UN Human Rights Body: States must protect human rights abroad from abuses of business entities within their jurisdiction

A United Nations Committee has issued new guidance confirming that States have a duty to regulate business enterprises domiciled in their territory or jurisdiction, in their actions abroad. It also clarified that business entities under a State’s jurisdiction include ‘corporations incorporated under their laws, or which have their statutory seat, central administration or principal place of business on their national territory’.
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UN Human Rights Body: States must protect human rights abroad from abuses of business entities within their jurisdiction

14/08/2017 - Por: Sara Brandão | Photo: La Mano Sucia

The Committee on Economic, Social and Cultural Rights, tasked with clarifying and interpreting the International Covenant on Economic, Social and Cultural Rights (ICESCR) and monitoring State compliance with this core human rights treaty, has issued this guidance in its most recent general comment – General Comment No.24 on State Obligations under the ICESCR in the Context of Business Activities.

The document refers to some developments in international law that support the principle of extraterritorial human rights obligations – beginning with customary international law which ‘prohibits a State from allowing its territory to be used to cause damage on the territory of another State’.[1] It also includes moments of acknowledgement or support of the principle of extraterritorial obligations from the Human Rights Council,[2] the International Court of Justice,[3] the Charter of the United Nations,[4] and most importantly, with Article 2(1) of the ICESCR itself. It underlined a lack of provisions within the treaty that would limit these rights to territorial boundaries.[5]

The Committee states that the duties to respect, protect and fulfill are equally applicable in the realm of extraterritorial obligations. Regarding the duty to respect, States Parties must ensure their actions do not interfere with another State’s ability to comply with its ICESCR obligations – particularly when completing trade, investment, financial and tax treaties or agreements.

The duty to protect, which requires greater action from States in general, would require steps that both prevent and redress violations resulting from business activities of enterprises domiciled in their territory or jurisdiction.[6] Prevention may mean imposing regulations (such as due diligence regulations) or providing business incentives (such as favoring businesses that have ‘robust and effective human rights due diligence mechanisms’ for public contracts)[7] for business entities under the State Party’s jurisdiction. The States Parties should also pressure corporations within their jurisdictions to use their influence over subsidiaries and business partners to ensure respect for Covenant rights.

Redressing violations, on the other hand, would require further international cooperation to ‘improve the effectiveness of cross-border cooperation between State agencies and judicial bodies with respect to both public and private law enforcement of domestic legal regimes’.[8] It would also require States to reduce the risks of conflict of jurisdiction, which often results in legal uncertainty and leaves victims unable to obtain redress.[9]

The duty to fulfill means that States Parties must create an ‘international environment that enables the fulfilment of the Covenant rights’ by combatting abusive tax practices by transnational corporations, for example.[10] The committee suggests that ‘States should combat transfer pricing practices and deepen international tax cooperation, and explore the possibility to tax multinational groups of companies as single firms, with developed countries imposing a minimum corporate income tax rate during a period of transition.’[11] It also notes that reducing corporate tax rates with the purpose of attracting investors is inconsistent with State Party’s duties as it induces a race to the bottom and as such, undermines the ability of all States to mobilize resources for the realization of economic, social and cultural rights.[12]

Although the Committee cannot and does not impose obligations on business entities directly, several of the recommendations they make to State Parties to the treaty would require State-imposed obligations for business entities. In a time where norms and best practices regarding the role of corporations is still developing, this General Comment will be extremely beneficial in helping both business entities and States to understand what exactly their obligations are. It will also provide leverage for civil society to analyze and critique the actions or inaction of their States in ensuring the Covenant rights in the context of business entities.

The report also discusses aspects of States Parties’ duties to respect, protect and fulfil the ICESCR rights within their own territories, and details State obligations related to remedies for abuses. States should ensure victims of human rights abuses have access to justice regardless of who is directly responsible; they should combat challenges put in place by business entities to justice by facilitating access to information through mandatory disclosure laws, for example; and they must ensure that remedies are provided, including comprehensive reparations.

To read the full report, available in English, click here.

[1] E/C.12/GC/24, para.27.

[2] As the Committee on Economic, Social and Cultural Rights noted, Human Rights Council Resolution 21/11 ‘endorsed the Final draft of the Guiding Principles on Extreme Poverty and Human Rights submitted by the Special Rapporteur on extreme poverty and human rights (A/HRC/21/39), which provide that “as part of international cooperation and assistance, States have an obligation to respect and protect the enjoyment of human rights, which involves avoiding conduct that would create a foreseeable risk of impairing the enjoyment of human rights by persons living in poverty beyond their borders, and conducting assessments of the extraterritorial impacts of laws, policies and practices” (para. 92).’, quote from E/C.12/GC/24, Footnote 72.

[3] Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, 2004 I.C.J. 136 (9 July), paras. 109-112.

[4] Charter of the United Nations (June 26, 1945), 59 Stat. 1031, entered into force Oct. 24, 1945 (Article 56).

[5] Article 2(1) of the International Covenant on Economic, Social, and Cultural Rights includes the requirements to take steps “through international assistance and co-operation” to ensure the rights within the Covenant.

[6] E/C.12/GC/24, para.30.

[7] E/C.12/GC/24, para. 31.

[8] E/C.12/GC/24, para.34.

[9] E/C.12/GC/24, para.35.

[10] E/C.12/GC/24, para.37.

[11] E/C.12/GC/24, para.37.

[12] E/C.12/GC/24, para.37.