The Potential of Arbitration as Effective Remedy in Business and Human Rights
Will the Hague Rules be enough?
Master thesis
International and European Law – Public International Law Student: A. Baaij, 10717382
Email: andi.baaij@student.uva.nl Supervisor: Prof. Dr. J.E. Nijman
Word Count: 13.580
1 Table of Contents Table of Contents... 1 Abbreviations ... 2 Abstract ... 3 Introduction ... 4 Methodology ... 6
Chapter 1 – The Development of Arbitration towards BHR Law... 7
Chapter 2 – The Concept of Effective Remedy in the Context of BHR ... 11
Chapter 2.1 – Accessibility ... 12
Chapter 2.2 – Fair trial ... 13
Chapter 2.2.1 – Institutional requirements ... 13
Chapter 2.2.2 – Procedural requirements ... 15
Chapter 2.3 – Reparations ... 16
Chapter 3 – A Normative Assessment of The Hague Rules ... 17
Chapter 3.1 – Accessibility in the Hague Rules... 18
Chapter 3.2 – Fair trial rights in the Hague Rules... 20
Chapter 3.3 – Reparation in the Hague Rules ... 24
Chapter 3.4 – Conclusion ... 26
Chapter 4 – BHR Arbitration in light of the Draft Hague Rules ... 26
Chapter 4.1 – Accessibility ... 27
Chapter 4.2 – Fair Trial Rights ... 28
Chapter 4.3 – Reparation... 32
4.4 – Conclusion ... 33
Conclusion ... 35
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Abbreviations
BHR: Business and Human Rights BIT: Bilateral Investment Treaty
CERD: Convention on the Elimination of All Forms of Racial Discrimination CRPD: Convention on the Rights of Persons with Disabilities
ECHR: European Convention on Human Rights ECtHR: European Court of Human Rights
IACtHR: Inter-American Court on Human Rights
ICCPR: International Covenant on Civil and Political Rights IIA: International Investment Agreement
ISDS: Investor-State Dispute Settlement MNC: Multinational Corporations PCA: Permanent Court of Arbitration
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Abstract
Confronted with a jurisdictional dilemma, victims of business-related human rights abuse are offered two options to seek a legal remedy, the one being often even less ‘effective’ than the other. In the state where the abuse occurred victims regularly face an incompetent court system, due to dysfunctionality, corruption, or forms of political influence. The other option is to make a claim in the home state, where the business is domiciled. This avenue is likely to introduce other barriers which seem to accompany transnational litigation, particularly of a jurisdictional, financial or evidentiary nature. Thus, the area of business and human rights law evidently has a gap in its means to effectively remedy violations. In pursued of implementing the third pillar of the UN Guiding Principles, which focusses on providing an effective remedy to victims of corporate human rights violations, the idea has been proposed to utilize arbitration as a platform to deal with such disputes. The Working Group that has instigated this initiative, is currently working on a set of procedural rules for BHR arbitration, called ‘the Hague Rules’. The most recent development in this regard has been the publishing of a Draft version of these rules. These arbitral rules are tailored to the specific needs of human rights adjudication. The compatibility of human rights law and the concept of arbitration is, however, not a given. The latter is of course mainly designed to deal with commercial disputes, not necessarily involved with the particularities of addressing public interest. On the following pages, the general idea of BHR arbitration will be analyzed, and assessed in light of the normative concept of ‘effective’ remedy, using the Draft Hague Rules as a case study. Firstly, this paper will deliberate on the developing interaction between the arbitration mechanism and the human rights regime. Secondly, it will deal with the concept of ‘effective’ remedy and how it can be defined under international and European law. Thirdly, on the basis of the normative standards identified in the first chapter, the likely benefits of the Draft Hague Rules to the area of business and human rights will be addressed. The last chapter will discuss what the Draft Hague Rules would introduce to the general concept of BHR arbitration as an ‘effective’ remedy to victims of business-related human rights issues, but also what limitations will still remain.
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Introduction
‘Go ahead, try and accuse us…’.1 This was the response received by a government
authority in Mabende, in the Democratic Republic of Congo, when he went to the site of a Chinese non-ferrous metal mining corporation to express concern about reports of human rights violations and environmental damages, but was refused access.2 The quote is also the title of a report that was published by a Congolese Environmental NGO at the end of last year.3 The report documents how the activities of this Chinese corporation have caused loss of land4 and
pollution of water from the river and wells5, but it also documents how the process of
procurement of minerals has been accompanied by numerous human rights violations.6
The quote has particular symbolic value in the context of business and human rights (hereinafter: BHR) law. The exploitation of the weak state structures in Congo by the Chinese corporation and its obvious awareness that any real risk of accountability is non-existent, perfectly highlights the gap that is still very present in BHR law. Part of the explanation lies with the rapidly globalizing world economy over the past decades, which has presented a continuing challenge to human rights law. One of the reasons for the pace of this development, has been the liberalization of international trade and investment, which made it much easier for businesses to expand abroad or outsource their activities.7 However, the regulation of human rights responsibilities have played no part in this pursuit for globalization. On the one hand, we have the ever-expanding amount of transnational business activities, and, on the other hand, the need for sufficient institutional underpinnings to regulate the human rights responsibilities of businesses and prevent impunity.8 Bridging that gap has been one of the main priorities in the area of BHR law.
One of the areas where a lot can still be achieved as to bridging the gap, is with providing an ‘effective’ legal remedy for victims of business-related human rights abuse. What makes the regulation particularly complex, is the fact that international businesses rely mostly on a structure of parent-subsidiary relationships, in which the entities are spread-out over different countries, operate in various jurisdictions and are subject to differing legal standards.9 This structure has been difficult to regulate for multiple reasons. The laws of the home state, where 1 PREMICONGO Report, p. 12. 2 Ibid. 3 Ibid. 4 Ibid. p. 28. 5 Ibid. p. 32 6 Ibid. pp. 10 – 11.
7 Skinner, McCorquodale & de Schutter 2013, p. 1.; A. Chapman, Chapter 28: Non-State Actors, p. 559, in Moeckli, Shah & Sivakumaran 2018.
8 Rodríguez-Garavito 2017, p. 11. 9 Weber & Baisch 2016, p. 671.
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the company is domiciled, for instance, do not as a rule apply to its subsidiaries abroad, where also a lower standard of protection may be required.10 This allows the subsidiaries to engage in conduct in the host state, which would be considered unlawful in the home state of the parent company. It is also not always clear to what extent those subsidiaries have legal autonomy and, therefore, what control is actually being exercised by the parent company.11 Furthermore, the international businesses are often yielded a significant power in the host state through the protection of multilateral and bilateral investment treaties.12 The host state, as a result, is often
not able or willing to find a balance between the influence of the companies and its own obligations to provide effective human rights protection. This lack of regulation has undeniably created ‘a permissive environment for wrongful acts’.13 In this imperfect world, victims of
business-related human rights abuse are constantly running into insurmountable barriers that leave them without access to an effective remedy.
In recent years, the remedy aspect of the business and human rights debate has however gained a lot of attention, looking to hard, legal solutions, as well as softer, more politically orientated approaches. Arguably the greatest driving force in this regard, have been the United Nations Guiding Principles on Business and Human Rights (UNGPs), which identify the weakness in the current system and the responsibilities that particularly States and businesses have towards addressing this situation. One of the foundational principles of the UNGPs is the responsibility to ensure effective access to remedy for victims of business-related human rights abuse.14 In implementing this principle, a particularly surprising proposal has been the idea to apply the international arbitration mechanism to human rights disputes. The most recent development in this area has been the drafting of a set of arbitration rules specifically tailored to be used in BHR disputes. This initiative was started by the Working Group on International Arbitration of Business and Human Rights (hereinafter: the Working Group). The so-called ‘the Hague Rules’, intent to provide a neutral forum for specialized dispute resolution, which is accessible to victims.15
The proposal is considered to have a lot of potential, however, before the concept can become operational it will need to address a number of challenges. Arbitration is, after all, mainly contemplated and designed for commercial disputes. It is true that arbitration is known for its flexibility and has adapted to other specialised areas of law before. Nonetheless, the
10 Bantekas & Oette 2016, p. 767 11 Ibid.
12 Ibid. p. 769
13 As stated by John Ruggie: U.N. Human Rights Council, Protect, Respect and Remedy: A Framework for Business and Human Rights, U.N. Doc. A/HRC/8/5 (Apr. 7, 2008), para. 3.
14 Ibid, principles 25 – 31. 15 Elements Paper 2018, p 4.
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unique nature of the interests involved in BHR disputes will require an especially careful evaluation. Obvious examples where human rights law might clash with the international arbitration mechanism include, respectively, the concern for greater transparency versus the aura of confidentiality; the requirement of accessibility versus the growing criticism on inefficiency and costliness; the aim for fair proceedings versus the obvious inequality of arms between the parties in dispute; the need for effective enforcement versus the potential inarbitrability of human rights awards. As the most recent proposal in the larger BHR arbitration debate, it will be relevant to evaluate how the Working Group addresses these issues and whether it will be sufficient to ensure an ‘effective’ remedy for victims of corporate human rights abuse. In order to reflect upon this larger BHR arbitration debate, the concretized initiative of the Draft Rules will provide a clear indication of where we are at, in terms of the development of this concept and where we (may) still have to go.
The research question will therefore be the following: How can the general proposal to use arbitration to resolve business and human rights disputes meet the requirements of 'effective’ remedy?
Methodology
In order to provide an answer, this paper will firstly discuss the developing interaction between the international arbitration mechanism and human rights law. The concept of arbitration will, therefore, be introduced shortly. Chapter 1 will further reflect upon how the idea for BHR arbitration was introduced and address the initial tension which appears to exist in this concept. Then, the chapter will discuss specific developments that cumulatively provide evidence of the potential of arbitration as a means to resolve human rights disputes.
In Chapter 2, an analysis will be made of what the concept of ‘effective’ remedy requires under international and European human rights law. The structure of this analysis will rely on three essential requirements which form the core of ‘effective’ remedy. This paper will derive these requirements from existing human rights instruments that have addressed the concept of ‘effective’ remedy. For this exercise, this paper will look mainly to the ECtHR and its interpretation of article 6, 13 and 41 ECHR and the Human Rights Committee’ interpretation of article 2 (3) and 14 ICCPR as the ECHR’ global equivalent. The three requirements that this paper will discuss are respectively: the concept of accessibility, fair trial rights and the requirement of reparation.
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Once a theoretical foundation has been provided by the analysis of the concept of ‘effective’ remedy, this paper will make an assessment of the Draft Hague Rules in light of the normative standards identified (Chapter 3). The Chapter will open with a short introduction of the proposal of the Hague Rules. Subsequently, this paper will elaborate on how the Draft Hague Rules would deal with specific aspect inherent to the concept of ‘effective’ remedy and particularly relevant in the context of BHR law. Although the final version of the Hague Rules has not been published yet, the Working Group has, thus, released a draft version. For this research, this paper will, therefore, rely to a large extent on this document. Furthermore, the Working Group has released various documents that clearly illustrate the steps taken towards the publication of the draft version. Consequently, these sources can be sufficiently relied on to assess how this specific initiative would give shape to the idea of BHR arbitration and what ideas are being proposed to meet the requirements of ‘effective’ remedy.
After having made an assessment of the Draft Hague Rules’ provisions in light of the normative standards derived from the concept of ‘effective’ remedy, this paper will address to what extent the general concept of BHR arbitration is therefore closer to meeting those standards. What answers do the Draft Hague Rules propose for the pertinent challenges faced by the arbitration mechanism? Would it overall be capable of providing an accessible, fair and restorative remedy to victims of business-related human rights abuse?
Chapter 1 – The Development of Arbitration towards BHR Law
The search for means by which to regulate transnational corporate conduct and prevent impunity, is part of the larger debate on how international law is to respond to the shift in the traditional public/private partition. Particularly with regard to international businesses, phenomena like economic globalization and privatization of public sectors have condensed public powers and placed governmental functions in the hands of private businesses.16 Under
the traditional view, however, international human rights documents are written by States, for States. In its purest form, they are the sole subjects of the legal framework.17 This approach continues to raise conceptual issues as to regulating the behaviour of other actors who have power and influence on the international plane, and are capable of undermining the effective protection of human rights.18 Over the years an increasing amount of attention is placed on how
public interest is to be better safeguarded within the private sphere.
16 Bantekas & Oette 2016, p. 809. 17 A/HRC/11/13 (22 April 2009), para. 57. 18 Ibid.
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Arguably the most important initiative in identifying where the current BHR system falls short and how it should improve, have been the UN Guiding Principles on Business and Human Right (UNGPs), drafted by Professor John Ruggie, former UN Secretary General’s Special Representative for Business and Human Rights. The core of the UNGPs lies with the ‘Protect, Respect and Remedy’ Framework. This framework rests on three pillars: 1) the state’s duty to protect against human rights abuse of third parties 2) the corporate responsibility to
respect human rights and 3) the access to effective remedies.19 The third pillar acknowledges
that, despite the best efforts of states and companies, business-related human rights abuse will happen. Therefore, those that are affected should be able to seek redress through effective remedies. The principles of the third pillar, just as the other pillars, do not establish new law, but clarify already existing standards.20 They also addresses the inherent complexities of the business and human rights sphere. In this regard, the third pillar establishes important benchmarks as to what remedies should actually look like in order to be effective within the context of business and human rights.
The third pillar’ foundational principle stresses that States have a duty to take appropriate steps, through judicial, administrative, legislative or other appropriate means, to provide the victims of business-related human rights abuse with access to such remedies. 21 Both the procedural and substantive aspects of an effective remedy are to be administered through so-called ‘grievance mechanisms’. 22 This generic notion is said to include State-based judicial and non-judicial mechanisms, but also non-State-based mechanisms, as long as they are, thus, capable to ‘effectively’ deal with a claim of business-related human rights abuse and provide reparation.23
Within the debate on furthering the third pillar, the idea that the international arbitration mechanism may offer an ‘effective’ remedy was considered to have a lot of potential.24
Arbitration is an alternative form of dispute resolution, that can be used instead of litigation. Much as litigation, the arbitral procedure is binding, adjudicative and subjected to legal rules. However, by contrast, arbitration is also generally perceived for being consensual, private, flexible, speedy and inexpensive. It permits the parties to the dispute considerable latitude to design the proceedings. Among others, the parties have a say in the composition of the tribunal and where it has its seat, but also in how the proceedings are conducted and what the applicable
19 The UNGPs. Para. 6. 20 Ibid. para. 14. 21 Ibid. Principle 25.
22 Ibid. Commentary to Principle 25. 23 Ibid.
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rules are to resolve the dispute. Within international arbitration, there are a number of legal systems that have a bearing on the proceedings. These can be divided in the laws applicable in arbitration and the laws applicable to arbitration.25 As to the former, this pertains to the law that governs the substantive issues (the governing law).26 The latter are the laws that govern arbitration. These include the law governing the arbitration agreement, the procedural rules of arbitration, the law governing the recognition and enforcement of awards and the lex arbitri, which is the national arbitration legislation applicable to the proceedings.27
Although this mechanism is, thus, considered to have a lot of potential for providing an effective remedy to human rights disputes, it does not necessarily seem to be a given. Arbitration is, after all, mainly contemplated and designed for commercial disputes. In this context, arbitration is known/valued for its confidential proceedings, ability to effectively enforce corporate claims and simultaneous lack of prioritization of public interest.28 Such a reputation does not seem likely to fare well within the context of international human rights law. Several developments, nevertheless, can be identified which reinforce the suggestion of arbitration as a suitable remedy in BHR disputes. Furthermore, there are even examples where human rights law and the arbitration mechanism have had more concrete interactions. This will be shortly addressed below.
From a broader perspective, the international arbitration mechanism has been pushed towards reform as a result of criticism regarding its lack of consideration for affected public
interests.29 Particularly in light of the increased international recognition for the right to access to information30, calls for more openness and stakeholder-involvement were heard.31 The most comprehensive and far-reaching response, so far, has been the adoption of the UNCITRAL Rules on Transparency in 2013 and the corresponding Convention on Transparency in 2014. The Rules introduce several means by which to protect public interests, such as the publication of documents (written statements or submissions by the parties, expert reports, witness statements)32, the acceptance of third party submissions (amicus curiae submissions)33 and
open access to the hearings34.
25 Paulsson 2010, p. 1.
26 Ibid; Summers & Gough 2018, Chapter 12 written by Iona Cismas and Sarah Macrory, p. 10
27Chapter 12 written by Iona Cismas and Sarah Macrory in Summers & Gough 2018, p. 10; Henderson 2014, p. 887. 28 Castillo 2012, pp. 49 – 50.
29 Carmody 2016, pp. 141 – 143.
30 See for example: UN Human Rights Committee (HRC), General comment no. 34, Article 19, Freedoms of opinion and expression, 12 September 2011, CCPR/C/GC/34, para. 19.; Társaság a Szabadsägjogokért v. Hungary, App. No. 37374/05, ECtHR, 14 July 2009, para. 26; Claude-Reyes et al. v. Chile, IACtHR, 19 September 2006, para 77.
31 Carmody 2016, pp. 141 – 143; Reith 2015, pp. 124 – 125. 32 UNCITRAL Rules on Transparency, Article 3.
33 Ibid. Article 4 and 5. 34 Ibid. Article 6.
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Moreover, the capacity of arbitration to adapt to both the nature of the dispute and the parties, has also shown to be a means by which to reconcile public and private interests. After all, by adopting the Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources (PCA Environmental Rules), the Permanent Court of Arbitration (PCA) has established precedent as to the option of reforming the default arbitration mechanism to better suit the needs of a particular area of law.The PCA Environmental Rules are a set of procedural rules specifically tailored to disputes concerning the protection of natural resources and the environment.35 For instance, the rules provide for the establishment of list of
arbitrators who are considered experts in this specialized area and a list of scientific and technical experts that can be appointed as expert witnesses.36 Consequently, such versatility enables the arbitration mechanism as a viable forum to be used in other specialised areas, like human rights law.
More specifically, the arbitration mechanism has increasingly been confronted with the discussion surrounding the actual or, at least, perceived antinomy between the human rights
regime and the investment regime.37 Concerns are often expressed as to the “regulatory chill” caused by the investment agreements and the accompanied enforcement mechanism of the arbitration process, which are seen as constraining factors on the State’ ability to abide by its human rights obligations.38 After all, from a human rights perspective, the arbitration mechanism can be viewed as a tool to review the exercise of public authority, which a foreign investor has the sole right to trigger.39 Moreover, the lack of human rights language included in the investment agreements, in combination with the contractual nature of the privatized regime of arbitration, frequently results in tribunals sidelining issues of public interest.40
However, there have recently been positive developments in this regard. Firstly, particularly interesting has been the ICSID case of Urbaser v. Argentina. Not only did a tribunal for the first time confirm the possibility of human rights counterclaims41, the tribunal also
addressed the existence of (negative) human rights obligations of private actors.42 Secondly,
examples like the Pan-African Investment Code and the Morocco-Nigeria BIT, evidence the existence of a potential trend, at least within African investment treaty law-making, towards counterbalancing the provided guarantees under investment treaties (IIA) with direct
35 Background on the specialized environmental rules: https://pca-cpa.org/en/services/arbitration-services/environmental-dispute-resolution/ 36 The PCA Environmental Rules, subsequently article 8(3) and article 27 (5).
37 As discussed by, for instance: Watt 2012; Krajewski 2017; 38 See for example: Simma 2011, pp. 579 – 580.; CCSI 2018; 39 Deva & Bilchitz 2017. P.Watt 2012, p. 4.; Krajewski 2017, p. 2.
40 Deva & Bilchitz 2017, p. 361; Abel 2018, p. 63 – 64.; Guntrip 2018, p. 38 – 40.;
41 Urbaser s.a. and Consorcio de Aguas Bilbao Biskaia, Bilbao Biskaia Ur Partzuergoa v. Argentine Republic, ICSID Case No. arb/07/26, Award, 8 December 2016, para. 1155.
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obligations on investors pertaining to social and environmental issues, such as human rights.43 The incorporation of human rights provisions in investment treaties would be the most direct way to subject investors to such obligations, which could in the future potentially provide ground for a counterclaim (as evidenced by the Urbaser-case). This idea is part of a larger international debate on reform of the investment treaty mechanism and the strengthening of the human rights regime.44 A widely suggested option in that regard was the removal of
investor-state arbitration altogether.45 Nonetheless, the discussion on making use of the international
arbitration mechanism to resolve BHR disputes was also started. That brings us here.
The Bangladesh Accord on Fire and Building Safety represents the first time an arbitration clause has been incorporated into an international instrument, specifically as a remedy for BHR violations. This document was established in reaction to the building collapse in Bangladesh’ Rana Plaza on April 24, 2013. The Accord constitutes a legally binding agreement between global brands, retailers and trade unions meant to improve human rights standards and worker safety in the Bangladeshi garment industry.46 It provides a dispute settlement mechanism with the option of appeal through a binding arbitration process.47 In 2016, two PCA arbitrations were raised by global labour unions, being IndustriALL Global and UNI Global, who claimed that two leading fashion brands were not acting in compliance with the Accord. Although both cases were settled, in the initial stages the tribunal had to deliberate on the competing private and public interest involved, but also address the demands for confidentiality and transparency.48 Although, the case manifested what challenges would arise as a result of the hybrid nature of BHR arbitration, the Bangladesh Accord was hailed as a turning point in the debate on the potential of arbitration to provide an ‘effective’ remedy in BHR disputes.49
Chapter 2 – The Concept of Effective Remedy
43 See in general: Mbengue & Schacherer 2017; Krajewski 2017, pp. 8 – 9. 44 CCSI 2018, pp. 15 – 16. For a general background:
https://www.ohchr.org/EN/Issues/Business/Pages/IIAs.aspx, accessed 20 – 07 – 19. 45 CCSI 2018, p. 15
46“About the Accord”, The Accord on Fire and Building Safety in Bangladesh, available at: https://bangladeshaccord.org/about/, accessed 27 – 04 – 2019.
47 2018 Accord on Fire and Building Safety in Bangladesh, available at https://admin.bangladeshaccord.org/wp-content/uploads/2018/08/2018-Accord.pdf, article 3.
48 PCA Case No. 2016-36 and PCA Case-No. 2016-37, Procedural Order No. 2 (Decision on Admissibility Objection and Directions on Confidentiality and Transparency), paras. 93 – 97.
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Within international human rights law, the concept of effective remedy is well-established.50 This seems logical since the very meaning of having a (human) right depends on
the possibility of redress when it is violated. At the end of the day, in the absence of a mechanism capable of giving effect to this right, it would be reduced to a mere empty promise. Before going into an in-depth analysis of what an effective remedy requires, it is important to firstly establish what components it encapsulates. A distinction should be made between the
procedural and the substantive aspects of effective remedy. Although some human rights
documents, like the ECHR, have incorporated these elements in separate provisions (respectively article 13 and 41 ECHR), it is generally accepted that an effective remedy necessarily implies a right to substantive remedy.51 The procedural remedy encompasses the process by which access is provided to competent authorities (courts of law, tribunals, administrative agencies, etc.) that consider and decide upon claims of alleged human rights violations.52 The substantive remedy is concerned with the form of reparation that is provided at the end of that process, of course if a violation has been established.53 In order, to address both components sufficiently and in a logically structured manner, this chapter will start with a discussion on the two crucial standards inherent to an effective procedural remedy: respectively, accessibility and fair trial guarantees. Lastly, the concept of ‘effective’ reparation will be addressed.
Chapter 2.1 – Accessibility
In essence, the right to access provides a rightholder with the possibility to institute proceedings before a legal remedy.54 Part of ensuring the effectiveness of the overall remedy,
is addressing the obstacles, whether legal, practical or otherwise, that could impede that rightholder from adequately pursuing a claim. This notion of accessibility is largely grounded in the principle of equality and non-discrimination: Everyone should have equal access to high quality legal services in seeking realization of their rights.55
50 Article 8 of the Universal Declaration of Human Rights (hereafter: the UDHR); article 2(3)(a) of the International Covenant on Civil and Political Rights (hereafter: the ICCPR); article 14(1) of the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (hereafter: CAT); article 39 of the Convention on the Rights of the Child (hereafter the CRC); article 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (hereafter: the ECHR); article 25(1) of the Inter-American Convention on Human Rights (hereafter: the IACHR); article 7(1)(a) of the African Charter on Human and Peoples' Rights (hereafter: the ACHPR);
51 CCPR/C/21/Rev.1/Add.13, para 16. 52 Shelton 2005, p. 7.
53 Ibid.
54 Golder, v. The UK, App. No. 4451/70, ECtHR, 21 February 1975, paragraph 36.
55 CCPR/C/21/Rev.1/Add.13, para 15; CEDAW Committee, General recommendation on women’s access to justice, UN Doc
CEDAW/C/GC/33 (2015), paras 36 and 37; Committee on the Rights of the Child, General comment No. 16, State obligations regarding the impact of the business sector on children’s rights, UN Doc CRC/C/GC/16 (2013), para 68
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A distinction can be made between obstacles that are of a more structural nature, and more operational obstacles. 56 ‘Structural obstacles’ are those that are caused by ‘the very nature
of societal organization’. To address such obstacles, justice systems are required to remove, to the fullest extent, the effects of social and economic limitations, like direct or indirect discrimination and/or the lack of financial resources, but also of geographical restrictions. The latter are those obstacles that are caused by the efficiency of the administration of the remedy system. Examples include, admissibility requirements and time limits, if applied in an excessively formalistic manner. The operational obstacles, consequently, have a more internal origin, as opposed to structural obstacles.
Chapter 2.2 – Fair trial
Although the unquestionable significance of the fair trial rights is recognized in a number of international human rights documents, its features remain complex and dynamic.57 Their nature, therefore, make it difficult to formulate a comprehensive definition. Nevertheless, within those documents, of which art. 14 ICCPR and art. 6 (1) ECHR arguably provide the most detailed provisions, there seems to be a general consensus on the intrinsic elements of fair trial rights. In order to provide a structure in analyzing these specific elements, this chapter shall make a distinction between institutional requirements and procedural requirements. As to the former, an essential element of the fair trial rights is to provide a normative standard regarding the quality of the institutional dimension of the proceedings. This standard requires that the provided remedy is competent, independent and impartial.58 These will be separately discussed. With regard to the latter, safeguards have to put in place to guarantee the quality of the proceedings themselves; to guarantee ‘procedural fairness’. This element encapsulates numerous guarantees, however, the two basic fundamental rights that we will discuss are: the right to a fair hearing and the right for that hearing to be public.59
Chapter 2.2.1 – Institutional requirements Competence
The concept is understood to involve three aspects of the institutional side of fair trial rights: the competence of the judicial officers, the competence of the tribunal to make binding
56 Abregu 2001, p. 57; Meçe 2015, para. 1.2, p. 5 57 A. Koprivica, p. 5.
58 Art. 6 (1) ECHR and art. 14 (1) ICCPR 59 Leanza & Pridal, p. 6; A. Koprivica, para. 43.
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decisions and the tribunal’s jurisdictional competence.60 Firstly, competence demands procedures that aim to guarantee the due performance of the judicial office. This involves the incorporation of rules on the selection, recruitment, promotion and retirement of the judicial officers, which is key in ensuring quality (and independence) on the bench, but also implies a standard of conduct with regard to the officers themselves.61 Secondly, the power of the judicial office to make binding decisions is also strongly related to the element of independence. It implies that other authorities must respect the judgement and shall not act to the detriment of the judicial office’ authority.62 Lastly, the principle of competence requires that the tribunal
exercises full jurisdiction.63 In order to prevent the judicial office from ‘abandoning any of the
elements of its judicial function’64, it must have jurisdiction ‘to examine all questions of fact
and law relevant to the dispute’.65 This requirement overlaps with the notion of accessibility.
Independence
In more general terms, the tribunal’ independence requires it to be free from direct or indirect influence from whomever (governments, parties to the proceedings, third parties, etc.) and for whatever motive.66 This entails both independency in individual and institutional relationships. As to the former, the procedures regarding the appointment of the judges and the provided guarantees during (and regarding) their term of office, can help secure their independence by avoiding the risk of it being compromised.67 Furthermore, it requires the officers to be shielded from conflicts of interest and intimidation in order to freely give judgement.68 All the aforementioned elements contribute to securing independence in practice, but also contribute to the appearance of independence.
Impartiality
Closely linked to the principle of independence, is the need for the judicial office to be unprejudiced in making its judgements. This implies both subjective as well as objective impartiality.69 The notion of subjective impartiality requires the judicial office not to let
personal convictions influence their judgement. Specifically relevant to the appearance of independence, however, is the objective feature of impartiality. This feature requires that the
60 Ibid.
61 Ibid; United Nations Office on Drugs and Crime (UNODC), The Bangalore Principles of Judicial Conduct, E/CN.4/2003/65 (25-26 November 2002), Value 6.
62 OHCHR Professional Training series no. 9 2003 p. 121.
63 Beaumartin v. France, App. No. 15287/89, ECtHR, 24 November 1994, paragraph 38. 64 Chevrol v. France, App. No. 49636/99, ECtHR, 13 February 2003, paragraph 63.
65 Terra Woningen B.V. v. The Netherlands, App. No. 20641/92, ECtHR, 17 December 1996, paragraph 52. 66 CCPR/C/GC/32, para. 25.
67 Ibid. para. 19. 68 Ibid. para. 19. 69 ODIHR 2012, p. 61
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tribunal provides sufficient guarantees to the ‘objective observer’ which exclude any legitimate doubt as to its impartiality. Whether a fear of partiality can be objectively justified is, after all, depended om the ascertainable facts.70 This is where the appearance of a judge becomes relevant, because ‘justice must not only be done, it must also be seen to be done’.71
Chapter 2.2.2 – Procedural requirements Fair hearing
Due to all the different requirements pertaining to the fairness of the proceedings, reference is generally made to the generic notion of ‘fair hearing’. In general terms, in order to meet this fairness standard, the proceedings have be carried out in such a way that the interest of both parties are protected.72 There are two core features that need to be addressed: the concepts of adversarial proceedings and equality of arms.73 Together they encapsulate most of the circumstances that pertain to the application of the fairness standard and, therefore, have numerous implications that cannot be discussed exhaustively here.74 Broadly speaking, securing these two concepts entails that at any stage of the proceedings there must be a fair balance between the parties.75
As to the adversariality of the proceedings, this includes that the parties have had sufficient opportunity to gain knowledge of and comment on all evidence and arguments presented by the other party.76 There are several implications that flow from this principle, including, for instance: the right to produce evidence in the first place77, the right to have adequate time to prepare the case and familiarize oneself with the evidence78, but also that grounds are provided for non-disclosure, which can be justified if a legitimate aim is provided and the non-disclosure is necessary and proportionate.79
Strongly intertwined is the notion of equality of arms. It implies that each party must have a ‘a reasonable opportunity to present its case under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent’.80 The focus of this principle is not necessarily
on the fact that every imbalance has to be compensated or that the parties cannot be treated
70 Castedo v Spain, HRC Communication 1122/2002, UN Doc CCPR/C/94/1122/2002 (2008), para 9.7 71 Ibid; Micallef v. Malta, App. No. 17056/06, ECtHR, 15 October 2009, para. 98.
72 Settem 2016 p. 67.
73 Yves Morael v. France, Communication No. 207/1986, U.N. Doc. Supp. No. 40 (A/44/40) at 210 (1989), para. 9.3; Kress v. France, App. No. 39594/98, ECtHR, 7 June 2001, paras. 72 and 76.
74 Settem 2016 p. 119.
75 OHCHR Professional Training series no. 9 2003 p. 260.
76 Ruiz-Mateos v. Spain, App. No. 12952/87, ECtHR, 23 June 1993, para 63.
77 Clinique des Acacias and Others v. France, App. Nos. 65399/01, 65406/01, 65405/01 and 65407/01, ECtHR, 13 October 2005, para. 37. 78 Krcmar and Others v. The Czech Republic, App. No. 35376/97, ECtHR, para. 42.
79 Doorson v. The Netherlands, App. No. 20524/92, ECtHR 26 March 1996, para. 70
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differently at all, but that the parties are on an equal footing during the procedures, preventing inequalities that are too gross.81 In line with this perspective, a fair hearing also implies that the
parties to the proceedings are given reasoned decisions.82 After all, besides showing that the case of both parties has been truly and equally heard, providing sufficient reasoning detaches the decisions from any appearance of arbitrariness.83
Public hearing
Rendering the course of the proceedings visible, is considered an important guarantee for the fairness of the proceedings.84 Important transparency measures pertain to the written and
oral submissions during the proceedings, open access to the hearings and the judicial ‘output’,85
like judgements or opinions. These measures can be in the interest of the parties to the proceedings, but can also be in the interest of society.86 After all, conducting the hearings in public can provide a means through which confidence in the tribunal is maintained.87 Allowing such public monitoring provides a sense of transparency and integrity to the proceedings. Public monitoring could also protect the parties against potential abuse, which would be more likely to occur if the proceedings were held in secret without any external scrutiny.
Chapter 2.3 – Reparations
Once a breach of human rights norms has been identified, the substantive dimension of effective remedy demands reparation. Arguably one of the most important international standard-setting instruments, which articulates and concretizes what is required under the right to reparation, are the Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law (hereinafter: the Basic Principles), adopted in 2006 by the General Assembly. It stipulates that the various forms reparation may take include restitution, compensation, rehabilitation, satisfaction and guarantees of non-repetition.88 Although the
victim has a freedom of choice as to the preferred forms of reparation, there does exist a theoretical hierarchy of modes of reparation.89 If possible, the victim should be returned to the original situation before the human rights breach, also known as restitutio integrum.90 However,
81 McVicar v. The U.K., App. No. 46311/99, ECtHR, 7 May 2002, paras. 32, 46 – 62; Settem 2016 p. 112. 82 Ibid. p. 68.
83 Ibid. p. 71.
84 Diennet v. France, App. No. 18160/91, ECtHR, 26 September 1995, para. 33. 85 Neumann & Simma 2013, p. 437.
86 CCPR/C/GC/32, para. 28.
87 Diennet v. France, App. No. 18160/91, ECtHR, 26 September 1995, para. 33. 88 As evidenced, for instance, by the adoption of the Basic Principles.
89 Buyse 2008 p. 3.
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since the consequences of human rights violations are often by their nature irreparable, the rights of the victim should be restored and repaired to the fullest extent.91 To achieve this aim,
compensation for economically assessable damages may be provided. As to modes of non-monetary reparation, rehabilitation may take the form of medical and psychological care. Furthermore, satisfaction can include a variety of measures: an obligation of cessation, public recognition of wrongdoing, human rights training, etc. Besides measures concerning the restitution of victims, measures that guarantee non-repetition might have to be taken.
Finally, related to the notion of the tribunal’ competence and an essential element to the right of reparation, is the enforceability of the judgement.92 A tribunal that does not possess the
means to carry out its judgements, after all, evidently lacks effectiveness.93 The absence of enforceability would not only weaken the tribunal’s capacity to offer protection, but also weaken its legitimacy and authority. Furthermore, for a victim seeking remedy, winning the case would also just constitute a hollow victory if there would be no opportunity to claim it.
Chapter 3 – A Normative Assessment of The Hague Rules
In facing the remedy gap, that is still preventing victims of corporate human rights abuse from receiving justice, it has become clear that out-of-the-box-thinking is a prerequisite to finding a solution. The Working Group has shown what forms this pursued might take. The aim of the Working Group is to contribute to the implementation of the third pillar by making use of the international arbitration mechanism.94The Hague Rules will be a new set of arbitral procedural rules, which could be applied upon agreement between the parties to the dispute. In developing the Hague Rules, the Working Group intends to revise the rules currently used by international arbitration institutions, mainly gaining inspiration from the UNCITRAL Arbitration Rules and UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.95 These rules are of course mainly focused on regulating investor-state disputes.
Therefore, the Working Group aims to introduce features specifically suited to BHR arbitration.96
The publication of the Draft Rules is the first tangible output provided by the Working Group, which gives insight into the concept of BHR arbitration and how it could be conducted.
91 E/CN.4/Sub.2/1993/8, para. 131.
92 Article 2(3)(c) ICCPR; Principles and Guidelines on the Right to a Fair Trial and Legal Assistance in Africa, Principle C; Case Hornsby v Greece, Judgment of 19 March 1997, ECtHR, Reports 1997-II, para 40.
93 3 I/ACtHR, Advisory Opinion OC-9/87, Habeas Corpus in Emergency Situations, 6 October 1987, Serie A No 9, para 24. 94 Working Group Paper 2017, p. 2.
95 Working Group Paper 2017, p. 28. 96 Ibid, p. 26.
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The following chapter will discuss the general benefits of arbitration as to providing a remedy in BHR disputes. Furthermore, it will provide an analysis of how the Draft Rules would address specific challenges pertaining to BHR arbitration as a means to establish an ‘effective’ remedy for victims of business-related human rights violations. In order to so in a structured manner, the same design will be applied as in Chapter 2 with regard to the concept of ‘effective’ remedy.
Chapter 3.1 – Accessibility in the Hague Rules
The proposal to use the Hague Rules in arbitration proceedings, opens the door to a potentially more accessible remedy for victims of business-related human rights abuse. As an alternative dispute resolution mechanism, arbitration would in a more general sense already offer greater access to effective remedy by simply providing an alternative to conventional litigation. This carries particular weight where a victim would otherwise have no other option. The Draft Rules regulate two avenues through which victims can submit their dispute with a corporation to arbitration. Either by means of an ad hoc arbitration agreement between the victim and the corporation97 or, by means of, so-called, third-party beneficiary status (‘arbitration without privity’). As to the latter, the Draft Rules distinguishes two situations where this status is applicable: when a contractual clause, part of a pre-existing contract between business parties, provides a right to recourse to arbitration for third-parties, or if the arbitration agreement itself ‘foresees’ such a right.98
Furthermore, one of the beneficial features of arbitration, is that it offers greater procedural flexibility and party autonomy. Among other advantages, this allows the parties to establish a more accessible remedy. The flexible nature pertains, for instance, to the set of rules and procedures governing the arbitration proceedings, but also the applicable substantive law. The parties may choose to a large extent the applicable rules that they believe can best meet their particular needs and the needs of the case.99 Moreover, the location of the proceedings is
moveable. They can take place in any particular territory or jurisdiction.100 This relates also to
the language used in the proceedings, which parties are free to agree upon under the Draft Rules.101 The proceedings can, therefore, in theory take place anywhere, reinforcing the (physical) accessibility of the remedy. Nonetheless, as pointed out by the Working Group, the parties, but also the arbitral tribunal should, of course, select a seat where BHR disputes are
97 The Draft Rules 2019, article 1 (1).
98 The Draft Rules 2019, article 17-bis, respectively para. 2 and 3 + Commentary. 99 The Draft Rules 2019, article 41 (1)
100 The Draft Rules 2019, article 18; Not referring to jurisdiction in the sense of competence of the tribunal. 101 The Draft Rules 2019, article 19.
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arbitrable.102 From the perspective of accessibility, the fact that BHR disputes are not arbitrable everywhere does not necessarily raise an issue considering that the parties are, thus, free to choose the place of arbitration.
There is a general discontent with regard to the efficiency and cost-effectiveness of the international arbitration mechanism.103 In fact, costliness has been considered one of its worst features.104 Various provisions have, therefore, been incorporated into the Draft Rules which
aim to facilitate more cost-efficient proceedings. The arbitral tribunal has been accorded a considerable amount of responsibility in that respect. For instance, article 17 (1), as a general provision, underlines the importance of finding a balance in each case between cost-efficiency and fairness. The arbitral tribunal is expected to utilize its considerable discretion towards producing such a balance.105 In the Commentary to article 17, the Working Group refers to the specific areas where that responsibility should be concretized. Among others, this pertains to the tribunal’ power to set requirements for the length and form of written statements (article 24), impose limits on the scope of the evidence that may be produced (article 27 (2)) and determine the manner in which oral hearings will be held (article 28 (2)). Also, the Draft Rules would introduce the option of an expedited procedure under article 52, which changes the default starting position.106
With regard to the likely lack of resources available to victims, the Draft Rules have introduced various provisions to address this unavoidable imbalance. In article 47 (1), for example, it is emphasized that with regard to the fees and expenses of the arbitrators, various circumstances of the case will be taken into account, such as the amount in dispute, the complexity of the subject matter, the time spent by the arbitrators and the cost burden on each party. After the tribunal is constituted, it is to inform the parties of its proposed determination of the fees and expenses.107 In order to give effect to the tribunal’ proposal, article 47 (4) would
adopt a cost review mechanism, allowing the parties to address inconsistencies in the tribunal’ determination. These provisions would indeed make the incurring costs of arbitration proceedings more predictable and transparent. Lastly, the tribunal must ensure that the requested deposit(s), under article 49 of the Draft Rules, shall not place ‘an undue obstacle’ before any party.
102 Ibid.
103 Reed 2010, accessed at 09 – 05 – 19.
104 International Bar Association (IBA) Arb40 Subcommittee, Compendium of Arbitration Practice (October 2017), p. 5. 105 The Draft Rules 2019, article 17 (1) + Commentary.
106 The Draft Rules 2019, article 52 + Commentary.
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Another example of a small innovation, but nonetheless potentially significant, would be the proposed addition of a list to article 48, which illustrates what circumstances of the case would reasonably justify the apportionment of the costs between the parties.108 These circumstances include, the conduct of the parties, the costs burden of an award on each party and the public interest. Although article 48 of the Draft Rules would otherwise reflect article 42 UNCITRAL Arbitration Rules, which already provides the tribunal the opportunity to refrain from applying the default rule of the loser pays, the addition might underline the value of such discretion within the BHR context. After all, the principle of loser pays might incentivize victims to arbitrate, but also establishes greater risk. Consequently, providing the arbitrator with the flexibility to reallocate the costs, thereby also reducing the deterrent effect which the loser pays-principle might have, could indeed improve the accessibility of BHR arbitration.
Chapter 3.2 – Fair trial rights in the Hague Rules
In developing the Draft Rules, the Working Group has thoroughly taken into account the issues that victims in the BHR context face in obtaining a fair trial, but also how the arbitration mechanism is to sufficiently compensate for its own (perceived) inadequacies in that regard.
Starting with the institutional requirements, the provisions pertaining to the election criteria and the process of nominating and appointing arbitrators would be of particular importance. As a default rule under the Draft Rules, the Secretary- General of the PCA would serve as appointing authority.109 The parties obviously have the opportunity to select a different appointing authority. However, the Working Group more or less dissuades the parties from doing so, emphasizing the PCA’s particular suitability in this regard, given its experience with BHR disputes, but also considering the sensitivity of the general process of selecting competent arbitrators.110
The Draft Rules would incorporate various provisions, adapted to BHR arbitration, that attempt to ensure the independency and impartiality of the arbitration panel. Article 10-bis, for instance, constitutes an entirely new article as to the UNCITRAL Arbitration Rules. It provides two general considerations: (1) No person can be appointed as arbitrator whom has had prior involvement in the dispute and (2) the annexed Code of Conduct will provide the normative framework to assess the impartiality, independence or qualifications of the arbitrators. The
108 The Draft Rules 2019, article 48 + Commentary. 109 The Draft Rules 2019, article 6 + Commentary. 110 Ibid.
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standards incorporated in the Code of Conduct play an important role in the disclosure requirements and in the procedure to challenge arbitrators, which are set out in article 11 to 13. The taking of such measures will not only strengthen the quality of the proceedings and the enforceability of the award, but also the trust enjoyed by the arbitration mechanism.
Emphasis has also been placed on the procedural requirements of a fair trial. With regard to the costliness of bringing a claim before an arbitration tribunal, as discussed in the previous chapter, the Draft Rules would adopt various tools that could assist in controlling the costs of arbitration and also would accord the arbitral tribunal with the discretion to design the proceedings in a more cost-efficient manner. Besides making the arbitration mechanism more accessible, such innovations would also level the playing field to a certain extent. It would help counterbalance the existing disparities between parties as to financial resources and might also help the power imbalance. An option of subjecting the proceedings to strict schedules and cost-saving measures could, for instance, limit the corporation in using the many means at its disposal to hinder or steer the proceedings to its benefit. The application of such a model of arbitration would, of course, only be applied consensually. So, if the intent of the corporation is to make use of bad-faith litigation tactics, like raising every procedural and jurisdictional objection possible in order to extend the proceedings and wear down the opponents ‘war chest’, it can in theory still do so.
Speaking of potential bad-faith tactics, the Draft Rules address in several provisions specifically the vulnerability of witnesses, human rights defenders and the victim’ legal counsel.111 Acknowledging the risk of reprisals and retaliation, the Draft Rules intend to offer protection through transparency measures, oscillating between the benefits of public knowledge and anonymity. During the hearings, for instance, the arbitral tribunal can choose under article 28 (3) to adopt such measures for the protection of witnesses.112 This can take various forms,
like removing names and identifying information from the public record or protecting the witness’ anonymity by means of image or voice altering devices, assigning a pseudonym, or even through closed hearings (article 31).113 However, in order for the arbitral tribunal to adopt such measures, it must be convinced that the witness has a legitimate interest based on a ‘genuine demonstrated fear’.114 The Commentary elaborates that the standard encapsulates a
subjective fear and, therefore, is to be interpreted taking the individual experience into account.
111 The Draft Rules 2019, article 28 (3) + Commentary 112 Ibid.
113 Ibid.
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This, consequently, leaves the tribunal with the discretion under article 28 (3) to find a fair procedural balance between the interest of the litigants.
The unique nature of the interest involved in human rights disputes also oblige a careful, but adequate response in time-sensitive situations. By means of article 26, the Draft Rules has incorporated a regime of interim measures similar to the UNCITRAL Rules, only with a much larger margin of latitude afforded to the arbitral tribunal.115 This allows the tribunal to take any interim measure it deems necessary, even allowing to adopt measures that differ from what is requested.116 Furthermore, paragraph 3 accords the tribunal the power to coerce compliance
with the interim measures by stipulating any monetary penalty it deems appropriate.117
However, specifically to give voice to the likely urgent threats of irreparable harm in some BHR scenarios, the Draft Rules have also introduced an ‘emergency arbitrator’ article, which is a concept currently absent in the UNICTRAL Rules.118 When the relevant circumstances do not permit waiting for the constitution of the arbitral tribunal and, therefore, necessitate a quick response, a request can be submitted for appointing an emergency arbitrator.119 Preserving the status quo supports the overall fairness of the proceedings by preventing the rights of a party to be interfered with before a judgement has been pronounced. This has also a particular bearing on the accessibility of the remedy. After all, although such interim procedures may refrain from making any decision on the merits of the case, they help maintain the party’ temporary position in order to allow the tribunal to effectively examine the application and for the party to effectively pursue a claim.120
In order to address the clear tension between demands for transparency and confidentiality, the Draft Rules have relied mainly on the UNCITRAL Rules on Transparency. The UNCITRAL rules have created a shift in the traditional prioritization of confidentiality in investor-state arbitration by recognizing the need for transparency measures and taking account of the public interests involved in ISDS.121 The same reasoning can indeed be applied to adopt
such measures in BHR arbitration. Measures that are incorporated in the UNCITRAL Rules on Transparency include, the publication of documents (written statements or submissions by the parties, expert reports, witness statements)122, the acceptance of third party submissions (amicus
115 The Draft Rules 2019, article 26 + Commentary 116 Ibid.
117 Ibid.
118 The Draft Rules 2019, article 26-bis + Commentary 119 Ibid.
120 Ibid.
121 UNCITRAL Rules on Transparency, regarding the text of resolution A/68/462. 122 Ibid., Article 3.
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curiae submissions)123 and open access to the hearings124. The UNCITRAL Rules also addresses some confidentiality concerns, such as the protection of confidential and or protected information and information that might impede the integrity of the arbitral process.125
To better suit BHR arbitration, the Draft Rules have introduced several nuances to the UNICTRAL Rules. Article 33(2), for instance, just as article 1(4) UNCITRAL Transparency Rules, describes in general the complex balance which the tribunal needs to find in adopting transparency measures, thereby also demarcating the tribunal’ discretionary authority. By contrast, to recognize the particular complexity of BHR arbitration, article 33(2), adds that ‘security, privacy and confidentiality concerns of the parties, witnesses, counsel and others involved in or affected by the arbitration proceedings’, will also need to be taken into account.126
Consequently, the tribunal is expected to exercise an active role in finding that balance and is, therefore, entrusted with a substantial amount of responsibility. In closing, the last interesting development that requires mentioning, is the PCA’ task, in its role as repository, to regularly publish general information on BHR arbitration. Not only is this measure intended to further the protection of public interest, it also means to constitute ‘a source of continuous learning’ in order to improve the overall mechanism, an element which the UNGPs consider to be an essential part of an effective remedy.127
Lastly, the collection and production of evidence receives particular attention in the Draft Rules.128 Specifically, it recognizes the power imbalance between the parties in BHR arbitration with regard to the information they possess or can get access to.129 This recognition is, for instance, incorporated into article 20, which addresses what an admissible statement of claim requires. Paragraph 4 clarifies that the state of claim should, as far as possible¸ be accompanied by the relevant evidence. According to the Commentary to article 19, this phrase provides the tribunal with the discretion to address the imbalance, and potentially even compensate such an imbalance by utilizing its available tools to order the production of evidence.130 Under article 27 such tools are incorporated, allowing the tribunal to ‘draw the
consequences it deems appropriate’ if the party fails to comply with the order to produce
123 Ibid. Article 4 and 5. 124 Ibid. Article 6. 125 Ibid. Article 7.
126 The Draft Rules 2019, article 33 (2) + Commentary 127 The UNGPs, principle 31 (g).
128 The Draft Rules 2019, article 20 (4) + Commentary 129 Elements Paper 2018, p. 15.
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evidence.131 Such consequences may include drawing adverse inferences and reversing the burden of proof.132
This recognition is crucially important in satisfying the requirement of equality of arms. After all, in order for a victim to make a successful legal claim it would need the necessary information to build a persuasive case. Often victims are prevented from building such a case, due to the fact that either the State or the businesses have refrained from collecting information or from disclosing it.133 The discretion of the tribunal to take into account the evidentiary
imbalance between the parties, carries also particular weight in light of article 23-bis of the Draft Rules, which provides the parties opportunity to object to claims or defences that they consider manifestly without merit.134 After all, considering that later on in the proceedings a
victim can make a request under article 27 to order the production of evidence, a victim’ claim should not necessarily be expeditiously dismissed due to it being unmeritorious in the absence of sufficient evidentiary support.135
Chapter 3.3 – Reparation in the Hague Rules
In acknowledging the need for BHR arbitration to provide more extensive forms of reparation, article 40 (2) of the Draft Rules states that an award may order both monetary and non-monetary relief. The forms that relief may take, include restitution, rehabilitation, satisfaction, specific performance and the provision of guarantees of non-repetition. This illustrative list is based on principle 25 of the UNGPs.136 Moreover, under the same article the tribunal would also be granted the authority to adopt recommendations. Although these recommendations would be (of course) non-binding, they would broaden the scope of measures capable of providing satisfaction.137 Consequently, by means of article 40 (2), the Draft Rules
would indeed introduce a solid basis for the arbitral tribunal as to award extensive remedial action. It will be interesting to see how this basis will be used in practice when the final rules are published.
To address the risk of implementation of the award, specifically regarding any non-monetary relief, article 40 (3) enables the tribunal, at the request of a party, to ‘stipulate any penalty, monetary or otherwise’. According to the Commentary, this provision is to be
131 The Draft Rules 2019, article 27 (4) + Commentary 132 Ibid.
133 Amnesty International, ‘Injustice Incorporated: Corporate Abuses and the Human Right to Remedy’ (2014), p. 157. 134 The Draft Rules 2019, article 23-bis + Commentary
135 As also emphasized by the Commentary: Ibid. 136 The Draft Rules 2019, article 40 (2) + Commentary 137 Ibid.
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interpreted as to provide the tribunal with the power to ‘adopt a wide range of sanctions’, including those that deal reputational damage.138 It was strongly supported by the Sounding Board Members to authorize such power to the tribunal.139 After all, it would in practice have the potential to greatly reinforce the overall effectiveness of the Draft Rules.
As to enforcement, the victims seeking remedy in BHR Arbitration would benefit from the fact that under the New York Convention, 157 State Parties are bound to recognize foreign awards.140 The victims could thus potentially seek enforcement in multiple domestic courts
throughout the world. However, one of the issues that might hinder this beneficial feature, is the arbitrability of human rights claims.141 Whether the award is arbitrable at the enforcement
stage, depends on the national jurisdiction and its applicable law.142 After all, some jurisdictions
have excluded particular issues from being arbitrated in order to reserve them for judgement by national courts.143 This is, therefore, outside of the scope of what can be regulated by the Draft Rules. This will, consequently, require a State-by-State analysis.
Another such concern pertains to the scope of application of the New York Convention. Around 50 State Parties have made use of the reservation option provided in article 1 (3) of the New York Convention. 144 This provision allows State Parties to limit the application of the Convention to ‘differences arising out of legal relationships, whether contractual or not, which are considered commercial under its national law’. The question then arises if BHR arbitration can be considered ‘commercial’. The Draft Rules would incorporate this same provision in article 1 (2). The Commentary mentions that the interpretation of ‘commerciality’ is not binding upon national courts, which therefore means that BHR awards could be excluded. Incorporation is considered to still bears relevance, due to the fact that national courts’ are expected to acknowledge the value of expressing the expectations and intentions of the parties. Thereby, the Working Group also intends to avoid the risk of objections to enforcement of a BHR award.145 Nevertheless, it is clear that the Draft Rules cannot resolve such issues, whether
BHR awards will be enforced depends on the discretion of the national courts.
Lastly, during the consultation round concerns were also expressed as to whether international arbitration will be capable of producing ‘rights-compatible’ awards’146, meaning
138 Ibid.
139 Sounding Board Consultation Summary 2019, p. 13.
140 State Parties to the New York Convention, their declarations and reservations: http://www.newyorkconvention.org/countries, accessed 25 – 05 – 19; the New York Convention, Article 3.
141 ‘Arbitrability’ refers to the legal capacity of a particular dispute to be settled by arbitration. 142 UNCTAD/EDM/Misc.232/Add.37, p. 21.
143 Ibid. p. 37
144 State Parties to the New York Convention, their declarations and reservations: http://www.newyorkconvention.org/countries, accessed 25 – 05 – 19
145 The Draft Rules 2019, article 1 (2) + Commentary 146 Elements Paper 2018, p. 20.
