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1 HUGO - Hague Utilities for Global Organisations - Comments on the report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Draft Guiding Principles for the Implementation of the United Nations Protect, Respect and Remedy Framework 28 January 2011

2 World Legal Forum Foundation together with its mentioned partners (hereinafter: WLF ) comments on the report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Draft Guiding Principles for the Implementation of the United Nations Protect, Respect and Remedy Framework The need for a worldwide dispute management facility Introduction In 2008, the United Nations Special Representative for Business and Human Rights proposed the Protect, Respect and Remedy Framework, a policy framework which rests on three pillars: the state duty to protect against human rights abuses, the corporate responsibility to respect human rights and greater access for victims to effective (judicial and non-judicial) remedies. WLF welcomes and supports the Special Representative in his initiative to provide clear guidance and recommendations to states, businesses and other parties for the implementation of this Framework. WLF particularly welcomes the Special Representative s attention to the topic of access to remedies. While considerable expertise and practices have been built up in conflict management systems with sophisticated early dispute resolution mechanisms such as mediation and conciliation in so called business to business conflicts and the basics of these mechanisms are certainly valuable for CSR related conflicts, it must be acknowledged that these mechanisms may need adaptation for the types of conflicts addressed by the Ruggie Framework. After all, CSR related conflicts between business enterprises and individuals, civil society organizations and other stakeholders may be characterized by elements such as inequality of power and resources, major cultural and political differences, possible internal political conflicts in host states and absence of rule of law or weak law enforcement in the countries in question. 1 The Draft Guiding Principles confirm the 1. The reference to other stakeholders encompasses states. This is reflected by the Draft Guiding Principles. For example Draft Guiding Principle 4 sees at host states concerns. The SRSG has mooted the idea of mediation/arbitration as a means of offering remedies in human rights claims. According to his report of 2009: Arbitration by [an existing body or network with international standing that could offer mediation of disputes involving human rights issues] might also be an option. In particular, companies operating in conflict affected areas should have a strong incentive to agree ex ante to use such mediation/arbitration bodies in the event of disputes with communities, and their investors and States should have a strong interest in seeing them do so. See UN Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Business and Human

3 six main principles, specified in the 2008 Framework Protect, Respect and Remedy, underpinning all non-judicial grievance mechanisms: legitimacy, accessibility, predictability, equitability, rightscompatibility and transparency of any conflict resolution mechanism in field of business and human rights. It is important to note that the SGSR in his 2009 Report has added a seventh principle, specifically for company-level mechanisms, that they should operate through dialogue and mediation rather than the company itself acting as adjudicator. 2 WLF aims to contribute to the operationalization of the third pillar of the Ruggie Framework greater access for victims to effective remedies and in particular non-judicial mechanisms. In Principle 29(g) of the Draft Guiding Principles, professor Ruggie emphasises that operational level grievance mechanisms should be based on dialogue and engagement, leaving adjudication to independent third party mechanisms whether judicial or non judicial. WLF has embarked on a project to investigate the feasibility of the establishment of a non-judicial Conflict Management Facility (hereinafter: CMF ) for disputes between business enterprises and stakeholders in the field of human rights, environment and labour. This facility should focus on facilitating in settlement of disputes between business enterprises and stakeholders. WLF recognizes that grievances based on alleged violations of human rights or other CSR-related issues are best addressed locally, preferably by non-judicial means. However, the question whether judicial or non-judicial means are preferable should be addressed on a case-by-case basis. The CMF intends to serve primarily as a hub assisting parties involved in a dispute to find the appropriate local dispute management mechanisms. Whereas local non-judicial means are not available, or fail to offer an appropriate solution, the CMF itself could provide mediation services. Additionally, the CMF intends to contribute to prevent business-related conflicts by offering assistance and expertise to individual business enterprises in the development of an internal conflict management system including a complaint procedure for external stakeholders. The CMF will also offer to business enterprises and stakeholders advice on best practices on conflict management and due diligence methods in connection with early conflict management mechanisms. Furthermore, the CMF intends to take up a proactive role in raising awareness for Rights: Towards Operationalizing the Protect, Respect and Remedy Framework of 22 April 2009 UN Doc A/HRC/11/13, par UN Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises Business and Human Rights: Towards Operationalizing the Protect, Respect and Remedy Framework, UN General Assembly of 22 April 2009, UN Doc A/HRC/11/13, par. 99.

4 CSR conflict management by organising conferences and workshops on alternative conflict management of CSR disputes. The CMF also supports training and further capacity building for companies in how best to integrate human rights into their day to day business and to support institutions on a national level committed to solving business and human rights conflicts (also as far as these issues relate to labor or environment). Lastly, it strives to become a facility where companies and other institutions can find information, advice, networking opportunities as well as the professional means to help find, facilitate and offer the appropriate remedy on business related human rights conflicts. The Hague could be a neutral place with a long tradition of international law and international organizations to establish this facility, in cooperation with other initiatives. The Draft Guiding Principles The aim of the CMF is reflected and underpinned by and consistent with the Draft Guiding Principles. Draft Guiding Principle 10(b) states there is a need for providing adequate assistance to business enterprises to assess and address the heightened risk of abuse. In the comment on this principle it is noted that innovative and practical approaches are needed. A (worldwide) conflict management facility as CMF could contribute to such a innovative and practical approach. Draft Guiding Principle 12 emphasizes the need for business enterprises to respect human rights, in light of the impact business enterprises can have on virtually the entire spectrum of internationally recognized human rights and their responsibility to respect these rights. The SGSR points out the importance of risk management (i.e. the risk of harming third parties rights) as one of the principles supporting corporate responsibility. It is in the direct interest of a business enterprise to prevent tensions or problems escalate into a human rights violation, which will inevitably cause reputational and financial harm. Financial harm may be caused when the license of a business enterprise is withdrawn as a result of the reputational harm inflicted by a human rights violation. Corporations associated with human rights violations may also find that institutional investors pursuing a SRI strategy will withdraw their funds and/or put this company on a so-called exclusion list. Dialogue and engagement, as well as due diligence (prevention) could lead to reduced systemic risk, thereby avoiding conflicts or at least minimizing damages on

5 both sides. However, business enterprises should incorporate or adhere to human rights standards not only from a risk management but more importantly from a values perspective, enhancing an adequate corporate culture. To enable business enterprises to assess their human rights impacts accurately, they should, as is noted in the comment to Draft Guiding Principle 16, seek to understand the concerns of potentially affected stakeholders by engaging directly with them. In situations where such engagement is not possible, business enterprises should consider reasonable alternatives such as consulting credible expert resources. These business enterprises could in such circumstances also make use of independent mediation services before the tensions or problems escalate. In the comment to Draft Guiding Principle 25 it is noted that gaps in the provision of remedy for business-related human rights harms could be filled, where appropriate, by expanding the mandates of existing non-judicial mechanisms and/or by adding new mechanisms. These may be mediation-based, adjudicative or follow other culturally-appropriate and rights-compatible processes or involve some combination of these depending on the issues concerned, any public interest involved, and the potential needs of the parties. A conflict management facility as CMF could contribute to assessing options for existing mechanisms and, where these options are not available or not appropriate, could provide for new mechanisms. Draft Guiding Principle 27 covers access to effective operational-level grievance mechanisms. However, as professor Ruggie emphasizes, in a world of 192 UN Member States and transnational enterprises a one size fits all approach does not serve the cause of business and human rights, and that tailor made solutions that fit both the specific circumstances of the case and the organizational structure of the enterprise concerned, offer the best perspective at progress. Business enterprises and other stakeholders should therefore be informed about and offered effective remedies through judicial, non-judicial and/or other appropriate means whichever fit the complaint, tension or problem at hand the best. As the comment on principle 27 states, this may be provided through recourse to a mutually acceptable external expert or focal point. This focal point need not require that a complaint or grievance amount to an alleged human rights abuse before it can be raised, but specifically aim to identify any legitimate concerns of those who may be adversely impacted. If their concerns are not identified and addressed, the complaint or grievance may over time escalate into more major

6 disputes and human rights abuses. This emphasizes the relation between human rights and related fields such as labor and environment in the context of CSR. 3 The focal point therefore should assess options for dispute management mechanisms, establish standards for neutral parties and processes and, if not available or appropriate on a local level, provide dispute management services itself with regard to a much wider range of issues than human rights (in a strict sense). According to the comment on Draft Guidance Principle 29 (draft report page 26): A grievance mechanism can only serve its intended purpose if those whom it is intended to serve know about it, trust it and are able to use it. In this respect, as was noted in connection with Draft Guiding Principle 10(b), CMF could have an enhancing role. To emphasize the need for a worldwide neutral facility which is not adversely affected by any business, stakeholder, local or regional interest, WLF would propose an addition to the comment on Draft Guiding Principle 29 in which the need for a worldwide facility is promulgated. This facility could assess options for dispute management mechanisms, establish standards for neutral parties and processes and, if not available or appropriate on a local level, provide dispute management services itself. Additionally the facility should advocate the need for dispute management with key institutional actors, should train and build capacity of stakeholders and should develop case studies and best practices. Acknowledgement WLF would like to take this opportunity to express its sincere gratitude to professor Ruggie for his efforts to propose global standards in the area of business and human rights, to increase the dialogue between business, stakeholders and communities and to connect corporate responsibility and global governance. 3. Reference can be made to the addendum to the 2008 Report entitled Corporations and human rights: a survey of the scope and patterns of alleged corporate-related human rights abuse, UN Doc A/HRC/8/5, Add. 2 of 23 May The European Commission also defines CSR as a concept whereby companies integrate social and environmental concerns into their business operations and in their interaction with their stakeholders on a voluntary basis.

7 WLF consists of: World Legal Forum Foundation (The Hague, the Netherlands) Prof. Jan Eijsbouts Camilla Perera Francis Camstra Pels Rijcken & Droogleever Fortuijn (The Hague, the Netherlands, based law firm) Martijn Scheltema Institute for Environmental Security (The Hague, the Netherlands) Serge Bronkhorst Lambooy Legal Consultancy Tineke Lambooy (Utrecht University/Nyenrode Business University, the Netherlands) Buren van Velzen Guelen (The Hague, the Netherlands, based law firm) Fred Guelen Pieter van den Berg Rein Philips

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