Transnational Corporations and Human Rights: Towards a Binding International Treaty.
As part of the Global Campaign’s preparation for engaging the UN Inter Governmental Working Group (IGWG), this expert Seminar brought together thirty experts (human rights, international law, political economy) and representatives of trade unions and social movements to discuss key issues related to the scheduled IGWG mandated on the preparation of a Binding Instrument on TNCs and Human Rights. The Seminar was facilitated by the Europe-Third World Centre (CETIM) and the Transnational Institute (TNI)
The Seminar aimed at identifying proposals regarding the scope, content, nature and form of the future international instrument. Discussions were based on the Base Document for a Peoples Treaty – a proposal developed by the Global Campaign from the contributions and recommendations drawn from consultations with affected communities, social movements and other civil society organisations in Africa, Asia, Latin America, Europe, US and Canada.
The following objectives were set for the Seminar:
- To identify the core demands and proposals of the movements, networks, affected
communities and peoples
- To mobilise the necessary expert opinion (Human rights, legal economic) in support of these core proposals
- To lay the basis for developing a Campaign document to be submitted to the IGWG andpresented to governments and civil society organisations participating in its first Session (July 6-10).
Reference Documents for use of Participants:
- UN Human Rights Council Resolution: HRC/Res/26/9 Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights. (June 27, 2014)
- Campaign Document: Base Document for a Peoples Treaty (available at http://www.stopcorporateimpunity.org/?page_id=5534)
- Campaign Working Paper: Framework Document for Participants
Next steps – agreed at the Seminar:
Preparation of a Summary based on main exchanges and debate of the Expert Seminar to be circulated to participants and the Campaign network.
A Draft Document (carrying forward the insights from the Expert Seminar and other considerations) will be prepared in June by the Campaign Working Group on the Peoples Treaty. This will be circulated in the Campaign network for consultation and inputs in preparation for the IGWG.
SCOPE
The participants began by discussing the scope of the future treaty and, in particular, the sort of business enterprises that should be targeted. It was recalled that the resolution adopted by the Human Rights Council on June 26, 2014 (A/HRC/26/9), dealt with the drafting of a legally binding international instrument regarding transnational corporations and other business enterprises. However, a footnote in the resolution’s preamble stipulated that the term “other business enterprises” designates all business enterprises whose operational activities have a transnational character and does not apply to local business enterprises registered under domestic legislation.
Participants generally supported an approach that would explicitly target TNCs in order to respond to the challenge set by the operational mode of these entities and to deal with their unprecedented economic power. On the one hand, it was noted that the economic power of the TNCs is such that it is often difficult for states to oppose them and that, de facto, TNCs are often above national laws and manage to capture states. On the other hand, it was pointed out that TNCs use a transnational structure and complex schemes to avoid compliance with national legislation and evade their responsibilities. They opt to be based in countries with the weakest tax and transparency laws, far from where they carry on their major economic activities, and generally operate through affiliates, sub-contractors, licensees or local business enterprises, supposedly independent but de facto under their control. Thus, it becomes very difficult to hold them responsible for their activities and the crimes they commit.
This is the major gap that must be bridged at the level of international law: to assure that TNCs are held accountable for their actions abroad, including through their affiliates, sub-contractors, licensees and the other business enterprises that they control de jure or de facto. (It was pointed out for example that sometimes TNCs do not have even contractual relations with the business enterprises through which they operate but that they control them de facto owing to their economic power.) It was also proposed that the chain of responsibility be re-established upward, to assure that investors, share-holders, states and the international financial institutions controlling or mandating TNCs can also be held responsible for their actions.
There was an exchange among the participants regarding the definition of TNCs, based on proposals contained in the Peoples Treaty (draft base document) and other relevant documents. Most of the participants mentioned the necessity of adopting a definition of TNCs that could evolve and be adapted to reflect the constantly evolving corporate practices and strategies. There was also a discussion about having a detailed and precise definition or, on the contrary, using an open and descriptive definition, with a minimum of conditions, which would be completed by provisions in other parts of the treaty. Some participants suggested a very simple definition centered on defining a TNC as any business enterprise comprising several entities through which it carries on business activities in more than one country.
Other remarks were formulated regarding the specifics of the Peoples Treaty‘s definition, notably the necessity of specifying that the activities carried out in other countries be “commercial” and the need to solve the contradiction between the condition set in the first sentence (activities in more than one country, meaning min. 2 countries) and the one in the second sentence (parent company + operations in other countries, thus min. 3 countries). The need to be more specific about the conditions “regardless of the legal framework they adopt” and “that are considered both as an individual and a group” was also highlighted for they are too vague and all enterprises could fall under such a definition. Problems were highlighted in the French and Spanish versions of the definitions1 and the translations need to be revised on the basis of the original definition (Spanish). Several participants insisted that the definition include affiliates and sub-contractors, for it is in this form that TNCs operate abroad, and not only those under de jure control but also those under de facto control. The notion of product or of registered trademark was proposed as a means of reestablishing the chain of responsibility. Difficulties were pointed out, notably regarding the identification of the parent company and the headquarter country. A remark was made regarding the inclusion in the definition of the reason why a treaty is needed, the “why” of the treaty (impunity) – TNCs are currently entities that are beyond any control).
Then followed a discussion about whether or not to include other business enterprises in the scope of the treaty. Some of the participants were in favor of limiting the scope of the treaty to TNCs in order to avoid diluting the purpose of the initiative. The argument was made that domestic enterprises only active in one country are already subject to national legislation, and thus, in principle, it is possible to prosecute them in case of crimes or human rights violations, which is not the case with TNCs, which are based in another country and act through the intermediary of affiliates, licensees and sub-contractors.
Moreover, it was pointed out that in wanting to extend the “net” to all business enterprises, the risk arises of digressing from the main purpose and opening loopholes that will allow the “big fish” to escape. The risk of losing the support of countries of the Global South that are currently behind this process was also highlighted. They support a treaty on TNCs, but would they accept subjecting “their” local and national business enterprises to such a binding international treaty? The extension of the treaty to all business enterprises could thus derail the whole process. That the European Union and the other western countries are making the inclusion of all other business enterprises a condition to their participation in the negotiations reinforces this idea.
Other participants argued that many crimes and human rights violations in the Global South are the doings not of TNCs or foreign business enterprises but of local and national businesses and remain often unpunished (notably because of the failure of national judicial systems or lack of law enforcement). From this point of view, the treaty should not exclude from its scope (the many and often serious) crimes and human rights violations often committed with total impunity by these entities. It was therefore proposed to go beyond the language of the resolution and the footnote and include also the other business enterprises with only local or national activities. It was also pointed out that there could be differentiated obligations between those other businesses and TNCs.
Some participants proposed to find a middle way between limiting the scope only to TNCs and including all businesses. They argued in particular that cooperatives, artisans (bakers et al.) and small enterprises should not be targeted by the treaty. Various possibilities were suggested as a way of doing this, in particular including only joint stock companies or major companies, or limiting the scope to certain serious crimes.
There was also a brief discussion on the enterprises covered by the footnote: these other business enterprises which are not TNCs but whose activities have a transnational character. The issue was flagged by some participants but no extensive discussion was held on the kind of enterprises and activities concerned. An example was given that there are many entities that carry on commercial activities in other countries without being TNCs, in particular a whole series of small businesses selling products or buying supplies abroad. The UNHRC Resolution’s footnote could be interpreted as including those kind of activities and enterprises. The experience of a constitutional amendment proposed in Switzerland was flagged where the approach taken was to include all businesses but target their international operations and activities and therefore focus on extra-territorial obligations. In general participants did not take an explicit position on whether or not they supported the inclusion of the transnational activities of all businesses within the scope of the treaty and this would need to be further discussed.
Moreover, the question of state owned enterprises was mentioned but needs to be explored further, especially the case of major state-owned corporations (or those in which the state is a major shareholder) which operate abroad. They should, in principle, come under the definition of TNCs and other businesses whose activities have a transnational character in so far as they operate in several countries, but the participants did not come to an explicit conclusion on this.
On the other hand, the case of TNCs operating in “their home country”, in the country where they are headquartered, was not extensively discussed (for example the actions of Vale in Brazil or of a Chinese TNC in China). Do these activities also come under the scope of the treaty? Or should the treaty concentrate on the activities of TNCs outside the country in which they are headquartered?
In general, one can say that there was no consensus among the participants regarding whether or not to go beyond the Human Rights Council resolution to include other types of business enterprises in the scope of the treaty, but generally peoples agreed that in any case the treaty should not target cooperatives, artisans or small business enterprises.
CONTENT
In the discussion on the key elements the treaty should contain, participants insisted that the obligation of states to protect human rights from the actions of TNCs should be central to the text. It was emphasized that it is the states that are responsible for protecting human rights in the face of the actions of TNCs and that they fail to fulfill this obligation. Very often, they are complicit and even the architects of TNC impunity. The treaty must be an instrument of pressure in order for them to assume their duty of protection. It must also make possible holding states responsible when they fail to fulfill this obligation. It should be borne in mind that some states also attempt to take action against TNCs misbehavior and to take measures in favor of human rights but often do not succeed, are not able to do so, or are in the current conjuncture bereft of means or are attacked and put under pressure. The treaty should be an instrument that they can rely on..
Participants emphasized that a central element of the treaty should be states’ extra-territorial obligations regarding their duty to protect human rights from the actions of TNCs. Some participants pointed out that the treaty should not only clarify these obligations but specify where they lie and in what situations they arise.
The discussions demonstrated that TNCs have a home country most of the time, a host state that supplies them with the political, economic and financial support indispensable for the expansion of their activities and that guarantees their impunity. However, several participants drew attention to the difficulty of identifying the host country, for it is not necessarily the country where the TNC is headquartered or pays its taxes, as the headquarters can be a smoke screen. In this regard, some participants mentioned the Maastricht Principles on states’ extra-territorial obligations regarding economic, social and cultural rights as a source of inspiration, for they go beyond the notion of home country or country of registry.
Regarding the content of these extra-territorial obligations, the participants pointed out that they should mainly concern states’ obligation to assure that “their” TNCs respect human rights and labor and environmental laws when operating abroad, as well as the possibility for victims to have access to redress in their courts.
Several participants insisted that the treaty should contain ambitious provisions regarding the obligation of states to cooperate internationally in this regard and that it is at this level that it could make a real difference. Participants mentioned relevant provisions on international cooperation in the Framework Convention on Tobacco Control. States refusing to cooperate should be penalized. The problem of free-trade and investment treaties, as well as international arbitration tribunals, was much discussed, and the participants emphasized that these should be the focus of specific state obligations in the context of the treaty, in relation to their obligation to protect human rights. Thus, these same states committed to protecting human rights sign free-trade and investment treaties that have the opposite effect and reinforce the power and impunity of TNCs. They submit to international arbitration tribunals that take absolutely no account in their decisions of human rights or labor and environmental law. Some states are also victims of these practices and are attacked for measures taken in favor of human rights. There was thus agreement that the treaty must affirm the superiority of international human rights law over international trade and investment norms.
Some participants proposed to be more specific and include in the treaty the obligation of states to introduce a human rights supremacy clause into all trade and investment treaties that they sign, and to renegotiate existing agreements to this effect, or else to cancel them and refuse to sign any such agreements that do not explicitly establish the mandatory supremacy of human rights obligations. An obligation concerning the prohibition for states to submit the settlement of disputes with TNCs to international arbitration tribunals was also proposed. The possibility of identifying in the treaty obligations that states must never assume through international economic treaties was also brought up, as was the right to break economic contracts in case of human rights violations (on the model of the WTO Doha Declaration regarding access to medicines).
The participants also mentioned other states’ obligations, in particular the necessity for all states to establish effective mechanisms enabling access by victims to justice at the national level. It was also proposed that the victims should be able to choose in which country’s court system they wish to have their case heard (home or host country) and that the possibility of going to court should not be limited to victims but extended to human rights defenders.
Several participants insisted on the necessity of introducing the obligation of states to consult and obtain the consent of potentially affected populations before granting concessions to TNCs. It was also proposed that the treaty reaffirm states obligations not to take retrogressive measures (principle of non-regression). A proposal was also formulated to introduce specific states’ obligations regarding freedom of association, non-discrimination in the work place, on the job health and safety, a pay level sufficient for a decent way of life, forced labor and child labor, abusive trade practices, the quality of goods and services, the precautionary principle, the codifying of strict anticorruption law and environmental and social impact assessments.
Further proposals included reformulating some of the proposals of the Peoples Treaty. It was proposed to change the provision regarding the prohibition of privatizing certain essential goods and services for an obligation of states to guarantee accessibility to them. Similarly the prohibition of the movement of upper-level management personnel from the public into the private sector (and vice versa) could be reformulated into an obligation to establish a cool-off period of minimum two to three years.
The participants also emphasized the importance of including in the treaty strong provisions on TNCs. They in particular emphasized the importance of affirming the double indictment of TNCs and their primary managers as well as their criminal and civil liability and, further, the TNC coresponsibility regarding their subsidiaries, sub-contractors, suppliers and licensees, as essential elements of the treaty.
Further, the participants insisted on the importance of including in the treaty the obligation of TNCs to respect all human rights, as well as labor and environmental law (as enshrined both in national and international law). The potential danger of giving human rights obligations to TNCs was also raised, even if they are only obligations related to respect of human rights.
Generally, the participants insisted on the necessity of affirming TNCs’ obligation to respect national and international laws but also to abstain from interfering in the drafting of such legislations.
It was proposed to establish due diligence for TNCs, in particular regarding the activities of their subsidiaries, sub-contractors, suppliers and licensees. It was further proposed to identify and legally establish new types of corporate crimes, especially environmental and economic crimes, mass displacement or destruction of livelihoods and, more specifically, to create an offense by default of due diligence or criminal negligence.
The participants also focused on certain specific TNC obligations that should figure in the treaty. It was for example proposed to include the obligation of TNCs to assure that essential goods and services be available to the population, to pay particular attention to the potential vulnerability of certain groups to human rights violations, to refrain from using the state’s armed forces and private security forces or paramilitaries, and to carry on their activities in recipient countries in accordance with the same standards as prevail in their home countries. Some participants argued that those should be characterized as state obligations and not obligations of TNCs.
Finally, the participants also insisted on the necessity of including in the treaty obligations for the international financial and economic institutions (IMF, World Bank, WTO in particular), especially when they are complicit in or responsible for the impunity of TNCs, but few specific proposals were put forth in this regard.
FORM
The participants finally discussed the monitoring and enforcement mechanisms and institutions that should be set up at the international level.
The establishment of an international legal mechanism allowing for the prosecution of TNCs and their directors, at both the civil and criminal level, was flagged as a top priority. Some participants mentioned the possibility of modifying the mandate of the International Criminal Court (ICC) in this regard, for it is an institution that has the advantage of being already established, of being empowered to judge individuals and of having the means to enforce its rulings. But it was recalled that the Peoples Treaty consultation process had clearly shown a tendency for the creation of a new mechanism. The establishment of a World Court dealing with TNCs and human rights was supported by most of the participants. Resources at the national level would first need to be exhausted before moving to the international level. The question of the implementation of the Court’s rulings was also raised, as was the necessity of endowing it with the means to carry out its work. It was also pointed out that a recurrent problem with this sort of international tribunal has been the lapse of time between the alleged facts and the judgments, thus transforming them into sorts of historic tribunals.
There was also a discussion about the types of crimes, violations and misconduct that could be brought before the Court touching in particular on the Peoples Treaty proposal of recognizing new types of international crimes (economic crimes against humanity, international business crimes and environmental crimes). It was notably pointed out that the notion of economic crime as defined in the Peoples Treaty is currently limited to crimes against humanity but that it should be reformulated to include all violations of human rights, in particular economic, social and cultural rights, but also civil and political rights, resulting from a systematic and generalized practice of a TNC. Regarding the definition of international corporate crimes included in the Peoples Treaty, it was proposed to include also the complicity of banks and investors. And regarding the Peoples Treaty proposals on environmental crimes, it was pointed out that the notion of privatization as a crime should be clarified, for it rather relates to states’ actions rather than the actions of TNCs. On sanctions, some participants mentioned the possibility of having a kind of “death penalty” for TNCs (a prohibition to continue its operations).
A proposal to establish a public center for the control of TNCs was also discussed. The purpose would be to set up an international mechanism empowered to investigate, carry out research on and document the practices of TNCs. One of the problems cited was the lack of information on the practices of TNCs. Participants insisted on the necessity of obliging TNCs and states to collaborate with this entity and to transmit information. It was also emphasized that whereas it would take time to set up a World Court, the public center could be set up relatively fast and would fulfill an essential function. It would complement the World Court and make possible the prevention of some crimes.
Finally, the creation of a treaty body (committee) that would monitor the implementation of the treaty by states at the national level was proposed, on the model of what is generally done for the other international human rights instruments. The participants emphasized that it would be the states that would be held accountable before such a committee. It was pointed out that the disadvantage of these committees is the non-binding character of their decisions, for they have no means to enforce them. Participants also emphasized that it would have to be a mechanism within which the primacy of human rights would be recognized and affirmed and which states could count on in acting against the impunity of TNCs. Some participants also brought up the possibility that the committee might receive complaints against TNCs.
May 31, 2015
1 Both characterize TNCs as entities that realize activities in other countries through the setting up of a company,
which is not always the case, and both create a confusion between the legislation in which the TNC was created and
the legislation of the country it is based in. Besides, an important mistake in the French version of the definition
(last sentence) was pointed out. It needs to read “sans créer d’entreprises ou au travers d’entreprises ou de
filiales…” (without creating a local company or through subsidiaries…)
7
