I. Introduction
In June 2014, as a result of an initiative by Ecuador and South Africa, the United Nations (UN) Human Rights Council established an open-ended intergovernmental working group with the mandate to ‘elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises’.Footnote 1 In July 2015, the intergovernmental working group held its first session in Geneva, officially launching the negotiations at the UN towards a business and human rights (BHR) treaty. The fourth session, in October 2018, marked the beginning of substantive negotiations on the text.Footnote 2
Treaty supporters argue that a BHR treaty is necessary to address businesses’ significant and often adverse impact on human rights.Footnote 3 Serious human rights violations involving companies keep occurring despite international standards such as the Organisation for Economic Co-operation and Development (OECD) Guidelines on Multinational Enterprises,Footnote 4 and the UN Guiding Principles on Business and Human Rights (UNGPs).Footnote 5 There is growing frustration over the slow pace of implementation of the UNGPs and over the apparent inaction of most governments and companies.Footnote 6 Companies often operate with impunity, and victims continue to lack access to effective remedy. Therefore, a stronger, legally binding instrument is needed to force companies and states into action.Footnote 7 In particular, a BHR treaty could provide clarity on issues of mutual legal assistance, which are especially relevant for cross-border violations; set up common standards for mandatory human rights due diligence legislation; and redress the imbalance between legally enforceable rights enjoyed by companies, for example, in the area of investment law, and the corporate responsibility to respect human rights under the UNGPs, which has no legal basis. ‘Not only is a business and human rights treaty needed, it is do-able at this point of time in history’, says Surya Deva, a legal academic and member of the UN Working Group on the issue of human rights and transnational corporations and other business enterprises.Footnote 8 He refers to the ‘springboard’ of the UNGPs and the growing realization that neither voluntary initiatives alone nor measures merely at national level will ever be adequate to regulate corporate activities.Footnote 9 A BHR treaty would not fix all the existing regulatory gaps or end the current state of corporate impunity, it is argued, but it would provide an additional regulatory tool to ensure that businesses comply with human rights norms.Footnote 10
Business and human rights as a field raises questions about the respective areas of responsibility under international law for states and non-state actors. The UNGPs, implementing the ‘protect, respect and remedy’ framework, rest on the idea that only states have obligations under international law. Companies, by contrast, have a ‘responsibility to respect human rights’ in the sense that they are socially expected to do no harm.Footnote 11 Many supporters of the BHR treaty process believe the treaty must create binding obligations on corporations so as to overcome what they view as the UNGPs’ deficiencies on this point.Footnote 12 Commentators have debated whether it is a good idea and whether it is even feasible.Footnote 13 The Zero Draft of the proposed treaty released by Ecuador in July 2018, which has provided the basis for discussions, does not include direct obligations for companies.Footnote 14 The 2019 Revised Draft does not include such obligations either, although the preamble highlights that business enterprises ‘have the responsibility to respect all human rights’, thus mirroring the language of the UNGPs.Footnote 15 Despite the language of the Revised Draft, this question, together with many others, remains unsettled. As further argued below, the current treaty-making process represents a once-in-a-generation opportunity to set up human rights obligations of companies under international law. This opportunity should not be wasted.
This article provides a fresh perspective on the debate around human rights obligations of corporations and their liability by looking at the deep seabed mining regime under the UN Convention on the Law of the Sea (UNCLOS).Footnote 16 UNCLOS organizes the activities of states and private companies in ‘the Area’, which refers to ‘the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction’.Footnote 17 The deep seabed mining regime includes obligations of both states and corporations in relation to the prevention and remediation of environmental impacts, which bear similarities to human rights impacts, and combines state and corporate responsibility and liability in an original way. In many ways, negotiating a BHR treaty entails exploring new ground and embracing innovative approaches. In this spirit, this article delves into the deep seabed mining regime under UNCLOS with the view to inform the BHR treaty negotiating process. It highlights points of convergence and divergence between the two areas and aims to ascertain the extent to which the proposed BHR treaty could draw from the deep seabed mining regime with regard to the respective responsibility and liability of states and companies. This article argues that, at a minimum, the treaty should establish direct general obligations for corporations, as the language of the UNGPs, now included in the Revised Draft’s preamble, is not enough. The chance to set up human rights standards for global corporate activity should not be missed, and UNCLOS demonstrates it is possible to set up broad standards directly applicable to the private sector. UNCLOS may also inspire the drafting of other important provisions of the BHR treaty regarding human rights due diligence and liability regimes.
Section II of this article presents key UNCLOS provisions on the deep seabed mining regime and introduces the rationale for a comparison between this regime and the one that a future BHR treaty may establish. Section III then introduces the debate on the human rights obligations of corporations and explores how the BHR treaty could incorporate some of the arrangements of UNCLOS to address state and corporate human rights obligations, both of a general and specific nature. Section IV looks at provisions of UNCLOS that could inform responsibility and liability of states and corporations under the future BHR treaty and proposes that the treaty move beyond UNCLOS in this respect. Section V provides a brief conclusion.
II. The Deep Seabed Mining Regime under UNCLOS
UNCLOS, adopted in 1982, is one of the most important treaties ever drafted.Footnote 18 Dubbed a ‘Constitution for the oceans’, it covers ‘every aspect of the uses and resources of the sea’.Footnote 19 At the time of writing, UNCLOS has 168 state parties, including key maritime states such as Greece, Japan, China and Singapore, but not the United States.Footnote 20 Part XI of UNCLOS, entitled ‘the Area’, governs activities in the Area, defined as ‘the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction’.Footnote 21 The Area lies under the high seas, a part of sea that no state can validly claim as their own,Footnote 22 and where states enjoy freedom of navigation.Footnote 23 The Area is part of the ‘common heritage of mankind’Footnote 24 and as such states cannot claim sovereignty over it or over the resources it contains.Footnote 25 The reason why the Area was granted a special status under UNCLOS is that it is rich in minerals, the exploitation of which could become profitable provided technological challenges are solved. Those challenges arise regarding both the recovery and the extraction of minerals. Minerals are contained in ‘potato-sized manganese nodules’ (a type of metal), which lie on the ocean floor.Footnote 26 Recovering those nodules will have to ‘take place at a depth of more than fifteen thousand feet of open-ocean, thousands of miles from land’.Footnote 27 Once the nodules have been brought out of the ocean, the minerals need to be extracted using either heat or chemicals. With recent technological advances and growing demand for minerals used in emerging and high technology,Footnote 28 deep sea mining appears poised to become the next frontier in resource extraction,Footnote 29 and has been hailed as the ‘new global gold rush’.Footnote 30
Part XI of UNCLOS attempts to reconcile the idea of the Area as common heritage of mankind and as a place where mining operations may be carried out. UNCLOS establishes the International Seabed Authority (‘the Authority’),Footnote 31 whose purpose is to administer the Area ‘on behalf of mankind as a whole’.Footnote 32 The Authority is based in Kingston, Jamaica, and has three principal organs: the Assembly, the Council and the Secretariat. UNCLOS also refers to an additional organ, the Enterprise. The Enterprise was meant to be an international organization-owned company through which the Authority was to directly explore and exploit the Area alongside state-owned and private companies, but at the time of writing it still has not been set up.Footnote 33
Immediately after the adoption of UNCLOS, it became clear that Part XI constituted a problem. A number of industrialized states viewed Part XI as a product of the New International Economic Order.Footnote 34 They disagreed with some of its provisions. In particular, the United States, under President Reagan’s administration, was concerned that Part XI would impose artificial limitations, onerous regulations and financial burdens on industrialized countries’ seabed mineral production, and that private deep seabed miners would be subject to a mandatory requirement for the transfer of technology to the Enterprise and to developing countries.Footnote 35 The United States and other industrialized countries deemed Part XI of UNCLOS ‘anti-market’Footnote 36 and decided either not to sign the Convention or to delay ratification.Footnote 37 In order to solve the issue, the UN Secretary-General held talks between 1990 and 1994. They led to an Agreement Relating to the Implementation of Part XI of the Convention (‘1994 Agreement’).Footnote 38 The Agreement modifies Part XI and is to be applied and interpreted together with Part XI.Footnote 39 Substantial changes were introduced to make the regime more acceptable to industrialized states (for example, regarding transfer of technology), thus prompting their ratification of UNCLOS.Footnote 40 Despite those changes, the core aims of Part XI remain. The Area is part of the common heritage of mankind and deep seabed mining cannot be freely undertaken.
Deep seabed mining as a project, and its legal framework, have been discussed since the 1960s, but it has only become economically viable within the past decade. In anticipation of this hour, governments and companies have scrambled to obtain exploration licenses for vast tracts of both national and international seabed.Footnote 41 In 2011, the government of Papua New Guinea granted the world’s first deep-sea mining lease within their Exclusive Economic Zone (‘an area beyond and adjacent to the territorial sea’Footnote 42) to Canadian company Nautilus Minerals.Footnote 43 Solwara 1, operated by Nautilus in a joint partnership with the Papua New Guinea government, was scheduled to begin production in 2019.Footnote 44 The project met with legal challenges, funding problems and strong community resistance.Footnote 45 In September 2019, Nautilus filed for bankruptcy, with major creditors seeking to recover hundreds of millions and spurring calls, notably by Fiji President Frank Bainimarama, for a decade-long moratorium on seabed mining in the Pacific.Footnote 46 In August 2017, Japan became the first country to successfully mine its own seabed, tapping into a deposit of mineral resources 1,600 metres below the ocean’s surface off the coast of Okinawa.Footnote 47 With the support of the European Union (EU) and other government actors, multinational mining companies have been actively prospecting in the Exclusive Economic Zones of Pacific Island countries.Footnote 48
Under UNCLOS, exploration for and exploitation of seabed minerals in the Area may only be carried out under a contract with the International Seabed Authority. At the time of writing, the International Seabed Authority has issued 29 exploration licences for the Area,Footnote 49 amid controversy over the environmental impact of such operations.Footnote 50 Contracts may be issued to both public and private mining enterprises. Before being able to mine in the Area, companies must possess the nationality of a state party or be effectively controlled by a state party or its nationals, and be sponsored by a state party.Footnote 51 As explained in the next section, a number of UNCLOS provisions regarding the Area place obligations on such sponsored companies.
Shared responsibility between states and companies for activities in the Area is the starting point for a comparison between the deep seabed mining regime and the future BHR treaty. Shared responsibility is not the norm in treaties governing activities undertaken by the private sector in locations outside the jurisdiction of any state. Under the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, non-governmental entities must be authorized by a State Party in order to operate in outer space.Footnote 52 This is not unlike the sponsorship mechanism described in UNCLOS for private operations in the Area. Unlike in UNCLOS, however, States Parties bear international responsibility for their activities in outer space ‘whether such activities are carried on by governmental agencies or by non-governmental entities’Footnote 53 such as private companies. The state is the only entity that may be held internationally responsible. The Agreement Governing the Activities of States on the Moon and Other Celestial Bodies contains similar provisions.Footnote 54 Moreover, when it comes to liability, the Convention on International Liability for Damage Caused by Space Objects, the launching state is ‘absolutely liable to pay compensation for damage caused by its space object on the surface of the Earth or to aircraft in flight.’Footnote 55
Before exploring the responsibility and liability regimes of UNCLOS in detail, two points deserve preliminary attention. First, UNCLOS is not the only treaty providing for corporate liability. Many environmental treaties contain provisions to that effect. For example, the 1969 Convention on Civil Liability for Oil Pollution Damage provides that the owner of a ship, which may be a legal person such as a corporation, shall be liable for any pollution damage caused by it.Footnote 56 What makes Part XI special is the mechanism for shared responsibility and liability set up in Articles 137 and 139, analysed in the next section. Second, there is an inherent limitation to the comparison between Part XI of UNCLOS and the proposed BHR treaty. Part XI of UNCLOS regulates a special part of our planet, the Area. The Area is both part of the common heritage of mankind and a source of mineral wealth. Deep seabed mining in the Area involves clearly identified state-sponsored companies who will carry out technically complex operations, but under a straightforward legal framework, and under contract. By contrast, the ambition of the BHR treaty is to provide an international legal framework on the protection of human rights for all types of corporate activities around the world, particularly but not only those that may span across different jurisdictions.Footnote 57 This covers hundreds of thousands of actors. The context, therefore, is quite different. Beyond these differences, however, Part XI of UNCLOS is used here to support a simple idea: that introducing direct human rights obligations for corporations in the proposed BHR treaty does not constitute a radical move. As explained in the next section, Part XI of UNCLOS shows that it was accepted as early as 1982 that companies must act to prevent damaging the environment and human life in areas in which they conduct their business. The next section introduces the debate about human rights obligations of companies under international law and analyses some key provisions of UNCLOS related to corporate obligations that could provide a model for a future BHR treaty.
III. Obligations of States and Corporations: Drawing Inspiration from UNCLOS
This section first argues that the proposed BHR treaty could imitate some of the arrangements of Part XI of UNCLOS on shared state and corporate general obligations. Second, it compares the corporate obligation to conduct environmental impact assessments under Part XI of UNCLOS and a proposed obligation to conduct human rights due diligence under the BHR treaty.
A. General Obligations of States and Corporations
Under a traditional reading of international law, states are the only full-fledged subjects of international law.Footnote 58 The Vienna Convention on the Law of Treaties makes clear that treaties may bind states, without mentioning non-state actors such as private corporations.Footnote 59 A vast literature discusses whether corporations are also subjected to international obligations in the area of human rights.Footnote 60 While some authors have convincingly argued that companies already have some obligations under international human rights law, most authors consider it is not yet the case.Footnote 61 In February 2020, the Canadian Supreme Court held in Nevsun Resources Ltd v Araya that Canadian corporations were subject to customary international law. However, the Court reached this conclusion because it reasoned that customary international law was part of Canadian law and that, as such, it directly bound Canadian corporations.Footnote 62 Critics against the very idea of direct human rights obligations for corporations consider the move to hold corporations directly liable under international law for their human rights abuses would be unprecedented – it would contravene the traditional approach of international law to hold only states accountable for human rights violations, including those committed by corporations in their territory.Footnote 63 They also argue that states will use the treaty to excuse their own refusal to protect human rights. John Ruggie, for example, pointed out that the treaty co-sponsors (Ecuador, South Africa, Bolivia, Cuba and Venezuela) have thus far done ‘little if anything’ to act on the UNGPs.Footnote 64 Others argue that asking businesses to implement elaborate human rights policies could also pose impossible practical difficulties, given the complicated, partly unpredictable and sometimes contradictory implications business activities can have on human rights. According to Danny Bradlow, ‘it would be imprudent to establish binding rules on how businesses should manage human rights issues before we fully understand how to draft such rules without causing unintended consequences… [Human rights law] has not yet worked out how to deal with human rights situations that require making trade-offs, setting priorities, and managing risk. These are standard in business.’Footnote 65
Drawing parallels with UNCLOS, this article argues, instead, that including direct human rights obligations for corporations in a future BHR treaty is not an unprecedented move and is in fact crucial for two reasons. First, many corporations have more power, influence and revenue than a number of states. An article published in 2018 in The Conversation put 71 corporations in the top 100 revenue generators for the year 2016. In this context, revenues of states are mainly taxes, which means that admittedly the comparison rests on shaky grounds. Still, it is telling that Walmart, for example, generated more revenue than Spain, Australia and the Netherlands.Footnote 66 International human rights law mechanisms, with their almost exclusive focus on state responsibility, do not adequately capture this reality. To remain relevant, international human rights law must evolve and include corporate accountability.Footnote 67 This symbolic but important development could have implications beyond human rights legal instruments as such, for example, in the area of investment arbitration. Under investment law, corporate investors often successfully bring claims against states, which argue that the impugned measures were adopted to comply with such states’ human rights obligations.Footnote 68 Arbitrators interpret binding investment treaties that create a number of rights for companies, without corresponding binding human rights obligations. It is argued here that a BHR treaty clearly setting up corporate human rights obligations under international law would even things out, and lead to better human rights protection. A number of civil society organisations (CSOs) campaign for a BHR treaty because they view the process as an opportunity to create binding human rights obligations for corporations.Footnote 69 In this context, a treaty imposing obligations on states only and dodging the question of direct human rights obligations of businesses would be disappointing.Footnote 70
The second reason why including direct human rights obligations for corporations in the future treaty is crucial is that the current treaty-making process is a once-in-a-generation opportunity to move forward on this question. If the treaty is adopted without a clear stand on this question, it is unlikely to be revisited. The preamble of the 2018 Zero Draft and 2019 Revised Draft make explicit that the ‘primary responsibility’ for human rights (including protecting people from abuses by business) remains with states. The Revised Draft underlines, following the language of the UNGPs, that business enterprises ‘have the responsibility to respect all human rights’Footnote 71, but this is not repeated in the core part of the text. Thus, the Revised Draft does not create direct obligations for business enterprises for two reasons. First, it follows the UNGPs by distinguishing between state obligations and non-binding corporate responsibility. Second, the language is found in the Revised Draft’s preamble. While there is some debate about this among international lawyers, it is generally believed that only the core part of a treaty is legally binding, while the preamble is not.Footnote 72 The preamble may only be used to provide context in treaty interpretation as per Article 31(2) of the Vienna Convention on the Law of Treaties.Footnote 73 This is the only mention in the Revised Draft of something resembling corporate human rights obligations under international law. The Revised Draft, and before that the Zero Draft, have dropped the proposals made in the ‘Elements’ of the treaty – a document Ecuador had released in 2017 – of direct imposition of international law obligations on business and of international mechanisms for suing and prosecuting companies.Footnote 74 The decision to only cover state obligations was made presumably in a bid to secure more support as some states are reluctant to the idea of a treaty setting up direct corporate obligations in the area of human rights. Negotiations, however, are still in the early stages, and the Revised Draft is, as the name suggests, a document that can be modified. In this respect, it will be interesting to see what position the EU will adopt in the next round of negotiations. In October 2019, the EU delegation announced they could not participate to the negotiations because they did not yet have a mandate from the new EU Commission. In short, the current draft can be revisited and including direct human rights obligations in the treaty is still possible.
Here, the deep seabed mining regime under UNCLOS offers an interesting point of comparison. As shown below, a picture of corporate accountability under international law emerges when looking at certain provisions of Part XI, together with official documents from the Authority. The first relevant provision is Article 137. Article 137 creates a general obligation for states not ‘to claim or exercise sovereignty or sovereign rights over any part of the Area or its resources’. Under this article, ‘juridical persons’, such as corporations, are prohibited from ‘appropriat[ing] any part thereof’.Footnote 75 States and juridical persons alike are also prohibited to ‘claim, acquire or exercise rights with respect to the minerals recovered from the Area except in accordance with this Part’.Footnote 76 Thus, without ambiguity, UNCLOS creates direct obligations for non-state actors, as well as rights, albeit negatively phrased.Footnote 77 This obligation not to appropriate any part of the Area, however, is relatively narrow. Still, a future BHR treaty could draw from Article 137 of UNCLOS and create a general obligation for states and corporations alike to respect (i.e., not to violate) human rights in the conduct of business activities. With regard to state obligations, this would essentially involve grounding Pillar I of the UNGPs in binding treaty law. With regard to corporate obligations, it would provide much-needed clarification and embed the core element of Pillar II of the UNGPs, the corporate responsibility to respect human rights, into treaty law. Following UNCLOS precedent, and specifically Articles 145, 146 and 149 read in conjunction with the Authority’s official documents, as discussed in the next section, the treaty could also go further, and consider setting up a corporate obligation to carry out human rights due diligence.
B. Obligation to Conduct Environmental Impact Assessments and Corporate Human Rights Due Diligence Obligation
This section shows that Part XI of UNCLOS can be interpreted as establishing direct obligations for corporations not only of a general nature (Article 137), but also more detailed obligations, particularly the obligation to conduct environmental impact assessments in the Area. It is argued that the obligation to conduct environmental impact assessments in the Area shares similarities with the obligation to carry out human rights due diligence, and creates an interesting model from which to draw inspiration for the BHR treaty.
Obligations of corporate entities first arise from Article 145 of UNCLOS on the protection of the marine environment. This article states that ‘[n]ecessary measures shall be taken in accordance with this Convention with respect to activities in the Area to ensure effective protection for the marine environment from harmful effects which may arise from such activities’. This provision specifically empowers the Authority to take such measures, but the reference to measures being taken ‘in accordance with’ the Convention acknowledges that states may also act. Moreover, the 1994 Agreement modified Annex III of UNCLOS, on the basic conditions of prospecting, exploration and exploitation, to include the obligation for contractors to submit ‘an assessment of the potential environmental impacts of the proposed activities and … a description of a programme for oceanographic and baseline environmental studies’ at the same time as their application for approval of a plan of work.Footnote 78 This assessment must be conducted in accordance with the regulations to be adopted by the Authority.Footnote 79 In 2000, the Authority adopted the Regulations on Prospecting and Exploration for Polymetallic Nodules in the Area (Regulations), as part of the Mining Code.Footnote 80 Regulation 31(3) requires contractors ‘in accordance with Article 145 of the Convention’ to take necessary measures ‘to prevent, reduce and control pollution and other hazards to the marine environment arising from its activities in the Area’. Regulation 33(5) in both the 2010 Regulations on Prospecting and Exploration for Polymetallic Sulphides in the Area and the 2012 Regulations on Prospecting and Exploration for Cobalt-rich Ferromanganese Crusts in the Area contain a similar requirement, and a reference to Article 145.Footnote 81 Thus, although the text of Article 145 does not explicitly mention corporate obligations, subsequent developments lead to the interpretation of Article 145 as imposing obligations on non-state actors – at least the obligation to conduct an environmental impact assessment.Footnote 82
The next relevant provision is Article 146. Article 146, titled ‘Protection of human life’, declares that ‘necessary measures shall be taken to ensure effective protection of human life’ in the Area. Like Article 145, Article 146 empowers the Authority to take such measures. Arguably, Article 146 imposes obligations on contractors, although this is less clear than for Article 145. The Standard Clauses for Exploration Contracts, contained in Annex 4 of the Regulations on Prospecting and Exploration for Polymetallic Nodules in the Area, require contractors to ‘comply with the generally accepted international rules and standards established by competent international organizations or general diplomatic conferences concerning the safety of life at sea’. There is no mention of Article 146 as the source of the obligation but, as noted in the Commentary of UNCLOS, ‘this provision appears fully consistent with the spirit of article 146’.Footnote 83
Finally, Article 149, on ‘archaeological and historical objects’ asserts that ‘[a]ll objects of an archaeological and historical nature found in the Area shall be preserved or disposed of for the benefit of mankind as a whole’. This provision does not place such obligation upon any particular entity, whether states or non-state actors, nor does it provide details as to how this obligation must be discharged.Footnote 84 Regulation 34 (in the Regulations on Prospecting and Exploration for Polymetallic Nodules in the Area), however, requires contractors to ‘immediately notify the Secretary-General in writing of any finding in the exploration area of an object of an archaeological or historical nature and its location’ and to ‘take all reasonable measures to avoid disturbing such object’. Again, the adoption of this provision supports the interpretation that Article 149 of UNCLOS imposes obligations on corporations.
Taken together, Articles 137, 145, 146 and 149 create an international legal regime in which corporations have obligations regarding their impact on the environment, human life and archaeological and historic objects. Corporations are required to minimize this impact, in other words to ‘do no harm’. Thus, as a concept, corporate responsibility in Part XI of UNCLOS is closely related to corporate responsibility for human rights. Corporate responsibility in UNCLOS naturally covers fewer issues, but it is similar in nature to corporate responsibility for human rights.
A future BHR treaty could establish an obligation for states to establish mandatory human rights due diligence regulations. Some countries are already doing so.Footnote 85 France’s Duty of Vigilance Law,Footnote 86 enacted in March 2017, mandates certain large French companies to publish and implement a vigilance plan to prevent human rights and environmental violations; the Swiss Responsible Business Initiative,Footnote 87 launched in April 2015, aims at adding an article to the Swiss Constitution that would entail a mandatory due diligence provision for corporations and a liability provision.Footnote 88 The 2019 Dutch Child Labour Due Diligence Law requires companies selling goods or services to Dutch consumers to identify and prevent child labour in their supply chain.Footnote 89
Following the model of Part XI of UNCLOS, which arguably imposes the obligation on non-state actors to at least conduct an environmental impact assessment, the proposed BHR treaty could also explicitly impose direct due diligence obligations on corporations. The Revised Draft currently only envisages such obligations for states. Under draft Article 5, states ‘shall adopt measures necessary to ensure that all persons conducting business activities … undertake human rights due diligence’.Footnote 90 Broadly consistent with the UNGPs, draft Article 5 defines due diligence as identifying, assessing, preventing, monitoring and communicating on the human rights impacts that may arise from their own business activities or from their contractual relationships.Footnote 91 A future BHR treaty could include both obligations for states to establish mandatory human rights due diligence regulations, and direct obligations for company to carry out human rights due diligence. These two obligations are not mutually exclusive: companies would have the obligations to carry out human rights due diligence independently from whether a State Party has fulfilled its obligations under the treaty. Including direct corporate obligations of this nature would further strengthen the international human rights legal framework applicable to corporations. It would constitute a clear departure from the state-centred model and a step towards addressing, in law, the imbalance between corporate power and corporate accountability for human rights in the global economy. In practice, it is likely that companies would carry out human rights due diligence primarily under the domestic law of a given state party. However, in doing so they would also abide by their international obligation. In the next section, we explore the consequences of this approach on corporate responsibility and liability.
IV. Responsibility and Liability of States and Corporations: Moving Beyond UNCLOS
Part XI of UNCLOS sets up an intricate system of responsibility and liability of states and corporations in the Area. No other international legal regime has looked at these issues in such detail. Not only is the text itself creating a mechanism of shared liability between the two entities (states and corporations) but the International Tribunal on the Law of Sea (ITLOS) also had the opportunity to elaborate further on this mechanism in its 2011 Advisory Opinion.Footnote 92 This is particularly important in light of the fact that international law in general is ill-equipped to deal with situations of shared responsibility, even between states, let alone between states and non-state actors such as corporations.Footnote 93 Part XI of UNCLOS, therefore, allows us to anchor the discussion on a BHR treaty to an existing regime, rather than in the abstract. This section proposes that the BHR treaty move beyond Part XI to embrace a mechanism of residual liability and explains why it should do so.
Article 139 of UNCLOS is titled ‘Responsibility to ensure compliance and liability for damage’. Article 139(1) reads as follows:
States Parties shall have the responsibility to ensure that activities in the Area, whether carried out by States Parties, or state enterprises or natural or juridical persons which possess the nationality of States Parties or are effectively controlled by them or their nationals, shall be carried out in conformity with this Part.
In its 2011 Advisory Opinion on the ‘responsibilities and obligations of States with respect to activities in the Area’, the ITLOS clarified the meaning of the phrase ‘responsibility to ensure’.Footnote 94 It concluded that this provision creates an obligation of due diligence – in other words an obligation of conduct and not of result.Footnote 95
Under Article 139(2), a failure by a state to carry out its responsibilities shall entail liability. Hence Article 139 ‘imposes a responsibility on state parties to ensure that activities are carried out in conformity with the Convention and holds them liable for damage caused by their failure to discharge this responsibility’.Footnote 96 However, if the state has taken ‘all necessary and appropriate measures to secure effective compliance’, it will not be held liable for damage caused by a failure to comply by a person, for example, a company that the state has sponsored.Footnote 97 In other words, if, despite the state’s efforts, a company has failed to comply with the provisions of the Convention, the company, and not the state, will be liable. Although in international law both terms are often used interchangeably,Footnote 98 Article 139 differentiates between responsibility and liability. In the 2011 Advisory Opinion, the ITLOS confirmed this, and stated that under Article 139 ‘the term “responsibility” refers to the primary obligation whereas the term “liability” refers to the secondary obligation, namely, the consequences of a breach of the primary obligation’.Footnote 99
Article 139(2) applies ‘[w]ithout prejudice to the rules of international law and Annex III, article 22’ of UNCLOS, which is titled ‘responsibility’ and reads as follows:
The contractor shall have responsibility or liability for any damage arising out of wrongful acts in the conduct of its operations, account being taken of contributory acts or omissions by the Authority … Liability … shall be for the actual amount of damage.
Hence, Article 139 of UNCLOS, read in combination with Article 22 of Annex III, set up a system whereby ‘the contractor is, prima facie, liable for damage’.Footnote 100 This regime raised questions about the scope and potential overlap of state and corporate liability, a key issue also in the area of business and human rights. In the 2011 Advisory Opinion, the ITLOS provided clarification by stating that
[t]he liability of the sponsoring State and the liability of the sponsored contractor exist in parallel. The liability of the sponsoring State arises from its own failure to comply with its responsibilities under the Convention and related instruments. The liability of the sponsored contractor arises from its failure to comply with its obligations under its contract and its undertakings thereunder.Footnote 101
Under Part XI of UNCLOS, the two mechanisms for liability are thus separate. This leads to two conclusions. First, the state and the corporation do not bear joint and several liability. Joint and several liability is a form of liability under which each entity that has contributed to a damage is liable for full reparation. Instead, they are each separately liable.Footnote 102 Second, and more importantly for the purposes of this article, there could be situations where no entity can be held liable. To avoid this possibility, ‘some have argued that the sponsoring State has a residual liability, that is, the liability to cover the damage not covered by the sponsored contractor although the conditions for a liability of the sponsoring State under article 139, paragraph 2, of the Convention are not met’.Footnote 103 The ITLOS rejected the idea of residual liability. In doing so, it acknowledged the possibility of liability gaps under UNCLOS.Footnote 104 Thus, under Part XI of UNCLOS, state liability and corporate liability are both established but they exist in parallel, with no residual liability, and liability gaps are possible. Because deep seabed mining has not started yet in the Area, the discussion about the respective liability of states and corporations under Part XI remains hypothetical. However, even if no concrete issue has arisen yet from this liability gap, the situation is clearly suboptimal. As Greenpeace and the World Wide Fund for Nature (WWF) noted in the memorial they presented to the ITLOS during the Advisory Opinion proceedings, ‘an appropriate liability regime … requires that the true costs of new activities are internalized, so that irresponsible risk-taking is discouraged, and it is not humanity as a whole and our shared environment that will foot the bill if devastating damages result.’Footnote 105 The lesson to draw from Part XI of UNCLOS is to avoid setting up modes of liability for states and corporations in the BHR treaty that allow similar liability gaps.
This is important because the lack of effective remedies for victims of corporate human rights abuse is one of the key problems in the area of business and human rights. At the moment, there is no corporate liability mechanism under international law.Footnote 106 Relying on domestic corporate liability mechanisms leads to various jurisdictional hurdles as well as practical access to justice issues, whether cases are litigated in the state where the harm occurred or in the state of incorporation of the parent company.Footnote 107 In this context, closing liability gaps so as to ensure better remedies appears to be one of the future BHR treaty’s objectives.Footnote 108 The Revised Draft covers corporate liability to be defined and enforced under domestic law only. It requires states parties to provide, through their domestic law, for criminal, civil and administrative liability for violations of human rights and for effective criminal and non-criminal sanctions.Footnote 109 This is a step towards more accountability for corporations, but these provisions will not be game changers given the power imbalance and the range of obstacles faced by victims of corporate human rights abuse. Moreover, these provisions fall short of corporate liability under international law. This is in line with the approach adopted in the Revised Draft. This text does not create direct human rights obligations for corporations, so naturally there is no international form of liability either. However, the current approach is not set in stone and, as discussed above, it could be modified during future negotiations.
In this context, the remainder of this section explores the possible inclusion of a mechanism of residual liability in the future BHR treaty and how this would benefit rights-holders. Two options that would allow for residual liability are possible, but only one is politically feasible. First, as explained in section III of this article, the treaty could follow the approach enshrined in Part XI of UNCLOS and set up direct human rights obligations for corporations. In addition, the proposed treaty could create a mechanism for corporate liability at the international level. This would go much further than Part XI of UNCLOS because, under this legal regime, corporations are liable but their liability seems to only arise from their contractual obligations, and not from their more general obligations regarding appropriation, the protection of the environment and human life, and archaeological objects. In practice, even if future contracts for exploitation of minerals in the Area were going to include corporate obligations with regard to these issues, liability would arise out of the contract alone. The ITLOS made clear in its 2011 Advisory Opinion that ‘the liability of the sponsored contractor arises from its failure to comply with its obligations under its contract and its undertakings thereunder.’Footnote 110
Clearly, the future BHR treaty is meant to set up a very different regime in which corporations are not contractors but have general obligations to at least respect human rights throughout their operations. Thus, setting up a proper liability regime under the treaty would entail the creation of an international mechanism to hold corporations liable under international law. In a paper published in 2019, Marco Fasciglione explores three possible models for such liability: (1) creating a specialized Chamber of the International Court of Justice; (2) reorganizing regional human rights courts; and (3) amending the International Criminal Court statute. However, none of these models seems politically feasible.Footnote 111 In this context, it is premature to discuss the possibility of a residual liability mechanism.
The second option, which appears more feasible, would be for the BHR treaty to follow Part XI’s approach and set up direct human rights obligations for corporations, but to then rely on states to establish corporate liability under domestic law. This is close to what is already in the Revised Draft, except that this text does not create direct human rights obligations for corporations but, rather, follows the UNGPs in adopting the notion of corporate responsibility to respect human rights, which has no legal basis by virtue of the UNGPs. Assuming a future draft embraces the model proposed in this article—that is, creating direct human rights obligations for corporations, and requiring states to set up corporate liability mechanisms under domestic law – the added-value of residual liability comes forward. It is possible to imagine a system whereby if a corporation is not held liable under domestic law, because of various jurisdictional and practical obstacles, or is simply insolvent, then the state of nationality of the corporation and/or the state where the damage occurred becomes residually liable under international law. Importantly, this residual liability would be additional to a much broader state responsibility to protect human rights against corporate abuse.
This proposed system would constitute an important departure from the current state of international law on the question of residual state liability. In a commentary of the ITLOS Advisory Opinion mentioned above, one author noted that residual liability is not yet ‘a regular feature’ of international treaty law, but also highlighted developments showing that things are ‘moving in this direction’.Footnote 112 One of these developments is the adoption in 2006 of the International Law Commission’s Principles on the Allocation of Loss in the Case of Transboundary Harm Arising out of Hazardous Activities.Footnote 113 Although the phrase ‘residual liability’ is not mentioned, draft Principle 4(5) provides that in case compensation has not been provided by private operators, ‘the State of origin should also ensure that additional financial resources are made available’.Footnote 114 The author of the commentary noted that this provision is arguably more an example of progressive development of international law, rather than codification.Footnote 115
A future BHR treaty draft could consider a mechanism of residual liability, which in practice is not that far removed from the mechanism currently proposed in the Revised Draft. The Revised Draft sets up a mechanism of international oversight, in the form of a treaty body, of how states parties abide by their obligations under the treaty. The Draft Optional Protocol, released in 2018, sets up a right for individuals or groups of individuals to bring claims before the treaty body against state parties ‘with regards to human rights violations in the context of business activities … under the jurisdiction of a State Party to the present Protocol.’Footnote 116 Presumably, these claims are going to include situations where victims have tried to obtain compensation from corporate actors before domestic courts, but failed to secure it. That a state party can be deemed internationally responsible for having failed to ensure victims’ access to a proper remedy is a logical consequence of the state’s due diligence obligation. That an international quasi-judicial body could establish such responsibility is important, even though the Protocol is a separate instrument that will require separate signatures and ratifications. Such a system, however, falls short of an ideal system of residual liability for several reasons. First, it seems difficult to entrust a treaty body with the task to hold states liable to pay damages. An international judicial body, such as a court or an arbitral tribunal, would be better suited to do so. Yet, a treaty body could still be able to make a non-binding ruling establishing responsibility and asking the state to compensate victims when domestic corporate liability mechanisms have failed to grant such compensation. Second, the proposed mechanism would allow victims to bring claims against states ‘with regards to human rights violations in the context of business activities … under the jurisdiction of a State Party to the present Protocol’.Footnote 117 The Draft Optional Protocol does not explicitly mention the possibility of a state compensating victims when the corporation has not done so. Setting up a mechanism of residual liability would therefore require substantial modification of the text. It would also put further emphasis on victims by ensuring their losses are compensated.Footnote 118
V. Conclusion
The deep seabed mining regime under UNCLOS creates direct obligations for corporate contractors in the area of environmental protection, and protection of human life. This treaty was adopted in 1982 and has 168 State Parties, including most Asian, African and Latin American countries, as well as the Russian Federation, the EU, Canada, Australia and most EU member states. At the very least, the wide acceptance of the idea that international treaty law may establish direct obligations for corporations to minimize their impact on the environment and on human life, albeit only in the Area and when they are contractors, could be used to advocate in favour of direct human rights obligations under the future BHR treaty. As discussed in this article, this has been an unnecessarily polarizing issue, and many have argued that including direct human rights obligations in the treaty would constitute a radical move. This article has shown such inclusion would not be ground-breaking as the principle is already accepted by those states who have ratified UNCLOS. It has also highlighted the importance of this issue, and how the BHR treaty process provides a once-in-a-generation opportunity to acknowledge that corporate actors have the means and influence to violate human rights and actually do so, and to adapt international law to better reflect this reality. As negotiations are still under way, the Revised Draft is work in progress and it is not too late to move in this direction.
This article has also explored what the BHR treaty process can learn from another aspect of Part XI of UNCLOS, namely, its mechanism for shared responsibility between states and corporations when operating in the Area. In its 2011 Advisory Opinion, the ITLOS conducted an analysis of the text of the Convention in this respect, and concluded that residual liability could not be read into its relevant provisions. CSOs intervening in the procedure before the ITLOS had advocated for residual liability in the name of better environmental protection. Without residual liability, Part XI of UNCLOS creates liability gaps. The future BHR treaty is meant to address poor access to remedies for business and human rights victims who face various obstacles in accessing justice and also in receiving compensation for the harm they have suffered. In this context, residual liability for the home and/or host state deserves closer attention as one possible avenue to maximize the impact of the future treaty.
