Crossing the Rubicon: Major Developments on the Human Rights Obligations of Corporations

Two significant legal developments in the Americas — a Canadian Supreme Court judgment issued last week, and a report of the Inter-American human rights system — will shape how we understand international law’s imposition of direct obligations on corporations. Close observers of developments in the field of business and human rights have been accustomed to witnessing a heavy emphasis on the so-called first and third “pillars” of the United Nations Guiding Principles on Business and Human Rights (UNGPs): pillar 1 – State obligations to protect individuals from corporate abuses, on the one hand; and pillar 3 – access to remedies for those whose rights are infringed by business activities, on the other. Conversely, the second pillar, focusing on corporate duties to respect human rights, has tended to be neglected or toned down. Indeed, some view this second pillar as being non-legal or, at most, limited to the realm of domestic activities. Some even insist on examining corporate conduct mostly through the prisms of notions of social expectations, corporate social responsibility or voluntary standards. However, these non-legally obligatory approaches have far too little bite and serious limitations, as argued below.

In my view, the heavy emphasis on pillars one and three at the expense of pillar two is deeply troubling. Unless the second pillar is strengthened and its true potential recognized, the business and human rights field will remain anchored to an outdated State-centered paradigm, muting the promise of this emerging field and ignoring the need to fill accountability and reparation gaps. The importance of pillar two is underscored by the fact that pillars one and three mostly duplicate and reaffirm longstanding State obligations to ensure that victims of violations have access to justice and to prevent and respond to non-state violations, corporate ones included. For example, in the context of the Americas, the region this post will focus on, at least as far back as the Inter-American Court of Human Rights’ 1988 judgment in the famous Velásquez-Rodríguez case, State obligations to prevent and repress private violations of human rights have been recognized. This principle was confirmed and explicitly linked with the UNGPs in the 2015 case of Kaliña and Lokono v. Suriname (see, inter alia, para. 224).

Therefore, the first and third pillars in themselves are not entirely groundbreaking. By this, I do not mean to minimize, in the very least, the necessity of addressing complex and thorny questions these pillars seek to address (such as, inter alia: extraterritorial jurisdiction, cooperation, and alternative methods to settle disputes involving alleged corporate violations of human rights). These pillars are truly important, but the imbalance between the access that corporations have to foreign investment fora and the possibility of challenging their conduct when domestic remedies are ineffective, among other deficiencies stemming from the lack of direct corporate accountability and passive jus standi, must be tackled, once and for all.

Often, despite a diligent State effort to protect human rights, corporations are able to get away with abuses, thanks largely to inadequate human rights protections in applicable domestic commercial law regimes. Indeed, Special Rapporteur on Economic, Social, Cultural and Environmental Rights (REDESCA) Soledad García Muñoz of the Inter-American Commission on Human Rights (IACHR) raised this issue in a November 2019 report on business and human rights (see para. 135, currently available only in Spanish). In such circumstances, the State in question may not have breached any of its own human rights obligations, making it difficult or even impossible for those affected to make claims before international human rights supervisory bodies. Nonetheless, regardless of whether a State did or did not breach its human rights obligations, victims remain deeply affected. Additionally, even in those circumstances wherein a State is found to be responsible for relevant rights violations, reparations provided by the State may remain insufficient, as apologies or other actions required of business entities that participated in the relevant rights violations may be necessary for reparations to be meaningful. Thus, if one takes seriously the imperative that reparations are to be made in full, it follows that in many cases it will be crucial that business entities be required to participate in efforts to redress rights violations. If they are deemed to be accountable, such participation will be mandatory in those legal systems incorporating applicable standards. In turn, the existence of international duties will level the playing field and avoid problems arising from the absence of corporate obligations under some jurisdictions.

These challenges are but several of many reasons why human rights protections will continue to suffer from serious gaps and shortcomings unless and until the second UNGP pillar is seriously strengthened in a way that treats the three pillars of the human rights and business field in a synergistic way. Special Rapporteur García Muñoz’s November 2019 report states that all three pillars must be seen as a coherent and interconnected whole (para. 9). In my view, given the risk of impunity, which is not fully addressed by State responsibility considerations, the third pillar on remedies should also envisage the possibility of recourse to non-domestic remedies against corporations themselves, be it in the form of arbitration, or otherwise. While the availability of domestic legal remedies against corporate abuses is mandatory under human rights law, as the Committee on Economic, Social and Cultural Rights pointed out in its General Comment No. 24, such remedies may end up proving ineffective, even when available. It is precisely this discussion on the potential for direct corporate responsibility that two quite different bodies in the Americas — the IACHR and the Supreme Court of Canada — have just contributed.

The Approaches of the IACHR and Canadian Supreme Court

As IACHR Special Rapporteur García Muñoz notes, different sources of international law, including customary law and general principles, and hierarchically-superior norms, i.e. jus cogens norms, may directly regulate corporate obligations:

El análisis y uso de normas consuetudinarias, principios generales del derecho u otras fuentes del derecho internacional, incluyendo aquellas con carácter de jus cogens, también pueden ser útiles para observar la existencia de obligaciones que vinculen a las empresas y otros actores económicos respecto de la vigencia de los derechos humanos (para. 178) (currently in Spanish only).

The Supreme Court of Canada adopted a similar approach in its February 28 decision in Nevsun Resources Ltd. v. Araya concerning allegations of forced labor and inhumane working conditions at the Bisha mine in Eritrea operated by Canadian mining company Nevsun (a helpful overview of the case and facts is available, here). The Court found that custom and peremptory law must be taken into account in order to resolve questions of corporate accountability for human rights violations. In Araya, the Court rightly highlights that “[t]he context in which international human rights norms must be interpreted and applied today is one in which such norms are routinely applied to private actors” (quoting from Beth Stephens, here). This approach highlights that we are witnessing an increase in the acknowledgment that for human rights protection to be fully meaningful it is unavoidable to consider its guarantees vis-à-vis non-state actors, including businesses.

Various authorities, such as the U.N. Working Group on Enforced or Involuntary Disappearances, the UK Supreme Court in R. v. Reeves-Taylor, and Judgment SU123/18 of the Colombian Constitutional Court, have similarly grappled with issues of human rights corporate due diligence, with mixed results. In my view, the legitimacy of supervisory bodies and human rights law itself will likely be compromised if States are found to be the only duty-bearers in human rights law. While protection from State human rights violations cannot and should not be renounced, nor undermined or weakened in any way, given the power and capacity of States to disregard human dignity, it remains imperative to also address increasingly powerful non-state actors. Indeed, recognizing non-state actor duties, far from challenging State obligations, actually helps to shed light on what States are actually required to do in order to fulfill their obligations to protect human rights.

The Canadian Supreme Court also stressed the “constantly and incrementally evolving” nature of customary international law in Araya. While this observation merely acknowledges the nature of custom, it is important to never lose sight of this reality. Otherwise, legal actors may keep interpreting and applying the law as it was understood (inadequately, to my mind) years or even months ago, in relation to possible corporate human rights duties. Let us not forget how, as Rosalyn Higgins once put it, the concepts related to international legal subjectivity often operate as some sort of “intellectual prison”. In fact, even in the Kiobel v. Royal Dutch Petroleum case, in which corporate human rights violations were considered to not presently exist, the U.S. Second Circuit Court of Appeals readily accepted that things could change in the future, observing that “We do not know whether the concept of corporate liability will ‘gradually ripen[]into a rule of international law.’”

The Supreme Court of Canada took a different tract in Araya, finding that “since customary international law is part of Canadian common law, a breach by a Canadian company can theoretically be directly remedied.” The Court further held that certain customary norms have achieved peremptory or jus cogens status and as such, violations of such norms are deemed as so “heinous” as to merit “stronger responses than typical torts claims, given the public nature of the violated rights involved, the gravity of their breach, the impact on domestic and global rights objectives, and the need to deter subsequent breaches” (emphasis added).

While the Court’s reasoning in Araya is based on the applicability of customary law in horizontal relations given Canada’s direct incorporation of custom into its domestic law, the thrust of the decision may be seen as being in accordance with the IACHR report previously discussed regarding the notion that international law may directly govern corporate duties, especially when it comes to jus cogens norms. The notion that businesses may have express or implied human rights obligations arising from customary or peremptory law, among other possible sources, is in fact, not at all new. Scholars such as Roland Portmann and Jordan J. Paust, have made the case that such obligations exist; the United States Court of Appeals for the Seventh Circuit adopted this position in Flomo v. Firestone; and even an International Centre for Settlement of Investment Disputes arbitral tribunal did so in the rightly famous Urbaser case, among others.

The Araya judgment and IACHR report however, remain important for several reasons which are discussed in the remainder of this post.

Confirming that Peremptory Norms can be Directly Applied to Non-State Actors

Firstly, the Araya decision and IACHR report both seem to confirm a trend in terms of recognizing what I view as the prohibition of violations of peremptory norms of human rights law attributable to non-state actors. This approach is also not completely new or novel. For example, in my view, the ICTY Trial Chamber judgment in Prosecutor v. Furundžija contains arguments supporting this train of thought (see especially paras. 153-157), insofar as it supports ideas of some horizontal effects of peremptory law, in this instance the prohibition on torture, going beyond mere State responsibility considerations and imposing duties directly on individuals.

Avoiding Backsliding and Resisting Regulatory Forum Shopping

Secondly, the fact that different bodies — the Canadian Supreme Court and IACHR Special Rapporteur García Muñoz — reached similar conclusions in terms of the possible sources of corporate human rights obligations is also noteworthy because it confirms both that the 2011 UNGPs in no way foreclosed future developments and discussion. Even if a treaty on business and human rights is ever adopted, it will then be but part of the corpus juris relating to human rights and business activities. Therefore, any absence of references to direct international obligations in future instruments, such as the multilateral treaty currently being drafted, cannot be interpreted as an outright denial of the (potential) existence of such obligations. Furthermore, previous drafts of said treaty may be interpreted as acknowledging that such obligations can exist, as I have argued here and here.

Some could ask, however, whether placing direct international human rights obligations on businesses are necessary or perhaps redundant, considering that obligations to respect those rights may exist under domestic law, or that corporations may adopt voluntary guidelines in codes of conduct or elsewhere. Sadly, the shortcomings of domestic laws and voluntary guidelines actually highlight the necessity of pursuing increased recognition of peremptory-based obligations and creating more direct human rights business regulations. On one hand, domestic law-makers may have competing incentives leading to inadequate standards. Corporations can, and do, take advantage of this, and may even influence the shaping of applicable standards (a dynamic termed “corporate capture”), leading to a race to the bottom and “forum shopping” for standards that, apart from being theoretically problematic, end up leading to unsanitary and unsafe working conditions and communities, environmental degradation and various other problems. Having some basic international standards and increased recognition of peremptory law obligations on all States and other actors, including international organizations (see e.g. here and here), regardless of their consent, may counter problems of regulation forum shopping and the race to the bottom that comes along with this practice.

Developing Customary Law and a Possible Positive Domino Effect

Thirdly, as Jean-Marie Henckaerts has persuasively argued, the input and demands made by non-state actors may trigger State responses that can end up generating custom. Perhaps, the Araya judgment and IACHR report can trigger a positive domino effect against corporate impunity, thereby reducing gaps in protection regimes, while increasing the accountability of businesses, both transnational and otherwise, for their human rights records. Hopefully these two initial pronouncements will end up generating the multi-level dynamics typically necessary for global threats and problems to be properly tackled.

Conclusion: Two Steps in the Right Direction

The recognition of corporate obligations is welcome, considering how some studies have indicated that the endorsement of voluntary standards, such as the U.N. Global Compact, may have a negligible impact on corporate conduct and can actually serve to “bluewash” corporate reputations by operating as a form of window-dressing, distracting some from the need to generate external regulations. The recent Boeing aircraft accidents are but one example demonstrating the limits of such voluntary and internal regulations. Not all regulation need be international in origin, however. Domestic and regional bodies can certainly contribute to change by operating as agents of legal recognition and transformation in the human rights field, as Andrea Bianchi and others have argued. Indeed, in my view, the Araya judgment and IACHR report represent welcome examples of domestic and regional actors helping take the lead in applying human rights to business activities, as they create opportunities for civil society actors, victims and others to invoke standards at the domestic and regional levels; and for businesses to change their perspective. Additionally, the expressive effects of the judgment and the report, and the greater attention that will be paid to corporate conduct in light of their recognition of direct human rights obligations on private actors, cannot be dismissed. For all these reasons, and likely more, the Canadian Supreme Court and IACHR Special Rapporteur García Muñoz should be applauded for moving the conversation on business and human rights forward on a very important aspect and daring to look at the elephant of corporate obligations in the room.

Image – A pile of copper dust at Bisha Mine, Eritrea’s first major international mine, 150 kilometres west of Asmara is pictured on July 17, 2013. The Eritrean government, which owns 40 percent of the gold, copper and zinc mine, says it is committed to using profits from the mining sector to boost other industries and to avoid the resource curse of many other African nations. The country’s nascent agriculture, fisheries and tourism sectors have not been developed to date, which the country says is due to a looming threat from arch-foe Ethiopia and Eritrea remains one of the world’s poorest nations. Critics accuse the government of gross rights violations, and warn foreign companies against working in the Red Sea nation, but there are currently four more international mines set to open in Eritrea over the next two years, and 17 foreign companies exploring potential sites. AFP PHOTO/JENNY VAUGHAN (Photo by Jenny VAUGHAN / AFP) (Photo credit should read JENNY VAUGHAN/AFP via Getty Images)

 

About the Author(s)

Nicolás Carrillo-Santarelli

Associate Professor of International Law at La Sabana University (Colombia), former Lecturer and Researcher at the Autónoma de Madrid University (Spain), former Judicial Assistant at the Colombian Constitutional Court. Follow him on Twitter (@NicolasCS).