This column has tracked developments about a globally binding treaty that covers transnational businesses and human rights, ever since the process began to gather momentum in 2014. Unsurprisingly, developed nations are generally against the United Nations-shepherded treaty, citing issues of sovereignty and the independence and robustness of their judicial systems. And a clutch of developing nations often at the rough end of supply chains from extractives to agriculture products are vehemently for it. The latest draft of the proposed treaty was presented in July to the UN’s High Commission for Human Rights, in Geneva.

The formal name for the work-in-progress treaty is: “Legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises." It’s as complicated as it seems. And quite necessary—in intent if not outcome—to caution businesses about almost always choosing earnings over ethics, that giddy first step to human rights violations and liabilities.

The Washington D.C.- and London-based international law firm Hogan Lovells LLC has pointed out a few ongoing issues over the latest draft in an analysis dated 26 July. The major one is containment of the treaty to transnational businesses. As Article 3 of the draft treaty has it: “…any for-profit economic activity, including but not limited to productive or commercial activity, undertaken by a natural or legal person, including activities undertaken by electronic means, that take place or involve actions, persons or impact in two or more national jurisdictions."

This logic may be untenable in a world in which definitions of transnational and national are increasingly fuzzy with confounding webs of holding companies, joint ventures and subsidiaries. Moreover, “this restrictive approach risks creating an uneven playing field for domestic and transnational enterprises, particularly those operating in states where the protection of human rights under domestic law is weak," write Julianne Hughes-Jennett, Peter Hood and Alison Berthet of Hogan Lovells’ Business and Human Rights practice. “It may also deprive victims of a means to access a remedy against a domestic enterprise. It is in the interests of both victims and business, not to mention fundamental to the rule of law, that the law should apply equally to all."

Besides this, there are specific matters related to civil and criminal liability, due diligence, jurisdiction, and reciprocity of judgement—a judgement in one country influencing litigation in a similar case in another country—addressed in the draft treaty. I shall discuss these landmarks, warts and all, next week. For now, some background to bring you up to speed.

In 2014, India voted yes to establish an open-ended inter-governmental working group with the mandate to work on drafting a treaty. It joined countries such as Ecuador, South Africa—the two were the earliest votaries of the treaty—Pakistan, Indonesia, China, the Philippines, Venezuela and Vietnam. The vote was carried in the UN’s human rights council by 20 Yes votes and 13 abstentions overriding the 14 No votes from the other side of the economic fence—among others, the US, UK, Japan, South Korea, Germany and France.

John Ruggie, a professor of human rights and international affairs at Harvard University’s Kennedy School of Government had raised practical issues back in January 2015. These would be “quite apart from the doctrinal debate about corporations as ‘subjects’ of international law", Ruggie maintained. “For instance, is it plausible that governments could agree on a single global corporate liability standard for every internationally recognized human right? And if only limited rights, which ones would they be, and on what basis would they be selected?"

The other key concern is of a watered-down treaty, more “face" than substance, as developed countries and business lobby groups undermine it as they have from the inception of the treaty process. All it might do is supplement current practice: nudge litigants to demand greater remedial action, and for businesses to be more vigilant about rights violations, supply chain management and potential liability. But even that will have been productive. Reducing bent corporate behaviour is its own virtue.

This column focuses on conflict situations and the convergence of businesses and human rights and runs on Thursdays.

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