Business and Human Rights: Is Extraterritoriality the Magic Potion?

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The starting point of most discussions on business and human rights as an academic field is the acknowledgment that there exists no international judicial mechanism equipped to deal with gross human rights violations committed by businesses in the course of their operations. Indeed, the recently adopted United Nations Guiding Principles on Business and Human Rights, resulting from the remarkable work of John Ruggie and his team, do not provide for the establishment of any court or body which could deal with claims by victims of corporate abuse. The UN Working Group which is now continuing Ruggie’s work has been working on the implementation of the Guiding Principles but there seems to be no plan to set up an international judicial (or even non-judicial) mechanism in the near future.

Thus, the Guiding Principles largely depend on state action and corporate good will for their implementation. One example of state action to prevent and redress violations of human rights committed by companies outside their country of registration is the adoption of measures with extraterritorial implications, such as selective purchasing laws (i.e. procurement policies including human rights conditionality) or the assertion of direct extraterritorial jurisdiction in specific instances.

Extraterritoriality, which is the generic term used to cover these measures of prevention as well as proper judicial remedies for victims of corporate abuse, has therefore become a key word in the business and human rights discourse. Some United Nations human rights treaty bodies, such as the UN Committee against Racial Discrimination, and non-governmental organisations are clearly supporting the use of extraterritoriality and have even argued that international human rights law places an obligation on states to embrace extraterritoriality so as to better control the activities of companies registered on their territories.

Because it may provide remedies for victims and it does address issues that are otherwise ignored, extraterritoriality is sometimes almost presented as a sort of magic potion that will help enhance corporate accountability for human rights violations committed overseas. I have looked into this in my recently published piece in the Journal of Business Ethics and unsurprisingly, have concluded that there is nothing magic about extraterritoriality. The concept, however, holds great potential not only to redress violations through court cases but, perhaps even more importantly, to prevent violations before they occur. There is a great deal that governments could do to influence the way companies operate and to foster a corporate culture that puts respect of human rights at the centre of its ethos: through strengthened reporting requirements and human rights-informed export credit and procurement policies to name but a few.