Huff Post BHR Blog Series Complete

The fifth and final installment of The Huffington Post blog series on Business & Human Rights is now live here. A page describing the series and linking to each part is here.

I have been getting great feedback about it, and it is clearly spurring important discussion — including a formal review process established by the Business & Human Rights Resource Centre to gather a wider range of opinions about some of the issues I raised about its Company Response mechanism in Part IV of the series.

 

New installments to Huff Post BHR blog series

[New Parts III and IV added. Probably one more part on its way to finish it up.]

“Business & Human Rights” (BHR) is an international legal and political framework, arising from the UN Guiding Principles on Business and Human Rights(UNGPs), that just in the last few years has revolutionized how the world’s leading multinational corporations are talking about and engaging with human rights. As part of BHR, states are drafting National Action Plans, companies are drafting Human Rights Policies and conducting Human Rights Due Diligence (of both their own conduct and the conduct of companies in their supply chains), and civil society groups are both celebrating these efforts and scrutinizing the results.

In this blog series, Aaron Marr Page, a law professor and human rights lawyer with over a decade of on-the-ground experience with indigenous and other affected communities around the world, takes an appreciative but critical tour of core BHR concepts, debates, practices, and institutions, digging into the mysterious alchemy — the magic “&” — that has so quickly and forcefully brought the business and human rights communities together, and asking important questions about whether and how this bond will endure.

Part I: The BHR Boom Years
Setting aside old animosities creates a dynamic new space; but does it have the tools and fortitude to achieve real results?

Part II: A Pendulum Swing?
As the business community starts using the BHR discourse to reframe what human rights success and progress looks like, some leading BHR voices express concern.

Part III: The Missing Institution
Questions about the almost built-in lack of leadership behind the “Third Pillar” of BHR that was supposed to demand real remedies for human rights victims.

Part IV: The Rules of the Game
Allegations of corporate human rights abuse are raised — and responded to — in an important weekly dialogue that looks like a “level playing field,” but doesn’t always work out that way.

Part V: [Forthcoming]

New blog series on Business & Human Rights

I am in the process of rolling out a Huffington Post blog series on the topic of Business & Human Rights (BHR). The first two blogs introduce the topic and lay the foundation for a series of slightly more challenging analyses and criticisms that will be forthcoming in the next few weeks. Always happy to hear feedback by email or Twitter.

 

Advocacy & analysis, litigation & arbitration: A response to Roger Alford

My response to Roger Alford’s recent post on Opinio Juris, in which he highlights a letter he wrote with colleagues in response to an earlier letter by other law professors (hosted or published by the Alliance for Justice) on issues of investor-State arbitration in the run-up to upcoming debates about TTP and TTIP/TAFTA.  As I note, the debate itself is an important and urgent one — but Alford’s attempt to elevate himself and his views to some privileged privileged position of truth above “political advocacy” is grating and unconvincing.

While I’m not surprised that the author of one letter thinks his letter is better than his opponents’, I think Mr. Alford goes too far by dismissing what he calls the Alliance for Justice letter as “political advocacy,” while characterizing his own as “a memorandum by scholars offering legal analysis.”  I would say both are 80% the former, 20% the latter.

The “analysis” provided by the Alford letter, as I read it, is that the world of international investment disputes is simple and objective: when a state has acted badly, it will be held liable; when it hasn’t, it won’t.  What’s the problem?

The problem is that litigation is litigation, even when it’s arbitration.  While “objective” facts matter, the system is driven by a competitive inter-subjectivity where the parties’ underlying resources and commitment to the dispute are often (some would say always) determinative of the outcome.  States can be trusted to continue to claim they act in the global public interest; corporations can be trusted to aggressively and creatively package state regulatory actions as arbitrary, discriminatory, etc.  The “truth” can be trusted to continue reside somewhere in between.

The case Alford et al choose to highlight as an example, S.D. Myers, is an example indeed.  Alford et al suggest that this is an easy case of state discrimination, asserting that the objective truth is that “Canada’s goal in imposing the [PCB export] ban was not to protect the environment, but to protect Canada’s PCB waste disposal industry, as acknowledged by Canada’s Minister for the Environment in a speech that she gave to the House of Commons.”

In fact, the ban was the product of more than a decade of deliberation by numerous Canadian authorities involving numerous complicated factors and considerations, including as just one example whether the ban was required for compliance with the Basel Convention.  The gloss in Alford’s letter would throw all this out this window in favor of a “truth” purportedly revealed when a cabinet minister, who was obviously not solely responsible for the ban, responded to a question during a parliamentary session with the off-the-cuff summary that “it is still the position of the government that the handling of PCBs should be done in Canada by Canadians.”  I’m not saying this remark was not a legitimate piece of evidence, but playing it for its “ah ha” value, as Alford et al do and as the claimant did in the arbitration, is an example of litigation — and advocacy — that should remind us that we know this process (and its relation to truth) all too well.

And in fact, even accepting the “in Canada by Canadians” position as the government’s official position doesn’t turn the case into a simplistic story of greedy nationalism.  That policy, to the extent it played a role, was substantively justified by the state’s legitimate interest in maintaining capacity and control in an area critical to citizen and environmental health and safety, especially in light of the possibility that the U.S. disposal facilities might become unavailable or were the border to be closed, which had happened  in the past.

The Alford letter tries to take the AFJ letter to task for focusing on what “might” happen.  It’s response, apparently, is to tell us with resounding confidence, is a standalone paragraph, what ”will” happen:

“Corporations cannot and will not gain victory simply by arguing reduced investment value. Rather, legitimate government conduct will be upheld as a proper exercise of sovereignty.”

Great!  We’re done then.  Or perhaps not quite, because how do we know this will happen.  It actually does tend to happen this way in the United States with respect to takings claims under the U.S. Constitution, but that’s because we have a strict interpretation of the takings clause by the highest court in the land, which interpretation is binding on all other (federal) courts, i.e. Tahoe/Lucas/Penn Central and the requirement that only “permanent obliteration of value” can result in a finding of regulatory taking.  Not only is there not a similar doctrine in international investment law, but the disaggregated system as currently established would be incapable of developing and enforcing it.  It could be included in the text of any upcoming treaty, but the leaked treaty texts see the them going in the other direction, setting up a system where regulatory acts will be evaluated according to their “legitimacy” – again, in a disaggregated system where each panel decides for itself, expressly not bound by any larger system of jurisprudence  or higher authority.

This is one of the reasons the AFJ letter complains of the lack of an appeals process.  The Alford letter respond that at least in the ICSID context there is the annulment process.  But  it acknowledges that annulment is available only where the arbitrators have “manifestly exceeded their authority or departed from a fundamental rule of procedure.”  This is akin to the standard for issuance of the writ of mandamus in the common law.  If we were to ditch the availability of appeal in this country and say, let’s just use mandamus to correct the most egregious cases, I doubt people would be satisfied with this as sufficient due process.

It’s also worth noting the details of the Alford et al assurance that states will have to pay foreign corporations for exercise of state regulatory functions “only if their acts are arbitrary, discriminatory, or otherwise violate the investment guarantees to which states have previously agreed.”  Pay attention to that last clause.  Countless tribunals have read “umbrella clauses” into investment treaties, meaning that any violation of even a purely domestic contract by the state thus gives rise to international liability under the treaty.  So we end up back in the realm on typical commercial contract litigation – except, as the AFJ letter notes but the Alford letter ignores, it’s a one-way street, because system only allows corporations to sue states, not vice versa.

We cannot blind ourselves to the fact that litigation often has a strategic dimension. Companies file lawsuits to pressure their opponents to settle, or to improve their negotiating position in ongoing and evolving relations.  Indeed settlement is probably the dominant feature of commercial litigation, where cases almost never go to trial.  Corporate claimants are certainly aware of this, and have particularly powerful leverage in the form of the system’s built-in sky-high costs and fees.  Remember, in arbitration you’re not just paying for counsel, you’re paying for the judge – in fact for three of them, and typically around $1,000 an hour.  The tribunal wants to hold a motions hearing?  That’s probably $20,000 just to get started, not counting travel and other expenses.   A two-week trial?  Do the math.  And while the U.S. has a fantastic in-house lawyers teed up and ready to litigate these cases, most countries don’t, and end up having to go to the club of elite law firms who specialize in this work and charge correspondingly elite-level fees for the privilege.

The issue of settlement raises particular concerns in the sovereign context because it goes beyond the issue of states using taxpayer money to pay off potentially meritless corporate claims.  States will often be tempted to “settle” a claim by revising the challenged regulation to suit the claimant.  The Alford letter faux-naively suggests that the regulatory taking concern is limited because “nothing in investment treaties requires states to change their domestic regulations” – instead, they can just pay damages.  Come on.  The idea that states are free to keep regulations on the books and just happily pay off private parties (at whatever damages figures those parties’ lawyers can sell to private tribunals) for the privilege is ridiculous.   The budgetary issue will almost always be determinative – by law, every regulation in the US is rigorously evaluated for its budgetary impact – and corporations know it.

As to a number of other issues in the AFJ letter, the Alford letter just ignores them.  The controversial cases such as Philip Morris’ tobacco labeling challenges or the gold-mining cases in El Salvador?  No comment.  The rotating lawyer/arbitrator system, in which a tiny club of individuals sit on panels and represent parties before those panels?  No comment.  The fact that arbitration often allows corporations to bypass domestic court systems?  No comment – except that the letter cites (for a different proposition) the BG Group case, where it was eventually decided that arbitrators were within their rights to relieve a claimant of the requirement to exhaust domestic remedies, even though that requirement was expressly stated in the treaty.

Alford is right that these battle lines are not new.  But his suggestion that he and his colleagues are not part of the fray, or are somehow above it – that his letter is “legal analysis” while his opponents only offer “political advocacy” – is unconvincing.  Just like litigation is litigation, advocacy is advocacy – it’s the butter on the bread of public discourse and Alford is more than welcome to spread it as thick as he likes.  But I for one can’t believe it’s not butter.

Why didn’t the Boliden case settle?

Reprinted from CSRWire Talkbalk

Sometime later this year or early next, lawyers for Swedish mining giant Boliden will head to court in northern Sweden to square off with lawyers for over 700 community members from Arica, Chile.

A Clean-up Gone Wrong

The dispute concerns some 20,000 tons of arsenic-laden smelting waste that Boliden off-loaded in the mid-1980s to an inexperienced Chilean enterprise that claimed it could “process” the waste, but in fact just dumped it on the outskirts of town. Boliden claims the dumping wasn’t its fault; the Chileans say Boliden was negligent.

The lawsuit is a vindication of the affected Arica community’s decades of effort to demand justice, but at the same time presents them with new uncertainties: a jurisdictionally complex case, a new round of legal costs (albeit to be borne by the lawyers), the prospect of lengthy appeals, and litigation’s well-deserved reputation for driving even the most embattled parties farther apart.

Boliden, which in its latest Annual Report talks about wanting to “highlight the positive role that a responsible mining industry plays in society,” can’t be looking forward to the spectacle either.

What Happened to Negotiation?

Indeed, no sane business wants litigation—especially litigation involving alleged human rights and environmental abuses. That’s why CSR observers often find litigation itself less interesting than picking through the wreckage of failed pre-trial Boliden-minenegotiations to try to figure out what went wrong. The Boliden case is a particularly interesting and mysterious debris field because a number of factors suggest that the conditions for a negotiated settlement were ripe. Continue reading