Wednesday, September 10, 2014

John Ruggie on the Framework for a New Business and Human Rights Treaty: "Quo Vadis? Unsolicited Advice to Business and Human Rights Treaty Sponsors"

I have been considering the recent moves by the Human Rights Council to frame a treaty  to replace/amplify/substitute/supersede the Guiding Principles for Business and Human Rights that the HRC has itself only recently and unanimously endorsed.  See Larry Catá Backer, The Guiding Principles of Business and Human Rights at a Crossroads: The State, the Enterprise, and the Spectre of a Treaty to Bind them All (July 5, 2014).

It is in this context that the insights of John Ruggie continue to be especially important.  See HERE and HERE.  John G. Ruggie, is the chair of the Institute for Human Rights and Business International Advisory Board, and is the Berthold Beitz Professor in Human Rights and International Affairs at Harvard’s Kennedy School of Government and Affiliated Professor in International Legal Studies at Harvard Law School. From 2005-2011 he served as the UN Secretary-General’s Special Representative for Business and Human Rights (and HERE). In June 2014 he received the Harry LeRoy Jones Award of the Washington Foreign Law Society, honoring “an individual who has made an outstanding contribution to the development and application of international law.”

His most recent essay, Quo Vadis? Unsolicited Advice to Business and Human Rights Treaty Sponsors, follows. It appeared originally as a Commentary for the Institute for Human Rights and Business.

The most valuable insight from the essay can be drawn from the larger picture Professor Ruggie paints.  It is clear that the great ideological differences that marked the Cold War years has not disappeared--they have merely been transformed to fir into the new realities of international relations.  At its heart is the key and fundamental difference among states in this respect:  on one side are aligned states whose political and economic orders are grounded in the premise that social, economic and cultural rights are the pathway to the development of civil and political rights.  Within this group there are powerful states who believe that such rights are better understood as obligations of states rather than as inherent in individual human dignity as a force to constrain state action. (Discussed in Backer, Larry Catá, China's Corporate Social Responsibility with National Characteristics: Coherence and Dissonance with the Global Business and Human Rights Project (June 9, 2014)). On the other are states, for the most part developed states, for which a central element of social, political and economic organization are centered on civil and political rights, from out of which social, economic and cultural rights may be attained. (Comparison in Backer, Larry Catá, Privatization, the Role of Enterprises and the Implementation of Social and Economic Rights: A Comparison of Rights-Based and Administrative Approaches in India and China (March 24, 2014). George Washington International Law Review, Vol. 45, No. 4, 2013). There are three points of conflicts among these world views in the construction of transnational systems of norms for business and human rights. First is the role of the state (as a central element of normative and enforcement systems or as one of many stakeholders and operators of that system).  Second, centers on the content of those norms, an area within which there remains substantial divergence among the community of nations and between them and global human rights stakeholder communities.  And third, the role of public international bodies as an autonomous source of legislation and implementation, or merely as the inter governmental construct serving only in a ministerial capacity. Professor Ruggie wisely suggests caution and compromise--principled pragmatism--if the object is to accommodate these distinct views in a workable system.  For those who view the treaty exercise as just another front in the great battle among these divergent world views for supremacy, the these efforts will, like those of the past, produce failure in the status of the dis-equilibrium that passes as the status quo. And this leads ultimately to underline the value of Professor Ruggie's final point--the need to preserve and intensify the work of operationalizing the Guiding Principles for Business and Human Rights even as the international community confronts its demons int he context of the current discourse on the construction of a treaty for business and human rights.

John G. Ruggie
Quo Vadis? Unsolicited Advice to Business and Human Rights Treaty Sponsors
In June of this year, a group of countries led by Ecuador succeeded in persuading the UN Human Rights Council to initiate negotiations aimed at regulating the conduct of multinational corporations. Preparations are now under way in Geneva and national capitals. In our highly tumultuous world such a development generates few headlines, but its importance for the everyday lives of people all around the globe, and possibly also for economic development prospects as well as corporate profits, can be utterly profound.
Therefore, it deserves close attention and serious debate. In this note I offer unsolicited—though I hope not unwelcome—advice to the initiative’s sponsors, based on my forty years of engagement with these issues as a scholar and practitioner, and put forward in the spirit of George Santayana’s famous dictum that those who do not learn from the past are doomed to repeat it. The note begins with some background, points out several key challenges the initiative’s sponsors face, and concludes with suggestions for how those challenges might be addressed.


In 1973-74, I was a newly-minted assistant professor of international relations at Berkeley. Global governance was (and remains) my chosen field. Together with a Yugoslav colleague, I was conducting research on the New International Economic Order debates, the attempt by developing countries to employ the platform of the United Nations to reshape the world economy toward a more statist and, they believed, therefore more equitable path. [1]
A core element in this program was the regulation of multinational corporations. An Economic and Social Council resolution mandated the creation of an advisory group of eminent persons. The UN Secretariat prepared a comprehensive and impressive background report, Multinational Corporations in World Development [2] Substantive hearings with leading world experts were convened in Geneva, some of which I attended as an observer. Not long thereafter, the newly established UN Commission on Transnational Corporations launched negotiations on a code of conduct to govern multinationals.[3]
A UN Centre for Transnational Corporations was established to service these various activities. Initially I followed the code of conduct negotiations with great interest, though it soon waned as they became deadlocked. The cause is typically attributed to the clash between the developing countries’ preference for a mandatory instrument and OECD countries’ insistence on voluntary measures. But that is only part of the story. Two other factors were determinative. One was the refusal by the Group of 77 of developing countries to include the conduct of all business enterprises within the scope of the code, including national firms and state-owned enterprises. Another was that the OECD countries considered the G-77 proposals regarding host governments’ treatment of multinationals to be inadequate, above all the modalities of determining compensation in case of nationalization. The Soviet Union and its East European satellite states generally supported the G-77 while insisting that the code of conduct would not apply to their multinationals because they did not pose the problems of profit-driven Western firms.
Tentative compromises were struck on a number of issues and the G-77 ultimately conceded that they would accept a voluntary code. But on the main divisive matters, prolonged negotiations seemed only to harden the position of each side rather than facilitating compromise. By the mid 1980s the ground under the negotiations had shifted. Developing countries were now competing with one another to attract foreign direct investment funds, as they had been forced to borrow heavily on international capital markets in the aftermath of the 1979 oil-price crisis induced by OPEC. The negotiations were formally abandoned in the early 1990s, the Commission as well as the Centre abolished.
Over time, renewed pressure for such a treaty instrument has come most persistently from activists, and more intermittently from developing countries. The most recent instance was called the Norms on Transnational Corporations and Other Business Enterprises with Regard to Human Rights, drafted by a working group of a subsidiary body of the Commission on Human Rights, the institutional predecessor of the Human Rights Council.[4]
At its 2004 session, the Commission declined to adopt the text, pointedly noting in a resolution that it “has not been requested by the Commission and, as a draft proposal, has no legal standing.”[5] A recent civil society survey sums up the overall record to date: “All these efforts met with vigorous opposition from TNCs and their business associations, and they ultimately failed"[6] Not to be deterred, in September 2013 Ecuador proposed that the Human Rights Council establish an intergovernmental working group (IGWG) to negotiate “an international legally binding framework on the issue of human rights and transnational corporations and other business enterprises.” A “treaty alliance” of some 600 NGOs formed to support it.[7] In a sharply divided vote, the Council approved the proposal on June 26, 2014. Negotiations are expected to convene sometime in mid-2015, and to meet for one week annually for an indefinite duration.
Will this latest attempt to impose binding international law obligations governing transnational corporations turn out to be another instance of the classic dysfunction of doing the same thing over and over again and expecting a different outcome? Or might the negotiations come to reflect more deeply on this prior record and try to chart a more productive direction? We may get some inkling soon, as the opening moves by the treaty sponsors will have a decisive impact on the direction the negotiations will take. According to the rules of the game they basically get to choose the rules, and they are currently discussing what their approach will be.
What is my message to the treaty sponsors? That success is not guaranteed by listening to the advice offered here, but failure is if they don’t. In the upcoming negotiations, as in any other, countries on all sides will pursue what they believe to be in their individual interests as well as their views of what constitutes the collective interest. That’s a given, and it will shape the range of possibilities. But beyond that, the sponsors come into these negotiations with baggage that ensures failure unless it is adequately addressed right at the outset. Below, I outline the main challenges they face, and then offer some suggestions for how they might be addressed.

Key Challenges

The successful development of any international legal instrument requires a certain degree of consensus and good faith assumptions among states. The decision to establish the IGWG was highly controversial, and there is a significant risk that the divisions created during the negotiations around the resolution will persist. The key challenges for treaty sponsors are a weak political mandate, the proposed treaty’s unworkable scope and scale, and the sponsors’ as well as many supporters’ own record with regard to the UN Guiding Principles on Business and Human Rights (UNGPs)—unanimously endorsed by the Council in June 2011, and the only authoritative guidance the Council and its predecessor, the Commission, have issued for states and business enterprises on their respective obligations in relation to business and human rights. [8]
  1. Weak Political Mandate The treaty sponsors have the thinnest of political mandates. In addition to Ecuador, the resolution proposing the IGWG was co-sponsored by Bolivia, Cuba, South Africa, and Venezuela. The vote was twenty in favor, fourteen against, with thirteen abstentions. Thus, the proposal did not win the support of a majority of Council members, only a plurality. The home countries of the vast majority of the world’s transnational corporations were opposed. The European Union and the United States not only voted against the resolution, describing it as polarizing and counterproductive; both also stated that they would not participate in the negotiating process. Although China voted in the affirmative, in explaining its vote it laid down tough conditions which make it clear that its support should not be taken for granted. [9] Apart from the sponsors, all Latin American members, including Brazil, abstained. The largest bloc of affirmative votes came from African members—nine in all.
    In stark contrast, the day after the deeply divided vote on the Ecuador proposal the Council adopted a second resolution, introduced by Argentina, Ghana, Norway, and Russia. It extends the mandate of the inter-regional expert working group the Council established in 2011 to promote and build on the UNGPs, and requests the High Commissioner for Human Rights to facilitate a consultative process with states, experts, and other stakeholders exploring “the full range of legal options and practical measures to improve access to remedy for victims of business-related human rights abuses.” [10] This resolution was adopted by consensus, requiring no vote. There may be a message to the treaty sponsors in the difference between these two outcomes.
  2. Scope of Proposed Treaty The resolution establishing the IGWG assigns it the mandate “to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.” [11]
    A footnote defines “other business enterprises” in a way that is intended to exclude national companies. Thus, to illustrate, the language of the proposed treaty would have covered international brands purchasing garments from the factories housed in the collapsed Rana Plaza building in Bangladesh, but not the local factory owners producing those garments and employing the more than 1,100 workers who died and the 2,500 injured.
    The core sponsors of the resolution may have found this formulation to be useful in putting together their voting coalition. But it poses two enormous impediments to future progress. First, an exclusive focus on transnational corporations has always triggered strong opposition from their home countries, of which there are now many more, and from a greater diversity of countries, than in the past, as well as from international business. In this instance, it has also dampened the enthusiasm of civil society organizations for the initiative. As Arvind Ganesan of Human Rights Watch wrote when the resolution was adopted: “A fundamental flaw lies in Ecuador’s insistence that the treaty focus on multinational companies, even though any company can cause problems and most standards, including the UN [guiding] principles, don’t draw this artificial distinction.” [12] Virtually all subsequent NGO statements have raised a similar objection, because for victims the corporate form of the abuser is irrelevant.
    Second, the definition of “other business enterprises” contained in the resolution makes no sense either in logical or legal terms. Here is what it says: “’Other business enterprises’ denotes all business enterprises that have a transnational character in their operational activities, and does not apply to local businesses registered in terms of relevant domestic law.” To begin with, there is no meaningful distinction between “transnational corporations” and “enterprises that have a transnational character.”
    So the term “other business enterprises” is redundant and plays a purely rhetorical role in the resolution, perhaps intended to convey the impression that business enterprises other than transnational corporations are contemplated within the scope of the treaty. More importantly, transnational corporations’ subsidiaries are typically required to incorporate under “relevant domestic law,” often in joint ventures, including with state-owned enterprises or other corporate forms that classify as local businesses. And at the same time, a growing number of local companies conduct business across borders, and thus may be said to have a transnational character. How do all these structures and relationships get disentangled? Given the extraordinary level of sophistication these days in what corporate legal strategists call “legal entity optimization” of firms, this definition is unlikely to survive the first round of critical scrutiny and go on to serve as the basis of any viable treaty instrument.  
  3. Scale of Proposed Treaty The proposed treaty is not addressed to specific human rights abuses. Rather, it seeks to establish an overarching international legal framework—a global constitution of sorts—governing transnational corporate conduct under international human rights law. The idea of establishing such an overarching legal framework through a single treaty instrument may seem like a reasonable aspiration. But as I have argued previously, neither the international political or legal order is capable of achieving it in practice. [13] The crux of the challenge is that while business and human rights may be a single label, it is not so discrete an issue-area as to lend itself to a single set of comprehensive and actionable treaty obligations.
    Politically, business and human rights exhibits extensive problem diversity, institutional variation, and conflicting interests across and within states. This challenge only increases as the number of home countries of multinationals grows (note, for instance, China’s remarks, quoted earlier). On the legal side, the International Law Commission documented nearly a decade ago that the predominant trend in international legalization is the fragmentation of international law into separate and increasingly autonomous spheres. Its seminal report to the UN General Assembly concludes that “no homogenous hierarchical meta-system is realistically available” within the international legal order to resolve detailed differences among the separate spheres, noting that this would have to be worked out more discretely in the realm of practice.[14]
    The category of business and human rights is a case in point: it encompasses too many complex areas of national and international law for a single treaty instrument to resolve across the full range of internationally recognized human rights.[15]
    Any attempt to do so would have to be pitched at such a high level of abstraction that it would be largely devoid of substance, of little practical use to real people in real places, and with high potential for generating serious backlash against any form of further international legalization in this domain—as we already began to witness in the recent Council IGWG debate.
    This is not an argument against further legalization, but for carefully crafted international legal instruments—“precision tools” as I have called them—building on existing foundations and focused on specific governance gaps that other means are not reaching.[16] I am well aware of what some call the “expressive” function of law, in contrast to its problem-solving role. But the field of international human rights does not lack for expressive texts; what is in short supply are specific actionable paths capable of generating cumulative progress.[17]
  4. Record in Implementing UNGPs A final challenge facing treaty sponsors concerns the relationship between their initiative and the UNGPs, endorsed just three years ago. Every country that spoke in the IGWG debate, including Ecuador, stressed the importance of implementing and building on the UNGPs. Yet the main criticism of the treaty proposal by the U.S., the European Union, and others characterized it as a distraction from, if not an outright attempt to undermine, the UNGPs. How could this be so? Here is the problem: most states that voted in favor of initiating treaty negotiations have done little if anything to implement and promote the UNGPs within their own countries, regions, or globally. In contrast, other developing nations, many OECD countries, public and private international agencies, and hundreds of companies have been moving on this front, albeit not always as rapidly and robustly as one might wish, while a growing number of NGOs and workers organizations have developed increasingly detailed policy and legal reform proposals based on the UNGPs.
    Going forward, the fact that many of the most ardent treaty proponents have done least to act on the UNGPs poses a fundamental challenge for treaty advocates. Given Ecuador’s own conjecture that a treaty may be a decade or more away, what do they plan to offer in the interval to achieve practical progress on the ground? Will they now take steps toward instituting the UNGPs—as an interim measure if nothing else? Will they explain how the treaty is intended to build on and strengthen the foundation established by the UNGPs? If not, they will fuel the suspicion voiced by opponents that the treaty initiative has less to do with achieving practical improvements in business and human rights than it does with using this sensitive issue in the pursuit of other international political aims.

    Suggested Next Steps

    If Ecuador and its supporters hold fast to their current positions then their effort can lead to only one of two possible outcomes. Either the negotiations drag on for a decade or more and follow the path of the 1970s code of conduct negotiations; or they manage to persuade enough developing countries to adopt such a treaty text, but which home countries of most transnational corporations do not ratify and, therefore, are not bound by. Either outcome would represent another dead end, delivering nothing to individuals and communities adversely affected by corporate conduct.
    On the assumption—and in the hope—that this is not their intent, what are some steps the treaty sponsors could take to put the negotiations on a more constructive path? I briefly enumerate seven.
    1. Having the right chair of the IGWG is critical to obtain any agreement around these very complex issues. It is the prerogative of the sponsors to chair the process themselves, but they would be wise to consider appointing a respected third party, say, a former Secretary-General or High Commissioner, with the latitude to focus on consensus-building rather than the pursuit of strong national positions.
    2. The agenda for IGWG meetings should encourage presentation of all views, including by stakeholders who see no need for an overarching treaty or any other kind. All regions should be involved in the preparations well in advance and have the same right to help shape the agenda.
    3. The mandate calls on the IGWG to address the human rights conduct of “transnational corporations and other business enterprises.” The sponsors would be well advised to take those terms literally, in their ordinary language sense, and include “all other business enterprises” within the scope of the negotiations, rather than trying to base the drafting exercise on a meaningless distinction between “transnational corporations” and “corporations that have a transnational character.”
    4. The Guiding Principles succeeded because states, business, and a significant segment of civil society each felt a sense of ownership in them. Therefore, every effort should be made to include civil society and business in consultations. The full range of civil society representatives should be invited to participate, including human rights defenders that play an important role in promoting corporate respect for human rights and corporate accountability for human rights violations. Representation of business should not be limited to the accredited international business associations but also include individual firms, from all regions.
    5. Business and human rights comprises an enormously complex set of issues, and one cannot expect delegations to work those out without a clearer sense of what an international instrument could conceivably look like. Basic research into relevant precedents/models, needs, scope and other such information is critical to support productive negotiations. It is imperative that research is initiated early in the process, and that it is based on a broad range of perspectives and inputs, including expertise in corporate law and international investment law.
    6. Everyone agrees that even with the best of political will it would take long time to develop a viable international instrument. Therefore, it should be made clear from the outset not only that this initiative is intended to complement and build on the UN Guiding Principles, but also how.
    7. Finally, there is a need for all states, in all regions, to step up efforts to implement the UNGPs. Where the UNGPs are being acted upon and developed further they help reduce the overall incidence of corporate-related human rights harm and provide for sources of non-judicial remedy that did not exist before. No future treaty, real or imagined, can substitute for the need to achieve further progress in the here and now. Privileging the long-term goal of formulating an international treaty without a commitment to acting on the UNGPs today has little value for victims in the short and medium term.

    [1] See Branislav Gosovic and John Gerard Ruggie, “On the Creation of a New International Economic Order: Issue-Linkage and the Seventh Special Session of the UN General Assembly,” International Organization, 30 (Spring 1976); and "The 'New International Economic Order': Origins and Evolution of the Concept,” International Social Science Journal, 28 (Autumn 1976).
    [3] See Tagi Sagafi-nejad, The UN and Transnational Corporations: From Code of Conduct to Global Compact (Bloomington: Indiana University Press, 2008).
    [4] UN Document E/CN.4/Sub2/2003/12/Rev. 2 (26 August 2003).
    [5] UN Document E/CN.4/DEC/2004/116 (20 April 2004).
    [6] “Corporate Influence on the Business and Human Rights Agenda of the United Nations,” Working paper issued by Misereor, Global Policy Forum, and Brot für die Welt,” June 2014, p. 5,
    [7] It is noteworthy that the major global human rights organizations, such as Amnesty International and Human Rights Watch, did not join the alliance, reflecting doubts about the timing and efficacy of the Ecuador proposal.
    [8] For the full text see UN document A/HRC/17/31. The UNGPs rest on three pillars: the state duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation, and adjudication; an independent corporate responsibility to respect human rights, which means that business enterprises should act with due diligence to avoid infringing on the rights of others and to address adverse impacts with which they are involved; and greater access by victims to effective remedy, judicial and non-judicial. They comprise thirty-one principles, each with commentary elaborating its meaning and implications for law, policy, and practice. And they encompass all internationally recognized rights, and apply to all states and all business enterprises. I elaborate on the thinking and activities that produced the UNGPs in my book, Just Business: Multinational Corporations and Human Rights (New York: W.W. Norton, 2013).
    [9] China’s delegate stated that their affirmative vote was based on the following “understanding”: that the issue of a business and human rights treaty is complex; that differences exist among countries in terms of their economic, judicial, and enterprise systems, as well as their historical and cultural backgrounds; and that it will be necessary, therefore, to carry out “detailed and in-depth” studies, and for the treaty process itself to be “gradual” and “inclusive.” See
    [10] UN Document A/HRC/26/L.1/Rev.1.
    [11] UN Document A/HRC/26/L.22/Rev. 1.
    [12] Arvind Ganesan, “Dispatches: A Treaty to End Corporate Abuses,” available at
    [13] See “A Business and Human Rights Treaty? International legalisation as precision tools,”
    [14] See International Law Commission, “Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law,” UN Document A/CN.4/L.682 (13 April 2006). Of course, there is the category of jus cogens, the name given to norms of general international law that permit no derogation under any circumstances. But even leaving aside various doctrinal and practical challenges, jus cogens norms do not encompass the broad spectrum of human rights harms with which businesses may be involved.
    [15] For starters, I count human rights law, labor law, anti-discrimination law, health and safety law, privacy law, consumer protection law, environmental law, anti-corruption law, humanitarian law, criminal law, investment law, trade law, tax law, property law and, not least, corporate and securities law.
    [16] See John Gerard Ruggie, “Business and Human Rights: The Evolving International Agenda,” American Journal of International Law, 101 (October 2007).
    [17] This is why I have suggested that one obvious focus for such an instrument would be the worst of the worst: business involvement in gross human rights abuses, such as genocide, extrajudicial killings, and slavery as well as forced and bonded labor. In the case of natural persons, broad consensus exists on the underlying prohibitions, which generally enjoy greater extraterritorial application in practice than other human rights standards. But further specificity is required as to what steps states should take with regard to business enterprises. Such an instrument would have the secondary effect of heightening state and corporate awareness business and human rights issues more generally, much as the Alien Tort Statute did before the U.S. Supreme Court restricted its extraterritorial applicability in the recent Kiobel case. (See “A Business and Human Rights Treaty?” supra, fn. 13). 

No comments: