Transnational human rights litigation not a panacea for addressing structural roots of corporate impunity: examples from African justice systems

Tweet

This blog post by Dr Kebene Wodajo and Wangui Kimotho is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Dr Kebene Wodajo is Postdoctoral (Senior Research) Fellow at the Institute for Business Ethics, University of St.Gallen (Switzerland). Wangui Kimotho is a Research Associate and PhD Candidate at the Institute for Business Ethics, University of St. Gallen (Switzerland).

*****************************************

The legitimacy of the extraterritorial application of domestic measures by home states – whether this is in the form of litigation or legislation is among disputed BHR issues. Our contribution will focus on transnational litigation (“Transnational” litigation throughout this contribution is used in the context of extraterritorial human rights litigation or Foreign Direct Liability).

We argue that the current debate on transnational litigation overlooks two perspectives: 1) that corporate irresponsibility and lack of corporate accountability is a form of structural injustice (SI) that requires actions by both host and home states, and 2) the arguments for and against transnational litigation do not engage with the necessity of dismantling structural roots that enable corporate irresponsibility. The debate aside, we show how litigation against businesses in host jurisdictions has the potential to challenge these structures, whose overall impact is hindering access to justice for victims of corporate abuse.

Non-engagement with structural roots as a limitation of the transnational debate

SI originates from social and institutional systems that render people vulnerable to different forms of injustice, including vulnerability to corporate abuse. In the context of corporate irresponsibility and lack of accountability, some of the structural roots can be traced back to the colonial era and to the institutions and the mechanisms for governance that emerged (i.e., the private/public divide, state centrism; separate corporate personality and corporate veil of company law, forum non conveniens; collectively ‘Fundamental Doctrines’). These, on the one hand, facilitate corporate extraction from the Global South, while legally protecting businesses against accountability. We understand these institutions and laws as forms of structures that hinder corporate accountability and opine that addressing the structural root means transforming such laws and institutions. Such an understanding helps focus on the structures that produce or enable injustice and not only on the incident of violation. Hence, we aim to assess transnational litigation considering its ability to mitigate SI by progressively transforming such structures, and we attempt to make sense of debates on its legitimacy against such affordance. On transnational human rights litigation, see here and here.

Selected arguments against transnational litigation and implications for SI

The first point against transnational litigation is that it is a form of imperialism. This claim asserts that transnational litigation could be considered imperialistic as it may facilitate the imposition of home states’ judicial jurisdiction over host states. Its limit from a structural standpoint is that it does not place primary focus on interrogating unjust structures of global governance that sustain hegemonic domination and corporate impunity, such as procedural and substantive requirements to establish accountability for cross-border corporate impunity. It fails to effectively engage with Fundamental Doctrines.

The second argument focuses on a lack of sufficient positive international legal bases to extend extraterritorial judicial jurisdiction (barring few exceptions). Accordingly, home states do not have an international duty to adjudicate transnational wrongs committed by their companies. The limitation of this criticism, from a SI standpoint, is that if our aim is to positively transform the unjust global governance in which corporations are embedded, one would need to go beyond positive law and question the law itself as part of unjust structures.

Selected arguments in favour of transnational litigation and implications for SI

The first argument, viz. the sovereignty gap points to the functional inequality of states: sovereign equality is a legal fiction. The assumption that states have equal power to regulate business activities within their territory is misleading. Moreover, this argument problematizes the claim that extending the adjudicative jurisdiction transnationally is a breach of international law. Instead, it argues transnational human rights litigation could be understood as a form of assistance and cooperation between home and host jurisdictions. While the challenge against the formalistic account of sovereignty is well-founded, this claim has a blind spot. Justifying transnational litigation on the ground that states are functionally unequal and, hence, ‘better’ sovereigns may serve as venues for justice, entrenches existing inequality.

The second argument in favour of transnational litigation is its recognition and acceptance by host states. Evidence often used to support this position are cases like the Bhopal incident. In this case, the Union of India, as a sovereign plaintiff, sued Union Carbide and pleaded the inadequacy of the host state legal system to handle the Bhopal litigation. However, scholars reason that the goal of this endeavour was “to bring [the corporation] back under Indian jurisdiction” (p.29) and not actual acceptance of home state jurisdiction. That said, the strength of this claim rests in the way it tends to draw legitimacy from the will of the host states. One could argue that transnational litigation may be a space where the host states assert their agency. However, the slippery slope in this argument is that it turns to state-centrism by equating the consent of the state with the will of the impacted people. From a structural perspective, justifying transnational litigation on host state acceptance shifts focus back to states and ignores that people are the real victims of SI.

Addressing structures that shield corporate impunity through host state adjudicative jurisdictions

As shown above, debates on transnational litigation (with few exceptions), while registering reasonable worries, have limitations in addressing SI that make people in the Global South vulnerable to lack of access to justice for corporate harm. Neither side reaches the core, that lack of corporate accountability is predominantly structural, hence, the need to question transnational litigation from that perspective. As participants in the systems of international governance, economy and related affairs, host, and home states, BHR advocates and other stakeholders are enjoined in overcoming the unjust structures. One way is by strengthening and recognizing the value of jurisdictions beyond the West. This is important given the likelihood of realizing transnational litigation exists for only a miniscule number of cases: the possibility of litigation in host states must become the norm. While host state litigation will not overcome all the aforementioned structural challenges, an increase would signal that host states are expanding their capacity to protect against corporate human rights abuse and, thereby, contributing towards overcoming structural barriers to access justice. We demonstrate this premise through two examples of host state litigation.

The first is the case of Institute for Human Rights and Development in Africa and others versus Democratic Republic of Congo (or Anvil Mining case). The case involved the 2004 killing of tens of people and numerous other human rights violations by the DRC army with logistical support from Anvil Mining, which had operations in Kilwa, the site of the offensive. The case went to the African Commission on Human and Peoples’ Rights (ACHPR) after failed efforts to secure justice through host and home state mechanisms, a total of three jurisdictions – DRC, Canada and Australia. Criminal cases brought in host and home states were unsuccessful due to government interference and acquittal of defendants in DRC, insufficient evidence in Australia, and the prolonged investigation process in Canada. Civil cases brought in Canada failed due to lack of jurisdiction, and one brought in Australia also failed as Congolese lawyers and NGOs experienced difficulties (including death threats) in accessing evidence and moving out of the country. In its decision issued in 2017, the ACHPR, while finding that the DRC government had failed in its obligation to protect, also denounced the company, stating that it had the responsibility to uphold human rights and could, therefore, not violate the rights of the communities where it operated. The ACHPR called for new investigations and prosecution of those responsible in the military and Anvil Mining. Furthermore, it also required the DRC government to compensate the claimants and, in recognition of collective violations suffered by the whole community, ordered collective remedies for the Kilwa community. While recommendations by the ACHPR are not binding, and enforcement remains a key challenge, this case is important for two reasons. (1) It provides evidence that host states’ regional mechanisms can be venues that enable overcoming structural barriers. The victims’ journey to justice shows that transnational litigation is not a panacea for corporate accountability, and there are institutionalized barriers (structures) both in home and host state justice mechanisms. (2) It introduces creative remedies informed by local context and traditions – e.g., collective, not just individual remedies, can be/are part of adequate and effective remedies.

Motaung v Samasource Kenya & 2 others, an ongoing case, was brought by a South African national who had been employed in Kenya, by the first defendant, Samasource, as a content moderator for the social media platform Facebook, owned by tech giant Meta, who are enjoined to the case as the second and third defendants. The plaintiff alleges, among others, to have been fired for leading attempts to unionise for better pay and working conditions. Meta’s preliminary objection challenges the court’s jurisdiction on the basis that it is a foreign company and it was not properly served. Disallowing Meta’s motion, the High Court reaffirmed that under the Kenyan Constitution, any person who violates or threatens to violate another’s rights can be sued and that striking out Meta without determining the ‘weighty matters’ of jurisdiction would be premature. The next phase of the case is determination of jurisdiction which, if confirmed, could turn the tides of transnational litigation as a host state court will be determining if Meta, a foreign company can be legally responsible for violations of human rights under Kenyan law.

In summary, we may not need to pit transnational litigation against host state litigation but rather put forward the best of both accounts at the service of overcoming structural hurdles enabling corporate impunity and blocking access to justice. Transforming unjust structures would mean strengthening the capacity to overcome structural barriers and building confidence in local justice systems while preserving accessibility to transnational litigation for victims that might need it.

Adjudicating Human Rights and Environmental Claims Against Transnational Corporations: The Jurisdictional Reasonableness Test

Tweet

This blog post by Dr Ekaterina Aristova is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Dr Aristova is Leverhulme Early Career Fellow, Bonavero Institute of Human Rights, University of Oxford.

*****************************************

In April 2023, I had the pleasure of presenting at the symposium ‘Colonisation in, of and through Business & Human Rights’ convened by Tilburg University. My contribution focused on the adjudication of human rights and environmental claims involving transnational corporations (TNCs) in the courts of their home states in relation to the harm arising from overseas operations. Foreign claimants often seek justice in the courts of TNCs’ home state because host states are unwilling or unable to address corporate human rights abuses committed within their jurisdiction. Yet, the exercise of jurisdiction under private international law by the home state courts may be said to be an interference with the internal affairs of the host state or even amount to a form of neo-colonialism. How can we resolve this puzzle? When is it reasonable for a home state court to adjudicate a dispute about human rights and environmental performance of its TNC if the events leading to the abuse have occurred in a foreign state?

The sovereignty concerns of host states regarding extraterritorial human rights protection by the Western states should not be discarded lightly. At the same time, I don’t think that acceptance of jurisdiction by a home state court in a case involving human rights or environmental performance of a TNC should be automatically considered imperialistic. I will share some thoughts about the jurisdictional reasonableness test in this blogpost and suggest a list of factors that may be used in evaluating the legitimacy of an exercise of adjudicative jurisdiction in business and human rights litigation. Often, the home state court is the only avenue available to the victims of business-related human rights and environmental abuses.

Before I frame an argument, a few points should be highlighted. First, I approach business and human rights litigation in home state courts as one of the many avenues to enhance corporate accountability. I do not consider it a more effective or legitimate approach than remedies available to the claimants in the host state or any other forum. In an ideal world, individuals and local communities affected by corporate abuses should have access to domestic judicial remedies, but this is not always the case. Second, the analysis of jurisdictional issues surrounding litigation against TNCs presented in this piece is a very short summary of substantial research from my forthcoming book, ‘Tort Litigation against Transnational Corporations in the English Courts: The Challenge of Jurisdiction (Oxford University Press 2024). In this work, I address a normative argument about the limits of adjudicative jurisdiction over business and human rights claims in-depth.

The Problem of Jurisdiction

Adjudication of human rights and environmental claims against TNCs in the Western states is an established trend. In the US, claimants from all over the world had high hopes that the Alien Tort Statute (ATS) would provide them with redress for harm they suffered from the operations of TNCs. Other jurisdictions, including Canada, several EU Member States and the UK, witnessed over the last few decades an emergence of civil liability claims alleging a breach of the parent company’s duty of care in relation to the activities of its subsidiaries and suppliers abroad. More recently, there has been a surge in climate change litigation against corporate actors. Individuals and communities from host states have different incentives to commence litigation in the home states, ranging from weak local remedies to provide redress to a more favourable procedural environment of Western states to pursue a class action.

The question of jurisdiction is one of the most central and important aspects of business and human rights litigation. The decision of the court of the home state to accept jurisdiction has the potential to open the door for claimants to proceedings before experienced jurists and expose TNCs to significant awards of damages. However, at the same time, it may constitute an intervention in the internal affairs of another sovereign state. The dispute often has a strong connection with the territory of the host state in which subsidiaries or suppliers conduct their operations and the claimants sustained their injuries. More importantly, when the home state court declines jurisdiction to hear the claims, and the claimants are unlikely to obtain a fair trial in the host state, the question is whether litigation can proceed at all in any forum. Business and human rights litigation against TNCs triggers many narratives about the scope of adjudicative jurisdiction, including the location of the appropriate forum, the limits of extraterritoriality, and the suitability of the existing connecting factors under private international law to capture peculiarities of cross-border business operations. Moreover, the so-called ‘delocalised justice’ by the home states raises concerns about the sovereignty, self-determination and legal and economic development of the host states (Boggio 2006; Duval and Plagis 2021).

Narrative of Judicial Imperialism

The sovereignty objection and imperialistic critiques in the business and human rights literature often build on the TWAIL (Third World Approaches to International Law) scholarship, which seek to reconsider the history and development of international law and highlights its colonial legacy (see, e.g., Chimni 2004 and Anghie 2005). Sara Seck refers to the ‘impoverished sovereignty’ of Third World states as opposed to the full sovereignty enjoyed by Western states. Oyeniyi Abe highlights the imbalances of power and negotiating capacity between non-state actors and the African states. Using a TWAIL lens, Caroline Omari Lichuma and Debadatta Bose scrutinise human rights due diligence legislation adopted by Western states. The adjudication of disputes under the ATS has drawn strong criticism about US courts becoming the ‘world courts’ (see, for instance, Bradley 2001 and Moore 2016).

On the other hand, some commentators call for a more nuanced approach to assessing legitimate limits of extraterritorial home state regulation and the adjudication of disputes against TNCs (among these voices are Seck 2011, Chambers 2018, Palombo 2022). Jennifer Zerk also reminds us that the interests of individuals and communities in the host states can differ from those of the governments of host states. By way of example, the right of an employee to safe and healthy working conditions can be undermined by the actions of the host states to lower the regulatory requirements with an aim of protecting foreign direct investment.

Jurisdictional Reasonableness Test

I join scholars who place rightsholders at the centre of the debate about the adjudication of human rights and environmental claims against TNCs. In the absence of an international treaty and effective remedies in the host states, it is feasible that foreign citizens suffering from business-related human rights and environmental abuses will continue to seek opportunities to access justice, including by recourse to the courts of states where the headquarters of TNCs are located. It is also assumed that the assertion of jurisdiction in business and human rights litigation by the national courts of home states necessarily involves some degree of extraterritoriality.

I suggest that the reasonableness of exercising extraterritorial jurisdiction by Western courts could be determined case-by-case by evaluating four factors. The first one is the strength of the territorial nexus between the forum and the dispute. For instance, the claims against English parent companies in English courts for harms abroad have been framed as an alleged breach of duty of care by the parent company. In cases such as Lungowe v Vedanta and Okpabi v Shell, claimants established that parent companies exercised significant managerial control and otherwise supervised group operations, giving rise to an argument that human rights and environmental performance of the subsidiaries were shaped from England and, therefore, strengthened the territorial nexus between the dispute and the forum.

A second factor to consider is the legitimacy of the home state’s interest in regulating overseas operations of its TNCs. The legitimacy of home state regulation derives from the strength and significance of the personal and territorial connections between the home state and the TNC. TNCs enjoy multiple benefits from locating their headquarters in states with a stable economy, favourable tax regime and well-developed legal system. These privileges often come with responsibilities, such as anti-money laundering regimes, disclosure requirements and tax measures. Moreover, home states also receive vast political and economic gains from the overseas activities of their TNCs. It has been widely accepted by the UN human rights treaty bodies that states are required to take necessary steps to prevent human rights violations abroad by businesses domiciled within their jurisdiction within the limits permitted by public international law (for instance and among many others, CESCR 2017). Many Western states have been enhancing their monitoring and control of the human rights and environmental performance of their TNCs, including by way of reporting regimes and human rights due diligence legislation.

The next factor to examine is whether there is a sufficient international support on the assertions of the jurisdiction by the home state courts. It must be remembered that several international organisations have recently encouraged home states to ensure that their domestic courts have jurisdiction over civil claims concerning the overseas activities of local companies domiciled within their jurisdiction and, in certain circumstances, their foreign subsidiaries (International Law Association 2012, section 2 ; Council of Europe 2016, [35]-[36]; European Parliament 2016, [25]; EU Agency for Fundamental Rights 2017, 7-8; UN Draft Treaty on Business and Human Rights 2023, Article 9).

A final factor for analysis is the extent to which the host states where events leading to the dispute occurred object to the adjudication of business and human rights claims by the home states. There are established methods by which host states can express concerns about the exercise of extraterritorial civil jurisdiction, such as diplomatic protests, blocking or retaliatory statutes, the non-recognition of judgments and amicus curiae briefs.

Looking Forward

These suggested factors could serve as a valuable starting point to assess the legitimacy of home states’ assertion of jurisdiction in business and human rights litigation. Ultimately and unavoidably, it will be a balancing exercise that is naturally connected with the broader question of when and how home states should be involved in managing the operations of their TNCs. I reiterate a statement made at the start: home state regulation is not a panacea. Political and economic concerns inform arguments in favour of and against home state regulation, and it is easy to lose the voice of the rightsholders in the debate. Claimants from the affected regions often initiate litigation via one of the few avenues available to them to assert their rights and request a remedy. A multilateral binding framework is arguably a better way to increase access to justice for victims of business-related human rights abuses. However, in the absence of one, labelling home state adjudication as illegitimate and abusive could do more harm than good.

Legislating French values for the rest

Tweet

This blog post by Debadatta Bose is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Debadatta Bose is a Doctoral candidate at the Amsterdam Law School, University of Amsterdam (Netherlands).

*****************************

As the foremost mandatory human rights due diligence (mHRDD) law, the French law on the duty of vigilance (French law) has wide acclaim as having ushered in a new era in business and human rights regulation. Owing to the French law, the possibility of holding corporations accountable for transnational human rights harms did not seem far off. Since 2017, civil society organisations have worked tirelessly to ensure that the objectives of the law are fulfilled. The objective of the law is, of course, corporate accountability for human rights violations … or is it?

Drawing from my recent article which analysed the legislative debates preceding the enactment of the law, this blog post reiterates the argument that a neo-colonial flavour is inherently attached to the law. This is due to three characteristics of the French law: first, as a self-described ‘law for the whole world’ enacted by France; second, as a national law of a Global North country (on the use of the terms Global North and Global South, see this post which is a reply to this post); and third, as a law of France and the Global North as opposed to a business and human rights treaty. Let us examine these characteristics one by one.

A French law for the whole world

One of the proponents of the French law said on the floor of the National Assembly that the law ‘is in the tradition of the French Revolution and the Enlightenment by stating the law in a new world, for the whole world.’ This is because France, in itself, represents ‘a foundation of values.’ To advance the French law, the left-wing bloc primarily focused on the narrative of the law as an effectuation of universal French values. In contrast, the right-wing bloc objected that the French law, which then was going to be the only mHRDD law, would impose a disproportionate burden on French companies resulting in a loss of their competitive advantage. The bargain seemed to be between, on one hand, the assertion of French values as exportable to the whole world and, on the other hand, a separation of the economic considerations of French companies from their human rights considerations: what an iconic illustration of a Faustian bargain.

In the latter case of nationalism, the argument was that the onus is on the capital-importing state where supply chains are located, to strengthen its regime of legal protection of human and labour rights, which France may perhaps take a role in setting up. This argument was put forward while ignoring the fact that Global South countries have been vocal since half a century ago about being unable to counter the power of transnational corporations through national measures. Further, the question posed on the floor was that when companies are already progressing in terms of transparency, labelling, etc. why were they being treated as ‘permanent culprits’?

In the former case of universalism, it was argued that it is only natural that France legislate for the whole world since French legislators cannot be blind to the suffering of people elsewhere, especially given France’s important role in the international economic order when international organisations have failed to act on the issue. Further, it was also stated on the floor of the Assembly, ‘Let us not neglect the fact that it is our ideals that ensure the “France brand” keeps all its influence. (…) [W]e can therefore show that our commitments to human rights and respect for the environment are sincere and truly universal.’

In that same session, legislators explained that they ‘cannot continue to ignore certain practices on the pretext that they take place abroad, in countries that do not respect the constraints and standards that apply to our companies on French territory.’ Perhaps, most interestingly, on the day of the adoption of the law by the National Assembly, it was also stated by a major proponent of the law that ‘[W]e are building a more equitable world (…). We humbly say to these people, who live hard in these [Global South] countries, that we will take care of them, and we ask their leaders to do the same.’ Perhaps it was about saving Global South people from Global South states after all.

How is the ‘whole world’ structured anyway?

A large, if not exclusive, focus of the French law was the protection of people in the Global South whose presence in a presumably ‘despotic state’ hinders their enjoyment of human rights, which France must now take it upon itself to guarantee, i.e., to ‘[protect] the weak in new forms.’ These mHRDD legislation by the Global North for the Global South have been aptly called to be of a ‘vigilante justice’ character by one of the seminal works on this topic. Given the historical decentring of Global South people in international law and the international economic order, the assertion of the Global North to set standards governing global corporate conduct, and Global South state conduct, through national laws is problematic to say the least.

This is not exclusive to France, however. For example, in the report introducing the recently adopted European Corporate Sustainability Reporting Directive, the Explanatory Memorandum states that in case these standards are set internationally or from other nations, ‘then sustainable development would be defined by a non-European vision, making it more difficult for European values to be effectively taken into account. (…) What is at stake is European independence and sovereignty (…).’ Yet somehow this is not a problem the other way round.

In this narrative, largely visible throughout the entirety of the legislative discussion, people from the Global South are the victims and France is conceptualised as the generous saviour. The world is therefore structured around the generosity of France and the haplessness of the Rana Plaza victims, who are highlighted in legislative discussions extensively. In this world, how much the experience of Rana Plaza victims counts or how much agency they have within the French legal system is a fair question to ask. The lived experience, agency, and voices of those who are the purported beneficiaries of the laws are decentred now to make way for expert opinions on legal issues that involve interpretations of the laws that would, e.g., in case of the French law, be embedded in the French legal system. What is also at stake is knowledge production since European national laws privilege European academic and professional discourse to advance interpretations and working of the laws, which is particularly unfortunate in laws that seek to regulate global conduct aimed at protection of Global South peoples.

So, why national laws after all?

Even in this context, why is a national law celebrated as a grand avenue of justice, and perhaps even rightly so? The answer is in the historical context of the struggle for regulation of transnational corporate activity with the Global North and Global South hardly having convergent views on either the form or the substance of regulation. Generalising to some extent, the Global North pushed for national regulation in capital-importing states and the Global South pushed for international regulation of the negative impacts of transnational corporate activity.

One may observe from the resolution establishing the treaty process that a clear North-South divide was visible where Global North countries voted against the establishment of the process, while Global South countries voted for. The USA, for example, was ‘extremely disappointed’ that the resolution was tabled, calling it an ‘ill-considered treaty drafting exercise.’ France, explained its negative vote by its preference for national law on the topic. The limited success of international law initiatives has made the celebration of the French law inevitable, partly because the Global North, including France, made (a French) national law from the Global North inevitable. This is because when national laws are the avenue it is possible to govern Fijian corporate conduct through French law but not the other way round. National laws for the whole world are only possible in the current legal architecture when legislated by the Global North. Such laws are not participatory in their legislative deliberation as regards Global South people and perhaps only partially empowering for Global South people (but adopted in a paternalistic manner). They enable Global North courts to subsume justice decisions in faraway territories as part of their ordinary functioning.

So what?

The question, ‘so what?’ as long as either human rights are protected ex-ante or remedy is provided ex-post whether in France or elsewhere is a fair one. However, it privileges pragmatism over asking why we ended up here in the first place. While the French law may have good effects, its contribution to Global South capacity building has to be further explored. This position is not one of no law from the Global North — but that the laws come in context of active erosion of economic power and capacity to respect human rights in the Global South have to be borne in mind; that is the problem to be solved, not that of lack of jurisdiction in French courts. At best, the French law is an ad hoc instrument towards that end, and at worst, a neo-colonial instrument.

European Corporations in Brazilian Regions Inhabited by Indigenous Communities: Colonial Legacies and Potential Room for Change

Tweet

This blog post by Luiza Pigozzo Rocha is part of a Blog Series on Colonization in, of and through Business and Human Rights published on Rights as Usual. Luiza Pigozzo Rocha is a research associate of the NOVA Knowledge Centre for Business, Human Rights and the Environment. She is currently on the Themis exchange programme at the University of St. Gallen, and enrolled on the 2nd year of the Nova School of Law Master’s in International and European Law.

*******************************

In this post I analyze the current efforts to include the protection of indigenous peoples’ rights in the EU Directive on Corporate Sustainability Due Diligence (hereafter the Directive) currently under negotiation. I focus on a practical example to illustrate the challenges of effectively protecting indigenous’ rights.

I first present the violent practices suffered by indigenous peoples during Brazil’s colonial period, and how similar patterns of indigenous’ rights violations are perpetuated by informal European powers nowadays. In light of this example, I then assess the approach taken by the European Commission, the Council of the European Union, and the European Parliament on the Draft Directive. Overall, I aim to stress the need for a more encompassing definition of business’ obligations in respect to indigenous peoples in the final Draft.

Indigenous peoples in Brazil

Brazilian lands were inhabited by indigenous peoples for several centuries before a permanent Portuguese settlement was stablished in 1500. Brazil’s colonisation was fundamentally driven by the dispossession of the local inhabitants’ homeland, and the exploitation of their bodies and labour through enslavement, religious persecution and sexual exploitation. Genocidal policies were implemented to repress insubordination and prevent potential reactions against the settlers. In short, Brazil’s history is marked with brutality, violence, and dominance over indigenous peoples.

After more than 300 years of struggle, the independency act of 1822 recognised Brazil’s sovereignty and formally ended any kind of foreign domination over its politics, peoples, and lands. Nonetheless, Brazil’s independency act was only the beginning of an ongoing process, as informal imperial powers continued to interfere and project dominance on the same lands and over the same people to fulfil neo-colonial political, cultural, and economic objectives.

Nowadays, capital accumulation continues to be fuelled by the violent dispossession of postcolonial subjects. Large-scale resources extraction, unsustainable development strategies, and irresponsible modes of production are often concretized through unjust processes of land appropriation, transgression of local and indigenous communities’ rights, and ethnic-racial hierarchization of populations.

One recent example of this reality is the Yanomami crisis that came to light in the beginning of 2023. The deplorable state of health and malnutrition of the Yanomami indigenous community was brought to light in areas of Brazil where economic projects are carried out, specifically in illegal mining areas. This fueled existing discussions of a never-ending colonial cycle of domination, subjugation and other forms of violence against indigenous peoples in Brazil. This systemic violence is devised and carried out under the auspices of corporate powers today.

 Colonial legacies

European corporations are very much involved in this cycle through their direct or indirect business activities. For example, in the meat sector, companies such as Carrefour, Aldi Süd, Rewe, and Tesco had their supply chain activities linked to indigenous peoples’ rights violations. Many of their imports come from indigenous lands where violation of labour laws, violent conflicts with landowners, and death threats and murders are a common reality.

Another example is the soybean trade and financing area. The Netherlands, Spain, Germany and France were identified as the home countries of corporations and financial institutions supporting soy exports from the Amazon and Cerrado regions in which unprecedented rates of deforestation and over-exploitation of indigenous lands were attributed to the soy industry. This pattern of violence against Indigenous peoples in Brazil exists in other sectors such as the sugar, timber, leather, cocoa, dairy and oil extractive sectors.

For many years the lack of corporate accountability for human rights abuses was not addressed in a way that balanced the asymmetries in power-relations between businesses and the people affected by their activities. However, in the last decade, critical discussions around this topic have attracted greater attention. Meaningful progress was made after the launch of the United Nations Guiding Principles on Business and Human Rights (2011), creating an optimistic ground for change in the coming years.

Most recently, the core ideas brought in the Guiding Principles were the basis for the development of national laws such the UK Modern Slavery Act (2015), the French Corporate Duty of Vigilance Law (2017), the Dutch Child Labour Due Diligence Law (2019), the Australian Modern Slavery Act (2019), the Norwegian Transparency Act (2022), the US Uyghur Forced Labor Prevention Act, (2022) and the German Supply Chain Due Diligence Act (2023). In a regional context, the protection of human rights from corporate activity impacts led the European Commission to propose a Directive on Corporate Sustainability Due Diligence, which is currently in the adoption process.

All those initiatives indicate significant advancement formalizing human rights protection in the context of global business operations. Notwithstanding these positive developments, the recent laws are insufficient when it comes to the protection of Indigenous peoples’ rights. As they stand, these legal frameworks cannot end the patterns of rights violations and stop the reproduction of colonial legacies, as discussed below.

 The Corporate Sustainability Due Diligence Draft Directive

In 2022, the European Commission proposed the Draft Directive on Corporate Sustainability Due Diligence aiming to make human rights due diligence mandatory for large companies in EU Member states. The duty to perform human rights due diligence includes ‘identifying, bringing to an end, preventing, mitigating and accounting for negative human rights, environmental and climate impacts in the company’s own operations, their subsidiaries and their value chains .’

During the process of adoption of the Directive, the European Commission, the Council of the European Union, and the European Parliament differently approached the notion of Indigenous peoples’ rights protection when performing human rights due diligence. As such, these three institutions are still grappling for a common ground.

The European Commission’s proposal of February 2022 made no reference at all to Indigenous peoples’ rights and human rights defenders. In November of the same year, the Council of the European Union presented amendments for the Directive and article 26(a) was introduced calling upon companies to consult affected stakeholders throughout the process of carrying out due diligence, indicating that affected individuals could possibly mean Indigenous peoples. This article did not specify any duties in relation to the consultation of Indigenous groups or environmental defenders, nor clarified how to perform due diligence when those communities are affected by business activities. At best, it fell back on mere recommendations to companies.

After months of dialogue, the European Parliament presented the latest amendments adopted on June 1, 2023, with greater progress on indigenous peoples’ rights. This updated document introduced article 8(d) which clarifies what carrying out meaningful engagement with affected stakeholders mean. But the text abandoned suggestions for a more incessive approach that would have strengthened due diligence practices. In addition, the same article mentioned the necessity to fully respect the United Nations Declaration on the Rights of Indigenous Peoples when engaging with stakeholders; and in the amendment of article 3, point n(a), indigenous peoples were included in the list of vulnerable stakeholders.

The Parliament also proposed an amendment to points 19 and 20 of the Directive’s subheading prohibiting environmental harms that affect the rights of Indigenous peoples to self-determination and their right to give, modify, withhold or withdraw their free, prior and informed consent to interventions, decisions, and activities that may affect them and their lands, territories and resources which they have traditionally owned.

Until now, only the European Parliament presented amendments that can bring meaning to the Directive in the sense of changing the colonial cycle of indigenous peoples’ rights abuses. By elucidating what a meaningful stakeholder engagement entails in practice, these amendments increased Indigenous people’s likelihood to benefit from human rights’ due diligence processes. Including Indigenous peoples’ voices in the due diligence process, however, is not a simple activity. Linguistic, geographic, educational, religious and other barriers can make the process very complex and time consuming. But if these crucial points are overlooked and the three institutions do not reach an agreement, Indigenous peoples’ rights violations will continue.

Applying a postcolonial perspective to business and human rights laws is vital to the drafting of effective legislation. Revisiting Brazil’s past colonial practices in light of contemporary corporate activity can contribute to our comprehension of the myriad challenges faced by Indigenous communities and how to develop impactful instruments of change. Overall, the amendments adopted by the European Parliament represent an initial advance in relation to the protection of Indigenous peoples’ rights. Yet, the possibility of changing the colonial cycle of indigenous peoples’ rights violations and rebalancing unequal power relations will depend on the fate of the Directive, which rests on the outcome of a wishful coordination between the three institutions.

A Divided World? A Lesson from the Energy Charter Treaty

Tweet

This blog post was authored by Dr Dalia Palombo – Tilburg University. She was one of the organisers of the Symposium: Colonisation in, of and through Business and Human Rights, held in April 2023 in Tilburg (the Netherlands). The blog post is part of a Blog Series published on Rights as Usual.

********************************

The morning after the Symposium: Colonisation in, of and through Business & Human Rights | Tilburg University, I tried to connect the dots between the thought-provoking presentations I heard the day before. From the need to decolonize investment or tax law to the imperialist danger entailed in mandatory human rights due diligence laws, the image of a world divided in two, the West and the Rest, started to emerge.

In extreme synthesis, countries from the Global North often argue that the corporate accountability gap depends on the inability of developing states to regulate corporate conduct in their territories (with a focus on the lack of rule of law and corrupted institutions). Instead, several Global South countries, and especially the least developed countries, argue that the bulk of the business and human rights problems originate from an exorbitant power (often resulting from colonial legacies) concentrated in a few multinational enterprises, furthering the interests of the West at the expense of the Rest. This division inevitably affects the solutions proposed to address business and human rights problems: better and more effective implementation of existing rules versus reconceptualizing and reframing the core structures of the global economy. For a clear picture of the dichotomy, one could check the declarations made, for example, by Cuba (in favour of a treaty establishing internationally legally binding obligations on transnational enterprises) and the United States (arguing that the business and human rights (BHR) treaty initiative shall not to be pursued in its current form) at the Human Rights Council Seventh Session of the Intergovernmental Working Group on Transnational Corporations and other Business Enterprises with Respect to Human Rights.

Unfortunately, the division between the West and the Rest does not only touch the BHR realm. This summer, the UN Secretary General Antonio Guterres warned at the BRICS Summit about the dangers entailed in an increasingly divided world. Listening to his powerful words, the North/South divide in BHR seems nothing other than the expression of a deeper dichotomy that is emerging in every field and risks becoming the defining fracture of the XXI century.

In response to such a dark picture of division ahead of us, I wonder what could make us embrace a different world conception. In other words, what should happen for the West and the Rest to better understand each other’s discourses to avoid living in two parallel worlds that rarely meet? Maybe it is necessary for each camp to be in the other’s shoes.

An excellent example demonstrating how the West can change its perspective when put in the Global South’s shoes is the rise and fall of the Energy Charter Treaty (the “Charter”), which indeed was discussed during the Symposium: Colonisation in, of and through Business & Human Rights | Tilburg University. The Charter is a trade agreement signed by all European Union states as well as extra-European countries, such as several post-Soviet and Middle Eastern countries. It includes Investment-State Dispute Settlement (ISDS), a mechanism enabling investors to sue states for failing to provide fair and equitable treatment or for property expropriation. ISDS is highly criticised by several scholars and NGOs for de facto preventing (often developing) countries from enforcing human rights and environmental standards that could limit corporate profit.

In 2009, Russia withdrew from the Charter, which it had signed and agreed to provisionally apply until ratification.

The withdrawal was met with sharp criticism by the other European states, given the centrality of Russia in providing energy to Europe. The European Union interpreted the withdrawal, to a large extent, as an answer to the filing of the Yukos case, that was later decided in 2014. Based on the Charter, an arbitral tribunal ordered Russia to pay the investors in the energy company Yukos over 50 billion euros in damages. In response to the Russian exit, European countries have put an effort to promote the Energy Charter outside of Europe, particularly in African countries that also provide energy to Europe. This has resulted in the adoption of the International Energy Charter, a non-binding political declaration aimed at strengthening cooperation among the signatory states.

However, other commentators interpreted Russia’s exit as part of a bigger movement initiated by developing countries to leave their investment treaties or eliminate ISDS from their trade agreements. Indeed, in those same years, Ecuador, South Africa, Indonesia and Bolivia terminated their investment treaties. Other countries, such as Morocco, Nigeria, and The Gambia adopted innovative investment treaties. For instance, the Brazilian BIT model does not include ISDS, while the Indian BIT model subjects the possibility for investors to file a request for arbitration to the exhaustion of domestic remedies.

The Charter could be considered at the very centre of the ISDS debate, facing two opposite camps: Europe in favour of ISDS and an increasing number of developing countries opposing it.

But climate change changed everything.

In 2015, after a series of environmental protests, Italy passed a law banning oil and gas drilling within 12 nautical miles of its coasts. It became clear that this, and other energy-related laws, could expose Italy to ISDS complaints under the Charter. Thus, in 2016 Italy left the Charter.

Other European states also understood that the Charter could expose them to liability when adopting laws fighting climate change. A particularly significant case (later withdrawn as part of a bailout deal) was filed by the German company Uniper against the Netherlands, alleging that the Netherlands’ plan to stop coal-fired power stations would violate the Charter.

As a result of this and several other cases, a long list of European countries decided to exit the Charter. The European Commission (EC) proposed to modify the Charter in order to take climate change into account. But European states considered this proposal not enough to guarantee they would not be subject to lawsuits for enacting laws combating climate change. As a result, the European Parliament called on the EC to establish a mechanism for states to withdraw from the Charter. This summer, the EC finally proposed a coordinated withdrawal from the Charter.

But this does not enable Europe to get rid of the Charter’s ISDS. Indeed, the Charter includes a sunset clause, meaning that states will still be subject to ISDS for 20 years after their withdrawal. Italy has already experienced the effects of such a clause. Although the country left the Charter in 2016, British company Rockhopper filed for arbitration in 2017 based on the sunset clause. Rockhopper received the award condemning Italy to pay over 185 million euros in damages for the loss of income (expropriation) resulting from Italy’s 2015 law preventing Rockhopper from drilling in the Adriatic Sea.

As evidenced by this case, the sunset clause could be a liability to European countries adopting environmental laws. If any investor can sue any European state, like Rockhopper did, for enacting laws preventing them from developing coal, oil and gas, then the costs of the energy transition might become unsustainable. This is not the first time Europe has to face the sunset clause challenge. Indeed, after a long debate, the European Union adopted the Termination Agreement, terminating all investment treaties between member states, including the effects of their sunset clauses. The question now is whether Europe can also convince third parties to remove the Charter’s sunset clause effects.

The Charter history suggests that when European countries find themselves in the shoes of developing countries, they react in the same way: they want to exit investment treaties. Once European states risked facing lawsuits from investors seeking damages, they realized they no longer wanted to be part of the Charter. Remarkably, a better implementation of the existing rules was not considered a viable solution to the Charter crisis. An increasing number of European states demanded a complete reconceptualization of the energy sector, which inevitably entailed exit from the Charter. This “radical” approach sounds very much in tune with the decisions taken by several developing countries to leave their investment treaties. Is this going to be an exception to the rule or can the Charter become an exiting model for countries to leave ISDS?

Only time will answer this question, but the Charter experience can certainly become a laboratory for the “putting ourselves in the others’ shoes” strategy. We may adopt this strategy to overcome our differences on a series of global challenges that an increasingly divided world raises.