In July 2018, the United Nations’ intergovernmental working group on business and human rights released the first official draft of a proposed binding international treaty on business and human rights (the Treaty).

Key features of the Treaty

The key provisions of the Treaty are as follows:

  1. Scope: The Treaty applies to human rights violations in the context of any business activities of a transnational character.
  2. Obligations of states: Under the Treaty, all states must, among other things:
    a. guarantee the right of victims to present claims to their courts;
    b. investigate human rights violations “effectively, promptly, thoroughly and impartially” and (where appropriate) take action against perpetrators;
    c. facilitate access to information for victims, including through international cooperation;
    d. provide proper and effective legal assistance to victims;
    e. establish an International Fund for victims;
    f. provide effective mechanisms for enforcement of remedies; and
    g. protect victims, their representatives, families and witnesses from unlawful interference with their privacy and from intimidation, and retaliation.
  3. Requirement to legislate for human rights due diligence: Article 9 of the Treaty stipulates that states must use their domestic legislation to require all persons with business activities of a transnational character within their territory or otherwise under their jurisdiction or control to undertake due diligence throughout their business activities, taking into consideration the potential impact on human rights resulting from the size, nature, context of and risk associated with the business activities. Such due diligence shall include (but shall not be limited to):
    a. monitoring human rights impacts;
    b. identifying and assessing human rights violations;
    c. preventing human rights violations;
    d. reporting on non-financial matters, including at a minimum environmental and human rights matters;
    e. undertaking environmental and human rights impact assessments; and
    f. carrying out meaningful consultations with affected groups and relevant stakeholders.
  4. Requirement to enforce human rights due diligence obligations: The Treaty also requires states to enact effective national procedures to enforce compliance with human rights due diligence legislation.
  5. Legal liability for perpetrators: Under Article 10 of the Treaty, all states have a duty to hold perpetrators criminally, civilly and administratively liable for human rights violations in the context of transnational business activities through their domestic law. Such liability is subject to both criminal and non-criminal sanctions, including monetary penalties. The liable party must “provide reparation to the victim or compensate the state if the state has already provided reparation to the victim”.
  6. Jurisdiction: The Treaty allows claimants to bring actions in either the court of the state where the human rights violations occurred, or where the defendant is domiciled.
  7. Mutual legal assistance: Article 11 of the Treaty stipulates that states must “cooperate in good faith to enable the implementation of commitments” under the Treaty and in the fulfilment of its purposes and must “afford one another the widest measure of mutual legal assistance” in initiating and carrying out investigations, prosecutions and judicial proceedings to this end.
  8. Implementation: The Treaty requires states to take legislative and administrative measures to ensure the effective implementation of the Treaty and to accord special attention to business activities in conflict-affected areas and groups “facing heightened risks of violations of human rights within the context of business activities, such as women, children, persons with disabilities, indigenous peoples, migrants, refugees and internal displaced persons”.
  9. Monitoring: In accordance with Article 14 of the Treaty, a committee of experts will be established to monitor and promote the implementation of the Treaty.

Impact for businesses and states

The Treaty is still in its early stages. If enacted and properly implemented by states, it is likely to have a profound effect on how companies conduct due diligence on potential investments and how countries provide access to remedy for victims.

A legal requirement for all persons with business activities of a transnational character to conduct human rights due diligence is also likely to have an effect on the scope of duty of care and the standards that courts can expect from multinational businesses, including parent companies with subsidiaries abroad.

Read the Treaty here. See also this link for a further exploration of parent company liability for human rights impacts overseas.