(Pix © Larry Catá Backer 2019)
The Coalition for Peace and Ethics BHR Treaty Project is considering Draft of the "Legally
Binding Instrument to Regulate, in International Human Rights Law, The
Activities Corporations and Other Business Enterprises,"
released on 16 July 2019 by the open-ended intergovernmental working
group (OEIGWG) Chairmanship. The CPE Introduction Statement can be
accessed here: The
New Draft of the "Legally Binding Instrument to Regulate, in
International Human Rights Law, The Activities of Corporations and Other
Business Enterprises" And a Call to Submit Comments Before October 2019.
This post starts our examination of Article 3 (Scope) of
the Draft Legally Binding Instrument (DLBI), These include
its
terms, its underlying ambitions, ideologies, and the feasibility of its
gasp, given the constraints within which its authors are necessarily
made to work. With this layer one begins to see actualized the dissonance already built into Articles 1 and 2 of the DLBI. This examination was prepared by Flora Sapio.
Article 3. Scope
Flora Sapio
1. This (Legally Binding Instrument) shall apply,
except as stated otherwise, to all business activities, including particularly
but not limited to those of a transnational character.
“except as stated otherwise”: any legal document creates its own “world”, and
so does the LBI. The “world” of the LBI is a world populated by those entities
that fit the definitions provided by Article 1. This world should ideally be
coherent with all the other “worlds” created by other guidelines on CSR and by
other documents on business and human rights.
Here instead we have a first caveat. In these
words of Article 3 many will see a mixed or else a hybrid approach to
regulation. And there is no doubt that the intent behind the wording of
Article 3 was adopting an approach that would allow the state to respect,
protect, fulfill and promote human rights throughout supply and value chains.
Given the different viewpoints that existed about the effects on national
economies of a more stringent regulation (at least in theory) of domestic
enterprises, the solution adopted by Article 3 is the best one.
While the wording of Article 3 is useful in
that embodies a broad consensus among stakeholders, the article can lend the
side to various interpretations, and it allows for unintended uses.
It is possible to say that, in the world of the
LBI, human rights obligations apply to all business activities. But, they apply
to some business activities more than to others. And they also apply to some
business activities, but not to others. The criterion to determine whether a
business activity is to be more heavily regulated is whether the activity is
“of a transnational character”.
In other words, business activities more
heavily regulated are those conducted by foreign enterprises, while those
conducted by domestic enterprises seem to occupy a residual place in Article 3.
“including particularly but not limited to”: here Article 3.1 creates a second exception.
The real world is a world in which supply chains stretch from one continent to
another. In the world of the LBI, the supply chain connecting hundreds of
domestic and foreign enterprises do not exist. Neither it seems easy to adopt
an interpretation that would read Article 3.1 as including all of these
entities.
The treaty targets business activities of a
transnational character. They are a particular target (“including
particularly”) but they are not the only one (“but not limited to”). There are
other targets beyond foreign businesses. Presumably, these targets are domestic
enterprises – both those included in global supply and value chains, and those
that exist outside of them.
Yet article 3.2 — a new paragraph — only defines “business activit[ies] of a
transnational character:
2. For the
purpose of paragraph 1 of this Article, a business activity is of a
transnational character if:
a) it is undertaken in more than one national
jurisdiction or State; or
b) It is undertaken in one State through any
contractual relationship but a substantial part of its preparation, planning,
direction, control, designing, processing or manufacturing takes place in
another State;
To understand
this definition and its potential, it is necessary to go back to the commentary
on Article 1:
“If a court
was of a mind to be more expansive, nothing it he definition would preclude it
including the work of religious organizations, or even of large transnational
civil society organization — Amnesty International, Oxfam and the like” within
the meaning of “business activity”.
What is
potentially true for Amnesty International is also true for
government-organized NGOs, international friendship associations, clubs and
associations established on one’s national territory by citizens of another
country, and generally speaking any entity that produces something. That
“something” may be shoes, cars, an intangible product such as information, or
anything else. As long as a relationship that can be constructed in terms of
domestic legislation or administrative regulation on labor, insurance,
immigration, health, taxation, etc. exists, the State has a duty to protect the
unknowing victims from abuses. Any activity that violates non-binding industry
standards can be qualified as a human rights violation, as long as those
standards maintain a relation no matter how remote to the UDHR. And, if not
present, those relations can be derived through textual exegesis of all
relevant documents.
The duty of the
State to protect citizens from abuses – whether these abuses are real ones or
aptly constructed by the State - exists
also if the entity does not maintain any kind of contractual relationship
inside of the territory of a State. At least, Article 3.2(d) makes this
interpretation possible. A transnational business activity can be
d) (...) undertaken in one State but ha[ve]
substantial effect in another State
Article 3.2(d)
opens up a hypothetical scenario where the most diverse allegations may be made
against any foreign for-profit or not-for-profit entity, but also individuals.
What is a “substantial effect”? And when does a business activity in State A
causes “substantial effects” in State B?
The answers to
these questions will depend on the interpretive abilities of States, on their
skillful use of data and projections, on their ability to mobilize the domestic
public opinion in support of their position.
A brief example
may better illustrate this point.
Italy is a
state that is not playing a role in the negotiation of this treaty. Therefore,
it serves only as an example. In our example, Italy could attempt to use the
LBI against a variety of foreign entities. Or even individuals. As long as
those individuals are engaged in an activity that produces something.
The existence
of a contractual relation between any foreign entity and a domestic physical or
legal person would not be necessary to invoke the LBI. In principle, the
foreign entity may conduct its activities anywhere in the world. What is
necessary is that those activities fit the broad definitions of Article 1. And
that the political, economic, international or domestic interest of Italy can
be pursued also by accusing the foreign entity of a human rights violation.
While using the
LBI in this way, the country could at the same time express its reservation
on Article 3.1, and exclude its small and medium-sized enterprises from the
scope of the treaty. Alternatively, a promise could be made to withdraw
reservations about Article 3.1, but only when small and medium-sized
enterprises will have built a sufficient awareness and capacity. After all, the
LBI does apply to all enterprises. But, it applies “particularly” to foreign
entities.
The LBI, as
Article 3.3 says, covers “all human rights”. This creates further opportunities
to pick those parts of the treaty that are useful to oneself, and leave out the
rest. And to choose those allegations that will produce the most
sensationalistic impact on the global and the domestic public opinion.
3. This
(Legally Binding Instrument) shall cover all human rights and those rights recognized under domestic law
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