The Hague Rules on Business and Human Rights Arbitration: Some Challenges and Responses

24 Pages Posted: 18 Aug 2022

See all articles by Giorgia Sangiuolo

Giorgia Sangiuolo

affiliation not provided to SSRN

Bruno Simma

International Court of Justice

Date Written: January 1, 2022

Abstract

The rise in power of multinational corporations over the past fifty years is a well-documented phenomenon. Multinational enterprises have emerged as truly global actors, able to affect government policies in strategic, economic and legal ways. Strategically, they often operate into sectors traditionally run by governments, by providing infrastructures or other social services. Economically, they are powerful financial centres, wealthier than certain small countries. Legally, multinational corporations tend to be independent of one specific state, except for the formal nexus of incorporation, and have the capability to quickly restructure to adapt to changing circumstances. From an international law standpoint, the large majority of international legal scholars argue that multinational corporations do not possess international legal personality, making it difficult to subject them to direct legal obligations applicable across borders.

The comprehensive protection that these entities have received, for instance, under international investment law, goes to demonstrate how multinational corporations can often contribute to the economic and technical development of society. At the same time, these corporations can be responsible for breaches of human and environmental rights, spanning from the provision of unsafe or unhealthy working conditions, to discrimination against employees, to damage to people’s health through pollution, environmental accidents, and health and safety failures, often without being held accountable for those breaches due to the incapability or unwillingness of national and international authorities to effectively regulate them.

A range of initiatives has attempted to close this accountability gap. Reflecting the difficulty of creating binding obligations on non-state actors, the most widely used international law instruments deployed to date are international instruments of a ‘soft law’ nature, such as the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines. More recently, an increasing number of countries have begun to address this gap by setting out human rights due diligence obligations on multinational enterprises in their own national legislation, such as through the French Loi relative au devoir de vigilance. International treaties, and judicial and quasi-judicial national and international courts and tribunals have also proven to be increasingly efficient instruments to fill the governance gap between the power and regulation of corporations. The Hague Rules on Business and Human Rights Arbitration (the ‘Hague Rules’), which the authors of this article have contributed to develop, are another instrument that aims to effectively address harm to human rights or the environment caused by corporations. Launched in December 2019, the Hague Rules are a set of arbitral rules specifically devised to settle disputes arising from the alleged breach of human and environmental rights by businesses and their supply-chain partners across borders.

We have previously discussed why this ad hoc instrument for resolving such human rights disputes, alongside other national and international instruments, might prove beneficial for the prevention and resolution of human rights violations on the part of businesses. Indeed, the Hague Rules have received a broadly positive reception from stakeholders and it would appear that they have recently been integrated in the Sustainable Investment Facilitation Cooperation Agreement (SIFCA), a next-generation model bilateral investment treaty (BIT) developed for The Gambia. In the present contribution we want to take stock of how the landscape of remedies for human rights violations by businesses has evolved since the launch of the Hague Rules in 2019 and attempt to respond to the main criticisms that have been raised to date in relation to them.

Keywords: Arbitration, Hague Rules, Business and Human Rights, Corporate Social Responsibility, Sustainability

Suggested Citation

Sangiuolo, Giorgia and Simma, Bruno, The Hague Rules on Business and Human Rights Arbitration: Some Challenges and Responses (January 1, 2022). Michigan Journal of International Law, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4152404 or http://dx.doi.org/10.2139/ssrn.4152404

Giorgia Sangiuolo (Contact Author)

affiliation not provided to SSRN

Bruno Simma

International Court of Justice ( email )

Carnegieplein 2
The Hague, 2517 KJ
Netherlands

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