Holding big business to account

The question of how to enforce breaches of human rights against large corporations is never out of the news. In the UK it has usually taken the form of action against one of the giant tech companies (see, for instance, the recent judgment against Google on the right to be forgotten. The judge cited several human rights mechanisms as part of the legal framework for his decision).

The effort to bring legislation in line with the modern world and its numerous mega-businesses is a constant struggle. Just recently, the European Commission announced what it called ‘A New Deal for Consumers’, including EU-wide collective redress, citing specifically the ‘Dieselgate’ scandal involving VW as a reason why new legislation was needed.

The EU announcement also said ‘Representative actions’ – collective redress – ‘will not be open to law firms, but only to entities such as consumer organisations that are non-profit and fulfil strict eligibility criteria, monitored by a public authority. This new system will make sure European consumers can fully benefit from their rights and obtain compensation, while avoiding the risk of abusive or unmerited litigation’. But that attack on lawyers is a topic for another day.

The subject of business and human rights is of growing importance, and the problem of enforcement after serious damage to people or the wider environment will not go away. Last year, the EU Fundamental Rights Agency (FRA) delivered an opinion on ‘Improving access to remedy in the area of business and human rights at the EU level’. There are also other bodies at work, as I listed last year when dealing with this serious gap in the law after globalisation (tinyurl.com/y92b7bah).

Now there have been further, if modest, developments. The FRA recently came together with the European Law Institute (ELI) in Vienna to begin an 18-month project on ‘Business and Human Rights: Access to Justice and Effective Remedies’. The project acknowledges that access to justice is hindered ‘by a number of factors, partly inherent in the imbalance of power between the victims of human… rights abuse and international businesses’. It aims to identify possible draft EU regulatory and/or soft law options dealing with obstacles such as: funding; appropriate legal procedural rules; access to information; and private international law jurisdictional rules and applicable law regimes.

Separately, and on a global as opposed to European stage, the Working Group on Business and Human Rights Arbitration has been promoting international arbitration as a solution. Its report says that such a solution ‘would amount to a judicial system without a country’, which it believes is a good thing.

It believes this because disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified, so making international arbitration attractive. The report also acknowledges that changes would have to be made to the arbitration system: greater transparency of proceedings and awards; the ability of numerous victims to be able to aggregate their claims; and a system for ensuring that arbitrators for such cases will have appropriate expertise in business and human rights.

The group also favours special rules designed for business and human rights arbitration (BHR Arbitration Rules), claiming that they could be used within or outside the jurisdiction of the main arbitration centres. It further hopes that multinationals will ensure that the terms and conditions they use in their supply chains will include a reference to binding arbitration before a BHR Arbitration Panel in case of disputes.

As for the inequality of arms (or imbalance of power referred to by the ELI-FRA project) this could be dealt with by permitting representation of victims before an arbitration panel by human rights NGOs and labour unions, with the help of legal aid or through pro bono services by lawyers. Third-party funding and the establishment of trust funds which accept both private and public contributions are other solutions.

You will note the undercurrent in some of this that lawyers are part of the problem, not the solution. This is so both in respect of the exclusion of lawyers from bringing collective redress actions in the European Commission’s proposals, and the cost of lawyers leading to inequality of arms in the international arbitration proposals. We need to acknowledge the problem and contemplate its consequences.

But we must also keep in mind that it is lawyers – in the ELI, for instance, and on the Working Group on Business and Human Rights Arbitration – who are leading the charge for long-term solutions to the serious problem of enforcement of such disputes. We should wish them well.

Jonathan Goldsmith is Law Society Council member for EU matters and a former secretary general of the Council of Bars and Law Societies of Europe. All views expressed are personal and do not necessarily reflect the views of the Law Society Council