The EC’s draft ban on products made using forced labour: Key measures to guarantee remediation for victims
I am very pleased to host two blog pieces which reflect on the 10 years which have passed since Rana Plaza as well as offering thoughts as to the way forward. The first one, by Rubana Huq was posted here. The second one, by Claire Methven O’Brien and Amy Weatherburn focus on the remedy gap in the Draft Regulation proposed by the EC.
These blog pieces were commissioned and edited by Sandhya Drew and Felogene Anumo for the Blog of the Business and Human Rights Journal but an IT blip on the CUP website is delaying publication, and so I have seized this opportunity. These pieces will be crossposted by the BHRJ Blog too at a later date.
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Claire Methven O’Brien and Amy Weatherburn
In 2022, the European Commission (EC) proposed a new Regulation to ban products made using forced labour from the EU market. In this post, we highlight the absence of provisions in the draft Regulation to guarantee remedies for victims, and put forward five remediation measures that could be introduced to address this gap.
The EC’s proposed ban on products made using forced labour in outline
The EC’s proposal seeks to prevent goods made with forced labour from circulating on the EU market. The draft Regulation would hence empower Member State authorities, where there are indicators of forced labour in the supply chain, to investigate products and businesses (Articles 4-5) and conduct checks and inspections inside as well as outside the European Economic Area. Where forced labour is implicated in their production, goods can be withheld or disposed of (Article 6) and penalties imposed for non-compliance (Article 30). Additional EU-level measures aim to promote the law’s effectiveness. These include an EU database of forced labour risk areas and products to supply data to guide investigations and checks (Article 11) and guidance (Article 23). In terms of checks and balances, enforcement action against businesses is to be subject to review and appeal before national courts.
Remedies for forced labour victims in the draft EU Regulation: a crucial omission
Despite its prohibition in international law and its designation as one of the five fundamental principles and rights at work, forced labour is on the rise globally, with 28 million victims worldwide, 86 % in the private sector and most women. Human rights standards, including those binding on the EU, demand that individuals who fall victim to forced labour must be remediated. Remedies must be sufficient and certain in practice and context-specific, with reference to victims’ individual circumstances. While these rules generally relate to forced labour occurring within a state’s jurisdiction, the UN Guiding Principles on Business and Human Rights (UNGPs) and Council of Europe standards affirm the need for ensure remedy also in cross-border and value chain settings.
It is striking, then, that the EC’s proposed Regulation omits measures that would secure remedies for victims of forced labour. As is well-known, victims of forced labour face extreme difficulties in securing remediation, facing obstacles such as trauma, precarity, resource constraints, language barriers, lack of rights awareness and risks of reprisals. As remarked also by stakeholders, this lack of remedy perpetuates injustice, undermines the rule of law, exacerbates risks of re-victimisation and hence stands to frustrate the policy goals of the draft Regulation as well as broader EU and international human rights and sustainable development objectives.
Fixing the EU Regulation’s remedy gap: A package of proposals
The European Parliament is currently developing its position on the EC’s draft forced labour Regulation. There is therefore still time and opportunity to fix the failure of the EC’s draft to advance remedy for forced labour victims. As we analysed in our recently presented Briefing for the European Parliament, this goal might be promoted through the following mechanisms.
First, the Regulation should explicitly affirm the goal of preventing and remediating harm for victims. What after all is the point of EU legislation in this area, if not redressing the affront to human dignity and significant harm to human beings inflicted via exploitative labour practices?
Second, the draft Regulation should require economic operators to provide evidence of remediation as a condition of having bans or restrictions lifted. Such evidence could relate to, for example, financial and non-financial compensation; restitutionary measures; formal apologies or future-oriented preventative measures or guarantees of non-recurrence.
Third, the proposed EU Regulation could direct fines and administrative penalties into a trust fund for victims. This could then be drawn on to secure remediation in cases where perpetrators cannot be identified or fines enforced, well known obstacles to recuperating compensation where it has been awarded. Such a fund could draw lessons from and coordinate with existing initiatives, such as the UN Voluntary Trust Fund on Contemporary Forms of Slavery and Alliance 8.7.
Fourth, the foreseen Union Network Against Forced Labour Products (Article 24) should be leveraged to involve stakeholders in identifying cases of forced labour as well as monitoring and following up on the implementation of remediation. The network could also facilitate stakeholders in the process of evidence gathering for investigations as this can be a burdensome task for organisations with limited resources given the covert character of forced labour practices, and can dissuade them from pursuing legal action that would hold businesses accountable for forced labour practices. Given the latter, competent authorities should also have a duty to identify and inform potential victims, or their representatives, of the right to remediation in the course of investigations or remedial action.
Fifth, the Regulation should be articulated with other controls on market access. EU public procurement law already provides for exclusions from eligibility to bid for public contracts based on corporate misconduct and corruption and multi-lateral development banks operate a scheme of cross-debarment on a similar basis. Adverse determinations against businesses under the new EU Regulation should activate these or similar exclusions with the possibility, as under EU procurement law and debarment regimes, for ‘self-cleaning’ based on remediation for victims as well as improvements to business systems.
Conclusion
Ten years ago more than 1,110 garment workers lost their lives in the Rana Plaza disaster. Despite some advances, today millions of workers across the world and their families still suffer the immediate and long-terms consequences of serious breaches of minimum labour, health, safety, and environmental standards. Even in cases where activists and workers have won remediation for victims , the risk of reoccurrence and re-victimisation remains high. An unequivocal commitment in principle to securing remedies for forced labour victims, as EU actors claim, is therefore crucial. By integrating the measures outlined here into the draft Regulation, we suggest, the EU would help to put that principle into practice.
Rana Plaza, 10 years on: time for brands, unions and the industry to work together
I am very pleased to host two blog pieces which reflect on the 10 years which have passed since Rana Plaza as well as offering thoughts as to the way forward. The first is by Rubana Huq. Rubana is a Bangladeshi businesswoman, university academic and poet. She is the current Vice-chancellor of Asian University for Women. She is the chairperson of the Mohammadi Group and served as the first female president of the Bangladesh Garment Manufacturers and Exporters Association during 2019–2021. She offers a close up assessment of the sector and the well being of the people who work in it.
These blog pieces were commissioned and edited by Sandhya Drew and Felogene Anumo for the Blog of the Business and Human Rights Journal but an IT blip on the CUP website is delaying publication, and so I have seized this opportunity. These pieces will be crossposted by the BHRJ Blog too at a later date.
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On February 3, 2014, I wrote here about the hell which workers at Rana Plaza had gone through, and finished by asking ‘Where do we go from here?’
My pessimism in 2014 about Bangladesh’s readymade garment industry exports has proved unfounded. In only seven months, from July 2022 to January 2023, exports stood at $27.42 billion, registering a growth rate of 14.31% on a year-on-year basis. Way back in 2013-2014, right after the Rana Plaza collapse, export from Bangladesh was $24.49 billion, followed by 2014-15 number of $25.49 billion and it has continued to grow ever since. The last export figure of 2021-22 registered an export figure of $42.61 billion.
What led to this growth? The answer is pretty straightforward this time around. Bangladesh has remediated over the last ten years. The factory situation with regard to structural, fire and electrical integrity stand at an A++ level. Thanks to the international partners, namely Accord and Alliance, who had come in and intervened as early as May 2013 and began pushing factories to change their ways of business, things worked, things turned around. Today, the industry boasts about having 55 out of the best 100 green factories in the world.
But can Bangladesh RMG sector brag about labour conditions? This answer, this time around, is not necessarily easy to respond to. Minimum wage stands at $88 dollars per day including overtime. Prices of essentials such as onion, rice, wheat and sugar have sky rocketed. Meanwhile, demand for compliance has also shot up leaving a distinct disconnect with sourcing practices. Prices of garments have dipped.
Who will pay the extra? At a time like this, when the countries are waging wars, clothes are not cut to be priorities. Therefore, brands and retailers are as tight fisted as ever, yet trying to cover their own margins. But if the workers need to be paid more, manufacturers need to receive the extra bit, without which changing the wage scene will be a utopia.
Thus, the readymade garment sector of Bangladesh is sprinting to its destiny of cheap volume products instead of marathoning to the ultimate destination of a value added sustainable future. Ten years after the tragedy, the sector needs collaboration from all sides, brands and unions both. The time for finger pointing has to come to an end. Blame doesn’t steer towards progress; it just handicaps innovation.
Unless the brands, unions and the industry work hand in hand, the real success that evolves around the people who work there will be undermined and shortchanged.
Maybe twenty years down the line, while we stand sufficiently distanced from the horror of 24 April 2013, the sector may even turn a new page where the story of the workforce being shielded from want will be etched forever.
Rubana Huq is chairperson of the Mohammadi group. Between 2019-2021, she was the first woman president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) She is Vice-Chancellor of the Asian University for Women.
Human Rights and Sovereign Debt Restructurings: A Proposal for an Optimal Outcome
I am very pleased to host Danny Bradlow’s exposition of his Dove Principles. Danny has used his vast experience to design these principles. This blog piece was commissioned and edited by Sandhya Drew and Felogene Anumo for the Blog of the Business and Human Rights Journal but an IT blip on the CUP website is delaying publication, and so I have seized this opportunity. This piece will be crossposted by the BHRJ Blog too at a later date.
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Daniel Bradlow, University of Pretoria
Zambia defaulted on its debt in November 2021 but has not yet reached an agreement with its creditors. Its president recently warned that this situation is hurting its citizens and undermining its democracy because “you cannot eat democracy”.
Given their adverse economic, social, and political impacts, it should be expected that human rights considerations would play an important role in sovereign debt restructurings. Unfortunately, this is not the case, even though all negotiating parties have human rights responsibilities or obligations.
It is unclear why these actors pay so little attention to human rights in the sovereign debt restructuring context. One possibility is that they are not sure how to incorporate human rights into their transactions.
This should not be surprising. It is difficult to understand the causal linkages between a sovereign debt crisis and the deteriorating human rights situation that follows. There can be multiple such linkages and the lines of causation can run in different directions.
Consequently, a human rights consistent debt restructuring will be fact and context specific and will require the parties to understand their role in both creating the situation and in mitigating or eliminating the adverse human rights impacts.
This requires the parties to have a common approach to analysing the debt crisis and its anticipated economic, financial, human rights, environmental, social and governance impacts. Thus, they could benefit from having a mutually acceptable set of principles that incorporates all these issues.
In 2021, I received a grant from the Open Society Initiative for Southern Africa to explore the feasibility of my proposal to establish a DOVE (Debts of Vulnerable Economies) Fund. This fund would buy the debts of sovereigns in distress and state that it would only support sovereign debt restructurings that were consistent with widely accepted international norms and standards, My work on this project revealed shortcomings with all the existing international standards and led me to develop the DOVE Fund Principles. The principles are based on 20 existing international norms and standards developed by states, international organisations, industry associations and civil society organisations. They can provide a common framework for the negotiations between states and their creditors. They are now set out and explained.
The DOVE Fund Principles
Principle 1: Guiding Norms: Sovereign debt restructurings should be guided by the following 6 norms: Credibility, Responsibility, Good Faith, Optimality, Inclusiveness, and Effectiveness.
- Credibility: The Negotiating Parties and the Affected Parties are confident that the restructuring process can produce an Optimal Outcome. The “Negotiating Parties” are the sovereign debtor, its creditors and their advisors. The “Affected Parties” are the residents of the debtor country and those individuals whose savings either directly or indirectly finance the debt being restructured.
- Responsibility: The Negotiating Parties seek an agreement that respects their respective economic, financial, environmental, social, human rights and governance obligations and/or responsibilities.
- Good Faith: The Negotiating Parties intend to reach an agreement that takes account of all their rights, obligations and responsibilities.
- Optimality: The Negotiating Parties seek an “Optimal Outcome”, that addresses the circumstances in which the transaction is being negotiated, the parties’ respective rights, obligations and responsibilities, and offers them the best possible mix of economic, financial, environmental, social, human rights and governance costs and benefits.
- Inclusiveness: All creditors can participate in the restructuring process and the Affected Parties are able to make informed decisions about how it will impact them.
- Effectiveness: The Negotiating Parties should seek an Optimal Outcome in a timely and efficient manner.
Principle 2: Transparency: The Negotiating Parties and the Affected Parties should have access to the information that they need to make informed decisions regarding the debt restructuring.
The creditors have access to sufficient information that they can make informed decisions about the scope of the sovereign’s debt problems, the options for their resolution and their potential economic, financial, environmental, social, human rights and governance impacts. The Affected Parties should also have access to sufficient information, subject to appropriate safeguards, that they can make informed decisions about how the restructuring may affect their rights and interests.
The creditors should inform the debtor and the Affected Parties about their environmental, social, and human rights obligations and responsibilities.
Principle 3: Due Diligence: The sovereign debtor and its creditors should each undertake appropriate due diligence before concluding a sovereign debt restructuring process.
The Negotiating Parties should utilize a debt sustainability analysis which credibly determines the sovereign’s debt restructuring needs and their impacts.
Principle 4: Optimal Outcome Assessment: At the earliest feasible moment, the Negotiating Parties should publicly disclose why they expect their restructuring agreement to result in an Optimal Outcome.
An Optimal Outcome requires the Negotiating Parties to assess the expected impacts of their proposed agreement on the economic, financial, environmental, social, human rights and governance condition of the sovereign borrower and the Affected Parties.
Principle 5: Monitoring: The restructuring process should incorporate credible mechanisms for monitoring the implementation of the restructuring agreement.
The Negotiating Parties should audit the financial aspects of the agreement and monitor its economic, social, environmental, human rights and governance impacts. This information should be published periodically.
Principle 6: Inter-Creditor Comparability: The restructuring process should ensure that all creditors make a comparable contribution to the restructuring of the sovereign’s debt.
The process should give creditors the confidence that all other creditors are making comparable contributions to an Optimal Outcome.
Principle 7: Fair Burden Sharing: An Optimal Outcome should share the burden of the restructuring fairly between Negotiating Parties and should not impose undue costs on any of the Affected Parties.
Both the debtor and the creditor bear some responsibility for causing debt crises and should absorb some of the restructuring costs. Moreover, they should seek to limit how much of the restructuring costs the Affected Parties will have to bear, considering their relative wealth and ability to absorb losses.
Principle 8: Maintaining Market Access: The restructuring agreement, to the greatest extent possible, should be designed to facilitate future market access for the borrower.
It is an unfortunate reality that debtor countries must seek financing from international financial markets. Thus, the Optimal Outcome should help the debtor regain access to financial markets as quickly as possible.
As the Zambian case demonstrates, the current arrangements for restructuring sovereign debt are sub-optimal. The DOVE Fund Principles seek to overcome this problem by offering both Negotiating and Affected Parties a common conceptual framework that facilitates a fair resolution of the crisis incorporating all its social, environmental, human rights, economic, financial and governance impacts. They therefore can promote an Optimal Outcome.
For further information on this ongoing project, contact: danny.bradlow@up.ac.za
Business and Human Rights Journal articles for further reading:
1) Social Bonds for Sustainable Development: A Human Rights Perspective on Impact Investing
Stephen Kim PARK
Journal: Business and Human Rights Journal / Volume 3 / Issue 2 / July 2018
pp. 233-255
2) The Record of International Financial Institutions on Business and Human Rights
Jessica EVANS
Journal: Business and Human Rights Journal / Volume 1 / Issue 2 / July 2016
pp. 327-332
Business and Human Rights Regulation after the UN Guiding Principles – a Critical Assessment
It is a pleasure to welcome back Dr René Wolfsteller and Dr Yingru Li on Rights as Usual. René is a Lecturer in the Department of Political Science at Martin Luther University Halle-Wittenberg where he analyzes the governance of business and human rights, sustainability, and climate change. Yingru is a Lecturer in Accounting at the Adam Smith Business School, University of Glasgow, and co-convenor of the Glasgow Human Rights Network. Her research focuses on corporate accountability for human rights and a sustainable economy. This post is theirs and it was first published on the Glasgow Human Rights Network’s website.
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Since the UN Guiding Principles on Business and Human Rights (UNGPs) were adopted by the UN Human Rights Council in 2011, they have diffused into policy frameworks, laws, and regulations across the globe and have become the lynchpin of the transnational business and human rights regime (BHRR). In a Special Issue of the Human Rights Review, we brought together a multidisciplinary group of human rights experts to critically examine the construction and effectiveness of key elements of that regime, including due diligence laws, National Human Rights Institutions and National Action Plans, as well as of proposals for a binding international treaty. Based on these analyses, we argue that the BHRR’s effectiveness is inhibited by three major constraints: the weak conception of corporate human rights accountability in the UNGPs; the insufficient regard to the perspective of victims of corporate human rights abuse; and the structural gaps and misalignments in the BHRR’s governance architecture.
The UN Guiding Principles and the Business and Human Rights Regime
Developed by the Special Representative of the UN Secretary-General (SRSG), the late John Ruggie, the UN Guiding Principles have over the past eleven years evolved as the focal point of a transnational regime complex for the regulation of business and human rights. The UNGPs were aimed at tackling and preventing business-related human rights abuses through a new regulatory framework based on three pillars: the state duty to protect against human rights abuse, including by third parties such as business corporations; the corporate responsibility to respect human rights; and the provision of access to effective remedies for victims of business-related human rights abuse. Despite persistent critique of their form and substance by many scholars and civil society actors, their endorsement by the UN Human Rights Council and other organisations has triggered a remarkable process of global norm diffusion, and it has encouraged the development of national systems for the regulation of corporate human rights conduct through instruments such as National Action Plans, National Contact Points, National Human Rights Institutions, as well as through the introduction of mandatory due diligence laws. Leading human rights scholars from political science, law, accounting, and philosophy have examined the construction and effectiveness of this business and human rights regime in a new Special Issue of the Human Rights Review on “Business and Human Rights Regulation After the UN Guiding Principles”. Their critical analyses suggest that the potential of the BHRR’s norms, actors, and instruments to bring about substantive and sustainable human rights change in the corporate sector is severely limited by three structural constraints:
(1) The weak conception of corporate human rights accountability in the UNGPs
The UNGPs rest on a weak and defensive conception of corporate human rights accountability as a social expectation of do-no-harm without proposing new binding obligations or sanctions for business. They define corporate human rights accountability as the responsibility to respect human rights, requiring business firms to “avoid infringing on the human rights of others” and to carry out “due diligence”, which means “to identify, prevent, mitigate and account for how they address their adverse human rights impacts.” (UNGPs 11 and 17) This confined definition was the deliberate outcome of a strategic process of international norm construction by Ruggie, as the contributions by Brigitte Hamm and by Benjamin Gregg demonstrate. Through a worldwide consultation process, Ruggie sought to establish the broadest possible consensus among stakeholders, especially from governments and the business community, in order to create a realistic prospect of support and implementation of the new framework by key actors on the ground. While he succeeded in establishing the UNGPs as the BHRR’s normative lynchpin, the diffusion of their norms and standards meant that subsequent regulatory instruments rarely went beyond the UNGPs’ limited do-no-harm approach.
(2) Insufficient regard to victims and vulnerable groups
The contributions to the Special Issue reveal a recurring pattern in the construction of the BHRR’s norms and instruments: victims’ groups and people at heightened risk of rights abuse are often not adequately represented in consultations and negotiation processes, as business interests often tend to be prioritised over the interests of those groups. For instance, the consultation process leading to the UNGPs did not involve visits of places where corporate human rights abuses had occurred and, hence, no encounters with people directly affected. Civil society organisations and victims’ groups also find it difficult to make their voices heard in the negotiations for an international business and human rights treaty because, in order to get access to the meetings of the UN Working Group in Geneva, NGOs have to acquire a consultative status with the UN Economic and Social Council through a selective accreditation process. The systematic study of the construction of National Action Plans for business and human rights by Claire Methven O’Brien, John Ferguson and Marisa McVey shows that most NAPs have not been based on stakeholder mapping exercises to identify relevant constituencies, and only a minority of states has taken steps to get particularly vulnerable groups involved in NAP development. The prioritisation of business interests over those of potential victims of corporate human rights abuses became visible also in the drafting process of the French Duty of Vigilance Law when the initial proposal to shift the burden of proof from victims to companies was abandoned before the passing of the bill – a change that created a considerable barrier to the law’s effective enforcement, according to Almut Schilling-Vacaflor.
(3) Structural gaps and misalignments in the BHRR’s governance architecture
The articles in the Special Issue also highlight significant implementation gaps and misalignments in the BHRR’s governance architecture regarding the envisaged functions vs. actual competences and capabilities of specific actors and instruments. René Wolfsteller demonstrates that most National Human Rights Institutions are currently unable to fulfill the role of state-based, non-judicial grievance mechanisms as originally envisaged by the UNGPs because the key international steering instrument for NHRIs’ design and functions – the Paris Principles – does not prescribe strong complaints handling powers against corporate actors; hence, most NHRIs are lacking this competence. Moreover, National Action Plans on business and human rights are often characterised by misalignments between their general aims and a lack of specific indicators and measurable targets, as well as by structural gaps in the capacity of states to effectively monitor and evaluate NAP implementation. And although the French Duty of Vigilance Law was the first comprehensive national due diligence regulation rendering companies and their subsidiaries liable for human rights abuses and environmental damages in transnational supply chains, the law suffers from a lack of state commitment to monitor its implementation and to sanction corporations’ non-compliance.
All of these intended and unintended gaps and limitations inhibit the BHRR’s potential to bring about effective human rights change in the corporate sector as they allow business actors to evade accountability through strategic ignorance, selective engagement or minimal compliance, as Alvise Favotto and Kelly Kollman show in their case study of the largest UK-based TNCs. However, recent proposals for a European Directive on Corporate Sustainability Due Diligence, as well as for an international business and human rights treaty, have restored hope for more stringent and coherent transnational regulations. Largely resembling the “progressive model” of corporate human rights accountability proposed by Nadia Bernaz, the latest treaty draft would – if adopted – not only establish a more ambitious benchmark. It would also present a crucial step toward the creation of a level playing field for a global economy more human rights friendly.
Human Rights Review, Vol. 23, No. 1 (2022), Special Issue:
“Business and Human Rights Regulation After the UN Guiding Principles”
Guest Editors: René Wolfsteller & Yingru Li
Table of Contents
by René Wolfsteller & Yingru Li
Beyond Due Diligence: The Human Rights Corporation
by Benjamin Gregg
by Alvise Favotto & Kelly Kollman
by Almut Schilling-Vacaflor
by René Wolfsteller
National Action Plans on Business and Human Rights: An Experimentalist Governance Analysis
by Claire Methven O’Brien, John Ferguson & Marisa McVey
by Nadia Bernaz
by Brigitte Hamm
Business and Human Rights in the New Chilean Constitution? Implications for Chile and Latin America
It is a pleasure to welcome Moisés Montiel Mogollón and Salvador Herencia-Carrasco to Rights as Usual. Moisés Montiel Mogollón (@MoisesMontielM) is an adjunct professor of International Law at Universidad Iberoamericana and Universidad Panamericana in Mexico and Managing Partner at Lotus Soluciones Legales. Salvador Herencia-Carrasco (@Sherencia77) is the Director of the Human Rights Clinic, HRREC and part-time professor at the Section de Droit Civil at the University of Ottawa. This post is theirs.
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In July 2021, a democratically elected Constitutional Assembly was sworn in Chile. The mandate is to draft a new Constitution to replace the 1980 text adopted under the Pinochet regime. To enter into force, the new Constitution must be approved via referendum, which should take place in the second half of 2022.
Since the Constitutional Assembly began its work, both constituents and the public have tabled proposals of norms to be included in the new Constitutional text. In December 2021, eight members of Chile’s Constitutional Assembly introduced a bill to include a Business & Human Rights (BHR) article in the new Constitution. The proposal seeks to address a high number of socioenvironmental conflicts caused by transnational corporations (TNCs) as well as breaches to privacy caused by the growing control of information and communication technology services by private businesses (paras. 3 and 4).
The bill was made public in January through the social media accounts of Mr. Gaspar Domínguez, the new Vice-President of the Chilean Constitutional Assembly and a co-sponsor of the bill. If approved, this article would raise to a constitutional level the obligations of businesses to respect human rights and the environment and to prevent, mitigate, and remedy the human rights and environmental impacts of their activities on individuals and communities. The proposal states the following:
“Duties of Businesses. Businesses must respect fundamental rights and prevent, mitigate, and remedy any activities that bring about negative consequences on the full enjoyment of human rights.”
To our understanding, this is the first bill that seeks to include in a Constitution a norm that mirrors the core principles of the UN Guiding Principles on Business and Human Rights (UNGPs). Irrespective of the bill’s outcome, the proposal should be celebrated as an important precedent as it brings the BHR discussion to a Constitutional level. The purpose of this post is to present the bill and explain why it makes sense in the Chilean context, and to explore what this development could mean for Chile’s and Latin American Constitutional law, and particularly for public interest litigation.
BHR legislation in Chile and Latin America: Not much to celebrate
Almost 11 years since the adoption of the UNGPs, no Latin American country has adopted specific BHR legislation. Moreover, only Colombia, Chile and Peru have adopted a National Action Plan (NAP), while Mexico has included a chapter on BHR in its current National Human Rights Plan. In a region with multiple BHR problems related to extractive industries, precarious labour conditions, lack of access to effective legal remedies and attacks on environmental defenders and Indigenous leaders, the situation is rather bleak.
To justify their proposed bill, constituents argue that, despite having had a NAP since 2017, its impact has been minimal (para. 7). In addition, the Chilean Executive has not adopted any legislation implementing the UNGPs and no significant change in environmental, labour, natural resources or Indigenous Peoples regulations have been made (para. 8). The proposal makes specific reference to the UNGPs to ensure that companies operating in the country, particularly TNCs, adopt a responsible business conduct and can be held accountable if they do not (paras. 9-13).
The proposal rests on three main ideas: (i) the growing influence of private actors in strategic sectors of the economy, like mining; (ii) the increasing involvement of the private sector to provide public goods such as health and education; and (iii) the lack of regulations from the government to ensure that business activities do not have a negative impact on human rights and the environment.
For the constituents, including this article in the new Constitution would contribute to achieve a “socially sustainable globalization” (para. 5), while focusing on the need to establish due diligence processes by private and public businesses (para. 13).
Why Chile? Because “No son 30 pesos, son 30 años”.
In 2016, Chileans protested against the privatization of education, including higher education. Chile has been one of the leading economies in Latin America and it remains a model for the region, but the cut in public spending and the mercantilization of public goods has had adverse impact, mainly on low-income families and vulnerable groups like Indigenous Peoples. In October 2019, the increase of 30 pesos (approximately 40 USD cents at the time) in public transportation fees was the spark that ignited nation-wide protests and resulted in the call for a Constitutional Assembly to broaden the social scope of State activity.
Chile suffers from massive disparities in terms of income, wealth, and well-being. Chile only allocates 11.4% of its GDP to social programs. The only OECD country with a lower allocation is Mexico (7.5% of the GDP), while the average social spending in the OECD is 20%. At the same time, Chile’s combined corporate income rate is one of the lowest of the OECD countries, with an average of 10%.
Recently this blog published a post about the case of Martina Vera that went to the Inter-American Court of Human Rights (IACtHR). Martina is a teenage girl with serious disabilities. Her family hired a private health insurance policy (ISAPRE) to keep her alive. The ISAPRE unilaterally cancelled her policy because of the costs incurred, putting her life at severe risk. The story is more than one about the horrific actions of a cut-throat business. It is about how the laws in force at the time allowed such behavior from private businesses. Stories like Martina’s happen almost daily in Chile (and other countries in Latin America), affecting those that need quality public services the most. Therefore these protests were not just about 30 pesos, but about 30 years of economic growth with indifference and without adequate social safety nets, including BHR regulations.
The Constitutional Authority Argument: An opportunity for Latin America
When it comes to BHR standards at the international level, a problem is that the UNGPs are not legally binding and do not generate new international state obligations. Despite the ongoing negotiation for a BHR treaty, and significant advances in this process (see new draft), there are no legally binding instruments in the field. In the Latin American context, the case law of the IACtHR has contributed to link the UNGPs with the American Convention on Human Rights but that is not enough to usher in necessary legal and policy changes in the continent. That is why the Chilean constitutional proposal is a formidable step. It would create a truly binding UNGPs-inspired norm and elevate the UNGPs from mere soft law to constitutional law.
Including the UNGPs’ language in the Constitution would oblige the state to adopt the necessary measures to prevent, and to protect against, the potential negative human rights’ impacts of businesses (by way of regulation) and have them honor their duties to respect, prevent, mitigate and remedy. In Latin American constitutional tradition, a hierarchical norm of this kind should guarantee the adoption of specific laws, policies and recourse measures.
If adopted, such norm could have a triggering effect in the region. Since the 1990s, Latin American Constitutionalism has developed a rich synergy in the recognition of rights and the adoption of Constitutional recourses like the amparo or tutela (this is a recourse that seeks the protection of fundamental rights not related to personal freedom). In addition to the case law of the IACTHR, it is now a common practice to see Constitutional Courts and Supreme Courts using standards and decisions from other Latin American courts to decide on similar matters. This Ius Constitutionale Commune is a rich tradition that has also had a significant impact on the case law of the IACtHR. Therefore, the adoption of a Constitutional norm on BHR could have a spill-over effect in other Latin American countries, particularly through public interest litigation.
Additionally, should other States follow suit, this norm could signal the emergence of a new customary rule building on the three pillars of the UNGPs, at least at the regional level. Although a new rule of customary law would require general practice and opinio juris and is a long way off, the inclusion of a constitutional level BHR rule would be a precedent too big to ignore in Latin America. The UN International Law Commission in its 2018 Draft Proposal on Identification of Customary International Law attributes significant weight to the inclusion of norms in domestic legislation. After all, what better evidence is there of a norm being “accepted as law” as per the formulation in Article 38 of the ICJ Statute, than its inclusion in domestic legal systems, especially at the constitutional level.
Keeping an eye on the Horizon
The Constitutional Assembly is now deliberating on the text. Constituents have until July 2022 to finalize a proposal and 60 days later, Chileans will have to vote in favour or against the new Constitution by referendum. The new government, led by Mr. Gabriel Boric, will assume office in March 2022, and was elected on a platform of social change. In this context, his party is likely to approve a BHR norm and its corresponding implementing legislation. That said, by no means is this a done deal and it remains to be seen whether the proposed bill will make it into the new Chilean Constitution. If it does, it will probably translate into more responsible business practices and diminish negative impacts on the human rights of Chileans, perhaps bringing about a slightly less unequal society where people come closer to owning their rights. If that is the case, this BHR rule will likely become a banner of a new, responsible, and socially-mindful business paradigm that addresses the prominent root causes that the constitutional renewal.
One thing is clear, in a context of great social inequality, adding a BHR norm to the new Constitution makes sense. If successful, this initiative holds tremendous potential. It could spark a regional conversation on BHR standards beyond the IACtHR. The international normative implications of such a dialogue could very well turn Latin America into a stronghold for the UNGPs and the BHR movement.
Business and Human Rights before the Inter-American Court of Human Rights: 2021 in Review and a Look Forward to 2022
It is a pleasure to welcome (back) Salvador Herencia-Carrasco and Kelsea Gillespie to Rights as Usual. Salvador Herencia-Carrasco (@Sherencia77) is the Director of the Human Rights Clinic, HRREC and part-time professor at the Section de Droit Civil at the University of Ottawa. Kelsea Gillespie (gill006@uottawa.ca) is a J.D. candidate at the Faculty of Common Law, and research assistant at the Human Rights Clinic of the University of Ottawa.
This post is theirs.
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In 2021 the Inter-American Court of Human Rights (IACtHR) released two judgements with significant business and human rights (BHR) implications: Miskito Divers vs. Honduras and Martina Vera vs. Chile. Both decisions build on the 2015 Kaliña and Lokono vs. Suriname ruling, where the IACtHR used the UN Guiding Principles on Business and Human Rights (UNGPs) to highlight a state’s duty to assure that private businesses fulfill human rights and environmental regulations. Miskito Divers and Martina Vera are new decisions from the Court that engage with the UNGPs, and while the outcomes of both decisions are welcome, the application of the UNGPs and BHR principles leaves room for improvement.
The Miskito Divers and Martina Vera cases take small steps toward tying the UNGPs to the American Convention on Human Rights (ACHR) and to a lesser degree, to the San Salvador Protocol on Economic, Social and Cultural Rights. The IACtHR seems willing to engage with BHR principles in its reasoning but timid about introducing more concrete reparation orders to address the state’s role in regulating business conduct vis-à-vis human rights. In this post we review the 2021 decisions and make recommendations, as the Court is set to consider new BHR cases in 2022.
Miskito Divers : Labour rights and responsibility of businesses
This case addresses the health and labour conditions of Miskito divers working for lobster fishing companies operating in their territory. The case resulted in a friendly settlement between the state and the petitioners, which was reviewed and accepted by the IACtHR. The main focus of the Court’s decision is the health, safety, and working conditions of the victims, but in its review of the settlement, the IACtHR uses the UNGPs to establish some general obligations of states regarding BHR.
First, the Court reiterates the state duty to prevent all human rights violations by private entities operating under its jurisdiction (para. 48). This duty includes the adoption of specific laws and policies, including due diligence (para. 49) and reparation procedures (para. 50). These are broad statements that build on the first and third pillars of the UNGPs but lack specific reference to the situation of the Miskito divers.
Second, the IACtHR uses the second pillar of the UNGPs to state that businesses should bear the primary responsibility for ensuring their activities respect human rights (para. 51). This includes measures such as internal policies that are constantly evaluated, mitigation strategies, and accountability mechanisms that also apply to supply chains (para. 52). Once again, this broad language impairs its impact on the specific case and the Court fails to consider other key BHR governance instruments and internationally-recognized labour standards.
Finally, the Court did not order any specific measure obligating Honduras to enact specific laws or policies applicable to all corporations to observe human rights and BHR principles. This outcome would have been possible under Art. 63 of the ACHR related to reparations. Such an order could have gone a long way towards not only ensuring non-repetition in this case, but also preventing future rights violations by corporate actors.
The only reference to such a measure is a commentary on a reparation regarding the adoption of certification plans for safe fishing (para. 162.6.k), where the Court provides that Honduras must adopt new fishing regulations that includes “human rights policies, due diligence processes and processes to remedy human rights violations” (para. 138). The Court specifies that businesses should be made responsible for the financial cost of implementing new safety and oversight mechanisms. However, given that the order to adopt new fishing regulations is not integral to the overall judgment, it is doubtful whether the state will enforce this requirement for businesses.
Martina Vera: Health and the duty of private health insurances to respect human rights
Martina Vera is a case that deals with the right to health of a child with a disability and the state’s duty to assure her right to health. Martina was born with a rare condition known as Leigh Syndrome, which chronically affects mental and psychomotor abilities. In her hometown of Arica, the public hospital did not have the expertise to provide adequate treatment, forcing her parents to contract with a private health insurance policy (ISAPRE) in 2007. In 2010, the ISAPRE unilaterally cancelled the policy because Martina’s condition was “progressive and irrecoverable” (para. 128). The cancellation, which put her life at severe risk, was technically legal and done according to Chilean regulations at the time, as confirmed by the Chilean Supreme Court.
Martina Vera is an important decision because it develops the right to health of children with disabilities and the role of the state to assure the right to health of its population. But as the IACtHR analyzes the right to health, social security, and whether Chile fulfilled its duty to ensure that private corporations offer a quality and efficient health service (para. 100), a specific BHR approach is noticeably absent.
As in Miskito Divers, the IACtHR refers to the UNGPs (para. 84-88), but the focus is on the state’s duty to regulate and oversee that private businesses offering public good services – like healthcare – do not affect the rights to life and personal integrity of individuals (para. 89). Noticeably, in Martina Vera the Court chose not to analyze issues like conflict of interest or the mercantilization of public goods, which have a significant impact on the privatization of public goods.
For example, regulating private health insurance is highly technical and many of the experts in the field move between regulatory agencies and the companies offering such services, resulting in a “revolving door” effect in the industry. The fact that at the time legislation allowed health insurance companies to cancel client policies when deemed too expensive should have raised questions from the Court during the evidence stage. The Court could have asked Chile for more information on the process regarding the drafting of this legislation, as well as a study regarding the economic impact of these regulations on the rights of vulnerable people. Most likely, the result would have showed that the privatization of public goods leads to economic factors prevailing over the human rights of the beneficiaries.
The lack of analysis of the root causes contributing to Martina’s case becomes more evident in the reparation orders, where the Court did not include any specific measure regarding BHR. Even though the Court recognized that the ISAPRE knew about the condition of Martina Vera and still cancelled her policy (para. 129), the Court did not order Chile to review its current regulation of private health companies or to adopt policies to assure a prompt access to effective legal remedies by users of the ISAPREs.
Conclusions: Diagnosing and treating the root causes of BHR cases
In Miskito Divers and Martina Vera, the IACtHR advances the integration of the UNGPs with the ACHR, particularly with Art. 1 (obligation to respect rights), Art. 2 (adoption of internal measures) and Art. 25 (right to judicial protection). These cases show that where a private business impacts the rights of an individual, the IACtHR is willing to evaluate the merits of the case against state requirements to protect and uphold human rights and to provide access to remedy under the ACHR.
However, the Miskito Divers and Martina Vera cases demonstrate that while the Court is willing to engage with the UNGPs in its reasoning, it is yet to apply BHR principles consistently in reparation orders. If a state is to achieve not only non-repetition of the same human rights violation but also is to prevent future violations, more proactive reparations orders would assist a state in fulfilling its duties under the ACHR.
To properly address the lack of specific regulation on BHR in the Americas, the Court needs to take a direct approach in confronting the root causes of cases like Miskito Divers and Martina Vera. The Court will have a chance in 2022, in three cases with BHR implications: the U’wa Indigenous Peoples vs. Colombia (extractive projects on Indigenous land), the Tagaeri and Taromenane Indigenous Peoples in Voluntary Isolation vs. Ecuador (environment and extractive licenses on naturally protected areas) and La Oroya Trail Smelter vs. Peru (environment and health of population).
There is an obvious cost to introducing more regulation requiring businesses to respect and protect human rights in the marketplace, but as demonstrated by Miskito Divers and Martina Vera, the human cost of not doing so is higher.
My name is Nadia Bernaz and I am Associate Professor of Law and Governance at Wageningen University in the Netherlands.
My main area of research is business and human rights. I look at how corporations and businesspeople can be held accountable for their human rights impact through international, domestic and transnational processes.