Keywords: human rights responsibilities of transnational corporations· extraterritorial human rights obligations· extraterritorial jurisdiction· preventive due diligence obligations 

 

Human rights violations by transnational corporations are a focus of concern in International Human Rights Law (IHRL) and in the international jurisprudential circle. Theoretically, it involves such essential issues as the subject and the right of jurisdiction of the International Law, and the extraterritorial application of the IHRL. In practice, it deals with the implementation of international human rights obligations and the regulation of transnational corporations by the host and home countries through legislative, administrative, and judicial measures. It is precisely because transnational corporations are not the subject of international law that regulating transnational corporations with the International Law always fails to be fully advanced. Therefore, even though such violations occur frequently, they cannot be effectively prevented or cracked down on due to the imperfect legal system or

government inaction.

 

The United Nations has been working on the issue of the human rights responsibilities of transnational corporations over the years and has adopted two solutions for regulating transnational corporations: one is from the perspective of human rights responsibilities of business enterprises and the other is under the framework of the dual human rights responsibilities of the state and the enterprise. Given the bottleneck that restricts the issue of Human Rights Responsibilities of Transnational Corporations in recent years, the United Nations has gradually shifted the focus of regulation to national obligations and responsibilities and passed the zero draft of the Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and Other Business Enterprises (hereinafter referred to as the “Legally Binding Instrument”) and later its revised draft between July 2018 and October 2020, to incorporate the human rights responsibilities of transnational corporations into the scope of national human rights obligations for supervision. The above-mentioned Legally Binding Instruments have not only strengthened the obligations of national prevention and protection but also made breakthroughs in the extraterritorial application of human rights obligations and such. Most of the current research, both domestic and overseas, is confined to the exploration of the human rights responsibilities of the transnational companies in industry and commerce, which lags behind the latest study on the issue by the United Nations and its influence. In consequence, this paper is designed to reveal the trend and significance of strengthening the national human rights obligations through analysis of the history of the UN regulating the human rights responsibilities of transnational corporations, and to demonstrate the necessity of states regulating the human rights responsibilities of transnational corporations while uncovering the national conflicts of interests and challenges in the process of exploring what the United Nations had done in this field in recent years. It also examines the current situation and problems related to the soft law governance based on the compilation of the “Legally Binding Instrument” and the latest research results, to provide intellectual support for China to safeguard national interests, respond to the contradictions and differences effectively and play a positive role in regulating the human rights responsibilities of transnational corporations.

 

 

 

As early as the 1970s and 1980s, the United Nations noticed the issue of human rights violations by the industrial and commercial enterprises, especially transnational ones, and thus made attempts to compile a treaty of human rights responsibilities to put it right. However, the effort suffered setbacks for the next 30 years, the attempt was frustrated, and ended with a non-binding “soft law”, the Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” (hereinafter referred to as the “Guiding Principles”) as the phased achievements.

 

The earliest codification by the United Nations began in 1974 when the Commission on Transnational Corporations established by the UN Economic and Social Council (ECOSOC) was responsible for developing guidelines on the operation of transnational corporations.¹ In 1982, the Commission completed the compilation of the first draft of Guidelines For Transnational Corporations, which, after repeated discussions, was submitted by ECOSOC to the United Nations General Assembly for deliberation in 1990. The draft was not adopted due to the large differences between the developed and developing countries over the legal nature of the Guidelines, the treatment, and jurisdiction of transnational corporations in host countries, and other issues.² However, as the violation of human rights by transnational corporations intensified, the then UN Secretary-General Kofi Annan proposed in 1999 the “United Nations Global Compact” to propel the fulfillment of human rights responsibilities by transnational corporations, which were required to comply with 10 principles involving human rights, labor rights, environmental protection and anti-corruption in their business operations, and support the implementation of public policies appropriately. The Compact appealed to the enterprises to “support and respect the protection of internationally recognized human rights” and “offer a guarantee against their involvement in the human rights violations”.³

 

Accordingly, the United Nations launched a new round of codification on the human rights responsibilities of transnational corporations, which was taken up by the UN Commission on Human Rights (UNCHR). In 2003, the UNCHR submitted to ECOSOC the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises concerning Human Rights (hereinafter referred to as the “Norms on the Responsibilities”), making attempts to directly stipulate the mandatory human rights responsibilities of the transnational corporations and other business enterprises. The “Norms on the Responsibilities” clarified the primary responsibilities of countries in the field of human rights, and the obligations of business enterprises to respect, protect and promote human rights within their sphere of influence.⁴ As the “Norms on the Responsibilities” was aimed at providing “the most comprehensive and authoritative corporate norms in the world”,⁵ there was strong opposition from the business community. According to the International Chamber of Commerce and the International Organization of Employers, the Sub-Committee on Human Rights took too radical steps toward the privatization of human rights in the attempts to enforce the obligations of private business owners, and the draft of “Norms on the Responsibilities” even omitted states.⁶ Due to the strong opposition from transnational corporations and other business enterprises as well as their home countries, the “Norms on the Responsibilities” were not adopted.

 

In response to recurring obstacles to imposing human rights obligations directly on transnational corporations, the UNCHR in 2005 appointed John Ruggie as the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises to further the study. Concerning such files as Corporate Responsibility under International Law and Issues in Extraterritorial Regulation: Summary of Legal Workshops⁷ and A Survey of the Scope and Patterns of Alleged Corporate-Related Human Rights Abuse⁸, Ruggie submitted to the UNCHR Protect, Respect and Remedy: A Framework for Business and Human Rights (hereinafter referred to as the “Guiding Principles” in 2011 which built up the three pillars to address the problem: the state duty to protect, corporate responsibility to respect, and access to remedy. According to the Guiding Principles, human rights violations by transnational corporations and other business enterprises should be curbed in the direct way of businesses undertaking to shoulder their human rights responsibilities and in the indirect way of states simultaneously regulating business.⁹

 

With the adoption of the Guiding Principles, the United Nations switched to soft law governance of the human rights responsibilities of transnational corporations. In 2011, the Human Rights Council, the “successor” to the UNCHR, adopted a resolution at its 17th session establishing the Working Group on Human Rights and Transnational Corporations and Other Business Enterprises,¹⁰ responsible for the spread, promotion, and implementation of the "Guiding Principles" and promoting exchanges through state visits and such. Step by step, the Working Group helped to bring about consensus among the states, the transnational corporations, and other business enterprises on this issue, to promote the protection of human rights in this field.

 

 

Given the inability of the soft law to curb human rights violations by transnational corporations after two years of implementing the “Guiding Principles”, the international community has sought to replace it with a binding regulation. In September 2013, Ecuador, together with some countries in Asia, Africa, and Latin America, submitted a Joint Statement to the 24th session of the Human Rights Council, holding that, as the result of the increasing number of human rights violations by the transnational corporations, it is necessary to formulate legally binding documents to regulate the transnational corporations. The adoption of the “Guiding Principles” was just the first step to solve this problem. To deepen the work, a binding legal framework should be established to clarify the human rights obligations of the states, strengthen the state actions of protecting human rights and preventing the violations of human rights, to address the issues of inadequate accountability to the transnational corporations, and lack of legal relief for the victims.¹¹ Therefore, driven by NGOs, the United Nations has put on the agenda the issue of “hard law” to regulate the human rights responsibilities of transnational corporations.

 

On June 26, 2014, the Human Rights Council adopted a resolution establishing an open-ended intergovernmental working group on transnational corporations and other business enterprises concerning human rights at its 26th session, with a mandate to elaborate a legally binding international instrument.¹² The Working Group issued the Legally Binding Instrument (Zero Draft) in 2008,¹³ adopted the Legally Binding Instrument (Revised Draft) in 2019¹⁴, and passed the Legally Binding Instrument (Second Revised Draft) in 2020¹⁵, to further promote the codification on the human rights responsibilities of transnational corporations.

 

The Legally Binding Instrument is an international instrument on the full-scale regulation of transnational corporations by the state. Its draft covers all internationally recognized human rights and freedoms, and stipulates the state’s obligations regarding punishment, relief, and prevention. It considers various obligations at the domestic and international levels, aiming to create a new framework of international human rights law for the human rights responsibilities of transnational corporations. The formulation of the Legally Binding Instrument followed the result of compiling Guiding Principles, and referred to the basic regulations of the Maastricht Principles¹⁶. The Legally Binding Instrument gave expression to the new position of the United Nations on regulating the human rights responsibilities of transnational corporations and marked a return to traditional state obligations, and revealed the latest progress in the conversion of soft law into rules with legal effects. It boasts groundbreaking value to be reckoned with despite the subsequent hard and tortuous process of codification.

 

 

Compared to the previous UN documents regulating human rights responsibilities of transnational corporations, the Legally Binding Instrument is unique in terms of thinking and focus. The most obvious change is that the current international human rights law is fully applicable to the transnational corporations, and provides a more comprehensive solution for them to fulfill human rights responsibilities by strengthening state obligations, especially the human rights obligations in their home countries. The Legally Binding Instrument is compiled, based on the practice of human rights responsibilities of business enterprises and the reflection on the poorly implemented human rights protection in the host country and combining with the development of extraterritorial application of international human rights law, to create the outline of the framework of state human rights obligations, featuring distinct characteristics in comparison with the Guiding Principles and other international documents.

 

 

From the point of view of the process of compilation and the relevant practice related to the human rights responsibilities of transnational corporations and other business enterprises, although the multilayered soft law governance system has been established at home and abroad over the past few decades, and borne fruit to some extent, the framework of human rights responsibilities created in such documents as the Guiding Principles, with no legally binding effect, was always held back by the inadequate accountability of the transnational corporations and the lack of legal relief for the victims. Therefore, it is an inevitable choice to integrate the human rights responsibilities of transnational corporations into the existing framework of international human rights law for regulation and supervision.

 

To be specific, the significance of strengthening national human rights obligations to ensure transnational corporations shoulder their human rights responsibilities lies in the following aspects: First, the “guarantee obligations” of a state to safeguard human rights can cover the shortfall in transnational corporations’ undertaking their human rights responsibilities. The human rights responsibilities of corporations have evolved not only in theory but also in practice with a series of standards taking shape, which have played an important role in regulating the operation of transnational corporations, such as improving the rights and interests of workers and reducing the impact on the environment. However, there is still a long way to go. Above all, the soft law rules or industry norms on human rights responsibilities have not been well documented. Currently, except for such industries as the textile, communications, and financial industries with a relatively complete responsibility system, the human rights standards and supervision systems have yet to be put in place for industries. Taking such resource-related fields as the mining industry, for example, violations of the host countries’ environmental rights and indigenous peoples’ rights continue to occur due to a lack of human rights due diligence. In some cases, the transnational corporations are not fully aware of they are not upholding their human rights obligations. The degree of cognition and the fulfillment of human rights responsibilities vary with the region as well as economic strength of the corporation and its work culture. Lured by economic interests, even world-famous transnational corporations may seek to evade their human rights obligations. For instance, only 50% of all enterprises based in Germany that have more than 500 employees had incorporated the elements of human rights due diligence by 2020.¹⁷ Second, the biggest problem of soft law governance is the weak supervision both at home and abroad. At the domestic level, transnational corporations and other enterprises have weak awareness of their human rights responsibilities and the state regulatory system is not in place, while internationally, despite the establishment of the “Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises” by the United Nations Special Procedure, the supervision and regulation of human rights violations by transnational corporations have always been inadequate due to limited resources and capacity. Therefore, such supervision should follow the approach of “human rights risk management” to guide transnational corporations to respect and protect human rights based on the adjustment and incentive of economic measures and the analysis of market opportunities, customer demand, corporate image, and the loss caused by human rights litigation. However, such risk analysis tends to be insignificant in the face of the low “cost of violation”. Driven by short-term interests, too many enterprises will still abandon their human rights obligations, so the economic measures can only be effective if they are guaranteed by legal measures. Therefore, it is the most realistic choice to incorporate the human rights responsibilities of transnational corporations into the framework of the international human rights law and put them under the supervision and implementation of the state, which can effectively change the selectivity and randomness of the transnational corporations in fulfilling their human rights responsibilities. Through legislation, administration, and justice, a state can guide, urge, supervise and regulate the operation of transnational corporations, promoting the implementation of human rights responsibilities more effectively.

 

 

The purpose of fully incorporating the human rights responsibilities of transnational corporations into the framework of the international human rights law is to strengthen the state obligations in the regulation of transnational corporations. In this regard, the Legally Binding Instrument has enriched and detailed the provisions of state obligations, expanding the theory and practice which apply to the international human rights law. But, at the same time, it has provoked disputes since it goes beyond the scope of the human rights obligations of various countries. First, the human rights in the Legally Binding Instrument cover all internationally recognized human rights and fundamental freedoms emanating from the Universal Declaration of Human Rights, any core international human rights treaty and fundamental ILO convention to which a state is a party, and customary international law, breaking through the scope of the “human rights as defined in the International Charter of Human Rights and the Declaration on Fundamental Principles and Rights at Work of the International Labour Organization” in the Guiding Principles. Second, the Legally Binding Instrument expands the scope of the state obligations to regulate transnational corporations, specifically including the following aspects: it first increases the state obligations to regulate the extraterritorial operations of transnational corporations. Previously, as the Guiding Principles stated, “at present States are not generally required under international human rights law to regulate the extraterritorial activities of businesses domiciled in their territory and/or jurisdiction. Nor are they generally prohibited from doing so, provided there is a recognized jurisdictional basis”. However, such regulation got widely criticized by scholars for “its conservation hindered the development of national extraterritorial human rights obligations and the solution to the problem of extraterritorial human rights violations by multinational corporations despite the current development of international human rights law”¹⁸. Because of this, the Legally Binding Instrument has clarified the state obligations to regulate transnational business operations. The Legally Binding Instrument has also strengthened the obligation for prevention, which has been taken as its highlight, since it would establish a legislative and administrative supervision framework for regulating the operations of transnational corporations based on the existing experience of various countries. This obligation includes the duties of States Parties to ensure that transnational corporations within their territory or jurisdiction respect human rights, prevent human rights violations, and take the necessary steps to fulfill their “human rights due diligence” responsibilities, such as conducting impact assessments of their operations’ impacts on the environment and human rights and reporting financial and non-financial matters openly and regularly, including their policies and their attendant risks, and how they fare in relation to environmental and labor standard indicators for state and social supervision. Meanwhile, the scope of States parties’ prevention obligations is very broad under the “Legally Binding Instrument”, which will ensure that multinational companies have the obligation to foresee, prevent and control “any relationship between natural or legal persons to conduct business activities, including those activities conducted through affiliates, subsidiaries, agents, suppliers, partnerships, joint venture, beneficial proprietorship, or any other structure or contractual relationship as provided under the domestic law of the State, including activities undertaken by electronic means”.¹⁹ Finally, it strengthens the penalties. In the first place, the states are obliged to establish a system of accountability and penalties for human rights violations by transnational corporations, while ensuring that appropriate relief shall be provided to victims. Next, if the transnational corporations can control or anticipate risks but fail to prevent human rights violations, states must hold them legally responsible. However, in practice, the assessment of risks is subjective and uncertain to a certain extent and this needs further exploration especially for that of the ability to foresee transnational human rights risks. Third, states are obliged to impose criminal, civil, and administrative penalties on the human rights violations committed by transnational corporations and their related branches in their business operations, and should ensure that their domestic criminal legislation recognizes criminal offenses covered by the International Law, and gives criminal sanctions.

 

 

Echoing with the state extraterritorial human rights obligations, the biggest change of the Legally Binding Instrument is to add the human rights obligations of the home country of transnational corporations. The obligation of the mother country to regulate transnational corporations is a supplement to the host country’s human rights obligations and jurisdiction, aiming to improve the poor monitoring of human rights in host countries, bridge the actual political, economic, and legal gaps between developing and developed countries when it comes to the transnational business operations and the resulting loopholes in human rights protection. To be specific, the establishment of human rights obligations in the home countries of transnational corporations is mainly based on the following specific reasons.

 

First, the inability of host countries to regulate transnational corporations leaves most human rights issues unresolved. Under the framework of the existing International Law and domestic laws, the host country has the primary obligation to supervise the operations of transnational corporations. In the case of human rights violations by transnational corporations, the host country not only has the right to provide relief for the victims through administrative and judicial channels but also to facilitate the implementation of judicial decisions or mediation agreements, to ensure that the victims obtain indemnity. However, several cases in recent years have shown that host countries have repeatedly failed to fulfill these obligations. On the one hand, the host countries neglect to conduct human rights supervision over transnational corporations due to economic interests. Host countries tend to

sacrifice the environment and labor rights and interests to attract the investment of transnational corporations, and thus lose sight of the protection of human rights for the sake of development. Furthermore, some host governments, due to corruption or the consideration of safeguarding their interests, have conspired with transnational corporations to violate human rights for military and political gain. For example, in the lawsuit of Bowoto v. Chevron Corp., Chevron Nigeria Ltd., a subsidiary of Chevron USA, was accused of violently suppressing local protests with the Nigerian military. In such countries, the government has no intention of regulating human rights violations by transnational corporations, leaving domestic victims without access to relief. On the other hand, even if host countries are willing to punish transnational corporations for human rights violations, they may be constrained by their inability to regulate them effectively. In practice, the political and economic strength of transnational corporations and their home countries far exceeds that of most host countries. Most of the host countries are developing countries, some of which are extremely poor, so they are willing but unable to do enough to supervise transnational corporations in the field of human rights due to their imperfect legal systems, policies, and regulations, as well as the lack of specialized resources and technologies for the supervision of transnational corporations.²⁰ Second, the home country has the necessity and advantage of regulating the extraterritorial human rights operations of the transnational corporations, where the extraterritorial human rights were put forward, in fact, to serve as the dual safeguard mechanism under the jurisdiction of both the host country and the home country to ensure that the transnational corporations uphold their human rights responsibilities. It also acts as a supplementary program should the host country have the inability to provide appropriate relief, and aims to urge the home country to supervise the legality of transnational corporations’ business operations through legislation, administration, and justice, and reduce the violations. In practice, the mother country has obvious advantages in regulating transnational corporations. First, the home country can regulate the extraterritorial operations of transnational corporations through a relatively complete legal system and a variety of policies and regulations, which can not only play the role of relief afterward, but also prevent violations through supervision, guidance, and such. Second, most of the home countries of transnational corporations are developed countries, which have strong economic strength and enough resources and expertise to supervise and regulate domestic transnational corporations. Compared with the host country, the home country usually provides a high measure of indemnity, which to some extent benefits the victims of extraterritorial human rights and acts as a deterrent. In the end, the home country’s regulation of transnational corporations is consistent with its international human rights obligations, which is also the trend and focus of the UN human rights supervision. At the international level, the treaty bodies not only indicate the regulatory obligations of countries for transnational business operations, but also give clear suggestions and supervision on relevant issues in the country-based conclusions. For example, the International Covenant on Economic,Social and Cultural Rights emphasizes the state international cooperation obligation, and indicates the content of extraterritorial obligations in the General Comment in terms of the right to food, the right to water, the right to health, the right to work, the right to social security, the right to sexual and reproductive health, and the right to fair and good working conditions.²¹ Among other things, General Comment No. 15 states that the states parties must respect the right to water of people in other countries, take measures to prohibit their citizens and companies from infringing upon the right to water of individuals and groups in other countries, and promote the realization of right to water in other countries in the light of water availability.²² Besides, the UN Special Procedure Rapporteur made related suggestions in his country visits. For example, the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, after the visit to the United States, proposed that it received a lot of ideas that the United States should strengthen relief for victims of extraterritorial human rights violations by its corporations, and recommended the country to take measures to reduce the gaps on the regulation or remove actual or legal barriers that prevent victims from taking their cases to court.²³

 

Overall, the Legally Binding Instrument stipulates that the state shall ensure the transnational corporations abide by all recognized human rights obligations, prevent infringement in related business operations at home and abroad, and impose legal penalties, which embodies the vision of the international community to comprehensively strengthen the human rights responsibilities of transnational corporations, but encounters difficulties in compilation for expanding the existing human rights obligations. However, research on the new characteristics of the Legally Binding Instrument and its changing background will help to further clarify the development trend of the United Nations on the issue of human rights responsibilities of transnational corporations, and facilitate countries to grasp the compilation process of the Legally Binding Instrument, timely deal with differences and contradictions, and establish or adjust their positions and strategies in the process of getting involved.

 

 

It is not only a summary of historical experience but also a new attempt to regulate transnational corporations through the framework of the human rights obligations of the state. While it has significant advantages, it has encountered some difficulties and problems, and the resulting conflicts of the extraterritorial human rights responsibilities and jurisdiction need to be further explored.

 

 

The challenges at the level of the national interest mainly originate from the short-term interest conflicts between human rights protection and economic development as well as the differences and struggles between the developed and the developing countries in the reconstruction of the international economic order.

 

From the perspective of long-term development goals, human rights protection and economic development support and promote each other. After all, the development is ultimately human development.²⁴ However, in the short run, they do have a competitive relationship in terms of development goals and resource allocation. For the host country, setting too many human rights standards in the legal system of foreign investment is bound to affect the attraction of foreign investment. Compared with the rapid economic growth and the urgency of infrastructure construction, the protection of human rights is often placed in a secondary position. For the mother country, excessive legislative, administrative, and judicial measures on human rights would also constrain the development of its transnational corporations, increase their operating costs, hinder their international competitiveness, and put an additional burden on the domestic courts and increase the responsibility for human rights protection. Moreover, the rights of victims stipulated in the Legally Binding Instrument are considered by many countries to exceed reality in some aspects. For example, some believe that it is neither realistic nor consistent with the principles of equity and the rule of law that the Legally Binding Instrument requires transnational corporations to undertake human rights obligations for the operations of their supplychain partners.²⁵ Meanwhile, many countries also worry that giving victims too much power would result in the misuse of legal procedures.²⁶ Therefore, the state obligation stipulated in the Legally Binding Instrument lacks appeal because it is contrary to the national interests of the host country and the mother country.

 

Besides, the compilation of the document has encountered obstruction from the developed countries in particular. The purpose of regulating the operations of transnational corporations is to reduce their infringement on the human rights of host countries while making profits and to adjust the international economic order by increasing the obligations of transnational corporations and their home countries while promoting the international protection of human rights. Considering that currently most of the mother countries of transnational corporations are developed countries and emerging countries, the strengthening of the human rights obligations of transnational corporations in their mother countries would trigger strong opposition and resistance with the right of speech from the developed countries. Therefore, the compilation of the Legally Binding Instrument is, to some extent, a conflict of the South-North countries. Moreover, what kind of attitude China takes in the conflict is worth thinking about and needs to be explored urgently. Since China is both a developing country and an emerging economy, its national interest would partly reflect the demands of developed countries, and conform to the interest of the developing countries. The attitude and position of China help to resolve the conflict and promote the balance of interests between the two sides. Therefore, to some extent,the compilation of the Legally Binding Instrument will depend on China’s support by giving up its short-term interests and actively putting forward a fair proposal to promote the compromise and cooperation among the states, and thus play a positive role in the construction of the order and drive the reconstruction of the international economic order and the safeguard of human rights. Based on these considerations, China clarified the following positions in the meeting of reviewing the Legally Binding Instrument (Revised Draft), to promote the compilation towards the positive and effective direction: first, coordinate the promotion and the development of human rights. Strengthening human rights protection should not hinder the countries,especially the developing countries, from benefiting from the business operations by the transnational corporations. Second, the responsibility of the mother country and the host country should be properly handled to avoid the improper transfer of matters within the sovereignty of the host country to the mother country of the transnational corporation. Third, clearly define the state obligations that shall be “respected”,“protected” and “realized”, and avoid setting up new international human rights obligations. Fourth, adhere to the principle of consensus, respect the concerns of all countries and build consensus to the greatest extent.²⁷

 

 

The discrepancy of the Legally Binding Instrument with the existing domestic legal systems of states involves the addition of new obligations of international human rights for the states and has given rise to a series of controversies. First, in the scope of human rights, while the Legally Binding Instrument (Second Revised Draft) has set a specific legal source for “all human rights and freedoms”, to reduce the scope of human rights to a large extent compared to the zero draft and the revised draft. However, the global acceptance of core international human rights conventions still goes beyond the scope of international human rights obligations committed by most countries. In this regard, some countries suggest that the relevant regulations should be consistent with the Guiding Principles.²⁸ Second, in terms of preventive obligations, the Legally Binding Instrument requires ensuring that transnational corporations perform the obligations of preventing and mitigating human rights violations in their operations, which is a little strict and does not leave enough flexibility for the contracting parties.²⁹ In response, the Chinese delegation proposed that concerning the “human rights due diligence” obligations of enterprises and the preventive obligations of States parties, to take reference to the Guiding Principles, and not to make excessive demands on corporations, impose disproportionate burdens on them, nor create new human rights obligations for states. In particular, the principle of an independent corporate juridical person shall be avoided to hold the corporations responsible for human rights violations committed by their business partners.³⁰ Third, in terms of legal liability, relevant debates were included as early as in the deliberation of the Legally Binding Instrument (Revised Draft) in which the session “State Obligations to Penalty” required the state to punish the transnational corporations for the violations of civil and political rights, as well as economic, social and cultural rights.³¹ It also called for the punishment of international crimes such as crimes against war, humanity, and genocide. However, due to the lack of general acceptance of the Rome Statute of the International Criminal Court and the International Convention for the Protection of All Persons from Enforced Disappearance and other conventions mentioned in the Instrument, some participating countries are concerned that the inclusion of these proposals would make it politically difficult for the States parties to join the Legally Binding Instrument. ³² To address the above questions, the Legally Binding Instrument (Second Revised Draft) has omitted the specific conventions and crimes in the relevant expressions. However, it failed to fundamentally solve the problems existing in the previous drafts, which tended to be more obscure and unworkable. On the one hand, there is no unified understanding of the scope of international crimes at the international level. On the other hand, in the legal systems of many countries, legal persons do not bear criminal liability.

 

As mentioned above, to avoid the above contradiction, the future amendment of the Legally Binding Instrument should focus more on the consistency between the scope of human rights obligations of the Instrument and the scope of human rights obligations accepted by the States parties, and try to avoid creating new obligations for the states.³³

 

 

The Legally Binding Instrument has not only strengthened the obligations of the state but also attempted to break through the existing practice to compile and implement new international human rights laws and regulations. Among them, the provisions about the extraterritorial human rights obligations not only pose great difficulties to the reading of this document but also present new challenges for the state to regulate the human rights responsibilities of transnational corporations.

 

Although the issue of extraterritorial application of international human rights law has made great progress in practice in recent years, even the countries that recognize the extraterritorial effect of international human rights treaties only emphasize that respect and protection of extraterritorial human rights are soft legal rules and moral obligations. Besides, the extraterritorial application of international human rights law impacts the existing jurisdictional rules and brings more practical problems.

 

First, the debate on the theory and system of extraterritorial application of international human rights law. The premise of the proposition that the mother country should regulate the extraterritorial operations of transnational corporations referring to the international human rights law is to prove that the state has extraterritorial human rights obligations. It is well known that the international human rights law, which aims at adjusting the vertical relationship between the state and the individual, applies primarily within the territory of a state, and many conventions, while not precluding extraterritorial application, treat it as an exception. Take the International Covenant on Civil and Political Rights (ICCPR) for example, its Article 2, Paragraph 1, states: “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.” In practice, the UNCHR establishes some rules regarding the “exceptions subject to its jurisdiction”. For example, in the case of Antonio v. Uruguay, UNCHR argued that human rights complaints filed outside the State party by individuals who have been abused in the State party should also fall within the jurisdiction of that State party.³⁴ In the case of Burgos v. Uruguay, UNCHR held that the extraterritorial exercise of administrative authority by State representatives should be limited by international human rights law. Therefore, the ICCPR should be applied to the arrest and torture carried out by Uruguayan security personnel across the Argentine border.³⁵ Moreover, in the case of Cyprus v. Turkey, the European Court of Human Rights held that Turkey, since it exercised full control over Northern Cyprus, therefore bears human rights responsibility for the actions of the authorities.³⁶ Thus, the ICCPR is limited in its extraterritorial application. The victims concerned can only claim their human rights responsibilities if they are proved to have been “under the jurisdiction” of the State party.

 

Although the International Covenant on Economic, Social and Cultural Rights does not provide for a strict scope of application, the Optional Protocol to the International Covenant on Economic, Social and Cultural Rights explicitly states that only “infringements within territories and their jurisdiction” are accepted. Up to now, among the criteria for extraterritorial application of the International Covenant on Economic, Social and Cultural Rights, the one widely accepted was the ruling of the International Court of Justice based on de facto control in the Case Concerning the Legal Consequences of the Construction of the Separation Wall in the Occupied Palestinian Territory. In that case, Israel, by exercising effective control over an area of Palestine, was obliged to apply the International Covenant on Economic, Social and Cultural Rights in that area to safeguard the human rights within the jurisdiction.³⁷Although the Committee on Economic, Social and Cultural Rights, in its general comments, has repeatedly emphasized that the extraterritorial operations of States parties and their transnational corporations should respect such local rights as the right to water, it is generally considered a soft-law obligation. Therefore, as far as the current practice is concerned, the extraterritorial application of international human rights law is based on the actual control of a country over other countries, regions, or individuals. In the analysis of the scope of extraterritorial jurisdiction in the Legally Binding Instrument with such a standard, the following questions arise: first, in the Legally Binding Instruments (Zero Draft) and the Legally Binding Instruments (Revised Draft), the States parties have no open provisions regarding the extraterritorial human rights obligations and responsibilities of transnational corporations within the national territory and jurisdiction, which goes beyond the applicable practice of the existing international human rights law.³⁸ Second, the Legally Binding Instrument (Second Revised Draft) made special regulation to correct the above problems: “State parties shall ensure that their domestic law provides for a comprehensive and adequate system of legal liability of legal and natural persons conducting business activities, domiciled or operating within their territory or jurisdiction, or otherwise under their control, for human rights abuses that may arise from their business activities, including those of transnational character, or their business relationships.”³⁹ However, it is the interpretation of “otherwise under their control” that will cause disagreement. If it is consistent with the current standards of international human rights law, the legal obligation of the mother country to regulate extraterritorial infringement by transnational corporations would be greatly reduced. However, if the interpretation is expanded or different from “within their territory or jurisdiction” mentioned above, it would go beyond the existing theory and practice applied in international human rights law. Therefore, how to define the scope of extraterritorial application of international human rights law and properly stipulate the human rights obligations of the home country for extraterritorial operations of transnational corporations needs to be further explored and studied.

 

Second, the jurisdiction of the home country is bound to lead to jurisdictional conflicts, which require special consultations and arrangements together with the host country. According to the existing framework of International Law, the territorial jurisdiction of the host country has priority over the transnational corporations, and the personal jurisdiction of the home country over the transnational corporation should give way to territorial jurisdiction. The supplementary jurisdiction arising from the extraterritorial application of international human rights law of the home country, as proposed in the Legally Binding Instrument (Second Revised Draft), although different from the personal jurisdiction, is equally complimentary to the jurisdiction of the host country and requires special consultations to avoid conflict. As stated in the Instrument, “Jurisdiction concerning claims brought by victims, irrespectively of their nationality or place of domicile, arising from acts or omissions that result or may result in human rights abuses covered under this (Legally Binding Instrument), shall vest in the courts of the State where the human rights abuse occurred, an act or omission contributing to the human rights abuse occurred, or the legal or natural persons alleged to have committed an act or omission causing or contributing to such human rights abuse in the context of business activities, including those of a transnational character, are domiciled.”⁴⁰ Besides, the article also provides that “a legal person conducting business activities of a transnational character, including through their business relationships, is considered domiciled at the place where it has its place of incorporation, statutory seat, central administration, or principal place of business”. This extremely broad scope of jurisdiction may not only cause conflicts of jurisdiction, but also lead to the victim’s arbitrary choice of court, which deviates from the original intention of the Instrument to fill the “gap” of the host country’s jurisdiction, and undermines national sovereignty, especially the judicial jurisdiction. In this regard, the compilation of the Legally Binding Instrument is required to formulate specific guiding principles for relevant jurisdiction, to adjust the order and sequence of jurisdiction and coordinate the application of international human rights law and the overall rules of International Law.

 

Regarding the above jurisdiction stipulated by the Legally Binding Instrument,the countries involved in the Instrument review held different attitudes. Some states expressed support and stressed that the exercise of jurisdiction must have extraterritorial effects to guarantee due respect for human rights by transnational corporations and their supply-chain partners. They also suggested the addition of provisions for the resolution of jurisdictional conflicts while ensuring that victims had the right to choose the jurisdiction courts. However, other States pointed out that the introduction of extraterritorial jurisdiction would lead to the exercise of unreasonable jurisdiction over the entire supply chain and infringe on the judicial sovereignty of other countries.⁴¹ Some business organizations argued that such rules made it impossible for transnational corporations to predict which state courts will govern them and fail to address the issue of exercising jurisdiction over cross-border business activities conducted electronically.⁴² The Chinese delegation, on the other hand, stated that the jurisdiction clause should clearly distinguish between civil and criminal proceedings, respect the basic legal principles of each country and establish jurisdiction reasonably to avoid the de facto “universal jurisdiction” and give victims the right to “choose the court” at will and constitute an abuse of process.⁴³ The States parties should be very cautious in exercising their jurisdiction within the scope permitted by International Law in case of the infringement of the sovereignty of other countries.⁴⁴

 

Third, in practice, the domestic regulations of transnational corporations, especially of their extraterritorial operations, are faced with many difficulties. From the existing extraterritorial practices, the development of countries on this issue is still in its infancy. Among them, some countries have initiated legislative, administrative, and judicial measures to regulate the extraterritorial operations of transnational corporations, but they are basically at the level of the national policy, mainly relying on the self-discipline of corporations. After all, excessive interference of a state in transnational corporations will not only result in the conflict of company law but also constrain economic development. At the legislative level, for example, France promulgated the Act on Responsible Investigation of Parent Companies and Contractors in 2017, which imposes a duty for the parent company and the contractor to carry out investigations to identify human rights risks, to prevent environmental hazards and human rights violations caused by their subsidiaries and through their business relationships.⁴⁵ At the administrative level, for example, Germany adopted the National Action Plan for Business and Human Rights on December 21, 2016, to implement the Guiding Principles and strengthen the human rights responsibilities of transnational corporations and other businesses. At the judicial level, there are also some breakthroughs in judicial precedents in various countries. For example, in the case of Chalk v. Hudbay Minerals, Canada ruled that its parent company was liable for its violation of the rights of the indigenous people in Guatemala due to its actual control over its subsidiary in the country.⁴⁶ However, most aggrieved parties face obstacles to legal redress in the home country of the transnational corporation, which is chiefly due to the principle of comity of the mother country,⁴⁷ or the unwillingness of taking human rights responsibilities for extraterritorial violations of human rights by transnational corporations. Therefore, even if the criminal law, civil law, company law, tort law, and relevant procedural law of some countries grant judicial organs jurisdiction over the extraterritorial operations of transnational corporations, the courts of the home country will refuse to implement jurisdiction on the grounds of forum non conveniens. A typical case is the India Bhopal Gas Leak, the victims of the Union Carbide Corporation filed a complaint in the United States District Court for the Southern District of New York. Although there was evidence that enough compensation would not be provided to the victims by Indian law, the United States District Court for the Southern District of New York rejected the plaintiff’s prosecution on the ground of forum non conveniens. Thus, forum non conveniens is sometimes abused so as not to provide relief for the victims.⁴⁸ In practice, the fact that the famous case of “Kiobel v. Royal Dutch Petroleum Co.” failed after 11 years of litigation also proves that the cases of transnational corporations generally involve greater economic interests, and the lawsuits in the home country are often rejected due to jurisdictive disputes. Therefore, the current emphasis on the duty of prevention, such as regulation and supervision through legislative and administrative measures, is an indispensable step to reduce the cost of litigation and fill the gaps in

judicial redress.

 

To sum up, the construction of Human Rights Responsibilities of Transnational Corporations and their international legal framework has a long way to go. The compilation of the Legally Binding Instrument is the latest attempt of the United Nations to solve this problem and the accumulation of historical experience to push forward the process of “hard law” of international rules in this field from the path of state obligations. The new instrument aims to strengthen national obligations to supplement the deficiency of transnational corporations in fulfilling their human rights obligations and to improve the ineffective relief of host countries for human rights violations by clarifying the extraterritorial human rights jurisdiction of the home country. Therefore, it is of great value and significance that cannot be ignored. Meanwhile, this approach also goes beyond the existing framework of international human rights law and challenges the interests of the state and the theory and practice of International Law, so it faces multiple obstacles. How to combine the existing rules and practices, further optimize the provisions of the Legally Binding Instrument, and promote consensus and the commitment of all countries on this issue based on the development demand of all countries is the focus of the compilation of the United Nations in the next step. Given the main arguments and challenges in the compilation, the “complementarity” “legality” “fairness” and “predictability”⁴⁹ proposed by China may become an effective principle for resolving differences, which deserves being given special attention and adherence to by the international community, thus effectively promoting the implementation and development of transnational corporations’ human rights responsibilities.

 

(Translated by XU Chao)