Watching the Small Print in Business and Human Rights

By Claret Vargas*

 

In the long struggle to implement the Guiding Principles on Business and Human Rights, five years since they were first adopted, the call for tangible action, not only words and commitments, is a common refrain. A necessary element of implementation is the involvement of business, but we must proceed with caution, and focus significant attention on the small print.

Fine print is already making its usual disastrous appearance in the business and human rights context. For example, in an infamous case involving Barrick Gold, owner of a mine in Papua New Guinea since 2006. There, private security guards working for the mine were accused of beatings, rapes and gang rapes and other atrocities, gave rise to a deeply flawed Remedial Framework, with a miserly compensation of $8,500 for gang rapes. It included a waiver clausethat barred women, whose poverty forced them to accept any deal, from seeking redress. 119 women who accepted the deal denounced the waivers at the most recent Forum on Business and Human Rights. None of them had legal representation when they were presented the deal and accepted it.

There are important reasons to bring in business into the process of implementing the Guiding Principles. Some initiatives seek to engage businesses that are willing to play leadership roles in the protection of human rights, and create a network among them. Another proposal, by Jo Ford, considers how or whether private contracts might be more effective in implementing human rights. We have to think creatively to find ways to engage business in the implementation of the Guiding Principles.

Forum on business and human rights at Geneva. Photo credit: U.S. Mission Geneva/ Eric Bridiers

Forum on business and human rights at Geneva. Photo credit: U.S. Mission Geneva/ Eric Bridiers

There are signs of growing interest by business in participating in the Guiding Principles implementation process, but as businesses and their lawyers take note, they must also be aware that claims-denying tactics will be met with resistance. A leading international law firm highlighted the growing importance of lawyers in “embedding and operationalizing respect for human rights within firms and helping companies to manage their human rights risks.” As this firm’s lawyers summarized takeaways from the 2016 Forum on Business and Human Rights, they argued that the “Multiple (and even majority) business representation on panels on topics such as effective due diligence, corporate liability, community engagement, land rights and access to remedy led to a rich debate and valuable exchange of concrete, practical ideas for the implementation of the [Guiding Principles].” (emphasis my own). In this account, business dominance is what is required for lofty human rights ideals to become practical realities.  

When corporations and their lawyers begin to take a leading role in advising and designing implementation mechanisms, they can take control of the aims of the mechanism. It is important to balance being watchful, even as we recognize the importance of their participation. For even if rights are enshrined and commitments are proclaimed, we must ask whether there will be meaningful ways to enforce rights and private commitments.

One aspect that will be key is access to justice. How will communities be able to enforce rights and bring claims for violations by corporations? There is already a woeful implementation gap in access to justice, and it is one of the most important issues for communities and their advocates in the current debates on Business and Human Rights.  But would having access to the judicial fora of the home country of a transnational corporation, for example, help lift the obstacles for affected communities’ access to justice? It will depend on the fine print of the mechanisms that are developed.

Access to justice in the United States, for example, is denied every day through arbitration clauses. Arbitration clauses have been used to prevent class action cases, cases in which the stakes for a single individual are relatively small compared to how much she might have to pay to a lawyer. Class actions usually would address this access problem, but when a contract with a corporation contains a mandatory arbitration clause, it will usually result in barring class actions or even  joint claims. In that case, the individual simply does not have access to justice. As David Schwartz puts it, “Nothing is more claim-suppressing than a ban on class actions, particularly in cases where the economics of disputing make pursuit of individual cases irrational.” The power of corporations to force individuals into arbitration, is the  “power to impose a mandatory, no opt-out system in their own private “courts” designed to preclude aggregate litigation.” (Resnik, at 133).

In 2014, the New York Times took note of the damaging effects of private arbitration clauses and began a series on arbitration. While this provided some much needed attention to a boring problem (and fine print problems are always boring until they affect your life), it ignited only limited reform. Part of the reason is the control of information that these clauses allow, which enables spin. Corporations can claim that the results are the same as those in Court, but less costly for all involved. But in general, these claims are “largely anecdotal because arbitrations are confidential and there is no federal database that records their outcomes.”

Phto credit: Michael Coghlan

Phto credit: Michael Coghlan

Why belabor arbitrations clauses? Because they have been a silent agent in eroding access to justice in places where this right is often assumed to be secure. How much more watchful must we be in spaces where access to justice is currently denied?

I do not advocate for closing the door on dialogue and participation of business in the attempt to implement the Guiding Principles. However, imagine an innovative Alternative Dispute Resolution for international individual claims, offered as a solution to the lack of access to forums of the home country of a Corporation. How will arbitrators be selected and how will their interest in being asked to arbitrate again play a role in ruling for the corporation? Will repeat players, that is, corporations who use these systems often, play a role in “reforming” and “improving” their rules to benefit corporate outcomes? And what restrictions will be imposed? Will there be confidentiality requirements? How about prohibitions on joint or aggregate claims? These are all questions that human rights advocates must engage. If and when businesses propose practical solutions to implement the Guiding Principles in earnest, everyone must watch the fine print.

 

*Claret Vargas is a researcher at the Center for the Study of Law, Justice and Society (Dejusticia).

Photo credit: Plenty’s Paradox