Wading through the (polluted) mud: the Hague Court of Appeals rules on Shell in Nigeria
It is a pleasure to welcome back Dr Lucas Roorda as a guest poster on “Rights as Usual”. Dr Roorda (@LRoordaLaw) is an Assistant Professor and postdoctoral researcher at Utrecht University. This post is his.
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On 29 January, the Court of Appeals (Gerechtshof) of The Hague delivered its judgments in the case of Four Nigerian Farmers and Milieudefensie v. Shell. These judgments are of seminal importance for improving accountability of transnationally operating businesses for violations of human and environmental rights. This is because it is the first appeals case in Europe that resulted in a victory on the merits for the victims, but also the first case to hold that a parent company was under a duty of care with regard to foreign claimants. In this blog, I will summarize the judgment, address some key points and analyse its potential impact on future litigation.
Preliminary notes
The three judgments are over 150 pages, which is exceptionally long by Dutch standards. Here I focus on the merits of the case and have skipped the jurisdictional questions, discussed here and elsewhere on this blog. I have also not extensively examined the (failed) challenges of the defendant to various claimants’ standing, or Shell’s argument on the purported exclusivity of the Oil Pipelines Act (OPA). Lastly, I have limited discussion about the evidence provided by the parties, although to a large extent this case is about factual findings of the court.
Factual background and case history
The case concerns three separate incidents of oil spills in the Niger Delta, and the court delivered three separate but partially overlapping judgments. The first (‘Cases A and B’) concerns an oil spill from an underground pipeline near Oruma in 2005; the second (‘Cases C and D’) concerns an oil spill from an underground pipeline near Goi in 2004; the third (‘Cases E and F’) concerns an oil spill from a wellhead near Ikot Ada Udo. These spills caused severe damage to local farmlands and fishing grounds. The claimants were Nigerian (fish) farmers, who held both Shell Nigeria (SPDC) and its parent company Royal Dutch Shell (RDS) liable for negligent maintenance of the pipelines and wellhead, inadequate response to the spills and insufficient clean-up, thereby causing that damage. They were supported in their claims by Dutch NGO Milieudefensie (Friends of the Earth Netherlands).
The District Court of the Hague in 2013 initially only upheld one claim from Cases E and F, that of Friday Alfred Akpan (discussed here). It dismissed all other claims, accepting Shell’s defence that the respective spills were likely caused by sabotage, and rejecting liability of parent company RDS. After first issuing several interlocutory decisions, most importantly on jurisdiction and applicable law in 2015, the Court of Appeal has now reversed the holdings of the District Court. On 29 January 2021, it held SPDC liable for damage caused by oil spills in Cases A to D and ordered payment of damages to the claimants, the amount to be determined in a separate hearing (schadestaatprocedure). It also orders both SPDC and RDS to install a leak detection system (LDS) in the pipeline central to Cases A and B. In Cases E and F, the court issues an interlocutory decision ruling that these spills were caused by sabotage, but requests additional information from the parties on the extent of the damage and subsequent clean-up actions. In the remainder of this post, I will only discuss Cases A to D, the oil spills in Oruma and Goi.
Liability of SPDC
As per its 2015 interlocutory decision, the court applies Nigerian law to the case’s substantive questions. The claimants had primarily argued their case on the basis of the federal OAP, which outlines obligations for operators of oil infrastructure; and on common law torts, specifically the torts of negligence, nuisance and trespass to chattel. To determine the liability of SPDC for both spills, the court looks primarily at the OPA, SPDC being the operator of the pipelines in the sense of the OPA.
First, the court examines liability for causing the oil spills. It considers that art. 11(5)(c) OPA imposes a strict liability standard for operators of oil pipelines. The operator can be exempt from liability in cases of sabotage, which Shell argued was the most likely cause of the spills in Oruma and Goi. The court however holds that under Nigerian law sabotage should be proven beyond reasonable doubt, as was argued by the claimants. While the court notes that the available expert reports indeed suggested that sabotage was a likely cause of the spills, it holds that this does not meet the standard of ‘beyond reasonable doubt’. It thus concludes that SPDC could not evade the strict liability standard of art. 11(5)(c) OPA, and that it is liable for damages arising out of the spills. The court does not consider it necessary to examine liability for any of the common law torts. It considers obiter that in either case it would likely not have found SPDC liable on this basis, given that sabotage was still a likely cause of the spill.
Second, regarding Shell’s response to the oil spills, the court notes that art. 11(5)(c) of the OPA is not applicable and that the claims regarding the response should be assessed in light of common law torts, specifically negligence. In both cases (A and B; and C and D), the court finds that SPDC owed a duty of care to the claimants, and acted negligently in its response to the spills. In the case of the Oruma spill, SPDC was aware of the risk of spills and potential problems with on-site inspection following a suspected spill, yet neglected to install a ‘Leak Detection System’ or take other sufficient measures. This would have allowed a more immediate response to leaks and spills, even if access to the site was (temporarily) impossible. In the case of the Goi spill, the court notes that while SPDC did perform an on-site inspection by helicopter to assess the leak, this could have been done at least a day earlier. The court additionally orders that SPDC should install an LDS system in the Oruma pipelines to prevent future spills; it had already done so in the Goi area in 2019.
Lastly, the court discusses the clean-up undertaken by Shell after the spills. Here, the court finds that while there was still some pollution in both regions, the duty of care Shell had to ensure adequate clean-up did not extend beyond the actions it had already undertaken, as assessed by applicable industry standards. The court also dismisses the claimants’ arguments that the remaining pollution constituted a violation of the farmers’ right to a clean environment, leaving aside whether such a right could be horizontally invoked under Nigerian law.
Liability of RDS
The court examines whether Royal Dutch Shell, parent company of the Shell group, is also liable for the oil spills. Such liability can be based on English precedent, which the court notes has persuasive authority in Nigeria’s common law system. The question is then whether the parent company also owed a duty of care to the claimants. A duty of care can be incurred if the company is in sufficient proximity to the claimants, for example by intervening in its subsidiary’s operations, and if imposing that duty is ‘fair, just and reasonable’. As the court notes, the UK Supreme Court confirmed in Vedanta v. Lungowe that parent companies can owe a duty of care to persons affected by harmful activities of foreign subsidiaries.
The claimants had argued that RDS, through its position in the Shell group and interventions with its Nigerian subsidiary, had incurred a duty of care, but the court dismisses this argument with regard to causing the spills. It notes that for a parent to incur a duty of care, the subsidiary must have acted wrongfully. However, as seen above, the court did not find that SPDC had acted wrongfully. Instead, it found that SPDC incurs strict liability as an operator under the OPA. With regard to the response to the spill, the court does find a limited duty of care. Based on internal documents, bonus policies and a witness statement, the court concludes that after 2010 RDS was actively trying to limit the amount of oil spills in SPDC’s operations, amongst other things by installing Leak Detection Systems (LDS) in its pipelines. The court thus finds that with respect to the installation of an LDS in the Oruma pipeline, where it had not been installed at the time of the proceedings, RDS had a duty of care to the claimants. It orders Shell to insure it is installed within a year.
Small steps, giant leaps
The Court of Appeals’ judgment is a monumental victory for the victims and their communities, and by extension for Milieudefensie. The court found in their favour on two of the three central issues after over a decade of litigation and uncertainty, although the finding that Shell conducted adequate clean-up after the spills must be disappointing. Whether this will actually result in an award that is sufficient to cover the personal and economic losses incurred both directly after the spills and in the decade since then remains to be seen, but it certainly appears that the award will be more than symbolic. Not that this case is devoid of symbolism: it is the first foreign direct liability case to result in an enforceable decision on the merits, in favour of the claimants. All comparable cases have either been dismissed, settled or are still being litigated. That alone signifies how impactful this case may be, and what a big leap it is towards more corporate accountability.
Moreover, this case is the first case where a parent company was found to owe a common law duty of care to claimants residing in a third state, specifically local communities affected by its subsidiary’s operations. English courts had contemplated this possibility in Connelly v. RTZ and Lubbe v. Cape, and the UK Supreme Court confirmed this in Vedanta v. Lungowe. Until this case, however, no court had concluded on the merits that a parent company was in sufficient proximity to its employees or local communities to incur such a duty. This holding thus staves off the fears that transnational corporate duties of care are a mere hypothetical, theoretically possible but never actually occurring in the real world. In my view, this is potentially the most lasting aspect of the case.
While of course enormously important to the victims, the court’s findings regarding SPDC’s liability are of limited legal relevance to other ongoing and future cases. These findings mostly concern the particular rules (the OPA) and facts (Shell’s actions regarding the spills) of this case. This is not a point of criticism: in a case as complicated and contentious as this one, it is sensible for the court to keep its ruling (if not its word count) relatively narrow. It does mean that in a different case, say in a different country with different local laws, concerning a different industry with different operational policies, or concerning even slightly different facts, the outcome may be completely different to this case.
Even the court’s finding of a parental duty of care, while significant, should be approached with some caution. It is of course only relevant for cases where the applicable law is the common law and English precedent can be applied. The way the court then applies that precedent is arguably problematic, specifically where it sides with Shell in holding that the subsidiary must itself have committed a tort before the parent can incur a duty of care. This does not follow directly from the English cases cited by the court, nor does the court clarify why finding that SPDC was subject to strict liability with regard to oil spills precludes a duty of care for RDS. Where it does find a duty of care, that finding stems from RDS’ specific interventions in SPDC’s operations after 2010, rather than from its central position of authority in the corporate group. I have argued on this blog before that finding a duty of care based on actual interventions of the parent, rather than its capacity to intervene, could create an incentive for parent companies not to interfere with their foreign subsidiaries (or only very generally), as this could potentially lead to liability later.
Separately, it must be noted that the proceedings took so long – 16 years since the first spill, 11 years since the litigation started – that several initial claimants passed away before this decision was issued, and litigation was continued by their next of kin. Part of this duration is inherent to the complexity of this case, part of this is arguably due to Shell dragging out the litigation, by arguing procedural points and being slow to produce internal documents requested by the claimants. It is of course fully within Shell’s rights to litigate potentially far-reaching issues like jurisdiction, and the court itself also requested a significant amount of additional evidence to be produced. What is certain is that the length of procedures like this disproportionately works to the detriment of individual claimants, as is painfully demonstrated by this case.
Conclusion
This decision takes a notable step towards more corporate accountability for human rights and environmental impacts. It was rightly celebrated, not just by the victims in this procedure who waited 13 years for a proper remedy, but also in the wider communities of the Niger Delta. As I pointed out in this blog, several significant legal and practical questions remain, from the availability of information necessary to viably argue a case to the precise extent of parental duties of care. But this outcome may well bolster other victims to bring their cases before home state courts, and push the trend towards more corporate accountability further forward.
The UNGPs and the Future of Business and Human Rights Regulation – Interdisciplinary Workshop at Martin Luther University Halle-Wittenberg
It is a pleasure to welcome Dr René Wolfsteller on Rights as Usual. René holds a PhD in Politics from the University of Glasgow. He is a Lecturer in the Department of Political Science and associated Research Fellow of the Research Cluster “Society and Culture in Motion” at Martin Luther University Halle-Wittenberg, Germany. His research focuses on the institutionalization of international human rights norms, business and human rights, and national human rights institutions. His work has been published in the Journal of Human Rights, the International Journal of Human Rights, and in Leviathan. This post is his.
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On 13 February 2020, I organized an interdisciplinary research workshop at Martin Luther University Halle-Wittenberg (Germany). The workshop brought together leading experts in the field of business and human rights from law, politics, ethics and critical accounting studies, to analyze the conceptual foundations and effectiveness of the transnational regulatory regime that has emerged since the endorsement of the Guiding Principles on Business and Human Rights (UNGPs) by the UN Human Rights Council in 2011.
Funded by the Forum for the Study of the Global Condition and the Research Cluster Society and Culture in Motion, the workshop yielded three key insights.
(1) The governance potential of the emerging business and human rights regime is far from exhausted. There continues to be an urgent need for internationally coordinated, enforceable standards.
(2) The normative foundations of this regime need to be developed further, yet without giving business actors the opportunity to dilute the meaning of human rights norms and standards beyond recognition.
(3) Business and human rights research is complex, and this complexity can only be adequately addressed through the combination of different disciplinary perspectives, as exemplified by the thematic variety of the contributions and the insightful comments of participants.
In my welcome address, I pointed to the potential opening of a new window of opportunity in Europe where leading political actors have expressed an interest in strengthening business and human rights regulation and introducing enforceable safeguards against business-related rights abuse.
Before turning to these empirical issues, the workshop began by discussing the normative and theoretical foundations of the emerging business and human rights regime. Yingru Li and John McKernan (University of Glasgow) opened the first panel with a paper criticizing two major shortcomings in the construction of the UN Guiding Principles from the standpoint of moral philosophy. First, they contended that the UNGPs do not sufficiently allow for the active participation of civil society actors in their further development and implementation. Second, the UNGPs miss what the authors identified as the most fundamental point of human rights, that is, their potential to serve as an instrument for emancipatory struggle. Joining the normative debate, Elke Mack (University of Erfurt) argued in her presentation that the moral legitimacy of the global market economy cannot be derived from mere compliance with human rights law alone. In her view, it is necessary also to underpin economic globalisation with the construction of social contracts between corporate and societal actors on a micro-level, in order to ensure a mutual economic and social benefit based on liberal and cosmopolitan values. In the third contribution to the panel, Christian Scheper (@ChrisSchep, University of Duisburg-Essen) highlighted the risk of empowering business enterprises further as an unintended consequence of their increasing regulation. In fact, the stronger regulation of businesses may contribute, according to Scheper, to companies’ increasing epistemic influence and political power over the knowledge production on business behaviour as the regulatory system relies so heavily on corporate self-reporting and self-measurement.
Following this note of caution, the second workshop panel examined the implementation of corporate human rights accountability and due diligence through different state-based mechanisms. Kelly Kollman and Alvise Favotto (University of Glasgow) presented a study of the effects of the UK National Action Plan for Business and Human Rights on corporate human rights accountability of 50 transnational companies based in Britain. Although their analysis of the companies’ CSR reports from 1995 to 2015 and of original interview data revealed a small increase in the engagement with human rights issues, Kollman and Favotto expressed scepticism on whether substantive progress has been made, especially since the companies’ engagement was largely limited to the level of rhetoric and management. In the following presentation, I examined the potential and the challenges of National Human Rights Institutions (NHRIs) to contribute to the promotion and protection of human rights in relation to business actors. Pointing out the divergence between the high expectations put on NHRIs and the structural challenges inhibiting these institutions to engage with business actors effectively, I identified the weak mandate under international law and the lack of adequate powers as the two main factors preventing NHRIs from unfolding their full potential.
In the third panel, the discussion turned to the specifically legal challenges in holding businesses accountable for human rights abuses. Analysing international law and legal doctrine, Markus Krajewski (@KrajewskiMarkus, Friedrich Alexander University Erlangen-Nuremberg) reconstructed a wide-ranging duty of so-called “home states” to protect individuals from human rights abuses by transnationally operating business enterprises based within their jurisdiction. According to Krajewski, this home state duty extends also to the protection of individuals affected by the operation of the parent company in other countries if the rights abuses were foreseeable and preventable. In the following paper presentation, Başak Bağlayan (@basakbc, University of Luxembourg) analyzed the role of National Contact Points (NCPs) in OECD member states in the realisation of the UNGPs’ second pillar by providing access to remedy. While Bağlayan recognised the potential of NCPs, she argued that the diversity of their form, powers, and funding, as well as of the remedial procedures offered by them, made it difficult to consider these institutions per se an effective mechanism for the provision of access to remedy for victims of business-related rights abuse. Almut Schilling-Vacaflor (University of Osnabrück) concluded the law panel with a paper examining the effectiveness of the French vigilance law of 2017 which imposes relatively extensive due diligence duties on transnational firms based in France. With a case study of the activities of the French-based oil and gas company Total in Bolivia, Schilling-Vacaflor showed that in legal practice it is extraordinarily difficult to enforce this supposedly progressive law effectively under the conditions of globalised production processes because of the high burden of proof and unclear jurisdictional competences of national courts.
The final panel was dedicated to a possible future binding treaty on business and human rights which is being negotiated since 2015 by the Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises With Respect to Human Rights (IGWG) in Geneva. Nadia Bernaz (@NadiaBernaz, Wageningen University) set out the advantages and limitations of different conceptions of corporate accountability for human rights to be adopted by a future treaty. Eventually, Bernaz made the case for a progressive model of corporate accountability which would combine the development of existing principles of international law with state-based enforcement mechanisms. Janne Mende (Justus Liebig University Giessen) closed the workshop with an analysis of the struggle over authority in the treaty negotiations of the IGWG. Based on original interview data and documents, Mende argued that contestations over the authority and legitimacy of actors do not necessarily lead to resistance and crises in the negotiation process but can also pave the way for new hybrid solutions, as illustrated by the recent treaty draft from October 2019.
Report of the IACHR on Business and Human Rights: towards the Inter-Americanization of Business and Human Rights
It is a pleasure to welcome Salvador Herencia-Carrasco on Rights as Usual. Salvador is the Director of the Human Rights Clinic of the Human Rights Research and Education Centre at the University of Ottawa. E-mail: [email protected] Twitter: @Sherencia77. This post is his. Disclaimer: in October 2018, he attended a closed session in Mexico to discuss an early draft of the report.
In January 2020, the Special Rapporteurship on Economic, Social, Cultural and Environmental Rights of the Inter-American Commission on Human Rights (IACHR) published its long awaited report, “Business and Human Rights: Inter-American Standards”. Created in 1959 by the Organization of American States, the (IACHR) has jurisdiction to promote human rights over all 35 member states of this regional organization. This includes countries that have not ratified the ACHR like Canada, the United States and most of the Caribbean nations.
While we wait for the English version of the report to be released, the purpose of this post is to identify its key elements, and to discuss what this publication means for the Business & Human Rights (B&HR) field in the Americas. By providing a strong focus on the rights to due process and access to justice of victims, this report can be seen as an attempt by the IACHR to link the United Nations Guiding Principles on Business and Human Rights (UNGP) to the American Convention on Human Rights (ACHR). This “inter-americanization” of the UNGP could translate into concrete obligations for states, including adopting legislation and policies on B&HR, and eliminating legal barriers that limit access to courts by victims of corporate abuse.
The first part of the post shows how the main B&HR focus in the Inter-American Human Rights System (IAHRS) has been on mining companies so far, and how in its new report the IACHR identifies other fields of concern. In doing so, they “de-extractivize” the B&HR discussion in the Americas. The second part explains how the IACHR interprets the duty of the state to protect people from corporate abuses and how this could change how we use the UNGP in the IAHRS.
Business and Human Rights and the Inter-American Human Rights System: Going beyond Indigenous Peoples and Extractive Industries
The IAHRS has played a significant role in assessing the impact of extractive industries on Indigenous Peoples, particularly on the violation of the rights to land, territory, consultation as well as free, prior and informed consent. Since Awas Tingni vs. Nicaragua, decided by the Inter-American Court of Human Rights (IACtHR) in 2001, the other 20+ cases on this field -including landmark cases of Saramaka vs. Suriname and Sarayaku vs. Ecuador- all have similar circumstances: a state authorizes an extractive corporation (usually mining) without any consultation with Indigenous Peoples who live in that area and who are the rightful owners of that land.
In the B&HR spectrum, these cases –despite focusing on state responsibility – have showed how mining permits are obtained, usually by presenting false documentation, bribing corrupt officials or benefiting from loose regulations. To complement these judicial standards, the IACHR published the report “Indigenous Peoples, Afro-Descendant Communities and Natural Resources: Human Rights Protection in the Context of Extraction, Exploitation, and Development Activities in 2016. This was the IACHR’s first attempt to identify the B&HR obligations of states in the extractive sector.
The new report “Business & Human Rights: Inter-American Standards” has sections on Indigenous Peoples and mining companies (paras. 339-351) but it goes beyond the extractive industry. It identifies other topics of interest like transitional justice and the responsibility of businesses for gross violations of human rights (paras. 200-218), climate change (paras. 232-252) and the privatization of public services (paras. 219-231), among others.
Due process and access to justice as the key for victims to seek a prompt recourse for Business and Human Rights abuses
The main scope of the report is the first pillar of the UNGP, which addresses the state duty to protect human rights. And that is clear throughout the 224 pages of the report. With the exception of chapter 4, the report emphasizes on obligations of the state vis-à-vis the first pillar.
At first glance, this could be seen as a missed opportunity because more analysis is needed on how to understand the second pillar of the UNGP, particularly within the IAHRS. However, a closer look at the report provides valuable guidance regarding the responsibilities of companies. For example, the report mentions how corruption and corporate interests have limited the capacity of states to fulfill human rights obligations (paras. 53 and 130), and points to the limitations of corporate social responsibility programs to effectively prevent human rights abuses (para. 134).
The IACHR report establishes from the start that the state has the primary duty to fulfill the UNGP. This includes the state’s (i) duty to adopt laws and policies; (ii) duty to prevent violations to human rights caused by business activities; (iii) duty to monitor/inspect businesses; (iv) duty to investigate, prosecute and repair victims (para. 85).
These duties correspond to the general human rights obligations found in Art. 1, Art. 8 and Art. 25 of the ACHR. For the B&HR discussion, paras. 133-139 of the report are important because they show the limitations of forum non conveniens and how inequality of arms between corporations and victims affects judicial proceedings at the national level. For those working on B&HR, this is not new. However, it is important to read this report from the point of view of the IACHR, particularly in its capacity to take cases against states to the IACtHR.
In practical terms, the IACHR –in my view- is carefully stating that it would be open to bring cases against home and/or host states to the IACtHR, as long as these are party to the ACHR. The IACHR is indicating that forum non conveniens and corporate veil are being used by businesses to prevent victims from accessing a prompt recourse. In my understanding of the report, the IACHR is suggesting that these are not protections but barriers that will not be opposable to IACHR while assessing a complaint.
Conclusion
This new report comes at a time of significant jurisprudential changes within the IAHRS. In December 2017, the IACtHR adopted the Lagos del Campo vs. Peru case, determining that economic, social and cultural rights are autonomously protected under the IAHRS. This opens a wide array of possibilities for B&HR litigation, allowing us to assess the impact that business activities might have on health or safety in the workplace. In 2020, the IACtHR should decide on a case related to an explosion of a factory in Brazil due to poor working conditions and on another case related to the impact of privatization of health insurance policies to the right of health in Chile.
In addition, the 2017 Advisory Opinion OC-23/17 on the Environment and Human Rights by the IACtHR establishes specific requirements on human rights and environmental impact assessments. In addition to this new judicial standards, the IACHR has recently published its report on “Corruption and Human Rights”(currently just available in Spanish). Of relevance to the B&HR discussion, this report goes beyond the adoption of criminal laws, highlighting the impact that corruption by businesses has on vulnerable populations.
Despite these relevant developments, legislation and the case law on B&HR in the Americas remain scarce. Many Latin American countries are still prioritizing developing National Action Plans or cases related to Indigenous Peoples. The report aims to broaden the scope by identifying how human rights abuses by businesses affect vulnerable populations (paras. 312-406) while also recommending states to prioritize due diligence legislation (paras. 103-119) and to implement extraterritorial obligations of home states (paras. 146-174).
The main challenge of any thematic report from the IACHR is how to fulfill its recommendations. I read the report as a set of tools to allow CSOs, victims and academics to work together to make “Inter-Americanization” of B&HR a reality.
UK NCP Takes Step Towards Strengthening Multi-stakeholder Initiative Accountability
It is a pleasure to welcome Dr Rachel Chambers to Rights as Usual. Rachel is a Postdoctoral Fellow in Business and Human Rights at the University of Connecticut and serves on the steering committee of UConn’s Business and Human Rights Initiative. Her research centres on access to remedy through judicial and non-judicial mechanisms, non-financial reporting and human rights due diligence. She is a Barrister (England and Wales). This post is hers.
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On 25 September 2019 it was announced that the UK National Contact Point (NCP) has decided to accept a complaint regarding the actions of sugar industry multi-stakeholder initiative (MSI) Bonsucro as admissible and offer mediation to the parties. This decision forms part of a welcomed trend of greater acceptance of complaints by the UK NCP. It is also the second complaint about an MSI to be accepted by an NCP – the first being a complaint against the Roundtable for Sustainable Palm Oil (RSPO) that was the subject of a final statement by the Swiss NCP last year. This is an important development that will enhance the accountability and ultimately the strength and legitimacy of MSIs.
The UK NCP’s Record of Accepting Complaints
The OECD NCP is a non-judicial mechanism intended to hold companies to account over breaches of the OECD Guidelines for Multinational Enterprises, an international standard set by the OECD on labour rights, human rights, the environment and corruption, among others. To-date, 46 governments have adopted the Guidelines, and the prominence of this mechanism has been widely acknowledged (see previous posts on this blog about NCP cases here and here). For example, in June 2015 the G7 leaders made a declaration calling for the strengthening of NCPs in the context of providing access to remedy.
The UK NCP has a good reputation, particularly since 2008 when its processes were strengthened. A complaint is brought by filling in a form which is available on the NCP’s website. The NCP offers professional mediation in suitable cases and, where mediation fails or is not taken up by the parties, examination of the complaint and determination of whether or not the Guidelines have been breached. There is follow up by the NCP a year after examination of a complaint to assess progress on the issues raised.
However, in recent years the UK NCP has been the subject of criticism. An Amnesty International report from 2016 charted the decline in the NCP’s performance in the period from 2011 (see my earlier blog). OECD Watch wrote an open letter to the UK NCP in early 2018 in an attempt to restore civil society’s confidence in the NCP.
One of the primary criticisms of the NCP was that it was rejecting too many complaints at the initial assessment stage, by imposing an unreasonably high burden of proof. The OECD’s Procedural Guidance merely tells an NCP to ‘determine whether the issue is bona fide and relevant to the implementation of the Guidelines’.
A quick survey of complaints considered by the UK NCP since the Amnesty report reveals that relatively few have been brought in that period, no doubt reflecting the lack of confidence civil society felt in the process. However, of the seven complaints brought, five have been accepted for mediation. The last time a complaint was outright rejected at the initial assessment stage was three years ago, in November 2016. The NCP did, however, reject complaints against two of three companies named in complaints last year. The tenor of decisions is less strict when it comes to the evidentiary threshold, however. In one decision, the UK NCP noted a distinct lack of detail in the evidence, but stated nonetheless:
(…) the initial assessment process is to determine whether the issues raised merit further examination. It is not an assessment of the likely outcome of any further examination. It is on this basis that the UK NCP has considered the complaint.
The Complaint against Multi-stakeholder Initiative Bonsucro
The complaint against Bonsucro alleges that the MSI failed to conduct adequate due diligence and apply leverage to its member Mitr Phol Group – Thailand with regard to alleged human rights violations: the forced evictions of hundreds of Cambodian families to make way for sugar cane plantations. The complainants also allege that Bonsucro does not have in place adequate human rights policy commitments and an effective grievance mechanism in line with the OECD Guidelines. The complainant NGOs produced evidence both of the forced evictions in Cambodia and of the lack of human rights policy. Thus, on an evidentiary level, this case was easier to get off the starting blocks than many. More challenging, potentially, was the need to convince the UK NCP to accept a case against an MSI – not the usual target of complaints under the OECD Guidelines, despite the Swiss precedent in the RSPO complaint.
The multi-stakeholder initiative (MSI) approach to business regulation emerged from the 1992 Rio Summit (UN Conference on Environment and Development). It consists of multiple stakeholders (usually business and civil society, along with others, including governments, universities and/or investors) working together to solve complex problems in the field of business and human rights. Although praised as a step forward from corporate self-regulation, MSIs are being increasingly assessed for their performance and critiqued, particularly when they fail to hold their corporate members to account for human rights violations.
The issues that underlie the Bonsucro case had previously been raised in a complaint brought under the MSI’s own grievance mechanism in 2011. Bonsucro dismissed the complaint on the grounds that it did not receive cogent evidence of a breach of its code of conduct.
At the OECD Guidelines initial assessment stage, Bonsucro argued that the UK NCP was not the appropriate forum for the complaint to be heard, asserting that the real issue was with its member company, and that Bonsucro should not be used as a conduit for this complaint.
The UK NCP gave short shrift to these arguments, finding that Bonsucro falls within the loose definition of an MNE from the Guidelines, and that it was appropriate for the NCP to consider alleged human rights violations that are linked to a company’s operations, products or services by a business relationship (i.e. the membership relationship between Mitr Phol Group- Thailand and Bonsucro). This outcome was hailed as a success by one of the complainant NGOs. The UK NCP will now offer the parties an opportunity to mediate the issues, or if mediation fails, it will examine the claim that Bonsucro’s actions are inconsistent with the Guidelines.
It is hoped that the mediation will be productive and, if not, that the UK NCP will use this opportunity to clarify the OECD Guidelines’ role in enhancing the accountability and ultimately the strength and legitimacy of MSIs. The Bonsucro decision should also be placed in its wider context, i.e. the practice of the Swiss NCP, who besides the RSPO, has held complaints against FIFA (formally an association under Swiss law) and WWF admissible. With two separate NCPs going in the same direction, the role of business and human rights standards to strengthen the accountability of non-state actors operating transnationally is now open for discussion. In an upcoming article they presented at the Business and Human Rights Scholars Association Conference in September, Domenico Carolei and Nadia Bernaz bring this question to the fore.
Another Star in the BHR Galaxy of Norms? ILC Draft Principles Encourage States to Address Corporate Environmental Harm in Armed Conflict
It is a pleasure to welcome Marie Davoise as a guest poster on “Rights as Usual”. Marie Davoise is an English-qualified solicitor specialising in international criminal law and business and human rights, with experience in private practice and at the International Criminal Court. She tweets about international law and human rights at @micawberist. This post is hers.
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On 20 August 2019, the International Law Commission (“ILC”) published an advance copy of its 2019 Report to the UN General Assembly. The report contains texts and commentaries on various topics of international law. It will also be of interest to business and human rights (“BHR”) enthusiasts for its inclusion of BHR-related Draft Principles on Protection of the Environment in Relation to Armed Conflict.
Draft Principle 10 discusses the concept of corporate due diligence. It recommends that States take appropriate measures to ensure that corporations operating in or from their territories exercise due diligence with respect to the protection of the environment, including in relation to human health, in areas of armed conflict or in post-conflict situations. The due diligence described at Draft Principle 10 is identical in content to the “human rights due diligence” as understood in the UN Guiding Principles on Business and Human Rights. Draft Principle 11 invites States to take appropriate measures to ensure corporate liability for environmental harm caused by companies operating in or from the State’s territory.
Although not binding, the Draft Principles reflect and consolidate a growing set of norms which can be used to tackle environment-related corporate wrongs in the context of armed conflict. Three features of this set of norms are made clear in the ILC report: the variety and fluidity of existing frameworks; the expansion of parent company liability in various jurisdictions; and the added layer of complexity when seeking to hold companies accountable for harm occurring in armed conflict.
A Cautious, Flexible Approach to Due Diligence and Corporate Liability
Both draft principles generated extensive comments in the plenary session, with some ILC members expressing concerns over the legal and political reach of the text under discussion. The original wording of Draft Principle 11, for example, was changed from requiring that States take “necessary measures” to requiring them to take “appropriate… measures aimed at ensuring” business accountability (see here). This is reflected in the latest report, which acknowledges that the measures taken at the national level may differ from one country to another, and may not always consist of legislative measures. The report also specifies that Draft Principle 10 “does not reflect a generally binding legal obligation and has been phrased accordingly as a recommendation.”
This flexibility does not merely reflect a reluctance to go too far, too fast – it is also a reflection of the BHR “galaxy of norms”, which takes many forms, and operates in fluid ways on various jurisdictional and geographical levels. The wide network of normative frameworks is evident throughout the report, which describes a broad range of initiatives, from the most well-known (e.g. the UN Guiding Principles and OECD Guidelines) to the industry-specific or niche (e.g. the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains or the Lusaka Protocol of the International Conference on the Great Lakes Regions).
Parent Company Liability: a Central Concept in the Search for Accountability
Another noteworthy feature of the report is its discussion of parent company liability. Draft Principle 11 invites States to take measures aimed at ensuring that businesses can be held liable for harm caused by their subsidiaries acting under their de facto control. To illustrate the importance of this concept, the report points to one of the most important BHR cases of 2019: Vedanta v Lungowe, which Lucas Roorda reviewed on this blog. The case concerned the possible liability of the British multinational group Vedanta Resources for the release of toxic substances to a watercourse in Zambia by its subsidiary. The United Kingdom Supreme Court found that “[e]verything depends on the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations (including land use) of the subsidiary.”
This is in line with the growing body of transnational tort cases on parent company liability, in which courts are increasingly willing to consider the existence of a duty of care owed by parent companies for certain actions of their subsidiaries. Recent high-profile cases in the United Kingdom include Unilever, in which the Court of Appeal set out certain scenarios in which such duty of care could arise (e.g. if the parent company has in substance taken over the management of the subsidiary’s relevant activity) and Okpabi, which is following a trajectory similar to Vedanta and for which the Supreme Court granted the claimants leave to appeal on 24 July 2019. Canadian cases include Choc v Hudbay Minerals, Garcia v Tahoe Resources and Araya v Nevsun Resources, in which various courts looked at the responsibility of mining companies for actions of their subsidiaries in Guatemala and Eritrea. Similar discussions are being held in the context of claims against Shell before the Dutch courts (the Eric Dooh litigation regarding spills in the Niger Delta, and the Kiobel litigation regarding the execution of the ‘Ogoni Nine’). As is clear from the ILC report’s discussion of the importance of de facto control, the BHR galaxy is witnessing a convergence of legal systems which could ultimately lead to a more expansive application of parent company liability.
BHR in the Context of Armed Conflict
Finally, it’s worth remembering that the Draft Principles seek to address environmental harm in a specific context, i.e. armed conflict. This adds a layer of complexity to the search for corporate compliance and accountability. This is acknowledged in UN Guiding Principle 7, which recognises that some of the worst human rights abuses involving business occur in armed conflict situations “where the human rights regime cannot be expected to function as intended.” This heightened risk, and the resulting expanded web of liability for businesses, is also reflected in the commentary to UN Guiding Principle 23.
Armed conflict can therefore turn the national jurisdiction in which the environmental harm occurs into what Skinner refers to as a “high-risk host country”, i.e. one that has a weak, ineffective, or corrupt judicial system. This is where the notion of parent company liability could improve access to remedy for victims of harm by multinational businesses, especially as courts have shown sympathy for forum necessitatis arguments (which allows domestic courts to assert jurisdiction when there is no other forum available in which the plaintiffs could pursue their claim). The lack of available justice in Zambia was a key factor in Vedanta. Similarly, in Araya v Nevsun the Court of Appeal for British Columbia endorsed the first instance judge’s finding that it would be difficult for the claimants to have a fair trial in Eritrea, particularly “if they chose to commence legal proceedings in which they make the most unpatriotic allegations against the State and its military, and call into question the actions of a commercial enterprise which is the primary economic generator in one of the poorest countries in the world.”
The ILC report itself acknowledges that the collapse of State and local institutions “is a common consequence of armed conflict and one that often casts a long shadow in the aftermath of conflict, undermining law enforcement and the protection of rights as well as the integrity of justice.”
Conclusion
The legal conversation is increasingly concerned with both corporate accountability and the protection of the environment. On 23 July 2019, in response to the publication of the ILC Draft Principles, a group of scientists published an open letter in Nature, calling for a Fifth Geneva Convention that would make environmental damage a war crime. On 25-27 November 2019, the United Nations is due to hold its annual Forum on Business and Human Rights. Topics for discussion will include, inter alia, “Lessons from other relevant fields, such as environmental protection” and “Building sustainable peace and reconstruction in countries emerging from conflict and fragility and address corporate crimes”. Draft Principles 10 and 11 have clearly captured the legal zeitgeist.
The ILC report draws on various existing frameworks and legal principles to offer avenues to address wrongs situated at the intersection of three circles: business, the environment, and armed conflict. It draws attention to this Venn diagram rather than seeking to reinvent the wheel. It reflects existing conceptual tools rather than creating new ones. In that sense, the Draft Principles do not add a new ‘star’ to the BHR galaxy, but rather offer a helpful telescope to examine the existing firmament. They also represent a chance to galvanise discussions of protection of the environment in armed conflict when negotiating binding instruments, such as the draft business and human rights treaty, for which the latest round of negotiations is due to take place on 14-18 October 2019.
Clearer, Stronger, Better? – Unpacking the 2019 Draft Business and Human Rights Treaty
(1) Clearer language and structure
Overall, the 2019 draft is clearer and more precise than the previous version. I have picked a few examples but a close reading of the text should reveal many more. Drafters fleshed out the definitions article, and polished up the language. For instance, under Article 8 on Statute of Limitations, the previous text stated that “[d]omestic statutes of limitations (…) should not be unduly restrictive and shall allow an adequate period of time for the investigation and prosecution of the violation” (Article 6, 2018 Zero Draft). In the new text, this becomes: those statutes of limitation “shall allow for a reasonable period of time for investigation and prosecution of the violation”. “Unduly restrictive”, a subjective requirement likely to cause problems, was dropped; and “adequate” was replaced by a more precise term, “reasonable”. Similarly, the necessity for States Parties to “protect the[...] policies and actions” they adopt/take “from commercial and other vested interests of the [business sector]” (Article 15(3), Zero Draft), which was likely to antagonize certain states, is now gone.
In terms of structure, the text is also clearer. For example, the requirement that “States Parties shall cooperate in good faith” is now located in the opening paragraph of Article 11 on International Cooperation, where it belongs, rather than in the opening paragraph of the article on Mutual Legal Assistance, where it was in the previous draft (Article 11, 2018 Zero Draft). In a similar vein, the International Fund for Victims is now mentioned in Article 13 on Institutional Arrangements, rather than buried within the article on the rights of victims (Article 8(7), 2018 Zero Draft). Those are significant improvements.
(2) Stronger provisions
The new text also contains stronger provisions from a human rights perspective, as well as key additions. In the preamble, a new paragraph recognizes “the distinctive and disproportionate impact of certain business-related human rights abuses on women and girls, children, indigenous peoples, persons with disabilities, migrants and refugees, and the need for a perspective that takes into account their specific circumstances and vulnerabilities.” Under Article 31(2) of the Vienna Convention on the Law of Treaties, preambles may be used to provide context in treaty interpretation. Therefore, this paragraph could have important consequences on how operative provisions of the treaty are interpreted in the future.
The 2019 draft treaty includes a new Article 15 titled Relation with protocols, which paves the way for the adoption of an optional protocol to the future treaty. Last year a Draft Optional Protocol was released, which I discussed here. The first reading of the Draft Optional Protocol is scheduled for October 2019.
The 2019 draft treaty also includes a rather interesting optional compromissory clause (Article 16(2)). Under this provision, States Parties can declare they “accept (…) as compulsory” the “submission of the dispute to the International Court of Justice” and/or “arbitration in accordance with the procedure and organization mutually agreed by both state parties”. Although oddly phrased, I suppose this means that states may consent to the compulsory jurisdiction of the International Court of Justice or to arbitration in case of a dispute between State Parties that could not be resolved by non-judicial means. This opt-in mechanism is different from that of existing UN human rights treaties which either include a general compromissory clause (CERD), or a compromissory clause with the possibility to opt out (CEDAW, CAT, ICPRAMW, and ICPPED). The fact that it requires states to opt in makes it weaker, but it is a positive development that it is in there at all.
The preamble of the 2018 Zero Draft contained a paragraph that said: “all business enterprises, regardless of their size, sector, operational context, ownership and structure shall respect all human rights, including by avoiding causing or contributing to adverse human rights impacts through their own activities and addressing such impacts when they occur.” At the time I wrote that this was “the only mention in the Draft of something resembling corporate human rights obligations under international law”. I also made the point that being in the preamble and not in the operative part of the draft, this statement was actually quite weak. The preamble of the 2019 draft treaty contains a similar provision. It says that business enterprises “have the responsibility to respect all human rights”. I am struggling with how to interpret this change. On the one hand, “shall respect” was pretty strong, possibly stronger than “have the responsibility”. On the other hand, replicating the language of the UN Guiding Principles, whose second pillar is titled the “corporate responsibility to respect human rights”, ties the draft treaty to the already widely accepted UNGPs. I see this as a clever, strategic move. And it does not end there. The paragraph then uses similar language to that of Guiding Principle 13 (which defines the corporate responsibility to respect human rights), almost word for word. I suspect there will be some discussion about this, but my initial feeling is that this strengthens the text.
Finally, I am of course delighted to see references to international crimes in Article 6 of the 2019 draft treaty (Legal Liability). In 2015 I argued that the negotiation of a business and human rights treaty provided a golden opportunity to establish corporate criminal liability under international law. I still believe this is the case. The 2019 draft falls short of this but still, it asks States Parties to establish liability under domestic law for a series of core crimes. This is in line with recent developments at the International Law Commission (ILC). Article 6(8) of the ILC Draft Convention on Crimes against Humanity requires states to establish the liability of legal persons for the offences covered in the Draft Convention. Draft Principle 10 of the 2019 ILC Draft Principles on the Protection of the Environment in Relation to Armed Conflicts also provides for corporate liability under domestic law.
I look forward to following debates on this at the next session of the Open Ended Intergovernmental Working Group. I hope this part of the draft treaty stays in the final text, and states and other stakeholders understand its symbolic importance. Criminalizing the involvement of corporate actors in international crimes is not a mere technical issue, it’s a necessity. Corporate interests of the Global North are central to many armed conflicts around the world, and this needs addressing. As Jelena Aparac recently argued in relation to the ICC and its controversial focus on Africa, “by excluding corporate liability, the Court implicitly assumes that violence is indigenous to the Third World and overlooks external factors that contribute to local conditions of violence. As a result, the Court, through international criminal law, places crimes as specific to third world countries and reproduces the neo-colonial narrative”. Obviously, the future business and human rights treaty is not going to fix the ICC, nor is it meant to do so. However, by acknowledging corporate involvement in international crimes, the 2019 draft treaty is a step in the right direction, even if we are only talking about domestic prosecutions.
(3) Better text, better chances of success?
In light of all this, I am convinced we are now working with a better text, which is both clearer and stronger. Moreover, strategic decisions were made, which should improve the treaty’s chances of success.
As mentioned already, the text mirrors the language of the UNGPs. What is more, the preamble mentions them explicitly and notes “the role” they “have played”. This wasn’t in the Zero Draft, and is important given concerns about the UNGPs and the treaty process being on two parallel tracks. Instead, the treaty now links itself to the UNGPs, which is likely to please States of the Global North who generally support them. At the same time, the preamble suggests to “take into account all the work undertaken by the Commission on Human Rights” (and the Human Rights Council) on business and human rights. I guess this is meant to be a non-confrontational way of saying that the 2003 Draft Norms designed at the time when the Commission on Human Rights was still in existence, might be relevant after all. This is remarkable when one considers that Professor Ruggie’s self-confessed “Normicide” took place almost 15 years ago. I confess I don’t understand why this provision is there. While mentioning the UNGPs is certainly a nice gesture towards those States who don’t particularly like the idea of the treaty, reviving the Norms really isn’t.
But the clearest move towards EU States is to be found in revised Article 3 on Scope. The new text mentions that the treaty “shall apply, except as stated otherwise, to all business activities including particularly but not limited to those of a transnational character.” By contrast, the 2018 Zero Draft was to apply to human rights violations in the context of any business activities of a transnational character, and only those. The new scope is aligned with the position the EU delegation had defended in the negotiation. This clearly improves the treaty’s chances of success and is a welcome development.
On the whole, the 2019 draft treaty should be easier to sell to reluctant states than the 2018 Zero Draft. Let’s see what happens in October, at the fifth session of the Open-Ended Intergovernmental Working Group.
My name is Nadia Bernaz and I am Associate Professor of Law and Governance at Wageningen University in the Netherlands.
My main area of research is business and human rights. I look at how corporations and businesspeople can be held accountable for their human rights impact through international, domestic and transnational processes.