"On 5-6 October 2009, the Office of the UN High Commissioner for Human Rights (OHCHR) held a consultation: "Operationalizing the framework for business and human rights presented by the Special Representative" -- the "Protect, Respect, Remedy" framework [PDF] proposed by Special Representative Ruggie in his 2008 report to the UN Human Rights Council." Business and Human Rights Resource Center, Consultation on Operationalizing the Ruggie Framework--Geneva, 5-6 October 2009.
The Background to the Consultation was explained in the Draft Program:
After setting the stage, Mr. Ruggie focused on two significant issues facing an effort to implement any system of governance of business enterprises at the supra-national level--(1) implementation challenges; and (2) alternative approaches.
Mr. Ruggie identified five key challenges to the framework he has been developing. The first touches on the issue of framework scope. Here the great difficulty is defining the scope of the obligations to be imposed, formally and socially, on enterprises. There is a great tension between the need for precision and certainty--the great foundation of law systems--and the reality that in practice all activity is intimately interconnected--the foundation of systems of social or customary norm systems.
The second challenge flows from the first. If the normative basis of law systems is fundamentally inadequate, those political systems grounded solely in such systems must, by definition, also share the similar inadequacies. The principal inadequacy identified by Mr. Ruggie was what he termed legal and policy incoherence. "Governments currently lack adequate policies and regulatory arrangements for fully managing the complex business and human rights agenda. Although some states are moving in the right direction, overall their practices exhibit substantial legal and policy incoherence. " Id. More particularly, Mr. Ruggie points to the ease with which governments have become trapped by the complexity of its operations in a global environment, what he terms "horizontal incoherence. The point was driven home with an example:
The third challenge flows from this insight. If at least the most advanced multinational enterprises are the functional equivalent of states, then they ought to undertake burdens commensurate with their power and effects.
If multinational enterprises are bound by a social norm, rather than merely a law, structure, Mr,Ruggie suggests in his fourth challenge, then such enterprises are bound to provide an adequate mechanism for enforcing its norm obligations. "In effect, this replicates the “legalistic” approach I’ve just described: if it isn’t required by law, we don’t need to do it. Companies thereby deny those who are adversely affected by their activities an opportunity to resolve issues that may be readily remediable." Id., at 3.
This brings Mr. Ruggie to his last challenge, one that embraces the implication that there is a greater difference between developed and developing states than may be between developed states and advanced multinational enterprises. "The incidence of corporate-related human rights abuse is higher in countries with weak governance institutions: local laws either do not exist or are not enforced, even where the country in question may have ratified all the relevant international human rights conventions. The worst cases occur amid armed conflict over the control of territory or of the government itself." Id., at 3. The insights from the OECD Risk Awareness Tool now better reveal their governance implications. That is meant to substitute multinational governance, through self governance in its relationship with others, for law systems within territories in which the state is largely marginal. This is meant to avoid the problem of a blind adherence to a hierarchy of rule system that always posits the supremacy of law systems even where the state is effectively absent. "Such contexts attract marginal and illicit enterprises, which treat them as law-free zones." Id.
Yet the state is not absent from this analysis--rather, Mr. Ruggie suggests a more horizontal relationship among governance institutions, again grounded in the necessary relations between law systems (the state) and norm systems (the enterprise). "The use of extraterritorial jurisdiction might be one way to close such impunity gaps, but it also raises legitimate concerns on the part of states and business. In the absence of other widely applicable tools, the U.S. Alien Tort Statute has become a de facto ultimate recourse. . . This is far from a systemic solution— which needs to include greater enforcement of existing laws, clearer standards and more innovative policy responses by both home and host states. " Id., at 3-4.
The challenges serve as foundation for discussion of alternatives. Mr. Ruggie describes the two traditional approaches and their champions--"Human rights advocates favor binding standards imposed on companies directly under international law. Business traditionally has favored voluntary initiatives coupled with the identification of best practices and the development of management tools, arguing that the market itself will drive the process of change." Id., at 4. Mr. Ruggie suggests both are inadequate. The rationale flows naturally from the presumption that states, like multinational enterprises, are subject BOTH to law systems and norm systems that exist in a complex set of entwined horizontal relationships. Translated back into the language of common discourse, Mr. Ruggie puts it this way:
But the framework is not yet ready for deployment. Mr. Ruggie emphasized: "Now, I am not foolish enough, or so arrogant, as to believe that the “protect, respect and remedy” framework answers all our prayers. In fact, our journey has just begun. But I think it’s fair to say that we have come remarkably far in a relatively short period of time. And judging from these and other examples of uptake, I believe we can draw the conclusion that we are heading in." ID., at 6.
The Background to the Consultation was explained in the Draft Program:
In resolution 8/7 the Human Rights Council requested that the Office of the United Nations High Commissioner for Human Rights to organize a two day consultation, bringing together the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, business representatives and all relevant stakeholders, including non-governmental organizations and representatives of victims of corporate abuse, to discuss ways and means to operationalize the “Protect, Respect, and Remedy” framework on business and human rights put forward by the Special Representative. Each session will be addressed by 3-4 panelists who will make brief presentations, followed by interventions from the floor. It is anticipated that there will be around one hour of open discussion and interventions from participants during each panel session. The consultation is open to all individuals and organisations who registers in advance . . . Non-governmental organizations without ECOSOC accreditation need to submit the accreditation form. (Draft agenda & registration details)Most interesting and worth reflection were the remarks of John Ruggie, Opening remarks by UN Special Representative John Ruggie, October 5, 2009, and those of Opening statement by UN High Commissioner for Human Rights Navanethem Pillay, Oct. 5, 2009. Stakeholder contributions may be accessed as well. This essay will briefly consider Mr. Ruggie's remarks.
After setting the stage, Mr. Ruggie focused on two significant issues facing an effort to implement any system of governance of business enterprises at the supra-national level--(1) implementation challenges; and (2) alternative approaches.
Mr. Ruggie identified five key challenges to the framework he has been developing. The first touches on the issue of framework scope. Here the great difficulty is defining the scope of the obligations to be imposed, formally and socially, on enterprises. There is a great tension between the need for precision and certainty--the great foundation of law systems--and the reality that in practice all activity is intimately interconnected--the foundation of systems of social or customary norm systems.
Therefore, the quest to construct ex ante a delimited list of business-specific rights for which companies would have some responsibility is a fool’s errand. Virtually all rights are relevant, though some may be more so than others in particular circumstances. This fact needs to inform the policies of states and companies alike. Opening remarks by UN Special Representative John Ruggie, October 5, 2009, at 2.Mr. Ruggie rejects legal formalism as the sole basis for the construction of the social framework for business conduct.
The second challenge flows from the first. If the normative basis of law systems is fundamentally inadequate, those political systems grounded solely in such systems must, by definition, also share the similar inadequacies. The principal inadequacy identified by Mr. Ruggie was what he termed legal and policy incoherence. "Governments currently lack adequate policies and regulatory arrangements for fully managing the complex business and human rights agenda. Although some states are moving in the right direction, overall their practices exhibit substantial legal and policy incoherence. " Id. More particularly, Mr. Ruggie points to the ease with which governments have become trapped by the complexity of its operations in a global environment, what he terms "horizontal incoherence. The point was driven home with an example:
Not long ago, the government of South Africa was confronted with a startling instance of how serious this lack of policy coherence can be when investors from Italy and Luxembourg took it to binding international arbitration under a bilateral investment treaty. The investors claim that certain mining provisions of the Black Economic Empowerment Act amount to expropriation, entitling them to compensation. Why did the government sign up in the first place to an investment agreement that could threaten the country’s post-apartheid foundational principle of social justice? An official policy review explains that, among other reasons, “the Executive had not been fully apprised of all the possible consequences of BITs,” including for human rights. Id., at 2-3.All the same, it is interesting that governments appear to suffer from this horizontal regulatory incoherence to an extent significantly greater than other large organizations--for example the large multinational enterprises that appear to be able to take advantage of sloppy government and the structural limitations of law based systems. But that is not the case universally. Large , rich, well run multinationals, like states with well developed and expensive-to-maintain governmental bureaucracies, are better able to avoid incoherence, than either poorer multinational enterprises or poorer or less developed states. That provides an irony of sorts--large multinational enterprises are more similar in their organization and operation to more developed states than either are to their poorer and less well developed counterparts.
The third challenge flows from this insight. If at least the most advanced multinational enterprises are the functional equivalent of states, then they ought to undertake burdens commensurate with their power and effects.
With rare exceptions, even large multinational companies lack fully- fledged internal governance and management systems for conducting adequate human rights due diligence. Their approach in a sense has been highly “legalistic”: focused on the requirements of their legal license to operate, and only slowly discovering that in many situations meeting legal requirements alone may fall short of the universal expectation that they operate with respect for human rights—especially, but not only, where laws are inadequate or not enforced. Respecting rights is the very foundation of a company’s social license to operate. Id., at 3.Mr. Ruggie makes the quite sensible point that large and powerful enterprises cannot on the one hand protect their power to operate unhampered within a framework of social norm systems, and at the same time invoke their formalist subordination to states under legal norm systems. Yet the consequences may be profound for the relationship between state based law systems and transnational norm systems (and the related social license construct). This tension is most profoundly felt in efforts like the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones (2006).
If multinational enterprises are bound by a social norm, rather than merely a law, structure, Mr,Ruggie suggests in his fourth challenge, then such enterprises are bound to provide an adequate mechanism for enforcing its norm obligations. "In effect, this replicates the “legalistic” approach I’ve just described: if it isn’t required by law, we don’t need to do it. Companies thereby deny those who are adversely affected by their activities an opportunity to resolve issues that may be readily remediable." Id., at 3.
This brings Mr. Ruggie to his last challenge, one that embraces the implication that there is a greater difference between developed and developing states than may be between developed states and advanced multinational enterprises. "The incidence of corporate-related human rights abuse is higher in countries with weak governance institutions: local laws either do not exist or are not enforced, even where the country in question may have ratified all the relevant international human rights conventions. The worst cases occur amid armed conflict over the control of territory or of the government itself." Id., at 3. The insights from the OECD Risk Awareness Tool now better reveal their governance implications. That is meant to substitute multinational governance, through self governance in its relationship with others, for law systems within territories in which the state is largely marginal. This is meant to avoid the problem of a blind adherence to a hierarchy of rule system that always posits the supremacy of law systems even where the state is effectively absent. "Such contexts attract marginal and illicit enterprises, which treat them as law-free zones." Id.
Yet the state is not absent from this analysis--rather, Mr. Ruggie suggests a more horizontal relationship among governance institutions, again grounded in the necessary relations between law systems (the state) and norm systems (the enterprise). "The use of extraterritorial jurisdiction might be one way to close such impunity gaps, but it also raises legitimate concerns on the part of states and business. In the absence of other widely applicable tools, the U.S. Alien Tort Statute has become a de facto ultimate recourse. . . This is far from a systemic solution— which needs to include greater enforcement of existing laws, clearer standards and more innovative policy responses by both home and host states. " Id., at 3-4.
The challenges serve as foundation for discussion of alternatives. Mr. Ruggie describes the two traditional approaches and their champions--"Human rights advocates favor binding standards imposed on companies directly under international law. Business traditionally has favored voluntary initiatives coupled with the identification of best practices and the development of management tools, arguing that the market itself will drive the process of change." Id., at 4. Mr. Ruggie suggests both are inadequate. The rationale flows naturally from the presumption that states, like multinational enterprises, are subject BOTH to law systems and norm systems that exist in a complex set of entwined horizontal relationships. Translated back into the language of common discourse, Mr. Ruggie puts it this way:
A pure model of self-regulation beyond compliance with national laws lacks prima facie credibility. We live in a world of 192 nation states, 80,000 multinational corporations, millions of affiliates and suppliers, and countless other firms, large and small. There is not enough magic in any marketplace, real or imaginary, to overcome the staggering collective action problems.That leaves Mr. Ruggie in essentially new territory--one that rejects the monopoly of law systems within states and the conception of norm systems as non-binding.
As for imposing binding substantive human rights standards on companies directly under international law, that would require a treaty. And if we take seriously the fact that corporations can affect all human rights, as I do, then the treaty would have to include such standards for companies in relation to all internationally recognized rights. . . . First, why would states, North and South, which do not accept all international human rights standards for themselves, agree to subject their companies, multinational and national, to such standards under international law? Second, leaving that issue aside, would the standards in such a treaty likely be higher or lower than the highest standards companies have in place today? . . . . Third, how would such a treaty be enforced? Would it include a new international court for companies as legal persons? No one seriously expects that to materialize any time soon. . . . Fourth, major treaties on complex and controversial subjects require decades for the subject to ripen and negotiations to conclude.Id., at 4-5.
The “protect, respect and remedy” framework lays the foundations for generating the necessary means to advance the business and human rights agenda. It spells out differentiated yet complementary roles and responsibilities for states and companies, and it includes the element of remedy for when things go wrong. It is systemic in character, meaning that the component parts are intended to support and reinforce one another, creating a dynamic process of cumulative progress—one that does not foreclose additional longer-term meaningful measures. Id., at 5What is described, effectively, is polycentric norm making among multiple systems of functionally differentiated governance communities that are required to interact with each other in complex and dynamic ways. Incompatible systems, law and norm--must effectively find a way to communicate and to harmonize values and relevance for their constituting communities, whether these are citizens, consumer, employees, or investors. "In a diverse set of sectors serious empirical research has now shown that polycentric systems tend to outperform monocentric systems governing similar ecological, urban, and social systems. Empirical studies of the vulnerability of differently linked social-biophysical systems are highly likely to demonstrate that governance systems composed of multiple units at multiple scales of organisations are less vulnerable to many types of external shocks than centralized systems."Elinor Ostrom, Vulnerability and Polycentric Governance Systems, Newsletter of the International Human Dimensions Programme on Global Environmental Change, Nr. 3/2001 ("polycentric governance systems are frequently criticized for being too complex, redundant, and lacking a central direction when viewed from a static, simple-systems perspective. They have considerable strengths when viewed from a dynamic, complex-systems perspective, particularly one that is concerned with the vulnerability of governance systems to external shocks." Id.). See also, Larry Catá Backer, Governance Without Government: A Preliminary Overview, Law at the End of the Day, June 16, 2009;
But the framework is not yet ready for deployment. Mr. Ruggie emphasized: "Now, I am not foolish enough, or so arrogant, as to believe that the “protect, respect and remedy” framework answers all our prayers. In fact, our journey has just begun. But I think it’s fair to say that we have come remarkably far in a relatively short period of time. And judging from these and other examples of uptake, I believe we can draw the conclusion that we are heading in." ID., at 6.
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