Drafting a Treaty to Regulate Transnational Corporations and Human Rights

Meeting: Open Ended Intergovernmental Working Group on Transnational Corporations and other Business Enterprises with Respect to Human Rights

Date/Location: 23 October, 2017, 15:00 – 18:00; Building E Room 20, Palais Nations

Speakers: State representatives from Nicaragua, the Philippines, Russia, Egypt, Cuba, Algeria, Bolivia, Brazil, Azerbaijan, Iraq, Chile, Norway, Switzerland, Australia; NGO Representatives from the International Chamber of Commerce and the International Organization of Employers

By: Marli Kasdan

 

Last week the Human Rights Council (HRC) convened a meeting to discuss the drafting of a new, legally binding treaty on states’ obligations in regard to the regulation of transnational corporations (TNCs) and human rights. The discussion centered around how, if at all, states should regulate TNCs and their human rights practices through a legally binding treating.

The first two statements during the general debate from Nicaragua and the Philippines expressed their support for a legally binding instrument that obligates states to regulate TNC business practices and human rights. The statements emphasized the need for victims of human rights abuses at the hands of TNCs to have access to legal recourse. However, Russia’s statement focused on the need to fully implement the existing UN Guiding Principles on Business and Human Rights (which include regulations surrounding TNCs and human rights), instead of creating a new legally binding treaty. Further comments during the debate paralleled these two opposing viewpoints – with some states taking the position that a legally binding treaty is needed to establish a compliance mechanism and ensure that TNCs do not regularly violate human rights with impunity, while other states took the view that the existing UN Guiding Principles on Business and Human Rights already outline these provisions and are sufficient.

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Statements from Egypt, Cuba, Algeria, Bolivia, Brazil, Azerbaijan, Iraq, and Chile supported the creation of a legally binding instrument, citing the need for states to regulate TNC activities in order to protect human rights and provide access to justice for people whose rights are violated. Furthermore, the statement from Bolivia emphasized the unbalanced regulation in the current legal framework, where TNCs have required binding laws to protect their investments in the form of international arbitration clauses for decades, but no binding norms exist to protect human rights from abuse by TNCs.

Nevertheless, many states, including Norway, Switzerland, and Australia, emphasized the need to work within the existing Guiding Principles, which are based on years of consensus building between states, businesses, and human rights advocates, and already cover provisions for protecting human rights from TNC abuses (albeit in a non-legally binding way). These statements emphasized that a focus on the creation of a new instrument has the potential to detract from the implementation of the Guiding Principles, which are already firmly established. These statements also expressed concern that the proposed treaty would only regulate states’ obligations surrounding TNC activities, as opposed to a wider variety of businesses.

Unsurprisingly, leaders of pro-business NGOs, including the International Chamber of Commerce and the International Organization of Employers, expressed their reluctance for the creation of a treaty. In line with statements made by state delegations against the creation of a treaty, international business leaders expressed concern that this treaty would only cover TNCs and not other types of businesses, including domestic businesses. However, domestic businesses are already covered by domestic law, underscoring the need for the creation of a legally binding instrument to regulate TNCs within international law because TNCs often fall into a legal grey area when it comes to state regulation since they operate in multiple countries.

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