Author: Iryna Malakhouskaya
| Jurisdiction: International |
Topics: Other |
Business-related human rights violations have been posing a challenging question for a long time. Since many national courts do not have procedures for redressing business-related human rights violations as well as international courts have not found a proper way to deal with these kinds of violations, the solution should be searched for somewhere else. International arbitration may become this solution, and this solution may benefit not only victims, but also businesses.
During the United Nations Forum on Business and Human Rights (“Forum”), which took place in Geneva from November 27th till November 29th, 2017, the Working Group on International Arbitration of Business and Human Rights (“Working Group”) focused on the third pillar of the United Nations Guiding Principles on Business and Human Rights – access to effective remedy.[1] Need to strengthen this pillar resulted in a three-year discussion and evaluation, after which the Working Group came up with several ideas how to do this.[2] On February 13th, 2017, it published a proposal where it advocated the use of arbitration to resolve disputes involving business-related human rights abuses.[3] This proposal provided two scenarios in which the arbitration of business and human rights could be invoked: (i) claims by victims of human rights violations against businesses or (ii) disputes between commercial parties, actions of one of which resulted in violations of human rights.[4] On August 17th, 2017, the Working Group addressed major concerns about the proposal through the Question and Answer document.[5] After the Forum, the Working Group brought together a drafting team “to prepare a set of rules designed specifically for international business and human rights arbitration.” [6] When completed, this set of rules will be offered to the Permanent Court of Arbitration and other international arbitration institutions for the use in arbitration proceedings.[7]
There are many advantages of human rights arbitration for both businesses and victims. It is beneficial because arbitration forum is in a better position than courts to resolve disputes impartially.[8] Additionally, when a business’s reputation is threatened, arbitration provides a speedy resolution of a dispute and by this, limits potential harm to the business.[9] To prevent future human rights abuse in its supply chains, businesses may insert “human rights commitments and arbitration clauses into its contracts” and therefore increase supply chain responsibility.[10] Another powerful tool which businesses may provide to victims of human rights violations is enabling them to invoke the arbitration clauses and as a result, to become third party beneficiaries.[11] Victims of human rights violations, of course, would benefit even more than businesses from the opportunity to arbitrate because for some of them, it may be the only way to gain an access to justice.[12] Finally, both businesses and victims would benefit from universal recognition of the arbitral award.[13]
There are, however, challenges and unanswered questions to consider for the Working Group before its final implementation of the business and human rights arbitration rules. One of the challenges of the arbitration in human rights violations disputes is inequality of resources between victims and businesses.[14] The Working Group suggests several solutions, such as creating funds for the human rights victims and contractual requirements in business and human rights arbitration clauses for mandatory payment of costs and legal fees by a losing business.[15] Another challenge is confidentiality of commercial arbitration. In order to deter future violations of business-related human rights, there is a significant public interest in transparency.[16] Overall, the commentators are enthusiastic about a new potential forum for business-related human rights violations redressability; at the same time, many of them stress the need for further development of the concept of business and human rights arbitration.[17]
[1] Catherine Dunmore, International Arbitration of Business and Human Rights Disputes: Part 2 – Advantages and Challenges, Doing Bus. Right Blog (Dec. 13, 2017), http://www.asser.nl/DoingBusinessRight/Blog/post/international-arbitration-of-business-and-human-rights-disputes-part-2-advantages-and-challenges-by-catherine-dunmore.
[2] Christina Beharry, International Business and Human Rights Arbitration Proposal Gains Momentum, Corp. Soc. Resp. and the L. (Dec. 18, 2017), http://www.csrandthelaw.com/2017/12/18/international-business-and-human-rights-arbitration-proposal-gains-momentum.
[3] Id.
[4] Alison Berthet, Arbitration: A New Forum for Business and Human Rights Disputes?, Lexology (Sept. 14, 2017), https://www.lexology.com/library/detail.aspx?g=798e646b-48ec-4a29-9bd1-849e45d92701.
[5] See supra note 2.
[6] See supra note 1.
[7]Id.
[8] Working Group on International Arbitration of Business and Human Rights, International Arbitration of Business and Human Rights: A Step Forward, Kluwer Arb. Blog (Nov. 16, 2017), http://arbitrationblog.kluwerarbitration.com/2017/11/16/international-arbitration-business-human-rights-step-forward.
[9] Id.
[10] Id.; see supra note 1.
[11] See supra note 8.
[12] Id.
[13] See supra note 1.
[14] Id.
[15] Id.
[16] Id.
[17] Id.; see supra note 2.