human rights & business (and a few other things)

EU Fundamental Rights Agency Calls for Better Access to Remedies through Criminal Justice

Source: FRA website

It is a pleasure to welcome Alessandra De Tommaso as a guest poster on ‘Rights as Usual’. Alessandra is a PhD candidate at Middlesex University School of Law in London. She works on the challenges arising from corporate criminal liability under international criminal law. This post is hers.

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On 10 April 2017, the Fundamental Rights Agency (FRA) published an Opinion on Improving access to remedy in the area of business and human rights at the EU level, providing advice on how to ensure access to remedy for victims of business-related human rights abuses. This blog post briefly presents the main aspects of the Opinion, and then focuses on the area of criminal legal remedies for victims of business-related human rights abuses. In that area, FRA recommends that existing instruments be better implemented and calls for more cooperation among states when investigating cross-border corporate crimes.

Main Aspects of the Opinion

The Opinion was sought by the Council of the European Union in its Conclusions on business and human rights of 20 June 2016. In the Opinion, FRA calls for more action to ensure access to remedies for victims of business-related human rights abuses. Too often existing legal and practical barriers leave victims without opportunity for effective remedy. The EU and its Member States are therefore advised to take all the appropriate steps to remove these obstacles and guarantee access to remedy to victims.

FRA’s analysis covers the areas of judicial and non-judicial remedies, as well as issues related to their effective implementation. Based on its findings, FRA formulated 21 specific opinions on what actions the EU should undertake to increase access to remedies in the field of business and human rights. Some of the suggestions include, for instance, facilitating access to legal aid for victims of business-related human rights abuses, improving access to remedy in extra-territorial cases, strengthening the role of non-judicial mechanisms in the business and human rights field, and improving data collection on complaints and compensation.

Criminal Justice

FRA’s findings suggest that more could be done at the EU level to ensure access to effective remedies through criminal justice in the area of business and human rights. Even though a number of existing EU instruments require Member States to criminalise some forms of serious business-related human rights violations, these instruments are not used at their intended capacity. The Opinion mentions, in particular, the Employers Sanctions Directive (2009/52/EC), which obliges EU Member States to criminalise severe forms of labour exploitation, and the Anti-Trafficking Directive (2011/36/EU), which establishes minimum rules concerning the definition of criminal offences and sanctions in the area of trafficking in human beings. Both directives oblige EU Member States to ensure that legal persons can be held accountable for offences criminalised according to these two instruments. However, research conducted by FRA into the implementation of these instruments shows a lack of states’ commitment to holding business companies to account for their involvement in severe forms of labour exploitation and trafficking in human beings. This failure to ensure full implementation of these instruments at national level is a serious issue that needs to be addressed by the EU institutions. The EU is therefore strongly advised to make “greater efforts to ensure proper implementation in the Member States of the existing EU criminal law instruments that are relevant to business and human rights.”

Another aspect that needs further consideration at the EU level is cooperation among Member States in investigating corporate crimes. Due to the often transnational nature of business-related human rights abuses, effective and specific cross-border cooperation mechanisms are essential to ensure proper investigation of corporate crimes. In this regard, the Opinion rightly underlines how the EU can play “a unique role” in facilitating cross-border investigations by making greater use of existing resources, such as Eurojust.

Overall, what is clear from the Opinion is that more needs to be done to improve victims’ access to remedies through criminal justice in the field of business and human rights. Even though advances have been made in recent years, the lack of proper implementation of existing instruments prevents victims from fully exercising their rights to remedies. The EU, therefore, must adopt a more proactive approach to ensure states’ commitment in this regard.


The Moment of Truth Has Come – US Supreme Court to Decide whether the Alien Tort Statute “Categorically Forecloses Corporate Liability”

On 3 April 2017, the US Supreme Court granted certiorari in Jesner v Arab Bank, PLC. The issue to be decided is whether the Alien Tort Statute (ATS) “categorically forecloses corporate liability”. If the Supreme Court decides that the ATS does indeed categorically foreclose corporate liability, it will be the end of ATS-based business and human rights litigation in the United States. This is a big deal and a case that will no doubt be of great interest to human rights scholars and practitioners.

Those following business and human rights litigation in the United States will remember that the US Supreme Court granted certiorari on the same point before. This was in 2011 in the Kiobel et al v Royal Dutch Shell case. In 2010, the Court of Appeals for the Second Circuit had ruled that the Alien Tort Statute didn’t allow corporate liability. In February 2012, oral arguments were held before the Supreme Court on this point. However, unexpectedly, the Supreme Court later asked the parties to submit supplemental briefs addressing a different question, that of jurisdiction. In April 2013, the US Supreme Court held that following the presumption against the extraterritorial application of statutes, only in the rarest of circumstances will courts have jurisdiction, under the ATS, over matters which fall under the jurisdiction of another sovereign state. For the US federal courts to be able to exercise jurisdiction, the Court further noted, the case must “touch and concern the territory of the United States with sufficient force” (see my blog post on this).

As disappointing as the Kiobel decision was for the human rights community, there was at least one reason to rejoice: the principle that corporations can be sued under the Alien Tort Statute was intact. The Court refused to address the question directly but it is hard to reconcile the Kiobel decision with the idea that corporations cannot be sued at all under the Alien Tort Statute. By noting for example that “it would reach too far to say that mere corporate presence” in the United States is enough to subject a defendant to ATS liability, the Supreme Court implied that something more than corporate presence could subject corporate defendants to such liability. If it was the Court’s intention to reject corporate liability under the ATS altogether, why make this point?

Logically, therefore, the US Supreme Court should decide that the ATS does not categorically foreclose corporate liability; and the ATS should remain an important tool in the fight against corporate impunity for human rights violations. I hope I am right, as the opposite decision would be a serious blow to global business and human rights litigation.


Book launch at Middlesex University

Me and Rae Lindsay

Me and Rae Lindsay

Last night, my book, Business and Human Rights. History, Law and Policy – Bridging the Accountability Gap, published by Routledge, was officially launched at Middlesex University.

Rae Lindsay, partner at Clifford Chance and co-lead of their international law practice, presented the book.

A heartfelt thank you to all those who came to the event.


Criminal Complaint against French Cement Company for Terrorism Financing, Complicity of Crimes against Humanity and War Crimes in Syria

Source: WiseGeek

Today French newspaper Le Monde reports that two NGOs, Sherpa and the European Centre for Constitutional and Human Rights, have brought a criminal complaint in France against the Franco-Swiss cement company LafargeHolcim. Lafarge and Holcim merged in 2015. In 2013, The Economist described Lafarge and Holcim as two of the six leading firms in the global cement industry. Hence, the complaint targets a major player in this multi-million dollar industry.

The complaint focuses on the activities of the Syrian subsidiary of Lafarge, Lafarge Cement Syria, in 2013-2014. Le Monde explains that at the time Lafarge Cement Syria was operating a cement plant in Jalabiya, in the Northern part of Syria, in a zone then controlled by the so-called Islamic State. Le Monde had previously reported that to be able to operate there, Lafarge Cement Syria had to indirectly pay the Islamic State. For example, the cement plant employees as well as businesspeople visiting the plant to buy cement had to pay a fee to the Islamic State to access the plant. Moreover, to operate the plant, the company had to buy oil and pozzolan from local suppliers who themselves were buying from the Islamic State or at least were paying taxes to the organisation. The complaint, which I haven’t seen myself, seems to focus on financing the operations of the Islamic State, in other words on financial complicity for international crimes.

The complaint constitutes an important development for the field of business and human rights for at least three reasons.

1. Business and human rights litigation seems to have taken off in France. This is an important development in itself, after two decades of focus on not-so-successful Alien Tort Statute litigation in the United States. After the Kiobel case was decided by the US Supreme Court in 2013, crushing the hopes of many, I wrote those optimistic words:

The United States are not the only country in the world. While US Courts won’t exercise jurisdiction under the ATS, other countries might be more open to these types of cases against corporations.

Three years later, it is nice to see things moving forward indeed in other countries. ATS litigation has done a lot for our field in terms of attracting attention, but not so much to actually advance corporate liability in courtrooms. We need successes in courts and French courts may be well placed in this respect. I have written about these other cases in France here and here.

2. As far as I know, no one has ever successfully brought a complaint in a case involving corporate liability for financial complicity in international crimes. If this complaint against LafargeHolcim was to at least go to trial, it would be groundbreaking. If I have missed some of these cases, please let me know in the comments section below or tag me on Twitter (@NadiaBernaz).

3. There is a lot of uncertainty when it comes to financial complicity in international crimes. I explored the practical difficulties raised by that notion in a book chapter published in 2014, and pointed to them in a blog post on the Khulumani (Apartheid) case. The complaint against LafargeHolcim could be a great opportunity to get some clarity around the precise conditions under which a company can be held criminally liable of aiding and abetting atrocity crimes.


Book launch at Middlesex University – 7 Dec. 2016

BookAs announced in a previous post, my book Business and Human Rights. History, Law and Policy – Bridging the Accountability Gap, published by Routledge, has just come out. The book will be launched on 7 December at 6pm at Middlesex University in London.

Rae Lindsay, co-head of the international law practice at Clifford Chance will be the guest speaker.

To register, or for more details about the event, please visit the Eventbrite page here.

If you have any questions about the event, please email Christiana Rose: c.rose@mdx.ac.uk.

 

 


The Draft EU Regulation on Conflict Minerals: “Smart Mix” or Missed Opportunity?

Source: Jewish World Watch

It is a pleasure to welcome Dr Chiara Macchi as a guest poster on Rights as Usual. Dr Macchi is a post-doctoral researcher at the Sant’Anna School of Advanced Studies (Pisa, Italy) and project associate of the Essex Business and Human Rights Project. This post is hers. It is a shorter version of a paper she presented at the International Conference on Business and Human Rights in Sevilla which took place last week, and where I also presented.

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The first version of the EU draft Regulation on conflict minerals, published in March 2014, came as a disappointment to the many civil society actors that had advocated for strong EU rules, creating a non-binding opt-in self-certification system limited to the import of 3TG (tin, tantalum, tungsten and gold ores and concentrates). While one of the EU Commission’s stated aims was to complement Section 1502 of the US Dodd-Frank Act , which imposes legal obligations on the “downstream” section of the conflict minerals supply chain, the proposal created a crippled complementarity by establishing a purely voluntary scheme for EU “upstream” companies. EU institutions were split, with the Commission and Council favouring a soft approach and the European Parliament proposing, in May 2015, far-reaching amendments that would impose binding due diligence requirements on both upstream and downstream companies. A political understanding was reached on 20 June 2016 after a few months of “trilogue negotiations”. While a new version of the draft Regulation is not available yet (as its technical aspects are being finalized), one question that arises is whether the policy framework emerging from the trilogue, that combines mandatory and voluntary elements, is what the UN Guiding Principles on Business and Human Rights define as a “smart mix”, or whether, as maintained by critics, it constitutes a missed opportunity.

Mandatory due diligence checks for smelters, refiners and direct importers only

Mandatory due diligence checks conducted according to the OECD Due Diligence Guidance are introduced for smelters, refiners and direct importers. However, EU manufacturers and sellers above 500 employees are only “encouraged” to report on their sourcing practices.

The introduction of binding rules for upstream companies constitutes a welcome development, especially because smelters and refiners are best placed in the supply chain to track the minerals back to their mine of origin. However, only 20 smelters and refiners and 400 direct importers of 3TG based in the EU will be targeted by these rules, while the some 880 thousand downstream companies placing finished and semi-finished products (laptops, jewels, mobile phones, etc.) on the EU market will not be subjected to binding disclosure. Given that, as pointed out by Eurometaux, “conflict minerals mostly find their way into Europe through imported products and components”, excluding downstream companies from mandatory due diligence has at least four negative effects:

(i) it reduces the impact of the Regulation, targeting roughly 0,05% of EU companies and failing to guarantee that EU consumers will be informed about the sourcing practices of brands whose products may contain conflict minerals;

(ii) it does nothing to prevent EU downstream companies from resorting to non-EU smelters and refiners, the majority of which are based in countries that do not have binding conflict minerals legislation in place (China, Malaysia, Indonesia, Thailand and Russia);

(iii) it does not incentivize EU downstream companies to pressure their non-EU upstream suppliers to conduct supply chain due diligence;

(iv) it fails to create a level playing field among EU downstream companies, a stated aim of the Commission: while between 150 and 200 thousand EU-based companies are de facto required to conduct conflict minerals due diligence in order to retain their business relationships with US downstream clients, who are bound by the Dodd-Frank Act, the remaining EU downstream companies will continue to be addressees, at best, of non-binding recommendations under EU rules.

The EU could and should amend the draft Regulation introducing an extensive definition of “importer”, encompassing, in line with the European Parliament 2015 proposal, not only direct importers of raw materials, but “all companies who first place covered resources, including products that contain those resources, on the Union market”. This would allow for mandatory due diligence checks to be extended to thousands of EU companies importing finished and semi-finished products containing 3TG.

The Regulation is global in scope but its impact may still be limited to certain areas

The Regulation is global in scope (unlike the Dodd-Frank Act), but the Commission, with help from external experts, will draw an indicative, non-exhaustive list of conflict-affected and high-risk areas.

Although intended not to be exhaustive, this list risks being interpreted as such by companies bound by the Regulation. The 2014 draft Regulation targets imports from conflict-affected areas, as well as “areas witnessing weak or non-existent governance and security, such as failed states, and widespread and systematic violations of international law (…)”. Interpreting this definition narrowly, as limited to countries with a clear link between mining and conflict and to failed states associated with widespread or systematic violations of human rights, would leave outside of the Regulation’s scope countries that are not conflict-affected or failed, but in which, nonetheless, due to a “sector-specific” weak governance, documented links exist between grave human rights violations and minerals extraction (e.g. widespread child labour use in hazardous work in Ghana’s gold mining industry).

The material scope is limited to the 3TG.

This choice derives, on the one hand, from the Commission’s aim to complement the Dodd-Frank Act by targeting the same minerals and metals, and, on the other, from the draft Regulation’s reliance on the model supply chain policy contained in the Supplements to the OECD Due Diligence Guidance, which only specifically address the 3TG. This limitation is arguably not the biggest flaw in the draft Regulation – it may actually make implementation more realistic – but the EU should specify (similarly to what the Dodd-Frank Act does) whether and how the definition of conflict minerals leaves the door ajar to future expansion of the material scope. Many more minerals linked to conflict dynamics and serious abuses need heightened attention from the international community (e.g. rubies from Burma, lapis lazuli from Afghanistan, diamonds from the Central African Republic).

Interim appraisal: the draft regulation falls short of ensuring companies “respect human rights”

The process of adoption of the final text should begin in the coming months, under the Slovak presidency, and the Regulation will enter into force after a transition period. The Commission declared in the political understanding that “it will consider making additional legislative proposals” targeted at downstream companies, should the adopted instrument fail to sufficiently leverage responsible corporate conduct. The draft EU policy has some positive aspects, including the provision of ex-post checks on importers and some important accompanying measures (e.g. public procurement conditionalities). However, its combination of voluntary and binding measures falls short of being a “smart mix”, as it has a low capacity to trigger virtuous dynamics in the supply chain. The EU, as matters stand, is missing an opportunity to use its market leverage to its full potential. Instead it could have sent out the message, in line with the principles of its external action and its human rights obligations, that the corporate responsibility to respect , the second pillar of the UN Guiding Principles, is not a matter of voluntary initiatives, but of legal compliance for all segments of the supply chain.


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