ADR & Business-related Human Rights Violations (Part 2/2)

By Charlotte Tran

In the previous blog post, we have explained why ADR could potentially be an effective tool in reaching an optimal outcome for business-related human rights disputes. The highlights were also dedicated to the approaches of mediation and negotiation in the field. In this blog, we will shift the focus to the use of arbitration on business-related human rights abuses.

In recent years, the topic of holding businesses accountable for their involvement in human rights and environmental issues attracted more and more attention from professionals and scholars. With a legislative trend in the field, it is indispensable to analyze all mechanisms available for such legal topics. In other words, could international arbitration be an effective forum for BHR?

According to the proposal of the Working Group on Business and Human Rights, arbitration could be implemented in BHR by “victims of human rights violations who wish to bring claims against businesses” or when it comes to “claims between commercial parties (for example, where a supplier fails to comply with certain contractually-imposed human rights obligations)”.[1] However, this raises the question of the current legal basis that provides for the use of arbitration in BHR.

In 2019, the Hague Rules on Business and Human Rights Arbitration (“the Hague Rules“, “the Rules on Human Rights Arbitration“) were launched at the Peace Palace in the Hague, the Netherlands.[2] On the basis of UNCITRAL Arbitration Rules 2013,  the Rules on Human Rights Arbitration address additional BHR issues and provide for the administration of arbitrations concerning such disputes.[3] The Guiding Principles on Business and Human Rights are also the foundation for the promotion and regulation of BHR practices.[4] Article 1 of the Hague Rules posits that parties can agree that disputes between them in respect of any defined legal relationship, whether contractual or not, be resolved by arbitration under these Rules.[5]

According to the Working Group, the application of international arbitration in the field has numerous advantages.[6]  One of the most important advantages is the use of a neutral forum without any external influences, such as judicial corruption or political pressure, which can be found in the practice of national and international tribunals.[7] Upon one of its core values, arbitration offers the parties the flexibility to choose their own judges who are impartial experts in business and human rights law and practice.[8] With an expertise in the applicable field, they accordingly can tailor their knowledge and experience to disputes.[9] Time-efficiency is undeniably another advantageous feature of arbitration, which is prominent for the business and remedies for the victims.

With the indicated advantages, arbitration of business and human rights disputes can be beneficial both for the victims (e.g. the factory workers) and the multinational company. The Rules on Human Rights Arbitration are believed to be the suitable legal basis to provide access and remedies for victims of human rights violations, “in keeping with Pillar III of the UN Guiding Principles on Business and Human Rights”.[10]

In conclusion, arbitration could potentially become more effective mechanism for dispute resolution with respect to BHR disputes. With a wide range of advantages and great flexibility, arbitration is believed to increase supply chain responsibility of corporations. Nevertheless, this concept still requires further developments and improvements on its implementation in the practice.

[1] ‘Commentary: Arbitration as a method of resolving disputes around human rights abuses by businesses’ (Business & Human Rights Centre) https://www.business-humanrights.org/en/latest-news/commentary-arbitration-as-a-method-of-resolving-disputes-around-human-rights-abuses-by-businesses/ accessed 25 February 2022.

[2] ‘The Hague Rules on Business and Human Rights Arbitration’ (Global Arbitration News) https://globalarbitrationnews.com/the-hague-rules-on-business-and-human-rights-arbitration/ accessed 25 February 2022.

[3] Ibid.

[4] ‘Working Group on the issue of human rights and transnational corporations and other business enterprises’ (OHCHR) https://www.ohchr.org/en/issues/business/pages/wghrandtransnationalcorporationsandotherbusiness.aspx accessed 25 February 2022.

[5] BHRC (n 1).

[6] Catherine Dunmore, ‘International Arbitration of Business and Human Rights Disputes Part 2’ (Asser Institute) https://www.asser.nl/DoingBusinessRight/Blog/post/international-arbitration-of-business-and-human-rights-disputes-part-2-advantages-and-challenges-by-catherine-dunmore accessed 25 February 2022.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Global Arbitration News (n 2).