Saturday, May 01, 2010

A Consideration of John Ruggie's 2010 Report to 14th session of UN Human Rights Council: "Business and Human Rights: Further steps toward the operationalization of the 'protect, respect and remedy' framework"

John Ruggie recently submitted his report to 14th session of UN Human Rights Council: "Business and Human Rights: Further steps toward the operationalization of the 'protect, respect and remedy' framework"  (The 2010 Report).  The Report serves as a crucial last step in the long process that began in 2006 when Mr. Ruggie started to distinguish what would become the Protect-Respect-Remedy project from the failed efforts to develop a set of Norms on the responsibilities of transnational corporations and other business enterprises with regard to human rights and will end next year with the publication of a set of guiding principles for the operation of the Protect-Respect-Remedy framework.  This short essay considers the 2010 and its place in the process from theory to operating system.

The 2010 Report[1] serves to refine the conceptualization of the Protect-Respect-Remedy framework and to provide the foundation for the development of a set of governance principles that will serve as the basis for operationalizing the framework. Reflecting the format of the original mandate, the SRSG first focused on principled pragmatism as the core working method utilized to move closer to operationalizing the Three Pillar framework.[2] The remainder of the Report distilled the essence of each of the pillars and the linkages between them. This was meant to provide the last official version of the conceptual framework from which the final product of the mandate will be drawn—the guiding principles.

The first part of the Report reminds its readers of the fundamental importance of the notion of “principled pragmatism” to the conceptualization of the mandate,[3] first announced in the 2006 Report.[4] The 2010 Report reminds its readers that principled pragmatism was at the heart of the conclusion of the 2008 Report of the impossibility of finding a unified approach to the issue of business and human rights in the context in which states and corporations occupied different regulatory spaces.[5] “As has been true throughout the mandate, the operationalization phase combines research, consultations and practical experimentation.”[6]

The 2010 Report then turns to the State duty to protect. It “describes a portfolio of possible measures by States to promote corporate respect for human rights and prevent corporate-related human rights abuse.”[7] These are grouped into “five priority areas through which States should strive to achieve greater policy coherence and effectiveness as part of their duty to protect: (a) safeguarding their own ability to meet their human rights obligations; (b) considering human rights when they do business with business; (c) fostering corporate cultures respectful of rights at home and abroad; (d) devising innovative policies to guide companies operating in conflict-affected areas; and (e) examining the cross-cutting issue of extraterritorial jurisdiction.”[8]

The corporate responsibility to respect is offered as both contrast and supplement to the state duty to protect human rights.[9] Companies have a fundamental responsibility to comply with the laws of all host states.[10] This obligation exists even in the absence of a government (in which case the company is expected to fill the void).[11] It poses special problems where national law conflicts with international standards, a problem the solution to which remains elusive. [12] But actions that affect human rights may also collaterally affect the ability of a company top comply with law, producing community resistance that may delay otherwise lawfully operating companies.[13] Lastly, blind compliance with local law might expose companies to complicity in state violations of international human rights norms.[14]

The limitations on a company’s obligations to comply with local law in all circumstances suggests the key characteristic of the corporate responsibility to respect human rights: its autonomy from both domestic law systems and from the state. The SRSG continues to emphasize that “responsibility exists independently of States’ human rights duties. It applies to all companies in all situations. ”[15] This responsibility exists with respect to all actors with whom the corporation interacts.[16] It is framed by the International Bill of Rights combined with the ILO core Conventions,[17] but not limited to the principles contained therein.[18] Yet the SRSG resists expanding the scope of the responsibility to respect human rights to something more positive. Reflecting concerns about the democratic legitimacy of corporate control of political policy within states, the SRSG suggests that such a role would substitute the corporation for the government of a state.[19]

What the SRSG does posit as a positive obligation in the context of the responsibility to respect is the obligation to undertake and disclose the products of internal and external due diligence.[20] “Human rights due diligence can be a game-changer for companies: from “naming and shaming” to “knowing and showing.” Naming and shaming is a response by external stakeholders to the failure of companies to respect human rights. Knowing and showing is the internalization of that respect by companies themselves through human rights due diligence.”[21] The SRSG elaborates the way in which such due diligence is to be undertaken. He suggests four basic components of due diligence,[22] and indicates that such systems can increase the likelihood of better management of human rights violations, and serve as a basis for the provision of remedies.[23] He also notes that such systems are ineffective unless implemented.[24] And he seeks to reassure companies that due diligence will reduce rather thasn increase exposure to liability.[25]

Lastly, the SRSG focuses on the Remedy pillar, arguably the most conceptually difficult of the three. The difficulty arises form the relationship between remedy and the distinct source of obligation for human rights that attach to states and to corporations. That suggests a substantive component tied to the character of the state duty to protect and the corporate responsibility to respect. At the same time, remedies are procedurally laden. Remedies can be understood as the process for vindication of rights and the management of claims. They serve as an important prong of accountability in the relationship between state and stakeholders, and corporation and stakeholders.

For the 2010 Report, the SRSG chose process and organization. In connection with process, he focuses “on three types of grievance mechanisms that can provide avenues for remedy: company-level mechanisms and both non-judicial and judicial State-based mechanisms.”[26] For organization the SRSG “examined how these can be complemented by initiatives undertaken by industry bodies, multi-stakeholder groups, international organizations and regional human rights systems. ”[27]

Company level remedies are grounded in internal grievance mechanisms. These would be available both for internal problems and also as a method for outside stakeholders to interact with the company. For the company these procedures are meant to serve as early warning systems, that is as a method for managing and minimizing the adverse impacts of potential human rights violations.[28] To ensure process legitimacy, the SRSG imports traditional Rechtsstaat notions in the construction and operation of such systems: “legitimacy, accessibility, predictability, equitability, rights-compatibility and transparency. A seventh principle specifically for company-level mechanisms is that they should operate through dialogue and engagement rather than the company itself acting as adjudicator.”[29]

States are also encouraged to create non-formal systems of dispute resolution.[30] The SRSG points to models that might be incorporated into state practice—from the national contact point system under the OECD Guidelines for Multinational Enterprises,[31] to the deployment of national human rights institutions.[32] “Whatever roads they choose, States should view the provision of remedy comprehensively so that judicial and non-judicial approaches begin to cohere as a system of remedial options for victims of corporate-related abuse. ”[33] However, at least as far as states are concerned, the core remedial institutions are judicial. In this sense, the remedial pillar and the state duty to protect converge.[34]

The SRSG then considers the appropriate scope of judicial remedies. These touch on a number of substantive issues. Ironically, having embraced the paramount role of the state system, and territorially bounded law-systems in the construction of the First Pillar, the SRSG is confronted with the consequences of that necessary choice in the elaboration of the Remedial Pillar. These include difficulties relating to the consequences of respecting the distinct legal personalities of corporations,[35] the extraterritorial reach of the judicial power, [36] and the problem of prosecutorial resources when poorer states confront investigations on a global scale.[37] Additionally, practical considerations may effectively deny individuals (and states) adequate remedies through the invocation of formal judicial process. “Turning to practical obstacles, three are particularly problematic: costs; bringing representative and aggregated claims; and disincentives to providing legal and related assistance to victims. Their coexistence can make it almost impossible for victims to access effective judicial remedy.”[38] Yet this is a problem that confronts all litigants in even the richest states. The issue of access to justice is as much a problem in the United States for the poor as it is for victims of human rights abuses in developing states.

Lastly, the SRSG emphasizes complementarity in the remedial context. State based formal and informal systems ought to be integrated in some way. [39] Likewise expanded and integrated private grievance mechanisms “can enable companies to increase the reach and reduce the costs of grievance mechanisms. ”[40] The SRSG notes the importance of collaboration across pillars—between states and companies, and the need to be sensitive to class, culture and context issues in designing remedial structures. The object is to maximize the availability of remedy. And that objective is likely to serve as the basis for judging the effectiveness of remedial mechanisms implemented rather than some compliance with formal system construction.[41] For the moment all remedial systems remain underdeveloped.[42]

The SRSG then points to the future. He will provide a set of guiding principles in the 2011 Report.[43] “The final report also will present options and recommendations to the Council regarding possible successor initiatives to the mandate. ”[44] The 2010 Report ends with a warning—all the conceptualization in the world is no substitute for the institutionalization and bureaucratization of the standards developed. In the absence of some sort of institutional structure, the work of the mandate will effectively die on the vine with the publication of the 2011 Guiding Principles.[45] The next move will be both contentious and important in the development of global governance standards for business and human rights.

[1] Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Business and Human Rights: Further steps toward the operationalization of the “protect, respect and remedy” framework, A/HRC/14/27, Human Rights Council, 14th session, Agenda item 3, Promotion and protection of all human rights, civil, political, economic, social and cultural rights, including the right to development, available (hereafter the 2010 Report).

[2] 2010 Report ¶¶ 4-15.

[3] 2010 Report ¶¶ 4-15.

[4] See 2006 Report at ¶ 81.

[5] “But, he added, those things must cohere and generate an interactive dynamic of cumulative progress – which the framework is designed to help achieve.” 2010 Report, supra, at ¶ 5.

[6] Id., at ¶ 7.

[7] Id., at ¶ 17.

[8] Id., at ¶ 19.

[9] The SRSG explained in language somewhat more subtlety drawn than in the 2008 Report:

The term “responsibility” to respect, rather than “duty”, is meant to indicate that respecting rights is not an obligation that current international human rights law generally imposes directly on companies, although elements may be reflected in domestic laws. At the international level, the corporate responsibility to respect is a standard of expected conduct acknowledged in virtually every voluntary and soft-law instrument related to corporate responsibility,31 and now affirmed by the Council itself.

2010 Report, supra, at ¶ 55.

[10] Id., at ¶ 66.

[11] Id., at ¶ 67.

[12] Id., at ¶ 68.

[13] Id., at ¶¶ 69-73 (“human rights are adversely impacted, serious corporate value erosion occurs and disclosure requirements and directors’ duties may be breached. Clearly, better internal control systems and oversight are necessary. ” Id., at ¶ 73).

[14] “For example, the more than fifty cases brought since 1997 against United States-based and other companies under the Alien Tort Statute have included allegations of complicity in genocide, slavery, extrajudicial killings, torture, crimes against humanity, war crimes and other egregious human rights violations. ” Id., at ¶ 75.

[15] Id., at ¶ 57.

[16] Id., at ¶ 58.

[17] Id., at ¶ 60. The International Bill of Rights consists of the Universal Declaration of Human Rights and the main instruments through which it has been codified: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.

[18] “Depending on circumstances, companies may need to consider additional standards: for instance, they should also take into account international humanitarian law in conflict-affected areas (which pose particular challenges)36; and standards specific to “at-risk” or vulnerable groups (for example, indigenous peoples or children) in projects affecting them.” Id., at ¶ 61.

[19] Id., at ¶ 62-65. He notes that

the proposition that corporate human rights responsibilities as a general rule should be determined by companies’ capacity, whether absolute or relative to States, is troubling. On that premise, a large and profitable company operating in a small and poor country could soon find itself called upon to perform ever-expanding social and even governance functions – lacking democratic legitimacy, diminishing the State’s incentive to build sustainable capacity and undermining the company’s own economic role and possibly its commercial viability. Indeed, the proposition invites undesirable strategic gaming in any kind of country context.

Id., at 64.

[20] Id., at ¶¶ 79-86. On the importance of monitoring in this context, see, Larry Catá Backer, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations, 39 Georgetown Journal of International Law 591 (2008).

[21] 2010 Report, supra, at ¶ 80. On the governance effects of surveillance and disclosure systems, see Larry Catá Backer, Surveillance and Control: Internal, External and Governmental Monitoring of Corporate Insiders After Sarbanes-Oxley, 2004 Michigan State Law Review 327 (2004).

[22] These include: “a statement of policy articulating the company’s commitment to respect human rights; periodic assessment of actual and potential human rights impacts of company activities and relationships; integrating these commitments and assessments into internal control and oversight systems; and tracking and reporting performance.” 2010 Report, supra, at ¶ 83.

[23] Id.

[24] “Accordingly, the Special Representative is also developing guidance points for their implementation.” Id., at ¶ 84.

[25] Id., at ¶¶ 85-86.

[26] Id., at ¶ 89.

[27] Id.

[28] Id., at ¶ 92.

[29] Id., at ¶ 94. The actual construction of such grievance mechanisms is left to the company. Id. at 95.

[30] “The importance of non-judicial, State-based mechanisms, alongside judicial mechanisms, is often overlooked, as regards both their complaints-handling role and other key functions they can perform, including promoting human rights, offering guidance, building capacity and providing support to companies and stakeholders. ” Id., at ¶ 96.

[31] Id., at ¶ 98-100. The SRSG however notes the weaknesses of this system.

[32] Id., at ¶ 97.

[33] Id., at ¶ 102.

[34] “States that deliberately erect barriers to prevent cases from being brought against business or that obstruct or intimidate the peaceful and legitimate activities of human rights defenders may breach their duty to protect.” Id., at ¶ 103. Convergence with the corporate responsibility to respect occurs where corporations impede access to courts. Id.

[35] The SRSG notes both the problem of dealing with corporate groups (id., at ¶ 105) and parent subsidiary structures. Id., at ¶106.

[36] Id., at ¶ 107

[37] Id., at ¶ 108.

[38] Id., at ¶ 109.

[39] “State-based judicial and non-judicial mechanisms should form the foundation of a wider system of remedy for corporate-related human rights abuse. ” Id., at ¶ 114.

[40] Id., at ¶ 115

[41] Id., at ¶ 114-115.

[42] Id., at ¶ 117.

[43] Id., at ¶ 124.

[44] Id., at ¶ 125. “The Special Representative will engage extensively with Member States and others in developing these ideas. Nevertheless, to sustain the momentum the mandate has achieved, he is flagging one recommendation now. ” Id.

[45] Id., at ¶ 126. “Resource constraints limit how much he and his small team have been able to do. However, even those limited efforts will come to a halt once his mandate ends unless an advisory and capacity-building function is anchored firmly within the United Nations.” Id.

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