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Professor Flora Sapio

Summary – The Belt and Road Initiative. Progress, Contributions and Prospects

A few days before the opening of the Second Belt and Road Forum for International Cooperation (25 – 27 April 2019) the Office of the Leading Group for Promoting the Belt and Road Initiative published a 68-pages Report titled The Belt and Road Initiative. Progress, Contributions and Prospects (in Chinese here).

The Report is divided in three sections, and it is the single most important document on the BIR after the 2015 Visions and Actions on Jointly Building the Silk Road Economic Belt and 21-st Century Maritime Silk Road. The Visions and Actions outlined the grand project of a new model of globalization. Initially met with some skepticism, this “globalization with Chinese characteristics” is still the object of criticism. In the meantime, China and several European, Latin American and African countries – which had been cooperating with China as well as with other partners for roughly 45 years if not more – quietly went on building a global system of economic, juridical (here, here) and political governance.

The Report describes all the results this far achieved by the Belt and Road Initiative, and how the OBOR may unfold in a very near future. More importantly, the Report outlines the content of this system of governance, its very structure, logic and its broader features. The document also provides valuable clues as to: what this new system of governance still lacks to completely fulfil its stated goals; how the governance system proposed by China substantially differs from global governance under the Washington Consensus; how the “Beijing Consensus” reproduces certain features of European nation-states during the so-called first wave of globalization. But, these will be the topics of other posts.

The Preface of the Report describes the launching of the BIR, and the most important cooperation meetings that have been held this far. It continues by providing a definition of what the Belt and Road is, and differentiating this model from the existing model of global governance. Page 3 defines the Belt and Road as follows:

The Belt and Road Initiative originated in China, but it belongs to the world. It is rooted in history, but oriented toward the future. It focuses on Asia, Europe and Africa, but is open to all partners. It spans different countries and regions, different stages of development, different historical traditions, different cultures and religions, and different customs and lifestyles. It is an initiative for peaceful development and economic cooperation, rather than a geopolitical or military alliance. It is a process of open, inclusive and common development, not an exclusionary bloc or a “China club”. It neither differentiates between countries by ideology nor plays the zero-sum game. Countries are welcome to join in the initiative if they so will.

Section One of the Report follows the same structures as the 2015 Visions and Actions, listing the components of the BIR under separate paragraphs, and describing how each one of this goals has been fulfilled in the last 6 years:

1. Policy coordination. The Belt and Road Initiative “has been incorporated into important documents of international organizations”, giving life to an emerging international consensus about the expectations and standards of behavior States are willing to accept in their interaction. Next follows the information that “By the end of March 2019, the Chinese government had signed 173 cooperation agreements with 125 countries and 29 international organizations” and an overview of policy coordination across different fields of governance.

2. Infrastructure connectivity. This section describes the current status of the global network of physical and digital infrastructure China has been constructing since 2013, if not even before the launch of the Belt and Road. Here, we find a list of all the infrastructure projects allowing a smooth reach of flows of investment and commodities from China to Europe, Asia, Latin America, Africa, and viceversa.

3. Unimpeded trade. Closely related to the goal of building physical and digital infrastructure is the goal of trade. If the global trade system seems to be retreating in competing regional trade blocks, the 125 countries who are members of one or more of the blocks are cooperating with China to an alternative system of trade and investment. One ideally designed to reinforce the trajectories of convergence already visible in the first and second paragraph of Section I.

4. Financial integration. Convergence in policy-making, infrastructure, and free trade needs to be supported by financial integration. This paragraph of the Report describes how the BIR is leading to the birth of a new model of international investment and financing. One that is rhizomatic and decentralized, and premised on China’s cooperation with various multilateral development institutions. The BIR is also resulting in the creation of new financial products, included the Panda Bonds some European sovereign governments, such as Poland, are already issuing. Step by step, the Renminbi is moving towards becoming a currency for international payment, investment, trade, and reserve.

5. People-to-people ties. More than in any other section in the Report, here similarities between the new model of transnational governance of the OBOR and Massimo d’Azeglio’s ideas about domestic governance are striking. “We have made Italy. Now we must make Italians”, d’Azeglio wrote in his Memoirs. Culturally diverse territories were unified under a single government in 1861, but it took almost 100 years, and the advent of the state television, for all the Italians to speak the same language. Equally striking, in light of Chinese tradition itself, is the choice to place people-to-people ties as the last goal in the list of priorities of the Belt and Road.

6. Industrial cooperation. This goal was absent from the list of 5 cooperation priorities articulated by the 2017 Visions and Actions. The section describes the flow of investment from China to its BIR partners.

Section Two of the Report describes how each one of the BIR partners has contributed to constructing a “community of shared future” through “extensive consultation, joint contribution, and shared benefits”. The section oulines how:

  • the BIR was first proposed by China in 2013, seeing the consensus of the heads of state and government of 29 countries, and representatives of 140 countries, of several regional and international organizations, and 3,600 foreign enterprises

  • China has promoted the “principles of consultation on an equal footing, openness, and inclusiveness” within 18 multilateral mechanisms

  • China has established a wealth of track two mechanisms for dialogue, that are seeing the participation of Western political parties, parliaments, think tanks, NGOs, businesses, etc.

  • China has launched the Asian Infrastructure Investment Bank, that by now has seen the consensus of 93 members

  • China has been conducting cooperation in third-party markets

This section then describes how a convergence of interest between China and each one of the OBOR countries has been achieved:

  • China is providing aid in poverty reduction, agriculture, education, health, and other fields

  • China has signed 46 agreements on cooperation in science and technology, facilitating the transfer of technology

  • China is working with the United Nations Environment Programme, to realize the notion of ‘green development’

  • China is building a “global community of a shared future”. This notion perhaps means, as the Report makes clear, that China is “Offering a Chinese approach to reforming the current global governance system” (p. 46).

Here, Section 2 of the Report comes to an end, and Section 3 start. This section offers a blueprint for the future development of the OBOR. The entire section is weaved around 6 notions. Each one of these notions is sufficiently general and abstract to attract a wide consensus and agreement. The notions are those of:

  1. Peace, understood as the existence of a stable environment that favors investment, partnership, and respect for principles of international relations established at Westphalia, included those of sovereignty, national security, etc.

  2. Prosperity, understood as economic growth and development through free trade and the removal of barriers to investment, through infrastructure projects and industrial cooperation; through new financial services and cooperation between national governments and private enterprises

  3. Opening up. This paragraph repeats the definition of the Belt and Road Initiative on page 2 of the Report

  4. Green development, understood as including a reduction in carbon emissions, notions of circular economy and environmental protection

  5. Innovation, understood as involving cooperation in science and technology, and its integration with industry and finance; the access of all countries to global industrial and value chains constructed by China; technology transfer; information technology etc.

  6. Connected civilizations, understood as an attempt to align persons who live in the countries adhering to the OBOR to the broader governance structures of the Belt and Road

  7. Clean government, understood as the complex of regulatory and policy means needed to reduce negative externalities, bureaucratic red tape, monitoring and accountability systems.

In its closing paragraph, the Report calls for embracing the concept of development proposed by the OBOR, its values and governance structures, and forging a global consensus about the desirability of the Belt and Road Initiative.

Comments to Article 10 of the Zero Draft of the legally binding instrument to regulate the activities of transnational corporations and other business enterprises

Article 10. Legal Liability

1. State Parties shall ensure through their domestic law that natural and legal persons may be held criminally, civil or administratively liable for violations of human rights undertaken in the context of business activities of transnational character. Such liability shall be subject to effective, proportionate, and dissuasive criminal and non-criminal sanctions, including monetary sanctions. Liability of legal persons shall be without prejudice to the liability of natural persons.

2. Civil liability shall not be made contingent upon finding of criminal liability or its equivalent for the same actor.

3. Where a person with business activities of a transnational character is found liable for reparation to a victim, such party shall provide reparation to the victim or compensate the State if the State has already provided reparation to the victim.

4. Subject to domestic law, courts asserting jurisdiction under this Convention may require, where needed, reversal of the burden of proof for the purpose of fulfilling the victim’s access to justice.

Civil Liability

5. State Parties shall provide for a comprehensive regime of civil liability for violations of human rights undertaken in the context of business activities and for fair, adequate and prompt compensation.

6. All persons with business activities of a transnational character shall be liable for harm caused by violations of human rights arising in the context of their business activities, including throughout their operations:

a. to the extent it exercises control over the operations, or

b. to the extent it exhibits a sufficiently close relation with its subsidiary or entity in its supply chain and where there is strong and direct connection between its conduct and the wrong suffered by the victim, or

c. to the extent risk have been foreseen or should have been foreseen of human rights violations within its chain of economic activity.

7. Civil liability of legal persons shall be independent from any criminal procedure against that entity.

Criminal liability

8. State Parties shall provide measures under domestic law to establish criminal liability for all persons with business activities of a transnational character that intentionally, whether directly or through intermediaries, commit human rights violations that amount to a criminal offence, including crimes recognized under international law, international human rights instruments, or domestic legislation. Such criminal liability for human rights violations that amount to a criminal offence, shall apply to principals, accomplices and accessories, as may be defined by domestic law.

9. Criminal liability of legal persons shall be without prejudice to the criminal liability of the natural persons who have committed the offences.

10. Each State Party shall, in particular, ensure that legal persons held liable in accordance with this article are subject to effective, proportionate and dissuasive criminal or non-criminal sanctions, including monetary sanctions.

11. Where applicable under international law, States shall incorporate or otherwise implement within their domestic law appropriate provisions for universal jurisdiction over human rights violations that amount to crimes.

12. In the event that, under the legal system of a Party, criminal responsibility is not applicable to legal persons, that Party shall ensure that legal persons shall be subject to effective, proportionate and dissuasive non-criminal sanctions, including monetary sanctions or other administrative sanctions, for acts covered under the previous two paragraphs.

Article 10 of the Legally Binding Instrument on Transnational Corporations and Other Business Enterprises was scheduled for discussion on 17 October 2018, from 10 AM to 13 PM, together with articles 11 (Mutual legal assistance), and 12 (International cooperation).

After an introduction by the Chair, Luis Gallego Chiriboga, permanent representative of Ecuador at the UN in Geneva, comments on Article 6 were submitted by 4 experts. Written comments specific to Article 6 were submitted by:

  • 10 states (Azerbaijan, Chile, China, Egypt, India, Iraq, Mexico, Namibia, Peru, Russian Federartion)

  • 2 observer states (the Holy See and Palestine)

  • 11 NGOs

Comments by Experts

Surya Deva, UN Working Group on Business and Human Rights: one important contribution that the proposed legally binding instrument could make is to improve access to effective remedies for business-related human rights abuses. The Working Group in its 2017 report to the UN General Assembly outlined what an effective remedy means under the Guiding Principles. This report stresses that rights holders should be central to the entire remedy process. The remedial process should be gendersensitive and rights holders (including human rights defenders) should be able to seek remedies without any fear of victimization. Moreover, rights holders should be able to seek, obtain and enforce a “bouquet of remedies” which have preventive, redressive and deterrent elements.

Article 10 of the zero draft contains no details related to administrative penalties, and does not give enough attention to preventive remedies, which may arise due to non-compliance with mandatory human rights due diligence or otherwise. The obligation under Article 10(1) should be limited to regulatory targets within the territory or jurisdiction of the relevant States. It is also doubtful whether courts “may require, where needed, reversal of the burden of proof” under Article 10(4). Rather, legal reforms would be needed. Article 10(8) seems to limit liability to “intentional” commission of human rights violations amounting to a criminal offence. This may be quite restrictive and not in line with existing State practice.

The liabilities contemplated under Article 10 are likely to involve courts or tribunals. The value of non-judicial state mechanisms such as national human rights institutions (NHRIs) should not be overlooked. The proposed instrument should, therefore, include a role for NHRIs in facilitating access to remedies.

David Bilchitz, University of Johannesburg: the Guiding Principles on Business and Human Rights and other initiatives lack hard consequences for those violating human rights. The treaty places an obligation clearly on states to ensure liability for violations of human rights.

Existing state-based regimes for holding corporation to account are inadequate. The approach adopted in the Zero Draft fails to adequately recognize these problems. Two options exist: international law may impose clear direct obligations on corporations, or a country may create liability on the corporation based within it, for harms caused in a second country. The Zero Draft adopts the second alternative. There are problems with this alternative: it is not clear all jurisdictions will pass equally effective laws; given a number of countries are refusing to sign or ratify the treaty, a direct route would offer a more secure basis for access to remedies. To remedy the accountability gap it is important that the treaty recognize direct obligations for corporations. Failure to realize these obligations should be a ground of liability.

The draft treaty at present does not expressly engage with corporate law. This is very strange given that one of the core targets of the treaty is the corporation. The draft treaty contains provisions that attempt to address decision-making within a corporation – yet, those provisions strangely do not mention corporate law and the need to shift legislation in that regard. The treaty should require a change in corporate law to place a fiduciary duty on directors to ensure company activities conform with their obligations to respect (and arguably to protect and promote) fundamental rights. The missing link in provisions of Article 10 is the need to recognize upfront obligations on the decision-makers of a company. Doing so could help develop article 10(6), and, in particular, the second part of this article which currently conflates two different considerations – causation and relationship – which should be kept apart.

Article 10(6) proposes three criteria for an imposition of liabilities on corporations. Currently, the approach adopted in the treaty is to try and avoid engaging with the piercing of the veil by focusing on the responsibilities of the parent or lead company itself. Yet, doing so, may also fail to draw on some of the resources that corporate law already has for when the veil should be pierced. It also can fail to engage with the continuities between human rights law and company law in this respect. I would suggest that we draw on existing texts in the treaty. The central enquiry in any case where there is a violation by one entity that is connected to another must be whether in substance rather than in form the parent company can be said to be responsible for the actions of the subsidiary or contractor.

Richard Meeran, Leigh Day: the objection that restrictions of the Zero Draft to “business activities of a transnational character” would exclude access to remedy against state owned companie sis exaggerated. There are presumably already laws in place locally that should make state-owned companies liable for HR abuse. Problem is inability to obtain practical access to justice at all in developing countries. Extending wording to include national companies won’t change this.

Article 10: it is not stated in the Zero Draft, but the obligation/duty under article 10 presumably is the due diligence duty under Article 9 (Prevention).

Article 10.6: its wording is unclear but it seems to be contemplated that liability will broadly corresponds to the position under UK law, that businesses will be liable for harm (a) caused by activities and/or subsidiaries over which they have control (b) that they should have foreseen. Various concern have been expressed about Article 10.6:

(a) whether it may be limited to MNC parent subsidiary relationship and if so whether MNCs might rearrange their business relationships by not having subsidiaries; whether liability arises from the conduct of MNCs; whether MNCs could avoid liability by dealing directly with suppliers. I think Article 10.6(b) is intended to cover all of these concerns.

(b) whether Article 10.6 covers MNCs that are complicit in human rights violations by public security. I think they are meant to be.

Of course proving legal liability crucially depends on victims having access to internal corporate documents. This difficulty especially acute in MNC home states that only provide for limited disclosure. In this regard: under Article 8.4 victims shall be guaranteed appropriate access to information relevant to the pursuit of remedies.

Written comments by Maddalena Neglia, FIDH, are not available on the OHCHR website.

Comments by States

Written comments on Article were submitted by

Azerbaijan: expressed concern over the definition and the scope of “universal jurisdiction” under Article 10.11. Sometimes violations by TNCs are taking place in conflict or post-conflict situations, on territories of one state that are occupied by another state. In this case we would like to ask you to help us understand which state shall bear the responsibility for such violations, and the courts of which state will be in position to study the case. We also see the need to work on the definition of the term “business activities of a transnational character”, to cover activities taking place in conflict and post-conflict situations.

Chile: the notion of international jurisdiction in Article 10.11 is still an object of wide discussion at the Sixth Committe of the United Nations. Because of this reason, we express our reservation on this matter.

China: the term “universal jurisdiction” is often used, but it is differently understood. From 2009 until now, the Sixth Committee of the United Nations most accurately reflects the national official position on major issues of international law. Issues about the scope and application of universal jurisdiction have made no real progress. Universal jurisdiction is not a legal concept that is mutually recognized. Given there is no uniform definition, in practice the concept may be abused at the expenses of courts. Problems that states cannot solve at the Sixth Committee cannot be solved in this working group. In addition, universal jurisdiction is not directly related to the subject matter of legal liability under Article 11. We believe use of this vague and easily abused concept is neither necessary nor appropriate, does not facilitate consensus, and the term universal jurisdiction should be deleted.

The reversal of the burden of proof is an exception to general laws, and it depends on the provisions of national legislation.

Egypt: we emphasize the importance of taking into account the inconsistency between national laws and the provisions of the Zero Draft. We believe that further drafting is necessary to ensure the effective implementation of Article 10 in the future. In a number of national jurisdiction is common practice that the burden of proof lies with the respondent, therefore Article 10.4 runs counter to those laws.

India: we believe Article 10 cannot be insulated or be in conflict with corporate law but, in fact be harmonious with the corporate structure and the corporate legal architecture. We believe both Articles 10 and 11 need more clarity as certain elements have the potential to infringe upon the sovereignty of states. We believe terms like ‘universal jurisdiction’ need more clarity. We are also the view that additional grounds for refusal of legal assistance which are already provided in the United Nations Conventions against Corruption and Transnational Organized Crimes should also be part of this article as they factor in the sovereign rights of states.

Iraq: there is a contradiction in Article 10, since the article imposes criminal, civil and administrative penalties on natural or legal persons, and then at the end of the text denies responsibility for legal persons acting through natural persons. Therefore the imposition of a criminal punishment on the natural person represented by the legal person and the decision-maker is a matter of necessity. Provisions of the Zero Draft need to adopt a more concrete legal formulation, before the responsibility and punishment can be determined.

Mexico: suggested to amend Article 10.6 as follows

6. All natural and legal persons with business activities of a transnational character shall be liable for harm caused by violations of human rights arising in the context of their business activities, including throughout their operations:

a. to the extent they exercize control over the operations, or

b. to the extent it exhibits sufficient control or influence over its subsidiary or entity in its supply chain and where there is strong and direct connection between its conduct and the wrong suffered by the victim, or

c. to the extent risk could have been foreseen or should have been foreseen of human rights violations within its chain of economic activity.

Mexico suggested to adopt a broader formulation, similar to the one of Article 9.1, uniting the words “resulting from or associated with” and “impact on human rights”, so the standard of protection is not limited to direct causality, but also include the foreseeability of an event, in the case of indirect causal relations involving subsidiaries, controlled enterprises, or production chains. Article 10.6(b) may be modified. In private law, there is no uniform practice among states to attribute distinct types of responsibility to legal persons, or to quantify damage and the modalities of its reparation. Therefore the Zero Draft could signal how different types of responsibility deriving from different violations of human rights should be regulated according to domestic legislation.

The delegation supported the reversal of the burden of proof under Article 10.4, stating states have no obligation to amend their domestic legislation to comply with Article 10.4, but they can regulate the possibility of reversing the burden of proof through their national legislation.

The delegation suggested panelists to express their opinion on Article 10.8, given proving the existence of the subjective element of intent can be difficult in practice.

The Mexican delegation also asked the following questions to Professor Bilchitz:

How do you estimate that the implementation of the direct obligations you propose would be made, if not through the same States? Do you not consider it necessary to strengthen the internal legal capacity for regulation, and to increase the level and precision of international cooperation and mutual legal assistance?

Namibia: under article 10, proportionate and dissuasive non-criminal sanctions, including monetary sanctions, can be considered. This is set out in instruments like the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and provides for some useful flexibility. The UNCAC for example also requires States to “establish the liability” of corporations for offenses under that Convention, whether that be criminal or, in States whose legal systems do not permit criminal prosecution of legal persons, then “effective, proportionate and dissuasive” civil or administrative sanctions.

Intention as stated in Article 10 (8) is an element of crime in many legal systems and requires that the criminal act must be on purpose. However, the foreseeability test provides for a viable alternative to this stringent requirement, which is often difficult to proof. This can indeed be helpful if incorporated as stated by Mr. Deva.

As indicated yesterday during the discussions under Article 6 (Statue of limitation), the process of piercing of the corporate veil is not an easy one and can be an obstacle to indigent victims, especially in developing States. Article 10(6) can be enhanced in this regard, keeping in mind the challenges with the enforcement of laws in States with weaker governance structures as the abuses taking place at the hands of TNC’s in such States are often more severe.

We prefer the flexibility of article 10(4) on the burden of proof, making the reversal subject to domestic law, because reversal of the burden can be problematic for some states.

Peru: we consider that this article should be sent to the International Law Commission for comments.

Russian Federation: criminal liability of legal entities does not exist in the Russian legal system, and this obligation would obstacle Russia’s accession to the treaty. Existing problems in this article are not solved by paragraph 12, because criminal responsibility is a key principle of Article 10.

Article 10.12 contains vague wording (effective and proportionate and dissuasive non-criminal sanctions) that may be used as a pretext for potential accusations of non-compliance. There are other expressions which meaning is not clear, such as “or its equivalent”, “control over operations, sufficiently close relation, strong and direct connection”, “crimes under international law”.

Article 10.11: universal jurisdiction exists also for the most serious crimes under international law. There is no sufficient basis to expand universal jurisdiction to essentially all human rights violations. The words “where applicable under international law” further confuse the situation because universal jurisdiction only applies to crimes for which is already recognized. There is no need for an additional confirmation.

Article 10.4: requires additional thought, because the reversal of the burden of proof does not exist in the legal systems of many countries. The reversal is used when the parties are clearly not equal, but the Zero Draft deas with formally equal participants. We do not object to such an option, but it would be accompanied by clear guarantees that the reversal of the burden of proof does not prejudice the principle of equality of all before the court.

The authors of the Zero Draft should clarify the meaning of Article 10.3, since as a general rule the state has no responsibility for the actions of private individuals.

Comments by Observer States

The Holy See: the rights of business companies are backed up by hard laws and strong enforcement mechanisms, while their obligations are backed up only by soft laws, like voluntary guidelines.

Article 10 of the zero draft represents a good basis for defining legal liability, overcoming the realm of public law, by assigning to domestic law the capacity to hold natural and legal persons “criminally, civil or administratively liable for violations of human rights in the context of business activities of transnational character”. Legal liability results in a combination of public and private law with substantive and procedural elements. Through the provision of Article 10.8, the offences and their authors are defined with sufficient clarity, accentuating that criminal liability of a legal entity does not exclude the personal individual criminal responsibility of company directors or managers. Through the inclusion of the reversal of the burden of proof there is a clear effort to balance, in the contest of huge power and resources asymmetries, the differences between corporations and affected local communities. Such a language represents a good basis for the negotiation.

Palestine: the creation of a uniform international rule on the civil and criminal liability of TNCs by the draft treaty would be a positive step. To the effect, certain points need to be highlighted. We should look for ways to create accountability for corporations that are enabling, aiding and abetting violations of international law and human rights especially in cases of occupation and conflict-affected areas. Criminal liability of the corporate actors should be universally defined within this Treaty. This should not be subject only to ‘domestic law’ and we ask for this limitation to be removed from the text, we also ask that criminal liability is not only limited to intentional cases.

Comments by NGOs

Brazilian AIDS Interdisciplinary Association (coordinating a group of 17 NGOs in Brazil): the obligations of states and TNCs must be addressed in separate topics. We suggest that the following phrases are included: (a) TNCs are liable civilly, administratively and criminally for all obligations listed in this Convention that are; (b) States Parties must establish administrative, civil and criminal liability for TNCs and their managers.

It must not matter if States and TNCs operate as perpetrators or accomplices of violations. We believe the Convention must make clearer the relation between the main company and its subsidiaries, licensees, subcontractors and so forth. States parties must provide for sanctions, including the dissolution of the TNC, and oblige the TNC to pay the fees. We also suggest to exclude the references to “domestic law”, since some states do not have provisions of such kind and it may put in jeopardy the scope of this Convention.

CETIM: Article 10 should be the heart of the Zero Draft. It could be improved as follows:

  • introduce direct civil and criminal liability for TNCs

  • the text mentions administrative liability, but does not develop it, neither it specifies administrative punishments

  • introduce the direct responsibility of states for actions or omissions of enterprises under its control, direction, or authorization, or that expressely or tacitly exert delegated government authority

  • article 10.4 can lose all its force because it is subordinated to domestic law

  • the expression “subject to domestic law” should be eliminated

  • the formulation of Article 10.6 is vague and insufficient even though this is one of the most important articles. The use of terms should be improved, and the concept of global value chain or global production chain should be introduced. The term “control” is not defined. Article 10.6(b) is broad and underminate, and can be easily eluded. Improve the consistency in language

  • Article 10.8: introduces a notion of criminal intent, that should be eliminated. The concept of “intermediaries” should be defined

  • Article 10.12 introduces a way out, that should be revised in light of the first sentence of Article 10.8 as “in case that, according to the legal system of a party, criminal responsibility is not applicable to legal persons” (En caso de que, según el ordenamiento jurídico de una Parte, la responsabilidad penal no sea aplicable a las personas jurídicas,)

Corporate Accountability International: the draft does not include several key elements provided in the “Elements document” presented during the third session, rather taking on board too many proposals made by countries and other entities hosting and supporting TNCs. We regret that the zero draft does not include direct obligations to TNCs nor explicit provisions on administrative, civil and criminal liabilities of their managers. Such responsibilities shall moreover extend to all links in the supply chain of the TNC in question, in order to lift the corporate veil and to determine all responsible of violations, without impunity.

We appreciate the inclusion of a provision on the reversal of the burden of proof for the purpose of fulfilling the victim’s access to justice, even if we think this provision should rather be included in article 8.

Confederación Sindical Internacional: Article 10 should be strengthened as follows:

  • the reversal of the burden of proof should be mandatory, and states should modify their internal legislation

  • TNCs should be responsible for human rights violations in all of their ativities, including those of production chains, regardless of the modality of their establishment, of ownership or control

  • crimes should be broadly defined, introducing the responsibility of legal persons, and by establishing a duty for states to modify their internal legislation

  • mandatory due diligence should be complemented by a legal liability defined by the Binding Treaty

  • responsibility should be introduced for direct violations, but also for complicity

  • we observe the absence of responsibility of states for actions and omissions of enterprises under its control, direction, or authorization, or that expressely or tacitly exert delegated government authority

FIAN: We can not pretend to develop a country and ensure the prosperity of its people if the draft treaty does not clearly and unambiguously mention the direct obligations of Transnational Corporations to respect the rights of countries and peoples. Liability should be linked to the reissue of accounts throughout the chain, the overall production of its companies (parent company, schedule, suppliers, franchises ……). Articles in the text that refer to legal, criminal and administrative liability must be reformulated in the sense of obliging TNCs to respect human, economic rights; political, social, cultural and environmental issues. The treaty is not supposed to legislate and create new rights; it should be an effective tool to enforce the legal arsenal that already exists and that humanity has paid dearly for.

FIDH: when it comes to the civil liability described in 10.6 and its relation to article 9, the Draft could benefit from distinguishing two grounds of liability:

1. Liability for lack of compliance with due diligence obligations;

2. Liability for human rights violations by entities with sufficient proximity to the company under scrutiny.

Regarding the second ground of liability, we strongly advise deleting article 10.6.a and using the ‘proximity’ condition where control is assumed under certain conditions, for example, ownership. Further specificity would be welcomed here in order to prevent the notion of ‘sufficiently close relationship’ from being restrictively understood.

Furthermore, drafters need to ensure liability for violations by ‘sufficiently proximate actors’ does not encourage companies to artificially reduce proximity.

Article 10.4 is positive but needs further strengthening in order to close existing accountability gaps. Therefore, the draft should create a more specific obligation that indicates when the reversal of the burden of proof is necessary, which shouldn’t be discretionary. We strongly advise to make it obligatory in the final draft, which would require greater detail as to when the burden of proof was to be reversed (such as where access to information is denied).

Article 10(11): since most human rights violations will not amount to international crimes, the significance of this article is limited.

Article 10(12) potentially undermines other provisions in Article 10, deferring to national law in determining whether legal persons can be subject to criminal liability. While the possibility of administrative liability is introduced under 10.1, it is not developed in the Zero Draft.

Friends of the Earth Palestine: some states and corporations are both involved in human rights violations and therefore, distinguishing the actions of corporations as abuses, simply ends up shielding corporates from full duties. Article 10 needs to be explicit and unequivocal in creating a uniform rule that imposes criminal, civil and administrative responsibility on transnational corporations – including the entire value chain – and obliges all states to enforce it. Criminal liability can not be limited to ‘intentional’ cases as this has served repeatedly as smokescreen for TNCs to continue their human rights violations in Palestine. We finally need to insist that ‘special attention’ to be given to conflict areas, as mentioned in article 15 is far too vague to have effect. TNCs and states should have special independent obligations, in particular in cases of crimes under the Rome Statute.

International Association of Democratic Lawyers: supply chains are mentioned in Article 10.6, but this is an equivocation, because supply chains should be defined in Article 4, to clarify the definition of TNCs and the relationship with its supply chains. The expression “sufficiently close relations” is vague and imprecise, and words as “strong” and “direct connection” are problematic. In the dialogue among Articles 9, 10, and 13 the transnational nature of this instrument has been sacrificed to the obedience to concepts of sovereignty and territorial integrity.

International Commission of Jurists: suggested to revise article 10.6 to focus on certain kind of relationships, adopting more precise and standard notions of causality and contribution, proximity and foreseeability, [but adding an element of strict liability in the equation [to more robustly encourage the adoption of strong human rights due diligence by the parent/controlling company.]

Article 10.8 calls for criminal liability for all human rights violations amounting to criminal offences under international law and “domestic law”, opening too large a window for divergent and potentially arbitrary approaches. At the present stage, the most practical option would be allowing states a certain degree of flexibility, while ensuring that all offences are defined with sufficient clarity to meet the requirements of legality. [International practice offers several good examples in terms of the degree of flexibility for ensuring legal accountability of businesses enterprises, which may be seen in the extended statement in our website. ]

To provide legal certainty and due process, crimes recognised under international law or for which international law require the imposition of criminal sanctions should be incorporated as part of national criminal law applicable to business corporations. This Article should also provide for adequate, thorough, impartial and independent, investigations and sanctions following standards suggested in the full version of this statement in our website and to be handed to the Chair.

Articles 10.9, 10.10, and 10.12 should be retained in their current form.

Article 10.11 should be deleted.

International Organization of Employers: the Zero Draft Treaty grossly oversimplifies the nature of global business and sets an unreasonable bar for creating liability on the basis of activities that is beyond a company’s control. It also ignores many key elements of the UNGPs on remediation, notably in its articulation of the three ways in which a company can be involved in a harm. Introducing a reverse onus clause to require the accused party to prove its innocence violates due process principles and fundamental notions of fairness. Added to this, the Zero Draft Treaty offers no guidance on the situations where words “where needed” could apply.

The very flexible and imprecise definition of civil liability is particularly problematic. It is incompatible with the established doctrine of separate legal personality, it would create irreconcilable conflicts between domestic corporate laws, and it provides a far broader scope for liability than exists in most current national laws. The Zero Draft Treaty’s provisions blur the boundaries of legal personality; they cause huge legal uncertainty; and they would establish liability on very broad grounds (such as direct or indirect ownership of shares). The Zero Draft Treaty foresees civil liability without causality and it assigns legal liability to situations where a harm is directly linked to a company through its business relationship without any recognition of or safe harbour for companies that take meaningful steps to try and halt the abuse.

Regarding the specific provisions on criminal liability: this section unfairly targets persons carrying out “business activities of a transnational character” and not domestic businesses. It also gives no consideration for the inevitably inconsistent approaches that different national courts would take to determine criminal liability under this instrument. It is not clear what the term “intermediaries” means or how such a broad set of “international human rights instruments” would apply in relation to criminal liability. The obligation for States to incorporate or implement within their domestic law “appropriate provisions for universal jurisdiction over human rights violations that amount to crimes” raises many legal and political complications. The principle of universal jurisdiction relies on national authorities to enforce international prohibitions, there are big questions around the impartiality of the prosecuting country towards the person facing criminal liability. There is no guarantee that trials would be conducted with full respect for due process and not be politically-motivated. Many States’ national legal systems lack the necessary legal definitions and/or means to investigate and prosecute on the basis of universal jurisdiction.

Le Pont: the victims of Chiquita Brands in Colombia (4.335 persons murdered, 1.306 persons disappeared, 1.675 persons displaced) are a sufficient reason to endorse the Treaty and request all States to take part to the debate in a positive and constructive manner. The need for states to create specialized and independent judicial entities within each country should be included.

Professor Sapio is the holder of a research position at the University “Orientale” in Naples, Italy. The views and opinions expressed on this website are her personal views only.

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