International arbitration as a means to protect human rights: analysis of the Hague Rules on Business and Human Rights Arbitration

This article analyses the Hague Rules on Business and Human Rights Arbitration that were published in December 2019. The Hague Rules state how arbitration proceedings should resolve disputes arising from the influence of commercial activity in general on human rights. The purpose of the article is to assess the efficiency of the Hague Rules in settling such disputes by examining their features. The first part of the article studies the possibility of referring human rights disputes to international arbitration. In particular, the author examines the current practice of international investment tribunals and specifies the following situations where arbitrators deal with issues of human rights violations: to accept jurisdiction over counterclaims by host states against foreign investors; to interpret and provide guidance for establishing international investment law standards; to reasonably reduce the amount of compensation awarded to foreign investors in the event of violation by the host state. The author also emphasises that the application of the Hague Rules will enable tribunals to fully exercise their jurisdiction over human rights disputes and to examine such disputes on their merits. Having established the general possibility of referring human rights disputes to international arbitration, the author proceeds by analysing certain features of the Hague Rules, and then considering provisions on the importance of collaborative settlement mechanisms, special requirements to arbitrators, culturally appropriate arbitration proceedings, the possibility of bringing multiparty claims, enhanced requirements to the transparency of the arbitration proceedings and other issues. Finally, the author delves into certain challenges that may impede the practical application of the Hague Rules. In particular, such challenges may include: the fact that the Hague Rules do not solve the problem of the companies’ lack of obligations to protect human rights; the problem of enforcing awards taken in accordance with the Hague Rules; the hindered access of individuals to arbitration proceedings. Despite the above challenges, the author concludes that the Hague Rules may become a rather powerful instrument as an additional mechanism to resolve human rights disputes.

Resolving Business and Human Rights Disputes – Is Arbitration the Way to Go?

The insufficient level of protection afforded to human rights violations caused by business-related activities of multinational enterprises has recently begun to garner increased attention. On an intergovernmental level, the elaboration of an internationally binding treaty regulating the activities of transnational corporations is underway. States have also taken initiatives on a national level to reflect their commitment in implementing the UN Guiding Principles on Business and Human Rights. In both respects, much work remains ahead. Against this background, a group of prominent lawyers have suggested the use of arbitration as an alternative venue for resolving business and human rights disputes. After a span over five years of concept elaboration, public consultation and drafting, the idea has materialised in the creation of the Hague Rules on Business and Human Rights Arbitration (the Hague Rules or Rules), which were officially launched on 12 December 2019. This paper aims to take stock of the proposed Rules and the context of their appearance and examine if arbitration is a suitable medium for resolving business-related human rights infringements. In doing so, it discusses the legal framework governing the confluence of business and human rights as well as the features which speak both in favor and against arbitration as a means of settling business-related human rights disputes. The provisions of the Hague Rules are addressed in detail, particularly where default rules where tailored to better respond to the needs of human rights disputes. The paper concludes with an assessment of arbitration’s potential to ensure protection and enforcement of human rights in international business and reflects whether the Rules are robust enough to empower victims in this endeavor.

The Hague Rules on Business and Human Rights Arbitration

Let me start with the goals of the Hague Rules on Business and Human Rights Arbitration. The Business and Human Rights Arbitration Project dates back to 2013. In that year the U.S. Supreme Court ruled in the Kiobel v. Shell case that the U.S. Alien Tort Statute of 1789 has no extraterritorial effect. It denied victims of human rights abuses by companies access to U.S. courts to obtain damages for alleged violations. As a consequence, the idea arose that arbitration could be used as an alternative route for dispute resolution available to corporations and rights holders to resolve their disputes in the business and human rights field.