In June 2019, the Draft Hague Rules on Business and Human Rights Arbitration (hereafter, “Draft BHR Arbitration Rules”) was released for global online public consultation, with the consultation period set to end by 25 August 2019. Judge Bruno Simma chairs the global Drafting Team that has collaborated in developing the draft rules, since the Drafting Team started its work in January 2018 with the support of the City of the Hague. (Drafting Team Members and Working Group Members all listed here.) The final version of the Hague Rules on Business and Human Rights Arbitration will be published on 10 December 2019. Before the release of the Draft BHR Arbitration Rules, the Working Group had produced a 2017 concept paper on business and human rights arbitration. This was followed by the creation and first meetings of the Drafting Team in January 2018; the Drafting Team’s production of its Elements for Consideration in Draft Rules, Model Clauses, and Other Aspects of the Arbitral Process in time for the November 2018 Online Consultation Procedure; the April 2019 meetings of the Drafting Team and the June 2019 publication of the Summary of the Sounding Board Consultations; up to the June 2019 release of the Draft BHR Arbitration Rules.
As described in the Draft BHR Arbitration Rules:
“The Hague Rules on Business and Human Rights Arbitration provide a set of procedures for the arbitration of disputes related to the impact of business activities on human rights. The Hague Rules are based on the UNCITRAL Arbitration Rules, with modifications needed to address certain issues likely to arise in business and human rights disputes. As with the UNCITRAL Arbitration Rules, the scope of the Hague Rules is not limited by the type of claimant(s) or respondent(s) or the type of subject-matter of the dispute and extends to any disputes that the parties to an arbitration agreement have agreed to resolve by arbitration under the Hague Rules. Parties could thus include business entities, individuals, labor unions and organizations, States and State entities and civil society organizations. Equally, the Hague Rules purposefully do not define the terms “business”, “human rights”, or “business and human rights.” For the purposes of the Hague Rules, such terms should be thus understood at least as broadly as the meaning such terms have under the UN Guiding Principles on Business and Human Rights. However, in the vast majority of cases, no definition of these terms should be necessary at all.
Like the UNCITRAL Rules, the Hague Rules do not address the modalities by which the parties to the arbitration may consent to it nor the content of that consent, which are matters for the parties. Consent remains the cornerstone of business and human rights arbitration, as with all arbitration, and it can be established before a dispute arises, e.g. in contractual clauses, or after a dispute arises, e.g. in a submission agreement (compromis). Model Clauses may provide potential parties with options for expressing their consent to arbitration. In addition, like the UNCITRAL Rules, the Hague Rules do not address enforcement of arbitral awards made under these Rules, which are governed by national law and various treaty obligations, including in most cases the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. While these Rules have been conceived as a uniform set of rules, we acknowledge that the parties remain entitled to exercise their discretion in opting out of certain provisions that do not respond to their specific needs as arising out the dispute at issue. Certain other Model Clauses are being developed in this respect.” (Emphasis added.)
I have served in the Drafting Team under Judge Simma’s leadership since January 2018. My colleagues Martin Doe, Steve Ratner, and Katerina Yiannibas have helpfully crystallized elsewhere several of the main points of innovation contained in the Draft Rules, such as:
“1. provisions on facilitating settlement and mediation, and emphasizing the complementarity of arbitration to such procedures as the OECD National Contact Points system (Articles 1(6), 17(3), 42, and 51)
2. provisions to address the inequality of arms which may arise in such disputes (inter alia, Articles 5(2), 20(4), 24, 27(2), and 27(4));
3. the establishment of the Permanent Court of Arbitration as the default appointing authority, given its intergovernmental nature and experience in business and human rights disputes (Article 6);
4. procedures for multiparty claims and joinder by third parties (Article 17-bis);
5. a procedure for the early dismissal of claims manifestly without merit, developed on the basis of similar procedures in the ICSID, SIAC, SCC, and HKIAC Rules (as well as the proposed new ICSID Rules) (Article 23-bis);
6. provisions making the arbitral tribunal’s power over interim measures more robust, and at the same time more flexible (Article 26);
7. an emergency arbitrator mechanism elaborated on the basis of the ICC and SCC Rules (Article 26-bis);
8. specialized evidentiary procedures drawn up on the basis, inter alia, of the IBA Rules and Rules of the International Criminal Court, among others (Articles 27, 28, and 30(3));
9. measures to protect the identity of parties, counsel, and witnesses where such protections are warranted by the circumstances of the case, while ensuring due process is maintained for all parties (Articles 17(5), 28(3), and 37(5));
10. provisions on transparency and third-party participation (Articles 24-bis and 33-38);
11. tailored provisions on remedies in the business and human rights context (Article 40);
12. rules on applicable law that enhance flexibility and party autonomy (Article 41);
13. rules to protect the public interest in the case of confidential settlements (Article 42(1));
14. nuanced rules in respect of costs and deposits that encourage the tribunal to sensitive to the interests of access to justice (Articles 46-49);
15. an expedited arbitration procedure for small claims (Article 52); and
16. a Code of Conduct that reflects the highest standards for independence and impartiality in international dispute resolution (Annex).”
In this post, I do not aim to provide an authoritative commentary on the Draft Rules (which is exactly what our global online consultation procedure is for). Rather, and notwithstanding the explicit caveat drawn by the Drafting Team above on leaving the modalities and content of consent to arbitration to the parties, I instead offer my personal observations to examine the essence of main criticisms (see public comments of the Columbia Center for Sustainable Investment here as well as a few questions and comments I received at Harvard Law School in April 2019), directed against having the BHR Arbitration Rules in the first place: 1) whether companies and human rights victims would even consent to arbitration; and 2) if they do consent, whether one should view that consent with skepticism as to the authenticity of arbitration as a mode of access to justice for human rights victims. The gist of my argument is this: while the BHR Arbitration Rules will never purport to be the exclusively prescribed mechanism for human rights victims of transnational business conduct and neither does it presume to displace State-based judicial or non-judicial remedies, against the realities of a continuing limited universe of legally binding human rights recourse against the impacts of private transnational activities, we cannot afford to close off the arbitral option either. As human rights practitioners well know, no single dispute resolution mechanism for human rights disputes against transnational business is perfect, and even recent national court victories in Lungowe v. Vedanta (as spearheaded by my BHR Drafting Team colleague Richard Meeran of Leigh Day) depend on the jurisdictional openness of a State’s judicial system to transnational tort claims. The question, in my view, thus has to be reframed away from “why international arbitration?“, to “why not also international arbitration?“.