The UN intergovernmental working group tasked with developing a binding international treaty on business and human rights recently concluded its fourth round of negotiations in Geneva (15-19 October 2018). In contrast to the third session, where the “Elements” of the proposed treaty were published only three weeks before the working session began, delegations were provided with the “Zero Draft” treaty in July 2018 (see our previous post here), giving them ample opportunity to consider the text in advance of the session.

In his opening remarks, the Chair-Rapporteur noted that “like any project of legal text, the Zero Draft is a fully improvable document which can and should be enriched with [delegates’] contributions, constructive criticisms and concrete proposals of improvement…” (translated from original statement made in Spanish). Delegates certainly operated with this in mind: there was significant discussion and dialogue on the specific provisions of the Zero Draft treaty. A number of unresolved issues from previous negotiating rounds re-emerged and continued to be a sticking point in discussions, some of which are discussed in this post.

The limited scope of the Treaty’s application to transnational businesses

The treaty only applies to “human rights violations in the context of any business activities of a transnational character” (draft Article 3). A number of delegates, most notably the European Union, reiterated their opposition to this limitation, arguing that all businesses (both domestic and transnational) should be made subject to the treaty. Some delegates responded by referring to the mandate of the working group under Human Rights Council Resolution 26/9 which refers specifically to transnational corporations and argued that the treaty appropriately focussed on transnational companies, as their complex structures and supply chains have historically allowed them to operate outside the scrutiny of national legal frameworks. However, it is difficult to square this argument with the spirit of the UNGPs which, by contrast, applies to “all business enterprises, both transnational and others, regardless of their size, sector, location, ownership and structure.

Beyond this point of principle, there are still details to be ironed out. For instance, it is unclear whether the definition of “business activities of a transnational character“, which is restricted to “for-profit economic activity“, would include State-owned enterprises. The scope of the treaty and the relevant definitions will no doubt continue to be a point of contention in further rounds of negotiation.

Treaty reach and the issue of extra-territorial jurisdiction

Although territoriality and nationality (reflected in draft Article 5(1)) are familiar grounds of jurisdiction in international law, there was a lack of consensus on the scope of national courts’ exercise of adjudicative jurisdiction over human rights claims. In particular, there was concern about the exercise (and possible abuse) of extra-territorial jurisdiction. The UNGPs themselves are circumspect in this regard, with the commentary to Principle 2 noting 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.” The treaty thus provides an opportunity to clarify and develop a consistent international approach to the principles of jurisdiction applicable to business and human rights claims.

The meaning of “domicile” as set out in draft Article 5(2) is likely to be subject to further debate. The current definition is consistent in some respects with other international instruments on civil jurisdiction; for example, Article 63 of the EU’s Brussels I Recast Regulation also defines domicile by reference to a business’ “statutory seat” or “central administration”. However, other limbs of the definition lack sufficient clarity. There is no guidance on what might constitute a “substantial business interest” or the meaning of “subsidiary, agency, instrumentality, branch, representative office or the like“. As such, the Zero Draft gives rise to potentially wide-reaching jurisdiction without adequate consideration of the appropriate limits, a matter which will need to be addressed in subsequent drafts to ensure the treaty is consistent with the rule of law.

There was awareness amongst delegates about other surrounding issues which are well-trodden in the field of private international law, such as the application of the doctrine of forum non conveniens (enabling courts to refuse jurisdiction on the grounds of a more appropriate forum being available), lis alibi pendens (the issue of parallel proceedings) and forum shopping. There is scope for cross-fertilization of international law here, although serious thought and consideration will be required as to how the final treaty would interact with existing private international law instruments in this sphere.

Another significant concern was draft Article 10(11), which requires States to adopt domestic provisions which would allow for universal jurisdiction to be exercised over human rights violations that amount to crimes. Its inclusion was controversial and did not have widespread acceptance; it remains to be seen whether the article will be retained in the final text.

Mandatory human rights due diligence

The proposed obligation of mandatory human rights due diligence in draft Article 9 presents an opportunity to address the gap highlighted by the working group in its July report to the UN General Assembly, who noted that despite human rights due diligence becoming a “norm of expected conduct for all business enterprises […] the majority of business enterprises around the world remain unaware, unable or unwilling to implement human rights due diligence as required of them in order to meet their responsibility to respect human rights.” The contours of that obligation, however, will need to be further refined.

In the view of some delegates, the due diligence descriptors in draft Article 9(2) were not entirely consistent with the UNGPs and other due diligence guidance. For instance, the four steps set out in the UNGPs have not been fully translated into the draft treaty. Any misalignment between the treaty and existing soft law instruments in this area will need to be addressed to ensure greater legal certainty for businesses going forward.

Concluding remarks

Any lawyer will tell you that drafting by committee is always a difficult task, which is even more compounded when one must agree a treaty by taking into account the input of States, NGOs and business organisations, each with their own respective set of interests. However, one should bear in mind the aptly chosen name for the text: the “Zero Draft” is merely the starting point, and it will be important to have continued engagement from all interested parties to develop and refine the document. Expect there to be further parsing of the language of the text in the upcoming rounds of negotiations.