The Second Revised Draft of the legally binding instrument on business and human rights was released in August 2020 by the Chairperson of the Open-ended Intergovernmental Working Group on Transnational Corporations and other Business Enterprises with respect to Human Rights (OEIGWG). It is a step forward before the adoption of a UN Legally Binding Instrument in the field of business and human rights. Please see here our previous reports on these discussions:
2 November 2017: A binding treaty on business and human rights? Still a way to go.
A broader scope
The Second Revised Draft includes State-owned enterprises in the definition of legal entities undertaking business activities which clarifies that domestic business activity is covered by the Draft Treaty. It also refers to “business relationship” instead of “contractual relationship”, a term formerly used in the Revised Draft which was perceived as a limitation to the multiple ways in which companies relate to one-another.
Due diligence and prevention
The Second Revised Draft emphasises the responsibilities of business enterprises. In that regard, the obligations of business enterprises to prevent human rights abuses throughout their operations are reinforced. Article 6(1) requires business enterprises to undertake human rights due diligence to identify and assess any actual or potential human rights abuses that may arise for their own business activities or from their business relationships, when former Article 5 of the Revised Draft only referred to “contractual relationships”. Moreover, Article 6(2) provides that business enterprises need to take appropriate actions not only to prevent, but also to effectively mitigate actual or potential identified human rights abuses in the context of business activities, including in their business relationships.
New Article 8 clarifies the system of purported legal liability for legal entities and individuals carrying out business activities that might lead to human rights abuses. Both home and host States shall ensure that their domestic law provides for criminal or a functionally equivalent liability where legal entities or individuals carrying out business activities have caused or contributed to human rights abuses. This is a major change, since many States Parties such as Argentina and Russia do not recognise the criminal liability of legal entities.
New jurisdiction rules
The Second Revised Draft brings also changes regarding the allocation of jurisdiction when it comes to human rights abuses in the context of business activities. Business enterprises can now be sued under the Second Revised Draft Treaty where “an act or omission contributing to the human rights abuses occurred” provides a logical connection between the forum and the abuse. Most importantly, courts cannot use the doctrine of forum non conveniens to decline jurisdiction to rule over a claim brought on the grounds of Articles 9(1), 9(4) and 9(5).
The Second Revised Draft will be the basis for future substantive negotiations leading to the preparation of a fourth version during the 6th Session of the OEIGWG that will be held from 26 to 30 October 2020. Further analysis of the Second Revised Draft will be provided in the coming weeks. In the meantime, do not hesitate to contact us should you wish to discuss the above.