group on Business and Human Rights

‘Guidance on National Action Plans on Business and Human Rights’ (Geneva 2016) available at https://www.ohchr.org/Documents/Issues/Business/UNWG_NAPGuidance.pdf



Other UN Documents

International Military Tribunal, ‘Trial of the Major War Criminals before the International Military Tribunal’ (Nuremberg, 14 November 1945 – October 1946) Official Documents (1947) League of Nations Advisory Committee of Jurists, ‘Procès-verbaux of the Proceedings of the Committee with Annexes’ (16–24 July 1920) UN Economic Commission for Africa, ‘Draft Pan-African Investment Code’ (2016) Doc E/ECA/COE/35/18 AU/STC/FMEPI/EXP/18(II) UNCTAD Investment Policy Hub, available at https://investmentpolicyhub.unctad.org/IIA UNCTAD, ‘Final Consensus Statement of the Global Partnership for Effective Development Cooperation’ (Mexico City 16 April 2014) UNCTAD, ‘Statement made by Mr Raúl Prebisch, Under-Secretary-General of the United Nations, Director-General of the Latin American Institute for Economic and Social Planning and Former Secretary-General of UNCTAD’ (26 April 1972) 103rd Plenary Meeting on Annex VIII C

general principles for business and human rights in international law



Documents of other International Organisations



African Union

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Draft Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human Rights’ (as at Thursday 15 May 2014) STC/Legal/Min/7(I) Rev. 1 Draft Pan African Investment Code (December 2016)



Council of Europe

Committee of Ministers, ‘Declaration of the Committee of Ministers on the UN Guiding Principles on Business and Human Rights’ (16 April 2014) Committee of Ministers, ‘Recommendation on Human Rights and Business’ (2 March 2016) CM/Rec(2016)3



Economic Community on West African States

ECOWAS, ‘Adopting Community Rules on Investment and the Modalities for their Implementation with ECOWAS’ (2008) Supplementary Act A/SA.3/12/08



European Union

‘EU Reply to the OHCHR Questionnaire on Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to Human Rights’ available at https://www2.ohchr.org/english/issues/globalization/business/docs/replyfinland.pdf



European Commission

‘A Renewed EU strategy 2011-14 for Corporate Social Responsibility’ (25 October 2011) COM (2011) 681 final ‘Corporate Social Responsibility: Encouraging Best Behaviour’ (15 June 2006) ‘Green Paper: Promoting a European Framework for Corporate Social Responsibility’ (18 July 2001) COM (2001) 366 final ‘Proposal for a Regulation of the European Parliament and of the Council on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, COM(2013) 554 final – 2013/0268 (COD)’ ‘Recommandation 2013/396/EU’ (11 June 2013) OJ L 201



European Parliament

‘Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards Disclosure of Non-financial and Diversity Information by Certain Large Undertakings and Groups’ OJ L 330 ‘Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 Concerning Unfair Business-to-Consumer Commercial Practices in the Internal Market’ OJ L 149

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other international instruments

‘Implementation of the UN Guiding Principles on Business and Human Rights’ (February 2017) ‘Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the Law Applicable to non-Contractual Obligations’ (31 July 2007) OJ L199/40 (Rome II) ‘Regulation No 1215/2012 of the European Parliament and of the Council on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters’ (12 December 2012) OJ L 351/1 (Brussels I Recast) ‘Regulation No 2017/821 of the European Parliament and of the Council Laying Down Supply Chain Due Diligence Obligations for Union Importers of Tin, Tantalum and Tungsten, their Ores, and Gold Originating from Conflict-Affected and High-Risk Areas’ (17 May 2017) OJ L 130/1 ‘Regulation No 995/2010 of the European Parliament and of the Council Laying Down the Obligations of Operators who place timber and Timber Products on the Market’ (20 October 2010) OJ L 295/23 ‘Resolution on Corporate Liability for Serious Human Rights Abuses in Third Countries’ (25 October 2016) Res 2015/2315(INI)



EU Fundamental Rights Agency

EU Fundamental Rights Agency, ‘Improving Access to Remedy in the Area of Business and Human Rights at the EU Level’ (10 April 2017) Opinion 1/2017



International Labour Organisation

‘Checkpoints for Companies: Eliminating and Preventing Child Labour’ (2016). ‘Constitution of the International Labour Organisation’ (1 April 1919) ‘Declaration on Fundamental Principles and Rights at Work’ (adopted 18 June 1998) ‘Declaration on Social Justice for a Fair Globalization’ (10 June 2008) ‘Rules of the Game: A Brief Introduction to International Standards’ (3rd edn, 2014) ‘Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy’ (2017 edition)



Organisation of American States

American Declaration of the Rights and Duties of Man (adopted by the 9th International Conference of American States, Bogotá, on 2 May 1948) ‘Promotion and Protection of Human Rights in Business’ (4 June 2014) AG/RES. 2840 (XLIV-O/14)



Organisation for Economic Cooperation and Development

‘Consultation Paper by the OECD Secretariat on Business Responsibilities and Investment Treaties’ (15 January 2020) ‘Decision of the Council on the OECD Guidelines for Multinational Enterprises’ (1984)

general principles for business and human rights in international law

xxxiii

‘Decision of the Council on the OECD Guidelines for Multinational Enterprises’ (27 June 2000) ‘Declaration on International Investment and Multinational Enterprises’ (21 June 1976) ‘Due Diligence Guidance for Responsible Business Conduct’ (2018) ‘Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas’ (2013) ‘Guidelines for Multinational Enterprises’ (1976, as revised in 2011) ‘Guidelines on Corporate Governance of State-Owned Enterprises’ (2015 edition) G20, ‘Guiding Principles for Global Investment Policymaking’, available at http://www. oecd.org/investment/g20-agrees-principles-for-global-investment-policymaking.htm. ‘Structures and Procedures of National Contact Points for the OECD Guidelines for Multinational Enterprises’ (2018) ‘The Legal Status of an OECD Act and the Procedure for its Adoption’ (OECD Directorate for Legal Affairs 2004)



Select Domestic Legislation and Policy Instruments

Australia Modern Slavery Bill (2018), available at https://www.aph.gov.au/Parliamentary_ Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6148. California Transparency in Supply Chains Act (2010) Senate Bill No 657, available at https://oag.ca.gov/SB657 Canada Global Affairs, ‘Responsible Business Conduct Abroad’ http://www.international. gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csrrse.aspx?lang=eng Dutch Child Labour Due Diligence Law (2017), available at http://www.bhrinlaw.org/ key-developments/66-netherlands French Government, “PACTE, the Action Plan for Business Growth and Transformation” available at https://www.gouvernement.fr/en/pacte-the-action-plan-forbusiness-growth-and-transformation German Federal Foreign Office, ‘National Action Plan Implementation of the UN Guiding Principles on Business and Human Rights (2016–2020), available at https:// www.institut-fuer-menschenrechte.de/en/topics/business/national-action-plan Italian Ministry of Foreign Affairs, ‘Italian Action Plan on Business and Human Rights (2016–2021)’ 11, available at https://cidu.esteri.it/comitatodirittiumani/it/ Loi no 2017-399 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre (2017), available at https://www.legifrance.gouv.fr/eli/loi/2017/3/27/2017399/jo/texte Norwegian Ministry of Foreign Affairs, ‘Business and Human Rights: National Action Plan for the Implementation of the UN Guiding Principles’ (2016–2020), available at https://www.regjeringen.no/en/aktuelt/business_hr/id2457726/.

xxxiv

other international instruments

Swiss Parliamentary Initiative for Mandatory Human Rights Due Diligence (2018), available at http://www.bhrinlaw.org/key-developments/64-switzerland#Parlamentary%20 in%20for%20mHRDD United Kingdom Bribery Act (2010), available at https://www.legislation.gov.uk/ukpga/2010/23/contents United Kingdom Modern Slavery Act (2015 Chapter 30), available at http://www.legislation.gov.uk/ukpga/2015/30/contents/enacted United States Foreign Corrupt Practices Act of 1977 (1977) 15 U.S.C. available at https:// www.law.cornell.edu/uscode/text/15/78dd-1

Miscellaneous American Law Institute, ‘Restatement, Fourth, the Foreign Relations Law of the United States – Sovereign Immunity’ (2018) FAFO, ‘Overcoming Obstacles to Justice. Improving Access to Judicial Remedies for Business Involvement in Grave Human Rights Abuses’, by M Taylor and A Ramasastry (2009) ILA Study Group on the Use of Domestic Law Principles in the Development of International Law, ‘Conference Report’ (Johannesburg 2016), available at http://www. ila-hq.org/index.php/study-groups?study-groupsID=51. ILA Committee on Formation of Customary (General) International Law, ‘Final Report on the Formation of Customary (General) International Law’ (2000) http://www. ila-hq.org/index.php/committees ILA Study Group on Due Diligence in International Law, ‘Second Report’ (2016), available at http://www.ila-hq.org/index.php/study-groups ILA Study Group on Non-State Actors, ‘Washington Conference’ (2014) 12, available at http://www.ila-hq.org/index.php/committees. International Peace Information Service, ‘The Adverse Human Rights Risks and Impacts of European Companies: Getting a Glimpse of the Picture’ (IPIS Antwerp 2014) IOE and ICC, ‘Joint Views on the Draft Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with regard to Human Rights’ (22 July 2003) IOE, ICC and BIAC, ‘Joint Views to the Human Rights Council on the Third report of the Special Representative of the UN Secretary-General on Business and Human Rights’(May 2008), 3 available at http://www.reports-and-materials.org/Letter-IOEICC-BIAC-re-Ruggie-report-May-2008.pdf

Table of Cases

African Commission on Human and Peoples’ Rights

Commission Nationale des Droits de I’Homme et des Libertés v Chad (1995) Comm No 74/92 Social and Economic Rights Action Center (SERAC) and Center for Economic and Social Rights (CESR) v Nigeria (2001) Comm No 155/96 Union Interafricaine des Droits de l’Homme v Zaire (1995–1996) Comm No 100/93 Zimbabwe Human Rights NGO Forum v Zimbabwe (2006) Comm no 245/02



Court of Justice of the European Union

Gencor Ltd v Commission (1999) ECR II T-102/96 Handelskwekerij G. J. Bier B.V. v Mines de Potasse d’Alsace S.A. (1976) Case 21/76 ECR 1735 Intel Corporation Inc v Commission (2014) Case C-413/14 P Owusu v Jacson (2005) Case C-281/02 ECR I-1383 Procureur de la République v ADBHU (1985) Case 240/83 ECR 531 Unión de Pequeños Agricultores v Council of the European Union (2002) Case 50/00 Van Gend en Loos v Nederlandse Admniistratie der Belastingen (1963) Case 26/62



European Commission of Human Rights

Kommunistishe Partei Deutschland v Federal Republic of Germany (1957) ECmHR App No 250/57



European Committee of Social Rights

Marangopoulos Foundation for Human Rights (MFHR) v Greece (Merits) (2006) ECSR Complaint No 30/2005



European Court of Human Rights

Al Adsani v the United Kingdom (2001) ECtHR App No 35763/97 Al-Skeini and Others v UK (2011) (GC) ECtHR App No 55721/07 Appleby and others v United Kingdom (2003) ECtHR App No 44306/98 Case of Airey v Ireland (1979) ECtHR App No 6289/73 Cordella and Others v Italy (2019) ECtHR Apps Nos 54414/13, 54264/15 Costello-Roberts v UK (1993) ECtHR App No 13134/87 Cyprus v Turkey (GC Judgment) (2001) ECtHR App No 25781/94 Demir and Baykara v Turkey (2008) ECtHR App No 34503/97 Fadeyeva v Russia (2005) ECtHR App No 55723/00

xxxvi

table of cases

Giacomelli v Italy (2006) ECtHR App No 59909/00 Golder v United Kingdom (1975) ECtHR App No 4451/70 Guerra and others v Italy (1998) ECtHR App No 14967/89 Hatton and others v the United Kingdom (2002) ECtHR App No 36022/97 Hirsi Jamaa and others v Italy (2012) (GC) ECtHR App No 27765/09 Ireland v UK (1977) ECtHR App no No 5310/71 Islamic Republic of Iran Shipping Lines v Turkey (2007) ECtHR App No 40998/98 Kaya v Turkey (1998) ECtHR App No 22729/93 Kebe and Others v Ukraine (2017) ECtHR App No 12552/12 Keegan v Ireland (1994) ECtHR App No 16969/90 Loizidou v Turkey (Merits) (1996) ECtHR App No 15318/89 López Ostra v Spain (1994) ECtHR App No 16798/90 M and Others v Italy and Bulgaria (2012) ECtHR App No 40020/03 Markovic and Others v Italy (2006) (GC) ECtHR App No 1398/03 Naït-Liman v Switzerland (2018) ECtHR App No 51357/07 Öcalan v Turkey (2005) (GC) ECtHR App No 46221/99 Öneryıldız v Turkey (2004) ECtHR App No 48939/99 Osman v the United Kingdom (1998) ECtHR App No 23452/94 Ouranio Toxo and Others v Greece (2005) ECtHR App No 74989/01 Özel and others v Turkey Applications (2015) ECtHR App Nos 14350/05; 15245/05; 16051/05 Rantsev v Cyprus and Russia (2010) ECtHR App No 25965/04 Silver and Others v United Kingdom (1983) ECtHR App Nos 5947/72; 6205/73; 7052/75; 7061/75; 7107/75; 7113/75; 7136/75 Söderman v Sweden (2013) (GC) ECtHR App No 5786/08 State Holding Company Luganskvugillya v Ukraine (Admissibility) (2009) ECtHR App No 23938/05 Steel and Morris v United Kingdom (2005) App No 68416/01 Storck v Germany (2005) ECtHR App No 61603/00 Swedish Engine Drivers’ Union Case (1976) ECtHR App No 5614/72 Taşkın and others v Turkey (2004) ECtHR App No 46117/99 Tătar v Romania (2009) ECtHR App No 67021/01 The Sunday Times v UK (1979) ECtHR App No 6538/74 United Communist Party v Turkey (1998) ECtHR App No 19392/92 VGT Verein gegen Tierfabriken v Switzerland (2001) ECtHR App No 24699/94 Von Hannover v Germany (2004) ECtHR App No 59320/00 Wilson, National Union of Journalists and Others v UK (2002) ECtHR App Nos 30668/96; 30671/96; 30678/96 X and Y v Netherlands (1985) ECtHR App No 8978/80

general principles for business and human rights in international law

xxxvii

Young, James and Webster v The United Kingdom (1981) ECtHR App No 7601/76; 7806/77



Inter-American Commission of Human Rights

Maya Indigenous Communities of the Toledo Districts v Belize (Merits) (2004) Rep No 40/04 Case 12.053 Victor Saldano v Argentina (1999) Report No 38/99



Inter-American Court of Human Rights

Abrill Alosilla and Others v Peru (Merits, Reparations and Costs) (2011) IACtHR Series C No 223 Almonacid-Arellano et al v Chile (Preliminary Objections, Merits, Reparations and Costs) (2006) IACtHR Series C No 154 Caballero-Delgado and Santana v Colombia (Reparations and Costs) (1997) IACtHR Series C No 31 Caesar v Trinidad and Tobago (2005) IACtHR Series C No 123 Castillo Petruzzi et al. v Peru (Merits, Reparations and Costs) (1999) IACtHR Series C No 52 Claude Reyes v Chile (2006) IACtHR Series C No 151 Five Pensioners v Peru (Merits, Reparations and Costs)(2003) IACtHR Series C No 98 González et al. (“Cotton Field”) v Mexico (Preliminary Objections, Merits, Reparations and Costs) (2009) IACtHR Series C No 205 Hacienda Brasil Verde Workers v Brazil (Preliminary Objections, Merits, Reparations and Costs) (2016) Series C No 318 Indigenous Community Yakye Axa v Paraguay (2005) IACtHR Series C No 125 Juridical Condition and Rights of the Undocumented Migrants (Advisory Opinion) (2003) OC-18/03 Kaliña and Lokono Peoples v Suriname (Merits, Reparations and Costs) (2015) IACtHR Series C No 309 Kawas-Fernández v Honduras (Merits, Reparations and Costs) (3 April 2009) IACtHR Series C No 196 Kichwa Indigenous People of Sarayaku v Ecuador (Merits) (2012) IACtHR Series C No 245 Mapiripán Massacre v Colombia (2005) IACtHR Series C No 134 Mayagna Awas Tingni (Sumo) Indigenous Community v The Republic of Nicaragua (2001) IACtHR Series C No 79 Obligaciones estatales en relación con el medio ambiente en el marco de la protección y garantía de los derechos a la vida y a la integridad personal (Consultive Opinion) (2017) OC-23/17 Paniagua Morales et al v Guatemala (Merits) (1998) IACtHR Series C No 37 Rubio and Parents v Colombia (2006) IACtHR Series C No 146 Sawhoyamaxa Indigenous Community v Paraguay (Merits, Reparations and Costs) (2006) IACtHR Series C No 146

xxxviii

table of cases

Titularidad de derechos de las personas jurídicas en el sistema Interamericano de derechos humanos (2016) (Advisory Opinion) OC-22/16 Velásquez Rodríguez v Honduras (Merits) (1988) IACtHR Series C No 4 Ximenes Lopes v Brazil (Merits, Reparations and Costs) (2006) IACtHR Series C No 149 Yakye Axa Indigenous Community v Paraguay (Merits, Reparations and Costs) (2005) IACtHR Series C No 125



International Arbitral Tribunals

Affaire des biens britanniques au Maroc espagnol (Espagne c Royaume-Uni) (1924) 2 RIAA 615 Affaire du Lac Lanoux (Spain v France) (1957) 12 RIAA 281 Alasdair Ross Anderson et al v Republic of Costa Rica (Award) (2010) ICSID Case No ARB(AF)/07/3 AMCO v Republic of Indonesia (Decision on Jurisdiction) (1983) ICSID Case No ARB/81/1 Aguilar-Amory and Royal Bank of Canada claims (Great Britain v Costa Rica) (1923) 1 RIAA 369 Antoine Fabiani case (France v Venezuela) (1896) 10 RIAA 83 Bear Creek Mining Corporation v Republic of Peru (Award) (2017) ICSID Case No ARB/14/21 Biwater Gauff v Tanzania (Award) (2008) ICSID Case No ARB/05/22 Charanne and Construction Investments v Spain (2016) SCC Case No 062/2012 Copper Mesa v Ecuador (Award) (2016) PCA Case No 2012-02 Dispute Concerning Access to Information under Article 9 of the OSPAR Convention (Ireland v United Kingdom) (Award) (2003) 42 ILM 330 El Paso Energy International Company v The Argentine Republic (Award) (2011) ICSID Case No ARB/03/15 Emilio Agustín Maffezini v Spain (Award) (2000) ICSID Case No ARB/97/7 Enron Corporation and Ponderosa Assets, LP v Argentina (Award) (2007) ICSID Case No ARB/01/3 Gustaf F.W. Hamester GmbH & Co kg v Republic of Ghana (Award) (2010) ICSID Case No ARB/07/24 Hulley Enterprises Limited (Cyprus) v the Russian Federation (Award) (2014) PCA Case No 2005-03/AA226 Inceysa v El Salvador (Award) (2006) ICSID Case No ARB/03/26 Iran v USA (A1) (1983) 1 Iran–USA Claims Tribunal Island of Palmas (Netherlands, USA) (1928) 2 RIAA 829 Methanex Corporation v United States of America (Award) (2005) NAFTA Parkerings-Compagniet AS v Lithuania (Award) (2007) ICSID Case No ARB/05/8 Perenco Ecuador Ltd v Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Interim Decision on the Environmental Counterclaim) (2015) ICSID Case No ARB/08/6; (Award) (2019)

general principles for business and human rights in international law

xxxix

Phoenix Action Ltd v Czech Republic (Award) (2009) ICSID Case No ARB/06/5 Rainbow Warrior (New Zealand v France) (1990) 82 ILR 500 Re-Evaluation of the German Mark (1980) 19 RIAA 67 Romak SA (Switzerland v Uzbekistan) (Award) (2009) PCA Case No AA280 Rudloff Case (US v Venezuela) (on merits) (1903–1905) 9 RIAA 255 Salini v Marocco (Decision on Jurisdiction) (2003) ICSID Case No ARB/00/4 Saluka Investments BV v The Czech Republic (Partial Award) (2006) UNCITRAL Sempra Energy International v Argentina (Award) (2007) ICSID Case No Arb/02/16 Trail Smelter Case (United States, Canada) (1941) 3 RIAA 1905 Tulip Real Estate and Development Netherlands B.V. v Republic of Turkey (Decision on Annulment) (2015) ICSID/ARB/11/28 United States – Import Prohibition of Certain Shrimp and Shrimp Products (1998) WTO/ DS58/AB/R, DSR 1998:VII, 2755 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v Argentina (Award) (2016) ICSID Case No ARB/07/26 World Duty Free v The Republic of Kenya (Award) (2007) ICSID Case No ARB/00/07



International Court of Justice and Permanent Court of International Justice

Ahmadou Sadio Diallo (Republic of Guinea v Democratic Republic of the Congo) (Preliminary Objections) [2007] ICJ Rep 582 Anglo-Iranian Oil Co. Case (UK v Iran) (Judgment) [1952] ICJ Rep 93 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Yugoslavia) (Preliminary Objections) [1996] ICJ Rep 595 Arbitral Award of 31 July 1989 (Guinea-Bissau v Senegal) [1991] ICJ Rep 53 Armed Activities on the Territory of the Congo (Democratic Republic of Congo v Uganda) [2005] ICJ Rep 168 Barcelona Traction, Light and Power Company, Limited (Belgium v Spain) [1970] ICJ Rep 3 Case Concerning Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v Russia) [2010] ICJ Rep 70 Case Concerning Certain German Interests in Polish Upper Silesia (Germany v Poland) (Merits) [1926] PCIJ Rep Series A No 7 Case Concerning East Timor (Portugal v Australia) [1995] ICJ Rep 90 Case Concerning Oil Platforms (Islamic Republic of Iran v USA) (Merits) [2003] ICJ Rep 161 Case Concerning Temple of Preah Vihear (Cambodia v Thailand) (Merits) [1962] ICJ Rep 6 Case Concernjng the Payment of Various Serbian Loans Issued in France (France v France v Kingdom of the Serbs, Croats, and Slovenes) [1929] PCIJ Series A No 20 Case of the Free Zones of Upper Savoy and the District of Gex (France v Switzerland) [1932] PCIJ Series A/B No 46

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table of cases

Certain Activities Carried out by Nicaragua in the Border Area (Costa Rica v Nicaragua) and Construction of a Road in Costa Rica along the San Juan River (Nicaragua v Costa Rica) [2015] ICJ Rep 665 Colombian-Peruvian Asylum Case (Colombia v Peru) [1950] ICJ Rep 266 Delimitation of the Maritime Boundary in the Gulf of Maine Area (Canada v United States of America) (Merits) ICJ Rep 246 Electricity Company of Sofia and Bulgaria (Belgium v Bulgaria) PCIJ Series A/B No 79 Elettronica Sicula S.P.A. (ELSI) (USA v Italy) (Merits) [1989] ICJ Rep 15 Factory at Chorzow (Germany v Poland) (Judgment) [1928] PCIJ Series A No 17 Fisheries Jurisdiction (UK v Iceland) (Merits) [1974] ICJ Rep 3 Gabčikovo-Nagymaros Project (Hungary v Slovakia) (Judgment) [1997] ICJ Rep 7 International Status of South West Africa (Advisory Opinion) [1950] ICJ Rep 128 Jurisdiction of the Courts of Danzig (Advisory Opinion) [1928] PCIJ Series B No 15 Jurisdictional Immunities of the State (Germany v Italy: Greece intervening) [2012] ICJ Rep 99 Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v Nigeria) (Preliminary Objections) [1998] ICJ Rep 275 Legal Consequences for States of the Contitiued Presence of South Africa in Namibia (South West Africa) notwithstanding Security Council Resolution 276 (1970) (Advisory Opinion) [1971] ICJ Rep 16 Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) [1996] ICJ Rep 226 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v USA) (Merits) [1986] ICJ Rep 14 North Sea Continental Shelf (Federal Republic of Germany/Netherlands) (Federal Republic of Germany/ Denmark) (Judgment) [1969] ICJ Rep 3 Nuclear Tests Case (Australia v France) [1974] ICJ Rep 253 Pulp Mills on the River Uruguay (Argentina v Uruguay) [2010] ICJ Rep 14 Question Concerning the Acquisition of Polish Nationality (Advisory Opinion) [1923] PCIJ Series B, No 7 Question of the Delimitation of the Continental Shelf between Nicaragua and Colombia beyond 200 Nautical Miles from the Nicaraguan Coast (Nicaragua v Colombia) (Preliminary Objections) [2016] ICJ Rep 100 Questions relating to the Obligation to Prosecute or Extradite (Belgium v Senegal) (Judgment) [2012] ICJ Rep 422 Reparation of Injuries Suffered in the Service of the United Nations Case (Advisory Opinion) [1949] ICJ Rep 174 Reservations to the Convention on the Prevention and Punishment of the Crime of Genocide (Advisory Opinion) [1951] ICJ Rep 15 Right of Passage over Indian Territory (Portugal v India) (Merits) [1960] ICJ Rep 6

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South West Africa Cases (Liberia v South Africa) (Ethiopia v South Africa) (Merits) [1966] ICJ Rep 6 SS Lotus (France v Turkey) (1927) PCIJ Series A No 10 Territorial Dispute (Libyan Arab Jamahiriya v Chad) [1994] ICJ Rep 6 The Corfu Channel Case (Advisory Opinion) (Merits) [1949] ICJ Rep 4 The Legal Consequences of the Construction of a Wall in the Occupied Palestine Territory [2004] ICJ Rep 136 United States Diplomatic and Consular Staff in Tehran (US v Iran) [1980] ICJ Rep 3



International Criminal Court

Prosecutor v Omar Hassan Ahmad Al Bashir (2009) ICC-02/05-01/09



International Criminal Tribunal for Rwanda

Prosecutor v Musema (Judgment and Sentence) (2000) Case No ICTR-96-13-T Prosecutor v Nahimana (Judgment and Sentence) (2003) Case No ICTR–99–52–T



International Criminal Tribunal for the Former Yugoslavia

Prosecutor v Dusko Tadic a/k/a ‘Dule’ (Decision on the Defence Motion for Interlocutory Appeal on Jurisdiction) (2 October 1995) ICTY Appeals Chamber Prosecutor v Duško Tadić (1999) ICTY Case IT-94–1-A Prosecutor v Kunarac et al. (Judgement) (22 February 2001) ICTY IT-96-23-T and IT-96-23/1-T



International Tribunal on the Law of the Sea

Responsibilities and Obligations of States Sponsoring Persons and Entities with Respect to Activities in the Area (Advisory Opinion) (1 February 2011) Seabed Disputes Chamber Case No 17



Special Tribunal for Lebanon

Case against Al-Jadeed S.A.L./New T.V. S.A.L. and Al Khayat (Public Redacted Version of Judgment on Appeal) (2016) STL Case No STL-14-05/A/AP. In re Akhbar Beirut & Al Amin (2016) (Public Redacted Version of the Judgment) STL Case No STL-14-06/T/CJ



Quasi-Judicial Bodies



Committee on the Elimination of Racial Discrimination

Gabaroum v France (2016) Comm No 52/2012 (2016)

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table of cases

Human Rights Committee

A v Australia (1997) Comm No 560/1993 Baboeram et al v Suriname (1985) Comm No 146/1983 and 148–154/1983 Bithashwiwa & Mulumba v Zaire (1989) Comm Nos 241/1987 and 242/1987 Cabal and Pasini Betran v Austalia (2003) Comm No 1020/2001 Chaparro et al v Colombia (1994) Comm No 612/1995 Delgado Páez v Colombia (1990) Comm No 195/1985 Francis Hopu and Tepoaitu Bessert v France (1997) Comm No 549/1993 Herrera Rubio et al v Colombia (1987) Comm No 161/1983 Hertzberg and Others v Finland (1979) Comm No 61/1979 Ländsman v Finland (1994) Comm No 511/1992 Lilian Celiberti de Casariego v Uruguay (1981) Comm No 56/1979 Love v Australia (2001) Comm No 983/2001 Ms. G. v Canada (2000) Comm No 934/2000 Munaf v Romania (2006) Comm No 1539/2006 Sergio Euben Lopez Burgos v Uruguay (1979) Comm No R.12/52 Yassin and others v Canada (2017) Comm No 2285/2013 Zamora v Venezuela (2018) Comm No 2203/2012



Decisions of Domestic Courts



Australia

Regie Nationale des Usines Renault SA v Zhang (14 March 2002) 210 CLR 491 (High Court of Australia) Voth v Manildra Flour Mills Pty Ltd (13 December 1990) 171 CLR 538 (High Court of Australia)



Belgium

Prosecutor v TotalFinaElf and others (28 March 2007) Pas No P070031F



Canada

Amchem Products Inc. v British Columbia (Workers’ Compensation Board) (1993) 1 SCR 897 (Canadian Supreme Court) Anvil Mining Ltd v Association Canadienne contre l’impunité (24 January 2012) QCCA 117 (Quebec Court of Appeal) Araya and Others v Nevsun Resources Ltd (21 November 2017) BCCA 401 (Court of Appeal for British Columbia); (6 October 2016) BCSC 1856 (Supreme Court of British Columbia); (28 February 2020) SCC 5 (Supreme Court of Canada)

general principles for business and human rights in international law

xliii

Bil’in (Village Council) v Ahmed Issa Yassin (18 September 2009) Q.J. No 2579 (Québec Superior Court) Black v Breeden (18 April 2012) 1 SCR 666 (Canadian Supreme Court) Choc v Hudbay Minerals (22 July 2013) ONSC 1414 (Ontario Superior Court of Justice) Club Resorts Ltd v Van Breda (18 April 2012) 1 SCR 572 (Canadian Supreme Court) Garcia and Others v Tahoe Resources Inc. (26 January 2017) 2017 BCCA 39 (Court of Appeal for British Columbia) Hill v Hamilton- Wentworth Regional Police Services Board (4 April 2007) SCC 41 (Canadian Supreme Court) Recherches Internationales du Quebec v Cambior, Inc. (14 August 1998) Q.J. No. 2554 (Québec Superior Court) Van Breda and Others v Villages Resort Ltd and Others (2 February 2010) ONCA 84 (Ontario Court of Appeal); (18 April 2012) 1 SCR 572 (Canadian Supreme Court) Yaiguaje v Chevron Corporation (23 May 2018) ONCA (Ontario Court of Appeal)



Chile

Sociedad Agua Mineral Chusmiza S.A.I.C, ex parte Domínguez v Comunidad Indígena Aymara De Chusmiza y Usmagama (25 November 2009) Rol nr 2/840-2008 (Supreme Court of Chile)



Colombia

José Eliécer Díaz Bohórquez v Oleoducto Central Andino y el Consorcio de Tierras Boyacá (19 December 2016) T-732/16 (Colombian Constitutional Court) Junta Directiva del Consejo Comunitario de Mulaló v Ministerio del Medio Ambiente y Desarrollo Sostenible and Others (23 September 2013) T-657/13 (Colombian Constitutional Court)



Ecuador

Aguinda et al v Chevron Corporation (14 February 2011) Case No 2003-2002 (Corte Provincial de Justicia Sucumbíos)



France

Association FrancePalestine Solidarité et al v Societé Alstom Transport SA et al (22 March 2013) Case No 11/05331 (Court of Appeals of Versailles) Comilog Decisions (10 September 2015) 11/05953, 11/05955, 11/05956, 11/05957 11/05959, 11/05960 (Paris Court of Appeals)



Germany

Bundesverfassungsgericht (3 July 2019) 2 BvR 824/15 (Federal Constitutional Court) Jabir and Others v KiK Textilien und Non-Food GmbH (11 January 2019) 7 O 95/15 (Dortmund Regional Court)

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table of cases

India

Union Carbide Corporation v Union of India (Order) (15 February 1989) Civil Appeal No 3187-89 (Supreme Court of India)



Israel

Attorney General v Adolf Eichmann (11 December 1961) 336/31, 36 ILR 28 (Supreme Court of Israel)



Netherlands

Akpan Royal Dutch Shell Plc and others (30 January 2013) Case No C/09/337050/HA ZA 09-1580 (District Court of The Hague) Dooh and Others v Shell-Nigeria and Others (18 December 2015) Case Nos C 200.126.843, D 200.126.848 (Court of Appeal of The Hague) El-Hojouj v Unnamed Libyan Officials (21 March 2012) Case No 400882/HAZA11-2252 (District Court of The Hague) Esther Kiobel v Royal Dutch Shell PLC (1 May 2019) ECLI:NL:RBDHA:2019:4233. Public Prosecutor v Frans Cornelius Adrianus van Anraat (23 December 2005) Case No AX6406 (District Court of The Hague); (9 May 2007) Case No BA6734 (Court of Appeal of The Hague)



England and Wales

AAA and Others v Unilever PLC and Unilever Tea Kenya Limited (27 February 2017) EWHC 371 (QB) (High Court); (4 July 2018) EWCA Civ 1532 (Court of Appeal) Adam v Cape (27 July 1989) 2 WLR 657 (Court of Appeal) Belhaj v Straw (30 October 2014) EWCA Civ 1394 (Court of Appeal) Bodo Community and Others v Shell Petroleum Company of Nigeria, Ltd (20 June 2014) EWHC 2170 (TCC) (High Court) Caparo Industries Plc v Dickman (8 February 1990) 2 AC 605 (House of Lords) Chandler v Cape Plc (25 April 2012) EWCA Civ 525 (Court of Appeal) Connelly v RTZ Corporation Plc and others (24 July 1997) AC 854 (House of Lords) Gouriet v Union of Post Office Workers (1978) AC 435 (House of Lords) Guerrero v Monterrico Metals Plc (16 October 2009) EWHC 2475 (QB) (High Court) Hunter v Chief Constable of the West Midlands Police (19 November 1981) AC 529 (House of Lords) Lubbe and Others v Cape Plc (20 July 2000) 1 WLR 1545 (House of Lords) Lungowe and Others v Vedanta Resources Plc and Konkola Copper Mines Plc (27 May 2016) EWHC 975 (TCC) (High Court); (13 October 2017) EWCA Civ 1528 (Court of Appeal); (10 April 2019) UKSC 20 (Supreme Court) Motto and Others v Trafigura Ltd and Others (12 October 2011) EWCA Civ 1150 (Court of Appeal)

general principles for business and human rights in international law

xlv

Okpabi and Others v Royal Dutch Shell PLC and Others (26 January 2017) EWHC 89 (TCC) (High Court); (14 February 2018) EWCA Civ 191 (Court of Appeal) Prest v Petrodel Resources Ltd (12 June 2013) UKSC 34 (Supreme Court) Salomon v Salomon & Co Ltd (16 November 1897) AC 22 (House of Lords) Sithole and Others v Thor Chemicals Holdings Ltd and Another (3 February 1999) EWCA Civ 706 (Court of Appeal) Spiliada Maritime Corporation v Cansulex Ltd (19 November 1986) AC 460 (House of Lords) Thompson v The Renwick Group Plc (13 May 2014) EWCA Civ 635 (Court of Appeal) Vilca & Others v Xstrata Limited and Compania Minera Antapaccay SA [2018] EWHC 27 (High Court)



United States

Aguinda v Texaco, Inc. (2002) 303 F.3d 470 (US Court of Appeals 2nd Circuit) Al Shimari v Caci et al (21 October 2016) 840 F.3d 147 (US Court of Appeals 4th Circuit) Al Shimari v Caci Premier Tech., Inc. (30 June 2014) 758 F.3d 516 (US Court of Appeals 4th Circuit) Aldana v Del Monte Fresh Produce N.A., Inc. (2009) 578 F.3d 1283 (US Court of Appeals 11th Circuit) Alomang v Freeport-McMoran (20 February 2002) 811 S.2d 98 (US Court of Appeals 4th Circuit) Anderson v Abbott (1944) 321 S.Ct. 349 (US Supreme Court) Balintulo v Daimler AG (21 August 2013) 727 F.3d 174 (US Court of Appeals 2nd Circuit) Balintulo v Ford Motor Co. (27 July 2015) 796 F.3d 160 (US Court of Appeals 2nd Cicuit) Beanal v Freeport-McMoran (39 November 1999) F.3d 161 (US Court of Appeals 5th Circuit) Bigio et al v Coca-Cola (6 May 2006) 239 F.3d 440 (US Court of Appeals 2nd Circuit) Bowoto et al Chevron Texaco et al (10 September 2010) 621 F. 3d 1116 Cardona v Chiquita Brands International, Inc (24 July 2014) 760 F.3d 1185 (US Court of Appeals 11th Circuit) Chowdhury v Worldtel Bangladesh Holding Ltd (10 February 2014) 746 F.3d 42 (US Court of Appeals 2nd Circuit) Citizens United v Fed. Election Comm’n (21 January 2010) 558 U.S. 310 Daimler AG v Bauman (14 January 2014) 134 S.Ct. 746 (US Supreme Court) Doe et al v Exxon Mobil Corp. et al (14 October 2005) (US District Court for the District of Columbia) Doe et al v Exxon Mobil Corp. et al (8 July 2011) 654 F.3d 11 (US Court of Appeals District of Columbia Circuit) Doe I et al v Nestlé USA Inc. et al (4 September 2014) 766 F.3d 1013 (US Court of Appeals 9th Circuit); (23 October 2018) Opinion No 17-55435 (US Court of Appeals 9th Circuit) Doe I v Unocal Corp. (24 April 1997) 963 F. Supp. 880 (District Court for the Central District of California); (31 August 2000) 110 F.Supp 2d 1294 (District Court for the

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Central District of California); (18 September 2002) 395 F.3d 932 (US Court of Appeals 9th Circuit) EEOC v Arabian American Oil Co. (25 March 1991) 499 S.Ct. 244 (US Supreme Court) Filártiga v Peña-Irala (30 June 1980) 630 F.2d 876 (US Court of Appeals 2nd Circuit) Flomo v Firestone National Rubber Co. LLC (July 2011) 643 F.3d 1013143 (US Court of Appeals 7th Circuit) Goodyear Dunlop Tires Operations, S.A. v Brown (27 June 2011) 131 S.Ct. 2846 (US Supreme Court) Gulf Oil Corp. v Gilbert (10 March 1947) 330 S.Ct. 501 (US Supreme Court) Hilao v Estate of Marcos (In re Estate of Marcos) (16 June 1994) 25 F.3d 1467 (US Court of Appeals 9th Circuit) In Re Union Carbide Corp. Gas Plant Disaster at Bhopal, India in Dec. 1984 (12 May 1986) 634 F. Supp. 842 (District Court for the Southern District of New York) Jesner et al v Arab Bank (8 December 2015) 808 F.3d 144 (US Court of Appeals 2nd Circuit); (24 April 2018) 138 S.Ct. 1386 (US Supreme Court) Kadic v Karadžić (13 October 1995) 70 F.3d 232 (US Court of Appeals 2nd Circuit) Kasky and Others v Nike (20 April 2000) 93 Cal Rptr. 2d 854 (California Court of Appeals). Khulumani et al v Barclays National Bank et al (27 November 2007) 504 F.3d 254 (US Court of Appeals 2nd Circuit) Kiobel et al v Royal Dutch Petroleum Co. et al (29 September 2006) 456 F Supp 2d 457 (District Court for the Southern District of New York); (17 September 2010) 621 F.3d 111 (US Court of Appeals 2nd Circuit); (17 April 2013) 133 S.Ct.1659 (US Supreme Court) Marbury v Madison (23 February 1803) 5 S.Ct. 137 (US Supreme Court) Morrison v National Australia Bank Ltd (24 June 2010) 130 S.Ct. 2869 (US Supreme Court) Nike Inc. v Kasky (26 June 2003) 23 S.Ct. 2554 (US Supreme Court) Piper Aircraft Co. v Reyno (8 December 1981) 454 S.Ct. 235 (US Supreme Court) Presbyterian Church of Sudan v Talisman Energy, Inc. (19 March 2003) 244 F. Supp. 2d 289 (District Court for the Southern District of New York); (2 October 2009) 582 F.3d 244 (US Court of Appeals 2nd Circuit) Romero v Drummond Co., Inc (22 December 2008) 552 F 3d 1303 (US Court of Appeals 11th Circuit) Sarei v Rio Tinto Plc (9 July 2002) 221 F. Supp. 2d 1116 (US District Court of California); (28 June 2013) 722 F.3d 1109 (US Court of Appeals 9th Circuit) Sinaltrainal v Coca-Cola (11 August 2009) 578 F 3d 1252 (US Court of Appeals 9th Circuit) Sosa v Alvarez-Machain (29 June 2004) 542 S.Ct. 692 (US Supreme Court) Tomasella v The Hershey Company (Class Action Complaint filed 26 February 2018) Case No. 1:18-cv-10360 (District Court of Massachusetts) Trustees of Dartmouth College v Woodward (25 February 1819) 17 S.Ct. 518 (US Supreme Court) United States v Bestfoods et al (8 June 1998) 524 S.Ct. 51 (US Supreme Court)

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United States v Milwaukee Refrigerator Transit Co. (28 December 1905) 142 F. 247 (United States Circuit Court for the Eastern District of Wisconsin) United States v Pizzarusso (9 January 1968) 388 F.2d 8 (US Court of Appeals 2nd Circuit) Wiwa v Royal Dutch Petroleum Co. (14 September 2000) 226 F.3d 88 (US Court of Appeals 2nd Circuit)

General Introduction

The Heart of the Matter

In the wave of the privatisation of services and the liberalisation of trade, particularly since the 1990s, business has gained a prominent role in providing goods, services, and commodities within and between states. Through foreign direct investments corporations operate as an important vehicle in the transfer of technology, services and goods to global markets. In many instances, the trade and investment activities of the corporate sector can contribute to the efficient use of capital, technology and human and natural resources, playing a key role in promoting social welfare and human rights.1 Suffice it to think of the right to health, the right to work and the right to food, or the ambitious goals set by the United Nations (UN) 2030 Agenda for Sustainable Development.2 However, it holds equally true that corporate activities can violate human rights.3 Such violations have concerned, among others, the right to life, the right to health and to a healthy environment, labour rights, freedom from discrimination, and the right to privacy. One can add to the complexity of the picture by noting that such violations are often, though not always, perpetrated by transnational corporations (TNCs). Such actors are able to establish their seat in the countries offering the most permissive legal systems, in order to maximise their profits and escape liability.4 The activities of TNCs, some of which outperform the national

1

UN General Assembly (GA), ‘Globalisation and its Impact on the Full Enjoyment of All Human Rights’ (6 April 2011) UN Doc A/RES/65/216, para 10; see also Sarah Joseph, ‘Liability of Multinational Corporations’ in Malcolm Langford (ed), Social Rights Jurisprudence: Emerging Trends in International and Comparative Law (CUP 2009), 613. 2 GA, ‘Transforming our World: the 2030 Agenda for Sustainable Development’ (21 October 2015) UN Doc A/RES/70/1. See P Farah, ‘Sustainable Development Goals in Europe and their Intersection with the Business and Human Rights Framework’ in Angelica Bonfanti (ed), Business and Human Rights: International Law Challenges (Routledge 2017). 3 See UN High Commissioner for Human Rights, ‘Corporations and Human Rights: A Survey of the Scope and Patterns of Alleged Corporate-Related Human Rights Abuse’ (23 May 2008) UN Doc A/HRC/8/5/Add.2. 4 ‘[l]’entreprise transnationale jouit d’une double liberté, de faire ou de ne pas faire de choix normatifs. Vis-à-vis du droit international, rien ne l’oblige à retenir une norme internationale et de s’y soumettre. Vis-à-vis du droit national, elle dispose de toute latitude pour choisir ses lieux d’implantation et par voie de conséquence d’élire le droit local applicable’, Isabelle Daugareilh, ‘La responsabilité sociale des entreprises transnationales et les droits fondamentaux de © koninklijke brill nv, leiden, 2020 | doi:10.1163/9789004440029 _002

2

general introduction

economies of states, 5 have been raising complex questions for bodies of law, like human rights, where major issues of justiciability arise.6 Under international law, the responsibility for ensuring the respect and protection of human rights has long been assumed to lie with states.7 States are under the obligation to regulate the conduct of natural and legal persons under their jurisdiction, in order to ensure that such conduct shall not result in a violation of the human rights of others. This means that states are bound to prevent and address violations committed by legal persons, as well as to provide effective remedies when such violations occur.8 There would be no debate on business and human rights if states duly fulfilled in good faith all their international obligations.9 It is the unwillingness and/or inability of many states to live up to their obligations that has shifted attention to the direct relationship between corporations and human rights.10 Establishing forms of human rights accountability and liability for corporations has proved to be a puzzling matter for international law, as corporations are l’homme au travail : le contre-exemple des accords internationaux’ in Isabelle Daugareilh (ed), Mondialisation, travail et droits fondamentaux (Bruylant 2005), 379. 5 ‘Large corporations […] share many characteristics, including immortality, with States’ in Vaughan Lowe, ‘The Function of Litigation in International Society’ (2012) 61 ICLQ 209-222, 213; see also Detlev F Vagts, ‘The Multinational Enterprise: A New Challenge for Transnational Law’ (1970) 83 Harvard Law Review 739-792, 740; Peter T Muchlinski, Multinational Enterprises and the Law (2 edn, OUP 2007) 3; Alice de Jonge, ‘The Evolving Nature of the Transnational Corporation in th 21st Century’ in Alice de Jonge and Roman Tomasic (eds), Research Handbook on Transnational Corporations (Edward Elgar 2017), 10. 6 See Nigel Rodley, ‘Non-State Actors and Human Rights’ in Nigel Rodley and Scott Sheeran (eds), Routledge Handbook of International Human Rights Law (Routledge 2013), 536 ff. 7 See Velásquez Rodríguez v Honduras (Merits) (1988) IACtHR Series C No 4, para 166. 8 See Olivier De Schutter, International Human Rights Law: Cases, Materials and Commentary (2 edn, CUP 2014) 441 ff. 9 Commission on Human Rights, ‘Interim Report of the Special Representative of the SecretaryGeneral on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John G Ruggie’ (22 February 2006) UN Doc E/CN.4/2006/97, para 79. 10 When a state is negligent in preventing or addressing a violation perpetrated by private actors under its jurisdiction, any other state could bring a claim before the ICJ, provided that both states have accepted the jurisdiction of the Court. However, political and diplomatic considerations would often discourage states from pursuing a claim before the ICJ for violations of human rights. As stressed by Schachter, ‘I suspect States will hesitate to open a Pandora’s box which would allow every member of the now numerous community of States to become a “prosecutor” in judicial proceedings on behalf of the human rights of all persons’ in Oscar Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (1991) 178 RdC 21, 342; see also Thomas Buergenthal, ‘International Human Rights: Need for Further Institutional Development’ (2018) 50 Case Western Reserve Journal of International Law 9-16, 9.

general principles for business and human rights in international law

3

first and foremost “domestic creatures”. The issue has been on the UN agenda since the time of the ‘new international economic order’ in the 1970s.11 The extraordinarily rich production of international instruments relevant to the topic under consideration12 suggests that corporate activities are a fitting subject for international regulation.13 However, a piecemeal approach of the kind underway to standard-setting within an ‘unusual global policy process’14 also reveals the lack of general agreement on the legal basis of corporate obligations in international law.15 While there is widespread acceptance of the importance of business actors complying with human rights, the legal basis for corporate human rights obligations remains an unsettled question. Within the complex process of structural transformation and growing interdependence, known as “globalisation”, 16 the corporate impact on human rights has come in the spotlight of the current debate in international law. Much of the discussion on corporations and human rights has been obfuscated by the thorny issue of their potential subjectivity in international law.17 According to some, corporations are not “subjects” of international law and, therefore, cannot violate its primary rules.18 The issue of the legal status of corporations will be addressed in Part IV. For the moment, suffice it to recall that different shades of legal capacity flow from the rights and duties imposed by international law, 11

12 13 14 15

16

17

18

GA ‘Declaration on the Establishment of a New International Economic Order’ (1 May 1974) UN Doc A/RES/S-6/3201 (S-VI); see Giorgio Sacerdoti, ‘New International Economic Order’ MPEPIL (2015). It is worth noting that corporate violations of human rights have also occurred way before, e.g. the corporations involved in facilitating the slave trade in the African region during the era of colonisation. See infra, Part I. Steven R Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (2001) 111 Yale Law Journal 443-545, 488. John G Ruggie, Just Business: Multinational Corporations and Human Rights (W.W. Norton 2013) xi. GA, ‘Twentieth Anniversary and Promotion of the Declaration on the Right and Responsibility of Individuals, Groups and Organs of Society to Promote and Protect Universally Recognized Human Rights and Fundamental Freedoms’ (25 January 2018) UN Doc A/RES/72/247, para 12. GA, ‘Globalization and its Impact on the Full Enjoyment of All Human Rights’ (16 December 2005) UN Doc A/RES/60/152, para 10; see also Robert McCorquodale and Richard Fairbrother, ‘Globalisation and Human Rights’ (1999) 21 Human Rights Quarterly 735-766. See infra, Part IV, Chapter 12.1. On the concept of international legal personality see, among others, Janne E Nijman, The Concept of International Legal Personality: an Inquiry into the History and Theory of International Law (T.M.C. Asser Press 2004); Roland Portmann, Legal Personality in International Law (CUP 2010); Fleur Johns (ed), International Legal Personality (Routledge 2010). See, among others, Carlo Focarelli, Diritto Internazionale (4 edn, Wolters Kluwer – CEDAM 2017) 91.

4

general introduction

not the other way around,19 and that nothing in international law prevents corporations from bearing rights and obligations.20 Corporations are entities sui generis with a certain degree of international legal capacity.21 Some commentators suggest that the shift of economic power on the international scene towards the business sector contributed to a paradigm shift entailing international human rights obligations addressed to corporations.22 Others maintain that the role of corporations as prominent participants in the international arena does not provide a sufficient legal basis to claim that such actors are the recipients of rules of international law.23

19 Clapham, Human Rights Obligations of Non-State Actors (n 22), 68-69; see also Andreas Heinemann, ‘Business Enterprises in Public International Law: the Case for an International Code on Corporate Responsibility’ in Ulrich Fastenrath and Others (eds), From Bilateralism to Community Interest: Essays in Honour of Bruno Simma (OUP 2011), 730. 20 See Hersch Lauterpacht, ‘General Rules of the Law of Peace’ in Elihu Lauterpacht (ed), International Law: Being the Collected Papers of Hersch Lauterpacht, vol 1 (CUP 1970) 284. 21 Vaughan Lowe, ‘Corporations as International Actors and International Law Makers’ (2004) 14 Italian Yearbook of International Law 23-38, 32; James Crawford, ‘Chance, Order, Change: The Course of International Law’ ‘Chance, Order, Change: The Course of International Law’ (2013) 365 RdC 27, 137-159. 22 See, among others, Chris Jochnick, ‘Confronting the Impunity of Non-State Actors : New Fields For the Promotion of Human Rights’ (1999) 21 Human Rights Quarterly 56-79; Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer Law International 2000); Jordan J Paust, ‘Human Rights Responsibilities of Private Corporations’ (2002) 35 Vanderbilt Journal of Transnational Law 801-825, 810; David Weissbrodt and Maria Kruger, ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ (2003) 97 AJIL 901-922; David Kinley and Junko Tadaki, ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law’ (2004) 44 Virginia Journal of International Law 931-1024; Andrew Clapham, Human Rights Obligations of Non-State Actors (OUP 2006) 28; Francesco Francioni, ‘Alternative Perspectives on International Responsibility for Human Rights Violations by Multinational Corporations’ in Wolfgang Benedek and Others (eds), Economic Globalisation and Human Rights (CUP 2007); Andrew Clapham, ‘Human Rights Obligations for Non-State-Actors: Where are We Now?’ in Fannie Lafontaine and François Larocque (eds), Doing Peace the Rights Way: Essays in International Law and Relations in Honour of Louise Arbour (Intersentia 2017). 23 See, among others, François Rigaux, ‘Transnational Corporations’ in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff Publishers-UNESCO 1991), 129; Carlos M Vazquez, ‘Direct vs. Indirect Obligations of Corporations under International Law’ (2005) 43 Columbia Journal of Transnational Law 927-959, 932; Eric De Brabandere, ‘Human Rights and Transnational Corporations: The Limits of Direct Corporate Responsibility’ (2010) 4 Human Rights & International Legal Discourse 66-88; Christian Tomuschat, Human Rights: Between Idealism and Realism (3 edn, OUP 2014) 132 ff; Markos Karavias, Corporate Obligations under International Law (OUP 2013); Crawford, ‘Chance, Order, Change’ (n 21),155.

general principles for business and human rights in international law

5

Whichever position one embraces, the fact remains that there is currently no international court or tribunal with jurisdiction ratione personae over corporations. Victims of corporate violations must seek remedy before domestic courts, as it emerges from the numerous claims lodged for violations of labour rights,24 indigenous rights,25 as well as violations of environmental law,26 responsibility for environmental disasters, human trafficking,27 forced labour,28 inhuman and degrading treatment,29 complicity in war crimes and crimes against humanity.30 Differences abound concerning the willingness and ability of states to fulfil their obligations within their jurisdiction. Disparities concerning the definition and scope of corporate civil and criminal liability across different jurisdictions raise the issue of the direct applicability of international standards and rules to corporations.31 The relevant issue here is whether, in terms of substantive law, current international law establishes only a vertical relationship between the individual and the state, or whether it also contemplates a direct horizontal effect between private actors (e.g. between an individual and a corporation). This exercise requires looking at the relevant norms of international law, treaties, custom and general principles, and to verify whether they apply to corporations.

24 Connelly v RTZ Corporation Plc (24 July 1997) UKHL 30 (UK House of Lords); Comilog, Decisions (10 September 2015) 11/05953, 11/05955, 11/05956, 11/05957 11/05959, 11/05960 (Paris Court of Appeal). 25 Sociedad Agua Mineral Chusmiza S.A.I.C, ex parte Domínguez v Comunidad Indígena Aymara De Chusmiza y Usmagama (25 November 2009) Rol nr 2/840-2008 (Supreme Court of Chile). 26 Dooh v Shell-Nigeria (18 December 2015) ECLI:NL:GHDHA:2015:3586 (Court of Appeal of The Hague); Lungowe and Others v Vedanta Resources Plc & Anor (10 April 2019) UKSC 20 (US Supreme Court); Alame and Others v Royal Dutch Shell Plc (14 February 2018) EWCA Civ 191 (Court of Appeal). 27 For an account of the case law on human trafficking, see the UN Office on Drugs and Crime Case Law Database, available at https://www.unodc.org/cld/en/v3/htms/index.html; see also the ‘Report of the Special Rapporteur on Trafficking in Persons, Especially Women and Children, Maria Grazia Giammarinaro’ (3 August 2015) UN Doc A/70/260, paras 42, 54; Ashley Feasley, ‘Eliminating Corporate Exploitation: Examining Accountability Regimes as Means to Eradicate Forced Labor from Supply Chains’ (2016) 2 Journal of Human Trafficking 15-31. 28 Institute for Human Rights and Business, ‘Corporate Liability for Forced Labour and Human Trafficking’ (2016), available at https://www.ihrb.org/focus-areas/migrantworkers/ corporate-liability-for-forced-labour-and-human-trafficking 29 Doe I et al v Unocal Corporation et al (18 September 2002) 395 F.3d 932 (US Court of Appeals 9th Circuit). 30 Presbyterian Church of Sudan v Talisman Energy, Inc. (2 October 2009) 582 F.3d 244 (US Court of Appeals 2nd Circuit). 31 August Reinisch, ‘The Changing International Legal Framework for Dealing with Non-State Actors’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005); see also John H Knox, ‘Horizontal Human Rights Law’ (2008) 102 AJIL 1-47.

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With respect to the enforcement dimension, there are currently no international courts with jurisdiction to oversee corporate compliance with international law and accessible by those who may have suffered unjust damage from corporations in breach of international standards. Regional human rights courts and international quasi-judicial bodies are concerned only with state conduct. International criminal courts and tribunals may entertain their jurisdiction only over individuals. The absence of international dispute-settlement mechanisms with jurisdiction over corporations has been used as an argument to reject the existence of international obligations addressed to corporations.32 Yet, as authoritatively stressed in legal doctrine, the issue around the existence of a given rule is different from the one over the jurisdictional means to enforce such rule.33 In other words, since principles and rules of international law exist and create obligations regardless of their enforceability,34 an obligation may very well exist regardless of the mechanism chosen by states to enforce it.35 International tribunals are not the sole means of enforcing international rules and domestic courts have always played a key role in implementing international law. Furthermore, it is maintained that the alleged enforcement gap we have been facing in the last seventy years does not depend a priori on the features of the international legal system. Whilst no specific enforcement mechanism exists yet at the international level on business and human rights disputes, nothing prevents states from enabling existing courts and tribunals to acquire jurisdiction over corporate violations, or to set up an international body tasked with adjudicating corporate-related infringements of human rights. The everlasting tension between sovereignty and the international law process will be no less relevant to the subject matter of the present book than to any other topics of international law, despite the non-state nature of both the bearers of business-related human rights duties and the beneficiaries of the rights in question.36 The challenge is to accommodate duties and rights without impairing normativity and falling into “human rightists”’ arguments.37 32 Vazquez, ‘Direct vs. Indirect Obligations of Corporations under International Law’ (n 23), 940. 33 See Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (n 10), 59; Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (n 13), 481; Larissa van den Herik and Jernej Letnar Černič, ‘Regulating Corporations under International Law’ (2010) 8 Journal of International Criminal Justice 725-743, 732; Peters, Beyond Human Rights: The Legal Status of the Individual in International Law 65. 34 Richard R Baxter, ‘International Law in “Her Infinite Variety”’ (1980) 29 ICLQ 549-566, 549. 35 Lauterpacht, ‘General Rules of the Law of Peace’ (n 20), 286 ff. 36 Chris N Okeke, Controversial Subjects of Contemporary International Law: An Examination of the New Entities of International Law and Their Treaty-making Capacity (Rotterdam University Press 1974) 217. 37 See Ludovica Chiussi, ‘Remarks on the ILC Work on the Identification of Customary Law and Human Rights: Curbing “Droit de l’hommisme”?’ (2017) 27 Italian Yearbook of International

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The present work seeks to assess whether general principles of law provide for a legal basis apt to face such challenge.

1

Research Question and Outline of the Book

Business and human rights have been gaining traction as a discipline of its own and have been receiving extensive coverage in a variety of scholarly fields, including international law,38 private law,39 global governance,40 business ethics.41 At the same time, the more recent scholarship in the field has been dominated by a multidisciplinary approach,42 focusing on specific economic sectors,43 and on specific regions.44 Law 163-174. 38 For a select bibliography on business and human rights from a public international law perspective, see Francesco Francioni, Imprese multinazionali, protezione diplomatica e responsabilità internazionale (Giuffré 1979); Nicola Jägers, Corporate Human Rights Obligations: in Search of Accountability (Intersentia 2002); Clapham, Human Rights Obligations of Non-State Actors (n 22), 195-266; Muchlinski, Multinational Enterprises and the Law (n 5); Jernej Letnar Černič, Human Rights Law and Business: Corporate Responsibility for Fundamental Human Rights (Europa Law Publishing 2010); Angelica Bonfanti, Imprese multinazionali, diritti umani e ambiente. Profili di diritto internazionale pubblico e privato (Giuffré 2012); Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business. Beyond the Corporate Responsability to Respect? (CUP 2013); Karavias, Corporate Obligations under International Law (n 23); César Rodriguez-Garavito (ed), Business and Human Rights: Beyond the End of the Beginning (CUP 2017); Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (2017) 385 RdC 47; Dalia Palombo, Business and Human Rights: The Obligations of the European Home State (Hart Publishing 2020). 39 Giuseppe Conte, L’impresa responsabile (Giuffré 2018). 40 Julia Ruth-Maria Wetzel, Human Rights in Transnational Business: Translating Human Rights Obligations into Compliance Procedures (Springer 2016); Dorothée Baumann-Pauly, Managing Corporate Legitimacy: A Toolkit (Routledge 2013). 41 Thomas Donaldson, The Ethics of International Business (OUP 1989); Kenneth E Goodpaster, ‘Corporate Responsibility and Its Constituents’ in George G Brenkert (ed), The Oxford Handbook of Business Ethics (OUP 2009); Denis G Arnold, ‘Transnational Corporations and the Duty to Respect Basic Human Rights’ (2010) 20 Business ethics quarterly 371-399. 42 Daniel E Lee and Elizabeth J Lee, Human Rights and the Ethics of Globalization (CUP 2010); Lambooy, Corporate Social Responsibility: Legal and Semi-Legal Frameworks Supporting CSR (n 113). 43 Hevina S Dashwood, The Rise of Global Corporate Social Responsibility: Mining and the Spread of Global Norms (CUP 2012); Penelope Simons and Audrey Macklin, The Governance Gap : Extractive Industries, Human Rights, and the Home State Advantage (Routledge 2014); 44 See, among others, Bård A Andreassen and Võ Khánh Vinh (eds), Duties Across Borders (Intersentia 2016) 225 ff; Mahdev Mohan and Cynthia Morel (eds), Business and Human

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general introduction

Although the relationship between corporations and human rights has emerged as one of the most hotly debated topics in international law, the existing studies rarely undertake a systemic public international law analysis. While the role of custom and treaties vis-à-vis corporations has been subject to some doctrinal speculation, no particular attention has been devoted to the actual and potential role of general principles of law. This study attempts to fill this gap. The aim is to deliver a critical analysis of the existing public international law framework and to assess to what extent principles of law have a role in the business and human rights normative process.45 The core research question of this study may be summarised as follows: What is the role of general principles of law in the business and human rights legal process? I will address this question dividing it up into a series of sub questions: I. II. III. IV.

What is the current public international law framework on the issue of corporations and human rights? How do general principles of law relate to the existing state obligations to protect human rights with regard to corporate activities? Do, or can, general principles contribute to the development of obligations for corporations? Can corporate liability be considered a general principle of law?

To begin with, the public international law framework governing the issue of business and human rights must be identified. In order to do so, it is not sufficient to confine the analysis to the instruments specifically dealing with human rights standards for corporations. The broader framework of the sources of international law, as the process through which primary rules are created and modified,46 has to be examined. To inquire whether international law imposes obligations on corporations requires addressing the issue of how international law works and develops.47 Article 38 of the Statute of the International Court of Justice (ICJ), reads as follows: Rights in Southeast Asia (Routledge 2016). 45 ‘It is exactly the job of international legal scholars to produce ideas, ideas which − depending on the side conditions − potentially have the power to shape attitudes and actions, hence also law-making and legal interpretation, together with political, social, cultural, and other factors’, in Anne Peters, ‘The Rise and Decline of the International Rule of Law and the Job of Scholars’ in Heike Krieger and Others (eds), The International Rule of Law: Rise or Decline? (OUP 2020). 46 Gaetano Morelli, Nozioni di Diritto Internazionale (7 edn, CEDAM 1967) 21; Malcolm N Shaw, International Law (8 edn, CUP 2017) 66. 47 Ralph G Steinhardt, ‘Multinational Corporations and their Responsibilities under International Law’ in Lara Blecher and Others (eds), Corporate Responsibility for Human Rights Impacts:

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The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: (a) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; (b) international custom as evidence of a general practice accepted as law; (c) the general principles of law recognized by civilized nations; (d) subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.48 Paragraph 2 of the same Article adds, ‘[t]his provision shall not prejudice the power of the Court to decide a case ex aequo et bono, if the parties agree thereto.’ Article 38 of the ICJ Statute provides the Court with the applicable law in the disputes submitted to it; it does not claim to list the formal sources of international law. As a treaty, the Statute ‘is subject to the vicissitudes to which all treaties are liable’.49 At the same time, the fact that the ICJ Statute specifies that the Court is bound to decide ‘in accordance with international law’ and that Article 38 has been consistently referred to by other courts and tribunals,50 suggests that Article 38 can be regarded as an authoritative statement of the sources of international law,51 however imperfect and incomplete it might be.52 The sources listed therein – namely, treaties, custom and general principles New Expectations and Paradigms (American Bar Association Publishing 2014), 27. 48 Charter of the United Nations and Statute of the International Court of Justice (adopted 26 June 1945, entered into force 24 October 1945) 1 UNTS 16. 49 Hersch Lauterpacht, ‘Private Sources and Analogies of International Law’ in Elihu Lauterpacht (ed), International Law: Being the Collected Papers of Hersch Lauterpacht, vol 2 (CUP 1975), 182. 50 See, e.g. Prosecutor v Dusko Tadic a/k/a ‘Dule’ (Decision on the Defence Motion for Interlocutory Appeal on Jurisdiction) (2 October 1995) ICTY Appeals Chamber, para 43; Enron Corporation and Ponderosa Assets, LP v Argentina (22 May 2007) ICSID Case No ARB/01/3, para 257; see Robert Jennings, ‘General Course on Principles of International Law’ (1967) 121 RdC 327, 330. 51 See ILC, ‘First Report on Formation and Evidence of Customary International Law by Michael Wood, Special Rapporteur’ (17 May 2013) UN Doc A/CN.4/663, para 29; Robert Jennings and Arthur Watts, Oppenheim’s International Law, vol 1 (9 edn, OUP 2008) 24; Rüdiger Wolfrum, ‘Sources of International Law’ MPEPIL; Alain Pellet, ‘Article 38’ in Andreas Zimmermann and Others (eds), The Statute of the International Court of Justice: A Commentary (OUP 2012), 812-813, para 10; Hugh Thirlway, The Sources of International Law (OUP 2014) 5-6. 52 For a critical reading of Article 38, see Anthea Roberts and Sandesh Sivakumaran, ‘The Theory and reality of the Sources of International Law’ in Malcolm D Evans (ed), International Law (5 edn, OUP 2018), 115-116.

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– constitute the framework within which the issue of corporations and human rights will be investigated.53 When it comes to treaties and custom, the role of state consent in treatymaking and of state practice in the customary process reveal the “oligarchic”, state-centred nature of such sources.54 The direct applicability of treaties and custom to non-state actors is not precluded by international law. However, it poses structural issues that are still unsettled. Small wonder, then, that the attempts to draw from these two sources obligations addressed directly to corporations have seldom been successful.55 Article 38(1) includes among the primary sources of international law ‘the general principles of law recognised by civilized nations’. The doctrinal disagreements around the meaning of this expression, together with the reluctance of international courts and tribunals to explicitly refer to it, have contributed to an overall underestimation of the normative function of principles of law. The inclusion of general principles among the sources of international law allows the legal system to address fast-emerging areas that used to fall outside its traditional scope. Principles have a role in ‘the emergent international law concerned with the individuals, business companies, environmental dangers and shared resources’.56 As ‘bees of law […] cross-pollinating legal systems […] these principles are among others a powerful basis for new legal developments.’57 Despite the high normative potential of principles of law, no attention has been devoted to their role in the business and human rights legal domain. I will address principles from the perspective of both states and corporations. 53 There is no denying that the list is today complemented by other sources. 54 On the role of non-state actors in contemporary law making, see Alan E Boyle and Christine M Chinkin, The making of international law (OUP 2007); Math Noortmann and Cedric Ryngaert (eds), Non-State Actor Dynamics in International Law: From Law-Takers to Law-Makers (Routledge 2010); Dennis Patterson, ‘Transnational Lawmaking’ in Catherine Brölmann and Yannick Radi (eds), Research Handbook on the Theory and Practice of International Lawmaking (Edward Elgar Publishing 2016); Jean d’Aspremont, ‘Subjects and Actors in International Lawmaking: The Paradigmatic Divides in the Cognition of International Norm-generating Processes’ in ibid. 55 See Weissbrodt and Kruger, ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ (n 22); Karavias, Corporate Obligations under International Law (n 23); Olivier De Schutter, ‘The Challenge of Imposing Human Rights Norms on Corporate Actors’ in Olivier De Schutter (ed), Transnational Corporations and Human Rights (Hart Publishing 2006). 56 Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (n 10), 51. 57 Robert Kolb, ‘Principles as Sources of International Law (With Special Reference to Good Faith)’ (2006) 53 Netherlands International Law Review 1-36, 26.

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With respect to the state-based dimension, I will focus on the role of general principles as an interpretative tool for the human rights obligations addressed to states. Here, the question concerns the role of general principles in interpreting, redefining and perhaps expanding the scope of state obligations pertaining to the protection of human rights with regard to corporate human rights violations. The principle of good faith requires states to implement their obligations in ways that do not drain the respective rules of their content and purpose. Under the principle of good neighbourliness, states must ensure that their territory is not used so as to harm the rights of other states. Although originally conceived in a bilateral and territorial dimension, one could ask what the role of this principle may be today in interpreting the existing state duty to protect human rights. In a similar vein, one could ask what is the impact of the principle of access to justice on the state duty to protect human rights. From the corporate-based perspective, the main question is whether principles of law constitute a useful source on which to rely when arguing the case for corporate human rights obligations. Principles unquestionably provide a legal guarantee to private actors, such as corporations in their relationships with states in the context of international investment arbitration. Suffice it to recall the principle of fair and equitable treatment. The main question, therefore, is whether principles can also serve as sources of obligations for corporations that are relevant to the effective protection of human rights. This could be done either by researching the role of principles as sources of human rights law,58 or investigating principles that are not prima facie related to human rights, but that can provide a useful tool in the development of corporate liability in international law. I will confine my research to the latter option, investigating the role of principles such as abuse of rights, due diligence, good faith and estoppel in the development of corporate human rights obligations. While the subject of corporations and human rights poses considerable challenges from both a substantive and a procedural international law perspective,

58 On general principles as a source of human rights, see Louis Henkin, ‘Human Rights and State Sovereignty’ (1996) 25 Georgia Journal of International and Comparative Law 31-45; Martti Koskenniemi, ‘The Pull of the Mainstream. Review of Human Rights and Humanitarian Norms as Customary Law, by Theodor Meron’ (1990) 88 Michigan Law Review 1946-1962; Bruno Simma and Philip Alston, ‘The Sources of Human Rights Law: Custom, Jus Cogens, and General Principles’ (1988-1989) 12 Australian Yearbook of International Law 82-108; Olivier De Schutter, ‘Human Rights and the Rise of International Organisations: The Logic of Sliding Scales in the Law International Responsabilité’ in Jan Wouters and Others (eds), Accountability for Human Rights Violations by International Organizations (Intersentia 2010); Jan Wouters and Cedric Ryngaert, ‘Impact on the Process of the Formation of Customary International Law’ in Menno T Kamminga and Martin Scheinin (eds), The Impact of Human Rights Law on General International Law (OUP 2009).

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investigating principles of law may offer new insights on the legal position of corporations vis-à-vis international human rights law. The study is structured in four parts. Part I provides a bird’s-eye view on the public international law landscape surrounding business and human rights. It delivers a critical analysis of the non-binding instruments providing for human rights standards for corporations. It investigates the relationship between corporations and human rights through the lens of treaty law and customary law. It introduces general principles of law, setting the scene for the way in which this source is employed in the subsequent parts of the book. Part II illustrates the role of general principles as an interpretative tool of human rights obligations of states in the context of business activities. It aims to answer the following question: what role do principles play with regard to the existing human rights obligations addressed to states with regard to business and human rights? This Part will address the role played by the principles of good faith, no-harm and access to justice in the context of state human rights obligations with regard to corporate activities. Part III devotes close scrutiny to the actual and potential role of general principles vis-à-vis corporations. It focuses on abuse of rights, due diligence and good faith/estoppel as principles applicable to corporations, assessing their role in the development of corporate obligations relevant to the protection of human rights. Finally, Part IV, which builds up on previous parts, will discuss whether a principle of corporate liability has developed in international law. This study focuses on the normative perspective on business and human rights and analyses the topic through the lens of public international law. The definition of international law as embraced is that of a system of rules and of legal relations59 operating within an “international legal community”, however loose the community bond may be, or may be perceived, at any given point in time.60 The adopted methodology, intended both as the process to determine the content of international legal rules, and as the way in which the argumentation is structured,61 is grounded in the analysis of the sources of international law.62 59 See Philip Allott, ‘The True Function of Law in the International Community’ (1998) 5 Indiana Journal of Global Legal Studies 391-413. 60 See Manfred Lachs, ‘The Development and General Trends of International Law In our Time’ (1980) 169 RdC 19, 239-251; Andreas L Paulus, Die Internationale Gemeinschaft im Völkerrecht. Eine Untersuchung zur Entwicklung des Völkerrechts im Zeitalter der Globalisierung (C.H. Beck 2001). 61 Christian Dominicé, L’ordre juridique international entre tradition et innovation: recueil d’études (Publications de l’Institut de hautes études internationales 1997) 3. See also Philip Allott, ‘Language, Method and the Nature of International Law’ (1971) 45 BYIL 79-135 62 Martti Koskenniemi, ‘Methodology of International Law’ MPEPIL (2007), paras 7-13.

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The research relies in equal measure on theoretical analysis, international governmental and non-governmental practice, and on case law.63 Thus, the analysed material includes international conventional and non-conventional instruments, national legislation, case law, and academic literature. The relevant case law includes that of international courts and tribunals, quasi-judicial bodies, and domestic courts. Although no a priori stand will be taken on the different approaches on the subject under consideration in international legal theory, there are a number of scholarly positions that have greatly informed this research. The first is ‘enlightened’ or ‘modern’ positivism, as elaborated by Simma and Paulus.64 This position refutes a purely consent-based approach to international law.65 Yet, it upholds the idea that for international law to remain “credible”, it must hold to its normative dimension: Relying on a positivist conception of law does not necessarily imply subscribing to the view that there is only one correct answer to any legal problem. Rather, it means that we do not give up the claim to normativity and the prescriptive force of law. In many cases, law does provide guidance regarding what to do or not to do. Only by being normative can law preserve a balance between its transformative force, which does not accept reality as it is, and its roots in social reality.66 The added value of this approach is that it allows for consideration of the emerging needs of the international community, without weakening the normative dimension of international law.67 A second useful approach to this book is that of global constitutionalism. From a constitutional perspective, individuals are the “final” actors of the international

63 Georg Schwarzenberger, ‘The Inductive Approach to International Law’ (1947) 60 Harvard Law Review 539-570. 64 See Bruno Simma and Andreas L Paulus, ‘The Responsibility of Individuals for Human Rights Abuses in Internal Conflicts: A Positivist View’ (1999) 93 AJIL 302-316. 65 ‘If positivism is simplistically termed the most conservative of the methods, it is safe to say that the positivist method of today might well have been unrecognizable to a lawyer one hundred years ago’, in Steven R Ratner and Anne-Marie Slaughter, ‘Apprising the Methods of International Law: A Prospectus for Readers’ (1999) 93 AJIL 291-302, 295. 66 Simma and Paulus, ‘The Responsibility of Individuals for Human Rights Abuses in Internal Conflicts: A Positivist View’ (n 64), 307. 67 It has been argued that Simma’s shares some features with cosmopolitanism. See Steven R Ratner, ‘From Enlightened Positivism to Cosmopolitan Justice: Obstacles and Opportunities’ in Ulrich Fastenrath and Others (eds), From Bilateralism to Community Interest: Essays in Honour of Bruno Simma (OUP 2011).

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community.68 In this sense, principles of law may represent the gateway for a better integration of the private and the public sphere. Finally, the “darwinisme juridique” elaborated by Loquin in the context of international trade law and of lex mercatoria appears germane to the approach adopted in the present study.69 By such an expression, Loquin indicates the capacity to select rules which are best equipped to accommodate the needs of international (trade) law.70 This approach will be extrapolated to assess the contribution of general principles of law to address an emerging area of international law, such as business and human rights. By way of caveat, it should be stressed that the present work does not aim to provide an exhaustive treatment of the topic. Selections of particular issues have proved necessary and omissions are inevitable.71 The objective is to walk down some of the well-known paths of the debate, while seeking to open up to some new and promising ones.

2

Note on Terminology

A brief note on the terminology is deemed pertinent. As is often the case with issues involving different branches of the law, the use of the same term with different meanings under different legal disciplines has the potential to alter the substance of the debate.72 This is all the more so in a field, like that of business and human rights, touching upon so many different domains of international and domestic law.

68 Anne Peters, Jan Klabbers and Geir Ulfstein, The Constitutionalization of International Law (OUP 2009) 261. 69 Éric Loquin, ‘Les sources du droit mondialisé’ (2001) 96 Droit et patrimoine, 70. 70 Éric Loquin, ‘Règles matérielles du commerce international et droit économique’ (2010) 24 Revue internationale de droit économique 81-101; see also Emmanuel Gaillard, ‘Aspects philosophiques du droit de l’arbitrage international’ (2008) 329 RdC 61, 103. 71 Some aspects of business and human rights have been only briefly touched upon, such as corporate obligations in international humanitarian law, see Régis Bismuth, ‘Mapping a Responsibility of Corporations for Violations of International Humanitarian Law: Sailing Between International and Domestic Legal Orders’ (2010) 38 Denver Journal of International Law and Policy 203-226; the role of private international law, see Francisco J Zamora Cabot and Others (eds), Implementing the U.N. Guiding Principles on Business and Human Rights: Private International Law Perspectives (Schulthess 2017). 72 ‘It often happens that discussions are falsified because different authors make use of the same term but give it different meanings, or on the other hand because they use different terms to mean the same thing’ in Roberto Ago, ‘Positive Law and International Law’ (1957) 51 AJIL 691-733, 691-692.

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2.1 Corporations This study employs the term “corporation” to describe an ‘entity that is legally separate from its members, which enjoys its own personality and can hold rights and obligations in its own name’.73 The scope of the study is limited to corporations which conduct business activities. The term “corporation” is preferred over other terms such as “company” or “enterprise”, primarily because it is the term mainly used by the UN with regard to discussions pertinent to the topic under consideration. Other terms such as “enterprise” or “company” may be occasionally employed synonymously. 74 When a corporation owns or controls production or service facilities outside the country in which it is based, it can be referred to as a “transnational corporation” (TNC).75 There is no fixed meaning of “TNC”, as the latter is first and foremost an economic reality articulated in a variety of legal shapes.76 Neither treaties77 nor non-binding instruments provide a stringent definition of such entity.78 In 1972, the UN Economic and Social Council (ECOSOC) requested that the UN Secretary General appoint a Group of Eminent Persons to examine the role of TNCs in the international economy and their impact on development and on international relations.79 The Report presented by the Group of Eminent Persons described ‘multinational corporations’ as ‘enterprises which own or control production or service facilities outside the country in which they are based’, adding that ‘such enterprises are not always incorporated or private; they can also be cooperatives or state-owned entities.’80 The ECOSOC later welcomed the 73 Peter T Muchlinski, ‘Corporations in International Law’ MPEPIL (2014), para 1. 74 The term “company” is usually preferred by the European Union, while in Canada and in the United States “corporation” is more common. 75 See Luzius Wildhaber, ‘Some Aspects of the Transnational Corporation in International Law’ (1980) 27 Netherlands International Law Review 79-88; Menno T Kamminga, ‘Holding Multinational Corporations Accountable for Human Rights Abuses: A Challenge for the EC’ in Philip Alston (ed), The EU And Human Rights (OUP 1999), 553. 76 Alexandra Gatto, Multinational Enterprises and Human Rights: Obligations under EU Law and International Law (Edward Elgar 2011) 38. 77 Yann Kerbrat, ‘Les manifestations de la notion d’entreprise multinationale en droit international’ in Laurence Dubin and Others (eds), L’entreprise multinationale et le droit international (Pedone 2017) 57. 78 OECD Guidelines for Multinational Enterprises (2011) Chapter I, para 4; ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (2017), para 6. 79 ECOSOC, ‘The Impact of Multinational Corporations on the Development Process and on International Relations’ Res 1721 (LIII) UN Doc E/5209 (28 June 1972), 4. 80 ECOSOC, ‘Report of the Group of Eminent Persons on the Impact of Multinational Corporations on Development and International Relations’, Res 1974/1721, UN Doc E/5500/Rev.1 (24 May 1974) 25.

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point made by Latin American countries that the term “transnational” was to be preferred over “multinational”, in order to describe the cross-border activities of such entities.81 The ‘catch all definition’82 provided by the Group of Eminent Persons has been substantially shared within the UN and other international organisations, and will be relied upon throughout this study.83 Although TNCs lack a legal definition, one can summarise their constitutive features as follows: existence of a corporation, regardless of its country of origin and its ownership, comprising entities located in two or more countries; existence of a link between the entities where one is able to exercise significant influence over the activities of others; existence of a system of decision making which permits coherent policies and a common strategy through one or more decision-making centres. TNCs, by posing a special challenge for both their home and their host state,84 are at the forefront of the so-called “accountability gap”. Yet, the debate is not confined to the conduct of entities operating across borders, as also domestic companies can – and do – violate human rights.85 The arguments made in this study are therefore intended to be applicable to all business entities, whether operating transnationally or not, whether they are private or state-owned, and regardless of their size, sector, location, ownership and structure. 2.2 General Principles of Law Article 38(1)(c) of the ICJ Statute lists ‘the general principles of law recognised by civilised nations’ among the primary sources of international law. Although the use of the definite article “the” seems to indicate well identifiable principles, the meaning and scope of such source remains subject to disagreement.

81 “Multinational enterprise” indicates an entity ‘owned and controlled by entities from several countries’ in Muchlinski, Multinational Enterprises and the Law (n 5), 6; the term “transnational” conveys better the idea of corporations scattered over the territories of several states, see Rigaux, ‘Transnational Corporations’ (n 23), 121. 82 See Janet Dine, The Governance of Corporate Groups (CUP 2000) 42. 83 It has also been substantially shared by the Institut de Droit International, which stated that ‘enterprises which consist of a decision-making centre located in one country and of operating centres, with or without the legal personality in one or more other countries should, in law, be considered as multinational enterprises’, in Annuaire de l’institut de droit international (1978), 341. 84 ‘[I]l n’est plus possible aujourd’hui d’assimiler les Etats occidentaux aux pays d’origine des investissements et ceux du Sud à leurs receveurs’ in Alain Pellet, ‘Préface’ in Laurence Dubin and Others (eds), L’entreprise multinationale et le droit international (Pedone 2017), 4 85 See Clapham, Human Rights Obligations of Non-State Actors (n 22), 201; Karavias, Corporate Obligations under International Law (n 23), 4.

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Principles of law are unwritten norms of wide-ranging character.86 They may be distilled from domestic legal systems, as long as they are structurally suitable to the structure of international law. Examples of such principles include procedural principles such as res judicata, which bars a party from raising a claim after it has been already settled by a judicial decision, and substantive ones such as unjust enrichment, according to which no one should be allowed to profit at another’s expense without a valid legal cause. Principles can also be inferred from the international legal system, as it is the case of the principle of sovereign equality of states, or uti possidetis juris. Finally, there are principles that can hardly be traced back to one system or the other, as they just appear to be common to both. This is often the case with principles, such as good faith, regulating the conduct of all kinds of legal relations, regardless of the specific legal system.87 Although it is not always possible to make hard and fast distinctions among different types of principles, the present study will mainly focus on principles inferred from municipal systems. 2.3 Responsibility, Liability and Accountability The terms “responsibility”, “liability” and “accountability” have been employed with a vast array of meanings in the business and human rights debate. The lack of consistency in the use of such terms is not only due to a certain ‘tactics of wording’88 among scholars, but also to the fact that, while the English language provides three different terms indicating different legal concepts addressing the qualification and consequences of breaches of law, the majority of languages do not foresee such idiomatic nuances.89 International responsibility, as codified in the International Law Commission’s Draft Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA), can be defined as ‘the new legal relations which arise under international law by reason of the internationally wrongful act of a State’.90 The 86 See Giorgio Gaja, ‘General Principles of Law’ MPEPIL (2020). 87 Hermann Mosler, ‘General Principles of Law’ in Rudolf Bernhardt (ed), Encyclopedia of Public International Law, vol 7 (North-Holland 1987), 103. 88 Jean d’Aspremont, ‘Wording in international law’ (2012) 25 LJIL 575-602, 576. 89 Pierre Marie Dupuy, ‘The International Law of State Responsibility: Revolution or Evolution?’ (1989) 11 Michigan Journal of International Law 105-128, 109. 90 ILC, ‘Draft Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA) (2001) Yearbook of the International Law Commission, Vol II, Part II, Commentary to Article 1; see also Dionisio Anzilotti, Teoria generale della responsabilità dello stato nel diritto internazionale (Firenze 1902); Jimenez E de Aréchaga, ‘International Responsibility’ in Max Sørensen (ed), Manual of Public International Law (Macmillan 1968), 533; Alain Pellet, ‘The Definition of Responsibility in International Law’ in James Crawford and Others (eds), The Law of International Responsibility (OUP 2010).

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existence of international responsibility rests on two pillars: i) a conduct that constitutes an unlawful act: ii) and the attributability of such conduct to the state. However, within the debate on the relationship between corporations and human rights, “responsibility” has been used with different connotations, starting from the multifaceted notion of corporate social responsibility.91 In his 2007 Report, the Special Representative of the Secretary General, John Ruggie, described responsibility as ‘the legal, social or moral obligations imposed on companies’.92 In his 2008 report, however, Ruggie referred to ‘corporate responsibility as ‘defined by social expectations’, as opposed to the state’s legal duty to protect.93 Such a non-legal feature of corporate responsibility was also replicated by the UN Guiding Principles on Business and Human Rights, adopted in 2011 by the UN Human Rights Council.94 As a matter of international law, it remains that responsibility ‘is concerned with acts which are unlawful under international law’.95 State responsibility is the paradigm of responsibility in international law. Although its core elements have 91 See infra. The term “responsibility” has been used with different meanings also in concepts such as “responsibility to protect” or “common but differentiated responsibilities”, see Volker Roeben, ‘Responsibility in International Law’ in Armin von Bogdandy and Rüdiger Wolfrum (eds), Max Planck Yearbook of United Nations Law, vol 16 (2012). 92 HRC, ‘Report of the Special Representative of the Secretary-General on the issue of Human Rights and Transnational Corporations and Other Business Enterprises: Mapping International Standards of Responsibility and Accountability for Corporate Acts’ (19 February 2007) UN Doc A/HRC/4/35, para 6. 93 HRC, ‘Protect, Respect and Remedy: A Framework for Business and Human Rights: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’ (7 April 2008) UN Doc A/ HRC/8/5, paras 54, 55. see John G Ruggie, ‘The Construction of the UN “Protect, Respect and Remedy” Framework for Business and Rights: The True Confessions of a Principled Pragmatist’ (2011) 2 European Human Rights Law Review 127-133, 130. 94 HRC, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’ (21 March 2011) UN Doc A/HRC/17/31, Guiding Principle 11. The commentary to Guiding Principle 12 affirms that the ‘responsibility of business enterprises to respect human rights is distinct from issues of legal liability and enforcement, which remain defined largely by national law provisions in relevant jurisdictions’. 95 James Crawford, State Responsibility: The General Part (CUP 2013) 63. On the terminological confusion in the use of “responsibility” in the UNGPs, see Carlos López, ‘The ‘Ruggie Process’: From Legal Obligations to Corporate Social Responsibility?’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 65; see also Surya Deva, ‘Business and Human Rights, or the Business of Human Rights: Critical Reflections on Emerging Themes’ in Bård A Andreassen and Võ Khánh Vinh (eds), Duties Across Borders (Intersentia 2016), 30.

general principles for business and human rights in international law

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been adapted to accommodate breaches of law by international organisations of an intergovernmental nature,96 the international legal responsibility régime is not necessarily well suited to cover human rights violations committed by corporations.97 Accordingly, this study employs the expression “international responsibility” in its traditional meaning, to indicate the legal consequences arising out of an internationally wrongful act of a state. Accordingly, corporate violations will amount to international state responsibility only insofar as: a) the entity concerned is in fact acting upon instructions by a state, or under its control or direction in carrying out the particular conduct at issue;98 b) the corporation is empowered under the state party’s legislation to exercise elements of governmental authority99 or if the circumstances call for such exercise of governmental functions in the absence or default of the official authorities;100 c) if the state party acknowledges and adopts the conduct as its own;101 d) if, despite not having caused the violation, the state is in breach of its obligation to protect human rights against violations from third parties. As to liability, in the classical doctrine of international law it was used as a synonym of responsibility.102 In the work of the ILC, the term refers to due diligence mitigation and compensatory legal relations arising out of the mere occurrence of transboundary harm without the need for a violation of a primary rule of international law.103 More precisely, it is employed to indicate ‘situations according to which states have a duty to take reparatory and, at the same time, preventive measures vis-à-vis other states for damage caused, or likely to be caused, by activities – carried out, either directly by them, or by private operators – which are harmful though not prohibited under international law’.104 Differently from international responsibility, the damage is a key precondition for liability, which in turn does not (necessarily) require a violation of an 96 ILC, ‘Draft Articles on the Responsibility of International Organizations’ (2011) Yearbook of the International Law Commission, Vol II, Part II. 97 Jean d’Aspremont and others, ‘Sharing Responsibility Between Non-State Actors and States in International Law: Introduction’ (2015) 62 Netherlands International Law Review 49-67; Markos Karavias, ‘Shared Responsibility and Multinational Enterprises’ (2015) 62 Netherlands International Law Review 91 – 117. 98 ARSIWA (n 90), Article 8. 99 Ibid, Article 5. 100 Ibid, Article 9 101 Ibid, Article 11. 102 Dupuy, ‘The International Law of State Responsibility: Revolution or Evolution?’ (n 90), 110. 103 ILC, ‘International Liability for Injurious Consequences Arising out of Acts not Prohibited by International Law’ Yearbook of the International Law Commission (2001) Vol II, Part II; see Malgosia Fitzmaurice, ‘International Responsibility and Liability’ in Daniel Bodanski and Others (eds), The Oxford Handbook of International Environmental Law (OUP 2008), 1022. 104 Attila Tanzi, ‘Liability for Lawful Acts’ MPEPIL (2013), para 1.

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general introduction

international obligation. Furthermore, while in international responsibility the duty of reparation constitutes a secondary obligation, in the liability regime reparation constitutes a primary obligation in combination with other primary obligations of a preventive and mitigation character.105 For the present work, liability will be used mainly with regard to corporations. The concept is germane to domestic legal systems and allows one to distinguish between the civil and the criminal dimension. Furthermore, liability’s focus on “damage”, rather than on the breach of the rule, may assist in overcoming some conceptual impasses linked to the discussed possibility for corporations to violate international law. The third relevant term is “accountability”, a multifaceted notion that provides for both a quasi-legal106 and a legal dimension.107 The Oxford Dictionary defines “accountability” as ‘the quality of being accountable; liability to account for and answer for one’s conduct, performance of duties’.108 Brunée describes accountability as a ‘legal justification of an international actor’s performance vis-à-vis others, the assessment or judgment of that performance against international legal standards, and the possible imposition of consequences if the actor fails to live up to applicable legal standards’.109 Similarly, Morgera refers to the ‘way in which public and private actors are considered answerable for their decisions and operations, and are expected to explain them when they are asked by stakeholders’.110 Accountability, as a ‘duty to account’, appears as a looser concept describing the relationship between a subject with the power to produce certain effects on others, and those affected by such condition, and the community where they operate.111 The hybrid dimension of accountability will turn useful in this

105 Alan E Boyle, ‘State Responsibility and International Liability for Injurious Consequences of Acts Not Prohibited by International Law: A Necessary Distinction?’ (1990) 39 ICLQ 1-26, 10. 106 Mark Bovens, ‘Analysing and Assessing Accountability: A Conceptual Framework’ (2007) 78 European Law Journal 447-468, 449. 107 Rosalyn Higgins, Problems and Process: International Law and How We Use It (OUP 1995) 147. 108 Oxford English Dictionary, available at: http://www.oed.com. 109 Jutta Brunnée, ‘International Legal Accountability through the Lens of the Law of State Responsibility’ (2005) 36 Netherlands Yearbook of International Law 21-56, 24, emphasis added. 110 Elisa Morgera, Corporate Accountability in International Environmental Law (OUP 2009) 22-23. 111 Nadia Bernaz, ‘Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?’ (2013) 117 Journal of Business Ethics 493–511, 494; see also Crawford, State Responsibility: The General Part (n 95) 63; Simon Zadek, ‘The Meaning of Accountability’ in Dorothée Baumann-Pauly and Justine Nolan (eds), Business and Human Rights: From Principles to Practice (Routledge 2016), 240.

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study, with special regard to the compliance regimes under the “non-binding” instruments and the self-regulation of corporations through codes of conduct. 2.4 Corporate Social Responsibility and Business and Human Rights “Corporate social responsibility” (CSR) and “business and human rights” are two distinct but complementary fields.112 There is no single, generally accepted definition of CSR.113 Its underlying premise is a vintage one which goes back to the eighteenth-century theories of Adam Smith.114 CSR embodies the expectation that a corporation should act in a responsible manner in the environment in which it operates and that the role of the corporation goes beyond providing financial benefits to its shareholders. In the words of the European Commission, CSR is ‘the responsibility of enterprises towards their impact on society’.115 Accordingly, in order to discharge such responsibility, companies should set up processes to integrate social and environmental concerns into their business planning and operations. The objectives of corporations should include the maximisation of shared values for both the shareholders and other stakeholders, as well as the identification, prevention and mitigation of adverse impacts stemming from their activities.116 The contours of corporate social responsibility are not neat and the operationalisation of socially responsible practices evolves according to time and context.117 The understanding of CSR in this study builds upon the definition of it provided by the European Commission referred above.118 CSR 112 Anita Ramasastry, ‘Corporate Social Responsibility Versus Business and Human Rights: Bridging the Gap Between Responsibility and Accountability’ (2015) 14 Journal of Human Rights 237-259, 238. 113 For an overview of the debates around the notion of CSR, see Andrew Crane and Others (eds), The Oxford Handbook of Corporate Social Responsibility (OUP 2009); Michael Kerr, Richard Janda and Chip Pitts, Corporate Social Responsibility: A Legal Analysis (LexisNexis 2009); Tineke E Lambooy, Corporate Social Responsibility: Legal and Semi-Legal Frameworks Supporting CSR (Kluwer 2010); David Millon, ‘Corporate Social Responsibility and Environmental Sustainability’ in Beate Sjåfjell and Benjamin J Richardson (eds), Company Law and Sustainability: Legal Barriers and Opportunities (CUP 2015). 114 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776, 1977 edition by University of Chicago Press). 115 European Commission, ‘A Renewed EU strategy 2011-14 for Corporate Social Responsibility’ (Communication of 25 October 2011) COM (2011) 681 final, 6; see also ‘Green Paper: Promoting a European Framework for Corporate Social Responsibility’ (18 July 2001) COM (2001) 366 final, ‘Corporate Social Responsibility: Encouraging Best Behaviour’ (15 June 2006). 116 Ibid. 117 See Kerr, Janda and Pitts, Corporate Social Responsibility: A Legal Analysis (n 113), 51. 118 Ibid.

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adopts the business perspective on human rights and environmental standards,119 requiring companies to go beyond the interests of their shareholders and to take into account the impact of their activities on the “community”. The business and human rights discourse, on the other hand, addresses multiple viewpoints and concerns, namely from states, corporations and right-holders. From a legal perspective, the topic touches upon a wide range of different areas, including but not limited to general international law, international human rights law and environmental law, and also branches of domestic law, such as labour law, anti-discrimination law, investment and trade law, consumer protection law, civil law, commercial law, corporate and criminal law. One should not see the difference between CSR and business and human rights as one of “corporate philanthropy” vs. legal regulation,120 or preventive approach vs. remedial approach. The difference lies in the perspective.121 Business and human rights go beyond the corporate perspective, encompassing the quilt of legal relations between states, corporations and rights holders.

119 Although it has been suggested that CSR might entail legally binding instruments, see Leyla Davarnejad, ‘In the Shadow of Soft Law: The Handling of Corporate Social Responsibility Disputes Under the OECD Guidelines for Multinational Enterprises’ (2011) 2011 Journal of Dispute Resolution 351-386. 120 Radu Mares, ‘Global Corporate Social Responsibility, Human Rights and Law: An Interactive Regulatory Perspective on the Voluntary-Mandatory Dichotomy’ (2010) 1 Transnational Legal Theory 221–285. 121 Nadia Bernaz, Business and Human rights. History, Law and Policy – Bridging the Accountability Gap (Routledge 2016) 3 ff.

part i

A Public International Law Framework for Business and Human Rights Introduction This part offers a systemic analysis of the normative framework of business and human rights, anchoring the topic in the sources of public international law. First, it will examine the international instruments setting human rights standards for corporate activities, assessing their legal value against the backdrop of the other rules and principles of international law. Second, the role of treaty law in the business and human rights domain, from the UN Covenants to the ongoing negotiations of a treaty on business and human rights, will be addressed. Here, the focus will be on the extent to which existing human rights treaties create human rights obligations for corporations, and on the efforts of the international community to elaborate a binding instrument on business and human rights. Third, an analysis will follow on the relationship between customary human rights law and corporations. After a brief overview of the customary law process in the field of human rights, the direct applicability of customary international law to corporations will be addressed, followed by an analysis of the plausibility of a customary rule on corporate liability. The role of corporations in the customary law-making process will be also touched upon. Fourth, this part will focus on principles of law. It will shed light on the legal value of principles, their codification in Article 38(1)(c) of the ICJ Statute, their multifaceted origin, the role of principles of law in international law, similarities and differences with custom, and the methodology for their assessment. Finally, the role of principles in the business and human rights legal process will be illustrated.

1

Business-Related International Human Rights Standards

This chapter provides a critical analysis of the main international instruments setting human rights standards for corporations. A caveat is needed concerning their legal status in international law. While being non-binding instruments per se, their legal effects must be assessed on the basis of their interaction with the relevant rules and principles of international law.

© koninklijke brill nv, leiden, 2020 | doi:10.1163/9789004440029 _003

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1.1

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The OECD Guidelines for Multinational Enterprises

The Guidelines for Multinational Enterprises (hereinafter the “Guidelines”) were adopted in 1976 under the auspices of the Organisation for Economic Cooperation and Development (OECD), as one of the constitutive parts of the Declaration on International Investment and Multinational Enterprises.1 The Guidelines are recommendations addressed to corporations operating in or from the forty-eight adhering countries.2 They aim to set the bar for the responsible business conduct of corporations, providing principles and standards concerning sustainable development, governance, disclosure, human rights, employment and industrial relations, the environment, anti-corruption, consumer interests and taxation.3 The successful adoption of this instrument in 1976 was made possible by the common political background of the OECD member states. Differently from the UN context, where the 1970’s North–South frictions stood in the way in the efforts to adopt a Code of Conduct for the business sector,4 the OECD had the advantage of providing a fairly homogenous forum for negotiations.5 Two main factors contributed to the adoption of the Guidelines. First, the fact that they were negotiated in the context of the Declaration on International Investment and Multinational Enterprises, which aimed at fostering foreign direct investments, provided an incentive for the negotiating states to reach an 1

2

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4 5

OECD, ‘Declaration on International Investment and Multinational Enterprises’ (21 June 1976). The Declaration consists of four parts: The Guidelines for Multinational Enterprises; National Treatment (a voluntary undertaking by adhering countries to accord to foreigncontrolled enterprises on their territories treatment no less favourable than that accorded in like situations to domestic enterprises); Conflicting Requirements (general considerations and practical approaches to avoid the imposition of conflicting requirements on TNCs by states); International Investment Incentives and Disincentives (promoting the transparency of incentives and disincentives on FDIs). The Declaration is available at http://www.oecd. org/investment/investment-policy/oecddeclarationanddecisions.htm. As of 1 April 2020, the countries adhering to the Guidelines include the 36 OECD members, as well as 12 non-OECD states (Argentina, Brazil, Costa Rica, Croatia, Egypt, Jordan, Kazakhstan, Morocco, Peru, Romania, Tunisia, Ukraine). Although the Guidelines refer to ‘multinational enterprises’, they state that they do not seek to introduce ‘differences of treatment between multinational and domestic enterprises; they reflect good practice for all. […] multinational and domestic enterprises are subject to the same expectations in respect of their conduct wherever the Guidelines are relevant to both’, OECD ‘Guidelines’ (n 1), Chapter I, para 5. See infra in this Part, Chapter 2.2.1. Daniel J Plaine, ‘The OECD Guidelines for Multinational Enterprises’ (1977) 11 The International Lawyer 339–346, 340; Nadia Bernaz, Business and Human Rights: History, Law and Policy - Bridging the Accountability Gap (Routledge 2017) 197.

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agreement on their adoption. Second, the OECD members were determined to avoid a legally binding instrument at the UN level.6 Indeed, Chapter I of the Guidelines emphasises at the outset that the ‘observance of the Guidelines by enterprises is voluntary and not legally enforceable’.7 Since their adoption in 1976, the number of states adhering to the Guidelines has considerably broadened, including among non-OECD members.8 The instrument has been subject to a number of revisions, with a growing substantive coverage.9 It may be noted that already in 1991 a revision was adopted that added a new chapter on the protection of the environment.10 In the wake of the revival of the organisation after the wave of investment liberalization in the 1990’ had reduced the OECD role in regulating corporate activities,11 in 2000 a further revision of the Guidelines breathed new life into the instrument. Two new chapters on combating bribery and protecting consumers’ interests were added, and a reference to human rights was inserted in the General Policies Chapter (Chapter II).12 Most importantly, the same revision significantly expanded the scope of the Guidelines so as to cover corporations operating in and from adhering states.13 6

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8 9

10 11

12 13

Peter T Muchlinski, ‘Multinational Enterprises as Actors in International Law: Creating “Soft Law” Obligations and “Hard Law” Rights’ in Math Noortmann and Cedric Ryngaert (eds), Non-State Actors Dynamics in International Law: From Law-Takers to Law-Makers (Ashgate 2010), 17; Andrew Clapham, Human Rights Obligations of Non-State Actors (OUP 2006) 201. OECD Guidelines (n 1), Chapter I, para 1. However, the same paragraph adds that ‘some matters covered by the Guidelines may also be regulated by national law or international commitments’. This indicates that the Guidelines may be in certain cases declaratory of existing obligations under treaties, custom or general principles of law. Since 1976, the number of OECD and non-OECD countries adhering to the Declaration has grown from 24 to 48, namely 36 OECD member states and 12 non-members. The Guidelines consist today of eleven chapters: I. Concepts and Principles; II. General Policies; III. Disclosure; IV. Human Rights; V. Employment and Industrial Relations; VI. Environment; VII. Combating Bribery; VIII. Consumer Interests; IX. Science and Technology; X. Competition; and XI. Taxation; and the Implementation Procedures. The first version of the Guidelines did not make any reference to the protection of the environment and human rights. The Guidelines seemed to have gained new momentum when they were included in the draft text of the Multilateral Agreement on Investment (MAI). Yet the negotiations of the latter failed in 1998, also due to a strong lobby of the business sector against the possibility of facing possible obligations. OECD Guidelines (n 1), Chapter II, para 2: Enterprises should ‘respect the internationally recognised human rights of those affected by their activities’. See Jan Huner, ‘The Multilateral Agreement on Investment and the Review of the OECD Guidelines for Multinational Enterprises’ in Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer Law International 2000).

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The last revision of the Guidelines in 2011 introduced a standalone chapter on ‘Human Rights’.14 In referring to the UN Guiding Principles on Business and Human Rights, adopted the same year,15 Chapter IV asserts that ‘states have a duty to protect human rights’ in relation to private corporate activities. Most importantly, the revised text concurrently stresses that corporations should respect the international human rights obligations of the countries in which they operate, as well as relevant domestic laws. The Commentary on Chapter IV further clarifies that respect for human rights is the global standard of expected conduct for enterprises independently of States’ abilities and/or willingness to fulfil their human rights obligations, and does not diminish those obligations’, and that ‘a State’s failure […] to implement international human rights obligations or the fact that it may act contrary to such laws or international obligations does not diminish the expectation that enterprises respect human rights.16 It is notable how according to the document in hand the expectation that corporations comply with human rights is independent of the state duty to respect and protect human rights. The Commentary recalls that irrespective of the relevant domestic jurisdiction, regard must be paid to the International Bill of Human Rights, as well as to the principles laid down by the International Labour Organisation.17 This approach is replicated by the Chapter on Environment (Chapter VI), which specifies that enterprises should, within the framework of laws, regulations and administrative practices in the countries in which they operate, and in consideration of relevant international agreements, principles, objectives, and standards, take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development.18 Chapter IV provides a fairly detailed “to do” (and “not to do”) list for corporations. Firstly, corporations are required to avoid encroaching directly on human rights of others, to address ‘adverse human rights impacts’ in which they are involved 14 15 16 17 18

OECD Guidelines (n 1) Chapter IV. For an analysis of the UN Guiding Principles on Business and Human Rights, see infra, Chapter 1.4. OECD Guidelines (n 1), Commentary on Chapter IV, paras 37–38 (emphasis added). Ibid, paras 38–39. Ibid, Chapter VI (emphasis added).

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and to cooperate in the remediation process.19 Secondly, corporations should seek ways to prevent or mitigate adverse human rights impacts ‘directly linked to their business operations, products or services by a business relationship’, even if they have not contributed to those impacts.20 Thirdly, corporations, should have a human rights policy in place and carry out a human rights due diligence.21 The use of the verb “should” and the preference for expressions such as “adverse human rights impacts” over “violations” does not help clarify the legal value of the instrument vis-à-vis states and corporations. From a state perspective, the Guidelines appear prima facie as a mere political commitment towards responsible business conduct, in line with ‘principles and standards of good practice consistent with applicable laws and internationally recognised standards’.22 Yet a closer look reveals that the Guidelines entail a legal obligation for the adhering states. According to Article 5 of the OECD Charter, the Organisation may take decisions that are binding on the Members.23 The OECD Directorate for Legal Affairs makes it plain that such decisions are legally binding on all those Member countries who do not abstain when the Act is adopted. While they are not international treaties they do entail, for Member countries, the same kind of legal obligations as those subscribed to under international treaties. Members are obliged to implement Decisions and they must take the measures necessary for such implementation.24 A relevant example of such decisions is precisely the 2000 revision of the Guidelines, in which the adhering states agreed to implement the instrument by establishing National Contact Points.25 It follows that states are under the legal obligation to implement the Guidelines by setting up domestic bodies tasked 19 20

21 22 23 24 25

Ibid, paras 1, 2 and 6. Ibid, para 3. The Commentary to Chapter IV specifies that ‘among the factors that will enter into the determination of the appropriate action in such situations are the enterprise’s leverage over the entity concerned, how crucial the relationship is to the enterprise, the severity of the impact, and whether terminating the relationship with the entity itself would have adverse human rights impacts’ (para 43). Ibid, paras 4 and 5. Ibid, Chapter I, para 1. Convention on the Organisation for Economic Co-operation and Development (adopted 14 December 1960, entered into force 30 September 1961) 888 UNTS 179, Article 5. See Nicola Bonucci, ‘The Legal Status of an OECD Act and the Procedure for its Adoption’ (OECD Directorate for Legal Affairs, 2004), 1. OECD, ‘Decision of the Council on the OECD Guidelines for Multinational Enterprises’ (adopted 27 June 2000); OECD, ‘Guidelines for Multinational Enterprises: Responsible Business Conduct Matters’ (2013), 2.

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to promote and apply their standards. The question arises as to whether such an obligation applies also to the non-OECD states adhering to the Guidelines. It has been argued that since the normative force of Council’s Decisions stems from the OECD Charter, non-OECD members would not be bound by such decisions.26 This argument is, however, hardly reconcilable with the assumption that a state adhering to an instrument, regardless of its binding or non-binding nature, is expected to behave in good faith with regards to its commitments. It seems reasonable to assume, therefore, that the obligation to implement the Guidelines is addressed to OECD members and adhering non-members alike.27 The normative profile of the Guidelines has also been strengthened by their increasing endorsement at the national and international level. Key aspects of the instrument have been incorporated in EU regulations;28 the Guidelines have been increasingly referred to in international investment agreements and they have been operationalised through the National Action Plans on Business and Human Rights.29 In sum, the disclaimer regarding the “voluntary” nature of the OECD Guidelines has not deprived the instrument of its legal value.30 The standards set therein are applied rather vigorously by their implementation mechanism, cajoling increasing consensus on the expectations of corporate compliance.31 In 1984, the states adhering to the Guidelines agreed to include an obligation to set up National Contact Points (NCPs) to promote the instrument and provide a forum for discussion for the relevant stakeholders.32 Since 2000, the NCPs are also tasked with the administration of a complaint mechanism for the resolution of issues arising from the alleged non-observance of the OECD Guidelines

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29 30 31

32

Scott Robinson, ‘International Obligations, State Responsibility and Judicial Review under the OECD Guidelines for Multinational Enterprises Regime’ (2014) 30 Utrecht Journal of International and European Law 68–81, 76. OECD, ‘Structures and Procedures of National Contact Points for the OECD Guidelines for Multinational Enterprises’ (2018), 16. The OECD Guidelines are among the instruments on the basis of which European companies have to base their obligations of disclosure according to EU Directive 2014/95 as regards disclosure of non-financial and diversity information by certain large undertakings and groups. See infra, Chapter 1.4. See Barnali Choudhury, ‘Balancing Soft and Hard Law for Business and Human Rights’ (2018) 67 ICLQ 961–986, 967. Larry Catá Backer, ‘The Arc of Triumph and Transformation of the OECD Guidelines’ in OECD (ed), OECD Guidelines for Multinational Enterprises: a Glass Half Full (OECD Publishing 2018), 46. OECD, ‘Decision of the Council on the OECD Guidelines for Multinational Enterprises’ (May 1984), para 1.

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in specific instances.33 Such bodies are of a domestic nature, but they apply international standards. The procedure before NCPs allows victims of an alleged violation of the Guidelines to lodge a complaint against corporations.34 The procedure comes in three phases: initial assessment, mediation and final statement. Phase one starts with the submission, by anyone who can demonstrate an ‘interest’ in the alleged violation,35 of a complaint before the NCP. The latter conducts an initial assessment to determine whether the case deserves further examination.  If affirmed, phase two commences with the NCP offering its good offices to the company and the complainant in order to facilitate a consensual solution of the issue, through mediation and conciliation. If the parties reach an agreement, in the third and final stage of the procedure the NCP reports on the successful outcome of the mediation. Should the mediation process fail, the NCP can still examine the complaint and issue a final statement. The final statement summarises the facts of the case and the alleged breaches, it might contain a finding as to whether a breach of the Guidelines has occurred, and may provide recommendations to comply with provisions found to have been infringed. The NCP can follow up on its recommendation within the timeframe indicated in the final statement, in terms that, however, are devoid of any enforcement powers. Regrettably, not all NCPs seem to address the merits of the case if the mediation process fails. For examples in Jamaa Resource Initiatives et al. v US Company, a case concerning the environmental impact of a US company’s subsidiary on an indigenous population in Kenya, the US NCP confined itself to assessing the failure of the mediation process, generically inviting the company to comply with the Guidelines.36 There is no prescribed structure for NCPs and states are given ample discretion on the institutional architecture within which to set up their respective contact points. A good number of NCPs are housed in a single government office,37 while certain states have NCPs located in between two or more ministries.38 Only a few 33 34

35 36 37 38

OECD, ‘Decision of the Council’ (27 June 2000) (n 25). See Dalia Palombo, ‘National Contact Point: Organisation for Economic Cooperation and Development’ MPEiPRO (2019); Giuseppe Palmisano, ‘Reflections on the Implementation Procedures of the OECD Guidelines for Multinational Enterprises’, in Ennio Triggiani and Others (eds), Dialoghi con Ugo Villani (Cacucci Editore 2019). Being either an individual, organisation or community. US NCP, Jamaa Resources Initiatives vs. U.S. Company for Conduct in Kenya (Final Statement) (24 November 2017). E.g. the Italian and the US NCPs, housed respectively in the Ministry of Economic Development and in the Bureau of Economic and Business Affairs. E.g. Canada and Germany. The former is composed of seven member departments and chaired by Global Affairs Canada; the latter is housed in the Federal Ministry for Economic Affairs and Energy, which coordinates all decisions with an inter-ministerial steering group.

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NCPs have a mixed structure representing various stakeholders,39 or are composed of independent experts.40 The structure of the NCP is key to its effectiveness. The housing of NCPs in a single ministry, being often a business department, may raise issues of impartiality and conflicts of interest. NCPs consisting either of a panel of independent experts, a multipartite organization with participants from several stakeholder groups, or an entity overseen by a steering board, are more likely to guarantee impartiality. Since 2000, NCPs have received hundreds of complaints relating to corporate violations. Since 2011, when the human rights chapter was added to the Guidelines, human rights cases have accounted for the majority of the complaints. As non-judicial mechanisms, NCPs do not provide compensation. Their aim is to prevent litigation and, when a dispute arises nonetheless, to provide a forum for mediation between corporations and the other stakeholders. Their relationship with the domestic judiciary is one of complementarity.41 Although the mechanism in question cannot be compensatory, NCPs can still play a role in reshaping corporate conduct. By way of example, one can single out the case Lawyers for Palestinian Human Rights vs. G4s, in which the UK NCP dealt with a series of allegations against the UK company G4s for the violations committed by its subsidiaries in providing, installing, and maintaining equipment used in military checkpoints in the West Bank. The complaint alleged that G4s’s subsidiaries contributed to serious human rights abuses, including the detention and imprisonment of children in Israeli prison facilities in the West Bank. After the initial refusal by the company to accept mediation, the UK NCP found that the company’s actions were inconsistent with its obligation to seek to address impacts of its business relationships.42 As a result, two years later the final statement, G4S sold its Israel unit. NCPs are a unique feature of the Guidelines, which are currently the only business and human rights-related instrument endowed with a non-judicial grievance mechanism.43 As already stressed, the NCP mechanism is a strong argument against too quick a dismissal of the Guidelines as an instrument

39 40 41

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E.g. France and Sweden, which have a decision-making body based upon a tripartite composition of representatives from the government, trade unions and business associations. E.g. Denmark, Netherlands and Norway. Kathia Martin-Chenut, René de Quenaudon and Leandro Varison, ‘Les Points de contact nationaux : un forum de résolution des conflits complémentaire ou concurrent du juge?’ in Kathia Martin-Chenut and René de Quenaudon (eds), La RSE saisie par le droit (Pedone 2016). UK NCP, Lawyers for Palestinian Human Rights (LPHR) v G4S PLC (Final Statement) (7 July 2016). As of 1 April 2018, 47 out of 48 countries have established National Contact Points. Tunisia is the only country currently without a functioning NCP.

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devoid of legal value. The mechanism in question is not too distant from the compliance mechanisms established under the existing human rights treaties. Furthermore, it may be noted that, differently from the human rights treaty bodies, the NCPs’ competence over individual complaints does not require any specific acceptance by the states adhering to the Guidelines.44 However, NCPs only partly foster access to remedy for the victims of corporate human rights violations. They lack the power to impose corporate participation in specific instances procedures, they cannot issue reparation and they do not normally sanction non-compliance with their final statements. Some NCPs have taken steps in this direction. Canada, for example, included new measures to be applied in the case of non-participation of companies in the NCP process. Companies that do not engage in good faith in the mediation process may be sanctioned by the withdrawal of the Canadian Government trade support services.45 This also shows, once again, that there is an expectation by states that companies operating within its jurisdiction will comply with the Guidelines. Despite the inherent limits of the different NCPs, if able to develop a generally coherent practice, such entities would contribute significantly to the “crystallisation” of generally shared standards of expectations towards corporations46 as well as a useful “humus” for domestic law.47 In particular, their domestic nature, matched with their task to apply international standards, may provide key elements for the formation of a general principle on corporate liability, which will be addressed in Part IV.48 It can well be said that with the Guidelines the OECD has created a key communication tool to bridge the gap between states and corporations from the international law standpoint, which is matched with a minimum core of 44 John Evans and Kirstine Drew, ‘The OECD Guidelines for Multinational Enterprises: Responsible Business Conduct in a Global Context’ in Hervé Ascensio and Nicola Bonucci (eds), Le pouvoir normatif de l’OCDE (Pedone 2014), 130. 45 See ‘Engagement in Good Faith in the NCP Process and Possible Consequences’, available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/ncp-pcn/index. aspx?lang=eng&menu_id=1&menu=R. 46 Jernej Letnar Černič, Human Rights Law and Business: Corporate Responsibility for Fundamental Human Rights (Europa Law Publishing 2010) 184; Laurence Dubin, ‘L’élaboration des principes à l’intention des entreprises multinationales par l’OCDE ou comment globaliser la régulation du comportement d’un acteur global?’ in Hervé Ascensio and Nicola Bonucci (eds), Le pouvoir normatif de l’OCDE (Pedone 2014), 125. 47 Maria Chiara Malaguti, ‘La Responsabilità sociale dell’impresa nel prisma delle attività di mediazione e monitoraggio dei Punti di Contatto Nazionale’, in Marina Castellaneta and Francesca Vessia (eds), La responsabilità sociale d’impresa tra diritto societario e diritto internazionale (Edizioni scientifiche italiane 2019), 313. 48 See Ernst-Ulrich Petersmann, ‘Codes of Conduct’ in Rudolf Bernhardt (ed), Encyclopedia of Public International Law, vol 7 (North-Holland 1984), 30.

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procedural guarantees for victims of human rights violations. In the words of Kassedjian, the OECD est finalement très adaptée au XXIème siècle marqué par les philosophies de John Rawls et Jürgen Habermas. L’OCDE applique de manière magistrale l’agir communicationnel du second et le droit procédural du premier. L’essentiel est d’influencer. Peu importe la hiérarchie des normes. […] Peu importe la séparation hard/soft law, droit dur/droit tendre.49 It is much to be hoped that the same procedural and communicative philosophical underpinnings of the legal discourse at the end of the 20th century may continue to inform the legal process in the 21st century. 1.2 The ILO Tripartite Declaration The creation of the International Labour Organisation (ILO) in 1919 marked the first encounter of intergovernmental organisations with the business sector.50 The ILO, established in the aftermath of the First World War, was created as a means to promote social progress and improve the conditions of workers worldwide.51 The idea behind its creation is that social justice represents a precondition for lasting peace,52 and that both can only be achieved through international cooperation. The Preamble of the ILO Constitution affirms that the ‘failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve the conditions in their own countries’.53 Such a statement evokes the basic concept of economic and

49 50 51

52

53

Catherine Kessedjian, ‘Eloge du foisonnement (du désordre) fructueux’ in Hervé Ascencio and Nicola Bonucci (eds), Le pouvoir normatif de l’OCDE (Pedone 2014), 144. For an historical overview of the ILO, see Gerry Rodgers and others, The International Labour Organization and the Quest for Social Justice, 1919–2009 (ILO 2009). The ILO was created as a part of the 1919 Treaty of Versailles, which in Article 23 affirms that: ‘[The state parties] will endeavour to secure and maintain fair and humane conditions of labour for men, women, and children, both in their own countries and in all countries to which their commercial and industrial relations extend, and for that purpose will establish and maintain the necessary international organisations’; see Albert Thomas, ‘The International Labour Organisation: Its Origins, Development and Future’ (1921) 1 International Labour Review 5. Franklin D Roosevelt, ‘Address to the International Labour Organization’ (6 November 1941); Francis Maupain, The Future of the International Labour Organization in the Global Economy (Hart Publishing 2013). ILO, Constitution (1 April 1919), Preamble, available at https://www.ilo.org/dyn/normlex/ en/f?p=1000:62:0::NO:62:P62_LIST_ENTRIE_ID:2453907:NO.

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social interdependence among states. At the same time, it represents an early recognition of a general principle of fair competition, aiming to avoid undue disadvantage to states (and corporations) adopting social policies vis-à-vis other states and competitors operating at variance with human rights standards.54 For the purpose of the present analysis, it is to be noted that in 1977, i.e. a year after the adoption of the OECD Guidelines illustrated in the previous section, the ILO Governing Body adopted the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.55 The Declaration, which was revised in 2017,56 aims to ‘encourage the positive contribution which multinational enterprises can make to economic and social progress’.57 Its 58 paragraphs cover several areas related to workers’ rights, such as employment promotion, social security, elimination of compulsory labour, security of employment, conditions of work and life, freedom of association and collective bargaining.58 It is worth recalling that the addressees of the Declarations are corporations, both national and multinational, governments, employers’ and workers’ organisations.59 Paragraph 8 affirms that [a]ll the parties concerned by this Declaration should […] respect the Universal Declaration of Human Rights and the corresponding International Covenants adopted by the General Assembly of the United Nations as well as the Constitution of the International Labour Organization and its principles according to which freedom of expression and association are essential to sustained progress. […] They should also honour commitments which they have freely entered into, in conformity with the national law and accepted international obligations.60 The non-binding character of the Declaration does not detract from the fact that this instrument offers a systemic framework of international standards to 54

55 56

57 58 59 60

On the same score, the General Agreement on Tariffs and Trade (GATT) in its Article XX allowed for restricting trade on grounds of serious human rights violations that endangered life and health. ILO, ‘Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy’ (1 November 1977) and amended in 2000, 2006 and 2017. The 2017 revision took stock of the 2008 Declaration on Social Justice for a Fair Globalization, the 2007 Conclusions Concerning the Promotion of Sustainable Enterprises, the 2011 UN Guiding Principles on Business and Human Rights (see infra) the 2015 UN 2030 Agenda for Sustainable Development (see infra) and the 2016 Resolution Concerning Decent Work in Global Supply Chains. ILO, ‘Tripartite Declaration’ (n 55), para 2. Ibid, para 7. Ibid, para 4. Ibid, para 8.

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be complied with by states and corporations.61 The Declaration can be read as an authoritative interpretation of the ILO Conventions and the core UN human rights treaties. Its legal value is supported by the follow-up procedures put in place and strengthened over the years. In fact, in 1980 an interpretation procedure was set up which allows states and organisations of employers and workers to submit requests for interpretation in case of a dispute over the interpretation and application of the provisions of the Tripartite Declaration.62 The process has been further boosted by the establishment, in 2014, of a regional follow-up mechanism comprising a reporting system.63 In 2017, the ILO Governing Body also encouraged the addressees of the Tripartite Declaration to appoint national focal points on a tripartite basis, in order to promote the use of the Declaration in the national context.64 It is noteworthy that the revised version of Tripartite Declaration also requires parties to ‘contribute to the realization of the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, adopted in 1998’.65 The latter is of the utmost relevance for the purposes of the present analysis because it affirms the obligation falling on member states, regardless of whether they have ratified the core labour conventions, to fulfil in good faith the principles concerning the fundamental rights contained in the conventions, namely freedom of association and collective bargaining, the elimination of forced and child labour and the elimination of discrimination.66 Such a reference to the binding obligations bearing on the parties (including corporations) might constitute an adequate legal basis to assess whether such obligations apply to corporations. This seems to be coherent with the ILO’s “tripartism”, which provides for the participation, alongside states, of employers’ and workers’ organisations.67 Sight should be not 61 Clapham, Human Rights Obligations of Non-State Actors (n 6), 212. 62 Adopted by the Governing Body of the ILO at its 214th Session (November 1980), and revised at its 232nd Session (March 1986) and at its 329th Session (March 2017). The procedure cannot be invoked in respect of national law and practice, in respect of international labour conventions and recommendations and in respect of matters falling under the freedom of association procedure. 63 Adopted by the Governing Body of the ILO at its 320th Session (March 2014). The regional reporting is based on a four-year cycle with a report to be presented to the Governing Body at the end of each cycle. 64 Adopted by the Governing Body of the International Labour Office at its 317th Session (March 2013) and revised at its 329th Session (March 2017); see also 1 GB.337/INS/12/2, appendix, para 10. 65 ILO, ‘Tripartite Declaration’ (n 55), para 9. 66 ILO, ‘Declaration on Fundamental Principles and Rights at Work’ (adopted 18 June 1998), para 2. 67 ILO Constitution (n 53), Article 3; see Francis Maupain, ‘l’OIT, la justice sociale et la mondialisation’ (1999) 278 RdC 209, 331 ; Dinah Shelton, ‘Protecting Human Rights in a Globalized

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lost of the fact that the ILO conventions and recommendations are negotiated and adopted by the International Labour Conference, where each state is represented by a delegation consisting of two governmental delegates, an employer delegate, a worker delegate, and their respective advisers.68 This underlines the role of economic actors as standard-setters and provides an additional argument for the opposability of the ILO instruments to corporations.69 The Declaration on Social Justice for a Fair Globalization, which was adopted in 2008, would also be potentially relevant for corporations,70 insofar as it enshrines the four pillars of the Decent Work Agenda, namely employment creation, social protection, development and social dialogue promotion.71 Regrettably, this instrument refers to the Tripartite Declaration only in passing. While calling for the development of new partnerships with transnational corporations in order to achieve the objectives of the organisation, the Declaration has missed an opportunity to recall the expectation that corporations comply with the core labour standards set by the organisation. 1.3 The UN Global Compact The Global Compact was launched by then UN Secretary General Kofi Annan in his address to the world business leaders gathered in Davos for the 1999 World Economic Forum.72 There, Mr Annan called on the business community to

World’ (2002) 25 Boston College International and Comparative Law Review 273–322, 281. The ILO is composed of other two bodies: The Governing Body (28 government members, 14 employee members and 14 worker members) and the International Labour Office (secretariat composed of independent civil servants only). Once a standard is adopted, member States are required under the ILO Constitution to submit them to their competent authority (normally the parliament) for consideration. In the case of Conventions, this means consideration for ratification. 69 Though the ILO decision-making process has proved more “bottom-up” than other and human rights instruments, it has been argued that the ILO tripartism is not always able to ‘capture the voice of all those they claim to represent’, in Claire La Hovary, ‘A Challenging Ménage à Trois? Tripartism in the International Labour Organization’ (2015) 12 International Organizations Law Review 204–236, 220. The ILO structure has also been criticised for not representing the real economic forces, as explained by Rodgers and others, The International Labour Organization and the Quest for Social Justice, 1919–2009 (n 50), 17. 70 ILO, ‘Declaration on Social Justice for a Fair Globalization’ (10 June 2008). 71 Jean-Michel Servais, ‘A New Declaration at the ILO: What for?’ (2010) 1 European Labour Law Journal 286–300. 72 While the Global Compact started as an initiative of the then Secretary- General Kofi Annan, it has also been recognized and endorsed by the UN General Assembly, see UN GA, ‘Towards Global Partnerships’ (24 January 2002) UN Doc A/RES/56/76. 68

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‘embrace, support and enact a set of core values in the areas of human rights, labour standards, and environmental practices’.73 The story of the Global Compact has to be read against the painstaking negotiations of a UN Code of Conduct through the 70s and 80s.74 The unsuccessful outcome of that process shifted the strategy from regulation to governmental-stakeholder partnership.75 Conceived as a voluntary initiative to promote good corporate practices and as a platform to bridge the gap between the intergovernmental dimension of the UN and corporations, the Compact was meant to side-step ideological clashes and embrace a more bottom-up approach.76 The Compact lays down ten universal principles in the areas of human rights, labour, environment, and anti- corruption, drawing from the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the Rio Declaration on Environment and Development. Principles 1 and 2 of the Global Compact are explicitly concerned with the general human rights duties of businesses. Principle 1 provides that ‘businesses should support and respect the protection of internationally proclaimed human rights’. According to Principle 2 ‘businesses must make sure that they are not complicit in human rights abuses’. According to the Commentary to the Global Compact, “complicity” consists of ‘[a]n act or omission […] by a company, or individual representing the company, that “helps” (facilitates, legitimizes, assists, encourages, etc.) another, in some way, to carry out a human rights abuse, and … [t]he knowledge by the company that its act or omission could provide such help’.77 The Global Compact’s labour principles (Principles 3–6) are derived from the ILO Declaration on Fundamental Principles and Rights at Work. They encompass freedom of association and the effective recognition of the right to collective bargaining (Principle 3), elimination of forced and child labour (Principles 4–5) and the elimination of discrimination in the employment and occupation (Principle 6).78 Principles 7 to 9 contain the environmental section. 73 74 75 76 77 78

UN Press Release, ‘Secretary-general Proposes Global Compact on Human Rights, Labour, Environment, in Address to World Economic Forum in Davos’ (1 February 1999) SG/SM/6881. See infra, Chapter 2.2.1.; Bernaz, Business and Human Rights: History, Law and Policy - Bridging the Accountability Gap (n 5), 176 ff. See Ursula A Wynhoven, ‘The Protect-Respect-Remedy Framework and the United Nations Global Compact’ (2011) 9 Santa Clara Journal of International Law 81–100, 84. Georg Kell, ‘The Global Compact: Selected Experiences and Reflections’ (2005) 59 Journal of Business Ethics 69–79, 71. Global Compact, Commentary to Principle 2. The Compact provides a Guide with practical steps for companies. By way of example, with regard to collective bargaining, corporations’ policies should not discriminate against individuals on the basis of their opinions on trade unions or their trade union activities. In countries where the government does not permit respect for human rights (including rights at work) or does not provide a proper legal and institutional framework for industrial

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Principle 10, added in 2004, upholds that businesses should work against all forms of corruption. Corporations are required to embrace, support and enact the ten principles within their “sphere of influence”. Once a corporation has signed onto the Global Compact, it pledges to promote and endorse its principles by including them in its business strategy and operations. While the principles contained in the Compact are non-binding, since 2003 the participating companies are expected to submit annually a Communication on Progress specifying the measures adopted to implement the principles.79 In case of lacking or inadequate self-reporting, corporations incur the sanction of being delisted from the Compact. The Global Compact also envisages a rudimental compliance mechanism for egregious or systematic violations of its ten Principles.80 Written complaints can be lodged before the UN Global Compact Office, which preliminary “filters” the allegations to verify their prima facie credibility. A process of communication starts with the company, whose lack of engagement can directly result in delisting from the Compact. The Compact can offer its good offices or invite the parties to resort to other compliance mechanisms, including those provided by the ILO and the OECD. Regrettably, there seems to be a lack of visibility and transparency regarding this process. The Compact has become one of the largest global corporate responsibility initiatives, joined by more than 12,000 companies in over 150 states. While having its share of supporters, it has not escaped criticism. In the first place, the elusiveness of formulas such as “sphere of influence” of corporations does not always prove efficient in clarifying the relationships within corporate groups.81 The concept is not particularly problematic as long as one remains within the “voluntary” dimension of the instrument. However, if imported into the prospect of a binding instrument, or interpreted within the framework of general international law, “sphere of influence” entails considerable normative challenges.82 Second, the lack of reference to the two International Bill of Human Rights in the Compact appears to be a missed opportunity to provide a sound

79 80 81 82

relations and collective bargaining, corporations should preserve the confidentiality of trade unions and leaders. UN Global Compact, ‘After the Signature: A Guide to Engagement in the United Nations Global Compact’ (2008), 19 ff, available at https://www.unglobalcompact.org/library/241. UN Global Compact, ‘Integrity Measures, Dialogue Facilitation’, available at https://www. unglobalcompact.org/about/integrity-measures. Denis G Arnold, ‘Transnational Corporations and the Duty to Respect Basic Human Rights’ (2010) 20 Business ethics quarterly 371–399, 373. The concept was indeed used by the UN Draft Norms, see infra, Chapter 2.2.2.

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international normative basis on which the instrument must be interpreted.83 Third, the lack of transparency regarding participants’ performance may risk allowing corporations to benefit from the UN label, while maintaining practices at variance with international human rights standards.84 Fourth, while the Global Compact initiative may prove effective in encouraging large corporations to comply with human rights, the same cannot be said about small and medium enterprises, which are less concerned with reputational risk and with the “courts of public opinion”.85 Be that as it may, it is to note that the Global Compact was never intended as a form of regulation proper, but as a multi-stakeholder platform to share good practices86 and to operationalise corporate social responsibility.87 Unquestionably, through the active participation of the business sector, the Compact contributes to enhance the regulatory standards on which the international community can base its legitimate expectations concerning corporate conduct.88 1.4 The UN Guiding Principles on Business and Human Rights Following the previous failures of the UN to adopt a legally binding instrument imposing human rights obligations on corporations, the then Commission on Human Rights requested the Secretary-General in 2005 to appoint a special representative on the issue of human rights and transnational corporations

83 84

85

86 87

88

Alexandra Gatto, Multinational Enterprises and Human Rights: Obligations under EU Law and International Law (Edward Elgar 2011) 81. The critique is well summarised by Betty King, ‘The UN Global Compact: Responsibility for Human Rights, Labor Relations and the Environment in Developing Nations’ (2001) 34 Cornell International Law Journal 481–485, 482; see also Justine Nolan, ‘With Power Comes Responsibility: Human Rights and Corporate Accountability’ (2005) 28 University of New South Wales Law Journal 581–613, 588; Justine Nolan, ‘The United Nations’ Compact with Business: Hindering or Helping the Protection of Human Rights?’ (2005) 24 University of Queensland Law Journal 445. See Surya Deva, ‘Global Compact: A Critique of the UN’s “Public-Private” Parnership for Promoting Corporate Citizenship’ (2006) 34 Syracuse Journal of International Law and Commerce 107–151. John G Ruggie, ‘Global_governance.net: The Global Compact as Learning Network’ (2001) 7 Global Governance 371–378, 373. Hervé Ascensio, ‘Le pacte mondial et l’apparition d’une responsabilité internationale des entreprises’ in Laurence Boisson de Chazournes and Emmanuelle Mazuyer (eds), Le Pacte mondial des Nations Unies 10 ans après / The Global Compact of the United Nations 10 years after (Bruylant 2011), 184. See Marina Castellaneta, ‘La responsabilità sociale di impresa nel contesto internazionale: il programma Global Compact delle Nazioni Unite’ in Castellaneta and Vessia (n 47).

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and other business enterprises.89 Professor John Ruggie, who had already had a prominent role in the elaboration of the UN Global Compact, was appointed as a Special Representative of the Secretary General on the topic. In his wideranging mandate Ruggie was entrusted with identifying and clarifying standards of corporate human rights responsibility and accountability for TNCs and other business enterprises; elaborating on the role of states in effectively regulating and adjudicating the issue in hand; clarifying concepts such as corporate “complicity” and “sphere of influence”; developing methodologies for human rights impact assessments in the business sector; and drafting a compendium of best practices of both states and corporations.90 In the interim report presented at the beginning of his mandate, the Special Rapporteur set forth his approach to the business and human rights agenda,91 recalling the change of landscape since the adoption of the UN Charter and the increasing leverage of economic actors in international law.92 On that score, he emphasised how, while in its early years the UN was operating in a state-based international order, today ‘actors for which the territorial State is not the cardinal organizing principle have come to play significant public roles’.93 The first challenge for the Special Rapporteur was the systemisation of the several existing international standards.94 As already noted, Ruggie’s mandate had been adopted in the aftermath of the dismissal of the UN Draft Norms, which had sought to extend human rights obligations to corporations.95 This explains Ruggie’s attempt to distance his initiative as much as possible from the previous (unsuccessful) instrument.96 In criticising the doctrinal excesses of the Norms, Ruggie proposed to embrace a ‘principled form of pragmatism’, defined as ‘an unflinching commitment to the principle of strengthening the promotion and protection of human rights as it relates to business, coupled with a pragmatic attachment to what works best in creating change where it matters most – in the daily lives of people’.97 Ruggie did not explain his approach more extensively, but it emerges from the outcome of his mandate that the priority was to avoid

89 90 91

92 93 94 95 96 97

UN Commission on Human Rights, ‘Human Rights and Transnational Corporations and other Business Enterprises’ (2005) UN Doc E/CN.4/RES/2005/69. Ibid, para 1. UN Commission on Human Rights, ‘Interim Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (22 February 2006) UN Doc E/CN.4/2006/97. Ibid, para 9. Ibid, para 10. Ibid, para 55. See infra, Chapter 2.2.2. UN Commission on Human Rights ‘Interim Report’ (n 91) Ibid, para 56–69. Ibid, para 81.

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any legal impasse, thus focusing on strategies to reach a doable agreement for both states and the business sector.98 The first official report presented by the Special Representative to the HRC in 2007 provides a snapshot of the international landscape surrounding the issue of corporations and human rights.99 The state duty to protect human rights from violations committed by non-state actors is presented as the bedrock of the human rights regime, grounded in human rights treaties and customary international law.100 The thorny issue of extraterritorial jurisdiction is briefly touched upon in the Report, affirming that states are not at present required to exercise extraterritorial jurisdiction over corporate violations, nor are they prevented to do so, as long as a recognised basis of jurisdiction exists.101 The Report concedes that states are not the only duty bearers in international law,102 and assessed the increasing recognition of corporate criminal liability in domestic legal systems.103 Yet with particular regard to international human rights law, the Special Rapporteur refutes the existence of a legal basis for international corporate obligations,104 though acknowledging that “soft law” instruments ‘may, in due course, crystallize into harder forms’.105 In 2008, Ruggie presented the so-called ‘Protect, Respect and Remedy: a Framework for Business and Human Rights’, which was adopted by the HRC by consensus.106 The Framework rests on three pillars:

98

99

100 101 102 103 104 105 106

It has been argued that ‘by putting aside the Norms and their legal ambitions, the 2006 interim report also seemed to be directed at burying the proposition that companies can be bound by international law’, in Carlos López, ‘The ‘Ruggie Process’: From Legal Obligations to Corporate Social Responsibility?’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 63. HRC, ‘Business and Human Rights: Mapping International Standards of Responsibility and Accountability for Corporate Acts. Report of the Special Representative of the SecretaryGeneral on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie’ (19 February 2007) UN Doc A/HRC/4/35. Ibid, para 10, 18. Ibid, para 15. On extraterritorial jurisdiction, see infra, Part II. Ibid, para 19. Ibid, paras 24, 26. Ibid, paras 34–35. Ibid, para 49. HRC, ‘Protect, Respect and Remedy: a Framework for Business and Human Rights. Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie’ (7 April 2008) UN Doc A/HRC/8/5. Since 2006 the UN Human Rights Council replaced the UN Commission on Human Rights.

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the State duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and the need for more effective access to remedies.107 The three pillars in question are considered mutually independent and complementary: Each pillar is an essential component in an inter-related and dynamic system of preventive and remedial measures: the State duty to protect because it lies at the very core of the international human rights regime; the corporate responsibility to respect because it is the basic expectation society has of business in relation to human rights; and access to remedy because even the most concerted efforts cannot prevent all abuse.108 According to Professor Ruggie, the previous intergovernmental initiatives on business and human rights lacked a focal point and proved ineffective, allowing states and companies to ‘fly below the radar’.109 The purpose of the Framework, according to his author, is to provide a common denominator through a simple formula: states must protect, companies must respect and the victims of violations must have a right to redress. Differently from the previous initiatives, which aimed at extending a number of human rights obligations to corporations,110 the Framework embraces the principle of ‘differentiated but complementary responsibilities’.111 A neat distinction is drawn between the first pillar, i.e. the state duty to protect human rights, and the second pillar, i.e. the responsibility of corporations to respect. On the one hand the duty to protect human rights is defined as an obligation that current international law places on states. On the other hand, corporate responsibility appears as defined by ‘social expectations’.112 It does not have, in the view of Ruggie, a legal basis in international law.113 The HRC welcomed the 2008 Framework and extended Ruggie’s mandate for another three years, asking him to “operationalise” it.114 The operationalisation of 107 108 109 110 111 112 113

114

Ibid, Summary. Ibid, para 9. Ibid, para 5. Ibid, para 6. Ibid, para 9. Ibid, para 54. Such a distinction is further emphasized in HRC, ‘Report of the Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises (9 April 2010) UN Doc A/HRC/14/27, para 55. HRC, ‘Mandate of the Special Representative of the Secretary-general on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (18 June 2008) UN Doc A/HRC/RES/8/7.

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the Framework resulted in thirty-one Guiding Principles (UNGPs), unanimously endorsed by the Human Rights Council in 2011.115 The state duty to protect, as ‘the bedrock of protection against corporate human rights abuse’,116 is operationalised by the first ten principles. According to Principle 1, states ‘must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises’. To discharge their duty, states are required ‘to take appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication’.117 The duty to protect is framed as a standard of conduct, not of result.118 Accordingly, states have discretion as to what measures are the most appropriate to discharge their duty, as long as they are effective in preventing, investigating, punishing and redressing private actors’ violations.119 In order to meet their duty to protect, states are also required to ‘set out their expectations to all business enterprises domiciled within their jurisdiction to respect human rights in their operations’.120 The thorny issue of extraterritorial obligations of the states is quickly bypassed by the Commentary to Principle 2, which points out that under current international human rights law there is the possibility, but not the obligation, for states to regulate corporations outside their territory.121 I will revert to this aspect in Part II. The need for coherence between human rights obligations and their economic and investment policies is the main subject of Principles 8 and 9.122 Principle 8 focuses on the domestic dimension of policy coherence, requiring states to ensure that their policies and laws comply with and implement their international human rights obligations. Principle 9 addresses the international dimension of policy coherence, requiring states to ensure that the investment treaties and contracts concluded with other states or business enterprises do not impair their sovereign regulatory power to protect human rights. The particular issue of policy coherence is also recalled by the UN Committee on Economic, Social 115 HRC, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie’ (21 March 2011) UN Doc A/HRC/17/31, Annex. The UNGPs, together with their Commentary, are available at https://www.ohchr.org/Documents/ Publications/GuidingPrinciplesBusinessHR_EN.pdf. 116 John G Ruggie, Just Business: Multinational Corporations and Human Rights (W.W. Norton 2013) xiii. 117 UNGP 1. 118 Ibid, Commentary to UNGP 1. 119 Ibid, UNGP 4. 120 Ibid, UNGP 2. 121 Ibid, Commentary to UNGP 2. 122 Ibid, UNGPs 8 and 9.

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and Cultural Rights (CESCR). In its General Comment 24 on State Obligations in the Context of Business Activities, the Committee has tackled in detail the issue of conflicting state obligations under human rights and trade or investment treaties, underlying the primacy of the protection of human rights under the umbrella of Article 103 of the UN Charter.123 The corporate responsibility to respect human rights, which constitutes the second pillar, is operationalised through Principles 11–24. Corporations, regardless of their size,124 should avoid infringing the human rights of others and should address adverse impacts in which they might be involved.125 Importantly, no distinction is drawn between civil and political rights and economic, social and cultural rights. The core human rights to be respected by corporations include the International Bill of Human Rights and the principles set out in the ILO Declaration on Fundamental Principles and Rights at Work. The list is not, however, exhaustive, as corporations may need to comply with additional standards depending on the sectorial context in which they operate.126 Alongside the obligation to avoid causing or contributing to adverse human rights impacts within their own activities, corporations should prevent or mitigate those impacts linked to their operations, products or services by their business relationships.127 A special focus is dedicated to human rights due diligence by corporations.128 According to Principle 17, the due diligence process should include four stages: the identification of actual and potential human rights impacts that corporations may cause or contribute to through its activities, or which may be linked to its operations, products or business relationships; the integration of such assessments into the company’s decision making; the tracking of how the company effectively addresses the impacts; and the communication of such actions to the shareholders.129 The following principles elaborate on the practical steps of the due diligence process, starting from the human rights and human rights holders potentially affected by the business operations,130 and monitoring the effectiveness of the policies put in place.131

123 CESCR, ‘General Comment No 24: State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities’ (10 August 2017) UN Doc E/C.12/GC/24, para 13. I will return on the issue of conflicting obligations under investment and human rights treaties in Part II, Chapter 7.1.3. 124 UNGP 14. 125 UNGP 11. 126 UNGP 12. 127 UNGP 13. 128 UNGPs 17–20. On the principle of due diligence, see Part III, Chapter 8. 129 UNGP 17. 130 UNGP 18. 131 UNGP 20.

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The third pillar, access to remedy, underscores the need for an integrated application of redress mechanisms, including states’ judicial and non-judicial ones, as well as corporate grievance mechanisms.132 With regard to state-based judicial mechanisms, states should guarantee the effectiveness of domestic judicial mechanisms, tackling the legal and practical barriers to access to justice.133 At the national level, judicial mechanisms should be complemented by administrative, legislative and other non-judicial mechanisms.134 Non-state grievance mechanisms, on the other hand, include regional human rights mechanisms and corporate based or multi-stakeholders initiatives.135 Though remedies constitute one of the three pillars of the UNGPs, the latter do not provide for their own enforcement mechanism. The dissemination and implementation of the UNGPs heavily relies on the work of the UN Working Group on the Issue of Transnational Corporations and other Business Enterprises, which consists of five independent experts appointed by the Human Rights Council.136 Regrettably, the Working Group has not been vested with the power to hear individual complaints. But it has been seriously engaged in the elaboration of guidance to states in the adoption of National Action Plans (NAPs) as a means to implement the UNGPs.137 Such policy instruments, although not always effective, corroborate that corporations are expected to comply with human rights, and bridge the gap between the international standards and national policies.138 By way of example, the NAP adopted by Italy in 2016 affirms that ‘enterprises domiciled and/or operating in Italy must respect human rights throughout all their activities: the respect of fundamental human rights is a 132 133 134 135 136

UNGPs 25–27. UNGP 26. UNGP 27. UNGP 31. HRC, ‘Human Rights and Transnational Corporations and other Business Enterprises’ (6 July 2011) UN Doc A/HRC/RES/17/4. The Human Rights Council also set up a UN Forum on Business and Human Rights, a multi-stakeholder gathering held annually in Geneva; on the role of the Working Group, see Michael K Addo, ‘The Reality of the United Nations Guiding Principles on Business and Human Rights’ (2014) 14 Human Rights Law Review 133–147, 137 ff; César Rodriguez-Garavito, ‘Business and Human Rights: Beyond the End of the Beginning’ in César Rodriguez-Garavito (ed), Business and Human Rights: Beyond the End of the Beginning (CUP 2017), 19 ff. 137 See UN Working Group on Business and Human Rights, ‘Guidance on National Action Plans on Business and Human Rights’ (Geneva 2016); as to 1 October 2018, 21 states have adopted NAPs, while other 23 are in the process of developing them. 138 For an analysis of the implementation process of the UNGPs, see EU Directorate-General for External Policies, ‘Implementation of the UN Guiding Principles’ (2017); Marta Bordignon, ‘National Action Plans and their Legal Value’, in Martina Buscemi and Others (eds), Legal Sources in Business and Human Rights (Brill Nijhoff 2020).

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cornerstone of the economic activities as well, carried out either by public or private companies’.139 The Norwegian Action Plan of 2015 affirms that ‘there is thus a global standard for what can be expected of a business enterprise’. And it is worth noting that this expectation is described as being based on such a global standard ‘regardless of whether or not the local legislation affords adequate protection for human rights’.140 The UNGPs have been incorporated in a number of international instruments, such as the revised version of the OECD Guidelines141 and the ILO Tripartite Declaration, as well as the ISO 26000 Guidance on Social Responsibility.142 The UN High Commissioner for Human Rights has described them as ‘the global standard of practice that is now expected of all governments and businesses with regard to business and human rights’, which, although non-legally binding themselves, offer an authoritative elaboration on ‘existing standards and practices for states and businesses.’143 Considerable uptake was also shown by the EU144 and the Organisation of the American States.145 The business sector has largely endorsed the Ruggie framework and the Principles, welcoming the framework as ‘a clear, practical and objective way of approaching a very complex set of issues’.146 There is no doubt that the endorsement of the UNGPS, as the first universal endorsement of standards on business and human rights, marked a breakthrough in the field. They go beyond the plethora of sector-specific and regional initiatives. 139 Italian Ministry of Foreign Affairs, ‘Italian Action Plan on Business and Human Rights (2016–2021)’ (2016), 11, available at http://cidu.esteri.it/resource/2016/12/49117_f_NAPBHRENGFINALEDEC152017.pdf. 140 Norwegian Ministry of Foreign Affairs, ‘Business and Human Rights: National Action Plan for the Implementation of the UN Guiding Principles’ (2015), 30, available at https://www. regjeringen.no/globalassets/departementene/ud/vedlegg/mr/business_hr_b.pdf. 141 See also OECD ‘Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas’ (2013) and the ‘Due Diligence Guidance for Responsible Business Conduct (2018). 142 International Organisation for Standardisation, ‘ISO 26000’ (2010), available at https://www. iso.org/iso-26000-social-responsibility.html. 143 OHCHR, ‘The Corporate Responsibility to Protect Human Rights: An Interpretive Guide’ (2012), 3. 144 EU Commission ‘A Renewed EU strategy 2011–14 for Corporate Social Responsibility’ (25 October 2011) COM (2011) 681 final; EU Parliament, Committee on Foreign Affairs, ‘Resolution on Corporate Liability for Serious Human Rights Abuses in Third Countries’ (25 October 2016) Res 2015/2315(INI). 145 OAS, ‘Promotion and Protection of Human Rights in Business’ (4 June 2014) AG/RES. 2840 (XLIV-O/14). 146 IOE, ICC and BIAC, ‘Joint Views to the Human Rights Council on theThird report of the Special Representative of the UN Secretary-General on Business and Human Rights’(May 2008), 3, available at http://www.reports-and-materials.org/Letter-IOE-ICC-BIAC-re-Ruggiereport-May-2008.pdf.

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Compared to other initiatives, the process of elaboration of the UNGPs has been more inclusive.147 In Ruggie’s polycentric governance-based approach, the priority was to secure consensus among the different stakeholders involved in the negotiations.148 As it is generally the case for other international instruments, the avoidance of strictly legal language is instrumental to reaching an agreement.149 The use of terms such as “framework” instead of “rules”, or “impact” instead of “violation”, was also a conscious choice to avoid controversy around the legal effect of the instrument and prevent adverse lobbying by the business sector.150 At the same time, the search for a stakeholder buy-in has its downsides. The consensus-driven approach followed by Ruggie steered clear of the most controversial issues within the business and human rights debate.151 As incisively argued by Deva, it can hardly be disputed that the state duty to protect human rights entails ensuring that private actors do not infringe human rights. Nor is there any doubt on the existence of an unspecified “responsibility” of corporations to protect human rights.152 Contentious issues, such as the extraterritorial obligations of the state, were bypassed. The somewhat sceptical approach to legal dimension of the issues addressed while focusing on the social responsibility of 147 John Ruggie employed a participatory approach throughout his mandates. The need for an inclusive approach in boosting compliance from the corporate sectors had already been underscored by Jonathan I Charney, ‘Transnational Corporations and Developing Public International Law’ (1983) Duke Law Journal 748–788, 756. 148 John G Ruggie, ‘A UN Business and Human Rights Treaty? An Issues Brief’ (2014) Business and Human Rights Resource Centre, available at https://www.business-humanrights.org/sites/ default/files/media/documents/ruggie-on-un-business-human-rights-treaty-jan-2014.pdf ; although, as pointed out by Deva and Bilchitz, the victims of corporate-related violations were not included in the consultations, see Surya Deva and David Bilchitz, ‘The Human Rights Obligations of Business: a Critical Framework for the Future’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013). 149 See, among others, Ludovica Chiussi, ‘The UN 2030 Agenda on Sustainable Development: Talking the Talk, Walking the Walk?’ (2016) 71 La Comunitá internazionale 49–70. 150 Karin Buhmann, ‘Navigating from ‘Train Wreck’ to Being ‘Welcomed’: Negotiation Strategies and Argumentative Patterns in The Development of the UN Framework’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 57. 151 For an interesting discussion on the point, see David Bilchitz, ‘The Ruggie Framework: An Adequate Rubric for Corporate Human Rights Obligations?’ (2010) 7 International Journal on Human Rights 199–231. 152 Surya Deva, ‘Business and Human Rights, or the Business of Human Rights: Critical Reflections on Emerging Themes’ in Bård A Andreassen and Võ Khánh Vinh (eds), Duties Across Borders (Intersentia 2016), 29; Robert C Blitt, ‘Beyond Ruggie’s Guiding Principles on Business and Human Rights: Charting an Embracive Approach to Corporate Human Rights Compliance’ (2012) 48 Texas International Law Journal 33–62, 47.

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corporations seems to have partly diluted what is already developing as a legal phenomenon.153 This approach has not necessarily helped clarifying the extent to which human rights are opposable to corporations.154 1.5 Non-Legally Binding Instruments (per se) The instruments analysed above are grouped (and often dismissed) under the category of “soft-law”. Such a label, with limited practical use as such,155 covers a wide range of instruments, from treaties a given provision of which is vague and open-ended,156 to non-legally binding instruments adopted by states and standards adopted by non-state actors.157 Given the vast array of legal phenomena falling under the category of soft law, it is difficult to make a general assessment as to its normative value. It also highly diminishes the significance of the label.158 Soft law instruments are deliberately cast in a non-binding shape, and one shall not pretend otherwise. States negotiate and adopt non-binding instruments purportedly.159 Yet such instruments cannot be readily dismissed as lex

153 Nicola Jägers, ‘UN Guiding Principles on Business and Human Rights: Making Headway towards Real Corporate Accountability?’ (2011) 29 Netherlands Quarterly of Human Rights 159–163, 161. 154 Alexandra Popova, ‘Business and Human Rights after Ruggies’ Mandate: Feasible Next Steps’ in Jena Martin and Karen E Bravo (eds), The Business and Human Rights Landscape: Moving Forward, Looking Back (CUP 2015), 107. 155 On the label’s lack of utility, see Anthony Clark Arend, Legal Rules and International Society (OUP 1999) 25; for a critical analysis of soft law from an enforcement perspective, see W Michael Reisman, ‘Soft Law and Law Jobs’ (2011) 2 JIDS 25–30, 30. 156 Examples of “goal-oriented obligations” are Article 2 of the UN Covenant on Economic, Social and Cultural Rights; Article VI of the 1968 Treaty on non-Proliferation of Nuclear Weapons, UN Framework Convention on Climate Change (adopted 9 May 1992; entered into force 21 March 1994) 1771 UNTS 107, Article 4; on this type of obligations, see Rüdiger Wolfrum, ‘General International Law (Principles, Rules, and Standards)’ in Rüdiger Wolfrum (ed), Max Planck Yearbook of United Nations Law (2010) paras 94 ff. 157 Jaye Ellis, ‘Shades of Grey: Soft Law and the Validity of Public International Law’ (2012) 25 LJIL 313–334, 315. 158 Christine M Chinkin, ‘The Challenge of Soft Law: Development and Change in International Law’ (1989) 38 ICLQ 850–866, 850. 159 As underscored by the Special Rapporteur on the Formation and Identification of Customary International Law, Michael Wood, ‘“Soft law” [is] a term without clear meaning that has been described as more of a “catchword” and mostly refers to rules that are deliberately made non-binding’, in ILC, ‘First Report on Formation and Evidence of Customary International Law by Michael Wood, Special Rapporteur’ (17 May 2013) UN Doc A/CN.4/663, note 55. Dinah Shelton, ‘International Law and ‘Relative Normativity’’ in Malcolm D Evans (ed), International Law (4 edn, OUP 2014), 161; Christine M Chinkin, ‘Normative Development

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ferenda.160 While the latter refers to a desirable normative solution,161 instruments which are non-binding per se still produce a number of legal effects.162 As Thirlway convincingly argues, soft law amounts to a system of international commitments or obligations that are not regarded by those concerned as binding in the sense that can be enforced in the same way as those imposed by international law proper, but yet are considered as something more than mere political gestures, so that there is an expectation of compliance even if there is no legal duty.163 The fact that a good number of non-binding instruments are coupled with enforcement procedures not dissimilar from those established under binding instruments seems to corroborate this view. Beside the NCPs analysed above, one could make the example of the International Financial Corporation, an affiliate of the World Bank, which provides loans to the private sector under the condition that borrowers respect the International Bill of Human Rights and the ILO standards.164 The hard/soft label is not particularly useful in explaining the functioning of international law.165 The sliding scale of hardness and softness166 of an inter-

160 161

162 163

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in the International Legal System’ in Dinah Shelton (ed), Commitment and Compliance: The Role of Non-binding Norms in the International Legal System (OUP 2003), 25. Although Judge Arold Mc Nair, who coined the term, equalled lex lata with hard law, see Robert Y Jennings, ‘An International Lawyer Takes Stock’ (1990) 39 ICLQ 513–529, 516. Hugh Thirlway, ‘Concepts, Principles, Rules and Analogies: International and Municipal Legal Reasoning’ (2002) 294 RdC 273, 389; Dispute Concerning Access to Information under Article 9 of the OSPAR Convention (Ireland v United Kingdom) (Award) (2 July 2003) PCA, 42 ILM 330, paras 101–104; see also Hugh Thirlway, ‘Reflections on lex ferenda’ (2001) 32 Netherlands Yearbook of International Law 3–26; others, like Georges Abi-Saab, consider “soft law” as synonymous with lex ferenda, see Georges Abi-Saab, ‘Cours général de droit international public’ (1987) 207 RdC 29, 211. Rosalyn Higgins, Problems and Process: International Law and How We Use It (OUP 1995) 24. Hugh Thirlway, The Sources of International Law (OUP 2014) 166; for a similar approach, see Alan E Boyle, ‘Some Reflections on the Relationship of Treaties and Soft Law’ (1999) 48 ICLQ 901–913, 901. See in general Fabrizio Marrella and Arianna Vettorel, ‘Banca mondiale e diritti umani: il ruolo dell’Inspection Panel’ in Michele Vellano and Laurent Manderieux (eds), Éthique globale, bonne gouvernance et droit international économique (Giappichelli 2017). See Oscar Schachter, ‘The Twilight Existence of Non-Binding International Agreements’ (1977) 71 AJIL 296–304, 296; Richard R Baxter, ‘International Law in “Her Infinite Variety”’ (1980) 29 ICLQ 549–566, 549. Gabrielle Kaufmann-Kohler, ‘Soft Law in International Arbitration: Codification and Normativity’ (2010) 1 JIDS 1–17, 3.

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national rule may vary according to a number of factors, among which are the specificity of the content of the rule, the interaction with other existing rules as well as the context within which the rule operates.167 Such standards can have a direct impact when incorporated into treaties, contracts and domestic regulation. They can also work indirectly by giving more specificity and substance to open-ended standards in the primary legal instruments, legitimating legal arguments and legitimating arbitral decision-making.168 Furthermore, the reasons leading to the adoption of soft law instruments cannot be confined to the intention to avoid binding obligations. Other factors informing the choice of producing non-binding instruments may be found in their inherent flexibility or their suitability to allow for the active participation of non-state actors.169 Non-binding instruments should not necessarily be considered as an alternative to hard law, but as a complementary tool.170 As pointed out by Deva, corporations are a challenging target and an “integrated” regulatory approach combining a binding instrument with non-binding and multi-stakeholders instruments is the most effective solution.171 Beside the well-known role of non-binding instruments in the customary international law process in general,172 two further interactions are relevant to the research question of this work. Namely, the relationship of non-binding

167 See Michel Virally, ‘Résolution et accord international’ in Jerzy Makarczyk (ed), Essays in International Law in Honour of Judge Manfred Lachs (Martinus Nijhoff Publishers 1984), 299 ff; Kenneth W Abbott and Duncan Snidal, ‘Hard and Soft Law in International Governance’ (2000) 54 International Organization 421–456. 168 Thomas W Wälde, ‘The Role of International “Soft Law” in Natural Resources and Energy Investment’ (2004) 2 Oil, Gas & Energy Law Intelligence 1–41, 1. 169 For a thorough analysis of the policy reasons behind non-binding instruments, see Hartmut Hillgenberg, ‘A Fresh Look at Soft Law’ (1999) 10 EJIL 499–515, 505; Dinah Shelton, Commitment and Compliance: the Role of Non-Binding Norms in the International Legal System (OUP 2003) 12–13. 170 As argued by Peter T Muchlinski, ‘Human Rights and Multinationals: Is there a Problem?’ (2001) 77 International Affairs 31–47, 45; see also Jan Wouters and Leen Chanet, ‘Corporate Human Rights Responsibility: A European Perspective’ (2008) 6 Northwestern University Journal of International Human Rights 262–303, 266; for a different view, see Gregory C Shaffer and Mark A Pollack, ‘Hard vs. Soft Law: Alternatives, Complements, and Antagonists in International Governance’ (2010) 94 Minnesota Law Review 706–799, 707. 171 Surya Deva, Regulating Corporate Human Rights Violations: Humanizing Business (Routledge 2012). 172 Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) [1996] ICJ Rep 226, para 70; see, among others, Antonio Cassese, International Law (2 edn, OUP 2005) 71; Alan E Boyle, ‘Soft Law in International Law-Making’ in Malcolm D Evans (ed), International Law (5 edn, OUP 2018), 118–121.

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instruments to human rights treaties, on the one hand, and to general principles of law, on the other. The relationship between “soft law” and treaty law has long been acknowledged.173 According to Schachter, the resolutions of the UN General Assembly can serve as ‘authentic interpretation by the parties of their existing treaty obligations when read together with the human rights clauses of the Charter’.174 In a similar vein, it may be suggested that certain binding instruments analysed above may be considered, in Chinkin’s vocabulary, as ‘elaborative instruments’ of the UN Charter and the International Bill of Human Rights.175 They complement existing treaties by adapting their content to a specific context, that of business activities. They should, therefore, be interpreted accordingly,176 and taken into adequate consideration when interpreting human rights treaties.177 The jurisprudence of international human rights courts seems to confirm the relevance of non-binding instruments in the interpretation and application of human rights treaties. In Demir and Baykara v Turkey, the European Court of Human Rights (ECtHR) observed that it ‘in searching for common ground among the norms of international law it has never distinguished between sources of law according to whether or not they have been signed or ratified by the respondent State’.178 Considering that a multilateral treaty which has been adopted, but 173 See Boyle, ‘Some Reflections on the Relationship of Treaties and Soft Law’ (n 163); Joost Pauwelyn, Ramses A Wessel and Jan Wouters, ‘The Stagnation of International Law’ (Working Paper No 97) (October 2012) available at http://doc.utwente.nl/86725/1/SSRN-id2271862.pdf; Alain Pellet stresses that soft law complements hard law in general, and not only treaties, in Alain Pellet, ‘Complementarity of International Treaty Law, Customary Law and NonContractual Law-Making’ in Rüdiger Wolfrum and Völker Roben (eds), Developments of International Law in Treaty Making (Springer 2005), 415. 174 Oscar Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (1991) 178 RdC 21, 113; for a different view on the interpretative role of non-binding instruments, see Hersch Lauterpacht, ‘The Universal Declaration of Human Rights’ (1948) 25 BYIL 354–381, 365. 175 Chinkin, ‘Normative Development in the International Legal System’ (n 159), 30.; For a similar approach with regard to the UN Declaration on the Rights of Indigenous Peoples, see Mauro Barelli, ‘The Role of Soft Law in the International Legal System: The Case of the United Nations Declaration on the Rights of Indigenous Peoples’ (2009) 58 ICLQ 957–983, 966: ‘the fact that the Declaration contains provisions that refer to rights and principles already recognized, or emerging, in the realm of international human rights, […] represents a first important indication of the legal significance of the instrument’. 176 Boyle, ‘Soft Law in International Law-Making’ (n 172), 125. 177 Andrew Clapham, Brierly’s Law of Nations: An Introduction to the Role of International Law in International Relations (OUP 2012) 77; Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (2017) 385 RdC 47, 238. 178 Demir and Baykara v Turkey (2008) ECtHR App No 34503/97, para 78; the case related to the right to strike and the relevance of ILO instruments. For a critical analysis of the use of soft

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not entered into force bears the same relevance of a soft-law instrument, if the Court is allowed to take into account treaties not ratified by the parties,179 there is no reason to exclude a priori the legal relevance of non-binding instruments adopted in contexts other than a diplomatic conference for the negotiation of a treaty, especially when adopted by widespread support.180 Having specific regard to the business and human rights context, it is noteworthy that the UNGPs have been relied on also by the Inter-American Court of Human Rights (IACtHR)181 and before international investment tribunals.182 Furthermore, the Ruggie Framework has also been referred to, although not always in the desired direction,183 before domestic courts.184 The second type of normative interaction of specific relevance to the purposes of this book concerns the relationship between non-binding instruments and principles of law, such as good faith, estoppel and legitimate expectations.185

179

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182 183

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law by the ECtHR, see Angelika Nußberger, ‘Law or Soft law - Does It Matter?: Distinction Between Different Sources of International Law in the Jurisprudence of the ECtHR’ in Anne van Aaken and Iulia Motoc (eds), The European Convention on Human Rights and General International Law (OUP 2018). Since a treaty is binding only once it is ratified, there is practice no difference between an unratified treaty and a “soft-law” instrument; on this point, see Attila Tanzi, ‘The UN Convention on International Watercourses as a Framework for the Avoidance and Settlement of Waterlaw Disputes’ (1998) 11 LJIL 441–472. As put it by Professor Hugh Thirlway, ‘it cannot be denied that when a resolution is formally adopted in as universal organisation as the United Nations, the resolution is something more than the consistent statements or wishes of the member states’, in Hugh Thirlway, International Customary Law and Codification (Springer 1972) 65. Kaliña and Lokono Peoples v Suriname (Merits, Reparations and Costs) (2015) IACtHR Series C No 309, para 224. See Rodriguez-Garavito, ‘Business and Human Rights: Beyond the End of the Beginning’ (n 138), 39. Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v Argentina (2016) ICSID Case No ARB/07/26, para 1195, footnote 434. Shell quoted from the 2007 Ruggie Report: ‘it does not seem that the international human rights instruments discussed here currently impose direct legal responsibilities on corporations’, in Kiobel v Royal Dutch Petroleum Co. (Brief for Respondents) (27 January 2012) No. 10–1491 (US Supreme Court) 2. Ruggie then filed an amicus curiae to clarify that his Framework had been misinterpreted by Shell. José Eliécer Díaz Bohórquez v Oleoducto Central Andino y el Consorcio de Tierras Boyacá (19 December 2016) T-732/16 (Colombian Constitutional Court). The Court made ample use of the UNGPs tripartite structure (paras 37–44) and elaborated on the principle of due diligence as a standard applicable to corporations (para 41). See also Junta Directiva del Consejo Comunitario de Mulaló v Ministerio del Medio Ambiente y Desarrollo Sostenible and Others (23 September 2013) T-657/13 (Colombian Constitutional Court), para 84. See Ian Sinclair, ‘Estoppel and Acquiescence’ in Malgosia Fitzmaurice and Vaughan Lowe (eds), Fifty Years of the International Court of Justice: Essays in Honour of Sir Robert Jennings

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Such principles, applicable to states and non-state actors alike, obviously do not transform non-binding instruments into non-binding ones. However, the subjects adopting to a certain instrument are expected to behave in good faith and to take the content of such instrument seriously.186 One would agree with the position maintaining that such instruments constitute the broader normative context within which the behaviour of states, and possibly non-state actors, should be assessed.187 In the words of Schachter: When States enter into a non-legal commitment, they generally assume a political (or moral) obligation to carry it out in good faith. Other States concerned have reason to expect such compliance and to rely on it. What we must deduce from this is that the non-binding declarations that express political or moral commitments are governed by the general principle of good faith. Inasmuch as good faith is an accepted general principle of international law, it is appropriate to apply it to such commitments. […] A significant legal consequence of the ‘good faith’ principle is that a party which committed itself in good faith to a course of conduct or to recognition of a legal situation would be stopped from acting inconsistently with its commitment or position when other parties have reasonably relied on it.188 Next to being governed by the general principle of good faith, non-binding instruments, by operating in conjunction with standards set by domestic legal systems, might also have a role in the development of new principles of law. For our purposes, the increased focus on corporate accountability in some intergovernmental instruments, together with the general recognition of corporate liability at the domestic level, suggests that we might be facing the development of a general principle of law on corporate liability. Here, the ‘pre-normative “noise”’189 of non-binding instruments provides useful material in assessing the adaptability of a domestic principle, i.e., that of corporate liability, to the international sphere. In so doing, such principle may be swiftly transposed to

186 187 188 189

(CUP 1996); See Attila Tanzi, International Law: A Concise Introduction (Bonomo Editore 2017) 83. Joseph Gold, ‘Strenghtening the Soft International Law of Exchange Arrangements’ (1983) 77 AJIL 443–489, 443; Daniel Thürer, ‘Soft Law’ MPEPIL, paras 26 ff. Vaughan Lowe, International Law (OUP 2007) 95–96; for a similar view, see Timothy Meyer, ‘Soft Law as Delegation’ (2008) 32 Fordham International Law Journal 888–942, 889. Oscar Schachter, ‘Non-Conventional Concerted Acts’ in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff - UNESCO), 267–268. Kate Miles, The Origins of International Investment Law: Empire, Environment and the Safeguarding of Capital (CUP 2013) 226.

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the international legal dimension through a gradual law-making process.190 This prospect will be explored further in Part IV. A final remark on the legal relevance of non-binding instruments.191 Without delving into considerations of compliance in the present context, suffice it to recall that non-binding instruments are generally not judicially enforceable. At the same time, one should not forget that the consensual nature of jurisdiction in international law significantly reduces the justiciability of “hard law”, which for this purpose distinguishes itself only moderately from soft-law instruments.192 A number of other factors therefore will influence compliance with an international instrument that has been adopted in a non-legally binding format. Such factors include primarily its relation to the existing international rules and principles, the clarity of the wording of the instrument, the presence of a monitoring system, and not least the way the instrument in question is perceived by its addressees.193

2

Corporations and Human Rights under Treaty Law

Fifty years ago, McNair described treaties as the ‘only and sadly overworked instrument with which the international society is equipped for carrying out

190 ‘Nous aboutissons ainsi à une théorie de création juridique par “big bang” […]. En réalité cependant, le droit international, comme tout droit, ne provient pas d’un « néant » ou d’un vide social’, in Georges Abi-Saab, ‘Les sources du droit international : essai de déconstruction’ in Eduardo Jiménez de Aréchaga (ed), Le droit international dans un monde en mutation: liber amicorum en hommage au professor Eduardo Jiménez de Aréchaga (Fundacion de Cultura Universitaria 1994), 47. 191 W Michael Reisman, ‘International Lawmaking: A Process of Communication. The Harold D. Lasswell Memorial Lecture’ (1981) 75 Proceedings of the ASIL Annual Meeting 101–120, 102. 192 Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Rwanda) [2006] ICJ General List No 126, para 88; Hanspeter Neuhold, ‘Variations on the Theme of “Soft International Law”’ in Isabelle Buffard and Others (eds), International Law between Universalism and Fragmentation: Festschrift in Honour of Gerhard Hafner (Martinus Nijhoff 2008), 347; Matthias Goldmann, ‘We Need to Cut off the Head of the King: Past, Present and Future Approaches to International Soft Law’ (2012) 25 LJIL 335–368, 336. 193 Jonathan L Charney, ‘Commentary Compliance with International Soft Law’ in Dinah Shelton (ed), Commitment and Compliance: the Role of Non-binding Norms in the International Legal System (OUP 2003), 118; Joost Pauwelyn, ‘Is it International Law or Not, and does it Even Matter?’ in Joost Pauwelyn and Others (eds), Informal International Lawmaking (OUP 2012), 151; Jutta Brunnée and Stephen J Toope, Legitimacy and Legality in International Law: An Interactional Account (CUP 2010), 111.

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its multifarious transactions’.194 To some, treaties consolidate unwritten international law ‘like iron bonds reinforcing a cracking building’.195 There is no denying that treaty-making has increased exponentially in the last half century, gaining a key role in efforts to provide coordinated and precise legal responses to transnational and global challenges. As a prominent means to protect community interests, treaties have been increasingly employed, for example, to regulate and promote international trade and economic cooperation, to address environmental concerns and to afford effective protection to human rights.196 It seems all the more pertinent, therefore, to assess the role of treaties in the business and human rights legal process. Theoretically, a treaty specifically imposing human rights obligations on corporations – and providing for an international enforcement mechanism – would seem a most practical option to close the “accountability gap” for such actors in international law.197 This would guarantee a level playing field among corporations and provide a tool enhancing compliance with the relevant human rights obligations complementary to those applicable to states.198 From an enforcement perspective, however, it remains highly challenging to imagine an international body adjudicating claims against corporations, given that jurisdiction over a relatively small crowd (of states) already places a significant workload on human rights courts and quasi-judicial bodies.199 Policy considerations aside, there is nothing in international law preventing private legal persons to become 194 Arnold D McNair, The Law of Treaties (Clarendon Press 1961) 739–740; see also Arnold D McNair, ‘The Functions and Differing Legal Charachter of Treaties’ (1930) 11 BYIL 100–118, 101. 195 Bruno Simma, ‘From Bilateralism to Community Interest in International Law’ (1994) 250 RdC 217, 323. 196 See Christine M Chinkin, ‘Sources’ in Daniel Moeckli and Others (eds), International Human Rights Law (3 edn, OUP 2017), 79. 197 For arguments in favour of an international mechanism adjudicating civil and/or criminal claims against corporations, see Sarah Joseph, ‘An Overview of the Human Rights Accountability of Multinational Enterprises’ in Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer Law International 2000), 87–88; Jennifer A Zerk, Multinationals and Corporate Social Responsibility: Limitations and Opportunities in International Law (CUP 2006) 297–298; Douglass Cassel and Anita Ramasastry, ‘White Paper: Options for a Treaty on Business and Human Rights’ (2016) 6 Notre Dame Journal of International and Comparative Law 1–50, 33. 198 See Jean-Louis Iten, ‘Les rattachements de l’entreprise multinationale: le point de vue du droit international public’ in Laurence Dubin and Others (eds), L’entreprise multinationale et le droit international (Pedone 2016), 112. 199 The point was also made by Ruggie, John G Ruggie, ‘Treaty Road not Travelled’ (2008) Ethical Corporation 42–43; similar concerns have been advanced regarding the proposal of a world court on human rights.

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bearers of international rights and obligations.200 As posited by the Permanent Court of International Justice (PCIJ) in its Advisory Opinion on the Jurisdiction of the Courts of Danzig, it cannot be disputed that the very object of an international agreement, according to the intention of the contracting Parties, may be the adoption by the Parties of some definite rules creating individual rights and obligations and enforceable by the national courts.201 As stressed almost a century later by Jennings in discussing the LaGrand case, ‘there are many treaties and conventions, of many different kinds and functions, that might […] be alleged to create some sort of status, or rights, or obligations, for individuals and corporations’.202 Treaties already exist across different fields of international law, establishing rights and obligations for legal persons.203 As argued by Ratner, ‘if states and international organizations can accept rights and duties of corporations in some 200 Hersch Lauterpacht, Private Law Sources and Analogies of International Law (with Special Reference to International Arbitration) (Longmans 1927) 79. 201 Jurisdiction of the Courts of Danzig (Advisory Opinion) [1928] PCIJ Series B No 15, para 37. 202 Robert Jennings, ‘The LaGrand case’ (2002) 1 LPICT13-54, 26. 203 See, among others, the Convention on the Prevention and Punishment of Genocide (adopted 9 December 1948, entered into force 12 January 1951) 78 UNTS 277, Article IV: ‘Persons committing genocide or any of the other acts enumerated in article III shall be punished, whether they are constitutionally responsible rulers, public officials or private individuals’; the Geneva Convention Relative to the Protection of Civilian Persons in Time of War (adopted 12 August 1949, entered into force 21 October 1950) 75 UNTS 287, Article 3: ‘in the case of armed conflict not of an international character occurring in the territory of one of the High Contracting Parties, each Party to the conflict shall be bound to apply, as a minimum, the following provisions […]’; the Paris Convention on Third Party Liability in the Field of Nuclear Energy (adopted 29 July 1960, entered into force 1 April 1968) 956 UNTS 251, Article 3: ‘The operator of a nuclear installation shall be liable, in accordance with this Convention, for: damage to or loss of life of any person; and damage to or loss of any property […]’; the International Convention on Civil Liability for Oil Pollution Damage (adopted 29 November 1969, entered into force 19 June 1975) 973 UNTS 3, Art. III: ‘the owner of a ship at the time of an incident, or where the incident consists of a series of occurrences at the time of the first such occurrence, shall be liable for any pollution damage caused by oil which has escaped or been discharged from the ship as a result of the incident’; the International Convention on the Suppression and Punishment of the Crime of Apartheid (adopted 30 December 1973, entered into force 18 July 1976) 1015 UNTS 243; the UN Convention on the Law of the Sea (adopted 12 October 1982, entered into force 16 November 1994), 1833 UNTS 3, Art. 137(1): ‘No State shall claim or exercise sovereignty or sovereign rights over any part of the Area or its resources, nor shall any State or natural or juridical person appropriate any part thereof. No such claim or exercise of sovereignty or sovereign rights nor such appropriation shall be recognized’.

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areas, there is no theoretical bar to recognizing duties more broadly, including duties in the human rights area’.204 Yet states have not so far resorted to treaty law to establish human rights obligations for corporations.205 The UN initiatives to tackle corporate violations through treaty law have been so far unsuccessful. The latest effort in this direction, launched in 2014, is still underway, although it appears fraught with disagreements among states.206 In the absence, as of today, of a specific treaty expressly providing for human rights obligations for non-state actors, one may wonder whether corporate human rights obligations could be inferred from the existing human rights treaties. The exercise, by some considered a ‘search for a needle in the haystack’,207 will be the first focus of this chapter. The second part of the chapter will examine the efforts carried out by the UN to elaborate a treaty regulating corporations in international human rights law. The Search for Corporate Obligations under Existing Human Rights Treaties Human rights treaties undoubtedly boast a certain degree of speciality in international law.208 Despite lacking some of the traditional features of treaty law,209 such conventions remain constructed in the form of agreements between states.210 Their original aim was to protect individuals from abuses by the state

2.1

204 Steven R Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (2001) 111 Yale Law Journal 443–545, 488. 205 Joseph, ‘An Overview of the Human Rights Accountability of Multinational Enterprises’ (n 197), 87–88. 206 See infra, Chapter 2.2.3. 207 Manfred Nowak and Karolina M Januszewski, ‘Non-State Actors and Human Rights’ in Math Noortmann and Others (eds), Non-State Actors in International Law (Hart 2015), 117. 208 See Benedetto Conforti, ‘The Specificity of Human Rights and International Law’ in Fastenrath Ulrich and Others (eds), From Bilateralism to Community Interest: Essays in Honour of Bruno Simma (OUP 2011), 433 ff. 209 One could name but a few; human rights treaties are pacta tertiiss, where the ultimate beneficiaries are individuals; reciprocity has little room in this field, the suspension of human rights cannot be the object of countermeasures, as human rights obligations are of an erga omnes nature. 210 See Bruno Simma, ‘How Distinctive are Treaties Representing Collective Interest? The Case of Human Rights Treaties’ in Vera Gowlland-Debbas (ed), Multilateral Treaty-Making (Martinus Nijhoff Publishers 2000), 87; the same argument according to which the sui generis character of human rights treaties should not be exaggerated, is further elaborated in Bruno Simma, ‘Sources of International Human Rights Law: Human Rights Treaties’ in Jean d’Aspremont and Samantha Besson (eds), The Oxford Handbook of the Sources of International Law (OUP 2017).

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authority,211 and yet they rely on states to be implemented and enforced.212 I should emphasise that the wording of many human rights treaties does not lead to a clear-cut conclusion as to their direct legal effects vis-à-vis non-state actors, including corporations. In order to interpret the “silence” of many human rights treaties on the reach of their obligations vis-à-vis non-state actors, it seems reasonable to turn to the bodies and courts tasked with their monitoring and implementation. However, as we shall see in the next sub-chapters, the position adopted by the UN human rights treaty bodies on the obligations of such actors is far from consistent,213 while regional human rights courts have not so far developed a firm position on the matter. The silence of human rights treaties and the ambiguous interpretations provided by judicial and quasi-judicial bodies have sparked endless discussions among scholars. Without the intention to over-simplify a very complex debate, I am briefly going to outline the three main scholarly arguments put forward in favour, as well as against, corporate obligations under human rights treaties. A first recurring argument made by proponents of international corporate obligations is the “right-holder argument”. According to this approach, human rights treaties are not necessarily meant to place duties only on states.214 Articulated from the perspectives of the rights holders, such treaties do not provide an exhaustive list of duty bearers,215 allowing ‘flexibility in determining the allocation of the obligations that flow from them’.216 At the root of this argument is the principle of human dignity, the protection of which is the main purpose of international human rights law.217 Since human rights flow from the inherent dignity of the individual, they must be respected by all actors, regardless of their 211 Thomas Buergenthal, ‘International Human Rights in an Historical Perspective’ in Janusz Symonides (ed), Human Rights: Concepts and Standards (Ashgate 2000). 212 David Feldman, ‘Sovereignties in Strasbourg’ in Richard Rawlings and Others (eds), Sovereignty and the Law: Domestic, European and International Perspectives (OUP 2013), 219. 213 As stressed by Ruggie in UN HRC, ‘Business and Human Rights: Mapping International Standards of Responsibility’ (n 99), 41. 214 See, among others, Jordan J Paust, ‘The Other Side of Right: Private Duties under Human Rights Law’ (1992) 5 Harvard Human Rights Journal 51–64. 215 Clapham, Human Rights Obligations of Non-State Actors (n 6), 34; Surya Deva, ‘Business and Human Rights: Time to Move Beyond the “Present”?’ in César Rodriguez-Garavito (ed), Business and Human Rights: Beyond the End of the Beginning (CUP 2017), 69. 216 David Bilchitz, ‘A Chasm Between ‘is’ and ‘ought’? A Critique of the Normative Foundations of the SRSG’s Framework and the Guiding Principles’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 108. 217 Theodor Meron, Human Rights and Humanitarian Norms As Customary Law (Clarendon Press 1989) 170; see also Christian McCrudden, ‘Human Dignity and Judicial Interpretation of Human Rights’ (2008) 19 EJIL 655–724.

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public or private nature.218 It follows that excluding corporations from the duty bearers of human rights treaties would not be compatible with the essence of human rights treaties.219 A second argument put forward in favour of international corporate obligations builds upon the difference between the existence of the obligation and the means to implement it. The absence of international jurisdiction over corporations does not prove that such actors do not bear any obligation under treaty law.220 A third argument relies on the positive obligations of states under human rights treaties. As part of their duty to protect, states must ensure that the rights of individuals are not violated by third parties, including corporations. It follows that human rights treaties’ provisions permeate not only the relation between the state and the individual, but also the legal relations between private actors.221 According to De Schutter, one should not be misguided by the fact that, at the international level, the law on state responsibility governs the consequences stemming from the violation of treaty rule. ‘The material object […] is to impose obligations on private actors’.222 In a similar vein, Bilchitz argues that states’ obligations to protect human rights from third party abuses would be meaningless if corporations were to be considered outside the reach of human rights treaties.223 218 Jean Rivero, ‘La protection des droits de l’homme dans les rapports entre personnes privées’ in Institut International des Droits de l’Homme (ed), René Cassin Amicorum Discipulorumque Liber, vol 3 (Pedone 1971) 311 ff; Robert McCorquodale, ‘Overlegalizing Silences: Human Rights and Nonstate Actors’ (2002) 96 Proceedings of the ASIL Annual Meeting 384–388, 387. 219 See, among others, Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (n 204), 472; Bilchitz, ‘A Chasm Between ‘is’ and ‘ought’? A Critique of the Normative Foundations of the SRSG’s Framework and the Guiding Principles’ (n 216), 113; Nicolás Carrillo-Santarelli, Direct International Human Rights Obligations of non-State Actors: A Legal and Ethical Necessity (Wolf Legal Publishers 2017). 220 See, among others, Paust, ‘The Other Side of Right: Private Duties under Human Rights Law’ (n 214); Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (n 204), 481; Nicola Jägers, Corporate Human Rights Obligations: in Search of Accountability (Intersentia 2002), 38; Clapham, Human Rights Obligations of Non-State Actors (n 6), 266; Černič, Human Rights Law and Business: Corporate Responsibility for Fundamental Human Rights (n 46), 40. For the opposite view, according to which no international enforcement equals the absence of the international obligation, see Carlos M Vazquez, ‘Direct vs. Indirect Obligations of Corporations under International Law’ (2005) 43 Columbia Journal of Transnational Law 927–959, 934. 221 Jägers, Corporate Human Rights Obligations: in Search of Accountability (n 220), 37. 222 Olivier De Schutter, ‘The Challenge of Imposing Human Rights Norms on Corporate Actors’ in Olivier De Schutter (ed), Transnational Corporations and Human Rights (Hart Publishing 2006), 19. 223 Bilchitz, ‘A Chasm Between ‘is’ and ‘ought’? A Critique of the Normative Foundations of the SRSG’s Framework and the Guiding Principles’ (n 216), 111.

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Turning to the arguments advanced by commentators rejecting that corporations have obligations under international human rights treaties,224 a recurrent line of reasoning is based on the age-old debate of the international legal status of corporations whereby the latter, as domestic creatures, are not subjects of international law because of their domestic legal nature.225 Thus, lacking international legal personality, they would not be able to bear international obligations. A second argument relies on the positive obligations of the state, as spelled out by human rights treaties. Differently from the proponents of corporate obligations, state positive obligations relied upon to uphold the state-centric dimension of human rights treaties.226 States are the only ones bound by human rights treaties to regulate non-state actors in their respective legal systems.227 Only a state failure to adopt adequate measures to prevent and address corporate human rights violations can amount to an international wrongful act.228 Thirlway admits that ‘an obligation to respect human rights may of course also rest on other individuals or groups […], [but] this obligation will exist because such is the domestic law of the state whose legislation is applicable, not (or not directly) as a matter of international law’.229 In a similar vein, de Brabandere argues, ‘although the conduct of corporations under these treaties is regulated by an international instrument, the international legal obligation under the treaty rests with the state, which needs to adopt national measures to regulate the activity of the corporations’.230 The third point propounded by those who object to international corporate obligations relies on a “functional argument”, based on the alleged risk that 224 HRC, ‘Business and Human Rights: Mapping International Standards of Responsibility’ (n 99), para 44. 225 Peter Malanczuk, Akehurst’s Modern Introduction to International Law (7 edn, Routledge 1997) 102; François Rigaux, ‘Transnational Corporations’ in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff Publishers-UNESCO 1991); James Crawford, ‘Chance, Order, Change: The Course of International Law’ (2013) 365 RdC 27, 156. I will return on the issue of international legal personality in part IV. 226 Eric De Brabandere, ‘Human Rights Considerations in International Investment Arbitration’ in Malgosia Fitzmaurice and Panos Merkouris (eds), The Interpretation and Application of the European Convention of Human Rights: Legal and Practical Implications (Brill 2012), 189. 227 Markos Karavias, Corporate Obligations under International Law (OUP 2013). 228 Carlos López, ‘Human Rights Legal Liability for Business Enterprises: The Role of an International Treaty’ in David Bilchitz and Surya Deva (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 310. 229 Hugh Thirlway, ‘Human Rights in Customary Law: An Attempt to Define Some of the Issues’ (2015) 28 LJIL 495–506, 498. 230 Eric De Brabandere, ‘Human Rights and Transnational Corporations: The Limits of Direct Corporate Responsibility’ (2010) 4 Human Rights & International Legal Discourse 66–88, 82 (emphasis added).

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making non-state actors directly liable under human rights treaties will allow states to escape their own obligations.231 According to this view, placing human rights obligations on non-state actors would not necessarily strengthen the protection of human rights, as states are in a far better position to balance competing interests. Locating one’s own position in such a complex debate is not an easy task. Both sides have strengths and flaws in their arguments. First, the fact that human rights treaties were conceived with states in mind, does not prevent extensions of protection vis-à-vis other entities. Nor can an a priori argument on the lack of international legal personality of corporations demonstrate that such actors are precluded from holding international obligations. As will be illustrated in Part IV, evidence suggests that corporations have enough legal capacity to hold rights and duties in international law.232 Yet in order to prove the existence of corporate obligations it is not enough to argue that ‘a change of circumstances may lead to the creation of new duties based on the old right’.233 The fact that the state-centric approach is lagging behind in reacting to the unprecedented scope of action of corporations234 does not provide a legal basis for corporate human rights obligations. The same argument might acquire a legal pedigree if grounded, for example, in the principle of effectiveness, according to which one is to opt for the most effective interpretation of a treaty in order to realise

231 Maurice Mendelson, ‘In the Matter of the Draft “Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights”’ (2004) 2 Oil, Gas & Energy Law Intelligence, 10; Christian Tomuschat, Human Rights: Between Idealism and Realism (3 edn, OUP 2014) 130. 232 See Part IV, Chapter 10.1. On this point, see Clapham, Human Rights Obligations of Non-State Actors (n 6), 68–69; John H Knox, ‘Horizontal Human Rights Law’ (2008) 102 AJIL 1–47, 19; a similar point has been made with regard to individuals, see Marko Milanovic, ‘Is the Rome Statute Binding on Individuals? (And Why We Should Care)’ (2011) 9 Journal of International Criminal Justice 25–52, 39. 233 Joseph Raz, The Morality of Freedom (Clarendon Press 1986) 171; see Margot E Salomon, Global Responsibility for Human Rights: World Poverty and the Development of International Law (OUP 2007) 18–19: ‘since the international law of human rights exists first and foremost to challenge abuse of power, the growth in power of non-state actors such as transnational corporations will require that human rights law be made applicable to them’. 234 Philip Alston, ‘The “Not-a-Cat” Syndrome: Can the International Human Rights Regime Accommodate Non-State Actors?’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 4; Daniel Augenstein and David Kinley, ‘When Human Rights ‘Responsibilities’ Become ‘Duties’: The Extra-Territorial Obligations of States that Bind Corporations’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 271.

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its object’s purpose.235 The principle has been acknowledged by the ILC236 and consistently upheld by international courts and tribunals.237 In Acquisition of Polish Nationality, the PCIJ extended the protection of the Minorities Treaty to non-Polish nationals, arguing that ‘if this were not the case, the value and sphere of application of the Treaty would be greatly diminished’.238 By applying the principle of effectiveness to human rights treaties, one may argue the existence of corporate obligations along the following lines. First, one could rely on the fact that the core purpose of human rights treaties is to guarantee the effective protection of human rights. Thus, for human rights treaties not to lose their normative value, in line with good faith contextual and effet utile hermeneutic principles, such treaties are to be interpreted so as to extending their obligations to all actors capable of interfering with the rights laid down therein.239 The argument is far from being “bullet proof”, but at least it provides a potentially more solid normative basis to claim corporate obligations, while keeping in line with the object and purpose of human right treaties.240 Second, the fact that a number of provisions contained in human rights treaties require states to implement the rights they lay down, does not prevent ipso iure those provisions from creating obligations for corporations.241 The 235 On the principle of effectiveness, see Hersch Lauterpacht, ‘Restrictive Interpretation and the Principle of Effectiveness in the Interpretation of Treaties’ (1949) 26 BYIL 48–85, 67 ff; Richard Gardiner, Treaty Interpretation (2 edn, OUP 2017) 221–222; Alexander Orakhelashvili, The Interpretation of Acts and Rules in Public International Law (OUP 2008) 403; Luigi Crema, ‘Disappearance and New Sightings of Restrictive Interpretation(s)’ (2010) 21 EJIL 681–700. 236 ILC, ‘Commentary on Draft Articles on the Law of Treaties with Commentaries’ (1966) Yearbook of the ILC, Vol II, 219. 237 See, for example, Iran v USA (A1) (1983) 1 Iran–USA Claims Tribunal, para 49; United Communist Party v Turkey (1998) ECtHR App No 19392/92, para 33; Mapiripán Massacre v Colombia (2005) IACtHR Series C No 134, para 105. 238 Question Concerning the Acquisition of Polish Nationality (Advisory Opinion) [1923] PCIJ Series B, No 7, para 31. 239 Although not explicitly elaborating on the principle of effectiveness, a similar point is made by Surya Deva, ‘Multinationals, Human Rights and International Law: Time to Move beyond the “State-Centric” Conception’ in Jernej Letnar Černič and Tara Van Ho (eds), Human Rights and Business: Direct Corporate Accountability for Human Rights (Wolf Legal Publishers 2015), 39. 240 As argued by Meron, ‘when a human rights treaty establishes an obligation of result, and that result may be frustrated by private action, the arguments for an interpretation reaching private action are compelling’, in Meron, Human Rights and Humanitarian Norms As Customary Law (n 217), 169. 241 This does not allow them, though, to benefit from the pacta tertiis rule, given that no formal procedures exist for such actors to consent to human rights treaties, see Markos Karavias, ‘Treaty Law and Multinational Enterprises: More than Internationalized Contracts?’ in

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task of supervising, regulating and enforcing human rights rightly falls on states. Vazquez points out that many specific standards defined in international agreements are indeed addressed to non-state actors, but their implementation is left to the state parties to such agreements.242 Having treaties whose enforcement relies on domestic law is not a special feature of international human rights law, but a standard modus operandi of international law.243 One can see no particular reason according to which corporations are ‘immunized’ from international law simply because the implementation of many rights occurs through domestic law.244 On the other hand, arguing that positive obligations of the state automatically presuppose obligations of corporations may seem as legally crossing a bridge too far. To date, scholars have not come to an unequivocal and unambiguous conclusion as to whether corporations are directly bound by international human rights treaties. The only undisputed issue in the academic debate is the state duty to secure the rights set forth in human rights treaties by adopting adequate legislative, administrative and judicial measures.245 According to Karavias, ‘this says nothing of the extent to which human rights are applied horizontally under positive international law’.246 Such a conclusion may not fully grasp how international law works and develops. It conceives international law and municipal law as two watertight compartments, ignoring the dynamic relationship existing between the two systems.247 International treaties may reveal a general consensus by states on a given issue (i.e. that human rights must be protected by third-parties, including corporations) and states are generally required to adjust domestic law accordingly. True, such positive obligations of states do not automatically entail corporate obligations of the same kind under international law. Yet certain rules, when shared among the majority of domestic legal systems, may catalyse the development of a principle at the international level.248 The ICJ is familiar with these dynamics, Christian J Tams and Others (eds), Research Handbook on the Law of Treaties (Edward Elgar 2014), 603. 242 Vazquez, ‘Direct vs. Indirect Obligations of Corporations under International Law’ (n 220), 935. 243 Cassese, International Law (n 172), 17. 244 Ralph G Steinhardt, ‘Multinational Corporations and Their Responsibilities under International Law’ in Lara Blecher and Others (eds), Corporate Responsibility for Human Rights Impacts: New Expectations and Paradigms (American Bar Association Publishing 2014), 35. 245 See infra, Part II. 246 Karavias, Corporate Obligations under International Law (n 227), 31. 247 A vision of complementarity is proposed by Černič, Human Rights Law and Business: Corporate Responsibility for Fundamental Human Rights (n 46), 47; 248 See Part IV, Chapter 10.3. See also Surya Deva, ‘The Human Rights Obligations of Business: Reimagining the Treaty Business’ (2014) Business and Human Rights Resource Centre, available

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and it has not hesitated to take into account municipal law when assessing the existence of the separate legal personality of corporations.249 If that is so, one could wonder whether it would not be possible to take cognizance of municipal law in order to infer a general principle of corporate liability under international law. As argued by Paust, ‘this widespread pattern of legal responsibility and non-immunity of private corporations under domestic law is itself a general principle of law relevant to international legal decision making’.250 This point will be explored further in part IV. 2.1.1 The Two UN Covenants The International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR) represent the backbone of the international protection of human rights.251 The general scope of the rights enshrined in those instruments obviously encompasses human rights that may be infringed upon by corporations more or less directly. The ICCPR covers substantive rights such as the right to life (Article 6), the freedom from torture, inhuman and degrading treatment (Article 7), freedom from slavery and forced labour (Article 8), the right of privacy (Article 17), freedom of opinion and expression (Article 19), the right to equality before the law and rights of non-discrimination (Article 26).252 The ICESCR protects rights such as the right to work (Article 6) and of just and favourable conditions of work (Article 7), the right to form and join trade unions (Article 8), the right to an adequate standard of living (Article 11) and the right to health (Article 12).253

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at https://www.business-humanrights.org/en/pdf-the-human-rights-obligations-of-businessreimagining-the-treaty-business. Barcelona Traction, Light and Power Company, Limited (Belgium v Spain) [1970] ICJ Rep 3, para 38. Jordan J Paust, ‘Human Rights Responsibilities of Private Corporations’ (2002) 35 Vanderbilt Journal of Transnational Law 801–825, 803 (footnote 3). International Covenant on Civil and Political Rights (adopted 16 December 1966, entered into force 23 March 1976) 999 UNTS 171 (ICCPR); International Covenant on Economic, Social and Cultural Rights (adopted 16 December 1966, entered into force 3 January 1976) 993 UNTS 3 (ICESCR). See Theo Van Boven, ‘50 Years of the UN Human Rights Covenants’ (2016) 34 Netherlands Quarterly of Human Rights 108–112. For an overview of substantive rights and obligations stemming from the ICCPR, see Sarah Joseph and Melissa Castan, The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary (3 edn, OUP 2013). For an overview of substantive rights and obligations stemming from the ICESCR, see Ben Saul, David Kinley and Jacqueline Mowbray, The International Covenant on Economic, Social and Cultural Rights: Commentary, Cases and Materials (OUP 2014).

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Neither the ICCPR, nor the ICESCR, contain any express reference to corporations, or to legal persons. Yet their Preamble does state: ‘the individual, having duties to other individuals and to the community to which he or she belongs, is under a responsibility to strive for the promotion and observance of the rights recognized in the present Covenant’.254 Differently from other international instruments, such as the American Convention on Human Rights and the African Charter on Human and Peoples’ Rights, no mention is made to the duties of individuals in the substantive text of the treaties.255 This does not detract, however, from the legal value of the Preamble in the interpretation of the treaty, as prescribed in Article 31(2) of the Vienna Convention on the Law of Treaties (VCLT).256 In the words of Gerald Fitzmaurice, the interpretational conclusions to be drawn from a preamble are as binding on the parties as those to be drawn from any other part of the treaty. In none of these respects can the validity of a finding or conclusion be denied merely because it is drawn from, or based on language contained in a preamble, and not in an operative clause, though if there is conflict, the latter will prevail.257 As to the substantive provisions, Article 5(1) of both Covenants deserves special attention. According to Article 5(1) nothing in the treaty ‘may be interpreted as implying for any State, group or person any right to engage in any activity or perform any act aimed at the destruction of any of the rights and freedoms recognised herein’.258 The overall aim of such a provision is to prevent persons, 254 ICCPR, ICESCR, Preamble. 255 See infra, chapter 2.1.3. 256 Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 311. On the role of the preamble as a tool in treaty interpretations, see Eric Suy, ‘Le Préamble’ in Emile Yakpo and Tahar Boumedra (eds), Liber Amicorum Judge Mohammed Bedjaoui (Kluwer Law International 1999) 53 ff; on the role of the preamble in setting the object and purpose of the treaty, see Romak SA (Switzerland) v Uzbekistan (Award) (2009) PCA Case No AA280, para 181. 257 Gerald Fitzmaurice, ‘The Law and Procedure of the International Court of Justice 1951–4: Treaty Interpretation and Other Treaty Points’ (1957) 33 BYIL 203–293, 229 (emphasis added). For a different view, see Martti Koskenniemi, ‘The Preamble of the UDHR’ in Gudmundur Alfredsson and Asbjørn Eide (eds), The Universal Declaration of Human Rights: A Common Standard of Achievement (Martinus Nijhoff 1999), 27, where he argues that ‘the preamble is an exclusion […] a place where, as a last compromise, ideas that tried to push themselves into the text but where not admitted, were situated’. 258 ICCPR, ICESCR, Article 5; the wording corresponds to Article 30 of the Universal Declaration of Human Rights, Article 17 of the European Convention on Human Rights and Article 29 of the American Convention on Human Rights.

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groups and states from misusing the rights guaranteed in the Covenant to negatively affect the rights of others. It is true that the original intent of the drafters was to impede that certain rights could be abused, e.g. by totalitarian groups, so as to threaten the democratic institutions.259 However, given that the Covenants forbid states, persons and groups from violating human rights in the exercise of their own rights, it may be argued that a fortiori such instruments do not tolerate violations perpetrated by the same actors beyond the exercise of their rights.260 There is no denying that a number of provisions on the implementation of the rights contained in the treaties are addressed to states.261 Article 2 of the ICCPR requires states to respect and ensure to all individuals within their territory and subject to their jurisdiction the rights recognized in the Treaty.262 It also bounds states to adopt adequate measures to give effect to the rights enshrined in the treaty,263 and to ensure that persons whose rights have been violated have access to an effective remedy.264 Article 2 (1) of the ICESCR obliges states ‘to take steps, individually and through international assistance and co-operation […] to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures’.265 In the case of the ICESCR, also substantive rights are often introduced by formulas such as ‘states recognise’, or ‘states undertake to ensure’. This is also due to the nature of economic, social and cultural rights, which requires the state to play a particularly active role in terms of law and policy-making.266 In any case, the fact that a number of obligations are explicitly addressed to states is not a mark of the absence of complementary obligations of corporations.267

259 Manfred Nowak, U.N. Covenant on Civil and Political Rights: CCPR Commentary (2 edn, N.P. Engel 2005) 115. 260 For a different view, see Karavias, Corporate Obligations under International Law (n 227), 29, affirming that such a clause is not intended to place an independent obligation on individuals or groups of persons. 261 Nowak, U.N. Covenant on Civil and Political Rights: CCPR Commentary (n 259), 28. This is not to say that civil and political rights do not require positive measures by the state. 262 ICCPR, Article 2 (1). 263 Ibid, Article 2(2) 264 Ibid, Article 2(3). 265 ICESCR, Article 2. 266 CESCR, ‘General Comment No 3: The Nature of States Parties’ Obligations’ (14 December 1990) UN Doc E/1991/23, para 3. 267 Dinah Shelton, ‘Normative Evolution in Corporate Liability for Violations of Human Rights and Humanitarian Law’ (2010) 15 Austrian Review of International and European Law 45–88, 46.

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In this regard, it may be useful to look at how the treaty bodies monitoring the two Covenants have been elaborating upon the scope of the obligations stemming from their respective provisions.268 In its General Comment 31, the UN Human Rights Committee (HRCtee) states [o]bligations are binding on States [Parties] and do not, as such, have direct horizontal effect as a matter of international law. The Covenant cannot be viewed as a substitute for domestic criminal or civil law.269 At first sight, the Committee seems to leave little space for arguments in favour of direct obligations of non-state actors under the ICCPR. However, against such clarification it appears that the Committee primarily aims to ensure that states do not shy away from implementing the Covenant’s rights in their domestic legal orders. The Committee specifies that the Covenant is no substitute for adequate domestic measures preventing and addressing human rights violations. Indeed, the Committee goes on by saying that the positive obligations on States parties to ensure Covenant rights will only be fully discharged if individuals are protected by the State, not just against violations of Covenant rights by its agents, but also against acts committed by private persons or entities that would impair the enjoyment

268 The implementation of the ICCPR and UNESCR is monitored by the UN HCtee and the CESCR respectively. Both bodies are of a quasi-judicial nature and comprise 18 experts sitting in their own capacity. They issue General Comments, they adopt non-binding “views” on individual communications brought by individuals, and they adopt concluding observations on the basis of states’ reports. On the nature and role of general comments, see Philip Alston, ‘The Historical Origins of the Concept of ‘General Comments’ in Human Rights Law’ in Laurence Boisson de Chazournes and Vera Gowlland-Debbas (eds), The International Legal System in the Quest of Equity and Universality: Liber Amicorum Georges Abi-Saab (Brill Nijhoff 2001); Helen Keller and Leena Grover, ‘General Comments of the Human Rights Committee and Their Legitimacy’ in Helen Keller and Geir Ulfstein (eds), UN Human Rights Treaty Bodies: Law and Legitimacy (CUP 2012); Paula Gerber, Joanna Kyriakakis and Katie O’Byrne, ‘General Comment 16 on State Obligations Regarding the Impact of the Business Sector on Children’s Rights: What Is its Standing, Meaning And Effect?’ (2013) 14 Melbourne Journal of International Law 93–128; on the “views”, see Rosanne Van Alebeek and André Nollkaemper, ‘The Legal Status of Decisions by Human Rights Treaty Bodies in National Law’ in Helen Keller and Geir Ulfstein (eds), UN Human Rights Treaty Bodies: Law and Legitimacy (CUP 2012); Machiko Kanetake, ‘UN Human Rights Treaty Monitoring Bodies before Domestic Courts’ (2017) 67 ICLQ 201–232. 269 HRCtee, ‘General Comment No 31: The Nature of the General Legal Obligation Imposed on States Parties to the Covenant’ (26 May 2004) UN Doc CCPR/C/21/Rev.1/Add. 13, para 8.

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of Covenant rights insofar as they are amenable to application between private persons or entities.270 As will be explored in Part II, the obligation to make sure that the rights of the Covenant are ‘fully discharged’ has to be performed by states in good faith. States must exercise due diligence to prevent, investigate and redress the harms caused by private persons. Given the close relationship between the rights protected by the ICESCR and corporate activities, the Committee on Economic Social and Cultural Rights (CESCR) has had a prominent role in addressing the relationship between the rights listed in the covenant and corporations.271 The CESCR soon acknowledged that globalisation, by privatising functions previously considered to be the exclusive domain of the state, has provided the corporate sector with an increasingly prominent role.272 The Committee emphasised that while such developments are in principle reconcilable with the rights protected by the Covenant, adequate policies must be put in place by states to avoid the protection of human rights being downgraded. As observed by the Committee in its General Comment 12 on the Right to Adequate Food, While only States are parties to the Covenant and thus ultimately accountable for compliance with it, all members of society – individuals, including health professionals, families, local communities, intergovernmental and non-governmental organizations, civil society organizations, as well as the private business sector - have responsibilities regarding the realization of the right to health. State parties should therefore provide an environment which facilitates the discharge of these responsibilities.273 It is worth noting that the CESCR, after recalling that states must ensure that business activities are carried out in conformity with the right to food,274 stresses that ‘violations of the right to food can occur through the direct action of States or other entities insufficiently regulated by States’.275 Similar statements can 270 Ibid. 271 See Brigit Toebes and Jernej Letnar Černič, ‘Corporate Human Rights Obligations under Economic, Social, and Cultural Rights’ in Jeffrey F Addicott and Others (eds), Globalization, International Law, and Human Rights (OUP 2011). 272 CESCR, ‘Globalization and its Impact on the Enjoyment of Economic, Social and Cultural Rights (Eighteenth Session) (1998) UN Doc E/C.12/1998/26, Chapter VI, para 515. 273 CESCR, ‘General Comment No 12: The Right to Adequate Food (Article 11)’ (12 May 1999) UN Doc E/C.12/1999/5, para 20. 274 Ibid, para 27. 275 Ibid, para 19.

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be consistently found in General Comment 14 on the Right to Health276 and in General Comment 15 on the Right to Water.277 In its General Comment 18 on the Right to Work, the CESCR affirms that although corporations are not bound by the Covenant, they ‘should conduct their activities on the basis of legislation, administrative measures, codes of conduct and other appropriate measures promoting respect for the right to work, agreed between the government and civil society’.278 A section of General Comment 23 on the Right to Just and Favourable Conditions of Work, entitled ‘Obligations of Non-state Actors’, affirms that [b]usiness enterprises, irrespective of size, sector, ownership and structure, should comply with laws that are consistent with the Covenant and have a responsibility to respect the right to just and favourable conditions of work, avoiding any infringements and addressing any abuse of the right as a result of their actions. In situations in which a business enterprise has caused or contributed to adverse impacts, the enterprise should remedy the damage or cooperate in its remediation through legitimate processes that meet recognized standards of due process.279 In 2017, the CESCR issued its General Comment 24 on State Obligations under the ICESCR in the Context of Business Activities.280 Besides clarifying the duties incumbent upon states in this field, to which I will return in Part II, the General Comment stresses under international standards companies are expected to respect the Covenant regardless of whether domestic laws exist or are fully enforced.281 In sum, while the language employed by the treaty bodies monitoring the two covenants does not allow for a clear-cut conclusion regarding their opposability to corporations, from the General Comments it seems that most of the provisions

276 CESCR, ‘General Comment No 14: The Right to Highest Attainable Standard of Health (Article 12)’ (11 August 2000) UN Doc E/C.12/2000/4, paras 42, 51. 277 CESCR, ‘General Comment No 15: The Right to Water (Articles 11 and 12)’ (20 January 2003) UN Doc E/C.12/2002/11, paras 23 and 49. See Jernej Letnar Černič, ‘Corporate Obligations Under the Human Right to Water’ (2011) 39 Denver Journal of International Law and Policy 303–345. 278 CESCR, ‘General Comment No 18: The Right to Work (Article 6)’ (6 February 2006) UN Doc E/C.12/GC/18, para 52. 279 CESCR, ‘General Comment No 23: The Right to Just and Favourable Conditions of Work (Article 7)’ (7 April 2016) UN Doc E/C.12/GC/23, para 75. 280 CESCR, ‘General Comment No 24’ (n 123). 281 Ibid, para 5.

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of the Covenants reach corporations, albeit only indirectly.282 In this regard, one should recall the restrictive interpretation expressed by the European Union (EU). When requested to express its opinion on the value of the International Bill of Human Rights for corporations, the EU maintained that [a]ccording to the Universal Declaration on Human Rights and the International Covenant on Civil and Political Rights, every individual and every organ of society is under a responsibility to strive for the promotion and observance of human rights. The EU stresses that such a provision does not constitute direct legal obligations for companies under human rights law, unless the company performs public functions, which may invoke state responsibility. Such a provision could allocate responsibility to corporations, but the legal obligations rest with States. The Covenants, Conventions and Declarations that lay at the basis of human rights responsibilities and duties have been negotiated, signed and ratified by States, which also bear prime responsibility for their implementation.283 2.1.2 The ILO Core Labour Conventions Given that a good number of corporate human rights abuses concern labour rights, the ILO standards are of key im­portance for the business and human rights field.284 As early as 1930, ILO started to lay down what would have soon become the eight core labour Conventions, which cover the abolition of forced labour, the abolition of child labour, the elimination of discrimination and freedom of association.285 Although the ultimate goal of the ILO Conventions is to guarantee corporate compliance with a minimum core of labour rights, there is no agreement on the extent to which the obligations set forth in those Conventions directly bind corporations. The 1930 ILO Forced Labour Convention states that ‘no concession 282 See John G Ruggie, ‘Business and Human Rights: The Evolving International Agenda’ (2007) 101 AJIL 819–840, 833. 283 EU Reply to the OHCHR Questionnaire on Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to Human Rights. para 6. 284 Bernaz, Business and Human Rights: History, Law and Policy - Bridging the Accountability Gap (n 5), 43 ff. 285 Freedom of Association and Protection of the Right to Organise Convention, 1948; Right to Organise and Collective Bargaining Convention, 1949; Forced Labour Convention, 1930; Abolition of Forced Labour Convention, 1957; Minimum Age Convention, 1973; Worst Forms of Child Labour Convention, 1999; Equal Remuneration Convention, 1951; Discrimination (Employment and Occupation) Convention, 1958; for an overview of the Conventions, see ILO, ‘Rules of the Game: A Brief Introduction to International Standards’ (3rd edn, 2014) 15 ff.

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granted to private individuals, companies or associations shall involve any form of forced or compulsory labour for the production or the collection of products which such private individuals, companies or associations utilise or in which they trade’.286 The more recent 2014 Protocol to the ILO Abolition of Forced Labour Convention requires member states to implement legislation to suppress forced labour and to sanction the perpetrators, without any express reference to the relevant corporate duties.287 The 1973 Minimum Age Convention adopts a similar indirect approach to corporate duties, stating that ‘all necessary measures, including the provision of appropriate penalties, shall be taken by the competent authority to ensure the effective enforcement of the provisions of this Convention’.288 The 2000 Worst Forms of Child Labour Convention requires the ratifying states to ‘take immediate and effective measures to secure the prohibition and elimination of the worst forms of child labour as a matter of urgency’.289 The fact that many ILO Conventions are formulated as state obligations to implement adequate policies and legislation on labour rights does not, as such, excludes the existence of corporate duties conforming to the relevant labour standards. It simply indicates that domestic regulation is the key means to align business activities with labour standards.290 Furthermore, the 1998 Declaration on Fundamental Principles and Rights at Work, the standards of which reproduce the eight core labour conventions, affirms that all ILO members are bound by such standards irrespective of whether they have ratified the conventions. This means that the business sector is expected to comply with the principles set forth in the Declaration regardless of the national regulatory framework in which it operates. The UNGPs also recommend that business enterprises should conduct human rights due diligence in order to identify, prevent, mitigate and account for how they address human rights impacts, with special regard to the 1998 ILO Declaration.291

286 Forced Labour Convention (adopted 28 June 1930, entered into force 1 May 1932) C29, article 5. 287 Protocol of 2014 to the Forced Labour Convention, 1930 (adopted 11 June 2014, entered into force 9 November 2016) P029. 288 Convention concerning Minimum Age for Admission to Employment (adopted 26 June 1973, entered into force 19 June 1976) C138, article 9. 289 Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour (adopted 17 June 1999, entered into force 19 November 2000) C182, article 1. See also ILO, ‘Checkpoints for Companies: Eliminating and Preventing Child Labour’ (2016). 290 A limited number of ILO Conventions address employers directly, such as the Chemicals Convention, 1990 (C170). See also, among many others, Prevention of Major Industrial Accidents Convention, 1993 (C174), Safety and Health in Mines Convention, 1995 (C176), Guarding of Machinery Convention, 1963 (C119). 291 UNGP 14.

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One is also to note a number of international investment agreements incorporating ILO standards and clearly stating their applicability to companies. One example is the Community Rules on Investment adopted by the Economic Community of West African States (ECOWAS) in 2008. Under the chapter entitled ‘Post-establishment Obligations’, the rules require that ‘investors and investments shall act in accordance with fundamental labour standards as stipulated in the ILO Declaration on Fundamental Principles and Rights of Work, 1998.292 An additional factor that may corroborate the applicability of ILO standards to corporations is the already recalled tripartite structure of the ILO bodies and the active participation of the business sector in the elaboration and implementation of standards by the organisation. In fact, both recommendations and conventions are adopted by the International Labour Conference, where each member state is represented by a delegation consisting of two government delegates, an employer delegate and a worker delegate.293 2.1.3 Regional Human Rights Treaties The African, American and European human rights systems provide a key layer of human rights protection in international law. This section examines their core treaties in order to assess if and to what extent they impose direct obligations on corporations. Following a chronological order, the analysis will start with the Council of Europe key human rights treaties, namely the European Convention on Human Rights and Fundamental Freedoms (ECHR) and the European Social Charter. It will then address the Organisations of American States and the African Union instruments. The ECHR and its protocols protect predominantly civil and political rights,294 although the latter’s interplay with economic, social and cultural rights has allowed the European Court of Human Rights (ECtHR) to guarantee some forms of protection to both categories of rights.295 The European Social Charter, as the counterpart of the ECHR, covers an extensive number of economic, social and cultural rights the protection of which is monitored by the European Committee

292 ECOWAS, ‘Adopting Community Rules on Investment and the Modalities for their Implementation with ECOWAS’ (2008) Supplementary Act A/SA.3/12/08, Article 14. 293 Furthermore, a specific item is placed on the ILO Agenda by the ILO Governing Body, which is composed of governments, as well as worker and employer members elected in their individual capacity. 294 European Convention for the Protection of Human Rights and Fundamental Freedoms (adopted 4 November 1950, entered into force 3 September 1953) 213 UNTS 221. 295 Airey v Ireland (1979) ECtHR App No 6289/73, para 26.

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of Social Rights.296 The two treaties make no reference to corporations, nor to duties of non-state actors in general. Similar to the UN Covenants, the ECHR contains a provision prohibiting individuals or groups of individuals the abusive exercise of their rights. Accordingly, the same reasoning made with regard to Article 5 of the UN Covenants may be applied to the ECHR.297 The jurisdiction ratione personae of the ECtHR and the European Committee of Social Rights concerning defendants is confined to states.298 Yet the lack of passive locus standi of corporations in the Council of Europe human rights judicial system does not establish conclusively that corporations are exempt from any obligation pertaining to relevant human rights.299 The ECtHR case law has acknowledged that non-state actors can interfere with and even ‘violate’ the human rights protected in the Convention.300 In Kommunistische Partei Deutschland v Federal Republic of Germany, the European Commission on Human Rights stated that the German Communist Party, as a private organization, was obliged to respect the rights contained in the Convention.301 In Von Hannover, the ECtHR stated that ‘protection of private life has to be balanced against the freedom of expression guaranteed by Article 10 of the Convention’ and that the press ‘must not overstep certain bounds, in particular respect for 296 European Social Charter (adopted 18 October 1961, entered into force 26 February 1965) CoE Treaty No 35. The Charter was revised in 1996 at which point other substantive rights were included. Unlike the ECtHR, the Committee of Social Rights can only consider complaints from organisations of employers and trade unions and NGOs (without requirement of exhaustion of local remedies), and its decisions are not enforceable at the domestic level. 297 Although some doubts have been advanced on an interpretation of Article 17 ECHR as imposing autonomous obligations, see Pieter Van Dijk and Others (eds), Theory and Practice of the European Convention (5 edn, Intersentia 2018) 29. 298 ECHR (n 294), Article 35(3); Additional Protocol to the European Social Charter Providing for a System of Collective Complaints (adopted 9 November 1995, entered into force 1 July 1998) CoE Treaty No 158, Unlike the ECtHR, the Committee of Social Rights cannot consider individual applications (only certain NGOs are entitled to bring a complaint), and its decisions are merely declaratory. 299 Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (n 204), 481; Clapham, Human Rights Obligations of Non-State Actors (n 6), 31. 300 The term “violation” has only been used in Cyprus v Turkey (GC Judgment) (2001) ECtHR App No 25781/94, para 81; the Court usually employs the term “interference”, see Ireland v United Kingdom (Merits) (1977) ECtHR App No 5310/71, 149; see also Swedish Engine Drivers’ Union Case ECtHR App No 5614/72, 42, where the Court affirmed that if ‘it is the role of the Convention and the function of its interpretation to make the protection of individuals effective, the interpretation of Article 11 should be such as to provide, in conformity with international labour law, some protection against “private” interference’. Young, James and Webster v The United Kingdom (Merits) (1981) ECtHR App No 7601/76; 7806/77, paras 48–65. 301 Kommunistische Partei Deutschland v Federal Republic of Germany (1957) ECmHR App No 250/57, 223.

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the reputation and rights of others […] its duty is nevertheless to impart – in a manner consistent with its obligations and responsibilities – information and ideas on all matters of public interest’.302 These are clearly rights that may be infringed upon by media companies. However, while recognising state positive obligations to protect human rights, which will be explored in Part II, the ECtHR has been so far disinclined to spell out the obligations of non-state actors under the Convention. In Vgt Verein gegen Tierfabriken v Switzerland the Court declared that ‘[it] does not consider it desirable, let alone necessary, to elaborate a general theory concerning the extent to which the Convention guarantees should be extended to relations between individuals inter se’.303 Similarly in Özel v Turkey, a case concerning construction deficiencies of a building that collapsed after an earthquake, the Court did not refer to the relevant obligations of the companies involved, confining its reasoning to the state obligation to take appropriate steps to protect individuals ‘in any context of any activity, whether public or not, in which the right to life may be at stake’.304 Despite the unpromising silence of the ECtHR on the scope of corporate duties, the Council of Europe has shown awareness of the challenges stemming from violations committed by business enterprises.305 In 2016, the Committee of Ministers of the Council of Europe adopted a Recommendation on Human Rights and Business.306 The latter requires states, inter alia, to ‘ensure that their legislation creates conditions that are conducive to the respect for human rights by business enterprises and do not create barriers to effective accountability and remedy for business-related human rights abuses’.307 With regard to the Inter-American system, its strong focus on duties is rooted in the 1948 American Declaration of the Rights and Duties of Man. The Declaration affirms that ‘the fulfilment of duty by each individual is a prerequisite to the rights of all’, and provides a separate section on the “duties” of individuals.308 Consistent with such a premise, the American Convention on Human Rights (ACHR), adopted a couple of decades later, states in Article 32 that ‘every person 302 Von Hannover v Germany (2004) ECtHR App No 59320/00, para 58. 303 VGT erein gegen Tierfabriken v Switzerland (2001) ECtHR App No 24699/94, para 46. 304 Özel and Others v Turkey Applications (2015) ECtHR App Nos 14350/05, 15245/05 and 16051/05, para 170. 305 CoE Committee of Ministers, ‘Declaration of the Committee of Ministers on the UN Guiding Principles on Business and Human Rights’ (16 April 2014). 306 CoE Committee of Ministers, ‘Recommendation on Human Rights and Business’ (2016) CM/ Rec(2016)3 (2 March 2016) 307 Ibid, para 18. The Recommendation also invites states to put in place civil liability of corporations and to set up criminal liability. 308 American Declaration of the Rights and Duties of Man (adopted by the 9th International Conference of American States, Bogotá, on 2 May 1948).

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has responsibilities to his family, his community, and mankind’.309 The fact that here, unlike the UN Covenants, the duty clause is not confined to the preamble, may allow more space to extract obligations of non-state actors. In this regard Article 1(2) of the ACHR specifies that for the purpose of the Convention the term ‘every person’ means “human being”. It has been maintained that this would exclude corporations from the potential duty bearers of the Convention.310 It is not clear, however, whether Article 1(2) refers to the right holders only, or also to duty bearers. Since Article 1(1) requires states to guarantee ‘human rights […] to all persons’,311 it is arguable that the clarification made in Article 1(2) only refers to the beneficiaries of the Convention’s rights. Such an interpretation may be substantiated by the recent Advisory Opinion issued by the Inter-American Court of Human Rights (IACtHR), which confirms that legal persons do not hold rights under the Convention.312 Furthermore, it should be borne in mind that the Charter of the Organization of American States is unique among the treaties creating international organizations, in demanding that corporations obey the law of each host country, including the treaties to which the state is a party. Besides, even conceding that Article 32 originally referred to the duties of individuals, there is no reason to believe that individuals, operating through a corporate structure, can escape their duties under the convention. As to the argument according to which the formulation of Article 32 is too elusive to provide a basis for legal obligations of individuals or other non-state actors,313 Article 32 should not be read in isolation. The non-binding instruments analysed in Chapter 1 clarify the expectations towards corporations and can play a key role in interpreting the ACHR. The fact that the IACtHR and the IACmHR can only hear claims lodged against states has not kept two institutions from recognising that non-state actors can incur human rights violations.314 In the landmark decision Velázquez-Rodríguez v Honduras the Court acknowledged that violations of international law by private persons can lead to international responsibility of the state for the lack of due diligence in preventing or addressing the violation.315 In González v Mexico, a 309 American Convention on Human Rights (adopted 22 November 1969, entered into force 18 July 1978) 1144 UNTS 123, Article 32. 310 Karavias, Corporate Obligations under International Law (n 227), 23. 311 ACHR, Article 1(1). 312 Titularidad de derechos de las personas jurídicas en el sistema Interamericano de derechos humanos (Advisory Opinion) (2016) IACtHR OC-22/16, para 37. 313 Tomuschat, Human Rights: Between Idealism and Realism (n 231), 130. 314 ACHR, Article 63. 315 Case of Velásquez Rodríguez v Honduras (Merits) (1988) IACtHR Series C No 4, para 172. The IACmHR has also emphasised that the conduct of non-state actors bears relevance for the

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case concerning the disappearance and death of three Mexican women, the Court acknowledged that private actors might infringe upon human rights, thus requiring the state to prevent and address such violations.316 More explicitly and pertinently to the present research, in its advisory opinion on the Juridical Condition and Rights of the Undocumented Migrants the Court recalled that non-state actors, including private employers, must respect human rights.317 Such a conclusion was reached on the premise that in an employment relationship regulated by private law, the obligation to respect human rights between individuals should be taken into consideration. That is, the positive obligation of the State to ensure the effectiveness of the protected human rights gives rise to effects in relation to third parties (erga omnes).318 The IACtHR has been increasingly taking stock of the developing international framework on business and human rights.319 In Kaliña and Lokono Peoples v Suriname the Court was called upon to address the violations of indigenous peoples’ rights in the context of a mining concession.320 According to the claimants, the state had awarded a concession to a mining company in the communities’ traditional territories without carrying out adequate consultation aimed at obtaining prior and informed consent. The IACtHR concluded that the mining activities of the TNC negatively affected the ecosystem of the land and that the

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evaluation of state obligations concerning human rights protection, see IACmHR, ‘Report on Terrorism and Human Rights’ (22 October 2002) OEA/ Ser.L/V/II.116, Doc. 5 rev. 1 corr. para 48. Case of González et al. (“Cotton Field”) v Mexico (Preliminary Objections, Merits, Reparations and Costs) (2009) IACtHR Series C No 205, para 247. Juridical Condition and Rights of the Undocumented Migrants (Advisory Opinion) IACtHR (2003) OC-18/03, paras 146, 151. Ibid, para 140. For an analysis of business and human rights in the Inter-American system, see Alejandra Gonza, ‘Integrating Business and Human Rights in the Inter-American Human Rights System’ (2016) 1 Business and Human Rights Journal 357–365; Ana María Mondragón, ‘Corporate Impunity for Human Rights Violations in the Americas: The Inter-American System of Human Rights as an Opportunity for Victims to Achieve Justice’ (2016) 57 Harvard International Law Journal 53–59; María Carmelina Londoño-Lázaro, Ulf Thoene and Catherine Pereira-Villa, ‘The Inter-American Court of Human Rights and Multinational Enterprises: Towards Business and Human Rights in the Americas?’ (2017) 16 LPICT 437–463. Kaliña and Lokono Peoples v Suriname (n 181). The case was first submitted to the Inter-American Commission in 2007 by eight indigenous peoples’ communities, collectively comprising the Kaliña and Lokono peoples of the Lower Marowijne River. The IACHR decided the case in 2013 and, following Suriname’s noncompliance with its recommended remedial measures, transmitted the case to the Court in 2014.

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state had failed to comply with the duty to guarantee the indigenous people effective participation, sharing of benefits from the development project and social and environmental impact assessment.321 In reaching such a conclusion, the Court recalled that the UNGPs establish that businesses must respect and protect human rights, as well as prevent, mitigate, and accept responsibility for the adverse human rights impacts directly linked to their activities. Hence, as reiterated by these principles, “States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises”. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication.322 The Court added that under the UNGPs, companies ‘must’ respect the human rights of indigenous and tribal peoples, and pay special attention when such rights are violated.323 The Court did not elaborate further on the scope of corporate duties, but it relied on such instruments to substantiate the state duty to carry out environmental impact assessment and to recall that corporations are expected to comply with human rights. A similar approach was adopted in Hacienda Brasil Verde Workers v Brazil, which concerned the slavery-like working conditions of eighty-five workers in a private-owned livestock farm in Brazil.324 The Court referred to the UNGPs as a framework for both states and corporations, though focusing primarily on the due diligence obligation of states to prevent and punish forms of forced labour and slavery.325 These cases are important evidence of the trend towards the recognition of the opposability of the ACHR to non-state actors, including business enterprises. This trend seems confirmed also by the prompt response of the OAS to the issue of corporate human rights violations. In 2014, the General Assembly of the OAS issued a resolution on the ‘Promotion and Protection of Human Rights in Business’, where it upheld the UNGPs and asked the IACmHR to assist states in their implementation.326 The resolution was followed by a number of thematic 321 Ibid, para 201. 322 Ibid, para 224, emphasis added. 323 Ibid, para 225. For an analysis of the case, see Lucas Lixinski, ‘Case of the Kaliña and Lokono Peoples v. Suriname’ (2017) 111 AJIL 147–154. 324 Hacienda Brasil Verde Workers v Brazil (Preliminary Objections, Merits, Reparations and Costs) (2016) IACtHR Series C No 318. 325 Ibid, para 318, fn 452; see Roger Plant, ‘Workers of the Hacienda Brasil Verde v Brazil: Putting the Judgment in Perspective’ (2017) 3 International Labour Rights Case Law 387–392. 326 OAS, ‘Promotion and Protection of Human Rights in Business’ (n 145).

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reports.327 In its report on Indigenous Peoples, Afro-Descendent Communities and Extractive Industries, the IACmHR acknowledges the potential detrimental effect of corporate conduct on human rights, together with the need for a ‘platform that enhances and does not undermine human rights, within or beyond national borders’.328 The Commission also recognises the need ‘of measures to ensure the investigation and, where appropriate, the application of criminal and administrative sanctions to the people in the public or private sphere, and companies responsible for human rights violations’.329 I finally turn to the African system. The African Charter on Human and Peoples’ Rights (ACHPR), also known as the Banjul Charter, is one of the youngest regional human rights treaties.330 Although the Banjul Charter was partly inspired by the adoption of the ICCPR and ECHR, it presents a number of peculiar features. First, the Charter includes both civil and political rights (Articles 4–14) and economic, social and cultural rights (Articles 15–17), and, most interestingly, the latter are not qualified by the notion of “progressive realisation”. The Charter also comprises “third generation” rights, such as the right to development (Article 22), the right to self-determination (Article 21) and the right to a satisfactory environment (Article 24).331 A second relevant feature of the Banjul Charter, which is most relevant to the present research, can be found in its explicit reference to the duties of individuals towards the state and the community.332 According to Article 27, ‘[e]very individual shall have duties towards his family and society, the State and other legally recognized communities and the international community’. Article 28 affirms that the individual has a ‘the duty to respect and consider 327 IACmHR, ‘Corporations, Human Rights, and Prior Consultation in the Americas’ Report on the 154th Session (29 June 2015); see also IACmHR, ‘Memorandum of Understanding between the General Secretariat of the OAS through the IACmHR and the Danish Institute for Human Rights’ (16 March 2015). A report on human rights and business is also being drafted by the Commission’s Special Rapporteur on Economic, Social, Cultural and Environmental Rights. 328 IACmHR, ‘Indigenous Peoples Afro-Descendent Communities and Natural Resources: Human Rights Protection in the Context of Extraction, Exploitation, and Development Activities’ (31 December 2015) OEA/Ser.L/V/II. Doc 47/15, para 81. 329 Ibid, para 144. 330 African Charter on Human and Peoples’ Rights (adopted 27 June 1981, entered into force 21 October 1986) 1520 UNTS 217, see Philip Alston and Ryan Goodman, International Human Rights (OUP 2012) 1025 ff. 331 The Preamble of the Charter stresses that ‘civil and political rights cannot be dissociated from economic, social and cultural rights in their conception as well as universality’ (para 8). The Charter also contains provisions peculiar to the African context, such as disposal of people’s wealth and natural resources and the elimination of foreign economic exploitation. See Frans Viljoen, International Human Rights Law in Africa (2 edn, OUP 2012) 214. 332 Alston and Goodman, International Human Rights (n 330).

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his fellow beings without discrimination, and to maintain relations aimed at promoting, safeguarding and reinforcing mutual respect and tolerance’. These two features have a considerable potential in the business and human rights discourse, the former being a tool to guarantee the justiciability of economic, social and cultural rights, and the latter providing a fertile ground to argue in favour of corporate obligations under the Charter.333 The monitoring of the Charter was originally entrusted to the African Commission on Human and Peoples’ Rights (ACmHPR),334 while it was only in 1998 that the African Court on Human and Peoples’ Rights (ACtHPR) was established, becoming operative in 2004.335 In fact, states have been reluctant to accept the jurisdiction of the existing Court to receive cases of human rights violations directly from individuals and NGOs.336 This fact per se highly restricts the Court’s potential to clarify, interpret and apply the contents and scope of the Charter.337 One is left therefore with the interpretative activity provided by the non-judicial ACmHPR. In Center for Economic and Social Rights and Social and Economic Rights Action Center v Nigeria, two NGOs alleged that the Nigerian government, through its state oil company and in a consortium with Shell Petroleum, had caused environmental degradation and violated the rights to food, health and housing of the indigenous people of the Ogoni region. The ACmHR held that ‘governments have a duty to protect their citizens, not only through appropriate legislation and effective enforcement, but also by protecting them from damaging acts that

333 Other treaties in the African region envisage violations in the private sphere. See African Charter on the Rights and Welfare of the Child, OAU Doc CAB/LEG/24.9/ Article 20(1); Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Women in Africa (adopted on 13 September 2000, entered into force 25 November 2005). 334 ACHPR, Articles 47–53. The Commission is empowered to promote the rights of the Charter, to issue advisory opinions and concluding observations on state reports, and to hear individual complaints (without any need for acceptance of jurisdiction by member states). 335 Protocol to the African Charter on Human and Peoples’ Rights on the Establishment of the African Court on Human and Peoples’ Rights (adopted 10 June 1998, entered into force on 25 January 2004) 336 As of February 2020, only 9 of the 20 States parties to the Protocol to the African Charter on Human and Peoples’ Rights on the Establishment of an African Court on Human and Peoples’ Rights had made the declaration recognising the competence of the Court to receive cases from individuals and NGOs. 337 Furthermore, a Protocol in 2011 was adopted to merge the ACtHPR with the African Court of Justice. The Protocol has not entered into force yet. Meanwhile in 2014 the AU adopted the Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human Rights, which extends the jurisdiction of the Court to cover international crimes, including corporate crimes.

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may be perpetrated by private parties’.338 The Commission added that such duty requires positive action of states as part of their obligation under human rights instruments, whereas the Nigerian Government ‘has given green light to private actors and the oil companies in particular, to devastatingly affect the well-being of the Ogonis’.339 Eventually, the Commission found the Government in breach of the rights to health and to satisfactory environment, the right to property, the right to housing, the right to food, and the right to be free from the forced deprivation of one’s wealth and resources. Yet the Commission did not make any reference to the responsibility of the oil companies, so much so that Shell is only mentioned twice in the entire decision. The ACmHPR has subsequently acknowledged that ‘some perpetrators of human rights abuses are organizations, companies, or other structures of business and finance’,340 but it has generally avoided spelling out the duties of companies under the Charter. The Working Group on Extractive Industries, Environment and Human Rights Violations, which is a special mechanism of the African Commission, stressed the ‘unconditional responsibility’ of states parties to prevent all forms of violations of human and peoples’, rights including the violations of by non-state actors.341 Since 2016, the AU has been working on a regional policy on business and human rights.342 In sum, regional human rights treaties and the case law of regional courts offer little help to provide clarity on the issue as to whether corporations can be the direct recipient of human rights obligations under such treaties. The described jurisdictional limitations of the regional human rights courts affect their role in spelling out obligations of non-state actors, with special regard to the fact that they retain jurisdiction exclusively for claims against states.343 It seems that for the time being, and with very few exceptions, the recognition that corporations 338 Social and Economic Rights Action Center (SERAC) and Center for Economic and Social Rights (CESR) v Nigeria (2001) ACmHPR Comm No 155/96, para 57. 339 Ibid, para 58. 340 Human Rights NGO Forum v Zimbabwe (2006) IACmHPR Comm No 245/02, para 136. 341 ACmHPR, ‘Resolution on the Establishment of a Working Group on Extractive Industries, Environment and Human Rights Violations in Africa’ (25 November 2009) Res 148(XLVI)09. 342 African Union and European Union, ‘Validation Workshop of the African Union Policy on Business and Human Rights’ Joint Press Release (21 March 2017), available at https://au.int/en/ pressreleases/20170321/validation-workshop-african-union-policy-business-and-human-rights. 343 See, for example, Case of Castillo Petruzzi et al. v Peru (Merits, Reparations and Costs) (1999) IACtHR Series C No 52, para 89, where the Court noted that it lacked jurisdiction to adjudicate obligations of private actors. The IACtHR has been keener in resorting to ‘creative ways’ to express condemnation of corporate violations, see Nicolás Carrillo-Santarelli and Carlos Arévalo-Narvález, ‘The Discursive Use and Development of the Guiding Principles on Business and Human Rights in Latin America’ (2017) 30 Revista colombiana de derecho internacional 61–118, 79.

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can violate human rights, and that states have positive obligations, is as far as regional courts can go.344 2.2 The Drive for Corporate Obligations through a New Treaty The UN journey to regulate corporate conduct relevant to human rights through a binding instrument is a long one, and still underway. As rightly observed, When the United Nations system was created, nation-states, some of them imperial powers, were dominant. […] the state had few rivals. The world economy was not as closely integrated as it is today. The vast array of global firms and corporate alliances that has emerged was just beginning to develop. The huge global capital market, which today dwarfs even the largest national capital markets, was not foreseen.345 Against the changes that have occurred ever since the creation of the UN in the governmental and corporate panoramas regarding the human rights discourse, the following sections are devoted to the analysis of three major efforts to draft a binding international instrument imposing human rights obligations on corporations, one of which is still in process. 2.2.1 The UN International Code of Conduct for Transnational Corporations The thorny legal issues peculiar to TNCs appeared on the UN Agenda in the 1970s.346 The debate over the conduct of corporations emerged in the aftermath of the interference of the American corporation ITT in the coup d’état that led to the dictatorship of Augusto Pinochet in Chile.347 In 1972, the economist and former director of UNCTAD, Raúl Prebisch, stated, 344 With the entry into force of Protocol 16 of the ECHR, the European Court may be given a powerful tool to elaborate on the duties of corporations. The Protocol allows the highest domestic courts, during pending cases before them, to require the Court to issue advisory opinions on ‘questions of principle relating to the interpretation or application of the rights and freedoms defined in the Convention or the protocols thereto’. 345 UN Commission on Global Governance, Our Global Neighbourhood (1995) 3. 346 See also GA ‘Declaration on Social Progress and Development’ (11 December 1969) UN Doc A/ RES/24/2542; although no reference is made to TNCs, the declaration recognizes that ‘social progress and development shall aim at the continuous raising of the material and spiritual standards of living of all members of society, with respect for and in compliance with human rights and fundamental freedoms, through the attainment of the following main goals’ (Part II, Objectives). 347 See ‘The I.T.T. and Chile’ The New York Times (6 March 1972); Tagi Sagafi-Nejad and John Dunning, The UN and Transnational Corporations: From Code of Conduct to Global Compact

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[t]he portent of the international corporation has arisen. A “portent”, in the ordinary sense of the word, is a cause for both wonder and concern. The cause for wonder is not only its production technology, but also its organizational and commercial expansion techniques throughout the world. It is a cause for concern since we must ask ourselves: […] can it be said that what is good for the corporation is good for the whole world, of which the peripheral countries are also apart? In truth, it is indispensable to draw up new rules of the game.348 It is in the context of the New International Economic Order349 that a Group of Eminent Persons from the public and private sector were entrusted by the UN Economic and Social Council (ECOSOC) with the task of studying the impact of TNCs on development and international relations and elaborating a normative framework.350 Following a landmark report from the Group, where the point was made that some measure of regulation of TNCs had to be introduced on the global scale,351 in 1974 the UN ECOSOC established a Commission on Transnational Corporations.352 The main task for the Commission was to draft a code

(Indiana University Press 2008) 45. 348 Statement made by Mr Raúl Prebisch, Under-Secretary-General of the United Nations, Director-General of the Latin American Institute for Economic and Social Planning and Former Secretary-General of UNCTAD, at the 103rd Plenary Meeting on 26 April 1972, Annex VIII C, paras 21–22. 349 GA, ‘Declaration on the Establishment of a New International Economic Order (1 May 1974) UN Doc A/Res/S-6/3201; The Declaration asked, among other things, for the ‘[r]egulation and supervision of the activities of transnational corporations by taking measures in the interest of the national economies of the countries where such transnational corporations operate on the basis of the full sovereignty of those countries’; see also Giorgio Sacerdoti, ‘New International Economic Order’ MPEPIL (2015). 350 ECOSOC, ‘Resolutions Adopted by the Council during its Fifty-Third Session’ (3–28 July 1972) Res 1721(LII) UN Doc E/5209. The Group of Eminent Persons included nine members from the public sector, six from academia, and five from the business sector; see Stéphan Coonrod, ‘The United Nations Code of Conduct for Transnational Corporations’ (1977) 18 Harvard International Law Journal 273–308; Khalil Hamdani and Lorraine Ruffing, ‘Lessons from the UN Centre on Transnational Corporations for the Current Treaty Initiative’ in David Bilchitz and Surya Deva (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 28 ff. 351 DESA, ‘Report of the Group of Eminent Persons on the Impact of Multinational Corporations on Development and International Relations’ (24 May 1974) Res 1974/1721, UN Doc E/5500/ Rev.1, 54–55. 352 ECOSOC, ‘The Impact of Transnational Corporations on the Development Process and on International Relations’ (1974) Res 1913 UN E/5570/Add.1.

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of conduct for corporations, which was meant to be ‘an intermediate step to a fuller international arrangement on the TNC’.353 From the earliest phases of the negotiations, divergent views emerged as to whether the Code was supposed to address only the responsibilities of TNCs, or also their rights vis-à-vis host states.354 Whilst developing and socialist countries prioritised the regulation of the conduct of TNCs, industrialised countries were keener to regulate the treatment of TNCs operating in foreign countries. The “Group of 77” countries aimed at strengthening the principle of sovereignty over natural resources and urged the adoption of measures regulating the activities of TNCs in areas pertaining to the exploitation and management of natural resources, with special regard to oil, gas and mining.355 Industrialised countries, as capital exporting countries, wanted to secure fair treatment for their TNCs operating in emerging markets.356 In 1980, the UN ECOSOC decided that the Code would address both dimensions.357 Another important point of disagreement among delegations revolved around the legal format of the Code.358 Whilst the “Group of 77” non-aligned developing countries were supportive of a legally binding and enforceable code, the delegations from industrialised countries and the business community were prepared to accept only a non-binding instrument. Already then, some states were expressing reservations about the possibility of having corporations as direct addressees of the provisions of the Code. It was stressed that while states are ‘sovereign entities, full subjects and makers of international law’, corporations are ‘qualitatively different participants’ within the international legal order and mainly subject to domestic law.359

353 Commission on Transnational Corporations, ‘Report on First Session 17–28 March 1975’ (1975) UN Docs E/5655 and E/C.10/6. 354 See Wolfgang Sprote, ‘Negotiations on a United Nations Code of Conduct on Transnational Corporations’ (1990) 33 German Yearbook of International Law 331–348. 355 As expressed by UN GA, ‘Charter of Economic Rights and Duties of States’ (12 December 1974) UN Doc A/RES/29/3281, Article 2. 356 David Bilchitz and Surya Deva, ‘The Human Rights Obligations of Business: A Critical Framework for The Future’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013) 5. 357 ECOSOC Res 1980/60 (24 July 1980); see also Commission on Transnational Corporations, ‘Information Paper on the Negotiations to Complete the Code of Conduct on Transnational Corporations’ (4 January 1983) UN Doc E/C.10/1983/S/1 para 13. 358 Samuel K Asante, ‘United Nations: International Regulation of Transnational Corporations’ (1979) 13 Journal of World Trade 55–66, 58. 359 UN Centre on Transnational Corporations, ‘Issues Involved in the Formulation of a Code of Conduct’ (20 July 1976) UN Doc E/C.10/17 para 42; see Stephen Tully, Corporations and International Law Making (Martinus Nijhoff Publisher 2007) 56.

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The first draft of the Code was submitted in 1978. A series of drafts followed,360 the last of which was in 1990.361 The last version specifies in the preamble that the purpose of the UN Draft Code was ‘to maximize the contributions of TNCs to economic development and growth and to minimize the negative effects of the activities of these corporations’.362 The Draft includes both a section on the regulation of TNCs and a section on their treatment. In the former section, the Code posited that ‘TNCs should/shall respect human rights and fundamental freedoms in countries in which they operate’.363 No agreement, though, could be found on the legal value of such a provision, as indicated by the disagreements around the alternative use of the terms “shall” and “should”. Although agreement could be found on a number of provisions, such as the definition of TNCs, the remaining areas of disagreement reflected what seemed to be unbridgeable ideological differences. A major obstacle for industrialised countries concerned precisely the possibility of imposing international law obligations on corporations; developing countries, on the other hand, struggled with the issue of national treatment and fair and equitable treatment of foreign investors, seeking to preserve as much as possible their regulatory sovereign freedom.364 After almost two decades of efforts to reconcile the East–West divide, the negotiations stalled, not least as a result of the evolving economic and political scenario.365 Foreign direct investment patterns had in the meantime changed significantly from the mid-seventies. Advancements in new materials and industrial production processes lowered the demand and prices for many of the raw materials supplied by developing states and the slowing of their manufacturing sector sensibly reduced their bargaining power. As a consequence, foreign investments directed at developing nations decreased, while flows between industrialized countries kept growing. The states formerly belonging to the now dismembered Soviet Bloc began to reconsider their nationalistic policies in order to provide an attractive environment for foreign direct investments. The progressive rise of globalisation shifted the attention from the regulation of foreign investments to

360 UN Commission on Transnational Corporations, ‘Draft UN Code of Conduct on Transnational Corporations’ (1983) UN Docs E/1983/17/Rev.1, E/1988/39/Add 1(1988). 361 UN Commission on Transnational Corporations, ‘Draft UN Code of Conduct on Transnational Corporations (‘Chairman’s text’)’ (12 June 1990) UN Doc E/1990/94. 362 Ibid, Preamble. 363 Ibid, Draft Article 13. 364 See Karl P Sauvant, ‘The Negotiations of the United Nations Code of Conduct on Transnational Corporations: Experience and Lessons Learned’ (2015) 16 Journal of World Investment & Trade 11–87. 365 UN Centre on Transnational Corporations, ‘The New Code Environment’ (April 1990) UN Doc ST/CTC/SER.A/16.

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investment promotion and protection, while public–private partnerships started to emerge between UN agencies and the business sector.366 Against such a background, also western countries lost interest in the Code. As made clear by the US delegation: We believe that the Code is a relic of another era, when foreign direct investment was looked upon with considerable concern. The Code does not reflect the current investment policies of many developing countries. […]. In the light of the above, Washington agencies have decided to seek the support of host government officials responsible for foreign investment and quietly build a consensus against further negotiations. […] We stress that the Demarche should be given to officials responsible for investment not those responsible for UN affairs.367 The Code’s official demise came in 1992, when the President of the UN General Assembly affirmed that no consensus was possible and that the changed international environment concerning foreign investment called for a new approach.368 The reasons behind the setting aside of the Draft Code of Conduct can be found both in the ambitious scope of the instrument for the standards of the time of its negotiation and in the fast evolution of the political and economic climate. With respect to the 1970s, in the 1990s major changes took place in the structure and content of international economic activities, including the advent of globalisation and the rise of new emerging economic powers, with special regard to China. The ideological clashes of 1970s on foreign direct investments began to fade. The fall of the Berlin Wall, the collapse of the Soviet Union and the end of the Cold War had brought radical change onto the world scene. In the aftermath of the energy crises of the 1980s and economic stagnation the attitude of developing countries shifted dramatically as their priorities switched from regulation to attracting foreign direct investments.369 Industrialised and

366 Justine Nolan, ‘The Corporate Responsibility to Respect Human Rights: Soft Law or not Law’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 147. 367 As quoted in Sagafi-Nejad and Dunning, The UN and Transnational Corporations: From Code of Conduct to Global Compact (n 347), 120. 368 GA, ‘Report of the President of the Forty-Sixth Session of the General Assembly’ (15 September 1992) UN Doc A/47/446 Annex. 369 See Rhys Jenkins, ‘Corporate Codes of Conduct: Self-Regulation in a Global Economy’ (2001) 2 United Nations Research Institute for Social Development 3.

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developing countries started to compete for the skills, technology and investments brought by foreign corporations.370 ‘The Zeitgeist had changed’.371 2.2.2 The UN Draft Norms on Transnational Corporations Although the UN Code of Conduct was never finalised as a legal instrument, it paved the way for the debate on corporations and human rights. After the deadlock of its negotiations, in 1993 the Sub-Commission on Prevention of Discrimination and Protection of Human Rights,372 a subsidiary body of the UN Commission on Human Rights,373 established a sessional working group to address the working methods and activities of TNCs.374 The working group was tasked with making recommendations and proposals relating to the methods of work and activities of TNCs, ‘in order to ensure that such methods and activities are in keeping the economic and social objectives of the country in which they operate’.375 In 1999, Professor David Weissbrodt, one of the working group’s members, was asked by the Sub-Commission to prepare a draft code

370 Geoffrey Chandler, ‘The Evolution of the Business and Human Rights Debate’ in Rory Sullivan (ed), Business and Human Rights: Dilemmas and Solutions (Greenleaf Publishing 2003) 22. 371 Sauvant, ‘The Negotiations of the United Nations Code of Conduct on Transnational Corporations: Experience and Lessons Learned’ (n 364), 61. 372 The Sub-Commission on Prevention of Discrimination and Protection of Minorities was created in 1947 by the UN Economic and Social Council and was composed of twenty-six independent experts elected by their countries in an individual capacity. The Sub-Commission’s function included undertaking studies and making recommendations to the Commission. The Sub-Commission was then renamed as Sub-Commission on the Promotion and Protection of Human Rights. 373 The UN Commission on Human Rights, as an intergovernmental body composed of fiftythree states, was replaced in 2006 by the UN Human Rights Council. 374 UN Sub-Commission on the Promotion and Protection of Human Rights, ‘The Relationship Between the Enjoyment of Economic, Social and Cultural Rights and the Right to Development, and the Working Methods and Activities of Transnational Corporations’ (20 August 1998) UN Doc E/CN.4/Sub.2/RES/1998/8; The members of the sessional working group were El-Hadji Guissé (representing Africa), Professor David Weissbrodt (representing Western Europe and other States), Mr. Manuel Rodriguez-Cuadros (representing Latin America), and Mr. Vladimir Kartashkin (representing Eastern Europe). During the subsequent years, the mandate of the working group was expanded several times. In 2001, the mandate was extended for three years and expanded to compile a list of human rights instruments and norms pertaining to transnational corporations. 375 Ibid; see David Weissbrodt, ‘The Beginning of a Sessional Working Group on Transnational Corporations within the UN Sub-Commission on Prevention of Discrimination and Protection of Minorities’ in Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer 2000), 119 ff.

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of conduct for TNCs.376 A four-year consultation followed within the sessional working group, as well as with civil society organizations, trade unions and UN bodies. The views of the business community were also taken into account, although at a later stage of the negotiations.377 The idea of a Draft Code turned into a project of ‘Draft Norms” in 2002, indicating that the text had shifted from a voluntary initiative to one aiming at a legally binding instrument.378 At the 54th session of the Sub-Commission, Weissbrodt emphasised that the Norms were binding to the extent that they reflected human rights law under ratified treaties.379 Later, however, he indicated that the Norms were not intended to be legally binding as such, at least in their initial stage. The UN Norms presented themselves as neither the introduction of new obligations nor the expression of existing ones.380 As we shall see in the discussion that follows, such ambiguity has dominated the debate around the Norms. In 2003, the sessional working group submitted to the UN Sub-Commission its draft version of the ‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ (hereinafter “the Norms”).381 The UN Sub-Commission approved by consensus the draft version of the Norms, along with the Commentary, and transmitted it to the UN Commission on Human Rights.382 The latter, however, expressed the view

376 UN Sub-Commission on the Promotion and Protection of Human Rights, ‘Report of the Sessional Working Group on the Working Methods and Activities of Transnational Corporation’ UN Doc E/CN.4/Sub.2/1999/9, para 32. 377 See Karin Buhmann, Power, Procedure, Participation and Legitimacy in Global Sustainability: A Theory of Collaborative Regulation (Routledge 2017) 46–47. 378 Although already in extension of the Group’s mandate in 2001 (Res 2001/3), there is an explicit reference, among the functions of the Group, to the contribution to the drafting of ‘binding norms’ (para 4.d.). 379 UN Sub-Commission on the Promotion and Protection of Human Rights ‘Report of the Sessional Working Group on the Working Methods and Activities of Transnational Corporations on its Fourth Session’ (15 August 2002) UN Doc E/CN.4/Sub.2/2002/13, para 14; Weissbrodt also added that the language of the document emphasized binding obligations through the use of “shall” rather than “should”. 380 Bilchitz, ‘A Chasm Between ‘is’ and ‘ought’? A Critique of the Normative Foundations of the SRSG’s Framework and the Guiding Principles’ (n 216), 15. 381 UN Sub-Commission on the Promotion and Protection of Human Rights, ‘Report of the Sessional Working Group on the Working Methods and Activities of Transnational Corporations’ (6 August 2003) UN Doc E/CN.4/Sub.2/2003/13. 382 UN Sub-Commission on the Promotion and Protection of Human Rights, ‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’ (26 August 2003) UN Doc E/CN.4/Sub.2/2003/12/Rev.2; ‘Commentary on the Norms on the Responsibilities of Transnational Corporations and Other Business

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that although the instrument contained ‘useful elements and ideas […] has not been requested by the Commission and, as a draft proposal, has no legal standing’.383 In the same decision, the Commission requested the OHCHR to consult with all the relevant stakeholders, including the business sector, in order to draft a report setting out the scope and legal status of existing initiatives and standards relating to the human rights responsibility of TNCs.384 In its report, the OHCHR provided a list of the existing standards on business and human rights, as well as an analysis of the main arguments brought by the supporters and the detractors of the Norms.385 Before exploring the reasons behind the decision of the UN Commission to shelve the UN Draft Norms, the scope and the content of the instrument deserve further analysis.386 The scope ratione personae of the Norms is not confined to TNCs.387 It also covers all corporate entities, but only insofar as: a) they relate to TNCs; b) the impact of their activities is not entirely local; c) their activities involve violations of the right to security.388 The partial inclusion of domestic corporations in the scope of the instrument is particularly relevant, as the issue Enterprises with Regard to Human Rights’ (26 August 2003) UN Doc E/CN.4/Sub.2/2003/38/ Rev.2. 383 UN Commission on Human Rights, ‘Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to Human Rights’ (20 April 2004) Decision 2004/116. 384 The decision was formally requested by the United Kingdom on behalf of Australia, Belgium, the Czech Republic, Ethiopia, Ghana, Hungary, Ireland, Japan, Mexico, Norway, South Africa and Sweden. 385 UN Commission on Human Rights, ‘Report of The United Nations High Commissioner on Human Rights on the Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to Human Rights’ (15 February 2005) UN Doc E/CN.4/2005/91, paras 20–21. 386 For an account of the formation and content of the UN Norms and their formation process, see Carolin F Hillemanns, ‘UN Norms on the Responsibilities of Transnational Corporations and Other Enterprises with Regard to Human Rights’ (2003) 4 German Law Journal 1065–1080; Larry Catá Backer, ‘Multinational Corporations, Transnational Law: The United Nations’ Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility in International Law’ (2005–2006) 37 Columbia Human Rights Law Review 287–389. 387 ‘The term “transnational corporation” refers to an economic entity operating in more than one country or a cluster of economic entities operating in two or more countries -whatever their legal form, whether in their home country or country of activity and whether taken individually or collectively’ in UN Norms (n 382), para 20. 388 ‘Any business entity, regardless of the international or domestic nature of its activities, including a transnational corporation, contractor, subcontractor, supplier, licensee or distributor; the corporate, partnership, or other legal form used to establish the business entity; and the nature of the ownership of the entity. These Norms shall be presumed to apply, as a matter of practice, if the business enterprise has any relation with a transnational corporation, the impact

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of business and human rights is increasingly recognised as a relevant matter for local companies.389 The scope ratione materiae of the Draft Norms is far-reaching, as their 23 paragraphs cover, next to human rights in general,390 the right to security, labour rights, the prohibition of corruption, consumer protection, indigenous’ rights, and environmental protection.391 No difference is drawn between civil and political rights and economic, social and cultural rights, in light of the premise made in the preamble regarding their universality, independence and indivisibility. The first distinguishing feature of the Draft Norms can be found in their departure from the prevailing voluntary approach. The Preamble recognises that although states have the primary responsibility to promote, respect and protect human rights, [t]ransnational corporations and other business enterprises, as organs of society, are also responsible for promoting and securing the human rights set forth in the Universal Declaration of Human Rights […]. [They] are also obliged to respect generally recognized responsibilities and norms contained in United Nations treaties and other international instruments.392 Paragraph 1 of the Norms, framed under the chapter “General Obligations”, provides that States have the primary responsibility to promote, secure the fulfilment of, respect, ensure respect of, and protect human rights recognised in international as well as national law, including assuring that transnational corporations and other business enterprises respect human rights. Within their respective spheres of activity and influence, transnational corporations and other business enterprises have the obligation to promote, secure the fulfilment of, respect, ensure respect of, and protect human rights recognized in international as well as national law.393

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of its activities is not entirely local, or the activities involve violations of the right to security as indicated in paragraphs 3 and 4’, Ibid, para 21. Peter T Muchlinski, ‘Corporate Social Responsibility and International Law: The Case of Human Rights and Multinational Enterprises’ in Doreen McBarnet and Others (eds), The New Corporate Accountability: Corporate Social Responsibility and the Law (CUP 2007), 442. UN Norms (n 382), para 23, referring to both civil and political rights and economic social and cultural rights. Ibid, paras 3–14. UN Norms (n 382), Preamble (emphasis added). Ibid, para 1 (emphasis added).

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In brief, the Norms propose a full extension of international human rights obligations to corporations, the only caveat being that such obligations are limited to the ‘sphere of activity and influence’ of the economic actors.394 The notion of “sphere of influence” builds upon and expands the concept of “sphere of activity” originated in the UN Global Compact. Its aim, comparable to the concept of state jurisdiction,395 is to ‘align the human rights responsibility of companies with the effective power that they exercise’.396 In a “graphic” representation of the operations of the corporations, the latter occupy the centre of the “sphere”, while the successive circles indicate the suppliers and the other stakeholders.397 In so doing, the concept provides for a sliding scale of responsibility for the corporation, based on its proximity to the relevant stakeholders. As noted by David Kinley and Rachel Chambers, the sphere of influence includes such actors as workers, consumers and members of the host community as well as the environment in which the company operates. The addition of the word ‘influence’ (not present in either the Global Compact or the OECD Guidelines) apportions responsibility where the company has some degree of influence, even if the human rights violations are at the periphery of the company’s area of activity.398 The sliding scale of responsibility deriving from the concept of sphere of influence helps in providing different gradations of responsibility according to the size and leverage of a company; in other words, it effective power.399 While small corporations may not be able to exercise the same amount of influence as larger ones, they are still required to employ due diligence in ensuring that their activities do not contribute to human abuses, and that they do not benefit from abuses of which they were aware or should have been aware.400 A second key feature of the Norms lies in their being the first UN initiative proposing an enforcement mechanism on business and human rights. The implementation envisaged by the UN Draft Norms is based on internal policy, 394 See Amnesty International, The UN Human Rights Norms for Business: Towards Legal Accountability (2004) available at https://www.amnesty.org/en/documents/ior42/0002/2004/ en/. 395 Karavias, Corporate Obligations under International Law (n 227), 172. 396 Olivier De Schutter, ‘Corporations and Economic, Social, and Cultural Rights’ in Eibe Riedel and Others (eds), Economic, Social, and Cultural Rights in International Law (OUP 2014), 204. 397 Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (n 204), 508. 398 David Kinley and Rachel Chambers, ‘The UN Human Rights Norms for Corporations: The Private Implications of Public International Law’ (2006) 6 Human Rights Law Review 447–497, 469. 399 See David Weissbrodt and Maria Kruger, ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ (2003) 97 AJIL 901–922, 912; the concept of “sphere of influence” has been widely criticised for its alleged vagueness in the context of a legally binding instrument. 400 Commentary on the Norms (n 382), para 1(b).

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reporting and monitoring.401 First, TNCs are required to disseminate and implement internal rules of operation in compliance with the Norms, including the Norms in their contracts.402 Second, corporations shall periodically report on the measures adopted to implement the Norms.403 Third, they shall be subject to periodic monitoring by UN mechanisms and other international and domestic remedies. The monitoring has to take into account the input from stakeholders, including NGOs.404 Most importantly, implementation is backed by a specific provision on reparation. Corporations shall provide prompt, effective and adequate reparation to those persons, entities and communities that have been adversely affected by failures to comply with these Norms through, inter alia, reparations, restitution, compensation and rehabilitation for any damage done or property taken.405 The Norms specify that such reparation shall be determined by ‘national courts and/or international tribunals, pursuant to national and international law’.406 This seems to suggest that the nature of the Norms was intended by their drafters as having a binding character, granting effective rights of reparation to victims of corporate-related violations.407 Apart from the Preamble, states only figure once in the text of the Draft Norms, as they are called upon to establish and reinforce their legal and administrative framework for ensuring that the Norms are implemented by the business sector.408 It has been pointed out that choice of the term “should” when it comes to states might point to a non-binding character of the provision.409 In spite of the surprising and perhaps questionable terminological choice, the fact remains that international law already imposes on states a legal obligation to respect, protect and fulfil human rights.410 It would all the same have been advisable to 401 Weissbrodt and Kruger, ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ (n 399), 922. 402 UN Norms (n 382), para 15. 403 Ibid. 404 Ibid, para 16. 405 Ibid, para 18. 406 Ibid. 407 Muchlinski, ‘Corporate Social Responsibility and International Law: The Case of Human Rights and Multinational Enterprises’ (n 389) 453. 408 UN Norms (n 382), para 17. 409 Kinley and Chambers, ‘The UN Human Rights Norms for Corporations: The Private Implications of Public International Law’ (n 398), 453. 410 Surya Deva, ‘UN’s Human Rights Norms for Transnational Corporations and Other Business Enterprises: An Imperfect Step in The Right Direction?’ (2004) 10 ILSA Journal of International

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stick to the term “shall”, in order to avoid the impression of downplaying the role of states in the protection of human rights. Though receiving support of a number of NGOs,411 states, businesses412 and academics,413 the Norms have prompted considerable criticism, from both a normative and a policy perspective. From a strictly legal viewpoint, it has been argued that there is no legal basis for corporate obligations in international law. Weissbrodt, the main author of the Norms, affirms that ‘the legal authority for the Norms derives principally from their sources in treaties and customary international law’.414 Mendelson, on the other hand, in considering the Norms ‘fatally riddled with indeterminacy, confusion and inflation’,415 argues that ‘international law remains, as it has always been, essentially a law between States, and it is on States that its obligations fall’.416 The same view is shared in Ruggie’s

& Comparative Law 493–523, 516. 411 See Amnesty International, The UN Human Rights Norms for Business: Towards Legal Accountability (n 394); Amnesty International and Others, Non-Governmental Organizations Welcome the New U.N. Norms on Transnational Business (2003). 412 The Business Leaders Initiative on Human Rights started ‘road-testing’ the Norms in 2004, and some scholars; see also Carrefour, Carrefour Makes a Commitment in Favour of UN Standards on the Responsibility of Companies for Human Rights (2005) available at https:// www.business-humanrights.org/sites/default/files/reports-and-materials/Carrefour-statementintl-standards-Nov-2005.pdf. 413 See, among others, Deva, ‘UN’s Human Rights Norms for Transnational Corporations and Other Business Enterprises: An Imperfect Step in The Right Direction?’ (n 410); David Kinley, Justine Nolan and Natalie Zerial, ‘The Politics of Corporate Social Responsibility: Reflections on the United Nations Human Rights Norms for Corporations’ (2007) 25 Companies and Securities Law Journal 30–42; Joris Oldenziel, ‘The Added Value of the UN Norms: A Comparative Analysis of the UN Norms for Business with Existing International Instruments’ (2005) SOMO Centre for Research on Multinational Corporations, available at https://www. somo.nl/wp-content/uploads/2005/04/The-Added-Value-of-the-UN-Norms.pdf; Kinley and Chambers, ‘The UN Human Rights Norms for Corporations: The Private Implications of Public International Law’ (n 398), 482. 414 Weissbrodt and Kruger, ‘Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights’ (n 399), 913. 415 Maurice Mendelson appended to the Confederation of British Industry submission to the UN High Commissioner for Human Rights. Mendelson, ‘In the Matter of the Draft “Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights”’ (n 231). 416 Ibid. Professor De Schutter suggests that the arguments against the imposition of human rights responsibility on corporations miss out the existing precedents in international criminal law, in De Schutter, ‘The Challenge of Imposing Human Rights Norms on Corporate Actors’ (n 222), 12.

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Report, according to which ‘there are no international legal principles that bind corporations.417 The business sector unsurprisingly drew on this very argument.418 Aside from the different arguments concerning the Draft Norms, one should not forget that the only way they have been binding would have been if they took the shape of a treaty. Although the Draft Norms were drafted as if they entailed binding obligations, the document could not produce any legal effect per se. The Norms could have only provided the basis for a later treaty or relevant practice and opinion juris.419 From a policy perspective, strong reservations have been expressed on what was perceived as a dangerous shift from the traditional human rights paradigm. Some states resisted the idea of having binding rules on companies, alleging that a binding instrument would have unduly privatised human rights protection and risked to provide states a diversion to avoid their human rights obligations.420 Such claims appear unfounded, given that the Norms stress that they should not be interpreted as ‘diminishing, restricting, or adversely affecting the human rights obligations of States under national and international law’.421 The same Commentary to the Norms emphasizes that corporate obligations ‘may not be used by States as an excuse for failing to take action to protect human rights, for example, through the enforcement of existing laws’.422 A strong lobby against the Norms was carried out by the business sector, in particular by the International Chamber of Commerce, the International Organisation of Employers and the UK Confederation of British Industry. A major critique by the business sector concerned the binding form of the UN Norms. Such organisations put up fierce opposition against such a ‘legalistic approach to human rights, arguing that the Norms were ‘counterproductive to the UN’s ongoing efforts to encourage companies to support and observe human rights norms by participating in the Global Compact’.423 They stressed that such a paradigm shift would have ended up nullifying the many corporate-based voluntary initiatives to embrace responsible business conduct. 417 UN Commission on Human Rights ‘Interim Report’ (n 91), para 60. 418 IOE and ICC, ‘Joint Views on the Draft Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with regard to Human Rights’ (22 July 2003), 3 ff. 419 See John H Knox, ‘The Ruggie Rules: Applying Human Rights Law to Corporations’ in Radu Mares (ed), The UN Guiding Principles on Business and Human Rights: Foundations and Implementation (Martinus Nijhoff 2012), 54. 420 See Jacob Gelfand, ‘The Lack of Enforcement in the United Nations Draft Norms: Benefit or Disadvantage?’ in Olivier De Schutter (ed), Transnational Corporations and Human Rights (Hart Publishing 2006), 320–322. 421 UN Norms (n 382), para 19. 422 Commentary on the Norms (n 382), para 1. 423 IOE and ICC, ‘Joint Views’ (n 418).

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The fierce opposition to the Norms from the business was also due to the weak multi-stakeholder engagement. A participatory approach, the importance of which had already been stressed during the negotiations of the UN Draft Code,424 remains central to the legitimacy and effectiveness of international instruments. This is even more so when the instrument aims at regulating corporate activities. At the same time, Kinley and Chambers compellingly argue that such fierce opposition can be explained by the fact that companies ultimately aimed at avoiding liability.425 The fact remains that the ILO Tripartite Declaration, the OECD Guidelines and the Global Compact already speak directly to companies, which have not raised objections. The concern of the business sector is therefore that of being bound by an international instrument. Theoretical disagreements, the opposition of some states and strong corporate lobbying have not been the only obstacles in the adoption of the Norms. The internal institutional policy dynamics of the UN also had a role. Indeed, the UN Sub-Commission had not received any mandate to draft the Norms, so much so that the UN Commission explicitly noted that it had never requested such an instrument.426 As pointed out by Professor Mendelson, ‘as a matter of the UN’s internal law and practice, let alone as a matter of general international law, it is not competent for a UN organ to enact anything in the name of the Organization’.427 The UN Commission, as an intergovernmental body, might have felt the Sub-Commission had levered it out.428 The UN Commission did not officially dismiss the Norms, it simply set the instrument aside. This does not preclude the Norms, at least in theory, from playing a role in the business and human rights process. Yet the fact that the Norms were considered as having ‘no legal standing’ by the Commission,429 and that no reference was made to such an instrument in the resolution establishing the mandate of Ruggie, provides significant indication of what little legal

424 Nian Tzu Wang, ‘Design of an International Code of Conduct for Transnational Corporations’ (1975) 10 Journal of International Law and Economics 319–336, 322–327. 425 Kinley and Chambers, ‘The UN Human Rights Norms for Corporations: The Private Implications of Public International Law’ (n 398), 491. 426 Commission on Human Rights, ‘Responsibilities of Transnational Corporations and Related Business Enterprises (n 383), para c. 427 Mendelson, ‘In the Matter of the Draft “Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights”’ (n 231). 428 See Jena M Amerson, ‘“The End of The Beginning?”: A Comprehensive Look At The U.N.’s Business And Human Rights Agenda From a Bystander Perspective’ (2012) 17 Fordham Journal of Corporate & Financial Law 871–941, 995; Jägers, Corporate Human Rights Obligations: in Search of Accountability (n 220), 128. 429 UN Commission on Human Rights, ‘Responsibilities of Transnational Corporations and Related Business Enterprises’ (n 383).

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authority, if any at all, was attached to the instrument in hand.430 This is in line with the fact that only a small number of states have expressed their support to the Norms.431 2.2.3 The Current Negotiations of a Treaty on Business and Human Rights Although neither of the previous efforts to adopt a binding instrument on business and human rights have yielded success, the issue has never been completely removed from the UN Agenda. On 26 June 2014, the Human Rights Council (HRC) adopted Resolution 26/9, establishing an open-ended intergovernmental working group to elaborate a ‘Legally Binding Instrument on Transnational Corporations and other Business Enterprises with Respect to Human Rights’.432 The resolution was tabled by Ecuador and South Africa and co-sponsored by Bolivia, Cuba and Venezuela. Twenty member states voted in favour,433 fourteen states voted against the resolution,434 and thirteen abstained.435 Another resolution was endorsed, this time by consensus, at the same HRC session. Resolution 26/22 was tabled by Argentina, Ghana, Norway and Russia, and called upon all business enterprises to meet their responsibility to respect human rights in accordance with the UNGPs.436 The two resolutions reveal the existing disagreement between those states wanting the UNGPs to remain the authoritative instrument, and those considering a treaty as a necessary development to fill the gaps left by the existing non-binding framework. The adoption of two resolutions advancing two distinct policy processes also reveals 430 Some NGOs and states criticised the silence of the UN Human Rights Commission on the Norms in Ruggie’s mandate. 431 See Alice De Jonge, Transnational Corporations and International Law: Accountability in the Global Business Environment (Edward Elgar 2011) 41; See Karavias, Corporate Obligations under International Law (n 227), 78. 432 HRC, ‘Elaboration of an International Legally Binding Instrument on Transnational Corporations and Other Business Enterprises with Respect to Human Rights’ (14 July 2014) UN Doc A/HRC/Res/26/9. For a detailed discussion about the treaty process, see Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017). 433 Algeria, Benin, Burkina Faso, China, Congo, Cote d’Ivoire, Cuba, Ethiopia, India, Indonesia, Kazakhstan, Kenya, Morocco, Namibia, Pakistan, Philippines, Russia, South Africa, Venezuela, and Vietnam. 434 Austria, Czech Republic, Estonia, France, Germany, Ireland, Italy, Japan, Montenegro, South Korea, Romania, Macedonia, the United Kingdom, and the United States of America. 435 Argentina, Botswana, Brazil, Chile, Costa Rica, Gabon, Kuwait, Maldives, Mexico, Peru, Saudi Arabia, Sierra Leone, and the United Arab Emirates. 436 HRC, ‘Human Rights and Transnational Corporations and other Business Enterprises’ (15 July 2014) UN Doc A/HRC/Res/26/22.

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the ambiguous relationship between the UNGPs and a future treaty on business and human rights.437 Within the wide margin of manoeuvre left by the Resolution starting the treaty process, the Open-ended Intergovernmental Working Group (OEIWG) grappled for years with the regulatory target of the treaty.438 A ‘Zero Draft’ version of the binding instrument was published in 2018, followed by a revised draft in 2019.439 Already at the first OEIWG session in 2015, disagreements emerged on the scope ratione personae of the treaty (i.e. as to what kind of corporations should be covered), and its scope ratione materiae (i.e. as to which human rights should be protected).440 While the Zero Draft only covered human rights violations in the context of business activities of a transnational character, the current Draft Treaty applies, ‘except as stated otherwise, to all business activities, including particularly but not limited to those of a transnational character’.441 This amendment, very much supported by the EU, is to be welcomed. As to the scope ratione materiae of the treaty, discussions entertained a variety of views about the substantive rights to be covered by the instrument. Article 3(3) clarifies that the draft covers all human rights. Despite its notable generality, such a broad approach has its advantage, such as that it takes stock of the need to reduce the gap between civil and political rights and economic, social and cultural rights.442 Although the wide-ranging scope of the previous 437 For a perspective of complementarity between the two instruments, see Sara Blackwell and Nicole Vander Meulen, ‘Two Roads Converged: The Mutual Complementarity of a Binding Business and Human Rights Treaty and National Action Plans on Business and Human Rights’ (2016) 6 Notre Dame Journal of International and Comparative Law 51–75. 438 For an outline of the main issues raised by the treaty process, see Cassel and Ramasastry, ‘White Paper: Options for a Treaty on Business and Human Rights’ (n 197). 439 For previous drafts and the current draft of the Treaty, see https://www.ohchr.org/EN/ HRBodies/HRC/WGTransCorp/Pages/IGWGOnTNC.aspx. 440 See Carlos López and Ben Shea, ‘Negotiating a Treaty on Business and Human Rights: A Review of the First Intergovernmental Session’ (2016) 1 Business and Human Rights Journal 111–116; Humberto Cantú Rivera, ‘¿Hacia un tratado internacional sobre la responsabilidad de las empresas en el ámbito de los derechos humanos? Reflexiones sobre la primera sesión del grupo de trabajo intergubernamental de composición abierta’ (2016) 16 Anuario Mexicano de Derecho Internacional 425–460. 441 Article 3 (1). 442 See Surya Deva, ‘Scope of the Propose Instrument: What Human Rights to be Covered? Remarks made at OEIWG on TNCs and Other Business Enterprises with Respect to Human Rights’ (7 July 2015), available at https://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/ Session1/Pages/Session1.aspx. Deva proposed including a list with the nine core human rights conventions adopted by the UN, the eight fundamental ILO conventions, as well as the Universal Declaration of Human Rights (UDHR), the Rio Declaration on Environment and

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UN initiatives has been among the factors hampering consensus,443 a treaty on selected rights would not be compatible with the principle of universality, interdependence and indivisibility of human rights The elephant in the room, as it had already emerged in the two previous UN initiatives, remained the tension between the direct and indirect regulation of corporations. One option was to build upon, and sharpen, the state duty to protect human rights against violations committed by corporations. The alternative route was to aim at an instrument imposing direct human rights obligations on corporations, possibly backed by an international enforcement mechanism.444 The Preamble of the Draft Treaty postulates that ‘all business enterprises, regardless of their size, sector, operational context, ownership and structure have the responsibility to respect all human rights’.445 Compared to the language employed in the Zero Draft, which used the formula ‘shall respect’, it seems the current Draft Treaty has embraced the UNGPs approach to corporate responsibility. There are no other provisions in the treaty directly addressing corporations. The Draft Treaty opts indeed for an “indirect model” of regulation of corporate activities. This may be disappointing for those advocating the adoption of an instrument spelling out of direct obligations of corporations.446 Despite the choice to opt for indirect regulation, two provisions appear particularly relevant. Article 5, titled ‘Prevention’, sets out the obligation for states to impose mandatory due diligence on companies domiciled in their territory and/or jurisdiction.447 The provision clearly reflects the human rights due diligence process established by UNGP 17. As we shall see in Part III, this might contribute to bridge the gap between human rights due diligence and the due diligence principle in international law.

443 444

445 446

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Development 1992 (Rio Declaration) and the UN Declaration on the Rights of Indigenous Peoples (UNDRIP), in Surya Deva, ‘Scope of the Proposed Business and Human Rights Treaty: Navigating through Normativity, Law and Politics’ in Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights (CUP 2017), 155. Wolfgang Fikentscher, ‘United Nations Codes of Conduct: New Paths in International Law’ (1982) 30 The American Journal of Comparative Law 577–604, 602. David Bilchitz, ‘Corporate Obligations and a Treaty on Business and Human Rights’ in Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 186. ‘Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises’ (16 July 2019), Preamble. See, among others, Bilchitz, ‘Corporate Obligations and a Treaty on Business and Human Rights’ (n 444); Deva, ‘Business and Human Rights: Time to Move Beyond the “Present”?’ (n 215), 62. Article 5 largely builds on the UNGP, with the difference that in Zero Draft it has a mandatory nature, except for small and medium enterprises. On the principle of due diligence, see Part III.

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Under Article 6, titled ‘Legal Liability’, states are bound to ensure that their domestic law ‘provides for a comprehensive and adequate system of legal liability for human rights violations or abuses in the context of business activities, including those of transnational character’. The Draft Treaty also asks states to establish liability under domestic law for core international crimes. If adopted and implemented, Article 6 would mark a major step in harmonising domestic legal systems on corporate human rights liability for international crimes. Most importantly, Article 6(6) proposes a standard of legal responsibility of one company in relation to the harm caused by another company, regardless of where the latter is located, in circumstances when the former company control or supervises the activities that caused the harm. The provision, supported by recent jurisprudence,448 is however limited in its scope by the reference to the “contractual relationship” between the two companies. The unintended, or perhaps intended, effect of this limitation is that it leaves outside the other forms of interaction between companies. Among the assets of the Draft Treaty as it stands is the reinforced focus on victims.449 Draft Article 4(5) recognises that ‘victims shall have the right to fair, effective, prompt and non-discriminatory access to justice and adequate, effective and prompt remedies in accordance with this instrument and international law’. Besides the classical forms of reparation, the Draft includes environmental remediation and ecological restoration where applicable, including covering of expenses for relocation of victims and replacement of community facilities. Importantly, the Draft Treaty also requires states to establish an International Fund for Victims, in order to provide legal and financial assistance in litigation.450 While the possibility has been considered of establishing an international court on transnational corporations and human rights, or special chambers in existing international courts, the Draft Treaty does not envisage either an international court, or a quasi-judicial body with the mandate to hear complaints for its breaches. The Committee established under Article 13 would only have the mandate to make general comments and provide concluding observations on state reports. There is no denying that the state reporting procedure is a useful tool to monitor and boost the implementation of the treaty provisions at the

448 Vedanta Resources PLC and Another (Appellants) v Lungowe and Others (Respondents) (10 April 2019) UKSC 20 (UK Supreme Court). 449 Effective access to justice and remedy to victims of human rights violations is one of the purposes of the Treaty, as recalled by a number of delegations, including Argentina, China, France and Russia, during the fourth session of the OEIWG in October 2018. 450 Article 8(7).

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national level.451 Indeed, it would have also been desirable to extend the UN Universal Periodic Review Process to the instrument in hand.452 To address the enforcement gap, a Draft Optional Protocol was prepared in September 2018.453 The Optional Protocol confers to the Committee the power to handle individual complaints and to make confidential enquiries. It is regrettable though, that such prerogative is confined to an Optional Protocol. Under the Draft Optional Protocol, states are also required to establish a National Implementation Mechanism to promote and monitor the implementation of the future treaty.454 The Mechanism, which in certain states could be run within the existing national human rights institutions, would be tasked with promoting the treaty and making recommendations to the state hosting the national human rights institution.455 Furthermore, Article 6 provides for a non-judicial complaint mechanism relying on mediation, similar to those run by OECD National Contact Points (NCPs). In spite of the discouraging records of the previous attempts to elaborate a binding instrument on business and human rights, one finds Ruggie’s position overly pessimistic in arguing that this initiative is ‘another instance of the classic dysfunction of doing the same thing over and over again and expecting a different result’.456 After all, Ruggie himself acknowledged that the UNGPs were not going to provide a definitive solution to the business and human rights challenges. It is to be borne in mind that the political and economic landscape has undergone significant transformation since the previous efforts to regulate corporations.457 451 See Walter Kälin, ‘Examination of State Reports’ in Helen Keller and Geir Ulfstein (eds), UN Human Rights Treaty Bodies: Law and Legitimacy (CUP 2012). 452 Claret Vargas, ‘A Treaty on Business and Human Rights? A Recurring Debate in a New Governance Landscape’ in César Rodriguez-Garavito (ed), Business and Human Rights: Beyond the End of the Beginning (CUP 2017), 120. The draft also provides for the creation of a Conference of State Parties to monitor the treaty. 453 OEIWG, ‘Draft Optional Protocol to the Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises’, available at https://www.ohchr.org/EN/HRBodies/HRC/WGTransCorp/Session4/ Pages/Session4.aspx. 454 Ibid, Article 1. 455 On the potential impact of National Human Rights Institutions on business and human rights, see Linda C Reif, ‘The UN Guiding Principles on Business and Human Rights and Networked Governance: Improving the Role of Human Rights Ombudsman Institutions as National Remedies’ (2017) 17 Human Rights Law Review 603–632; Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (n 177), 381 ff. 456 See John G Ruggie, ‘The Past as Prologue? A Moment of Truth for UN Business and Human Rights Treaty’ (2014) Business and Human Rights Resource Centre. 457 See Francesco Francioni, ‘Alternative Perspectives on International Responsibility for Human Rights Violations by Multinational Corporations’ in Wolfgang Benedek and Others (eds),

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The business and human rights debate is no longer a North–South debate, and foreign direct investments do not constitute anymore a one-way flow. In less than a decade, half of the Fortune Global 500 companies will be headquartered in “emerging market” economies. Given the emerging challenges in other areas, such as taxation, or climate change, states might realise the urgency of compelling standards of conduct for corporations. The Draft Treaty might not be revolutionary, but it may offer the added value harmonising domestic legislations regarding the expected behaviour by companies. The approach should therefore be one emphasizing the added value of a treaty on business, rather than the practical difficulties associated with it.458 This should not mean that that the proposed treaty should not be considered with caution, as it does not look as a panacea for the business and human rights challenges. International lawyers are often tempted to conceive of treaty law as a shortcut to tackle compelling issues, even if it comes at the expense of ‘longterm coherence’.459 Practice shows that the price of such shortcuts is sometimes the dilution of the legal standards.460 Furthermore, the experience with widely ratified human rights treaties such as the ICCPR and the ICESCR suggests that adopting and ratifying is one thing, while enforcing is quite a different story.461 To avoid the risk of an instrument swinging between lack of meaningful provisions and lack of ratification, the negotiators need to avoid losing a systemic view of business and human rights issue.

3

Corporations and Human Rights under Customary International Law

In the previous chapter, I depicted the challenges of assessing the human rights obligations derived from international human rights treaties. I now turn to the second source listed in Article 38(1)(b) of the ICJ Statute, ‘international custom, as evidence of a general practice accepted as law’. After an overview of the formation of customary international law in the field of human rights, this chapter Economic Globalisation and Human Rights (CUP 2007), 246. 458 See David Bilchitz, ‘The Necessity for a Business and Human Rights Treaty’ (2016) 1 Business and Human Rights Journal 203–227, 204. 459 Philip Alston, ‘Making Space for New Human Rights: The Case of the Right to Development’ (1988) 1 Harvard Human Rights Yearbook 3–40, 7. 460 Penelope Simons, ‘The Value-Added of a Treaty to Regulate Transnational Corporations and Other Business Enterprises’ in Surya Deva and David Bilchitz (eds), Building on a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 70. 461 See Florian Wettstein, ‘Normativity, Ethics, and the UN Guiding Principles on Business and Human Rights: A Critical Assessment’ (2015) 14 Journal of Human Rights 162–182.

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explores the relationship between this source and corporations, with a view to assessing whether customary human rights obligations can reach corporations. 3.1 Human Rights as Customary International Law In Barcelona Traction, the ICJ affirmed that the ‘basic rights of the human person, including protection from slavery and racial discrimination’ have acquired the status of customary law.462 The Court left unsolved, however, the question as to what ‘basic rights’ should be considered to be of a customary nature. Customary rules have not lost their relevance despite the creation of a substantial network of human rights treaties over the last seventy years. Custom has a key role in international human rights law, providing a source of obligations ‘retaining separate existence’.463 Custom may be resorted to by non-state parties to human rights treaties, it may provide an interpretative tool in relation to treaty provisions and it may contribute to the protection of those rights not explicitly covered by treaty law. Given the absence of an international court adjudicating business and human rights disputes, the direct incorporation of customary human rights rules can be key in enforcing human rights against corporate actors before domestic courts and tribunals. The UN HRCtee, in its General Comment 24, held that a number of ICCPR provisions, such as those on the prohibition of arbitrary deprivation of life, of slavery, torture or degrading treatment, prohibition of incitation to racial hatred, as well as on freedom of thought, conscience and religion, belong to customary international law.464 The list appears quite restrictive and, given in particular the competence ratione materiae of the Committee, it leaves behind a number of important economic, social and cultural rights.465 Although the UDHR was not intended as a legally binding instrument at the time of its adoption,466 many of its provisions have, however, entered customary 462 Barcelona Traction (n 249), para 34. 463 Case Concerning Military and Paramilitary Activities an and Against Nicaragua (Nicaragua v USA) (Merits) [1986] ICJ Rep 14, para 178; see also Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (n 174), 334; Clapham, Human Rights Obligations of Non-State Actors (n 6), 85. 464 HRCtee, ‘General Comment No 24: Issues Relating to Reservations Made upon Ratification or Accession to the Covenant or the Optional Protocols thereto, or in Relation to Declarations under Article 41 of the Covenant’ (4 November 1994) UN Doc CCPR/C/21/Rev.1/Add.6, para 8. 465 ‘Restatement of the Law, Third: The Foreign Relations Law of the United States’ (1987) American Law Institute, para 702; it substantially reflects the same list, but also adds that such a list is not necessarily complete. 466 ‘Statement of Mrs Eleanor Roosevelt, Chairman of the Commission on Human Rights’ (1948) 19 US Department of State Bulletin 751; Lauterpacht, ‘The Universal Declaration of Human

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international law.467 Most of the UDHR rights have been incorporated into domestic legal systems. Virtually every international instrument concerned with human rights contains at least a reference to the Declaration, as do many declarations adopted unanimously or by consensus by the UN General Assembly.468 The First International Conference on Human Rights, held in Teheran in 1968, proclaimed that the UDHR ‘constitutes an obligation for the members of the international community’.469 Furthermore, the Universal Periodic Review regularly assesses state compliance with the ‘human rights obligations’ set out in the UDHR.470 The process of formation of customary international law in the field of human rights, not differently from other fields, falls within a broader process where treaties, principles of law, resolutions, court decisions and scholarly works constitute the raw material.471 Admitting that in different branches of international law the weight put on practice and opinio juris may differ according to the “context” should not lead to unnecessary claims of exceptionalism on the part of human rights lawyers; nor does a logical attention to the specific “context” of any given custom imply that the uniform theory of customary law is to be replaced by sectorial theories of custom. Whilst the ICJ recognises that both practice and opinio juris lie at the core of the customary process, it does not expect that ‘for a rule to be established as customary, the corresponding practice must be in absolutely rigorous conformity with the rule’.472 At the same

Rights’ (n 174), 356 ff. 467 ‘Wrongfully to deprive human beings of their freedom and to subject them to physical constraint in conditions of hardship is in itself manifestly incompatible with the principles of the Charter of the United Nations, as well as with the fundamental principles enunciated in the Universal Declaration of Human Rights’ in United States Diplomatic and Consular Staff in Tehran (USA v Iran) (Judgment) [1980] ICJ Rep 3, para 91; See also Humphrey Waldock, ‘Human Rights in Contemporary International Law and the Significance of the European Convention’ (1965) 11 ICLQ Supplementary Publication 1–23; John P Humphrey, ‘The Universal Declaration of Human Rights: Its History, Impact and Juridical Character’ in Bertrand G Ramcharan (ed), Human rights: Thirty years after the Universal Declaration (Martinus Nijhoff 1979), 29; Jochen Von Bernstorff, ‘The Changing Fortunes of the Universal Declaration of Human Rights: Genesis and Symbolic Dimensions of the Turn to Rights in International Law’ (2008) 19 EJIL 903–924. 468 Vienna Declaration and Programme of Action, World Conference on Human Rights (14–25 June 1993), UN Doc A/CONF.157/24 (Part I), paras 20–46. 469 Final Act of the International Conference on Human Rights, Proclamation of Teheran (22 April – 13 May 1968) UN Doc A/CONF. 32/41. 470 HRC, Universal Periodic Review, https://www.ohchr.org/EN/HRBodies/UPR/Pages/BasicFacts. aspx. 471 Joseph H Weller and Antonio Cassese (eds), Change and Stability in International Law-Making (De Gruyter 1988) Comments of Ted Stein, 13 ff. 472 Military and Paramilitary Activities in and against Nicaragua (n 463), para 186.

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time, the inherent flexibility of customary international law cannot go so far as to contradict its essential nature as a general practice accepted as law. In each case, a careful process of legal analysis is required in order to ensure that only a rule of customary international law properly called is identified. For the sake of the effectiveness of international human rights law, irreproachable legal methods need to be followed.473 3.2 Corporations as Addressees of Customary Human Rights Rules The issue of corporations and human rights can be addressed in relation to customary law under two different – but not mutually exclusive – perspectives. One approach consists in addressing the question as to whether corporations are addressees of the existing customary human rights rules. A second approach consists of enquiring whether corporate liability is itself a customary rule in international law. Starting from the first approach as to whether corporations can be said at present to be the recipient of customary rules, a firm indication in the negative comes from Ruggie, who maintains that ‘respecting rights is not an obligation current international human rights law generally imposes directly on companies’.474 In reaching such a conclusion it seems that no distinction is drawn by Ruggie between human rights treaties and customary international law.475 As already suggested, it is generally accepted that the core provisions of the UDHR have acquired a customary status.476 One could ask, then, to what extent the Declaration binds corporations as customary law. It has been pointed out

473 Meron, Human Rights and Humanitarian Norms As Customary Law (n 217), 81. 474 John G Ruggie, ‘The Construction of the UN “Protect, Respect and Remedy” Framework for Business and Human Rights: the True Confessions of a Principled Pragmatist’ (2011) 2 European Human Rights Law Review 127–133, 128. 475 Deva stresses the inaccuracy of such an approach, see Surya Deva, ‘Treating Human Rights Lightly: A Critique of the Consensus Rhetoric and the Language Employed by the Guiding Principles’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 94. 476 Hersch Lauterpacht, International Law and Human Rights (Stevens & Sons 1950) 61 ff; Louis Henkin, The Age of Rights (Columbia University Press 1990) 19; Theodor Meron, The Making of International Criminal Justice. A View from the Bench: Selected Speeches (OUP 2011) 62; Alston and Goodman, International Human Rights (n 330), 144; August Reinisch, ‘The Changing International Legal Framework for Dealing with Non-State Actors’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 39; Olivier De Schutter, ‘The Status of Human Rights in International Law’ in Catarina Krause and Martin Scheinin (eds), International Protection of Human Rights: A Textbook (2 edn, Åbo Akademi University Institute for Human Rights 2012), 41.

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that the UDHR does not specify its addressees.477 However, the UDHR Preamble proclaims that ‘every individual and every organ of society […] shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance’.478 Interestingly, there is no reference to the term “state” in the Declaration.479 The language of the Preamble urges ‘organs of society’, intended as an institution or a group of people, to promote human rights and to prevent and address their violation. According to Henkin, non-state actors are not excluded from the ambit of the Declaration, which is a common standard for all peoples and all nations. It means that every individual and every organ of society shall strive-by progressive measures to secure their universal and effective recognition and observance among the people of member states. Every individual includes juridical persons. Every individual and every organ of society excludes no one, no company, no market, no cyberspace. The Universal Declaration applies to them all.480 Contrary to Henkin’s interpretation, others maintain that the reference to ‘every organ of society’ is confined to the Preamble of the Declaration, which as an aspirational part would not be able to evolve into customary international law.481 Ruggie similarly argues that the language contained in the Preamble cannot have the same value of substantive provisions.482 Other scholars consider the use of the verb ‘strive’ as the intention of the drafters to impose ethical obligations only.483 477 Andrew Clapham, ‘The Changing Character of Human Rights’ (2015) Europaeum Lecture delivered at the St Antony’s College, Oxford, 12 November 2015, 8, available at https:// europaeum.org. 478 GA, ‘Universal Declaration of Human Rights’ (10 December 1948) Res 217A (III), Preamble. 479 Shabtai Rosenne, ‘The Perplexities of Modern International Law: General Course on Public International Law’ (2001) 291 RdC 23, 238. 480 Louis Henkin, ‘The Universal Declaration at 50 and the Challenge of Global Markets’ (1999) 25 Brooklyn Journal of International Law 17–25, 24–25 (emphasis added). 481 Jan Wouters and Anna Luise Chané, ‘Multinational Corporations in International Law’ in Math Noortmann and others (eds), Non-State Actors in International Law (Hart 2015), 237. 482 HRC, ‘Business and Human Rights: Mapping International Standards of Responsibility’ (n 99), para 38; see also Johannes Morsink, The Universal Declaration of Human Rights: Origins, Drafting, and Intent (University of Pennsylvania Press 1999) 323–324; José E Alvarez, ‘Are Corporations “Subjects” of International Law?’ (2011) 9 Santa Clara Journal of International Law 1–36, 5. 483 Nigel Rodley, ‘Can Armed Opposition Groups Violate Human Rights?’ in Kathleen E Mahoney and Paul Mahoney (eds), Human Rights in the Twenty-first Century: A Global Challenge (Martinus Nijhoff 1993), 307; Koskenniemi, ‘The Preamble of the UDHR’ (n 257), 33; David Kinley and Junko Tadaki, ‘From Talk to Walk: The Emergence of Human Rights Responsibilities for

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Article 29(1) of the UDHR provides that ‘everyone has duties to the community in which alone the free and full development of his personality is possible’. Differently from the wide list of rights enshrined in the Declaration, there is no catalogue of duties.484 Yet the rationale of the provision remains that rights are accompanied by duties.485 The idea has been echoed by the preambles to both UN Covenants, which allude to the individual’s ‘duties to other individuals and to the community to which he belongs’.486 Article 30 of the UDHR states that ‘[n]othing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein’. Indeed, during the travaux préparatoires of the UDHR, a number of delegations insisted on the opportunity to include the term ‘group’ in Article 30,487 precisely because it became evident that states were not, or not anymore, the sole violators of human rights.488 At the time of the negotiations the drafters did not have corporations in mind, not least because corporate conduct was not yet a sensible issue. Yet the “saving clause” of Article 30 could be interpreted as a general ‘no harm’ standard applicable to states, individuals and legal persons. Such an interpretation may be plausible in light of the Declaration on the Right and Responsibility of Individuals. Groups and Organs of Society to Promote and Protect Universally Recognised Human Rights and Fundamental Freedoms. Adopted by the General Assembly fifty years after the UDHR, the Declaration states that ‘no one shall participate, by act or by failure to act where required, in violating human rights and fundamental freedoms’.489 In principle, the view may be shared that in setting the purpose and object of the UDHR, the Preamble provides for an “open clause” of the potential addressees of the Declaration. Yet the fact that the reference to ‘organ of society’ has been left out by the two UN Covenants building on the Declaration may challenge such argument.490 Corporations at International Law’ (2004) 44 Virginia Journal of International Law 931–1024, 948. 484 See Torkel Opsahl and Vojin Dimitrijevic, ‘Articles 29 and 30’ in Gudmundur Alfredsson and Asbjørn Eide (eds), The Universal Declaration of Human Rights: A Common Standard of Achievement (Martinus Nijhoff Publishers 1999), 637. The risk was considered that a list of duties might have been abused by states in order to limit rights. 485 For a different view, see Karavias, Corporate Obligations under International Law (n 227), 80. 486 ICCPR and ICESCR, Preamble. 487 Bernaz, Business and Human Rights: History, Law and Policy – Bridging the Accountability Gap (n 5), 83. 488 Ibid. 489 GA, ‘Declaration on the Right and Responsibility of Individuals, Groups and Organs of Society to Promote and Protect Universally Recognized Human Rights and Fundamental Freedoms’ (9 December 1998) UN Doc Res 53/144, Article 10. 490 Karavias, Corporate Obligations under International Law (n 227), 77.

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Whilst there may not be sufficient legal basis to claim the applicability to corporations of the entire corpus of customary human rights law, the opposability of jus cogens human rights to corporations is less controversial. Jus cogens is defined by the VCLT as ‘accepted and recognized by the international community of States as a whole as a norm from which no derogation is permitted and which can be modified only by a subsequent norm of general international law having the same character’.491 The concept is not confined to the ambit of the law of treaties and it comprises peremptory rules which are universally recognised and serve to protect fundamental values of the international community.492 One can include among such peremptory rules the prohibition of the use of force, genocide, crimes against humanity, war crimes, torture, slavery, and racial discrimination.493 As the constitutional pillar of the international community,494 jus cogens applies ‘unconditionally’ to all its members.495 For example, the prohibition of the use of force is considered to bind all actors, to the extent that they have the capacity to violate the rule.496 As pointed out by Deva, ‘it would be strange to suggest that such individual responsibility disappears in relation to certain individuals simply because those individuals incorporate themselves as a company’.497 The Report of the Independent International Commission of Inquiry on the Syrian Arab Republic clarifies that ‘at a minimum, human rights obligations constituting peremptory international law (Jus cogens) bind States,

491 VCLT, Article 53. 492 ILC, ‘First Report on Jus Cogens by Dire Tladi, Special Rapporteur’ (8 March 2016) UN Doc A/ CN.4/693, paras 61–63. The Special Rapporteur ha also clarified that “general international law” can encompass both customary rules and general principles of law, see ILC, ‘Second Report on Jus Cogens by Dire Tladi, Special Rapporteur (16 March 2017) UN Doc A/CN.4/706, para 52. 493 See ILC, ‘Draft articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries’ (2001) Yearbook of the International Law Commission Vol II, Commentary to Article 26, para 5; see also Michael Wood, ‘Customary International Law and Human Rights’ (Distinguished Lectures of the Academy of European Law, European University Institute 27 June 2016), para 31; Alfred Verdross, Die Quellen des universellen Völkerrechts (Rombach 1973), para 64. M. Cherif Bassiouni, ‘International Crimes: Jus Cogens and Obligatio Erga Omnes’ (1996) 59 Law and Contemporary Problems 63–74, 68. 494 Alfred Verdross, ‘Jus Dispositivum and Jus Cogens in International Law’ (1966) 60 AJIL 55–63. 495 Anne Peters, Beyond Human Rights: The Legal Status of the Individual in International Law (CUP 2016) 101. 496 Nicholas Tsagourias, ‘Non-State Actors in International Peace and Security: Non-State Actors and the Use of Force’ in Jean d’Aspremont (ed), Participants in the International Legal System: Multiple Perspectives on Non-State Actors in International Law (Routledge 2011), 327. 497 Deva, ‘Multinationals, Human Rights and International Law: Time to Move beyond the “State-Centric” Conception’ (n 239), 38.

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individuals and non-State collective entities’.498 Similarly, the CEDAW General Recommendation 35 on Gender Based Violence against Women recognises that both international humanitarian law and human rights law have recognised the direct obligations of non-State actors, including as parties to an armed conflict, in specific circumstances. These include the prohibition of torture, which is part of customary international law and has become a peremptory norm (jus cogens).499 With regard to the crime of genocide, the Genocide Convention requires all persons to be liable, ‘whether they are constitutionally responsible rulers, public officials or private individuals’.500 In the negotiation of the text, the Soviet delegate stressed that the purpose of the provision on liability was ‘to proclaim that all those committing genocide, no matter who they were, should be punished’.501 Consequently, Article IV is in principle applicable to corporations.502 Once it is admitted that individuals and other non-state actors must refrain from violating peremptory norms of international law, it is a short step to arguing that legal persons are bound by the same rules.503 True, no international criminal tribunal has, or has had, jurisdiction over corporations.504 Yet such jurisdictional limitations do not automatically imply that substantive rules of a peremptory character that constitute the ground for international core crimes are not applicable to juridical persons.505 As pointed out by Ruggie himself, the absence in the past of an international court or tribunal adjudicating crimes perpetrated 498 HRC, ‘Report of the Independent International Commission of Inquiry on the Syrian Arab Republic’ (22 February 2012) UN Doc A/HRC/19/69, para 106. The same view was shared by the ILA, ‘Washington Conference on Non-State Actors’ (2014) 12, available at http://www. ila-hq.org/index.php/committees. 499 CEDAW, ‘General Recommendation No 35 on Gender-Based Violence against Women, Updating General Recommendation No 19’ (14 July 2017) UN Doc CEDAW/C/GC/35, para 25. 500 Convention on the Prevention and Punishment of the Crime of Genocide (adopted 9 December 1948, entered into force 12 January 1951) 78 UNTS 277, Article IV. 501 As quoted in Hirad Abtahi and Philippa Webb, The Genocide Convention: The Travaux Préparatoires, vol 2 (Brill 2009) 1591–92. 502 Harold H Koh, ‘Separating Myth from Reality About Corporate Responsibility Litigation’ (2004) 7 Journal of International Economic Law 263–274, 266. 503 Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer Law International 2000), 9. 504 Although the ICC, the ICTR and the ICTY Statute specify that their jurisdiction comprehends ‘natural persons’, the Special Tribunal for Lebanon and the Statute of the Special Court of Sierra Leone refer to ‘individuals’. 505 Koh, ‘Separating Myth from Reality About Corporate Responsibility Litigation’ (n 502), 21.

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by individuals did not prevent the recognition of individual responsibility for international crimes. There is no reason to assume that the lack of international criminal jurisdiction over companies preclude their liability.506 In the Nuremberg Trials, the possibility was discussed to hold German companies liable for war crimes during the Nazi Regime.507 Although the Nuremberg Charter allowed for the prosecution of ‘a group or organisation’,508 only individual managers were formally prosecuted.509 The International Military Tribunal acknowledged that ‘international law imposes duties and liabilities upon individuals as well as upon States’, adding that ‘crimes against international law are committed by men, not by abstract entities’.510 Nonetheless, in the aftermath of the Nuremberg trials, the Military Tribunals tried executives from German firms for corporate activities and to the benefit of corporations, such as appropriating industrial facilities in the occupied territories, exploiting the labour of prisoners of war and concentration camp inmates, and supplying gas in concentration camps. In US v Krauch the US Military Tribunal stated that While the Farben organization, as a corporation, is not charged under the indictment with committing a crime and is not the subject of prosecution in this case, it is the theory of the prosecution that the defendants individually and collectively used the Farben organization as an instrument by and through which they committed the crimes enumerated in the indictment.511

506 HRC, ‘Business and Human Rights: Mapping International Standards of Responsibility’ (n 99), para 21. After all, nobody would argue that because the ICC only has jurisdiction only over four crimes, no other crime exists under international law. 507 The “Nuremberg Trials” include the Major War Criminals tried at the International Military Tribunal at Nuremberg from 1945 to 1946, and the subsequent tribunals established by the Allied powers in the occupied German territories. 508 Charter of the International Military Tribunal – Annex to the Agreement for the Prosecution and Punishment of the Major War Criminals of the European Axis (“London Agreement”) (8 August 1945) 82 UNTC 280, Article 9. 509 See Jonathan A Bush, ‘The Prehistory of Corporations and Conspiracy in International Criminal Law: What Nuremberg Really Said’ (2009) 109 Columbia Law Review 1094–1262; see also Harmen van der Wilt, ‘Corporate Criminal Responsibility for International Crimes: Expoloring the Possibilities’ (2013) 12 Chinese Journal of International Law 43–77, 50 ff. 510 Trial of the Major War Criminals before the International Military Tribunal, Nuremberg, 14 November 1945 – October 1946 Official Documents (1947), 223. 511 See US v Krauch et Al (the IG Farben Case) Trials of War Criminal before the Nuremberg Military Tribunals under Control Council Law No 10 (1952), Vol X, 1108.

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Jurisdictional limitations notwithstanding, the Tribunal focused on Farben’s involvement in war crimes and crimes against humanity. Indeed, it affirmed that the action of individuals and ‘juristic persons’ exploiting the military occupancy ‘by acquiring private property against the will and consent of the former owner […] is in violation of international law’.512 In US v Krupp, individual corporate officials were convicted for their participation in corporate criminal activities. The US Military Tribunal acknowledged that ‘the initiative for the acquisition of properties, machines, and materials in the occupied countries was that of the Krupp firm and that it utilized the Reich government and Reich agencies whenever necessary to accomplish its purpose’.513 Both cases show that the decision to go after the individual corporate officers rather than the company was not a choice dictated by the legal impossibility to establish corporate criminal liability under international law.514 Article 25 of the Statute of the ICC, entitled ‘Individual Criminal Responsibility’, grants the Court jurisdiction over ‘natural persons’.515 All the same, it is noteworthy that an early draft of the ICC Statute envisaged the possibility of subjecting legal entities to the jurisdiction of the Court, as long as the crimes ‘were committed on behalf of such legal persons or by their agents or representatives’.516 Yet the lack of a uniform approach in domestic legal systems appeared to make it difficult to apply the principle of complementarity in relation to cases of alleged corporate criminal liability.517 Eventually, disagreements among the delegations left the passive locus standi of legal entities out of the ICC Statute.518 It is to be 512 Ibid, 1132–1133. See Andrew Clapham, ‘The Question of Jurisdiction under International Criminal Law over Legal Persons: Lessons from the Rome Conference on an International Criminal Court’ in Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer Law International 2000), 170. 513 US v Krupp, Trials of War Criminal before The Nuremberg Military Tribunals under Control Council Law No 10 (1950), Vol 1372. 514 Michael J Kelly, Prosecuting Corporations for Genocide (OUP 2016) 30. 515 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002) 2187 UNTS 3, Article 25(1). 516 Report of the Preparatory Committee on the Establishment of an International Criminal Court (14 April 1998) UN Doc A/CONF.183/2/ Add.1, 49. 517 The principle of complementarity ex Article 17 of the ICC Statute allows the ICC to step in and exercise jurisdiction only where states are unable or unwilling genuinely to investigate or prosecute. See Micaela Frulli, ‘Jurisdiction Ratione Personae’ in Antonio Cassese and Others (eds), The Rome Statute of the International Criminal Court: A Commentary (OUP 2002), 532; Régis Bismuth, ‘Mapping a Responsibility of Corporations for Violations of International Humanitarian Law: Sailing Between International and Domestic Legal Orders’ (2010) 38 Denver Journal of International Law and Policy 203–226, 209. 518 ‘Report of the Preparatory Committee on the Establishment of an International Criminal Court’ (n 516), Article 23, para 6, footnote 3; For a detailed analysis of the negotiations,

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borne in mind, however, that throughout the debate it was never challenged that corporations are precluded from being addressees of international obligations.519 Nor was it challenged that they cannot violate international criminal law.520 Furthermore, Article 10 of the ICC Statute, which is contained in Part I on Jurisdiction, Admissibility and Applicable Law, provides that ‘nothing in this Part shall be interpreted as limiting or prejudicing in any way existing or developing rules of international law for the purposes other than this Statute’.521 A number of developments are indeed undergoing, such as at the Special Tribunal for Lebanon, where the question of corporate criminal liability was addressed for the first time in the Al-Jadeed TV case and in the Akhbar Beirut case.522 In both cases two companies, one of which a broadcasting company and the other a newspaper, were indicted with knowingly and wilfully interfering with the administration of justice on two counts. The companies were accused of disseminating information on confidential witnesses in another case before the STL and, in the case of Al-Jadeed TV, of failing to remove this information from its website, thus violating a pre-trial order of the Tribunal.523 In Al-Jadeed TV, the defendant challenged the Tribunal’s jurisdiction on the basis that under the latter’s Statute there is no rule allowing instituting criminal proceedings against legal persons. The STL Contempt Judge applied a narrow see Clapham, ‘The Question of Jurisdiction under International Criminal Law over Legal Persons: Lessons from the Rome Conference on an International Criminal Court’ (n 512), 146 ff; Cristina Chiomenti, ‘Corporations and the International Criminal Court’ in Olivier De Schutter (ed), Transnational Corporations and Human Rights (Hart Publishing 2006). 519 Clapham, Human Rights Obligations of Non-State Actors (n 6), 30. 520 Andrew J Wilson, ‘Beyond Unocal: Conceptual Problems in Using International Norms to Hold Transnational Corporations Liable under the Alien Tort Statute’ in Olivier De Schutter (ed), Transnational Corporations and Human Rights (Hart Publishing 2006), 50; David Scheffer, ‘Is the Presumption of Corporate Impunity Dead?’ (2018) 50 Case Western Reserve Journal of International Law 213–224, 216. 521 Rome Statute of the International Criminal Court (n 515), Article 10. As to the possibility of including corporations in the jurisdiction of the ICC, see Larissa van den Herik, ‘Corporations as Future Subjects of the International Criminal Court: An Exploration of the Counterarguments and Consequences’ in Carsten Stahn and Larissa van den Herik (eds), Future Perspectives on International Criminal Justice (TMC Asser Press 2010), 350 ff; David Scheffer, ‘Corporate Liability under the Rome Statute’ (2016) 57 Harvard International Law Journal 35–39, 39. For a view to the contrary, see De Jonge, Transnational Corporations and International Law: Accountability in the Global Business Environment (n 431), 162 ff. 522 Case against Al-Jadeed S.A.L./New T.V. S.A.L. and Al Khayat (Public Redacted Version of Judgment on Appeal) (2016) Case No STL-14-05/A/AP; In re Akhbar Beirut & Al Amin (2016) STL Case No. STL-14-06/T/CJ, Public Redacted Version of the Judgment). 523 For an analysis of the cases, see Nadia Bernaz, ‘Corporate Criminal Liability under International Law: The New TV S.A.L and Akhbar Beirut S.A.L Cases before the Special Tribunal for Lebanon’ (2015) 13 Journal of International Criminal Justice 313–330.

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interpretation of the term “person” in Article 60 bis of the Tribunal’s rules, finding for the defendants and excluding that legal persons could be prosecuted for contempt.524 On Appeal, the Ad hoc STL Appeals Panel ruled that the Contempt Judge had erred in holding that the STL has no personal jurisdiction over legal persons for contempt proceedings under the Tribunal’s Statute and remanded the case to the STL Contempt Judge for retrial on corporate liability grounds.525 By relying on the “principle of effectiveness” under the VCLT, according to which the statute and Rules of the STL ought to be interpreted in a manner that makes the authority of the Tribunal effective,526 the Appeals Panel argued that excluding companies from the jurisdiction of the Tribunal would ‘lead to unacceptable impunity for criminal actions’.527 Most interestingly, the Appeals Panel found that there has been ‘a concrete movement on an international level backed by the United Nations for […] corporate accountability’, revealing an emerging international consensus regarding what is expected from business in relation to human rights.528 While recognising that domestic laws on the issue in hand are not identical, the Appeals Panel found that they are ‘sufficiently similar’ to conform that corporate liability for serious harm is ‘on the verge of attaining, at the very least, the status of a general principle of law applicable under international law.529 The Contempt Judge, in rejecting the existence of customary rules or general principles on corporate liability, left open the possibility to rely on Lebanese criminal law, but still found it for the defendants.530 The case was appealed again before another Panel, which reaffirmed the existence of corporate criminal liability under international law and yet agreed that the elements for the attribution of criminal liability in the specific case where to be found in Lebanese law.531 Despite the final acquittal of the corporate defendant on evidentiary grounds, 524 In the Case Against New TV S.A.L. and Al Khayat, Case No. STL-14-05/PT/CJ, F0054 (24 July 2014) (Decision on Motion Challenging Jurisdiction and on Request for Leave to Amend Order in Lieu of an Indictment). Under the statutory framework of the STL, Rule 60 bis (A) codifies the STL’s power to hold in contempt ‘any person’ who knowingly and wilfully interferes with its administration of justice. 525 Case against Al-Jadeed S.A.L./New T.V. S.A.L. and Karma Mohamed Tahsin al Khayat (Decision on Interlocutory Appeal Concerning Personal Jurisdiction in Contempt Proceedings) (2014) Case No STL-14-05/PT/AP/AR126.1, para 74. 526 Ibid, paras 38–39. 527 Ibid, paras 83–84. 528 Ibid, para 46. 529 Ibid, para 67. 530 Case against Al-Jadeed S.A.L./New T.V. S.A.L. and Karma Mohamed Tahsin al Al Khayat (Judgment) (2015) Case No STL-14-05/ T/CJ, para 61. 531 Case against Al-Jadeed S.A.L./New T.V. S.A.L. and Karma Mohamed Tahsin al Al Khayat (Public Redacted Version of Judgment on Appeal) (2016) Case No STL-14-05/A/AP, paras 191–92, 196.

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the case shows that legal persons may fall under the jurisdiction of the STL. In fact, in the twin case Akhbar Beirut & Al Amin, the STL sentenced a corporate media enterprise and one of its employees for the same facts as Al Jadeed TV.532 In June 2014 the African Union adopted the ‘Malabo Protocol’, which sets up a criminal chamber to the yet-to-be established African Court of Justice and Human Rights (ACJHR).533 The criminal chamber of the Court is meant to serve as an African regional criminal court, operating in a manner similar to that of the ICC, albeit within a narrowly defined geographical and over a wider list of crimes.534 Most importantly, Article 46C of the ACC’s Statute, entitled ‘Corporate Criminal Liability’ gives the Court jurisdiction over ‘legal persons, with the exception of States’.535 According to Article 46C, the corporate intention to commit an offence may be established ‘by proof that it was the policy of the corporation to do the act which constituted the offence’.536 Finally, in 2017 a group of scholars called upon the Prosecutor of the ICC to investigate the situation in the offshore detention centres on Manus Island and Nauru, arguing that there was a reasonable basis to believe that Australian agents and staffs of their corporate partners had perpetrated crimes against humanity against the detainees, including unlawful imprisonment, torture, deportation,

532 In re Akhbar Beirut S.A.L. and Al Amin (Reasons for Sentencing Judgment) (2016) Case No STL-14-06/S/CJ. See Monica Hakimi, ‘In Re Akhbar Beirut & Al Amin’AJIL 111 (2017) 133–139. 533 AU, ‘Draft Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human Rights’ (as at Thursday 15 May 2014) STC/Legal/Min/7(I) Rev. 1; Amnesty International, Malabo Protocol: Legal and Institutional Implications of the Merged and Expanded African Court (2016), available at https://www.amnesty.org/en/documents/ afr01/3063/2016/en/ 534 Thus, if the Malabo Protocol comes into force, the ACJHR will have jurisdiction to try the following 14 crimes: genocide, crimes against humanity, war crimes, the crime of unconstitutional change of government, piracy, terrorism, mercenarism, corruption, money laundering, trafficking in persons, trafficking in drugs, trafficking in hazardous wastes, illicit exploitation of natural resources, and the crime of aggression. 535 Article 46A adds that: ‘3. A policy may be attributed to a corporation where it provides the most reasonable explanation of the conduct of that corporation. 4. Corporate knowledge of the commission of an offence may be established by proof that the actual or constructive knowledge of the relevant information was possessed within the corporation. 5. Knowledge may be possessed within a corporation even though the relevant information is divided between corporate personnel’. 536 For a detailed analysis of Article 46, see Joanna Kyriakakis, ‘Article 46C: Corporate Criminal Liability at the African Criminal Court’ in Charles C Jalloh and Others (eds), The African Court of Justice and Human and Peoples’ Rights in Context: Development and Challenges (CUP forthcoming).

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persecution and other inhumane acts.537 A class action was also brought before the Supreme Court of Victoria against Australia. The case was settled in 2017.538 3.3 The Plausibility of a Customary Rule on Corporate Liability The previous sub-chapter has analysed the applicability of customary human rights rules to corporations. I will now address a second and different approach, namely one based on whether a customary rule on corporate liability exists under international law.539 This approach has been embraced by US courts in relation to some of the claims lodged under the Alien Tort Statute (ATS), a well-known piece of legislation granting US district courts jurisdiction over ‘any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States’.540 Having being ignored for almost two centuries, the ATS became an instrument affording the US Federal Courts jurisdiction for damages claims based on breaches of human rights litigation since the 1980s, when the US Court of Appeals for the Second Circuit applied the Statute to assess the human rights violations perpetrated by a Paraguayan police officer against a Paraguayan citizen.541 Since then, the ATS has been applied also to individuals acting in their individual capacity, as well as to legal persons.542 Since the scope of the jurisdiction in question is confined to claims for damages, the Act in

537 ‘The Situation in Nauru and Manus Island: Liability for Crimes Against Humanity in the Detention of Refugees and Asylum Seekers’ (Communiqué to the Office of the Prosecutor of the International Criminal Court under Article 15 of the ICC Statute), available at https://law.stanford.edu/publications/ communique-to-the-office-of-the-prosecutor-of-the-international-criminal-court-under-article-15-ofthe-rome-statute-the-situation-in-nauru-and-manus-island-liability-for-crimes-against-humanity/, 538 Gabrielle Holly, ‘Transnational Tort and Access to Remedy under the UN Guiding Principles on Business and Human Rights: Kamasaee v Commonwealth’ (2018) 19 Melbourne Journal of International Law 52–83, 64. 539 See Steinhardt, ‘Multinational Corporations and Their Responsibilities under International Law’ (n 244), 29. 540 Alien Tort Statute, 28 US Code, para 1350. 541 Filartiga v Peña Irala (1980) 630 F.2d 876 (US Court of Appeals 2nd Cir.) It was alleged that a young man had been tortured and murdered by Peruvian police officers, and that an officer named Pena-Irala was one of the supervisors and perpetrators. The District Court had originally dismissed the case for lack of subject-matter jurisdiction. The decision was reversed on appeal where it was stated that ‘in light of the universal condemnation of torture in numerous international agreements, and the renunciation of torture as an instrument of official policy by virtually all of the nations of the world (in principle if not practice), we find that an act of torture committed by a state official against one held in detention violates established norms of the international law of human rights, and hence the law of nations’, para 12. 542 Kadic v Karadzic (1995)70 F.3d 232 (US Court of Appeals 2nd Cir.); Doe I v Unocal Corp (1997) 963 F. Supp. 880 (C.D Cal.).

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question has for a long time being interpreted in the sense of dispensing with the requirements of territoriality and of active or passive nationality. Dozens of corporations have been sued before US Courts under the ATS, with claims alleging violations of international law such as crimes against humanity, extrajudicial killings, environmental damage, labour rights violations, financing of terrorism, initially also when committed outside the US territory. I will address the issues concerned with extraterritorial jurisdiction in Part II. In Sosa v Alvarez-Machain, the US Supreme Court held that the ATS allows US courts to recognise federal common law causes of actions based on an international rule that is specific, universal and obligatory. According to the Court, the features of such (customary) rule must be comparable to the 18th-century paradigm within which the ATS was conceived, namely rules on infringement of the rights of ambassadors, violations of safe-conduct, and piracy.543 Once such the existence of a “well-defined” customary rule is assessed, which the claimant invokes to have been infringed, the Court has to determine whether accepting the claim is a proper exercise of judicial discretion.544 The factual background of Sosa is not directly relevant to corporations, but the test set in this case has significantly affected litigation against corporations under the ATS. By relying on the onerous Sosa test, the outcome of corporate litigation under the ATS has been made dependent on the existence of a norm of corporate liability under customary international law. This became apparent in Kiobel v Royal Dutch Petroleum.545 There, Nigerian citizens claimed that Dutch, British, and Nigerian oil corporations aided and abetted the Nigerian Government in committing serious violations of human rights. The US Court of Appeals for the Second Circuit was confronted with the question as to whether the ATS could ground its jurisdiction for the claims of damages against such corporations.546 The Court stated that corporate liability does not represent a ‘specific, universal, and

543 Sosa v Humberto Alvarez-Machain (2004) 542 S.Ct. 692 (US Supreme Court), 730–731. A footnote added: ‘A related consideration is whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual’, 732, footnote 20. 544 The second part of the test is strongly influenced by the principle of separation of powers and by foreign policy considerations. The ATS was conceived to make sure that the US, as a young nation, would be able to redress violations of international law. 545 Kiobel et al v Royal Dutch Petroleum et al (17 September 2010) 621 F.3d 111 (US Court of Appeals 2nd Cir.) (hereinafter Kiobel I). 546 When the complaint was filed, the respondents Royal Dutch Petroleum Company and Shell Transport and Trading Company Plc were holding companies incorporated in the Netherlands and England respectively. Their joint subsidiary, the respondent Shell Petroleum Development Company of Nigeria, Ltd, was incorporated in Nigeria and ran oil exploration and production operations in Ogoniland.

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obligatory norm’ and, therefore, it failed to meet the Sosa test.547 It was concluded that corporations cannot be sued under the ATS because no rule on corporate liability exists under customary international law. The decision of the Court of Appeals was subsequently appealed to the Supreme Court. Without referring to corporate liability per se, the Supreme Court held that ‘the presumption against extraterritoriality’ applies to claim under the ATS, barring claims which do not ‘touch and concern the territory of the United States […] with sufficient force to displace the presumption against extraterritorial application’.548 I will return to the issue of extraterritoriality in Part II. The extremely restrictive reasoning followed by the Court of Appeals in Kiobel has had a strong influence on subsequent litigation before US Courts. In Chowdhury v World Bangladesh Holding Ltd, for example, the second Circuit Court, again, held that claims cannot be entertained by US Courts against corporations under the ATS, as international law does not recognise the existence of a customary rule on corporate liability.549 In 2018 the US Supreme Court was once again confronted with the issue of corporate liability in Jesner v Arab Bank.550 The claimants, non-US citizens who were victims of terror attacks in Israel, the West Bank and Gaza, alleged that Arab Bank, PLC, a Jordanian financial institution with a branch in New York, knowingly financed the terrorist activities of which the claimants had become victims.551 The majority opinion was penned by Justice Kennedy, who framed the question, once again, as to whether there is a ‘norm of corporate liability under currently prevailing international law’ that would meet the Sosa test.552 While recognising that ‘human-rights norms must bind the individual men and women responsible for committing humanity’s most terrible crimes, not just

547 Kiobel I (n 545), 141. 548 Kiobel v Royal Dutch Petroleum Co. (17 April 2013) 133 S.Ct. 1659 (US Supreme Court) (hereinafter Kiobel II), 1669. 549 Chowdhury v Worldtel Bangladesh Holding Ltd (10 February 2014) 746 F.3d (US Court of Appeals 2nd Circuit), 42; see also Thirlway, The Sources of International Law (n 163), 63. 550 Jesner et al v Arab Bank, PLC (24 April 2018) 138 S.Ct. 1386 (US Supreme Court); see Ludovica Chiussi, ‘Jesner Et Al. v Arab Bank, Plc: Closing the Door to Litigation Against Foreign Corporations under the Alien Tort Statute?’ (2018) Italian Society of International Law Blog, available at http://www.sidiblog.org/2018/09/12/jesner-et-al-v-arab-bank-plc-closingthe-door-to-litigation-against-foreign-corporations-under-the-alien-tort-statute/; Rebecca Hamilton, ‘Jesner v Arab Bank’ (2018) 112 AJIL 720–727. 551 The District Court had dismissed their claims on the grounds that corporations could not be sued under the ATS. The decision was confirmed by the Second Circuit Court of Appeals. The US Supreme Court granted certiorari. 552 Jesner v Arab Bank (n 550), 1425.

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nation-states in their interactions with one another’, the majority ruling held there was no specific, universal and obligatory rule on corporate liability.553 The above case-law shows that searching for an international customary rule on corporate liability for human rights violations can be a daunting exercise. First, a rule of such a high level of specificity can hardly meet the required degree of consistency in the practice and opinion juris. As recalled by the ICJ in assessing the existence of a customary rule on diplomatic asylum, the facts brought to the knowledge of the Court disclose so much uncertainty and contradiction, so much fluctuation and discrepancy in the exercise of diplomatic asylum and in the official views expressed on various occasions, there has been so much inconsistency in the rapid succession of conventions on asylum, ratified by some States and rejected by others, and the practice had been so much influenced by consideration of political expediency in the various cases, that it is not possible to discern in all this any constant and uniform usage, accepted as law.554 Furthermore, in assessing a customary rule on corporate liability, the risk is high that one will end up confusing ‘the substance of international law with how it has been enforced in particular contexts’.555 Since no international mechanism currently exists to hold corporations to account for violation of international law, the search for the constituent elements of a customary rule on corporate liability is likely to hit a dead end. This was the case in Kiobel, where the Court of Appeals held that international law has steadfastly rejected the notion of corporate liability for international crimes, and no international tribunal has ever held a corporation liable for a violation of the law of nations. We must conclude, therefore, that insofar as plaintiffs bring claims under the ATS against corporations, plaintiffs fail to allege violations of the law of nations, and plaintiffs’ claims fall outside the limited jurisdiction provided by the ATS.556 Similarly, in Jesner, the US Supreme Court stated that the international community’s conscious decision to limit the authority of these international tribunals to natural persons counsels against a 553 Ibid, 1400. See William Dodge, ‘Corporate Liability Under the US Alien Tort Statute: A Comment on Jesner v Arab Bank’ (2019) 4 BHR Journal 131–137. 554 Asylum Case (Colombia v Peru) [1950] ICJ Rep 266, 277. 555 Jesner v Arab Bank (n 550), Justice Sotomayor (Dissenting), 1423. 556 Kiobel I (n 545), 120.

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broad holding that there is a specific, universal, and obligatory norm of corporate liability under currently prevailing international law.557 Already in Kiobel I Justice Leval considered such reasoning as dealing a ‘blow to international law and its undertaking to protect fundamental human rights’,558 noting that the fact that international tribunals do not impose criminal punishment on corporations in no way supports the inference that corporations are outside the scope of international law and therefore incur in no civil compensatory liability to victims when they engage in conduct prohibited by the norms of international law.559 Indeed, international law does not usually prescribe how its rules must be enforced. Especially in the field of human rights, enforcement of human rights norms is left to states through means of their own choice, unless expressly and specifically provided otherwise by way of treaty law. In her dissenting opinion in Jesner, Justice Sotomayor’s argued that asking whether corporate liability is a customary rule ‘fundamentally misconceives how international law works’.560 According to Justice Sotomayor, the rule that had to be assessed in that case was not the secondary rule on corporate liability under international law, but rather the primary rule on the prohibition against financing of terrorism. The following question should have been whether there is any reason to distinguish between a corporation and a natural person for the purpose of assessing the violation of such a rule. One could argue that corporate liability is not precluded, at least in principle, from evolving into a customary law. The UNGPs were adopted by consensus, the OECD Guidelines have been adhered to by one fourth of states, and the UN Global Compact gathers more than 12,000 companies across different jurisdictions. It is clear that these instruments are adding, bit by bit, to the body of international law, so that a customary rule on corporate liability may not be ‘too far-fetched to conceive’.561 However, the international community of states has not so far 557 Jesner v Arab Bank (n 550), 1401. 558 Kiobel I (n 545), 149. 559 Ibid, 150. See William S Dodge, ‘Corporate Liability under Customary International Law’ (2012) 43 Georgetown Journal of International Law 1045–1051, 1047. 560 Jesner v Arab Bank (n 550), Justice Sotomayor (Dissenting), 1419. 561 Humberto Cantú Rivera, ‘Business & Human Rights: From A “Responsibility to Respect” to Legal Obligations and Enforcement’ in Jernej Letnar Černič and Tara Van Ho (eds), Human Rights and Business: Direct Corporate Accountability for Human Rights (Wolf Legal Publishers 2015), 316.

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developed a widespread consistent practice and sufficiently specific opinio juris to satisfy the requirements of a customary rule. Against this backdrop, the first approach examined above, namely ‘whether international law extends the scope of liability for a violation of a given norm to a [corporate] perpetrator being sued’562 seems to be a more realistic one. Alternatively, general principles of law may turn out to be a more suitable source to accommodate the issue of corporate liability under international law. Already in Sosa, the US Supreme Court recognised that in the 18th century international law and domestic law were not considered formally separate. In Kiobel, the Court of Appeal affirmed that a ‘recognition of a norm of liability as a matter of domestic law, therefore, cannot create a norm of customary international law’,563 as ‘it can do so […] only by achieving universal recognition and acceptance as a norm in the relations of States inter se’.564 As we have seen above, the existence of domestic rules on corporate liability in different jurisdictions may not suffice to create a customary rule, unless it is complemented by opinion juris regarding the sense of international obligation accompanying such practice. General principles of law, as a distinct source of international law, can be inferred by seeking the common denominator between domestic legal systems without the need for opinion juris and practice of the kind required for customary law. Corporations are subject to civil liability, administrative and sometimes criminal liability in the world’s major legal systems for conduct that violates domestic and international law. As we shall see in Part IV, this may suggest that a general principle on corporate liability is emerging in international law. 3.4 Corporations and the Making of Customary International Law The mushrooming of corporate entities since the middle of the last century has not only triggered the question of their duties under customary international law, but has also raised the issue of their role in the customary law-making process.565 Article 38(1)(b) of the ICJ Statute defines custom as ‘evidence of a general practice accepted as law’. The recent ILC Draft Conclusions on the Identification of Customary International Law seem to dispel in the negative any doubt about a potential participation of corporations in the customary 562 Sosa v Alvarez-Machain (n 543), footnote 20. 563 Kiobel I (n 545), 6 (emphasis added). 564 Ibid, 49. As we will see in Part II, the Supreme Court did not rule upon the question whether corporations per se are liable under the ATS. It upheld the dismissal of the complaint on the basis of the presumption of extraterritoriality, since the alleged violation had occurred in Nigeria. 565 See Math Noortmann and Cedric Ryngaert (eds), Non-State Actor Dynamics in International Law: From Law-Takers to Law-Makers (Routledge 2010).

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law process. However, one may also detect elements of constructive ambiguity leaving some room open for a role for corporations in the formation of custom. Draft Conclusion 4 explains that [t]he requirement of a general practice, as a constituent element of customary international law, refers primarily to the practice of States that contributes to the formation, or expression, of rules of customary international law. In certain cases, the practice of international organizations also contributes to the formation, or expression, of rules of customary international law. Conduct of other actors is not practice that contributes to the formation, or expression, of rules of customary international law, but may be relevant when assessing the practice referred to in paragraphs 1 and 2.566 According to the ILC, thus, it is only state practice that formally contributes to the formation of customary international law. ‘States remain in ultimate control over the formal content of international law’,567 and in principle the interactions of non-state actors do not directly create customary international law.568 At the same time, Commentary to Draft Conclusion 4 recognises that the conduct of non-state actors, including individuals and corporations, may have an indirect role in the identification of customary international law, by stimulating or recording the practice and the opinio juris of states and international organizations.569 Some scholars have canvassed the possibility of a direct influence of nonstate actors on the formation of customary law.570 In his 1964 study on the changing character of international law, Friedmann argued for their inclusion in international law-making.571 The monopoly of states in law making has been defined as outdated and detached from the ‘day-to-day practice of decisionmaking’.572 Paust has affirmed that, ‘contrary to false myth perpetrated in the early twentieth century, the subjective element of customary international law 566 ILC Drafting Committee, ‘Drafting Conclusions’, Draft Conclusion 4. 567 Peter T Muchlinski, ‘“Global Bukowina” Examined: Viewing the Multinational Enterprise as a Transnational Law-Making Community’ in Gunther Teubner (ed), Global Law without a State (Dartmouth Publishing 1997), 89. 568 Arend, Legal Rules and International Society (n 155), 176. 569 ILC Drafting Committee, ‘Drafting Conclusions’, Commentary to Draft Conclusion 4. 570 See, amongst others, Lazare Kopelmanas, ‘Customs as a Means of the Creation of International Law’ (1937) 18 BYIL 127–151, 149; Michael Akehurst, ‘Custom as a Source of International Law’ (47) BYIL 1-53, 53. 571 Wolfgang Friedmann, The Changing Structure of International Law (Columbia University Press 1964) 71. 572 Hans J Mertens, ‘Lex mercatoria: A Self-Applying System Beyond National Law?’ in Gunther Teubner (ed), Global law Without a State (Dartmouth 1997), 40; see also Isabelle R Gunning,

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(i.e., opinio juris or expectations that something is legally appropriate or required) is to be gathered from patterns of generally shared legal expectations among humankind, not merely among official State elites’.573 The 2000 report of the International Law Association’s (ILA) Committee on Formation of Customary (General) International Law also notes this limited role for non-state actors. ‘The conduct of individuals, corporations and other, non-governmental bodies’, it states, ‘undoubtedly contributes to the customary process in its extended sense’.574 Mendelson defines custom as emerging from ‘the constant and uniform practice of States and other subjects of international law, in their international relations, in circumstances which give rise to a legitimate expectation of similar conduct in the future’.575 He acknowledges that ‘[a] contribution to the formation of customary international law, in a broader sense, is also made by other types of entity, such as […] multinational and national corporations’.576 Others see CSR as lex mercatoria and, thus, as potentially contributing to customary international law,577 arguing the occurrence of a shift from a state-centred governance to a multifaceted “network governance”578 and forms of informal law-making.579 Baade underlines instead that ‘the practice of MNEs in response to codes of conduct or guidelines, quite irrespective of its motivations, cannot supply the element of opinio necessitates iuris that remains an indispensable prerequisite for the development of customary international law’.580 The better view appears to be that the constitutive elements of custom refer to states and that the practice of corporations does not per se participate in the creation of customary rules.581 However, in the modern world, state practice is

573 574 575 576 577

578 579 580 581

‘Modernizing Customary International Law: The Challenge of Human Rights’ (1990) 31 Virginia Journal of International Law 222-234. Jordan J Paust, ‘Customary International Law: Its Nature, Sources and Status as Law of the United States’ (1990) 12 Michigan Journal of International Law 59–91, 61. ILA, ‘Statement of Principles Applicable to the Formation of General Customary International Law’ (London Conference 2000),16. Maurice Mendelson, ‘The Formation of Customary International Law’ (1998) 272 RdC 155, 188. Ibid, 203. Ralph G Steinhardt, ‘Corporate Responsibility and the International Law of Human Rights: The New Lex Mercatoria’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 179. Jan Klabbers, International Law (CUP 2013) 59. See Jan Wouters and Linda Hamid, ‘Custom and Informal International Lawmaking’ in Curtis A Bradley (ed), Custom’s Future: International Law in a Changing World (CUP 2016). Hans W Baade, ‘The Legal Effects of Codes of Conduct for Multinational Enterprises’ (1979) 22 German Yearbook of International Law 12–52, 17. A similar point is made regarding individuals in Gennady M Danilenko, ‘The Theory of International Customary Law’ (1988) 31 German Yearbook of International Law 9–47, 21.

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largely influenced, by different actions stemming from the practice of non-state actors, including corporations.582

4

General Principles of Law: A Forgotten Source

After an examination of the role of customary law in the business and human rights legal process, this chapter introduces the ‘general principles of law’, listed as one of the sources of international law in Article 38(1)(c) of the ICJ Statute. The aim is to shed light on the origin and scope of principles of law in order to explore, in the next three parts of this study, their actual and potential role in the business and human rights legal process. 4.1 The History of Article 38(1)(c) of the ICJ Statute In 1920 ‘the general principles of law recognized by civilized nations’ were included in Article 38(1)(3) of the Statute of the Permanent Court of International Justice (PCIJ) among the three sources of international law to be applied by the Court.583 The travaux préparatoires of Article 38 of the PCIJ Statute, the wording of which has been reproduced by Article 38 of the ICJ Statute, provide a good starting point to assess the nature of general principles of law, a preliminary and necessary step with respect to a legal analysis of the relevance of general principles of law to the business and human rights discourse.584

582 Tully, Corporations and International Law Making (n 359), 101. 583 It is worth noting that the application of principles of law can be found in early international arbitral practice. See, e.g., Antoine Fabiani case (France v Venezuela) (1896) (vol X) UN Reports of International Arbitral Awards Vol X 83–139, 86. Some authors suggest, however, that general principles acquired a formal role in international law only after their inclusion in the PCIJ Statute, see Vladimir D Degan, Sources of International Law (Martinus Nijhoff 1997) 46; According to d’Aspremont, principles were “reinvented” as sources of law by Article 38, see Jean d’Aspremont, ‘What Was not Meant to be: General Principles of Law as a Source of International Law’ in Riccardo Pisillo Mazzeschi and Pasquale De Sena (eds), Global Justice, Human Rights, and the Modernization of International Law (Springer 2018), 168. 584 On the drafting history of the PCIJ Statute, see Godefridus J H Hoof, Rethinking the Sources of International Law (Kluwer 1983) 136–139; Ole Spiermann, ‘Who Attempts too Much does Nothing Well: The 1920 Advisory Committee of Jurists and the Statute of the Permanent Court of International Justice’ (2002) 73 BYIL 187–260; Malgosia Fitzmaurice, ‘The History of Article 38 of the Statute of the International Court of Justice: The Journey from the Past to the Present’ in Samantha Besson and Jean d’Aspremont (eds), The Oxford Handbook of the Sources of International Law (OUP 2017).

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In 1920, the Council of the League of Nations instructed an Advisory Committee of Jurists to prepare a draft Statute of the PCIJ.585 The Belgian member Descamps, in his capacity as Chairman of the Committee, proposed to include in the applicable law by the Court, next to ‘conventional international law’ and ‘international custom’, ‘the rules of international law as recognized by the legal conscience of civilized nations’.586 The proposal was met with fierce opposition by the British and American members. The US member, Root, opposed the view on the basis that it threatened legal certainty and fostered subjective conceptions of the law.587 He stressed that principles are ‘differently understood in different countries’,588 and that states were not going to accept the jurisdiction of a Court basing its decisions on vague rules not grounded in state consent.589 Descamps countered these arguments by noting that principles belong to ‘the law of objective justice’, which is ‘deeply engraved on the heart of every human being and […] is given its highest and most authoritative expression in the legal conscience of civilised nations’.590 Cheng has pointed out how the use of term “conscience”, which bears different connotations in the French and English idioms, was never intended by Descamps as referring to what is morally right or wrong’, but rather to the ‘opinio juris communis of civilised mankind’.591 A second major issue was the role principles confer on the international judge, with particular regard to the issue of “non liquet”.592 The American, British and Italian members took the position that when a legal gap, a “lacuna” exists, the court must declare a non liquet and abstain from deciding the case.593 The Norwegian member Francis Hagerup, joined by the French Albert de Lapradelle and the Ducth Bernard Loder, maintained that a non liquet would amount to a denial of

585 The Advisory Committee of Jurists was composed of ten members: Micheiro Adatci (Japan); Rafael Altamira (Spain); Clovis Bevilaqua (Brazil, then replaced by Fernandes); Édouard Descamps (Belgium); Francis Hagerup (Norway); Albert de Lapradelle (France); Bernard Loder (Netherlands); Robert Phillimore (UK); Arturo Ricci Busatti (Italy); Elihu Root (USA). 586 League of Nations Advisory Committee of Jurists, ‘Procès-verbaux of the Proceedings of the Committee with Annexes’ (16–24 July 1920), 306. 587 Ibid, 309. 588 Ibid, 310. 589 Ibid, 287. 590 Ibid, 324, 310–311. 591 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Stevens and Sons 1953) 8–9. 592 On the issue of non liquet in international law, see Hersch Lauterpacht, ‘Some Observations on the Prohibition of ‘Non Liquet’ and the Completeness of the Law’ in Symbolae Verzijl (Martinus Nijhoff 1958); Daniel Bodansky, ‘Non liquet’ MPEPIL (2006). 593 Procès-verbaux (n 586), 309, 314.

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justice.594 They, thus, strongly supported the inclusion of general principles as a “gap filling” source to which to resort in the absence of customary or conventional rules.595 Eventually, with the aim to reach an agreement on this crucial matter, Root proposed the wording ‘general principles of law as recognized by civilized nations’,596 which was finally agreed upon by the Committee.597 The question as to whether there was a hierarchy among the sources was also discussed by the Court. Descamps’ proposal directed the PCIJ to apply treaties, custom and principles, adding the words ‘en ordre successif’. The Italian member, Arturo Ricci-Busatti and Norway’s Francis Hagerup pointed out that such an expression was redundant, given that the well-known principle of lex specialis derogat legi generali already granted primacy to treaties and custom, adding that the expression ‘dans l’ordre successif’ failed to recognize that the PCIJ could apply all three sources at once.598 This argument prevailed and, as a result, Article 38 of the PCIJ Statute did not establish any hierarchy among its sources. With regard to the anachronistic formula ‘civilised nations’, carrying with it the heavy legacy of the colonial period, it should be interpreted today as encompassing those principles common to the majority of states that share the principle of the rule of law and the core values enshrined in the UN Charter.599 This line of interpretation appears compatible with Article 9 of the ICJ statute, according to which the composition of Court should represents ‘the main forms of civilisation and of the principal legal systems of the world’.600 The travaux revealed lack of agreement among the drafters regarding the origin and scope of principles of law, together with the efforts to reconcile the positivist with the giusnaturalist views represented in the Committee.601 However, from the minutes of the debate it also emerges that the inclusion of principles of law in the PCIJ Statute, irrespective of the actual wording and rationale, very much reflected the will of the Committee. The drafters were aware that custom and treaties do not always suffice to address the emerging issues in a fast evolving

594 Ibid, 317. 595 Ibid, 296. The same argument was shared by Loder and de Lapradelle. 596 Ibid, 334. 597 Ibid, 344. 598 Ibid, 332, 337–338. 599 Georg Schwarzenberger, A Manual of International Law (6 edn, Milton 1976); M Cherif Bassiouni, ‘A Functional Approach to “General Principles of International Law”’ (1990) 11 Michigan Journal of International Law 768–818, 768; Degan, Sources of International Law (n 583), 70; Carlo Focarelli, Diritto Internazionale (4 edn, Wolters Kluwer – CEDAM 2017) 123. 600 Statute of the International Court of Justice (26 June 1945) 33 UNTS 993, Article 9. 601 Riccardo Pisillo Mazzeschi and Alessandra Viviani, ‘General Principles of International Law: From Rules to Values?’ in Pasquale De Sena and Riccardo Pisillo Mazzeschi (eds), Global Justice, Human Rights and the Globalisation of International Law (Springer 2018), 124.

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system such as international law.602 The final formula of Article 38(1)(c) has created an important link between domestic and international law, aiming to express ‘the normative concept of law, domestic and international, as living in the minds of civilized nations and as reflected in the general principles of law adopted in their legal systems’.603 4.2 The Legal Nature of Principles Legal systems are made of rules and principles.604 Both, as norms, aim to guide actions and decisions of the members of a community.605 However, while rules usually cogently prescribe a conduct and apply in an ‘all-or-nothing fashion’,606 principles are open-textured and do not necessarily command a specific act or omission.607 While being open-textured, principles cannot be simply defined as rules of a more general feature. They underlie rules and go beyond their realm of operation.608 As put by Gerald Fitzmaurice, ‘a rule answers the question “what”; a principle answers the question “why’’’.609 In so doing, principles may fall outside the right–obligation scheme.610 Yet neither this quality, nor their rudimentary formulation, impair their normativity. Principles of law are ‘open by nature, not by defect’,611 and such a feature allows them to operate in a variety of settings.612 602 Procès-verbaux (n 586), 320; see Robert Jennings and Arthur Watts, Oppenheim’s International Law, vol 1 (9 edn, OUP 2008) 38–39. 603 Maarten Bos, ‘The Recognized Manifestations of International Law’ (1977) 20 German Yearbook of International Law 9–74, 37. 604 Ronald Dworkin, The Philosophy of Law (OUP 1977) 45. 605 See Norberto Bobbio, ‘Principi generali di diritto’ (1966) X Novissimo Digesto italiano 894 ff; Robert Alexy, A Theory of Constitutional Rights (OUP 2009). 606 Ronald Dworkin, ‘The Model of Rules’ (1967) 35 The University of Chicago Law Review 14–46, 25. 607 Joseph Raz, ‘Legal Principles and the Limits of Law’ (1972) 81 Yale Law Journal 823–854, 834; Ronald Dworkin, Taking Rights Seriously (Harvard University Press 1977) 25–26; see Case Concerning East Timor (Portugal v Australia) [1995] ICJ Rep 90, Judge Weeramantry (Dissenting Opinion), 210. 608 Neil MacCormick, Legal Reasoning and Legal Theory (Clarendon Press 1978) 152 ff; Robert Kolb, ‘Les maximes juridiques en droit international public : questions historiques et théoriques’ (1992) 32 Revue belge de droit international 407–434, 428. 609 Gerald Fitzmaurice, ‘The General Principles of International Law Considered from the Standpoint of the Rule of Law’ (1957) 92 RdC 5, 7; for a different view, see Hermann Mosler, ‘The International Society as a Legal Community’ (1974) 140 RdC 11, 90. 610 Hervé Ascensio, ‘Principes généraux du droit’ in Paul Lagarde and Others (eds), Répertoire de droit international (Dalloz 2004), para 4. 611 Gustavo Zagrebelsky, ‘Ronald Dworkin’s Principle Based Constitutionalism: An Italian point of View’ (2003) 1 International Journal of Constitutional Law 621–650, 637. 612 Klabbers, International Law (n 578), 37.

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There is no denying that principles may bear some connotations of natural law.613 Dworkin defines principles as ‘standards that are to be observed because they are a requirement of justice or fairness or some other dimension of morality’.614 Lammers defines principles of law as ‘norms underlying national legal orders […] [that] are the manifestation of the universal legal conscience certified by the law of civilized States’.615 Principles represent the common denominator of the different domestic legal systems, contends Favre, thus constituting the ‘fonds juridique commun pour l’ensemble des états’.616 De Visscher affirms that ‘les principes généraux de droit ont leur origine dans une conviction juridique, sinon universelle, du moins très générale, qui a trouvé son expression dans les principaux systèmes juridiques internes des nations civilisées’.617 It remains the case, though, that such principles have a role to play in international law only insofar as they are ‘given sufficient expression in legal form’.618 A positivist approach does not preclude the inclusion of such approaches in the analysis of the law. One might subscribe to the view according to which principles are ‘“transformators” of extra-positive (moral, social, or other) needs into the legal system’.619 But conceding that principles are ‘factors which bring morality

613 ‘[I]t is undeniable that in Article 38, paragraph 1 (c), some natural law elements are inherent. It extends the concept of the source of international law beyond the limit of legal positivism […] this provision does not require the consent of States as a condition of the recognition of the general principles’, in South West Africa, Second phase (Ethiopia v South Africa, Liberia v South Africa) [1966] ICJ Rep 6, Dissenting Opinion of Judge Tanaka, 298; see Louis Henkin, ‘International Law: Politics, Values and Functions: General Course on Public International Law’ (1989) 216 Recueil de Cours 19, 61–61; For a view to the contrary, see Karl Wolff, ‘Les principes géneraux du droit applicables dans les rapports internationaux’ (1931) 36 RdC 479, 496. 614 Dworkin, ‘The Model of Rules’ (n 606), 23. 615 Johan G Lammers, ‘General Principles of Law Recognized by Civilized Nations’ in Frits Kalshoven (ed), Essays on the Development of the International Legal Order: In Memory of Haro F Van Panhuys (Springer 1980) 616 Antoine Favre, ‘Les principes généraux du droit, fonds commun du droit des gens’ in Recueil d’études de droit international en hommage à Paul Guggenheim (Faculté de droit de l’Université de Genève 1968), 390. 617 Charles Visscher, ‘Contribution à l’étude des sources du droit international’ (1933) 14 Revue de droit international et de législation comparée 395–420, 406. 618 South West Africa (Ethiopia v South Africa) (Liberia v South Africa) (Merits) [1966] ICJ Rep 6, para 49. 619 Robert Kolb, ‘Principles as Sources of International Law (With Special Reference to Good Faith)’ (2006) 53 Netherlands International Law Review 1–36, 7; Robert Kolb, ‘La sécurité juridique en droit international: aspects théoriques’ (2002) 10 African Yearbook of International Law 103–142, 124.

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into the law of nations’,620 does not exempt them from having to be recognised in the majority of legal systems. Principles of law are to be understood in their normative dimension, not as a mere expression of ethics.621 In sum, as stated by Judge Fernandes in Right of Passages over the Indian Territory, Whatever view may be held in regard to these principles, whether they are considered to be emanations of natural law or to be rules of custom, or constitutional principles of the international legal community, or principles directly deduced from the concept of law, or principles agreed to by States because they are members of a legal family, whatever, I say, may be the attitude of each towards the origin and basis of these principles, all are agreed in accepting their existence and their application as a source of positive law.622 4.3 The Multiple Origins of General Principles of Law Different viewpoints have been put forward by scholars on general principles of law, and controversies persist on their origin, content and scope of application.623 The mainstream view is that principles of law develop in foro domestico.624 Jennings describes principles as a ‘distillation from some essential notions found in 620 North Sea Continental Shelf (Federal Republic of Germany/Netherlands, Federal Republic of Germany/ Denmark) (Merits) [1969] ICJ Rep 3, Separate Opinion of Judge Ammoun (Separate Opinion), 136, footnotes omitted. 621 Louis Cavare, Le droit international public positif (Pedone 1967) 240 ff; Hermann Mosler, ‘General Principles of Law’ in Rudolf Bernhardt (ed), Encyclopedia of Public International Law, vol 7 (North-Holland 1987), 516; Alain Pellet, ‘Article 38’ in Andreas Zimmermann and Others (eds), The Statute of the International Court of Justice: A Commentary (OUP 2012), 767. 622 Right of Passage over Indian Territory (Portugal v India) (Merits) [1960] ICJ Rep 6, Dissenting Opinion of Judge Fernandes, 137. 623 For an analysis of the various doctrinal perspectives, see Béla Vitanyi, ‘Les positions doctrinales concernant le sens de la notion de ‘Principes généraux de droit reconnus par les nations civilisées’ (1982) 86 Revue générale de droit international public 48–116. 624 Procès-verbaux (n 586), 335; See, among others, Mario Scerni, I principi generali di diritto riconosciuti dalle nazioni civili (CEDAM 1932) 13 ff; Michel Virally, ‘The Sources of International Law’ in Max Sørensen (ed), Manual of Public International Law (Macmillan 1968), 144; Charles Rousseau, Droit International Public, vol 1 (Sirey 1970); Hermann Mosler, ‘General Principles of Law’ in Encyclopedia of Public International Law, vol 2 (1995), 511–512; Pellet, ‘Article 38’ (n 621), 435; Dominique Carreau and Fabrizio Marrella, Droit International (11 edn, Pedone 2012) 327; Samantha Besson, ‘General Principles in International Law: Whose Principles?’ in Samantha Besson and Pascal Pichonnaz (eds), Principles in European Law (Schulthess 2011); Enzo Cannizzaro, Diritto internazionale (Giappichelli 2016) 133; Jan Wouters and others, International Law: A European Perspective (Hart Publishing 2019) 157.

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municipal laws generally’.625 Similarly, Virally refers to ‘des principes communs à l’ensemble des systèmes juridiques développés’.626 Lauterpacht equates principles with principles of private law.627 Schlesinger refers to core legal ideas ‘common to all civilized legal systems’.628 In his separate opinion on the North Sea Continental Shelf case, Judge Ammoun stated that ‘the general principles of law mentioned by Article 38, paragraph 1(c), of the Statute, are nothing other than the norms common to the different legislations of the world, united by the identity of the legal reason therefore’.629 In El Paso Energy International Company v The Argentine Republic, the Arbitral Tribunal considered Article 38(1)(c) as referring to ‘rules largely applied in foro domestico, in private or public, substantive or procedural matters, provided that after adaptation, they are suitable for application on the level of public international law’.630 The domestic reservoir from which the principles are drawn includes different branches of the law. While initially focusing on private law, Lauterpacht explains, it comprises ‘a comparison, generalization and synthesis of rules of law in its various branches – private and public, constitutional, administrative, and procedural – common to various systems of national law’.631 In a similar vein, according to Judge Tanaka, To restrict the meaning to private law principles or principles of procedural law seems from the viewpoint of literal interpretation untenable. So far as the “general principles of law” are not qualified, the “law” must be understood to embrace all branches of law, including municipal law, public law, constitutional and administrative law, private law, commercial law, substantive and procedural law.632 625 Robert Jennings, ‘General Course on Principles of International Law’ (1967) 121 RdC 327, 339. 626 Michel Virally, ‘Panorama du droit international contemporain : cours général de droit international public’ (1983) 183 RdC 25, 171. 627 Lauterpacht, Private Law Sources and Analogies of International Law (with Special Reference to International Arbitration) (n 200), 71. 628 Rudolf B Schlesinger, ‘Research on the General Principles of Law Recognized by Civilized Nations’ (1957) 51 AJIL 734–753, 739; for a similar approach, see Wolfgang Friedmann, ‘The Uses of “General Principles” in the Development of International Law’ (1963) 57 AJIL 279–299, 284. 629 North Sea Continental Shelf Case (n 620), Separate Opinion of Judge Ammoun, 134. 630 El Paso Energy International Company v The Argentine Republic (Award) (2011) ICSID Case No ARB/03/15, para 622. 631 Hersch Lauterpacht, The Development of International Law by the International Court (Stevens and Sons 1958). 632 South West Africa Case (n 613), Dissenting Opinion of Judge Tanaka, 292.

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Principles stemming from domestic legal systems include procedural principles, such as res judicata,633 as well as substantive ones, such as estoppel,634 abuse of rights635 and the obligation to make good of the damaged caused.636 At the other end of the spectrum there are those who hold that Article 38 (1)(c) refers primarily to principles of international law proper.637 The positions are varied. Kelsen doubts ‘whether such principles common to the legal orders of civilized nations exist at all’, arguing that the only existing principles are those stemming from the existing international rules.638 The Soviet doctrine rejects the idea of commonalities between socialist and western countries.639 Others rely on the primacy of sovereignty and consent to exclude a role for general principles amongst the sources of international law.640 The view has also been expressed that principles are simply customary rules,641 or that, once general principles of law in foro domestico are transposed into international law and repeatedly applied as a source of international law, they are bound to become part of international customary law, possibly being characterized by the distinguishing domestic provenance and the generality of its contents.642 According to the view whereby the formation of general principles of law as a source of international law is an exclusively public international law process, Article 38(1)(c) refers to principles that do not have a counterpart in domestic legal systems, such as

633 Question of the Delimitation of the Continental Shelf between Nicaragua and Colombia beyond 200 Nautical Miles from the Nicaraguan Coast (Nicaragua v Colombia) (Preliminary Objections) [2016] ICJ Rep 100, para 58. 634 Case concerning the Temple of Preah Vihear (Cambodia v Thailand) (Merits) [1962] ICJ Rep 6, 23. 635 Case of the Free Zones of Upper Savoy and the District of Gex (France v Switzerland) [1932] PCIJ Series A/B No 46. 636 Case Concerning the Factory at Chorzów (Germany v Poland) (Merits) [1928] PCIJ Series A No 17, 47. 637 Virally, ‘The Sources of International Law’ (n 624), 116. 638 Hans Kelsen, Principles of International Law (Rinehart & Co 1952) 393–394. 639 Grigory Tunkin, ‘International Law in the International System’ (1975) 147 RdC 9, 103. Tunkin only admits the existence of rules of logic and legal technique. See also Géza Herczegh, General Principles of Law and the International Legal Order (Akadémiai Kiadó 1969) 97 ff. 640 Karl Strupp, ‘Les règles générales du droit de la paix’ (1934) 47 RdC 263, 337. 641 Dionisio Anzilotti, Corso di diritto internazionale (Cedam 1955) 67; Paul Guggenheim, Traité de droit international public (Geneva 1967) 298; Joe Verhoeven, Droit international public (Larcier 2000) 349 ff; Georges Scelle, Précis de droit des gens : principes et systématique, vol 2 (Sirey 1934) 312 ff.; Benedetto Conforti (ed), Diritto Internazionale (11 edn, Editoriale Scientifica, a cura di Massimo Iovane 2018). 642 Attila Tanzi, Introduzione al diritto internazionale contemporaneo (CEDAM – Wolters Kluwer 2019) 59.

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sovereign equality, self-determination, peaceful settlement of disputes and other principles recognised in the “Friendly Relations” Declaration.643 There is no denying that principles in international law can stem from an international law process. The fact that general principles must be ‘recognized’ in domestic legal systems does not imply that general principles in international law are supposed to have their root exclusively in domestic legal systems. In the Corfú Channel case, the ICJ relied on ‘certain general and well-recognized principles, namely: elementary considerations of humanity […] and every State’s obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States’.644 In East Timor, the ICJ referred to the principle of self-determination of peoples as ‘one of the essential principles of contemporary international law’.645 Again, in its advisory opinion on the Genocide Convention, the ICJ referred to the principles underlying the Convention as ‘principles which are recognized by civilized nations as binding on States’.646 Simma and Alston have encouraged the use of general principles derived from international law in the human rights context, arguing that such expansion would ‘percolate down into domestic fora’, instead of being inferred from domestic legal systems.647 Although during the negotiations of the PCIJ Statute it was argued by some that the expression ‘principles of law’ referred to domestic law principles, it would seem unreasonable to exclude principles stemming from international law itself.648 It is submitted here that Article 38(1)(c) comprises principles ex foro domestico, and those developed in international law.649 Principles can be

643 GA, ‘Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in Accordance with the Charter of the United Nations’ (24 October 1970) UN Doc A/RES/25/2625. 644 Corfu Channel (United Kingdom of Great Britain and Northern Ireland v Albania) (Merits) [1949] ICJ Rep 4, 22. 645 Case Concerning East Timor (n 607), 16. 646 ILO, Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, adopted at its 204th Session (Geneva 1977), amended at is 279th (November 2000), 295th (March 2006), 329th (March 2017), 23. 647 Bruno Simma and Philip Alston, ‘The Sources of Human Rights Law: Custom, Jus Cogens, and General Principles’ (1988–1989) 12 Australian Yearbook of International Law 82–108, 102. 648 Frede Castberg, ‘La méthodologie du droit international public’ (1933) 43 RdC 313, 370 ; Bassiouni, ‘A Functional Approach to “General Principles of International Law”’ (n 599), 772. 649 A number of authors consider general principles of law as encompassing both principles ex foro domestico and principles of international law, see Charles Rousseau, Principes généraux du droit international public, vol I (Pedone 1944) 914; Paul Reuter, Droit international public (6 edn, Thémis 1984) 56 ff ; Lammers, ‘General Principles of Law Recognized by Civilized

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induced from municipal systems and can be inferred from international law.650 The wording of Article 38 does not confine the origin of principles of law to domestic legal systems, and the case law of international courts and tribunals has not upheld a rigid distinction between the two categories of principles.651 Furthermore, there are principles, such as good faith, which are common to both legal systems, operating as a ‘“Janus concept”, with one face looking at the national legal order and one at the international legal order’.652 4.4 The Normative Functions of General Principles of Law It his seminal study on the topic Cheng identifies two core functions of general principles of law. First, principles operate as means of interpretation of customary and treaty rules; second, they constitute an independent source of law (and obligations).653 In a similar vein, Wolfrum argues, Principles of law complement other sources of international law in various ways; they guide the interpretation of international treaties and, due to their abstract formulation, are the gateway for progressive interpretation. […] They may be the starting point for the evolution of a new rule of customary international law and they have frequently had an influence on the interpretation of the latter. Principles of law have even been used as a basis for the development of new rights and obligations. In general, they may, and indeed have, become the motor of a progressive development of international law.654

Nations’, 66–70; Karl Zemanek, ‘The Legal Foundations of the International System: General Course on Public International Law’ (1997) 266 RdC 23, 135–136. 650 Hoof, Rethinking the Sources of International Law (n 584), 147; Christina Voigt, ‘Delineating the Common Interest in International Law’ in Wolfgang Benedek and Others (eds), The Common Interest in International Law (Intersentia 2014), 14. 651 The PCIJ held that the duty of the party to abstain from impairing the execution of a decision is a ‘principle universally accepted by international tribunals and likewise laid down in many conventions’, in Electricity Company of Sofia and Bulgaria (Belgium v Bulgaria), PCIJ Series A/B, No 79, 199; similarly the ICJ noted that the obligation of reparation is a ‘principle generally accepted in the jurisprudence of international arbitration, as well as by municipal courts’, in Factory of Chorzow (Jurisdiction) PCIJ Series A No 9, 31. 652 Phoenix Action Ltd v Czech Republic (Award) (15 April 2009) ICSID Case No ARB/06/5, para 109. 653 Cheng, General Principles of Law as Applied by International Courts and Tribunals (n 591), 390. 654 Rüdiger Wolfrum, ‘Sources of International Law’ MPEPIL (2011), para 39.

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It is fairly uncontested that principles of law in international law provide for the background in light of which the existing rules of international law are interpreted and applied.655 This function is well acknowledged also in domestic legal systems.656 Principles have a general legal character which allow them to discharge their interpretative function throughout the whole international legal order, serving as an argumentative basis for upholding a certain legal solution.657 Though explicit references to principles of law in the decision of international courts and tribunals are rare, principles play a key role in the legal reasoning of judges and arbitrators.658 They guide interpretation of customary and treaty rules and provide an important dynamic tool.659 As to the doctrinal controversy on the role of principles as an autonomous source of international law,660 the arguments rejecting principles as an autonomous source of international law can be rebutted through a plain reference to the wording of Article 38(1)(c) of the ICJ Statute.661 Given that the Court is bound to decide, under that provision, ‘in accordance with international law’, it seems hardly disputable that such a source must be given an autonomous role in the system.662

655 Alfred Verdross, ‘Les principes généraux du droit dans la jurisprudence internationale’ (1935) 52 RdC 195, 227; Schlesinger, ‘Research on the General Principles of Law Recognized by Civilized Nations’ (n 628), 735; Lauterpacht, The Development of International Law by the International Court (n 631), 158 ff; Robert Kolb, Theory of International Law (Hart Publishing 2016) 138. 656 Denis Alland, ‘L’interprétation du droit international public’ (2013) 362 RdC 53, 180. In some domestic systems, such a function is explicitly acknowledged. See, for example, Article 12(2) of the Pre-laws of the Italian Civil Code, entitled ‘The Interpretation of the Law”. The text, comprising two paragraphs, states: ‘If the controversy cannot be decided with a precise disposition, one can turn to dispositions that regulate similar cases or analogous subjects, if the case still remains doubtful, it is decided according to the principles of the juridical system of the State’. 657 Robert Kolb, Good Faith in International Law (Hart Publishing 2017) 3. 658 Ian Brownlie, ‘International Law at the Fiftieth Anniversary of the United Nations: General Course on Public International Law’ (1995) 255 RdC 21; 40; Friedmann, ‘The Uses of “General Principles” in the Development of International Law’ (n 628). 659 Besson, ‘General Principles in International Law: Whose Principles?’ (n 624), 32. 660 The question is clearly formulated by Paul Visscher, ‘Cours général de droit international public’ (1972) 136 RdC 7, 112. 661 See Charles de Visscher, Theory and Reality in Public International Law (3 edn, Princeton University Press 2015) 419; Jennings and Watts, Oppenheim’s International Law (n 602), 38. 662 Pellet, ‘Article 38’ (n 621), 768; Malcolm N Shaw, International Law (8 edn, CUP 2017) 98.

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This is the position adopted by the ILC Special Rapporteur on General Principles of law,663 as well as in other ILC works.664 In Inceysa v El Salvador, the Arbitral Tribunal noted that principles of law have been generally understood as ‘general rules on which there is international consensus to consider them as universal standards and rules of conduct that must always be applied’.665 In his dissenting opinion in the Asylum case, Judge Caicedo Castilla argued that Article 38 of the ICJ Statute Says that the latter will apply the general principles of law; it cannot be argued that, because these principles have not been determined and because the article makes a simple reference to law, this provision of the Statute is null and void.666 In sum, principles can facilitate the interpretation of existing rules and ‘may give rise to rules of independent force’.667 These two functions are closely interrelated. General principles of law were conceived by the drafters of the PCIJ Statute as gap-fillers to avoid a non liquet.668 Yet their normative function goes beyond adjudication. As ‘elements of law-creation and of law-creativity’, they serve a normative role also in law-making. They provide guidance in the elaboration of binding (and non-binding) instruments, as well as legal arguments to be taken into account in the policies pursued by states.669 When operating as an autonomous source of law, principles usually substantiate a legal reasoning so as to “discover” some auxiliary rule. In so doing, they allow for the completeness of

663 First Report on General Principles of Law, by Marcelo Vázquez Bermúdez, Special Rapporteur’ (5 April 2019) UN Doc A/CN.4/732, para 30. 664 ILC, ‘Report on the Law of Treaties by Sir Hersch Lauterpacht, Special Rapporteur’ (24 March 1953) UN Doc A/CN.4/63, Commentary to Article 5, para 4; ILC ‘Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission, Finalised by Martti Koskenniemi’ (13 April 2006) UN Doc A/CN.4/L.682, para 28; ILC, ‘Second Report on Jus Cogens by Dire Tladi’, Special Rapporteur’ (n 492), para 51. 665 Inceysa v El Salvador (Award) (2006) ICSID Case No ARB/03/26, para 227 (emphasis added). 666 Colombian-Peruvian Asylum Case (n 554), Dissenting Opinion of Judge Caicedo Castilla, 369. 667 Jennings and Watts, Oppenheim’s International Law (n 602), 40; Martti Koskenniemi, ‘General Principles: Reflexions on Constructivist Thinking in International Law’ in Martti Koskenniemi (ed), Sources of International Law (Ashgate 2000), 364. 668 Lauterpacht, The Development of International Law by the International Court (n 631), 165 ff. 669 ILA Study Group on the Use of Domestic Law Principles in the Development of International Law, ‘Conference Report’ (Johannesburg 2016), para 2, available at http://www.ila-hq.org/ index.php/study-groups?study-groupsID=51.

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legal system.670 Obviously, the gap-filling function of principles is more relevant when international law ventures into uncharted areas previously confined to domestic legal systems.671 In Search of a Methodology: Distillation and Transposition of Principles The scant explicit references to Article 38(1)(c) by the ICJ do not allow to detect a precise methodology for their ascertainment.672 The proposed method, embraced by the ILC Special Rapporteur on the topic, entails two phases: distillation and transposition of the principle.673 “Distillation” consists of assessing legal rules from the principal legal systems of the wolrd, in order to derive their ratio legis, i.e., the underlying principle:

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L’opération consiste plutôt, sur base d’un «double procédé d’abstraction et de généralisation» à «exploiter la rationalité» des principales solutions internes, à en vérifier l’effectivité et à ramener ces solutions à leurs aspects les plus fondamentaux et cependant judiciairement utilisables, après les avoir dépouillées de leurs caractéristiques purement techniques et contingentes.674 At the same time, it will have to be assessed whether a given principle, despite its nuances in domestic legal systems, ‘remains constant across jurisdictions’.675 This phase might rely on a comparative approach: Le juge ou l’arbitre international se mue alors en comparatiste. Il dégage lui-même de cette confrontation les règles communément admises par les 670 Humphrey Waldock, ‘General Course on Public International Law’ (1962) 106 RdC 5, 64. 671 Friedmann, The Changing Structure of International Law (n 571), 188 ff. 672 The court often makes use of principles but does not explicitly rely on Article 38, nor does it give methodological hints. See, for example, Corfu Channel Case (n 644), 18 where the Court affirms that ‘indirect evidence is admitted in all systems of law, and its use is recognized by international decisions’. 673 ILC, ‘Second Report on General Principles of Law, by Marcelo Vázquez Bermúdez’ (9 April 2020) UN Doc A/CN.4/74; see Charles T Kotuby and Luke A Sobota, General Principles of Law and International Due Process: Principles and Norms Applicable in Transnational Disputes (OUP 2017) 16. These methodological considerations are germane to principles drawn from domestic legal systems. See North Sea Continental Shelf Case (n 620), Separate Opinion of Judge Ammoun, 134. 674 Visscher, ‘Cours général de droit international public’ (n 660), 116–117. 675 Kotuby and Sobota, General Principles of Law and International Due Process: Principles and Norms Applicable in Transnational Disputes (n 673), 20.

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uns et les autres, dont l’existence traduit ainsi une sorte de sens commun des lois internes obéissant, au-delà des disparités culturelles, à une logique ou des exigences universelles. Du fait de cette transposition judiciaire, ces principes de droit deviennent alors à la fois communs aux principaux systèmes juridiques internes et au droit international.676 The number of states has quadrupled in the past seventy years. Requiring a given principle to be recognised by all legal systems would not only be unrealistic, but also undesirable, as it would allow isolated tendencies to prevail over the generalised ones.677 Domestic legal systems can thus be grouped into two major “legal families”: Romano-Germanic and common law ones.678 Given that the ICJ is representative of ‘the main forms of civilization and of the principal legal systems of the world’, one would in principle be legitimised to resort also to the ICJ decisions to identify a given general principle under international law.679 In discussing how a consensual obligation is formed, Judge Weeramantry affirmed that [t]he completed legal product results from the classical process of the meeting of minds which follows from a confluence of offer and acceptance. This is accepted by most legal systems, with the rarest of exceptions. This principle is accepted alike by the Anglo-American law and the Romanistic legal systems. There are indeed substantial differences among different legal systems regarding such matters as the status and revocability of the offer, but the basic principle that the minds of offeror and offeree must

676 Pierre-Marie Dupuy, ‘L’unité de l’ordre juridique international : cours général de droit international public’ (2002) 297 RdC 25, 181. 677 ‘Il s’agit de dégager de l’ensemble des droits la tendance dominante, ce qui ne suppose évidemment pas la constatation que la règle en cause ait fait l’objet d’une reconnaissance unanime. Une telle exigence reviendrait à vider la méthode de tout sens, tout l’objet de l’exercice tendant précisément à départager les règles qui font l’objet d’une large reconnaissance et celles qui procèdent d’un particularisme exacerbé ou désuet’ in Emmanuel Gaillard, ‘Aspects philosophiques du droit de l’arbitrage international’ (2008) 329 RdC 61, 104. 678 ‘Second Report on General Principles of Law’ (n 673), para 50; Raimondo proposes to base the comparative test on equitable geographic distribution, so as to make it clear that national legal systems from all over the world are worthy of consideration, in Fabiàn Raimondo, General Principles of Law in the Decisions of International Criminal Courts and Tribunals (Martinus Nijhoff Publishers 2008) 55-56. 679 Michael K Addo, Human Rights Standards and the Responsibility of Transnational Corporations (Kluwer Law International 1999), Judge Levy Carneiro (Dissenting Opinion), 161.

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meet remains unaffected by these considerations, and belongs to the common core of legal systems.680 In the Oil Platforms case, Judge Simma resorted to a comparative analysis of both common and civil law jurisdictions in order to identify the principle of joint and several responsibility.681 It is to be borne in mind that the task of ascertaining the existence of the principle does not merely mean looking for coincidences among rules belonging to different legal systems. The exercise consists in an effort of synthesis,682 one which goes beyond the formal shape of different rules and institutions across legal systems allowing to discover their common ratio: Il ne suffit donc point de rechercher les règles formulées par la science du droit comparé pour les appliquer aux relations internationales, il est nécessaire de pénétrer jusqu’aux principes généraux supposés par le droit positif.683 As to the second step, that of transposition, it requires serious scrutiny of the structural differences between domestic legal systems and international law. Mechanical transpositions should be avoided,684 as not all municipal law principles are suited to be transposed to the international legal system. McNair, in his individual opinion on the International Status of South West Africa, recalled that [I]nternational law has recruited and continues to recruit many of its rules and institutions from private systems of law [… ] The way in which international law borrows from the source is not by means of importing private law institutions ‘lock, stock and barrel’, ready-made and fully equipped with a set of rules […] In my opinion the true view of the duty of international tribunals in this matter is to regard any features or terminology which are reminiscent of the rules and institutions of private law as 680 Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v Nigeria) (Preliminary Objections) [1998] ICJ Rep 275 Dissenting Opinion of Judge Weeramantry, 368–369. 681 Oil Platforms (Islamic Republic of Iran v USA) (Preliminary Objections) [1996] ICJ Rep 161, Separate Opinion of Judge Simma, para 74. 682 See Charles de Visscher, Théories et réalités en droit international public (Pedone 1970) 419. 683 See Eugène Borel, ‘Les voies de recours contre le sentences arbitrales’ (1935) 52 RdC 5, 205 ; Ellis raises concerns about the possibility of finding a common denominator among domestic systems, see Jaye Ellis, ‘General Principles and Comparative Law’ (2011) 22 EJIL 949–971, 960. 684 Prosecutor v Delalic, IT-96-21, ICTY (1998), para 405 ; Georges Ripert, ‘Les règles du droit civil applicables aux rapports internationaux (contribution à l’étude des principes généraux du droit visés au statut de la Cour permanente de justice internationale)’ (1933) 44 RdC 569, 581.

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an indication of policy and principles rather than as directly importing these rules and institutions.685 The transposition of a principle into international law is subject to two requirements. First, the principle ex foro domestico must be compatible with the fundamental principles on which international law is based, such as sovereignty or consensual jurisdiction. In other words, the principle must be capable of existing within the broader framework of international law.686 Second, adequate conditions must exist for the application of the principle in the international legal system.687 This serves to assess ensure that the principle can properly serve its purpose in within the structure of international law, without distortions.688 As observed by Weil, Une fois réduit à l’état d’une abstraction désincarnée, le principe doit […] être réimplanté dans le terreau du système international dans lequel il est appelé désormais à vivre. Une fois déshydratée et lyophilisée, la règle doit être réhydratée dans le contexte de l’ordre international. Bref, il ne suffit pas d’extraire le principe de son environnement national et de le réduire à l’état de squelette ; il faut encore redonner vie à ce squelette en le revêtant de chair et de peau et en lui insufflant vie de manière à ce qu’il puisse désormais régir des relations interétatiques. C’est à ce prix-là seulement que le droit comparé peut devenir une voie d’accès à la normativité internationale.689 4.6 General Principles of Law and Customary International Law In his First Report on Formation and Evidence of Customary International law, Wood finds that ‘the distinction between customary international law and general principles of law is […] important, but not always clear in the case law or the literature’.690 685 International Status of South West Africa (Advisory Opinion) [1959] ICJ Rep 128, Separate Opinion of Judge McNair, 148. 686 Ibid, para 75. 687 ‘Second Report on General Principles of Law’ (n 673), paras 75 ff. 688 Ibid, para 85. 689 Prosper Weil, ‘Le droit international en quête de son identité : cours général de droit international public’ (1992) 237 RdC 25, 146. 690 ILC, ‘First Report on Formation and Evidence of Customary International Law’ (n 159), para 36 (footnotes and references omitted); a similar point had been made by the Committee on the Formation of Customary International Law of the American Branch of the International Law Association in its Report on ‘The Role of State Practice in the Formation of Customary and Jus cogens Norms of International Law’ (1987–1988), 111.

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This section seeks to outline the differences between the two sources. The relevance of such a distinction to the research question of this book is not only theoretical. Assessing whether corporate liability is a principle of law may lead to a different result from the ascertainment of a rule with the same content under customary law. In Jesner v Arab Bank, an Amici Curiae in support of the claimants argued for the existence of a general principle on corporate liability. The Amici stressed that ‘general principles are a distinct source of international law, proved not through the universal practice of states inter se combined with opinio juris, as customary international law is, but by seeking the common denominator among domestic legal systems’.691 As a matter of fact, Article 38 (1)(c) of the ICJ Statute lists general principles of law as a distinct source from customary international law,692 providing a strong argument in favour of their autonomy. At the same time, the unwritten nature of both custom and principles, and their being framed as ‘general international law’,693 makes the line of demarcation between the two sources a blurred one.694 It may be helpful to distinguish between custom and principles starting from the constitutive elements of the former source, namely practice and opinio juris. In the North Sea Continental Shelf cases the ICJ recalled that Not only must the acts concerned amount to a settled practice, but they must also be such, or be carried out in such a way, as to be evidence of a belief that this practice is rendered obligatory by the existence of a rule of law requiring it. The need for such a belief, i.e., the existence of a subjective element, is implicit in the very notion of the opinio juris sive necessitatis. The states concerned must therefore feel that they are conforming to what amounts to a legal obligation.695 691 Brief of Amici Curiae of Comparative Law Scholars and Practitioners in Support of Petitioners, Joseph Jesner et Al v Arab Bank, Plc., (27 June 2017), 10, available at https://www.scotusblog. com/case-files/cases/jesner-v-arab-bank-plc/. 692 “Restatement of the Law Third” (n 465), para 102: ‘a rule of international law is one that has been accepted by the international community of states by affirmative agreement, “in the form of customary law” or “by derivation from general principles common to the major legal systems of the world”’. 693 On the concept of “general international law”, see ILC ‘Fragmentation of International Law’ (n 664) 254. 694 On the difference between customary international law and general principles of law, see Louis Le Fur, ‘La Coutume et les principes généraux du droit comme sources du droit international public’ in LivreRecueil d’études sur les sources du droit en l’honneur de François Gény, vol 3 (Sirey 1935); Waldock, ‘General Course on Public International Law’ (n 670), 39; Thomas Kleinlein, ‘Customary International Law and General Principles: Rethinking their Relationship’ in Brian D Lepard (ed), Reexamining Customary International Law (CUP 2017). 695 North Sea Continental Shelf Case (n 620), 44.

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In the formation of customary international law, the ‘generalization of the practice of States’696 requires states to be ‘conscious of having a duty’,697 to have a ‘feeling of legal obligation’.698 In the words of Mendelson, the practice of states has to be accompanied by ‘a belief in the legally permissible or obligatory nature of the conduct in question, or of its necessity’.699 As already alluded to, the way principles emerge in international law is similar, but not entirely analogous, to the customary law process. The material element is not, or not necessarily, based on state conduct relating to relations among states. Article 38(1)(c) makes no reference to “practice”; it simply requires principles to be “recognised” in the majority of legal systems.700 When it comes to principles ex foro domestico, the various domestic legal rules ‘are written ex ante, without necessarily any thought of their eventual incorporation into international law or their possible invocation by or against the State and its citizens’.701 When, on the other hand, principles stem from the international legal order, they will result from a process of abstraction from existing international instruments.702 Admittedly, the difference between principles and custom will appear more or less neat according to how “traditional” is the approach to custom we embrace. As argued by Roberts, ‘traditional custom is evolutionary and is identified through an inductive process in which a general custom is derived from specific instances of state practice’, while ‘modern custom is derived by a deductive process that begins with general statements of rules rather than particular instances of practice’.703

696 Fisheries Case (UK v Norway) [1951] ICJ Rep116, Dissenting Opinion of Judge Read, 191. 697 SS Lotus (France v Turkey) [1927] PCIJ Series A No 10, 28. 698 Colombian-Peruvian Asylum Case (n 554), para 286; see Malanczuk, Akehurst’s Modern Introduction to International Law (n 225), 44. 699 Mendelson, ‘The Formation of Customary International Law’ (n 575), 769. 700 Cheng, General Principles of Law as Applied by International Courts and Tribunals (n 591), 24; see also Jean Combacau and Serge Sur, Droit International Public (12 edn, LGDJ 2016) ‘Les principes généraux ne sont pas dégagés à partir d’actes et de pratiques ayant par euxmêmes une signification internationale, exprimant sur ce point une opinion juris, mais à partir d’instruments juridiques spécifiquement internes’. 701 Kotuby and Sobota, General Principles of Law and International Due Process (n 673), 29. 702 Beatrice I Bonafé and Paolo Palchetti, ‘Relying on General Principles in International Law’ in Catherine Brölmann and Yannick Radi (eds), Research Handbook on the Theory and Practice of International Lawmaking (Edward Elgar 2016), 163. 703 Anthea Roberts, ‘Traditional and Modern Approaches to Customary International Law: A Reconciliation’ (2001) AJIL 757–791, 757.

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4.7 A Role for General Principles in Business and Human Rights The recruitment of general principles of law from domestic legal systems should be handled with care. As mentioned above, not all principles are apt to be part of international law. However, as argued by Schachter, and most interestingly for the scope of the present analysis, in the ‘emergent international law concerned with the individual, business companies, environmental dangers and shared resources […] national law principles will often be suitable for international application’.704 This section outlines the role of general principles of law vis-à-vis the two core players in business and human rights: states and corporations. 4.7.1 General Principles as a Tool to Interpret the State Obligations Under the principle of pacta sunt servanda, treaties are binding on the parties and must be performed by them in good faith.705 The principle of good faith reflects ‘the need that actions should correspond with words (written or spoken), that promises be kept – otherwise there would be no point in concluding treaties’.706 The role of good faith in interpreting human rights treaties – and customary human rights rules – raises a number of questions concerning state obligations pertaining to corporate activities. States have positive obligations to regulate corporate activities to ensure they do not infringe upon the human rights of others. Good faith forbids states to invoke their domestic law to justify the lack of compliance with their international obligations. Furthermore, in discharging their obligations in good faith, states are precluded from assuming conflicting obligations through other treaties, such as investment agreements. Principles can also serve an important role in clarifying the “reach” of state human rights obligations. States are required under international human rights law to regulate activities of businesses domiciled in their jurisdiction. Does the principle of no-harm have anything to say about the “reach” of such obligations? This principle requires states not to use their territory, or allow it to be used, for activities that impair human rights of others. In a globalised world, the principle has evolved so as to encompass more than just bilateral relationships between neighbouring states. Analysing state duty to protect through the principle of no-harm may point to the conclusion that states have a duty to prevent, through regulation, corporate abuses committed abroad by corporations domiciled under their jurisdiction. The general principle of access to justice can also play a key role in assessing the reach of the state duty to protect, and in particular 704 Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (n 174), 79. 705 VCLT, Article 26. 706 Manfred Lachs, ‘The Development and General Trends of International Law in our Time’ (1980) 169 RdC 19, 198.

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to provide victims of corporate-related violations with access to remedy. Does such a principle justify, or even impose a duty to provide a forum necessitatis to victims of human rights abuses? Part II seeks to address these questions. 4.7.2 General Principles and the Development of Corporate Obligations Principles are the “epitome” of monism, they reveal the unity of the legal phenomenon. Whether their roots are domestic or international, or common to any legal system, principles do not need incorporation. They “navigate” between municipal and international law, bridging the gap between the two systems. When principles and rules generally applied in domestic legal systems are transferred onto the international plane, they automatically become part of international law. If one thinks of principles such as good faith, abuse of rights, due diligence, legitimate expectation, and estoppel, it seems safe to argue that they apply to both states and non-state actors. In Doe v Exxon Mobil Corp., Judge Kavanaugh, by quoting Brierly, recalled that [p]rivate law, being in general more developed than international law, has always constituted a sort of reserve store of principles upon which the latter has been in the habit of drawing […] for the good reason that a principle which is found to be generally accepted by civilized legal systems may fairly be assumed to be so reasonable as to be necessary to the maintenance of justice under any system.707 By the same token, one could ask what obligations could stem for corporations from principles of law and what is their relevance with regard to their duty to respect human rights. This is the main question addressed by Part III. 4.7.3 The Development of a Principle on Corporate Liability According to the expert opinion of Judge Greenwood in the Talisman case before the US Supreme Court, ‘there is no basis in existing international law for the liability of corporations and, consequently, no rules of international law regarding the questions which necessarily arise when a corporation is accused of wrongdoing’.708 Clapham, on the other hand, in his seminal monographic study on human rights obligations of non-state actors, maintains that ‘customary 707 Doe v Exxon Mobil Corp. (8 July 2011) 654 F.3d 11, 54 (US Court of Appeals D.C. Circuit), Judge Kavanaugh (Dissenting). 708 Presbyterian Church of Sudan v Talisman Energy Inc., Civil Action No 19882 (7 May 2002), Declaration of Christopher Greenwood, 8.

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international law, international treaties, and certain non-binding international instruments already create human rights responsibilities for non-state actors’.709 Both positions somehow ignore the role of principles of law in rejecting or affirming the existence of corporate obligations in international law. In the majority’s opinion in Kiobel I, the fact that corporations are liable under domestic law does not imply that they can be held liable under international law. Such a conclusion fails to take into account that parallel developments across domestic legal systems can contribute to the formation of a general principle of law. As illustrated by the ICTY, commonalities among legal systems can reveal ‘“general concepts and legal institutions” which, if common to a broad spectrum of national legal systems, disclose an international approach to a legal question which may be considered as an appropriate indicator of the international law on the subject’.710 As we shall see in Part IV, the widespread presence of corporate liability at the domestic level, may reveal a common principle on corporate liability. In assessing whether such principle is compatible with the fabric of international law, the arguments made in Part I will come in handy. The state duty to protect human rights against corporate abuses, together with the non-binding business and human rights instruments addressed to corporations, confirm that the principle of corporate liability, as a principle ex foro domestico, can be transposed to compatible with the international legal system. As tellingly argued by Marrella, Il s’agit, selon nous, d’une obligation négative pesant sur l’entreprise et dont l’Etat territorial, comme les autres Etats parties à un traité de protection des droits de l’homme, sont créanciers. C’est une obligation négative découlant des principes généraux de droit au sens de l’article 38 du Statut de la CIJ, une source toujours méconnue du droit international, et expression des trois règles élémentaires de tout droit: « honeste vivere, alterum non laedere et suum cuique tribuere […].711

709 Clapham, Human Rights Obligations of Non-State Actors (n 6), 21. 710 Prosecutor v Kunarac et al. (Judgement) (22 February 2001) ICTY IT-96-23-T and IT-96-23/1-T, para 439. 711 Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (n 177), 192.

part ii

General Principles and the Human Rights Obligations of States Introduction States lie at the heart of international human rights law, under which they have a duty to respect, protect and fulfil human rights.1 In the context of corporate activities, the state duty to respect entails an obligation to refrain from violating human rights, while under the state duty to protect states are required to take steps to prevent and address human rights violations deriving from the conduct of no-state actors, including corporations. Having regard to the state duty to respect, the conduct of corporations may be attributed to the state and may thus trigger its international responsibility; as to the state duty to protect, the state may incur international responsibility for failing to take adequate measures to protect individuals against abuses committed by corporations as third parties. Part II investigates the role of general principles of law in relation to the state duty to protect human rights. It proceeds in four chapters. Chapter 5 sets the scene by outlining the concept of jurisdiction and its legal contours in public and private international law. Chapter 6 begins with an analysis of the state duty to protect in light of the principle of good faith, assessing the impact of positive obligations in making the protection of human rights effective. The same chapter then assesses the potential “extraterritorial reach” of the state duty to protect in light of the principle of no-harm and the right to remedy.

1

The tripartite typology of obligations was elaborated by Asbjørn Eide, then Rapporteur to the UN Sub-Commission on Prevention of Discrimination and Protection of Minorities, with regard to the right to food, see UN Doc E/CN.4/Sub.2/1987/23; see also Henry Shue, Basic Rights, Subsistence, Affluence and US Foreign Policy (Princeton University Press 1980) 52.

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Jurisdiction: The Contours of the State Entitlement and Duty to Act

5.1 A Public International Law Perspective on Jurisdiction A core challenge pertaining to states’ international human rights obligations concerns the determination of the scope of the state’s jurisdiction. This warrants a preliminary consideration of this fundamental legal institution prior to analysing the state duties to respect, protect and fulfil human rights in relation to corporate activities. The Dictionnaire de la terminologie du droit international defines “jurisdiction” as Le fait de « dire le droit », elle est ensuite le pouvoir de juger ; elle est également l’aire territoriale sur laquelle s’étend ce pouvoir ; dans une sens plus général, elle est la puissance en vertu de laquelle l’État soumet à l’action de ses juges les personnes et les choses.2 The multifaceted notion of jurisdiction is inherent in the sovereign power of the state to create and enforce the rights and duties of natural and legal persons by its domestic law.3 The ILC has upheld the generally recognised three-pronged dimension of jurisdiction: [T]he jurisdiction of a State may be divided into three categories, namely: prescriptive jurisdiction, adjudicative jurisdiction and enforcement jurisdiction. Prescriptive jurisdiction refers to the authority of a State to adopt legislation providing norms of conduct which govern persons, property or conduct. Adjudicative jurisdiction refers to the authority of a State to determine the rights of parties under its law in a particular case. Enforcement jurisdiction refers to the authority of a State to ensure compliance with its law.4

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‘Juridiction’, in Union académique internationale, Dictionnaire de la terminologie du droit internationale (Sirey 1960), 354. The meaning of jurisdiction as the competence of an international court or tribunal to hear a case will not be included in the analysis, see Christopher Staker, ‘Jurisdiction’ in Malcolm Evans (ed), International Law (OUP 2018), 289–290. Derek W Bowett, ‘Jurisdiction: Changing Patterns of Authority over Activities and Resources’ (1983) 53 BYIL 1–26, 1. James Crawford, Brownlie’s Principles of Public International Law (8 edn, OUP 2012) 46. ILC, ‘Report of the International Law Commission, Fifty-eighth Session (1 May-9 June and 3 July-11 August 2006)’ Annex E (2006) UN Doc A/61/10, 517–518; see also American Law Institute, ‘Restatement of the Law Fourth, the Foreign Relations Law of the United States’, – Jurisdiction (Tentative Draft No 3, March 10, 2017), Section 101.

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The rules on jurisdiction in public international law revolve around three structural principles: sovereignty, non-intervention and cooperation.5 Whilst, in its domestic dimension, sovereignty implies the exclusive state powers and prerogatives the to make, assess and enforce the law within the boundaries of its territory.6 In its external dimension, sovereignty entails the independence of the state vis-à-vis other states.7 The principle of non-intervention, on the other hand, provides for a dividing line between potentially conflicting sovereign rights between states. Accordingly, the state must respect the corresponding sovereign rights of other states, refraining from exercising acts of coercion on foreign territory.8 Finally, international law requires states to settle their conflicts relating to jurisdiction peacefully and in good faith. The distinction between jurisdiction to prescribe, enforce and adjudicate is not of a merely theoretical value, as the criteria for the lawful exercise of jurisdiction may vary according to each of the three aspects.9 Jurisdiction to enforce is confined, as a general rule, to the state’s territory. As stated by the PCIJ in the Lotus case, ‘[f]ailing the existence of a permissive rule to the contrary […] [the state] may not exercise its power in any form in the territory of another State’.10 Prescriptive and adjudicative jurisdictions are also primarily territorial in scope, as the state has the prerogative to regulate and adjudicate on its own territory for facts occurred on its own territory. Yet there are circumstances under which international law allows for such sovereign prerogative to be exercised extraterritorially, as long as there is a reasonable link between the disputed facts and the state enacting a given rule or adjudicating the case.11 Again, as observed by the PCIJ in Lotus, Far from laying down a general prohibition to the effect that States may not extend the application of their laws and the ‘jurisdiction’ of their 5

6 7 8

9 10 11

Hervé Ascensio, ‘Extra-Territoriality as An Instrument: Contribution to the Work of the UN Secretary-General’s Special Representative on human Rights and Transnational Corporations and Other Businesses’ (2010), 1. Robert Jennings and Arthur Watts, Oppenheim’s International Law, vol 1 (9 edn, OUP 2008) 171. Island of Palmas (Netherlands, USA) (1928)2 RIIAA 829, 838. UN Charter, Article 2(7). See Case Concerning Military and Paramilitary Activities an and Against Nicaragua (Nicaragua v USA) (Merits) [1986] ICJ Rep 14, para 205; Frederick Mann, ‘The Doctrine of International Jurisdiction Revisited after Twenty Years’ (1984) 186 RdC 19, 20. Bernard H Oxman, ‘Jurisdiction of States’ in Rudolf Bernhardt (ed), Encyclopedia of Public International Law, vol 3 (Elsevier Science Publishers 1997), 55. SS Lotus (France v Turkey) [1927] PCIJ Series A, No 10, 18–19. See also Vaughan Lowe, ‘Jurisdiction’ in Malcolm D Evans (ed), International Law (3 edn, OUP 2014). Michael Akehurst, ‘Jurisdiction in International Law’ (1972–1973) 46 BYIL 145–257, 179.

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courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure of discretion which is only limited in certain cases by prohibitive rules.12 Such measure of discretion, the scope of which remains controversial,13 is dependent on certain connecting factors.14 The principles that may be invoked in order to justify the exercise of forms of extraterritorial jurisdiction include: i) the nationality principle, which grants the state jurisdiction over the activities of its nationals abroad, being them natural or legal persons;15 ii) the objective territoriality principle, which refers to jurisdiction over persons, property or acts when a constitutive element of the conduct regulated by a given state occurred in the territory of that state;16 iii) the effects doctrine, which refers to jurisdiction over activities carried out by foreigners abroad which produce effects within the territory of the state;17 iv) the protective principle, according to which a state may exercise its jurisdiction over acts committed by aliens abroad and threatening vital interests of the state;18 v) the universality principle, according to which, 12 13

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SS Lotus (n 10), 19. Rosalyn Higgins, ‘The Legal Bases of Jurisdiction’ in Cecile J Olmstead (ed), Extra-Territorial Application of Laws and Responses Thereto (International Law Association – ESC Publishing 1984), 14. See also Robert Jennings and Arthur Watts, Oppenheim’s International Law (n 6), 12: ‘it is important that freedom is derived from a legal right and not from an assertion of unlimited will, and is subject ultimately to regulation within the legal framework of the international community’. ILC, ‘Report of the International Law Commission, Fifty-eighth Session’ (n 4), 520–522. A distinction is made between the active nationality principle, according to which the state has jurisdiction over its nationals for crimes committed abroad (sometimes used also in tax law), and the passive personality principle, according to which the state would have jurisdiction over foreigners for offenses against its own nationals. The passive nationality principle, originally considered as an excess of jurisdiction, has been more recently recognised under restrictive conditions for crimes such as terrorism. See Cedric Ryngaert, Jurisdiction in International Law (2 edn, OUP 2015) 111–113; William S Dodge, ‘Jurisdiction in the Fourth Restatement of Foreign Relations Law’ (2016–2017) 18 Yearbook of Private International Law 143–170, 154. Differently from the “protective” principle (see infra), this principle requires actual harmful effects in the territory of the state, and not merely a potential harm. The doctrine has been used in EU competition law, see Gencor Ltd v Commission (1999) ECR II T-102/96; Intel Corporation Inc v Commission (2014) C-413/14 P. The effects doctrine is similar to the objective territoriality principle, but differently from the latter it does not require that an element of the conduct takes place in the territory of the regulating state. The principle is not controversial, but it is usually only relied upon for very specific purposes related to the protection of the state’s sovereignty and security (e.g. counterfeiting of government money or violation of immigration and custom laws). See US v Pizzarusso (9 January 1968) 388 F.2d 8 (US Court of Appeals 2nd Cir.), 10.

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in the absence of any connecting factor, a state may exercise jurisdiction over certain crimes, such as torture, genocide, or crimes against humanity, even in situations where it has no particular connection to the perpetrator, the victim or the locus commissi delicti.19 “Extraterritorial jurisdiction” can be defined as ‘the exercise of sovereign power or authority by a State outside of its territory’.20 While the territoriality principle remains the primary base of jurisdiction, the ILC has acknowledged that The exercise of extraterritorial jurisdiction by a State with respect to persons, property or acts outside its territory has become an increasingly common phenomenon largely as a consequence of: (a) the increase in the movement of persons beyond national borders; (b) the growing number of multinational corporations; (c) the globalization of the world economy; (d) the increase in transnational criminal activities, including drug trafficking, money laundering, securities fraud and international terrorism; (e) the increase in illegal migration; and (f) the increasing use of the internet across national borders for legal or illegal purposes, such as electronic contracts, e-commerce and cyber crimes.21 By reshaping the concept of sovereignty, international human rights law has significantly impacted the contours of state jurisdiction. As emphasised by the ICTY: A State-sovereignty-oriented approach has been gradually supplanted by a human-being-oriented approach. Gradually the maxim of Roman law hominum causa omne jus constitutum est (all law is created for the benefit of human beings) has gained a firm foothold in the international community as well.22 19

20 21 22

Attorney General v Adolf Eichmann (11 December 1961) Supreme Court of Israel 336/31, 36 ILR 28. The ICJ has adopted a restrictive view of the principle, see Andreas Fischer-Lescano and Gunther Teubner, ‘Regime Collisions: The Vain Search for Legal Unity in the Fragmentation of Global Law’’ (2003–2004) 25 Michigan Journal of International Law 999–1046, Judges Higgins, Kooijmans and Buergenthal (Joint Separate Opinion), paras 45 and 53; ‘there is no established practice in which States exercise universal jurisdiction, properly so called’, and ‘the only clear example of an agreed exercise of universal jurisdiction was in respect of piracy’. For a critical analysis of universality, see Roger O’Keefe, ‘Universal Jurisdiction: Clarifying the Basic Concept’ (2004) 2 Journal of International Criminal Justice 735–760. ILC, ‘Report of the International Law Commission, Fifty-eighth Session’ (n 4), 517. Ibid, 516 (emphasis added). Prosecutor v Tadic (Jurisdictional Phase) (1995) Appeals Chamber ICTY, 97. See Johan D Van Der Vyver, ‘Sovereignty’ in Dinah Shelton (ed), The Oxford Handbook of International Human Rights Law (OUP 2013), 395.

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Jurisdiction under international law has been gradually evolving from the institution which delimits the state entitlement to act,23 to one that also defines the scope of the state duty to act.24 As Mills put it, jurisdiction ‘is not merely a “ceiling” delimiting state power, but also a “floor” reflecting minimum requirements for the exercise of regulatory power by states in order to satisfy their international obligations’.25 This is particularly the case in international human rights law, where states parties to human rights treaties are generally required to protect the rights of individuals falling within their “jurisdiction”.26 In this context, jurisdiction operates as ‘a threshold criterion which must be satisfied in order for treaty obligations to arise in the first place’,27 and aims to ‘delimit an arena’ within which human rights obligations operate.28 In other words, the notion of jurisdiction in the human rights context serves to clarify the relationship between states and individuals, to delimit the pool of duty-bearers and right-holders.29 The majority of international human rights treaties include a clause limiting the rights guaranteed in the treaty – and the correlative obligations of the state – to the latter’s territory and/or jurisdiction.30 In its Advisory Opinion on 23

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Rosalyn Higgins, Problems and Process: International Law and How We Use It (OUP 1995) 146; Robert Jennings and Arthur Watts, Oppenheim’s International Law (n 6), 456–457; Anne Peters, ‘Humanity as the Alpha and Omega of Sovereignty’ (2009) 20 EJIL 513–544, 525. This is because sovereignty implies rights and duties for states, see Mario Giuliano, I diritti e gli obblighi degli stati (CEDAM 1956) 79. See also S.N. Guha Roy, ‘Is the Law of Responsibility of States for Injuries to Aliens a Part of Universal International Law?’ (1961) 55 AJIL 863–891, 867; Alex Mills, ‘Rethinking Jurisdiction in International Law’ (2014) 84 BYIL 187–239, 210. Jan Wouters and Others, International Law: A European Perspective (Hart Publishing 2019) 464 ff. Marko Milanovic, ‘From Compromise to Principle: Clarifying the Concept of State Jurisdiction in Human Rights Treaties’ (2008) 8 Human Rights Law Review 411–448, 416. Alexander Orakhelashvili, ‘Restrictive Interpretation of Human Rights Treaties in the Recent Jurisprudence of the European Court of Human Rights’ (2003) 14 EJIL 529–568, 540; Maarten den Heijer and Rick Lawson, ‘Extraterritorial Human Rights and the Concept of ‘Jurisdiction’’ in Malcolm Langford and others (eds), Global Justice, State Duties: The Extraterritorial Scope of Economic, Social, and Cultural Rights in International Law (CUP 2013), 158 ff. Samantha Besson, ‘The Extraterritoriality of the European Convention on Human Rights: Why Human Rights Depend on Jurisdiction and what Jurisdiction Amounts to’ (2012) 25 LJIL 857–884, 860. See, among others, International Covenant on Civil and Political Rights (adopted 16 December 1966, entered into force 23 March 1976) 999 UNTS 171 Article 1; Convention for the Protection of Human Rights and Fundamental Freedoms (adopted 4 November 1950, entered into force 3 September 1953) 213 UNTS 221, Article 1 ECHR; American Convention on Human Rights (adopted 22 November 1969, entered into force 18 July 1978) 1144 UNTS 123, Article 1. Not all human rights treaties contain a jurisdictional clause. See, for example, International Convention on the Elimination of Racial Discrimination (adopted 21 December

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The Legal Consequences of the Construction of a Wall in the Occupied Palestine Territory, the ICJ, in referring to the scope of application of the ICCPR, the ICESCR and the CRC, observed that the jurisdiction of states may sometimes be exercised outside their national territory.31 This approach was followed by the Court in Democratic Republic of Congo v Uganda32 and, with regard to the ICERD, in Georgia v Russia.33 The Human Rights Committee has also found that the scope of application of the ICCPR could reach beyond the territory of states parties, on the basis that ‘it would be unconscionable to so interpret the responsibility under article 2 of the Covenant as to permit a State party to perpetrate violations of the Covenant on the territory of another State, which violations it could not perpetrate on its own territory’.34 As to the ECHR, its jurisdictional clause has been interpreted by the ECtHR as going beyond the national territory of the state parties in exceptional circumstances.35 “Jurisdiction” under Article 1 of the Convention has been understood by the Court to indicate either the effective control over a geographical area located outside the territory of the state (spatial model),36 or the effective control of the state over persons located outside its territory (personal model of jurisdiction).37 The IACtHR has also recognised that the term “jurisdiction” in the American Convention on Human Rights is not necessarily confined to the territorial boarders of the state and that states must respect and ensure the human rights of all

1965, entered into force 4 January 1968) 660 UNTS 195; Convention on the Elimination of All Forms of Discrimination against Women (adopted 1 March 1980, entered into force 3 September 1981) 1249 UNTS 13; Convention on the Rights of the Child (adopted 20 November 1989, entered into force 2 September 1990) 1577 UNTS 3. 31 Legal Consequences of the Construction of a Wall in the Occupied Palestine Territory [2004] ICJ Rep 136, para 111. 32 Case Concerning Armed Activities on the Territory of the Congo (Democratic Republic of Congo v Uganda) [2005] ICJ Rep 168, para 216. 33 Case Concerning Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v Russia) (Provisional Measures) [2008] ICJ Rep, paras 109, 149. 34 HRCtee, Sergio Euben Lopez Burgos v Uruguay (1979) Comm No R.12/52, para 12; see also HRCtee, Lilian Celiberti de Casariego v Uruguay (1981) Comm No 56/1979, para 10.3. 35 Koen Lemmens, ‘General Survey of the Convention’ in Pieter Van Dijk and others (eds), Theory and Practice of the European Convention on Human Rights (Intersentia 2018), 12. 36 Cyprus v Turkey (GC) (1992) ECtHR App No 25781/94, paras 77, 78; Loizidou v Turkey (Merits) (1996) ECtHR App No 15318/89; Kebe and Others v Ukraine (2017) ECtHR App No 12552/12, paras 74–76. 37 Öcalan v Turkey (2005) (GC) ECtHR App No 46221/99; Hirsi Jamaa and Others v Italy (2012) (GC) ECtHR App No 27765/09, para 81. The landmark judgment Al-Skeini and Others v UK (2011) (GC) ECtHR App No 55721/07, seems to uphold both the spatial and the personal model, see Marko Milanovic, ‘Al-Skeini and Al-Jedda in Strasbourg’ (2012) 23 EJIL 121–139.

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persons subject to their jurisdiction, even if they are not within their territory.38 In its recent Advisory Opinion on the Environment and Human Rights, the Court has also acknowledged the existence of a jurisdictional link between the state of origin – i.e. where the activities are carried out which caused transboundary harm – and consequent violation of human rights beyond its boundaries.39 When it comes to extraterritorial jurisdiction in the business and human rights context, the relevant principles of international law referred to above must be taken into account, together with the purpose of human rights treaties and the rights guaranteed therein. As stressed by Higgins, ‘the key to the issue lies in the protection of common values rather than the invocation of state sovereignty for its own sake’.40 5.2 A Private International Law Perspective on Jurisdiction The jurisdictional principles defined by public international law are operationalised in the field of private international legal relations through the rules of private international law, which are part of the individual national legal orders.41 Indeed, such domestic rules determine the scope of jurisdiction of municipal courts and tribunals, as well as the domestic, or foreign applicable law by them, in relation to disputes having foreign elements. Nonetheless, the interplay between jurisdiction in public and private international law is a constant one, as ‘rules of private international law are national in their source, but nevertheless directly affect a state’s compliance with its international obligations’.42 The business and human rights domain reveals the confluence of public and private international law, since in order to be able to enjoy the protection of human rights before domestic courts, victims of corporate human rights violations need to come within the human rights jurisdiction of the state concerned. The EU regime on civil jurisdiction over disputes having a transboundary character is harmonized through the Brussels I Regulation43 and the Lugano 38 39

40 41

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Victor Saldano v Argentina (1999) IACmHR Report No 38/99, para 19. Obligaciones estatales en relación con el medio ambiente en el marco de la protección y garantía de los derechos a la vida y a la integridad personal (Opinión consultiva) IACtHR (2017) OC-23/17, para 74. Rosalyn Higgins, Problems and Process: International Law and How We Use It (n 23), 77. Although, as noted by Moss, public international law principles are interpreted so extensively that their capacity to shape private international law rules is limited, in Giuditta Cordero Moss, ‘Between Private and Public International Law: Exorbitant Jurisdiction as Illustrated by the Yukos Case’ (2007) 32 Review of Central and East European Law 1–17, Alex Mills, ‘Rethinking Jurisdiction in International Law’ (n 25), 202; see also Robert Jennings and Arthur Watts, Oppenheim’s International Law (n 6), 7. EU Regulation No 1215/2012 of the European Parliament and of the Council on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (12

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Convention on the Recognition and Enforcement of Judgments in Civil and Commercial Matters.44 Brussels I applies ratione materiae to all civil and commercial disputes.45 The Regulation affirms that ‘persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State’.46 With respect to legal entities, the domicile is intended as the place where the entity has its statutory seat, central administration or principal place of business.47 The problem remains that the criteria set in Article 4 of Brussels I do not give due account of current transnational corporate structures. An “ad hoc” jurisdictional link should be established for claims concerning human rights violations committed abroad by transnational corporations.48 It should be noted that Brussels I contains a number of exceptions to the criterion of the defendant’s domicile. Article 7(2) gives concurrent jurisdiction in cases of ‘tort, delict or quasi-delict to the courts of the member state where the harmful event occurred or may occur’. The European Court of Justice interpreted Article 7(2) to the effect that it offers to claimants the option to resort to jurisdictional remedies, either in ‘the place where the damage occurred or [in] the place of the event giving rise to it’.49 Additionally, Article 7(3) grants concurrent jurisdiction to the courts of the Member State where the same act has already given rise to criminal proceedings. Once it has been established that the court before which a claim has been brought has jurisdiction to hear the matter, the question arises as to the applicable law. Within the EU context, the issue of the applicable law is largely regulated

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December 2012) OJ L 351/1 (Brussels I Recast). The Regulation superseded the EU Council Regulation No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 16 January 2001 (OJ L 12), which in turn had replaced the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (adopted 27 September 1968, entered into force 1 February 1973) 1262 UNTS 153. Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (adopted 30 October 2007, entered into force 1 January 2010). Brussels I, Article 1(1). Ibid, Article 4(1). Ibid, Article 63. Similarly, see American Law Institute, ‘Restatement of the Law, Fourth’ (n 4), Section 214. Fabrizio Marrella, ‘I Principi Guida dell’ONU sulle imprese e i diritti umani del 2011 e l’accesso ai rimedi tramite gli strumenti di diritto internazionale privato europeo: una critica’, in Marina Castellaneta and Francesca Vessia (eds), La responsabilità sociale d’impresa tra diritto societario e diritto internazionale (Edizioni scientifiche italiane 2019), 327. Handelskwekerij G. J. Bier B.V. v Mines de Potasse d’Alsace S.A. (1976) Case 21/76 ECR 1735, para 19.

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by the Rome II Regulation,50 which refers to the law of the country where the damage occurred, ‘irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur’.51 This might raise issues whenever the legal framework of the country where the damage occurred does not contain adequate provisions on human rights protection. Among the exceptions to the rule of the lex loci damni, a relevant one is the provision allowing the victims in transboundary tort cases arising out of environmental damage to choose the applicability of the law of the country where the event giving rise to the damage originated, rather than that of the country where the damage occurred.52

6

The State Duty to Protect Human Rights and General Principles of Law

In Armed Activities on the Territory of Congo, the ICJ found Uganda internationally responsible not only for the acts and omissions of its own military forces, but also for ‘any lack of vigilance in preventing violations of human rights […] by other actors present in the occupied territory’.53 The previous chapter explored the contours of jurisdiction in public and private international law, highlighting the main challenges linked to the business and human rights domain. I now turn to cases where the state is not responsible for the corporate abuse per se, but for failing to abide by its duty to protect human rights from violations committed by corporations, thus not attributable to it.54 Unlike in the case of the obligation to abstain from infringing upon human rights,

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Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the Law Applicable to non-Contractual Obligations (31 July 2007) OJEU L199/40 (Rome II). Note that the Regulation covers torts occurring within and outside the EU alike and may as such also lead to the application of the law of a non-EU Member State; its geographical scope is universal (Article 3 Rome II Regulation). Ibid, Article 4(1). Ibid, Article 7. See Liesbeth Enneking, ‘Paying the Price for Socially Irresponsible Business Practices? Corporate Liability for Violations of Human Rights and the Environment Abroad’ (2017) 8 Aktuelle juristische Praxis – Pratique juridique Actuelle 988–997, 994. Armed Activities on the Territory of the Congo (n 32), 179, emphasis added. See also United States Diplomatic and Consular Staff in Tehran [1980] ICJ Rep 3, paras 73-76. HRC, ‘Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie: Business and Human Rights: Mapping International Standards of Responsibility and Accountability for Corporate Acts’ (19 February 2007) UN Doc A/HRC/4/35, para 10.

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the duty to protect entails a positive obligation of conduct, not of result.55 This implies that the state is responsible only for the violations that are traceable to its failure to take all the appropriate measures to prevent that rights of individuals under its jurisdiction are violated by third parties. As noted by the ICJ with regard to the state obligation to prevent genocide, ‘[R]esponsibility is […] incurred if the State manifestly failed to take all measures to prevent’ the violation.56 The duty to protect in the business and human rights context is thus one of due diligence in taking adequate steps to prevent, and also to ensure redress for, violations by corporations.57 All three branches of the state are bound by such duty. The legislative power must enact appropriate laws regulating corporations; the executive power must put in place administrative measures effectively implementing the legislation in question; and the judicial power must guarantee effective access to justice when human rights are encroached upon by companies, or when the adequate legislation is not appropriately applied by the competent state authorities. This chapter investigates the role of general principles of law with regard to the state duty to protect against human rights violations by corporations. Three main issues will be explored: i) the overarching role of the principle of good faith in interpreting the positive human rights obligations of the state in relation to corporate activities; ii) the role the principle of no-harm vis-à-vis the state duty to prevent human rights abuses committed by corporations having the nationality of the state and operating abroad; iii) the role of the right to remedy, as a principle of law, in tackling the legal procedural barriers faced by victims of violations committed by corporations. The Principle of Good Faith and the Effectiveness of Human Rights Treaties ‘Every treaty in force is binding upon the parties to it and must be performed by them in good faith’.58 The principle pacta sunt servanda lies at the heart of any legal system; without it ‘[i]nternational law as well as civil law would be a mere mockery’.59 6.1

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Robert Jennings and Arthur Watts, Oppenheim’s International Law (n 6), 549. Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Preliminary Objections) [1996] ICJ Rep 595, para 430. The principle of due diligence will be further explored in Part III. Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 311, Article 26. See also Article 31: ‘A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. Rudloff Case (on merits) (1903–1905) 9 RIAA 255, 255.

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Under human rights treaties, states are duty-bound to protect individuals under their jurisdiction from abuses committed by third parties, including corporations. The UNGPs further operationalise such a duty as generally entailing ‘taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication’.60 More specifically, as alluded to above, states are first required to enact and enforce laws requiring corporations to respect human rights, while ensuring that corporate law does not restrain such compliance.61 Second, states should maintain adequate ‘policy space’ to meet their human rights obligations when pursuing business-related policy objectives through economic agreements.62 Third, states should ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their jurisdiction, those affected have access to effective remedy.63 In a legal community characterised by decentralisation and sovereign equality, as in international law, the effectiveness of the rights provided for in human rights treaties relies on the assumption that states will comply in good faith with their human rights obligations.64 The state duty to protect human rights in relation to corporate activities, as interpreted and applied in light of the principle of good faith, requires the state to put in place an adequate legal framework where human rights are effectively protected. It appears that a state may not comply with such a legal standard without appropriate recognition of corporate liability in general within its domestic legal order. It follows that, not only is the state precluded from invoking its internal law as justification for its failure to comply with its international obligation to regulate corporations,65 but it is also precluded from contradicting itself by refuting that corporations have human rights obligations and may therefore not be held to account for their violations.

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UNGPs, Commentary to Principle 1. Ibid, Principle 3. Ibid, Principle 9. Ibid, Principle 27. The good faith of international actors is presumed. See Michel Virally, ‘Review Essay: Good Faith in Public International Law’ (1983) 77 AJIL 130–134, 132; Manfred Lachs, ‘Some Thoughts on the Role of Good Faith in Public International Law’ in Robert Akkerman and Others (eds), Declarations on Principles: A Quest for Universal Peace (Springer 1977), 49. VCLT, Article 27; GA, ‘Draft Declaration on Rights and Duties of States’ (6 December 1949) UN Doc Res 375 (IV), Article 13.

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6.1.1 Good Faith as a Universal Principle of Law Good faith is ‘one of the basic principles governing the creation and performance of legal obligations, whatever their source’.66 It is essential to the functioning of any legal system67 and permeates every aspect of international law.68 There is no doubt that the principle can be framed as a general principle of law under Article 38(1)(c) of the ICJ Statute.69 The content and meaning of good faith is broad and, as such, defies a precise definition. Yet this does not deprive the principle of its legal value.70 The principle plays a key role in the law of treaties,71 governing the life of the treaty from its negotiation, to its interpretation, performance and potential termination.72 The obligations of states under the UN Charter must be fulfilled in good faith;73 the same holds for the performance and interpretation of treaties in general under the VCLT.74 Given its broad content, the principle of good faith has a variety of normative functions, including:75 i) the protection of legitimate expectations upon 66

Nuclear Tests Case (Australia v France) [1974] ICJ Rep 253, para 46. United States – Import Prohibition of Certain Shrimp and Shrimp Products (1998) WTO/DS58/AB/R, DSR 1998:VII, 2755, para 158. 67 The principle is codified in a wide number of domestic legal systems. See, among others, Article 242 of the German Civil Code; Article 1134(3) of the French Civil Code; Article 7 of the Spanish Civil Code; Article of the Brazilian Civil Code; Section 205 of the US Restatement (Second) of Contracts. 68 Robert Jennings and Arthur Watts, Oppenheim’s International Law (n 6), 38 ; see also Alfred Verdross-Drossberg, ‘La bonne foi comme fondement du droit international public’ (1952) 5 Revue hellénique de droit international 17–21, 2. 69 Markus Kotzur, ‘Good Faith (Bona Fide)’ MPEPIL, para 22; Andreas R Ziegler and Jorun Baumgartner, ‘Good Faith as a General Principle of (International) Law’ in Andrew D Mitchell, Muthucumaraswamy Sornarajah and Tania Voon (eds), Good Faith and International Economic Law (OUP 2015), 10. 70 See Shabtai Rosenne, Developments in the Law of Treaties (1945–1986) (CUP 1989) 135–136; Guy S Goodwin-Gill, ‘State Responsibility and the “Good Faith” Obligation in International Law’ in Malgosia Fitzmaurice and Dan Sarooshi (eds), Issues of State Responsibility before International Judicial Institutions (Hart 2004), 87. 71 Anthony Aust, ‘Pacta Sunt Servanda’ MPEPIL (2007), para 1. 72 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Stevens and Sons 1953) 106. 73 UN Charter, Article 2(2). 74 VCTL, Articles 26 and Article 31(1), which read: ‘A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. The VCLT notes in its preamble that ‘the principles of free consent and of good faith and the pacta sunt servanda rule are universally recognized’. 75 Robert Kolb, ‘Principles as Sources of International Law (With Special Reference to Good Faith)’ (2006) 53 Netherlands International Law Review 1–36, 17–18.

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which others have legitimately relied, such as the adoption of an agreement, a declaration or a given conduct;76 ii) the prohibition of abuse of rights;77 and iii) the impossibility of gaining unjustified advantage from unlawful acts. Such functions find manifestation, and are given effect to, in narrower principles, such as legitimate expectations, abuse of rights78 and estoppel. Good faith also includes the principle of effectiveness.79 As noted by the ICJ in the Gabčíkovo-Nagymaros case, ‘[t]he principle of good faith obliges the Parties to apply [the treaty] in a reasonable way and in such a manner that its purpose can be realized’.80 The principle of effectiveness, as ‘one of the fundamental principles of interpretation of treaties’,81 implies that when a treaty is open to two interpretations one of which does and the other does not enable the treaty to have appropriate effects, good faith and the objects and purposes of the treaty demand that the former interpretation should be preferred (ut res magis valeat quam pereat).82 In its broader and less technical dimension, the principle of effectiveness allows the law to ‘adjust to reality’.83 This can sometimes allow for a dynamic interpretation of the treaty whereby the change in the factual circumstances is taken into account.84 Since the object and purpose of human rights treaties is 76 ‘C’est dans cette confiance dans la parole donné e que se trouve le fondement de validité de la promesse […]. L’intérêt supérieur de la sécurité des rapports internationaux exige que la promesse soit obligatoire d è s qu’elle est connue par les sujets intéressés et cet intérêt se traduit dans le principe de la bonne foi qui doit régir toutes les relations internationales’, in Eric Suy, Les actes juridiques unilatéraux en droit international public (Paris 1962) 151 ; see also Paul Reuter, Droit international public (6 edn, Thémis 1984) 164 ; Anthony D’Amato, ‘Good Faith’ in Rudolf Bernhardt (ed), Encyclopedia of International Law (North-Holland 1992), 601. 77 Gerald Fitzmaurice, ‘The Law and Procedure of the International Court of Justice 1951–54: General Principles and Sources of Law’ (1953) 30 BYIL 1–70, 12–13. 78 Hersch Lauterpacht, The Development of International Law by the International Court (Stevens and Sons 1958) 163. 79 Case Concerning the Re-Evaluation of the German Mark (1980) 19 RIAA 67, 126. See also Gerald Fitzmaurice, ‘The Law and Procedure of the International Court of Justice 1951–4: Treaty Interpretation and Other Treaty Points’ (1957) 33 BYIL 203–293, 211. Charles de Visscher, Problèmes d’Interprétation Judiciaire en Droit International Public (Pedone 1963) 86; Charles Rousseau, Droit International Public, vol 1 (Sirey 1970) 270. 80 Gabčíkovo-Nagymaros Project (Hungary v Slovakia) [1997] ICJ Rep 7, para 142. 81 Case Concerning the Territorial Dispute (Libyan Arab Jamahiriya v Chad) [1994] ICJ Rep 6, para 51. 82 Lauterpacht, The Development of International Law by the International Court (n 78), 27. 83 Marius Emberland, The Human Rights of Companies: Exploring the Structure of ECHR Protection (OUP 2006) 6. 84 Malgosia Fitzmaurice, ‘Dynamic (Evolutive) Interpretation of Treaties’ (2009) 22 Hague Yearbook of International Law 101–153. For a detailed analysis of evolutive interpretation of treaties, see Eirik Bjorge, The Evolutionary Interpretation of Treaties (OUP 2014).

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to afford effective protection of the rights contained therein,85 interpretation ‘in the light of present-day conditions’ may be required in order to avoid such instruments do become ‘obsolete’86 and, therefore, ineffective. 6.1.2 State Positive Obligations to Prevent Corporate Violations Under international human rights law, as already anticipated, the state duty to protect entails “positive obligations” to adopt measures in order to prevent and address human rights violations by third-parties. The illustration of human rights “positive obligations” which will follow focuses on international practice and case law addressing the state duty to prevent violations by corporations. The duty of prevention under consideration has been developed both within the UN treaty bodies and regional human rights systems.87 Article 2(1) of the ICCPR affirms that the state has a duty to respect and ensure to all individuals the rights protected under the Covenant. Article 2(2) provides for an undertaking by states to introduce measures of domestic implementation, where necessary, to give effect to the treaty.88 It is worthy of note that the HRCtee has underscored that such duty ‘will only be fully discharged if individuals are protected by the state, not just against abuses of Covenant rights by its agents, but also against acts committed by private persons or entities that would impair the enjoyment of Covenant rights’.89 The Committee has recalled that an interpretation of the Covenant which would limit the responsibility of the state to violations committed by state agents, would devoid the guarantees enshrined in its text of any ‘effectiveness’.90 In its recent General Comment on the Right to Life, the HRCtee expressly places on states an obligation to

85 86 87

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Başak Çali, ‘Specialized Rules of Treaty Interpretation: Human Rights’ in Duncan B Hollis (ed), The Oxford Guide to Treaties (OUP 2012), 538. Magdalena Sepulveda, The Nature of the Obligations under the International Covenant On Economic, Social, and Cultural Rights (Intersentia 2003) 83. For an analysis of the development of the duty to protect under the UN treaty bodies, see Olivier De Schutter, International Human Rights Law: Cases, Materials and Commentary (2 edn, CUP 2014) 441 ff. For a comparative analysis of the duty to protect in regional systems, see Aoife Nolan, ‘Addressing Economic and Social Rights Violations by Non-state Actors through the Role of the State: A Comparison of Regional Approaches to the “Obligation to Protect”’ (2009) 9 Human Rights Law Review 225–256. Herrera Rubio et al v Colombia (1987) HR Cttee Comm No 161/1983, para 11. HRCtee, ‘General Comment No 31: The Nature of the General Legal Obligation Imposed on States Parties to the Covenant’ (26 May 2004) UN Doc CCPR/C/21/Rev.1/Add.13, para. 8. Delgado Páez v Colombia (1990) HRCtee Comm No 195/1985, para 5.5.

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take adequate measures of protection, including continuous supervision, in order to prevent, investigate, punish and remedy arbitrary deprivation of life by private entities, such as private transportation companies, private hospitals and private security firms.91 In Francis Hopu and Tepoaitu Bessert v France, which concerned the concession granted by the government to a private company to build on the burial site of an indigenous community in the French Polynesia, the HRCtee affirmed that the construction of a hotel complex on the authors’ ancestral burial grounds did interfere with their right to family and privacy. The State party has not shown that this interference was reasonable in the circumstances, and nothing in the information before the Committee shows that the State party duly took into account the importance of the burial grounds for the authors, when it decided to lease the site for the building of a hotel complex.92 Article 2(1) of the ICESCR requires the state to take measures ‘to the maximum of its available resources’ and ‘with a view to achieving progressively the full realisation of the rights’ of the Covenant. For the present purposes, it is worth stressing how the CESCR, in its General Comment on the Right to Food, emphasises that under the duty to protect states must take measures to ensure that enterprises do not deprive individuals of their access to adequate food, and that corporate activities ‘are in conformity with the right to food’.93 In its General Comment on the Right to Health, the same Committee also points out that a state violates its duty to protect human rights when it fails to take adequate measures to protect persons under its jurisdiction from infringements by third parties. Most importantly, this includes ‘such omissions as the failure to regulate the activities of individuals, groups or corporations so as to prevent them from violating the right to health of others’.94 Similar statements can be found in the General Comment on the Right to Water, where the Committee also adds that, in order to prevent abuses by private parties, states must

91

HRCtee, ‘General Comment No 36 (Article 6): The Right to Life’ (31 October 2018) UN Doc CCPR/C/GC/36, para 25. 92 Francis Hopu and Tepoaitu v France (1997) HRCtee Comm No 549/1993, para 10.3. 93 CESCR, ‘General Comment No 12: The Right to Adequate Food (Article 11)’ (12 May 1999) UN Doc E/C.12/1999/5, para 15. 94 CESCR, ‘General Comment 14: The Right to the Highest Attainable Standard of Health (Article 12)’ (11 August 2000) UN Doc E/C.12/2000/4, para 51.

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put in place an ‘effective regulatory framework’ that includes the imposition of penalties for non-compliance.95 The CESCR has clarified the specific content of the state duty to protect with regard to business conduct. In its General Comment 24 on the State Obligations in the Context of Business Activities, the Committee acknowledges that states have a positive duty to adopt a legal framework requiring business entities to exercise human rights due diligence in order to identify, prevent and mitigate the risks of violations of human rights, to avoid such rights being abused, and to account for the negative impacts caused or contributed to by their decisions and operations and those of entities they control on the enjoyment of Covenant rights.96 The Committee adds that when the state fails to abide by its duty to protect, it may incur international responsibility even if other factors have contributed to the violations or the state had not foreseen such a violation, provided that it was foreseeable by resorting to due diligence.97 Other human rights treaties explicitly lay down positive obligations for states with regard to corporate activities. By way of example, the Convention on the Elimination of Discrimination against Women (CEDAW) and the Convention on the Rights of Persons with Disabilities require the state to take appropriate measures to eliminate discrimination by companies on the basis of disability and gender respectively.98 Furthermore the CEDAW Committee has highlighted that [u]nder general international law and specific human rights covenants, states may also be responsible for private acts if they fail to act with due diligence to prevent violations of rights or to investigate and punish acts of violence, and for providing compensation.99

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CESCR, ‘General Comment No 15: The Right to Water (Articles 11 and 12)’ (20 January 2003) UN Doc E/C.12/2002/11, para 24. CESCR, ‘General Comment No 24: State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities’ (10 August 2017) UN Doc E/C.12/GC/24, para 16. Ibid, para 32. Convention on the Elimination of All Forms of Discrimination against Women, Article 2(e); Convention on the Rights of Persons with Disabilities, Article 4(e). CEDAW, ‘General Recommendation 19: Violence Against Women’ (30 January 1992) UN Doc A/47/38, para 9.

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The Optional Protocol to the Convention on the Rights of the Child on the Sale of Children, Child Prostitution and Child Pornography requires states to take action against ‘legal persons’ where appropriate.100 In particular, it is worth stressing how the CRC has encouraged states to ‘extend liability’ for those offences envisaged in the Convention to legal persons.101 Positive obligations of states under the ECHR have also been long recognised in the case law of the European Court.102 Under Article 1 of the ECHR, States must ‘secure’ to everyone within their jurisdiction the rights and freedoms protected by the Convention. This implies abstaining from interfering with the rights protected under the Convention, as well as taking appropriate steps to prevent and address violations ‘even in the sphere of the relations of individuals between themselves’.103 It follows that, as emphasised by the Court, in order for the state to perform its obligations in good faith, it must ensure that the rights enshrined in the Convention are ‘not theoretical or illusory, but practical and effective’.104 Numerous judgments rendered by the ECtHR illustrate the content and scope of positive obligations of states with regard to corporate activities.105 In López Ostra v Spain, which involved pollution and nuisance to a private home from a nearby privately owned company, the Court held that although Spain was not 100 Optional Protocol to the Convention on the Rights of the Child on the Sale of Children, Child Prostitution and Child Pornography (adopted 25 May 2000, entered into force 18 January 2002) 2171 UNTS 227, Article 3. 101 CRC, ‘Concluding Observations: Iceland’ (2 June 2006) UN Doc CRC/C/OPSC/ISL/CO/1, paras 13 and 14(d). 102 According to the Court there is no neat definition between negative and positive obligations, see Keegan v Ireland (1994) ECtHR App No 16969/90, para 49. For an analysis of the concept of positive obligations under the Convention, see Frédéric Sudre, ‘Les obligations positives dans la jurisprudence européenne des droits de l’homme’ (1995) 23 Revue trimestrielle des droits de l’homme 363–384; Alastair Mowbray, The Development of Positive Obligations under the European Convention on Human Rights by the European Court of Human Rights (Hart Publishing 2004); Benedetto Conforti, ‘Exploring the Strasbourg Case Law: Reflections on State Responsibility for the Breach of Positive Obligations’ in Malgosia Fitzmaurice and Dan Sarooshi (eds), Issues of State Responsibility before International Judicial Institutions (Hart Publishing 2004); Brice Dickson, ‘Positive Obligations and The European Court of Human Rights’ (2010) 61 Northern Ireland Legal Quarterly 203–208. 103 See, among others, X and Y v Netherlands (1985) ECtHR App No 8978/80, para 23; CostelloRoberts v UK (1993) ECtHR App No 13134/87; Von Hannover v Germany (2004) ECtHR App No 59320/00, para 57; Ouranio Toxo and Others v Greece (2006) ECtHR App No 74989/01, para 37; Söderman v Sweden (2013) (GC) ECtHR App No 5786/08, para 117. 104 Ouranio Toxo and Others v Greece (2005) ECtHR App No 74989/01, para 37. See also Artico v Italy (1980) ECtHR App 6694/74, para 33. 105 See Marco Fasciglione, ‘Enforcing the State Duty to Protect Under the UN Guiding Principles on Business and Human Rights: Strasbourg Views’ in Angelica Bonfanti (ed), Business and Human Rights in Europe: International Law Challenges (Routledge 2018).

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directly responsible for the harmful emissions, by allowing the construction of the plant it failed to strike a balance between economic interests and the applicant’s effective enjoyment of her right to private and family life under Article 8.106 In Guerra v Italy the Court found that the state had violated Article 8 by failing to provide the claimants with essential information regarding the health risks stemming from their proximity to a chemical factory realising toxic substances.107 In Wilson, the applicants alleged violations of their freedom of expression and assembly because their employer had offered them financial incentives to renounce their rights to collective bargaining. The ECtHR found that states have positive obligations to secure the effective enjoyment of the Convention’s rights and that ‘[t]he responsibility of the United Kingdom would […] be engaged if these matters resulted from a failure on its part to secure to the applicants under domestic law the rights set forth’ in the Convention.108 In Fadeyeva v Russia, a case concerning a private plant’s air and noise pollution exceeding the permitted levels under domestic law, causing the applicant’s severe health problems, the Court maintained that the State’s responsibility in environmental cases may arise from a failure to regulate private industry. Accordingly, the applicant’s complaints fall to be analysed in terms of a positive duty on the State to take reasonable and appropriate measures to secure the applicant’s rights under Article 8(1) of the Convention.109 Given that the state duty to protect human rights against corporate violations is one of due diligence, i.e., a duty of means or conduct, but not of result, the scope of the duty to protect has to be assessed on a case-by-case basis in order to determine whether it is reasonable to expect from the state certain measures according to the specific circumstances of the case. In Appleby v United Kingdom, which concerned the alleged breach by a company of the freedom of expression of the claimants when forcing them to leave from a shopping centre where they were protesting against the relocation plans of the municipality, the Court observed that

106 López Ostra v Spain (1994) ECtHR App No 16798/90, para 58. 107 Guerra and others v Italy (1998) ECtHR App No 14967/89, para 60. See also Giacomelli v Italy (2006) ECtHR App No 59909/00. 108 Wilson, National Union of Journalists and Others v UK (2002) ECtHR App Nos 30668/96 30671/96 and 30678/96, paras 41, 48. 109 Fadeyeva v Russia (2005) ECtHR App No 55723/00, para 89 (emphasis added).

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[i]n determining whether or not a positive obligation exists, regard must be had to the fair balance that has to be struck between the general interest of the community and the interests of the individual, the search for which is inherent throughout the Convention.110 The required standard of due diligence of the state in discharging its positive obligations also varies according to the type of business activity. In Öneryıldız v Turkey, which concerned an explosion in a waste-collection site that killed the applicant’s relatives, the Court emphasised that [t]he positive obligation on States to take appropriate steps to safeguard the lives of those within their jurisdiction […] must be construed as applying in the context of any activity, whether public or not, in which the right to life may be at stake, and a fortiori in the case of industrial activities, which by their very nature are dangerous, such as the operation of waste-collection sites. […] The positive obligation to take all appropriate steps to safeguard life for the purposes of Article 2 entails above all a primary duty on the State to put in place a legislative and administrative framework designed to provide effective deterrence against threats to the right to life. This obligation indisputably applies in the particular context of dangerous activities, where, in addition, special emphasis must be placed on regulations geared to the special features of the activity in question, particularly with regard to the level of the potential risk to human lives. They must govern the licensing, setting up, operation, security and supervision of the activity and must make it compulsory for all those concerned to take practical measures to ensure the effective protection of citizens whose lives might be endangered by the inherent risks.111 In sum, the Court emphasised the state obligation to set up a legal framework apt to deter, and respond to, human rights violations. The same approach was followed by the ECtHR in Tătar v Romania, which concerned an environmental accident caused by a company in the extractive industry. The Court concluded that the state had failed to take suitable measures in order to protect the right to private life of the claimant from the risk a mining company’s activities might entail.112 A similar approach was followed by the Court in the recent Cordella and Others v Italy case, where 180 claimants complained about the effects of toxic

110 Appleby and others v United Kingdom (2003) ECtHR App No 44306/98, para 40. 111 Öneryıldız v Turkey (2004) ECtHR App No 48939/99, para 90. 112 Tătar v Romania (Merits) (2009) ECtHR App No 67021/01, para 125.

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emissions from the Ilva steelworks in Taranto on the environment and on their health.113 By relying on Articles 2 and 8 of the ECHR, the claimants argued that the State had not adopted legal and statutory measures to protect their health and the environment, and that it had failed to provide them with information concerning the pollution and the attendant risks for their health. The Court noted that despite the numerous scientific reports that established the existence of a causal link between Ilva’s industrial emissions and the sanitary records of people living in the “high environmental risk” municipalities, the state was unable to put in place adequate measures to ensure the protection of the environment and of citizens’ health, thereby violating Article 8 ECHR.114 The European Committee of Social Rights has also recognised the positive obligations of states in the business and human rights context. In Marangopoulos Foundation for Human Rights (MFHR) v Greece, which concerned a range of alleged European Charter violations resulting from the poorly regulated lignite mining industry, the European Committee emphasised that ‘as a signatory to the Charter, Greece is required to ensure compliance with its undertakings, irrespective of the legal status of the economic agents whose conduct is at issue’.115 The state’s positive obligations under consideration have also long been recognised in the Inter-American system. In the landmark case Velásquez Rodriguez v Honduras, the IACtHR held that [t]he second obligation of the States Parties is to ‘ensure’ the free and full exercise of the rights recognized by the Convention to every person subject to its jurisdiction. This obligation implies the duty of States Parties to organize the governmental apparatus and, in general, all the structures through which public power is exercised, so that they are capable of juridically ensuring the free and full enjoyment of human rights.116 Similarly in Morales v Guatemala, the Court emphasised that ‘the State’s international responsibility is also at issue when it does not take the necessary steps under its domestic law to identify and, where appropriate, punish the authors of such violations’.117 In Comunidad de Paz de San José de Apartadó v Colombia, the Court held that, for the general state duty to respect human rights to be effective,

113 Cordella and Others v Italy (2019) ECtHR Apps nos 54414/13 et 54264/15. 114 Ibid, paras 164–166. 115 Marangopoulos Foundation for Human Rights (MFHR) v Greece (Merits) (2006) ECSR Complaint No 30/2005, para 192. 116 Velásquez Rodríguez v Honduras (Merits) (1988) IACtHR Series C No 4, para 166. 117 Paniagua Morales et al v Guatemala (Merits) (1998) IACtHR Series C No 37, para 91.

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the obligation must be understood as being ‘imposed not only in relation to the power of the State, but also in the relations between private individuals’.118 In Mayagna Awas Tingni (Sumo) Indigenous Community v The Republic of Nicaragua the plaintiffs alleged that the government of Nicaragua had infringed their right to the use and enjoyment of ancestral lands by awarding a 30-year concession for the construction of a road and timber exploitation, to a Korean company.119 The claimants alleged that the economic activities in question would result in irreparable damage to their indigenous land. The Court maintained that ‘the State has violated the right of the members of the Mayagna Awas Tingni Community to the use and enjoyment of their property, and that it has granted concessions to third parties to utilize the property and resources located in an area which could correspond, fully or in part, to the lands which must be delimited, demarcated, and titled’.120 Most importantly, the Court held that the state must adopt in its domestic law the necessary legislative, administrative or other measures to create an effective mechanism for the delimitation and titling of the property of the members of the Awas Tingni Community. It is worth noting how, in determining the standards making up the contents of the due diligence duty in question, the ACHR relies on the key soft-law instruments pertinent to the human rights process under consideration. In Kaliña v Suriname, the Court drew on the ‘Guiding Principles on Business and Human Rights’, recognized by the United Nations Human Rights Council, which establish that companies must act in accordance with the respect and protection of human rights, as well as prevent, mitigate, and be accountable for the negative consequences of their activities on human rights. In this sense, just as it is reiterated by said principles, States are responsible for protecting persons’ human rights against violations committed in their territory and/or jurisdiction by third parties, including companies. To that effect, States must adopt the appropriate measures to prevent, investigate, punish, and repair through adequate policies, the abuses that they may commit, regulatory activities, and bringing them to justice.121

118 Comunidad de Paz de San José de Apartadó v Colombia (2002) IACtHR, para 11. 119 Mayagna Awas Tingni (Sumo) Indigenous Community v The Republic of Nicaragua (2001) IACtHR Series C No 79. 120 Ibid, para 153. 121 Kaliña and Lokono Peoples v Suriname (Merits, Reparations and Costs) (2015) (Merits, Reparations and Costs) IACtHR Series C No 309.

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The Court has been clear in finding that the state obligation to regulate covers both public services provided by the state, directly or indirectly, as well as services offered by private parties.122 The African system has also recognised the existence of a state duty to prevent and redress corporate violations. In Commission Nationale des Droits de l’Homme et des Libertés v Chad, the African Commission concluded that states parties to the Charter ‘shall not only recognise the rights, duties and freedoms adopted by the Charter’, but they should also take measures ‘to give effect to them’.123 The Commission concluded that the Chadian government had failed to meet its obligation to provide security and stability in the country, thereby allowing serious and massive violations of human rights, and that it had failed to conduct investigations into murders.124 In Social and Economic Rights Action Centre and the Centre for Economic and Social Rights v Nigeria, the Centre for Economic and Social Rights and the Social and Economic Rights Action Centre brought a case against the Nigerian government of behalf of the people of the Ogoni region of Nigeria. They alleged that two companies (Shell Petroleum Development Corporation and the Nigerian National Petroleum Corporation) that had formed a joint venture to exploit oil reserves in the Ogoni region of Nigeria, were depositing toxic waste in the region. The African Commission found that Despite its obligation to protect persons against interferences in the enjoyment of their rights, the Government of Nigeria facilitated the destruction of the Ogoniland. Contrary to its Charter obligations and despite such internationally established principles, the Nigerian Government has given the green light to private actors, and the oil Companies in particular, to devastatingly affect the well-being of the Ogonis. By any measure of standards, its practice falls short of the minimum conduct expected of governments, and therefore, is in violation of Article 21 of the African Charter.125 In sum, the positive state obligations in the field under review consistently emerge as due diligence in nature, i.e., obligations of conduct rather than of result. That means that states have to deploy their best efforts to prevent violations of human rights by private actors, and that the mere occurrence of such violations does not

122 Ximenes Lopes v Brazil (Merits, Reparations and Costs) (2006) IACtHR Series C No 149. 123 Commission Nationale des Droits de l’Homme et des Libertés v Chad (1995) ACmHPR 74/92 para 20. 124 Ibid. 125 Serac v Nigeria (2001) ACmHPR App No 155/96, para 58.

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amount per se to a breach of the positive obligations in hand.126 The principle of good faith requires the protection of the legitimate expectations that arise out of the commitments undertaken by the state.127 If human rights treaties are to be implemented in good faith, so that the rights laid down therein are effective, states must ensure that such standards are opposable to corporations within their respective legal systems.128 The IACtHR has consistently stated that Article 2 enshrines the obligation for the state to give effect in good faith to all provisions containing human rights.129 In the Five Pensioners case, after stating the obvious to the effect that a state that has ratified a human rights treaty is bound to adapt its domestic law to the international obligations thereby assumed, the Court stressed that the legislative measures introduced must be ‘effective’ in their interpretation and application, based on the principle of effet utile.130 A similar point was made by Judge Trindade in his Dissenting Opinion in Caballero-Delgado v Santana.131 Overall, an examination of the practice of treaty monitoring bodies and regional jurisprudence reveals the requirement for states to ensure that their respective domestic laws are consistent with, inter alia, the adoption of appropriate and effective legislative and administrative procedures ensuring corporate compliance with human rights. States parties to the relevant treaties assume the obligation to regulate corporate activities through their domestic legislation with a view to preventing that these activities encroach on the enjoyment of the human rights enshrined in the treaties in question.132 Through the duty to protect, international treaty law becomes relevant for corporate actors.

126 Sarah Heathcote, ‘State Omissions and Due Diligence: Aspects of Fault, Damage and Contribution to Injury in the Law of State Responsibility’ in Karine Bannelier and others (eds), The ICJ and the Evolution of International Law: The Enduring Impact of the Corfu Channel Case (Routledge 2012), 308. 127 Robert Kolb, ‘Principles as Sources of International Law (With Special Reference to Good Faith)’, (n 75)17. 128 Theodor Meron, Human Rights and Humanitarian Norms As Customary Law (Clarendon Press 1989) 263. 129 Hacienda Brasil Verde Workers v Brazil (Preliminary Objections, Merits, Reparations and Costs) (2016) IACtHR Series C No 318, para 87. 130 Five Pensioners v Peru (Merits, Reparations and Costs) (2003) IACtHR Series C No 98, para 164; See also Cantos v Argentina (2002) IACtHR Series C No 97, para 59; and Hilaire, Constantine and Benjamin et al v Trinidad and Tobago (2002) IACtHR Series C No 94, para 213. 131 Caballero-Delgado and Santana v Colombia (Reparations and Costs) (1997) IACtHR Series C No 31, paras 7–8. 132 Markos Karavias, ‘Treaty Law and Multinational Enterprises: More than Internationalized Contracts?’ in Christian J Tams and Others (eds), Research Handbook on the Law of Treaties (Edward Elgar 2014), 606.

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6.1.3 Good Faith and Policy Coherence in Drafting Investment Agreements In the contemporary debate on business and human rights, the relationship between international investment law and international human rights law is of increasing relevance.133 In his 2008 Report, Ruggie noted that [t]o attract foreign investment, host States offer protection through bilateral investment treaties and host government agreements. They promise to treat investors fairly, equitably and without discrimination, and to make no unilateral changes to investment conditions. But investor protections have expanded with little regard to States’ duties to protect, skewing the balance between the two. Consequently, host States can find it difficult to strengthen domestic social and environmental standards, including those related to human rights, without fear of foreign investor challenge, which can take place under binding international arbitration.134 To this pertinent remark, one may add that the missing piece in the puzzle is not only a more adequate balance between investors’ protection and the state duty to protect, but also between the rights and duties of foreign investors. The issue of the relevance of the investor’s good faith compliance with human rights will be addressed in Part III, while here the focus will remain on the state duty, under the principle of good faith, to avoid entering into investment agreements that can impair the protection of human rights from corporate violations.135 The rules on the protection of foreign investors are laid down in a complex and extensive web of bilateral and regional treaties and free trade agreements, aside from customary rules. The past two decades saw the adoption of almost

133 On the relationship between investment agreements and the protection of human rights see, among others, Bruno Simma and Theodore Kill, ‘Harmonizing Investment Protection and International Human Rights: First Steps Towards a Methodology’ in Ursula Kriebaum and Others (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (OUP 2009); Attila Tanzi, ‘On Balancing Foreign Investment Interests with Public Interests in Recent Arbitration Case Law in the Public Utilities Sector’ (2012) 11 The LPICT 47–76; Juan Pablo Bohoslavsky and Juan Bautista Justo, ‘Compatibilizando derechos de los inversores extranjeros y derechos humanos: ¿Por qué? ¿Cómo? ¿Quién? ¿Cuándo?’ in Attila Tanzi and Others (eds), International Investment Law in Latin America (Martinus Nijhoff 2016). 134 HRC, ‘Protect, respect and remedy: A framework for Business and Human rights, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie’ (7 April 2008) UN Doc A/HRC/8/5, para 34. 135 See Jeswald Salacuse, The Law of Investment Treaties (2 edn, OUP 2015) 1–23.

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three thousand bilateral investment treaties (BITs).136 A part from recent trends towards change, there are two common denominators unifying the existing BITs, namely (i) the substantive rights of investors, such as fair and equitable treatment and the right to adequate and prompt compensation in the case of expropriation; and (ii) the procedural rights of investors, who have direct access to compulsory dispute settlement procedures. As already alluded to, BITs and other investment agreements have come increasingly under scrutiny for allegedly constraining the sovereign regulatory space of states and, therefore, their capacity to uphold their human rights obligations. Investment agreements, and investor–state dispute settlement, have been described as a ‘Trojan horse favouring the rights of investors to the detriment of the public interest’.137 Yet one should not forget that it is states who negotiate and adopt such agreements and, therefore, the duty falls primarily on states to refrain from entering into treaties that risk jeopardising their duty to protect human rights. In line with such premises, the UNGPs stress the need for states to aim at internal and external coherence in their investment policies.138 As to internal coherence, Principle 8 requires states to ensure that their governmental departments and agencies shaping business practices are aware of the state’s human rights obligations and act accordingly. With regard to external coherence, Principle 9 reads as follows: States should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts. The Commentary to Principle 9 underscores that international economic agreements, including BITs, may constrain states from implementing human rights legislation, and put them at risk of having to undergo binding international arbitration when they do so. States should therefore be sure to retain an adequate policy and regulatory ability to protect human rights under the terms of such agreements, while providing the necessary investor protection. This entails 136 See UNCTAD Investment Policy Hub, available at https://investmentpolicyhub.unctad.org/ IIA. 137 HRC, ‘The Adverse Human Rights Impact of International Investment Agreements and Multilateral Free Trade Agreements, Including the Human Rights Impacts of WTO and Practice, Report of the Independent Expert on the Promotion of a Democratic and Equitable International Order, Alfred-Maurice De Zayas’ (14 July 2015) UN Doc A/HRC/30/44, para 48. 138 Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (2017) 385 RdC 47, 116 ff.

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conducting a suitable human rights impact assessment before concluding investment agreements, as well as including in the treaty provisions allowing the state to discharge its human rights obligations.139 It follows that if potential conflicts between the protection of human rights and investment agreements are deemed to exist, states should refraining from entering into such agreements, ‘as required under the principle of the binding character of treaties’.140 Similarly, Under Article 12(6) of the Draft Treaty on Business and Human Rights, titled ‘Consistency with International Law’, states parties agree that any bilateral or multilateral agreements, including regional or sub-regional agreements, on issues relevant to the Draft Treaty ‘shall be compatible and shall be interpreted in accordance with their obligations’ under such instrument.141 Indeed, in the absence of coherence at the law-making level, states may risk facing conflicting obligations. Here, insofar as investment agreements and human rights treaties can be considered as bearing on, at least partially, the same subject matter, the issue could be framed through the lens of the rules on conflicts between successive treaties. Article 30 of the VCLT, in setting out the criteria to solve such conflicts, refers to Article 103 of the UN Charter, according to which, in the event of conflict between obligations under the Charter and obligations stemming from international agreements, the former shall prevail.142 The exact meaning of ‘obligations under the Charter’ is not further defined. It has been argued that Article 103 covers not only obligations derived directly from the Charter, but also binding decisions of the Security Council under Chapter VII and of other UN organs.143 Since the protection of human rights figures as one of the objectives of the UN,144 that states ‘pledge themselves to take joint and separate action’ to achieve such objectives,145 most, if not all, of the human rights treaties have been adopted under auspices of the UN, the case could be made 139 See also GA, ‘Access to Effective Remedies under the Guiding Principles on Business and Human Rights: Implementing the United Nations Protect, Respect and Remedy Framework, Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises’ (18 July 2017) UN Doc A/72/162, para 77. 140 Ibid, para 13, emphasis added. 141 OEIGWG, ‘Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises, Revised Draft’ (16 July 2019). 142 Mark E Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties (Martinus Nijhoff 2009) 400. 143 Johann R Leiss and Andreas Paulus, ‘Article 103’ in Bruno Simma and Others (eds), Charter of the United Nations: A Commentary (3 edn, OUP 2012), 2124; see also Karl Zemanek, ‘The Legal Foundations of the International System: General Course on Public International Law’ (1997) 266 RdC 23, 230. 144 UN Charter, Articles 1 and 55. 145 Ibid, Article 56.

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that human rights obligations of states could be given primacy as “obligations under the Charter”.146 To that end, reference to the ‘universal respect for, and observance of, human rights’ under Article 55 of the Charter may represent a case of incorporation by reference of the core human rights into the UN Charter, thus extending the scope of application of Article 103 to the core of body of international human rights. While such an extensive interpretation of Article 103 may be debatable,147 there is no doubt that the principle of good faith requires UN member states to take account of the potential impact of investment agreements on their human rights obligations.148 According to the CESCR, [t]he interpretation of trade and investment treaties currently in force should take into account the human rights obligations of the State, consistent with Article 103 of the Charter of the United Nations and with the specific nature of human rights obligations. […] States parties cannot derogate from the obligations under the Covenant in trade and investment treaties that they may conclude. They are encouraged to insert, in future treaties, a provision explicitly referring to their human rights obligations, and to ensure that mechanisms for the settlement of investor-State disputes take human rights into account in the interpretation of investment treaties or of investment chapters in trade agreements.149 It is indeed possible to reconcile the interests protected by international investment law and the rights protected under human rights treaties. This should be done through coherent law-making in the first place, and via systemic integration in the process of interpretation and application of investment agreements and human rights treaties. Systemic integration, codified by Article 31(3)(c) the VCLT, is not always efficient in addressing potential conflicting obligations stemming from international human rights law and international investment law.150 In order to avoid norm collision, the principle of good faith must therefore be

146 Olivier De Schutter, ‘The Status of Human Rights in International Law’ in Catarina Krause and Martin Scheinin (eds), International Protection of Human Rights: A Textbook (2 edn, Åbo Akademi University Institute for Human Rights 2009), 48. 147 Conforti, for example, argues for a restrictive interpretation of Article 103, see Benedetto Conforti, ‘Consistency among Treaty Obligations’ in Enzo Cannizzaro (ed), The Law of Treaties Beyond the Vienna Convention (OUP 2011), 189. 148 ‘States parties should, in international agreements whenever relevant, ensure that the right to adequate food is given due attention’, in UN CESCR, ‘General Comment 12’ (n 93), para 36. Similar recommendations can be found in CESCR, ‘General Comment No 14’ (n 94), para 39; CESCR, ‘General Comment No 15’ (n 95), para 35. 149 CESCR, ‘General Comment No 24’ (n 96), para 13. 150

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given due account in the process of negotiation and drafting of international investment agreements. In Sawhoyamaxa Indigenous Community v Paraguay, Paraguay had tried to justify its its failure to enforce petitioners’ rights to the lands claimed, by referring to its obligations under a BIT. Interestingly, the IACtHR recalled the compatibility between obligations under investment agreements and the Convention, emphasizing that the latter ‘is a multilateral treaty on human rights that stands in a class of its own and that generates rights for individual human beings and does not depend entirely on reciprocity among States’.151 Although a 2014 OECD study found that less than 1 per cent of investment treaties feature a reference to human rights,152 it is worth noting that recent years have shown an encouraging trend towards recalibrating investment agreements through, inter alia, the inclusion of human rights provisions.153 The Preamble to the Cameroon-Turkey BIT, by way of example, contains an express indication that the objectives of the treaty ‘can be achieved without relaxing health, safety and environmental measures as well as internationally recognized labour rights’.154 The preamble to the Nigeria-Austria BIT similarly expresses the commitment of the parties to achieve the objectives of the treaty ‘in a manner consistent with the protection of health, safety, and the environment, and the promotion of internationally recognised labour’, stressing that ‘responsible corporate behaviour can contribute to mutual confidence between enterprises and host countries’.155 The BITs signed between Canada and a number of African states, such as Burkina Faso, Cote d’Ivoire and Guinea include a “non-lowering of standards” clause, where parties are told that it is inappropriate to encourage investment by loosening domestic health, safety or environmental measures.156 A corporate social responsibility provision was also included in these BITs, whereby 151 Case of the Sawhoyamaxa Indigenous Community v Paraguay (Merits, Reparations and Costs) (2006) IACtHR Series C No 146, para 137. 152 Kathryn Gordon, Joachim Pohl and Marie Bouchard, Investment Treaty Law, Sustainable Development and Responsible Business Conduct: A Fact Finding Survey (Paris: OECD Publishing 2014); see also Silvia Steininger, ‘What’s Human Rights Got To Do With It? An Empirical Analysis of Human Rights References in Investment Arbitration’ (2018) 31 LJIL 33–58, 34. 153 Jansen Calamita, ‘International Human Rights and the Interpretation of International Investment Treaties: Constitutionals Considerations’ in Freya Baetens (ed), Investment Law within International Law: Intergrationist Perspectives (CUP 2013), 183 ff. See also Jan Wouters, Sanderijn Duquet and Nicolas Hachez, ‘International Investment Law: the Perpetual Search for Consensus’ in Foreign Direct Investment and Human Development (Routledge 2012). 154 Cameroon-Turkey BIT (signed 24 April 2012), Preamble. The text of the signed BITs can be found at https://investmentpolicyhub.unctad.org/IIA. 155 Austria-Nigeria BIT (signed 8 April 2013), Preamble. 156 See, Canada-Guinea BIT (signed 27 May 2015, entered into force 27 March 2017), Article 15; Canada-Burkina Faso BIT (signed 20 April 2015, entered into force 11 April 2017) Article 15;

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‘contracting parties should encourage enterprises to voluntarily incorporate internationally recognized standards of corporate social responsibility in their practices and internal policies’.157 A number of so-called “new-generation” IIAs also include direct references to human rights obligations of foreign investors, although clear and straightforward reference to investors’ human rights obligations are still scant. The Indian Model BIT of 2015 contains a chapter on ‘Investor Obligations’, requiring investors to comply with the domestic laws of the state, followed by a chapter on Corporate Social Responsibility, under which investors shall endeavour to voluntary incorporate the internationally recognised standards in their practices.158 A similar provision can be found in the recently signed BIT between Argentina and Qatar,159 as well as in the 2018 BIT between Brazil and Suriname.160 In this respect, some interesting developments have been happening in the African region since 2012. Article 15(1) of the 2012 Southern African Development Community Model BIT, for example, establishes that Investors and their investments have a duty to respect human rights in the workplace and in the community and State in which they are located. Investors and their investments shall not undertake or cause to be undertaken acts that breach such human rights. Investors and their investments shall not assist in, or be complicit in, the violation of the human rights by others in the Host State, including by public authorities or during civil strife.161 The same Model BIT also includes a provision prohibiting investors to operate their investment ‘in a manner inconsistent with international environmental, labour, and human rights obligations binding on the Host State or the Home State, whichever obligations are higher’.162 Under Article 15 of the Morocco-Nigeria BIT, the states parties ‘shall ensure that their laws, policies and actions are consistent with the international human

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Canada-Côte d’Ivoire BIT (signed 30 November 2014, entered into force 14 December 2015), Article 15. See, e.g. Canada-Guinea BIT, Article 16. India Model BIT (28 December 2015), Articles 11 and 12. It is to note that the wording of the two Articles is significantly leaner compared to the initial draft version, which clearly articulated human rights obligations and imposed on the home state an extraterritorial duty to regulate. All the BIT Models are available at https://investmentpolicyhub.unctad. org/IIA/AdvancedSearchIRIResults. Argentine-Qatar BIT (signed 6 November 2016), Article 12. Brazil-Suriname BIT (signed 11 April 2018) Article 15. Southern African Development Community Model BIT (2012). Ibid, Article 15(3).

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rights agreements to which they are a Party’.163 The BIT also provides for a detailed chapter on ‘Post-Establishment Obligations’ of investors, which ‘shall uphold human rights in the host state’.164 The BIT also adds that investors should not conduct their business in a manner that ‘circumvents’ human rights obligations of the home or the host state. The Draft Pan African Investment Code (PAIC), which is envisaged as a guidance for Member States of the African Union in the negotiation of investment agreements, also reflects a new movement towards the inclusion of human rights obligations.165 The Draft PAIC explicitly refers to investors’ obligations relating to corporate social responsibility, combating bribery and compliance by investors with business ethics and human rights.166 In particular, Article 24 establishes that investors should ‘support and respect the protection of internationally recognized human rights internationally recognized human rights’ and ‘ensure that they are not complicit in human rights abuses’.167 In 2019, the Netherlands adopted a new Model BIT, the purpose of which is to ‘attract and promote responsible foreign investment’.168 Article 5 of the Dutch Model BIT, titled ‘Rule of Law’, affirms that [a]s part of their duty to protect against business-related human rights abuse, the Contracting Parties must take appropriate steps to ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their territory and/or jurisdiction those affected have access to effective remedy. These mechanisms should be fair, impartial, independent, transparent and based on the rule of law.. Article 6 (‘Sustainable Development’) of the Dutch Model BIT also highlights the obligation for states parties to promote international investment that contribute to sustainable development, and recalls the existing obligations of states in the field of environmental protection, labour standards and human rights.169 As we

163 Morocco-Nigeria BIT (signed 3 December 2016). 164 Ibid, Article 18(2). 165 Africa Union, ‘Draft Pan African Investment Code’ (December 2016), available at https:// au.int/en/documents/20161231/pan-african-investment-code-paic. 166 See Makane M Mbengue and Stefanie Schacherer, ‘The ‘Africanization’ of International Investment Law: The Pan-African Investment Code and the Reform of the International Investment Regime’ (2017) 18 Journal of World Investment and Trade 414–448. 167 See Makane M Mbengue, ‘Les obligations des investisseurs étrangers’ in Laurence Dubin and Others (eds), L’entreprise multinationale et le droit international (Pedone 2017). 168 Final Dutch Model BIT (22 March 2019), Preamble, emphasis added, available at https:// investmentpolicy.unctad.org/international-investment-agreements/model-agreements. 169 Ibid, Article 6 (1) and (5).

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shall see in Part III, the Dutch Model BIT also contains important provisions on investors’ conduct. In sum, it should be borne in mind that protection of foreign investment and the protection of human rights do not per se entail conflicting obligations for states.170 Foreign investment is vital for economic growth. Under the right conditions and an adequate legal framework, foreign investment can boost economic growth and benefit sectors like energy, transport and water, thereby promoting sustainable development and human rights.171 The role of international investment law in maintaining the rule of law should not be underestimated. For such a role to be effective, however, it falls on states to ensure that the regulatory incentives investment granted through investment agreements can accommodate their human rights obligations. This can be done by including adequate reference to human rights obligations of states and investors, by including saving clauses that guarantee harmonisation between investment and human rights treaties,172 and by envisaging adequate human rights impact assessment of investment agreements.173 As noted by the UN High Commissioner for Human Rights at the 2018 World Investment Forum, it is important that each State integrate human rights more explicitly and systematically into its investment laws and policies. Each State is responsible for not losing sight of its treaty and international obligations. Each State should remember that its duties cannot be suspended for the purposes of securing investment.174 

170 Stephan Schill and Vladislav Djanic, ‘International Investment Law and Community Interests’ in Eyal Benvenisti and Georg Nolte (eds), Community Interests Across International Law (OUP 2018), 223. 171 Anne Van Aaken and Tobias A Lehmann, ‘Sustainable Development and International Investment Law: An Harmonious View from Economics’ in Roberto Echandi and Pierre Sauvé (eds), Prospects in International Investment Law and Policy (CUP 2013), 329. 172 For a general analysis of the role of saving clauses in the relationship between treaties, see Deborah Russo, ‘Addressing the Relation Between Treaties by Means of ‘Saving Clauses’’ (2015) 85 BYIL 133–170. 173 See Jesse Coleman and others, ‘Human Rights Law and the Investment Treaty Regime’, in Surya Deva and David Birchall, Research Handbook on Human Righta and Business (Edward Elgar 2020). 174 Statement by UN High Commissioner for Human Rights Michelle Bachelet, World Investment Forum (25 October 2018), available at https://www.ohchr.org/EN/NewsEvents/Pages/ DisplayNews.aspx?NewsID=23773&LangID=E.

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The Principle of No-Harm and Parent-Based Extraterritorial Regulation The previous chapter examined the relevance of good faith in the interpretation and performance of the state duty to protect human rights against corporaterelated human rights violations. I now address the jurisdictional scope of the state duty to protect, focusing in particular on the state jurisdiction to prescribe. When a company operates in a country other than its country of incorporation (i.e. the home state), on the basis of the above considerations on the general obligation for states to prevent violations of human rights from activities carried out within their, the state where the business activities are carried out (i.e. the host state) has a duty to regulate the conduct of the company so as to prevent human rights abuse. Failure by the host state to discharge such an obligation in good faith may amount to an international wrong. At the same time, in a context where the host state may be unable, or unwilling, to uphold human rights standards, the question arises as to the obligations of the home state relating to the conduct of its corporate nationals operating abroad. At one end of the spectrum, the UN human rights treaty bodies have expressed the view that states should take steps to prevent human rights violations committed abroad by business enterprises incorporated under their laws, or whose main seat or place of business is located under their jurisdiction.175 By relying on the treaty bodies’ views – and on human rights courts’ acknowledgment that jurisdiction is not always to be equalled with territory – some scholars uphold the existence of a general duty of the state to prevent human rights abuses by its corporations operating overseas.176 At the other end of the spectrum one finds the statement in the UNGPs to the effect that states are not generally required to regulate the extraterritorial activities of their corporate nationals. Such a restrictive approach has been subscribed by those who maintain that extraterritorial obligations of states only arise under exceptional circumstances, and that no extraterritorial duty has materialised in international law in the business and 6.2

175 See infra, Chapter 6.2.2. 176 See, among others, Fons Coomans, ‘The Extraterritorial Scope of the International Covenant on Economic, Social and Cultural Rights in the Work of the United Nations Committee on Economic, Social and Cultural Rights’ (2011) 11 Human Rights Law Review 1–35; Daniel Augenstein and David Kinley, ‘When Human Rights ‘Responsibilities’ Become ‘Duties’: The Extra-Territorial Obligations of States that Bind Corporations’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013); Nadia Bernaz, ‘Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?’ (2013) 117 Journal of Business Ethics 493–511; Olivier De Schutter, ‘Towards a New Treaty on Business and Human Rights’ (2015) 1 Business and Human Rights Journal 41–67; Muthucumaraswamy Sornarajah, The International Law on Foreign Investment (4 edn, CUP 2017) 192.

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human rights context.177 The starting point of the analysis that follows is based on the general principle of no-harm, according to which no state may rightfully permit the use of its territory in a manner that causes injury to other states and their residents. The question is whether such a principle can shed light on the scope of the obligations, if any, bearing on the home state vis-à-vis the activities of its corporate nationals abroad. 6.2.1 No-Harm: From Geographical Proximity to Community Interests The principle of no-harm, or harm prevention, also known as sic utere tuo ut alienum non laedas178 (use your property in such a manner so as not to injure that of others), which stems from Roman law, is familiar to domestic jurisdictions, where it underlies the rights and duties of neighbouring owners, both in civil law and common law systems.179 In international law, the no-harm principle prescribes that states, not only cannot authorise any use of their territory that would cause significant harm to, or in, other states, but also should take all the appropriate measures to prevent this from occurring.180 Over a century ago, Westlake noted that no principle is more firmly established in the science of law than that which says to an owner sic utere tuo alienum non laedas. The right of sovereignty therefore does not extend to employ anywhere what may be foreseen to be engines of manslaughter and damage to unoffending foreigners.181 It has been suggested that the rationale of the principle of no-harm is grounded in the prohibition of abuse of rights, which forbids parties to exercise a right in a way that can infringe upon the rights of others.182 Others acknowledge 177 Claire Methven O’Brien, ‘The Home State Duty to Regulate the Human Rights Impacts of TNCs Abroad: A Rebuttal’ (2018) 3 Business and Human Rights Journal 47–73. 178 According to some the principle originates from Roman law, although the origin of the maxim is unclear; see Johan G Lammers, Pollution of International Watercourses: A Search for Substantive Rules or Principles of Law (Brill 1984) 570. 179 Herbert Broom, A Selection Of Legal Maxims: Classified and Illustrated (T. & J.W. Johnson 1852) 247 ff; See also John Bowring, The Works of Jeremy Bentham, Now First Collected (William Tait 1838) 314; William Blackstone, Commentaries on the Laws of England (Oxford 1770) 306; Elmer E Smead, ‘Sic Utere Tuo Ut Alienum Non Laedas A Basis of the State Police Power’ (1935–1936) 21 Cornell Law Review 276–292. 180 See Jutta Brunnée, ‘Sic utere tuo ut alienum non laedas’ MPEPIL (2010). 181 John Westlake, International Law (2 edn, CUP 1910) 313. 182 Günther Handl, ‘Territorial Sovereignty and the Problem of Transnational Pollution’ (1975) 69 AJIL 50–76, 56.

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the interrelationship between the two principles but maintain a distinction concerning their origin: abuse of rights would derive from the principle of good faith, while no-harm would be a corollary of the principle of sovereignty.183 It is arguable that both positions are correct, and that the principle of no-harm prescribes a prohibition for the state to abuse its sovereign right to use its territory. This interpretation seems reasonable also in the light of the tight relationship between the principle of no-harm and the principle of neighbourliness,184 which is enshrined in the UN Charter: members of the United Nations also agree that their policy in respect of the territories to which this Chapter applies, no less than in respect of their metropolitan areas, must be based on the general principle of goodneighbourliness, due account being taken of the interests and well-being of the rest of the world, in social, economic, and commercial matters.185 Both the principles of no-harm and of good neighbourliness rely on the duty of states to respect the sovereignty of other states and abstain from obstructing their capacity to fulfil their obligations. As emphasised by Judge Weeramantry in his dissenting opinion in the Legality of the Threat or Use of Nuclear Weapons, the principle of good neighbourliness is one of the bases of modern international law, which has seen the demise of the principle that sovereign states could pursue their own interests in splendid isolation from each other […] The Charter’s express recognition of such a general duty of good neighbourliness makes this an essential part of international law.186 The principle of no-harm has been developed and codified primarily in the context of international environmental law.187 The 1972 UN Declaration on the 183 Some consider the principles interchangeable, others consider no-harm as stemming from good faith, and good neighbourliness from the principle of sovereignty. For an overview of the debate, see Christina Lebb, Cooperation in the Law of Transboundary Water Resources (CUP 2013) 97. 184 See Laurence Boisson de Chazournes and Danio Campanelli, ‘Neighbour States’ MPEPIL (2006). 185 Charter of the United Nations (adopted 26 June 1945, entered into force 24 October 1945) 1 UNTS 16, Article 74. 186 Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) [1996] ICJ Rep 226, Dissenting Opinion of Judge Weeramantry, 505–506. 187 Attila Tanzi and Alexandros Kolliopoulos, ‘The No-Harm Rule’ in Attila Tanzi and Others (eds), The UNECE Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Brill Nijhoff 2015), 133 ff; Philippe Sands and Jacqueline Peel, Principles

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Human Environment affirms that ‘states have the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction’.188 A substantially similar wording can be found in Article 194 (2) of the UN Convention on the Law of the Sea.189 The ILC Articles on Prevention of Transboundary Harm from Hazardous Activities also require ‘states take all appropriate measures to prevent significant transboundary harm or at any event to minimize the risk thereof’, clarifying that such an obligation reflects the fundamental principle sic utere tuo ut alienum non laedas.190 Long before its codification in binding and non-binding international instruments, the no-harm principle was recognised by courts and tribunal as a general principle of law. In the dispute between the US and the Netherlands on the territorial sovereignty over the Islands of Palmas, the sole Arbitrator Huber held that ‘[t]erritorial sovereignty […] has as corollary a duty: the obligation to protect within the territory the rights of other States, in particular their right to integrity and inviolability’.191 According to the Arbitrator, sovereignty served to ‘divide between nations the space upon which human activities are employed, to assure at all points the minimum protection of which international law is a guardian’.192 In the Trail Smelter case, which involved a privately owned Canadian mining company whose harmful emissions affected the agricultural activities of farmers in the US, the Arbitral Tribunal noted that under the principles of international law […] no State has the right to use or permit the use of its territory in such a manner as to cause injury by fumes in or to the territory of another of the properties or persons therein,

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of International Environmental Law (CUP 2018) 206 ff; Pierre Marie Dupuy and Jorge E Viñuales, International Environmental Law (2 edn, CUP 2018) 63 ff. GA, ‘United Nations Conference on the Human Environment’ (15 December 1972) UN Doc A/RES/27/2994, Principle 21. See also UN GA, ‘Rio Declaration on Environment and Development’ (12 August 1992) UN Doc A/CONF.151/26, Principle 2. United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3, Article 194(2). ILC, ‘Draft Articles on Prevention of Transboundary Harm from Hazardous Activities, with Commentaries’, Yearbook of the International Law Commission (2001) Vol II, Part Two, Article 3. Island of Palmas (Netherlands, USA) (1928) 2 RIAA 829, 839. Ibid. See Eirik Bjorge, ‘Islands of Palmas (Netherlands v United States of America) (1928)’ in Eirik Bjorge and Cameron A Miles (eds), Landmark Cases in Public International Law (Hart Publishing 2017), 116 ff.

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when the case is of serious consequences and the injury is established by clear and convincing evidence.193 It is worthy of note that the Tribunal found that the principle also applied to activities carried out by private actors, recalling that the state ‘owes at all times a duty to protect other States against injurious acts by individuals from within its jurisdiction’.194 The Tribunal concluded that Canada had failed to ensure that no harm was caused by the activities of the privately operated company to the neighbouring state.195 Neither the parties to the Trial Smelter case, nor other states involved in international litigation where the principle of no-harm is applied, have ever challenged the existence of such a principle in international law. In fact, the principle has found wide support in the jurisprudence of the ICJ. In holding Albania responsible for damages caused to British warships by a minefield in the Corfu Channel, the Court stated that the due diligence obligations of states are based […] on certain general and well-recognized principles, namely […] every State’s obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States.196 In its 1996 Advisory Opinion on the Legality of the Threat or Use of Nuclear Weapons, the ICJ reiterated ‘the general obligation of States to ensure that activities within their jurisdiction and control respect the environment of other States or of areas beyond national control is now part of the corpus of international law relating to the environment’.197 This is corroborated by the more recent case of the ICJ, in Pulp Mills198 and in Nicaragua v Costa Rica.199 The principle of no-harm is not only relevant to the sovereign rights of other states, as such, but also to the human rights of the individuals residing in such states. In its Advisory Opinion on Human Rights and the Environment, the IACtHR concluded that states have a duty to abstain from impairing the capacity of other

193 Trail Smelter Case (United States, Canada) (1941) 3 RIAA 1905, 1965. See also Affaire du Lac Lanoux (Spain v France) (1957) 12 RIAA 281. 194 Ibid, 1963. 195 Ibid, 1974 ff. 196 The Corfu Channel Case (Advisory Opinion) (Merits) [1949] ICJ Rep 4, 22. 197 Legality of the Threat or Use of Nuclear Weapons (n 186), para 29. See also Gabčikovo-Nagymaros Project (Hungary v Slovakia) (Judgment) [1997] ICJ Rep 7, para 53. 198 Pulp Mills on the River Uruguay (Argentina v Uruguay) [2010] ICJ Rep 14, para 193. 199 Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v Nicaragua) and Construction of a Road in Costa Rica along the San Juan River (Nicaragua v Costa Rica) [2015] ICJ Rep 665, para 118.

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states to discharge their own obligations under the Charter.200 The Court also added that states must prevent their territory from being used in a manner that causes human rights violations to people outside their territory.201 Although the principle of no-harm was originally developed as a tool to regulate relations between neighbouring states, in the contemporary world the case can be made that its scope is no longer confined to geographical proximity.202 In an increasingly interdependent global community, and in light of the rapid expansion of transnational activities, the no-harm principle is of the utmost importance in ensuring the protection of the broader community interests. The latter have been defined by Simma as interests boasting ‘a consensus according to which respect for certain fundamental values is not to be left to the free disposition of states individually or inter se, but is recognized and sanctioned by international law as a matter of concern to all states’.203 It can hardly be disputed that the protection of human rights and of the environment belong to such category.204 The principle of no-harm is indeed at the core of international instruments addressing global phenomena such as climate change.205 In its recent statement on economic, social and cultural rights and climate change, the CESCR emphasised that under the Covenants states have duties not only to their own populations, but also to populations outside their territories, in accordance with articles 55 and 56 of the United Nations Charter.206 200 IACtHR, Medio ambiente y derechos humanos (Opinión consultiva) (n 39), para 95. 201 Ibid. A similar recommendation can be found in UN HRC ‘Guiding Principles on Extreme Poverty and Human Rights submitted by the Special Rapporteur on Extreme Poverty and Human rights’ (18 October 2012) UN Doc A/HRC/RES/21/11, para 92. 202 Jelena Bäumler, ‘Rise and Shine: The No-Harm Principle’s Increasing Relevance for the Global Community’ in Giuliana Ziccardi Capaldo (ed), The Global Community Yearbook of International Law and Jurisprudence 2017 (OUP 2018), 161. 203 Bruno Simma, ‘From Bilateralism to Community Interest in International Law’ (1994) 250 RdC 229, 233. 204 Wolfgang Benedek, ‘Humanization of International Law, Human Rights and the Common Interest’ in Wolfgang Benedek and Others (eds), The Common Interest in International Law (Intersentia 2014), 190 ff; Rüdiger Wolfrum, ‘Identifying Community Interests in International Law’ in Eyal Benvenisti and Georg Nolte (eds), Community Interests Across International Law (OUP 2018), 30. 205 Vienna Convention for the Protection of the Ozone Layer (adopted 22 March 1985, entered into force 22 September 1988) 1513 UNTS 293, Article 2(1); United Nations Framework Convention on Climate Change (adopted 9 May 1992, entered into force 21 March 1994) 1771 UNTS 107, Articles 2 and 4(2). See Werner Sholtz, ‘Human Rights and Climate Change: Extending the Extraterritorial Dimension via the Common Concern’ in Wolfgang Benedek and Others (eds), The Common Interest in International Law (Intersentia 2014) 206 CESCR, ‘Climate change and the International Covenant on Economic, Social and Cultural Rights: Statement of the Committee on Economic, Social and Cultural Rights’ (8 October 2018), para 5.

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As with the majority of principles of law, there is no restriction with regard to the field of application of the no-harm principle.207 While primarily developed in international environmental law, it has been employed in other domains of international law, such as trade law.208 Most importantly for our purposes, the Maastricht Principles on Extraterritorial Obligations of States with regard to Economic, Social and Cultural Rights affirm that under the ‘obligation of no-harm’, ‘states must desist from acts and omissions that create a real risk of nullifying or impairing the enjoyment of economic, social and cultural rights extraterritorially’.209 The question becomes then whether the principle of no-harm can serve as a legal basis to argue that the state has a minimum duty to prevent potential human rights violations of corporations domiciled or registered in its territory, and operating abroad. 6.2.2 Extraterritorial Regulation of Corporate Activities under the UNGPs The Ruggie Framework acknowledged the increasing ‘encouragement’, from international institutions, for home states to enact regulations preventing their companies from committing human rights violations overseas.210 Yet, against the tide described above, what Ruggie found difficult ‘to derive from the treaties or the treaty bodies [was] any general obligation on States to exercise extraterritorial jurisdiction over violations by business enterprises abroad’.211 To him, ‘the extraterritorial dimension of the [state] duty to protect remains unsettled in international law’.212 207 ILC, ‘Preliminary Report on International Liability for Injurious Consequences Arising out of Acts not Prohibited by International Law, by Robert Q Quentin-Baxter’ (24 June 1980) UN Doc A/ CN.4/334, para 93. See also Jelena Bäumler, ‘Rise and Shine: The No-Harm Principle’s Increasing Relevance for the Global Community’ (n 202), 157. 208 Lorand Bartels, ‘The EU’s Human Rights Obligations in Relation to Policies with Extraterritorial Effects’ (2014) 25 EJIL 1071–1091, 1072; Elena Basheska, ‘The Position of the Good Neighbourliness Principle in International and EU Law’ in Dimitry Kochenov and Elena Basheska (eds), Good Neighbourliness in the European Legal Context (Brill Nijhoff 2015), 28. 209 Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights, Principle 13. For an overview of the principles, see infra, Chapter 7.2.3. 210 HRC, ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’ (n 134), para 19. 211 HRC, ‘Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations: State responsibilities to Regulate and Adjudicate Corporate Activities under the United Nations Core Human Rights Treaties: An Overview of Treaty Bodies Commentaries’ (13 February 2007) A/HRC/4/35/Add.1, para 84. 212 HRC, ‘Promotion of All Human Rights, Civil, Political, Economic, Social and Cultural Rights, Including the Right to Development: Business and Human Rights: Towards Operationalizing

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On the basis of such premises, the UNGPs affirm that [a]t present, States are not generally required under international human rights law to regulate the extraterritorial activities of businesses domiciled in their territory and/or jurisdiction. Nor are they generally prohibited from doing so, provided there is a recognized jurisdictional basis. Within these parameters some human rights treaty bodies recommend that home States take steps to prevent abuse by business enterprises within their jurisdiction.213 The conclusion that states are neither ‘generally required’ nor ‘generally prohibited’ to regulate and control business operations outside their territories reveals Ruggie’s “principled pragmatism”.214 The UNGPs set aside the obligation to regulate and merely contemplate a hypothetic state “entitlement” to regulate.215 The possibility of an obligation is neglected in favour of a policy-oriented approach, according to which ‘there are strong policy reasons for home States to set out clearly the expectation that businesses respect human rights abroad’.216 In the approach adopted by Ruggie a distinction is drawn between jurisdiction exercised in relation to actors or activities overseas, which rely on the nationality of the perpetrator regardless of where the offence occurs, and domestic measures with extraterritorial implications.217 Ruggie points out that in latter case the jurisdictional base is primarily territorial, despite the extraterritorial implications.218 Although acknowledging that domestic measures with extraterritorial effects do not trigger as many objections, Ruggie still shies away from envisaging any obligation for the state in this regard. It has been suggested that Ruggie’s approach to extraterritoriality is not consistent with international law and that the UNGPs do not reflect the existing

the “Protect, Respect and Remedy” Framework’ (22 April 2009) UN Doc A/HRC/11/13, para 15. 213 UNGPs, Commentary to Principle 2. 214 Surya Deva and David Bilchitz, ‘The Human Rights Obligations of Business: a Critical Framework for the Future’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 14. 215 Daniel Augenstein and David Kinley, ‘When Human Rights ‘Responsibilities’ Become ‘Duties’: The Extra-Territorial Obligations of States that Bind Corporations’ (n 215), 279. 216 UNGPs, Commentary to Principle 2. 217 UN HRC, ‘Report of the Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie: Business and Human Rights: Further Steps Toward the Operationalization of the “Protect, Respect and Remedy” Framework (9 April 2010) UN Doc A/HRC/14/27, para 48. 218 Ibid.

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obligations of states with regard to the activities of their companies abroad.219 According to De Schutter, the UNGPs set ‘the bar clearly below the current state of international human rights law’ and do not take adequate account of the positions expressed by the UN Treaty bodies and ICJ.220 It has been argued that the ambiguity of the UNGPs has fuelled the existing indeterminacies on the obligations of states,221 thereby hindering the development of the law in this field.222 6.2.3 The UN Treaty Bodies Approach to Extraterritorial Regulation The extraterritorial dimension of the state duty to protect against human rights violations by corporations has been increasingly endorsed by the UN Treaty Bodies. In its recently adopted General Comment on the Right to Life, the HRCtee emphasises that states must also take appropriate legislative and other measures to ensure that all activities taking place in whole or in part within their territory and in other places subject to their jurisdiction, but having a direct and reasonably foreseeable impact on the right to life of individuals outside their territory, including activities taken by corporate entities based in their territory or subject to their jurisdiction, are consistent with article 6, taking due account of related international standards of corporate responsibility, and of the right of victims to obtain an effective remedy.223 This position adopted by the Committee is the last of a series of statements on the obligations of states parties in relation to business activities abroad by companies having their nationality.224 Canada, for instance, has been called upon by the Committee ‘to ensure that all Canadian corporations under its jurisdiction, in particular mining corporations, respect human rights standards

219 Daniel Augenstein and David Kinley, ‘When Human Rights ‘Responsibilities’ Become ‘Duties’: The Extra-Territorial Obligations of States that Bind Corporations’ (n 215) 220 Olivier De Schutter, ‘Towards a New Treaty on Business and Human Rights’, (n 176) 45. 221 Valentina Azarova, ‘The Bounds of (Il)legality: Rethinking the Regulation of Transnational Corporate Wrongs’ in Ekaterina Yahyaoui Krivenko (ed), Human Rights and Power in Times of Globalisation (Brill Nijhoff 2017), 229. 222 Nicolás Carrillo-Santarelli and Carlos Arévalo-Narváez, ‘The Discursive Use and Development of the Guiding Principles on Business and Human Rights in Latin America’ (2017) 30 Revista colombiana de derecho internacional 61–118, 89. 223 HRCtee, ‘General Comment 36’ (n 91), para 22. 224 HRCtee, ‘Concluding Observations: Germany’ (12 November 2012) UN Doc CCPR/C/DEU/ CO/6, para 16.

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when operating abroad’.225 Upon request of the Committee, Canada has also established an Ombudsperson for Responsible Enterprise to address complaints related to allegations of human rights abuses arising from Canadian companies’ operations abroad.226 In Yassin and others v Canada, the claimants, Palestinian inhabitants of a piece of land expropriated by Israel, alleged that Canada had failed to prevent two Canadian corporations from building on the expropriated land, thereby violating their right to freedom of movement and to freedom from interference in their private life.227 The HRCtee dismissed the case because of insufficient evidence provided by the claimants concerning Canada’s failure to exercise due diligence over the activities of the two corporations operating abroad.228 Yet the Committee acknowledged that ‘there are situations where a State party has an obligation to ensure that rights under the Covenant are not impaired by extraterritorial activities conducted by enterprises under its jurisdiction’.229 The issue of extraterritorial regulation of corporate activities has been increasingly addressed by the CESCR. In 2011, the Committee issued a statement on human rights and corporate activities, calling upon states to ‘take steps to prevent human rights contraventions abroad by companies which have their main seat under their jurisdiction, without infringing the sovereignty or diminishing the obligations of the host states under the Covenant’.230 Similar recommendations can be consistently found in the CESCR General Comments on the Right to Health,231 the Right to Water232 and the Right to Social Security.233

225 HRCtee, ‘Concluding Observations: Canada’ (13 August 2015) UN Doc CCPR/C/CAN/CO/6. 226 See Global Affairs Canada, ‘Responsible Business Conduct Abroad’ http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-rse. aspx?lang=eng. 227 Yassin and Others v Canada (2017) HRCtee Comm No 2285/2013. For an analysis of the issue of corporate obligations in the occupied territories, see Eva Kassoti, ‘Doing Business Right? Private Actors and the International Legality of Economic Activities in Occupied Territories’ (2018) 7 Cambridge International Law Journal 301–326. 228 It is to note that the Superior Court of Quebec had previously pointed out that the two corporations had been incorporated in Canada for domestic Israeli tax reasons only and acted as alter egos for and on behalf of a corporation which was not a resident of Canada and did not have any assets in Canada. 229 Yassin and others v Canada (n 227), para 6.5. 230 CESCR, ‘Statement on the Obligations of States Parties Regarding the Corporate Sector and Economic, Social and Cultural Rights’ (12 July 2011) UN Doc E/C.12/2011/1, paras 5–6. 231 CESCR, ‘General Comment No 14’ (n 94), para 39. 232 CESCR, ‘General Comment No 15’ (n 95), para 31. 233 CESCR, ‘General Comment No 19: The Right to Social Security’ (4 February 2007) UN Doc E/C.12/GC/19, para 54.

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In its recent General Comment 24, the CESCR stated that the extraterritorial obligation to protect requires states to take measures to prevent and redress violations of human rights outside their territory and linked to the activities of business entities over which they can exercise control’.234 The Committee went further by adding that States may seek to regulate corporations that are domiciled in their territory and/or jurisdiction: this includes corporations incorporated under their laws, or which have their statutory seat, central administration or principal place of business on their national territory.235 In line with such premises, the CESCR is increasingly requiring states to put in place a clear regulatory framework for companies domiciled under their jurisdiction, but operating abroad, in order to ensure that their activities do not violate economic, social and cultural rights.236 Other UN treaty bodies have also called upon states to regulate the extra­ territorial conduct of third parties registered in their territory.237 The CRC, for instance, has recognized that there are state obligations to respect, protect and fulfil children’s rights in the context of businesses’ extra-territorial activities and operations provided that there is a reasonable link between the State and the conduct concerned. A reasonable link exists when a business enterprise has its centre of activity, is registered or domiciled or has its main place of business or substantial business activities in the State concerned.238 In sum, treaty bodies appear to be increasingly likely to support a role for the home state in relation to the duty to protect against violations committed by corporations. This direction for UN Treaty bodies on extraterritoriality is

234 CESCR, ‘General Comment No 24’ (n 96), para 30. 235 Ibid, 31. 236 See, among others, CESCR, ‘Concluding Observations: Norway’ (13 December 2013) UN Doc E/C.12/NOR/CO/5, para 6; CESCR, ‘Concluding Observations: United Kingdom’ (14 July 2016) UN Doc E/C.12/GBR/CO/6, para 12; CESCR, ‘Concluding Observations: Australia’ (11 July 2017) UN Doc. E/C.12/AUS/CO/5, para 13; CESCR, ‘Concluding Observations: New Zealand (1 May 2018) UN Doc E/C.12/NZL/CO/4, para 16. 237 See, among others, UN CERD, ‘Concluding Observations: Canada’ (9 March 2012) UN Doc CERD/C/CAN/CO/19–20, para 14. 238 CRC, ‘General Comment No 16: State Obligations Regarding the Impact of the Business Sector on Children’s Rights’ (17 April 2013) UN Doc CRC/C/GC/16, para 43.

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buttressed by other governmental and non-governmental instruments.239 At the non-governmental level, in 2011 a group of legal experts developed the Maastricht Principles on States’ Extraterritorial Obligations in the Area of Economic, Social and Cultural Rights. Building on the Limburg Principles240 and the Maastricht Guidelines,241 the Principles affirm that states must respect, protect and fulfil human rights both within their territories and extraterritorially.242 Principle 3 postulates that all states have a duty to respect, protect and fulfil human rights both within their territories and extraterritorially. Such a duty requires states to ‘desist from acts and omissions that create a real risk of nullifying or impairing the enjoyment of economic, social and cultural rights extraterritorially’,243 as well as to take steps to prevent non-state actors from doing so. According to Principle 25, the cases in which states must adopt measures to protect economic, social and cultural rights include situations in which the business enterprise or its parent or controlling company, has its centre of activity, is registered or domiciled, or has its main place of business or substantial business activities, in the state concerned. 6.2.4 No-Harm and the Home State Duty to Prevent Corporate Violations The state has a duty to control the activities of corporations in its territory. As authoritatively underscored, such a duty ‘is no less applicable when the harm is caused to persons or other legal interests within the territory of another state’.244 Already in 1972, a UN Security Council Resolution required ‘all States whose nationals and corporations […] operating in Namibia […] to use all available means to ensure that such nationals and corporations conform in their policies of hiring Namibian workers to the basic provisions of the Universal Declaration of Human Rights’.245

239 CoE Committee of Ministers, ‘Declaration of the Committee of Ministers on the UN Guiding Principles on Business and Human Rights’ (16 April 2014), para 10. 240 Limburg Principles on the Implementation of the International Covenant on Economic, Social and Cultural Rights (1987), available at https://www.escr-net.org. 241 Maastricht Guidelines on Violations of Economic, Social and Cultural Rights (1997), available in (1998) 20 Human Rights Quarterly 691. 242 Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights (n 209). See Olivier De Schutter and Others, ‘Commentary to the Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights’ (2012) 34 Human Rights Quarterly 1084–1169. 243 Ibid. Principle 13. 244 Ian Brownlie, System of the Law of Nations: State Responsibility (Clarendon Press 1983) 165. 245 UN SC, ‘Security Council Resolution 310 (1972) [Namibia]’ (4 February 1972) UN Doc S/ RES/310, para 5.

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In order for the state to prevent corporations domiciled or registered in its territory from causing harms beyond its borders, it has to set up an effective regulatory framework. As opined by de Schutter, just as a state has no right to allow the use of its territory to cause environmental damage on the territory of another state, it should not allow a company domiciled under its jurisdiction to operate abroad in a way which causes violations of human rights.246 It is hard to ignore, though, the many instances in which corporations operate abroad through separate legal entities that fall under the jurisdiction of the host state.247 The case could be made, therefore, that the regulation by the home state cannot reach foreign companies, as it would clash with the principle of non-intervention in the domestic affairs of the host state. However, the no-harm principle appears to require the state to impose a duty on the corporations registered in its territory to avoid infringing human rights when operating abroad, not on the subsidiary operating in the host state. In this sense, the regulation would be parent-based, for it is on the parent corporation that obligations to control its subsidiaries, or to monitor its supply chain, are imposed by the home state.248 It follows that the home state only deals with the conduct of the entity over which it has regulatory control, the jurisdictional link, thus, remaining primarily territorial, in spite of indirectly extraterritorial effects of the conduct over which the home state has jurisdiction.249 From this perspective, as pointed out by Deva, the extraterritorial regulation of TNCs has a minimal extraterritorial component. In essence, such regulation affects only the parent corporation incorporated within the territory but operating abroad through its subsidiaries.250 This approach is echoed by the CESCR in its General Comment 24: 246 Olivier de Schutter, ‘The Responsibility of States’ in Simon Chesterman and Angelina Fisher (eds), Private Security, Public Order: The Outsourcing of Public Services and Its Limits (OUP 2009), 35. 247 Frederick Mann, ‘The Doctrine of International Jurisdiction Revisited after Twenty Years’ (n 8), 56; Robert McCorquodale, ‘International Human Rights Law Perspectives on the UN Framework and Guiding Principles on Business and Human Rights’ in Lara Blecher and Others (eds), Corporate Responsibility for Human Rights Impacts: New Expectations and Paradigms (American Bar Association 2014), 57. 248 Sara L Seck, ‘Home State Responsibility and Local Communities: The Case of Global Mining’ (2008) 11 Yale Human Rights and Development Law Journal 177–206, 190. 249 Robert McCorquodale, ‘International Human Rights Law Perspectives on the UN Framework and Guiding Principles on Business and Human Rights’ (n 247), 59. 250 Surya Deva, ‘Acting Extraterritorially to Tame Multinational Corporations for Human Rights Violations: Who Should “Bell the Cat”?’ (2004) 5 Melbourne Journal of International Law 37–65, 48.

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States parties should also require corporations to deploy their best efforts to ensure that entities whose conduct those corporations may influence, such as subsidiaries (including all business entities in which they have invested, whether registered under the State party’s laws or under the laws of another State) or business partners (including suppliers, franchisees and subcontractors), respect Covenant rights. Corporations domiciled in the territory and/or jurisdiction of States parties should be required to act with due diligence to identify, prevent and address abuses to Covenant rights by such subsidiaries and business partners, wherever they may be located.251 Besides, the way in which a state treats its own citizens and registered companies is not, or not anymore, a question of domaine réservé. Since the state is accountable for the way in which it treats those over whom it exercises power,252 it is also its legitimate concern and its duty to regulate the behaviour of corporations under its control, regardless of whether they operate within or outside its borders.253 This is all the more so when the host-state regulation is loose in terms of protection of human rights. As argued by Reinisch, if the host state fails in its duty to protect, it has a tough case arguing that other states with connections to a corporate entity are prohibited from discharging their duty to protect human rights.254 States should ensure that their due diligence regimes are consistent with their duty to prevent their national territory from being used to cause violations of human rights on another state’s territory, including by corporations domiciled on their territory. The home state, by regulating the corporation “at the source”, has the means to control, at least in part, the activities of its corporate nationals abroad.255 It may be objected that such an approach may lead to unlimited state responsibility for corporate human rights violations perpetrated in third countries. However, it needs to be recalled that the state duty to protect is subject to a standard of conduct, not of result. If, despite the home state having adopted all the 251 CESCR, ‘General Comment 24’ (n 96), para 33. 252 Malcolm D Evans, ‘State Responsibility and the European Convention on Human Rights: Role and Realm’ in Malgosia Fitzmaurice and Dan Sarooshi (eds), Issues of State Responsibility before International Judicial Institutions (Hart Publishing 2004), 139. 253 Sigrun I Skogly, ‘Regulatory Obligations in a Complex World: States’ Extraterritorial Obligations Related to Business and Human Rights’ in Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 328. 254 August Reinisch, ‘The Changing International Legal Framework for Dealing with Non-State Actors’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 58. 255 Francesco Francioni, ‘The Role of the Home State in Ensuring Compliance with Human Rights by Private Military Contractors’ in Francesco Francioni and Natalino Ronzitti (eds), War by Contract (OUP 2011).

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appropriate measures with regard to a national mother company, human rights were violated by a subsidiary of its corporate national on the foreign territory, the state in question may not be deemed to incur international responsibility. Furthermore, the home state’s obligations are parallel and complementary to those of the host state. CESCR clarified that the state in whose jurisdiction companies have their main seat should take measures to prevent human rights abuses abroad ‘without […] diminishing the obligations of the host States under the Covenant’.256 Parent-based regulation in business and human rights appears to be compatible with the jurisdictional principles of international law.257 In fact, states already exercise far more “aggressive” forms of extraterritorial regulation in other areas of international law, such as competition law, tax law, corruption and the fight against terrorism.258 Following the discussion in the previous sections, it appears safe to conclude that, in accordance with the principle of no-harm, states must take adequate steps to ensure that corporations of their nationality comply with human rights, whether at home, or abroad. As argued by Sornarajah ‘where a state knows that its national’s activities will cause, or are causing, harm to other states or peoples, it is consistent with this duty that it should prevent such harm’.259 The principle of no-harm unravels the jurisdictional dilemma of states, caught between the risk of the violation of the principle of non-intervention, and the violation of their duty to protect human rights against corporate-related violations.260 Relying on the principle of no-harm to assess a state duty to regulate its corporations’ activities both at home and abroad also helps avoiding the race to the bottom where companies relocate their business operations to countries with loose human rights standards.261 256 CESCR, ‘General Comment No 24’ (n 96), para 26. 257 Alice De Jonge, Transnational Corporations and International Law: Accountability in the Global Business Environment (Edward Elgar 2011) 91. Surya Deva, ‘Business and Human Rights, or the Business of Human Rights: Critical Reflections on Emerging Themes’ in Bård A Andreassen and Võ Khánh Vinh (eds), Duties Across Borders (Intersentia 2016), 34. 258 Peter T Muchlinski, Multinational Enterprises and the Law (2 edn, OUP 2007) 129 ff; Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (n 138), 146. 259 Muthucumaraswamy Sornarajah, ‘Linking State Responsibility for Certain Harms Caused by Corporate Nationals Abroad to Civil Recourse in the Legal Systems of Home States’ in Craig Scott (ed), Torture as Tort (Hart Publishing 2001), 507; see also Muthucumaraswamy Sornarajah, The International Law on Foreign Investment (n 176), 199. 260 Rachel Chambers, ‘An Evaluation of Two Key Extraterritorial Techniques to Bring Human Rights Standards to Bear on Corporate Misconduct’ (2018) 14 Utrecht Law Review 22–39. 261 Surya Deva, ‘Corporate Human Rights Violations: A Case for Extraterritorial Regulation’ in Christoph Luetge (ed), Handbook of the Philosophical Foundations of Business Ethics (Springer 2012), 1085.

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In a similar vein, the ECtHR has affirmed the obligations of states to regulate and control individuals within their territory also with a view to preventing human rights violations committed outside their borders. In Rantsev v Cyprus and Russia, which concerned the death of a woman who had allegedly been illegally trafficked by a non-state actor from Russia to Cyprus to work as a prostitute, the Court held that in the light of the fact that the alleged trafficking commenced in Russia and in view of the obligations undertaken by Russia to combat trafficking, it is not outside the Court’s competence to examine whether Russia complied with any obligation it may have had to take measures within the limits of its own jurisdiction and powers to protect Ms Rantseva from trafficking and to investigate the possibility that she had been trafficked.262 6.3 Access to Remedy and Extraterritorial Adjudication The right to remedy is generally recognized as a fundamental human right.263 As emphasised by the UN Special Rapporteur on the question of the impunity of perpetrators of human rights violations, [i]mpunity for violations of basic rights compromises the international obligation of States to guarantee these rights and to punish a failure to respect them. What is the point of proclaiming rights if they can be violated with impunity and disregarded? In this connection, it should be remembered that the efficacy of the international system for protecting the human rights of the individual is based on the right to an effective remedy. The various mechanisms which produce impunity make this right completely inoperative. This denial of justice occurs in the first place at the domestic level but also at the international level since it closes all access by individuals to the international human rights bodies.264

262 Rantsev v Cyprus and Russia (2010) ECtHR App No 25965/04, para 207. See also M and Others v Italy and Bulgaria (2012) ECtHR App No 40020/03, para 167. 263 ‘That a wrong done to an individual must be redressed […] is one of the timeless axioms of justice’, in S.N. Guha Roy, ‘Is the Law of Responsibility of States for Injuries to Aliens a Part of Universal International Law?’ (n 24), 863. See also Surya Deva, ‘Treating Human Rights Lightly: A Critique of the Consensus Rhetoric and the Language Employed by the Guiding Principles’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 102. 264 UN Commission on Human Rights, ‘Second Interim Report on the Question of the Impunity of Perpetrators of Human Rights Violations, Prepared by Mr El Hadji Guissé, Special Rapporteur’ (3 July 1996) UN Doc E/CN.4/Sub.2/1996/15, para 32.

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In other words, it falls on the state to put in place a judicial system that allows rights to be vindicated adequately and violations repaired.265 The business and human rights context makes no exception where affording access to effective remedy for persons affected by corporate abuses is an integral part of the state duty to protect human rights.266 The relevant state obligations have been reflected in the UNGPs, which require states to take appropriate steps to ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their territory and/or jurisdiction those affected have access to effective remedy.267 It is worth noting that judicial mechanisms are not the only means to grant access to remedy to victims of human rights violations by corporations. Other avenues may include state-based as well as company-based non-judicial mechanisms.268 It remains the case, though, that judicial mechanisms at the domestic level are key to ensuring access to remedy.269 The state where the violation has occurred bears an obligation to prosecute and redress corporate violations. That being said, plaintiffs may face legal obstacles in bringing claims where the violations occurred (usually the host-state). The obstacles faced by victims of corporate human rights violations in pursuing remedies may be due to the loose regulations in the host state, to the complicity of the latter in the violations perpetrated, or simply to the lack of an adequate judicial system.270 In this context, the question arises regarding the possibility for the victims to lodge the claim before the courts where the parent company is domiciled.271 265 Ibid, para 135. A similar remark was made by the CJEU in Unión de Pequeños Agricultores v Council of the European Union (25 July 2002) CJEU Case No C-50/00 P, paras 39–41. 266 Marco Fasciglione, ‘Enforcing the State Duty to Protect under the UN Guiding Principles on Business and Human Rights: Strasbourg Views’ (n 105), 45. 267 UNGPs, Principle 25. 268 See in general Karin Lukas and Others, Corporate Accountability: The Role and Impact of Non-Judicial Grievance Mechanisms (Edward Elgar 2016). For an account of company-based mechanisms for human rights violations, see Sarah Knuckey and Eleanor Jenkin, ‘CompanyCreated Remedy Mechanisms for Serious Human Rights Abuses: A Promising New Frontier for the Right To Remedy?’ (2015) 19 The International Journal of Human Rights 801–827. 269 HRC, ‘Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse, Report of the UN High Commissioner for Human Rights’ (10 May 2016) UN Doc A/HRC/32/19, para 3. 270 Beth Stephens, ‘Making Remedies Work’ in Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 426. 271 See Mark Taylor, Robert Thompson and Anita Ramasastry, ‘Overcoming Obstacles to Justice. Improving Access to Judicial Remedies for Business Involvement in Grave Human Rights

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This section examines if and to what extent the right to remedy, as a principle of law, may justify or even mandate forms of extraterritorial adjudication in transnational business and human rights litigation.272 6.3.1 The Right to Remedy as a General Principle of Law ‘It is a principle of international law, and even a general conception of law, that any breach of an engagement involves an obligation to make reparation’.273 The principle, which has been codified in Article 31 of the ARISWA, has been defined as ‘the cornerstone of international claims for reparations, whether presented by states or other litigants’.274 In 1803, Justice Marshall observed that a government cannot be called a ‘government of laws, and not of men […] if the laws furnish no remedy for the violation of a vested legal right’.275 The right to an effective remedy for harm is a core tenet of international human rights law,276 where the individual is the ultimate beneficiary of the reparation.277 The right to remedy includes both procedural and substantive elements.278 In its procedural dimension, it entails the right to mechanisms that allow victims to vindicate their rights through judicial and non-judicial venues. In its substantive dimension, the principle in question confers the victims of an assessed breach of one or more their legal rights the right to reparation for the harm suffered therefrom.279 Reparation Abuses’ (2010) FAFO, 10 ff. 272 See August Reinisch, ‘The Changing International Legal Framework for Dealing with NonState Actors’ (n 254254), 59. 273 Factory at Chorzow (Germany v Poland) (Judgment) [1928] PCIJ Series A No 17, para 73, 29. See Dionisio Anzilotti, Teoria generale della responsabilità dello stato nel diritto internazionale (Firenze 1902) 13; 274 Dinah Shelton, ‘Righting Wrongs: Reparations in the Articles on State Responsibility’ (2002) 96 AJIL 833–856, 836. 275 Marbury v Madison (1803) 5 S.Ct. 137 (US Supreme Court). See also Gouriet v Union of Post Office Workers (1978) AC 435: ‘a right without a remedy is no right at all’. 276 HRC, ‘Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse’ (n 269), para 6. 277 Louis Le Fur, ‘La Coutume et les principes généraux du droit comme sources du droit international public’ in LivreRecueil d’études sur les sources du droit en l’honneur de François Gény, vol 3 (Sirey 1935), Separate Opinion of Judge Trindade, para 206 ; Cyprus v Turkey (2014) ECtHR App No 25781/94, para 46. 278 GA, ‘Access to Effective Remedies under the Guiding Principles on Business and Human Rights: Implementing the United Nations Protect, Respect and Remedy Framework’ (n 139), para 14. 279 Erika George and Lisa J Laplante, ‘Access to Remedy: Treaty Talks and the Terms of a New Accountability Accord’ in Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 394 ff.

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at the inter-state level under international law encompasses a broad range of measures to restore the situation that would have existed prior to the wrongful act, including restitution, compensation, rehabilitation, satisfaction and guarantees of non-repetition.280 Such forms of reparation can easily find their counterpart at the domestic level to the benefit of individual claimants. This is amply corroborated by the case law of international human rights courts and international investment tribunals. The UDHR recognises the right to an effective remedy before domestic courts for violations of human rights.281 The ICCPR similarly imposes on states a duty to ensure that any person whose rights are violated is granted effective remedy.282 Although the ICESCR does not contain a specific provision dealing with the state obligation to provide access to remedy, the requirement under Article 2 (1) to provide for the progressive realization of all rights contained in the Covenant has been interpreted by the CESCR as implying a right to remedy.283 The Committee has also noted that with regard to certain obligations judicial remedy is essential to fulfil the obligations under the Covenant.284 With particular regard to corporate activities, the CESCR has noted that [e]ffective monitoring, investigation and accountability mechanisms must be put in place to ensure accountability and access to remedies, preferably judicial remedies, for those whose Covenant rights have been violated in the context of business activities. States Parties should inform individuals and groups of their rights and the remedies accessible to them pertaining to the Covenant rights in the context of business activities.285 The obligation of states to ensure effective remedies to the right-holders is further recognised by other human rights treaties both at the universal286 and at the regional level.287 The ECtHR has noted that ‘[a]n individual who has an arguable claim to be the victim of a violation of one of the rights in the Convention is entitled to a national remedy in order to have his claim decided and if appropriate

280 HRCtee, ‘General Comment No 31’ (n 89), para 16. 281 UDHR, Article 10. 282 ICCPR Article 2(3). The evaluation of the effectiveness of remedies should take into account the specific context and the features of the substantive right concerned. See Manfred Nowak, U.N. Covenant on Civil and Political Rights: CCPR Commentary (2 edn, N.P. Engel 2005) 67. 283 CESCR, ‘General Comment No 24’ (n 96), para 8. 284 Bithashwiwa & Mulumba v Zaire (1989) HRCtee Comm Nos 241/1987 and 242/1987, para 14. 285 CESCR, ‘General Comment No 24’ (n 96), para 38. 286 See, among others, CERD, Article 6; CRC, Article 39; CAT, Article 14(1). 287 ECtHR, Article 13; EU Charter of Fundamental Rights, Article 47; ACHR, Article 25; ACHPR, Article 7 (1)(a).

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to obtain redress’.288 According to the Court Article 13 of the Convention requires ‘the provision of a domestic remedy to deal with the substance of the relevant Convention complaint and to grant appropriate relief’.289 The Inter-American Court of Human Rights has pioneered an expanding range of international judicial remedies for human rights violations.290 In articulating the state duty to protect human rights, the IACtHR recalled that any violation of an international obligation that has caused harm entails the obligation to make satisfactory reparation.291 In Abrill Alosilla and others v Peru, the Court evoked the state obligation ‘to guarantee all persons under its jurisdiction access to an effective judicial remedy against acts that violate their fundamental rights’.292 With specific regard to corporate activities, the 2009 IACmHR Report on Indigenous and Tribal Peoples’ Rights over their Ancestral Lands and Natural Resources, notes that Enforcement of the environmental protection measures in relation to private parties, in particular of extractive companies and industries, is required to avoid the State’s international responsibility […] the duty of reparation is applicable not only to the negative impact of activities carried out by State authorities, but also by commercial companies or other private actors. In this latter type of cases, states are in the obligation of securing the existence of effective and accessible reparation mechanisms.293 In Yakye Axa Indigenous Community v Paraguay, which concerned the displacement of an indigenous community from its traditional land, the IACtHR found that the poor living conditions of the members of the indigenous community had become extreme, due to the presence of three UK corporations in their ancestral territory. The Court declared Paraguay responsible for the lack of protection of the Yakye Axa community. It ordered Paraguay to return to the Yakye Axa their ancestral land or to provide an alternative piece of land, and to 288 Silver and Others v United Kingdom (1983) ECtHR App Nos 5947/72; 6205/73; 7052/75; 7061/75; 7107/75; 7113/75; 7136/75, para 113. 289 Kaya v Turkey (1998) ECtHR App No 22729/93, para 106. 290 Douglass Cassel, ‘The Expanding Scope and Impact of Reparations Awarded by the InterAmerican Court of Human Rights’ in Koen De Feyter and Others (eds), Out of the Ashes: Reparation for Victims of Gross and Systematic Human Rights Violations (Intersentia 2006), 91. 291 Velásquez Rodríguez v Honduras (n 116), para 172. See Thomas M Antkowiak and Alejandra Gonza, The American Convention on Human Rights: Essential Rights (OUP 2017) 216. 292 Abrill Alosilla and Others v Peru (Merits, Reparations and Costs) (2011) IACtHR Series C No 223, para 75. 293 IACmHR, ‘Indigenous and Tribal Peoples’ Rights over Their Ancestral Lands and Natural Resources’ (30 December 2009) OEA/Ser.L/V/II, Doc 56/09, paras 203, 385.

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pay monetary compensation for the damaged caused to the indigenous community.294 Similarly, in Sawhoyamaxa Indigenous Community v Paraguay, the IACtHR recalled that states are under the obligation to protect individuals from abuses of third parties, and that such obligation implies adequate investigation and punishment of the offenders.295 In sum, the right to remedy may be considered a principle of law by which the infringing party is under the obligation to provide full reparation to the victim. The UN Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law, which were intended as a restatement of existing state obligations, identify three core aspects of the right to remedy in relation to gross violations: the right to equal and effective access to justice; the right to effective and prompt reparation for harm suffered; and to access to relevant information concerning violations and reparation mechanisms.296 As a key component of access to remedy, access to justice entails the right to obtain the protection of the law and the availability of legal remedies before a court in accordance with substantive standards of fairness.297 Under Article 6 of the ECHR, states must grant every individual a fair and public hearing within a reasonable time by an independent and impartial tribunal.298 In Golder v United Kingdom, the ECtHR included ‘the principle whereby a civil claim must be capable of being submitted to a judge ranks’ in the ‘the universally “recognised” fundamental principles of law’, adding that ‘the same is true of the principle of international law which forbids the denial of justice’.299 For the purposes of this

294 Yakye Axa Indigenous Community v Paraguay (Merits, Reparations and Costs) (2005) IACtHR Series C No 125. 295 Sawhoyamaxa Indigenous Community v Paraguay (Merits, Reparations and Costs) (2006) IACtHR Series C No 146. 296 GA, ‘Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law’ (21 March 2006) UN Doc A/RES/60/147. For an analysis of the principles, see M. Cherif Bassiouni, ‘International Recognition of Victims’ Rights’ (2006) 6 Human Rights Law Review 203–279. 297 See Francesco Francioni, ‘The Rights of Access to Justice under Customary International Law’ in Francesco Francioni (ed), Access to Justice as a Human Right (OUP 2007), 1; see also UN GA, ‘Declaration of the High-level Meeting of the General Assembly on the Rule of Law at the National and International Levels (30 November 2012) UN Doc A/RES/67/1, para 14. 298 Alastair Mowbray, The Development of Positive Obligations under the European Convention on Human Rights by the European Court of Human Rights (n 102), 97 ff, and 205 ff. 299 Golder v United Kingdom (1975) ECtHR App No 4451/70, para 35.

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research, it is important to emphasise that the Court referred to such a principle as falling within Article 38(1)(c) of the ICJ Statute.300 In sum, domestic courts are under an obligation to ensure access to justice and effective remedies when adjudicating private disputes between corporate perpetrators and victims of human rights abuses.301 As emphasised by the UNGPs, ‘states should ensure that they do not erect barriers to prevent legitimate cases from being brought before the courts in situations where judicial recourse is an essential part of accessing remedy’.302 Such a duty has been further emphasised by the UN Sustainable Development Goals, in reaffirming the importance to ‘promote the rule of law and ensure equal access to justice for all’.303  6.3.2 Foreign Policy Concerns and the Uncertain Fate of the Alien Tort Statute Given the current lack of an international jurisdiction over corporations, transnational litigation before domestic courts has a key role in affording victims of corporate violations access to remedy.304 This is even the more so in an age of increasing isolationism, where the judiciary can provide a tool to enforce international standards, making up for the shortcomings of the executives. The Alien Tort Statute (ATS) was enacted by the First US Congress as part of the Judiciary Act of 1789. It provides US federal courts with jurisdiction over ‘any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States’.305 Shortly after its adoption, the ATS was cited in a legal opinion recognising that providing a civil remedy to foreign citizens injured by a violation of international law could avoid an escalation of tension with a foreign state.306 Having thereafter remained dormant for two-hundred years, the ATS gained new life when it was successfully invoked by Paraguayan nationals for acts of torture committed by a former Paraguayan official.307 In the words of the US Court of Appeals for the Second Circuit: 300 301 302 303 304

305 306 307

Ibid. See also Steel and Morris v United Kingdom (2005) App No 68416/01, para 59. Dinah Shelton, Remedies in International Human Rights Law (3 edn, OUP 2015) 18. UNGPs, Commentary to Principle 26. UNGA, ‘Transforming our World: The 2030 Agenda for Sustainable Development’ (21 October 2015) UN Doc A/RES/70/1, Goal 16.3. Menno T Kamminga, ‘Transnational Human Rights Litigation against Multinational Corporations: Post-Kiobel’ in Cedric Ryngaert and Others (eds), What’s Wrong with International Law: Liber Amicorum AHA Sons (Brill Nijhoff 2015), 162. United States Code, ‘Alien’s Action for Tort’ 28 US Code, para 1350. Beth Stephens, ‘The Curious History of the Alien Tort Statute’ (2014) 89 Notre Dame Law Review 1467–1544, 1472. Filártiga v Peña-Irala (30 June 1980) 630 F.2d 876 (US Court of Appeals 2nd Cir.). See Anne Marie Burley, ‘The Alien Tort Statute and the Judiciary Act of 1789: A Badge of Honour’ (1989) 83 AJIL 461–493, 461.

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In the twentieth century the international community has come to recognize the common danger posed by the flagrant disregard of basic human rights and particularly the right to be free of torture. Spurred first by the Great War, and then the Second, civilized nations have banded together to prescribe acceptable norms of international behaviour […] Among the rights universally proclaimed by all nations […] is the right to be free of physical torture. Indeed, for purposes of civil liability, the torturer has become – like the pirate and slave trader before him – hostis humani generis, an enemy of all mankind. Our holding today, giving effect to a jurisdictional provision enacted by our First Congress, is a small but important step in the fulfillment of the ageless dream to free all people from brutal violence.308 The Filártiga decision paved the way for the so-called “foreign-cubed cases”, where foreigners began to lodge civil claims before US federal courts in relation to violations of international law committed abroad.309 Most importantly, by allowing private parties to lodge claims for violations of human rights, the ATS allowed individuals to play a role in the interpretation and application of international law310 and to become a ‘diplomatic force in their own right’.311 The ATS was initially employed for civil claims against individual perpetrators of human rights violations.312 From the mid-1990s, however, the Statute has been increasingly invoked by plaintiffs to claim civil liability of corporations 308 Filártiga (n 307), 889–890. 309 The only connection to the US in Filártiga was that the claimants were US residents and the defendant was physically in the US when served with the lawsuit. The term ‘foreign-cubed case’ was first used in Morrison v National Australia Bank Ltd (24 June 2010) 130 S.Ct. 2869 (US Supreme Court); see Harold H Koh, ‘Transnational Public Law Litigation’ (1991) 100 Yale Law Journal 2347–2402, 2366; Ernest A Young, ‘Universal Jurisdiction, the Alien Tort Statute, and Transnational Public- Law Litigation After Kiobel’ (2015) 64 Duke Law Journal 1023–1127, 1029. 310 Beth Stephens, ‘The Curious History of the Alien Tort Statute’ (n 306306), 1468. 311 Anne-Marie Slaughter and David Bosco, ‘Plaintiff’s Diplomacy’ (2000) Foreign Affairs, 102. 312 Kadic v Karadžić (13 October 1995) 70 F.3d 232 (US Court of Appeals 2nd Cir.). Croats and Muslim citizens of Bosnia-Herzegovina sued the leader of a breakaway Bosnia-Serb Republic for the atrocities committed under his command. The district court dismissed the complaint, concluding that Karadžić was not a state actor and that international law did not bind private actors. The Second Circuit, however, reversed the decision, holding that certain forms of conduct violate international law regardless of whether they are committed under the auspices of the state or by private individuals. For an analysis of the case, see David P Kunstle, ‘Kadic v Karadzic: Do Private Individuals Have Enforceable Rights and Obligations under The Alien Tort Claims Act?’ (1996) 6 Duke Journal of Comparative and International Law 319–346.

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for complicity in violations of international law such as torture, extrajudicial killings, forced labour, and financing of terrorism. While dozens of claims have been filed against corporations under the ATS, no case has so far reached a successful outcome for the claimants. A considerable number of claims have been dismissed either on political grounds, or under the comity doctrine, or on forum non conveniens grounds.313 Other cases, such as Wiwa v Royal Petroleum and Doe v Unocal, have been settled out of court.314 As seen in Part I, the scope of the ATS was severely constrained by the US Supreme Court decision in Sosa v Alvarez-Machain.315 The Court held that the ATS is a jurisdictional statute and, therefore, does not in itself create new causes of action for violations of international law.316 Accordingly, Sosa concluded that courts should not recognise causes of actions ‘with less definite content and acceptance’ that the sorts of norms recognised when the ATS was enacted, i.e., violations of safe conduct, infringement of the rights of ambassadors, and piracy.317 Already by then, the Court was arguing that ‘attempts by federal courts to craft remedies for the violation of new norms of international law’ would imply ‘risks of adverse foreign policy consequences’.318 However, it was not until litigation against corporations increased exponentially that foreign policy concerns started to play a most prominent role in the decisions of US courts concerning the scope of the ATS. In Kiobel v Royal Dutch Petroleum, Nigerian nationals invoked the ATS alleging that a British and a Dutch company, together with their Nigerian subsidiary, aided and abetted the Nigerian government to suppress demonstrations against their oil activities. The Nigerian military and police allegedly attacked Ogoni villages beating, raping and killing their villagers, benefitting from the complicity of the corporate defendants. The US Court of Appeals for the Second Circuit dismissed the complaint on the

313 On forum non conveniens see infra, Chapter 7.3.4. For an analysis of the political question and the comity doctrines, see Nadia Bernaz, Business and Human rights. History, Law and Policy – Bridging the Accountability Gap (Routledge 2016) 268 ff. 314 Wiwa v Royal Dutch Petroleum Co. (14 September 2000) 226 F.3d 88 (US Court of Appeals 2nd Cir.); the case concerned the alleged complicity of Shell in supporting military operations against the Ogoni People in Nigeria. In June 2009, Shell agreed to settle for 15.5 million dollars. Doe I v Unocal Corp. (24 April 1997) 963 F.Supp. 880 (District Court for the Central District of California), aff ’d in part, rev’d in part, 395 F.3d 932 (18 September 2002) (US Court of Appeals 9th Cir.). The case concerned the alleged complicity of a US-based energy company in the abuses committed by the Burmese military. In 2005, Unocal agreed, in a confidential settlement, to compensate the plaintiffs and provide funds for programmes in Burma. 315 Sosa v Alvarez-Machain (29 June 2004) 542 US 692 (US Supreme Court). 316 Ibid, 732. 317 Ibid. 318 Ibid, 762.

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grounds that customary international law does not recognise corporate liability and, therefore, it does not meet the requirement set by Sosa.319 While the US Supreme Court granted certiorari, after the first round of oral arguments the Court set aside the issue of corporate liability and focused on whether the ATS extended to conduct occurring in the territory of another state. In its 2013 decision, the US Supreme Court curtailed the jurisdictional scope of the ATS by upholding the presumption against its extraterritorial application.320 According to the Court, ‘[w]hen a statute gives no clear indication of an extraterritorial application, it has none’.321 The Court added that even where the claim ‘touches and concerns’ US territory, it must do it with ‘sufficient force’ to displace such a presumption.322 Given that businesses often operate across multiple jurisdictions, according to the Court, the ‘mere presence’ of a company in the US territory would not be enough to overcome the presumption against extraterritoriality.323 In his concurring opinion, Justice Breyer affirmed that the “touch and concern” test implies either that the conduct took place on US soil, or that the defendant is an American, or that the defendant’s conduct affects an important national interest of the United States.324 The little guidance provided by the Court on the relevant factors to rebut the presumption against extraterritoriality resulted in different and sometimes conflicting interpretations in the subsequent case law.325 Following Kiobel, a number of cases have been dismissed for lack of a sufficient link with the United States,326 sometimes even when the defendants were corporations registered in the US. In Balintulo v Daimler, the Second Circuit found that if all the relevant 319 Kiobel et al v Royal Dutch Petroleum Co. et al (17 September 2010) 621 F.3d 111 (US Court of Appeals 2nd Cir.) (hereinafter Kiobel I), 149. For an analysis of the reasoning of the Court with regard to the existence of corporate liability under international law, see Part I, Chapter 3. 320 Kiobel et al v Royal Dutch Petroleum Co. et al (17 April 2013) 133 S.Ct. 1659 (US Supreme Court), 1664–69 (hereinafter Kiobel II). 321 Ibid. In reaching this conclusion, the Court quoted Morrison v National Australia Bank Ltd (n 309) which established that if a statute does not clearly indicate that it is intended to have extraterritorial application, it should be presumed not to have any. 322 Kiobel II (n 320), 1669. 323 Ibid. 324 Ibid, Justice Breyer (Concurring), 1673. 325 See Maria Chiara Marullo and Francisco J Zamora Cabot, ‘Transnational Human Rights Litigations. Kiobel’s Touch and Concern: A Test Under Construction’ (2016) Papeles el tiempo de los derechos 1–38. 326 See, e.g., Sarei v Rio Tinto, PLC (28 June 2013) 722 F.3d 1109 (US Court of Appeals 9th Cir.), 1110. It is to note, however, that in a number of cases (not specifically against corporations), the “touch and concern” test set in Kiobel did not result in a dismissal. See, for example, Sexual Minorities Uganda v Lively (14 August 2013) 960 F. Supp. 2d 304 (D. Mass.)

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conduct occurred outside the US, the fact that the company is registered in the US constitutes an ‘irrelevant factual distinction’ for the “touch and concern” test.327 Such a restrictive interpretation was confirmed in Daimler AG v Bauman, where the US Supreme Court affirmed that only companies with close, constant, and pervasive ties to the United States can be sued before its courts.328 A similar stand was taken in Cardona v Chiquita Brands, where Colombian nationals filed a claim under the ATS against Chiquita, a US incorporated company, alleging that the defendants from their US offices approved payments to a Colombian terrorist organization and facilitated shipments of weapons that aided and abetted extrajudicial killings. The Court of Appeals concluded that, as in Kiobel, all the relevant conduct took place outside the US territory and that the nationality of the corporation was not per se sufficient to displace the presumption against the extraterritorial application of the ATS.329 In Balintulo v Ford Motors the defendants were accused of aiding and abetting the violations committed by the South Africa’s apartheid regime.330 The Second Circuit on appeal found that in deciding whether the plaintiff’s claims ‘touched and concerned’ the US, the focus should be on the ‘nature and location of the conduct constituting the alleged offenses under the law of nations’.331 A more flexible approach was followed by the Fourth Circuit in Al Shimari v Caci where courts were required to conduct an intensive ‘fact-based analysis’ on each ATS claim, noting that the “touch and concern” test is met ‘when extensive United States contacts are present and the alleged conduct bears  […] a strong and direct connection to the United States’.332 The above-mentioned decisions reveal the increasing reluctance of US Courts to apply the ATS to corporate violations occurring abroad. Foreign policy concerns have been playing a decisive role in grounding such an approach, so much so that the presumption against extraterritoriality has been considered by the Court as a tool to avoid ‘unintended clashes […] which could result in international

327 Balintulo v Daimler AG (21 August 2013) 727 F.3d 174 (US Court of Appeals 2nd Cir.). 328 Daimler AG v Bauman (14 January 2014) 134 S.Ct. 746 (US Supreme Court), quoting Goodyear Dunlop Tires Operations, S.A. v Brown (27 June 2011) 131 S.Ct. 2846 (US Supreme Court), 2850. The Daimler v Bauman case concerned the allegations against Mercedes Benz for allegedly aiding and abetting the Argentinian military in its human rights violations between 1976 and 1983. 329 Cardona, et al v Chiquita Brands Int’l Inc. (24 July 2014) 760 F.3d 1185 (Court of Appeals 11th Cir.), 1189. 330 Balintulo v Ford Motor Co. (27 July 2015) 796 F.3d 160 (US Court of Appeals 2nd Cir.). 331 Ibid, 11. 332 Al Shimari v CACI Premier Tech., Inc. (30 June 2014) 758 F.3d 516 (US Court of Appeals 4th Cir.), 527.

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discord’.333 The risk of diplomatic strife was also a key part of the decision in Nabisco v European Community, where the US Supreme Court pointed out that the presumption against extraterritoriality served to avoid ‘international discord’ with foreign countries.334 As already noted, in Kiobel II, considerable attention was paid to foreign governments’ opposition to the extraterritorial application of the ATS, and to ‘foreign policy consequences’ stemming from extraterritorial jurisdiction.335 The amici curiae briefs filed in Kiobel II by the United Kingdom and the Netherlands, home to the corporate defendants, argued that allowing extraterritorial adjudication under the ATS posed a threat to international comity.336 The two states also expressed a concern that by allowing ATS claims with little nexus with the US, some states might be given reason to downplay or even ignore their own responsibilities for implementing their human rights law obligations.337 Along these lines Justice Roberts, who penned the majority opinion in the case, emphasised that the presumption against extraterritoriality ‘reflects the “presumption that United States law governs domestically but does not rule the world”’.338 The recent decision by the US Supreme Court in Jesner v Arab Bank plc seems to confirm the attention devoted by the US Court to the foreign policy concerns related to transnational human rights litigations against corporations.339 The claimants, non-US citizens victims of terror attacks in Israel, the West Bank, and Gaza alleged that the Arab Bank, a Jordanian financial institution with a branch in New York, in part caused or facilitated acts of terrorism in the Middle East by maintaining accounts of known terrorists, accepting donations that would be used to fund terrorism, and distributing millions of dollars to families of suicide 333 EEOC v Arabian American Oil Co. (26 March 1991) 499 S.Ct. 244 (US Supreme Court), 248. See also Sarei v Rio Tinto Plc (9 July 2002) 221 F. Supp. 2d 1116 (US District Court of California), 1198–1199. 334 RJR Nabisco v European Community (20 June 2016) 136 S. Ct. 2090 (US Supreme Court), 2100. 335 Ibid; see Caroline Kaeb and David Scheffer, ‘The Paradox of Kiobel in Europe’ (2013) 107 AJIL 852–857, 852. 336 Supplemental Brief of the Governments of the Kingdom of the Netherlands and the United Kingdom of Great Britain and Northern Ireland as Amici Curiae in Support of Neither Party, 33–34. 337 Ibid, 35. 338 Kiobel II (n 320), 1664. 339 Jesner et al v Arab Bank Plc (24 April 2018) 138 S.Ct. 1386 (US Supreme Court). For a brief analysis of the case, see William S Dodge, ‘Corporate Liability Under the US Alien Tort Statute: A Comment on Jesner v Arab Bank’ (2018) Business and Human Rights Journal 1–7; Ludovica Chiussi, ‘Jesner Et Al. v Arab Bank, Plc: Closing the Door to Litigation Against Foreign Corporations under the Alien Tort Statute?’ (2018) Italian Society of International Law Blog, available at http://www.sidiblog.org/2018/09/12/jesner-et-al-v-arab-bank-plcclosing-the-door-to-litigation-against-foreign-corporations-under-the-alien-tort-statute/.

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bombers. Whilst most of the claimants’ allegations concerned conduct that occurred outside the United States, the claim sought to impose liability on Arab Bank for using its New York branch to clear dollar-denominated transactions that benefited terrorists through a system known as “Clearing House Interbank Payments System”. The Bank was also accused of facilitating the transfer of funds from a Texas-based charity to the bank accounts of terrorist-affiliated charities in the Middle East. The legal question before the Court of Appeals first, and then before of the US Supreme Court, was whether the bank, as a foreign entity, could be sued before US courts. The ruling of the US Supreme Court upheld the decision of the Court of Appeals for the Second Circuit, according to which foreign corporations could not be sued under the ATS.340 In reaching its holding, the Court noted that: i) the ATS was not intended to confer jurisdiction over claims against corporations; ii) international law does not recognize corporate liability; iii) extending jurisdiction over foreign corporations may result in litigation abroad against US corporations; iv) the recognition of corporate liability under the ATS falls to the Congress and risks impairing the US foreign relations with Jordan.341 One cannot ignore the foreign policy concerns that must be weighed in circumstances such as the ones before the Supreme Court in Jesner. Jordan considered the suit against Arab Bank ‘a direct affront’ to its sovereignty and one that ‘risk[ed] destabilizing Jordan’s economy and undercutting one of the most stable and productive alliances the United States has in the Middle East’.342 However, the utilitarian approach adopted by Justice Alito, according to which ‘unless corporate liability would actively decrease diplomatic disputes’, the Court has no authority to act, does not seem to find explicit support in the text of the ATS.343 It is arguable that foreign policy considerations also come into play when nationals of other states are affected by breaches of universal rules for the protection of international security, such as the prevention and repression of terrorism, piracy, genocide, and the like. Furthermore, as pointed out by Justice Sotomayor in her dissent, none of the “diplomatic friction” arguably identified

340 Jesner v Arab Bank (n 339), 1407. Justice Kennedy penned a plurality opinion, joined by Chief Justice Roberts and Justice Thomas. Justices Alito and Gorsuch filed opinions concurring in parts of the judgment. Justice Sotomayor wrote a dissenting opinion, which was joined by Justices Ginsburg, Breyer and Kagan. 341 Ibid, 1400–1403. 342 Kingdom of Jordan, ‘Brief for Hashemite Kingdom of Jordan as Amicus Curiae Supporting Respondent’, 4, available at https://www.americanbar.org/groups/public_education/ publications/preview_home/2017_2018_briefs/16-499/. 343 Jesner v Arab Bank (n 339339), Justice Alito (Concurring), 1408.

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by the majority seems to stem from a general recognition of corporate liability.344 On the contrary, [i]mmunizing corporations that violated human rights from liability under the ATS undermines the system of accountability for law-of-nations violations that the First Congress endeavored to impose. It allows these entities to take advantage of the benefits of the corporate form and enjoy fundamental rights, without having to shoulder attendant fundamental responsibilities.345 The majority of ATS case since Filartiga were “foreign-cubed” cases.346 The fact that the violation at the basis of the claim occurred outside the US territory has been seldom challenged in cases against individuals. It seems therefore that the issue of extraterritoriality becomes a major issue mainly when the defendant is a corporation. Yet one should not forget that the ATS does not differentiate between individuals and legal persons, the only requirement being that the party lodging the claim is an ‘alien’. One may argue that if the Congress intended to exempt particular defendants from ATS suits, it would have done so explicitly. In 1789, the United States was a young nation seeking to avoid conflicts with foreign countries. An original purpose of the ATCA was to avoid a ‘denial of justice’ to aliens in violation of customary international law, by providing them with access to US courts.347 In the Amicus curiae submitted by the European Commission on behalf of the European Union in the Kiobel case, the Commission recalled the need to guarantee ‘an effective remedy for repugnant crimes in violation of fundamental human rights’,348 and affirmed that the US ‘exercise of universal jurisdiction under the ATS is consistent with international law in accordance with these well-established constraints’.349 The brief points to the application of an exhaustion requirement of local and international remedies, affirming that within such constraints the ATS can grant individuals access to court where they would be otherwise facing a denial of justice. However, it seems that the right to access to justice of the victims has played a minor role both in the recent business and human rights litigation under the 344 Ibid, Justice Sotomayor (Dissenting), 1420. See Part I. 345 Ibid, 1437. 346 See, among others, Kadic (n 312); Hilao v Estate of Marcos (In re Estate of Marcos) (16 June 1994) 25 F.3d 1467 (US Court of Appeals 9th Circuit). 347 Jordan J Paust, ‘Human Rights Responsibilities of Private Corporations’ (2002) 35 Vanderbilt Journal of Transnational Law 801–825, 822. 348 EU Commission, ‘Brief of the European Commission on Behalf of the European Union as Amicus Curiae in Support of Neither Party’, 18. 349 Ibid, 4–5.

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ATS. This is despite the recognition by Justice Breyer that those who perpetrate certain gross violations of international law represent ‘common enemies of all mankind’.350 It is against this backdrop that for centuries piracy was covered by universal jurisdiction. Agreed, piracy is a sui generis crime and closer examination reveals that the foundations for universal jurisdiction over piracy cannot be easily translated to other types of crime.351 Piracy typically occurs on the high seas, beyond the territorial jurisdiction of states. At the same time, the piracy example cannot be too easily dismissed, as the relevant conduct (such as robbery or murder) often takes place on a ship that would fall accordingly fall within the jurisdiction of the nation whose flag it flies. Be that as it may, a better balance is needed under the ATS between foreign policy concerns and ensuring access to justice. In Kiobel case it was clear that the corporate influence on state regulatory bodies, investigative agencies and the judiciary highly threatened the possibility for victims to obtain justice where the violation occurred.352 As outlined by the plaintiff in another case against Shell before an English court, ‘Shell is Nigeria and Nigeria is Shell […]. You can never, never defeat Shell in a Nigerian court. The truth is that the Nigerian legal system is corrupt’.353 In sum, the ATS is a unique piece of legislation which finds no foreign counterpart containing similar statutory provisions with respect to civil liability for violations of international law.354 Since the mid-1990s, hundreds of cases have been brought under the ATS before US federal courts against corporations for alleged human rights violations suffered by non-US nationals. A number of features make the ATS a valuable litigation tool for victims of corporate human rights violations. First, claims lodged under the ATS are for violations of international law, not of domestic tort law. By contrast, when a case is framed as a traditional tort claim, the substantive claim is governed by the law of either the home or host state. Second, the United States offers convenient procedural rules for claimants, such as class action suits and punitive damages.355 The ATS 350 Kiobel II (n 320), Justice Breyer (Concurring), 131. 351 For a critical perspective on the piracy analogy, see Eugene Kontorovich, ‘The Piracy Analogy: Modern Universal Jurisdiction’s Hollow Foundation’ (2004) 45 Harvard International Law Journal 183–237; Devika Hovell, ‘The Authority of Universal Jurisdiction’ (2018) 29 EJIL 427–456, 443. 352 Stephanie Redfield, ‘Searching for Justice: The Use of Forum Necessitatis’ (2014) 45 Georgetown Journal of International Law 893–928, 923. 353 As quoted in Daniel Blackburn, ‘Removing Barriers To Justice: How a Treaty on Business and Human Rights Could Improve Access to Remedy For Victims’ (2017) SOMO, 39. 354 Beth Stephens, ‘Corporate Liability: Enforcing Human Rights Through Domestic Litigation’ (2001) 24 Hastings ICLQ 401–414, 409. 355 Andrew Sanger, ‘Corporations and Transnational Litigation: Comparing Kiobel with the Jurisprudence of English Courts’ (2013) 107 AJIL Unbound 23–30, 29. It is to note that the

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has frequently been hailed as the most promising avenue for legal redress for victims of gross corporate human rights violations. However, the restrictive attitude taken by the US the Supreme Court in Kiobel and Jesner has severely limited the role of the Statute as a vehicle for litigating international human rights abuses committed by corporations. Two consequences are likely to follow. The first is that litigants may decide to pursue their cases in the US by relying on domestic tort law, rather than on the ATS.356 The second is that European courts, in the past considered less hospitable to business and human rights litigation, may gain traction as a forum for victims seeking civil redress for human rights violations committed by corporations. .

6.3.3 Parent-Company Liability: When Remedy Depends on the Duty of Care Transnational litigation against corporations before European courts has been pursued on the basis of tort law.357 As seen in Chapter 5, the EU Brussels I and Rome II Regulations provide for a largely harmonised framework detailing jurisdictional rules in civil and commercial matters. Corporations domiciled in an EU member state are to be sued in that state, and the applicable law is generally that of the state where the relevant conduct violation has been carried out.358 The EU jurisdictional framework is key to the business and human rights debate, especially given that the twenty-five per cent of the one-hundred largest listed companies in the world are headquartered in EU member states.359 In the past years, victims of human rights violations committed by subsidiaries of companies domiciled in the EU have increasingly relied on Brussels I

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EU has sought to improve access to justice through the Recommendation by the European Commission on collective redress (EU Commission Recommendation 2013/396/EU (11 June 2013) OJ L 201) Gwynne Skinner, Robert McCorquodale and Olivier De Schutter, ‘The Third Pillar: Access to Judicial Remedies for Human Rights Violations by Transnational Business’ (2013) ICARCORE-ECCJ, 35. For a thorough analysis of the role of tort law in business and human rights litigation, see Liesbeth Enneking, Foreign Direct Liability and Beyond: Exploring the Role of Tort Law in Promoting International Corporate Social Responsibility and Accountability (Eleven Publishing 2012). Exceptions linked to questions of ordre public are contemplated, including foreign law manifestly contradicting human rights. The EU Fundamental Rights Agency (FRA) has stressed that the EU should provide guidance on such exceptions, in EU FRA, ‘Improving Access to Remedy in the Area of Business and Human Rights at the EU Level’ (10 April 2017) Opinion 1/2017, 8. International Peace Information Service, ‘The Adverse Human Rights Risks and Impacts of European Companies: Getting a Glimpse of the Picture’ (IPIS Antwerp 2014), available at http://ipisresearch.be/.

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to hold parent companies liable before European courts. These so-called “foreign direct liability” cases are typically filed by citizens of the state where the alleged violation occurred, who turn to the courts of the state where the transnational corporation is domiciled, invoking the negligence of the parent company in preventing or addressing the violation of its subsidiary.360 In fact, the conditions under which a company is liable for failing to prevent a human rights violation by its affiliate abroad may vary from one jurisdiction to another. Usually a claimant is required to prove that the parent company owes a duty of care towards him or her, and that, at least in part, the harm occurred was due to the negligence of the company with respect to such a duty. The advantage of a “duty of care” approach is that it does not aim to pierce the “veil” separating the subsidiary from the parent company.361 The two remain separate entities, but the parent company may be found liable for its own failures in preventing or addressing the harm caused by its subsidiaries. Furthermore, although the harm itself may have occurred abroad, the negligent behaviour of the parent company can be considered to have occurred at the seat of the parent company, therefore avoiding thorny issues relating to extraterritoriality.362 The challenge remains, however, for the claimant to prove the existence of a duty of care of the parent company. This may require an insurmountable burden of proof on the part of the victims, as we shall see below with regard to the recent case-law before English courts by way of example. Indeed, the United Kingdom is home to a large number of multinational corporations which operate abroad through integrated networks of subsidiaries and supply chains. Over the past thirty years, tort claims for corporate human rights violations have been brought as direct negligence cases against parent companies of transnational corporations, for harm arising from the activities of their affiliates.363 The existence of a duty of care in English tort law has been assessed on the basis of the three-fold test set by Caparo v Dickman: foreseeability of the harm, proximity of the relationship between the parties, and fairness of

360 For an overview of business and human rights litigation in Europe, see Richard Meeran, ‘Tort Litigation against Multinational Corporations for Violation of Human Rights: An Overview of the Position Outside the United States’ (2011) 3 City University of Hong Kong Law Review 1–41. 361 On the issue of corporate veil and the abuse of the corporate structure, see infra, Part III. 362 Jan Wouters and Cedric Ryngaert, ‘Litigation for Oversears Corporate Human Rights Abuse in the European Union: The Challenge of Jurisdiction’ (2009) 40 George Washington International Law Review 939–976, 947. 363 For an analysis of the recent case law before English and Dutch courts, see Claire Bright, ‘The Civil Liability of the Parent Company for the Acts or Omissions of its Subsidiary: The Example of the Shell Cases in the UK and in the Netherlands’ in Angelica Bonfanti (ed), Business and Human Rights in Europe: International Law Challenges (Routledge 2017).

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imposing such duty on the parent company.364 A number of claims have been rejected for failing to meet such test.365 In Lubbe v Cape Plc the claimants, who had worked for and lived around the mines operated by a South African subsidiary of the British company Cape Plc, lodged a claim before UK courts for the injuries caused to them by their exposure to asbestos in South Africa.366 The claimants argued that the parent company was responsible for knowing that exposure to asbestos was harmful, but nevertheless failed to take adequate measures, or to ensure that such measures would be taken by the affiliate company, aimed to ensure that proper safety precautions were observed. The question before the House of Lords was [w]hether a parent company which is proved to exercise de facto control over the operations of a (foreign) subsidiary and which knows, through its directors, that those operations involve risks to the health of workers employed by the subsidiary and/or persons in the vicinity of its factory or other business premises, owes a duty of care to those workers and/or other persons in relation to the control which it exercises over and the advice which it gives to the subsidiary company.367 The House of Lords addressed the issue of the level of control exercised by the defendant over the activities of the subsidiaries. Namely, what it (Cape) knew or ought to have known and what measures had been adopted by it.368 Even if the case was eventually settled, it paved the way for the recognition that a parent company may owe a duty of care to the workers of its subsidiary. In the landmark case Chandler v Cape the claimant, a former employee of Cape, had contracted asbestosis as a result of his employment with a UK-based subsidiary of the British company Cape.369 The Court applied the Caparo test and specifically identified four factors relevant to the existence and the assessment of the standard of a duty of care for the parent company: (1) the business of the parent and the subsidiary are in a relevant respect the same; (2) the parent has, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; (3) the subsidiary’s system of work is unsafe as the parent company knew, or t 364 Caparo Industries Plc v Dickman (8 February 1990) 2 AC 605 (House of Lords). 365 See, among others, Thompson v The Renwick Group Plc (13 May 2014) EWCA Civ 635 (Court of Appeal). 366 Lubbe and Others v Cape Plc (20 July 2000) 1 WLR 1545 (House of Lords). 367 Ibid, para 6. 368 Ibid, paras 20–21. 369 Chandler v Cape Plc (25 April 2012) EWCA Civ 525 (Court of Appeal).

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ought to have known; and (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for employees’ protection.370 The Court of Appeal found that in the specific the parent company owed a direct duty of care to employees of its subsidiary.371 Two questions were left untouched in Chandler, namely whether the same duty of care existed in the case of a foreign subsidiary, and whether such duty may extend to third parties not directly related to the parent company, such as local communities.372 In Okpabi v Royal Dutch Shell plc,373 the claimants alleged that Shell acted negligently in maintaining oil pipelines in Nigeria, thereby causing severe oil pollution. According to the claimants, the parent company breached the duty of care by failing to ensure the repeated oil leaks were effectively cleaned up in order to minimise the risk to their health, land and livelihoods and by failing to put in place adequate measures to address the systemic issues arising out of their operations in Nigeria. The claimants referred to a number of Shell documents, including sustainability reports and CSR policies, arguing that, as these were implemented by the parent company throughout the corporate group, they were sufficient to find a duty of care. By relying on Chandler, the Court noted that such documents did not provide adequate evidence of the necessary level of control to give rise to a duty of care, and that in the specific circumstances there was no evidence that the parent company had superior technical expertise. In the Court’s opinion, the company’s role in the operations of the subsidiary was marginal and, therefore, the former could not be considered in a position to prevent the harm caused.374 The Okpabi decision raises a number of concerns, as requiring proving the relationship between the subsidiary and the parent company at an early stage of the proceedings places a considerable burden on the claimants. The relevant documentation is usually with the defendant company, which will hardly disclose

370 Ibid, para 80. 371 Ibid, paras 72–76. 372 Nadia Bernaz, Business and Human rights. History, Law and Policy – Bridging the Accountability Gap (n 313), 278. 373 Okpabi and Others v Royal Dutch Shell PLC and Others (2018) EWCA 191. 374 Okpabi and Others v Royal Dutch Shell PLC and Others (14 February 2018) EWCA Civ 191 (Court of Appeal). The claimants have manifested their intention to appeal the decision. The Court of Appeal has deferred the decision on the appeal, pending the Supreme Court Decision in the Vedanta case.

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it unless forced to do so by the adjudicative body. This underscores the key role of the right to information in business and human rights litigation.375 The obstacles to be faced by claimants seeking to bring proceedings before English Courts against a UK-registered companies for activities of their subsidiaries have also emerged in AAA v Unilever in relation to the adequacy of corporate policies for emergency situations.376 Here, the claimants alleged that the UKregistered parent company Unilever and its Kenyan subsidiary were liable to the employees of the subsidiary and their families for failing to take adequate measures to protect them from the ethnic violence occurring in Kenya after the 2007 presidential elections. The High Court decided that under the Caparo test the events at issue were not sufficiently foreseeable to impose a duty of care on the parent company. As in Okpabi, the Court of Appeal distinguished between a parent company with a system of mandatory policies addressed to the corporate group, and circumstances where a parent company exercised control over the corporate group. Where the subsidiary is in charge of its daily operations, the existence of group-level policies is not a sufficient link to establish a duty of care of the parent company to those affected by such activities. As the Kenyan subsidiary had its own independent management structure and had promulgated its own policies for emergency situations, the Court found that the parent owed no duty of care to those affected by the violence and that the claimants failed to disclose a level of control by the parent company on the subsidiary’s operations.377 In the recent Vedanta case, some 2000 Zambian citizens brought proceedings against the UK company Vedanta and its Zambian subsidiary Konkola Copper Mines (KCM), alleging that the toxic effluent discharge from the copper mine negligently operated by KCM had being polluting lands and waterways in the Chingola District, heavily affecting their health and livelihood.378 The claimants relied on the precedent before English courts to argue that Vedanta owed them a duty of care on the basis of the level of control and direction exercised by the parent company over the mining operations of its Zambian subsidiary. Vedanta had published material in which it asserted its responsibility for the establishment of appropriate group-wide environmental control and sustainability standards, for their implementation throughout the group by training, and for their monitoring and enforcement. While the parent company had 375 See Nicola Jägers, ‘Access to Effective Remedy: The Role of Information’, in Surya Deva and David Birchall (eds), Research Handbook on Business and Human Rights (Edward Elgal 2020). 376 AAA and Others v Unilever Plc and Unilever Tea Kenya Ltd (27 February 2017) EWHC 371 (QB) (High Court). 377 AAA and others v Unilever PLC and Unilever Tea Kenya Ltd (4 July 2018) EWCA Civ 1532 (Court of Appeal). 378 Lungowe & Others v Vedanta Resources Plc & Konkola Copper Mines (10 April 2019) UKSC 20 (Supreme Court).

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sought to argue that plainly laying down group-wide policies is not enough to incur a duty of care in respect of the activities of the subsidiaries, the Supreme Court affirmed that the material published by Vedanta demonstrated a sufficient level of intervention by the parent company in the mine’s operations to justify a duty of care towards the claimants.379 According to the Court, a parent company laying group-wide policies and guidelines can incur a duty of care to individuals who are harmed by the operations of its foreign subsidiary when it actively disseminates group-wide policies and guidelines, when it takes active steps to implement them, or when it formulates such policies and acts as if it has supervision and control over the subsidiaries.380 While the judgment concerns jurisdiction and not substantive liability, it represents an important precedent in recognising that a parent company may hold a duty of care towards third parties affected by its subsidiary’s operations. Under Dutch law, it is also possible to bring a case against a parent company on the basis of its duty of care to potential victims of the subsidiary’s actions or omissions. Several proceedings have been brought in the Netherlands by Nigerian fishermen and farmers against Shell Nigeria and its parent company Royal Dutch Shell, seeking compensation for oil spills in Nigeria. In Akpan v Royal Dutch Shell the Court of Appeal of The Hague, overturning the District Court decision, ruled that Dutch courts have jurisdiction to consider the claims. It also enjoined Shell to provide the plaintiffs with access to documents pertaining to the oil spills.381 The Court of Appeal rejected Shell’s argument based on the lack of precedent in the Nigerian case law applying group liability on those grounds, and considered that this does not mean that Nigerian law a priori denies a duty of care for the parent company in the context of cleaning up pollution and preventing repeated spills arising out of the operations of its subsidiary. The court found that since Nigerian law as a common law system is based on English law, a basis for assuming such a duty of care could be found in decisions such as Chandler.382 Although the Dutch courts are yet to give a decision on the merits of the issues involved, it made a number of rather powerful assertions on the potential liability of the parent company for the conduct of its subsidiaries and also on the threshold of the duty of care expected from the parent company. England and The Netherlands are not the only jurisdictions where tort litigation against corporations is gaining traction. In 2015, four Pakistani nationals filed a suit before the Regional Court of Dortmund against the German retailer

379 Ibid, para 61. 380 Ibid, para 52–53. 381 Dooh of Goi and Others v Royal Dutch Shell Plc and Others (18 December 2015) Case Nos 200.126.843 (case c) + 200.126.848 (case d) (Court of Appeal of the Hague). 382 Ibid, para 3.22.

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KiK.383 The claimants sought damages for personal injury and death resulting from a deadly fire in 2012 at the Karachi factory of a KiK’s supplier in Pakistan. The lawsuit pursued compensation for the damages caused by the fire for all the affected families. The court upheld its jurisdiction and granted legal aid. As seen above, under the Rome II Regulation, the applicable law is the law of the country where the damage occurred (lex loci damni), i.e. Pakistan. Pakistani tort law is based on English common law, therefore the duty of care elaborated in English case law could have been relevant.384 While the case has been dismissed on status of limitations grounds, in 2018 a coalition of NGOs filed an OECD complaint before the Italian National Contact Point against the Italian auditor RINA, which had certified, before the accident, that the factory was in compliance with international labour and safety standards.385 In sum, while until recently civil litigation was perceived, especially in Europe, as merely concerned with private interests, it is today recognised as a key tool for the enforcement of human rights against corporations.386 Also in light of the uncertain fate of the admissibility of transnational litigation against corporations before US courts, tort-based proceedings before European courts are on the increase in affording access to justice for corporate violations human rights, whereas the case law on the merits remains controversial as to whether access to justice translates into access to remedy. 6.3.4

Access to Justice as a Limit to Forum non Conveniens and a Legal Basis for Forum Necessitatis The adjudicative jurisdiction of common law countries in business and human rights litigation may be diluted by the legal doctrine of forum non conveniens, which allows a court to dismiss a civil lawsuit ‘on the ground that the balance of relevant public and private factors favours that the trial takes place in a foreign forum’.387 This doctrine has often been invoked by corporate defendants in order 383 Jabir and Others v KiK Textilien und Non-Food GmbH (10 January 2019) 7 O 95/15 (Dortmund Regional Court). 384 Philipp Wesche and Miriam Saage-Maaß, ‘Holding Companies Liable for Human Rights Abuses Related to Foreign Subsidiaries and Suppliers before German Civil Courts: Lessons from Jabir and Others v Kik’ (2016) 16 Human Rights Law Review 370–385. 385 Ali Enterprises Factory Fire Affectees Assoc. v RINA S.p.A. (11 September 2018) Italian NCP, available at https://www.oecdwatch.org/cases/Case_514. As of 1 April 2020, the case is still pending. 386 Beth Stephens, ‘Conceptualizing Violence under International Law: Do Tort Remedies Fit the Crime?’ (1997) 60 Albany Law Review 579–606, 603; Caroline Kaeb and David Scheffer, ‘The Paradox of Kiobel in Europe’ (n 335), 855. 387 Surya Deva, Regulating Corporate Human Rights Violations: Humanizing Business (Routledge 2012) 69. See also Amnesty International and Business and Human Rights Centre, Creating

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to prevent a claim from moving forward in the jurisdiction where it is filed, usually the home state.388 This may lead to the dismissal of a claim lodged before the home state on the basis that the claim could be filed in the host state, where the violation has occurred. Issues related to access to justice might arise when the host state lacks a jurisdictional system as independent and functional as the home state’s. That is the case when the host state does not guarantee the same legal assistance to the victims, or when it does not provide adequate, effective and prompt reparation for the violation when judicially assessed. According to the CESCR, [i]n some jurisdictions, the forum non conveniens doctrine, according to which a court may decline to exercise jurisdiction if another forum is available to victims, may in effect constitute a barrier to the ability of victims residing in one State to seek redress before the courts of the State where the defendant business is domiciled. Practice shows that claims are often dismissed under this doctrine in favour of another jurisdiction without necessarily ensuring that victims have access to effective remedies in the alternative jurisdiction.389 In this respect, the CESCR emphasises that in the application of forum non conveniens ‘states parties have the duty to take necessary steps to […] prevent a denial of justice and ensure the right to effective remedy and reparation’.390 This shows how the principle of access to justice represents an important counterbalance to the forum non conveniens doctrine as complemented by the forum necessitatis. It is of note that although forum non conveniens is familiar to common law systems, differences persist in the way in which it is interpreted and applied.391 In the UK, the doctrine has developed according to the two-pronged test set in Spiliada v Cansulex.392 First, it falls on the defendant to demonstrate that

388

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a Paradigm Shift: Legal Solutions to Improve Access to Remedy for Corporate Human Rights Abuse (2017), 11 ff. Richard Meeran, ‘The Unveiling of Transnational Corporations: A Direct Approach’ in Michael K Addo (ed), Human Rights Standards and the Responsibility of Transnational Corporations (Brill Nijhoff 1999), 162 ff. CESCR, ‘General Comment No 24’ (n 96), para 43. Ibid, para 44. For a detailed analysis of the doctrine across common law jurisdiction, see Ronald A Brand and Scott R Jablonski, Forum Non Conveniens: History, Global Practice, and Future under the Hague Convention on Choice of Court Agreements (OUP 2007). Spiliada Maritime Corporation v Cansulex Ltd (19 November 1986) AC 460 (House of Lords), 476.

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there is another more appropriate forum.393 Here the Court must be ‘satisfied that there is some other available forum, having competent jurisdiction, [….] in which the case may be tried more suitably for the interests of all the parties and the ends of justice’.394 In considering that question, the seized court is first to address the factors which may point in the direction of another forum with a more substantive connection to the case. Once the defendant has succeeded in proving this, the burden of proof shifts to the claimant for it to demonstrate that substantive justice cannot be achieved in the alternative forum.395 Before delving into the relevance of access to justice in limiting the application of forum non conveniens in common law systems, it is worthy of note that following the ECJ decision in Owusu v Jackson, courts of the EU member states are precluded from declining jurisdiction on the basis of forum non conveniens when the case falls within the ambit of Brussels I Regulation.396 The arguments relied upon by the Court to restrict the applicability of the doctrine in question include the ‘legal protection of persons established in the Community’.397 It follows that the doctrine is no longer a barrier where the defendant is a UK parent company, even when the relevant events occurred outside the United Kingdom.398 In Connelly v RTZ Corporation, which concerned the claim brought by a Namibian citizen for the cancer contracted in a uranium mine operated by a subsidiary of the defendant company in Namibia, the plaintiff argued that the British parent company devised and implemented the subsidiary’s policy on health and the environment and, therefore British courts were the appropriate forum. The High Court applied the Spiliada test and concluded that Namibia was the most appropriate forum. In allowing the plaintiffs to appeal the decision of the lower court, however, Lord Bingham noted that Faced with the stark choice between one jurisdiction, albeit not the most appropriate in which there could in fact be a trial, and another jurisdiction, the most appropriate in which there never could, in my judgment, the interests of justice would tend to weigh, and weigh strongly, in favour of that forum in which the plaintiff could assert his rights.399

393 Ibid. 394 Ibid, 476, emphasis added. 395 Ibid, 482. For a detailed analysis of the forum non conveniens doctrine in England, see Ardavan Arzandeh, Forum (Non) Conveniens in England: Past, Present, and Future (Hart Publishing 2018). 396 Owusu v Jackson (2005) ECR I-01383 Case C-281/02. 397 Ibid, para 42. 398 Guerrero v Monterrico Metals Plc (16 October 2009) EWHC 2475 (QB) (High Court). 399 Connelly v RTZ Corporation Plc and Others (24 July 1997) AC 854 (House of Lords), 874.

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On appeal, Lord Goff underscored that although the lack of legal aid in the alternative forum is not a sufficient reason to grant a stay, it can exceptionally be a relevant factor in assessing whether the alternative forum would allow the claimant to obtain justice. Given that the specific case called for highly professional representation and needed expert scientific witnesses, the claimant could not proceed with the trial without financial assistance. Whereas no such assistance was available in Namibia, it was available in England. Against this backdrop, the case was allowed to proceed. In the Lubbe v Cape case already referred to above, the defendant challenged the jurisdiction of the UK courts on the basis of forum non conveniens, arguing that South Africa was the more appropriate forum.400 In rejecting such an argument, the Court took into account the unavailability of legal aid in South Africa, the degree of legal specialisation available for business and human rights cases in both Britain and South Africa, as well as the right to a fair trial enshrined in Article 6 of the ECHR. Lord Hope of Craighead emphasised that: [h]owever tempting it may be to give effect to concerns about the expense and inconvenience to the administration of justice in litigating actions […] the argument must only be resolved upon the examination of their effect upon the interests of the parties who are before the court and securing the end of justice.401 The case shows that the right to access to justice, as a principle of law, plays a key role in weighing the relevant factors for the application of forum non conveniens.402 In fact, the Court agreed that the Spiliada test is fully compatible with the right to access to justice as protected by Article 6 of the ECHR.403 In the Vedanta case seen above, the claimants relied on Artice 4 of Brussels I Recast Regulation to establish the jurisdiction of the UK court over the claim against the parent company. As Brussels I is only applicable to EU-domiciled defendants, the claimants relied on English law404 to argue that the proceedings

400 Lubbe and Others v Cape Plc (n 366) 401 Ibid, 1567. 402 Peter T Muchlinski, ‘Foreign Direct Liability Litigation: Toward the Transnationalization of Corporate Legal Liability’ in Lara Blecher and Others (eds), Corporate Respnsibility for Human Rights Impacts: New Expectations and Paradigms (American Bar Association 2014), 382. 403 Beth Stephens, Corporations and Transnational Human Rights Litigation (Hart Publishing 2004) 118. 404 Under Practice Direction 6B, paragraph 3.1(3), English courts may have jurisdiction over a defendant if the latter is a ‘necessary or proper’ party to proceedings against another defendant against whom there is a ‘real issue’ to be tried.

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against the parent company could be merged with that against the subsidiary, as the latter was a necessary or proper party to the legal proceedings. Most importantly, the claimants also argued that access to justice would make it impossible for them to obtain justice in Zambia. The defendants challenged the jurisdiction of the UK courts to try the claims against KCM on the basis of the doctrine of forum non conveniens. The High Court held that under EU law the claimants had a right to bring their claim in England, despite the fact that the alleged tort and harm occurred in Zambia, where both the claimants and the subsidiary of Vedanta were domiciled. Such a conclusion was upheld by the Court of Appeal and the Supreme Court.405 The latter acknowledged that while ‘it would offend the common sense of all reasonable observers’ to consider England as the appropriate forum, it was almost certain that the claimants would have not been unable to obtain justice before Zambian courts.406 Indeed, according to the Court, impoverished claimants would not have been able to obtain legal aid to bring a group claim, and Zambia lacked technical expertise to handling large and complex litigation against a well-resourced corporate defendant.407 In the United States forum non conveniens has developed through three core Court decisions, namely Piper Aircraft Co. v Reyno, Gulf Oil Corp. v Gilbert, and Koster v Lumbermens Mutual Casualty Co.408 Section 304 of the Fourth Restatement of Foreign Relations Law affirms that a federal court may dismiss a case over which it has subject-matter and personal jurisdiction if ‘there is an available and adequate alternative forum’, and ‘despite the deference owed to the plaintiff’s choice of forum, the balance of private and public interests favors dismissal’.409 US courts generally carry out a balancing exercise weighing, one the one hand, the private interests of the litigants, such as costs and access to documents and witnesses, and, on the other, the broader public interest, such as the interests of the forum state, the burden on the courts, and judicial comity. US courts have held that dismissal of a claim based on forum non conveniens is appropriate where: (i) an adequate alternate forum exists with jurisdiction over the whole case, including all of the parties; (ii) all relevant factors of private interest favor the alternate forum, weighing in balance a strong presumption against disturbing plaintiffs’ initial forum choice; (iii) if the balance of private interests is nearly equal, the court further finds that factors of public interest tip the balance in 405 406 407 408

Lungowe and Others v Vedanta Resources (n 378), para 89. Ibid, para 87. Ibid, paras 89 and 100. Gulf Oil Corp. v Gilbert (1947) 330 S.Ct. 501 (US Supreme Court); Koster v Lumbermens Mutual Casualty Co (1947) 330 S.Ct. 518 (US Supreme Court); Piper Aircraft Co. v Reyno (1981) 454 S.Ct. 235 (US Supreme Court). 409 American Law Institute, ‘Restatement of the Law Fourth’ (n 4), Section 304.

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favour of trial in the alternate forum; and (iv) the plaintiffs can reinstate their suit in the alternate forum without undue inconvenience or prejudice.410 Forum non conveniens has been a recurrent barrier to victims of corporate human rights violations bringing cases before US Courts. One of the early cases against corporations dismissed on the basis of forum non conveniens is Bhopal.411 The case originated from a dramatic industrial accident occurred in 1984 in the Indian city of Bhopal, where a toxic gas leaked out of a chemical plant owned and operated by Union Carbide India Limited (UCIL), a subsidiary of the USbased Union Carbide Corporation (UCC). The poisonous gas killed thousands of people and left many more injured. The Indian plaintiffs brought a claim against UCC before a US court arguing that the company was responsible for the conduct of its Indian subsidiary, and that the Indian legal system was not an appropriate forum for such a complex litigation. The plaintiffs claimed that the UCC had a large degree of control over the subsidiary UCIL, and that the parent company had been negligent both in the construction of the Indian plant and in the subsequent monitoring of its safety. The Court found to be faced with a paradox. In the Court’s view, to retain the litigation in this forum, as plaintiffs request, would be yet another example of imperialism, another situation in which an established sovereign inflicted its rules, its standards and values on a developing nation. This Court declines to play such a role. The Union of India is a world power in 1986, and its courts have the proven capacity to mete out fair and equal justice. To deprive the Indian judiciary of this opportunity to stand tall before the world and to pass judgment on behalf of its own people would be to revive a history of subservience and subjugation from which India has emerged. India and its people can and must vindicate their claims before the independent and legitimate judiciary created there since the Independence of 1947.412 By relying on the doctrine of forum non conveniens, the US Court concluded that ‘the Indian legal system is in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability’.413 The Court reached its conclusion notwithstanding the fact that the Chief Justice of the Supreme Court of India indicated that the victims’ only chance of a remedy

410 Aldana v Del Monte Fresh Produce N.A., Inc. (2009) 578 F.3d 1283 (US Court of Appeals 11th Cir.) 411 In re Union Carbide Corporation Gas Plant Disaster at Bhopal India (10 June 1986) 634 F. Supp. 842 (US District Court for the Southern District of New York). 412 Ibid, 867. 413 Ibid, 866.

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would have been through the US judicial system, given the serious backlog of cases in India.414 With regard to the Canadian legal system, forum non conveniens is largely applied following the Spiliada test.415 Quebec, Canada’s only civil law province, has adopted and codified such doctrine.416 In Recherches Internationales du Quebec v Cambior, which concerned the claim brought by a public interest group against a Canadian mining company following the spill of cyanide-contaminated tailings at a site occupied by its subsidiary in Guyana, the Quebec Supreme Court dismissed the case, finding that Guyana was the appropriate forum.417 In Bil’in Village Council v Green Park,418 which concerned a claim brought by heirs of a Palestinian landowner against two Canadian companies involved in constructing residential buildings and other settlement infrastructure in the Occupied Territories, the same Court dismissed the case on the grounds of forum non conveniens. The Court noted that that ‘the plaintiffs have selected a forum having little connection with the Action in order to inappropriately gain a juridical advantage over the Defendants’.419 A more restrictive approach to forum non conveniens was adopted in Club Resorts v Van Breda, where the Supreme Court of Canada held that in order for a court to dismiss a case on forum non conveniens grounds, the defendant must show that an alternative forum exists that is ‘clearly more appropriate’, and that in light of the characteristics of the alternative forum, it would be fairer and more efficient to litigate the case in the alternative forum.420 Interestingly, the Court noted that when forum non conveniens is invoked a court should not decline jurisdiction solely because an alternative forums exists; the latter must be in a 414 After the US courts dismissed the case on forum non conveniens grounds, the people of Bhopal and Union Carbide entered into an agreement brokered by the Indian government, providing for a “full and final settlement” of $470 million including all future claims. The settlement, however, was widely criticized as providing ineffective remedies for the victims, given that the settlement resulted in recoveries of between $2,500 and $7,500 per person for deaths, and between $1,250 and $5,000 for permanent disabilities. 415 Amchem Products Inc. v British Columbia (Workers’ Compensation Board) (1993) 1 SCR 897 (Canadian Supreme Court), 921. 416 Article 3135 of the Civil Code of Quebec affirms that ‘even though a Québec authority has jurisdiction to hear a dispute, it may exceptionally and on an application by a party, decline jurisdiction if it considers that the authorities of another country are in a better position to decide’. 417 Recherches Internationales Quebec v Cambior, Inc. (14 August 1998) Q.J. No 2554 (Quebec Superior Court). 418 Bil’in (Village Council) v Ahmed Issa Yassin (18 September 2009) Q.J. No 2579 (Quebec Superior Court), paras 175–176. 419 Ibid. 420 Club Resorts Ltd v Van Breda (18 April 2012) 1 SCR 572 (Canadian Supreme Court), para 109.

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better position to handle the litigation fairly and efficiently. The Court noted that a number of factors can influence the decision to grant a stay, such as the location of parties and witnesses, the cost linked to accepting jurisdiction, the possibility of conflicting judgments and issues related to the recognition and enforcement of judgments.421 The same approach was followed by the Court in Black v Breeden, where it was noted that although it is not required that ‘all the factors point to a single forum’, one forum must appear as clearly the more appropriate one.422 With specific regard to business and human rights litigation, two Canadian courts interpreted forum non conveniens in a manner that is more responsive to the right to remedy and access to justice. In Garcia v Tahoe Resources, the British Columbia Court of Appeal overturned a lower court’s decision dismissing a claim on forum non conveniens grounds.423 The claim had been lodged by a group of Guatemalans who had been injured by Tahoe’s private security personnel while protesting outside the company’s silver mine in Guatemala. Whilst the judge granted the order to decline jurisdiction on the basis that Guatemala was a more appropriate forum, on appeal the Court noted that [i]n characterizing the appellants’ claim as a personal injury case, the judge was insufficiently attentive to the context in which the conflict arose. This claim is not akin to a traffic accident. Rather, it arose in a highly politicized environment surrounding the government’s permitting of a large foreign-owned mining operation in rural Guatemala. The protest that led to the battery at issue in this case was not an isolated occurrence […].424 According to Justice Garcia, the lower Court failed to take into account the risk that the plaintiffs would not receive a fair trial in Guatemala, given the high level of corruption characterising the Guatemalan legal system.425 Such a conclusion underscores the necessity of analysing the risk of an unfair trial in another country in light of the specific context. Unlike the lower court, the Court of Appeal took a much closer look at existing barriers to justice, including structural problems affecting the judiciary and the political context of the dispute, and their potential effect on the ability of the claimants to access justice in Guatemala. Without framing it in human rights terms, the Court of Appeal’s approach is genuinely 421 Ibid, para 110. 422 Black v Breeden (18 April 2012) 1 SCR 666 (Canadian Supreme Court). 423 Garcia and Others v Tahoe Resources Inc. (26 January 2017) 2017 BCCA 39 (Court of Appeal for British Columbia). 424 Ibid, para 109. 425 Ibid, para 124.

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geared toward an understanding of, and concern for, the ability of claimants to access justice in practice. In doing so, it upheld the claimants’ human right to a remedy. Given that over half of the world’s mining companies are headquartered in Canada, this is a development of considerable practical significance. A similar approach was adopted by the same court in Araya v Nevsun Resources,426 which involved allegations of complicity by a Canadian mining company in forced labour, slavery and torture committed by the Eritrean government. While the defendant applied for a stay of proceedings in favour of Eritrea, the plaintiffs claimed that legal and political barriers, such as the lack of an independent judiciary and of an implemented constitution would have not allowed them to obtain justice. The Supreme Court of British Columbia took note of the allegations concerning the integrity of the Eritrean judicial system and affirmed that ‘there is evidence that corroborates the plaintiffs expressed fears that they cannot return to Eritrea and obtain a fair trial against Nevsun in that forum’.427 Importantly, in confirming the Supreme Court of British Columbia over the case, Judge Rosalie Abella noted, on behalf of the the majority of the Canadian Supreme Court, that ‘international human rights was ‘not meant to be theoretical aspirations or legal luxuries, but moral imperatives and legal necessities’.428 The majority also agreed that customary international law’s prohibitions against slavery, forced labour, crimes against humanity and cruel, inhuman and degrading treatment are automatically adopted into Canadian law and ‘potentially’ apply to Nevsun.429 The Australian approach on forum non conveniens appears prima facie considerably different from other common law jurisdictions,430 insofar as cases will only be stayed if Australia is a ‘clearly inappropriate forum’.431 The Australian High Court has further specified that forum non conveniens can be successfully invoked only when allowing the case to be judged in Australia ‘would be productive of injustice’, in the sense of being oppressive or vexatious to the defendant.432 The Australian legal systems seems therefore to lend more weight to the right of the claimant to have his case heard and decided in Australia. The pro-claimant 426 Araya v Nevsun Resources Ltd (21 November 2017) BCCA 401 (Court of Appeal for British Columbia). 427 Araya v Nevsun Resources Ltd (6 October 2016) BCSC 1856 (Supreme Court of British Columbia), para 284. 428 Nevsun Resources Ltd v Araya SCC 5 (28 February 2020) (Supreme Court of Canada), para 1. 429 Ibid, para 116. 430 Gabrielle Holly, ‘Transnational Tort and Access to Remedy under the UN Guiding Principles on Business and Human Rights: Kamasaee v Commonwealth’ (2018) 19 Melbourne Journal of International Law 52–83, 74 ff. 431 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 (High Court of Australia). 432 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 (High Court of Australia), 521.

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approach to forum non conveniens in Australia seems more suited to tackling the justiciability issues arising from, inter alia, corporate violations committed by Australian companies abroad.433 In sum, for foreign non conveniens to be compatible with the principle of access to justice, courts have to consider whether judicial proceedings in the alternative forum would guarantee the claimant access to justice and remedy.434 Similar considerations can be made when no effective access to justice is possible within a given jurisdiction, and legal systems may allow for some form of exception to jurisdictional rules to avoid denial of justice.435 Forum necessitatis, or forum of necessity, operates as a residual form of jurisdiction, allowing a court to assert jurisdiction when no other viable forum is available to the plaintiff where he or she can lodge his or her claim.436 Forum necessitatis can be considered as The mirror image of forum non conveniens, which allows defendants to establish that a court should not hear a claim, despite the tests for jurisdiction being met, based on a range of discretionary factors. While the doctrines operate on similar principles, forum non conveniens gives defendants an extra chance to kill a case, whereas forum of necessity gives plaintiffs an extra chance to save it.437 Forum necessitatis has been codified in the legislation of a considerable number of legal systems,438 and has also been recognised by domestic courts of a good number of other countries.439 In the course of the revision of the Brussels I Regulation in 2009, the European Commission proposed the inclusion of a rule on forum on necessity. Draft Article 26 of Brussels I Regulation (Recast) provided that 433 Peter Prince, ‘Bhopal, Bougainville and OK Tedi: Why Australia’s forum non conveniens Approach is Better’ (1998) 47 ICLQ 573–598, 598. 434 Alex Mills, The Confluence of Public and Private International Law: Justice, Pluralism and Subsidiarity in the International Constitutional Ordering of Private Law (CUP 2009) 273. 435 EU FRA, ‘Improving Access to Remedy’ (n 358), 7. 436 Chilenye Nwapi, ‘A Necessary Look at Necessity Jurisdiction’ (2014) 47 UBC Law Review 212–273. 437 Michael D Goldhaber, ‘Corporate Human Rights Litigation in Non-U.S. Courts: A Comparative Scorecard’ (2013) 3 UC Irvine Law Review 127–149, 135. On the differences between Forum necessitatis and forum non conveniens, see Pietro Franzina, ‘Sul forum necessitatis nello spazio giudiziario europeo’ (2009) 92 Rivista di diritto internazionale 1121–1129, 1123. 438 See, among others, Austrian Code of Civil Procedure, para 28; Belgian Law Code of Private International Law; Dutch Code of Civil Procedure, Article 9(b); Swiss Code of Private International Law, Article 3. Uniform Law Conference of Canada’s Model Court Jurisdiction and Proceedings Transfer Act, Section 6; Québec Civil Code, Article 3136. 439 See, among others, France, Germany, Norway and Japan.

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Where no court of a Member State has jurisdiction under the Regulation, the courts of a Member State may, on an exceptional basis, hear the case if the right to a fair trial or the right to access to justice so requires, in particular: (a) if proceedings cannot reasonably be brought or conducted or would be impossible in a third State with which the dispute is closely connected; or (b) if a judgment given on the claim in a third State would not be entitled to recognition and enforcement in the Member State of the court seized under the law of that State and such recognition and enforcement is necessary to ensure that the rights of the claimant are satisfied; and the dispute has a sufficient connection with the Member State of the Court seized.440 The proposal was rejected.441 Nonetheless, forum of necessity is contemplated in the legislation of an appreciable number of EU member states.442 The 2016 CoE Recommendation emphasises that domestic courts must be allowed to resort to Forum necessitatis where there is no other available forum for the victim and as long as there is a sufficiently close connection to the member state concerned.443 In spite of the nuances across different legal systems, there are two recurrent conditions for this exceptional ground of jurisdiction. First, there must be an obstacle for the plaintiffs to bring proceedings abroad. In some domestic systems, this requires the plaintiff to demonstrate the impossibility of bringing the claim elsewhere, as the court that would be competent either lacks the jurisdiction to hear the claim or has already declined its jurisdiction.444 In other 440 Article 26 Proposal for a Regulation of the European Parliament and of the Council on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, COM(2013) 554 final – 2013/0268 (COD). 441 The proposal was conceived as a counterbalance to the proposed universal scope of the Brussels Regulation. According to some, once the universal scope of Brussels I was rejected, Article 26 was set aside; see Daniel Augenstein and Nicola Jägers, ‘Judicial Remedies: The Issue of Jurisdiction’ in Juan José Álvarez Rubio and Katerina Yiannibas (eds), Human Rights in Business: Removal of Barriers to Access to Justice in the European Union (Routledge 2017), 28. 442 Chilenye Nwapi, ‘A Necessary Look at Necessity Jurisdiction’ (n 436), 33. Furthermore, the forum of necessity is explicitly recognised in a number of EU Regulations. See Benedetta Ubertazzi, ‘Intellectual Property Rights and Exclusive (Subject Matter) Jurisdiction: Between Private And Public International Law’ (2011) 15 Marquette Intellectual Property Law Review 357–448, 385 ff. 443 CoE Committee of Ministers, ‘Recommendation on Human Rights and Business’ (2 March 2016) CM/Rec(2016), para 36. 444 E.g. Poland and Romania. See Giulia Rossolillo, ‘Forum necessitatis e flessibilità dei criteri di giurisdizione nel diritto internazionale privato nazionale e dell’Unione Europea’ (2010) 2 Cuadernos de Derecho Transnacional 403–418, 406.

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systems it is sufficient for the claimant to prove a disproportionate difficulty in accessing the foreign forum, due to factual or legal obstacles. Natural disasters or armed conflicts are often considered among the factual obstacles, while the legal obstacles may include the lack of a guarantee that the claimant would get a fair trial abroad, the threats faced by the plaintiff on the foreign soil, or the disproportionate costs of litigation.445 Second, there must be some form of connection with the forum state, although the required link is not always neatly defined.446 There is a general consensus that the required connection exists at least when the plaintiff is a citizen of the forum state, or when he or she is domiciled or habitually resident in the state. Yet other contacts with the forum state may be relevant, such as the presence of assets of the defendant within the jurisdiction,447 or even the habitual residence of the claimant himself in the territory of the forum state. The two above-mentioned requirements distinguish the forum of necessity from universal jurisdiction.448 The Comilog case, before French Courts, concerned the alleged unfair dismissal of hundreds of Congolese workers by a Gabonese mining company operating in the Democratic Republic of Congo. Comilog, the defendant company, had meanwhile reached an agreement with the governments of Congo and Gabon, pledging to compensate the workers for their dismissal in exchange for their renunciation to litigation. Once a French company became the majority owner of Comilog, the workers filed a claim before a French employment tribunal, claiming that they had not been consulted in the agreement between Comilog and the two states, and that they never received any compensation. While the employment tribunal dismissed the claim for lack of jurisdiction, the Paris Court of Appeal held that French courts were competent to hear the case against Comilog, also given that the majorority shareholder of the defendant company was a French company. Most importantly, the Court noted that its jurisdiction was based on the necessity to avoid a denial of justice to the Congolese workers:

445 See Lycette Corbion, Le déni de justice en droit international privé (Presses universitaires d’Aix-Marseille 2004) 199. 446 The Dutch legal system does not require any connection when legal proceedings outside the Netherlands are proved impossible (Dutch Code of Civil Procedure, Article 9 (b)). The Canadian legal system does not require any connection of the dispute to the forum either. 447 Lucas Roorda, ‘Adjudicate This! Foreign Direct Liability and Civil Jurisdiction in Europe’ in Angelica Bonfanti (ed), Business and Human Rights in Europe: International Law Challenges (Routledge 2018), 206. 448 Cedric Ryngaert, ‘From Universal Civil Jurisdiction to Forum of Necessity: Reflections on the Judgment of the European Court of Human Rights in Nait-Liman’ (2017) 100 Rivista di diritto internazionale 782–807, 783.

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Il résulte du principe d’accès à la justice, notamment consacré par l’article 6 de la convention européenne de sauvegarde des droits de l’homme et des liberté fondamentales et découlant également de l’article 4 du code civil [que] l’impossibilité pour une partie étrangère d’accéder au juge national naturellement chargé de se prononcer sur sa prétention, et donc d’exercer un droit qui relève de l’ordre public international, constitue un déni de justice qui fonde la compétence de la juridiction française lorsqu’il existe un rattachement avec la France.449 The need to avoid a denial of justice is also at the core of the application of forum of necessity before Dutch Courts, which have accepted foreign-cubed cases when bringing those claims outside the Netherlands would have been legally or practically impossible for the plaintiffs.450 Outside Europe, Canada has exceptionally recognised that a Canadian Court may operate as a forum necessitatis, even in the absence of a precise connecting factor, when it could not reasonable expected that the claimant could seek relief in a foreign jurisdiction.451 Quebec, however, adopts a more restrictive approach to the doctrine and requires a connecting factor to the forum. In ACCI v Anvil, which concerned the company’s alleged complicity in human rights violations committed by government forces in the Democratic Republic of Congo, the Quebec Court of Appeal held that the presence of a representative of the company in Canada was an insufficient connection to meet that condition for the exercise of the forum of necessity jurisdiction.452 Furthermore, the Court noted, the claimants had failed to prove that justice could not be obtained where the harm occurred, namely in the Democratic Republic of Congo.453 As pointed out above, the interpretation and application of forum necessitatis doctrine by domestic courts varies from one jurisdiction to another. In particular, the two common denominators, namely some connection of the case to the forum and the absolute or relative impossibility for the claimant to bring proceedings abroad, are subject to different interpretations by domestic 449 Comilog (10 September 2015) Cases Nos 11/05953; 11/05955; 11/05956; 11/05957; 11/05959; 11/05960 (Paris Court of Appeal). See Etienne Farnoux, ‘L’affaire COMILOG (Cour d’appel de Paris) : l’appréhension du groupe multinational de sociétés par les règles de compétence juridictionnelle’ in Laurence Dubin and and others (eds), L’entreprise multinationale et le droit international (Pedone 2017). 450 El-Hojouj v Unnamed Libyan Officials (21 March 2012) Case No 400882/HAZA11-2252 (District Court of The Hague). 451 Van Breda and Others v Villages Resort Ltd and Others (2 February 2010) ONCA 84 (Ontario Court of Appeal), para 100. 452 Anvil Mining Ltd v Association canadienne contre l’impunité (24 January 2012) QCCA 117 (Quebec Court of Appeal), paras 85–89. 453 Ibid, para 100.

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judges. This may depend on domestic statutory provisions and/or on judicial discretion. This lack of consistency among domestic legal systems has been reflected in the case-law of the ECtHR, which has largely framed the issue of forum necessitatis within the margin of appreciation of the state. In Markovic and Arlewin the Court has recognised that the ‘jurisdictional link’454 established by the presence of the claimants in the forum state, as well as the ‘lack of reasonable and practical alternative’ forum for the claimant, may be relevant with respect to the state obligation to guarantee access to justice. In the recent case Naït-Liman v Switzerland, however, the ECtHR affirmed that ‘it cannot be concluded that there exists an international customary rule enshrining the concept of forum of necessity’ and that, therefore, international law did not impose an obligation on the Swiss authorities to open their courts with a view to ruling on the merits of the applicant’s compensation claim’.455 Indeed, it seems hard to argue that the acceptance of forum necessitatis in a number of domestic legal systems is sufficient to ground the evolution of the doctrine in question into a general customary rule.456 Being still unknown in a number of jurisdictions,457 it is similarly hard to frame forum of necessity as an autonomous principle of law.458 However, one may argue that forum necessitatis, even though on an optional basis, may operate as a procedural tool that gives effect to the legally binding international principle of access to justice. It follows that when victims of corporate human rights violations lodge a claim before a domestic court, the latter should give due consideration to whether a viable alternative forum exists.459 A refusal to establish jurisdiction in cases where no other court is competent, or when the case cannot be brought before another court, may amount to denial of justice. As underscored by Mills, the traditional view of jurisdiction as a right of the state is accompanied by a state duty to exercise jurisdiction in certain circumstances: There is increasing recognition that states may owe obligations to exercise prescriptive and particularly adjudicative jurisdiction (according to

454 Markovic and Others v Italy (2006) (GC) ECtHR App No 1398/03, paras 53, 54. 455 Naït-Liman v Switzerland (2018) ECtHR App No 51357/07, paras 201, 203. 456 Paul D Mora, ‘Universal Civil Jurisdiction and Forum Necessitatis: The Confusion of Public and Private International Law in Naït-Liman v. Switzerland’ (2018) 65 Netherlands International Law Review 155–183, 180. 457 Such as Australia, Denmark, South Africa, Sweden and the United Kingdom. 458 Nuyts answers the question affirmatively. See Arnaud Nuyts, ‘Study on Residual Jurisdiction: Review of the Member States’ Rules Concerning the “Residual Jurisdiction” of their Courts in Civil and Commercial Matters Pursuant to the Brussels I and II Regulations’ (2007), 64. 459 Daniel Augenstein and Nicola Jägers, ‘Judicial Remedies: The Issue of Jurisdiction’ (n 441), 13.

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international not domestic standards) directly to individuals. Some states take the view that access to justice may even require exercising forum of necessity jurisdiction if no other forum is available for the claimant, even if there is no connection between the state and the parties or their dispute which would justify jurisdiction on traditional grounds.460 Yet adjudicative jurisdiction over companies without any connecting factor would amount to universal jurisdiction, where one risked ending up in forum shopping and causing a general legal uncertainty. Accordingly, the need is there for common rules concerning forum necessitatis,461 possibly starting by adding a forum necessitatis rule to Brussels I Recast regulation.462 The International Law Association has elaborated Guidelines on Best Practices for International Civil Litigation for Human Rights Violations, which are meant to apply to civil claims against corporations, individuals and other non-state actors arising out of or brought to redress conduct constituting a human rights violation, ‘in view of the nature of the norm allegedly violated or the gross or systematic nature of the breach alleged’.463 The Guidelines envisage jurisdiction based on forum necessitatis when rejecting jurisdiction would cause the claimant a denial of justice and when there is a sufficient connection to the forum, such as: (a) the presence of the claimant; (b) the nationality of the claimant or the defendant; (c) the presence of assets of the defendant; d) some activity of the defendant; or (e) a civil claim based on an act giving rise to criminal proceedings in the court seized of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings.464 The non-binding nature of the ILA resolution does not diminish its value in establishing a coherent framework for legislators and judges. To start with, it would be auspicious to formalise the criteria for forum necessitatis at the EU level. It is regrettable that the current version of the draft treaty on business and human rights has missed the opportunity to address such an important jurisdictional issue.

460 Alex Mills, ‘Rethinking Jurisdiction in International Law’ (n 25), 235. 461 Lucas Roorda and Cedric Ryngaert, ‘Business and Human Rights Litigation in Europe and Canada: The Promises of Forum of Necessity Jurisdiction’ (2016) 80 Rabels Zeitschrift für ausländisches und internationales Privatrecht 783–816, 785. 462 See Axel Marx and others, ‘Access to Legal Remedies for Victims of Corporate Human Rights Abuses in Third Countries’ (2019), available at https://www.europarl.europa.eu/RegData/ etudes/STUD/2019/603475/EXPO_STU(2019)603475_EN.pdf. 463 ILA, ‘International Civil Litigation and the Interests of the Public’ (26 August 2012, Sofia) Res 2/2012 available at https://heinonline.org/HOL/LandingPage?handle=hein.ilarc/ ilarc0075&div=1&src=home. 464 Ibid, Guideline 2.3. The list is non-exhaustive.

part iii

General Principles of Law and the Development of Corporate Obligations Introduction In Part II the role of general principles of law has been investigated with regard to the existing human rights obligations of states in the context of business activities. This part, organised in three chapters, focuses on the actual and potential contribution of general principles in the development of corporate obligations relevant to the protection of human rights. Chapter 7 explores the principle of limited liability and its relation to the principle of abuse of rights. Chapter 8 inspects corporate human rights due diligence and investigates its relationship to the due diligence principle in international law. Chapter 9 examines the principle of legitimate expectations and focuses on the potential use of the principle in investment arbitration, as well as in assessing the legal effect of corporate codes of conduct.

7

Corporate Limited Liability and the Principle of Abuse of Rights

The corporation is a fictitious legal person, distinct from the individuals who own or manage it.1 It is a key vehicle through which business is conducted within and across legal systems.2 The separate legal personality is a constitutive element of the corporate form allowing corporations to engage in legal transactions, holding rights and bearing obligations in their own name.3 This legal separation grants shareholders limited liability, implying that they are not liable for the obligations of the corporation beyond their capital investment in the company. Corporate limited liability has been considered as the ‘greatest single discovery of modern time […]’, so much so that ‘even steam and electricity […] would be reduced to comparative impotence without it’.4 1 2

3 4

Samuel Williston, ‘History of the Law of Business Corporations before 1800’ (1888) 2 Harvard Law Review 105–124, 106. Arghyrios A Fatouros, ‘Transnational Enterprise in the Law of State Responsibility’ in Richard B Lillich (ed), International Law of State Responsibility for Injuries to Aliens (University Press of Virginia 1983), 372. Reinier Kraakman and Others, The Anatomy of Corporate Law (3 edn, OUP 2017) 5 ff. Nicholas Murray Butler, Why Should we Change our Form of Government? (Charles Scribner’s Sons 1912) 82.

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The principle of limited liability is deeply entrenched in domestic legal systems and has found firm ground in international law.5 By creating a “veil” between the individual investor and the company, limited liability serves an important economic purpose in that it encourages entrepreneurship. Limited liability has developed well beyond the original purpose of insulating individuals from the liabilities of the company in which they invest. It has been automatically extended to corporate groups, granting each company limited liability vis-à-vis its subsidiaries.6 Consequently, a parent company that owns shares in a subsidiary will not generally be held liable for the latter’s acts and omissions.7 Even when two corporations operate as a single economic unit, they remain two distinct legal entities with their own assets and liabilities.8 Accordingly, corporations are able to create multiple layers of insulation that shields them from liability for tax evasion, human rights violations and environmental damage. Since the raison d’être of the right to separate legal personality and limited liability was to promote the development of business activities by limiting the commercial risks of the shareholders and managers, this chapter seeks to explore whether the principle of abuse of rights may serve as a legal basis to presume that a company is not allowed to use the corporate structure to shield itself from liability for human rights violations committed by its subsidiaries. The Rationale of Limited Liability and the Purpose of the Corporation Although business corporations have existed for centuries, the separate legal personality and its twin principle of limited liability are relatively young. Roman law recognised the corporate status of some public entities, but did not grant the societas rights or assets of its own.9 Following the principle cuius commoda, eius et incommoda,10 individuals were personally liable for the debts contracted by 7.1

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HRC, ‘Human rights and Corporate Law: Trends and Observations from a Crossnational Study Conducted by the Special Representative, Addendum 2 to the Report’ (23 May 2011), A/HRC/17/31/Add.2, paras 31, 49. See Janet Dine, The Governance of Corporate Groups (CUP 2000). John G Ruggie, ‘Multinationals as Global Institution: Power, Authority and Relative Autonomy’ (2018) 12 Regulation & Governance 317–333, 320. Phillip Blumberg, ‘Limited Liability and Corporate Groups’ (1986) 11 Journal of Corporate Law 573–631, 575. See Giuseppe Dari-Mattiacci and Others, ‘The Emergence of the Corporate Form’ (2017) 33 The Journal of Law, Economics, and Organization 193–236, 201. The principle implies that those to whom benefits are granted must also bear the corresponding burdens.

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the partnership.11 A more hybrid solution characterised, for instance, the Italian commenda in the Middle Ages, an institution composed of a passive investor and an active trader, where only the former enjoyed limited liability.12 This model was replicated by the French société en commandite simple, where those with direct control of the company were personally liable for its debts, while those who only provided the capital were liable only to the extent of their investment.13 It was not until the mid-nineteenth century that British corporations started to enjoy separate legal personality in the modern sense of the term.14 In 1986, in Salomon, the House of Lords affirmed that the purpose of creating a separate legal entity is to limit the liability of the members for the debts incurred by the company.15 Separate legal personality and limited liability have been defined as the ‘whole foundation’ of English company law,16 and have been embedded in the 2006 Company Act.17 In the US, the concept of corporations as ‘artificial beings, invisible and intangible’ had been acknowledged by the Supreme Court already in 1819 in Trustees of Dartmouth College v Woodward.18 Almost two centuries later, in US v Bestfoods, the US Supreme Court referred to the principle of separate legal personality as a ‘general principle of corporate law deeply ingrained in our economic legal systems’.19 The ICJ, in Barcelona Traction, has recognised the separate legal personality of corporations as a domestic law institution that has developed

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Henry Hansmann, Reinier Kraakman and Richard Squire, ‘Law and the Rise of the Firm’ (2006) 119 Harvard Law Review 1335–1403, 1356 ff. Although limited liability was partly achieved through the institute of the peculium, a sum entrusted to a slave by his master or to a son by his father in order to pursue business activities. Robert S Lopez and Irving W Raymond, Medieval Trade in the Mediterranean World (Columbia University Press 1955) 174. Amalia D Kessler, ‘Limited Liability in Context: Lessons from the French Origins of the American Limited Partnership’ (2003) 32 The Journal of Legal Studies 511–548. For an historical perspective of the rise of the corporation in England, see William S Holdsworth, ‘English Corporation Law in the 16th and 17th Centuries’ (1922) 31 Yale Law Journal 382–407; Colin A Cooke, Corporation, Trust and Company: An Essay in Legal History (Manchester University Press 1950); Paddy Ireland, ‘Limited Liability, Shareholder Rights and the Problem of Corporate Irresponsibility’ (2010) 34 Cambridge journal of economics 837–856. Salomon v Salomon & Co. Ltd (16 November 1896) (1897) AC 22 (House of Lords). On the evolution of corporate limited liability, see Régis Bismuth, ‘Deciphering and Revisiting the (Guiding) Principles on Business and Human Rights’, in Mads Andenas and Others (eds), General Principles and the Coherence of International Law (Brill NIjhoff 2019), 222 ff. Prest v Petrodel Resources Ltd (12 June 2013) UKSC 34 (Supreme Court). Company Act (2006), Sections 16(2) and (3), and Section 3. Trustees of Dartmouth College v Woodward (25 February 1819) 17 S.Ct. 518 (US Supreme Court). United States v Bestfoods et al (8 June 1998) 524 S.Ct. 51 (US Supreme Court), 61.

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as a consequence of the expanding requirements in the economic field.20 According to the Court, International law has to recognize the corporate entity as an institution created by States in a domain essentially within their domestic jurisdiction. Separated from the company by numerous barriers, the shareholder cannot be identified with it. The concept and structure of the company are founded on and determined by a firm distinction between the separate entity of the company and that of the shareholders, each with a distinct set of rights.21 A number of factors have been put forward to substantiate the rationale of limited liability. Generally, as already alluded, limited liability aims to incentivise investment in corporate shares by protecting individual investors from incurring personal liability.22 It also allows shareholders to hold a diversified portfolio by reducing their need to monitor the management’s risk-taking behaviour.23 Limited liability plays a pivotal role in the functioning of capital markets. If the value of shares varied according to the wealth of every investor, an organized liquid market would not be possible. Limited liability was originally conceived for contractual relationships, where voluntary creditors are able to assess the risks of dealing with the company and negotiate the conditions before entering a contract.24 In fact, in addressing the issue of limited liability of shareholders, Stuart Mills pointed out that ‘nobody is obliged to deal with the association: still less is any one obliged to give it unlimited credit. The class of persons with whom such associations have dealings are in general perfectly capable of taking care of themselves’.25 Different considerations hold, however, for involuntary creditors, such as tort creditors, who are not in a position to conduct an assessment of the risks and

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Barcelona Traction, Light and Power Company, Limited (Belgium v Spain) [1970] ICJ Rep 3, para 39. Ibid, para 41. See also Ahmadou Sadio Diallo (Republic of Guinea v Democratic Republic of the Congo) (Preliminary Objections) [2007] ICJ Rep 582, para 61. See Sarah Joseph, Corporations and Transnational Human Rights Litigation (Hart 2004) 131; Robert McCorquodale, ‘Pluralism, Global Law and Human Rights: Strengthening Corporate Accountability for Human Rights Violations’ (2013) 2 Global Constitutionalism 287–315, 287. Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (New York 1932). Frank H Easterbrook and Daniel R Fischel, ‘Limited Liability and the Corporation’ (1985) 52 University of Chicago Law Review 89–117, 105. John Stuart Mill, The Principles of Political Economy with Some of their Applications to Social Philosophy (Book 5) (7 edn, Longmans Green & Co 1909), Chapter 9, para 6.

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bargain their protection beforehand.26 The category of involuntary creditors may include victims of human rights violations who, as already seen in Part II, rely on tort law to pursue cases against corporations before domestic courts. Through limited liability companies are able to shift the environmental and social costs linked to their business activity onto members of the public who have not consented to bear such costs.27 The legitimacy and economic efficiency of this externalisation of risks have been often called into question.28 In examining the rationale of limited liability, it is appropriate to call attention to the broader issue of the purpose of the corporation. The classical view is that the primary goal of a company is to make profit for the benefit of its shareholders.29 According to the often quoted statement by the Nobel laureate Milton Friedman, ‘there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits’.30 Yet a less quoted part of the statement adds that such an aim must be pursued ‘within the rules of the game, which is to say, engage in open and free competition without deception or fraud’.31 Corporations are creatures of domestic law and are embedded in the legal framework of domestic legal systems. There is no reason to exclude from today’s “rules of the game” international human rights and environmental standards that constitute international obligations of the states where such corporations operate. This is the more so given the fact that, as observed in Part I, states have negotiated and adopted specific human rights standards addressed to corporations.32

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Peter T Muchlinski, ‘Limited Liability and Multinational Enterprises: A Case For Reform?’ (2010) 34 Cambridge Journal of Economics 915–928, 918. David Millon, ‘Piercing the Corporate Veil, Financial Responsibility, and the Limits of Limited Liability’ (2007) 56 Emory Law Journal 1305–1382, 1316. See also Radu Mares, ‘Liability within Corporate Groups: Parent Companies’ Accountability for Subsidary Human Rights Abuses, in Surya Deva and David Birchall (eds), Research Handbook on Human Rights and Business (Edward Elgar 2020). Henry Hansmann and Reinier Kraakman, ‘Toward Unlimited Shareholder Liability for Corporate Torts’ (1991) 100 Yale Law Journal 1879–1934; Peter T Muchlinski, ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ (2012) 22 Business Ethics Quarterly 145–178, 152. Adolf Berle, ‘Corporate Powers as Powers in Trust’ (1931) 44 Harvard Law Review 1049–1074; Henry Hansmann and Reinier Kraakman, ‘The End of History for Corporate Law’ (2001) 89 Georgetown Law Journal 439–468, 439. Milton Friedman, Capitalism and Freedom (University of Chicago Press 2nd edn, 2002) 133. Ibid.; see also see also Milton Friedman, ‘The Social Responsibility of Business is to Make Profits’ in George Steiner and John Steiner (eds), Issues in Business and Society (2 edn, Random House 1977), 168. See Part I, Chapter 1.

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By alluding to the Preamble of the Universal Declaration of Human Rights, the Ruggie Report acknowledged that companies may be considered as ‘organs of society’.33 While the companies’ role towards the protection of human rights cannot be compared to that of states, business and human rights instruments, and the widespread practice of codes of conduct, indicate that companies are not, or not anymore, just profit-makers.34 Companies are granted the right to purse profit-making activities and to benefit from limited liability, but it is arguable that these rights cannot be exercised at the expense of human rights and environmental standards.35 In this regard, on would subscribe to the view that the purpose of a company is not merely to benefits shareholders, but also to take into account the impact of its activity, and that of any of its subsidiaries, on the relevant stakeholders, such as consumers, employees and local communities.36 Such a stakeholder perspective, which has been extensively discussed in the field of corporate governance,37 is also being increasingly employed to make a business case for corporate compliance with human rights and environmental standards.38 Further to that, as pointed out by the Chairman of Black Rock, one of the largest global investment management corporations, ‘to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders,

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HRC, ‘Protect, Respect and Remedy: A Framework for Business and Human Rights: Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises’ (7 April 2008) UN Doc A/ HRC/8/5, para 53. Kate Miles, The Origins of International Investment Law: Empire, Environment and the Safeguarding of Capital (CUP 2013) 219–220. Surya Deva, ‘Business and Human Rights: Time to Move Beyond the “Present”?’ in César Rodriguez-Garavito (ed), Business and Human Rights: Beyond the End of the Beginning (CUP 2017), 67. Beate Sjåfjell and Others, ‘Shareholder Primacy: The Main Barrier to Sustainable Companies’ in Beate Sjåfjell and Benjamin Richardson (eds), Company Law and Sustainability: Legal Barriers and Opportunities (CUP 2015), 94; see also Franck Bold, ‘Corporate Governance for a Changing World’ (2017) available at http://en.frankbold.org/our-work/campaign/ purpose-corporation). For an historical overview of the stakeholder theory in corporate governance, see Edward R Freeman and Others, Stakeholder Theory: The State of the Art (CUP 2010) 30 ff. Cynthia A Williams, ‘Corporate Social Responsibility and Corporate Governance’ in Jeffrey N Gordon and Wolf-Georg Ringe (eds), The Oxford Handbook of Corporate Law and Governance (OUP 2018), 667.

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including shareholders, employees, customers, and the communities in which they operate’.39 Corporate law is also progressively evolving to reflect the stakeholder theory.40 The idea of a corporation as a legal fiction without responsibilities is as outdated as that of unconstrained state sovereignty. In the UK, while shareholder primacy remains the core corporate governance model, the 2006 Companies Act imposes on directors the ‘duty to promote the success of the company’, while taking into account ‘the impact of the company’s operations on the community and the environment’.41 The Dutch Code of Corporate Governance, as revised in 2016, similarly requires the management board to take into account the interests of stakeholders.42 According to Sections 289b-289c of the German Commercial Code, which gives implementation to the Directive 2014/95/EU, certain large companies of public interest must include a non-financial reporting in their annual accounting report. Furthermore, the 2018 Bill on Business Growth and Transformation, amended Article 1833 of the French Civil Code, adding that corporations must be managed in their own interests, while taking into account the ‘social and environmental issues’ related to their operations.43 7.2 Abuse of Rights as a General Principle of Law In the attempt to define general principles of law, the Italian member of the Committee of Jurists preparing the Draft Statute of the PCIJ heavily relied on the principle of abuse of rights.44 The prohibition of abuse of rights is rooted in the principle of good faith in its constitutional dimension of any given legal order.45 It generally refers to a situation in which a right is formally exercised in

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Larry Fink, ‘A Sense of Purpose’ (Letter to CEOs) (2018), available at https://www.blackrock. com/corporate/investor-relations/larry-fink-ceo-letter. 40 Beate Sjåfjell and Linn Anker-Sørensen, ‘The Duties of the Board and Corporate Social Responsibility (CSR)’ in Karsten E Sørensen and Others (eds), Boards of Directors in European Companies – Reshaping and Harmonising their Organisation and Duties (Wolters Kluwer 2014). 41 Company Act (2006), Section 172. 42 The Dutch Governance Code (2016), Chapter 1(1). 43 French Civil Code, Article 1833 (2). 44 League of Nations Advisory Committee of Jurists, ‘Procès-verbaux of the Proceedings of the Committee’ (16 June-24 July 1920), 314–15, 335. 45 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Stevens and Sons 1953) 121; Gerald Fitzmaurice, ‘The Law and Procedure of the International Court of Justice 1951–54: General Principles and Sources of Law’ (1953) 30 BYIL 1–70, 53. Robert Kolb, Good Faith in International Law (Hart Publishing 2017) 133 ff.

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conformity with the rule granting it, but the legal outcome of such an exercise is contrary to the rationale of that rule.46 The principle is embedded in a large number of civil law legal systems.47 In those countries lacking a general codification of the abuse of rights, such as France and Italy, legal theorists have played a key role in developing the principle, which has thereafter been upheld by the jurisprudence and codified in certain areas of the law. In both countries, the principle has found initial application in the context of property rights, but was subsequently developed in both public and private law. Other civil law systems contain an explicit provision on abuse of rights. The German Civil Code, for instance, provides that the exercise of a right is forbidden if it has no other purpose than to harm another person.48 The Swiss Civil Code states that the abuse of rights is not protected by the law.49 A similar provision is contained in the Argentine Civil Code, which adds that there is abuse of a right when it is exercised in a manner that is contrary to the general purpose of the legal system, or that exceeds the limits imposed by good faith, morality and the public order.50 In his study on the content and scope of abuse of rights, Gutteridge concluded that such a principle is nowhere to be found in common law systems.51 However, tort law in such systems generally contemplates a number of wrongs stemming from behaviours substantially comparable to what in civil law jurisdictions amounts to abuse of right, such as in the field of private nuisance.52 Furthermore, the doctrine of abuse of process, which can be considered as a 46

Babatunde O Iluyomade, ‘Scope and Content of a Complaint of Abuse of Right in International Law’ (1975) 16 Harvard International Law Journal 47–92, 48; Annekatrien Lenaerts, ‘The General Principle of the Prohibition of Abuse of Rights: A Critical Position on its Role in a Codified European Contract Law’ (2010) 18 European Review of Private Law 1121–1154, 47 For a comparative analysis of the principle in civil law legal systems, see James Gordley, ‘The Abuse of Rights in the Civil Law Tradition’ in Rita de la Feria and Stefan Vogenauer (eds), Prohibition of Abuse of Law: A New General Principle of EU Law? (Hart Publishing 2011). 48 German Civil Code (1900, as amended in 2013), Article 226. See also Article 242. The English translation is available at https://www.gesetze-im-internet.de/englisch_bgb/. 49 Swiss Civil Code (1907), Article 2. Available at https://www.admin.ch/opc/en/classifiedcompilation/19070042/index.html. 50 Argentine (New) Civil Code (2014), Article 10, available only in Spanish at http://www.saij. gob.ar/docs-f/codigo-comentado/CCyC_Comentado_Tomo_I%20(arts.%201%20a%20400). pdf The formulation is similar to the one of Article 7 of the Spanish Civil Code (1978), Article 7. 51 Harold C Gutteridge, ‘Abuse of Rights’ (1933) 5 Cambridge Law Journal 22–45; see also Georg Schwarzenberger, ‘Uses and Abuses of the “Abuse of Rights” in International Law’ (1956) 42 Transactions of the Grotius Society 147–179. 52 Hersch Lauterpacht, The Function of Law in the International Community (Archon Books 1966) 297; Joseph Perillo, ‘Abuse of Rights: A Pervasive Legal Concept’ (1995) 27 Pacific

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procedural articulation of the abuse of rights, is consistently applied in common law jurisdictions, showing that the latter are far from denying the principle.53 In fact, it was precisely the United Kingdom that invoked the prohibition of abuse of rights in the Fisheries Jurisdiction Cases before the ICJ, claiming that the right to delimit exclusive fisheries zones is balanced by the duty to respect the rights of other states.54 In fact, the abuse of rights can be qualified as a general principle of law under Article 38(1)(c) of the ICJ Statute.55 In the words of the then Special Rapporteur on State Responsibility, Francisco García Amador, ‘the jurisprudence of the courts and claims commissions, clearly shows that at least the basic principle of the prohibition of abuse of rights is applicable in international relations’.56 The principle has been also incorporated in a number of international treaties, such as UNCLOS, which requires states to exercise the rights protected therein in a manner ‘which would not constitute an abuse of right’.57 In inter-state relations, an abuse occurs when a state exercises a right for a purpose that is alien to that for which the right was created, to the detriment of another state.58 In the Free Zones case, the PCIJ affirmed that when a state attempts to avoid an obligation by performing acts not prohibited per se, but with a similar result as that of the prohibited acts, an abuse of rights can be inferred.59 The same Court referred to abuse of rights also in the Upper Silesia case, adding that such abuse ‘cannot be presumed, and it rests with the party

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Law Journal 37–98, 40; Anna di Robilant, ‘Abuse of Rights: The Continental Drug and the Common Law’ (2010) 61 Hastings Law Journal 688–748, 701. Hunter v Chief Constable of the West Midlands Police (19 November 1981) AC 529 (House of Lords). See Tobias Lock, The European Court of Justice and International Courts (OUP 2015) 55. Fisheries Jurisdiction (United Kingdom v Iceland), Memorial on the Merits of the Dispute Submitted by the Government of the United Kingdom (14 April 1972) [1975] ICJ Pleadings (Vol 1), paras 153–54. ILC, ‘Report of the International Law Commission Covering the Work of its Fifth Session’ (1 June – 14 August 1953) UN Doc A/2456, Yearbook of the International Law Commission, Vol II, 218; see also G D S Taylor, ‘The Content of the Rule against the Abuse of Rights in International Law’ (1972–1973) 46 BYIL 323–352, 352; Hervé Ascensio, ‘Abuse of Process in International Investment Arbitration’ (2014) 13 Chinese Journal of International Law 763–785, 766. ILC, ‘International Responsibility, Fifth Report by García-Amador’ (1960) UN Doc A/CN.4/125, Yearbook of the International Law Commission, Vol II, para 73. United Nations Convention on the Law of the Sea, Article 300. Robert Jennings and Arthur Watts, Oppenheim’s International Law, vol 1 (9 edn, OUP 2008) 407. Case of the Free Zones of Upper Savoy and the District of Gex (France v Switzerland) [1932] PCIJ Series A/B No 46, 167.

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who states that there has been such misuse to prove its statement’.60 The principle has been likewise referred to in a number of separate and dissenting opinions before the ICJ.61 As noted by Kiss, one of the clearest articulations of the principle was provided by the WTO Appellate Body.62 As emphasised by the latter, the abuse of rights principle ‘prohibits the abusive exercise of a state’s rights and enjoins that whenever the assertion of a right “impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that is to say, reasonably”’.63 As to the criteria to qualify the occurrence of an abuse of right and the standards of proof, some municipal systems look at the animus nocendi of the right holder, i.e. the intention to harm others.64 In other systems, though, the relevant criterion consists of the merely objective incompatibility of the conduct of the right-holder with the normal function of the right in question or with its socio-economic purpose.65 Some other systems contemplate both criteria.66 At the general level, the ratio of the principle seems to be one of balancing between the position of the right holder and the effects of the exercise of the right on others and on the community.67 Such a balancing process requires the context within which the right is exercised and the purpose of the norm establishing the right to be taken into account. The exercise of the right does not, or not only, degenerate into abuse of rights on the basis of the malicious intention of the right holder, but due to the fact that it is exercised in an abnormal and excessive

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Case Concerning Certain German Interests in Polish Upper Silesia (Germany v Poland) (Merits) [1926] PCIJ Rep Series A No 7, para 88. See, among others Gabčikovo-Nagymaros Project (Hungary v Slovakia) (Judgment) [1997] ICJ Rep 7, Separate Opinion of Judge Weeramantry, paras 10, 22; Dissenting Opinion of Judge Parra-Aranguren, para 22. Alexandre Kiss, ‘Abuse of Rights’ MPEPIL (2006), para 14. United States-Import Prohibition of Certain Shrimp and Shrimp Products (1998) WTO Doc WT/DS58/AB/R, para 158 (quoting Cheng, footnotes omitted). E.g. German Civil Code, Article 226; Mexican Civil Code (1932), Article 1912 and the Italian Civil Code (1942), Article 833. The latter, although not formally codifying the principle of abuse of rights, prohibits the owner from carrying out actions with the sole malicious purpose to inflict harm to others. See, e.g. the Greek Civil Code (1940), Article 281 and the Portuguese Civil Code (1966), Article 334. The expression ‘socio-economic purpose’ was also used by the Soviet code of 1923. Dutch (New) Civil Code (1992), Article 3:13. ‘[I]l y a abus si l’intérêt général est lésé par le sacrifice d’un intérêt individuel très fort à un autre intérêt individuel plus faible’, in Nicolas Politis, ‘Le problème des limitations de la souveraineté et la théorie de l’abus des droits dans les rapports intemationaux’ (1925) 6 RdC 5, 81.

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manner.68 By granting an individual a subjective right, society seeks to further the social interest that stands at the basis of that right. Thus, it is prohibited to exercise a right in a manner that is not compatible with the objective of the rule granting it.69 As argued by Lauterpacht, The essence of the doctrine is that, as legal rights are conferred by the community, the latter cannot countenance their anti-social use by individuals; that the exercise of a hitherto legal right becomes unlawful when it degenerates into an abuse of rights; and that there is such an abuse of rights each time the general interest of the community is injuriously affected as the result of the sacrifice of an important social or individual interest to a less important, though hitherto legally recognized, individual right.70 It is noteworthy that abuse of rights and its articulation of abuse of process are increasingly relied upon by international investment tribunals, precisely with regard to the way investors play with corporate structures and corporate nationality in order to gain protection under one or more BITs.71 An abuse of rights has been found when the investor, foreseeing the likeliness of a dispute, has restructured his investment with the only purpose of being able to initiate a claim against the host state, or when the investor has initiated multiple proceedings to multiply his chances of securing a favourable award.72 In Phoenix Action v Czech Republic, for instance, two companies owned by a Czech citizen involved in an ongoing dispute with the Czech State, transferred their shares to the Israeli company Phoenix Action, created and controlled by the same shareholder.73 Two months after the transfer of the shares, Phoenix Action initiated a claim against the Czech state under the Israel–Czech Republic BIT. The state argued that the investor had abused the corporate structure.74 The Tribunal held that the corporate restructuring was pursued with the only purpose of transforming a domestic dispute into an international one, and

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Hersch Lauterpacht, The Function of Law in the International Community (n 52), 286–287. Wolfgang Friedmann, ‘The Uses of “General Principles” in the Development of International Law’ (1963) 57 AJIL 279–299, 288. Hersch Lauterpacht, The Function of Law in the International Community (n 52), 286. Andreas R Ziegler and Jorun Baumgartner, ‘Good Faith as a General Principle of (International) Law’ in Andrew D Mitchell, Muthucumaraswamy Sornarajah and Tania Voon (eds), Good Faith and International Economic Law (OUP 2015), 34. For a detailed analysis of abuse of rights and abuse of process in investment arbitration, see Emmanuel Gaillard, ‘Abuse of Process in International Arbitration’ (2017) 32 ICSID Review 1–21. See, e.g., Phoenix Action Ltd v Czech Republic (Award) (15 April 2009) ICSID Case No ARB/06/5. Ibid, para 40.

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declared the claim inadmissible.75 In reaching such a conclusion, the Tribunal relied on the principle of abuse of rights, affirming that ‘nobody shall abuse the rights granted by treaties, and more generally, every rule of law includes an implied clause that it should not be abused’.76 7.3 The Prohibition of Abuse of the Corporate Structure This overview on the content and contours of the principle of the prohibition of abuse of rights in the previous section has set the scene to explore its actual and potential role in the context of corporate limited liability in the context of business and human rights. The right to limited liability was conceived as a means of increasing capital circulation and fostering business activities. It originates from a time when corporations did not generally hold shares in other corporations.77 The extension of limited liability to corporate groups was, in the words of Blumberg, an ‘historical accident’.78 The choice of a company to carry out its activities through one or more subsidiaries may be driven by a number of reasons, such as the increase of financing options, the avoidance of impractical management structures, or the possibility to externalize the risks of its operations.79 In particular, by establishing a subsidiary with minimal capitalization, companies are able to maximise benefits and avoid liability when their subsidiaries commit violations of human rights or environmental standards.80 This use, and sometimes abuse, of the corporate structure was unanticipated when limited liability was conceived, long before the development of corporate groups. This adds to the fact that, as already suggested, limited liability was not originally intended to shield investors from ‘involuntary creditors’, such as consumers, workers and other tort creditors.81 The consequences of limited liability in the 75 76 77 78 79

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Ibid, para 100. Ibid, para 107. Deva, ‘Business and Human Rights: Time to Move Beyond the “Present”?’ (n 35), 67. Phillip Blumberg, The Multinational Challenge to Corporation Law: The Search for a New Corporate Personality (OUP 1993) 139. Gwynne Skinner, ‘Rethinking Limited Liability of Parent Corporations for Foreign Subsidiaries’ Violations of International Human Rights Law’ (2015) 72 Washington and Lee Law Review 1769–1864, 1777. Easterbrook and Fischel, ‘Limited Liability and the Corporation’ (n 24), 111. See also William Douglas and Carol Shanks, ‘Insulation from Liability through Subsidiary Corporations’ (1929) 39 Yale Law Journal 193–218; Virginia Harper Ho, ‘Of Enterprise Principles and Corporate Groups: Does Corporate Law Reach Human Rights?’ (2013) 52 Columbia Journal of Transnational Law 113–172, 124. Peter T Muchlinski, ‘The Changing Face of Transnational Business Governance: Private Corporate Law Liability and Accountability of Transnational Groups in a Post-Financial

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context of human rights violations caused by business activities have been recently recalled by the CESCR, which highlighted how parent companies hide behind the corporate veil even when they would be in the position to influence the conduct of their subsidiaries.82 In cautioning against the abuses of the corporate form, the ICJ noted in Barcelona Traction that, as a matter of international law, the separate status of an incorporated entity may be disregarded in certain exceptional circumstances: Forms of incorporation and their legal personality have sometimes not been employed for the sole purposes they were originally intended to serve; […] thus inevitably there have arisen dangers of abuse, as in the case of many other institutions of law.83 In recognizing that the right to separate legal personality has been granted for a specific purpose, the Court already in the 1970s acknowledged that such right can indeed be misused. In fact, the abuse of the corporate structure can simply be qualified as an exercise of a right, that of separate legal personality, for a purpose that is not compatible with that of the norm granting such right.84 As ‘[t]here is no right however well established, which could not, in some circumstances, be refused recognition on the ground that it has been abused’,85 both common and civil law systems contemplate exceptions to limited liability. One of the most debated issues in this regard is the technique of “veil piercing”, which entails disregarding the legal separation between the parent company and the subsidiary, on the basis that under the circumstances there is reason to believe that the corporate structure has been abused. As recognised by the ICJ, The independent existence of the legal entity cannot be treated as an absolute[…] “lifting the corporate veil” or “disregarding the legal entity” has been found justified and equitable in certain circumstances or for

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Crisis World’ (2011) 18 Indiana Journal of Global Legal Studies 665–705. CESCR, ‘General Comment No 24: State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities’ (10 August 2017) UN Doc E/C.12/GC/24, para 42. Barcelona Traction, (n 20), para 56. Francesco Galgano, Trattato di diritto civile, vol 1 (3 edn, CEDAM 2014) 228: ‘Fra abuso del diritto e abuso della personalità giuridica c’è un evidente rapporto di continuità: l’abuso della personalità giuridica altro non è, a ben guardare, se non l’abuso dei diritti nascenti dalle norme che la legge “riassume” nel concetto di persona giuridica, fra i quali principalmente il diritto di tenere il proprio patrimonio separato dal patrimonio della persona giuridica, ossia il beneficio della responsabilità limitata’. Hersch Lauterpacht, The Development of International Law by the International Court (Stevens and Sons 1958) 164.

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certain purposes. The wealth of practice already accumulated on the subject in municipal law indicates that the veil is lifted, for instance, to prevent the misuse of the privileges of legal personality, […] or to prevent the evasion of legal requirements or of obligations […].86 Although the test to pierce the corporate veil varies from jurisdiction to jurisdiction, and relies heavily on judicial discretion, there are two recurring criteria. The first one concerns the situation where there is evidence that the company is a mere façade, lacking any autonomy from the parent company. Here, factors such as the undercapitalization of the subsidiary, the degree of independence of the subsidiary’s board of directors and the existence of a common decisionmaking arrangement between the two companies may be decisive.87 The second one concerns the circumstance in which the corporate form has been abused to further an improper purpose.88 As noted by the US Supreme Court in a landmark decision on veil piercing, ‘when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons’.89 Similarly in Choc v Hudbay Minerals Inc., the Ontario Superior Court noted that separate legal personality should be disregarded when the parent company made fraudulent use of the subsidiary, when the subsidiary is a mere “puppet” acting under the control of the parent company and when the lawmaker created a duty on the parent company.90 At the judicial level, however, it remains challenging for the victims of corporate human rights violations to rely on the abuse of the corporate structure in order to bring a claim against a parent company for such human rights violations as are perpetrated by the subsidiary. In fact, domestic courts disregard separate legal personality only in exceptional circumstances, and the burden of proof that the corporate structure has been abused remains with the claimants. For instance, in Adams, which concerned a claim against a parent company for the damages caused by its subsidiary operating in the asbestos industry in South Africa, the England and Wales Court of Appeal affirmed that

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Barcelona Traction (n 20), paras 56, 58. Gwynne Skinner, ‘Parent Company Accountability: Ensuring Justice for Human Rights Violations’ (2015) ICAR, 15. For a comparative analysis on veil piercing, see Stephen M Bainbridge and M. Todd Henderson, Limited Liability: A Legal and Economic Analysis (Edward Elgar 2016); Mathias Siems and David Cabrelli (eds), Comparative Company Law: A Case-Based Approach (Hart Publishing 2018). United States v Milwaukee Refrigerator Transit Co (28 December 1905) 142 F.247 (United States Circuit Court for the Eastern District of Wisconsin), 255. Choc v Hubday Minerals (22 July 2013) ONSC 1414 (Ontario Superior Court of Justice), para 45.

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the court is not free to disregard the principle of Salomon […] merely because it considers that justice so requires. Our law, for better or worse, recognises the creation of subsidiary companies, which though in one sense the creatures of their parent companies, will nevertheless under the general law fall to be treated as separate legal entities with all the rights and liabilities which would normally attach to separate legal entities.91 According to the Court, there is nothing intrinsically fraudulent about deciding to set up subsidiaries in order to benefit from limited liability. It is regarded as an unavoidable consequence of the statutory grant of limited liability to all corporations. The Supreme Court confirmed such a restrictive approach in Prest, where Lord Sumption affirmed that veil piercing applies only when corporate personality has been abused in order to evade an existing obligation.92 There is no mistake that limited liability remains the rule and not the exception.93 The prohibition of abuse of rights may therefore have only a limited role in veil piercing, although it would perhaps be desirable that domestic judges relied more on such a principle to curb abuses of the corporate structure. Because of the unpredictable results of veil piercing, other approaches have been put forward. Two in particular. The first one is the “enterprise liability” approach, which considers corporations belonging to the same corporate group as one enterprise, where the parent company is in charge to provide expertise to the subsidiaries.94 The second approach relies on due diligence, and focuses instead on the direct liability of the parent company arising from the failure to exercise due diligence in controlling the acts of the subsidiaries it may exercise control upon.95 The argument made here is that the prohibition of abuse of rights is not only relevant as a tool to disregard separate legal personality. At a more systemic level, recognising that the corporate structure cannot be abused may foster the argument that there is a duty of the company to exercise due diligence with regard to the activities of its subsidiaries. If the abuse of the company setting up a subsidiary cannot be presumed, while assuming that the company will exercise its right to limited liability in conformity with a legitimate purpose, the case can be made that the parent company has an obligation to take adequate measures respect human rights throughout its activities and to ensure that its 91 92 93 94

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Adams v Cape Industries Plc (27 July 1989) [1990] 2 WLR 657 (Court of Appeal). Prest v Petrodel Resources Ltd (16), para 35. As pointed out in Anderson v Abbott (1944) 321 S.Ct. 349 (US Supreme Court), 362. See Richard Meeran, ‘The Unveiling of Transnational Corporations: A Direct Approach’ in Michael K Addo (ed), Human Rights Standards and the Responsibility of Transnational Corporations (Brill Nijhoff 1999), 170. See infra, Chapter 10.

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subsidiaries do not infringe upon human rights. Acknowledging that such an obligation already stems from the prohibition of abuse of rights should be a key point for domestic legislators and international policy-makers when considering reforms to company law.96 In sum, limited liability remains the bedrock of company law, but it should not be forgotten that it was intended for specific and legitimate purposes. The prohibition of abuse of rights requires every right, including that to separate legal personality and limited liability, to be exercised ‘in furtherance of the interests which the right is intended to protect’.97 Any exercise of the right to evade an obligation or to pursue an aim which is not compatible with that of the rule granting the right, may amount to an abuse of rights.98 A reasonable exercise of a right should also be fair and equitable, without procuring an unfair advantage to the right-holder. As elegantly put it by one of the most authoritative scholars in the field of abuse of rights, Chacune de nos facultés tend à un but qui est déterminé par l’esprit de l’institution : c’est la théorie de l’abus qui les maintient dans le droit chemin, qui les empêche de s’en écarter et qui les conduit ainsi, d’une impulsion sûre, jusqu’au but à atteindre.99

8

Corporate Human Rights Due Diligence: From the Process to the Principle

Due diligence is common to the majority of legal systems and is a feature of numerous primary rules across different branches of international law, such as international environmental law, human rights law, humanitarian law and investment law.100 It is also a key component of the corporate responsibility 96

See Beate Sjåfell, ‘How Company Law has Failed Human Rights – And What it Can do About it’ (2020) Business and Human Rights Journal 1–21. 97 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (n 45), 125. 98 Ibid, 123. 99 Louis Josserand, De l’esprit des droits et de leur relativité : Théorie dite de l’abus des droits (2 edn, Dalloz 2006) 415. 100 For an overview of due diligence across the different branches of international law, see Sarah Cassella (ed), Le standard de due diligence et la responsabilité internationale (SFDI Pedone 2018); Joanna Kulesza, Due Diligence in International Law (Brill Nijhoff 2016); Dinah Shelton and Ariel Gould, ‘Positive and Negative Obligations’ in Dinah Shelton (ed), The Oxford Handbook of International Human Rights Law (OUP 2015); Antal Berkes, ‘The Standard of “Due Diligence” as a Result of Interchange between the Law of Armed Conflict and General International Law’ (2018) 23 Journal of Conflict & Security Law 433; Eric De Brabandere,

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to respect human rights under the UNGPs, where it is defined as the process through which companies ‘identify, prevent, mitigate and account for how they address their impacts on human rights’.101 The architect of the UNGPs, John Ruggie, considered due diligence as a useful tool to bridge the gap between international human rights law and the corporate sector. Companies are indeed well acquainted with the concept, which is employed to indicate the process of assessment conducted by a company in order to identify, manage and mitigate commercial risks in its business activities.102 By analysing the relationship between corporate human rights due diligence in the context of business and human rights and the said principle in general international law, this chapter explores whether due diligence may provide a source of international legal obligations addressed to companies.103 It will begin by examining the normative contours of due diligence and its application in international law, then addressing the scope and content of the human rights due diligence process as envisaged by the UNGPs, with a view to understanding whether and to what extent such process can be framed in a public international law fashion. The fast-evolving phenomenon of mandatory human rights due diligence at the domestic level will be explored, in order to point to the increasing recognition by States that due diligence represents a standard of expected conduct for the business sector. Finally, the chapter will address the role of due diligence in international investment law, where the principle is already playing a pivotal role as a source to ground international obligations also on the part of foreign investors. 8.1 Due Diligence as a General Principle of Law Rooted in the Roman Law figure of the bonus pater familias, due diligence refers to ‘the diligence reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or to discharge an obligation’.104 The

‘Host States’ Due Diligence Obligations in International Investment Law’ (2015) 42 Syracuse Journal of International Law and Commerce 319. 101 United Nations Human Rights Council (UN HRC), ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework (hereinafter UNGPs)’ (21 March 2011) UN Doc A/HRC/17/31, Principle 15. 102 John F Sherman and Amy Lehr, ‘Human Rights Due Diligence: Is it Too Risky?’ (2010) Harvard University Working Paper 55/2010, 3. 103 See Ludovica Chiuss, ‘Corporate Human Rights Due Diligence: From the Process to the Principle’, in Martina Buscemi and others (eds), Legal Sources in Business and Human Rights: Evolving Dynamics in International and European Law (Brill 2020). 104 ‘Due Diligence’, in Black Law Dictionary (9th edn, West 2009). For an historical account of the principles, see Jan Hessbruegge, ‘The Historical Development of the Doctrines of

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principle has been incorporated in contract, as well as in tort law, of the majority of municipal systems.105 Due diligence is also a key principle in international law.106 It defines an obligation of conduct, according to which the state has a duty to take all the necessary measures to prevent or react to a specific act or omission.107 It requires ‘nothing more nor less than the reasonable measures of prevention which a well-administered government could be expected to exercise under similar circumstances’.108 It follows that the state may incur international responsibility not directly for the conduct by third parties in contrast with a given rule or the occurrence of harm as such, but for having failed to take appropriate steps to prevent or address such conduct or harm.109 One of the earliest applications of due diligence in international law has been in the context of the protection of aliens.110 In the British Claims in the Spanish Zone of Morocco case, the arbitrator Max Huber relied on due diligence to conclude that Si l’État n’est pas responsable des événements révolutionnaires eux-mêmes, il peut être néanmoins responsable de ce que les autorités font ou ne

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108 109 110

Attribution and Due Diligence in International Law’ (2004) 36 New York University Journal of International Law & Politics 265–306. Spanish Civil Code, Article 1104, available at https://www.refworld.org/cgi-bin/texis/vtx/ rwmain/opendocpdf.pdf?reldoc=y&docid=5a8ad42e4 ; Venezuelan Civil Code, Article 1133, available at https://www.oas.org/dil/esp/codigo_civil_Venezuela.pdf. In the French Civil Code the expression bonus pater familias has been recently replaced by “reasonableness”, but the substantive standard remains unchanged. In common law jurisdictions the same concept is included in the “reasonable person” test, see John Gardner, ‘The Many Faces of the Reasonable Person ’ (2015) 131 Law Quarterly Law Review 563–584. Luigi Condorelli, ‘The Imputability to States of Acts of International Terrorism’ (1989) 19 Israel Yearbook on Human Rights 233–240, 240; Robert P Barnidge, ‘The Due Diligence Principle under International Law’ (2006) 8 International Community Law Review 81–121, 121; Timo Koivurova, ‘What is the Principle of Due Diligence’ in Jarna Petman and Jan Klabbers (eds), Nordic Cosmopolitanism: Essays in International Law for Martti Koskenniemi (Martinus Nijhoff Publishers 2003), 344. For a position to the contrary, see Peter Malanczuk, Akehurst’s Modern Introduction to International Law (7 edn, Routledge 1997) 245–247. Pierre-Marie Dupuy, ‘Reviewing the Difficulties of Codification: On Ago’s Classification of Obligations of Means and Obligations of Result in Relation to State Responsibility’ (1999) 10 EJIL 371–385, 375. Alwyn V Freeman, ‘Responsibility of States for Unlawful Acts of their Armed Forces’ (1955) 88 RdC 267, 277–278. United States Diplomatic and Consular Staff in Tehran (US v Iran) [1980] ICJ Rep 3, para 63. Dioniso Anzilotti, ‘La responsabilité internationale des Etats à raison des dommages soufferts par les étrangers’ (1906) RGDIP, 291.

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font pas, pour parer, dans la mesure possible, aux suites. L’État est tenu à une certaine vigilance.111 Since the due diligence principle defines the ‘very content’ of an international duty – i.e. a primary rule – it has fallen outside the scope of ILC Draft Articles on State Responsibility, which codify only secondary rules on breaches of primary rules and their consequences.112 Due diligence is instead an integral part of the work of the ILC work on state liability for lawful acts, where it is a key component of the obligation to prevent transboundary harm from hazardous activities.113 In fact, the pivotal role of due diligence obligations as a preventive tool to avoid environmental harm has been acknowledged by the ICJ in several occasions.114 Due diligence entails the ‘adoption of appropriate rules and measures’, as well as ‘a certain level of vigilance in their enforcement and the exercise of administrative control applicable to public and private operators’,115 of which the environmental impact assessment is an integral part.116 As seen in Part II, due diligence also constitutes the backbone of the state duty to protect human rights, contributing to ease the public/private interplay in the application of international human rights law.117 In this context, states may incur international responsibility if they fail to exercise due diligence to 111 112

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Affaire des biens britanniques au Maroc espagnol (Espagne c Royaume Uni) (1 May 1925) 2 RIAA 615, 642. ‘[w]hether responsibility is ‘objective’ or ‘subjective’ in this sense depends on the circumstances, including the content of the primary obligation in question. The articles lay down no general rule in that regard. The same is true of other standards, whether they involve some degree of fault, culpability, negligent or want of due diligence. Such standards vary from one context to another for reasons which essentially relate to the object and purpose of the treaty provision or other rule giving rise to the primary obligation’, in ILC, ‘Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries’ (2001) Yearbook of the International Law Commission, Vol II, Part II, 34. ILC, ‘International Liability for Injurious Consequences Arising out of Acts not Prohibited by International Law’ (2001) Yearbook of the International Law Commission, Vol II, Part II, 154, 157. Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) [1996] ICJ Rep 226, para 29. Pulp Mills on the River Uruguay (Argentina v Uruguay) [2010] ICJ Rep 14. Ibid, para 205. See also Certain Activities Carried out by Nicaragua in the Border Area (Costa Rica v Nicaragua) and Construction of a Road in Costa Rica along the San Juan River (Nicaragua v Costa Rica) [2015] ICJ Rep 665, para 104. Christine M Chinkin, ‘A Critique of the Public/Private Dimension’ (1999) 10 EJIL 387–395, 393; Vincent Chetail, ‘The Legal Personality of Multinational Corporations, State Responsibility and Due Diligence: The Way Forward’ in Denis Alland and Others (eds), Unity and Diversity of International Law Essays in Honour of Professor Pierre-Marie Dupuy (Martinus Nijhoff Publishers 2014), 124.

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prevent, punish, investigate, or redress harm caused by private actors. Although international human rights treaties rarely refer to the term “due diligence”, human rights courts and quasi-judicial bodies have been unanimous in qualifying the due diligence nature of a number of state obligations in this field.118 In its landmark decision in Vélazquez-Rodríguez v Honduras, the IACtHR noted that An illegal act which violates human rights and which is initially not directly imputable to a State […] can lead to international responsibility of the State, not because of the act itself, but because of the lack of due diligence to prevent the violation or to respond to it […].119 Similar statements can be found in the case law of the ECtHR and of the core human rights treaty bodies.120 The concept of due diligence plays an important role also in international investment law, defining both rights and duties of investors. In the context of investors’ rights, key standards of investment protection, such as full protection and security, international minimum standard and fair and equitable treatment (FET), are assessed consistently with the level of due diligence expected by the state.121 The host state must exercise due diligence in providing physical protection to foreign investors and legal protection to their investments.122 Here again, the obligation is one of conduct, not of result.123 With regard to the obligations of investors, their conduct must also be informed by due diligence.124 I will revert to this specific aspect in Chapter 8.4. Despite the many articulations of the principle of due diligence, the core features of the principle remain unchanged across different areas of international law, and can be summarised as follows. First, it is inherently fluid and open 118 119 120

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123 124

See generally Riccardo Pisillo Mazzeschi, ‘Responsabilité de l’État pour violation des obligations positives relatives aux droits de l’homme’ (2008) 333 RdC 187. Velásquez Rodríguez v Honduras (1988) IACtHR Series C No 4, para 172. See, among others, Osman v the United Kingdom (1998) ECtHR App No 23452/94, paras 115–122; CRC, ‘General comment No 16 on State Obligations Regarding the Impact of the Business Sector on Children’s Rights’ (17 April 2013) UN Doc CRC/C/GC/16, para 28. See Ioana Tudor, The Fair and Equitable Treatment Standard in the International Law of Foreign Investment (OUP 2008) 185. With regard to physical protection, see Saluka Investments BV v The Czech Republic (Partial Award) (17 March 2006) UNCITRAL, paras 483–484. With regard to legal protection, see Biwater Gauff Ltd v Tanzania (Award) (2008) ICSID Case No ARB/05/22, para 729. See Christoph Schreuer, ‘Full Protection and Security’ (2010) 1 JIDS 1–17. Giuditta Cordero Moss, ‘Full Protection and Security’ in August Reinisch (ed), Standards of Investment Protection (OUP 2008), 139. Martins Paparinskis, The International Minimum Standard and Fair and Equitable Treatment (OUP 2013) 256 ff.

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ended.125 As noted by the ITLOS Advisory Opinion on the Seabed Activities, the content of due diligence is a variable concept that may evolve over time.126 A number of factors will have to be taken into account in assessing whether the due diligence obligation has been discharged, such as the importance of the interest at stake and the foreseeability of the harm occurred.127 Second, while due diligence normally concerns state obligations with regard to the activities of private parties under its jurisdiction, it can also be a feature of certain primary obligations pertaining to the state’s own conduct specifically in field of human rights. For instance, the state obligation to take ‘all appropriate measures’ to ‘achieve progressively’ the rights protected under the ICESCR, operate both with regard to the activities of third parties and its own legislative, measures.128 Third, due diligence moulds the façon d’être of a given international primary rule. In this respect, one wonders whether the obligation to exercise due diligence can operate as an autonomous obligation. The question is pertinent to the scope of the present analysis, as in the context of business and human rights due diligence is considered as the core component of the corporate responsibility to respect human rights. Given that under the UNGPs corporate responsibility does not purport to stem from a legal requirement, one may ask what is the legal value of such principle with regard to corporations. This will be the main issue addressed in the next session. 8.2 Corporate Human Rights Due Diligence Corporate human rights due diligence has been defined as ‘an ongoing management process that a reasonable and prudent enterprise needs to undertake, in the light of its circumstances (including sector, operating context, size and similar factors) to meet its responsibility to respect human rights’.129 Due diligence represents a key element of the second pillar of the Ruggie Framework, namely the corporate

125 ILC, ‘State Responsibility: Second Report by F.V. García Amador, Special Rapporteur’ (1957) Yearbook of the International Law Commission, Vol II, Part II, 122. 126 Responsibilities and Obligations of States Sponsoring Persons and Entities with Respect to Activities in the Area (Advisory Opinion) (1 February 2011) ITLOS Seabed Disputes Chamber Case No 17, para 117. 127 Riccardo Pisillo-Mazzeschi, ‘The Due Diligence Rule and the Nature of the International Responsibility of States’ (1992) 35 German Yearbook of International Law 9–51, 44. 128 International Covenant on Economic, Social and Cultural Rights (adopted, entered into force Rights (adopted 19 December 1966, entered into force 3 January 1976) 993 UNTS 3, Article 3. 129 OHCHR, ‘The Corporate Responsibility to Respect Human Rights: An Interpretive Guide’ (2012), UN Doc HR/PUB/12/02, 6.

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responsibility to respect human rights.130 For the substantive content of the due diligence process, companies are supposed to refer to the international bill of human rights and at the core ILO conventions.131 In requiring companies to carry out due diligence, the UNGPs clarify that the process involves four steps: (1) identifying and assessing actual or potential adverse human rights impacts that the enterprise may cause or contribute to through its activities, or which may be directly linked to its operations, products or services by its business relationships; (2) integrating findings from impact assessments across relevant company processes and taking appropriate action according to its involvement in the impact; (3) tracking the effectiveness of measures and processes to address adverse human rights impacts in order to know if they are working; (4) communicating on how impacts are being addressed and showing stakeholders that there are adequate policies and processes in place.132 Just like due diligence in general international law, the parameters informing corporate human rights due diligence may vary according to the context. The complexity of the practical measures to be adopted by the company will vary according to its size, the nature and the context of the operations, and the degree of risk of occurrence of severe human rights impacts.133 Most importantly, human rights due diligence should cover, not only the company’s own adverse human rights impacts, but also those impacts which may be directly linked to its operations, products or services by its business relationships, including its suppliers.134 Beside the corporate responsibility to avoid its own adverse human rights impacts,135 two others scenarios are contemplated by the UNGPs.136 If the company’s activities are not directly causing the impact, but still are contributing to it, the company should adopt measures to cease or prevent such contribution and use its leverage to mitigate such impact. If there is no contribution at all to the adverse human rights impact, but the latter is linked, though remotely, to the company’s operations, products or services by its business relationships,137 the company should nonetheless take steps to gain and use leverage to prevent and mitigate the impact, to the greatest extent possible.

130 HRC, ‘Protect, Respect and Remedy: A Framework for Business and Human Rights’ (n 33), para 58. 131 Ibid, para 56. 132 UNGP 17. 133 Ibid. 134 UNGP 18. 135 UNGP 13. 136 UNGP 19. 137 According to the Commentary to UNGP 13, “business relationships” is intended as relationships with business partners, entities in its value chain, and any other non-state or state entity directly linked to its business operations, products or services.

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The last version of the OECD Guidelines on Multinational Enterprises contains similar due diligence requirements for companies.138 According to the commentary to the Guidelines, the process entails assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses as well as communicating how impacts are addressed. It is also underscored that due diligence ‘is an on-going exercise’, given that human rights risks may change over time and upon the context.139 The 2018 OECD Due Diligence Guidance for Responsible Business Conduct, endorsed by all the 48 adhering countries, further clarifies the practical steps to be taken by companies in order to prevent or mitigate adverse human rights impacts associated to their activities.140 Due diligence was also incorporated in the last revision of the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, providing further impetus in the consolidation of such standards at the international level.141 Corporate human rights due diligence, as set forth in the UNGPs, is built upon business management practice and international law.142 The choice of due diligence as the tenet of corporate responsibility to respect human rights reflects Ruggie’s “principled pragmatism”, aimed at gaining consensus among states, human rights lawyers, NGOs and the business sector.143 At same time this also reflects the due diligence nature of international obligations for states in the field of economic, social and cultural rights, and environmental law. Companies regularly resort to due diligence to evaluate exposure to risks, such as changes of governmental policies and consumers’ preferences. Since human rights challenges can also represent material risks for the company, they should be subject to the same level of due diligence employed for commercial risks.144

138 139 140 141

OECD, ‘Guidelines for Multinational Enterprises’ (2011 edition), Chapter II, para 10. Ibid, Commentary on Chapter IV, para 44. OECD, ‘Due Diligence Guidance for Responsible Business Conduct’ (2018). ILO,’ Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy’ (2017 edition), para 10 (d). 142 Olga Martin-Ortega, ‘Human Rights Due Diligence for Corporations: From Voluntary Standards to Hard Law at Last?’ (2014) 32 Netherlands Quarterly of Human Rights 44–74. 143 Jonathan Bonnitcha and Robert McCorquodale, ‘The Concept of ‘Due Diligence’ in the UN Guiding Principles on Business and Human Rights’ (2017) 28 Business and Human Rights Journal 899–919, 900. 144 HRC, ‘Business and Human Rights: Towards Operationalizing the “Protect, Respect and Remedy” Framework Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprise’ (22 April 2009) UN Doc A/HRC/11/13,

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At the same time, Ruggie refers to due diligence as a key standard of conduct to avoid infringing the rights of others145 or, ‘put simply, to do no harm’.146 This mixing of legal and non-legal pedigrees of due diligence has raised some critiques.147 It has been argued that the UNGPs lack coherence in that they conflate the legal meaning of due diligence as a standard of conduct, with the transactional and voluntary process employed by the corporate sector to assess commercial risks.148 It is argued here that such two dimensions of due diligence are not irreconcilable. The UNGPs make use of a formula typically employed by companies in relation to self-assessment of their risks, and to expand it to a regulatory set of steps companies should take to discharge their responsibility to respect human rights. Yet, while having the merit of seeking to bridge the gap between human rights law and corporate law,149 due diligence as framed under the UNGPs remains hard to grasp from a normative perspective. Under the UNGPs, corporate responsibility has not been framed as a legal obligation. The Commentary to UNGP 12 emphasises that ‘[t]he responsibility of business enterprises to respect human rights is distinct from issues of legal liability and enforcement, which remain defined largely by national law provisions in relevant jurisdictions’.150 The idea of keeping corporate responsibility outside the legal dimension has been a mantra since the beginning of Ruggie’s work at the UN. The architect of the UNGPs has recently recalled that ‘this responsibility is neither based on nor analogizes from state-based law. It is rooted in a transnational social norm, not an international legal norm’.151 However, while due diligence in the UNGPs is pictured as a voluntary process, it is often matched by considerations germane to liability. The Commentary to UNGP 17 clarifies that, although exercising appropriate human rights due diligence should help companies to avoid legal claims by showing that appropriate measures have been taken, it should not be taken for granted that conducting

145 Ibid, para 2. 146 HRC, ‘Protect, Respect and Remedy Framework: A Framework for Business and Human Rights’ (n 33), para 24. 147 Chetail, ‘The Legal Personality of Multinational Corporations, State Responsibility and Due Diligence: The Way Forward’ (n 117), 129. 148 Bonnitcha and McCorquodale, ‘The Concept of ‘Due Diligence’ in the UN Guiding Principles on Business and Human Rights’ (143), 890. 149 Tineke E Lambooy, ‘Corporate Due Diligence as a Tool to Respect Human Rights’ (2010) 28 Netherlands Quarterly of Human Rights 404–448, 446. 150 Commentary to UNGP 12. 151 John G Ruggie and John F Sherman, ‘The Concept of ‘Due Diligence’ in the UN Guiding Principles on Business and Human Rights: A Reply to Jonathan Bonnitcha and Robert McCorquodale’ (2017) 28 EJIL 921–928, 923.

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due diligence will automatically absolve them from liability.152 This seems to indicate that due diligence is not deprived of a legal dimension.153 In this regard, the recent report on due diligence by the UN Working Group concluded that ‘corporate human rights due diligence has become a norm of expected conduct for all business enterprises’.154 Furthermore, Article 6 of the Draft Treaty on business and human rights provides that state parties to undertake human rights due diligence proportionate to their size, risk of severe human rights impacts and the nature and context of their operations.155 Although the scope ratione personae of the treaty is (regrettably) limited to companies conducting transnational activities, Draft Article 9 illustrates the fast evolving articulation of what used to be a vaguely defined as a state obligation to protect human rights. The state duty to protect human rights implies a duty to regulate companies and, possibly, to impose on such entities to exercise due diligence throughout their activities. At the domestic level, jurisdictions already share the principle that the subject whose faulty conduct caused damage has an obligation to provide reparation. A violation of due diligence by the company, while not generally framed in human rights terms, can amount to a breach of its duty of care under tort law. In common law jurisdictions, due diligence finds application in the tort law concept of duty of care, which sanctions the negligence that results in an injury to others. This consideration is key, as seen in Part II, in holding parent companies liable for the harm caused by their subsidiaries. If the company exercising control over the subsidiary fails to take adequate measures ensuring that human rights are respected throughout the activities of the subsidiary, it may incur liability for breaching of its duty of care.156 While it often proves challenging for victims to demonstrate before a court the existence and the degree of control of the parent company over the subsidiary, for our purposes what is relevant is that due diligence is already recognised as rule of conduct that applies to companies 152 Commentary to UNGP 17. 153 Robert McCorquodale and Lise Smit, ‘Human Rights, Responsibilities and Due Diligence: Key Issues for a Treaty’ in Surya Deva and David Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours (CUP 2017), 223. 154 GA, ‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises: ‘Corporate Human Rights Due Diligence – Emerging Practices, Challenges and Ways Forward’ (16 July 2018) UN Doc A/73/163, para 92. 155 OEIGWG, ‘Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises, Revised Draft’ (16 July 2019). 156 Cees Van Dam and Filip Gregor, ‘Corporate Responsibility to Respect Human Rights vis-à-vis Legal Duty of Care’ in Juan José Álvarez Rubio and Katerina Yiannibas (eds), Human Rights in Business: Removal of Barriers to Access to Justice in the European Union (Routledge 2017), 122.

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at the domestic level. In this respect, it has been argued that corporate human rights due diligence as envisaged by the UNGPs should be made enforceable by common law tort suits for negligence.157 As we shall see in the next session, mandatory human rights due diligence is gaining increasing traction in domestic legal systems. In sum, in the absence of well-delineated international human rights obligations addressed to companies, it may be argued that due diligence in the business and human rights context operates as a standard of conduct itself, not as a structural feature of an existing international primary rule. It seems as if due diligence accompanies a substantive obligation in statu nascendi, composed of a continuous interaction between international law and domestic legal systems, which adjusts its contents to the specific sector to which it applies. The non-legal dimension of corporate responsibility as understood by Ruggie may not, as such, hamper a progressive normative process of recognition of due diligence as a legal standard both at the domestic and at the international level. Interestingly, Ruggie himself acknowledges that corporate responsibility is not ‘a law-free zone’.158 The UNGPs have been widely endorsed but, as all legally relevant instruments, they need to be interpreted in the broader and evolving legal context. This is all the more so given that the Principles should not be read as ‘limiting or undermining any legal obligations a State may have undertaken or be subject to under international law with regard to human rights’.159 On this score, recent years have witnessed an increasing number of countries including due diligence in their National Action Plans (NAPs)160 and enacting regulatory action introducing mandatory reporting and mandatory human rights due diligence for companies. 8.3 Mandatory Human Rights Due Diligence in Domestic Legal Systems In its General Comment on State Obligations in the Context of Business activities, the CESCR noted that the state duty to protect 157 Douglass Cassel, ‘Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence’ (2016) 1 Business and Human Rights Journal 179–202. 158 UN HRC, ‘Business and Human Rights: Further Steps Toward the Operationalization of the “Protect, Respect and Remedy” Framework, Report of the Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie (9 April 2010) UN Doc A/HRC/14/27, para 66. 159 UN HRC, ‘Guiding Principles’ (n 101). 160 See, among others, ‘National Action Plan Implementation of the UN Guiding Principles on Business and Human Rights’(DE) (16 December 2016) accessed on 14 June 2019; ‘Piano di azione nazionale impresa e diritti umani 2016–2021’ (IT) (15 December 2016) accessed on 14 June 2019. For an analysis of NAPs, see Chapter 9, in this volume.

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Entails a positive duty to adopt a legal framework requiring business entities to exercise human rights due diligence in order to identify, prevent and mitigate the risks of violations of human rights, to avoid such rights being abused, and to account for the negative impacts caused or contributed to by their decisions and operations and those of entities they control on the enjoyment of Covenant rights.161 A similar call has come from the EU Fundamental Rights Agency, which stressed that due diligence should be codified as an obligation at the EU level,162 and from the Council of Europe, which urged states to require business enterprises domiciled within their jurisdiction to apply human rights due diligence throughout their operations.163 On the same score, the G20 Declaration in 2017 underlined the responsibility of business to exercise due diligence and committed to work towards ‘establishing adequate policy frameworks […] on business and human rights and underline the responsibility of businesses to exercise due diligence’.164 It seems therefore that imposing human rights due diligence on companies is progressively growing into an acquis of the state duty to take positive measures to prevent human rights violations by companies under its jurisdiction. Indeed, recent years have witnessed an increasing number of countries enacting regulatory action introducing mandatory reporting and mandatory human rights due diligence for companies, or including due diligence in their National Action Plans.165 As to mandatory reporting, the 2010 California Transparency in Supply Chains Act, for instance, requires companies with an annual revenue exceeding a hundred million dollars to disclose their efforts to eradicate slavery and human trafficking from their supply chains.166 There is however no possibility for individuals to bring claims for damages, and there is no provision for compensatory orders. Another major mandatory reporting initiative is the UK Modern Slavery Act, which applies to any company with an annual turnover of £36 million and carrying 161 CESCR, ‘General Comment 24’ (n 82), para 16 (emphasis added). A similar requirement can be found in the CRC, ‘General comment 16’ (n 120), para 62. 162 EU Fundamental Rights Agency, ‘Improving Access to Remedy in the Area of Business and Human Rights at the EU Level’ (10 April 2017) Opinion 1/2017, 17. 163 CoE Committee of Ministers, ‘Recommendation on Human Rights and Business’ (2 March 2016) CM/Rec(2016)3, para 20. 164 G20 Leaders’ Declaration, ‘Shaping an Interconnected World’ (Hamburg 7/8 July 2017), 5, available at http://www.g20.utoronto.ca/2017/170407-digitalization.html. 165 See, among others, German National Action Plan, available at https://www.institut-fuermenschenrechte.de/en/topics/business/national-action-plan/; Italian National Action Plan, available at. 166 California Transparency in Supply Chains Act (2010) Senate Bill No 657, available at https:// oag.ca.gov/SB657.

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out a business activity (or part of it) in the UK.167 Under the Act, companies must provide a statement where they report on the measures adopted to ensure that slavery and forced labour are not used within their supply chains or elsewhere within their business operations. While the reporting is mandatory, the Act does not impose any legal requirements to conduct due diligence, and the company is free to file a report stating that no measures have been taken to tackle forced labour in its supply chains. In this regard, the House of Lords and Commons Joint Committee on Human Rights urged the Government to enact legislation imposing a duty on all companies to carry out human rights due diligence.168 The recently adopted Australian Modern Slavery Bill substantially reflects the UK model,169 imposing mandatory reporting but not mandatory human rights due diligence as such. In parallel with such developments, mandatory reporting has been shaped in the EU by the 2015 Directive on Non-Financial Reporting.170 The Directive requires companies with more than five-hundred employees to provide annual non-financial statements concerning their policies concerning, inter alia, environmental matters, human rights, anticorruption and bribery. Companies may rely on national, EU or international frameworks to produce their statements. Mandatory reporting is a central element of due diligence and constitutes a key tool for ensuring transparency. Yet the risk is that focusing exclusively on the obligation to report on the measures adopted, and not on the actual obligation to adopt certain measures, may dilute due diligence as a standard of conduct.171 Furthermore, the measures seen above, differently from mandatory due diligence, do not contemplate any civil liability regime in case of harm. With regard to mandatory due diligence, the Loi relative au devoir de vigilance adopted by the French Parliament in 2017 represents the most notable development

167 UK Modern Slavery Act (2015 Chapter 30), available at http://www.legislation.gov.uk/ ukpga/2015/30/contents/enacted. 168 UK House of Lords and Commons Joint Committee on Human Rights, ‘Human Rights and Business 2017: Promoting Responsibility and Ensuring Accountability’ 6th Report of Session 2016–2017, para 193, available at https://www.parliament.uk/business/committees/ committees-a-z/joint-select/human-rights-committee/inquiries/parliament-2015/inquiry/. 169 Australia Modern Slavery Bill (2018), available at https://www.aph.gov.au/Parliamentary_Business/ Bills_Legislation/Bills_Search_Results/Result?bId=r6148. 170 EU, ‘Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards Disclosure of Non-financial and Diversity Information by Certain Large Undertakings and Groups’ (2014) 2014/95/EU 2014 OCJ L 330. 171 See Olga Martin-Ortega, ‘Due Diligence, Reporting and Transparency in Supply Chains: The United Kingdom Modern Slavery Act’ in Angelica Bonfanti (ed), Business and Human Rights in Europe: International Law Challenges (Routledge 2018).

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so far.172 Such law imposes on certain categories of companies173 a ‘duty of vigilance’ concerning risks and serious harms that derive from their activities and the activities of the companies they directly or indirectly control. Under the duty of vigilance, companies must draft, disclose and implement a vigilance plan, which includes: i) an assessment and analysis of risks; ii) procedures for the evaluation of certain subsidiaries, subcontractors or suppliers with which the company has an established commercial relationship; iii) action to mitigate risks and prevent serious harms; iv) an alert mechanism collecting risks; v) and a monitoring scheme on the plan’s implementation and efficiency. It is interesting to note that under the French law anyone can notify the company of its failure to adopt a vigilance plan. If no answer follows within three months, any person with locus standi may require the competent court to impose an order compelling the company to set up the vigilance plan, ensure its dissemination and account for its implementation.174 Furthermore, companies may incur civil liability under Articles 1240 and 1241 of the French Civil Code whenever the failure to comply with their obligations has caused injuries to others. It remains though that victims of human rights violations by companies failing to comply with their vigilance plan must prove the causal link between the harm suffered and the failure to comply with the standards in question. Here, the allocation of the burden of proof is a major issue. Initially, the legislative proposal included a presumption of liability of the company, to be rebutted by proving that all the necessary and reasonable measures to had been taken to prevent the damage. Eventually, the reversal of the burden proof was deleted. The French legislation in question is an illustrative example of a domestic regulatory measure resorting to due diligence as both a standard of conduct under tort law, as well as a practical process reflecting the model envisaged by the UNGPs. This demonstrates once again the complementarity between due diligence under the UNGPs and the broader principle of due diligence.

172 Loi no 2017-399 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre (2017), available at https://www.legifrance.gouv.fr/eli/loi/2017/3/27/2017-399/ jo/texte. 173 Companies headquartered in France that employ at 5,000 employees in France, or at least 10,000 employees worldwide (including through direct and indirect subsidiaries); and foreign companies headquartered outside France, with French subsidiaries, if those subsidiaries employ at least 5,000 employees in France. 174 See Sandra Cossart, Jérôme Chaplier and Tiphaine Beau de Lomenie, ‘The French Law on Duty of Care: A Historic Step Towards Making Globalization Work for All’ (2017) 2 Business and Human Rights Journal 317–323. Before the decision of the Council, the Bill allowed the judge to impose a civil fines up to 10 million euros.

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The Dutch Parliament has also adopted mandatory due diligence in its Child Labour Diligence Bill, which is due to come into effect in 2022.175 Subject to the approval from the Senate, the bill will require companies to examine whether child labour occurs in their production chain. If that is the case, companies are expected to draw up an action plan in line with international standards to prevent and address such impact. Any person will be allowed to file a complaint with the Dutch Consumer and Market Authority on the basis of concrete evidence that the company’s products or services were produced with child labour. If the regulatory authorities determine that the company has not conducted due diligence in line with the legislation in hand, the company will receive legallybinding instructions by the Regulator.176 Measures aiming at mandatory human rights due diligence are being discussed also in other European countries. In Switzerland, the First Chamber of the Parliament approved in June 2018 a legislative proposal that requires large companies to undertake human rights and environmental due diligence according to the UNGPs and the OECD Guidelines.177 It also establishes civil liability for parent companies for harm caused by their subsidiaries. The Parliament’s counter proposal will be discussed in the Parliament’s Second Chamber (Senate) in 2019. It should be noted that, apart from regulatory measures focusing specifically on mandatory due diligence, certain domestic legal systems substantially link due diligence to corporate criminal and administrative liability. The US Foreign Corrupt Practices Act,178 the UK Bribery Act179 and the Italian Legislative Decree on administrative liability of legal entities180 provide significant examples in this direction. In particular, the Italian Legislative Decree introduces corporate 175 Dutch Child Labour Due Diligence Bill (2019), available at http://www.bhrinlaw.org/ key-developments/66-netherlands. 176 Many of the Bill’s details are still undefined, but from the current version it appears that the company that is not implementing with the instructions of the regulator, it will be fined. If fined twice within five years, the next violation can lead to imprisonment of the responsible director. At the most extreme, failing to follow the law can lead to imprisonment and fines of € 750,000 or 10% of the company’s annual turnover. 177 Swiss Parliamentary Initiative for Mandatory Human Rights Due Diligence (2018), available at http://www.bhrinlaw.org/key-developments/64-switzerland#Parlamentary%20in%20 for%20mHRDD. The Act is a counterproposal to the Swiss Business Initiative, a popular initiative that aimed to amend the constitution by introducing a new article establishing a company’s obligation to respect human rights and environmental standards. The proposal was rejected in 2017. 178 UK Bribery Act (2010) Chapter 23. 179 US Foreign Corrupt Practices Act of 1977 (1977) 15 U.S.C. paras 78dd-1 ff. 180 Disciplina della responsabilità amministrativa delle persone giuridiche, delle società e delle associazioni anche prive di personalità giuridica, a norma dell’articolo 11 della legge 29 settembre 2000, n. 300, issued on June 8, 2001 and entered into force on 4 July 2011.

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criminal liability for crimes committed in the interest or advantage of the company by either corporate officers or employees under the supervision of a corporate officer. Legal persons can be held liable if the crime has been committed in the entity’s own interest or for its advantage by directors or managers of the entity.181 In order to avoid incurring criminal liability, the entity has to prove that it had implemented an adequate ‘management model’ to prevent the crime which has occurred. Finally, the EU has been increasingly active in the context of mandatory human rights due diligence, so much so that the EU Commissioner for Justice, announced that the European Union plans to develop a legislative proposal by 2021, requiring businesses to carry out due diligence in relation to the potential human rights and environmental impacts of their operations and supply chains. The draft law, once developed, is likely to be cross-sectoral and provide for sanctions in the event of non-compliance. The 2010 Timber Regulation prohibits the placing on the EU market of the so called illegal timber and obliges those operating in such market to exercise due diligence to determine the source of the timber and its legality.182 The due diligence system is based on risk criteria such as ‘prevalence of armed conflict’ and ‘sanctions imposed by the UN Security Council’ in the country of harvest. Furthermore, the Conflict Mineral Regulation adopted in 2017 lays down supply chain due diligence obligations for EU importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas. The Regulation establishes a ‘Union system for supply chain due diligence […] in order to curtail opportunities for armed groups and security forces to trade in the minerals’.183 It should be noted that, apart from regulatory measures focusing specifically on mandatory human rights due diligence, domestic jurisdictions already share the principle that the subject whose negligent conduct caused damage has an obligation to provide reparation. In common law jurisdictions, due diligence finds application in the tort law concept of duty of care, which sanctions the

181 Crimes include, among others, corruption, manslaughter, breach of health and safety legislation, environmental crimes, slavery, and labour exploitation and human trafficking. 182 EU, ‘Regulation No 995/2010 of the European Parliament and of the Council Laying Down the Obligations of Operators who place timber and Timber Products on the Market’ (20 October 2010) OJ L 295/23. 183 EU, ‘Regulation No 2017/821 of the European Parliament and of the Council Laying Down Supply Chain Due Diligence Obligations for Union Importers of Tin, Tantalum and Tungsten, their Ores, and Gold Originating from Conflict-Affected and High-Risk Areas’ (17 May 2017) OJ L 130/1.

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negligence that results in an injury to others.184 This is also increasingly recognised as a key tool in holding parent companies liable for the harm caused by their subsidiaries.185 If the company exercising control over the subsidiary fails to take adequate measures ensuring that human rights are respected throughout the activities of the subsidiary, it may incur liability for breaching of its duty of care.186 While it often proves challenging for victims to demonstrate before a court the existence and the degree of control of the parent company over the subsidiary, for our purposes what is relevant is that due diligence is already recognised as a relevant standard of conduct for legal persons at the domestic level. 8.4 Due Diligence of Investors in International Investment Law While the international community has been struggling to adapt the human rights regime to tackle the violations committed by corporations, ‘an intricate quilt of bilateral investment treaties has blanked the world’.187 The international investment regime consists of more than 3,000 international investment agreements (IIAs), including both bilateral investment treaties (BITs) and free trade agreements with investment chapters. Such agreements represent an important gateway for foreign investors – mostly private corporations – to international law.188 Similarly to international human rights treaties, they provide standards of protection whose material beneficiaries differ from the contracting parties. Differently from human rights treaties, however, IIAs generally dispense investors from the customary requirement to exhaust local remedies, granting them direct access to international arbitration.189 The protection of foreign investment and 184 On the relationship between human rights due diligence and duty of care, see Douglas Cassel, ‘Outlining a Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence’ (2016) 1 Business and Human Right Journal 179. 185 Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents) [2019] UKSC 20. 186 See Cees Van Dam and Filip Gregor, ‘Corporate Responsibility to Respect Human Rights vis-à-vis Legal Duty of Care’ in Juan José Álvarez Rubio and Katerina Yiannibas (eds), Human Rights in Business: Removal of Barriers to Access to Justice in the European Union (Routledge 2017), 122. 187 Eric W Orts, ‘Human Rights, the Environment, and Corporate Accountability’ in Donald K Anton and Dinah Shelton, Human Rights, the Environment, and Corporate Accountability (CUP 2011) 869. 188 Patrick Dumberry and Érik Labelle-Eastaugh, ‘Non-state Actors in International Investment Law: The Legal Personality of Corporations and NGOs in the Context of Investor-State Arbitration’ in Jean d’Aspremont (ed), Participants in the International Legal System: Multiple Perspectives on Non-state Actors in International Law (Routlege 2011), 360. 189 Article 26 of the ICSID Convention, for example, excludes the requirement to exhaust remedies ‘unless otherwise stated’. See Rudolf Dolzer and Christoph Schreuer, Principles of

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international human rights law share a common heritage in their being originally conceived as a tool to recalibrate the asymmetrical relationship between individuals and the sovereign state. Whether the same degree of asymmetry still persists vis-à-vis foreign investors, which are often part of powerful transnational groups, remains an open question. Along these lines, in the last decade investor-state dispute settlement has been subject to harsh criticism being charged, inter alia, of hampering human rights by prioritising the interests of investors over the right of the state to act in the broader public interest.190 Concurrently, much ink has been spilled on the need to better harmonise international investment law and international human rights law.191 In Part II I have pointed out that drafting BITs so that policy coherence is preserved between international human rights treaties and international investment agreements, is part and parcel of the state duty to perform its human rights obligations in good faith.192 IIAs generally stipulate reciprocal obligations on the contracting states and still hardly refer to human rights obligations of states, let alone of investors. The problem with “asymmetrical” BITs consists in their potential restraining the host state regulatory activity in pursuit of its international human rights obligations, as well as the state capacity to adequately prevent and address human rights violations by foreign investors. Although such issues have long been acknowledged, references to obligations of investors in the text of IIAs remain exceptional.193 The Guiding Principles for Global Investment Policymaking endorsed by the G20 in 2016, recall that ‘investment policies should promote and facilitate the observance by investors of international best practices and applicable International Investment Law (OUP 2012) 264 ff. 190 See, among others, HRC, ‘Report of the Independent Expert on the Promotion of a Democratic and Equitable International Order, Alfred-Maurice de Zayas’ (15 July 2015) UN Doc A/HRC/30/44; 191 See, among others, James D Fry, ‘International Human Rights Law in Investment Arbitration: Evidence of International Law’s Unity’ (2007) 18 Duke Journal of Comparative and International Law 77–149; Bruno Simma and Theodore Kill, ‘Harmonizing Investment Protection and International Human Rights: First Steps Towards a Methodology’ in Ursula Kriebaum and Others (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (OUP 2009); Bruno Simma, ‘Foreign Investment Arbitration: A Place For Human Rights?’ (2011) 60 ICLQ 573–596; Pierre Marie Dupuy and Jorge E Viñuales, ‘Human Rights and Investment Disciplines: Integration in Progress’ in Marc Bungenberg and others (eds), International Investment Law: A Handbook (Hart-Nomos 2012). 192 See Part II, Chapter 7.1.3. 193 For a thorough analysis of investors’ obligations in IIAs and in investment arbitration, see Makane M Mbengue, ‘Les obligations des investisseurs étrangers’ in Laurence Dubin and Others (eds), L’entreprise multinationale et le droit international (Pedone 2017); Jean Michel Marcoux, International Investment Law and Globalization (Routledge 2018) 23–60.

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instruments of responsible business conduct and corporate governance’.194 As illustrated in Part II, recent years have shown a more extensive human rights lenient trend in a number of countries revisiting their BITs programme. By way of example, the BIT signed in 2016 between Morocco and Nigeria, under the section on ‘Post-establishment Obligations’ affirms that ‘investors and investments shall uphold human rights in the host state’.195 Furthermore, investors shall not conduct their business in a manner that ‘circumvents’ human rights obligations of the home or the host state.196 The recently signed BITs by Brazil with Ethiopia, Guyana and Suriname, contain a common provision under which investors ‘shall’ endeavour to comply with the recognized human rights of those involved in their activities.197 As already alluded, the Dutch Model BIT, which aims to ‘attract and promote responsible foreign investment’,198 contains several provisions on investor conduct. Most importantly, for the purposes of the present part, Article 7 requires investors to comply with domestic laws on human rights further specifying that they Shall be liable in accordance with the rules concerning jurisdiction of their home state for the acts or decisions made in relation to the investment where such acts or decisions lead to significant damage, personal injuries or loss of life in the host state’. The same Article also recalls the commitment of the state parties to respect the core business and human rights instruments and, most importantly, ‘reaffirm[s] the importance of investors conducting a due diligence process to identify, prevent, mitigate and account for the environmental and social risks and impacts of its investment.199 To this end investors should be encouraged by the states parties to incorporate in their policies internationally recognised standards such as the OECD and the UNGPs and to conduct due diligence throughout their operations.200 While the human rights due diligence of investors is phrased in hortatory terms, Article 23 separately provides that in deciding the quantum of compensation for investors, a tribunal may take into account the investor’s (non) 194 ‘G20 Guiding Principles for Global Investment Policymaking’, Principle 8, available at http:// www.oecd.org/investment/g20-agrees-principles-for-global-investment-policymaking.htm. 195 BIT Morocco-Nigeria (3 December 2018), Article 18. 196 Ibid. 197 BIT Brazil-Ethiopia (11 April 2018), Article 14; BIT Brazil –Suriname (2 May 2018), Article 15; BIT Brazil-Guyana (13 December 2018), Article 15. 198 Final Dutch Model BIT (22 March 2019), Preamble, emphasis added, available at https:// investmentpolicy.unctad.org/international-investment-agreements/model-agreements. 199 Ibid, Article 7. 200 Ibid, Article 7(1), (2) and (3).

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compliance with its commitments under the UNGPs and the OECD Guidelines for Multinational Enterprises.201 Although the calculation of damages is perhaps not the ideal phase to address claims of irresponsible business conduct, Article 23 signals that investors’ due diligence counts. Another valuable example in this direction is represented by the Pan African Investment Code, elaborated under the auspices of the African Union as the first model investment treaty for the entire continent.202 The chapter titled ‘obligations of investors’, contains six Articles on corporate governance, socio-political obligations, bribery, corporate social responsibility, obligations concerning the use of natural resources, and business ethics and human rights. Article 19 (Framework for Corporate Governance), requires investors to ‘ensure that timely and accurate disclosure is made on all material matters regarding a corporation, including […] risks related to environmental liabilities’. In other words, due diligence. Furthermore, under the Code foreign investors are bound to respect labour rights, to conduct their activities in compliance with human rights,203 and to avoid engaging in bribery and land-grabbing.204 Such obligations are enforceable by counterclaims.205 It would be advisable that the due diligence obligation of investors, comprising an assessment of the environmental, human rights and social risks connected to their operations, were uniformly codified in all IIAs.206 Including a reference to the investor’s due diligence obligations in IIAs would contribute to bridge the gap between the alleged non-legal nature of corporate responsibility, and the normative dimension of the due diligence principle under international law. By looking at current IIAs, it appears though that the process of incorporating uniform human rights standards addressed to investors might be a long one.207 Meanwhile, however, due diligence as a principle already provides a useful standard on the basis of which international arbitral tribunals can elaborate on the obligations of investors relevant to the protection of human rights. The principle is already employed by investment tribunals to assess the 201 See Kabir Duggal K and Laurens H van de Ven, L, ‘The 2019 Netherlands BIT: Riding the New Investment Treaty Waves’ (2019) 35 Arbitration Journal 347–374. 202 UN Economic Commission for Africa, ‘Draft Pan-African Investment Code’ (2016) Doc E/ ECA/COE/35/18AU/STC/FMEPI/EXP/18(II). For on an analysis of the Code, see Makane M Mbengue and Stefanie Schacherer, ‘Africa and the Rethinking of International Investment Law: About the Elaboration of the Pan-African Investment Code’ in Anthea Roberts and others (eds), Comparative International Law (OUP 2018), 559. 203 Ibid, Draft Pan-African Investment Conde, Articles 19 and 24. 204 Ibid, Articles 21 and 23. 205 Ibid, Article 43(1). 206 Karsten Nowrot, ‘Obligations of Investors’ in Marc Bungenberg and others (eds), International Investment Law (Beck/Hart/Nomos 2015), 1162. 207 Ibid.

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reasonableness expectations of investors under the fair and equitable treatment clause. It is generally recognised that prudent investment practice is required for the investor to appraise the regulatory and political context of the state where the investment is made, being aware of the relevant regulations and policies in order to anticipate the possible risks.208 The foreign investor has only ‘a right of protection of its legitimate expectations provided it exercised due diligence and that its legitimate expectations were reasonable in light of the circumstances’.209 Furthermore, as noted by the Tribunal in Alasdair v Costa Rica, ‘an important element of such due diligence is for investors to assure themselves that their investments comply with the law. Such due diligence obligation is neither overly onerous nor unreasonable’.210 The law of the host State would normally include regulations implementing human rights treaties ratified by the host State, as well as customary human rights law and the relevant general principles of law. The recent case Bear Creek Mining v Peru, which concerned the state’s revocation of the investor’s concession for a silver mine following widespread protests of the local communities, is also illustrative of the potential relevance of the due diligence of the investor.211 The Tribunal considered whether the investor had obtained a “social license” to operate and, in particular, what was required of the investor when consulting indigenous populations affected by its operations. To that end, the Tribunal found that, aside from the concept of “social licence”, there was an established international legal framework governing the requirement of prior consultation with indigenous populations. The majority Award stated that Even though the concept of “social license” is not clearly defined in international law, all relevant international instruments are clear that consultations with indigenous communities are to be made with the purpose of obtaining consent from all the relevant communities.212

208 See, for example, Methanex Corporation v United States of America (Award) (2005) UNCITRAL, paras 9–10; Charanne and Construction Investments v Spain (2016) SCC Case No 062/2012, para 505. 209 Parkerings-Compagniet AS v Lithuania (Award) (2007) ICSID Case No ARB/05/8, para 333. 210 Alasdair Ross Anderson et al v Republic of Costa Rica (Award) (2010) ICSID Case No. ARB(AF)/07/3, para 58. 211 Bear Creek Mining Corporation v Republic of Peru (Award) (2017) ICSID Case No ARB/14/21, para 406. For an analysis of the case, see Joshua Paine, ‘Bear Creek Mining Corporation v Republic of Peru: Judging the Social License of Foreign Investments and Applying New Style Investment Treaties’ (2018) 33 ICSID Review 340–348. 212 Ibid, para 408.

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While according to the Tribunal the ILO Indigenous and Tribal People Convention does not produce direct obligations for private companies,213 in his partly dissenting opinion Arbitrator Sands argued that the ILO Convention still produces legal effects for investors.214 In particular, he pointed out that the investor ‘was not as fully prepared for the making of an investment in the lands of the communities of indigenous peoples – the peoples concerned by the project it was embarked upon – as it should have been’.215 What Sands is saying, without explicitly quoting the UNGPs, is that the investor failed to comply with a foundational element of due diligence. In fact, UNGP 18 stipulates that a proper assessment of potential human rights impacts linked to business activities should involve ‘meaningful consultation with potentially affected groups and other relevant stakeholder’. In conclusion, the case can be made that foreign investors are legally expected to comply with a minimum due diligence/duty of care standard which is made up of an amalgamate of binding and non-binding international instruments on corporate conduct and international human rights. At the 2018 World Investment Forum, the UN High Commissioner for Human Rights Michelle Bachelet highlighted that In all investment processes, there are legal obligations, which must always be present. On the one hand, States should ensure that the human rights and access to justice of the people affected by investment decisions are fully taken into account. On the other, Investors must respect these rights and honor their own responsibilities, including due diligence, guided by the UN Guiding Principles on Business and Human Rights.216

9

Corporate Conduct through the Principles of Good Faith and Estoppel

While much has been said already on good faith as a universal principle of law and it relevance to the topic under consideration in general,217 I will revert to this general principle in relation to some of its actual or potential operational aspects in the field. Good faith is often interpreted and applied as accessory to

213 Ibid, para 664. 214 Ibid, Partly Dissenting Opinion of Professor Philip Sands QC, para 10. 215 Ibid. 216 OHCHR, ‘Statement by UN High Commissioner for Human Rights Michelle Bachelet’ (25 October 2018) World Investment Forum available at https://www.ohchr.org/EN/NewsEvents/ Pages/DisplayNews.aspx?NewsID=23773&LangID=E. 217 See Part II, Chapter 6.

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an existing duty,218 ‘not being itself a source of obligation where none would otherwise exist’.219 However, while it is certainly true that good faith seldom operates through a direct application of its own substance to a particular case, this does not prevent this basic principle from being itself an autonomous source of obligations, since, as authoritatively stated, good faith ‘maintains itself always in the background’.220 The three functions of good faith aptly summarised by Kolb – namely, good faith as prohibition of abuse of rights, good faith as a shield against unfair advantages stemming from non-loyal and incorrect conduct and good faith as protection of legitimate expectations – are all germane to the present research.221 The role of good faith in protecting common interests against abuse of rights has been examined above in the context of the abuse of corporate limited liability.222 This chapter will deal with the two remaining functions of the principle. Good faith generally prohibits non-loyal behaviour that is incompatible with a minimum core of reciprocity.223 This aspect may be relevant, and so it will be analysed, in the context of the expected conduct from investors in international investment law. Finally, the third function of good faith, that is protecting legitimate expectations generated in others by a certain conduct, will be analysed through one of the articulations of the principle, i.e. estoppel.224 The latter will be examined against the backdrop of the copious codes of conduct voluntary adopted by companies. Despite differing in terms of content and specificity, such codes often carry a commitment by corporations to operate in accordance with international human rights treaties and business and human rights instruments, which amounts to ‘incorporation by reference’. When, however, corporations do not “practice what they preach”, the voluntary nature of such codes is generally considered of limited value in holding companies liable for their human rights violations. One may wonder whether these codes can potentially create reasonable expectations of compliance and, if so, whether such expectations are legally grounded.

218 Reparation of Injuries Suffered in the Service of the United Nations Case (Advisory Opinion) [1949] ICJ Rep 174, paras 38, 59. 219 North Sea Continental Shelf (Federal Republic of Germany/Netherlands) (Federal Republic of Germany/ Denmark) (Judgment) [1969] ICJ Rep 3, para 94; see also Delimitation of the Maritime Boundary in the Gulf of Maine Area (Canada v United States of America) [1984] ICJ Rep 246, 305. 220 Kolb, Good Faith in International Law (n 45), 31. 221 Ibid, 23. 222 See above. 223 Kolb, Good Faith in International Law (n 45), 31. 224 On the relationship between good faith and estoppel, see Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (n 45), 144.

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9.1 Good Faith and Estoppel The principle of estoppel is rooted in Roman law. It generally responds to the doctrine of ne venire contra factum proprium, implying that an actor representing a given state of affairs is prevented from subsequently denying or challenging the same state of affairs.225 By prohibiting a subject from gaining advantages, or imposing burdens through his or her inconsistent behaviour, estoppel responds to the need to protect legitimate expectations that a certain conduct has provoked in another person, ‘whichever the real (but unexpressed) intent of the actor’.226 Estoppel has largely developed in Anglo-American law, where one of the oldest and clearest instances of estoppel was “estoppel by deed”, according to which a person in a deed makes a declaration and is thereby estopped from later contradicting himself or herself.227 Yet estoppel is not a prerogative of common law systems only. It is recognised, as a corollary of good faith, in all legal systems,228 suffice to refer to the concept of forclusion under the French law. Besides the nuances between domestic legal systems, the core features of estoppel are recognizable also in international law. Here, the principle implies that, ‘a subject of international law is precluded from denying the truth of a statement made earlier by a duly authorised representative of the existence of a fact in which such representative has by word or conduct led others to believe’.229 For a minimum of predictability to be guaranteed in international relations, the state ought to be consistent in its attitude to a given factual or legal situation.230 There is today little doubt that estoppel, both in its substantive and procedural dimension, has established itself as a general principle of law within the meaning of Article 38 of the Statute of the ICJ.231 In his separate opinion in the Temple of Preah Vihear case, Judge Alfaro affirmed to have ‘no hesitation in asserting that this principle, known to the world since the days of the Romans, is one of the “general principles of law recognized by civilized nations”’,232 and that ‘[w]hatever term or terms be employed to designate this principle such as it has been applied 225 Arnold Mcnair, ‘The Legality of the Occupation of the Ruhr’ (1924) 5 BYIL 17–34, 35. 226 Robert Kolb, ‘Principles as Sources of International Law (With Special Reference to Good Faith)’ (2006) 53 Netherlands International Law Review 1–36, 17 (emphasis added). 227 For an overview of different types of estoppel in English law, see Piers Feltham, Tom Leech and Joshua Winfield, Spencer Bower: Reliance-Based Estoppel: The Law of Reliance-Based Estoppel and Related Doctrines (5 edn, Bloomsbury 2017). 228 Hersch Lauterpacht, Private Law Sources and Analogies of International Law (with Special Reference to International Arbitration) (Longmans 1927) 204. 229 Georg Schwarzenberger, A Manual of International Law (5 edn, Milton 1967) 631. 230 McGibbon, ‘Estoppel in International Law’ (1958) 7 ICLQ 468–513, 468. 231 Ian Brownlie, Principles of Public International Law (6 edn, OUP 2003) 616; Kolb, Good Faith in International Law (n 45), 104. 232 Case concerning the Temple of Preah Vihear (Cambodia v Thailand) (Merits) [1961] ICJ Rep 17, Separate Opinion of Judge Alfaro, 120–121.

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in the international sphere, its substance is always the same’.233 The dissenting opinion by Judge Spender in the same case noted that The principle operates to prevent a State contesting before the Court a situation contrary to a clear and unequivocal representation previously made by it to another State, either expressly or impliedly, on which representation the other State was, in the circumstances, entitled to rely and in fact did rely, and as a result that other State has been prejudiced or the State making it has secured some benefit or advantage for itself.234 The constitutive elements of estoppel in international law are generally identified in an unambiguous statement, which must be made voluntary, unconditional and authorized, and on which another party has relied to his detriment or to the advantage of the party making the statement.235 Older case law and doctrine did not necessarily require detrimental reliance, as the change of position itself was considered.236 The majority of scholars,237 as well as the prevailing international case law238 seem to uphold today the definition according to which detrimental reliance represents a constitutive element of estoppel. Estoppel, both in its strict and its broader meaning, figures prominently in international investment law, where it is often relied upon by investors against allegedly inconsistent behaviours of the host state.239 Interestingly, the principle has been also discussed with regard to the investor’s conduct.240 There is no 233 Ibid. 234 Ibid, Dissenting Opinion of Sir Percy Spender, 143–44. 235 Derek W Bowett, ‘Estoppel before International Tribunals and its Relation to Acquiescence’ (1957) 33 BYIL 176–202, 202. 236 Thomas Cottier and Jörg Paul Müller, ‘Estoppel’ MPEPIL (2007), para 6. 237 Hermann Mosler, ‘The International Society as a Legal Community’ (1974) 140 RdC 11, 147; Antoine Martin, L’Estoppel en droit international public (Pedone 1979) 259–260; Robert Kolb, La bonne foi en droit international public (Graduate Institute Publications 2000) 359. 238 Aguilar-Amory and Royal Bank of Canada claims (Great Britain v Costa Rica) (1923) 1 RIAA 369; North Sea Continental Shelf Cases (Germany v Denmark, Germany v The Netherlands) [1969] ICJ Rep 3, 30; Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v Nigeria) (Preliminary Objections) [1998] ICJ Rep 275, 303; Mayagna Awas Tingni (Sumo) Indigenous Community v The Republic of Nicaragua (2001) IACtHR Series C No 79; GuatemalaDefinitive Anti-dumping Measures on Grey Portland Cement from Mexico (2000) WT/DS156/R. 239 For an analysis of the use of estoppel in international investment arbitration, see Andreas Kulick, ‘About the Order of Cart and Horse, Among Other Things: Estoppel in the Jurisprudence of International Investment Arbitration Tribunals’ (2016) 27 EJIL 107–128. 240 ‘the Tribunal is of the view that the same general principle is applicable in international economic relations where private parties are involved’, in AMCO v Republic of Indonesia (Decision on Jurisdiction) (1983) ICSID Case No ARB/81/1, para 47.

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denying that an excessively broad notion of estoppel may result in an undesirable general doctrine of non-contradiction. In this respect, two premises are appropriate with regard to the specific use of estoppel in this chapter. First, it is true that overstretching estoppel to the point of prohibiting any change of conduct would not be desirable. However, as we shall see, the content of the declarations made by companies generally refer to internationally recognized human rights standards. Second, even subscribing to the narrow view according to which some form of damage is required to have been incurred because of reliance on the conduct or the statement of another party, such damage does not necessarily need to have already materialized. It can be potential or eventual.241 9.2 Good Faith Obligations of Investors in International Investment Law As already pointed out in the previous Chapter, IIAs prevailing focus is on a number of standards of protection for the investors’ rights and interests, which are retained for the purpose of inducing and protecting foreign investments. As noted by the Tribunal in Saluka Investments BV v Czech Republic, legitimate expectations represents ‘the dominant element of the right of the investor to a fair and equitable treatment’.242 The Tribunal also added, however, that in assessing compliance with such obligation, regard must be payed to ‘all relevant circumstances’,243 implying ‘a weighing of the Claimant’s reasonable and legitimate expectations on the one hand and the Respondent’s legitimate regulatory interests on the other’.244 The definition of the legitimate expectations of the investor, and in particular the meaning of what is to be considered “legitimate”, is first and foremost key to balance the protection of investors’ rights with the state right (and duty) to regulate in the public interest.245 This is a key aspect for the long debated issue of states invoking defensively human rights considerations to justify measures with adverse effects on investors.246 While 241 242 243 244 245

Robert Kolb, Good Faith in International Law (n 45), 101. Saluka Investments BV v Czech Republic (2006) (Partial Award), para 302. Ibid, 309. Ibid, 306. See Alain Pellet, ‘Police Powers or the State’s Right to Regulate: Chemtura v Canada’ in Meg Kinnear and Others (eds), Building International Investment Law: The First 50 Years of ICSID (Kluwer Law International 2015). 246 Among the many cases where human rights were invoked by states as a justification of their measures at variance with their obligations towards investors, see Azurix v Argentina (Award) (2006) ICSID Case No ARB/01/12; Biwater Gauff Ltd. v United Republic of Tanzania (Award) (2008) ICSID Case No ARB/05/22; Philip Morris Brands SÀRL, Philip Morris Products S.A. and Abal Hermanos S.A v Oriental Republic v Uruguay (Award) (2016) ICSID Case No ARB/10/7.

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not being the main focus of this section, such aspect is not of minor relevance for the business and human rights process, given that the primary obligation to ensure that third parties, including foreign investors do not violate human rights bears on the state.247 The debate on the content of the investor’s legitimate expectations also brings into the picture the relevance of the conduct of the investor.248 As argued by Alvarez: Interpretative principles drawn from either CIL or general principles of law, such as reliance on “legitimate expectations”, may also provide a licence for arbitrators to undertake a contextual enquiry of the circumstances in which those expectations are shaped and the respective duties that might be expected of the investor, and not merely the State.249 The acknowledgment that investors have an obligation to behave in good faith, including therefore to respect the host state law and the relevant international standards, is coherent with the premise upon which the ICSID was established. A corollary assumption was that foreign investment would yield a net positive benefit for both the investor and the state.250 The conduct of the investor is first and foremost relevant with regard to the initial phase of the investment. In Hamester v Ghana the Tribunal stated that ‘an investment will not be protected if it has been created in violation of national or international principles of good faith […]’.251 Similarly in Hulley v Russia the Tribunal noted that ‘[i]n imposing obligations on States to treat investors in a fair and transparent fash­ion, investment treaties seek to encourage legal and

247 See Eric De Brabandere, Investment Treaty Arbitration as Public International Law (CUP 2014) 129 ff. 248 See Attila Tanzi, ‘The Relevance of the Foreign Investor’s Good Faith’ in Andrea Gattini and others (eds), General Principles of Law and International Investment Arbitration (Brill Nijhoff 2018). 249 José E Alvarez, ‘The Public International Law Regime Governing International Investment’ (2011) 344 RdC 203, 352 (emphasis added). 250 Susan D Frank, ‘Managing Expectations: Beyond Formal Adjudication’ in Roberto Echandi and Pierre Sauvé (eds), Prospects in International Investment Law and Policy: World Trade Forum (CUP 2013), 374. 251 Gustaf F.W. Hamester GmbH & Co kg v Republic of Ghana (Award) (2010) ICSID Case No ARB/07/24, para 123.

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bona fide investments.’252 There is, therefore, an expectation that investment are made in compliance with domestic law.253 Along these lines, a good number of IIAs include provisions according to which the investor’s economic activity can be qualified as an “investment” falling within the scope of the treaty protection only when the activity in question has been carried out in accordance with the host-state law. The Dutch Model BIT, for example, provides that a tribunal shall decline jurisdiction ‘if the investment has been made through fraudulent misrepresentation, concealment, corruption, or similar bad faith conduct amounting to abuse of process’.254 Conditioning the legal protection of the investment to its legality, following a general requirement of good faith by the investor, theoretically requires that the investment is also made in compliance with international human rights. In fact, in World Duty Free v The Republic of Kenya, which concerned a concession obtained by the investor through bribery, the Tribunal looked at domestic and international law to determine that bribery is contrary to ‘transnational public policy’. In concluding that it had no jurisdiction over claims based on contracts obtained by corruption, the Tribunal noted that ‘such public policy based reasoning may apply also to claims tainted by evidence that the claimant has failed to respect the human rights of persons and communities affected by their investment’.255 A similar stance was taken in Phoenix Action v Czech Republic, where the Tribunal noted that ‘nobody would suggest that ICSID protection should be granted to investments made in violation of the most fundamental rules of protection of human rights’.256 The arbitrators in Phoenix had perhaps read the submission by the amici curiae in Biwater Gauff, where it was argued that ‘human rights and sustainable development issues are factors that condition the nature and extent of investor’s responsibilities’.257 Yet the good faith obligation of investors does not only apply to the way the investment was obtained, but also to the way the investment is carried out. In Aven v Costa Rica, which concerned the concession of lands in Las Olas for the development of touristic services, the state justified the revocation of the relevant permits by arguing that the purpose had been to guarantee the respect for the 252 Hulley Enterprises Limited (Cyprus) v the Russian Federation (Award) (2014) UNCITRAL, para 1352. 253 Ursula Kriebaum, ‘Illegal Investments’ (2010) 4 Austrian Yearbook on International Arbitration 307–335. 254 Dutch Model BIT, Article 16 (2). 255 World Duty Free v The Republic of Kenya (Award) (2007) ICSID Case No ARB/00/07, para 157 (emphasis added). 256 Phoenix Action, LTD v the Czech Republic (Award) (2009) ICSID Case No ARB/06/5, para 78. 257 Amicus Curiae Submission of LEAT, LHRC, TGNP, CIEL, IISD, para 51, available at https:// www.ciel.org/wp-content/uploads/2015/03/Biwater_Amicus_26March.pdf.

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environment. Costa Rica maintained that the claimants assumed investment obligations which gave rise to bona fide expectations that the investment would be carried out in compliance with customary rules on environmental protection. The Tribunal noted that Article 10.9.3.c. of the BIT, which recognises the regulatory power of the host State to adopt measures aimed at safeguarding the environment, entails investors’ obligations to comply with the environmental domestic laws and regulations. No investor can ignore or breach such measures and its breach is a violation of both domestic and international law. In Urbaser v Argentina the investor was awarded a concession for water and sewage services to be provided in the Province of Buenos Aires. After the devaluation of the peso in 2002, the company failed to obtain a renegotiation of the tariffs it was allowed to impose under the concession contract.258 Meanwhile, the company also failed to pursue the expansion of the water and sewage services as agreed under the concession contact. The concession contract was finally terminated by the state and the investor sought compensation before an ICSID Tribunal under the Argentina-Spain BIT. In its counterclaim, Argentina argued that the investors assumed investment obligations that gave rise to ‘bona fide expectations’ that their investments would be made it possible to guarantee the basic human right to water and sanitation. According to Argentina, by failing to make the investments they had undertaken to make, claimants ‘violated the principles of good faith and pacta sunt servanda as recognized both by Argentine law and by international law’.259 Most importantly for the purposes of the present work, the Tribunal noted that the argument proposed by the investor according to which corporations are not subjects of international law and, therefore, are unable to hold international human rights obligations, was untenable.260 The Tribunal emphasised that International law accepts corporate social responsibility as a standard of crucial importance for companies operating in the field of international commerce. This standard includes commitments to comply with human rights in the framework of those entities’ operations conducted in countries other than the country of their seat or incorporation.261 After referring to the relevant soft-law initiatives on business and human rights – which were not considered by the Tribunal as per se creating human rights obligations for the investors – the arbitrators looked into the relevant provisions 258 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v Argentina (2016) ICSID Case No ARB/07/26. 259 Ibid, para 1156. 260 Ibid, paras 1194, 1195. 261 Ibid, para 1195.

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of the International Bill of Human Rights. Relying mainly on Article 30 of the UDHR and on Article 5(1) of the ICESCR, the Tribunal concluded that the human right to water is ‘complemented by an obligation on all parts, public and private parties, not to engage in activity aimed at destroying such right’.262 However, the Tribunal specified that such obligation, when it comes to private actors, is merely an obligation to abstain from infringing upon the human right to water, as the state and the state only holds an obligation to fulfil human rights. The Tribunal noted, in the specific case, that the obligation to perform was grounded in the concession contract, on which the tribunal had no jurisdiction. Argentina could have perhaps elaborated more on the obligations of the investors stemming from the principle of good faith, as well the role of the mandate of the concession contract in shifting (at least partially) the positive duty to fulfil the right to water from the state to the investor. In performing a public utility function, the corporation is expected to leave up to the same standards which would apply to a state entity under international law. A due diligence-based argument might have also provided a strong point for Argentina to claim that, given the nature of the service in question, the investor should have taken adequate measures to fulfil the human right to water, and merely to abstain from violating it. Here, no reference was made by Argentina to the UNGP or the OECD Guidelines. Be as it may, the conclusion of the Tribunal still represents a watershed in the acknowledgment of investors’ obligations in international law and, not least, in recognising that the BIT, as any other treaty, must be interpreted in ‘harmony with other rules of international law […] including those relating to human rights’.263 In conclusion, there is no doubt that, regardless of the applicable law, investors are bound by the principle of good faith throughout all the stages of the investment. This implies a minimum standard of compliance with the legal framework of the host state, which presumably includes the international obligations in force for it. There is no denying that in the majority of BITs the scant references to human rights are often indirectly addressed to foreign companies. Furthermore, their language is seldom clear-cut binding. However, the view may be shared that ‘an investor seeking the protection of such treaties is thereby made aware that all States parties expect the host State (and, potentially, the home State) to ensure that the operations of investors abide by certain internationally recognized standards. As a result, investors could not reasonably expect that they will be

262 Ibid, para 1199. 263 Ibid, para 1200 (referring to Tulip Real Estate and Development Netherlands B.V. v Republic of Turkey (Decision on Annulment) (2015) ICSID/ARB/11/28, paras 86–92.)

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able to operate under lower standards, which, in turn, limits the range of what they can reasonably claim (and obtain) in investment proceedings’.264 9.3 Corporate-based Codes of Conduct Corporate-based codes of conduct, in the business and human rights context, can be generally defined as ‘commitments voluntarily made by companies, associations or other entities, which put forth standards and principles for the conduct of business activities in the marketplace’.265 There are different types of codes of conduct, ranging from public codes issued by intergovernmental organisations, to multi-stakeholders initiatives, codes prepared by industry associations, and codes adopted by individual companies which often incorporate by reference standards and principles contained in other relevant international instruments.266 In Part I have explored the non-binding instruments adopted by intergovernmental organisations which provide human rights standards for business activities. In this chapter I focus instead on the actual and potential legal effects of codes of conduct uti singuli,267 as voluntary initiatives adopted by individual companies with a view to making the protection of certain human rights an explicit corporate objective.268 264 Jorge E Viñuales, ‘Investor Diligence in Investment Arbitration: Sources and Arguments’ (2017) 32 ICSID Review 346–370, 355. 265 OECD, ‘Codes of Corporate Conduct: An Inventory, Working Party on the Trade Committee’ (1999), 5. 266 See Alex Wawryk, ‘Regulating Transnational Corporations through Corporate Codes of Conduct’ in Jedrzej George Frynas (ed), Transnational Corporations and Human Rights (Palgrave 2003). 267 Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (2017) 385 RdC 47, 239. 268 On the concept of codes of conduct, see Hans W Baade, ‘The Legal Effects of Codes of Conduct for Multinational Enterprises’ (1979) 22 German Yearbook of International Law 12–52; Bruno Simma and Andreas Heinemann, ‘Codes of Conduct’ in W Korff and Others (eds), Handbuch der Wirtschaftsethik, vol 2 Ethik wirtschaftlicher Ordnungen (1999); Kathryn Gordon and M Mikake, ‘Deciphering Codes of Corporate Conduct: A Review of Their Contents’ 1999 OECD Working Papers on International Investment accessed 10 October 2016; Oliver F. Williams, Global Codes of Conduct: An Idea Whose Time Has Come (University of Notre Dame Press 2000); Rhys Jenkins, ‘Corporate Codes of Conduct. Self-Regulation in a Global Economy’ (2001) 2 The United Nations Research Institute for Social Development 1–35; Helen Keller, ‘Codes of Conduct and Their Implementation: the Question of Legitimacy’ in Rudiger Wolfrum and Volker Röben (eds), Legitimacy in International Law (Springer 2008); Lutz Preuss, ‘Corporate Codes of Conduct’ in Samuel O Idowu (ed), Encyclopedia of Corporate Social Responsibility (Springer 2013).

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Although the idea of corporate codes of conduct is a vintage one,269 the past decades have witnessed an increasing trend towards self-regulation of companies.270 The specific content of codes usually varies from one company to another, or according to corporate sectors. An empirical assessment of the content and scope of such codes is beyond the scope of this book.271 It is interesting to note, however, that the language of this kind of codes of conduct is not always merely hortatory, while sometimes seemingly expressing an intention of the company to commit to specific binding human rights instruments.272 The Nestlé Group, for example, indicates to ‘adhere’ to the main human rights standards such as the UDHR, the Convention on the Rights of the Child, the OECD Guidelines and the UNGPs.273 The ENI Group asserts to operate ‘within the reference framework of the United Nations Universal Declaration of Human Rights, the Fundamental Conventions of the ILO – International Labour Organization – and the OECD Guidelines on Multinational Enterprises’.274 British Petroleum recognizes its ‘responsibility to respect human rights and avoid complicity in human rights abuses, as stated in the UN Guiding Principles on Business and Human Rights’.275 Shell affirms to ‘comply’ with such instruments, recalling its commitment to

269 Fiona McLeay, ‘Corporate Codes of Conduct and the Human Rights Accountability of Transnational Corporations: A Small Piece of a Larger Puzzle’ in Olivier De Schutter (ed), Transnational Corporations and Human Rights (Hart Publishing 2006). 270 Ralph G Steinhardt, ‘Corporate Responsibility and the International Law of Human Rights: The New Lex Mercatoria’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 183. August Reinisch, ‘The Changing International Legal Framework for Dealing with Non-State Actors’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2006), 44; Jennifer A Zerk, Multinationals and Corporate Social Responsibility: Limitations and Opportunities in International Law (CUP 2006) 42. 271 See, among others, Tori Loven Kirkebø and Malcolm Langford, ‘The Commitment Curve: Global Regulation of Business and Human Rights’ (2018) Business and Human Rights Journal 157–185. 272 International Council on Human Rights, ‘Beyond Voluntarism: Human Rights and the Developing International Legal Obligations of Companies’ (2002), 70. Surya Deva, ‘Multinationals, Human Rights and International Law: Time to Move beyond the “State-Centric” Conception’ in Jernej Letnar Černič and Tara Van Ho (eds), Human Rights and Business: Direct Corporate Accountability for Human Rights (Wolf Legal Publishers 2015), 45. 273 Nestlé, Corporate Business Principles, at p. 9., available at http://www.nestle.com/assetlibrary/ documents/library/documents/corporate_governance/corporate-business-principles-en. pdf. 274 ENI Codes of Ethics, at p. 13. Available at https://www.eni.com/en_FR/attachments/pdf/ code-ethics-model-231/codice-etico-ita-eng-23-10-08.pdf. 275 British Petroleum, Business and Human Rights Policy, at p. 1, available at http://www.bp.com/ content/dam/bp/pdf/sustainability/group-reports/BPHumanRightspolicy.pdf.

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engage with external stakeholders and to contribute to the general wellbeing of the communities in which we operate.276 Again, H&M stresses its Commitment to operating with respect for human rights […] defined in the Universal Declaration of Human Rights and its two corresponding covenants, The International Covenant on Civil and Political Rights and The International Covenant on Economic, Social and Cultural Rights. Additionally, […] the United Nations Convention on the Rights of the Child and the United Nations Convention on the Elimination of Discrimination against Women.277 A number of reasons can induce corporations to adopt codes of conduct, including improving public trust and influencing other social actors such as customers, contractors, and competitors.278 Such codes have undoubtedly the advantage of providing tailor-made solutions for different business activities and partly contribute to fill what has for long been perceived as a regulatory gap in international law,279 although their effectiveness remains a matter for debate.280 The OHCHR noted however that the ‘company and market initiatives have their limits and are not necessarily comprehensive in their coverage nor a substitute for legislative action’.281 It has also been argued that codes of conduct are a mere exercise of public relations,282 risking to overshadow the state duty

276 Shell Company Codes of Conduct, Available at http://www.shell.com/about-us/our-values. html277 H & M Code of Conduct, see http://sustainability.hm.com/en/sustainability/downloadsresources/policies/policies/human-rights-policy.html. 278 Ans Kolk, Rob van Tulder and Carlijin Walters, ‘International Codes of Conduct and Corporate Social Responsibility: Can Transnational Corporations Regulate Themselves?’ (1999) 8 Transnational Corporations 143–180, 152. 279 Surya Deva, Regulating Corporate Human Rights Violations: Humanizing Business (Routledge 2012) 75. 280 Cedric Ryngaert, ‘Transnational Private Regulation and Human Rights: The Limitations of Stateless Law and the Re-entry of the State’ in Jernej Letnar Cernic and Tara Van Ho (eds), Human Rights and Business: Direct Corporate Accountability for Human Rights (Wolf Legal Publishers 2015); Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (n 267), 253. 281 OHCHR, ‘The Responsibilities of Transnational Corporations and other Business Enterprises, Report of the United Nations High Commission on Human Rights’ (15 February 2005) UN Doc E/CN.4/2005/91, para 45. 282 Sarah Joseph, ‘An Overview of the Human Rights Accountability of Multinational Enterprises’ in Menno T Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Law (Kluwer Law International 2000), 83.

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to protect human rights.283 According to some, self-regulation may even lead to deregulation, as ‘no one would seriously suggest that individuals should regulate themselves […] because people are socially responsible. Yet oddly, we are asked to believe that corporate persons […] should be left free to govern themselves’.284 Be that as it may, corporate codes of conduct do not operate in a vacuum. They should be considered in the context of international and domestic law. They should be drafted, interpreted and performed accordingly. The voluntary nature of codes of conduct does not imply that the latter are without any legal value.285 Whilst the adoption of measures to discharge the responsibility to respect might (initially) be of a voluntary nature, non-compliance with such measures can potentially produce significant legal effects.286 Just like with non-binding instruments adopted by states, codes of conduct provide the context against which the expectation of a certain conduct is based.287 As noted by Schachter, ‘a party which committed itself in good faith to a course of conduct or to recognition of a legal situation would be stopped from acting inconsistently with its commitment or position when other parties have reasonably relied on it’.288 Similar considerations may be applicable to corporations, as they often commit themselves to upholding international law. An ILA study on Non-state actors pointed out that, while such codes are normally adopted as a matter of policy, there may be principles that could serve to specify and harden such commitments, including ‘duty of care, negligence, corporate organization, legitimate expectations, good faith and unilateral act […]’.289

283 See Colin Scott, Fabrizio Cafaggi and Linda Senden, ‘The Conceptual and Constitutional Challenge of Transnational Private Regulation’ (2011) 38 Journal of Law and Society 1–19; Alexandra Gatto, Multinational Enterprises and Human Rights: Obligations under EU Law and International Law (Edward Elgar 2011) 22. 284 Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (Constable 2004) 110. See also Scott, Cafaggi and Senden, ‘The Conceptual and Constitutional Challenge of Transnational Private Regulation’ Ibid, 5. 285 Fabrizio Marrella, ‘Human Rights, Arbitration, and Corporate Social Responsibility in the Law of International Trade’ in Wolfgang Benedek and Others (eds), Economic Globalisation and Human Rights (CUP 2007), 301. 286 Nicola Jägers, ‘Will Transnational Private Regulation Close the Governance Gap?’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 299. 287 Vaughan Lowe, International Law (OUP 2007) 95–96. 288 Oscar Schachter, ‘Non-Conventional Concerted Acts’ in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff – UNESCO), 267–268. 289 ILA Committee on Non-State Actors, ‘Report: Preliminary issues for the ILA Conference in Rio de Janeiro’ (2008) 3 (emphasis added), available at http://www.ila-hq.org/index.php/ committees; see also Nicolás Carrillo-Santarelli and Carlos Arévalo-Narváez, ‘The Discursive

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Corporate codes unquestionably appear as unilateral acts having the character of self-commitment. They are usually published on websites and they are widely advertised.290 One may wonder whether an analogy may be drawn between corporate-based codes of conduct and unilateral acts of states, the latter being ‘une manifestation de volonté émanant d’un ou de plusieurs sujets de droit international et destinée à créer des effets juridiques correspondant à la volonté exprimée’.291 As noted by the ICJ, ‘it is well recognized that declarations made by way of unilateral acts, concerning legal or factual situations, may have the effect of creating legal obligations’.292 The basis of the obligation stemming from unilateral acts rests precisely on the principle of good faith and estoppel, which equally operate before international and domestic courts.293 The subject to which the unilateral act is attributable is prevented from acting contrary to its declared intention.294 While it has been argued that there is no reason why unilateral acts should not be extended to actors other than states,295 it remains contested whether companies may have the capacity to bind themselves in a similar way. Even if assimilating corporates codes of conduct to unilateral acts of states were considered a bridge too far, there are indications that codes are not necessarily unenforceable, at least at the domestic level.296 And, interestingly, even following a dualist approach to adjudication, the fact of the matter remains that the principles of good faith in its articulations of reliance and estoppel illustrated above equally operate as generally recognised principles both on the international and domestic levels. While the public international law configurations of such principles at the public international law level have been elaborated above, on the domestic level the interaction between corporate codes and contract law may provide interesting

290 291 292 293

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Use and Development of the Guiding Principles on Business and Human Rights in Latin America’ (2017) 30 Revista colombiana de derecho internacional 61–118, 105. Anna Beckers, ‘Regulating Corporate Regulators through Contract Law? The Case of Corporate Social Responsibility Codes of Conduct’ (2016) EUI Working Paper MWP 2016/12 1-27, 14. Kolb, ‘La bonne foi en droit international public’ (n 237), 324. Nuclear Tests (Australia v France; New Zealand v France) [1974] ICJ Rep 253, para 46. ILC, ‘Guiding Principles Applicable to Unilateral Declarations of States Capable of Creating Legal Obligations, with Commentaries thereto’ (2006) Yearbook of the International Law Commission, Vol II, Part II. Georg Schwarzenberger, International Law – As Applied by International Courts and Tribunals, vol 1 (Stevens & Sons 1957) 553. See also Gabriella Venturini, ‘La portée et les effets juridiques des attitudes et des actes unilatéraux des états’ (1964) 112 RdC 367, 402. Cedric Ryngaert, ‘Non-State Actors in International Humanitarian Law’ in Jean d’Aspremont (ed), Participants in the International Legal System (Routledge 2015), 290. Lara Blecher, ‘Codes of Conduct: The Trojan Horse of International Human Rights Law?’ (2017) 38 Comparative Labor Law and Policy Journal 437–476, 437.

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insights, which corroborate the complementary view of the international and domestic legal dimension of the issues in question. A code of conduct may be interpreted as a unilateral statement directed at present or potential contractors.297 As a consequence, if the enforcement of the code had been an essential factor in determining the consent to sign the contract, the party who had relied on corporate compliance with the code may be entitled to terminate the contact and potentially to claim damages.298 Furthermore, companies may also decide to actually incorporate codes of conduct into contracts in order to bind their business partners and suppliers.299 Gap’s Code of Vendor Conduct, for example, applies to all the suppliers of Gap and its subsidiaries. The vendor code sets forth key requirements that suppliers must comply with concerning the prohibition of discrimination, forced labour, child labour, as well as the protection of the environment. The Code is based on the UDHR, and makes explicit reference to the ILO Tripartite Declaration and the UNGPs.300 It has been noted, however, that for a given corporate code to be enforceable, its wording must be unequivocally promissory. The problem is that the majority of suppliers’ codes of conduct, even where incorporated by reference into supply contracts, merely provide for a clause where the company “reserves the right” to terminate the contract in case of non- compliance by suppliers or business partners.301 Voluntary codes of conduct bear significant relevance also from the standpoint competition law. Indeed, disregarding a code of conduct by a company which has adopted it may also amount to unfair competition or deceptive advertising. A case in point is the claim brought under the California’s Unfair Competition Law and False Advertising Law by a North American citizen against the sportswear company Nike.302 The claimant alleged that Nike’s public statements regarding the working conditions in its overseas suppliers’ factories contained false information. In particular, the claimant challenged the accuracy of Nike’s 297 Katja Creutz, ‘Law versus Codes of Conduct: Between Convergence and Conflict’ in Normative Pluralism and International Law: Exploring Global Governance (CUP 2013), 196 ff. 298 Fabrizio Marrella, ‘Human Rights, Arbitration, and Corporate Social Responsibility in the Law of International Trade’ (n 285), 301. 299 See Anna Beckers, Enforcing Corporate Social Responsibility Codes (Bloomsbury 2015). 300 Gap Code of Vendor Conduct (2016), available at http://www.gapinc.com/content/dam/ gapincsite/documents/CodeofVendorConduct_FINAL.pdf. 301 Meredith R Miller, ‘Corporate Codes of Conduct and Working Conditions in the Global Supply Chain Accountability through Transparency in Private Ordering’ in Jena Martin and Karen E Bravo (eds), The Business and Human Rights Landscape: Moving Forward, Looking Back (CUP 2015), 452. 302 Kasky and others v Nike Inc. (5 February 1999) Case No 994446 (San Francisco Superior Court).

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statements concerning the local minimum wage, health care and working conditions of the employees in its overseas’ factories. Nike claimed that its statements were protected under the US Constitution’s First Amendment guarantee of free speech.303 After the Court of first instance and the California Court of Appeals found for Nike, upholding the argument that its statements fell within freedom of speech,304 Kasky appealed before the California Supreme Court. The latter reversed the lower courts’ rulings and held that Nike’s statements qualified as commercial speech, thus constituting misleading advertising. Following the California Supreme Court’s ruling, Nike appealed to the US Supreme Court, which declared itself incompetent and sent the case back to the federal court.305 The parties ultimately settled the case. Another relevant case is the one arising from a complaint by the Customer Protection Agency of Hamburg against the discount retailer Lidl.306 In an advertising campaign, Lidl had claimed that it opposed child labour and other human and labour rights violations in its supply chain. The Agency noted that the working conditions in Bangladeshi textile plants in Lidl’s supply chain did not comply with ILO standards and with the voluntary obligations undertaken by Lidl. Accordingly, the Agency found Lidl had deceived socially conscious consumers, thus, violating German law on unfair competition. A few weeks after the complaint was made, Lidl agreed in a declaration to the Consumer Protection Agency to retract the claims made in the advertisements regarding fair working conditions. Misleading statements and codes of conduct are often the basis for class actions before US Courts. One of the latest cases of this kind was filed against the Hershey Company in 2018 in a Massachusetts federal court, alleging human rights violations associated with the company’s suppliers of cocoa in Côte d’Ivoire.307 The complaint, filed under the Massachusetts Consumer Protection Act, alleged that the company failed to disclose trafficking and child labour in its supply chains. The omission of such information allegedly deceived consumers, which would have never purchased the product had they been made aware that the company’s supplier in relied on the worst forms of child labour. The claimants 303 One of the core issues was whether the statements by Nike counted as “political speech”, therefore protected by the First Amendment right to free speech, or as “commercial speech”, thereby subject to advertising and competition laws. 304 Kasky and Others v Nike (20 April 2000) 93 Cal Rptr. 2d 854 (California Court of Appeals). 305 Nike Inc. v Kasky (26 June 2003) 123 S. Ct. 2554 US Supreme Court. 306 For information on the case (in German), see https://www.ecchr.eu/en/topic/lidl/; See also Fabrizio Marrella, ‘Protection internationale des droits de l’homme et activités des sociétés transnationales’ (n 267), 361. 307 Tomasella v The Hershey Company (Class Action Complaint filed 26 February 2018) Case No. 1:18-cv-10360 (District Court of Massachusetts).

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mainly relied on the company’s statements on human rights, sustainability and corporate responsibility, according to which the company had declared ‘zero tolerance’ for trafficking and child labour. The case is still pending, but together with the cases seen above it highlights the increasing expectations of consistency and accuracy between corporate public statements, their codes of conduct and their actual conduct. The use of misleading advertisement laws against false social or environmental commercial claims is also prohibited under EU law.308 The Unfair Commercial Practices Directive explicitly provides a tool to ensure that corporations comply with the voluntary codes they have subscribed to. According to the Directive, a commercial practice is regarded as misleading If it contains false information and is therefore untruthful or in any way deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise [including the] geographical or commercial origin of the product’. While persons or organizations with a legitimate interest in combating unfair commercial practices, should be able to take action against such practices, the Directive leaves to member states to decide on the modalities of such action.309 Corporate codes of conduct can also play a role in establishing the standards of the duty of care the parent company requires of a subsidiary. In Choc v Hudbay Minerals the claimants, Guatemalan indigenous groups, alleged that the Canadian company Hudbay and its subsidiaries hired security personnel who committed rape and killed indigenous people.310 The Ontario Superior Court, rejecting the defendants’ motion to dismiss the case, found that the claimants had met the threshold of establishing a prima facie duty of care applicable to the defendant. In reaching this conclusion, the Court relied on the public statements the defendants had made regarding its adoption of the Voluntary Principles on Security and Human Rights.311 The Court then determined that a ‘proximate relationship’ between Hudbay and the plaintiffs existed, and that the nature of this relationship was such that Hudbay was ‘under an obligation to be 308 EU, ‘Directive 2005/29/EC of The European Parliament and of the Council of 11 May 2005 Concerning Unfair Business-To-Consumer Commercial Practices in the Internal Market’ OJ L 149, Article 6. 309 See Jan Wouters and Anna Luise Chané, ‘Multinational Corporations in International Law’ in Math Noortmann and others (eds), Non-State Actors in International Law (Hart 2015). 310 Choc v Hudbay Minerals (22 July 2013) ONSC 1414 (Ontario Superior Court of Justice). 311 Ibid.

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mindful of the plaintiff’s legitimate interests in conducting his or her affairs’.312 Most importantly, the court focused on Hudbay’s public statements regarding its commitment to respect human rights, which the court found affected the claimants’ legitimate expectations. The Voluntary principles on Security and Human Rights were also invoked in the Vilca v Xstrata, where a UK court indicated that commitment to the Voluntary Principles on Security and Human Rights could demonstrate a legal duty of care.313 In sum, the above-mentioned domestic case law confirms the increasing persuasiveness of “soft law” company standards on the application of binding legal obligations based on the general principles of good faith, reliance and estoppel.314 Corporations may initially adopt a particular voluntary policy or code for strategic reasons, only to find that adherence is ‘gradually maintained out of conviction that they are the appropriate basis for action’.315 As a sui generis type of soft law, codes of conduct interact with human rights standards agreed upon by states and international organisations, and seem to clarify the expectations companies have accepted to live up to. In this respect, it has been argued that while the decision to adopt a code is voluntary, once subscribed it creates legitimate expectations of compliance.316 In one of his first reports Ruggie acknowledged that soft law in general has an important role in ‘crystallizing the emerging norms of the international community’, adding that the standard-setting role of soft law suggests increased state and corporate acknowledgment of evolving ‘social expectations’.317 Whether the principle of estoppel can turn codes of conduct into self-imposed obligations before domestic courts, may still be controversial. Yet the principle could turn useful in certain fora, such as international investment arbitration, in order to further strengthen the argument that companies are also expected to comply with their public statements.

312 313 314 315

Ibid, 5. Ibid, 33. Vilca & Others v Xstrata Ltd & Another (2016) EWHC 389 (QB) (High Court), para 25. Hevina S Dashwood, The Rise of Global Corporate Social Responsibility: Mining and the Spread of Global Norms (CUP 2012) 66. 316 Michael Kerr, Richard Janda and Chip Pitts, Corporate Social Responsibility: A Legal Analysis (LexisNexis 2009) 82. 317 UN HRC, ‘Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie: Business and Human Rights: Mapping International Standards of Responsibility and Accountability for Corporate Acts’ (19 February 2007) UN Doc A/HRC/4/35, para 62.

part iv

A General Principle on Corporate Liability in International Law Introduction Legal systems throughout the world recognise that corporate liability is the necessary counterpart of the legal privileges of corporate personhood. Pulling the strings and building up on the research carried out in the previous three parts, this part investigates argues that a general principle on corporate liability has emerged in international law. After an overview of corporate civil and criminal liability in domestic legal systems, the compatibility of such principle with the international legal system will be assessed for the purposes of its transposition on the international plane.

10

Corporate Liability as a General Principle of Law

10.1 Corporate Liability in Domestic Legal Systems Corporations are subject to civil, administrative and sometimes criminal liability in the world’s major legal systems. In the Kiobel case before the US Court of Appeals for the Second Circuit, the majority acknowledged that the widespread existence of corporate civil liability in domestic legal systems represents an interesting element of practice. Yet, according to the Court, such practice would not suffice to make corporate liability a customary rule, as the latter would require ‘universal recognition and acceptance as a norm in the relations of States inter se.1 The reasoning of the Court, reiterated by the majority in the Jesner v Arab Bank before the US Supreme Court, appears correct.2 The simple recognition of corporate liability as a matter of domestic law does not create a norm of customary international law. The question then becomes whether such recognition may produce a general principle on corporate liability, and to what extent such principle can be transposed to international law. As noted by the US Court of Appeals for the Second Circuit in Flomo v Firestone,3 corporate liability is a fundamental feature of the tort law of all major legal 1 2 3

Kiobel et al v Royal Dutch Petroleum et al. (17 September 2010) 621 F.3d 111 (US Court of Appeals 2nd Circuit). Jesner et al v Arab Bank (24 April 2018) 138 S.Ct. (US Supreme Court). Flomo v Firestone Nat. Rubber Co, LLC, 643 F.3d 1013 (2011) (7th Circuit Court of Appeals), 1019; see ‘Brief of Amici Curiae of Comparative Law Scholars and Practitioners in Support

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systems.4 Indeed, corporations continue to be subject to suits in courts throughout the world for conduct that violates national and international norms. Under US law, the principle that corporations can be held civilly liable, has long been recognized as ‘unquestionable’.5 As seen in part II, in the US, Canada, and the UK, tort law has been used as a means to hold corporations responsible for human rights violations. While the success of such lawsuits has ofte been impaired by jurisdictional hurdles, the case law that the general concept of corporate tort liability has for long been embedded in such legal systems. In the Italian legal system, civil liability is generally regulated by Article 2043 of the Italian Civil Code, according to which any person (be it an individual or a legal person) who causes damage to another party, whether intentionally or through negligence, must compensate the injured party.6 In 2017, The Nigerian community of Ikebiri filed a legal case before Italian courts against the Italian oil company ENI and its Nigerian subsidiary NOAC for the oil spill caused by NOAC in the Niger Delta.7 The claimants sought clean up of the oil pollution, as well as compensation. Although the case was settled, it shows that the Italian courts recognise the possibility of receiving complaints regarding the activities of Italian companies at variance with domestic norms incorporating international human rights and environmental standards. With regard to the French Legal system, Article 1240 provides that: ‘any act of man that causes damage to another, shall oblige the person by whose fault it occurred to repair it’.8 Article 1241 further clarifies that civil liability can be imposed on either legal or natural persons whose fault has caused a damage Furthermore, as seen in Part III, France has adopted in 2017 a Law on the Duty of Vigilance, which requires companies to undertake human rights due diligence in their operations and supply chain.9

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of Petitioners’ in the Jesner v Arab Bank Case (27 June 2017). See International Commission of Jurists, ‘Report of Legal Experts on Corporate Complicity in International Crimes – Civil Remedies’ (2008); Beth Stephens, ‘The Amorality of Profit: Transnational Corporations and Human Rights’ (2002) 20 Berkeley Journal of International Law 45–90, 64. United States v Amedy, 24 US 392 (1826) (US Supreme Court ), 412. Italian Civil Code, available at https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=67509. Ododo Francis (as representative of the Ikebiri Community) v ENI and NOAC (Nigerian Agip Oil Company, ENI Nigerian subsidiary). Details of the case are available at http://www. bhrinlaw.org/key-developments/60-italy. French Civil Code, available at https://www.legifrance.gouv.fr/. Loi No 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, available at https://www.legifrance.gouv.fr/affichTexte.do? cidTexte=JORFTEXT000034290626&categorieLien=id.

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Tort liability claims can also be brought under German Civil Code10 and the Dutch Civil Code.11 Furthermore, the 2019 Dutch Child Labour Due Diligence Act adopted in 2019 by the Senate, requires companies providing goods and services to the Dutch market, to submit a statement describing the steps taken to assess whether there is a reasonable suspicion that child labour occurs in their operations or in their supply chain.12 Having regard to corporate criminal liability, it has long been entrenched in common-law systems,13 being recognised as a general concept in Australia,14 the UK, the US and Canada,15 which in response to one of the deadliest mining incidents in Canadian history, amended its criminal code to hold companies and individual managers liable for criminal negligence.16 Companies can be held liable for a wide range of criminal offences in the UK. Under the UK Bribery Act 2010, for example, a company is liable to prosecution if, for example, its employee engages in bribery, unless the company can prove that it has “adequate procedures” in place to prevent the unlawful conduct.17 In the Indian legal system, corporations can be liable for breaches of India’s Penal Code, which applies to ‘any company or association or body of persons, whether incorporated or not’.18 In the African region, states such as Botswana,

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German Civil Code, Articles 31 and 89(1), available at https://www.gesetze-im-internet.de/ englisch_bgb/englisch_bgb.html#p3489. Dutch Civil Code, Articles 6:162, available at https://www.ilo.org/dyn/natlex/natlex4. detail?p_lang=en&p_isn=91671&p_country=NLD&p_classification=01.03. Dutch Child Labour Diligence Act (2019), available at http://www.bhrinlaw.org/ key-developments/66-netherlands. Jennifer A Zerk, ‘Corporate Liability for Gross Human Rights Abuses: Towards a Fairer and More Effective System of Domestic Law Remedies’ (UNHCR 2014); see also Anthony O Nwafor, ‘Corporate Criminal Responsibility: A Comparative Analysis’ (2013) 57 Journal of African Law 81–107. Australian Criminal Code Act, Part 2.5, available at https://www.legislation.gov.au/Details/ C2019C00043. Sarala Fitzgerald, ‘Corporate Accountability For Human Rights Violations in Australian Domestic Law’ (2005) 11 Australian Journal of Human Rights 33–70. See UN HRC, ‘Report of the Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises on its Mission to Canada’ (23 April 2018) UN Doc A/HRC/38/48/Add.1, para 70. UK Bribery Act, Sections 7–8, available at https://www.legislation.gov.uk/ukpga/2010/23/ contents. Indian Penal Code, Article 11, available at http://legislative.gov.in/actsofparliamentfromtheyear/ indian-penal-code.

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Ethiopia, Kenya, Nigeria, South Africa and Zambia, amongst others, recognise corporate criminal liability.19 Civil law countries, anchored in the principle societas delinquere non potest, according to which only individuals can be held criminally liable, are gradually recognising forms of corporate criminal responsibility or administrative penalties.20 The majority of the EU Member States have introduced either general criminal liability in their legal systems or corporate criminal liability for specific offences.21 And even jurisdictions that do not provide for corporate criminal liability generally provide for administrative penalties.22 This is the case of Germany, which limits criminal liability to natural persons, but still imposes financial sanctions on a corporation if one its officers has acted criminally on the entity’s behalf.23 In Italy, Law 231/2001 provides for a quasi-criminal form of corporate liability, which remains administrative but is still subject to criminal procedure.24 The list of crimes falling under the application of the law, originally confined to few serious crimes, includes today specific human rights abuses, such as child prostitution and pornography, trafficking in human beings, slavery and, since 19

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Botswana (Section 24 of the Penal Code 1964); Ethiopia (Article 34 of the Criminal Code 2004); Kenya (Section 23 of the Penal Code 1930); Nigeria (Sections 65–66 of the Companies and Allied Matters Act 1990); South Africa (Section 332 of the Criminal Procedure Act 1977); Zambia (Section 26(3) of the Penal Code Act 1950). See First Report on State Responsibility, by James Crawford’ (1998) ILC UN Doc A /CN. 4 /490/Add. 3, para 86. See Allens A Robinson, ‘Corporate Culture as a Basis for the Criminal Liability of Corporations’ (2008) Prepared for the United Nations Special Representative of the Secretary General on Human Rights and Business; Celia Wells and Juanita Elias, ‘Catching the Conscience of the King: Corporate Players on the International Stage’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 154; See Jernej Letnar Cernic, ‘Corporate Accountability for Human Rights: From a Top-Down to a Bottom-Up Approach’ in Jena Martin and Karen E Bravo (eds), The Business and Human Rights Landscape (Cambidge 2016), 202 ff. These includes E.g. Norway (1991), Iceland (1993), France (1994), Finland (1995), Slovenia (1995), Belgium (1999), Estonia (2001), Hungary (2001), Malta (2002), Croatia (2003), Lithuania (2003), Poland (2003), Switzerland (2003), Slovakia (2004), Romania (2004), Austria (2006), Luxembourg (2010), Spain (2010), Czech Republic (2011) See Gert Vermeulen, Wendy de Bondt, Charlotte Ryckman, ‘Liability of Legal Persons for Offences in the EU’ (European Commission 2012); Marc Engelhart, ‘Corporate Criminal Liability from a Comparative Perspective’, in Dominik Brodowski and others (eds), Regulating Corporate Criminal Liability (Springer 2014). For a comparative overview, see Dominik Brodowski and others (eds), Regulating Corporate Criminal Liability (Springer 2014). Act on Regulatory Offenses, available at https://www.gesetze-im-internet.de/englisch_owig/ Legislative Decree No 231 of 8 June 2001 (Lgs. Decree no. 231/2001), available at https://sherloc. unodc.org/cld/document/ita/2001/legislative_decree_8_june_2001_no._231_english.html.

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2015, environmental crimes. Corporate liability arises when one of the listed crimes has been committed in the interest or to the advantage of the company. In order to avoid incurring liability, the company must prove that a sound model of organisation, management and control has been adopted to prevent the crime.25 Fines are assessed on the severity of the act, the degree of liability on the part of the body, and the activity performed to eliminate or mitigate the consequences of the act in order to prevent the commission of further unlawful acts. Furthermore, in 2016 a law was adopted to tackle forms of severe labour exploitation in agriculture, where most victims are migrants.26 The rules aim at addressing the phenomenon known as “Caporalato”, a form of labour exploitation in the the agriculture sector, which is accompanied by a lack of protection or a denial of fundamental rights and indecent living conditions. The law has amended the Italian Criminal Code and extended the responsibility of the employer who ‘exploits workers by taking advantage of their situation of need or want’. The French Code penal of 1994 introduced the concept of corporate criminal liability in French law. Initially applicable to a select number of offences, the principle has been subsequently extended to all offences.27 Under Articles 121–122 of the French criminal code, companies can be held criminally liable for the offences committed on their behalf by their organs or representatives. It is under this legal basis that in 2016 two NGOs, together with eleven former Syrian employees of Lafarge, filed a criminal complaint as parties civiles against the French cement company Lafarge, its Syrian subsidiary and a number of corporate executives. Lafarge was charged for complicity in war crimes, crimes against humanity, financing of a terrorist enterprise, deliberate endangerment of people’s lives and forced labour. The defendant allegedly bought raw material from diverse jihadists groups in Syria, among which the so-called ISIS (Islamic State of Iraq and the Levant), and allegedly paid sums in exchange for safe passage of its workers in the conflict-affected areas. The the case is still pending.28 In the Netherlands, a corporation can, in principle, commit and be prosecuted for any kind of offence, as Article 51 of the Dutch Criminal Code provides that

25

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In the case of offences committed by a senior manager, the company is assumed guilty unless it can demonstrate that it had an effective (compliance) program in place to prevent crimes and that the program had also been controlled effectively. In the case of offences committed by subordinate employees, the company is liable if the offence is due to the lack of supervision and control of senior managers and the company has no effective (compliance) program in place. Law 199 of 29 October 2016 (Provisions on countering undeclared labour, labour exploitation in agriculture and wages rebalance in agricultural sector). (Law No 2004-204 of 9 March 2004). See https://www.business-humanrights.org/en/latest-news/lafarge-lawsuit-re-complicityin-crimes-against-humanity-in-syria/

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criminal offenses can be committed by natural persons and legal persons.29 Companies in Japan do not face general criminal liability for all kinds of crimes.30 However, a number of statutory provisions, such as in the field of labour and environmental law, contemplate criminal liability of companies for crimes carried out by the company’s representatives or employees, where the misconduct in question relates to the company’s activities. While corporate criminal liability in South American countries remain rare, it is increasingly admitted for specific offences.31 This is the case of Brazil, where corporations cannot generally be held criminally liable for the conduct of their directors, officers or employees. Article 3 of the Law of Environmental Crimes, however, provides for corporate civil, administrative and criminal liability for environmental offences.32 Needless to say, by requiring states to set up civil, criminal and administrative liability, treaties represent an important propulsive force of corporate liability at the domestic level. The Council of Europe has invited states to ensure, within their domestic legal orders, that businesses, or their officers, can be held liable in criminal, civil or administrative law, for causing, or participating in, crimes under international law, specific offences referred to by Council of Europe and other international treaties, in areas such as corruption, human trafficking, cybercrime, domestic violence, child prostitution other offences constituting serious human rights abuses, such as forced evictions.33 A significant number of conventions already contain rules that require countries to provide for criminal, civil or administrative sanctions against corporations.34 Article 2 of the OECD Convention on Combating Bribery of Foreign Public Officials, titled Responsibility of Legal Persons’, affirms that ‘each Party shall take such measures as may be necessary, in accordance with its legal principles to

29 30 31

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Dutch Criminal Code, Article 51. Available at https://www.ilo.org/dyn/natlex/natlex4. detail?p_lang=&p_isn=69274&p_classification=01.04. Japanese Penal Code, available at http://www.japaneselawtranslation.go.jp/law/ detail/?id=1960&vm=04&re=02. See Jernej Letnar Černič, ‘Corporate Accountability for Human Rights: From a Top-Down to a Bottom-Up Approach’ in Jena Martin and Karen E Bravo (eds), The Business and Human Rights Landscape: Moving Forward, Looking Back (CUP 2016), 201–204. Federal Law 9605/1998. ‘Recommendation CM/Rec(2016) of the Committee of Ministers to member States on human rights and business’ (2 March 2016). See Convention against Transnational Organized Crime (adopted 15 November 2000) 2225 UNTS 209, Article 10; International Convention on the Suppression and Punishment of the Crime of Apartheid (adopted 30 November 1973, entered into force 18 July 1976) 1015 UNTS 243, Article 1(2).

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establish the liability of legal persons for the bribery of a foreign public official’.35 As it has been pointed out, the OECD Convention provided a pioneer model in tackling corporate liability rather than just individual wrongdoing.36 Here states are free to choose whether or not to establish corporate criminal liability, as long as the sanctions imposed are “effective, proportionate and dissuasive”.37 Another example is the UN Convention against Transnational Organized Crime, which compels states to adopt the necessary measures to establish the liability of legal persons in three cases: participation in serious crimes involving an organised criminal group; money laundering, corruption, obstruction of justice.38 In his Interim Report John Ruggie noted that ‘there are reasons to believe that the potential for greater corporate liability under domestic criminal law for grave human rights violations committed abroad also may be evolving’.39 The ILC Draft Articles on Prevention and Punishment of Crimes Against Humanity requires states, subject to the provisions of their national law, to take measures, where appropriate, to establish the liability of legal persons. Notably, such liability may be criminal, civil or administrative, depending on the legal principles of each state.40 Furthermore, Article 46C of the Malabo Protocol to the African Court of Justice and Human Rights has established the criminal jurisdiction of an international court over legal persons for purposes of corporate criminal liability41 An increasing number of legal systems have indeed incorporated corporate liability for international crimes into their criminal codes.42 In France, for example, ‘legal persons may incur criminal liability for crimes against humanity pursuant to the conditions set out under Article 121–2’.43 In addition, with regard to the charges of complicity in war crimes and crimes against humanity and the charge of financing a terrorist enterprise, the principle of universal jurisdiction under which serious international crimes can be prosecuted in national courts 35 36 37 38 39 40 41 42

43

OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (adopted 18 December 1997, entered into force 15 February 1999). Mark Pieth, ‘The Responsibility of Legal Persons’ in Mark Pieth and Others (eds), The OECD Convention on Bribery A Commentary (CUP 2010) 176. OECD Convention on Combating Bribery, Article 3. Article 10. UN Doc E/CN.4/2006/97, para 63. ‘ILC Draft Articles on Prevention and Punishment of Crimes Against Humanity’ Yearbook of the International Law Commission, 2019, vol II, Part Two, Article 6(8). African Union, Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human Rights (adopted 27 June 2014). E.g, Argentina, Australia, Belgium, Canada, Germany, the Netherlands, South Africa, Spain, and the United Kingdom. See Caroline Kaeb, ‘The Shifting Sands of Corporate Criminal Liability under International Criminal Law’ (2018) 49 George Washington International Law Review 351–403. French Criminal Code, Article 213(3).

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worldwide, also applies, according to Articles 689-1, 689-10 and 689-11 of the criminal procedure code. In sum, corporate liability permeates the majority of domestic jurisdictions. What remains to be assessed is the suitability of the principle to the international legal order. As noted by Oscar Schachter, the ‘most important limitation on the use of municipal law principles arises from the requirement that the principle be appropriate for application on the international level’.44 In the case of corporate liability, this inevitably requires dismantling some formalistic and dogmatic clichés of international law, starting from the international legal personality of corporations and the latter’s alleged threat to sovereignty. Transposing the Principle into International Law: Overcoming Legal Clichés That corporations are not states is perhaps the only statement enjoying universal consensus in the long-lasting debate surrounding their status in international law.45 The majority of scholarly works on business and human rights begin with an in-depth examination of the international legal personality of corporations in international law. I argue that the issue of legal personality, fraught with burdensome conceptualisations, should not be framed as a precondition to assess the existence of corporate obligations under international law. As convincingly argued by Alvarez, 10.2

International lawyers should spend their time addressing which international rules apply to corporations rather than whether corporations are or are not “subjects” of international law. Scepticism about the “personhood” of corporation should not be confused with doubts about whether international corporations have responsibilities (as well as rights) under international law. Clearly they now have both.46

44 Oscar Schachter, ‘International Law in Theory and Practice: General Course in Public International Law’ (1991) 178 RdC 21, 78. 45 Philip Alston, ‘The “Not-a-Cat” Syndrome: Can the International Human Rights Regime Accommodate Non-State Actors?’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2005), 7. 46 José E Alvarez, ‘Are Corporations “Subjects” of International Law?’ (2011) 9 Santa Clara Journal of International Law 1–36, 30; See also Emeka A Duruigbo, ‘Corporate Accountability and Liability for International Human Rights Abuses: Recent Changes and Recurring Challenges’ (2008) 6 Northwestern Journal of International Human Rights 222–261, 225.

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Legal personality is a concept common to all legal systems.47 Differently from domestic legal systems, however, international law lacks precise rules on legal personality.48 While being ‘an arena to which in most circumstances, one needs a ticket’,49 the international legal system does not provide explicit rules setting out the conditions to “obtain such ticket”. The diversity of scholarly opinions on who can be a subject of international law largely depends on the different doctrinal stands embraced.50 According to the “pure” positivist approach, states are the only subjects of international law.51 Actors other than states would be mere ‘objects’.52 Other focus on the difference between primary and secondary subjects,53 discerning a derived and limited personality for non-state entities, as opposed to original and plenary personality that belongs only to states.54 While primary subjects, i.e. states, would be subjects without which the system could not exist, the others would only enjoy the rights and duties conferred upon them by states.55 Another well-known perspective, known as the “policy-oriented” approach, rejects the ‘intellectual

47

James Crawford, The Creation of States in International Law (2 edn, OUP 2006) 32. On the concept of international legal personality, see Janne E Nijman, The Concept of International Legal Personality: an Inquiry into the History and Theory of International Law (T.M.C. Asser Press 2004); Roland Portmann, Legal Personality in International Law (CUP 2010). 48 Nicola Jägers, ‘The Legal Status of the Multinational Corporation in International Law’ in Michael K Addo (ed), Human Rights Standards and the Responsibility of Transnational Corporations (Kluwer Law International 1999), 262. 49 James Crawford, Brownlie’s Principles of Public International Law (8 edn, OUP 2012) 126; See also Bin Cheng, ‘Subjects of International Law’ in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff Publishers – UNESCO 1991), 24. 50 For an analysis of the different doctrinal approach, see Astrid Kjeldgaard-Pedersen, The International Legal Personality of the Individual (OUP 2018) 14 ff. 51 Lassa Oppenheim, International Law: a Treatise (Longmans 1905) 99. 52 Philip C Jessup, ‘The Subjects of a Modern Law of Nations’ (1947) 45 Michigan Journal of International Law 383–498; George Manner, ‘The Object Theory of the Individual in International Law’ (1952) 46 AJIL 428–449. 53 Bin Cheng, ‘Subjects of International Law’, in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff Publishers – UNESCO 1991) 54 Vincent Chetail, ‘The Legal Personality of Multinational Corporations, State Responsibility and Due Diligence: The Way Forward’ in Denis Alland and Others (eds), Unity and Diversity of International Law Essays in Honour of Professor Pierre-Marie Dupuy (Martinus Nijhoff Publishers 2014), 105 ff. 55 Christian Dominicé, ‘La personnalité juridique dans le système du droit des gens’ in Jerzy Makarczyk (ed), Theory of International Law at the Threshold of the 21st Century: Essays in Honour of Krzysztof Skubiszewski (Kluwe Law International 1996) 151; on the state as ‘fait primaire’, see Georges Abi-Saab, ‘Cours général de droit international public’ (1987) 207 RdC 29, 68.

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prison’ of subjects and focuses on the concept of “participants”.56 According to such view, international law is a decision-making process participated by a variety of actors, including corporations. In its often quoted 1949 advisory opinion, the ICJ recalled that ‘[t]he subjects of law in any legal system are not necessarily identical in their nature or in the extent of their rights, and their nature depends on the needs of the community’.57 According to the Court, to be a subject means ‘to be capable of possessing international rights and duties, and that it has capacity to maintain its rights by bringing international claims’.58 The statement of the Court is the closest thing we have to a definition of legal personality in international law. It explains that the category of “subjects” is comprehensive enough to include different types of entities with different degrees of legal personality or, to use a more practical term, of legal capacity.59 Indeed, the concept of legal capacity appears better equipped to capture the multifaceted landscape of legal persons in international law.60 Capacity also allows to distinguish the substantive dimension of a right or a duty, from its procedural aspect, as the two dimensions do not necessarily go together.61 The view is therefore shared that corporations are persons sui generis and their features cannot be equalled to those of states or individuals.62 As argued by Lowe, there are some considerable differences between individuals and business entities.63 Corporate entities, like states, are legal fictions. It should therefore be easier to admit them to the international legal system.64 Be that as it may, just like for individuals, companies do not own (or not anymore) their legal personality to the recognition of states. As a matter of fact, companies have come to enjoy rights and obligations in international law.65

56 57 58 59 60 61 62 63 64 65

Rosalyn Higgins, Problems and Process: International Law and How We Use It (OUP 1995) 49. Reparations for Injuries Suffered in the Service of the United Nations (Advisory Opinion) [1949] ICJ Rep 174, 178. Ibid, 179. Elihu Lauterpacht, ‘The Development of the Law of International Organization by the Decisions of International Tribunals’ (1976) 152 RdC 377, 403. Daniel P O’Connell, International Law, vol 1 (Stevens and Sons 1965) 81–82; Andrew Clapham, Human Rights Obligations of Non-State Actors (OUP 2006) 77. Hersch Lauterpacht, ‘General Rules of the Law of Peace’ in Elihu Lauterpacht (ed), International Law: Being the Collected Papers of Hersch Lauterpacht, vol 1 (CUP 1970), 286–287. Vaughan Lowe, ‘Corporations as International Actors and International Law Makers’ (2004) 14 Italian Yearbook of International Law 23–38. Ibid, 36. Markos Karavias, Corporate Obligations under International Law (OUP 2013) 9. Alain Pellet, ‘“Human Rightism” and International Law’ (2001) 10 Italian Yearbook of International Law 3–16, 14.

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Following such approach, the relevant question concerns the degree of legal capacity enjoined by corporations in international law.66 Many proponents of the international legal personality of corporations rely on the discrepancies between the legal framework and the economic and social reality, arguing that corporations wield so much power that they should be recognised as legal persons and regulated in international law. As observed by Nowrot, The current predominant view concerning the prerequisites of international legal personality is neither compatible with the central aim of the current international legal order, nor is it reflective of the resulting necessity for international law to be in sufficient conformity with the changing realties of the international system […] In an economic as well as political sense [corporations] are among the most influential participants in the current international system, thereby being endowed with a considerable potential to positively contribute to, but also to frustrate the promotion and protection of global public goods.67 Nowrot underscores that an approach to international legal personality that fails to consider relevant de facto actors as legal persons risks creating pernicious gaps in the normative system.68 There is no denying that given the considerable power of business entities, the latter ought to be regulated. But such power does not necessarily provide a proof of the international legal capacity of corporations. Any assessment of the legal capacity of corporations cannot but be based on factual evidence, as any different premise risks resulting in a circular argument.69 There is ample evidence that corporations have a certain degree of legal capacity,70 and that such level of capacity is in principle enough for them to carry international human rights obligations. 66 67

Dominique Carreau and Fabrizio Marrella, Droit International (11 edn, Pedone 2012) 439 ff. Karsten Nowrot, ‘Reconceptualising International Legal Personality of Influential Non-State Actors: Towards a Rebuttable Presumption of Normative Responsibilities’ (2005) 80 Philippine Law Journal 563–586, 585. 68 Daniel Thürer, ‘The Emergence of Non-Governmental Organizations and Transnational Enterprises in International Law and the Changing Role of the State’ in Rainer Hofmann and and others (eds), Non-State Actors as New Subjects of International Law (Duncker & Humblot 1999), 58. 69 Robert Jennings and Arthur Watts, Oppenheim’s International Law, vol 1 (9 edn, OUP 2008) 16. 70 Patrick Dumberry and Érik Labelle-Eastaugh, ‘Non-state Actors in International Investment Law: The Legal Personality of Corporations and NGOs in the Context of Investor-State Arbitration’ in Jean d’Aspremont (ed), Participants in the International Legal System: Multiple Perspectives on Non-state Actors in International Law (Routledge 2011), 364.

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First, corporations hold rights in international law.71 The ECHR provides an example of international protection of the rights of companies.72 Although only Protocol No 1 on the right to property expressly recognizes legal persons as recipients of fundamental rights, several other human rights enshrined in the ECHR are granted to corporations as well. Indeed, under Article states must secure the Convention’s rights to everyone within their jurisdiction.73 By “everyone” the drafters of the Convention intended to include both individuals and legal persons.74 The ECtHR has recognised such actors substantive rights such as the right to a fair trial,75 the right to respect for private life76 and freedom of expression.77

71

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73 74

75 76 77

Michael K Addo, ‘The Corporation as a Victim of Human Rights Violations’ in Michael K Addo (ed), Human Rights Standards and the Responsibility of Transnational Corporations (Kluwer Law International 2000); Jennifer A Zerk, Multinationals and Corporate Social Responsibility: Limitations and Opportunities in International Law (CUP 2006) 75 ; F Èmilie Schwaller, ‘Les droits fondamentaux des enterprises: outiles ou obstacles à l’imputation de responsabilité?’ in Kathia Martin-Chenu and René de Quenaudon (eds), La RSE Saisie par le droit (Pedone 2016). The HRCtee has recognised that legal entities may enjoy certain rights under the Convention (General Comment 31, para 9). Yet the Committee does not receive communications lodged by corporations, see UN Human Rights Committee, A Newspaper Publishing Company v Trinidad and Tobago, Communication No 360/1989, para 3(2); The ACHR, in Article 1(2) explicitly clarifies that the Convention creates rights only for individuals, as confirmed by the IACtHR advisory opinion. The African system does not consider the protection of fundamental rights of legal persons to be a Charter objective on its own; it merely seems to provide that protection as instrumental for the protection of human beings, see Constitutional Rights Project, Civil Liberties Organisation and Media Rights Agenda v Nigeria (1999 Comm No 140/94, 141/94, 145/95. Convention for the Protection of Human Rights and Fundamental Freedoms (adopted 4 November 1950, entered into force 3 September 1953) 213 UNTS 221. Marius Emberland, The Human Rights of Companies: Exploring the Structure of ECHR Protection (OUP 2006) 3; Emberland recalls that the first draft of the Convention included ‘any natural or corporate person’ as potential applicants, 35. Fortum Oil and Gas Oy v Finland (2002) ECtHR App No 32559/96; Paykar Yev Haghtanak Ltd v Armenia, (2007) Application No 21638/03. Niemietz v Germany (2002) ECtHR App No 13710/88; Société Colas Est v France App No 37971/97, paras 41–42. Times Newspaper Ltd, Harold Evans v UK ECtHRApp No 6538/74; Gmppera Radio AG v Switzerland (1990) ECtHR App No 10890/84; Kobenter and Standard Verlags Gmbh v Austria (2006) ECtHR App No 60899/00, paras 22–33; Verein gegen Tierfabriken Schweiz (VgT) v Switzerland (no. 2) (2009) ECtHR App No 32772/02.

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As we have seen in Part III, investment agreements also grant rights to investors, both as individuals and corporations.78 States commit to observing certain standards with regard to foreign investors, such as FET, full protection and security, as well as non-discrimination. Investment agreements also generally provide investors with substantive rights and active locus standi before international investment tribunals. Investor-State dispute settlement is not the only example of companies’ access to dispute settlement. The Iran-United States Claims Tribunal and the UNCLOS Tribunal also have jurisdiction over legal persons.79 Furthermore, companies can bring claims for violations of EU Law before the EU Court of Justice. As the latter noted in Van Gend en Loos: The Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only member states but also their nationals. Independently of the legislation of member states, community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. These rights arise not only where they are expressly granted by the treaty, but also by reason of obligations which the treaty imposes in a clearly defined way upon individuals as well as upon the member states and upon the institutions of the community.80 Second, companies can be addressees of resolutions adopted by the UN Security Council. The latter is empowered, under Article 41 of the UN Charter, to adopt non-military coercive measures, including economic sanctions. States, as well as corporations and individuals, can be addressees of such sanctions.81 The SC has indeed adopted targeted sanctions against individuals and legal persons potentially involved with serious violations of human rights and international humanitarian law.82 Although such resolutions are often addressed to 78

79 80 81 82

Peter Malanczuk, Akehurst’s Modern Introduction to International Law (7 edn, Routledge 1997) 101; Patrick Dumberry, ‘L’entreprise, sujet de droit international ? : retour sur la question à la lumière des développements récents du droit international des investissements’ (2004) 108 Revue générale de droit international public 103–122. United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3, Article 292. Van Gend en Loos v Nederlandse Admniistratie der Belastingen (1963) ECR 1. Accordance with International Law of the Unilateral Declaration of Independence in Respect of Kosovo (Advisory Opinion) [2010] ICJ Rep 403, paras 116–117. See Régis Bismuth, ‘Mapping a Responsibility of Corporations for Violations of International Humanitarian Law: Sailing Between International and Domestic Legal Orders’ (2010) 38 Denver Journal of International Law and Policy 203–226, 2010.

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states,83 and only indirectly to companies,84 their content can provide quite detailed measures to be followed by corporate actors. In its Resolution 1952, the SC required importers processing industries and consumers of Congolese mineral products to ‘carry out due diligence so as to mitigate the risk of further exacerbating the conflict […] by providing direct or indirect support to […] criminal networks and perpetrators of serious violations of international humanitarian law and human rights abuses’.85 Third, corporations have also started to ‘edge their way on[to] the international stage, making concession agreements with States and litigating against States as if they were their equals’.86 While the argument has been made that corporations enjoy some ius contrahendi in international law, the question of the legal value of the contracts between states and corporations remains unsettled.87 The classical view as expressed in the Serbian Loans the PCIJ is that ‘[a]ny contract which is not a contract between sovereign states in their capacity as subjects of public international law is based on the municipal law of some country’.88 Following World War II, there has been an increasing trend to qualify certain categories of contracts between states and corporations as “internationalized contracts”. The Texaco v Lybia award, which concerned the nationalization by Libya of several petroleum concessions held by two American companies,89 noted that ‘[c]ontracts between States and private persons can, under certain conditions come within the ambit of a particular and new branch of international law: The international law of contracts’.90 The critique against the internationalization of contracts as envisaged in Texaco revolved precisely around questions of legal personality.91 In criticizing the Award, Rigaux argued that it is the legal status of the private person that determines the legal feature of an agreement, and not vice-versa. The corporation cannot derive its international personality from entering into a contract governed by international law, as to enter such a 83 84

85 86 87 88 89 90 91

See David Adedayi Ijalaye, The Extension of Corporate Personality in International Law (Oceana Publications 1978) 245. SC Res 283 (29 July 1970): The SC ‘calls upon all States to withhold from their nationals or companies of their nationality not under direct governmental control, government loans, credit guarantees and other forms of financial support that would be used to facilitate trade or commerce with Namibia’. SC Res 1952 29 (29 November 2010), para 7. Vaughan Lowe, International Law (OUP 2007) 16. Hugh Thirlway, The Sources of International Law (OUP 2014) 23–24. Serbian Loans, [1929] PCIJ Series A, No 20/21, 41. Texaco Overseas Petroleum Company and California Asiatic Oil Company v The Government of the Libyan Arab Republic (19 January 1977) reprinted in (1978) 17 ILM 1. Ibid, 32. Ignaz Seidl-Hohenveldern, ‘The Theory of Quasi-International and Partly International Agreements’ (1975) 11 Revue belge de droit international 567–570.

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contract it should already enjoy a measure of international personality under international law.92 Beside internationalised contracts, companies are increasingly involved in more or less formalised “standard setting”. The ILO tripartite model envisages a role for corporations in the elaboration of international standards. Business entities take part in the trilateral structure of discussion at the ILO alongside trade union and governmental representatives. Perhaps Muchlinski is right in pointing out that this tells much about their power and influence, rather than about the legal status of corporations.93 But the ILO is not, or not anymore, an isolated case. Corporations have increasingly become ‘regulatory entrepreneurs’, particularly when the treaty relates to their activities. This holds true for the treaty on business and human rights currently being negotiated, but also for other instruments.94 The UN Convention on the Law of the Sea and the Framework Convention on Climate Change provide an example of the strong corporate role.95 The negotiation of the UN 2030 Agenda on Sustainable Development also saw a major role of the business sector.96 The International Organization for Standardization, an NGO which counts over 160 national standards bodies as members, launched the ISO 26000 in 2010.97 The standard was developed and negotiated over five years by representatives from governments, NGOs, industry, consumer groups and labour organisations, and the business sector. It provides internationally agreed CSR guidance for all types of organisations regardless of their activity, size or location. Companies also engage in standard setting within multi-stakeholder initiatives focusing on specific sectors, such as the extractive industry, private security or the information and communications technology  sector.98 The Voluntary 92 93

94 95

96 97 98

François Rigaux, ‘Des dieux et des héros – Réflexions sur une sentence arbitrale’ (1978) 67 Revue critique de droit international privé 435–459, 445–446. Peter T Muchlinski, ‘Multinational Enterprises as Actors in International Law: Creating ‘Soft Law’ Obligations and ‘Hard Law’ Rights’ in Math Noortmann and Cedric Ryngaert (eds), Non-State Actor Dynamics in International Law: From Law-Takers to Law-Makers (Ashgate 2010) 12. Anne Peters, Jan Klabbers and Geir Ulfstein, The Constitutionalization of International Law (OUP 2009) 248. Justine Nolan, ‘Responsibility to Respect: Soft Law or not Law?’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013), 141. See Ludovica Chiussi, ‘The UN 2030 Agenda on Sustainable Development: Talking the Talk, Walking the Walk?’ (2016) 71 La Comunitá internazionale 49–70. For a comprehensive analysis of the ISO 26000 see Lars Moratis and Timo Cochius, ISO 26000: The Business Guide to the New Corporate Social Responsibility (Routledge 2017). For an analysis of instruments addressing the extractive sector, see Scott Jerbi, ‘Extractive and Multi-stakeholders Initiatives: The Voluntary Principles on Security and Human Rights;

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Principles on Security and Human Rights, adopted in 2000 guide corporations on three sets of issues: risk assessment, including the potential for violence; identification of the potential human rights vulnerabilities faced by companies in their relationship with local military and police, as well as recommendations for how to deal with them.99 Within the fast pace of development of the information and technology sector, the Global Network Initiative was launched in 2008 by IT companies, investors and civil society, providing for a set of principles for companies operating in information and technology sector, to ensure they respect freedom of expression and privacy.100 The principles, anchored in the International Bill of Human Rights, the OECD Guidelines and the UNGPs, require companies to respect the freedom of expression also in presence of state acts that may be inconsistent with international human rights law.101 With regard to the right to privacy, participating corporations must employ protections with respect to personal information in all countries where they operate.102 Finally, in the aftermath of the collapse of the Rana Plaza building in Bangladesh, a group of predominantly European apparel companies developed the Accord on Fire and Building Safety, followed by the establishment of the Alliance for Bangladesh Worker Safety. The Accord on Fire and Building Safety in Bangladesh was signed in 2013 and is a five year independent, legally binding agreement between global brands and retailers and trade unions designed to build a safe and healthy garment industry.103

99 100

101 102 103

The Extractive Industry Transparency Initiative; The Kimberly Process Certification Scheme’ in Dorothée Baumann-Pauly and Justine Nolan (eds), Business and Human Rights: From Principles to Practice (Routledge 2016); with regard to private security companies, see Peter Corporate Warriors – The Rise of the Privatized Military Industry, (Cornell University Press 2003); on the information and communication technology sector, see Michael Samway, ‘The Global Network Initiative: How Can Companies in the Information and Communications Technology Industry Respect Human Rights?’ in Baumann-Pauly and Nolan (eds), Business and Human Rights: From Principles to Practice (n 98). Voluntary Principles on Security and Human Rights, available at http://www.voluntary principles.org/. Global Network Agreement Principles on Freedom of Expression and Privacy, available at https://globalnetworkinitiative.org. Adhering companies include, among others, Facebook, Google, Linkedin, Microsoft, Yahoo. Ibid, Principle 2. Ibid, Principle 3. See Jaakko Salminen, ‘The Accord on Fire and Building Safety in Bangladesh: A New Paradigm for Limiting Buyers’ Liability in Global Supply Chains?’ (2018) American Journal of Comparative Law 411–451.

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In sum international law is often presented as a system designed ‘exclusively by States exclusively for States’,104 regulating relations between entities that are superiorem non recognoscentes.105 The extent to which this statement was originally meant to describe the one and only reality of international law goes beyond the scope of this study.106 Yet it is noteworthy that other definitions of international law do not exclude non-state actors from the international legal scenario.107 Ius gentium, literally jus inter gentes, was conceived as the law applicable to the universal community.108 While civil law applied to Roman citizens only, ius gentium provided the rules applicable to cases between foreigners.109 Already in the 18th century, states recognised that piracy acts violated international law.110 Furthermore, the economic interactions between non-state actors have long been visible, by way of example, in the lex mercatoria.111 Actors such as the Dutch East India Company and the West India Companies not only wielded enormous economic influence, they also had the power to make war and peace, and to sign agreements.112 104 James Crawford, ‘Chance, Order, Change: The Course of International Law’ (2013) 365 RdC 27, 146. 105 In the words of Lotus, ‘international law governs relations between independent states’ [1927] PCIJ Ser A No 9, 18. See also Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (Burns & Hart 1970) 296; Lassa Oppenheim, International Law: A Treatise (Longmans 1905) paras 289–290. 106 On this point, see Jordan J Paust, ‘Nonstate Actor Participation in International Law and the Pretense of Exclusion’ (2011) 51 Virginia Journal of International Law 977–1004. 107 See, e.g. Blackstone, ‘The law of nations is a system of rules, deducible by natural reason, and established by universal consent among the civilized inhabitants of the world; in order to decide all disputes, to regulate all ceremonies and civilities, and to insure the observance of justice and good faith, in that intercourse which must frequently occur between two or more independent states, and the individuals belonging to each’, in William Blackstone, Commentaries on the Laws of England. Book the Fourth (Strahan & Woodfall 1975) Chapter 5, 67. 108 Hugo Grotius, The Rights of War and Peace. Book I (1625) Chapter 1, XIV, 162; see Gordon E Sherman, ‘Jus Gentium and International Law’ (1918) 12 AJIL 56–63. 109 Hermann Mosler, ‘The International Society as a Legal Community’ (1974) 140 Recueil des cours 11, 137–138. 110 James Crawford, Brownlie’s Principles of Public International Law (8 edn, OUP 2012) 302 ff. 111 See Ralph G Steinhardt, ‘Corporate Responsibility and the International Law of Human Rights: The New Lex Mercatoria’ in Philip Alston (ed), Non-State Actors and Human Rights (OUP 2006) 221 ff; Cedric Ryngaert, ‘Non-State Actors: Carving Out a Space in a State-Centred International Legal System’ (2016) 63 Netherlands International Law Review 183–195. 112 Philip C Jessup, A Modern Law of Nations (The Macmillan Company 1948), 22; see also Nick Robins, The Corporation that Changed The World : How The East India Company Shaped the Modern Multinational (2 edn, Pluto Press 2012); Pepijn Brandon, ‘Between Company and State: The Dutch East and West India Companies as Brokers between War and Profit’ in Grietje Baars and André Spicer (eds), The Corporation: A Critical, Multi-Disciplinary Handbook (CUP 2017).

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Even if one concedes that originally international law was not concerned with non-state actors, a cursory look at the present international legal system reveals a picture replete with changes.113 The individual has been recognised in many instances as a bearer of international rights and obligations.114 International law permeated new areas where non-state actors are inevitably involved.115 International organisations, non-governmental organisations (NGOs), and corporations are today visible to the international legal system, having made their way into a number of areas previously confined to the exclusive domain of states.116 It has become difficult, for the system, to ignore these latter-day ‘Princes’ and ‘Princesses’.117 The normative and institutional expansion of international law has also reverberated throughout its relationship with municipal systems. The increased permeability of states has gradually broken down the barrier between matters of international concern and those of domestic jurisdiction.118 Meanwhile, the privatisation of services in many sectors traditionally regarded to fall within the spectrum of state prerogatives has increasingly blurred the dividing line between the public and private spheres.119 In this context the unprecedented scope of activities carried out by corporations, enhanced by the process of globalisation, has been portrayed as a factor 113 Robert Y Jennings, ‘Universal International Law in a Multicultural World’ in Maarten Bos and Ian Brownlie (eds), Liber Amicorum for the Rt Hon Lord Wilberforce (Clarendon Press 1987), 39. 114 Anne Peters, Beyond Human Rights: The Legal Status of the Individual in International Law (Cambridge University Press 2016) 60 ff. 115 ‘[A] fundamental change has occurred within public international law. The traditional view of public international law as a system of law merely regulating the conduct of states among themselves on the international plane has long been discarded. In its place has emerged a system which includes the regulation of human rights by international law […]’, in Belhaj v Straw (30 October 2014) EWCA Civ 1394 (Court of Appeal), para 115. 116 Myres S McDougal, ‘International Law, Power, and Policy: a Contemporary Conception’ (1953) 82 Recueil des cours 137, 227 ff; Gaetano Arangio-Ruiz, ‘Le domaine réservé : l’organisation internationale et le rapport entre droit international et droit interne: cours général de droit international public’ (1990) 225 RdC 29. 117 W Michael Reisman, ‘The Quest for World Order and Human Dignity in the Twenty-first Century: Constitutive Process and Individual Commitment’ (2012) 351 RdC 29, 36. 118 See Bruno Simma, ‘International Human Rights and General International Law: A Comparative Analysis’ in Academy of European Law (ed), The Protection of Human Rights in Europe (Kluwer Law International/Martinus Nijhoff Publishers 1995). 119 See Andrew Clapham, Human Rights in the Private Sphere (Clarendon Press 1996); Anne Peters, ‘Privatisation under Public International Law’ (Hersch Lauterpacht Memorial Lecture) (2017), available at https://podtail.com/en/podcast/lcil-international-law-seminar-series/ hersch-lauterpacht-memorial-lecture-2017-privati-4/; Manfred Nowak, Human Rights or Global Capitalism: The Limits of Privatization (University of Pennsylvania Press 2016).

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challenging the state’s grip on sovereignty,120 giving way to new and disaggregated forms of governance beyond the nation-state.121 The Westphalian model has often been used as a “cliché” by the international legal scholarship.122 The risk of a demise of sovereignty has been used either to portray a perpetual crisis of international law, or to warn against the recognition of an international legal status to non-state actors, including corporations.123 It is submitted here that such concerns are overstated.124 There is no denying that sovereignty, both in its internal and external dimensions, is still a structural principle of the international legal order.125 According to Crawford, sovereignty ‘is not exhausted by the concession or recognition of rights’, given that the enforcement of such rights still relies on states.126 Similarly, the hypothetical expansion of the spectrum of duty bearers, so as to include non-governmental actors, does not replace the role of states. As regulation and 120 The UN Development Programme recognised that globalisation and its consequences had led to a substantial shift in global dynamics, noting in 1994 that ‘the same speed that has helped unify the world has also brought many problems to our doorsteps with devastating suddenness’, in UN Development Programme, ‘Human Development Report’ (1994), 2. 121 See in general Stephen D Krasner, ‘Globalization and Sovereignty’ in David A Smith and Others (eds), States and Sovereignty in the Global Economy (Routledge 1999); Armin von Bogdandy, ‘Globalization and Europe: How to Square Democracy, Globalization and International Law’ (2004) 15 EJIL 885–906, 888. 122 As argued by Marks and Knop, ‘conceptual clichés are outworn ways of framing, analysing, thematising or otherwise thinking about the issues under investigation. [...] Thus, some international legal examples might be ‘State sovereignty: Either eroding or persisting’; ‘The individual: Always emerging as a subject of international law’; ‘International legal system: Young, embryonic, primitive’; […]’ Stamped machinelike on the texts of international law, these topoi operate as stereotypes, shibboleths and performances of comfortable ‘communality.’’ in Karen Knop and Susan Marks, ‘The War Against Cliché: Dispatches from the International Legal Front’ in Christine Chinkin and Freya Baetens (eds), Sovereignty, Statehood and State Responsibility: Essays in Honour of James Crawford (CUP 2015), 10. 123 With regard to the risks of granting international legal personality to corporations see, for instance, the critique of Riguax: ‘drawing the private company into the international legal order proper involves for the private party a real privilege, an exorbitant guarantee given its own status’, in François Rigaux, ‘Des dieux et des héros – Réflexions sur une sentence arbitrale’ (1978) 67 Revue critique de droit international privé 435–459, 447. 124 Peter Malanczuk, ‘Globalization and the Future Role of Sovereign States’ in Friedl Weiss and Others (eds), International Economic Law with a Human Face (Kluwer Law International 1998), 45 ff. 125 Georges Abi-Saab, ‘Permanent Sovereignty over Natural Resources and Economic Activities’ in Mohammed Bedjaoui (ed), International Law: Achievements and Prospects (Martinus Nijhoff Publishers – UNESCO 1991). 126 See James Crawford, ‘Sovereignty as a Legal Value’ in James Crawford and Martti Koskenniemi (eds), The Cambridge Companion to International Law (CUP 2012).

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enforcement mechanisms can only be legitimate under the state’s control, there is no reason to fear that allocating duties to corporations will have pernicious consequences on the role of states.127 On the contrary, it strengthens the role of states in adapting their domestic legal systems accordingly.128 In the words of Dominicé: Le changement de structure n’implique pas une érosion de l’Etat. Celui-ci est plus que jamais nécessaire. Il résulte d’une transformation de son rôle qui est de moins en moins de décider, mais plutôt de participer à l’élaboration des décisions, et qui se prolonge ensuite dans la responsabilité de mettre en œuvre.129 Sovereignty is a fluid concept.130 As has been the case at other times in history, it needs to evolve to discharge its functions. Almost twenty years ago, Kofi Annan noted that the new developments in international legal theory and global cooperation were redefining the contours of sovereignty. He stressed, in particular, the need to reconceptualise the notion of “national interest”, claiming that: [o]ur conceptions of national interest have failed to follow suit. A new, broader definition of national interest is needed in the new century, which would induce states to find greater unity in the pursuit of common goals and values. In the context of many of the challenges facing humanity today, the collective interest is the national interest.131 In light of the remarkable expansion of international law over the last decades, both ratione materiae and ratione personae, despite – or even because – the diffused upraise of ‘sovereigntist’ trends, there is an urgency for the system to accommodate the needs of an increasingly heterogeneous society.132 A ‘humanized

127 José E Alvarez, ‘State Sovereignty is not Withering Away: A Few Lessons for the Future’ in Antonio Cassese (ed), Realizing Utopia: The Future of International Law (OUP 2012). 128 Emmanuel Decaux, ‘The Impact of Individuals and Other Non-State Actors on Contemporary International Law’ in Pasquale De Sena and Riccardo Pisillo Mazzeschi (eds), Global Justice, Human Rights and the Modernization of International Law (Springer 2018), 15. 129 Christian Dominicé, ‘La société internationale à la recherche de son équilibre: Cours général de droit international public’ (2014) 370 Recueil des cours 29, 32. 130 Nicolas Politis, The New Aspects of International law: A Series of Lectures Delivered at Columbia University in July, 1926 (Carnegie Endowment for International Peace 1928) 30. 131 Kofi Annan, ‘Two concepts of sovereignty’ The Economist (16 September 1999). 132 See W Michael Reisman, ‘The Democratization of Contemporary International-Law making Processes and the Differentiation of their Application’ in Rudiger Wolfrum and Volker Röben (eds), Developments of International Law in Treaty Making (Springer 2005).

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state sovereignty’ implies responsibility for the protection of basic human rights.133 This requires both external and internal sovereignty to be interpreted accordingly. Sovereignty no longer signals a simple status negativus, a legal basis for exclusion, but has become a legal basis for inclusion.134 If sovereignty is employed instead as a shield to reject any change in the system, it will only bolster shortcomings in the pursuit of international justice, leading to serious problems of accountability.135 In the words of Brierly, ‘to do that means that we are consenting to a divorce between the law and the ideas of justice prevailing in the society for which the law exists; and it is certain that as long as that divorce endures, it is the law which will be discredited’.136 In sum, corporations have so far escaped the ‘“net” fabricated by scholars to catch reality”,137 challenging the international legal system to keep pace with a changing juridical picture.138 The portrayed “crisis” of international law seems to be based on a conception of the Westphalian model as an ‘act of faith’,139 fuelling lacunas and accountability gaps.140 While not undermining the primary 133 Anne Peters, ‘The Merits of Global Constitutionalism’ (2009) 16 Indiana Journal of Global Legal Studies 397–411, 398; see also Anne Peters, ‘Humanity as the Alpha and Omega of Sovereignty’ (2009) 20 EJIL 513–544. 134 Günther Handl, ‘Environmental Security and Global Change: The Challenge to International Law’ (1991) 1 Yearbook of International Environmental Law 3–33, 32. 135 Attila Tanzi, ‘Remarks on Sovereignty in the Evolving Constitutinal Features of the International Community’ in Mahnoush H Arsanjani and Others (eds), Looking to the Future: Essays on International Law in Honour of W Michael Reisman (Martinus Nijhoff Publishers 2010), 303. 136 James L Brierly, ‘The Shortcomings of International Law’ (1924) 5 British Yearbook of International Law 4–16, 16. 137 Jean d’Aspremont, ‘Non-state Actors in International Law, Oscillating between Concepts and Dynamics’, in Jean d’Aspremont (ed), Participants in the International Legal System: Multiple Perspectives on Non-State Actors in International Law (Routledge 2011), 1. 138 See Fleur Johns, ‘The Invisibility of the Transnational Corporation: an Analysis of International Law and Legal Theory’ (1994) 19 Melbourne University Law Review 893–923. 139 A Claire Cutler, ‘Critical Reflections on the Westphalian Assumption of International Law and Organization: A Crisis of Legitimacy’ (2001) 27 Review of International Studies 133–150, 134. 140 See Daniel Bethlehem, ‘The Changing Nature of The International System and the Challenge to International Law’ (Sir Elihu Lauterpacht Lecture Series on the Administration of International Justice 2012) (2012), 8–9: ‘there is a risk that we are seeing the evolving international system like passengers on a train that is travelling at considerable speed such as to blur our vision of the landscape as we look out of the window. From this vantage point, as we attempt to identify the landscape across which we are travelling, we resort to images and recollections from the last station at which we stopped […] And in doing so, there is a real danger, as we take stock of the international legal system and attempt to assess its robustness and tens for purpose for the future, that things will already have moved decisively past us and we will be

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role of states in international law, the need is there for a legal understanding that is capable of taking into account the actual presence of corporations and other non-state actors.141 As seen throughout the book, international law is not silent on the relationship between corporations and human rights. The fact that many non-binding instruments are being adopted, and that a number of treaties require states to regulate corporations, indicates that corporate human rights violations are not generally tolerated by international law. The instruments analysed in Part I, such as the OECD Guidelines, the ILO Tripartite Declaration and the UNGPs, should be read in this context. As pointed out by Simma and Alston, by frequently affirming a norm of general character, ‘UN resolutions may evince that a general principle of law has been accepted and recognized, either ab initio or progressively’.142 While domestic legal systems remain the key incubator of a general principle on corporate liability, international resolutions on the subject in hand confirm its compatibility with the structure of international law. Although such instruments are non-binding per se, they provide an indication of the view of the majority of states around the conduct expected by companies with regard to the protection of human rights.143 In this regard, one should not forget that the composition of the HRC intends to represent the principal legal systems of the world. As noted by by Ratner, ‘the cumulative impact of this law-making application suggests a recognition to many decision makers that corporate behaviour is a fitting subject for international regulation’.144 The main human rights treaties at the domestic and at the regional level do not require states to impose criminal liability on legal persons.145 Yet a significant number of treaties currently require states to enact legislation providing for criminal, civil or administrative liability corporations. The number of different

141 142

143 144 145

caught in a constant cycle of catching up’. See also Bruno Simma and Andreas Paulus, ‘The ‘International Community’ Facing the Challenge of Globalization’ (1998) 9 EJIL 266–277; Philippe Sands, ‘Turtles and Torturers: the Transformation of International Law’ (2001) 33 New York University Journal of International Law and Politics 527–560. See Edith Brown Weiss, ‘The Rise or the Fall of International Law?’ (2000) 69 Fordham Law Review 345–372, 372. Bruno Simma and Philip Alston, ‘The Sources of Human Rights Law: Custom, Jus Cogens, and General Principles’ (1988–1989) 12 Australian Yearbook of International Law 82–108, 104. Alexandra Gatto, Multinational Enterprises and Human Rights: Obligations under EU Law and International Law (Edward Elgar 2011) 76. Steven R Ratner, ‘Corporations and Human Rights: A Theory of Legal Responsibility’ (2001) 111 The Yale Law Journal 443–545, 488. Peter Hein van Kempen, ‘The Recognition of Legal Persons in International Human Rights Instruments: Protection Against and Through Criminal Justice?’ in Mark Pieth and Radha Ivory (eds), Corporate Criminal Liability: Emergence, Convergence, and Risk (Springer 2011).

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types of sanction makes it possible to take account of the specific features of national legal systems, not all of which admit that legal entities may incur criminal liability. Similar developments have been seen with regard to phenomena such as corruption.146 In light of the above, it can be concluded that, when a principle common to the principal legal systems of the world is reflected at the international level, be it in treaties or other international instruments, this may serve as evidence which confirms that the principle can be transposed to the international legal system. The logic behind this appears to be that, once the community of nations expresses its recognition of such a principle, the latter can be considered to be compatible with the structure of international law. One may ask what the added value of a principle on corporate liability might be. As seen in Parts I, II and III, principles of law provide for an important interpretative tool vis-à-vis the other sources of international law, as well as an autonomous source of obligations. With regard to the first function, a principle on corporate liability would be a key tool for the interpretation of human rights treaties, filling the gap left by them concerning corporate conduct. As to the second function, admitting the existence of the principle in point provides a solid argument to upgrade corporate liability from domestic law to the international normative level.147

146 Anita Ramasastry, ‘Closing the Governance Gap in the Business and Human Rights Arena: Lessons from the Anti-Corruption Movement’ in Surya Deva and David Bilchitz (eds), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2011), 163. 147 Indeed, one of the most common arguments regarding corporate liability is that it is grounded in domestic law only, with no legal implications on the international level. See Eric de Brabandere, ‘Human Rights and International Investment Law’, in Markus Krajewski and Rhea T Hoffmann (eds), Research Handbook on Foreign Direct Investment (Edward Elgar 2019).

Concluding Remarks This research has attempted to assess the role of general principles of law in the business and human rights legal process. It has set about this task by critically analysing the relevant public international law framework and by examining the normative role of general principles of law from the perspective of both states and corporations. Obviously, reference to the domestic practice in the field under review, with special regard to municipal case law, has been made through a public international law prism. Namely, considering them either as elements of conscious implementation of international legal standards through the catalyst of general principles of law, or as merely coincidental parallel application of the same principles which apply on the inter-state level, thus mutually reinforcing their legal force nonetheless. I have made the argument that principles of law, as an interpretative tool and as a source of obligations, provide for a complementary source of a high gap-filling potential in the business and human rights legal process. From a state-based perspective, principles of law guide states in the interpretation, performance and implementation of their human rights obligations in the context of business activities. Based on the obvious premise that the principle of good faith require states to perform their human rights obligations in a way that preserves the effectiveness of human rights treaties, it has been argued that this implies regulating corporations so that they are prevented from violating human rights and held liable when such violations occur. Such a good faith interpretation and application of human rights treaties with regard to corporate conduct is complemented by the effet utile hermeneutic principle. The study has shown how general principles may also serve a prominent role in clarifying the reach of state human rights obligations. States are required under international human rights law to regulate activities of businesses domiciled in their jurisdiction. In line with that, the principle of no-harm has been shown to require states to adopt adequate measures in order to prevent abuses by their corporate nationals beyond their national borders. In fact, interpreting the state duty to protect human rights in a transboundary business context in light of the no-harm principle, buttresses the duty of states to impose on their companies an obligation to take adequate measures to ensure that their affiliates operating abroad do not violate human rights. The principle of access to remedy on the domestic level has also been illustrated as a key factor in giving effect to the business and human rights international legal process. Even though it does not go as far as recognising a state duty to © koninklijke brill nv, leiden, 2020 | doi:10.1163/9789004440029 _007

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adjudicate, it has been described to operate as a balancing tool, instrumental in curbing the jurisdictional barriers faced by victims of human rights violations. In particular, access to remedy has emerged as a countervailing factor with regard to the foreign policy concerns of the kind expressed by US courts in adjudicating claims under the ATS. Most importantly, access to remedy has proven to be widely recognised in domestic jurisdictions as a guiding principle in limiting the application of forum non conveniens and grounding the application of forum necessitatis. From a corporate-based perspective, general principles contribute to the developments of corporate obligations. Irrespective as to whether their roots are domestic or international, or common to any legal system, principles do not need incorporation. As the ultimate residual expression of monism, principles “navigate” between municipal and international law. Whatever the legal system they operate in, companies are bound by the universal principle of good faith and by its corollary principle of estoppel. The increasing relevance of the investor’s conduct in international investment law illustrate that the principle of good faith includes at a minimum the requirement of corporate compliance with international human rights standards. As to the much-debated voluntary codes of conduct adopted by companies, it has been emphasised how those – the largest majority – which incorporate by explicit reference binding human rights instruments, may foreclose companies from acting inconsistently with their commitments. Finally, the widespread presence of corporate civil, – and sometimes criminal – liability at the domestic level, reveals a general principle on corporate liability. The state duty to protect human rights against corporate abuses, together with the non-binding business and human rights instruments addressed to corporations, provide for an embryonic principle according to which corporations are generally expected to abstain from encroaching on human rights. The idea animating this research has been to provide a systemic analysis of business and human rights, while trying to give a fresh look at the principles of law, all too often downplayed, or simply neglected. Against the backdrop of the plethora of intergovernmental non-binding instruments, corporate codes of conduct and highly detailed multi-stakeholder initiatives, general principles of law, precisely due to their generality, may appear rudimental and outdated. Yet in times of political and economic uncertainty, amidst international law’s pendulum swings at one time leaning towards the thorough regulation of companies, and at other times away from it, it might prove useful to lean back onto principles of law. Over time, it is to be hoped that international human rights standards will increasingly be recognised as directly applicable to corporate actors. The general principles of law revolving around the constitutional principle of good faith – namely, abuse of rights, due diligence and estoppel – prove to be available legal instruments for achieving the same result, even though indirectly.

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As emerged throughout the book, international law is constantly evolving in order to address the increasing challenges posed by corporate actors to the protection of human rights. The treaty on business and human rights currently being negotiated will hopefully be able to fill at least some of the enforcement gaps that currently characterise the business and human rights legal process. Such process of change may not be rapid, and it will not be necessarily straightforward. Greater reliance on general principles of law may provide at one and the same time a normative gap-filling safety net while boosting convergence, coherence and consistency.1

1

See Mads Andenas and Ludovica Chiussi, ‘Cohesion, Convergence and Coherence of International Law’, in Mads Andenas and others, General Principles and the Coherence of International Law (Brill Nijhoff 2019).

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Index abuse of rights corporate structure … 236–239 principle of … 231–236 Alien Tort Statute … 112–117, 192–203 Kiobel … 113, 115–117, 140, 196–197, 199, 201–203 Jesner … 114–115, 199– 200, 203, 279 Sosa … 117, 196

general principles of law Article 38(1)(c) … 8–10, 120–122 corporate liability, on … 31, 117, 136, 279–302 function of … 129–132 gap filling nature … 122, 132 history of … 120–123 methodology of … 132–135 origin of … 125–129

corporations civil liability, of … 97, 207, 279–282 codes of conduct … 117–120, 270–278 criminal liability of … 109–110, 281–286 direct obligations of … 66, 71–80 international legal personality of … 286–299 limited liability of … 226–231 social responsibility of … 21, 170

good faith investors of … 265–269 principle of … 153–154, 263–265 states, of … 155, 165–172

customary law applicable to corporations … 102-110, 217 corporate liability, on … 112–116 making … 117–119

international investment agreements (IIAs) bilateral investment treaties (BITs) … 156, 165–172, 257–259, 170–172 investors’ obligations … 170–171, 259 Urbaser … 268–269

due diligence dévoir de vigilance … 252–253, 280 duty of care … 203–208, 255 human rights … 27, 43, 96, 245–250 investors, of … 256–261 mandatory … 250–256, 241, 250 principle of … 241–245 Vedanta … 207–208 estoppel codes of conduct, and … 270–277 principle of … 263–265

human rights treaties applicability of … 53–80 draft treaty on business and human rights … 94–99, 167, 223, 249 interpretation of … 61, 164, 154

International Labour Organisation (ILO) Conventions … 69–71 Tripartite Declaration … 32–35 jurisdiction extraterritorial … 40, 144–148 private international law, in … 149–150 public international law, in … 144–148

356 index limited liability abuse of … 246–239 principle of … 231–236 rationale of … 226–231 Malabo Protocol … 111, 285 no-harm community interests, and … 174–179 home state duty, and … 184–187 principle of … 173 non binding instruments … 23–38 ILO Tripartite Declaration … 32–35 legal value of … 47–53 OECD Guidelines on Multinational Enterprises … 24–31 UN Global Compact … 35–37 UN Guiding Principles on Business and Human Rights (UNGPs) … 38– 46, 179–181

remedy forum necessitatis … 218–223 forum non conveniens … 208–218 right to … 190–194 third pillar … 44–45 sovereignty … 135, 143, 145, 175, 297, 298 UN treaty bodies … 181–183, 63–69 Committee on Economic Social and Cultural Rights (CESCR) … 68–69, 182–184, 210 Committee on the Rights of the Child (CRC) … 147, 158, 183 Human Rights Committee (HRCtee) … 66, 100, 181–183