CYIL vol. 11 (2020)

CYIL 11 (2020) INVESTORS’ RESPONSIBILITIES BEYOND INVESTMENT TREATIES… In July 2018, four years after its establishment, the working group published the first official draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises – the “Zero draft”, 27 to which the Draft Optional Protocol was later added. The draft did not contain direct human rights obligations for MNEs, however a controversial issue related to the scope of the instrument: To which companies will the future treaty apply? The draft addressed only the conduct of transnational corporations and other business enterprises that have “transnational activities.” To define the ‘transnational’ nature of economic activities, the text proposed the following: [the transnational economic activities] take place in two or more jurisdictions; involve actions in two or more jurisdictions; involve persons in two or more jurisdictions; or impact two or more jurisdictions. Businesses acting only within domestic jurisdictions were not covered. The Revised draft 28 published in July 2019 clarified its proposed scope encompassing all business enterprises, not just MNEs, while still emphasising businesses with transnational activities. However, it would not be binding for private entities and now it seems unlikely that the treaty-drafting process will lead to introduction of direct obligations for MNEs. 29 More interestingly, the Revised draft links to domestic regulation containing an obligation of states to regulate business in the interest of protecting human rights and creating a comprehensive system of legal liability for human rights abuses committed by business enterprises or with their participation. 30 Therefore, the potential binding instrument can be complementary to existing or developing initiatives on investors’ responsibilities in many ways. 4. Human Rights Arbitration Rules The right to an effective remedy is universally perceived as the weakest pillar of the UNGP. Traditionally, the non-binding nature of RBC and CSR initiatives does not provide a venue for bringing a complaint or claim. The first break from this paradigm of weak enforceability and inclusivity is the Accord on Fire and Building Safety in Bangladesh (the Bangladesh Accord). It deviates from the traditional non-binding model of supply-chain governance and creates a legal relationship between buyers and their suppliers ‘employees. The recent proceedings before the Permanent Court of Arbitration (PCA) arising under the Bangladesh Accord 31 demonstrate that international arbitration can be an effective, attractive choice for business-related human rights disputes. 32 In 27 Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises With Respect to Human Rights: Zero draft of a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises, 16 July 2018. 28 Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises With Respect to Human Rights: Revised draft of a legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises, 16 July 2019. 29 KRAJEWSKI, M. A Nightmare or a Noble Dream? Establishing Investor Obligations Through Treaty-Making and Treaty-Application. Business and Human Rights Journal , 2020, Vol. 5, No. 1, p. 112. 30 Revised Draft, Art. 5.1, Art. 6.1. 31 IndustriALL Global Union and UNI Global Union commenced to arbitrations against a global fashion brands in 2016 (PCA Case No. 2016-36, PCA Case No. 2016-37). On 17 July 2018, the Tribunal constituted in the two arbitrations issued termination orders following the settlement by the Parties of both sets of claims. 32 However, the concept is not generally accepted as critics warn of unlimited legal liability “something goes awry in the global supply chain” and higher risk of litigation. Steven Greenhouse: U.S. Retailers See Big Risk in Safety Plan for Factories in Bangladesh. New York Times , 22 May 2013. Available at: https://www.

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