Chapter 12 Is Arbitration the Answer? An Analysis of Applicable Substantive Law under the Hague Rules on Business and Human Rights Arbitration in the Context of the ICT Manufacturing Industry

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Max Ebdon
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Abstract

This chapter examines business and human rights arbitration’s potential to address human rights abuses in the global ICT manufacturing supply chain. It analyzes possible avenues for applicable law in these arbitrations, including international soft law, domestic law, and contractual standards. The chapter underscores the challenges of traditional litigation, which can often fail to hold multinational corporations accountable due to weak legal frameworks and complex jurisdictional issues. In response, the Hague Rules on Business and Human Rights Arbitration offer a promising alternative by providing victims access to justice through arbitration. It evaluates applicable law sources based on accessibility and predictability, which are essential for effective arbitration, in the ICT manufacturing industry. Through analysis of the United Nations Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, constitutional norms, domestic human rights obligations placed on businesses, and use of contractual standards, the chapter argues that no one source is useful in isolation as the applicable substantive law in BHR arbitration for the ICT manufacturing industry. It concludes that the adoption of contractual standards is the best way for the useful elements from soft and domestic law to coalesce into one unified source of norms.

1 Introduction

The ever-growing advance of global value chains as the mode of production for an increasing number of goods has benefited some economies and societies, both in the Global North and Global South. It can, however, also be associated with exploitative employment and environmental irresponsibility.1 One industry where this is visible is the ict manufacturing industry, where there is evidence of bleak working conditions across the supply chains of leading brands like Apple, Dell, ibm, Sony and many others.2

Western brands have been able to avoid many repercussions for the human rights abuses occurring in their supply chains for two main reasons: firstly, local courts of the host country where the abuse took place can be located in regions where there is not a strong rule of law, or where courts may be corrupt or politically influenced.3 Secondly, courts of the multinational enterprise’s home country can be reluctant to “lift the corporate veil” and punish the businesses “at home” by exercising extraterritorial jurisdiction.4 This was highlighted by the UN High Commissioner for Human Rights, who stated that victims face gaps in both national and international laws, applicable court systems, as well as legal, practical and financial obstacles.5 It is against this backdrop that the international community has looked to business and human rights (“bhr”) arbitration to provide victims access to remedies.6

The Hague Rules on Business and Human Rights Arbitration (the “Hague Rules”) were created to solve the issue of bhr arbitration being underdeveloped. The Hague Rules aim to provide procedures so rightsholders can access justice against corporations or against the parent companies of their employers. The rules are based on the 2013 Arbitration Rules of the UN Commission on International Trade Law, with modifications to address issues which arise uniquely in the bhr arbitration context; issues like recognition and enforcement of the award, transparency in proceedings and many others.7

An analysis shall be conducted to determine which sources are suitable for use as substantive law in business and human rights arbitration under the Hague Rules with regard to the ict manufacturing industry. This analysis will explore the possibility of using international soft law, domestic law or contractual standards.

In the global economy, supply chains are spread across continents; components are mined and manufactured in different countries, assembled in others and usually sold elsewhere.8 This is particularly true in the ict manufacturing sector where raw materials are often extracted from African and South American states, assembled in Asia and sold globally.9 Minerals like gold and copper are used in components of electronic devices like printed circuits, transformers and microchips, and their extraction is often linked to a range of human rights abuses like dangerous working conditions and environmental damage.10 Product assembly is also linked to human rights abuses related to forced labor and dangerous working conditions due to exposure to hazardous chemicals.11 These are two examples of the myriad of human rights abuses that occur throughout the production of ict products.

2 Applicable Substantive Law under the Hague Rules

The choice of law under the Hague Rules can be found in article 46, which states:

(1): The arbitral tribunal shall apply the law, rules of law or standards designated by the parties as applicable to the substance of the dispute.12

The choice of law rules has been left open, which is common across various forms of arbitration. Allowing parties to a dispute to decide substantive law is one of the advantages of arbitration and why many businesses prefer it to traditional litigation in domestic courts. It acts as an incentive for businesses to arbitrate as it provides them with more control over the proceedings – a business will prefer to arbitrate with their chosen substantive law rather than litigate where they feel they have a greater chance of losing. This already occurs in the arbitration context where, for example, English law is often chosen in international mining disputes where the parties want to avoid the domestic law of the state where the violations occur, as it may be underdeveloped or unsatisfactory in other ways.13

The commentary to article 46 states that the term “rules of law” was included to permit the possibility to designate applicable law from different legal systems and from non-national sources.14 This openness is emphasized in the commentary where the drafters highlight that the phrase “law, rules of law or standards” in subsection 1 was used for the purpose of providing the “broadest possible flexibility in choosing the normative sources from which the applicable law is drawn,” and provides examples like supply chain codes of conduct, regulations from sports-governing bodies, statutory commitments and any human rights norms agreed upon.15 The commentary also highlights that applicable law may include international human rights obligations.16

The Hague Rules also allow for the combining of sources of law, which is mentioned in the launch report (the “Launch Report”) and the elements paper (the “Elements Paper”) which state the norms can come from several sources.17 This is also possible in international arbitration outside of the bhr context.18 This means parties to arbitration will be able to pick and choose elements and norms from the different sources analysed below to suit the ict manufacturing context. However, it is beyond the scope of this paper to create a new legal framework for ict manufacturing by combining the different sources discussed. The purpose of this paper is to analyse the suitability of the different sources of norms, not to create a framework from these sources to be used in practice.

2.1 What Makes Sources of Law Useful in Business and Human Rights Arbitration?

Regarding bhr arbitration, the accessibility and predictability of substantive law are the most important factors to consider. These characteristics are particularly important to business and human rights arbitration, as they facilitate a fast and efficient process, something which is at the heart of the Hague Rules, and therefore can minimize costs to the parties and achieve access to justice in a reasonable timeframe. The accessibility refers to the ability of the parties, their counsel and the arbitrators to research the law and to ascertain it with a minimum level of difficulty.19 Ideally, the arbitrators hearing the dispute should be able to understand the applicable legal principles without help.20 Predictability refers to the ability of the parties and their counsel to have a reasonable prediction about the result of arbitration – this is satisfied where the source of applicable law has clear statements on the issues which are most likely to arise.21 Without accessibility and predictability it is difficult to foresee businesses voluntarily submitting themselves to bhr arbitration. The usefulness of the applicable law shall thus be tested against these two factors, which will be satisfied where the law is clear to understand, provides detailed provisions on the most important matters and where it contains either clear jurisprudence or statements on relevant issues. It is important to note that the usefulness of applicable law is distinguishable from its viability – while a source of law may be possible to apply through a stretched and creative interpretation, this does not mean it is useful, as it may lack accessibility and predictability due to this creative interpretation.

3 The Use of “Soft Law” Standards

One solution that has been offered is that bhr arbitration can find the substantive norms in soft law.22 Soft law is a term often used in international law. It refers to certain instruments and norms which, while having a certain legal relevance and proximity to law, are not legally binding per se as a matter of law.23 Soft law does not stem from a formal source of law and, as such, lacks binding legal force – businesses are not directly bound by this law and, as such, it is soft. It is further characterized by a certain proximity to law and by its capacity to induce behaviour despite its legally “non-committal quality.”24

3.1 Reasons to Apply Soft Law

The main argument for applying soft law standards in bhr arbitration is that, due to a changing consensus in businesses and human rights, it is being treated as if it were binding, which is referred to as the “hardening” of soft law.25 This would suggest that certain soft law norms have, while starting as soft law, become so influential that they now reflect certain elements of hard law and can be treated as if binding. This finds support in some recent jurisprudence in the international investment arbitration case of Urbaser v Argentina.26 In this case the tribunal rejected the position of the claimant that the duty to guarantee the right to water was solely upon the State and never upon a private company because “when extended to human rights in general, this would mean that private parties have no commitment or obligation for compliance in relation to human rights, which are on the states’ charge exclusively.”27 The award further stated that “in light of more recent developments, it can no longer be admitted that companies operating internationally are immune from becoming subjects of international law.”28

Another example is the case of Milieudefensie et al. v Royal Dutch Shell from the District Court in the Hague.29 This case is a useful example of the trend in interpreting soft law as if it is hard law in the context of business and human rights, and in particular the hardening of the United Nations Guiding Principles on Business and Human Rights (“ungps”). The court ordered Royal Shell to cut its global carbon dioxide emissions, marking the first time a domestic court has required a business to mitigate its emissions.30 Importantly, the court held that Royal Shell has an obligation to comply with international human rights law (IHR), the ungps, and the goals of the 2015 Paris Agreement, illustrating the hardening of the ungps.31

However, both cases have been criticized. Urbaser v Argentina has been criticized for “clearly not [being] established based on the texts referred to by the tribunal”32 and for its failure to explicitly distinguish between positive and negative obligations under ihr law.33 Similarly, Miliedefensie has been criticized for finding Shell to be acting unlawfully even though it did not find a single specific provision of domestic or international law that it had breached, with the standards so “vague, and unwritten, it becomes debatable how far the courts can go in telling states, multinationals, and the rest of society how to behave.”34 These criticisms echo the oft-stated problem with applying soft law: that it lacks detailed provisions that are designed to be applied. This point is made clear in Mayer’s criticism of Milieudefensie, where he states that the soft law sources used “do not contain any specific standards that can help to determine the requisite level of mitigation action of any particular actor,” calling the reference to such sources “ornamental.”35 In my view, this criticism is justified. Soft law is not designed to be applied in concrete cases due to being soft law. This criticism relates to the predictability which is needed in bhr arbitration.

3.2 Challenges in Applying Soft Law

As previously mentioned, the main argument against the use of soft law is that soft law instruments are not designed to be enforced and, as such, have been drafted in an open-ended manner and so lack accessibility and predictability.36 One example of this is Principle 13 of the ungps which provides, in part, that “the Responsibility to respect human rights requires business enterprises: a) avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur.”37 This vague principle raises more questions than it answers – what are businesses expected to do to “avoid” their adverse human rights impacts? Which human rights? This vagueness means it is difficult to determine what is required in concrete terms and therefore whether there has been a breach.38 However, this criticism cannot be used against all soft law sources in the business and human rights context – the oecd Guidelines for Multinational Enterprises (the “oecd Guidelines”) do in fact contain a certain degree of precision on the standards of conduct that corporations should follow.39 This example illustrates one of the “harder” soft law documents, whereas the ungps can be considered a more “soft” document. In this regard, it is beneficial to see soft law as a continuum whereby some soft law displays more “hard” characteristics than others.

3.3 The United Nations Guiding Principles on Business and Human Rights

One piece of soft law mentioned as a potential source of human rights norms for bhr arbitration is the ungps.40 It is one of two examples of soft law provided in the Elements Paper.41 The ungps contain three fundamental principles with relation to the obligations of businesses:42 to have and adhere to a mission statement which is devoted to human rights compliance, to have due diligence commitments aimed at reducing the risk of violations of human rights norms, and to comply with all laws and respect internationally recognized human rights in their operations.43

It is the third of these principles that is most relevant to bhr arbitration.44 This principle means that multinational corporations (MNCs) are expected to comply with both the domestic law of the state in which they are operating as well as some ihr standards. It is thus this principle that will provide the more detailed obligations for mncs when operating in a certain state. It has been clarified in the commentary to Principle 23 that where the domestic context makes it impossible to meet the responsibilities fully, that they are expected to respect the principle of international recognized human rights to the greatest extent possible in the circumstances.45 This principle therefore opens up the ungps to include a whole host of potential sources which could provide more detailed obligations on mncs. However, the effect of this principle and the sources may not be as meaningful as one would hope. Firstly, the domestic law which the mnc ought to follow, as will be discussed in further detail later, will not necessarily be clear on the human rights obligations on businesses. Furthermore, the “internationally recognized” human rights are not clear. The human rights obligations of businesses under international law are not a settled issue and it is because of this very issue that there is a need to seek the human rights norms to apply in bhr arbitration.

The use of the ungps as the sole applicable substantive law in bhr Arbitration under the Hague Rules is ill-advised. As its critics correctly point out, the ungps have been deliberately drafted in an open-ended manner – they do not provide the detail necessary, and thus the accessibility and predictability needed, for bhr arbitration. This open-ended drafting means they are unsuitable for bhr arbitration generally, not just in the ict manufacturing industry.

3.4 The Organisation for Economic Co-Operation and Development Guidelines for Multinational Enterprises

The oecd Guidelines for Multinational Enterprises have also been suggested as a source of applicable law.46 They are the other soft law document mentioned in the Elements Paper47 and are “non-binding guidance for responsible business conduct in a global context.”48 They are more specific and broader in their scope than previous attempts at regulation by the UN, focusing on compliance with human rights standards.49 For example, they include expectations in areas like employment, industrial relations and the environment.50 The oecd Guidelines, like the ungps, provide that businesses should generally respect human rights within the framework of internationally recognized human rights, ihr obligations of the countries in which they operate, and the relevant domestic laws and regulations.51 However, the oecd Guidelines provide greater detail for certain areas.

One area the oecd Guidelines provide greater detail is in employment and industrial relations.52 This section, for example, includes the right to establish or join trade unions for workers of multinational enterprises.53 This is an issue that persists in the ict manufacturing industry, where there can be threats to women seeking to join unions and where unions can be labelled as “subversive organizations.”54 This section includes further provisions relating to other areas of concern like child labor and health and safety measures.55 The Guidelines also have a section on the environment, like a requirement for businesses to provide the public and workers with information on environmental, health and safety impacts of activities.56 This is an issue that affects the assembly stage of ict manufacturing.57 The oecd guidelines also cover issues which are less relevant to the human rights abuse, providing details on issues like consumer interest and competition.58

In summary, the oecd Guidelines and the ungps are similar in some areas – particularly in the human rights section of the former. The oecd Guidelines go into much more detail on many issues which are touched upon by the ict manufacturing industry, like collective labor rights and worker health and safety. However, they are not perfect as they do not cover all issues. For example, they do not cover resettling of communities, which is often carried out in the extractive industry without the relevant participation of the communities being moved.59

4 Domestic Law

The Hague Rules mention the use of “domestic” law when saying “[t]he term “rules of law” in Article 46(1) refers to the possibility for the parties to designate, and for the arbitral tribunal to apply, rules emanating from different legal systems.”60 This is also spelled out more explicitly in the Elements Paper, which refers to standards stemming from, among other sources, “domestic law” and refers to norms arising from national origin.61 This language is also used in the Launch Report.62

4.1 Domestic Law in the Accord on Fire and Building Safety

The use of domestic law is applied in the most recent binding bhr arbitration initiative, the 2018 Accord on Fire and Building Safety in Bangladesh (“the Accord”).63 The Accord was adopted after the Rana Plaza disaster.64 The Accord was originally created on 13th May 2013 and was limited to a 5-year period,65 which was extended with a new Accord in 2018.66 The 2013 Accord did not include a choice of law clause, but when the second Accord was created in 2018 it did include one, stating: “The Accord shall be governed by the law of the Netherlands.”67 Instead of providing a source of substantive law, the 2013 Accord left this matter to be chosen ad hoc for each dispute, in the aim of providing flexibility to the parties under the agreement.68

When looking at specific rights and obligations under domestic law there are two main sources of norms: Constitutional norms and particular human rights obligations imposed on businesses in home states.69

4.2 Using Constitutional Norms

Constitutional norms provide rights like the right to liberty and life, the prohibition of torture, and the right to freedom of expression.70 Importantly, Constitutional rights evolve with worldwide social views – for example there has been an “environmental rights revolution”71 whereby 148 of the 196 countries which have their own constitution have included some form of the right to the environment.72 As discussed before, environmental degradation is an issue which is strife in ict manufacturing, and so Constitutional rights could be used to provide norms applied in bhr arbitration. However, there are some issues with applying constitutional human rights norms to businesses. The biggest issue with relying on constitutional (and legislative, like the UK’s 1998 Human Rights Act) human rights norms is that they deal fundamentally with the relationship between states and individuals – a relationship of vertical nature – which can make it incongruous with use in horizontal relationships.73

The difficulty of applying constitutional-oriented human rights standards has been shown in several cases.74 One such example from the US is Kiobel v Royal Dutch Petroleum,75 where the Court found that where an Alien Tort Statute (ATS) claim rests on conduct that occurred outside the United States, such a claim must “touch and concern the territory of the United States … with sufficient force to displace the presumption against extraterritorial application.”76 This was further reinforced in the case of Jesner v Arab Bank in the US in 2018, which found that the ats does not permit lawsuits against corporations.77 The use of such human rights standards could overly complicate the arbitration proceedings as opposed to providing an accessible and predictable source of norms.

This argument may be refuted as this trend is subsiding as states are beginning to “pierce the corporate veil” more often, like in the aforementioned Milieudefensie v Royal Shell as well as Vedanta before the UK Supreme Court and Nevsun Resources Ltd v Araya before the Canadian Supreme Court.78 However, whether these cases bring accessibility and predictability to the human rights disputes of ict manufacturing firms is far from certain. Recourse to complex constitutional cases from various jurisdictions is unnecessary in the bhr arbitration context where all that is needed is clear human rights and environmental norms for businesses to follow. The fact that these constitutional courts have deployed “new” and “creative”79 ways to hold corporations to account for acts committed abroad is a success and to be applauded, but the use of these “new” and “creative” arguments under bhr arbitration risks unnecessarily complicating the arbitration process at the risk of increasing costs.

Ultimately the challenge of applying rights designed for use in a vertical relationship – whereby their purpose is to constrain the government – in a horizontal relationship provides difficulty. This difficulty stands in the way of providing accessibility and predictability to bhr arbitration and, as such, its use is ill-advised.

4.3 Using Human Rights Obligations which Are Imposed on Businesses in Home States

In recent years there has been a legislative movement centered around human rights due diligence (“hrdd”) in some western states.80 This influx of legislative initiatives could be used as an alternative to constitutional human rights norms as applicable law in bhr arbitration.81 Of course, the positive of using such legislation is that it is aimed at businesses – posing obligations on them – and so does not follow the same vertical relationship as constitutional rights. This argument has been advanced by Bruno Simma and Giorgia Sangiuolo, who both contributed to the creation of the Hague Rules, stating “due diligence legislation articulates clear substantive environmental, social, and governance rules, the breach of which could be arbitrated under the Hague Rules.”82

Whether hrdd legislation articulates clear rules is, however, not certain. For example, the French Duty of Vigilance Law refers only to “violations of: human rights and fundamental freedoms, the health and safety of individuals and the environment.”83 It does not provide a list of detailed norms which companies must uphold, leaving much room for interpretation which for the purpose of hrdd might be acceptable but would needlessly complicate bhr arbitration under the Hague Rules, which aim to expedite the already complex process of providing remedies to victims. A much more detailed list of norms can be found in the German Supply Chain Due Diligence Act in Section 2, however, which provides a specific catalogue of human rights-related risks.84 For example, including as one form of child labor “[t]he use, procuring or offering of a child for illicit activities, in particular for the production of or trafficking in drugs.”85 This list of norms is precisely what has been missing thus far, as it provides a detailed list of human rights expectations of businesses and a meaningful level of predictability and accessibility. The catalogue of norms also includes several issues pertinent to ict manufacturing supply chains like child labor, pollution, working conditions and forced evictions.86 However, the law has received criticism for failing to include gender-based violence and discrimination or indigenous rights.87 As previously mentioned, such rights are particularly at risk in the extractive industry and, as such, the catalogue of rights cannot be considered a perfect fit for use in bhr arbitration in this industry. That said, it does provide an example of what a catalogue of norms could look like that would be useful in bhr arbitration.

5 Contractual Standards that the Parties Choose to Incorporate

The final source of law suggested is to rely on contractual provisions which explicitly refer to human rights guarantees.88 Through contractual provisions, businesses could require their partners and those within their supply-chain to observe and follow particular human rights norms by specifying practices to be implemented (e.g. through provisions on working conditions, working hours or minimum age).89 While the use of contractual standards is not mentioned explicitly in the Hague Rules this does not prohibit the use of contractual standards as the examples provided are not exhaustive.90 Moreover, the option to choose contractual standards is included within the Hague Rules Launch Report and Elements Paper which, when listing the various sources that substantive standards could come from, mention contracts.91

5.1 Why Use Contractual Standards?

The use of contractual standards reflects a shift in the way contracts are viewed.92 Contractual regimes have grown beyond simply involving, for example, governments and investors, to now include community norms and shared understandings like those found in ihr law. This reflects the fact that contracts do not exist independently of their social context as was previously considered to be the case.93 Contracts can be considered as a “morally contingent type of private legislation.”94 This change in how contracts are viewed can be seen in the extractive industry.

5.2 Case Study: The Use of Contractual Standards in the Extractive Industry

As previously mentioned, the extractive industry and the ict manufacturing industry are interlinked due to the extractive industry providing the precious metals needed in ict components. Contracts are the life of extractive industry governance95 and affect various stakeholders – mining companies, governments through investment treaties and contracts, labor unions, local communities and many more. As a result, there has been an increase in extractive industry-related contracts which address issues beyond the private – addressing environmental, social and human rights issues.96 Contracts have begun to expand the responsibilities of all parties involved in the extractive industry and, as such, can help to guide the use of contractual human rights standards in bhr arbitration.

There is an understanding that contracts within this industry should involve the protection of human rights because large extractive industry projects have the tendency to implicate many contracting parties and local communities across multiple jurisdictions.97 One example is in relation to Canada’s Ekati mine, which is operated by BHP Group Limited (BHP) and where indigenous communities were allowed to participate in the negotiation of an environmental agreement which included their direct involvement in the “regulatory process.”98 This shows the trend of allowing third parties to be involved in processes and was further expanded when the Government of Canada, a provincial Government, the mining companies, and indigenous communities participated, as parties, in two environmental agreements formed with regard to the Diavik mine project99 and the De Beers Canada Mining inc Snap Lake diamond project.100 The legally binding agreements which came from this created contractual obligations and responsibilities that the parties could enforce through binding arbitration or through other forms of dispute settlement.101 This example shows that the use of contracts is a viable option to include issues which would traditionally be considered to fall out of the ambit of a contract. While this example is related to environmental issues which are, of course, instrumental in the enjoyment of certain human rights, other examples have focused more concretely on human rights as such.

A contractual method for addressing human rights violations in this industry emerged in the form of the Human Rights Undertaking employed by British Petroleum-led Baku-Tbilisi-Ceyhan (btc) Pipeline Company in the Baku-Tbilisi-Ceyhan project.102 Within this document, btc Company took certain undertakings regarding human rights, health, safety, and environmental considerations as part of “a legal, valid and binding obligation.”103 However, the enforceability of the undertaking and the nature of the remedies it provides has been debated – with Lawson-Remer noting that “the Undertaking does not establish the right of locally affected populations to hold the btc Company accountable for injuries relating to human rights, health, safety, or the environment … it remains solely up to the host governments to demand redress from the btc Company for any breach of its human rights commitments.”104 Despite this, the Undertaking demonstrates that it is possible for corporations to be held accountable for their human rights violations through contractual instruments if those instruments are drafted with such an intention.105 Using contractual provisions to protect the human rights at issue in ict manufacturing is therefore a viable option, provided those contractual provisions are drafted with accessibility and predictability in mind. While it is disappointing that in this scenario local rightsholders were forced to trust that their government would not turn a blind-eye,106 the usefulness of contractual provisions containing human rights is clear – they can be used to populate the human rights norms businesses must follow. The fact that, in this scenario, individual rightsholders could not get access to remedies further underlies why bhr arbitration under the Hague Rules is needed.

Having established that human rights norms can be incorporated into contractual standards and be used as a means of applicable law in bhr arbitration, the next question is how businesses and relevant stakeholders would go about doing this. One of the ways in which to incorporate this into the practice of a business is through the American Bar Association Model.

5.3 American Bar Association Model

In its 2018 Report on Human Rights Protections for Workers in International Supply Chains, the American Bar Association (“aba”) included a model contract clause for buyer companies to include in their agreements with their suppliers.107 The most important component of this is a human rights appendix, known as “Schedule P,” whereby the buyer can insert proposed human rights obligations. It is worth noting that the aba does not prescribe the content of this appendix. While it does provide a creative solution to the problem of making bhr obligations relevant to, and at home in, a business context,108 the aba model does not provide a real solution to the problem of locating the obligations of businesses. Furthermore, when looking at the aba model through the lens of bhr arbitration, it becomes clear that the model clauses are designed to apply to intra-supply chain disputes rather than those brought by human rights claimants which bhr arbitration under the Hague Rules looks to promote.109

Despite these issues, the aba model can be considered useful. But instead of choosing to apply soft law, it has been argued that the appendix be reimagined to include a “charter of rights” for third-party beneficiaries which are referred to in the Hague Rules model arbitration clause.110 Due to the failings of any one source previously discussed, this is the most convincing way to populate the human rights obligations of businesses, as it allows the norms of several sources to be combined to create one whole source. Shan has provided a model as follows:

[Buyer] and [Seller] acknowledge that [Schedule P, or specific provisions of Schedule P] of this agreement was entered into force for the benefit of [Buyer] and [each member of the class(es) of persons referred to in the clause granting arbitration rights to third parties], who are each entitled to bring a claim [for damages or other specific relief] for violation of the rights in [Schedule P].111

Shan argues that such a clause will most likely be upheld because it is quite unexceptional and is based loosely on similar provisions within the contracts common to several jurisdictions which generally provide that third parties may in their own right enforce a term of the contract if the contract expressly provides that they may, or the term purports to confer a benefit on them.112 This would be a useful way in which human rights obligations could be written into contractual provisions and so could be used in bhr arbitration under the Hague Rules. Such a means of including human rights into contractual provisions would work well in the ict manufacturing context because the industry is spread over many jurisdictions and has human rights implications on a broad range of actors. Such contractual provisions would therefore be able to include not only workers within the supply chain but also third parties who are negatively affected.

6 Conclusion

Ultimately, there is no one source that is useful in isolation as the applicable substantive law in bhr arbitration for the ict manufacturing industry. All sources have their merits and demerits. Soft law sources, while being addressed to businesses, do not have the necessary detail to provide accessibility and predictability to proceedings. The oecd Guidelines provided the most precision on matters relevant to the ict manufacturing industry, but not all, and, as such, cannot be considered useful in isolation. Similarly, domestic law does not provide a single source that can provide accessibility and predictability on all relevant issues. Constitutional rights suffer due to their horizontal relationship, and their use would likely complicate proceedings. Due diligence legislation can provide useful norms, particularly those found in the German Supply Chain Act, but, like the oecd Guidelines, are lacking on some areas of importance to the ict manufacturing industry. Therefore, this leaves the use of contractual standards where the useful norms from soft and domestic law can coalesce into one unified source of norms. The extractive industry has shown that human rights and environmental norms can be included in contracts, and the benefit of this is precisely because you need not rely on any one source of applicable law. While this would involve no small amount of effort, sector-specific human rights charters could be created and would be the best way to create meaningful and thorough human rights expectations on businesses. This will allow the bhr arbitration field and the Hague Rules to thrive and help to hold businesses in the ict manufacturing industry accountable for their human rights abuses.

1

Thomas Clarke and Martijn Boersma, “The Governance of Global Value Chains: Unresolved Human Rights, Environmental and Ethical Dilemmas in the Apple Supply Chain,” Journal of Business Ethics 143, no. 1 (June 2017): 112.

2

Id.

3

Antoine Duval and Catherine Dunmore, “The Case for a Court of Arbitration for Business and Human Rights,” t.m.c. Asser Institute for International and European Law, Policy Brief 2018–02 (June 2018).

4

Id.

5

“Improving accountability and access to remedy for victims of business-related human rights abuse: Report of the United Nations High Commissioner for Human Rights,” United Nations Human Rights Council (“unhrc”), May 10, 2016, 5, https://digitallibrary.un.org/record/841635?ln=en&v=pdf.

6

Duval and Dunmore, “The Case for a Court of Arbitration,” supra note 3.

7

Bruno Simma et al., “The Hague Rules on Business and Human Rights Arbitration,” Center for International Legal Cooperation (cilc), December 2019, https://www.cilc.nl/cms/wp-content/uploads/2019/12/The-Hague-Rules-on-Business-and-Human-Rights-Arbitration_CILC-digital-version.pdf (the “Hague Rules”); for a list of issues see Catherine Dunmore, “International Arbitration of Business and Human Rights Disputes: Part 2 – Advantages and Challenges,” Doing Business Right Blog, December 13, 2017, https://www.asser.nl/DoingBusinessRight/Blog/post/international-arbitration-of-business-and-human-rights-disputes-part-2-advantages-and-challenges-by-catherine-dunmore.

8

Stephane Brabant, “Setting human rights standards through international contracts,” Herbert Smith Freehills, June 24, 2016, https://www.herbertsmithfreehills.com/latest-thinking/setting-human-rights-standards-through-international-contracts.

9

Jeroen Merk, “Introduction,” Make ict Fair, accessed May 19, 2024, 4, https://www.ed.ac.uk/files/atoms/files/human_rights_risks_in_the_ict_supply_chain_0.pdf.

10

Id.

11

Id.

12

Simma et al., “The Hague Rules,” supra note 7, at Article 46.

13

Henry G. Burnett and Louis-Alexis Bret, Arbitration of International Mining Disputes: Law and Practice (Oxford: Oxford University Press, 2017), 235.

14

Simma et al., “The Hague Rules,” supra note 7, at Commentary to Article 46, para. 1.

15

Id. at Article 46, para. 2.

16

Id. at Article 46, para. 4.

17

Bruno Simma et al., “Elements for consideration in draft arbitral rules, model clauses, and other aspects of the arbitral process,” cilc, November 2018, https://www.cilc.nl/cms/wp-content/uploads/2019/01/Elements-Paper_INTERNATIONAL-ARBITRATION-OF-BUSINESS-AND-HUMAN-RIGHTS-DISPUTE.font12.pdf (“Elements Paper”); Bruno Simma et al., “Report: Launch symposium of The Hague Rules on Business and Human Rights Arbitration, cilc, December 12, 2019, https://www.cilc.nl/cms/wp-content/uploads/2020/02/The-Hague-Rules-on-Business-and-Human-Rights-Arbitration_Launch-Report-.pdf (“Launch Report”).

18

Salih Tuygun, “Applicable (Substantive) Law in International Commercial Arbitration,” Ketenci & Ketenci, August 15, 2011, https://www.ketencilaw.com/assets/pdf/applicable-law-in-international-commercial-arbitration.pdf.

19

Id.

20

Id.

21

Id.

22

Iris Ng Li Shan, “On the Path to Justice: Exploring the Promise and Pitfalls of the Hague Rules on Business and Human Rights,” ita in Review 2, no. 2 (Winter 2020): 64.

23

Daniel Thurer, “Soft Law,” in Max Planck Encyclopaedias of International Law, ed. Rüdiger Wolfrum (Oxford University Press, 2009).

24

Id.

25

Ioana Cisman and Sarah Macroy, “The Business and Human Rights Regime Under International Law: Remedy Without Law?” in Non-State Actors and International Obligations, eds. James Summers and Alex Gough (Brill Nijhoff, 2018), 233.

26

Urbaser s.a. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, icsid Case No arb/07/26, Award (8 December 2016).

27

Id. at para. 1193.

28

Id. at para. 1195.

29

Friends of the Earth Netherlands (Milieudefensie) v Royal Dutch Shell, District Court of The Hague, Judgement of 26 May 2021 (available online at “ecli:nl:rbdha:2021:5339,” de Rechtspraak, May 26, 2021, https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:RBDHA:2021:5339).

30

Id. at para. 5.3.

31

Jochem de Hoop, “The Responsibility of Royal Dutch Shell to Comply with Human Rights Obligations and Environmental Law through the Unwritten Standard of Care,” Public International Law Policy Group (pilpg), August 2, 2021, https://www.publicinternationallawandpolicygroup.org/lawyering-justice-blog/2021/8/2/the-responsibility-of-royal-dutch-shell-to-comply-with-human-rights-obligations-and-environmental-law-through-the-unwritten-standard-of-care.

32

Edward Guntrip, “Urbaser v Argentina: The Origins of a Host State Human Rights Counterclaim in icsid Arbitration?,” ejil:Talk!, February 10, 2017, https://www.ejiltalk.org/urbaser-v-argentina-the-origins-of-a-host-state-human-rights-counterclaim-in-icsid-arbitration/.

33

Anil Yilmaz-Vastardis, “Is International Investment Law moving the ball forward on ihrl obligations for business enterprises?,” ejil:Talk!, May 15, 2017, https://www.ejiltalk.org/is-international-investment-law-moving-the-ball-forward-on-ihrl-obligations-for-business-enterprises/.

34

Otto Spijkers, “Friends of the Earth Netherlands (Milieudefensie) v Royal Dutch Shell,” Chinese Journal of Environmental Law 5, no. 2 (December 2021): 237–56.

35

Benoit Mayer, “The Dutch Duty of Care of Fossil-Fuel Producers for Climate Change Mitigation,” Transnational Environmental Law 11, no. 2 (July 2022): 413.

36

Id.

37

“Guiding Principles on Business and Human Rights,” unhrc, June 16, 2011, UN Doc hr/pub/11/04, Principle 13 (available online at https://www.ohchr.org/sites/default/files/documents/publications/guidingprinciplesbusinesshr_en.pdf) (“Guiding Principles”).

38

Shan, “Promise and Pitfalls,” supra note 22, at 65.

39

Id. at 9.

40

Id.; Dunmore, “Advantages and Challenges,” supra note 7.

41

Simma et al., “Elements Paper,” supra note 17.

42

Oyeniyi Abe, “The feasibility of implementing the United Nations guiding principles on business and human rights in the extractive industry in Nigeria,” The Journal of Sustainable Development Law and Policy 7, no. 1 (July 2016): 149.

43

unhrc, “Guiding Principles,” supra note 37, at Principle 16, 17, 23.

44

Id. at Principle 23.

45

Id. at Commentary to Principle 23.

46

Shan, “Promise and Pitfalls,” supra note 22.

47

Simma et al., “Elements Paper,” supra note 17.

48

“Structures and Procedures of National Contact Points for the oecd Guidelines for Multinational Enterprises,” Organisation for Economic Co-operation and Development (“oecd”) (oecd Publishing, 2018), 9 (available online at https://mneguidelines.oecd.org/Structures-and-procedures-of-NCPs-for-the-OECD-guidelines-for-multinational-enterprises.pdf).

49

Andreas Rasche, “The UN Global Compact and the oecd Guidelines for Multinational Enterprises and Their Enforcement Mechanisms,” in The Cambridge Companion to Business and Human Rights Law, eds. Ilias Bantekas and Michael Ashley Stein (Cambridge: Cambridge University Press, 2021), 208.

50

oecd Guidelines for Multinational Enterprises 2011 Edition,” oecd, 2011, Parts v and vi https://www.oecd.org/daf/inv/mne/48004323.pdf.

51

Id. at Part iv, para. 1.

52

Id. at Part v.

53

Id. at Part v(1)(a).

54

Olof Björnsson, “Hazardous chemicals in ict-manufacturing and the impact on female workers in the Philippines,” Swedwatch, January 25, 2021, 4, https://swedwatch.org/wp-content/uploads/2021/03/mictfbriefing210120-fin.pdf.

55

“The Link Between Employment Conditions and Suicide: A Study of the Electronics Sector in China,” Electronics Watch, November 2018, 19, https://electronicswatch.org/the-link-between-employment-conditions-and-suicide-a-study-of-the-electronics-sector-in-china-november-2018_2549396.pdf; oecd “Guidelines for Multinational Enterprises,” supra note 50, at Part v, para. 4(C); Björnsson, “Hazardous Chemicals,” supra note 54, at 4, 10.

56

oecd, “Guidelines for Multinational Enterprises,” supra note 50, at Part vi 2(a).

57

See e.g., Björnsson, “Hazardous Chemicals,” supra note 54, at 9.

58

oecd, “Guidelines for Multinational Enterprises,” supra note 50, at 5.

59

Linda Scott Jakobsson, “Copper with a Cost: Human rights and environmental risks in the mineral supply chains of ict: A case study from Zambia,” Swedwatch, May 6, 2019, 4, https://swedwatch.org/wp-content/uploads/2019/05/94_Zambia_uppslag.pdf, 4.

60

Simma et al., “The Hague Rules,” supra note 7, at Commentary to Article 46, para. 1.

61

Simma et al., “Elements Paper,” supra note 17.

62

Simma et al., “Launch Report,” supra note 17.

63

“2018 Accord on Fire and Building Safety in Bangladesh: May 2018,” Bangladesh wp Engine, June 21, 2017, https://bangladesh.wpengine.com/wp-content/uploads/2020/11/2018-Accord.pdf.

64

Anne Trebilcock, “The Rana Plaza disaster seven years on: Transnational experiments and perhaps a new treaty?,” International Labour Review 159, no. 4 (September 2020): 1.

65

“Accord on Fire and Building Safety in Bangladesh,” Bangladesh wp Engine, May 13, 2013, https://bangladesh.wpengine.com/wp-content/uploads/2018/08/2013-Accord.pdf.

66

Bangladesh wp Engine, “2018 Accord,” supra note 63.

67

Id. at para. 24.

68

Jaako Salminen, “The Accord on Fire and Building Safety in Bangladesh: A New Paradigm for Limiting Buyers’ Liability in Global Supply Chains,” The American Journal of Comparative Law 66, no. 2 (June 2018): 448.

69

Shan, “Promise and Pitfalls,” supra note 22, at 66.

70

Id. at 64.

71

Geetanjali Ganguly, Joana Setzer, and Veerle Heyvaert, “If at First You Don’t Succeed: Suing Corporations for Climate Change,” Oxford Journal of Legal Studies 38, no. 4 (Winter 2018): 863.

72

Roderic O’Gorman, “Environmental Constitutionalism: A Comparative Study,” Transnational Environmental Law 6, no. 3 (November 2017): 461.

73

Shan, “Promise and Pitfalls,” supra note 22, at 66.

74

Dunmore, “Advantages and Challenges,” supra note 7; Alison Berthet, “Arbitration: a new forum for business and human rights disputes?,” Thomas Reuters Practical Law Arbitration Blog, October 16, 2017, http://arbitrationblog.practicallaw.com/arbitration-a-new-forum-for-business-and-human-rights-disputes/.

75

Kiobel v. Royal Dutch Petroleum Co., 569 US 108 (2013).

76

Id. at para. iv.

77

Jesner v. Arab Bank, plc 499 US 16 (2017).

78

Vedanta Resources plc and another (Appellants) v. Lungowe and others (Respondents) [2019] uksc 20 (April 10, 2019); Nevsun Resources Ltd. v. Araya [2020] 1 scr 166 (February 28, 2020).

79

Bruno Simma and Giorgia Sangiuolo, “The Hague Rules on Business and Human Rights Arbitration: Some Challenges and Responses,” Southwestern Journal of International Law 28, no. 2 (2022): 401–29.

80

Alison Berthet, “Emerging Voices: Momentum Builds for Mandatory Human Rights Due Diligence,” OpinioJuris, August 13, 2019, http://opiniojuris.org/2019/08/13/emerging-voices-momentum-builds-for-mandatory-human-rights-due-diligence/.

81

Shan, “Promise and Pitfalls,” supra note 22.

82

Simma and Sangiuolo, “Challenges and Responses,” supra note 79, at 411.

83

French Commercial Code, Article L225-102-4(i).

84

German Act on Corporate Due Diligence Obligations in Supply Chains, Article 2.

85

Id. at Article 2(2)(c).

86

Id. at Article 2.

87

“What the new Supply Chain Act delivers and what it doesn’t,” Initiative Lierferkettensegetz, June 11, 2021, https://lieferkettengesetz.de/wp-content/uploads/2021/06/Initiative-Lieferkettengesetz_Analysis_What-the-new-supply-chain-act-delivers.pdf.

88

Shan, “Promise and Pitfalls,” supra note 22, at 67.

89

Shan, “Promise and Pitfalls,” supra note 22.

90

Simma et al., “The Hague Rules,” supra note 7, at Commentary to Article 46, para. 2.

91

Simma et al., “Launch Report,” supra note 17; Simma et al., “Elements Paper,” supra note 17.

92

James Gathii and Ibironke T. Odumosu-Anyanu, “The Turn to Contractual Responsibility in the Global Extractive Industry,” Business and Human Rights Journal 1, no. 1 (January 2016): 70.

93

Id.

94

James Boyle, “Legal Realism and the Social Contract,” Cornell Law Review 78, no. 371 (1993): 378.

95

Gathii and Odumosu-Ayanu, “The Turn to Contractual Responsibility,” supra note 92, at 76.

96

Id.

97

Peter Rosenblum and Susan Maples, “Contracts Confidential: Ending Secret Deals in the Extractive Industries,” Revenue Watch Institute, September 13, 2009, 18, https://resourcegovernance.org/sites/default/files/RWI-Contracts-Confidential.pdf.

98

“Independent Review of the bhp Diamond Mine Process,” Canadian Institute of Resources Law, June 30, 1997, https://publications.gc.ca/collections/collection_2016/aanc-inac/R72-262-1997-eng.pdf.

99

“Environmental Agreement between Her Majesty the Queen in Right of Canada and the Government of the Northwest Territories and Diavik Diamond Mines Inc. and Dogrib Treaty 11 Council and Lutsel K’E Dene Band and Yellowknives Dene First Nation and North Slave Metis Alliance and Kitikmeot Inuit Association,” Environmental Monitory Advisory Board, March 8, 2000, https://www.emab.ca/sites/default/files/diavik_enviro_agree.pdf (“Diavik Environmental Agreement”).

100

“Environmental Agreement between Her Majesty the Queen in Right of Canada and the Government of the Northwest Territories and De Beers Canada Mining Inc. and Dogrib Treaty 11 Council and Lutsel K’E Dene Band and Yellowknives Dene First Nation and North Slave Metis Alliance,” Snap Lake Environmental Monitoring Agency, 2004, http://www.slema.ca/wp-content/uploads/2011/02/De-Beers-Final-Environmental-Agreement-PDF1.pdf (“De Beers Environmental Agreement”).

101

De Beers Environmental Agreement, supra note 100, at Article 13; Diavik Environmental Agreement, supra note 99, at Article 16.

102

“The Baku-Tbilisi-Ceyhan Pipeline Company, btc Human Rights Undertaking,” The Corner House (UK), September 22, 2003, https://www.thecornerhouse.org.uk/sites/thecornerhouse.org.uk/files/Human%20Rights%20Undertaking.pdf.

103

Id. at Clause 3(A).

104

Terra Eve Lawson-Remer, “A Role for the International Finance Corporation in Integrating Environmental and Human Rights Standards into Core Project Covenants: Case Study of the Baku-Tbilisi-Ceyhan Oil Pipeline Project,” in Transnational Corporations and Human Rights, ed. Olivier De Schutter (Oxford: Hart Publishing, 2006), 416.

105

Gathii and Odumosu-Ayanu, “The Turn to Contractual Responsibility,” supra note 92, at 81.

106

Lawson-Remer, “Integrating Environmental and Human Rights Standards,” supra note 104.

107

David Snyder and Susan Maslow, “Human Rights Protections in International Supply Chains – Protecting Workers and Managing Company Risk: 2018 Report and Model Contract Clauses from the Working to Draft Human Rights Protections in International Supply Chains Contracts, aba Section of Business Law,” Business Lawyer 73 (June 2018): 1096.

108

Shan, “Promise and Pitfalls,” supra note 22.

109

Id.

110

Id.

111

Id.

112

Id.

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