New Proposal to Develop Rules for International Business and Human Rights Arbitration
An independent Working Group led by three international law specialists from Sweden, the Netherlands, and the United States has recently proposed drafting a specialized set of arbitration rules to resolve alleged human rights abuses by businesses. The Working Group’s paper is available here.
According to the Working Group, new arbitration rules are required with a focus on the special requirements of human rights disputes. The Working Group argues that changes are needed to ensure that proceedings and awards benefit from greater transparency, that multiple victims can aggregate their claims, and that chosen arbitrators are prominent experts in business and human rights matters.
The Working Group asserts that both businesses and victims of human rights violations have an incentive to voluntarily agree to submit the dispute to international arbitration. While providing victims an “effective forum in which to seek justice,” arbitration provides businesses a way to resolve matters that “if allowed to fester, could have deleterious consequences for [the business’s] risk profile, reputation and social license.”
Regarding the implementation of business and human rights arbitration, the Working Group proposes that businesses could build specialized arbitration provisions into their compliance programs designed to implement their responsibilities under the UN Guiding Principles on Business and Human Rights and other international, national, and internal instruments on responsible business conduct. For example, with respect to supply chain responsibility, the Working Group suggests inclusion of so-called “perpetual clauses” that require “suppliers and contractors throughout the entire chain of suppliers, contractors, subcontractors and others to insert the same provisions into their own contracts.”
The Working Group’s proposal is currently open for comment.
Arent Fox’s Corporate Social Responsibility and International Arbitration & Dispute Resolution teams have deep, hands-on experience addressing business and human rights disputes. If you have any questions regarding the proposed business and human rights arbitration rules, or any other matter regarding business and human rights, please feel free to contact Lee Caplan and Claudia Hartleben.