Business and Human Rights Arbitration

The Hague Rules on Business and Human Rights Arbitration, initiated by the Business and Human Rights Arbitration Working Group, a private group of international practicing lawyers and academics, aims to create an international private judicial dispute resolution avenue available to parties involved in business and human rights issues as claimants and defendants, thereby contributing to filling the judicial remedy gap in the UN Guiding Principles on Business and Human Rights.

With the perspective that “international arbitration holds great promise as a method to be used to resolve human rights disputes involving business,” the Drafting Team released, in November 2018, an Elements Paper on Business and Human Rights Arbitration (available here), which was open to public comment.

CCSI submitted comments to the Drafting Team focusing on the following aspects of the Elements Paper: (1) which parties are necessary and sufficient to ensure effective access to justice of victims, including discussion of the desirable roles for both business and states, (2) the appropriate role for both international human rights law (IHRL) as well as other legal norms, and how IHRL should be interpreted and applied in this context, (3) whether model contract clauses are desirable, (4) the critical importance of choosing the appropriate appointing authority, (5) desirable qualifications of BHR arbitrators, including how they should be selected and how challenges to arbitrators should be handled, (6) how principles of transparency and access to information and effective participation should be treated, (7) the desirability of allowing amicus participation as a matter of right, and (8) principles that should govern allocation of costs, as well as a role for financial assistance for claimants and regulation of third-party funding.

Ultimately, CCSI questions whether this is the right strategy for improving accountability of business and human rights violations. It is indeed true that many rights-holders who are victims of business-related human rights abuses lack basic access to justice. Many lack access to functioning, well-resourced, and accessible courts in their domestic legal systems, and many face significant legal and practical hurdles to accessing justice in the home jurisdiction(s) of the corporate entity. However, the lack of availability of courts to victims of human rights abuse can be partly attributed to the limits that companies themselves have fought for and secured. These limits include those arising from doctrines of forum non conveniens, and norms shielding parent companies from liability, or shielding assets from execution.

If multinational corporations are challenging jurisdiction and the requirement to defend cases in host countries, home countries, and elsewhere, we question the circumstances under which such companies would consent to arbitration, particularly in situations without privity of contract. Moreover, if a company does consent, will that consent come from the legal entity or entities that actually have assets to satisfy a judgment and that committed the wrong? If not, how can it be ensured that those entities are also joined in the dispute? If, on the other hand, companies are willing to submit to BHR Arbitration (either ex ante, in a contractual context, or post-harm), should we be skeptical as to what is motivating this agreement when the same companies raise barriers elsewhere? While BHR Arbitration may offer a comparatively attractive way for corporations to manage human-rights-related claims, the reasons for which corporations perceive it as such must be carefully analyzed to ensure that human rights, and access to justice of claimants, are not undermined.