Abstract
This paper analyses the potential for international arbitration to provide effective remedy for business-related human rights abuses. Since the proliferation of international arbitration, the default arbitration mechanism as it stands has been contemplated by and large for the resolution of cross-border commercial disputes where the primary interests are efficiency and finality. However, there is evidence that human rights issues have emerged in international arbitration. Accordingly, if arbitration is to be used in such cases, the mechanism must be adapted in light of the particular issues that arise in the adjudication of human rights; the balance between transparency and confidentiality, reprisals against victims and human rights defenders, collective redress, financial assistance, the applicability of human rights standards. If proper procedures are in place to contemplate the particular interests involved in cases where the substantive claims involve human rights, the advantage of international arbitration is that it can provide direct access in a neutral forum for holding companies accountable where national jurisdictions are unavailable or difficult to access. This article begins by analysing the historical development of international arbitration so as to demonstrate a pattern of adaptability and flexibility vis-à-vis the subject matter of cross-border disputes. The article will then contemplate the potential of and concerns for international arbitration, putting forward specific recommendations for reforms of the international arbitration mechanism in cases where the substantive claims involve business-related human rights abuses.
Keywords
1. Introduction
In a supply chain-based global business context where corporate actors are organised into separate legal persons incorporated in different States with varying human rights standards, the protection of human rights and the accountability of private actors for their abuse is a complex challenge. As cases of business-related human rights abuses have emerged across the globe, so has the evidence of victims’ difficulty to access effective remedy, both legally and practically. 1 Actions must be taken to avoid a denial of justice and to provide uncomplicated access to remedy. The policy framework for access to remedy for victims of business-related human rights abuses is set out in the United Nations Guiding Principles on Business and Human Rights (UNGP), which was unanimously endorsed by United Nations Human Rights Council in 2011. The UNGPs clarify the responsibilities of States, businesses and those affected by business-related human rights abuses. 2 One of the foundational principles of the UNGPs is that States must ensure effective access to remedy for victims of business-related human rights abuses. As part of a comprehensive system for remedy, the UNGPs recommend that States should take steps beyond ensuring the effectiveness of domestic judicial mechanisms to address business-related human rights abuses. 3 In particular, this includes facilitating access to both State-based and non-State-based non-judicial mechanisms. 4
Arbitration is a non-judicial mechanism, based on party consent, which provides a final and binding resolution by one or more appointed arbitrators. If proper procedures are in place that take into account the particular interests involved in cases where substantive claims concern business-related human rights abuses, international arbitration can provide direct access in a neutral forum where national jurisdictions are unavailable or difficult to access. Throughout history, various cross-border adjudication challenges have emerged where foreign disputing parties are faced with the absence of a central governing power and instead turn to a neutral forum for conflict resolution; as exemplified in matters of war and disarmament, international commercial transactions, foreign investor protection, and environmental protection. As such challenges emerged, arbitral process adapted accordingly. An analysis of some of the key developments of the arbitration mechanism demonstrates some of the limitations of process vis-à-vis substantive law. Procedural rules can only go so far to provide solutions for challenges that ultimately must be solved by substantive law. On the other hand, developments in arbitral process have also illustrated that certain safeguards can be given to parties while relevant substantive law develops. This paper explores the development of the arbitral mechanism and the ways in which it adapted to cross-border adjudication challenges, identifying which patterns of change would be best applied to the use of the mechanism in matters concerning business-related human rights abuses. This paper then sets out the ways in which arbitration could be advantageous considering the particular issues presented in business-related human rights cases and where and how the mechanism should adapt so that it can provide effective remedy. The adjudication of business-related human rights abuses presents particular challenges; including striking the balance between transparency and confidentiality, reprisals against victims and human rights defenders, collective redress, financial assistance, the applicability of human rights standards. While some of those issues will have to be resolved in substantive law (domestic law, international law, maybe even a binding treaty on business and human rights), arbitral process should once again adapt accordingly to provide certain safeguards to the parties.
2. A pattern of adaptability and flexibility of the arbitration mechanism to cross-border challenges
From a contemporary perspective, arbitration is regarded as an alternative to litigation, a non-judicial remedy. From a historical perspective, arbitration 5 is an ancient form of conflict resolution that predates the sovereign state and formal legal systems. The key feature of arbitration, now and then, is the mechanism’s flexibility. The adaptability of the mechanism to the nature of the dispute and to the parties is what makes arbitration as relevant now as it was in ancient times.
Arbitration emerged in a context that was marked by an absence of a centralised governing power over disputing parties, wherein the neutrality and knowledge of a person chosen to finally resolve a conflict were essential. Some of the first evidences of arbitration date back from the archaic period in Greece and are noted in Homer’s Iliad. 6 There are further evidences of arbitration (or tahkim in Arabic) in the pre-Islamic period amongst the tribes of the Arabian Peninsula. The arbitral process was based on party autonomy: the disputing parties chose the arbitrator as well as the place and date for the hearing, the evidence and the arguments. 7 After the rise of Islam, the validity of arbitration for the settlement of disputes was recognised in the Koran as a contract based on party autonomy and is therefore recognised under contemporary Shari’a law. 8 The possibility of selecting an adjudicator who is best suited to resolve a particular dispute is still a foundational tenet of the arbitration mechanism.
This notion of establishing a neutral and binding dispute settlement mechanism between rather than within nations is the foundation of inter-State conflict resolution in the modern era. In 1899 the first International Peace Conference was held at The Hague, establishing the Permanent Court of Arbitration (hereinafter ‘PCA’) through the adoption of the Convention for the Pacific Settlement of International Disputes. 9 The negotiations principally concerned global issues of disarmament, laws of war and war crimes. The Convention preserved the notion of party autonomy in the selection of arbitrators 10 and recognised that “in questions of a legal nature, and especially in the interpretation or application of International Conventions, arbitration is recognised by the Signatory Powers as the most effective, and at the same time the most equitable, means of settling disputes which diplomacy has failed to settle.” 11 Over the course of the following century, arbitral procedure would adapt beyond the particularities of inter-State disputes and develop to take into consideration the procedural safeguards needed for disputes between private actors; namely, issues concerning recognition and enforcement.
After the Second World War, the post-war context for global economic reconstruction and recovery set off an exponential increase of cross-border commercial and investment activity. The turn of the century concept of the arbitration mechanism as a means of resolving inter-State disputes made way for the proliferation of international commercial and investment arbitration. This was due in large part to the adoption of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1958 (hereinafter ‘New York Convention’). 12 The New York Convention obliges Contracting States to recognise and enforce foreign or non-domestic awards in the same way as domestic awards, as well as requiring national courts to give full effect to arbitration agreements by requiring courts to enforce arbitration agreements and deny parties access to court in contravention of their agreement. The result on a global scale is that foreign arbitral awards in matters concerning international commercial transactions are more widely and directly enforceable than foreign judgments. The New York Convention, a legal mechanism that ensures less legal hurdles for recognition and enforcement of arbitral awards than decisions from national courts, is an oft-cited advantage of international arbitration. Important to note, however, is that the New York Convention was negotiated with certain deference to the commercial relationship between disputing parties. Under Article I(3), States may choose to apply the Convention “with to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration.” 13 Of the 159 Contracting States to the New York Convention, 48 have made the “commercial” reservation (including the United States, China, India and a fraction of EU Member States: Croatia, Cyprus, Denmark, Greece, Poland, Romania and Serbia). 14 The “commercial” reservation does not limit the applicability of the Convention to commercial disputes, but would require that the relationship between the disputing parties be commercial in nature.
In the same context of post-war reconstruction and economic recovery, a need also emerged for an international mechanism for the protection of cross-border investment. In the 1960s, the “first Development Decade”, it became clear that economic growth in developing countries needed private sector investment to supplement the inflow of governmental resources from bilateral and multilateral sources. 15 To promote investment from the private sector, the international community considered various mechanisms to safeguard against uncertainties and challenges that faced investors in any host State, and in particular, in those that had recently attained self-government. 16 After a controversial attempt by the Organisation for Economic Cooperation and Development (OECD) 17 to develop a framework on substantive standards for the compensation of foreign investment expropriation, the focus shifted instead to the process for the resolution of individual investor disputes. 18 The result was the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (hereinafter the ‘ICSID Convention’), establishing the International Centre for the Settlement of Investment Disputes (ICSID), one of the five development institutions of the World Bank. 19 ICSID’s mandate is to promote increased flows of international investment by providing a neutral and effective forum for the resolution of disputes between host governments and foreign investors by administering arbitration and conciliation. 20 This development demonstrates another pattern. It may be more efficient to develop consensus concerning procedural matters, before substantive law provisions are finally adopted in emergent areas of international law. In the case of investment protection, it was more efficient to develop consensus concerning investor-State dispute settlement rather than adopt a comprehensive, international binding treaty for investment protection. This is since regulated in a growing body of international investment law and in the 3000 international investment agreements.
In the area of business and human rights, there is not yet a binding international instrument. The United Nations Human Rights Council has established an open-ended intergovernmental working group (OEIGWG) with the mandate to elaborate an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights. In the fall of 2017, the OEIGWG Chairmanship prepared an elements paper for substantive negotiations on a draft treaty, but no draft of the treaty had yet been developed as there was still significant debate concerning the scope and substance. 21 In the last session of the OEIGWG in October 2017, there was debate among the State delegations whether the adoption of a legally binding instrument was premature, as more time was needed to implement the United Nations Guiding Principles. 22 As these are not mutually exclusive processes, treaty negotiations of course do not detract from a State’s ability to facilitate access to domestic judicial processes and non-judicial mechanisms.
3. Models for the development of arbitral process in matters concerning business-related human rights abuses
Certain models for the development of arbitral process in matters concerning business-related human rights abuses can be extracted from the development of the United Nations Commission on International Trade Law (UNCITRAL) Rules on Transparency in Treaty-based Investor-State Arbitration and the PCA Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources. In both cases, the Member States decided that the subject matters had a strong public interest, as do matters concerning business-related human rights abuses.
3.1. UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration
While the default arbitration mechanism is generally conducted in camera with confidentiality of proceedings and the resulting awards, the principle of transparency has garnered greater attention in recent years. The policy shift towards more transparency in international arbitration arose in the context of matters arising under an investment treaty where the State is a disputing party. 23 The policy shift was predicated on the need to make adjustments for the inherent public interest. On one hand, the public has an interest in the outcome of the arbitration, which can involve large sums of monetary liability from public funds. On the other hand, the public has an interest in the conduct of the arbitration proceedings; including, more accountability of arbitrators from public scrutiny of the award, the notice of and participation in hearings, knowledge of government misconduct, access to the award to be able to study and build a coherent body of lex mercatoria jurisprudence, to name a few. The UNCITRAL Working Group on Arbitration and Conciliation took up the negotiation of a draft text in 2010. In 2014, the UN General Assembly adopted the Convention on Transparency in Treaty-based Investor-State Arbitration (hereinafter the ‘Mauritius Convention’), which entered into force on 18 October 2017. 24
The Mauritius Convention, which renders the 2013 UNICTRAL Rules on Transparency in Treaty-based Investor-State Arbitration (hereinafter the ‘UNCITRAL Transparency Rules’) applicable to disputes arising out of investment treaties that were concluded prior to 1 April 2014, is evidence of an important reform to the otherwise non-participatory and confidential nature of international investment arbitration. If applied, or where the parties consent, the UNCITRAL Transparency Rules would make the following documents available to the public: the notice of arbitration and response, the statements of claim and of defence, any further written statements or written submissions by a disputing party, a table listing all exhibits to those documents, any written submissions by the non-disputing treaty Party/Parties and by third parties, transcripts of hearings, where available, and orders, decisions and awards of the arbitral tribunal. 25 The Rules further stipulate, upon discretion of the arbitral tribunal in consultation with the parties, to allow submissions from non-disputing parties. 26 This is now one method through which civil society could raise human rights considerations in treaty-based international arbitration. Pursuant to the Mauritius Convention, the UN Secretary General, through the UNCITRAL Secretariat, has created a repository (the Transparency Registry) for the publication of information and documents in treaty-based investor-State arbitration. 27 All in all, if applied, the UNCITRAL Transparency Rules render arbitral proceedings more transparent and participative than national court proceedings.
3.2. PCA Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources
Other evidence on the subject matter of driven adaptability of the international arbitration mechanism is found in matters relating to the environment and natural resources. In 2001, the PCA adopted a set of comprehensive environmentally tailored procedural rules: Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources (hereinafter ‘PCA Environmental Rules’). A working group and committee of environmental law and arbitration experts drafted the PCA Environmental Rules. The Rules were adopted namely to “reflect the particular characteristics of disputes having a natural resources, conservation, or environmental protection component [and] the public international law element which pertains to disputes which may involve States and utilisation of natural resources and environmental protection issues.” 28
While the PCA Environmental Rules are modelled on the UNCITRAL Arbitration Rules, which emphasise party autonomy and flexibility, there are certain key features that take into consideration the particular needs of environmental dispute resolution. 29 For example, pursuant to Article 8(3) of the PCA Environmental Rules, the PCA will make available a list of arbitrators considered to have relevant expertise in the subject matter of the dispute and are nominated by Member States and the PCA Secretary General. The list of specialised arbitrators is maintained and updated by the PCA and can be accessed directly from the PCA website. 30 Due to the highly technical and scientific nature of many environmental disputes, the drafting committee of the PCA Environmental Rules acknowledged that the arbitral tribunals or conciliation committees should be composed of skilled experts concerning the subject matter of the dispute. The technical demands on the arbitral tribunal are becoming increasingly recognised. For example, concerning the composition of the arbitral tribunal of the Indus Waters Kishenganga arbitration (Pakistan v. India) in 2013, the first arbitration under the 1960 Indus Water Treaty, the treaty provided that one member of the arbitral tribunal had to be a “highly qualified engineer”. Similarly, under Article 27(5) the PCA Secretary General will make available a list of technical experts for potential appointment as expert witnesses, though the arbitral tribunal is not limited in its choice of experts identified by the list. Moreover, site visits are contemplated under the Rules, pursuant to Article 16(3), the arbitral tribunal and parties may meet at any place deemed appropriate for the inspection of property or documents. To assist the arbitral tribunal, site visits have become increasingly used in international arbitrations under the auspices of the PCA. Under the founding Conventions of the PCA, the arbitral tribunal and/or experts may use site visits to evaluate environmental considerations. In the aforementioned Indus Waters Kishenganga arbitration for example, two site visits were held to inspect the Kishenganga Hydroelectric Plant Project at issue in the case. 31 Moreover, the arbitral tribunal may, at the request of any party, make provisional orders to prevent serious harm to the environment falling within the subject matter of the dispute (Article 26(1)). There is no explicit rule however, for the participation of non-disputing parties or amicus curiae participation without the explicit consent of the parties.
To promote the applicability of the PCA Environmental Rules, arbitration clauses referencing the PCA have been included in a number of international environmental protection agreements: the Convention on International Trade and Endangered Species of Wild Fauna and Flora (1973), the Convention on the Conservation of Migratory Species of Wild Animals (1979), the dispute resolution Protocol (2000) to the Convention for the Protection of the Alps, Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (“WCPF Convention”) (2000), Protocol on Civil Liability and Compensation for Damage Caused by the Transboundary Effects of Industrial Accidents on Transboundary Waters to the 1992 Conventions on the Protection and Use of Transboundary Watercourses and International Lakes and on the Transboundary Effects of Industrial Accidents (2003). 32 With the gradual increase of relevant cases in recent years, 33 the PCA Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources provide a precedent and a model for similar rules and guidelines to be developed in other specialised fields in cross-border disputes. The reforms to the default arbitration mechanism in a comprehensive set of arbitration rules for business-related human rights, however, can and should go even further than the aforementioned rules.
4. Concerns and potential for the adoption of international arbitration rules in matters of business-related human rights abuses
Looking at the examples extracted from past, the adaptability of the arbitration mechanism in the emergence of various cross-border concerns, lends weight to the argument that further adaptation of the mechanism is feasible in matters concerning business-related human rights abuses. Considering a situation in which national jurisdiction for judicial remedy is unavailable or difficult to access, international arbitration can provide another option for remedy. While the very nature of the international arbitration mechanism provides some advantages for providing effective remedy to victims of business-related human rights abuses, the mechanism lacks a number of appropriate measures needed to facilitate access for victims and to promote legitimacy of the remedy. The adjudication of business-related human rights abuses presents a particular set of considerations; including striking the balance between transparency in the public interest and confidentiality for witness protection and protected business information, specialised adjudicators and experts in human rights, the equality of arms and financial assistance, collective redress, the applicability of human rights standards, and in the context of arbitration, the issue of party consent and third party beneficiaries. Some of these concerns could be addressed in a set of procedural rules while others will have to be resolved in substantive law or external mechanisms.
To this end, work has been taken up by the Working Group on International Arbitration of Business and Human Rights (hereinafter, ‘Working Group’) composed of international jurists, myself a member. 34 After a three-year consultation with various stakeholders ranging from arbitral institutions to civil society, the Working Group published a proposal for the drafting of arbitration rules in matters concerning business-related human rights abuses in February 2017. 35 The project aims to create a set of rules to make international arbitration available to resolve disputes arising from human rights abuses occurring in supply chains and other settings. A Drafting Team has since been assembled, chaired by Bruno Simma and consisting of a diverse group of experts in arbitration, human rights, global business operations, and country-specific challenges. The Drafting Team held its first meeting in January 2018 to identify and to hold initial discussions of some key issues relevant to the preparation of a set of arbitral rules in international disputes concerning business-related human rights abuses, though no decisions were taken on the scope or content of the rules. 36
Despite the need for certain procedural safeguards that contemplate issues particular to human rights adjudication, human rights considerations have already begun to emerge in international arbitration. 37 To understand what specific measures need to be adopted to provide effective access to justice for victims of business-related human rights abuses looking forward, it is important to identify the specific areas of potential and of concern relating to the international arbitration mechanism and what adaptations should therefore be considered. 38
4.1. Consent to arbitrate 39
The availability of arbitration as a mechanism for the resolution of business-related human rights abuses depends from the outset on the parties’ consent to arbitrate. Under the New York Convention, a valid arbitration agreement, in writing, is a requirement for the recognition and enforcement of an arbitral award. 40 There are a number of scenarios possible to establish party consent to arbitration in a business and human rights context. In terms of the parties themselves, cases may arise between victims of human rights abuses and companies (V2B) or between different companies in a supply chain (B2B). Parties can consent to arbitrate ex ante or ex post via contract. In a B2B there is privity, so there is less concern to establish party consent. The challenge concerning party consent is more likely in a V2B scenario where it might be more difficult to establish privity and therefore an incentive for a company to submit to arbitration. In the V2B scenario, there are a number of possibilities. One option is that a company makes an open offer to arbitration to a defined class of recipients or persons that can otherwise assert some relationship to the business. Third-party beneficiary principles could provide a way to establish consent to arbitration, in such cases however, it would be highly unlikely for a company to offer open consent to an unidentified group of persons, particularly without privity. Another option could be a standing instrument, similar to the Bangladesh Accord on Fire and Building Safety or the United Nations Global Compact model, which businesses sign up to if and where they provide agreements to arbitrate- as is the case in the Bangladesh Accord. These are matters that cannot be settled in arbitration rules, but rather in the arbitration agreement itself in whatever instrument it manifests. Model clauses for an agreement to arbitrate would be very useful in this regard.
4.2. Neutrality and procedural flexibility
In a cross-border context for the resolution of disputes, the arbitration mechanism provides certain key advantages to disputing parties, but not without concern. First and foremost, it provides the choice of a neutral forum for disputing parties. In matters with the presence of a foreign element, this sets off a series of advantages for non-nationals. For example, disputing parties would not need to contract local counsel, as would be the case in litigation. A neutral forum offsets fairness concerns including bias or corruption when entering the national court of an opposing party. For non-State entities or persons, generally it provides a direct access to international remedy without the need of exhausting domestic remedies, as is often the case in access to international human rights courts, and supplants the need for diplomatic protection. While the geographic concentration of international arbitral practice tends to be centred in Europe and North America (jurisdictions that tend to be more ‘arbitration-friendly’), arbitration is a moveable feast and proceedings can be conducted anywhere in the world (even online) and in any language(s). 41
4.3. Selection and accountability of arbitrators
Another oft cited advantage of arbitration is that parties choose their adjudicators. This allows parties to choose an arbitrator with specialised expertise in the subject matter of the dispute. This becomes particularly relevant in matters relating to technical or specialised subject matter; for instance, in disputes relating to construction, environmental damage, investment law, indigenous communities, mining, global supply chain management, to name a few. In matters concerning business-related human rights abuses, this would potentially allow for a case to be resolved by the most knowledgeable experts in human rights and other relevant subject matter(s) of the dispute. Work to identify a diverse set of arbitrators and experts competent to adjudicate matters concerning business-related human rights abuses can be done by the secretariat of international arbitral institutions. 42 A list of specialised arbitrators and experts was devised by the PCA pursuant to the Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources and to Outer Space Activities. While arbitration institutions can produce lists of specialised arbitrators, under the aforementioned PCA rules for instance, the parties’ choice is not restricted to the list. If a set of arbitral rules mandated parties to select an arbitrator from a list, this would cause a tension with party autonomy, which is otherwise a salient feature of the arbitration mechanism.
On the other hand, the accountability of arbitrators raises concerns. To begin, there are no international qualifications for arbitrators. Unlike judges, arbitrators are not public servants paid by the State. Instead, they are appointed and paid by the parties themselves. The cost arrangement raises some concern over the independence and impartiality of contracted arbitrators. To this point, the New York Convention holds the lack of impartiality of an arbitrator as one of the few grounds for refusal of recognition and enforcement of an arbitral award. 43 Publicity of the award also stands to heighten the accountability of arbitrators. The knowledge that peers and future clients will scrutinise an arbitrator’s reasoning is a greater incentive in this regard than maintaining the award confidential. A related concern is the dual arbitrator/counsel role. The concern is that the decision of an arbitrator in one case might advance the interests of a client in a case he or she is handling in another case as counsel. 44 Restrictions concerning an arbitrator’s appointment would again create a tension with party autonomy.
4.4. Confidentiality vs. transparency
While confidentiality in international arbitration is an advantage in the context of commercial disputes between private parties, the lack of transparency raises concerns when one of the parties to the arbitration is a State or when the substantive claim relates to public law issues including, but not limited to, the environment or human rights. The arbitration mechanism is not confidential by nature; it is a creature of contract so that the confidentiality of the proceedings and/or the award depends on agreement by the parties either expressly or implicitly through the parties’ choice of arbitration rules. The UNCITRAL Transparency Rules contains mandatory and default provisions providing for the publicity of the notice of arbitration, documents, hearings and the award. A provision concerning open hearings was contemplated in the proposed revision of the ICSID Rules in 2005. The proposed revision would have given discretion to the arbitral tribunal, after consultation with the ICSID Secretariat, to allow other persons to observe all or part of the hearings. The revised rule, Article 32, allows other persons to attend all or part of the hearings, upon the discretion of the arbitral tribunal after consultation with the Secretariat, but gives a veto to either disputing party. 45 This does not change the fact that parties can and do choose to conduct fully transparent arbitration proceedings. 46 As concerning the publicity of the award, pursuant to Article 48(4) of the ICSID Arbitration Rules, the Secretariat cannot publish the award without the consent of the parties, but can however, publish the legal reasoning of the arbitral tribunal in its publications excerpts. In comparison, Article 34 of the PCA Arbitration Rules 2012 provides that any publicity of the award depends on the consent of all parties. 47 In cases where the substantive claims relate to human rights, not only is there an inherent public interest to warrant publicity of the conduct of the arbitration, but there is also the added advantage of the power of publicity of business-related human rights abuses, and the reputational damage that ensues, to produce satisfactory outcomes for victims.
Transparency provisions would be a necessary component of arbitral rules in matters of business-related human rights abuses. Model transparency provisions can be extracted from the UNICTRAL Transparency Rules and should provide for publicity of the notice and commencement of arbitration, publicity of the final award, open hearings, and public access to documents (the notice of arbitration, the response to the notice of arbitration, the statement of claim, the statement of defence, any other written statements or submissions by a disputing party, a table listing all exhibits to those documents, any written submissions by non-disputing parties or third parties, transcript of hearings, orders of the arbitral tribunal). Furthermore, a repository would be necessary to deposit the aforementioned documents. It would have to be determined, particularly in consideration of the associated costs, whether to adapt the existing Transparency Registry of the UNCITRAL Secretariat or to develop separate repositories.
The UNCITRAL Transparency Rules are silent on the transparency of settlement decisions. While there is an argument that the content of a settlement decision should be made available to the public in as much as a final award would be made available to the public, the very publicity of a settlement decision would likely affect the negotiation of its content. One of the goals of the UNGPs is to provide effective remedy for victims. Herein lies a tension, between achieving the best possible outcome to a remedy and the issue of rights-compatibility in line with the objectives of transparency. Currently, the PCA is administering two arbitrations arising under the Accord on Fire and Building Safety (Bangladesh Accord); a legally binding agreement to ensure safety in garment factories. In 2016, IndustriALL Global Union and UNI Global Union commenced two arbitrations under the Accord and the UNCITRAL Rules of Arbitration 2010 against two distinct global fashion brands. In both cases, the claimants and the defendants filed joint suspension notices advising the PCA that they have entered into settlement agreements. 48 In each case, the contents of the settlement agreements remain confidential, as do the names of the corporate defendants.
The complexity of the transparency debate is further illustrated by the need to establish parameters for exceptions. As acknowledged in Article 7 of the UNCITRAL Transparency Rules, there are exceptions to transparency that should also be accounted for, in particular: “confidential business information, information that is protected against being made available to the public under the treaty, information that is protected against being made available to the public in the case of the information of the respondent State, under the law of the respondent State, and in the case of other information, under any law or rules determined by the arbitral tribunal to be applicable to the disclosure of such information, or information the disclosure of which would impede law enforcement.” 49 In a business and human rights context, a perhaps overlooked concern is the interest in confidentiality for victims and witnesses. There is an increasing number of cases of intimidation, attacks and reprisals against human rights defenders. 50 There is also evidence of retaliation from host States against companies who speak out and advocate human rights. 51 Under the UNCITRAL Transparency Rules, it is the arbitral tribunal that has discretionary power, after consultation with the parties, to determine what information will be redacted or made available to the public. 52 In making this determination, Article 7 additionally provides that the arbitral tribunal should take “appropriate measures to restrain or delay the publication of information where such publication would jeopardise the integrity of the arbitral process because it could hamper the collection or production of evidence, lead to the intimidation of witnesses, lawyers acting for disputing parties or members of the arbitral tribunal, or in comparably exceptional circumstances.” 53
Transparency is not an end, but rather a means to engage more public scrutiny and participation in international arbitration. Amicus curiae, friends of the court, are non-disputing parties who are also not parties to the treaty in dispute, in the case of investment arbitration. Submissions by third parties can provide useful factual or legal information to the arbitral tribunal. Until the adoption of the UNCITRAL Transparency Rules, there was no explicit reference to third party submissions in international arbitration rules. Article 4 of the UNCITRAL Transparency Rules provides a model for a provision for BHR Arbitration Rules concerning written submissions by third persons to the dispute. The cited article however, does not explicitly consider other forms of participation, such as statements at hearings, which could be determined useful by the parties or the arbitral tribunal. 54 In the interest of transparency and the integrity of the arbitral proceedings, as identified in Article 4(2) of the UNCITRAL Transparency Rules, 55 a provision for third party participation should require the third person to disclose their interest in the dispute and any direct or indirect connection, financial or otherwise, with the disputing parties. In cases concerning business-related human rights abuses, amicus curiae participation would be important. On one hand, particularly in the case of NGO submissions, it could be a means of representing the voices of victims who do not come forward, for fear of reprisal, or who cannot otherwise participate in the arbitration, for legal or practical reasons. On the other hand, amicus curiae participation could fill an important gap, as depending on the case, it might be difficult to otherwise provide all the relevant expertise needed.
4.5. Cost, financial assistance and collective redress
A practical concern about international arbitration, as well as litigation, is the issue of its cost, which can result in a threshold denial of justice. Party autonomy in arbitration extends to decisions over practical procedural considerations that can significantly lower costs. For example, parties can agree to set a limit to the number of days of hearings, to limit the number of pages of pleadings and to limit the size of the arbitral tribunal. Depending on the complexity of the case, this may or may not be an appropriate solution to saving costs. While the issue of final assistance goes beyond the scope of a set of arbitral rules, there are institutional mechanisms that might be considered in parallel. For instance, the PCA currently has in place a Financial Assistance Fund. 56 The PCA Financial Assistance Fund was established in 1994 with the aim of assisting developing countries with the costs of international arbitration. As it currently stands, the Fund is only available to States. Voluntary contributions to the Fund are accepted from States, intergovernmental organisations, national institutions, as well as natural and legal persons. 57 Rather than creating a new fund for cases involving substantive human rights claims, the PCA Member States could consider reforming the existing Financial Assistance Fund to provide assistance to non-State parties. Moreover, other international arbitration institutions could develop financial assistance funds as well or consider developing a pro bono list of skilled and knowledgeable arbitrators and counsel.
Another way of mitigating costs and improving the efficiency of international arbitration is through collective redress. In 2000, the PCA established a Steering Committee on International Mass Claims Processes to consider such matters as funding, drafting rules of procedure, establishing standards of proof, defining the respective functions of arbitrators and the secretariat and utilising information technology. 58 Steering Committee members include individuals who have experience in two or more mass claims processes currently operational as an arbitrator, administrator or counsel. 59 These processes could serve as a model for providing remedy for business-related human rights abuses involving a large class of victims. Considering that business-related human rights abuses can often involve a large number of victims, a framework for a mass claims procedure would be highly relevant and useful. Collective redress is already emerging in both institutional and ad hoc arbitration 60 and there is a need to clarify procedural aspects in these cases. 61 Consent to collective redress in international arbitration would have to come from the arbitration agreement, not the arbitration rules. Here again, the inclusion of model arbitration clauses for mass claims would be useful.
4.6. Choice of law, arbitrability, recognition and enforcement
Another extension of party autonomy in international arbitration is the choice of applicable law: both concerning substantive law as well as the arbitration rules that determine procedure. In the absence of the choice of substantive law by the parties, international arbitration rules generally provide that it is the arbitral tribunal that will determine the applicable law. 62 In matters relating to substantive human rights claims, the parties, or the arbitration tribunal in the absence of party agreement, can choose to apply international human rights instruments. The analysis and evaluation of the human rights abuses will depend upon the applicable substantive standards. 63 While in theory the parties could choose to directly apply international human rights instruments, in practice this is less likely. Not only would model clauses be useful in this regard, but so also would a set of arbitration rules that set out how an arbitral tribunal may identify the applicable substantive law. Unlike national courts, arbitral tribunals can apply a diverse set of domestic and international norms, including soft law instruments such as the UNGPs and OECD Guidelines for Multinational Enterprises.
Those critical of the international arbitration mechanism question the arbitrability of substantive human rights claims. This issue of arbitrability 64 is not resolved under public international law; rather it is resolved in the national arbitration law of the seat of the arbitration or in the State(s) where recognition and enforcement is sought. Consider for example that individual labour disputes are arbitrable in the United States but not in France. As a result, different jurisdictions can consider different matters appropriate for arbitration. Of note, both an arbitration agreement and an arbitral award can be denied enforcement on grounds of non-arbitrability. Ultimately, the effectiveness of arbitration agreements and arbitral awards depends on national jurisdictions and the New York Convention and cannot be settled by arbitration rules. 65 The nationalisation of arbitrability, as a consequence, contributes to the fragmentation of international human rights law. Greater coherence concerning arbitrability, particularly as it concerns matters related to human rights, would provide greater legal security in cross-border disputes.
4.7. Oversight of award compliance
In a commercial context where the premium is on efficiency, the finality and the non-reviewability of an arbitral award is considered an advantage of international arbitration. Not only is the finality of an award one of the most salient features of the arbitration mechanism it is also what strikes one of the greatest distinctions of arbitration from litigation. Those critical of the international arbitration mechanism argue that the non-reviewability of awards detracts from the legitimacy of the remedy. For parties seeking appellate review, litigation would be a more optimal form of dispute resolution. Nevertheless, as arbitration is based on party autonomy, parties to the arbitration can mutually consent to establish an appellate procedure.
Appellate review was considered at the 1899 International Peace Conference establishing the PCA, but ultimately was not made part of the default arbitration mechanism. 66 The PCA Arbitration Rules 2012 are silent on appellate review, and while theoretically possible upon agreement of the parties, this possibility has yet to manifest in practice. In the latest revision of the ICSID Arbitration Rules, the ICSID Secretariat considered the proposal for an international appellate procedure. However, the Administrative Council found that an attempt of an ICSID appellate mechanism to be premature and the proposal was not adopted in the last revision of the Rules, which came into effect in 2006. 67
The finality of an award is another salient feature of arbitration. Rather than adopt a procedure for appellate review, which would significantly alter arbitration more akin to litigation, another option would be to institute award compliance. To ensure the proper enforcement of the award in a case concerning business-related human rights abuses, oversight of award compliance and implementation could be useful. There is an existing precedent for compliance in the Rules of the International Tribunal for the Law of the Sea (ITLOS) 68 and also exceptionally in the practice of the International Court of Justice for matters arising under the Convention for the Elimination of All Forms of Racial Discrimination. 69 In a set of arbitration rules for matters concerning business-related human rights abuses, this can be done in at least two ways. First, the arbitration agreement can be adapted to extend the competence of the arbitral tribunal to cover the period of enforcement and implementation of the arbitral award. To this end, the inclusion of model arbitration clauses would be useful. Alternatively, the rules can provide for a reporting requirement to the administering arbitral institution. The latter option of course would only be available to parties choosing institutional arbitration.
5. Conclusion
Business-related human rights abuses have garnered increased attention in the last decades and questions concerning responsibility and justice must be resolved. Specifically, action must be taken to provide and to facilitate access to remedy for victims of business-related human rights abuses. Under the UN Guiding Principles framework, States should take the appropriate steps to ensure the effectiveness of both judicial and non-judicial mechanisms. This includes international arbitration. The development of international arbitration evidences a neutral and flexible mechanism capable of adaptation to the subject matter of cross-border disputes. The international arbitration mechanism has been adapted to resolve conflicts between States, international organisations, individuals, and any combination thereof in a range of disputes from international border issues to investment, commercial contracts to outer space activity. But the form must accommodate the substance. The adaptability of arbitration allows reforms that could render the mechanism more effective than the default mechanism in providing remedy for business-related human rights abuses. While the international arbitration mechanism provides certain advantages relating to the neutrality of the forum, the choice of language(s), the choice of law, the flexibility of procedure, the selection of specialised arbitrators and experts, recognition of enforcement of an arbitral award under the New York Convention, certain aspects of the mechanism would need to be adapted in light of human rights considerations; particularly as concerning transparency, protection against reprisals, amicus curiae participation, costs, collective redress, the applicability of human rights standards, and award compliance. Not only is it possible that the arbitration mechanism evolves, but in a landscape where victims of business-related human rights abuses are being denied access to justice and there is a need to fill the gap in victim protection, it should.
Footnotes
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The research for this article was funded by the European Commission, Directorate-General Justice, Civil Justice Action Grant (Project 400000661).