partone – BHR Compendium

BUSINESS AND HUMAN RIGHT IN CAMBODIA

7. ACCESS TO REMEDIES: NON-JUDICIAL MECHANISMS

HING Vandanet, RADU Mares

Introduction

Access to remedies is a human right, a legal principle and a mark of good governance. When it comes to business and human rights, there is a high number of non-judicial mechanisms at international level. This corresponds to the high number of soft law instruments (chapter 2) and multistakeholder partnerships in CSR (chapter 5) and the corresponding dearth of hard law (chapters 1, 3, 4) and weak judicial mechanisms (chapter 6) to hold business accountable. The problem with these mechanisms is that they are overwhelmingly of the mediation-type, meaning they cannot reach binding decisions. Companies are able to disregard them completely and not even to participate in proceedings not to mention abiding by the recommendations issued. Sanctions can be in the form of de-listing from partnerships (e.g. Global Compact) or bad publicity (OECD system). The most well-known are the OECD mediation system and the World Bank’s investigation and mediation system. The OECD system has overall had limited success with high variations between the 40 countries where such arrangements are in place; to some extent this track-record reflects the inherent limitations of a mediation mechanism. The World Bank system has delivered rigorous and critical assessment of how the World Bank Group has at times failed to follow its own policies, and the management at times ignores these findings of the Bank’s own inspection body. The UNGPs emphasized the importance of the OECD system and of National Human Rights Institutions, an innovation of the human rights system since the 1990s. Furthermore the UNGPs identify criteria that help evaluating the design of a non-judicial remedial mechanism. Multistakeholder initiatives developed within specific sectors also have mediation mechanisms; the influence that member companies (international brands and retailers) have meant issues could be resolved quickly. Companies have also realized that having their own complaint-handling mechanisms is helpful in diffusing local tensions and an indicator if their due diligence systems work as intended or not (chapters 10-11). There is currently little but growing academic literature on non-judicial mechanisms for business and human rights.

Main Aspects

Relation with judicial remedies (adjudication)
Remedy as process (grievance mechanisms) and outcome (remediation)
Functions of remediation (feedback to HRDD, early warning, reparations)
Criteria to assess complaint mechanisms (KPI – key performance indicators)
Assessing process and outcomes of complaint mechanisms
Direct (individual) and indirect (systemic) effects of remedial mechanisms
Issues (labour relations, non-discrimination, consumer protection, privacy, environmental protection, water, health)
Mediation (e.g. OECD system)
National human rights institutions
Dispute resolution

Background

UN High Commissioner of Human Rights, An Interpretive Guide [1]

Remediation/remedy

Remediation and remedy refer to both the processes of providing remedy for an adverse human rights impact and the substantive outcomes that can counteract, or make good, the adverse impact. These outcomes may take a range of forms, such as apologies, restitution, rehabilitation, financial or non-financial compensation, and punitive sanctions (whether criminal or administrative, such as fines), as well as the prevention of harm through, for example, injunctions or guarantees of non-repetition.

Q: What if an enterprise agrees that it has caused or contributed to an impact but does not agree with those affected on the appropriate remedy?

A: If the enterprise and those affected cannot reach agreement on the appropriate remedy, it may prove necessary either to involve a neutral third party as a mediator or to turn to adjudication.

Any third-party mediator should be freely accepted by all involved. The mediator’s role is to assist the parties in the search for an agreed solution and no party to mediation can be forced to accept a particular outcome. If they do agree on an outcome, the parties are free to agree also that it will be binding on them.

Adjudication does not require the parties’ agreement to the outcome and is often binding. It could take place through the courts, a governmental or statutory body such as an ombudsman or a national human rights institution, or another mechanism that has jurisdiction or is agreed upon by the enterprise and those affected.

OHCHR, Improving Accountability through State-Based Non-Judicial Mechanisms [2]

6. State-based non-judicial mechanisms may take many different forms. In most jurisdictions, a range of mechanisms with a role to play in the handling of complaints and/or resolving disputes arising from business-related human rights abuses may be identified. Such mechanisms can be found at all levels of government: local, regional and national. While some have mandates relating to all human rights, many are specialized bodies that focus on specific human rights-related themes, such as labour rights, non-discrimination, consumer rights, the right to privacy, environmental rights, or the rights to water or to health. Common examples of relevant State-based non-judicial mechanisms include labour inspectorates; employment tribunals; consumer protection bodies (often tailored to different business sectors); environmental tribunals; privacy and data protection bodies; State ombudsman services; public health and safety bodies; professional standards bodies; and national human rights institutions.

7. In addition to the above-mentioned categories, States may innovate further to respond to specific business-related human rights risks within their jurisdictions, and in some cases have done so by establishing specialized mechanisms aimed at the protection of groups identified as being at a heightened risk of vulnerability or marginalization, such as women, children, migrant workers, persons with disabilities, victims of modern slavery or bonded labour practices, or members of indigenous communities.

9. These mechanisms are also diverse in their functions and powers; for instance, some are regulatory and/or adjudicative-type mechanisms, while others provide conciliation and/or mediation services. Some have self-executing powers (for example, to compel participation, to require production of information or to enforce remedial outcomes), whereas others rely on the cooperation of the parties involved. Some have the authority to conduct investigations on their own initiative, while the procedures followed by others can only be activated by specific complaints or disputes.

10. State-based non-judicial mechanisms can be broken down into five broad categories:

Complaint mechanisms (1)
Inspectorates (2)
Ombudsman services (3)
Mediation or conciliation bodies (4)
Arbitration and specialized tribunals (5)

(1) Typically operated by a State-appointed, State-supported and/or State-approved body with public regulatory and enforcement responsibilities.

(2) Typically operated by a State-appointed, State-supported and/or State-approved body with public regulatory and enforcement responsibilities and a range of enforcement functions and powers, including powers of investigation and to prescribe penalties and/or remedial action. Such a mechanism may take action on its own initiative or in response to a complaint, or both. It may also have education and awareness-raising functions.

(3) Typically with a specialized mandate associated with specific interest groups, regulatory themes or commercial sectors. Such mechanisms are charged with receiving, investigating and resolving disputes between individuals and business enterprises, and frequently draw on mediation and/or conciliation techniques to do so.

(4) Similar to ombudsman services, and aimed at finding a mutually acceptable outcome rather than the apportionment of blame. Mediation and conciliation techniques are often used in the resolution of consumer, employment or environment disputes and may be the precursor to more formal processes (for example, arbitration and conciliation).

(5) Oversee dispute resolution processes that are adversarial and/or inquisitorial in nature. Such mechanisms often have a high degree of procedural formality. Some have investigative powers that can be used on their own initiative. They may have the power to make legally binding determinations.

Instruments

UN, Guiding Principles on Business and Human Rights [3]

Remediation

22. Where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes.

Commentary

Even with the best policies and practices, a business enterprise may cause or contribute to an adverse human rights impact that it has not foreseen or been able to prevent.

Where a business enterprise identifies such a situation, whether through its human rights due diligence process or other means, its responsibility to respect human rights requires active engagement in remediation, by itself or in cooperation with other actors. (…)

Where adverse impacts have occurred that the business enterprise has not caused or contributed to, but which are directly linked to its operations, products or services by a business relationship, the responsibility to respect human rights does not require that the enterprise itself provide for remediation, though it may take a role in doing so. (…)

State-based non-judicial grievance mechanisms

27. States should provide effective and appropriate non-judicial grievance mechanisms, alongside judicial mechanisms, as part of a comprehensive State-based system for the remedy of business-related human rights abuse.

Non-State-based grievance mechanisms

28. States should consider ways to facilitate access to effective non-State-based grievance mechanisms dealing with business-related human rights harms.

Commentary

One category of non-State-based grievance mechanisms encompasses those administered by a business enterprise alone or with stakeholders, by an industry association or a multistakeholder group. They are non-judicial, but may use adjudicative, dialogue-based or other culturally appropriate and rights-compatible processes. These mechanisms may offer particular benefits such as speed of access and remediation, reduced costs and/or transnational reach. (…)

29. To make it possible for grievances to be addressed early and remediated directly, business enterprises should establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted.

Commentary

Operational-level grievance mechanisms perform two key functions regarding the responsibility of business enterprises to respect human rights.

First, they support the identification of adverse human rights impacts as a part of an enterprise’s on-going human rights due diligence. They do so by providing a channel for those directly impacted by the enterprise’s operations to raise concerns when they believe they are being or will be adversely impacted. By analyzing trends and adapt their practices accordingly.
Second, these mechanisms make it possible for grievances, once identified, to be addressed and for adverse impacts to be remediated early and directly by the business enterprise, thereby preventing harms from compounding and grievances from escalating. (…)

Operational-level grievance mechanisms can be important complements to wider stakeholder engagement and collective bargaining processes, but cannot substitute for either. They should not be used to undermine the role of legitimate trade unions in addressing labour-related disputes, nor to preclude access to judicial or other non-judicial grievance mechanisms.

Principle 31: Effectiveness criteria for non-judicial grievance mechanisms

In order to ensure their effectiveness, non-judicial grievance mechanisms, both State-based and non-State-based, should be:

(a) Legitimate: enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes;

(b) Accessible: being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particular barriers to access;

(c) Predictable: providing a clear and known procedure with an indicative timeframe for each stage, and clarity on the types of process and outcome available and means of monitoring implementation;

(d) Equitable: seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms;

(e) Transparent: keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake;

(f) Rights-compatible: ensuring that outcomes and remedies accord with internationally recognized human rights;

(g) A source of continuous learning: drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms;

Operational-level mechanisms should also be:

(h) Based on engagement and dialogue: consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances.

OECD, Guidelines for Multinational Enterprises [4]

Implementation in Specific Instances [complaint procedure]

The National Contact Point [set up by each OECD member state] will contribute to the resolution of issues that arise relating to implementation of the Guidelines in specific instances in a manner that is impartial, predictable, equitable and compatible with the principles and standards of the Guidelines. [Upon receiving a compliant] the NCP will:

1. Make an initial assessment of whether the issues raised merit further examination and respond to the parties involved.

2. Where the issues raised merit further examination, offer good offices to help the parties involved to resolve the issues. For this purpose, the NCP will consult with these parties and where relevant:

seek advice from relevant authorities, and/or representatives of the business community, worker organisations, other nongovernmental organisations, and relevant experts;
consult the NCP in the other country or countries concerned;
seek the guidance of the Committee if it has doubt about the interpretation of the Guidelines in particular circumstances;
offer, and with the agreement of the parties involved, facilitate access to consensual and non-adversarial means, such as conciliation or mediation, to assist the parties in dealing with the issues.

3. At the conclusion of the procedures and after consultation with the parties involved, make the results of the procedures publicly available, taking into account the need to protect sensitive business and other stakeholder information, by issuing:

a) a statement when the NCP decides that the issues raised do not merit further consideration. The statement should at a minimum describe the issues raised and the reasons for the NCP’s decision;

b) a report when the parties have reached agreement on the issues raised. The report should at a minimum describe the issues raised, the procedures the NCP initiated in assisting the parties and when agreement was reached. Information on the content of the agreement will only be included insofar as the parties involved agree thereto;

c) a statement when no agreement is reached or when a party is unwilling to participate in the procedures. This statement should at a minimum describe the issues raised, the reasons why the NCP decided that the issues raised merit further examination and the procedures the NCP initiated in assisting the parties. The NCP will make recommendations on the implementation of the Guidelines as appropriate, which should be included in the statement. Where appropriate, the statement could also include the reasons that agreement could not be reached.

OECD Watch, The State of Remedy under the OECD Guidelines [5]

In 2017, NCPs globally concluded 18 OECD Guidelines cases filed by NGOs or communities. (…) [Out of the 18 cases], just five generated some kind of positive outcome. In four of those five cases, the positive outcome was a determination or policy change – a positive step, but one that does not signify a tangible change of circumstances for the complainants. (…)

Former employees v. Heineken (Netherlands NCP)

The complaint alleged that Bralima, a subsidiary of Heineken, caused between 1999 and 2003 a massive, unfair, and unlawful retrenchment of employees in the Democratic Republic of Congo, and miscalculated and failed to pay a final settlement for some of the workers. The complaint asserted that Heineken, which closely cooperated with Bralima at that time, must have known and should have used its influence to prevent further damage to the former employees. The Dutch NCP accepted the case and the parties held mediation meetings in Uganda and Paris that led to an agreement. The NCP issued a final statement which stated that the parties wished to keep their agreement confidential. However, news reports published on the same day confirmed that Heineken had voluntarily paid over €1 million to the former employees. Heineken also agreed to develop a new policy and due diligence protocol for operating in conflict-affected areas. This result is enormously significant because it is one of the only OECD Guidelines cases ever to have achieved compensation for complainants as an outcome. (…)

Finance and Trade Watch Austria et al v. Andritz AG (Austria NCP)

The complainants alleged that poor design of the Mekong Delta Xayaburi dam in Laos would impede fish migration and sediment flow, causing extinction of species and impoverishment and malnourishment of downstream farm communities dependent upon sediment-enriched soils. The Austrian NCP accepted the case, and three years of mediation ensued. Some of the complainants left the process due to concerns over confidentiality restrictions, and others left feeling the process was not achieving a positive outcome. However, two complainants persisted. The parties reached an agreement and issued a joint statement in which Andritz committed to strengthen its internal corporate social responsibility, disclosure, and due diligence policies. Such outcomes do not immediately, and indeed may never, benefit the complainants. Without doubt, alterations to the dam design to mitigate foreseen impacts, or compensation for economic and human rights harms, would have been a stronger outcome. Nevertheless, policy changes do have the potential to help companies avoid repeating mistakes and prevent additional harm in the future

Sherpa et al v. Socfin Group/Socapalm (France and Belgium NCPs)

The case was initially filed in 2010 with three NCPs – the French, Belgian, and Luxembourgian – concerning allegations against the oil company SOCAPALM and four of its holding companies. The complainant Sherpa argued that SOCAPALM had caused negative human rights and environmental impacts by diminishing local communities’ access to natural resources and public services, polluting the water and air, and subjecting workers to precarious work and living conditions and physical abuse from security agents. The French NCP accepted the case and took the important step of issuing a determination in 2013 finding that SOCAPALM had indeed breached the Guidelines, and that all four holding companies had too, due to their business relationship with SOCAPALM, in respect of their disclosure policies. After initial foot-dragging, the French holding company Bolloré agreed to mediation and helped develop a remediation action plan that Socapalm and its Belgian parent company Socfin also accepted. However, Socfin blocked implementation of that plan, causing the French NCP to turn to the Belgian and Luxembourgian NCPs, in 2015, for help. The Belgian NCP successfully coaxed Socfin to join several mediations in 2016, but was unable to convince it to implement the action plan. Socfin did publically commit to adopt several notable changes to its responsibility and transparency policies. But in 2017 the Belgian NCP closed the case on grounds that Socfin was unwilling to adhere to the NCP’s requests and implement the agreed action plan. Therefore, the attempted agreement on a remediation plan was never ultimately realized for the case.

Jamaa Resources Initiative v. US Company (USA NCP)

The complainants alleged that a US Company’s subsidiary in Kenya caused loss of livelihood for local farmers and severe environmental and health impacts when it used an economically sensitive wetland for rice cultivation, an irrigation and hydropower project, a tilapia fish aquaculture farm, and other projects. The US NCP accepted the case for mediation, but the US Company refused to participate citing ongoing legal proceedings, and the US NCP closed the case. As a result, no remedy was achieved for complainants.

Scheltema and Kwant, Alternative Approaches to Strengthen the NCP Function [6]

The National Contact Point (NCP) intervention has brought about many positive impacts such as agreements between parties (in one specific instance including payment of compensation and in other specific instances other forms of direct remedy), changes in management practices, clarification of the OECD Guidelines for Multinational Enterprises (Guidelines) and a catalyst for the use of leverage by the company involved.

That said, the NCP function also faces some challenges. These are, amongst others, significant variations in the practice of NCPs in applying the guidance for specific instances, accessibility and overly stringent interpretation of criteria “material and substantiated” resulting in a high rate of non-acceptance of specific instances for further examination, overly restrictive definitions (such as the term “multinational enterprises”, “adverse impact”, “business relationship”), costs for parties to participate in mediation, good faith behaviour of the parties to the specific instance, parallel proceedings, delays, insufficient use of recommendations or determinations in final statements, and lack of clear or equitable procedures. Furthermore balancing confidentiality and transparency, cooperation between NCPs, and resource constraints are identified.

ILO Committee on Freedom of Association, Compilation of Decisions[7]

(…) there are three bodies which are competent to hear complaints alleging infringements of trade union rights that are lodged with the ILO, viz. the Committee on Freedom of Association set up by the Governing Body, the Governing Body itself, and the Fact-Finding and Conciliation Commission on Freedom of Association. (…)

[The CFA] does not level charges at, or condemn, governments. (…) The mandate of the Committee consists in determining whether any given legislation or practice complies with the principles of freedom of association and collective bargaining laid down in the relevant Conventions.(…) The Committee always takes account of national circumstances, such as the history of labour relations and the social and economic context, but the freedom of association principles apply uniformly and consistently among countries.

In cases where the governments implicated are obviously unwilling to cooperate, the Committee may recommend, as an exceptional measure, that wider publicity be given to the allegations, to the recommendations of the Governing Body and to the negative attitude of the governments concerned.

1. The Committee on Freedom of Association (CFA) is a tripartite body set up in 1951 by the Governing Body (GB) of the International Labour Organization (ILO). The CFA examines alleged infringements of the principles of freedom of association and the effective recognition of the right to collective bargaining enshrined in the Constitution of the International Labour Organization (Preamble), in the Declaration of Philadelphia and as expressed by 1970 ILC Resolution. (…) By membership of the International Labour Organization, each member State is bound to respect a certain number of principles, including the principles of freedom of association which have become customary rules above the Conventions [thus even if the state has not ratified the freedom of association ILO Conventions 87 and 98].

3. The conclusions issued by the CFA in specific cases are intended to guide the governments and national authorities for discussion and the action to be taken to follow-up on its recommendations (…). The object of the CFA complaint procedure is not to blame or punish anyone, but rather to engage in a constructive tripartite dialogue to promote respect for trade union rights in law and practice. When doing so, the CFA is cognizant of different national realities and legal systems.

7. The conclusions and recommendations of the CFA [3,200 cases over 65 years by year 2016] have been developed on the basis of complaints made by organizations of workers or of employers.(…) The CFA’s decisions drawn from previous conclusions compiled herein can also apply, mutatis mutandis, to organizations of employers. (…)

UN Committee on Economic, Social and Cultural Rights, General Comment No. 24 [8]

39. States parties must provide appropriate means of redress to aggrieved individuals or groups and ensure corporate accountability. This should preferably take the form of ensuring access to independent and impartial judicial bodies: the Committee has underlined that “other means [of ensuring accountability] used could be rendered ineffective if they are not reinforced or complemented by judicial remedies”.

Non-judicial remedies

53. While they generally should not be seen as a substitute for judicial mechanisms (which often remain indispensable for effective protection against certain violations of Covenant rights), non-judicial remedies may contribute to providing effective remedy to victims whose Covenant rights have been violated by business actors and ensuring accountability for such violations. These alternative mechanisms should be adequately coordinated with available judicial mechanisms, both in relation to the sanction and to the compensation for victims.

54. States parties should make use of a wide range of administrative and quasi-judicial mechanisms, many of which already regulate and adjudicate aspects of business activity in many States parties, such as labour inspectorates and tribunals, consumer and environmental protection agencies and financial supervision authorities. States parties should explore options for extending the mandate of these bodies or creating new ones, with the capacity to receive and resolve complaints of alleged corporate abuse of certain Covenant rights, to investigate allegations, to impose sanctions and to provide for and enforce reparations for the victims. National human rights institutions should be encouraged to establish appropriate structures within their organizations in order to monitor States’ obligations with regard to business and human rights, and they could be empowered to receive claims from victims of corporate conduct.

UN, Paris Principles on National Human Rights Institutions [9]

1. A national institution shall be vested with competence to promote and protect human rights. (…)

A national institution may be authorized to hear and consider complaints and petitions concerning individual situations. Cases may be brought before it by individuals, their representatives, third parties, non-governmental organizations, associations of trade unions or any other representative organizations. In such circumstances, and without prejudice to the principles stated above concerning the other powers of the commissions, the functions entrusted to them may be based on the following principles:

(a) Seeking an amicable settlement through conciliation or, within the limits prescribed by the law, through binding decisions or, where necessary, on the basis of confidentiality;

(b) Informing the party who filed the petition of his rights, in particular the remedies available to him, and promoting his access to them;

(c) Hearing any complaints or petitions or transmitting them to any other competent authority within the limits prescribed by the law;

(d) Making recommendations to the competent authorities, especially by proposing amendments or reforms of the laws, regulations and administrative practices, especially if they have created the difficulties encountered by the persons filing the petitions in order to assert their rights.

Danish Institute, Guidebook for National Human Rights Institutions [10]

Kenya National Commission on Human Rights

The Kenyan National Commission on Human Rights has used its formal powers of investigation to address alleged human rights abuses relating to a range of business sectors. For example, in 2005, the Commission undertook a public inquiry into alleged human rights abuses by salt mining companies in collusion with public authorities, in the Magarini, Malindi district. The Inquiry resulted in the publication of a special report, ‘Economic interests versus social justice: Public inquiry into salt manufacturing in Magarini, Malindi District’ (2006), presented to the President and National Assembly. In 2012 the Commission held follow-up meetings with local communities to identify whether the recommendations made in the Report had been implemented. Subsequently, in 2013 the Commission exercised its powers to litigate in the public interest, and filed a case against the companies in question in relation to violations of land rights and the right to a clean environment.

Human Rights Commission of Sierra Leone

The Human Rights Commission of Sierra Leone has undertaken a number of initiatives on business and human rights, including a formal investigation into mining-related human rights abuses in the Bumbuna, Tonkolili District in 2012. The investigation by the Commission consisted of a document review, oral and written statements from affected individuals and expert opinions, as well as focus group meetings and a public hearing. (…)

Prompted by the incidents leading to this investigation, as well as other reports to the Commission of business-related human rights abuses, the Commission decided to develop a Monitoring Tool, that can be used in future investigations and dialogues with companies, as well as other actors, to assess company conduct against human rights standards. Development of the Monitoring Tool has involved dialogue with government, business and civil society representatives. The finalised Monitoring Tool will include specific questions and indicators outlining the human rights laws and standards relevant to a number of business-unit functions, including human resources, environment and communities, security, government relations and procurement.

IFC, Compliance Advisor Ombudsman

The Office of the Compliance Advisor Ombudsman (CAO) was created in 1999 by the World Bank Group as the independent recourse and accountability mechanism of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) for environmental and social concerns. CAO is an independent office that reports directly to the President of the World Bank Group (the President).

CAO has three complementary roles:

The Complaints Process

Dispute Resolution

Approaches to dispute resolution

CAO and the relevant stakeholders may use a number of different approaches in attempting to find resolution of the issues. Each approach will be chosen in consultation with the parties, and may include:

Facilitation and information sharing: In many cases, the complaint will raise questions of fact regarding current or anticipated impacts of a project. The CAO Dispute Resolution team may be able to help complainants obtain information or clarifications that result in resolution from the perspective of complainants.

Joint fact-finding: Joint fact-finding is an approach that encourages the parties to jointly agree on the issues to be examined; the methods, resources, and people that will be used to conduct the examination; and the way that information generated from the process will be used by the parties.

Dialogue and negotiation: Where communication among parties has been limited or disrupted, the CAO Dispute Resolution team may encourage the parties to engage directly in dialogue and negotiation to address and resolve the issues raised in the complaint. The CAO Dispute Resolution team may offer training and/or expertise to assist the parties in this process.

Mediation and conciliation: Mediation involves the intervention by a neutral third party in a dispute or negotiation with the purpose of assisting the parties in voluntarily reaching their own mutually satisfying agreement. In conciliation, the third-party neutral may make recommendations to the participants in the conciliation process.

Compliance

The focus of CAO Compliance is on IFC and MIGA, not their client. (…) CAO assesses how IFC/MIGA assured itself/themselves of the performance of its business activity or advice, as well as whether the outcomes of the business activity or advice are consistent with the intent of the relevant policy provisions. In many cases, however, in assessing the performance of the project and IFC’s/MIGA’s implementation of measures to meet the relevant requirements, it will be necessary for CAO to review the actions of the client and verify outcomes in the field.

When conducting compliance appraisals and investigations, CAO will consider how IFC/MIGA assured itself/themselves of compliance with national law, along with other compliance investigation criteria. CAO Compliance role follows a two-step approach. The first step is a compliance appraisal. The second is a compliance investigation. (…)

The Investigation Report will be prepared by CAO Compliance team with the use of information gathered by expert panel members, as needed. The report will typically include:

A brief description of the project.
A description of the underlying issues that gave rise to the investigation.
The objectives and scope of the investigation.
The criteria against which the investigation was conducted.
The findings of the investigation with respect to noncompliance and any adverse environmental and/or social outcomes, including the extent to which these are verifiable.

IFC, Wilmar Cases [11]

This compliance investigation relates to IFC investments in Delta Wilmar in Ukraine (“DW” or “the client”). IFC approved two loans to Delta Wilmar: one of $17.5 million in 2006 to establish a greenfield palm oil refinery in Ukraine; and a second of $45 million to expand the Ukraine refinery in 2008. DW is a joint venture, co-owned by the Wilmar Group, a large agribusiness conglomerate specializing in the production and trade of palm oil and operating in Asia, Eastern Europe, and Africa.

The Wilmar-03 complaint raises concerns about the environmental and social (“E&S”) impacts of DW’s supply chains in Indonesia with a focus on land issues. The complaint raises specific concerns regarding PT Asiatic Persada (“PT AP”), a company that operated an oil palm plantation in Jambi (Sumatra), and was, until 2013, owned by Wilmar International (“Wilmar” or “the parent company”).

CAO Complaints Regarding Wilmar

CAO Case	Wilmar-01/West Kalimantan	Wilmar-02/Sumatra	Wilmar-03/Jambi
Date of Complaint	7/18/2007	12/19/2008	11/9/2011
Concerns	– Illegal use of fire to clear lands. – Clearance of primary forests. – Clearance of areas of high conservation value. – Take over of indigenous peoples’ customary lands without due process. – Failure to carry out free, prior and informed consultations with indigenous peoples leading to broad community support. – Failure to negotiate with communities or abide by negotiated agreements. – Failure to establish agreed areas of smallholdings. – Social conflicts triggering repressive actions by companies and security forces. – Failure to carry out or wait for approval of legally required environmental impact assessments. – Clearance of tropical peat and forests without legally required permits.	Similar to Wilmar-1, with additional mention of land conflict between communities and a number of Wilmar subsidiaries as the result of non-compliance with PS5.	– Social conflicts triggering repressive actions by companies and security forces. – Imposing a settlement on the communities that is viewed both contrary to IFC Performance Standards and with the use of coercive measures. – Serious human rights abuses and forced evictions of local community members by PT AP staff and PT AP contracted Mobile Police Brigade (BRIMOB). – Clearance and planting of estates without paying compensation for lands and other properties so taken. – Land acquisition and dispute resolution problems in Wilmar’s other subsidiaries.

6. Conclusion

Conclusions are presented as answers to the questions formulated in the Terms of Reference for this compliance investigation.

Question 1: Did IFC adequately assure itself that the environmental and social CODs [conditions of disbursement] of its loans to DW were in fact met prior to disbursement in January 2010?

IFC did not assure itself that the E&S [environmental and social] CODs were met prior to the 2010 disbursement of its loans to the client. IFC did not ensure that a supply chain risk analysis as required by PS1 [IFC Performance Standard 1] was conducted prior to disbursement, and instead sought to address supply chain issues with the parent company on a voluntary basis. This decision was inconsistent with IFC’s E&S policies. (…)

Question 3: Did IFC adequately assure itself that DW conducted a supply chain analysis in accordance with the requirements of Performance Standard 1?

IFC did not require DW to conduct a supply chain analysis, despite the advances made at a strategic level on supply chain issues, and despite specific information about Wilmar’s Indonesia supply chain risks which emerged from: (a) the Consultant Review of the parent company’s Indonesia plantations; and (b) the Wilmar-03 complaint to CAO. (…)

Question 6: Did IFC respond adequately to the issues raised by the Wilmar-03 complaint in the context of DW’s E&S obligations to IFC?

The IFC project team responsible for day-to-day supervision of the DW loans were not familiar with the issues raised by the Wilmar-03 complaint and did not respond to assist their client to address the issues raised.

5.4. Underlying Causes of Non-Compliance

CAO’s Terms of Reference for this compliance investigation provide that its scope should include “developing an understanding of the immediate and underlying causes for any noncompliance identified by the CAO.” As outlined above, CAO finds that IFC did not correctly apply the supply chain requirements of PS1 to its supervision of the DW loans. (…) Five interrelated causes for this non-compliance are identified:

1. Persistent belief that the agreements governing the investments did not require DW to take any action to address supply chain issues: IFC did not engage the client to undertake a supply chain analysis as required by PS1. (…) The project team’s interpretation of PS1 suggested that a lack of control and influence over a supply chain would excuse the client from the requirement to analyze or mitigate its supply chain risks. (…)

2. Preference for addressing the Indonesia palm oil supply chain issues with the parent company on a voluntary basis and outside of the E&S requirements of the DW loans: (…). IFC staff with direct knowledge of the project explained to CAO that there were concerns that a more compliance based approach could be counter-productive. Rather, management sought to maintain a good relationship with the parent company, as a potentially important partner for IFC’s future engagement in the sector. (…)

4. Insufficient understanding of palm oil supply chain issues in general, and of Wilmar’s supply chain in particular: (…) CAO also notes that IFC continued to rely significantly on the parent company’s membership of RSPO [Round Table on Sustainable Palm Oil], and its participation in the RSPO certification process as a supply chain risk management measure. CAO notes IFC’s view that Wilmar International’s engagement with the RSPO provided considerable comfort that it was working to improve the E&S performance of its Indonesia plantations. (…) Although undertaking RSPO certification of Wilmar plantations could have contributed to risk reduction, it should not have been seen as a substitute for the supply chain analysis and risk management measures required by PS1.

FLA, Third Party Complaint Process [12]

FLA’s Third Party Complaint procedure was established as a means for any person, group or organization to report serious violations of workers’ rights in facilities used by any company that has committed to FLA labor standards. (…) This process is an added precaution and is not intended to replace or undermine existing internal grievance channels in factories, or legal remedies available at the country level. Rather, the complaint procedure is intended as a tool of last resort when other channels have failed to protect workers’ rights. (…)

When a complaint is lodged, FLA first verifies whether the factory in question produces for any participating companies or university licensees, and whether the complaint contains specific and verifiable allegations of noncompliance with FLA’s Workplace Code of Conduct. FLA also considers whether local dispute resolution mechanisms were used to resolve the issues and what results they achieved. If the complaint meets the above criteria, FLA accepts the complaint for review and contacts participating companies sourcing from the factory in question. The FLA-affiliated company has 45 days to conduct an assessment and develop a remediation plan. If warranted, the FLA may intervene by engaging a third party to investigate the allegations and recommend corrective action to the affiliated company. The company is then required to develop a plan to address any noncompliance issues.

ICMM, Handling and Resolving Local Level Grievances [13]

Example of a complaints procedure illustrated in Anglo American’s tool

Zagelmeyer, Non-State Based Non-Judicial Grievance Mechanisms [14]

In his reflection on the research around the UNGPs, Ruggie explicitly states that the “most underdeveloped component of remedial systems in the business and human rights domain is grievance mechanisms at company’s operational level.” While the statement referred to the practical and factor phenomenon of NSBGM, it holds also true with respect to a relative lack of treatment in the theoretical, conceptual, analytical and empirical academic literature. (…)

We undertook a comprehensive and systematic review of the available literature, drawing on university libraries, academic journal archives, the internet and the grey literature of the ‘owners’ of grievance mechanisms, such as NGOs, trade unions, and companies. (…)

Although there is a substantial amount of case-based literature available on the different types of NSBGM, there is a dearth of information on processes, outcomes and the performance of grievance mechanisms. Especially companies appear to shield off requests for information by referring to the necessity to treat this information as confidential or to non-disclosure agreements. Some companies publish selective information online, while other organisations, for example the international development finance institutions, make their case registers available online. (…)

After an initial literature review, it was decided to divide the description and analysis of NSBGM according to the following four categories:

1) company and corporate level grievance mechanisms (CCGMs) (…);

2) grievance mechanisms of international development finance institutions (IDFIs);

3) grievance mechanisms related to international framework agreements (IFAs) concluded by multinational companies and trade unions;

4) multi-actor initiatives.

Table 1 below shows the criteria we developed as we analysed the NSBGM based on desk research (…):

1. General information, including the history of and the background to establishing the grievance mechanism;

2. Design features of the grievance mechanism, including information on the initiative to establish and ownership of the grievance mechanism and accessibility by design;

3. Coverage, with respect to the characteristics of the duty bearer and the rights holders as well as the covered human rights issues, temporal issues and whether cross-border cases could be covered potentially;

4. Processes, including filing a grievance, retrieving and processing information, and the respective decision-making processes;

5. Outcomes, which include the type and character of remedy, the transformative, learning related character for management, enforceability and transparency;

6. Evaluation, which includes the relevance and impact of the grievance mechanisms for victims; the usefulness as determined by internal performance indicators to the owners of the mechanism; and an evaluation of the usefulness of the mechanism as part of providing access to remedy more generally;

7. Linkages to other grievance mechanisms

Issues where clarification appears to be needed: (…)

KPIs needed:Related to this question of framing NSBGM, key performance indicators (KPIs) are still needed to assess whether NSBGM are fulfilling their intended role as described under the UNGPs, which incorporates also the perspective of those seeking access to remedy. Currently there are no authoritative or widely used KPIs that help determine the effectiveness of an offered NSBGM. Building understanding and then consensus around what these KPIs should be would facilitate 1) companies in understanding what is working and what is not; 2) public institutions and civil actors in monitoring and valuing the performance of companies. For example, could the number of cases as measured over a period of years be an indicator, in part, as to the GM’s effectiveness?

The UNGPs envision that NSBGMs, while providing companies with the feedback loop they need and early warning system, can also help fill the ‘access to remedy’ gaps that we find among state-based mechanisms. NSBGMs can be flexible with how they formulate remedy – more akin to what international human rights standards would recognise as remedy, and they can work across borders seamlessly. (…)

Miller-Dawkins, Beyond Effectiveness Criteria [15]

[The effects of non-judicial mechanisms (NJM)] are grouped into two broad categories: (i) ‘individual remedy’ (predominantly through problem-solving and mediated settlement), and (ii) ‘other’ (incorporating normative and systemic effects).]

Individual remedy

Individual remedy is understood as redress for specific individuals in a particular case in response to a human rights violation. (…)

Other effects

Beyond the results of formal mediations or settlements, the relationships formed between stakeholders, evidence gained, public exposure of practices, and experience gained in a non-judicial redress mechanism process can contribute to other kinds of positive effects. This includes empowering communities or worker’s groups; influencing other decision-makers to precipitate a change in policy; drawing public attention to a problem; and shifting power dynamics between companies and communities or workers. Engaging with non-judicial redress mechanisms can also have negative effects. This includes reinforcing existing power dynamics and further disenfranchising workers or communities; entrenching existing business positions and practices (e.g., allowing a project to go ahead) which can lead to perverse responses (e.g. withdrawal of orders rather than helping a supplier fix a problem); and taking significant resources and time away from other organising strategies. (…)

The long term effects of engaging with non-judicial redress mechanisms can be subtle. It includes empowering communities and shifting the power dynamics (even slightly) which can contribute to different outcomes regardless of more short term access to redress. However, these kinds of effects are, by their nature, uncertain and rely heavily on arduous work by communities and their allies. These kinds of shifts in power were more visible in our case studies in the garments industry where workers are progressively empowered over time, especially through the long-term foundation of union and worker organising. In tea plantations and stone quarries, we did not find the same effects on the longer-term power of the workers from engaging with a NJM. (…)

Background (Cambodia)

ASEAN, Overview of Cambodian Alternative Dispute Resolution System [16]

The solution of conflict outside the judicial system, which is known as an Alternative Dispute Resolution (ADR) is not new in Cambodia. Cambodian people have long been solving their disputes outside the Court. In principle, and according to current practice, dispute resolution outside the Court in Cambodia is conducted based on the following methods:

Negotiation is the most common form of ADR in Cambodia that parties use to resolve disputes directly without assistance of a third party through compromise. Negotiation is allowed under Cambodian Law, for example, Article 20 of the (…) Cambodian Investment Law when investment disputes happen.

Conciliation or mediation is part of Cambodian Culture and Legal system. Conciliation is traditionally conducted by the third party, namely a monk, an Achar (knowledgeable expert) or a (prominent) person the parties trust, and a King and formally it is conducted by a public officer appointed by the Government and the Judge. In practice, a settlement of disputes through the conciliation is conducted in daily life and people never think of criminal or civil cases. If it is not severe enough harm their interests they prefer compromise instead of bringing cases to the authorities or the Courts. According to the Cambodian legal framework, conciliation is permitted and found in various laws (…)

There are two arbitration which are labor arbitration and commercial arbitration:

Labor Arbitration is regulated under Chapter 12 of Labor Law and Prakas of the Ministry in charge of Labor – see Cambodian Labor Law, Art 309 (1997), and Prakas 099 on Arbitration Council dated 21 April 2004. Cambodian labor arbitration body is known as the Arbitration Council is a tripartite system composed of arbitrators from three lists, the employer’s list, the employee’s list and the government’s list or neutral list. The Arbitration Council has handled 2684 cases from 2003-2017 (July) according to the statistics recorded by the Secretariat of Arbitration Council. The Labor Arbitration is compulsory but the arbitral award in non-binding. The binding award can happen only when parties agree to choose binding or when there is no opposition of the arbitral award after eight days (12). The enforcement of binding arbitral award is made via the Compulsory Execution under the Code of Civil Procedures (…)

CCHR, Cambodia: An Overview of the Land Situation [17]

No end in sight: no dispute resolution mechanisms: There are five conflict resolution mechanisms in existence in Cambodia: the Commune Councils, the Administrative Committees, the Cadastral Commission, the National Authority for Land Conflict Resolution, and the judiciary. The Administrative Committees operate when there is a dispute arising during the land registration process but has no power to make binding decisions. If the Administrative Committee does not manage to settle the dispute, the conflict goes to the Cadastral Commission, which can only hear disputes related to unregistered land. In those cases, if a land dispute arises, it has to go first through the District Cadastral Commission, then the Provincial Cadastral Commission and finally the National Cadastral Commission as a last resort. In case of dissatisfaction with the decision of the National Cadastral Commission, an appeal must be lodged within the court system. Disputes related to registered land must be heard by the judiciary directly. Finally, in 2006, the National Authority on Land Dispute Resolution was established by a Royal Decree. Unfortunately, its role, mandate, and functioning remain unclear and very little information about proceedings are available to the public.

Instruments (Cambodia)

Law on Investment [18]

Article 20

Any dispute relating to a promoted investment established in the Kingdom by a Cambodian or a foreign national concerning its rights and obligations set forth in the Law shall be settled amicably as far as possible through consultation between the parties in dispute. Should the parties failed to reach an amicable settlement within two months from the date of the first written request to enter such consultations, the dispute shall be brought by either party for:

conciliation before the Council which shall provide its opinion or
refer the matter to the court of the Kingdom of Cambodia, or
refer to any international rules to settle the disputes as agreed by both parties.

Labour Law [19]

Chapter XII: Settlement of Labor Disputes

Section 1: Individual disputes

Article 300: An individual dispute is one that arises between the employer and one or more workers or apprentices individually, and relates to the interpretation or enforcement of the terms of a labor contract or apprenticeship contract, or the provisions of a collective agreement as well as regulations or laws in effect. Prior to any judicial action, an individual dispute can be referred for a preliminary conciliation, at the initiative of one of the parties, to the Labor Inspector of his province or municipality.

Article 301: On receipt of the complaint, the Labor Inspector shall inquire of both parties to elicit the subject of the dispute and then shall attempt to conciliate the parties on the basis of relevant laws, regulations, or collective agreements, or the individual labor contract. To this effect, the Labor Inspector shall set a hearing that is to take place within three weeks at the latest upon receipt of the complaint. The parties can be assisted or represented at the hearing. The results of the conciliation shall be contained in an official report written by the Labor Inspector, stating whether there was agreement or non-conciliation. The report shall be signed by the Labor Inspector and by the parties, who receive a certified copy. An agreement made before the Labor Inspector is enforceable by law. In case of non-conciliation, the interested party can file a complaint in a court of competent jurisdiction within two months, otherwise the litigation will be lapsed.

Section 2: Collective disputes (Art 302 – 317)

Article 302: A collective labor dispute is any dispute that arises between one or more employers and a certain number of their staff over working conditions, the exercise of the recognized rights of professional organizations, the recognition of professional organizations within the enterprise, and issues regarding relations between employers and workers, and this dispute could jeopardize the effective operation of the enterprise or social peacefulness.

Prakas on Arbitration Council [20]

Clause 24 The arbitration panel has the power to obtain information on the economic situation of the enterprises and the social situation of the employees involved in the dispute. It may conduct any inquiry with respect to enterprises or professional organisations and require the parties to present any document or economic, accounting, statistical, financial or administrative information that might be useful for the accomplishment of its mission. The arbitration panel may also solicit the assistance of experts.

Chapter 5: Arbitral Award

Clause 40 Each of the parties may lodge an opposition to the arbitral award by informing the Minister of Social Affairs, Labour, Vocational Training, and Youth Rehabilitation by registered letter or any other reliable means, within eight calendar days of notification. If the last day of this period is not a working day for civil government officials then the period shall be extended to include the next working day. If either party to a dispute lodges such an opposition within the specified timeframe, the award shall be unenforceable. In this case, if the dispute is about a right relating to the application of a rule of law (for example, a provision of the Labour Law, of a collective bargaining agreement, or an arbitral award that takes the place of the collective bargaining agreement) the disputant party may bring the case before the court of competent jurisdiction for final resolution.

Clause 47 (Enforcement of the Award) A party can only avoid the recognition and enforcement of a final and binding award if that party provides to the court proof that the award of the Arbitration Council was unjust on the grounds that:

A. that party was not properly involved in the selection of arbitrators or was not given proper notice of the arbitral proceedings or was unfairly prevented from making a full presentation of his case;

B. there was non-compliance with procedures indicated in the Labour Law or this Prakas in connection with the making of the award; or

C. the Arbitration Council rendered an award which went beyond the power given to it by the Labour Law and this Prakas.

Law on Management and Administration [21]

Section 6: Solution of Local Conflicts

Article 89: The council shall take appropriate actions to solve local conflicts within its jurisdiction.

Article 90: Local conflict is a private conflict between citizens in the jurisdiction of the same or different councils.

Article 91: Solution to conflict shall be based on written complaints of both or any parties to the conflict submitted to the council, where the party or parties permanently reside(s) in the jurisdiction of that council.

Article 92: The council shall mediate to solve local conflict to reach a solution that is acceptable by all parties to the conflict.

In event that any party to the conflict does not accept the proposed solution, the council shall advise the party on legal procedures for continuing to solve the conflict.

Sub-Decree on the Cadastral Commission [22]

Chapter 4: District/Khan Level Conciliation

Article 7. The Ministry of Land Management and Urban Planning and Construction (MLMUPC) shall determine the complaint form. The District/Khan Cadastral Commission (DKCC) shall register and open a file for all disputes submitted to it. The DKCC shall explain the procedure to the parties in conflict and inquire if they accept to resolve through conciliation following these procedures or not.

Article 8. The DKCC shall investigate the dispute. The investigation includes specifying the location of the disputed parcel and parties concerned with the object of the dispute and collecting available documents, witness statements and information related to the disputed parcel. The DKCC shall make and certify copies of any document to be kept in the file and return the originals to the parties in conflict. The DKCC shall make and enter this investigation documentation in the dispute file.

Article 9 The DKCC shall conciliate the disputes other than those specified in article 10. The conciliation shall be conducted according to the guidelines on conciliation provided by the Ministry of Land Management, Urban Planning and Construction.

Article 10. After the investigation, the DKCC shall submit the dispute file to the PMCC if the Chief determines, by the Chief’s own initiative or at the request of both parties, that it is impossible that an equitable resolution can be reached at the District/Khan level for the following reasons: (1) One person claims several parcels that are also claimed by small possessors; (2) One of the parties is a high-ranking authority; (3) There is a conflict of interest with the Chief of the DKCC; (4) The dispute involves State public land;

Article 11. If a settlement is reached through the unanimous agreement among the parties in dispute the DKCC shall report to the PMCC and shall submit a copy to the District/Khan Office of Land Management, Urban Planning, Construction and Land Administration so that it begins the process of conducting the registration procedure of the parcel over which the dispute had been resolved already. If a settlement cannot be reached the DKCC shall submit the dispute together with a written report of the conciliation to the Provincial/Municipal Cadastral Commission (PMCC).

Arbitration Council, Responsibilities on Workplace Safety Measures [23]

In this case, the workers of Can Sport Shoes Co., Ltd. (the “Claimants”) brought four claims against the respondent Can Sport Shoes Co., Ltd. (the “Employer”) demanding improvement of four working conditions.

Of the four claims in this case, one was settled by mutual agreement during the arbitration process and the Arbitration Council considered only the three remaining claims. This case note will examine one claim regarding the Employer’s management prerogative where workers were required to wear covered sandals with a strap to ensure their safety and prevent work-related accidents at the workplace.

The Employer’s enterprise practice was to require the workers to wear covered sandals with a strap to ensure their safety and prevent them from such work related-accidents such as slipping, objects falling on legs and toes, electrical shocks, etc. The workers were required to purchase the sandals at their own expense. The Claimants argued that they could not afford the sandals, reasoning that they were not only expensive, but also easily damaged as the straps broke off. Further, as it was the Employer’s requirement, the Employer should be responsible for purchasing and providing the sandals for the workers, and that if the Employer refused to do so, the workers demanded the Employer allow them to wear sandals without a strap.

The Arbitration Council’s consideration and subsequent view that the supervision and direction of the workers to wear covered sandals with a strap at the workplace was not made in accordance with the law, and was unreasonable because the Employer failed to prove it was a necessary measure to improve worker safety and protect them from work-related accidents.

The Arbitration Council was of the opinion that to protect the safety of the workers at the workplace, the Employer should have taken other proper measures in line with the provisions of the Labour Law rather than require the workers to wear covered sandals with a strap.

Pursuant to Article 34, Point D, of Prakas No. 099 on the Arbitration Council, dated 21 April 2004, the Arbitration Panel has the power and authority to order immediate cessation of any illegal conduct.

This case highlighted that the Employer has the right and power to supervise and direct the enterprise or establishment; however, this supervision and direction must be made in accordance with the law and be reasonable. In this respect, the Labour Law clearly states that it is the Employer’s burden and obligation to introduce measures to ensure worker safety and protect them from work-related accidents. The supervision and direction of the measures shall respond to actual situations and safety needs with regard to working conditions, as well as production lines of the Employer. The Employer’s failure to provide sufficient evidence to add weight to its demand meant the Arbitration Council could not make a decision as demanded by the Employer. Moreover, the burden of the cost of the sandals shouldn’t fall on the workers in order for the Employer to meet its responsibility to take measures to protect the safety and prevent work-related accidents, which are the obligation of the Employer.

Universal Periodic Review, State Report [24]

The RGC continues to solve land disputes more effectively and fairly based on existing laws and regulations by using both mechanisms inside and outside the A/HRC/WG.6/32/KHM/1 19 court system. For the long-term goal, the royal government will speed up the allocation of social land concession to people who are landless by using land stock withheld from inactive companies, and state’s land remained from locations under directive no. 01 and land remained from mine clearance. The RGC continues to postpone economic land concession program or permanent rental of land in order to strengthen the management of such lands in accordance with laws, regulations and contracts.

Royal Government of Cambodia, UPR: Compilation on Cambodia [25]

The United Nations country team stressed that Cambodia had experienced significant deforestation and forest degradation in recent years, the main causes of which included conversion to commercial agriculture, mining, economic and social land concessions, legal and illegal settlements and farmland, large-scale infrastructure and hydropower development, road construction, legal and illegal logging, fuelwood harvesting and forest fires. The Special Rapporteur on the situation of human rights in Cambodia highlighted issues with resettlement and compensation packages offered to persons and communities displaced by land concessions, including the adequacy of compensation and the appropriateness of relocation sites. She stressed that more needed to be done to ensure that compensation packages were fully understood by potential recipients and that all land disputes were resolved through a process free from threats, violence and intimidation. The United Nations country team indicated that business enterprises continued to have an important role in promoting the economic growth of Cambodia, which could affect the enjoyment of human rights, such as land and housing rights, rights in the workplace and gender equality, among other rights. That highlighted the Government’s role to protect human rights.

OHCHR, UPR: Summary of Stakeholders’ Submissions [26]

Noted that thousands of families across four Cambodian provinces (Koh Kong, Kampong Speu, Oddar Meanchey, and Preah Vihear) still awaited proper redress for their loss of land, homes, livelihoods, and other harm suffered as a result of the massive expansion of the Cambodian sugar industry. It noted with concern that community representatives advocating for adequate redress and effective remedies for their communities have faced intimidation, imprisonment, and violence, and have been coerced into accepting inadequate compensation for their losses. It recommended that Cambodia ensure that communities receive adequate compensation for their loss of land and other damages, and when possible, be allowed to return to their original lands and rebuild their homes.

IFC, CAO Ombudsman: Complaint Regarding HAGL [27]

In February 2014, CAO received a complaint from local members of fifteen villages in the Cambodian Ratanakiri Province (“Complainants”) with the support and assistance of five Cambodian NGOs. The complaint raises concerns about Hoang Anh Gia Lai’s (HAGL) Cambodia operations’ impacts on seventeen local villages, including impacts on water sources and fish resources, loss of land, lack of compensation, lack of information disclosure and engagement with the people, threat to spiritual, cultural and indigenous practices amongst other issues. CAO determined that the complaint met its three eligibility criteria, as per its Operational Guidelines, and began an assessment of the complaint. During the assessment process, the Complainants and HAGL have agreed to engage in a voluntary dispute resolution process facilitated by CAO. This Assessment Report provides an overview of the assessment process, including a description of the project, the complaint, the assessment methodology, and next steps.

The purpose of this CAO assessment is to clarify the issues and concerns raised by the Complainants, to gather information on how other stakeholders see the situation, and to determine whether the Complainants and HAGL would like to pursue a voluntary dispute resolution process under the auspices of CAO Dispute Resolution or if the complaint should be transferred to CAO Compliance for appraisal of IFC’s performance (see Annex A for CAO’s complaint handling process). The CAO does not gather information to make a judgment on the merits of the complaint during its assessment.

During CAO’s assessment, community members highlighted the following areas of concern:

Impacts on communities’ lands
Loss of identify and culture
Additional impacts on community livelihoods
Conduct of Company workers
Lack of Trust
Company’s perspective
Areas of agreement

In January of 2019, HAGL informed CAO of its decision to withdraw from the CAO-convened dispute resolution process, and to instead seek the support of the government for resolution of the communities’ outstanding concerns. In October 2019, HAGL indicated an interest in re-engaging in dialogue. In December 2019, CAO met separately with HAGL and the complainants, and both confirmed their commitment to resolving outstanding issues in dispute through a CAO-convened dispute resolution process. In February 2020, CAO released a progress report which provides an overview of the dispute resolution process and outlines the efforts made to date by the parties. The report is available in English and Khmer.

UK NCP, Compaint against Bonsucro in Mitr Phol Case [28]

This Specific Instance outlines breaches of the OECD Guidelines for Multinational Enterprises by Bonsucro Ltd, a UK-registered non-profit company and multi-stakeholder initiative for the sugar industry. The complainants are Inclusive Development International (IDI), Equitable Cambodia (EC) and the Cambodian League for the Promotion and Defense of Human Rights (LICADHO) on behalf of approximately 3000 affected people from the five villages (…). This specific instance concerns the failure of Bonsucro to comply with the OECD Guidelines vis-à-vis its business relationship with one of its members, Thai company Mitr Phol Group, Asia’s largest sugar producer, which is responsible for forced evictions and other human rights violations in Oddar Meanchey. (…)

Bonsucro claims to be “a multi-stakeholder organization that exists to promote sustainable sugarcane production around the world,” with a mission “to ensure that responsible sugarcane production creates lasting value for the people, communities, businesses, economies and eco-systems in all cane-growing regions.”5 By design, Bonsucro confers a public stamp of approval on its members, who, by joining the initiative, commit to, inter alia, uphold the law and respect human rights in the production of sugarcane. Bonsucro conferred this public prestige on Mitr Phol by, not only awarding it membership, but by doubling down on its public endorsement of the company’s social and environmental performance by bestowing it with a Sustainability Award. The week the present complaint was filed, Bonsucro was set to showcase Mitr Phol as a “leading member” at its annual “Bonsucro Global Week.”6 All of this is deeply offensive to the Cambodian communities who have suffered so greatly as a result of Mitr Phol’s human rights violations. (…)

Request for United Kingdom NCP assistance

On behalf of the approximately 711 affected families from the villages of O’Bat Moan, Khtum, Taman, Bos and Trapaing Veng, IDI and EC request the UK NCP to offer its good offices to resolve this dispute with the Respondents consequent to their failure to comply with OECD Guidelines.

The complainants have undertaken efforts to engage with Bonuscro, including via its own grievance mechanism, since 2011. These efforts have not resulted in remediation for the complainants due to the ineffectiveness of Bonsucro’s grievance mechanism.

The communities we represent recognize that Bonsucro is a multi-stakeholder initiative and not directly responsible for the forced evictions and harms they suffered. However, as explained above, as the sugar industry’s leading multi-stakeholder initiative, Bonsucro bears a special responsibility in relation to this matter.

We therefore request that the UK NCP investigate this complaint and make specific recommendations to bring Bonsucro into compliance with the OECD Guidelines with respect to the Mitr Phol case in particular, and more generally with respect to its Code of Conduct, Production Standard, due diligence processes for accepting new members, and grievance mechanism.

CCHR, The Failure of Land Dispute Resolution Mechanism [29]

The gap between the theory and practice of dispute resolution mechanisms. In practice, the use and implementation of the mechanisms described above remain limited due to a number of factors. First, the wide range of dispute resolution bodies and the lack of clarity over the jurisdiction of each mechanism have been cited as sources of confusion for potential complainants. Other deterring factors include poor access to dispute resolution mechanisms by impacted individuals and communities, time-consuming administrative and procedural burdens, and financial costs associated with submitting a complaint. In addition, complainants have reported that decisions issued by existing dispute resolution bodies are inconsistent and subject to political pressures. Further, one study commissioned by the World Bank Centre for Advance Study and GTZ found that Cadastral Commissions have a better record of resolving conflicts over small parcels of land, but struggle to resolve complex cases, particularly those involving multiple parties and parties with connections to the government or the military. The same report implies that while cases may fall under the jurisdiction of the Cadastral Commissions, weaker parties may not file cases due to lack of faith in the process and outcome. This study also reports that 27% of all parties surveyed reported that informal fees or gifts changed hands in relation to their case before the [Cadastral Commission]. Another World Bank study further found that people involved in land disputes avoid filing complaints because “formal institutions of justice such as the Cadastral Commissions or the courts were perceived as costly, time consuming and biased toward the rich.

Thuon, Case Study of Vietnamese Investment in Cambodia [30]

Land grabbing in poor countries by transnational corporations has been increasing, causing great concern over human rights violations in countries where states often lack the ability or will to regulate the conduct of foreign owned companies. Civil society organizations have played a significant role in attempts to hold companies from Organization for Economic Co-operation and Development (OECD) countries accountable for human rights violations by their subsidiaries in poor countries. However, civil society pressure for accountability from companies whose home base is in non-OECD, middle income, countries is rare. This paper explores the human rights impacts of the Cambodian operations of Vietnam’s Hoang Anh Gia Lai (HAGL) company, and how affected communities and NGOs in Cambodia have tried to hold HAGL accountable for its wrongdoing through approaching the Office of the Compliance Advisor Ombudsman of the International Finance Corporation. This is an initial attempt to examine how civil society and affected communities have challenged a Vietnamese company with no prior record of engaging with players from outside its home territory about the human rights impacts of its investments in Cambodia. The Office of the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC) has a problem-solving function, which mediates conflicts between affected communities and clients of the IFC, and a compliance review function (Compliance Advisor Ombudsman, 2015). Where TNCs have business relationships with international finance institutions that have safeguard policies and grievance mechanisms to ensure compliance with existing policies, there is space for CSOs to demand corporate accountability. Where an MDB is identified as an investor or financier, IAMs such as the CAO provide an avenue for affected people to lodge complaints and have their claims adjudicated. However, the CAO’s problem-solving process through mediation is conducted on a voluntary basis. Although not all investors are responsive to CSO campaigns, complementary advocacy strategies such as lobbying with a range of investors is important for trying to keep HAGL engaging in the process in good faith. Because the CAO mediation process has not yet been concluded, it remains to be seen whether this is an effective mechanism for gaining redress.

Martin, Business and Human Rights in ASEAN: Cambodia [31]

The International Organisation for Standardisation and its International Guidance Standard on Organization Social Responsibility or better known as ISO 26000, is popular amongst the ASEAN countries. The ISO 26000 “helps clarify what social responsibility is, helps businesses and organizations translate principles into effective actions and shares best practices relating to social responsibility. The success of the ISO 26000 within the context of ASEAN could be explained by the fact that, being a private initiative, it is not comprised of a remedy framework, not even a non-judicial mechanism such as a mediation or arbitration mechanism. Those mechanisms, however, are part of the recent improvement of workers’ rights in Cambodia.

Questions

What are the most effective international non-judicial mechanisms?
What are the non-judicial mechanisms for conflict resolution in Cambodia?
How legitimate are these non-judicial mechanisms and how do you assess their effectiveness?
Do Cambodian non-judicial mechanisms meet the criteria of the UNGPs?
Should an NGO trying to support victims spend its scarce resources on using non-judicial mechanisms or it is better to concentrate all resources on judicial mechanisms?
Can a complaint mechanism set up by a company ever deliver justice to victims?
In what industries can we find non-judicial mechanisms and why not in all industries?

Part I.

Human rights frameworks

The laws and policies for responsible business conduct

Part II.

Human rights due diligence

The management of

Part III.

Human rights standards

The impacts of business on specific human rights

With so much material to cover and with due regard to the complexity of the issues, the authors of the compendium made some careful choices.

Compendium size: One choice was to allow the compendium to take its space and grow to 800 pages, but we advise the teachers to begin by reading only the chapters which are the most interesting for them. We could have produced a much smaller compendium instead of delivering 28 chapters out of which half are dedicated to specific human rights. For example, we could have eliminated some of those 14 chapters altogether, but that would also have reduced the choice for teachers with widely different backgrounds. Teachers should therefore use the compendium more as an encyclopedia and therefore ‘pick and choose’ materials as required by their teaching situation.

Chapter size: Another choice was to also let each chapter take its space and go to 20-30 pages if needed. We carefully selected materials for high quality: we aimed only for most recent materials from authoritative sources. But again, giving systematically a voice to 4 groups of sources – government, business, civil society, and academia – unavoidably took space. We worked systematically and included, for example, 1 – law and policy (international conventions, soft law instruments, reports from UN treaty body and special rapporteurs, national laws, judicial decisions); 2 – documents from businesses (e.g. corporate policies, examples of systems, CSR reports, industry guidance); 3 – materials from NGOs (e.g. case studies of corporate abuses, analysis, advocacy campaigns, collaborations with businesses); 4 – academic writings. These sources are referred to as ‘Instruments’ in the structure below

The state

The company

The civil society

The academia

Selection of passages: Yet another choice was in how we selected the most relevant and important part from each material. Far from an arbitrary and rushed selection, we tried to identify important and original ideas/data; we would expect teachers to find these worth highlighting in presentations and class discussions. We encountered a trade-off when making the selections: if too short, they become incomprehensible (leading the teacher either to the original source or more likely to stop using the compendium) and if too long, the compendium would grow vastly beyond its current significant length.

Structure of chapters: we chose to standardize the format of each chapter to create familiarity for teachers. The same components as well as the same order are used consistently throughout the chapters.

Introduction
(summary of chapter by the compendium authors)

Main aspects
(bullet points on key issues covered in the chapter)

Background
(general and accessible information about the topic of the chapter)

Instruments
(from 4 sources)

Questions
(for class discussions)

Further readings

Support for teachers

In sum, each instrument was carefully selected for relevance and quality, and passages were excerpted to give the reader key aspects that should not be missed from any lecture/seminar. These key aspects and sources are the ‘building blocks’ and interesting bits – it is up to the teacher to select, emphasize and combine building blocks in the best way for their audience and academic discipline.

Taking these choices together, the major priority for the authors was to enable the teachers’ choice of topics and angles, and to through careful selection highlight the most important aspects that would in our estimation save 50%-70% of preparation time for the teacher.

Further priorities have been about the searchability of the compendium. The compendium is long at around 800 pages. It will be uploaded on-line as an open access publication. The e-compendium will be available in PDF format enabling searches through keywords and possibly in Website format for easier and speedier navigation through chapters.

To increase usability and reader-friendliness we omitted references (footnotes and endnotes) in order to simplify and shorten the text. Readers are invited to consult the original materials to access all references.

Contributions and quality assurance

Radu Mares has drafted the sections containing international materials in all chapters. Cambodia-based authors, as identified in each chapter, have drafted the sections containing Cambodia-related materials. The sections containing Cambodia-related materials have benefited from internal peer review coordinated by Prof. Kenneth Paul Charman and Soy Kimsan, with contributions from Sao Socheata. An evaluation of the Compendium from a teacher perspective has also taken place during the 9th Annual Ten December Academy – Training School on Business and Human Rights organised by the RWI in December 2020. Sen Mostafa, programme officer at RWI, has organised and coordinated the entire process that lead to the development of Cambodia-related sections. Elina Hammarström, research assistant at RWI, has proofread and formatted the entire manuscript.

SHORT TABLE OF CONTENTS PART I: HUMAN RIGHTS FRAMEWORK

BUSINESS AND HUMAN RIGHT IN CAMBODIA

Human Rights Framework

PART I: HUMAN RIGHTS FRAMEWORK

The Laws And Policies For Responsible Business Conduct

1. INTERNATIONAL LAW ON BUSINESS AND HUMAN RIGHTS

Soy Kimsan, Radu Mares

Introduction

By ratifying a human rights treaty, states acquire obligations to respect and ensure human rights under international law. These obligations are commonly referred to as obligations to ‘respect-protect-fulfil’ human rights. That means states should use a combination of legal, policy, administrative and other measures to ensure that human rights are enjoyed in practice. That means the government is obliged to regulate the private sector – through preventive and remedial measures – so that companies are less likely to inflict harm and cannot operate with impunity. In practice however, states often fall short of creating the strong laws and institutions needed for protecting human rights. In view of this ‘regulatory gap’, societal pressure has grown on transnational and local businesses to respect international standards in their operations even when a state is unwilling or unable to safeguard human rights. This pressure has grown in the last 30 years and such increased attention to CSR has manifested itself in international soft law (see chapter 2), corporate self-regulation (see chapter 8) and private governance arrangements such as multistakeholder collaborative initiatives (see chapter 5). The UN indicates that it is desirable, and perhaps even legally expected, for states to regulate ‘their’ companies when they operate in other countries: this is the discussion about the ‘extraterritoriality’ of state obligations to protect human rights (see chapter 4). But extraterritorial jurisdiction is controversial as it can lead to abuses by powerful states and create tensions between sovereign states. There is however a better way, and since 2014 the UN has begun discussions – currently on-going – on a possible treaty on corporate accountability, which would be a development in hard law to address this ‘gap’ in international law. Finally, hard law exists in relation to trade and investment (see chapter 3) and such treaties are meant to facilitate international economic activities. However, these economic agreements have been criticized for encouraging business activities while neglecting their sometimes serious negative social and environmental impacts. At the national level, over 20 countries have developed National Action Plans on business and human rights where the government seeks to increase policy coherence and outline a variety of measures on corporate responsibilities and access to remedies (chapters 6 and 7). In sum, it is now well accepted that states can and should regulate and facilitate responsible business conduct, through both international law and national regulations. Importantly though, market competition – between companies, and between states – is an important dynamic that can influence states ability to regulate in the public interest and businesses’ ability to self-regulate.

Cambodia has slowly transitioned to a full market economy and has sustained an average growth rate of 7-8% since 1998.[1] As a result, Cambodia has significantly reduced poverty and, eventually, become a lower middle-income country in 2015. While the country is aiming to achieve the upper middle-income status by 2030, its economic growth has in some ways proceeded without sufficient consideration on human rights.[2] Over the years, there have been reports of human rights violations perpetrated by businesses across different economic sectors, especially the land sector, often with the government’s support or acquiescence. Yet, business and human rights is a relatively a new concept in Cambodia. For example, the government development policy, particularly the 2018 Rectangular Strategy – Phase IV tends to focus on promoting business activities and job creation,[3] while there are virtually no policy measures on business respect for human rights. Furthermore, the government perceives human rights issues as a brake to economic growth and a political maneuver by the opposition and civil society organizations. In recent years, there have seen successive crackdowns on independent media, human rights defenders and NGOs.[4] However, the government could instead see such actors as watchdogs to promote responsible business conduct and, thus recognize their valuable contribution to achieving a sustainable and inclusive economic growth for all in the country.

To date, Cambodia has ratified eight out of nine core international human rights treaties and the eight core ILO conventions. The government is therefore legally bound to respect, protect and fulfil human rights in its territory, including protecting Cambodian citizens from human rights violations by non-state actors such as businesses. Its legal obligations in relation to human rights are emphasized in Article 31 of the Constitution of the Kingdom of Cambodia, which incorporates international human rights standards directly into Cambodian law and practice. Once incorporated into domestic legal order, these internationally recognized human rights are protected through several bodies of law, including civil law, criminal law, labor law, administrative law, property law, social security law and many others. However, as in other countries, such laws may have deficiencies and gaps or may not be enforced rigorously (or at all). It is these regulatory and enforcement gaps that allow businesses to pursue profits with relative impunity for involvement in human rights abuses. Such abuses will call into question Cambodia’s responsibility under international law for its failure to comply with its obligations under the human rights treaties it has chosen to ratify.

Main Aspects

State obligations to respect, protect and fulfill human rights
Extraterritorial obligations of states
Progressive realization of socioeconomic rights
Compatibility of human rights with different political and economic systems
Privatization of public services
Obligations of non-state actors under international law
UN treaty on corporate accountability
Sustainable Development Goals in the context of business and human rights
Regulatory options regarding corporate human rights responsibilities
Analytical framework to operationalize economic, social and cultural rights.
Human rights in Cambodia
Benefits of CSR for Cambodia
International treaties and mechanisms applicable to Cambodia
Relation between domestic law and international law
National human rights mechanisms in Cambodia

Background

UN Committee on Economic, Social and Cultural Rights, General Comment No. 13 [5]

46. The right to education, like all human rights, imposes three types or levels of obligations on States parties: the obligations to respect, protect and fulfil. In turn, the obligation to fulfil incorporates both an obligation to facilitate and an obligation to provide.

47. The obligation to respect requires States parties to avoid measures that hinder or prevent the enjoyment of the right to education. The obligation to protect requires States parties to take measures that prevent third parties from interfering with the enjoyment of the right to education. The obligation to fulfil (facilitate) requires States to take positive measures that enable and assist individuals and communities to enjoy the right to education. Finally, States parties have an obligation to fulfil (provide) the right to education. As a general rule, States parties are obliged to fulfil (provide) a specific right in the Covenant when an individual or group is unable, for reasons beyond their control, to realize the right themselves by the means at their disposal. However, the extent of this obligation is always subject to the text of the Covenant.

UN Committee on Economic, Social and Cultural Rights, General Comment No. 3 [6]

8. The Committee notes that the undertaking “to take steps … by all appropriate means including particularly the adoption of legislative measures” neither requires nor precludes any particular form of government or economic system being used as the vehicle for the steps in question, provided only that it is democratic and that all human rights are thereby respected. Thus, in terms of political and economic systems the Covenant is neutral and its principles cannot accurately be described as being predicated exclusively upon the need for, or the desirability of a socialist or a capitalist system, or a mixed, centrally planned, or laissez-faire economy, or upon any other particular approach. In this regard, the Committee reaffirms that the rights recognized in the Covenant are susceptible of realization within the context of a wide variety of economic and political systems, provided only that the interdependence and indivisibility of the two sets of human rights, as affirmed inter alia in the preamble to the Covenant, is recognized and reflected in the system in question. The Committee also notes the relevance in this regard of other human rights and in particular the right to development.

9. The principal obligation of result reflected in article 2 (1) is to take steps “with a view to achieving progressively the full realization of the rights recognized” in the Covenant. The term “progressive realization” is often used to describe the intent of this phrase. The concept of progressive realization constitutes a recognition of the fact that full realization of all economic, social and cultural rights will generally not be able to be achieved in a short period of time. In this sense the obligation differs significantly from that contained in article 2 of the International Covenant on Civil and Political Rights which embodies an immediate obligation to respect and ensure all of the relevant rights. Nevertheless, the fact that realization over time, or in other words progressively, is foreseen under the Covenant should not be misinterpreted as depriving the obligation of all meaningful content. It is on the one hand a necessary flexibility device, reflecting the realities of the real world and the difficulties involved for any country in ensuring full realization of economic, social and cultural rights. On the other hand, the phrase must be read in the light of the overall objective, indeed the raison d’être, of the Covenant which is to establish clear obligations for States parties in respect of the full realization of the rights in question. It thus imposes an obligation to move as expeditiously and effectively as possible towards that goal. Moreover, any deliberately retrogressive measures in that regard would require the most careful consideration and would need to be fully justified by reference to the totality of the rights provided for in the Covenant and in the context of the full use of the maximum available resources.

Instruments

International Covenant on Economic, Social and Cultural Rights [7]

Article 2

1. Each State Party to the present Covenant undertakes to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.

2. The States Parties to the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

3. Developing countries, with due regard to human rights and their national economy, may determine to what extent they would guarantee the economic rights recognized in the present Covenant to non-nationals.

UN Committee on Economic, Social and Cultural Rights, General Comment No. 24 [8]

2. The Committee has previously considered the growing impact of business activities on the enjoyment of specific Covenant rights relating to health, housing, food, water, social security, the right to work, the right to just and favourable conditions of work and the right to form and join trade unions. In addition, the Committee has addressed the issue in concluding observations on States parties’ reports, and in its first decision on an individual communication. In 2011, it adopted a statement on State obligations related to corporate responsibilities in the context of the Covenant rights. The present general comment should be read together with these earlier contributions. It also takes into account advances within the International Labour Organization and within regional organizations such as the Council of Europe. In adopting the present general comment, the Committee has considered the Guiding Principles on Business and Human Rights endorsed by the Human Rights Council in 2011, as well as the contributions made to this issue by human rights treaty bodies and various special procedures.

Obligations to respect, to protect and to fulfil

10. The Covenant establishes specific obligations of States parties at three levels — to respect, to protect and to fulfil. These obligations apply both with respect to situations on the State’s national territory, and outside the national territory in situations over which States parties may exercise control. (…)

Obligation to respect

12. The obligation to respect economic, social and cultural rights is violated when States parties prioritize the interests of business entities over Covenant rights without adequate justification, or when they pursue policies that negatively affect such rights. This may occur for instance when forced evictions are ordered in the context of investment projects. (…)

Obligation to protect

14. The obligation to protect means that States parties must prevent effectively infringements of economic, social and cultural rights in the context of business activities. (…)

16. The obligation to protect entails a positive duty to adopt a legal framework requiring business entities to exercise human rights due diligence in order to identify, prevent and mitigate the risks of violations of Covenant rights, to avoid such rights being abused, and to account for the negative impacts caused or contributed to by their decisions and operations and those of entities they control on the enjoyment of Covenant rights. States should adopt measures such as imposing due diligence requirements to prevent abuses of Covenant rights in a business entity’s supply chain and by subcontractors, suppliers, franchisees, or other business partners.

18. States would violate their duty to protect Covenant rights, for instance, by failing to prevent or to counter conduct by businesses that leads to such rights being abused, or that has the foreseeable effect of leading to such rights being abused, for instance through lowering the criteria for approving new medicines, by failing to incorporate a requirement linked to reasonable accommodation of persons with disabilities in public contracts, by granting exploration and exploitation permits for natural resources without giving due consideration to the potential adverse impacts of such activities on the individual and on communities’ enjoyment of Covenant rights, by exempting certain projects or certain geographical areas from the application of laws that protect Covenant rights, or by failing to regulate the real estate market and the financial actors operating on that market so as to ensure access to affordable and adequate housing for all. Such violations are facilitated where insufficient safeguards exist to address corruption of public officials or private-to-private corruption, or where, as a result of corruption of judges, human rights abuses are left unremedied.

21. The increased role and impact of private actors in traditionally public sectors, such as the health or education sector, pose new challenges for States parties in complying with their obligations under the Covenant. Privatization is not per se prohibited by the Covenant, even in areas such as the provision of water or electricity, education or health care where the role of the public sector has traditionally been strong. Private providers should, however, be subject to strict regulations that impose on them so-called “public service obligations”: in the provision of water or electricity, this may include requirements concerning universality of coverage and continuity of service, pricing policies, quality requirements, and user participation. Similarly, private health-care providers should be prohibited from denying access to affordable and adequate services, treatments or information. For instance, where health practitioners are allowed to invoke conscientious objection to refuse to provide certain sexual and reproductive health services, including abortion, they should refer the women or girls seeking such services to another practitioner within reasonable geographical reach who is willing to provide such services.

Obligation to fulfil

23. The obligation to fulfil requires States parties to take necessary steps, to the maximum of their available resources, to facilitate and promote the enjoyment of Covenant rights, and, in certain cases, to directly provide goods and services essential to such enjoyment. Discharging such duties may require the mobilization of resources by the State, including by enforcing progressive taxation schemes. It may require seeking business cooperation and support to implement the Covenant rights and comply with other human rights standards and principles.

International Covenant on Civil and Political Rights [9]

Article 2

1. Each State Party to the present Covenant undertakes to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. (…)

UN Human Rights Committee, General Comment No. 31 [10]

8. The article 2, paragraph 1, obligations are binding on States [Parties] and do not, as such, have direct horizontal effect as a matter of international law. The Covenant cannot be viewed as a substitute for domestic criminal or civil law. However the positive obligations on States Parties to ensure Covenant rights will only be fully discharged if individuals are protected by the State, not just against violations of Covenant rights by its agents, but also against acts committed by private persons or entities that would impair the enjoyment of Covenant rights in so far as they are amenable to application between private persons or entities. There may be circumstances in which a failure to ensure Covenant rights as required by article 2 would give rise to violations by States Parties of those rights, as a result of States Parties’ permitting or failing to take appropriate measures or to exercise due diligence to prevent, punish, investigate or redress the harm caused by such acts by private persons or entities. States are reminded of the interrelationship between the positive obligations imposed under article 2 and the need to provide effective remedies in the event of breach under article 2, paragraph 3. The Covenant itself envisages in some articles certain areas where there are positive obligations on States Parties to address the activities of private persons or entities. For example, the privacy-related guarantees of article 17 must be protected by law. It is also implicit in article 7 that States Parties have to take positive measures to ensure that private persons or entities do not inflict torture or cruel, inhuman or degrading treatment or punishment on others within their power. In fields affecting basic aspects of ordinary life such as work or housing, individuals are to be protected from discrimination within the meaning of article 26.

10. States Parties are required by article 2, paragraph 1, to respect and to ensure the Covenant rights to all persons who may be within their territory and to all persons subject to their jurisdiction. This means that a State party must respect and ensure the rights laid down in the Covenant to anyone within the power or effective control of that State Party, even if not situated within the territory of the State Party. As indicated in General Comment 15 adopted at the twenty-seventh session (1986), the enjoyment of Covenant rights is not limited to citizens of States Parties but must also be available to all individuals, regardless of nationality or statelessness, such as asylum seekers, refugees, migrant workers and other persons, who may find themselves in the territory or subject to the jurisdiction of the State Party. This principle also applies to those within the power or effective control of the forces of a State Party acting outside its territory, regardless of the circumstances in which such power or effective control was obtained, such as forces constituting a national contingent of a State Party assigned to an international peace-keeping or peace-enforcement operation.

UN, Guiding Principles on Business and Human Rights [11]

Introduction to the Guiding Principles

13. What do these Guiding Principles do? And how should they be read? Council endorsement of the Guiding Principles, by itself, will not bring business and human rights challenges to an end. But it will mark the end of the beginning: by establishing a common global platform for action, on which cumulative progress can be built, step-by-step, without foreclosing any other promising longer-term developments.

14. The Guiding Principles’ normative contribution lies not in the creation of new international law obligations but in elaborating the implications of existing standards and practices for States and businesses; integrating them within a single, logically coherent and comprehensive template; and identifying where the current regime falls short and how it should be improved. (…)

The State duty to protect human rights

1. States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication.

Commentary

States’ international human rights law obligations require that they respect, protect and fulfil the human rights of individuals within their territory and/or jurisdiction. This includes the duty to protect against human rights abuse by third parties, including business enterprises.

The State duty to protect is a standard of conduct. Therefore, States are not per se responsible for human rights abuse by private actors. However, States may breach their international human rights law obligations where such abuse can be attributed to them, or where they fail to take appropriate steps to prevent, investigate, punish and redress private actors’ abuse. While States generally have discretion in deciding upon these steps, they should consider the full range of permissible preventative and remedial measures, including policies, legislation, regulations and adjudication. States also have the duty to protect and promote the rule of law, including by taking measures to ensure equality before the law, fairness in its application, and by providing for adequate accountability, legal certainty, and procedural and legal transparency.

4. States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.

7. Because the risk of gross human rights abuses is heightened in conflict-affected areas, States should help ensure that business enterprises operating in those contexts are not involved with such abuses, including by:

(a) Engaging at the earliest stage possible with business enterprises to help them identify, prevent and mitigate the human rights-related risks of their activities and business relationships;

(b) Providing adequate assistance to business enterprises to assess and address the heightened risks of abuses, paying special attention to both gender-based and sexual violence;

(c) Denying access to public support and services for a business enterprise that is involved with gross human rights abuses and refuses to cooperate in addressing the situation;

(d) Ensuring that their current policies, legislation, regulations and enforcement measures are effective in addressing the risk of business involvement in gross human rights abuses.

Draft UN Treaty on Business and Human Rights [12]

Article 1. Definitions

2. “Human rights abuse” shall mean any harm committed by a business enterprise, through acts or omissions in the context of business activities, against any person or group of persons, that impedes the full enjoyment of internationally recognized human rights and fundamental freedoms, including regarding environmental rights. (…)

4. “Business activities of a transnational character” means any business activity described in paragraph 3 of this Article, when:

a) It is undertaken in more than one jurisdiction or State; or

b) It is undertaken in one State through any business relationship but a substantial part of its preparation, planning, direction, control, design, processing, or manufacturing, storage or distribution, takes place in another State; or

c) It is undertaken in one State but has substantial effect in another State.

Article 2. Statement of purpose

1. The purpose of this (Legally Binding Instrument) is:

a. To clarify and facilitate effective implementation of the obligation of States to respect, protect and promote human rights in the context of business activities, as well as the responsibilities of business enterprises in this regard;

b. To prevent the occurrence of human rights abuses in the context of business activities;

c. To ensure access to justice and effective remedy for victims of human rights abuses in the context of such business activities;

d. To facilitate and strengthen mutual legal assistance and international cooperation to prevent human rights abuses in the context of business activities and provide access to justice and effective remedy to victims of such abuses.

Article 6. Prevention

2. (…) State Parties shall require business enterprises, to undertake human rights due diligence proportionate to their size, risk of severe human rights impacts and the nature and context of their operations, as follows:

a. Identify and assess any actual or potential human rights abuses that may arise from their own business activities, or from their business relationships;

b. Take appropriate measures to prevent and mitigate effectively the identified actual or potential human rights abuses, including in their business relationships;

c. Monitor the effectiveness of their measures to prevent and mitigate human rights abuses, including in their business relationships;

d. Communicate regularly and in an accessible manner to stakeholders, particularly to affected or potentially affected persons, to account for how they address through their policies and measures any actual or potential human rights abuses that may arise from their activities including in their business relationships. (…)

Article 7. Legal liability

4. States Parties shall adopt legal and other measures necessary to ensure that their domestic jurisdiction provides for effective, proportionate, and dissuasive criminal and/or administrative sanctions where legal or natural persons conducting business activities, have caused or contributed to criminal offences or other regulatory breaches that amount or lead to human rights abuses. (…)

6. State Parties may require legal or natural persons conducting in business activities in their territory or jurisdiction, including those of a transnational character, to establish and maintain financial security, such as insurance bonds or other financial guarantees to cover potential claims of compensation. (…)

7. States Parties shall ensure that their domestic law provides for the liability of legal or natural or legal persons conducting business activities, including those of transnational character, for their failure to prevent another legal or natural person with whom it has a business relationship, from causing or contributing to human rights abuses, when the former legally or factually controls or supervises such person or the relevant activity that caused or contributed to the human rights abuse, or should have foreseen risks of human rights abuses in the conduct of their business activities, including those of transnational character, or in their business relationships, but failed to put adequate measures to prevent the abuse. (…)

Article 14. Consistency with international law principles and instruments

1. States Parties shall carry out their obligations under this (Legally Binding Instrument) in a manner consistent with, and fully respecting, the principles of sovereign equality and territorial integrity of States and that of non-intervention in the domestic affairs of other States. (…)

5. States Parties shall ensure that:

a. any existing bilateral or multilateral agreements, including regional or sub-regional agreements, on issues relevant to this (Legally Binding Instrument) and its protocols, including trade and investment agreements, shall be interpreted and implemented in a manner that will not undermine or limit their capacity to fulfill their obligations under this (Legally Binding Instrument) and its protocols, as well as other relevant human rights conventions and instruments.

b. Any new bilateral or multilateral trade and investment agreements shall be compatible with the State Parties’ human rights obligations under this (Legally Binding Instrument) and its protocols, as well as other relevant human rights conventions and instruments.

Article 15. Institutional arrangements

1. There shall be a Committee established in accordance with the following procedures:

a. The Committee shall consist, at the time of entry into force of the present (Legally Binding Instrument), (12) experts. (…) The members of the Committee shall serve in their personal capacity and shall be of high moral standing and recognized competence in the field of human rights, public international law or other relevant fields.

b. The experts shall be elected by the State Parties (…)

2. State Parties shall submit to the Committee, through the Secretary-General of the United Nations, reports on the measures they have taken to give effect to their undertakings under this (Legally Binding Instrument) (…)

4. The Committee shall have the following functions:

a. Make general comments and normative recommendations on the understanding and implementation of the (Legally Binding Instrument) based on the examination of reports and information received from the State Parties and other stakeholders;

b. Consider and provide concluding observations and recommendations on reports submitted by State Parties (…);

c. Provide support to the State Parties in the compilation and communication of information required for the implementation of the provisions of the (Legally Binding Instrument); (…)

7. States Parties shall establish an International Fund for Victims covered under this (Legally Binding Instrument), to provide legal and financial aid to victims. (…)

ICAR, Human Rights Due Diligence: The Role of States [13]

This Report describes measures that States can adopt to ensure that businesses engage in human rights due diligence. The research that informs this report examined existing due diligence regimes from around the world in areas analogous to, or relevant for, human rights, such as labor standards, environmental protection, consumer protection, and the prevention and detection of financial crimes such as money laundering and bribery (corruption). The research also revealed that new State practice is emerging in the area of human rights due diligence specifically.

A key conclusion of this Report is that there is ample evidence that States already use due diligence in regulation as a means to ensure companies meet specified standards of behavior. The objective served by such regulation is to prevent adverse impacts or harms and to protect people, in part by clarifying standards of compliance for business enterprises. States already deploy due diligence in this manner in jurisdictions around the world. (…)

National and international due diligence regimes require business enterprises to implement due diligence across organizational and national boundaries. An examination of various national and international legal texts that rely on due diligence suggests due diligence is used by these different legal regimes to overcome the obstacles to effective regulation posed by complex corporate structures or trans-jurisdictional activities. (…)

The options described in the Report indicate at least four main regulatory approaches through which States can ensure human rights due diligence activities by business. Usually these approaches co-exist within the same jurisdictions and legal systems. The first approach imposes a due diligence requirement as a matter of regulatory compliance. States implement rules that require business enterprises to conduct due diligence, either as a direct legal obligation formulated in a rule, or indirectly by offering companies the opportunity to use due diligence as a defense against charges of criminal, civil or administrative violations. For example, the courts use business due diligence to assess business compliance with environmental, labor, consumer protection and anti-corruption laws. Similarly, regulatory agencies regularly require business due diligence as the basis upon which to grant approvals and licenses for business activities.

The second regulatory approach provides incentives and benefits to companies in return for their being able to demonstrate due diligence practice. For example, in order for business enterprises to qualify for export credit, labeling schemes or other forms of State support, States often require due diligence on environmental and social risks.

A third approach is for States to encourage due diligence through transparency and disclosure mechanisms. States implement rules that require business enterprises to disclose due diligence with the intention that markets and society will attempt to constrain any identified harms. For example, securities laws, consumer protection laws and reporting requirements for corporate social responsibility operate on the logic that information serves the interests and will prompt action by investors, regulators, and people who might be adversely affected by a business activity.

A fourth category involves a combination of one or more of these approaches. States regularly combine aspects of these approaches in order to construct an incentive structure that promotes respect by business for the standards set down in the rules and ensures that compliance can be assessed in an efficient and effective manner. For example, administrative rules governing environmental protection, labor rights, consumer protection or anti-corruption may require business due diligence as the bases for a license or approval, and may also require regular reporting disclosure of due diligence activities by business. Enforcement of such rules can combine a combination of administrative penalty (fines), criminal law sanctions and the possibility of civil action.

Maastricht Principles on Extraterritorial Obligations of States [14]

3. All States have obligations to respect, protect and fulfil human rights, including civil, cultural, economic, political and social rights, both within their territories and extraterritorially.

8. Definition of extraterritorial obligations

Extraterritorial obligations encompass:

a) obligations relating to the acts and omissions of a State, within or beyond its territory, that have effects on the enjoyment of human rights outside of that State’s territory; and

b) obligations of a global character that are set out in the Charter of the United Nations and human rights instruments to take action, separately, and jointly through international cooperation, to realize human rights universally.

UN, Guidance on National Action Plans on Business and Human Rights [15]

The value of National Action Plans on Business and Human Rights

The UNWG considers that NAPs, and the process to develop them, can provide for:

Greater coordination and coherence within Government on the range of public policy areas that relate to business and human rights;
An inclusive process to identify national priorities and concrete policy measures and action;
Transparency and predictability for interested domestic and international stakeholders;
A process of continuous monitoring, measuring and evaluation of implementation;
A platform for ongoing multi-stakeholder dialogue; and
A flexible yet common format that facilitates international cooperation, coordination, and exchanges of good practices and lessons learned.

The UNGPs as the foundation for NAPs

A NAP is an instrument to implement the UNGPs. In line with the UNGPs, NAPs must be based on international human rights standards and reflect the complementarity and interrelatedness of State obligations and business responsibilities in preventing, mitigating and remedying adverse business-related human rights impacts. NAPs as public policy strategies should, in the first instance, provide answers as to how States plan to implement their human rights obligations. (…)

Knox, The Ruggie Rules [16]

The chapter first analyzes Ruggie’s response to the most fundamental legal issue presented to him: does the entire body of human rights law apply directly to corporations? Rejecting the approach taken by a group of UN experts two years earlier, Ruggie answered the question with an emphatic negative. International law supports his position; indeed, the opposite view is legally untenable. By itself, however, his restatement of existing law would not have quelled the controversy over the relationship of human rights law and corporations. But Ruggie did not stop there. He offered a new Framework and Guiding Principles that attempt (1) to elaborate the legal duties of states to protect against human rights abuses by regulating corporate conduct, and (2) to set out responsibilities for corporations that are not binding but that nevertheless provide a basis for monitoring and remediating corporate misconduct. (…) Here, I look at their complicated relationship with human rights law, examining both how the Principles draw on existing law and whether they prepare the ground for the law to recognize direct corporate duties in the future.

Second, the chapter discusses three narrower issues: (a) Even if corporations are not bound by the body of human rights law, are they at least obliged to refrain from committing particularly heinous abuses that are defined as international crimes? (b) When can corporations be complicit in state violations of human rights law? and (c) Does the state duty to protect extend extraterritorially, to actions by corporations outside the territory of their home state? International law does not yet provide a definitive answer to any of these questions. This chapter describes Ruggie’s positions: (a) corporations may be liable for committing international crimes; (b) corporations can be complicit in a state violation if they knowledgeably assist in its commission, even if they did not intend the violation to occur; and (c) the state duty to protect does not extend extraterritorially, although states should nevertheless encourage corporations to respect human rights abroad. These positions will help to inform, although they will certainly not end, the ongoing debate over how international law should address corporate abuses of human rights.

Developed countries have generally opposed extraterritorial human rights obligations, and developing countries may not always like the idea, either, in the context of a duty to protect (as opposed to a duty to assist). Olivier de Schutter states that “in general, it may be anticipated that control by the home States of the activities of transnational corporations will be resented as a limitation to the sovereign right of the territorial States concerned to regulate activities occurring on their territory, or as betraying a distrust of the ability of those States to effectively protect their own populations from the activities of foreign corporations.”138 If Ruggie believed that stronger statements of legal obligation would have been opposed from both richer and poorer countries, then he may have felt that he could go no further than emphasizing, as he did, that states have the authority to regulate the extraterritorial conduct of their companies and that they should exercise that authority more often. As so often in international law, legal changes in this regard may follow from changes in the practice of states, rather than vice versa.

DIHR, The AAAQ Framework [17]

The development of the AAAQ frameworks relies on a review and mapping methodology in order to operationalise the selected ESC [economic, social and cultural] rights.

Availability identifies whether there is a sufficient amount of water available within a given geographical area (e.g. a country, a district or a village) and whether there is a regular supply of water over time. Thereby the availability criterion takes into account seasonal changes in water supply according to weather patterns as well as the regularity of supply on a daily basis. Availability is viewed from a supply perspective in terms of ensuring enough water is available at any given time in a specific location. (…)

Accessibility concerns the level of access and identifies who has access and thereby encompasses the human rights principles of non-discrimination, participation and accountability. There might be an abundance of water within a country or a district, but there are a variety of factors that influence rights holders’ ability to access water. Accessibility is divided into four sub-criteria to help identify the barriers for accessing water.

Physical accessibility means that water must be within physical reach and that it can be accessed without physical threats.
Economic accessibility is often referred to as Affordability and concerns the cost of accessing water and attention is given to whether the cost of water threatens the realization of other rights; e.g. if a family is forced to prioritise between water for the family and school fees for the children.
Non-discrimination is a specific element of accessibility as well as an overarching human rights principle for all AAAQ criteria. In its simplest form, the non-discrimination criterion can be addressed through disaggregating data on the other AAAQ indicators based on prohibited grounds of discrimination. (…)
Information accessibility concerns the accessibility of information on water related issues and should consider e.g. the frequency, medium, form and language of the information. In a broader perspective, information accessibility also relates to the openness and responsiveness of public institutions to the requests and needs for information about water governance institutions and processes. This includes provision of information about how and when rights holders can participate in policy and decision-making processes as well as establishment of mechanisms for feedback and complaints. (…)

Acceptability concerns subjective assessments of the rights holders’ perceptions about water and the delivery of water. A distinction is made between consumer and cultural acceptability. Consumer acceptability includes the characteristics of the water (e.g. odour, taste and colour) as well as procedural considerations (e.g. the behaviour of water suppliers). Cultural acceptability refers to subjective perceptions based on the culture of individuals, minority groups and communities. (…)

Quality concerns the quality of water in objective, scientific terms and it is closely tied to international quality standards. Assessing the quality of water is highly complex and requires technical expertise on micro-organisms and chemicals that might pose a health risk. WHO and UNICEF are leaders in the field of water quality and have defined a set of core parameters for water quality (microbial quality, physical parameters and chemical parameters). (…)

Background (Cambodia)

Human Rights Council, General Human Rights Situation in Cambodia [18]

11. The 2030 Agenda for Sustainable Development explicitly recognizes that the promotion and protection of human rights is both a prerequisite to achieving the Sustainable Development Goals as well as a result. The principle of leaving no one behind is perhaps the clearest expression of this link. Indeed, respect for human rights is an integral part of ensuring lasting development and peace in Cambodia. Nevertheless, over the past year, government ministers, both during meetings and through the submission of official documents, have addressed comments to Special Rapporteur that prioritize peace, stability and development over human rights. Respect for rights and freedoms are enshrined in the Cambodian Constitution and Cambodia has ratified almost all the core human rights treaties. Human rights cannot be selectively respected or ignored, and they must never be sacrificed. Peace without justice is unsustainable; development without freedom leaves people behind.

89. The overall human rights situation in Cambodia has suffered over the past year. On one hand, the ongoing economic growth that Cambodia is enjoying has paved the way for improvements in the area of economic and social rights, in particular, social protection, minimum wage and maternity leave (…) The dissolution of Cambodian National Rescue Party (CNRP) and the imprisonment of its President, Kem Sokha, the banning of 118 CNRP officials from political activity for five years and the reallocation of CNRP seats to unelected representatives have seriously strained political rights. Developments in law, policy and practice, including amendment of the Constitution to introduce a lèse-majesté law, have targeted critical and dissenting voices and significantly curtailed fundamental freedoms. These developments are grave. For economic development to be sustainable, the indivisibility of rights dictates that respect for civil and political rights should accompany improvements in economic and social rights.

Instruments (Cambodia)

Constitution of the Kingdom of Cambodia [19]

Article 31: Every Khmer citizen shall be equal before the law, enjoying the same rights, freedom and fulfilling the same obligations regardless of race, color, sex, language, religious belief, political tendency, birth origin, social status, wealth or other status. The exercise of personal rights and freedom by any individual shall not adversely affect the rights and freedoms of others.

Article 36: (…) Khmer citizens of both sexes shall receive equal pay for equal work. (…) Khmer citizens of both sexes shall have the right to enjoy social security and other social benefits as determined by law. (…)

OHCHR Cambodia, UN Treaty-Based Bodies – Cambodia [20]

Cambodia has become party to the following core international human rights treaties and some of their optional protocols:

International Covenant on Economic Social and Cultural Rights (ICESCR)
International Covenant on Civil and Political Rights (ICCPR)
International Convention on the Elimination of All Forms of Racial Discrimination (ICERD)
Convention on the Elimination of Discrimination against Women (CEDAW) and its Optional Protocol
Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT) and its Optional Protocol
Convention on the Rights of the Child (CRC), its Optional Protocol on the sale of children, child prostitution and child pornography, and its Optional Protocol on the involvement of children in armed conflict
Convention on the Rights of Persons with Disabilities
Convention for the Protection of All Persons from Enforced Disappearance.

ILO Conventions – Cambodia [21]

Cambodia has been a member of ILO since 1969 and ratified all the fundamental conventions of ILO as follows:

Forced Labour Convention, 1930 (No. 29)
Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87)
Right to Organize and Collective Bargaining Convention, 1949 (No. 98)
Equal Remuneration Convention, 1951 (No. 100)
Abolition of Forced Labour Convention, 1957 (No. 105)
Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
Minimum Age Convention, 1973 (No. 138)
Worst Forms of Child Labour Convention, 1999 (No. 182)

[All States parties to a human rights treaty are obliged to submit regular reports to the United Nations on how the rights in the treaty are being implemented. These reports are reviewed by a committee of independent experts, often referred to as a “treaty body”. The Committee examines each report and addressed its concerns and recommendations to the State party in the form of “concluding observations”. The aim of this process is not to criticize governments, but to provide constructive advice on ways in which countries can make better progress towards ensuring that everyone can enjoy the rights set out in the treaty. The treaty body does not rely solely on information provided in the government’s report to make its assessment. It is also open to submissions from national and international non-governmental organizational (NGOs) as well as United Nations agencies, such as WHO or ILO.][22]

CEDAW Committee, Concluding Observations [23]

40. (…) It remains concerned, however, about report that microfinancing institutions charge high interest rates, require land titles as collateral and target poor clients, the majority of whom are women, and that, in the event of default, the land seized is frequently of much higher value than the debt, without the difference being compensated, which leaves many rural women destitute and homeless.

41. The Committee recommends that the State party ensure that rural women have access to low-interest loans and financial credit by effectively regulating microfinancing institutions and establishing an oversight mechanism to prevent exploitative lending practices. It also recommends that the State party adopt measures to facilitate opportunities for rural women to establish not only micro, small and medium-sized enterprises but also large enterprises.

CERD Committee, Concluding Observations [24]

28. Bearing in mind its General Recommendation No. 23 on the rights of indigenous peoples (1997), the Committee welcomes the Government’s development of a strategic plan for the development of indigenous peoples 2020-2024, and recommends that the state party [to] Protect indigenous people from attacks and intimidation, from government agents and private companies, as they seek to exercise their rights as it relates to communal lands (…)

31. The Committee notes efforts by the State party to prevent human trafficking, such as the National Plan of Action for Counter Trafficking (2019 – 2023), monitoring places of prostitution, and spreading information to business owners on issues related to trafficking. However, the Committee is deeply concerned that the State party remains a source, destination and transit country for human trafficking, in particular of women and girls, for purposes of sexual and labour exploitation. The Committee is particularly concerned about trafficking in children (art. 2 and 5).

CRC Committee, Concluding Observations [25]

26. The Committee notes that in the context of economic growth and increased domestic and foreign investment, the State party has taken positive measures to regulate the impact of business on child rights in the formal economy, such as the garment industry. The Committee is however concerned that the regulatory framework on the social and environmental responsibility of business corporations, both national and international, is not yet in place to prevent possible negative impact of their activities on children.

27. The Committee recommends that the State party continue to be vigilant about the compliance of its national law by local and foreign companies throughout its territory, and to establish and implement regulations to ensure that the business sector complies with international and domestic standards on corporate social and environmental responsibility, particularly with regard to child rights, in line with the United Nations Framework for Business and Human Rights which was adopted unanimously by the Human Rights Council in 2008, and which outlines the duty of States to protect against human rights abuses by businesses, corporate responsibilities to respect human rights, and the need for more effective access to remedies when violations occur.

72. The Committee urges the State party to:

(b) Condemn and take active measures against individuals and enterprises that enable, facilitate or exacerbate sex tourism;

CRC, Concluding Observations [on Child Sex Tourism][26]

19. The Committee urges the State party to pursue its efforts to prevent child sex tourism and orphanage tourism and to protect children from becoming victims by strengthening its regulatory framework and awareness-raising measures, including in rural areas, and to take all necessary measures to ensure that all cases of child sex tourism and orphanage tourism are investigated and that alleged perpetrators are prosecuted and duly sanctioned. The Committee also recommends that the State party:

(a) Conduct advocacy with the tourism industry and the media on the harmful effects of child sex tourism, widely disseminate the World Tourism Organization Global Code of Ethics for Tourism among travel agents and tourism agencies, and encourage these enterprises to become signatories to the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism (…)

ILO, Committee of Experts Observations [on Forced Labour][27]

1. Trafficking in persons. The Committee previously noted the Government’s indication that, within the framework of the National Action Plan of 2011-13 on the suppression of trafficking and sexual exploitation, it had monitored places where prostitution may occur; provided advice and rehabilitation to sex workers; and instructed over 700 business owners on issues related to sexual exploitation. It had also taken measures to inform recruitment agencies on the risks associated with the use of false documentation, as well as on the importance of providing pre-departure training for migrants. The Committee further noted the statistical information provided by the Government on the number of cases of trafficking in persons and sexual exploitation brought before the courts, as well as the number of victims identified and individuals accused. The Committee noted, in particular, that the number of victims of trafficking and sexual exploitation identified appeared to have decreased substantially during the period of implementation of the National Action Plan. However, no information was provided on the number of convictions, the penalties imposed on perpetrators or the specific action taken to protect and assist victims. (…)

2. Vulnerability of migrant workers to conditions of forced labour. While taking note of the measures undertaken by the Government, the Committee requests it to continue its efforts to ensure that all migrant workers are fully protected from abusive practices and conditions that amount to forced labour, and to continue providing information in this regard. The Committee also requests the government to continue providing information on the application in practice of Sub-Decree No. 190 of 2011 on labour migration and private recruitment agencies, as well as its supplementing Prakas, indicating the concrete results achieved.

Human Rights Committee, Concluding Observations [28]

5. While noting that international human rights treaties are part of Cambodian law and are directly applicable in Cambodian courts, the Committee is concerned at the apparently limited level of awareness of the provisions of the Covenant among the judiciary and the legal profession, resulting in a very small number of cases in which the provisions of the Covenant have been invoked or applied by courts in Cambodia (art. 2).

The State party should take appropriate measures to raise awareness of the Covenant among judges, prosecutors, lawyers and the public at large to ensure that its provisions are taken into account before national courts.

CESCR Committee, Domestic Applicability of ICESCR in Cambodia [29]

12. The Committee regrets that, despite the constitutional guarantees, it has not been established that Covenant provisions can in practice be invoked before or directly enforced by the State party’s national courts, tribunals or administrative authorities. In this regard, the Committee notes with concern, the lack of effective remedies for violations of human rights including economic, social and cultural rights, thereby undermining the State party’s ability to meet its obligations under the international human rights treaties that it has ratified including the International Covenant on Economic, Social and Cultural Rights.

The Committee draws the attention of the State party to its general comment No. 9 (1998) on the domestic application of the Covenant, and recommends that the State party take all appropriate measures to ensure the direct applicability of the Covenant provisions in its domestic legal order, including the conduct of training programmes for judges, lawyers and public officials. The Committee also requests the State party to include in its next periodic report detailed information on progress that has been made in this connection and on decisions of national courts, tribunals or administrative authorities giving effect to Covenant rights.

UN, Universal Periodic Review (UPR) Third Cycle [30]

[The UPR is a unique process that involves a periodic review of the human rights records of all 193 UN Member States. The UPR is a significant innovation of the Human Rights Council based on equal treatment for all countries. It provides an opportunity for all States to declare what actions they have taken to improve the human rights situation in their countries and to overcome challenges to the enjoyment of human rights. The UPR also includes a sharing of best human rights practices around the globe.][31]

14. The United Nations country team indicated that business enterprises continued to have an important role in promoting the economic growth of Cambodia, which could affect the enjoyment of human rights, such as land and housing rights, rights in the workplace and gender equality, among other rights. That highlighted the Government’s role to protect human rights. (…)

12. The United Nations country team stressed that Cambodia had experienced significant deforestation and forest degradation in recent years, the main causes of which included conversion to commercial agriculture, mining, economic and social land concessions, legal and illegal settlements and farmland, large-scale infrastructure and hydropower development, road construction, legal and illegal logging, fuelwood harvesting and forest fires.

13. The Special Rapporteur on the situation of human rights in Cambodia highlighted issues with resettlement and compensation packages offered to persons and communities displaced by land concessions, including the adequacy of compensation and the appropriateness of relocation sites. She stressed that more needed to be done to ensure that compensation packages were fully understood by potential recipients and that all land disputes were resolved through a process free from threats, violence and intimidation.

C. Economic, social and cultural rights

1. Right to work and to just and favorable conditions of work

33. The United Nations country team noted that, in 2017, the Government had introduced improved social protection for workers and a lump-sum payment scheme for pregnant workers and had raised the minimum wage for workers in the textile and footwear industries by 11 per cent in 2018. It also noted that the Government had suspended the drafting of a controversial bill on labour dispute resolution. Despite all those efforts, the living conditions of people working in factories, particularly women, were still poor and net salaries low. Sexual harassment at the workplace continued to be a serious problem, which undermined women’s rights and women’s participation in the economy. (…)

5. Migrants, refugees, asylum seekers and internally displaced persons

59. In the context of meeting international labour standards and Goal 8 of the Sustainable Development Goals, the United Nations country team encouraged the Government to increase protection mechanisms for Cambodian migrants abroad, including domestic workers, and closely monitor labour agencies recruiting and deploying Cambodian migrant workers abroad.

UN Special Rapporteur for Cambodia, 2011 Report [32]

[The Special Rapporteur is an independent expert appointed by the United Nations Human Rights Council to follow and report on the human rights situation in Cambodia. She is not a United Nations staff member, does not receive a salary from the United Nations, and does not work for any government or interest group. Her task is to assess the human rights situation, report publicly about it, and work with the Government, civil society and others to foster international cooperation in this field. The Special Rapporteur undertakes regularly visits or missions to Cambodia and reports annually to the Human Rights Council. OHCHR provides her with logistical and technical assistance. The current Special Rapporteur is Ms. Rhona Smith (UK), who was appointed in March 2015.][33]

91. The Government is advised to exercise greater transparency in economic land concessions and other land deals involving Government officials or private enterprises, and is encouraged to strengthen the capacity and independence of the court system, the cadastral commissions, and the National Authority for Land Dispute Resolution so that they may exercise accountability, impartiality and greater efficiency in resolving disputes. (…)

93. When engaging in land deals either with the Government of Cambodia or other land owners, foreign Governments and international business organizations should bear in mind that they have a responsibility under international law to respect the human rights of the people of Cambodia. Sponsorship of the use of armed law enforcement officials to carry out an unlawful eviction is illegal under international law and should be made illegal in Cambodia as well.

UN Special Rapporteur for Cambodia, 2012 Report [34]

133. There can be a cost benefit to inclusive development planning and preventing conflict. The Government should not assume that they are helping businesses by not holding them to account. On the contrary, businesses that do not respect human rights or offer effective remedies when they contribute to adverse impacts run an increasing risk of facing human rights litigation, disruption in operations due to conflicts, or negative publicity by being associated with abuses. These circumstances can affect profit and threaten the sustainability of the business, and lower rates of investment translate into decreased tax revenue for the Government. (…)

216. Due consideration should be given to proposals by concessionaires with enhanced legal and regulatory requirements attached to their investments (such as third-party certification schemes and rigorous codes of conduct) which incorporate international standards of environmental and social sustainability. (…)

217. Companies of all sizes, structures and modes of operation, both domestic and foreign, and whether wholly or partly owned by the State, should address their human rights impact by practicing due diligence, including implementing measures to identify, prevent, and mitigate adverse human rights consequences and account for their business activities. (…)

222. Concession companies should take all measures to avoid environmental destruction in their operations, including preventing water contamination, soil deterioration, and unnecessary clearing of land or illicit logging. They should ensure that access to infrastructure, such as new roads on their concessions, is accessible to all surrounding communities and should refrain from blocking transportation within the boundaries of the concession. (…)

224. Concession companies – with use of revenue from concession activity – should increase their contributions to the local communities, including by providing social benefits such as health services, educational opportunities and environmental protection measures. (…)

236. The use of international grievance procedures and mechanisms, as well as national human rights institutions abroad, should be further explored by civil society actors in order to bring complaints of alleged human rights abuses of foreign owned or operated business enterprises implicated in human rights violations in Cambodia (whether the businesses are majority or minority shareholders). The possible role of the ASEAN Inter-Governmental Commission on Human Rights may be further examined.

UN Special Rapporteur for Cambodia, 2014 Report [35]

67. The Special Rapporteur consulted with a wide range of stakeholders during his last two missions about their views regarding the need, or desirability, of establishing an independent national human rights institution. An independent national institution that conforms to the Paris Principles is responsible for monitoring and advising the Government on all human rights matter and is empowered to investigate individual complaints has proven to be an effective protection mechanism in many countries, including within the Association of Southeast Asian Nations. He considers that such an institution could also prove useful in filling an important gap in Cambodia.

73. Many individuals have told the Special Rapporteur that it is impossible for there to be a truly independent national institution in the current political context in Cambodia. However, the Special Rapporteur notes that one exception is the Arbitration Council, which has been able to preserve its independence and thus its credibility before the parties to most of the labour-management disputes brought to it. Although the results of arbitration are not binding, he understands that several major buyers and trade unions have accepted to be bound by the conclusions of the Arbitration Council. He further recommends that all those who have a stake in peaceful labour relations in Cambodia work together to ensure that the Council will continue to be adequately and sustainably resourced, with full guarantees for its continued independence.

UN Special Rapporteur for Cambodia, 2019 Report [36]

17. Cambodia is now in a distinct phase of development. Following years of strong economic growth and significant progress in poverty reduction, Cambodia has an ambition to be considered a high-income country by 2050. To help guide it towards realizing that vision, the Government has adopted phase IV of its “Rectangular Strategy” and the localization plan for the Cambodian Sustainable Development Goals and is now finalizing the national strategic development plan. These three documents are designed to provide a coherent development strategy for the country.

19. Human rights unequivocally anchor the 2030 Agenda for Sustainable Development and the Sustainable Development Goals. The 2030 Agenda explicitly states that it is grounded in the Charter of the United Nations, the Universal Declaration of Human Rights and international human rights treaties. Its implementation is to be consistent with the obligations of States under international law, including their human rights obligations. Many of the recommendations Cambodia has received in connection with treaty body reports, the universal periodic review and the reports and communications of special procedures mandate holders relate directly to the targets of the 2030 Agenda.

20. The Sustainable Development Goals are closely linked to civil, cultural, economic, political and social rights. They cover areas such as health, education, decent work, food, water and equality, as well as personal security, access to justice and fundamental freedoms. (…)

24. Underlining the importance of the principle of participation, the 2030 Agenda requires the implementation of the Sustainable Development Goals in a spirit of partnership, with the participation of all countries, stakeholders and people. Goal 17 emphasizes partnerships, including through encouraging and promoting “effective public, public-private and civil society partnerships” (target 17.17).

25. States should establish an accountability framework at the national, regional and global levels. That includes the voluntary review mechanism under the high-level political forum and participatory monitoring mechanisms at the national level. Accountability covers the actions of States and non-State actors, including the business sector, which should be guided by the Guiding Principles on Business and Human Rights. (…)

Worker’s Information Center, Shadow Report under CEDAW [37]

The Law on Labour (Articles 239, 242 and 244) state that enterprises employing at least fifty workers shall have a permanent infirmary on the premises of the establishment. The infirmary shall be supplied with adequate materials, bandages and medicines to provide emergency care to workers in the event of accidents or occupational illness or sickness during work. (…)

The Law on Labour (Article 186) requires enterprises to set up a nursing room or day-care-centre if the enterprise employing minimum of one hundred women or girls. (…)

Recommendations:

The Ministry of Labour and Vocational Training (MoLVT) to ensure the permanent infirmary is functioning with enough medical supplies for sick workers, and guarantee the provision of nursing and childcare services for working mothers.
MoLVT to ensure that factories provide women workers the right to sick leave as needed even if the leave is related to their monthly menstruation.
MoLVT to work with all factories to set up a mechanism for sexual harassment reporting and addressing violations, and to ensure the collective bargaining for women workers to address such issues in a respectful and sensitive manner.

Solidarity Center Cambodia, Shadow Report under CEDAW [38]

Recommendations for Cambodia:

Require the transnational companies operating in Cambodia conduct gender impact assessments and provide effective remedies in case of GBV/H. (…)

Recommendations for Cambodia:

In instances of alleged pregnancy discrimination, the employer should bear the onus of proof. The current Arbitration Council’s approach to cast the onus of proving discrimination on pregnant women must be reversed.
Cambodia should ratify the ILO Convention 183 and domesticate its provisions, including 14 weeks of paid maternity leave and cash and medical benefits.
A labor ombudsman mechanism should be established to allow workers to report unlawful working conditions outside of existing conciliation and arbitration process. Regulations should be issued that increase penalties for employers who fail to provide maternity benefits in accordance with the Labor Law.

CCHR, Business and Human Rights Handbook for Cambodia [39]

In Cambodia, where the business sector is plagued with a myriad of human rights concerns, the concept of business and human rights is especially crucial, yet it is a relatively new concept and many Cambodians are unfamiliar with this term

The concept is particularly important for Cambodia’s land sector, where the government has permitted large swathes of land to be leased for commercial interests through economic land concessions. Businesses often rely on false promises, intimidation and violence to secure land from vulnerable citizens. The violations do not end with land acquisition, either. In the aftermath of such land grabs, corporate actors, often with the collusion or complicity of state organs, continue to exploit the dispossessed through child labor, low wages, and denial of compensation.

Despite guarantees in domestic and international law, communities continue to have their land illegally taken away from them, for transfer to private companies for commercial agriculture (e.g. sugar and rubber plantations); and mining and energy projects, such as hydropower dams. Such business activities undermine the rights to adequate housing, food and water, and have long-term environmental and economic impacts.

The weak rule of law in Cambodia is certainly a factor that allows private companies to violate human rights in their business operations with ease.

The victims of business-based human rights abuses are often the most vulnerable in society who have few resources to stand up to such violations – the poor and disadvantaged, women, indigenous communities, and more generally those who are uneducated about their rights and the law.

CCHR, Fact Sheet: Business’ Responsibility to Respect Human Rights [40]

Benefits of Implementing the United Nations Guiding Principles for the Cambodian Government

Increased investor – confidence by promoting an environment that could facilitate foreign direct investment, especially from Western countries
Risk mitigation – the Guiding Principles would mitigate the risks of the Cambodian government violating international human rights law
Policy coherence – The Guiding Principles provide guidance to the government policy makers on paying due diligence to human rights
Access to remedy – as the government is already obligated to ensure the availability of remedial mechanisms in accordance with international human rights law, the Guiding Principles provide a useful framework

Benefits of Implementing the United Nations Guiding Principles for the Cambodian Government

Increased commercial reputation – implementing the Guiding Principles will assist businesses in complying with human rights which will greatly boost their reputations
Government engagement – the Guiding Principles encourage dialogue between the government and businesses on key issues
Risk mitigation – Implementing the Guiding Principles assists in alleviating the risks of litigation
No opportunity costs – committing to human rights will prevent losses arising from employee protests, a lack of consumer satisfaction and non-compliance with buyer standards
Increased productivity – committing to human rights will boost productivity if employees are satisfied, working in safe environments and have their rights secured
Competitiveness – operationalizing the Guiding Principles and committing to human rights enhances a company’s edge in the market
Value chain development – buyers and suppliers benefit from improved relations and increased productivity when companies respect human rights
Sustainability – with increased productivity and ethical business practices in place, businesses have greater chances to sustain and expand their economic activities
Increased opportunities to expand and engage export markets – implementing the Guiding Principles creates openings for those markets which require certain standards in relation to traceability, sustainability, certification and good business practices (for example European and American markets)

Ly and Soy, National Human Rights Institution – Cambodia [41]

The main human rights bodies in Cambodia are: The National Assembly Commission on Human Rights (NACHR); the Senate Commission on Human Rights (SCHR); and the Cambodian Human Rights Committee (CHRC). Further, various ministerial departments, such as the Cambodian National Council for Women, the Cambodian National Council for Children and the Disability Action Council address human rights related issues in respect of specific groups of persons.

NACHR and SCHR are legislative human rights commissions composed of nine members and five members, respectively. The NACHR is attached to the National Assembly, while the SCHR is attached to the Senate. These commissions are primarily tasked with addressing human rights issues by monitoring the implementation of human rights and receiving peoples’ complaints. However, both NACHR and SCHR appear to play a very limited role in resolving those complaints, as they can only address them to relevant authorities and the government for actions and solutions. These commissions can also initiate, draft, and review relevant proposals or laws to implement Cambodia’s human rights obligations under domestic laws and international human rights treaties that Cambodia ratifies. They also have mandates to educate and raise awareness about human rights through various outreach programs and play a consultative to the government on relevant laws.

Within the executive framework, the government established the CHRC in order to promote and protect human rights in Cambodia. It carries out investigations into human rights violations and receives complaints. In solving human rights violations addressed in the complaints, CHRC coordinates with relevant authorities and the courts. It also conducts education and awareness raising outreach related human rights. Unlike NACHR and SCHR, CHRC is mainly responsible for preparing and submitting national reports on human rights for the United Nations monitoring bodies, particularly the Universal Periodic Review.

Soy, Legal Protection of Construction Workers: Lessons from Cambodia [42]

Economic development – a double-edged sword?

Increased globalization and norm diffusion since the late 1980s mean that businesses have a growing responsibility for the safeguarding of human rights. However, the lack of concerted efforts to control the surge of privatization, deregulation, and liberalization of trade reflects the inability or unwillingness of states to establish a responsive system of governance to effectively tackle the increasing impacts of business activities on human rights. The primary objective of economic development should be society-wide improvements, creating equal opportunities and empowering all people, so that they can become involved in the process and benefit from it. The success of economic development must not be defined simply by economic indicators such as Gross Domestic Product, but should be seen as a holistic process that incorporates “economic, social, political, cultural and environmental needs of people to promote improvement in the quality of life for all”.

The impact of globalization on human rights has also been felt in Cambodia. In that context, 1993 can be seen as a significant milestone, with the adoption of a new constitution aimed at promoting liberal democracy and economic development, in an attempt to put the country’s violent past behind it. Since then, Cambodia has ratified eight core human rights conventions. Economic and political development are closely linked: real economic growth is dependent on political stability, and high levels of political violence and human rights violations acted as a brake on Cambodia’s economic growth, averaging 7.7% annually (ADB, 2017), with the garment, tourism, agriculture, and construction sectors the main drivers of the economy. Nevertheless, Cambodia remains one of the poorest countries in Asia, which raises the question: does the country’s rapid growth actually serve the needs and interests of all people, especially those marginalized workers who participate in and contribute to the development process? The adverse effects of business activities on human rights have become a reality and have grown every more acute as economic growth continues.

Cambodia government’s position in business and human rights

(…) In these decades of steady economic development, there is a risk that technical solutions to fix loopholes in laws, regulations, and practices to protect workers from getting harmed are thwarted by the political reality in Cambodia. Economic growth often breeds a human rights ‘governance gap’, especially in a developing economy with institutionalized corruption like Cambodia, where the government shows no real interest in imposing more regulations and obligations on businesses to guarantee decent work. Furthermore, in their pursuit of national economic development, policy makers in any developing economy tend to adopt laws and regulations that attract investment and employment, while they also try to ensure that legal frameworks protect workers’ rights, directly or indirectly, to decent work and a safe working environment. In Cambodia, the government seems to lack the capacity and the will to develop and apply such legal obligations for fear of losing investment; businesses are able to take advantage of this fear and exercise influence over the government and its policies. (…)

Karnavas, Bringing Domestic Cases into Compliance with International Standards [43]

Interplay of domestic and international law in Cambodia

The interplay between international law incorporated into the Constitution and domestic law in Cambodia supports the conclusion that the ECCC’s jurisprudence is applicable in domestic courts because international law incorporated through the Constitution is also domestic law. Cambodia appears to adhere to a dualist (as opposed to a monist) system in its approach to implementing international law in its domestic legal order. As distinct from a monist system, where international law exists alongside the domestic law as equally applicable by courts, a dualist system considers international law to be separate from domestic law and only applies international law if it is directly incorporated into domestic law through a State’s constitution or through implementing legislation. In Cambodia, international human rights principles have been explicitly incorporated into the domestic framework by the Constitution and are thus, at least in theory, applicable in domestic courts.

The Constitutional Council has recognized that, although a law may not violate the Constitution, a court must consider whether its application in a particular case would be incompatible with either provisions in the Constitution, other Cambodian law or international conventions recognized by Cambodia. In finding that a proposed amendment to the Law on the Aggravating Circumstances of Felonies was consistent with the Constitution, the Constitutional Council noted that the trial judge should rely not only on the proposed amended Article for a conviction, but also on “the laws”. The term “laws” refers to “the national laws, including the Constitution which is the supreme law, all the laws that remain in force, and the international laws already recognized by the Kingdom of Cambodia…” Thus, despite the fact that international law does not appear to be directly enforceable in domestic courts, local judges, like ECCC judges, are constitutionally obliged to consider international human rights conventions and fair trial rights in applying and interpreting domestic law.

Questions

How do business activities contribute to violations of human rights in Cambodia?
Are there any Cambodian laws and policies established to regulate businesses’ responsibility for human rights abuses?
Are there any legal requirement for businesses to carry out human rights due diligence or human rights impact assessment in Cambodia?
To what extent do businesses in Cambodia implement the United Nations Guiding Principles on Business and Human Rights?
What measures has the Cambodian government taken to promote the respect of human rights by businesses operating in Cambodia? What (further) measures should it undertake to implement the UN Guiding Principles?
What are is the role of civil society organizations in holding businesses accountable for human rights violations? How does the task of NGOs change when business wrongdoing and state conduct both are a cause of human rights violations?

Main Aspects

Corporate responsibility to respect human rights
Private sector’s contribution to development
State obligation to protect human rights
Protectionism and competitive advantage in international trade
Relation between soft law and hard law
Social dialogue and mature industrial relations
‘Decent work’ in a globalized economy
Complicity in human rights abuses
Relation of CSR with trade and development cooperation
Ethics and a fair globalization
Relation of CSR and compliance with law
Definition of multinational enterprises
ASEAN’s CSR instruments

Background

UN High Commissioner of Human Rights, An Interpretive Guide [2]

Q 3. How are human rights relevant to businesses?

International human rights treaties generally do not impose direct legal obligations on business enterprises. Legal liability and enforcement for the infringement by businesses of international human rights standards are therefore defined largely by national law. However, the actions of business enterprises, just like the actions of other non-State actors, can affect the enjoyment of human rights by others, either positively or negatively. Enterprises can affect the human rights of their employees, their customers, workers in their supply chains or communities around their operations. Indeed, experience shows that enterprises can and do infringe human rights where they are not paying sufficient attention to this risk and how to reduce it.

Q7. Is the responsibility to respect human rights optional for business enterprises?

No. In many cases the responsibility of enterprises to respect human rights is reflected at least in part in domestic law or regulations corresponding to international human rights standards. For instance, laws that protect people against contaminated food or polluted water, or that mandate workplace standards in line with the ILO conventions and safeguards against discrimination, or that require individuals’ informed consent before they take part in drug trials, are all different ways in which domestic laws can regulate the behaviour of enterprises to help ensure that they respect human rights. The responsibility to respect human rights is not, however, limited to compliance with such domestic law provisions. It exists over and above legal compliance, constituting a global standard of expected conduct applicable to all businesses in all situations. It therefore also exists independently of an enterprise’s own commitment to human rights. It is reflected in soft law instruments such as the Guidelines for Multinational Enterprises of the Organisation for Economic Co-operation and Development (OECD). There can be legal, financial and reputational consequences if enterprises fail to meet the responsibility to respect. Such failure may also hamper an enterprise’s ability to recruit and retain staff, to gain permits, investment, new project opportunities or similar benefits essential to a successful, sustainable business. As a result, where business poses a risk to human rights, it increasingly also poses a risk to its own long-term interests.

Do enterprises have any additional human rights responsibilities?

The Guiding Principles set the baseline responsibility of all enterprises as respect for human rights wherever they operate. Beyond that, enterprises may voluntarily undertake additional human rights commitments—such as the promotion of certain human rights—for philanthropic reasons, to protect and enhance their reputation, or to develop new business opportunities. National laws and regulations may require additional activities by enterprises regarding human rights in some situations, as may contracts with public authorities for particular projects. For example, a contract with a State for the provision of water services may require a business enterprise to help fulfil the human right to water. Operational conditions may also lead enterprises to take on additional responsibilities in specific circumstances. For example, enterprises may identify a need to make social investments, such as in local health care or education, in order to achieve or maintain support for its operations from surrounding communities (a so-called social licence to operate). Supporting human rights also forms part of the commitment undertaken by signatories to the United National Global Compact.

Debate continues over whether there may be a responsibility for some enterprises in some situations to go beyond respect for human rights and also to seek to promote them. This falls beyond the scope of the Guiding Principles, which constitute a global standard of responsibility for all businesses in all situations and therefore focus on the responsibility to respect human rights. Respect for human rights is about an enterprise’s core operations—how it goes about its daily business. It is not about voluntary activities outside its core operations, however welcome these may be.

Instruments

UN, Guiding Principles on Business and Human Rights [3]

These Guiding Principles are grounded in recognition of:

(a) States’ existing obligations to respect, protect and fulfil human rights and fundamental freedoms;

(b) The role of business enterprises as specialized organs of society performing specialized functions, required to comply with all applicable laws and to respect human rights;

I. The State duty to protect human rights

2. States should set out clearly the expectation that all business enterprises domiciled in their territory and/or jurisdiction respect human rights throughout their operations.

II. The corporate responsibility to respect human rights

11. Business enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.

12. The responsibility of business enterprises to respect human rights refers to internationally recognized human rights – understood, at a minimum, as those expressed in the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work.

15. In order to meet their responsibility to respect human rights, business enterprises should have in place policies and processes appropriate to their size and circumstances, including:

(a) A policy commitment to meet their responsibility to respect human rights;

(b) A human rights due-diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights;

III. Access to remedy

25. As part of their duty to protect against business-related human rights abuse, States must take appropriate steps to ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their territory and/or jurisdiction those affected have access to effective remedy.

OECD, Guidelines for Multinational Enterprises [4]

I. Concepts and principles

2. Obeying domestic laws is the first obligation of enterprises. The Guidelines are not a substitute for nor should they be considered to override domestic law and regulation. While the Guidelines extend beyond the law in many cases, they should not and are not intended to place an enterprise in situations where it faces conflicting requirements. However, in countries where domestic laws and regulations conflict with the principles and standards of the Guidelines, enterprises should seek ways to honor such principles and standards to the fullest extent which does not place them in violation of domestic law. (…)

4. A precise definition of multinational enterprises is not required for the purposes of the Guidelines. These enterprises operate in all sectors of the economy. They usually comprise companies or other entities established in more than one country and so linked that they may coordinate their operations in various ways. While one or more of these entities may be able to exercise a significant influence over the activities of others, their degree of autonomy within the enterprise may vary widely from one multinational enterprise to another. Ownership may be private, State or mixed. The Guidelines are addressed to all the entities within the multinational enterprise (parent companies and/or local entities). According to the actual distribution of responsibilities among them, the different entities are expected to co-operate and to assist one another to facilitate observance of the Guidelines.

II. General policies

27. It is important to note that self-regulation and other initiatives in a similar vein, including the Guidelines, should not unlawfully restrict competition, nor should they be considered a substitute for effective law and regulation by governments. It is understood that MNEs should avoid potential trade or investment distorting effects of codes and self-regulatory practices when they are being developed.

III. Disclosure

32. Disclosure is addressed in two areas. The first set of disclosures recommendations calls for timely and accurate disclosure on all material matters regarding the corporation, including the financial situation, performance, ownership and governance of the company.

33. The guidelines also encourage a second set of disclosure or communication practices in areas where reporting standards are still evolving such as, for example, social, environmental and risk reporting.

IV. Human rights

40. Enterprises can have an impact on virtually the entire spectrum of internationally recognized human rights. In practice, some human rights may be at greater risk than others in particular industries or contexts, and therefore will be the focus of heightened attention. However, situations may change, so all rights should be the subject of periodic review. Depending on circumstances, enterprises may need to consider additional standards. For instance, enterprises should respect the human rights of individuals belonging to specific groups or populations that require particular attention, where they may have adverse human rights impacts on them. In this connection, United Nations instruments have elaborated further on the rights of indigenous peoples; persons belonging to national or ethnic, religious and linguistic minorities; women; children; persons with disabilities; and migrant workers and their families. Moreover, in situations of armed conflict enterprises should respect the standards of international humanitarian law, which can help enterprises avoid the risks of causing or contributing to adverse impacts when operating in such difficult environments.

V. Employment and industrial relations

51. Paragraph 1 of this chapter is design to echo all four fundamental principles and rights at work which are contained in the ILO’s 1998 Declaration, namely the freedom of association and right to collective bargaining, the effective abolition of child labor, the elimination of all forms of forced or compulsory labor, and non-discrimination in employment and occupation. These principles and rights have been developed in the form of specific rights and obligations in ILO Conventions recognized as fundamental.

VI. Environment

1. In particular, enterprises should… Establish and maintain a system of environmental management appropriate to the enterprise, including:

a) Collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of their activities;

b) establishment of measurable objectives and, where appropriate, targets for improved environmental performance and resource utilization, including periodically reviewing the continuing relevance of these objectives; where appropriate, targets should be consistent with relevant national policies and international environmental commitments; and

c) Regular monitoring and verification of progress toward environmental, health, and safety objectives or targets.

VII. Combating bribery, bribe solicitation and extortion

Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage. Enterprises should also resist the solicitation of bribes and extortion. In particular, enterprises should: (…)

2. Develop and adopt adequate internal controls, ethics and compliance programmes or measures for preventing and detecting bribery, developed on the basis of a risk assessment addressing the individual circumstances of an enterprise, in particular the bribery risks facing the enterprise (such as its geographical and industrial sector of operation). These internal controls, ethics and compliance programmes or measures should include a system of financial and accounting procedures, including a system of internal controls, reasonably designed to ensure the maintenance of fair and accurate books, records, and accounts, to ensure that they cannot be used for the purpose of bribing or hiding bribery. (…)

VIII. Consumer interests

When dealing with consumers, enterprises should act in accordance with fair business, marketing and advertising practices and should take all reasonable steps to ensure the quality and reliability of the goods and services that they provide. In particular, they should: (…)

2. Provide accurate, verifiable and clear information that is sufficient to enable consumers to make informed decisions, including information on the prices and, where appropriate, content, safe use, environmental attributes, maintenance, storage and disposal of goods and services. Where feasible this information should be provided in a manner that facilitates consumers’ ability to compare products.

3. Provide consumers with access to fair, easy to use, timely and effective non-judicial dispute resolution and redress mechanisms, without unnecessary cost or burden.

4. Not make representations or omissions, nor engage in any other practices, that are deceptive, misleading, fraudulent or unfair.

XI. Taxation

1. It is important that enterprises contribute to the public finances of host countries by making timely payment of their tax liabilities. In particular, enterprises should comply with both the letter and spirit of the tax laws and regulations of the countries in which they operate. Complying with the spirit of the law means discerning and following the intention of the legislature. It does not require an enterprise to make payment in excess of the amount legally required pursuant to such an interpretation. Tax compliance includes such measures as providing to the relevant authorities timely information that is relevant or required by law for purposes of the correct determination of taxes to be assessed in connection with their operations and conforming transfer pricing practices to the arm’s length principle.

ISO 26000 – Guidance on Social Responsibility [5]

6.3.1.2 Human rights and social responsibility

An organization’s opportunity to support human rights will often be greatest among its own operations and employees. Additionally, an organization will have opportunities to work with its suppliers, peers or other organizations and the broader society. In some cases, Organizations may wish to increase their influence through collaboration with other organizations and individuals. Assessment of the opportunities for action and for greater influence will depend on the particular circumstances, some specific to the organization and some specific to the context in which is operating. However, organizations should always consider the potential for negative or unintended consequences when seeking to influence other organizations.

6.4.5 Labour practices issue 3: Social dialogue

Effective social dialogue provides a mechanism for developing policy and finding solutions that take into account the priorities and needs of both employers and workers, and thus results in outcomes that are meaningful and long lasting for both the organization and society. Social dialogue can contribute to establishing participation and democratic principles in the workplace, to better understanding between the organization and those who perform its work and to healthy labour-management relations, thus minimizing resort to costly industrial disputes. Social dialogue is a powerful means for managing change. It can be used to design skills development programmes contributing to human development and enhancing productivity, or to minimize the adverse social impacts of change in the operations of organizations. Social dialogue could also include transparency on social conditions of subcontractors.

6.5.1.2 The environment and social responsibility

Environmental responsibility is a precondition for the survival and prosperity of human beings. It is therefore an important aspect of social responsibility. Environmental matters are closely linked to other social responsibility core subjects and issues. Environmental education and capacity building is fundamental in promoting the development of sustainable societies and lifestyles.

6.7.1.2. Consumer issues and social responsibility

Consumer issues regarding social responsibility are related to, among other matters, fair marketing practices, protection of health and safety, sustainable consumption, dispute resolution and redress, data and privacy protection, access to essential products and services, addressing the needs of vulnerable and disadvantaged consumers, and education. The UN Guidelines for Consumer Protection provide fundamental information on consumer issues and sustainable consumption. (…)

Consumer issue 3: Sustainable consumption

Current rates of consumption are clearly unsustainable, contributing to environmental damage and resource depletion. Consumers play an important role in sustainable development by taking ethical, social, economic and environmental factors into account based on accurate information in making their choices and purchasing decisions.

7.4.3. Building social responsibility into an organization’s governance, systems and procedures

It is also important to recognize that the process of integrating social responsibility throughout an organization does not occur all at once or the same pace for all core subjects and issues. It may be helpful to develop a plan for addressing some social responsibility issues in the short term and some over a longer period of time. Such a plan should be realistic and should take into account the capabilities of the organization, the resources available and the priority of the issues and related actions.

ILO, Tripartite Declaration of Principles Concerning Multinational Enterprises [6]

1. (…) Through international direct investment, trade and other means, such enterprises can bring substantial benefits to home and host countries by contributing to the more efficient utilization of capital, technology and labour. Within the framework of sustainable development policies established by governments, they can also make an important contribution to the promotion of economic and social welfare; to the improvement of living standards and the satisfaction of basic needs; to the creation of employment opportunities, both directly and indirectly; and to the enjoyment of human rights, including freedom of association, throughout the world. On the other hand, the advances made by multinational enterprises in organizing their operations beyond the national framework may lead to abuse of concentrations of economic power and to conflicts with national policy objectives and with the interest of the workers. In addition, the complexity of multinational enterprises and the difficulty of clearly perceiving their diverse structures, operations and policies sometimes give rise to concern either in the home or in the host countries, or in both.

Security of employment

32. Governments should carefully study the impact of multinational enterprises on employment in different industrial sectors. Governments, as well as multinational enterprises themselves, in all countries should take suitable measures to deal with the employment and labour market impacts of the operations of multinational enterprises.

33. Multinational enterprises as well as national enterprises, through active employment planning, should endeavour to provide stable employment for workers employed by each enterprise and should observe freely negotiated obligations concerning employment stability and social security. In view of the flexibility which multinational enterprises may have, they should strive to assume a leading role in promoting security of employment, particularly in countries where the discontinuation of operations is likely to accentuate long-term unemployment.

34. In considering changes in operations (including those resulting from mergers, takeovers or transfers of production) which would have major employment effects, multinational enterprises should provide reasonable notice of such changes to the appropriate government authorities and representatives of the workers in their employment and their organizations so that the implications may be examined jointly in order to mitigate adverse effects to the greatest possible extent. This is particularly important in the case of the closure of an entity involving collective lay-offs or dismissals.

35. Arbitrary dismissal procedures should be avoided.

36. Governments, in cooperation with multinational as well as national enterprises, should provide some form of income protection for workers whose employment has been terminated.

ILO, Declaration on Fundamental Principles and Rights at Work [7]

The International Labour Conference

2. Declares that all Members, even if they have not ratified the Conventions in question, have an obligation arising from the very fact of membership in the Organization to respect, to promote and to realize, in good faith and in accordance with the Constitution, the principles concerning the fundamental rights which are the subject of those Conventions, namely:

(a) Freedom of association and the effective recognition of the right to collective bargaining;

(b) The elimination of all forms of forced or compulsory labour;

(c) The effective abolition of child labour; and

(d) The elimination of discrimination in respect of employment and occupation.

5. Stresses that labour standards should not be used for protectionist trade purposes, and that nothing in this Declaration and its follow-up shall be invoked or otherwise used for such purposes; in addition, the comparative advantage of any country should in no way be called into question by this Declaration and its follow up.

International Finance Corporation (World Bank Group)

Policy on environmental and social sustainability[8]

12. IFC recognizes the responsibility of business to respect human rights, independently of the state duties to respect, protect, and fulfill human rights. This responsibility means to avoid infringing on the human rights of others and to address adverse human rights impacts business may cause or contribute to. Meeting this responsibility also means creating access to an effective grievance mechanism that can facilitate early indication of, and prompt remediation of various project-related grievances. IFC’s Performance Standards support this responsibility of the private sector. Each of the Performance Standards has elements related to human rights dimensions that businesses may face in the course of their operations. Consistent with this responsibility, IFC undertakes due diligence of the level and quality of the risks and impacts identification process carried out by its clients against the requirements of the Performance Standards, informed by country, sector, and sponsor knowledge.

13. IFC believes that women have a crucial role in achieving sound economic growth and poverty reduction. They are an essential part of private sector development. IFC expects its clients to minimize gender-related risks from business activities and unintended gender differentiated impacts. Recognizing that women are often prevented from realizing their economic potential because of gender inequity, IFC is committed to creating opportunities for women through its investment and advisory activities.

Performance standards [9]

3. Business should respect human rights, which means to avoid infringing on the human rights of others and address adverse human rights impacts business may cause or contribute to. Each of the Performance Standards has elements related to human rights dimensions that a project may face in the course of its operations. Due diligence against these Performance Standards will enable the client to address many relevant human rights issues in its project. (…)

In limited high risk circumstances, it may be appropriate for the client to complement its environmental and social risks and impacts identification process with specific human rights due diligence as relevant to the particular business.

UN, Global Compact [10]

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

Principle 2: Make sure that they are not complicit in human rights abuses.

Labour

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Global Compact, Complicity[11]

Accusations of complicity can arise in a number of contexts:

Direct complicity — when a company provides goods or services that it knows will be used to carry out the abuse
Beneficial complicity — when a company benefits from human rights abuses even if it did not positively assist or cause them
Silent complicity — when the company is silent or inactive in the face of systematic or continuous human rights abuse. (This is the most controversial type of complicity and is least likely to result in legal liability)

Complicity is generally made up of 2 elements:

An act or omission (failure to act) by a company, or individual representing a company, that “helps” (facilitates, legitimizes, assists, encourages, etc.) another, in some way, to carry out a human rights abuse, and
The knowledge by the company that its act or omission could provide such help

EU, White Paper on CSR [12]

Corporate social responsibility concerns actions by companies over and above their legal obligations towards society and the environment. Certain regulatory measures create an environment more conducive to enterprises voluntarily meeting their social responsibility. (…)

By addressing their social responsibility enterprises can build long-term employee, consumer and citizen trust as a basis for sustainable business models. Higher levels of trust in turn help to create an environment in which enterprises can innovate and grow. (…)

The Commission puts forward a new definition of CSR as “the responsibility of enterprises for their impacts on society”. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:

maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;
Identifying, preventing and mitigating their possible adverse impacts.

The complexity of that process will depend on factors such as the size of the enterprise and the nature of its operations. For most small and medium-sized enterprises, especially micro-enterprises, the CSR process is likely to remain informal and intuitive.

To identify, prevent and mitigate their possible adverse impacts, large enterprises, and enterprises at particular risk of having such impacts, are encouraged to carry out risk-based due diligence, including through their supply chains. (…)

The role of public authorities and other stakeholders

The development of CSR should be led by enterprises themselves. Public authorities should play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation, for example to promote transparency, create market incentives for responsible business conduct, and ensure corporate accountability.

Enterprises must be given the flexibility to innovate and to develop an approach to CSR that is appropriate to their circumstances. Many enterprises nevertheless value the existence of principles and guidelines that are supported by public authorities, to benchmark their own policies and performance, and to promote a more level playing field.

Trade unions and civil society organisations identify problems, bring pressure for improvement and can work constructively with enterprises to co-build solutions. Consumers and investors are in a position to enhance market reward for socially responsible companies through the consumption and investment decisions they take. The media can raise awareness of both the positive and negative impacts of enterprises. Public authorities and these other stakeholders should demonstrate social responsibility, including in their relations with enterprises.

Emphasising CSR in relations with other countries and regions in the world

Internationally recognised CSR guidelines and principles represent values which should be embraced by the countries wishing to join the European Union, and the Commission will therefore continue to address this in the accession process.

The Commission promotes CSR through its external policies. It will continue, through a mix of global advocacy and complementary legislation, to aim at disseminating internationally recognised CSR guidelines and principles more widely and enabling EU businesses to ensure that they have a positive impact in foreign economies and societies. The Commission will make relevant proposals in the field of trade-and-development. Furthermore where appropriate, it will propose to address CSR in established dialogues with partner countries and regions.

EU development policy recognises the need to support CSR. By promoting respect for social and environmental standards, EU enterprises can foster better governance and inclusive growth in developing countries. Business models that target the poor as consumers, producers, and distributors help to maximise development impact. The search for synergies with the private sector will become an increasingly important consideration in EU development cooperation and in EU responses to natural and man-made disasters. (…)

UN, Sustainable Development Goals [13]

67. Private business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creation. We acknowledge the diversity of the private sector, ranging from micro-enterprises to cooperatives to multinationals. We call upon all businesses to apply their creativity and innovation to solving sustainable development challenges. We will foster a dynamic and well-functioning business sector, while protecting labour rights and environmental and health standards in accordance with relevant international standards and agreements and other ongoing initiatives in this regard, such as the Guiding Principles on Business and Human Rights and the labour standards of the International Labour Organization, the Convention on the Rights of the Child and key multilateral environmental agreements, for parties to those agreements.

68. International trade is an engine for inclusive economic growth and poverty reduction, and contributes to the promotion of sustainable development. We will continue to promote a universal, rules-based, open, transparent, predictable, inclusive, non-discriminatory and equitable multilateral trading system under the World Trade Organization, as well as meaningful trade liberalization. We call upon all members of the World Trade Organization to redouble their efforts to promptly conclude the negotiations on the Doha Development Agenda. We attach great importance to providing trade-related capacity-building for developing countries, including African countries, least developed countries, landlocked developing countries, small island developing States and middle-income countries, including for the promotion of regional economic integration and interconnectivity.

OECD, Principles of Corporate Governance [14]

The responsibilities of the board

A. Board members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and the shareholders. (…)

C. The board should apply high ethical standards. It should take into account the interests of stakeholders. The board has a key role in setting the ethical tone of a company, not only by its own actions, but also in appointing and overseeing key executives and consequently the management in general. High ethical standards are in the long term interests of the company as a means to make it credible and trustworthy, not only in day-to-day operations but also with respect to longer term commitments. To make the objectives of the board clear and operational, many companies have found it useful to develop company codes of conduct based on, inter alia, professional standards and sometimes broader codes of behaviour, and to communicate them throughout the organisation. The latter might include a voluntary commitment by the company (including its subsidiaries) to comply with the OECD Guidelines for Multinational Enterprises which reflect all four principles contained in the ILO Declaration on Fundamental Principles and Rights at Work.

ILO, Declaration on Social Justice for a Fair Globalization [15]

The Conference recognizes and declares that:

A. In the context of accelerating change, the commitments and efforts of Members and the Organization to implement the ILO’s constitutional mandate, including through international labour standards, and to place full and productive employment and decent work at the centre of economic and social policies, should be based on the four equally important strategic objectives of the ILO, through which the Decent Work Agenda is expressed and which can be summarized as follows:

(i) promoting employment by creating a sustainable institutional and economic environment in which:

– individuals can develop and update the necessary capacities and skills they need to enable them to be productively occupied for their personal fulfillment and the common well-being;

– all enterprises, public or private, are sustainable to enable growth and the generation of greater employment and income opportunities and prospects for all; and

– societies can achieve their goals of economic development, good living standards and social progress;

(ii) developing and enhancing measures of social protection – social security and labour protection – which are sustainable and adapted to national circumstances, including:

– the extension of social security to all, including measures to provide basic income to all in need of such protection, and adapting its scope and coverage to meet the new needs and uncertainties generated by the rapidity of technological, societal, demographic and economic changes;

– healthy and safe working conditions; and

– policies in regard to wages and earnings, hours and other conditions of work, designed to ensure a just share of the fruits of progress to all and a minimum living wage to all employed and in need of such protection;

(iii) promoting social dialogue and tripartism as the most appropriate methods for:

– adapting the implementation of the strategic objectives to the needs and circumstances of each country;

– translating economic development into social progress, and social progress into economic development;

– facilitating consensus building on relevant national and international policies that impact on employment and decent work strategies and programmes; and

– making labour law and institutions effective, including in respect of the recognition of the employment relationship, the promotion of good industrial relations and the building of effective labour inspection systems; and

(iv) respecting, promoting and realizing the fundamental principles and rights at work, which are of particular significance, as both rights and enabling conditions that are necessary for the full realization of all of the strategic objectives, noting:

– that freedom of association and the effective recognition of the right to collective bargaining are particularly important to enable the attainment of the four strategic objectives; and

– that the violation of fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate comparative advantage and that labour standards should not be used for protectionist trade purposes.

B. The four strategic objectives are inseparable, interrelated and mutually supportive. The failure to promote any one of them would harm progress towards the others. To optimize their impact, efforts to promote them should be part of an ILO global and integrated strategy for decent work. Gender equality and non-discrimination must be considered to be cross-cutting issues in the abovementioned strategic objectives.

World Commission on the Social Dimension of Globalization, A Fair Globalization [16]

A stronger ethical framework

37. The governance of globalization must be based on universally shared values and respect for human rights. Globalization has developed in an ethical vacuum, where market success and failure have tended to become the ultimate standard of behaviour, and where the attitude of “the winner takes all” weakens the fabric of communities and societies.

38. There is today a deep-seated desire by people to reaffirm basic ethical values in public life, as seen, for example, in calls for a more “ethical globalization”. Values are also the driving force behind the many public campaigns for universal causes, ranging from the abolition of child labour to the banning of landmines.

39. Cohesive societies are built around shared values, which create a moral and ethical framework for private and public action. Globalization has not yet created a global society, but the increased interaction between people and countries throws into sharp relief the urgent need for a common ethical frame of reference.

40. To a large extent, such a framework can already be found in the declarations and treaties of the multilateral system of the United Nations. They are enshrined, for example, in the Charter of the United Nations, the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and, more recently, in the United Nations Millennium Declaration. These universal values and principles represent the common ground of the world’s spiritual and secular beliefs. They must provide the foundation for the process of globalization. They should be reflected in the rules of the global economy, and international organizations should apply their mandates in accordance with them.

Mares, Business and Human Rights after Ruggie [17]

The SRSG work, with the ‘Protect, Respect and Remedy’ Framework (2008) and Guiding Principles (2011) as its peak, is multilayered and comprehensive. Instead of a dry, tedious description this introductory chapter will give the floor often to the SRSG: readers will find numerous quotations and references that will allow him or her to follow Ruggie’s reasoning. Ruggie should be commended for the way he explained many of his choices through accessibly-written reports, working papers, academic journal articles, speeches, interviews and private exchanges with countless individuals. (…)

Although Ruggie has refused to call for an encompassing treaty on business and human rights and he concluded that businesses currently do not have legal obligations under international human rights law (IHRL), it would be a grave mistake to overlook his work as of marginal relevance to legal academics and professionals, to presume that his thinking was not informed by law. Instead there is a wealth of materials, analyses and entry points for lawyers interested in international law, human rights law, criminal law, company law, securities law, investment law, transparency laws and law of contracts. Also the broader issue of what role the law could and should play in international governance and in complex regulatory regimes is at the core of Ruggie’s work.

Background (Cambodia)

Chhabara, Increasing Cambodia’s Competitiveness through CSR [18]

Benefits of promoting CSR

The main advantages of corporate social responsibility can be summarised as:

Increased market access: Fairtrade, sustainable tourism, eco-tourism, organic products, toys, sports goods, sustainable timber etc.
Foreign investment: Socially Responsible Investing, investment in ethical production, sustainable tourism, social enterprises, microfinancing institutions, high quality foreign investment.
Integration with international markets: Corporate governance, intellectual property rights, ethical business practices, financial institutions and stock markets.
Robust development of private sector: New business opportunities, more enabling environment, increased access to markets and investment, human resources, competitive advantage.
Socio-economic development: Private sector’s enhanced role in alleviating rural poverty, human resources development, inclusive business or pro-poor business development, social enterprises.
Rural development: Organic farming, fair trade, sustainable tourism, microfinance institutions, access to alternative energy (solar power, bio-gas).
Climate change mitigation: Environmental initiatives, emission reduction programs, renewable energy, forest conservation, organic farming.
Enhanced reputation and brand image: For both the country and the enterprises. Improved ranking on international indices such as World Bank’s Doing Business Index, World Economic Forum’s Global Competitiveness Index, Transparency International’s Corruption Perception Index.
Risk management: CSR is an excellent tool for managing risks which can potentially arise from negative media coverage of poor working conditions, and industrial action, workplace accidents, legal-action for non-compliance, environmental disasters, product safety and quality and community disputes.

Instruments (Cambodia)

ASEAN, Economic Community Blueprint [19]

B.2. Consumer protection

28. Consumer protection is an integral part of a modern, efficient, effective and fair market place. Consumers will demand the right of access to: adequate information to enable them to make informed choices, effective redress, and products and services that meet standard and safety requirements. Increased cross-border trade, use of e-Commerce and other new trading methods resulting from globalisation and technological advancement require governments to find innovative ways of protecting and promoting the interests of consumers. This will require comprehensive and well functioning national and regional consumer protection systems enforced through effective legislation, redress mechanisms and public awareness. (…)

B.6. Good governance

36. ASEAN recognises the need to continue engaging the various stakeholders to build a more dynamic AEC 2025. Strategic measures include the following:

i. Promote a more responsive ASEAN by strengthening governance through greater transparency in the public sector and in engaging with the private sector; and

ii. Enhance engagement with the private sector as well as other stakeholders to improve the transparency and synergies of government policies and business actions across industries and sectors in the ASEAN region. (…)

C.8. Minerals

63. Strategic measures include the following:

i. Facilitate and enhance trade and investment in minerals;

ii. Promote environmentally and socially sustainable mineral development;

iii. Strengthen institutional and human capacities in the ASEAN minerals sector; (…)

D.5. Contribution of stakeholders on regional integration efforts

77. Enhanced engagement could be undertaken to provide for better transparency of ASEAN activities and progress in ASEAN integration. The stakeholders, including civil society organisations, can contribute to the integration efforts by communicating the initiatives undertaken by the governments on economic integration initiatives to the general public. These stakeholders could also contribute by providing feedback on the impact of the integration efforts on ASEAN peoples.

78. Strategic measures include the following:

i. Continue to enhance engagement with stakeholders on economic issues to promote a better understanding of ASEAN economic integration initiatives;

ii. Work closely with stakeholders towards promoting corporate social responsibility (CSR) activities; and

iii. Enhance consultations with stakeholders on new initiatives.

ASEAN, Socio-Cultural Community Blueprint [20]

II. Characteristics and elements of the ASEAN socio-cultural community blueprint 2025

Engages and benefits the people

6. The ASEAN Community shall be characterised as one that engages and benefits its peoples, upheld by the principles of good governance.

7. It focuses on multi-sectoral and multi-stakeholder engagements, including Dialogue and Development Partners, sub-regional organisations, academia, local governments in provinces, townships, municipalities and cities, private-public partnerships, community engagement, tripartite engagement with the labour sector, social enterprises, government organisation, non-governmental organisation, civil society organisation (GO-NGO/CSO) engagement, corporate social responsibility (CSR), inter-faith and inter-cultural dialogue, with emphasis on raising and sustaining awareness and caring societies of ASEAN, as well as deepening the sense of ASEAN identity.

C.4. Sustainable consumption and production strategic measures

i. Strengthen public-private partnerships to promote the adoption of environmentally-sound technologies for maximising resource efficiency;

ii. Promote environmental education (including eco-school practice), awareness, and capacity to adopt sustainable consumption and green lifestyle at all levels;

iii. Enhance capacity of relevant stakeholders to implement sound waste management and energy efficiency; and

iv. Promote the integration of Sustainable Consumption and Production strategy and best practices into national and regional policies or as part of CSR activities. (…)

III. Implementation and review

A.2. Implementation strategies

27. The implementation of the ASCC Blueprint 2025 shall employ strategies and approaches that will maximise the role of ASEAN Organs and Bodies, encourage stakeholder engagement and enhance capacity building mechanisms in disseminating relevant knowledge to the peoples of ASEAN. It shall promote the provision of platforms for relevant stakeholders and groups to fully participate in programmes, meetings and other initiatives of ASEAN Organs and Bodies,

as well as the opportunities for partnerships and collaborations. It shall also promote public private partnerships (PPP), social entrepreneurship and CSR for inclusive and sustainable socio-cultural development. It will likewise develop capacity building mechanisms for relevant stakeholders in the ASCC who are able to cascade the relevant knowledge to the peoples of ASEAN. Furthermore, the ASCC will intensify strategies, work programmes and initiatives of sectoral bodies under the ASCC Pillar to narrow the development gap.

ASEAN, Political-Security Community Blueprint [21]

A.2. Strengthen democracy, good governance, the rule of law, promotion and protection of human rights and fundamental freedoms as well as combat corruption

A.2.2. Instil the culture of good governance and mainstream the principles thereof into the policies and practices of the ASEAN Community

v. Support the ASEAN Foundation to strengthen its collaboration with the private sector and other relevant stakeholders to instil corporate social responsibility; and

vi. Promote the sharing of experiences and best practices through workshops and seminars on leadership concepts and principles of good governance, aimed at setting baselines, benchmarks and norms.

ASEAN, Guidelines for Corporate Social Responsibility (CSR) on Labour [22]

Introduction

3. The promotion of CSR is called for in the ASEAN Political-Security Community (APSC) Blueprint 2025, ASEAN Economic Community (AEC) Blueprint 2025, and ASEAN Socio-Cultural Community (ASCC) Blueprint 2025, notably:

Support the ASEAN Foundation to strengthen its collaboration with the private sector and other relevant stakeholders to instill CSR (…);
Work closely with stakeholders towards promoting CSR activities (…);

5. The promotion of CSR will contribute to the achievement of the Sustainable Development Goals (SDGs) particularly Goal 8 to “Promote sustained inclusive and sustainable economic growth, full and productive employment and decent work for all”.

II. Purposes of the ASEAN CSR Model on Labour

6. This ASEAN Guidelines for CSR on Labour aims to serve as guidelines for the governments, enterprises/ establishments, employers’ organisations and workers’ organisations in ASEAN Member States, in line with national circumstances, to:

6.1. Raise awareness of CSR among enterprises/ establishments in ASEAN Member States for the benefit of the peoples;

6.2. Continuously and proactively encourage enterprises/establishments to incorporate CSR initiatives, human rights and decent work in their business practices;

6.3. Promote compliance of core labour standards set forth in the national labour laws, ILO Conventions and other relevant international instruments; and

6.4. Promote social dialogue among governments, employers’ organisations and workers’ organisations at all levels, and strengthen industrial relations. (…)

V. Definitions

9. This ASEAN Guidelines for CSR on Labour adopts the definition of CSR according to the ILO Governing Body (2006), which is a way in which enterprises give consideration to the impact of their operations on society and affirm their principles and values both in their own internal methods and processes and in their interaction with other actors. CSR is a voluntary, enterprise-driven initiative and refers to activities that are considered to exceed compliance with the law.

VI. Application

10. This ASEAN Guidelines for CSR on Labour is applied to enterprises/establishments, private or public, whose decisions and activities may have economic, social and environmental impacts, respecting national circumstances.

VIII. Guidance in implementing CSR

18. Implementing CSR for labour supports the fulfillment of international labour standards and human rights.

19. At national level, tripartism provides the framework to address this matter through social dialogue.

20. At enterprise/establishment level, commitments must be made and priority or action plan should be arrived at through social dialogue and stakeholder engagement.

21. Enterprises/establishments should plan their CSR initiative, report regularly on progress, and continue the process of improvement through social dialogue and stakeholder engagement.

22. Enterprises/establishments are encouraged to be part of CSR networks to further promote and embed CSR. They should promote continuity of CSR initiative. (…)

Government of Cambodia, Rectangular Strategy Phase III [23]

97. To address these challenges the Royal Government of the Fifth Legislature has set out two objectives: (1) to continue promoting the role of the private sector to be more active and dynamic as an engine for economic growth; and (2) to transform Cambodia to be an attractive and competitive destination for investment in the region, especially within the framework of ASEAN Economic Community.

98. To meet these objectives the Royal Government will focus on the following priorities: (…)

7. Further strengthening corporate governance to promote the health and growth of private sector and corporate social responsibility.

8. Strengthening the effectiveness of “Government-Private Sector Forum” to address the challenges faced by the private sector, while upgrading it to a platform for dialogue for recommending policy options and advice that will further promote the role of private sector as a stakeholder in development.

Government of Cambodia, Rectangular Strategy Phase IV[24]

4) Strengthening of private sector governance

In the sixth Legislature of the National Assembly, the Royal Government will focus on:

1. Carrying out studies and development of policy framework to enhance corporate governance to ensure proper management and good practice in the private sector.

2. Carrying out studies and preparation of the policy framework to augment Corporate Social and Environmental Responsibility to step up private sector’s participation in addressing social issues and enhancing environmental protection, value of the social morality and national culture, together with enhanced protection of consumer rights and safety by pushing for the development and enactment of Consumer Protection Law.

3. Continued implementation of the public-private dialogue mechanism at both policy and technical levels, national and sub-national levels, to promote policy dialogues and jointly address challenges by enhancing the role of Chamber of Commerce.

4. Pushing for and encouraging private sector’s reinvestment to enhance human capital development and innovation.

Government of Cambodia, National Strategic Development Plan[25]

Stock market and others

Continue to develop the stock market through promotion of national listing and issuance of public stock.
Develop a new law on corporate affairs, governance and responsibility. (…)

1.4 Strengthening of private sector governance

4.27 In the sixth Legislature of the National Assembly, the RGC will focus on (…) (2) Undertaking studies aimed at supporting the preparation of a policy framework to promote the Corporate Social and Environmental Responsibility of the private sector in terms of addressing social and environmental protection issues, inculcating social morality in national culture, enhancing consumer rights protection and consumer safety with the enactment of a Law on Consumer Protection, (…)

Questions

What are the functions of soft law?
Is soft law capable to influence business conduct? If so, in what ways?
What would the benefits be for the company that has aligned their CSR policy with soft law?
Do stakeholder in Cambodia take notice and use international soft law instruments?
What is the relation between soft law and hard law? Are they complementary? Are they a substitute for each other?

Main Aspects

Free trade agreements (FTAs)
Bilateral investment treaties (BITs)
Policy space (of states under economic law)
Stabilization clauses (in state-investor contracts)
(The state’s) right to regulate
Arbitration (investor-State disputes)
Human rights impact assessments (of economic agreements)
Investment contracts (investor-state contracts)
Labour chapters (in FTAs)
Trade and sustainable development chapters (FTAs)
Core labour standards (ILO)
Extraterritorial obligations of states
Obligation to enforce laws
Protectionism
Civil society mechanisms
Cooperation and institution building

Background

ILO, Social Dimensions of Free Trade Agreements [2]

An important part of the debate about making globalization more socially sustainable deals with the question of how to ensure that trade liberalization upholds or improves labour standards, rather than puts them at risk. In recent years, labour standards and other labour issues have increasingly been integrated into bilateral and regional trade agreements. Trade unions and civil society actors invest substantial resources in advocating for the inclusion of labour provisions in trade agreements and the issue is on the agenda of an increasing number of trade negotiators. There are widely divergent views on their effectiveness, however. While some consider them a panacea for improving labour standards and working conditions, others criticize them as mere window dressing or even disguised protectionism.(…)

There are a number of rationales for including labour provisions in trade agreements. From a social perspective the rationale is the safeguarding of social protection, while from an economic perspective labour provisions are tools against unfair competition, the main idea being that violations of labour standards can distort competitiveness (“social dumping”) and should be addressed in a manner similar to that employed against other unfair trading practices.4 In addition, there is the concern that trade liberalization without the necessary safeguards may lead to a race to the bottom as regards labour standards. There is also a human rights rationale, whereby labour provisions can be used as a means of ensuring respect for labour-related human rights that reflect values universally accepted by the international community. Through cooperative activities and dialogue such provisions can also be used as a catalyst for improvement of labour standards by increasing the labour-related implementation capacity of the countries concerned. (…)

Trade agreements with labour provisions have increased significantly in the last two decades, both in absolute and relative terms. Fifty-eight trade agreements included labour provisions in June 2013, up from 21 in 2005 and 4 in 1995. Although labour provisions tend to be concentrated in North-South trade agreements, there is a modest but increasing trend to integrate labour provisions into trade agreements among developing and emerging countries (South-South trade agreements).

About 40 per cent of trade agreements that include labour provisions have a conditional dimension. This implies that compliance with labour standards entails economic consequences – in terms of an economic sanction or benefit. Conditional labour provisions are typical of many of the trade agreements concluded by the United States and Canada.

The remaining 60 per cent of trade agreements that include labour provisions are exclusively promotional in nature. These provisions do not link compliance to economic consequences but provide a framework for dialogue, cooperation, and/or monitoring and are found mainly in EU, New Zealand and South-South trade agreements that consider labour issues. (…)

OHCHR, Impact of Free Trade and Investment Agreements on Human Rights [3]

A number of free trade and investment agreements, such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), are currently being negotiated. A group of UN experts have issued the following statement to express concern about the secret nature of drawing up and negotiating many of these agreements and the potential adverse impact of these agreements on human rights.

While trade and investment agreements can create new economic opportunities, we draw attention to the potential detrimental impact these treaties and agreements may have on the enjoyment of human rights as enshrined in legally binding instruments, whether civil, cultural, economic, political or social. Our concerns relate to the rights to life, food, water and sanitation, health, housing, education, science and culture, improved labour standards, an independent judiciary, a clean environment and the right not to be subjected to forced resettlement. (…)

Observers are concerned that these treaties and agreements are likely to have a number of retrogressive effects on the protection and promotion of human rights, including by lowering the threshold of health protection, food safety, and labour standards, by catering to the business interests of pharmaceutical monopolies and extending intellectual property protection.

There is a legitimate concern that both bilateral and multilateral investment treaties might aggravate the problem of extreme poverty, jeopardize fair and efficient foreign debt renegotiation, and affect the rights of indigenous peoples, minorities, persons with disabilities, older persons, and other persons leaving in vulnerable situations. Undoubtedly, globalization and the many Bilateral Investment Treaties (BITs) and Free Trade Agreements (FTAs) can have positive but also negative impacts on the promotion of a democratic and equitable international order, which entails practical international solidarity.

Investor-state-dispute settlement (ISDS) chapters in BITs and FTAs are also increasingly problematic given the experience of decades related arbitrations conducted before ISDS tribunals. The experience demonstrates that the regulatory function of many States and their ability to legislate in the public interest have been put at risk.

We believe the problem has been aggravated by the “chilling effect” that intrusive ISDS awards have had, when States have been penalized for adopting regulations, for example to protect the environment, food security, access to generic and essential medicines, and reduction of smoking, as required under the WHO Framework Convention on Tobacco Control, or raising the minimum wage.

ISDS chapters are anomalous in that they provide protection for investors but not for States or for the population. They allow investors to sue States but not vice-versa. (…)

Instruments

UN, Guiding Principles on Business and Human Rights [4]

9. States should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts.

Commentary

Economic agreements concluded by States, either with other States or with business enterprises – such as bilateral investment treaties, free-trade agreements or contracts for investment projects – create economic opportunities for States. But they can also affect the domestic policy space of governments. For example, the terms of international investment agreements may constrain States from fully implementing new human rights legislation, or put them at risk of binding international arbitration if they do so. Therefore, States should ensure that they retain adequate policy and regulatory ability to protect human rights under the terms of such agreements, while providing the necessary investor protection.

Committee on Economic, Social and Cultural Rights, General Comment No. 24 [5]

[State] Obligation to respect [human rights]

13. States parties should identify any potential conflict between their obligations under the Covenant and under trade or investment treaties, and refrain from entering into such treaties where such conflicts are found to exist, as required under the principle of the binding character of treaties. The conclusion of such treaties should therefore be preceded by human rights impact assessments that take into account both the positive and negative human rights impacts of trade and investment treaties, including the contribution of such treaties to the realization of the right to development. Such impacts on human rights of the implementation of the agreements should be regularly assessed, to allow for the adoption of any corrective measures that may be required. The interpretation of trade and investment treaties currently in force should take into account the human rights obligations of the State, consistent with Article 103 of the Charter of the United Nations and with the specific nature of human rights obligations. States parties cannot derogate from the obligations under the Covenant in trade and investment treaties that they may conclude. They are encouraged to insert, in future treaties, a provision explicitly referring to their human rights obligations, and to ensure that mechanisms for the settlement of investor-State disputes take human rights into account in the interpretation of investment treaties or of investment chapters in trade agreements.

Extraterritorial obligation to respect

29. The extraterritorial obligation to respect requires States parties to refrain from interfering directly or indirectly with the enjoyment of the Covenant rights by persons outside their territories. As part of that obligation, States parties must ensure that they do not obstruct another State from complying with its obligations under the Covenant. This duty is particularly relevant to the negotiation and conclusion of trade and investment agreements or of financial and tax treaties, as well as to judicial cooperation.

WTO, Singapore Ministerial Declaration [6]

Core Labour Standards

4. We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration.

Role of WTO

6. In pursuit of the goal of sustainable growth and development for the common good, we envisage a world where trade flows freely. To this end we renew our commitment to:

a fair, equitable and more open rule-based system;
progressive liberalization and elimination of tariff and non-tariff barriers to trade in goods;
progressive liberalization of trade in services;
rejection of all forms of protectionism;
elimination of discriminatory treatment in international trade relations;
integration of developing and least-developed countries and economies in transition into the multilateral system; and
the maximum possible level of transparency.

EU, Trade for All: Towards a Responsible Trade and Investment Policy [7]

4.1.2. Promoting a new approach to investment

(…) investment protection and arbitration have triggered a heated debate about fairness and the need to preserve the right of public authorities to regulate both in the EU and in partner countries, in particular in the context of the TTIP negotiations.

Over the past 50 years, states set up a dense global web of more than 3,200 bilateral investment treaties (BITs) — 1,400 of them involving EU Member States — with the goal of protecting and encouraging investment.

The current debate has cast light on the risk of the abuse of provisions common to many of those agreements, as well as lack of transparency and independence of the arbitrators. (…) The question is not whether the system should be changed but how this should be done. While the status quo is not an option, the basic objective of investment protection remains valid since bias against foreign investors and violations of property rights are still an issue.

The Commission will:

in a first step, include modern provisions in bilateral agreements, putting stronger emphasis on the right of the state to regulate, something which was not sufficiently highlighted in the past. EU bilateral agreements will begin the transformation of the old investor–state dispute settlement into a public Investment Court System composed of a Tribunal of first instance and an Appeal Tribunal operating like traditional courts. There will be a clear code of conduct to avoid conflicts of interest, independent judges with high technical and legal qualifications comparable to those required for the members of permanent international courts, such as the International Court of Justice and the WTO Appellate Body;
in parallel, engage with partners to build consensus for a fully-fledged, permanent International Investment Court;
in the longer term, support the incorporation of investment rules into the WTO. This would be an opportunity to simplify and update the current web of bilateral agreements to set up a clearer, more legitimate and more inclusive system

5.2.3. A redefined relationship with Africa

Africa’s ongoing transformation will have a significant impact on the world. The stakes are high both in terms of poverty eradication and new economic opportunities. Africa has been the fastest growing continent over the past decade. However, the key challenge is to make growth sustainable. This implies an effective agenda for economic transformation and industrialisation. Trade and investment will be instrumental in addressing those challenges. Africa still suffers from highly fragmented markets with high barriers between countries. There is a strong case for fostering regional integration and creating hubs that would benefit a whole region.

EU-Africa trade relations entered a new phase in 2014 with the conclusion of three regional Economic Partnership Agreements (EPAs) involving 27 western, southern and eastern African countries. It established a new dynamic partnership between the two continents, and paved the way to closer cooperation in the future. EPAs also support Africa’s own regional integration and prepare the ground for wider African integration efforts.

Fulfilling the promise of these agreements will be a major deliverable for the next few years. Many challenges lie ahead, including ensuring that they deliver their potential in terms of development. EPAs can help make the business environment more predictable and transparent but much will depend on genuine domestic reforms. This lies in the hands of African countries but the EU is ready to continue supporting them. The available development aid can reinforce capacity and optimise the conditions for African countries to reap the benefits of effective EPA implementation, in a way that is consistent with their own development strategies.

Looking ahead, EPAs are also a bridge to the future. Current EPAs mostly cover trade in goods only. There is a strong rationale for progressively extending EPAs to other areas like services and investment. Facilitating and protecting investment will be fundamental as the next step to support growth on the continent.

EU-Vietnam FTA [8]

Chapter 15: Trade and Sustainable Development

Article 2: Right to regulate and levels of protection

1. The Parties recognise the right of each Party to determine its sustainable development objectives, strategies, policies and priorities, to establish its own levels of domestic protection in the environmental and social areas as it deems appropriate and to adopt or modify accordingly its relevant laws and policies, consistently with the principles of internationally recognised standards or the agreements, to which it is a party, referred to in Articles 3 and 4.

2. Each Party shall strive to ensure that its laws and policies provide for and encourage high levels of domestic protection in the environmental and social areas and shall strive to continue to improve those laws and policies.

Article 3: Multilateral labour standards and agreements

2. Each Party reaffirms its commitments, in accordance with its obligations deriving from the membership of the ILO (…) to respect, promote and effectively implement the principles concerning the fundamental rights at work, namely:

a) the freedom of association and the effective recognition of the right to collective bargaining;

b) the elimination of all forms of forced or compulsory labour;

c) the effective abolition of child labour; and

d) the elimination of discrimination in respect of employment and occupation.

3. Each Party will make continued and sustained efforts towards ratifying, to the extent it has not yet done so, the fundamental ILO conventions, and the Parties will regularly exchange information in this regard. (…)

5. Each Party reaffirms its commitment to effectively implement in its laws and practices the ILO Conventions ratified by Vietnam and the Member States of the European Union respectively.

6. The Parties recognise that the violation of fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate comparative advantage and that labour standards should not be used for protectionist trade purposes.

Article 9: Trade and investment favouring sustainable development

The Parties confirm their commitment to enhance the contribution of trade and investment to the goal of sustainable development in its economic, social and environmental dimensions. (…)

(d) The Parties recognize that voluntary initiatives can contribute to the achievement and maintenance of high levels of environmental and labour protection and complement domestic regulatory measures. Therefore, each Party, in accordance with its laws or policies, shall encourage the development of and participation in such initiatives, including voluntary sustainable assurance schemes such as fair and ethical trade schemes and eco-labels.

(e) The Parties, in accordance with their domestic policies, agree to promote corporate social responsibility (CSR), provided that CSR-related measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the Parties or a disguised restriction on trade. Promotion of CSR includes among others exchange of information and best practices, education and training activities and technical advice. In this regard, each Party takes into account relevant internationally accepted and agreed instruments, that have been endorsed or are supported by the Party, such as the OECD Guidelines for Multinational Enterprises, the UN Global Compact, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.

Article 15: Institutional set-up and overseeing mechanism

2. The Parties shall establish a Specialised committee on Trade and Sustainable Development. (…)

3. The Specialised committee on trade and sustainable development on Trade and Sustainable Development shall (…) review the implementation of this chapter, including co-operative activities undertaken under Article 14. (…)

4. Each Party shall convene new or consult existing domestic advisory group(s) on sustainable development … [which] shall comprise independent representative organisations, ensuring a balanced representation of economic, social and environmental stakeholders, including among others employers’ and workers’ organizations, business groups, and environmental organizations. (…)

Article 16: Government Consultations

1. For any matter arising under this chapter where there is disagreement, the Parties shall only have recourse to the procedures established under Article 16 and Article 17. Except as otherwise provided in this Chapter, the Chapter XXX [Dispute Settlement] and its Annex III (Mediation) shall not apply to this Chapter (…)

3. The Parties shall make every attempt to arrive at a mutually satisfactory resolution of the matter. During consultations, special attention shall be given to the particular problems and interests of the developing country Party. Where relevant, the Parties shall give due consideration to the works of the ILO or relevant multilateral environmental organisations or bodies and may, by mutual agreement, seek advice from these organisations or bodies, or any other body or person they deem appropriate, in order to fully examine the matter.

Article 17: Panel of experts

1. If any matter has not been satisfactorily resolved by the Specialised committee on trade and sustainable development within 120 days, or a longer period agreed by both Parties, after the delivery of a request for consultations under Article 16.4, a Party may request, by delivering a written request to the contact point of the other Party, that a Panel of Experts be convened to examine that matter.

EU, Human Rights and Sustainable Development in the EU-Vietnam Relations [9]

The Agreement is the most ambitious and comprehensive FTA that the EU has ever concluded with a developing country, also with regard to sustainable development objectives and provisions. The FTA lives up to the commitments the Commission has taken in the new Communication on trade and investment strategy, according to which trade liberalisation, social justice, respect for human rights, and high labour and environmental levels of protection must go hand-in-hand. While trade policy has as a primary objective to deliver growth, jobs and innovation, it should also promote European and international values. (…)

Under Article 1 of the EU-Vietnam PCA [Partnership and Co-operation Agreement] both sides commit to respect democratic principles and human rights, as laid down in the UN General Assembly Universal Declaration of Human Rights and other relevant international human rights instruments.

The inclusion of this “human rights, democracy and rule of law clause” (in brief the “human rights clause”, which is an essential element of the agreement) in the EU-Vietnam PCA, as in other EU agreements with third countries, is intended to promote the values and political principles on which the European Union is founded (Art. 2 of the Treaty on the European Union) and constitutes the basis for the EU’s external policies, as stated in Article 21 of the Treaty on the European Union. (…)

The “human rights clause” ensures that human rights are a subject of common interest and part of the dialogue between the parties, and serves as a basis for the implementation of positive measures. The EU sees one of the principal values of this clause to have a legally binding expression of their shared commitment to the promotion and protection of human rights. It gives the EU a clear legal basis for raising human rights issues and it makes it impossible for both parties to claim that human rights are a purely internal matter. (…)

If a party fails to fulfil its obligations under the PCA the other party is empowered to take “appropriate measures” (Article 57 “Fulfilment of Obligations”). Unless there is a material breach of the agreement the case must first be examined by the Joint Committee.

In case of a material breach, defined in the Joint Declaration on Article 57 as a violation of an essential element of the Agreement, the other party can take measures with immediate effect. That can include the introduction of an expedited dialogue.

As the commitments to human rights constitute an essential element under the PCA, in the event of violations in this regard by one party, Article 57 enables the other party to take “appropriate measures” against the offending party, including as a last resort the suspension of the agreement or parts thereof. (…)

A human rights clause is included in all political framework agreements (e.g. Association Agreements and Partnership and Co-operation Agreements) concluded by the EU with third countries since 1995, covering over one-hundred and thirty countries. Such clause is defined as an essential element of the agreements. The human rights clause included in the most recent agreements is based on the Council Conclusions on the common approach on the use of political clauses endorsed by COREPER in May 2009. (…)

European Commission, Human Rights Impact Assessments for Trade Policy [10]

Human rights considerations in trade and investment policy

The EU’s trade policy is geared towards promoting free and fair openness to trade in the global market place. In combination with other instruments, it can contribute to the improvement of human rights in various countries.

As highlighted in the communication Trade, Growth and Development, openness to trade has been a key element of successful growth and development strategies; and sustainable development over a longer period supports the emergence of favourable conditions for human rights: e.g. rising levels of employment, better living standards, and increasing government resources that can be applied to human rights related goals.

Yet Trade, Growth and Development also underlines that while trade is a necessary condition for development, it is not sufficient. International trade can foster growth and poverty reduction, depending on the structure of the economy, appropriate sequencing of trade liberalisation measures and complementary policies such as domestic reforms and fair income distribution. International trade policy should be seen as one component in a jigsaw of policies and actions to address poverty and promote development: including, amongst others, co-operation at multilateral and bilateral levels, development aid and support, and political dialogues; paired with domestic policies in areas such as employment, social affairs, health, good governance, the rule of law and education, as well as corporate social responsibility (CSR) practices by the private sector, etc.

In consequence, when considering the impact of trade policies on human rights issues, the EU’s overall relations with the country/ies concerned should be taken into account. This may include, for example, the existence of a political framework agreement (eg, a Partnership and Cooperation Agreement), or of human rights dialogue mechanisms. These instruments provide the main platforms for the EU to discuss human rights issues with its trade partners.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)[11]

[ratified by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam]

Article 1 : Incorporation of the Trans-Pacific Partnership Agreement

1. The Parties hereby agree that, under the terms of this Agreement, the provisions of the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016 (“the TPP”) are incorporated, by reference, into and made part of this Agreement…

Trans-Pacific Partnership Agreement [12]

Chapter 19: Labour

Article 19.3: Labour Rights

1. Each Party shall adopt and maintain in its statutes and regulations, and practices thereunder, the following rights as stated in the ILO Declaration:

(a) freedom of association and the effective recognition of the right to collective bargaining;

(b) the elimination of all forms of forced or compulsory labour;

(c) the effective abolition of child labour and, for the purposes of this Agreement, a prohibition on the worst forms of child labour; and

(d) the elimination of discrimination in respect of employment and occupation.

2. Each Party shall adopt and maintain statutes and regulations, and practices thereunder, governing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

Article 19.10: Cooperation

1. The Parties recognise the importance of cooperation as a mechanism for effective implementation of this Chapter, to enhance opportunities to improve labour standards and to further advance common commitments regarding labour matters, including workers’ wellbeing and quality of life and the principles and rights stated in the ILO Declaration. (…)

Article 19.15: Labour Consultations

1. The Parties shall make every effort through cooperation and consultation based on the principle of mutual respect to resolve any matter arising under this Chapter.

2. A Party (requesting Party) may, at any time, request labour consultations with another Party (responding Party) regarding any matter arising under this Chapter by delivering a written request to the responding Party’s contact point. The requesting Party shall include information that is specific and sufficient to enable the responding Party to respond, including identification of the matter at issue and an indication of the legal basis of the request under this Chapter. The requesting Party shall circulate the request to the other Parties through their respective contact points. (…)

12. If the consulting Parties have failed to resolve the matter no later than 60 days after the date of receipt of a request under paragraph 2, the requesting Party may request the establishment of a panel under Article 28.7 (Establishment of a Panel) and, as provided in Chapter 28 (Dispute Settlement)…

13. No Party shall have recourse to dispute settlement under Chapter 28 (Dispute Settlement) for a matter arising under this Chapter without first seeking to resolve the matter in accordance with this Article.

US-Central America Free Trade Agreement (CAFTA)[13]

Chapter Sixteen: Labor

Article 16.2: Enforcement of Labor Laws

1. (a) A Party shall not fail to effectively enforce its labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement. (…)

Article 16.6: Cooperative Labor Consultations

1. A Party may request consultations with another Party regarding any matter arising under this Chapter (…)

3. The consulting Parties shall make every attempt to arrive at a mutually satisfactory resolution of the matter (…)

6. If the matter concerns whether a Party is conforming to its obligations under Article 16.2.1(a), and the consulting Parties have failed to resolve the matter within 60 days of a request under paragraph 1, the complaining Party may request consultations under Article 20.4 (Consultations) or a meeting of the Commission under Article 20.5 (Commission – Good Offices, Conciliation, and Mediation) and, as provided in Chapter Twenty (Dispute Settlement), thereafter have recourse to the other provisions of that Chapter. (…)

7. No Party may have recourse to dispute settlement under this Agreement for any matter arising under any provision of this Chapter other than Article 16.2.1(a).

8. No Party may have recourse to dispute settlement under this Agreement for a matter arising under Article 16.2.1(a) without first pursuing resolution of the matter in accordance with this Article.

Compa et al, U.S. – Guatemala CAFTA Labor Arbitration [14]

Background

On April 23, 2008, the AFL-CIO and six Guatemalan trade unions filed a complaint – known formally as a “public submission” – with the U.S. Department of Labor’s Office of Trade and Labor Affairs (OTLA) alleging that Guatemala was failing to effectively enforce its labor laws as required under Chapter 16 of the Dominican Republic – Central American Free Trade Agreement (DR-CAFTA). The complaint included five case studies where Guatemala failed to enforce its labor laws with regard to the right to freedom of association, to organize and to bargain collectively, as well as “acceptable conditions of work.” It also highlighted the troubling rise in anti-union violence since the passage of the trade deal. (…)

In August 2011, after formal labor consultations between the two nations failed to yield results, the United States Trade Representative (USTR) filed for arbitration under the CAFTA dispute resolution chapter. This was the first time the United States ever brought a labor case to dispute settlement under a trade agreement. Shortly after this filing, USTR announced yet another delay while both governments negotiated a “labor enforcement plan,” which was not signed until April 2013. Guatemala failed to implement key components of the plan and, over a year later, on September 18, 2014, USTR announced it would restart the arbitration process.

The U.S. filed its first written materials on November 3, 2014, and the first hearing before the arbitration panel took place on June 2, 2015, in Guatemala City. Beset with numerous delays, including the resignation of one of the arbitrators in the middle of the case, the panel’s final decision was handed down on June 14, 2017 – nine years after the unions filed their submission.

Analysis

The Panel here made conclusive findings that Guatemala failed to effectively enforce its labor laws in violation of the central obligation of the CAFTA labor chapter. (…) However, two more hurdles remained: whether the violations reflected a sustained or recurring course of action or inaction, and whether they were in a manner affecting trade.

Panel’s decision

The record evidence demonstrates that Guatemala’s failure to effectively enforce its labor laws against one employer – Avandia – conferred some competitive advantage upon it. The evidence does not establish that the other seven failures to effectively enforce labor laws [affected trade]… [A]lthough we have found (on an arguendo basis) that Guatemala’s failures to effectively enforce its labor laws constitute a sustained or recurring course of action or inaction, we have not found any evidence of such course itself having an effect on trade…

Conversely, while we have found one instance of a failure to effectively enforce labor laws to have been in a manner affecting trade (i.e., the Avandia case), that instance alone does not constitute a sustained or recurring course of inaction. (…)

The United States has proven that at eight worksites and with respect to 74 workers Guatemala failed to effectively enforce its labor laws by failing to secure compliance with court orders, but not that these instances constitute a course of inaction that was in a manner affecting trade. The United States has not proven sufficient failures to adequately conduct labor inspections to constitute a course of action or inaction. The Panel has no jurisdiction over the other claims advanced by the United States in these proceedings, as they were not included in the panel request. We therefore conclude that the United States has not proven that Guatemala failed to conform to its obligations under Article 16.2.1(a) of the CAFTA-DR.

Author’s recommendations

As the first case ever to proceed through the entire dispute resolution process under the labor chapter of any trade agreement, the arbitral panel’s decision is a devastating setback for advocates of workers’ rights in the global economy. It is even more harmful to workers themselves who seek protection under labor chapters in trade agreements. The panel’s pinched, hyper-technical, trade-first, nit-picking-the-evidence approach sets a terrible precedent on many fronts. It calls into question the viability of all labor chapters, and undermines the progress, however slight, in the evolution of such labor rights provisions since the CAFTA agreement, such as the “May 10” template which strengthened standards, obligations, and enforcement mechanisms in agreements with Peru, Korea, Colombia and other countries. They all contain the “in a manner affecting trade” formulation which was the death warrant in this case.

Harisson, Governing Labour Standards through Free Trade Agreements [15]

A superficial account of labour provisions within EU FTAs [free trade agreements] tells a positive story. Trade agreements have been negotiated with relatively extensive substantive standards and procedural commitments. Representatives of the respective parties are meeting with their international counterparts and civil society meetings are occurring. But in terms of addressing substantive labour standards issues, this article has shown that TSD [trade and sustainable development] chapters have delivered little. Scholars have already argued that the EU has not sought to ‘aggressively’ export labour standards through its trade agreements. We show that neither have state officials in trading partners readily imported them. Rather, they have reluctantly accepted – or even actively softened – minimalist obligations around core labour standards. The weight of expectation has been loaded instead onto processes of dialogue, particularly via CSMs [civil society mechanism], widely considered as the key institutions for making progress on labour issues. However, CSMs are seriously hampered by various operational deficiencies as well as political marginalization within the broader institutional mechanisms and processes of the FTA.

Overall, we found no evidence that the existence of TSD chapters has led to improvements in labour standards governance in any of our case studies, nor did we find any evidence that the institutionalization of opportunities for learning and socialization between the parties was creating a significant prospect of longer-term change. These findings thus offer the most robust refutation to date of the hypothesis that labour provisions in EU FTAs are actively advancing workers’ rights. And in contrast to more optimistic assessments, they also suggest that future normative influence is unlikely to be realized via TSD chapters in their current form.

Should the EU therefore seek to put more of its market power behind its labour governance strategy? Such an approach could in part be realized by the most common suggestion for reform from European interviewees involved in the labour movement, namely to increase the enforceability of the TSD chapter by giving the EU the ability to withdraw preferential access to its market if labour standards are violated. This would make the labour provisions more coercive, and in the shadow of sanctions, perhaps persuade trading partners to engage in more earnest dialogue and responsive action.

Yet some interviewees in case study countries averred from this approach, with unionists and allied researchers expressing concern about the dangers of labour standards being utilized as a form of disguised protectionism. We agree, then, with the comments made by one labour representative who noted that more must be done to assuage such concerns and explain how specific forms of conditionality could benefit labour struggles in trade partners. This demands consideration of a range of complex design issues including how a dispute is initiated, who it targets in relation to what labour-related allegations, who investigates those allegations, who decides on the kinds of corrective action and penalties, and what form of sanctions or fines are available to do this. Appropriately nuanced, a crude social clause founded on economic nationalism could thus be avoided.

UNCTAD, Investment Policy for Sustainable Development [16]

Core Principles for Investment Policymaking

The overarching objective of investment policymaking is to promote investment for inclusive growth and sustainable development.

1. Policy coherence: Investment policies should be grounded in a country’s overall development strategy. All policies that impact on investment should be coherent and synergetic at both the national and international level.

2. Public governance and institutions: Investment policies should be developed involving all stakeholders, and embedded in an institutional framework based on the rule of law that adheres to high standards of public governance and ensures predictable, efficient and transparent procedures for investors.

3. Dynamic policymaking: Investment policies should be regularly reviewed for effectiveness and relevance and adapted to changing development dynamics.

4. Balanced rights and obligations: Investment policies should be balanced in setting out rights and obligations of States and investors in the interest of development for all.

5. Right to regulate: Each country has the sovereign right to establish entry and operational conditions for foreign investment, subject to international commitments, in the interest of the public good and to minimize potential negative effects.

6. Openness to investment: In line with each country’s development strategy, investment policy should establish open, stable and predictable entry conditions for investment.

7. Investment protection and treatment: Investment policies should provide adequate protection to established investors. The treatment of established investors should be non-discriminatory.

8. Investment promotion and facilitation: Policies for investment promotion and facilitation should be aligned with sustainable development goals and designed to minimize the risk of harmful competition for investment.

9. Corporate governance and responsibility: Investment policies should promote and facilitate the adoption of and compliance with best international practices of corporate social responsibility and good corporate governance.

10. International cooperation: the international community should cooperate to address shared investment-for-development policy challenges, particularly in least developed countries. Collective efforts should also be made to avoid investment protectionism.

European Commission, EU-China Agreement (Sustainability Impact Assessment)[17]

Human rights impacts

At the outset, the SIA [Sustainability Impact Assessment] notes that the CAI’s [Comprehensive Agreement on Investment] impact on human rights – either positive or negative – will largely depend on the soundness of the domestic legal frameworks and their compliance with international standards. In addition, since the Agreement does not include specific human rights provisions as it is limited to investment protection and market access, the SIA notes that its overall impact on human rights would be mainly indirect.

Having clarified these two points, the SIA then estimates that such indirect effect is likely to be positive although minimal, and it would mainly derive from the increased engagement of the Parties on labour- and environment-related aspects of investment following from the sustainable development provisions. An increase in FDI from the EU could also promote economic stability and growth, increase employment and, as a result, lead to better living standards and less poverty. Additionally, EU investors would be expected to value and protect human rights, especially as they often include CSR [corporate social responsibility] and RBC [responsible business conduct] practices in their business operations. With an increase in Chinese investment in the EU, these investors are expected to observe EU human rights as implemented in various pieces of legislation and hence no negative impacts are expected in the EU.

The SIA also finds that an institutional mechanism under the CAI might provide an opportunity for participation of non-state stakeholders in discussions on labour and environment related aspects of investment. The obligation to ensure transparency and to promote public participation and public information might also positively impact the right of freedom of expression, especially in China.

Finally, as mentioned above, the SIA points to the CAI’s potential litigation risk. It echoes stakeholders’ calls for China and the EU to retain sufficient policy space under the Agreement to undertake the necessary reform process to promote social inclusion, labour rights and the protection of human rights. On the other hand, the SIA notes that the right to regulate will be embedded in the Agreement and hence the policy space will be preserved.

Brazilian Model BIT [18]

Article 14 Corporate Social Responsibility

1. Investors and their investment shall strive to achieve the highest possible level of contribution to the sustainable development of the Host State and the local community, through the adoption of a high degree of socially responsible practices, based on the voluntary principles and standards set out in this Article.

2. The investors and their investment shall endeavour to comply with the following voluntary principles and standards for a responsible business conduct and consistent with the laws adopted by the Host State receiving the investment:

a) Contribute to the economic, social and environmental progress, aiming at achieving sustainable development;

b) Respect the internationally recognized human rights of those involved in the companies’ activities;

c) Encourage local capacity building through close cooperation with the local community;

d) Encourage the creation of human capital, especially by creating employment opportunities and offering professional training to workers to;

e) Refrain from seeking or accepting exemptions that are not established in the legal or regulatory framework relating to human rights, environment, health, security, work, tax system, financial incentives, or other issues;

f) Support and advocate for good corporate governance principles, and develop and apply good practices of corporate governance;

g) Develop and implement effective self-regulatory practices and management systems that foster a relationship of mutual trust between the companies and the societies in which its operations are conducted;

h) Promote the knowledge of and the adherence to, by workers, the corporate policy, through appropriate dissemination of this policy, including programs for professional training;

i) Refrain from discriminatory or disciplinary action against employees who submit grave reports to the board or, whenever appropriate, to the competent public authorities, about practices that violate the law or corporate policy;

j) Encourage, whenever possible, business associates, including service providers and outsources, to apply the principles of business conduct consistent with the principles provided for in this Article; and

k) Refrain from any undue interference in local political activities.

Ruggie, Principles for Responsible Contracts (State-Investor Contract Negotiations)[19]

The 10 principles that can help guide the integration of human rights risk management into contract negotiations are listed below: (…)

4. Stabilization clauses: Contractual stabilization clauses, if used, should be carefully drafted so that any protections for investors against future changes in law do not interfere with the State’s bona fide efforts to implement laws, regulations or policies in a non-discriminatory manner in order to meet its human rights obligations.

Key implications of Principle 4 for the negotiations:

It is legitimate for business investors to seek protections against arbitrary or discriminatory changes in law. However, stabilization clauses that “freeze” laws applicable to the project or that create exemptions for investors with respect to future laws, are unlikely to satisfy the objectives of this Principle where they include areas such as labor, health, safety, the environment, or other legal measures that serve to meet the State’s human rights obligations.

Stabilization clauses, if used, should not contemplate economic or other penalties for the State in the event that the State introduces laws, regulations or policies which: are implemented on a non-discriminatory basis; and (b) reflect international standards, benchmarks or recognized good practices in areas such as health, safety, labor, the environment, technical specifications or other areas that concern human rights impacts of the project. (…)

Brief explanation: Stabilization clauses

31. Contractual stabilization clauses aim to mitigate the risks to business investors from changes in law. Not all investment contracts have these provisions, but research shows that where they do exist the breadth of their application, and their provisions for mitigating the impacts of new laws on investors, vary greatly.

32. Business investors view project financing predictability and consistency as a primary concern, as most large investments are long term and of an irreversible nature. This makes them vulnerable to changes in the rules governing their projects over time. (…)

34. However, the comparative research carried out by the Special Representative showed that, depending on the way the stabilization clause was drafted, it may have the potential to unduly constrict the policy space States need to meet their human rights obligations. The research found that those contracts negotiated with developing country governments were (1) typically much broader in their coverage than those agreed with developed country governments; and (2) they were much more likely to include exemptions for or award compensation to business investors for compliance with future laws–even in areas that are directly related to protecting human rights, such as health, environmental protection, labor and safety.

38. Additionally, necessary investor protection against arbitrary and discriminatory changes in law can be fashioned to not interfere with the State’s bona fide efforts to meet its human rights obligations. In certain circumstances, in particular for fixed-tariff projects, the parties to the contract can integrate a number of mechanisms to manage the material and economic consequences of changes in the law. These can specify procedures to facilitate the efficient and effective resolution of issues as they arise, such as formula for appropriate risk-sharing or procedures and requirements for the parties to negotiate in good faith regarding mitigating any impacts of changes in the law. (…)

Richard & Luke, Human Rights in Investment Law: Where to after Urbaser?[20]

So why is Urbaser [Urbaser S.A. v Argentina] so significant? After all, it is just one in a long line of cases in which Argentina has unsuccessfully invoked the human right to water as part of its defence. For example, in Suez v Argentina, the tribunal considered Argentina’s obligation to protect the right to water and held that it was not incompatible with its obligations towards foreign investors. Similarly, in SAUR International v Argentina, the tribunal held that although Argentina could nationalize a public service, such as the water supply, in order to safeguard human rights, it still had to pay compensation when doing so. More broadly, investment tribunals have considered a range of human rights issues in determining investment treaty claims, including indigenous rights (Glamis Gold Ltd v USA), arbitrary arrest and detention (Biloune v Ghana), the right to access the courts (Mondev v USA) and migrant rights (Channel Tunnel v France and the UK), among many others. Be that as it may, the Urbaser decision is significant for two reasons. First, as already mentioned, the tribunal accepted that a corporation could be bound by human rights standards. Second, this was the first time a tribunal has accepted jurisdiction over a human rights counterclaim (Argentina’s claim that Urbaser had threatened the right to water).

It is true that the permissive language of the Spain-Argentina BIT, which allows either the investor or the state to a dispute to commence an arbitration, helped the tribunal to assert jurisdiction over Argentina’s counterclaim in Urbaser. But to state that this was the only relevant factor misses the point, which is that in bringing its counterclaim, Argentina availed itself fully of the legal tools available to it. This leads conveniently into the next point: recent investment treaties suggest that states are increasingly seeking to balance the rights and obligations arising from investment treaties and human rights instruments.

Traditionally, very few, if any, BITs have referred to human rights. Limited provisions on human rights are, however, found in certain “model” BITs – the 2012 US Model BIT, for example recognises labour rights – however this is not mirrored in the treaties currently in force. But the indications are that things might be changing. At the end of 2016, just before the tribunal in Urbaser rendered its decision, Morocco and Nigeria signed a new BIT. The Morocco-Nigeria BIT has not yet entered into force, meaning that it is not strictly binding on the parties yet, however, it contains unprecedented and explicit recognition of the human rights obligations of Morocco and Nigeria and prioritizes the protection of human rights over the creation of a favourable climate for foreign investment. For example, the BIT prohibits Morocco and Nigeria from lowering labour, public health and safety standards in order to encourage investment. Investors, on the other hand must “strive to make the maximum feasible contributions to the sustainable development of the Host State and local community through high levels of socially responsible practices.”

Schill & Djanic, Public Interest-Based Justification of International Investment Law [21]

Critics consider international investment law (IIL) and investor–State dispute settlement (ISDS) to be a threat to global public interests, such as environmental protection, labour standards, public health or human rights, and portray them as one-sidedly protecting foreign investors and undermining public policies that are adopted for the benefit of local populations and the international community as a whole. They also dismiss economic justifications of the system as unfounded. The present article suggests a different approach to the justification of IIL, arguing that, properly construed, IIL can be justified as a system that, on aggregate, promotes global public interests.

First, the article shows how IIL and ISDS form part of the legal infrastructure that is necessary for the functioning of the global economy under a rule of law framework. Aimed at supporting global economic growth and welfare, this helps further not only economic, but also non-economic, global public interests, such as sustainable development.

Second, the article argues that IIL and ISDS do not turn a blind eye to the conflicts that can arise between economic and non-economic public interests. Instead, IIL and ISDS have numerous, although admittedly imperfect and as of yet insufficiently utilized, mechanisms at their disposal for alleviating ensuing tensions, thus allowing both economic and non-economic global public interests to be advanced at the same time.

Krajewski, Establishing Investor Obligations [22]

International investment law and international human rights law are two distinct fields of international law. Even if one subscribes to the view that they may have a common root in the customary law protecting aliens, the two regimes rest on different legal sources, contain different legal principles and are applied and administered in different institutional settings. (…)

International investment law rests on a web of thousands of bilateral investment treaties and other treaties with investment protection provisions.16 It contains general standards of protecting foreign investors and their investment, including compensation for expropriation as well as guarantees of fair and equitable treatment and nondiscrimination of the investor. Investment treaties are applied by ad hoc tribunals established at the request of a foreign investor and based on the claim that the host state treated the investor in a manner which violates the term of the respective investment agreement.

In contrast, human rights law is enshrined in global and regional human rights treaties which contain rights of individuals and respective obligations of states to respect, protect and fulfil those human rights. International human rights treaties are applied by regional human rights courts or special bodies established on the basis of human rights treaties. (…)

The preceding analysis reveals a sobering result: it cannot be assumed that a new human rights treaty will contain directly binding obligations for business entities. Similarly, recent treaty-making practice in investment law also does not seem to move towards including clear and precise binding human rights obligations for investors. Finally, investment tribunals remain extremely reluctant to develop such obligations on the basis of existing international law. If they consider such approaches, the doctrinal basis is not clear. As a consequence, it seems unlikely that investor obligations to respect human rights will emerge in the foreseeable future in international treaty-making or treaty-application.

(…) investment treaties incorporate references to domestic laws and may even oblige the states to effectively regulate businesses in a domestic and international setting. If relevant domestic laws are then incorporated into an investment treaty with the aim to allow a state to either base a counter-claim on the non-compliance of a domestic law by the investor or use such non-compliance to reduce the amount of the damages, international investment law and tribunals may indirectly contribute to the establishment of human rights obligations of investors. Finally, states should increasingly refer to international standards of investor responsibilities in their investment treaties. This would the allow investment tribunals to rely on standards such as the UNGPs or the OECD Guidelines when interpreting and applying the terms of investment agreements.

The emerging pluralistic regime of investor obligations consisting of domestic legislation, international soft law standards and binding international treaty norms could form the basis of a web of clear and effective provisions establishing investor responsibilities on safe legal grounds. (…)

Background (Cambodia)

European Commission, Report on EBA Beneficiaries [23]

Since 2017 (…) The [European] Commission had for many years raised its concerns on issues related to Economic Land Concessions (ELCs) in the sugar sector, recommending the establishment of an independent and transparent mechanism in order to deal with claims for compensation arising from the granting of ELCs for sugar cane plantations.

Following the deterioration of democracy, human rights and labour rights in Cambodia, the EU concerns covered the following main areas: a) political rights and the shrinking of the democratic space; b) freedom of expression and freedom of association; c) labour rights; and d) concerns over land issues arising from ELCs in the sugar sector. (…)

Economic Impact of EU Tariff Preferences under EBA

(…) In terms of socio-economic development, the percentage of the population living under the poverty line has steadily declined from 50.1% in 2007 to 13.5% in 2014.

In 2014, the EU became the first Cambodian export market, ahead of the US. The EU market currently accounts for more than one-third of Cambodia’s exports, particularly garment, footwear and bicycles. The EU ranked as the second biggest trade partner of Cambodia (after China), accounting for 17.3% of the country’s total trade (China 23.8%). Cambodia is the EU’s 56th largest trading partner (accounting for 0.2% of the EU’s total trade). In 2018, Cambodian exports to the EU registered a record of €5.3 billion (compared to €3 billion in 2014), concentrated on garments at 73.4% of total exports, footwear 12.7%, bicycles 5.7%, and rice 3%. Total trade in goods between the two partners equalled €6.2 billion. Over 95% of these exports entered the EU market under EBA tariff preferences (one of the highest ratios of any EBA beneficiary country). Overall, Cambodia is the second largest user of EBA preferences, after Bangladesh. In January 2019, the EU imposed – under the GSP regulation – safeguard measures on Indica rice from Cambodia and Myanmar for three years, thus introducing normal customs duties on this product for the first year (€175 per tonne), and then progressively reducing it to €150 per tonne in year two, and €125 per tonne in year three.

Key Concerns (…)

Freedom of association and of peaceful assembly. Restrictions to freedoms of assembly and association, including a shrinking of the space for civil society, remain a cause of concern. Procedural requirements going beyond the law are creating additional obstacles to legitimate work of civil society organizations. Some positive steps took place such as the Instruction of the Ministry of Interior to repeal the ‘three-day notice requirements’ and the establishment of a Government Working Group under the Ministry of Interior to consult with civil society. However, no concrete actions were taken to amend restrictive provisions of the Law on Associations and Non-Governmental Organizations (LANGO). Harassment and intimidation of journalists, human rights defenders, trade union members and workers, land and environmental activists continued to be reported by the UN and civil society organisations.

Non-discrimination, land and housing rights. Dispossession with no or inadequate compensation of families living or working on land designated as Economic Land Concessions related to sugar farming constitutes a violation of the relevant international conventions: International Covenant on Economic, Social and Cultural Rights (ICESCR), Committee on the Elimination of Racial Discrimination (CERD) and ICCPR. The EU recognises the actions taken by the Cambodian authorities to resolve these issues, but continues to be concerned over lack of transparency in the process, and the lack of a clear set of criteria for establishment of the validity of claims and the appropriate level of compensation.

Instruments (Cambodia)

Turkey-Cambodia Agreement on Protection of Investments [24]

The Government of the Republic of Turkey and the Government of the Kingdom of Cambodia (…)

Agreeing that fair and equitable treatment of investments is desirable in order to maintain a stable framework for investment and will contribute to maximizing effective utilization of economic resources and improve living standards; and

Convinced that these objectives can be achieved without relaxing health, safety and environmental measures of general application as well as internationally recognized labor rights;

Article 4 (General Exceptions)

1. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting, maintaining, or enforcing any non-discriminatory legal measures:

(a) designed and applied for the protection of human, animal or plant life or health, or the environment;

(b) related to the conservation of living or non” living exhaustible natural resources.

Hungary-Cambodia Agreement on Protection of Investments [25]

Article 2 (Promotion and protection of investments)

1. Each Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to make investments in its territory and, shall admit such investments in accordance with its laws and regulations.

2. Investments and returns of investors of either Contracting Party shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Contracting Party.

3. The Contracting Party shall not encourage investment by lowering domestic environmental, labour or occupational health and safety legislation or by relaxing core labour standards. Where a Contracting Party considers that the other Contracting Party has offered such an encouragement, it may request consultations with the other Contracting Party and the two Contracting Parties shall consult with a view to avoiding any such encouragement.

Cambodia Trade Integration Strategy [26]

4.2 Joining the CP-TPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership]

The CP-TPP agreement is a modern FTA encompassing a series of WTO-Plus disciplines both in terms of coverage and in depth. The preliminary analysis of the CP-TPP with respect to market access and rules of origin is similar to RCEP in the sense that the CP-TPP may not bring to Cambodia additional market access to what has been already been granted under different arrangements thanks to the current LDC status or as member of the ASEAN FTAs with dialogue partners. The complex rules of origin of the CP-TPP especially in the garment sector does not reflect the present capacity of the Cambodian garment industry. (…)

(…) It is noteworthy that the investment chapter includes several reform-oriented elements. For example, it refines definitions of investor and investment; clarifies the meaning of key standards to preserve regulatory space (e.g. clarifying that a government’s failure to respect an investor’s legitimate expectations does not automatically amount to a breach of the minimum standard of the treatment) …; contains a clause recognizing that parties should not relax health, safety and environmental standards and reaffirms Corporate Social Responsibility (CSR)-related obligations. (…)

Cambodia Industrial Development Policy [27]

E. Labor Market and Industrial Relations

Industrial relations is still a major challenge for industrial development not only in Cambodia but also in almost all countries going through a transition from agriculture/rural to industry/urban setting. A proper management of such transition can lay the foundation for attracting investments in the future, especially to ensure better working conditions, high productivity and reasonable wage for the workforce. The process would require careful and systematic solutions based on the applicable regulatory framework so as to strengthen social investment needed to reduce wage-rise pressure in order to maintain competitiveness of the economy.

This factor is even more important when Cambodia joins the ASEAN Economic Community where a carefully managed labor mobility can ensure the investment competitiveness of the country. An adequate development and effective implementation of the regulatory framework is thus necessary. Such a regulatory system combined with a proper labor market management such as workers orientation prior to starting their jobs, awareness of rights and obligations of employers/employees, reasonable demand for working conditions, are crucial and should be widely implemented to ensure stability and effectiveness of the labor market.(…)

European Commission, Temporary Suspension of Trade Preferences for Cambodia [28]

What is the Everything But Arms trade arrangement?

The Everything But Arms (EBA) arrangement is part of EU’s Generalised Scheme of Preferences (GSP) for developing countries. Under EBA, the EU grants unilaterally duty free and quota free access to its single market for all products – except arms and ammunition – to all the States classified by the United Nations as Least Developed Countries (LDCs).

The EBA arrangement, as the GSP scheme as a whole, aims to assist developing countries in their efforts to reduce poverty, promote good governance, and support sustainable development by helping them to generate additional revenue through international trade.

The access to this arrangement is conditional upon the beneficiary country respecting the principles of 15 core United Nations (UN) and International Labour Organisation (ILO) Conventions on human rights and labour rights (laid down in Annex VIII Part A of the GSP Regulation). (…)

Why is the EU targeting Cambodia and not other GSP beneficiaries with poor human rights records?

The Foreign Affairs Council in its Conclusions from February 2018 identified Cambodia and Myanmar for enhanced engagement under the EBA on the basis of the seriousness of their alleged violations (as testified by the most recent UN and ILO reports), as well as on the basis of their substantial trade with the EU. (…)

Cambodian Chamber of Commerce, et al., Press Release on EBA Decision [29]

Phnom Penh, Cambodia – The Cambodian Chamber of Commerce and signatories, as representatives of the Cambodian private sector, regrets the decision taken by the European Commission to partially withdraw preferences granted to the Kingdom of Cambodia under the Everything but Arms (EBA) arrangement, following the review it initiated on 12 February 2019.(…)

Looking forward, Cambodia will continue to benefit from trade preferences for 80% of its exports to the European Union. Therefore, we respectfully call on the European Commission and the Royal Government of Cambodia to continue to engage in dialogue on the issues raised by the Commission’s review. We have full trust in the resilience of the Cambodian people, and are committed to working with those most affected by this decision to mitigate the potential damage to trade and investment, and the Kingdom’s reputation. We will continue to work closely with international brands and development partners to strengthen and promote the values of human and labour rights in Cambodia, in accordance with international best practices. The decision by the Commission, while regrettable, is viewed by the private sector as an opportunity to initiate further structural reforms that strengthen legal compliance and reduce unfair competition, which will help to accelerate the diversification of Cambodia’s economy, export markets and sources of investment. The Cambodian private sector is dedicated to working with all investors, development partners and the Royal Government of Cambodia to review and implement additional measures and legislation that will enable a more conducive environment for all businesses, employees and Cambodian society.

Unions in Cambodia Urge EU Not to Withdraw EBA Benefit [30]

[…] Cambodian union leaders attending IndustriALL Global Union’s trade and workers’ rights training on 4-5 November in Phnom Penh expressed grave concern over the enormous impact of a suspension of the EBA scheme, as foreign investors have said they may move garment production to other countries, risking thousands of jobs in the process. […]

The Vice President of the Federation of Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC) Mann Senghak added: “Cambodian trade unions must urgently put aside any differences and unite to send a strong message to the EU that the trade preference scheme is of paramount importance for the survival of millions of Cambodian people dependent on the industry.” […]

Joint Letter from Companies to the Prime Minister of Cambodia on EBA Matter [31]

We are companies that source from Cambodia. Our work with suppliers in Cambodia contributed to the USD $9.5 billion in garment, footwear, and travel goods exported from Cambodia last year. Many of the companies signing this letter have been sourcing from Cambodia since the garment sector was established in Cambodia in the mid‐1990s.

The success of Cambodia’s garment sector has gone hand‐in‐hand with Cambodia’s adoption and adherence to high labor standards such as those set by the International Labor Organization (ILO). When the Multifibre Arrangement (MFA) was being phased out, there was concern that Cambodia’s garment sector would not survive, but European, Canadian, HK, and American companies kept buying from Cambodia largely based on your government’s strong commitment to higher labor standards that were embodied in your government’s implementation of the ILO Better Factories Cambodia (BFC) program.

Since 2001, the Cambodian Government’s strong support for the BFC and implementation of strong labor standards has enabled first the garment sector, and now the footwear and travel goods sectors, to grow exponentially. Today, exports of garments, footwear, and travel goods account for more than one third (43 percent) of Cambodia’s total Gross Domestic Product (GDP). This represents half of Cambodia’s total exports. The preferential trade benefits that Europe, Canada, and the United States have implemented over this same period continue to be an important factor in many company’s sourcing decisions.

We are concerned that the labor and human rights situation in Cambodia is posing a risk to trade preferences for Cambodia. Recently the European Union announced its decision to review Cambodia’s Everything but Arms (EBA) benefits. Members in the U.S. Congress have introduced bills that would require the U.S. Government to review Cambodia’s Generalized System of Preferences (GSP) benefits based on the declining respect for labor standards, including freedom of association, and other issues related to respect for human rights issues in Cambodia.

Many of the signatories to this letter have previously raised these concerns through multiple channels with your government. We are attaching a November 1, 2018, letter that details recommendations that we believe, if implemented, could demonstrate real progress toward respecting trade unions and civil society, and keeping Cambodia’s trade benefits in place. To date, we have not received any response to that letter. We look forward to hearing back from you and working with you to ensure a bright future for Cambodia’s workers and the Cambodian economy overall.

ADHOC, Joint Statement on the EU’s Decision on Cambodia’s Access to EBA [32]

We, the undersigned Non-Governmental Organisations, Associations, Trade Unions, Members of the Cambodian Civil Society, and citizens are deeply concerned about the launch of the European Union (EU) Commission’s procedure to temporarily suspend Cambodia’s access to its Everything But Arms (EBA) trade agreement.

The EU has indeed expressed its concerns over the crackdown on democracy and human rights including the repression of the political opposition, media and civic space in light of the general elections of July 2018. The EU has repeatedly reminded Cambodia that respect for human rights and fundamental freedoms, including labour rights was a crucial part of the granting of EU trade preferences. In July 2018, the European Union assessed the human rights and labour rights situation in Cambodia in response to serious concerns about the undermining of democracy, respect for human rights and the rule of law in Cambodia and requested the Royal Government of Cambodia (RGC) to fulfil some conditions in addition to bringing back democracy and the respect of human rights in the country. On 11 February 2019, in view of the RGC’s failure in fulfilling its obligations under the EBA agreement and the continuing deterioration of the human rights situation in Cambodia, the EU Commission officially announced the beginning of the tariff preferences removal process.

As defenders of fundamental rights and labour rights, we fully understand the European Union’ position and decision. However, we are deeply worried that the EBA suspension will directly and negatively impact Cambodian people’s welfare and livelihood.

We believe that this situation can be avoided if the RGC takes appropriate steps to fulfil its obligations towards its citizens and effectively implement the Cambodian Constitution, especially Article 31 stating that “The Kingdom of Cambodia recognizes and respects human rights as enshrined in the United Nations Charter, the Universal Declaration of Human rights, and all the treaties and conventions related to human rights, women’s rights and children’s rights (…) “, Articles 41 and 42 which guarantee the fundamental freedoms of association, expression and assembly, as well as Article 52 stating that “ (…) The State shall give priority to the improvement of the living conditions and welfare of citizens”.

Amfori, Call on the European Commission to Persuade Cambodia on EBA [33]

(…) [As] the leading business association for open and sustainable trade, amfori cannot ignore the serious shortcomings in human and labour rights that exist. With that in mind, amfori is:

– calling on the European Commission to make every effort to ensure that its investigation against Cambodia results in significant improvements to the conditions in the country.

– urging the Cambodian government to consider the serious economic and social impact that will occur should it lose its EBA status and to cooperate fully with the investigation and put into practice all the changes required to avoid this.

– advising companies with business links to Cambodia to engage in direct dialogue with the government, and local authorities, and support a satisfactory outcome of the investigation process

amfori believes that the investigation will achieve a mutually beneficial solution with Cambodia meeting the conditions required to retain its EBA preferences so that the livelihood of its workers in the garment and footwear industry will not be affected. The consequences of removing preferences would almost certainly be a fall in exports which would result in a lowering of development and employment. However, amfori would support any such decision, as a last resort, to lend credibility to the GSP system and show that penalties, as well as advantages, can occur.

Lawreniuk, Up in Arms [34]

Um Dina, General Secretary of the Coalition of Free Trade Union of the Woman’s Textile, explained the anxiety and panic this is causing among garment and footwear workers: “The government said Cambodia will learn to live by itself. But the problem is that workers are those who will suffer hardship.” […]

In the current climate of harassment, intimidation and fear, the union movement’s ability to organise national mobilisations to press for change, as seen in the past, is severely curtailed. The workers, [unionist] Sokny says, “will tell you they are afraid. They will not go to take the road again, to demonstrate again. They are scared to God to be killed like them at the Veng Sreng shooting.”

But amidst the apprehension, there are glimmers of hope. Dina points to how brave some of the union folks and garment workers are, especially the women – some have gone so far as to make blatant requests for change on the Prime Minister’s Facebook page. (…)

“I think the anger of the Cambodian workers at the factory can ignite the problem. One day, there can be unrest. … Do you want more of us to die? I don’t want that. Only the workers, when they rise up, [will create] unrest, social unrest in Cambodia.”

Kiyoyasu Tanaka, EBA Scheme & the Future of Cambodia’s Garment Industry [35]

Losing EBA benefits: A lesson from Myanmar

The potential impact of EBA suspension on the Cambodian economy is of great interest to policy makers and academics. For example, how much will the EBA suspension reduce garment exports? While there are a number of economic approaches to predict the potential impact, the precise magnitude often crucially depends on underlying assumptions in economic models such as an elasticity of substitution, import demand elasticity, and so on. Thus, the predicted impact can vary, casting doubts on the credibility of economic forecasts.

An alternative but unexplored approach is to draw from the recent experience of Myanmar. The EU suspended trade preferences for Myanmar in 1997 for forced labour, and re-established EBA preferences in 2013. While Cambodia’s recent economic environment is quite different from late-1990s Myanmar, it is reasonable to assume similar economic environments in these countries for the 2010s. From the re-establishment of EBA preferences for Myanmar, possible lessons can be drawn by looking at how much Myanmar’s garment exports increased after 2013.(…)

The loss of EBA preferences is likely to produce a substantial negative impact on the Cambodian economy, such as the closure of garment factories and job cuts for garment workers. Since female workers account for the majority of garment employment, this would particularly affect poor female workers from rural regions. A very rough estimate suggests that at least 60,000 jobs in garment factories would be lost.

Heng & Po, Cambodia and China’s Belt and Road Initiative [36]

Furthermore, considering bilateral relations between Cambodia and the US under the Sinocentric world, Carl A. Thayer, emeritus professor at the University of New South Wales, argues that Chinese support will buffer Cambodia under Prime Minister Hun Sen’s leadership against domestic pressure by civil society groups and external pressure from the US to address inadequacies of democratic and human rights issues. Such action has led former US Secretary of State Hilary Clinton to advise Cambodia not to be too dependent on any country. Therefore, Cambodia must raise important matters related to the Mekong issues with China. However, Bae and Kim (2014) argue that such a pattern will be likely to continue even without Chinese assistance. (…)

However, Cambodia’s total acceptance of China’s Belt and Road Initiative can be a mixed blessing, considering a strong likelihood that Cambodia may fall into the Chinese debt trap and China’s sphere of influence. In addition, Chinese investments and development assistance, outside or inside the BRI framework, which very often target the few Cambodian elites, not the general public, may facilitate corruption and nepotism, further the exploitation of natural resources, and worsen human rights records in Cambodia. More importantly, as Cambodia enthusiastically supports China’s BRI and continue to receive China’s “no string attached” aid and loans, its foreign policy will be undermined and formulated in favor of China’s broader interests and influence in the regional and international arena.

Amnesty International, Human Rights, Trade and Investment Matters [37]

A further innovation linking trade with labor rights occurred in 1993, when the United States incorporated a requirement that labor rights be respected as a condition of the North American Free Trade Agreement (NAFTA). (…) In 2002, the US Congress mandated that executive branch negotiators must include labor rights provisions in all future trade agreements. The United States also pioneered a novel incentive-based approach in a bilateral textile agreement with Cambodia (…)

In its textile trade agreement with Cambodia, the United States agreed to allow increased amounts of textiles to be imported from Cambodia if Cambodia implemented “a program to improve working conditions in the textile and apparel sector, including internationally recognized core labor standards” … The agreement was originally negotiated for a three-year term, from 1999 to 2003, and was subsequently extended until the end of 2004. Through the agreement, the United States not only granted an initial quota to Cambodia, but also pledged to increase the quota by 14% each year that working conditions in Cambodian factories were found to “substantially comply with such labor law and standards”. The US included these labor rights provisions partly as a reaction to increasing public anti-sweatshop and anti-globalization activism. (…) When the agreement was negotiated, these provisions were without precedent and appeared to herald a new era for a more rights-respecting international trade regime. By incentivizing improved conditions, the Cambodian agreement created the regulatory framework for a “race to the top”.

The Cambodian agreement focused on textiles because of an anomaly in the international trade regime, which allowed countries such as the United States to control textile imports through select quotas from different countries rather than treating all trading partners on the same terms. With relatively low capital investment and without a need for highly skilled workers, textiles were seen as a good entry-level manufacturing opportunity for poor countries to enter the global market. (…)

When the Cambodian agreement was signed, conditions in the country’s factories were generally regarded as very poor, on a par with similar conditions in other countries such as China, Bangladesh and El Salvador. As in many other countries, most of the factories in Cambodia were owned by Taiwanese and Hong Kong enterprises, and most of the workers were young women from the countryside. Cambodia agreed to the strict provisions of the trade agreement because the country, one of the poorest in the world, was almost entirely dependent on foreign aid and the goodwill of foreign donors.

The Cambodian Labor Code underwent substantial revision to meet international standards. However, the question remained of how improvements were to be undertaken and enforced. After the first year of the agreement, the United States agreed only to increase Cambodia’s quota by 9%, primarily to recognize that Cambodia had ratified core International Labor Organization (ILO) conventions and registered a labor federation. The United States would not have relied on Cambodia’s poorly resourced and corrupt labor inspectorate for an assessment of improvements. (…)

Questions

How do international trade and investment agreements incorporate human rights clauses?
What are the implications of EU’s EBA/GSP for governmental and corporate responsibilities toward human rights law compliance in Cambodia?
What have the responses been from the civil society, trade unions, and business associations regarding the withdrawal of trade preferential tariffs from Cambodia?
How should Cambodia prepare itself when concluding investment agreement after the withdrawal of EBA?
What should Cambodian Trade Agreements focus on that they are not focusing on now?
How is the Belt and Road Initiative affecting businesses’ responsibilities toward human rights law compliance?
Is it of advantage to Cambodia to lobby for an ASEAN-wide trade agreement?
What would be the impression when looking at the bilateral investment agreements concluded by Cambodia?
What are the implications of a US preferential trade deal on governmental and corporate responsibilities toward human rights law compliance in Cambodia?

7. ACCESS TO REMEDIES: NON-JUDICIAL MECHANISMS

ILO Committee on Freedom of Association, Compilation of Decisions[7]

LIST OF AUTHORS

SHORT TABLE OF CONTENTS

INTRODUCTION TO COMPENDIUM

Part I.

Part II.

Part III.

PART I: HUMAN RIGHTS FRAMEWORK

2. INTERNATIONAL SOFT LAW ON CORPORATE SOCIAL RESPONSIBILITIES

3. INTERNATIONAL TRADE AND INVESTMENT AGREEMENTS