Business, Human Rights, and the Rule of Law
This series of posts is based on our text, Business and Human Rights as Law: Towards Justiciability of Rights, Involvement, and Remedy (LexisNexis 2019). In the next several posts, we provide a synopsis of each chapter. The complete draft of Chapter 1, “Introduction: Towards Justiciability,” is available here.
The Evolution of Corporate Responsibility
In July 2018, the United Nations Human Rights Council released a Zero Draft of a treaty to govern corporate human rights responsibility under the aegis of international human rights law. The Zero Draft seeks to address lacunae in realizing international human rights “in the context of business activities of a transnational character”. As a proposed instrument of international law, its novelty lies in a legally singular precept: “[B]usiness enterprises … shall respect all human rights”. But the Zero Draft’s overarching structure is conventional.
The Zero Draft is not momentous in itself. Rather than augury, it is striking as memorial. It testifies to the remarkable evolution of business and human rights from public relations art to legal science. Less than a decade ago, respected legal scholars could safely find that corporate responsibility “does not appear to fit comfortably within a traditional legal setting” because law endeavours to “clarity and precision … [in] seeking a definition of key terms and concepts or guidance on what constitutes acceptable forms of conduct”.[1] Corporate responsibility as a concept intrinsically lacked such precision. At best, it was thus akin to marketing or public relations — a corporate imperative inherently beyond law’s grasp.
The Zero Draft rejects such a view as obsolete. If legal penalties may attach to corporate failure to respect human rights, respect itself must be justiciable: judges applying legal reasoning must be able objectively to determine a company’s liability (or lack thereof). The justiciability of the Zero Draft’s subject matter means that the bases of legal liability must be discernible to law in form and content. They must, in other words, accord with the rule of law. For business and human rights responsibility to result in legal liability, it must be precise enough to enable companies to anticipate and reasonably act on the consequences. The Zero Draft thus stands in riposte to the presumed ineffability of corporate responsibility as a legal discipline.
The aims, structure and content of the Zero Draft endeavor instead to furnish the pursuit of corporate respect for human rights with the tools of objective and replicable reason, the hallmarks of a legal science. To that end, it translates human rights from public to private contexts based on a corporate governance model. The model is built on three critical concepts: adverse human rights impact, involvement, and remedy. In those concepts lies the map to an uncharted legal discipline. But their provenance is not the Zero Draft. It is the Guiding Principles on Business and Human Rights, the origin of business respect for human rights as a defined term with practical contours. It is to a justiciable understanding of the Guiding Principles that our book is devoted.
Understanding the Guiding Principles
The Guiding Principles are the authoritative standard on business and human rights. While (nominally) voluntary, they were unanimously endorsed by the UN Human Rights Council in 2011 and have since been widely embraced by governments, industry associations, businesses, international organizations and bar associations. They reframe the social dimension of corporate responsibility in the language of rights. They are built on three “pillars”, conceived for the Guiding Principles to apply comprehensively to all states and business enterprises: (1) the state responsibility to protect human rights; (2) the business responsibility to respect human rights; and (3) the joint responsibility of the state and business to provide remedy.
A cornerstone of the Guiding Principles’ reach is their practicality. They advance a governance-based structure to define business respect for human rights. That structure shares notable similarities with other corporate compliance expectations, such as in corruption and money laundering. It has the virtue of making corporate human rights responsibility achievable by remaining sensitive to business constraints. This strength also promotes accountability — in the legal realm and beyond. While the Guiding Principles themselves are voluntary, they increasingly shape corporate legal liability directly and indirectly.
The Reasonable Business
The Guiding Principles’ legal imprimatur reaches far beyond the Zero Draft. The universe of legal risk related to corporate human rights governance and impacts is significant and rapidly expanding. Virtually all of these developments are derived, directly or indirectly, from the Guiding Principles. Their combined effect is to reconceive the reasonable business as one with a coherent system of policies, due diligence procedures, and remediation processes to address human rights impacts across its global value chain. Such a standard will have to be justiciable. To meet it, a business will need to be able to justify the strength of its human rights governance not only to stakeholders but to courts and regulators. The justification will turn on objective benchmarks rather than opinion polls. And it will be subject to the rigors of legal examination designed to unearth imprecision, incoherence, and circularity.
The Justiciability Challenge
This is where we find the justiciability challenge for companies, courts, stakeholders, and counsel. While a Guiding Principles-inspired standard of care is gaining traction in law, the contours of that standard have not been subject to judicial review or even rigorous legal analysis. The practical difficulty for lawyers is that the Guiding Principles are built on legal penumbrae. Despite the manifest virtues in clarity, precision, and practicality of judging respect by governance, the subject matter and scope of the Guiding Principles are, from the perspective of law, terra nova(ish).
Take human rights, the Guiding Principles’ raison d’être. As we discuss in Chapter 3, these are terms of art with specific and practical meanings under national and international law. But while they are framed as individual or group freedoms and claims, they are defined by limits on government action or imperatives to act. International human rights law may thus tell us whether a state can ban access to social media; it is less equipped to answer, however, when a social media company can ban a particular user. The justiciability challenge for designing and assessing Guiding Principles-based corporate governance programs in accordance with law starts at the very beginning: What is an adverse impact on human rights?
So too with involvement. As we discuss in Chapter 4, businesses are expected to identify and address those human rights impacts (1) they cause, (2) to which they contribute, and (3) those that are “directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts”. As with rights, none of these concepts is self-evident. Unlike with rights, however, there is not a clear body of law referenced by the Guiding Principles for businesses, courts, and stakeholders to apply in apprehending the involvement terms. Similar challenges apply to the definition of effective remedial process and rights-compatible remedy.
Method: Our Thought Experiment
This book applies legal method to address some of the core justiciability challenges in the Guiding Principles. The approach is in important ways speculative. The Guiding Principles have not yet been subject to judicial review. Our aim is nonetheless practical. We endeavour to a principled, transparent, and replicable method to unravel the concrete implications of the Guiding Principles qua source of law, for that is what all auguries suggest they are becoming.
To this practical end, this book is premised on a simple thought experiment: imagine if the Guiding Principles, written exactly as they are, were subject to judicial review. How would a neutral arbiter assess whether a company had met the Guiding Principles’ expectations? The resulting approach draws on principles from international human rights law, constitutional law, tort law, contract law, corporate law, and administrative law. We seek to illustrate how applying a legal method to interpreting the Guiding Principles can offer objectively justifiable issue- and context-specific guidance to companies, courts, legislatures, and stakeholders wrestling in good faith with the contours of business and human rights as a legal discipline.
Structure
Following the Introduction, the text proceeds in five chapters.
Chapter 2, “Legal Risk,” surveys business and human rights legislation and litigation across jurisdictions to show the rapid and diffuse evolution of the legal standard of care for global business.
Chapter 3, “Rights,” considers the practical meaning and limits of international human rights in the business context. We seek to answer, in particular, how to transpose the rights-related duties of states as public actors onto businesses as private actors, so as to give international human rights life in a purely private sphere.
Chapter 4, “Involvement,” focuses on the practical meaning of cause, contribute, directly linked, and omission. We draw on a case study involving a financial institution and modern slavery to distinguish in a principled and predictable fashion between the different levels of involvement and corresponding responsibility under the Guiding Principles.
Chapter 5, “Grievance Mechanisms,” is devoted to remedial process. We draw on a public assessment of Barrick Gold’s mechanism in Papua New Guinea to illustrate the justiciable meaning of terms like legitimate, equitable, transparent, and equitable under Guiding Principle 31.
Chapter 6, “Rights-Compatible Remedy,” focuses on the objective legitimacy of particular remedial outcomes. We endeavour to show how effective remedy under international law can be transposed reasonably into purely private relationships between business and stakeholders.
We summarize each of these chapters in the entries that follow.
[1] Michael Kerr, Richard Janda & Chip Pitts, Corporate Social Responsibility: A Legal Analysis (Markham, ON: LexisNexis Canada, 2009) at 5.
