Business and Human Rights Arbitration

The Hague Rules on Business and Human Rights Arbitration, initiated by the Business and Human Rights Arbitration Working Group, aims to create an international private judicial dispute resolution avenue available to parties involved in business and human rights issues, thereby helping to address the significant remedy gap faced by victims of business-related abuses.

With the perspective that “international arbitration holds great promise as a method to be used to resolve human rights disputes involving business,” the Drafting Team released, in November 2018, an Elements Paper on Business and Human Rights Arbitration (available here), as well as, in June 2019, Draft Arbitration Rules on Business and Human Rights (available here). Both documents were released for public consultation and comment. A designated Sounding Board, of which CCSI is a member, was also consulted.

With respect to the Elements Paper, CCSI submitted comments to the Drafting Team focusing on the following aspects of the Elements Paper: (1) which parties are necessary and sufficient to ensure effective access to justice of victims, including discussion of the desirable roles for both business and states, (2) the appropriate role for both international human rights law (IHRL) as well as other legal norms, and how IHRL should be interpreted and applied in this context, (3) whether model contract clauses are desirable, (4) the critical importance of choosing the appropriate appointing authority, (5) desirable qualifications of BHR arbitrators, including how they should be selected and how challenges to arbitrators should be handled, (6) how principles of transparency and access to information and effective participation should be treated, (7) the desirability of allowing amicus participation as a matter of right, and (8) principles that should govern allocation of costs, as well as a role for financial assistance for claimants and regulation of third-party funding.

Following the release of the Draft Rules, CCSI published a Briefing Note, “The Business and Human Rights Arbitration Rule Project: Falling Short of its Access to Justice Objectives,” and a blog, “Saving the Business and Human Rights Arbitration Rule project: Put Human Rights Holders at the Heart” each of which build on our comments on the Elements Paper and elaborate certain serious concerns that CCSI has regarding the ability of the Draft Rules to advance access to justice in cases of injustices caused or perpetuated by business activity.

Our comments are based on observed realities regarding both how arbitration has operated in other contexts and how companies have sought generally to avoid liability for human rights harms, as well as the steps that companies would need to take to facilitate arbitration and the enforcement of judgments against them. We suggest, among other things, that pressure devoted to seeing corporates submit to BHR Arbitration also be devoted to stopping them from undermining access to justice in domestic courts. We also note that the Draft Rules suffer from procedural and substantive gaps. As a procedural matter, we urge that, before the Draft Rules are finalized, every single one is reviewed carefully by a specific group that is representative of rights-holders and potential claimants. In terms of substance, multiple points, detailed in the above publications, also give us pause. These include, among others: the lack of anti-retaliation protections; a suggested loser-pays fee-shifting arrangement that ignores the reality of most human rights claimants; vague guidance on early dismissal of claims that could further tilt the process against rights-holder claimants; a proposal that interested third parties may need to bear the costs of their participation, which may effectively skew such participation away from all but corporate third parties; and suggestions on interim measures that could place unfathomable responsibility on human rights victims.