Extraterritorial obligations of states to protect human rights – a big gap in holding businesses to account

by Martin Kainz

© Patrizia Gapp

Martin Kainz holds an LLM in International Human Rights Law from the University of Essex. At the Essex Human Rights Centre he conducted research on human rights abuses in extractive industries. In his dissertation, he focused on extraterritorial obligations of states to regulate businesses abroad. At the VIDC, within the fairplay department, he is focusing on mega-sporting events and human rights.

The area of business and human rights is among the most topical issues in international law. Over a decade ago, the United Nations (UN) started a process for holding states to account for adverse business conduct – at domestic level, but also extraterritorially. However, state practice doesn’t give much reason for optimism yet; at least not when it comes to rights violations committed abroad.
According to Amnesty International (2018) “economic players, especially multinational companies that operate across national borders, have gained unprecedented power and influence across the world”. While the impact of transnational corporations (TNCs) may sometimes be positive – for example, resulting in jobs and benefits for communities –, Amnesty has “exposed countless instances when corporations exploit weak and poorly enforced domestic regulation with devastating effect on people and communities” (ibid).

The legal obligation of states and corporations

The rights holders of international human rights law (IHRL) as a branch of International law (IL) are individuals, the duty bearers are states. The state has to protect its individuals from human rights violations, it has to ensure rights. Corporations are neither individuals nor states under IL. From a legal point of view, a corporation cannot be held to account for a human rights violation. Therefore, it is the state which must be held to account if it has failed to adequately protect its individuals from a violation caused by a corporation. This is quite clear for violations on a domestic level, if the violation happened in the same country where the company is registered. When the violation happens abroad, IL is rather opaque.

© Amnesty International/Afrewatch

Extraterritoriality and the United Nations

Under IHRL a state is first and foremost responsible for human rights on its own territory. At the same time, states do have obligations to assist and cooperate internationally for the full realization of human rights (UN Charter Art. 55-56, ICESCR Art 2.1). Many treaty bodies, those are the entities monitoring the nine binding international human rights treaties, have addressed violations of businesses abroad and the obligations of home states to regulate those. The Committee on the Elimination of Discrimination against Women (CEDAW) with regards to extraterritoriality in 2018 states:
“The gendered social and environmental impact of the State party’s extractive industry projects, which is due to displacement, loss of livelihoods and social services for local women, result in their discrimination, exclusion and marginalisation, and fuel conflict and related gender-based violence against women” (CEDAW, 2018).
This is only one example out of many where treaty bodies requested states to stop and avoid adverse conduct. However, it is not only states that are reluctant to adequately regulate corporations. TNCs also tend to establish complex networks of parent companies, subsidiaries and suppliers, which make it extremely difficult to derive accountability (“corporate veil”).

The UN Guiding Principles on Business and Human Rights and the binding treaty

At the UN level, two processes are aiming at strengthening human rights in the context of business activities: the United Nations Guiding Principles on Business and Human Rights (UNGPs) adopted in 2011, and negotiations about a binding treaty on business and human rights, initiated in the same year.
The UNGPs are a soft law instrument, meaning that they are not binding upon states. However, they do have a guiding character and set out the states’ duty to protect human rights, the corporations’ duty to respect them and both entities’ obligations to remedy violations. While this first and foremost applies to the domestic level, the UNGPs are almost silent on extraterritorial obligations.
The UN Open-ended Intergovernmental Working Group on Business and Human Rights (OEIGWG), led by Ecuador and supported by South Africa (a.o.), advancing the negotiations for a binding treaty, is much more explicit on extraterritoriality. The “Zero Draft” (Art. 6.2) published in July 2018, clearly sets out that a state is responsible for any (sic) activity of TNCs with a “statutory seat, or central administration, or substantial business interest, or subsidiary” in the same state. Translated into hard law, the draft’s respective provisions would be a huge step for holding businesses and states to account for adverse conduct abroad. Although the treaty process is supported by middle and low-income states, it is supported much less – or rather neglected – by high income states (Macchi, 2018).

© Amnesty International/Afrewatch

State practice considering National Action Plans and the Universal Periodic Review

As an example, state practice concerning extraterritoriality can be tested by looking at National Action Plans (NAPs) and the Universal Periodic Review (UPR). The UNGPs have recommended for state parties to adopt NAPs illustrating the way UNGPs are applied to on a national level. By late 2018, 20 countries have issued NAPs – 17 are from Europe, two from South America and one from North America. While they generally address human rights within their state territories, they remain rather silent on regulations and protection involving TNCs’ and their subsidiaries.
One positive exception is the French NAP (2017: 49), stating that “any person suffering harm caused by a company domiciled in France can lodge a request for remedy with the French courts, regardless of the victim’s nationality and state of residence, and regardless of where the harm occurred”.
Another source for assessing state practice is the UPR, a mechanism within the UN Human Rights Council where states are undergoing peer reviews in a four-year-cycle.
With regards to businesses, it is mostly states outside of Europe and Northern America that are addressing violations caused by subsidiaries of TNCs, with a parent company domiciled in high-income states. Whenever the intensification of oversight of business conduct or the implementation of the UNGPS is mentioned, countries under review tend to “accept” or “support” the recommendation. Whenever legislations or regulatory frameworks are raised, countries tend to just “note” those statements, which proves low or non-acceptance (Kainz, 2018).

The role of the civil society

Civil society does play a major role when it comes to raising awareness and exposing states and corporations for causing human rights violations, and thereby strengthening accountability. As for the treaty process, the so called Treaty Alliance, a broad network of civil society organisations, is advocating for states to participate in the negotiations – with increasing success, when looking at the attendance of the fourth session of the OEIGWG in October 2018.
Generally, it is crucial for civil society to engage with UN mechanisms. States do, for example, periodically have to report on their human rights situations to UN treaty bodies. Here, NGOs are invited to lodge parallel reports to country reports, which are given considerable attention by treaty bodies in their concluding remarks. Furthermore, NGOs can engage through reports to UN Working Groups, to Special Rapporteurs and – again – through parallel reports to the UPR. Such interventions do influence states – they can lead to meaningful adaptions of the law and to the implementation of regulations and policies at a national level.
Positive developments in legislation can be found in France – a law adopted in 2017 establishes a so called “duty of vigilance” for TNCs, including their subsidiaries – and in the UK (“duty of care”), where current case law suggests that parent companies do indeed have certain responsibilities when it comes to their subsidiaries’ conduct abroad (17 December 2018).

Further reading and links

Amnesty International, Corporations

Chandler v Cape plc (2012) EWCA Civ 525 (Decision of the Court of Appeal of England and Wales).

Charter of the United Nations, 1945

CEDAW (2018) Concluding Observations: Australia UN Doc. CEDAW/C/AUS/CO/8, 20 July 2018.

The Global Initiative for Economic, Social and Cultural Rights (2018) Working Paper – Human Rights Law Resources: UN Pronouncements on Extra-Territorial Obligations.

International Covenant on Economic, Social and Cultural Rights, 1966

Kainz, Martin (2018) Extraterritorial Obligations and Transnational Corporations: to what Extent Do International Guidelines and Recommendations Translate into State Practice? University of Essex, Essex.

Lungowe v Vedanta Resources plc (2017) EWCA Civ 1528 (Decision of the Court of Appeal of England and Wales).

Macchi, Chiara (2018) A Treaty on Business and Human Rights: Problems and Prospects, in: Letnar Černič, Jernej; Carillo-Santarelli, Nicolás (eds.) (2018) The Future of Business and Human Rights: Theoretical and Practical Considerations for a UN Treaty, Intersentia, Cambridge, Antwerp, Portland.

Methven O’Brien, Claire (2018) The Home State Duty to Regulate the Human Rights Impacts of TNCs Abroad: A Rebuttal, Business and Human Rights Journal, Cambridge.
National Action Plan for the Implementation of the United Nations Guiding Principles on Business and Human Rights, France (2017).

OHCHR (2018) Legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises, ZERO DRAFT, 16.7.2018.

Treaty Alliance, Global Movement for a Binding Treaty

United Nations Guiding Principles on Business and Human Right (2011)

United Nations’ Open-ended Intergovernmental Working Group on Transnational Corporations and other Business Enterprises  (OEIGWG)