Multinational Corporations in International Law: A treaty to “rule” them all : A study on a progressive development towards corporate accountability in inter- national law

(1)

Multinational Corporations in International Law:

A treaty to “rule” them all

A study on a progressive development towards corporate accountability in

inter-national law

Tromvoukis Konstantinos

Student number: 11316195

ktromv@hotmail.com

University of Amsterdam

LLM in International and European Law: Public International Law

Supervisor: prof. dr. J. E. Nijman

(2)

Abstract

International law has traditionally viewed the states as the main bearers of international obliga-tions. In modern society, however, many multinational corporations are equally powerful and influen-tial as states. Being solely regulated by states that are for various reasons unwilling to firmly stand against them, corporation enjoy a wide freedom. With annual turnovers that in many cases exceed the GDPs of many states it is argued that corporations should bear responsibility for their actions. Lack of relevant and applicable legislation inevitably leads to corporate impunity, which in turn results in vic-tims of violations remaining without any form of redress.

As proven by the constant human rights violations perpetrated or orchestrated by corporations, the contemporary regulatory framework seems ineffective and in need for a change. Previous regula-tory attempts have paved the way for the current negotiations, by providing references on the contro-versial issues as well as the diverging interests. My argument in this thesis is that the currently debated upon treaty initiative on corporations and human rights can help bridge the existing accountability gap. This thesis concerns an ongoing law making process that is highly dependent on political inter-ests. The issue, however, remains in the end a legal one. The examination of the reasons that resulted in the accountability gap and the new initiatives potential for bridging it are argued to be paramount in an evolution of international law, that follows the changes in modern society.

(3)

1. Chapter – Introduction

1.1 - Factual Background on Human Rights and Multinational Corporations

Ever since the establishment of the UN, human rights never seized to evolve. Treaties are being drafted and revised constantly, and the most prominent international covenants have been ratified by almost every state- member to the UN. What best indicates the state of evolution is the Universal Dec-laration of Human Rights of 1948, which was only adopted as a “common standard of achievement for all peoples of all nations1_{”. Some decades later scholars argue the same document resulted in}

be-coming “part of customary international law, and that it is the most valid interpretation of the human rights and freedoms which the Members of the United Nations pledge to promote.”2

Despite the human rights evolution and the numerous treaties and conventions drafted seeking to uphold them, we are still witnessing a large number of human rights violations perpetrated by actors outside the contemporary regulatory scope of any international binding document. Child labor, mini-mal salaries, unhealthy and dangerous working environment, environmental harm, government coer-cion into land grabbings are just few of the violations that are still being witnessed at a regular basis. The actors in question are the Multinational Corporations (hereinafter cited as: MNCs).

There are several important factors that result in the human rights harm caused by activities of MNCs not being internationally regulated. To enumerate the most crucial factors, not in order of im-portance, one can mention the status of the multinational corporations' international legal personality, the inability or unwillingness of states to regulate the corporations and enforce their legislation, and the lack of a unified and specific international regulatory framework that results in the lack of MNCs' accountability under international law.

The debate concerning possible regulatory limitations on the activities of MNCs cannot be con-sidered as something entirely new, but is nevertheless of an extremely high importance as evidenced by the huge amount of scholarly research and concerns voiced by news reporters, NGOs, states and also corporations. Furthermore, Human Rights Council's resolution A/HRC/RES/26/9 in June 2014,

1E. Schelb, The Influence of the Universal Declaration of Human rights on International and national Law, in H. Hannum, S. James Anaya and D. L. Shelton, International Human Rights: Problems of Law, Policy and Practice, 5th edition, 2011, p. 138

(5)

once again lighted up the discussions concerning the international regulation of Multinational Corpo-rations through an international binding treaty.

1.2 - Theoretical framework

The concept of accountability is one of the most debated upon issues in contemporary interna-tional law. It can be broadly understood as justifying one actor's actions towards others, that are con-trary to certain established standards. It also includes potential repercussions if these actions are deemed to be wrongful3_{. However, even though the mentioning of accountability in the context of}

in-ternational law is constantly increasing, it has not yet “acquired a clearly defined legal meaning”4_.

In-ternational law is still predominantly favoring the traditional state-centric notions of state responsibil-ity. The articles of ILC on state responsibility state that for an action to give rise to state responsibility this action must firstly be wrongful under international law, and secondly that this same action must be attributable to a state. The accountability of individuals and more specifically Multinational Corpo-rations is, however, much more complex. As J. Brunee notes the most important reason that no formal system of international legal accountability of corporations exists to date is that they are not yet recog-nized as a subject of International Law5_{, nor have any norms to regulate them emerged}6_.

The legislation gap that exists does not come as a shock. This precise gap has been identified for more than 50 years now, but has yet to close. The reason such a gap in legislation becomes increas-ingly important, is the emergence of shifts of powers away from the state. Alternative accountability regimes, such as complaint mechanisms and compliance mechanisms in environmental agreements, were established in order to alleviate potential problems resulting from these shifts of powers7_.

It is without a doubt that multinational corporations, do not yet consist a subject of interna-tional law. It is also not disputed that their internainterna-tional law obligations are mainly of an indirect char-3R. Grant and R. Keohane, Accountability and Abuses of Power in World Politics, 99 American Political Science Review, 2005, pp. 29-43, at p. 29 et seq.

4J. Brunee, International legal accountability through the lens of state responsibility, Netherlands Yearbook of International Law , vol. 36, 2007, p. 4

5Ibid p. 23 6Ibid. p. 30

7P. A. Nollkaemper, P. A., & D. Curtin, Conceptualizing Accountability in International and European Law, Netherlands Yearbook of International Law, vol. 36, pp. 3-20, at p. 6

(6)

acter. The difficulty in regulating MNCs by no means justifies any inaction towards a potential solu-tion. Former Special Representative of the Secretary General J. Ruggie asserted that the negotiations towards a new binding instrument would either be abandoned, or that the final document will not be ratified by any of the immediately concerned stakeholders8_{. Even though this assertion is seemingly}

depicting the harsh reality in the sphere of political and diplomatic affairs, it also seems rather conser-vative. Major steps towards the formation of what we today characterize as international law were based on preliminary lack of consensus, which later grew stronger. Important examples that showcase this statement include the Additional Protocol II to the Geneva Conventions and the development of the International Criminal Court9_.

Setting the question of international legal personality aside, which also is a very important is-sue but will not fall within the scope of the present thesis, international law consists of a particular set of norms. What is universally regarded “the source of sources” of international law, even though it was just drafted as a jurisdiction clause for the International Court of Justice Statute, is article 38. Arti-cle 38 sums up the international law norms that are accepted before the ICJ and lists: a) international treaties, b) international customary rules, c) general principles of law and d) international jurispru-dence and scholarship.

The process, by which these norms come into being, although in some cases self-explanatory, is not stipulated in a. 38 of the ICJ Statute. The concerns about the development of international law first found their way in a. 13 of the UN Charter, where the General Assembly decided to take mea-sures so as to encourage the “progressive development” of international law. Following the Charter obligation the International Law Commission was founded with the mandate of promoting the pro-gressive development and codification of international law10_{. The precise meaning of the notion of}

“progressive development”, is stipulated in a. 15 of the ILC Statute, which states that progressive de-velopment means norms on subjects which have yet to be sufficiently developed in state practice. This ability to dynamically change and evolve is a very vital part of international law and in the words of

8J. Ruggie, Life in the Global Public Domain: Response to Commentaries on the UN Guiding Principles and the Proposed Treaty on Business and Human Rights (January 23, 2015). Available online at: https://ssrn.com/abstract=2554726

9S. Deva, D. Bilchitz (eds), Building a Treaty on Business and Human Rights: Context and Contours, Cambridge Univer-sity Press, 2017, p. 20

(7)

the drafters of the Vienna Convention on the law of treaties in the second to last preambulatory clause can “promote the purposes of the United Nations as set forth in the Charter”.

1.3 - Research Question

As the open-ended intergovernmental working group's on transnational corporations and other business enterprises negotiations successfully concluded its 3rd session of negotiations on a new inter-national legal framework governing the conduct of businesses with respect to human rights in October 2017, the main question the present thesis aims to answer is the following: “how does the new binding treaty initiative address the accountability gap of multinational corporations under international law”. In order to respond to the aforementioned question the present thesis will focus on: 1) What is the con-temporary legal framework in international law with respect multinational corporations and what do multinational corporations need to be held accountable for? 2) Why multinational corporations still cannot be held internationally accountable for human rights violations? 3) How does the new treaty initiative's scope of application bridge the accountability gap in the context of multinational corpora-tions and human rights?

1.4 Research Methodology

The research question at hand revolves around an ongoing law-making process. The nature of this topic essentially limits the source materials, as more in-depth academic contributions will cover and evaluate the present debate, but will only do so further in the future. The website portal of Busi-ness and human rights resource center proved to be one of the few reliable resources, as it keeps track and gathers all the contributions being made by various stakeholders of the ongoing debate, such as NGOs, states, corporations and also academics with respect to their preliminary observations.

Analyzing the preparatory works of a potentially future instrument with respect corporations and human rights is only possible if done in conjunction with already existing legal principles that can be found on a national and international level with respect to international treaties. Thus the Vienna Convention on the Law of Treaties of 1969 and the way human rights courts interpret its provision will be of great significance in addressing the thesis' research question. In order to address the core el-ements of the proposed treaty on corporations and human rights this thesis will take a doctrinal and

(8)

descriptive approach, so as to provide a systematic overview of the development and application of the existing legal framework. The doctrinal approach, or black-letter law approach, is based on utiliz-ing judicial decisions and statutes to provide a clearer and more thorough understandutiliz-ing of the law11_.

In order to do so, doctrinal research seeks to find a specific statement in law. The black letter approach describes the current status of the law, clarifies ambiguities within its rules, and places all relevant rules within a logical structural framework12_{. Therefore, this approach is adopted in the present thesis}

so as to systematize and clarify the legal rules that define the problem under investigation through the use of authoritative texts that are of both primary and secondary nature. The descriptive approach will be used so as to take a neutral standpoint, relying on facts such as case studies and stakeholders opin-ions to describe the current state of affairs with respect to the application scope of an international treaty that aims to regulate MNCs. Draft articles, scholarly contributions and official documents and reports will also be utilized to as to create a wider, thus more systematized and neutral, information basis.

A historical evaluation of examples of past regulatory attempts will be used so as to better showcase the current status of the international regulatory framework and the gaps within the interna-tional legislation. Past regulatory undertakings and the reasons these failed are vital to understand not only the legal framework itself, but can also serve as an objective point of reference to discern the state of a possible evolution of international law norms, as well as the state of stakeholders' (un)will-ingness to reach a consensus.

International law making procedures is almost inextricably linked with political science and also sociology. The present thesis will touch upon these disciplines but will do so only to better de-scribe the process of creating international legislation and the reasons the researched upon account-ability gap in international law exists.

1.5 Research Structure

The debate on the possibility of regulating multinational corporations on an international level has historically taken places in numerous fora. The present study will examine two issues before ad-11M. McConville and W. Chui, Research Methods for Law, Edinburgh University Press, 2007, p. 3

12W. Bradley Wendel, “Essay Explanation in Legal Scholarship: The Inferential Structure of Doctrinal Legal Analysis” (2010-2011) 96 Cornell Law Review 1035

(9)

dressing the matter of a contemporary final and binding instrument that seeks to hold MNCs account-able for human rights violations. The first issue will be what is the current regulatory framework re-garding the multinational corporations under international law. This issue will be addressed by exam-ining the existence of direct and indirect human rights obligations of multinational corporations in treaties, authoritative statements of human rights bodies and soft law documents. Examples of corpo-rate activities violating basic human rights will also be provided, so as to showcase the extent to which the current framework succeeds in protecting people against corporate activities.

The second issue that the present study will address will be the historical evolution of interna-tional law attempting to regulate multinainterna-tional corporations. The reasons behind the assumed failure of which, will firstly be used to ascertain the existence of a gap in multinational corporations’ account-ability for human rights violations. Secondly they will prove helpful in understanding whether the new treaty initiative can succeed in bridging the accountability gap in international legislation. The histori-cal recollection of past regulatory endeavors will also provide indications regarding the change in atti-tude of the implicated stakeholders, which will be the determining factor of whether a new legislative attempt would prove to be more successful.

In the last part of the present study the application scope of the newly proposed treaty will be examined, on the grounds of whether or not it moves forward in the attempt to create a legal frame-work that can establish corporate accountability under international law. The notions of a treaty’s scope of application will be explained in accordance with the sources of international law. Further-more, documents and statements from the latest round of negotiations will be presented, in an attempt to determine whether a progressive development of international law is in fact occurring or whether this is but an idealistic delusion.

(10)

2. Chapter -

Business and Human rights international regulatory

frame-work and case studies

2.1 An overview of MNCs and human rights- A “tricky terrain”

Up until the present day human rights appear to be one of the most dynamic fields within pub-lic international law. The process, however, of establishing corporate accountability for human rights violations is very slow. As striking as it may be, establishing accountability without prior establish-ment of binding obligations is not feasible.

Despite some scholarly opposition13_{, to the present date, no general human rights obligations}

have been imposed on corporations under public international law. Multinational Corporations' in-creased role and influence, which is a direct result of their economic power14_{, makes them an}

impor-tant actor in the governance field around the globe. The economic power and the political influence of MNCs gives them the ability to contribute to a positive social and economic development, but also en-ables them to harm certain established international environmental and human rights15_{. Even though it}

is true that corporations are not directly bound by international rules and regulations this does not

13D. Weissbrod and m. Kruger, Norms on the Responsibilities of Transnational Corporations and Other Business Corpora-tions and Other Business Enterprises with regard to human rights, American Journal of international law, 97, 2003, p. 901, at p. 921; D. Kinley and J. Tadaki, From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law. Virginia Journal of International Law, Vol. 44, No. 4, pp. 931-1023, 2004, available at https://ssrn.-com/abstract=923360

14J. Mikler, ‘Global Companies as Actors in Global Policy and Governance’ in John Mikler (ed), The Handbook of Global Companies, Wiley-Blackwell, 2013, vol. 1, p. 4

15Concerning the activities of Shell in Nigeria see: The New York Times, Shell game in Nigeria, December the 3rd₁₉₉₅

available online at: http://www.nytimes.com/1995/12/03/opinion/shell-game-in-nigeria.html ; Kiobel et al. v. Royal Dutch Petroleum Company, US Ct. of Appeals 2nd_{Circuit, 621 F. 3}rd_{111, Decision of the 17}th_{September 2010 ; Wiwa v. Royal}

Dutch Petroleum Co., US Ct. of Appeals 2nd_{Cicuit, 226 F. 3}rd_{88, Summary issued oon June 3}rd_{2009; Shell still not having}

paid the compensation for oil spill in the Niger Delta: see E. Gosden, Why Shell's Bodo oil spill still hasn't been cleaned up, The Telegraph, January 8th_{2017, at:}

(11)

mean that corporations can for example freely pollute the environment, promote child labor and adopt discriminatory salary policies. Certain standards of behavior are ought to be observed16_.

International law's traditional state-centric view with regards to duty bearers of international obligations is heavily challenged by MNCs' involvement in terrible tragedies. Historical evidence proves that the increased public awareness that is triggered by scandals and violations of human rights norms often results in legislative -or at least regulatory- initiatives17_{. In a brief case study that}

show-cases the involvement of MNCs to human rights violations around the globe, one can list the follow-ing examples.

More specifically, in December 1984 in the city of Bhopal, the methyl gas leak out of one of TNC Union Carbide Corporation's storage tanks resulted in the tragic end of more than 20.000 people, while it also affected several hundreds of thousands more18_{. The struggles of Nigerian Ogoni people}

with Shell date back in the 1960s and various judicial proceedings have been initiated against the Dutch company especially before US courts under the Alien Tort Claims Act, regarding the pollution of Niger River and also its alleged complicity in executions and crimes against humanity. Chevron's oil drilling activities in Ecuador19_{and Total's involvement with the military regime in Myanmar}20_were

also heavily discussed in judicial fora, but little to no satisfaction was provided to the victims of those alleged violations.

16J. Paust, The Other Side of Right: Private Duties Under Human Rights Law, 5 HARv. HUM. RTS. J. 51, 1992

17W. Mattli & N. Woods, In Whose Benefit? Explaining Regulatory Change in Global Politics, in W. Mattli & N. Woods (eds.), The Politics of Global Regulation, Princeton University Press, 2009 pp. 1- 43, 2009, at p. 22 et seq. ; for the Water-gate scandal triggering the implementation of the Foreign Corrupt Practices Act of 1977 and facilitating the way towards the negotiations and adoption of the OECD Anti- Bribery Convention of 1997 see: C. Rose, International Anti- Corruption Norms: Their creation and influence on domestic, Oxford University Press, 2015, p. 1 ; for the Enron scandal leading to Sarbanes- Oxley Act of 2002: R. Peavler, Sarbanes-Oxley Act and the Enron Scandal - Why Are They Important?, October 18th 2016, available online at: https://www.thebalance.com/sarbanes-oxley-act-and-the-enron-scandal-393497

18S. Deva, “Bhopal: The Saga Continues 31 Years On”, in D. Baumann-Pauly & J, Nolan (eds), Business and Human Rights: From Principles to Practice, United Kingdom, 2016, pp. 22-26, p. 22

19Regarding Chevron's activities and the judicial proceedings the followed: https://business-humanrights.org/en/texa-cochevron-lawsuits-re-ecuador

20Regarding the activities of Total and the belgian Court's dismissal of the lawsuit against the corporation: https://busi-ness-humanrights.org/en/total-lawsuit-in-belgium-re-myanmar

(12)

The increase in the number of human rights abuses by MNCs has been recognized by many ac-tors and attempts to address this problematic and complex under public international law issue have been made, varying from voluntary Codes of Conduct to draft norms and treaties. The problems that all these initiatives face are, however, numerous and not easy to tackle.

2.2 Binding international regulations on MNCs with respect to human rights

With regards to internationally binding norms under international human rights law, the first point of attention should indisputably be the international human rights treaties. Pursuant to the schol-arships’ interpretations of article 38 of the International Court of Justice’s Statute being the “source of sources”, treaties should be regarded as the primary source of law when determining one’s obligations. At this point of time international treaties do not contain any specific and explicit provisions that ad-dress the possibility of MNCs violating human rights.

It is submitted that certain steps towards regulating some “gross violations of human rights”, as former SRSG Ruggie so eloquently put it21_{, have already began to take shape. One of the admittedly}

not many good examples illustrating such norms, is illustrated in article 25 par. 2 of the Statute of the International Criminal Court, where the Statute explicitly accepts the responsibility of individuals for actions within the Court’s jurisdiction22_{. For this article, however, to take effect, the violations of}

hu-man rights by an individual must be of a certain a gravity, so as to fulfill the requirements of a crime under the statute, as these are described in articles 5 et seq.

Even though obligations under international law still fall primarily on the states23_{, the}

possibil-ity of non-state entities like MNCs to also act as a duty bearer is also being debated24_{. Common article}

21J. Ruggie, ‘Quo Vadis? Unsolicited Advice to Business and Human Rights Treaty Sponsors’ (9 September 2014), avail-able at http://www.ihrb.org/commentary/quo-vadis-unsolicited-advice-business.html

22The whole text of the Rome Statute of the International Criminal Court is available online at:

https://www.icc-cpi.int/nr/rdonlyres/ea9aeff7-5752-4f84-be94-0a655eb30e16/0/rome_statute_english.pdf

23M.D. Evans (ed.), International Law, Oxford University Press, 2014, p. 33

24See generally A. Clapham, Human rights obligations of Non-State Actors, Oxford University Press, 2006; S. Deva and D. Bilchitz, Human Rights obligations of Business: Beyond Corporate Responsibility to respect?, Cambridge University Press, 2013

(13)

3 of the Geneva Conventions of 1949 can further serve to demonstrate that the possibility of duty-bearers of international treaties other than the states in fact exists25_.

As far as human rights treaties are concerned the sources that should always first and foremost be examined are the 2 major human rights conventions, namely ICCPR and ICESCR. Although not explicit, the convention and the covenant, alongside with certain clarifications made by their respec-tive Committees, do include certain provisions that are of relevance with regards to violations perpe-trated by MNCs. One prominent example is reflected in a. 2.3(a) of the ICCPR, which reads as fol-lows: states shall “ensure that any person whose rights or freedoms as herein recognized are violated shall have an effective remedy, notwithstanding that the violation has been committed by persons act-ing in an official capacity”. This article, however relevant, recognizes the possibility of violations oc-curring as a result of activities undertaken by non-state actors including MNCs. It does not, however, impose any obligations on them and merely reaffirms the state's duty of protecting human rights and providing access to remedies in cases of violations. Furthermore, another problematic issue with re-spect to a. 2 ICCPR is that its application scope is limited to “all individuals within its [the state's] ter-ritory and subject to its jurisdiction”, thus creating a huge jurisdictional problem in cases that concern the global operation of MNCs.

Similarly, ICESCR does not contain any explicit provisions that can address human rights vio-lations by MNCs. An implicit reference could be drawn from a. 2 and the obligation of states to coop-erate with one another so as to protect and promote human rights26_.

It is worth noting that despite the lack of specific provisions that concern the human rights vio-lations by MNCs, human rights treaty bodies do regard these activities as problematic and try to strengthen the protection of human rights against such activities through statements and General Com-ments. In a statement of the Committee on Economic, Social and Cultural Rights in 2011 on obliga-tions of States Parties Regarding the Corporate Sector and Economic, Social and Cultural Rights27_{, the}

Committee explicitly stated that “the obligation of states to ensure that all economic, social and cul-25The text of the 4 Geneva Conventions of 1949 including common article 3 can be found online at: https://ihl-data-bases.icrc.org/applic/ihl/ihl.nsf/vwTreaties1949.xsp

26M. Langford, Extraterritorial Duties in International Law, In Malcolm Langford, Martin Scheinin, Wouter Vandenhole and Willem van Genugten (eds.) Global Justice, State Duties: The Extra-Territorial Scope of Economic, Social and Cul-tural Rights in International Law, Cambridge University Press, 2012, pp. 51-113, p.112f

27 Committee on Economic, Social and Cultural Rights, Statement on the obligations of States Parties regarding the cor-porate sector and economic, social and cultural rights, 20 May 2011, E/C.12/2011/1

(14)

tural rights laid down in the ICESCR are fully respected and rights holders are adequately protected in the context of corporate activities”28_{. Furthermore, the Committee stated that the states are also}

re-quired to “take steps to prevent human rights contraventions abroad by corporations which have their main offices under their jurisdiction, without infringing the sovereignty or diminishing the obligations of the host States under the Covenant”29_{. A similar approach can also be found in General Comment}

16 on State Obligations Regarding the Impact of the Business Sector on Children’s Rights in 201330_.

From the aforementioned paradigms, one can only conclude that despite the increased efforts of the human rights treaty bodies to confront the impact that corporate activities may have in the field of human rights, there are currently no specific provisions that create a clear regulatory framework.

2.3 Non-binding international regulations

Alongside the international human rights treaties certain non-binding international standards that require MNCs to respect human rights can be found in international soft law documents. The most prominent soft law documents that touch upon human rights violations by MNCs are the UN Universal Declaration of Human Rights, the UN Global Compact initiative and the UN Guiding Prin-ciples.

According to the UDHR's preambel31_{, the responsibility to protect and promote respect for}

hu-man rights is placed on “every individual and every organ of society”. With such broad wording, the preambulatory clause can be interpreted as to include private individuals and third parties such as Multinational Corporations.

The U.N.’s “Global Compact” initiative can be regarded as an initiative that shows the in-creased interest of the global community on the potential effects that corporate activities may have in the field of human rights. It has been cosigned in 2000 by 50 multinational firms, 12 labor unions, and a plethora of NGOs and at that point of time there were already over 8,000 firms that supported it32_.

The principles that this initiative asks companies to respect, are quite extended and amongst others in-28Para. 1

29Ibid. Para. 5

30UN Committee on the Rights of the Child (CRC), General comment No. 16 (2013) on State obligations regarding the impact of the business sector on children's rights, 17 April 2013, CRC/C/GC/16

31guUN General Assembly, Universal Declaration of Human Rights, 10 December 1948, 217 A (III)

(15)

clude respect towards the environment, abolishment of child labor, abolishment of corruption and the respect to human rights33_.

The United Nations Guiding Principles, despite being internationally non-binding standards, will be analyzed in the following chapter as they are in fact an attempt to regulate MNCs, circumvent-ing certain problems that occur when stricter “hard law” regulations are becircumvent-ing debated upon.

These standards and non-binding norms can hardly be considered as imposing obligations to MNCs. MNCs' activities are therefore still being regulated almost exclussively by national laws, which are object to corruption, bribery, economic pressure and furthermore can also be avoided through the very nature extraterritorial activities and the limits of national jurisdiction. The problem of MNCs lack of accountability under international law is known for a long time. In the following Chap-ter previous regulation attempts will be analyzed so as to discern the reasons behind their failure.

33The principles of Global Compact are available online at: https :// www . unglobalcompact . org / what - is - gc / mission / princi-ples

(16)

3. Chapter -

Past UN-driven regulation attempts' analysis and lessons

learned- UNCTC, Commission on Human Rights, UNCTAD, Special

Representative on Human Rights

As already stated in Chapter 2 of the present thesis, public international law and international human rights law still appears to be mostly state-centric. Despite their increasing influence and impact in the international state of affairs, the occasions when non-state entities, such as MNCs, bear direct obligations under public international law are extremely limited34_{. Most scholars that contemplate on}

the MNCs’ obligations under international law, mainly refer to indirectly opposable obligations, in the sense that the states will be the ones ultimately responsible to implement and enforce regulations that govern the activities of MNCs35_{. International law, however, does not seem to exclude, at least in}

the-ory, the possibility of international regulation of private entities36_{. The required conceptual shift of}

in-ternational law as a whole is what makes the issue of directly opposable to MNCs inin-ternational obliga-tions difficult and highly controversial.

The following chapter will seek to examine the reasons behind the past regulatory attempts' supposed failure that prompted the current new round of negotiations on the topic of a binding instru-ment with regards to MNCs and human rights. In order to do so it will provide an overview of the pre-vious regulation initiatives examining their provisions and their practical effects.

3.1 UNCTC- Code of Conduct

The activities of MNCs and the suspected regulatory void with respect to the protection of hu-man rights were the reasons behind the establishment by ECOSOC of the “Group of Eminent Per-sons” in 1973. The purpose of this group was to examine the potential impact of the MNCs' activities

34C. Vasquez, Direct vs. Indirect Obligations of Corporations Under International Law, 43 Colum. J. Transnat’ L. 927-959, 2005, p. 930

35S. R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111YALE L.J. 443, 2001, p. 485 36Ibid. p. 485; Lee McConell, Extracting Accountability from Non-state Actors in International Law: Assessing the Scope for Direct Regulation, Routledge, 2016, p. 21

(17)

on the process of international development37_{. It was under this Group's suggestion that that lead to the}

creation of the UNs' Centre on Transnational Corporations in 1974, that was tasked to produce a code of conduct for corporations38_{of transnational character}39_{. The UNs' Code of Conduct's ratione}

per-sonae application scope was limited on TNCs' as these were defined in a. 1(a) of the final draft. As far as the provisions included are concerned, these varied from environmental concerns to provisions against corruption and respect of state's sovereignty. Despite the fact that the negotiations on the Code of Conduct did not end up being fruitful, they do provide a rather important perspective on the objec-tives of the various stakeholders as well as the obstacles that an international regulatory undertaking has to overcome in order to be successful40_.

The key issues that arose from the long negotiations procedures of the Code are thoroughly de-scribed by the former director of UNCTAD's Investment division, Karl Sauvant in his article “The Ne-gotiations of the United Nations Code of Conduct on Transnational Corporations: Experience and Lessons Learned” and will be subsequently summarized as they comprise a set of issues many of which have yet to be solved. At the time of the Code's negotiations the main negotiating parties were divided in three blocks. The developed states, the developing states and the socialist states41_.

The developing states in the 1970s and 1980s were in their vast majority in the receiving end of the major MNCs' Foreign Direct Investment42_{. Therefore they strived to keep the social and political}

effects that MNCs may have in their territories at a minimum, while at the same time retaining the 37J. Nolan, “Mapping the movement: the business and human rights regulatory framework”, Business and Human Rights – From Principles to Practice, 2016, p. 39

38S. S. Deva and D, Bilchitz (note 24), p. 5

39The definition of TNCs according to the Draft United Nations Code of Conduct on Transnational Corporations, UN Doc. E/1990/94, can be found in a. 1(a) of the Draft, which reads as follows: “The term ‘transnational corporations’ as used in this Code means an enterprise, comprising entities in two or more countries, regardless of the legal form and fields of activity of these entities, which operates under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centres, in which the entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the activities of others, and, in particular, to share knowledge, resources and responsibilities with the others.”

40K. Sauvant, Karl, ”The Negotiations of the United Nations Code of Conduct on Transnational Corporations: Experience and Lessons Learned”, The Journal of World Investment & Trade, Vol 16, Issue 1, 2015, p. 12

41Ibid. p. 19

42United Nations, World Investment Report 1992: Transnational Corporations as Engines of Growth (New York: United Nations 1992), table I.1 and annex table 1

(18)

right to regulate MNCs at a domestic level. Furthermore, being home-states of almost no MNCs their interest towards the protection of investors’ rights was minimal. Their major objective was to conclude a set of multilateral behavioral rules for MNCs43_.

The socialist states block's view of the Code's negotiations was mainly political, as they re-garded the whole debate as a conflict between developed and developing countries44_{. The socialist}

states did not allow at that period of time any foreign direct investment in their territories, and their outward FDI was similarly insignificant. Their interest was, thus mainly focused on their position that state controlled corporations should not be included in the ratione personae application scope of the code of conduct45_.

The developed states' position and interest was on the other hand rather different. Being home states and host states of MNCs at the same time, they did have major interest in the protection of in-vestors. They therefore, had already developed multilateral instruments and treaties to regulate the rights of corporations and investors46_{. In their view, however, the protection of their corporations'}

in-vestments in developing countries was all but guaranteed, especially after the series of nationalizations that took place in the aftermath of decolonization47_{. They therefore wanted to draft a set of rules}

tar-geted to the host states, with special interest to the developing ones, essentially protecting their corpo-rations from local governments' interference48_.

43K. Sauvant (note 40), p.19

44See Udo Papies Communication, 17 March 2014, “At the beginning, the socialist countries regarded the debate about TNCs and the negotiations of a Code as a conflict between developed and developing countries. In the course of the nego-tiations, however, they developed a broader interest in the Code as an instrument to reflect equality and mutual benefit in international economic relations.”, as quoted by K. Sauvant (note 40), p. 19

45ibid

46e.g Treaty of Friendship, Commerce and Navigation Between the United States of America and Japan, signed 2 April 1953, 4 U.S.T. 2063, T.I.A.S. No. 2863, OECD's Code of Liberalisation of Capital Movements of 1961, which was later reviewed in 2016, available online at: http://www.oecd.org/daf/inv/investment-policy/Code-Capital-Movements-EN.pdf; International Labour Organization, Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, adopted by the Governing Body of the ILO on 16 November 1977, available: http://www.ilo.org/public/english/em-ployment/multi/download/english.pdf

47Stephen J. Kobrin, ‘Expropriation as an Attempt to Control Foreign Firms in LDCs: Trends from 1960 to 1979’ (1984) 28 International Studies Quarterly 329-334

(19)

The aforementioned different and in many aspects colliding interests, resulted in several “core difficulties” that remained to be resolved, but never did. One major difficulty was the legal nature of the proposed Code of Conduct as the developing states advocated in favor of strict binding guidelines for corporations but rejected an equal limitation to their own capacity with regards to regulating MNCs, while developed states opposed this proposal out of consideration of potential harsh towards their home corporations legislations. Finding a balanced solution to this problem was the only way to move forward at that time, which may very well be feasible according to the Chairman of the negotiat-ing Group on his presentation before the 8th Session of the Commission on Transnational Corpora-tions49_{. Other similarly challenging to tackle problematic issues that were a direct result of the}

afore-mentioned clash of interest amongst the states- parties to the negotiations, as listed in the information paper issued by the UNCTC included: 1) the application scope of the Code, and whether it should in-clude state owned corporations, 2) the treatment standards of host states towards the MNCs, and whether certain universally recognized principles of international law that prescribe some minimum treatment requirements are in existence, 3) provisions related to “international law” or “international obligations”, 4) the implementation and dispute settlement mechanism of the Code of Conduct, 5) na-tionalizations and compensation, 6) the respect of a state's national sovereignty and 7) the question of jurisdiction50_.

Despite the UNCTC's valiant efforts to facilitate the negotiations, the difference in the interests of the parties could not be alleviated and in the words of the UN General Assembly President in Sep-tember 1992: “no consensus was possible on the draft code at present”51_{. The formal ending of the}

ne-gotiations on the Code of Conduct came one year later, with the ECOSOC's resolution on “Strength-ening the role of the CTC”52_.

49Presentation of the Chair of the Working Group, Sten Niklasson, to the eighth session of the Commission on Transna-tional Corporations, as quoted in United Nations Commission on TransnaTransna-tional Corporations: Information Paper on the Negotiations to complete the Code of Conduct on Transnational Corporations, UN Doc. E/C.10/1983/S/2 of January 4th 1983, reproduced in 22 ILM 177 (1983), par. 24

50Ibid, par. 24 et seq; K. Sauvant, pp 35 et seq

51Report of the Economic and Social Council: Note by the Secretary-General, A/47/446 of 15 September 1992

52ECOSOC resolution 1993/49 of 29 July 1993, para. 14, available online at: https://documents-dds-ny.un.org/doc/UN-DOC/GEN/N94/932/99/PDF/N9493299.pdf?OpenElement

(20)

3.2 UNCTAD's regulatory endeavors

After the foundation of UNCTC in the early 1970s, the Commission held the primary role of dealing with the activities of transnational corporations up until its closing down in the early 1990s, when its activities where transferred to UNCTAD53_{, which Braithwaite and Drahos consider as the}

most prominent example of forum-shifting they encountered54_{. UNCTAD, despite not having the}

pri-mary expert role on regulating corporations did undertake certain efforts towards that direction55_.

The two main regulatory efforts that UNCTAD undertook and may have an impact on corpo-rate activities on an international level were the international code of conduct on Transfer of Technol-ogy and the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices. The negotiations on a potential code of conduct on the Transfer of Technology started in 197456_{. As the issue concerned the the transfer of technology from developed to less}

devel-oped states, the connection and also impact this code may have had to the TNCs becomes appar-ent57_{.Despite the fact that the negotiations for that code collapsed and not even a finalized draft could}

be agreed upon, the committee on Transfer of technology provided extensive studies on the impact of the transfer of technology, and the various drafts submitted by two separate working groups that were participating in the process can provide useful tools in determining the positions of the different stake-holders58_{. A major obstacle in these negotiations was closely related to the subject of the negotiations}

themselves, namely the technology transfer from developed to less developed states. This fact in-evitably pushed the negotiations into a strict North- South division, where both parties where skeptical

53K. Weilert, Taming the Untamable: Transnational Corporations in UN Law and Practice, Bogdandy and Wolfrum (eds.), Max Planck UNYB 14 , Brill, 2010, pp. 445-506, at p. 463

54J. Braithwaite and P. Drahos, Global Business Regulation, Cambridge University Press, 2000, available online at:

http://johnbraithwaite.com/wp-content/uploads/2016/06/Global-Business-Regulation.pdf, p. 567

55T. Fredriksson, 40 years of UNCTAD reasearch on FDI, Transnational Corporations Vol. 12 No.3, 2003, available online at: http://unctad.org/en/docs/iteiit35v12n3a1_en.pdf, p 6

56UNCTAD, The Possibility and Feasibility of an International Code of Conduct on Transfer of Technology, U. N. Doc. TD/B/AC.11/22; GE.74- 46032 (1974)

57Countess P. Jeffries, Regulation of Transfer of Technology: An Evaluation of the UNCTAD Code of Conduct, 18 inter-national law journal, 1977, p. 309

58J. D. Kurek, Supranational Regulation of Transnational Corporations: The UNCTAD and CTC Efforts, 2 Mich. YBI Le-gal Stud., p 268, at p. 270

(21)

about the other and subsequently reaching a consensus was very difficult59_{. The negotiating parties}

never really decided upon whether the code would include provisions of a binding or a voluntary na-ture60_{. In retrospect, it is submitted that the final draft of the code}61_{despite including only non-binding}

principles, it did pave the way for later multilateral regulatory undertakings, such as the TRIPS Agree-ment62_.

The work of UNCTAD in the area of restrictive business practices started around the same time that UNCTC started working on its own Code of Conduct, to be more precise on May 19th 197263_.

The Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Busi-ness Practices was successfully adopted by the UNs' General Assembly on December 5th 198064_{, and}

is has since been elaborated in seven Conferences65_{. The groups of interest during the negotiations of}

the Set were exactly the same as the groups in the negotiations of UNCTC's Code as they were being conducted virtually at the same time. The “multilaterally agreed upon rules and principles” faced strong opposition by representatives of the developed states, which viewed the Set as an attempt to aid the goals of NIEO, as well as a socialist undertaking to subtly impose anti-private rules for busi-nesses66_{. This Set has a voluntary and non-binding legal status, as a result of a clash of interests}

be-tween developed states -which favored the Set's voluntary status- and less developed states – which 59Gehl Sampath Padmashree and Roffe Pedro, Unpacking the International Technology Transfer Debate: Fifty Years and Beyond, ICTSD Programme on Innovation, Technology and Intellectual Property, Working Paper, International Centre for Trade and Sustainable Development, Geneva, 2012, available online at: https://www.ictsd.org/downloads/2012/07/unpack-ing-the-international-technology-transfer-debate-fifty-years-and-beyond.pdf , p. 26

60Ton J. M. Zuijdwijk, The UNCTAD Code of Conduct on the Transfer of Technology, McGill Law Journal 24, 1978, p. 566

61UNCTAD, "Draft International Code of Conduct on the Transfer of Technology as of 5 June 1985" (TD/CODE/TECH-NOLOGY TRANSFER/47, 1985)

62Padmashree (note 59), p. 28

63UNCTAD's Conference resolution 73 (III) of 19 May 1972 as quoted in “The history of UNCTAD 1964-1984”, avail-able online at: http://unctad.org/en/Docs/osg286_en.pdf, p. 114

64Doc. TD/RBP/CONF/10 of May 2nd 1980 adopted by A/RES/35/63 of December 5th 1980, available online at:

http://unctad.org/en/docs/tdrbpconf10r2.en.pdf

65The Report of the Seventh United Nations Conference to Review All Aspects of the Set of Multilaterally Agreed Equi-table Principles and Rules for the Control of Restrictive Business Practices, available online at:

http://unctad.org/meetings/en/SessionalDocuments/tdrbpconf8d11_en.pdf

(22)

rather wished for a more binding set of rules67_{. Its importance, however, can easily be observed in the}

decision of WTO's Panel in Mexico- Telecoms, where the Panel used the Set as a tool of interpretation of “anti-competitive practices”68_.

3.3 UN Commission on Human Rights- Draft Norms

69

The United Nations have constantly been paying attention to the complexities that arise from the activities of MNCs in the international scene. Without having previously concluded to a successful regulatory regime, in 1999 UNs' Sub-Commission on the Promotion and Protection of human rights established a working group that would “work on a code for TNCs based on human rights stan-dards”70_{, for an initial period of three years}71_{. After a series of negotiations sessions without having}

completed it task, in August 2001 the Sub-Commission decided on the extension of the working groups mandate for another 3 years72_{. Two years later, following numerous informal and also public}

meetings and deliberating upon all the suggestions received, the working group revised its previous Norms and Commentary Drafts and sent them to the Sub-Commission for approval73_{. On August 13th}

2003 the Norms were approved by the Sub-Commission in its resolution 2003/1674_{, thus becoming the}

first initiative at the international level that was of a non-voluntary nature75_.

67S. Griffin, United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, General Assembly Resolution 35/63 (1980)., 11 Ga. J. Int’l & Comp. L. 709, 1981, p. 720

68Report of the Panel on Mexico – Measures affecting Telecommunications Services, WT/DS204/R of April 2nd 2004, available online at: https://www.wto.org/english/tratop_e/dispu_e/204r_e.pdf, paras 7.236-7.238

69Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003), available online at:

http://hrlibrary.umn.edu/links/norms-Aug2003.html 70Doc. E/CN.4/Sub.2 of 12 August 1999, par. 32

71Sub-Commission Resolution 1998/8 of 20 August 1998, par. 4; Sub-Commission Decision 1999/101 of 3 August 1999 72Weissbrodt (note 13), p. 905 available onlinet at: http://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=1247&con-text=faculty_articles,

73Sub-Commission Report on the Working Methods and Activities of Transnational Corporations, UN Doc. E/CN.4/Sub.2/2003/13

74Responsibilities of transnational corporations and other business enterprises with regard to human rights, U.N. Doc. E/CN.4/Sub.2/2003/L.11 at 52 (2003), available online at: http://hrlibrary.umn.edu/links/res2003-16.html

(23)

Following the adoption of the Norms, many NGOs expressed their strong support to this initia-tive via public statements, and even transnational corporations stated that they would be willing to put the Norms to the test, as evidence of their commitment to protect human rights76_{. The Norms,}

how-ever, also faced strong opposition from organizations such as the International Chamber of Commerce and the International Organization of Employers77_{, and several states were very hesitant to move away}

from their traditional state- centric understanding of “subjects” in international law78_{. The Norms were}

effectively abandoned in spring of 2004, when the Commission on Human Rights requested the ECOSOC to affirm that the Norms had no legal standing and reduced them to “yet another statement of voluntary, aspirational goals”79_{. The underlying reasons that the Norms failed are, however, a very}

helpful tool in the attempt to evaluate the chances of success that future regulatory attempts may have. Through careful observation and analysis of the states' reservations on the Norms, as well as the legal scholarship that followed their abandonment, the reasons behind the failure of the Norms can be largely divided in three categories. Firstly, the claim that the Norms constituted in fact a progres-sive development80_{of international law and not a codification of pre-existing rules as they appeared to}

be. Secondly, the fact that the Norms moved away from the traditional understanding of international law by making TNCs actual addressees of international law and thirdly certain vague provisions and contradictions that could be found in specific provisions of the document.

76Ibid., p. 906 et seq.

77J. Ruggie, Business and human rights: The evolving Agenda, Corporate Social Responsibility Initiative, Working Paper No. 31, JFK School of Government and Harvard University, 2007, p. 4, available online at:

https://sites.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_38_ruggie.pdf ; Joint views of the IOE and ICC on the draft “Norms on the responsibilities of transnational corporations and other business enterprises with regard to human rights”, available online at:

https://business-humanrights.org/sites/default/files/reports-and-materials/IOE-ICC-views-UN-norms-March-2004.doc

78Miretski and Bachmann, Global Business and Human Rights - The UN 'Norms on the Responsibility of Transnational Corporations and Other Business Enterprises with Regard to Human Rights' - A Requiem (November 12, 2011), Deakin Law Review, Vol. 17, No. 1, 2012, p. 9, available online at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1958537

79L. Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, Columbia Human Rights Law Review, Vol. 37, 2005, p.140, at footnote 186, available online at: https://papers.ssrn.com/sol3/papers.cfm?

abstract_id=695641

80C. M Vázquez, ‘Direct vs Indirect Obligations of Corporations under International Law’, Columbia Journal of Transna-tional Law vol. 43, 2005, p. 927, p. 928

(24)

It is submitted that the first two categories that hindered the eventual adoption of the Norms are very closely interlinked. In order to establish the legal basis for the corporate obligations with respect to human rights, the Preamble of the Norms listed numerous international treaties and conventions starting from the UDHR. It is thus considered by some authors as “a restatement of existing interna-tional human rights law, humanitarian law, internainterna-tional labor law, environmental law, anti-corruption law and consumer protection law that already does or should apply to companies’ conduct”81_{. The}

huge amount of references used even though it serves as a ground for legitimacy as some of the hu-man rights described even are of jus cogens character82_{, for some scholars may even result in}

intelligi-bility83_{. The main problematic issue that arose, is that the Norms did not only include negative}

provi-sion, such as the obligation to refrain from certain human rights violations, but also provided positive duties for the corporations84_{. These are situated in Part A of the Norms, under “General Obligations”}

and are very similar to the obligations of the states described under the same section, which still are recognized to have the primary obligation to ensure and promote the protection of human rights85_{. The}

Norms, thus created a regime that essentially turned the corporations into “virtual state actors for pur-poses of many normative requirements”86_{. The imposition of direct obligations on the corporations}

drastically challenged the legal status quo of public international law. Furthermore the circumvention of the mediating role of the state raised concerns of going against the national sovereignty of states87_.

As far as the perceived ambiguity of the Norms is concerned, Deva submits- referencing the provision concerning fair and reasonable remuneration- that this will create substantial obstacles to the

81C. Hillemanns, U.N. Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights, German L.J. , vol. 4, p. 1065, 2003, at p. 1070

82S. Deva, UN’s Human Rights Norms for Transnational Corporations and Other Business Enterprises: An Imperfect Step in the Right Direction’ (2004), 10 ILSA Journal of International & Comparative Law, p. 493, at p. 498

83U. Baxi, ‘Market Fundamentalisms: Business Ethics at the Altar of Human Rights’ (2005) 5(1) Human Rights Law Re-view 1

84Miretski and Bachman (note 78), p. 19

85Sub-Commission on the Promotion and Protection of Human Rights, Commentary on the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, UN ESCOR 55th sess 22nd mtg Agenda Item 4, UN Doc E/CN.4/Sub.2/2003/38/Rev.2 (26 August 2003), available at:

http://hrlibrary.umn.edu/links/commentary-Aug2003.html 86C. Backer (note 79), p. 177

(25)

achievement of the Norms' aspired goals, as it enables corporations to maneuver around the provisions and not uphold them88_.

Even though the Norms did not end up becoming a binding document and the responsibility to create a regulatory framework for Corporations was transferred by the Commission on Human Rights to the Special Representative of the Secretary-General for Business and Human Rights, their impact is clearly visible not only on later international initiatives such as the UNGPs, but also on national legis-lations89_{and corporate initiatives}90_.

3.4 UN Special Representative of the Secretary General- The Guiding Principles

The increased attention towards the activities of MNCs and the both positive and negative ef-fect these may have in the enjoyment of human rights resulted in HRC's request to the UNs' to appoint a special representative on the issue of human rights and transnational corporations and other business enterprises91_{. The one that was called to step up and fulfill this difficult task was Professor J. Ruggie,}

whose mandate was rather restricted92_.

88Deva (note 82), p. 506

89United Kingdom’s Modern Slavery Act is available online at: http://www.legislation.gov.uk/ukpga/2015/30/contents/en-acted; The proposal of the french law of “The duty of vigilance of parent and subsidiary companies” is available online at:

http://www.assemblee-nationale.fr/14/ta/ta0924.asp; also see Wet zorgplicht kinderabeid (“Child Labor Due Diligence Law”), No. 34 506 (2016-2017) text available at:

https://www.eerstekamer.nl/behandeling/20170207/gewijzigd_voorstel_van_wet/document3/f=/vkbkk8pud2zt.pdf

90Weissbrodt (note 13), p. 907 at footnote 38

91UN Office of the High Commissioner for Human Rights, Commission on Human Rights, Human rights and transna-tional corporations and other business enterprises, Human Rights Resolution 2005/69 of April 20th 2005

92J. Ruggie's mandate as described in operative clause 1 of the resolution 2005/69 was: (a) To identify and clarify stan-dards of corporate responsibility and accountability for transnational corporations and other business enterprises with re-gard to human rights; (b) To elaborate on the role of States in effectively regulating and adjudicating the role of transna-tional corporations and other business enterprises with regard to human rights, including through internatransna-tional cooperation; (c) To research and clarify the implications for transnational corporations and other business enterprises of concepts such as “complicity” and “sphere of influence”; (d)To develop materials and methodologies for undertaking human rights im-pact assessments of the activities of transnational corporations and other business enterprises; (e) To compile a compen-dium of best practices of States and transnational corporations and other business enterprises

(26)

The difficulties the former SRSG Ruggie had to face where very similar to the ones that be-came apparent during the negotiations of UNCTC's Code of Conduct and UNCHR's Norms. The strong division of stakeholders' interests between developed and less developed states was still exist-ing. Additionally, USA made abundantly clear that it would not support any further initiative towards a Set of Norms or a Code of Conduct for TNCs93_.

In order to achieve the much-coveted balance and circumvent the dilemma of binding or volun-tary character94_{, Prof. Ruggie came up with a set of Principles, which was structured around three}

main pillars. The states' primary duty to protect human rights even against third parties, the businesses' responsibility to show due respect to human rights, and lastly the improvement of mechanisms that would facilitate the access to appropriate and effective remedy to any injured party95_{. Going through}

all the different and complex provisions that are included in the framework that Prof. Ruggie created, does not facilitate the purpose of the present thesis. It is, however, worth noting that even though this set of principles is not of a mandatory nature, its “normative contribution lies not in the creation of new international law obligations but in the implications of existing standards and practices for states and businesses; and identifying where the current regime falls short and how it should be improved”96_.

Furthermore, even if the UNGPs are not “hard law”, they do have the potential to lead to a gradual evolution of the international law provision that relate to human rights and businesses97_{. Since the}

en-dorsement of the UNGPs only marks “the end of the beginning”98_{, it is submitted that the steps have}

been taken towards the UNGPs' implementation99_{, cannot only be viewed as a successful}

implementa-93Statement of Leonard Leo, member of the Delegation of USA, at the Commission on Human Rights on April 20th 2005, as partially quoted in “Digest of United States Practice in International Law”, pp. 328,329, available online at:

https://www.state.gov/documents/organization/138677.pdf

94J. Ruggie, Incorporating human rights: Lessons learned and next steps, in Baumann and Nolan (note 18), p. 65 95UNHRC, Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Doc. A/HRC/17/31, par. 6

96Ibid, par. 14

97J. H. Knox, The Ruggie Rules: Applying Human Rights Law to Corporations (August 16, 2011), (R. Mares ed., 2012), The UN Guiding Principles on Business and Human Rights, Wake Forest Univ. Legal Studies Paper No. 1916664, avail-able online at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1916664 , p. 20

98J. Ruggie, A UN Business and Human Rights Treaty? An Issues Brief by John G. Ruggie, 28 January 2014, available online at: https://sites.hks.harvard.edu/m-rcbg/CSRI/UNBusinessandHumanRightsTreaty.pdf, p.5

(27)

tion of the Guidelines per se, but also as an indication of a change of perspective with regards human rights and corporate activities. That being said, the states that have already implemented National Ac-tion Plans following the UNGPs are still up until today very few in number100_.

100The exact number of states that have enacted National Action Plans can be found at:

https://business-humanrights.org/en/un-guiding-principles/implementation-tools-examples/implementation-by-govern-ments/by-type-of-initiative/national-action-plans; see also European Coalition for Corporate Justice,5 Years of UNGPs: 5 Business & Human Rights issues to focus on, June 10th 2016, available at:

(28)

4. Chapter -

Application scope of the newly proposed binding treaty-

ra-tione personae, rara-tione materiae

Following the aforementioned analysis of previous norm-creating attempts, and the reasons these have not yet created a stable framework that prevents human rights violations, or at the very least provides access to remedies for those that have been harmed, it is submitted that the main objec-tions that have been raised touch upon the core of the international treaties themselves, their scope of application.

Questions regarding the ratione persone, ratione materie and ratione loci scope of the pro-posed regulatory attempts, were the focal point of all the negotiations proceedings. At the time the present thesis is being written, the application scope of the newly proposed binding treaty that is being debated upon in the third session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights, was once again a matter that sparked heated discussions. When examining the application scope of an international treaty, the first point of reference is the Vienna Convention on the Law of the Treaties (hereinafter cited as: VCLT), under articles 24-30.

With regards to the ratione personae scope of treaties, it is submitted that a textual interpreta-tion of VCLT is a bit lacking. VCLT does not provide many informainterpreta-tions concerning applicainterpreta-tion

ra-tione personae of treaties, it does nevertheless reflect the traditional state-centric view of subject

un-der international law in article 2(g), where only states are recognized as states parties to the conven-tion. Having no clear cut guidelines, regional human rights courts have created an independent system of ascertaining responsibility under their respective conventions in cases the perpetrator is not a state, either through general principles of international law or through the invocation of the rule on State re-sponsibility101_.

The question on ratione materiae scope of the treaty is complex, not on the basis of what is covered by the the treaty and what is not, but rather on the basis of who has locus standi to bring a case before the relevant court. In the cases of two of the most prominent regional human rights con-ventions, namely ECHR and ACHR, private individuals play a very important role before the courts' 101For a thorough analysis see: F. Vaneste, Relationship between International Human Rights Law and General Interna-tional Law: Assessing the Specialty Claims of InternaInterna-tional Human Rights Law, University of Leuven, PhD Thesis, 2008, pp. 156-185

(29)

proceedings. ACHR may not include a direct provision enabling individuals to bring a claim to the IACtHR, but the individual's role is pivotal ever since 2001102_{. In the case of ECHR, a simple}

refer-ence to a. 34 is enough to support Friedman's observation, that ECHR contributed in “a revolutionary advance in the legal position of the individual”103

The application scope ratione loci of international treaties pertains the possible extraterritorial effect of treaties, and the “human rightist” belief that all human rights treaties have an extraterritorial effect. It is true that the wording of a. 29 VCLT104_{. is not strict, leaving States and Courts enough}

room to navigate according to the factual background of each case105_.

4.1 Contemporary Treaty negotiations

On June 2014 resolution 26/9 was adopted by the Human Rights Council with the purpose of creating an intergovernmental working group that was tasked to “elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corpo-rations and other business enterprises”106_{. Currently UNs’ Human Rights Council working group on}

102Article 44 § 1, 2001 Rules of Procedures of the IACommHR, entered into force on 1 May 2001, adopted by the IA-CommHR at its hundred and ninth regular session held on 4-8 December 2000

103W. Friedman, The Changing Structure of International Law, London, Stevens & Sons, 1964, p. 244

104a. 29 VCLT read as follows: “Unless a different intention appears from the treaty or is otherwise established, a treaty between one or more States and one or more international organizations is binding upon each State party in respect of its entire territory”.

105To understand the complexity and different positions on the issue of extraterritoriality one can view F. Coomans and M. Kamminga, Extraterritorial Application of Human Rights Treaties, Antwerp-Oxford, Intersentia, 2004; and EctHR's and IACtHRs' sometimes conflicting jurisprudence inter alia: 4 IACommHR, Armando Alejandr Jr. et al. v. Cuba (“Broth-ers to the Rescue”), decision of 29 September 1999, ACHR Report n° 86/99, Ann. Rep. ACHR 1999; IACommHR, Rafael Ferrer-Masorra and Others v. the United States (‘US Detention in Guantanamo’), decision of 4 April 2001, ACHRH Re-ports n° 51/01, Ann. Rep. ACHRH 2000; IACommHR, Victor Saldaño v. Argentina, decision of 11 March 1999, Report n° 38/99, Ann. Rep. ACHR 1998; ECommHR, ECtHR (GC), Bankovic v. Belgium and 16 other States, decision of 12 De-cember 2001, Reports 2001-XII; ECtHR (GC), Bankovic v. Belgium and 16 other States, decision of 12 DeDe-cember 2001, Reports 2001-XII; EctHR, Issa et al. v. Turkey, judgment of 16 November 2004; HRC, López v. Uruguay, decision of 29 July 1981, 68 ILR

106Human Rights Council, ‘Elaboration of an internationally legally binding instrument on transnational corporations and other business enterprises with respect to human rights’ A/HRC/26/L.22/Rev.1 (25 June 2014)

Multinational Corporations in International Law: A treaty to “rule” them all : A study on a progressive development towards corporate accountability in inter- national law