Wednesday, September 19, 2018

Flora Sapio: Comments on the "Zero-Draft," the first official draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

In July 2018, the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights released the first official draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

The Business and Human Rights Resource Center has called this  “Zero Draft” "a key milestone in a complex and lengthy process, against the backdrop of a political context which has become increasingly challenging since the UN Human Rights Council voted by majority to begin negotiations in June 2014." (Business and Human Rights Resource Centre, Reflections on the Zero Draft).

My comments were circulated HERE

My colleague, Flora Sapio (Uni Naples and CPE) also has recently prepared comments to the Zero-Draft.  With her permission I post them below.

To the Ministry of Corporate Affairs

Government of India

 A Wing, Shastri Bhawan, Rajendra Prasad Road,

New Delhi - 110 001



Dear Ms. Dhadich,

in July 2018 the Ministry of Corporate Affairs of the Government of India invited comments from members of the global academic community, non-governmental organizations, governments, and concerned global citizens on the Zero Draft of a Legally Binding Instrument (LBI) on Transnational Corporations (TNCs) and Other Business Enterprises (OBEs) – hereinafter referred to as LBI.

The LBI was drafted following Human Rights Council Resolution 26/9. The Resolution was adopted by a recorded vote of 20 to 14, with 13 abstensions, and supported by India, China, Algeria, Benin, Burkina Faso, Congo, Côte d’Ivoire, Cuba, Ethiopia, Indonesia, Kazakhstan, Kenya, Morocco, Namibia, Pakistan, Philippines, the Russian Federation, South Africa, Venezuela, and Vietnam.

As part of the Resolution, an Open-Ended Intergovernmental Working Group (OEIGWG) on Transnational Corporations nd Other Business Enterprises with respect to human rights was established to elaborate an international legally binding instruments to regulate the activities of transnational corporations and other business enterprises.

The first two sessions of the OEIGWG were dedicated to conducting constructive deliberations on what would be the future LBI. The third session of the OEIGWG took place from  23-27 October 2017 in Room XX of the Palais des Nations, discussing the elements for a draft legally binding instruments. During the third session, the OEIGWG requested the Chair-Rapporteur to complement the ongoing bilateral consultations with states and non-state stakeholders with informal consultations. A Zero Draft of the LBI was prepared by Ecuador, and presented as the basis for public comments.

I am respectfully submitting the present comment in my capacity as a citizen, who had the  opportunity to witness, as anyone else in our country, the impact of activities conducted by TNCs and their supply chains in some of the poorest regions of Italy. I welcome the invitation, extended by the Ministry of Corporate Affairs of India, to provide comments on the LBI, and I am honored to have a meaningful opportunity to contribute to making the creation of a  legally binding instruments on TNCs an exercize in true democratic participation by global citizens.

While these comments have been prepared under the auspices of the Coalition for Peace and Ethics, they are to be understood as reflecting my opinion as an individual acting in her personal capacity.



Flora Sapio

Comment on the

Legally Binding Instrument on Transnational Corporations


1. As I write this comment on the Legally Binding Instrument on Transnational Corporations (LBI), countless men and women are toiling in the factories, warehouses, and in the agricultural fields of Italy. They are the ones with a direct, first-hand experience of the adverse human rights impacts of the activities of TNCs and their suppliers. Yet, attempts to create a legally binding instrument on TNCs exist outside of their awareness, and it is somewhat doubtful that they can enjoy an effective access to justice, to state and non-state based remedies.

2. These facts are well-known by all those who live and work in close contact with ordinary citizens.

3. With these facts in mind, I believe a discussion of the LBI is a valuable exercize in democratic consultation, which will no doubt contribute to the raising of awareness of the LBI among its beneficiaries, included women, members of ethnic and religious minorities, and the disabled, and to the creation of effective, accessible remedies against human rights violations.

4. The present comment is divided in two parts. In the first part I will present my observations on the relationship between the LBI and the UNGPs, while the second part will offer observations on some of the provisions in the LBI.


The Relationship between the LBI and the UNGPs


5. The LBI builds upon the work of John Ruggie, who drafted the United Nations Principles on Business and Human Rights (UNGPs). The UNGPs are the first instruments to have addressed violations of human rights by TNCs. As it is well known, the UNGPs have created a three-pillars framework outlining how:

- States have the duty to protect all human rights against abuse by any third party, included business, through legislation, regulation, adjudication, and policy;
- TNCs have the responsibility to respect human rights, to avoid infringing on the rights of persons and to address any adverse impact. In a corporate context, the responsibility to protect human rights has to be translated into mechanisms and practices compatible with corporate governance mechanisms. These include but are not limited to due diligence, internal and external monitoring and rating systems, KPIs, etc.
- Victims of business-related human rights abuses should enjoy greater access to effective remedies. Remedies include a broad palette of judicial and non-judicial, state-based and non state-based remedies.

6. The UNGPs received unanimous endorsement by the Human Rights Council, national governments, TNCs, and civil society actors. Since 2011, the UNGPs have provided the basis to create more sustainable supply chains; develop national action plans; industry standards, good practices, risk management and sustainaibility policies more attentive to human rights. The UNGPs have provided inspiration for the further development and progress of the OECD Guidelines for Multinational Enterprises. They have contributed to raising the global awareness about business-related human rights abuses.

7. The UNGPs are grounded on the premise that TNCs are autonomous from State actors, and that while States have the ability to attempt to regulate markets, TNCs are sufficiently flexible to escape the grip of state-driven market regulation. Hence, the UNGPs consider TNCs as actors which, in practice, can wield a power comparable to that of national States.

8. The premises and logic behind the UNGPs marked a significant progress, bestowing on TNCs something very close to legal subjectivity in international law. While the legal subjectivity of non-state actors remains an object of debate, it is worth noting that even before the drafting of the UNGPs, several international human rights instruments already attributed obligations and rights to non-state actors.

9. The LBI & TNCs adopt a different approach. The Preamble attributes the “primary responsibility” to promote, respect and fulfil human rights and fundamental freedoms to national States, and a duty to respect human rights to all business enterprises. The preamble is coherent with the UNGPs. In fact, the UNGPs are listed in the “Non-exhaustive list of documents consulted during the preparation” among the reference documents consulted to draft Article 1 of the LBI & TNCs.

10. While the Preamble perpetuates the spirit of the UNGPs, Articles 3 and 9 adopt a traditional perspective, whereby TNCs are no longer considered as autonomous non-state actors in international law, or as entities with a power comparable to that of national States, but as mere objects of state regulation and control. The State and market actors are ontologically and legally distinct – a distinction that was present in the UNGPs, but has become much more nuanced in the LBI & TNCs.

11. The LBI & TNCs follow a more “classical” approach, focussed on developing the First Pillar of the UNGPs framework -  the state duty to protect all human rights against abuses by business. This is a welcome choice. Yet, this choice provokes the question of whether the UNGPs and has exhausted its life-cycle, or it has been simply incorporated in the LBI & TNCs in a version which excludes the Second Pillar.

Observations on Selected LBI Provisions


12. The logical relations among each one of the paragraphs of Article 1 could be strengthened by arranging the paragraphs in a different order.

13. The Open-Ended Interngovernmental Working Group on Transnational Corporations and Other Business Enterprise was created by Human Rights Council Resolution 26/9, so the fulfilment of the mandate by Resolution 26/9 may be mentioned in the first paragraph of the Preamble, to be followed by the desire to contribute to the development of international law and human rights, law, and the acknowledgment of the rules of international law and international human rights law in the field of business and human rights.

14. These rules exist to guarantee the universal enjoyment of human rights, and to uphold the principles mentioned in paragraph 7. It is suggested that the right to equal and effective access to justice and to remedies be put in closer connection to the indivisible, interdependent, and inter-related nature of human rights, and to those enunciated by articles 55 and 56 of the United Nations Charter. 
15. The right of equal and effective access to justice and the right to a remedy depend on the realization of all other human rights therefore, they do not have an existence separate from the right to a higher standard of living, to full employment, and generally speaking to all those conditions leading to material prosperity, social progress and development. These conditions include the solution of international and domestic economic, social, and health related problems. The right to access to justice and the right to a remedy arise following a violation of  personal, economic, or environmental rights in the context of economic activity. 
16. The attribution of the primary responsibility to promote, respect, protect and fulfil human rights to national States and of what seems to be a more generic duty to respect to business enterprises seems to place an excessive burden on States vis á vis business enterprises. This drafting choice results in a reversal of the equilibrium reached by the United Nations Guiding Principles on Business and Human Rights and provokes the question of the extent to which national States, without acting in synergy with business enterprises and civil society actors, can ensure an effective protection of human rights, included the right to access to justice and the right to a remedy. 
17. While States are responsible for defining and implementing economy policy, economic decisions are for the most part taken by market actors. Attributing to States the primary responsibility to ensure access to justice and remedy to victims of rights violated by enterprises (rather than by States themselves) should ideally result in closing all those legislative and regulatory gaps that make it possible for TNCs to choose to invest in those countries more likely to turn a blind eye to their violations of human rights.
18. The effective creation of an international human rights environment where there would be no place for “jurisdiction shopping” by TNCs however depends on the number of countries willing to ratify and implent the LBI & TNCs. The attribution of an overwhelming share of responsibility to States, and to a secondary role by TNCs, despite the latters’ effort to implement human rights norms in their business operations, may result in a low number of ratification by States, some of which have already expressed their doubts as to the language used in drafting the LBI & TNCs.
19. Some of the comments and doubts expressed by States about the the LBI and TNCs concerned the partial erosion of domestic jurisdictions, and the creation of a transnational jurisdiction on human rights violations by TNCs. The creation of such a transnational jurisdiction on human rights violations by TNCs would be more coherent with the principles of national sovereignty, self-determination, and domestic security if the responsibility for human rights violations committed by foreign TNCs were exclusively attributed to TNCs rather than to the States where TNCs invest. The choice taken by the Zero Draft might potentially bear unintended consequences on the fulfilment of the goals set by Articles 55 and 56 of the UN Charter.
Article 2
20. The wording of Article 2, 1, b) inverts the logical relationship between violation of human rights by TNCs and the attempts of the State to remedy to human rights violations committed not by  the State or its agents, but by a non-state actor. 
21. Seeking any kind of remedy, State or non-State based, judicial or non-judicial, to human rights violations is a procedure that follows acts of omissions or commission resulting in a violation of any right. Prevention – understood as encompassing procedures implemented by State and non-State actors – can avoid the occurrence of violations.
22. Therefore, it is suggested that Article 2 places a greater emphasis on the operational principles set forth by the UNGPs as they concern the general regulatory and policy functions of States. By its own nature, an international instrument open to ratification by States can address only a limited part of the State-business nexus.
Article 3
23. The mention in article 3.1 of business activities of a transnational character may be interpreted as excluding domestic business activities – both public and private – from the scope of the State duty to protect human rights. The inclusion of all international human rights and those rights recognized under domestic law pays respect to the principle of national sovereignty. 
24. Given the different pace with which national States are recognizing certain human rights, it is suggested to avoid the mention of those rights recognized under domestic law. The wording of the last part of of Article 3.2 may be understood in different ways by different States, and some specific perceptions of this article may result in the refusal to ratify the LBI & TNCs. Article 3.2 has the goal to find a minimum common denominator for all potential signatories to the convention, but its working may introduce a potential tension between global and local legal definitions of human rights, between the principles of human rights protection and sovereignty.
Article 4
25. The harm most commonly caused by any economic activity, be it transnational or domestic in nature, is a direct and often irreversible harm to health. Yet the right to health is not mentioned among the rights listed by Article 4. 
26. While there is no general agreement on the definition of TNCs, as a matter of fact human rights violations within supply chains or by transnational legal persons incorporated under legislation on not-for-profit entities have been amply documented. It is suggested that the definition of TNCs includes the entire supply chain of any TNC, and legal persons incorporated as not-for-profit entities.
27. The definition of TNCs as entities operating in two or more national jurisdictions excludes from the LBI & TNCs all those economic entities incorporated in Country A, which operate in Country B, even though their activities occur across two national borders. It is suggested to define TNCs as involving activities taking place or involving actions, persons or impact in one or more national jurisdictions.
Article 5
28. The definition of  jurisdiction adopted by article 5 is rather vague. Given the domestic legislation of some countries allows non-citizens (but not necessarily groups of non-citizens) to bring only administrative actions against corporate actors, it is suggested to build further consensus among States about a definition of jurisdiction acceptable to most potential signatories. This suggestion is also made in light of the fact that the options listed under article 5.a on the domicile of legal persons or associations or natural or legal persons do not seem to be mutually exclusive. Finally, the circumstances when a legal action can be brought against a corporation without the consent of an individual or a group thereof are in need of a more precise definition. The wording of article 5.3, in fact, might cause the bringing of spurious legal actions, without the consent or knowledge or directly interested individuals.
Article 7
29. Read in conjunction with Article 5, Article 6 has the goal to create a global jurisdiction on human rights violations by TNCs. It is suggested to seek further consensus on the wording of the Zero Draft. As it stands now, the wording used might result in the conflation of two or more different jurisdictions, with the ensuing potential conflicts of jurisdiction, rather than a true harmonization of law. It is also to be considered how most of the victims of human rights violations by TNCs and their supply chains may have little familiarity with law, generally understood. The same observation  applies to the majority of local legal firms and non-governmental actors. Articles 5 and 7 therefore provoke the question of how these mechanisms may be made understandable and accessible to an hypothetical victim of rape in an Italian tomato plantation who wished – if possible at all – to bring a lawsuit against a TNC with a tentacular corporate architecture, and a local supplier perhaps owned or controlled by an organized criminal group.

Article 8.7
30. While the LBI & TNCs is by defintion not open to signature or ratification by corporations, several corporations are engaged in philantropy. Their efforts, however, are not always as coherent and as coordinated as they could be. Given the direct responsibility for violating human rights in the context of business lies with TNCs and their local suppliers, it is suggested that the fund mentioned by Article 8.7 be constituted by drawing on anonymous donations from TNCs and their suppliers. This choice would give TNCs and their supplies an option to effectively contribute to human rights protection and thereby fulfil part of their responsibility to protect human rights. It would also ease the financial burden on tax-payers, who would have to indirectly shoulder the financial responsibility to compensate the damage caused by actors and actions who are not necessarily under their control.
Article 9 
31. There where it states “the potential impact on human rights resulting from the size, nature, context of and risk associated with the business activities.” article 9.1 seems to imply a relation between the size of a business activity and its potential impact on human rights. The size, nature context and risks of a business activity are considered as direct potential causes of human rights violation, the implication being that bigger businesses may potentially commit human rights violations on a larger scale than smaller businesses. Based on this assumption, the rest of article 9 contains a non-exhaustive list of due diligence obligations.
32. Each one of the due diligence obligations in article 9 seem to be conceive of human rights as referring to aggregate of individuals. It would otherwise be difficult to understand how due diligence obligations such as measuring and monitoring impact, identifying and assessing potential violations and preventing them could apply to individual cases. 
33. Conceiving of human rights as rights of an aggregate of individuals is a necessary condition to further develop the trend towards transnational mandatory human rights due diligence and reporting. Article 9 however goes one step further, conceiving of human rights as a single bundle of rights.
34. This circumstance may lead to the prioritization of different rights in different sectors, and in different jurisdictions. The seeds of such a prioritization are visible in article 9.2.d where it says:
“including at a minimum environmental and human rights matters”without mentioning rights such as the right to health, which is normally one of the first human rights to be harmed by business activities.
35. Establishing a hierarchy among human rights would not be entirely coherent with the principles of inter-relatedness, inter-dependence and indivisibility of human rights. It would potentially open up the way for TNCs to adopt selective, perhaps even cosmetic, approaches to human rights due diligence.
36. The consultations referred to in Article 9.2.g might pose potential questions about the representation of victims – potential or actual – of human rights violations. These questions would arise in those contexts where this kind of representative institutions do not exist yet;  or where legal norms and norms of political culture encourage individuals to manifest their will through specific venues and procedures. At its end, Article 9.2.g lists some categories of persons at the risk of human rights violations. These categories seem to be mutually exclusive, and yet in practice human rights violation never affect only “women”, “persons with disabilities”, “indigenous people”, and “migrants”. The totality of attributes that belong to individuals, and together form the very core of human rights, can never – in practice – be separated, abstracted and classified under distinct, non-communicating categories or labels. In reality, the human being who witnesses a violation of her rights may be a woman, who at the same time belongs to an ethnic minority, and migrated from her native place to the country where she is employed. 
37. Conceiving of human rights as rights to be labelled, listed and presumably implemented under separate categories may defeat the very goals of human rights protection.
38. The choice to exempt small and medium-sized enterprises from selected obligations under article 9 might provoke adaptations of the corporate form of some TNCs and their suppliers, with the obvious goal of circumventing at least some due diligence obligations. 
Article 10
39. Under the wording of Article 10, it is not clear how States will cover the expenses already sustained for reparation, if a transnational business refuses to compensate the State. Ironically, the entire community of domestic tax-payers, included victims of human rights violations, might have to sustain the costs of human rights violations by TNCs.

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