Pillar three of the UN Guiding Principles on Business and Human Rights (UNGPs) on access to remedy has increasingly been referred to as the “forgotten pillar”. Despite the unanimous endorsement of the UNGPs by the Human Rights Council in 2011, little meaningful action has been taken to date to guarantee effective remedy to victims of corporate human rights abuse. Being an essential element of any right, and indeed a human right itself, remedy should be a priority for any state genuinely committed to implementing the UNGPs; it may be the single most effective way of ensuring corporate respect for human rights.

In the meantime, victims of corporate human rights abuse around the world continue to face huge challenges in accessing remedy. They often face difficulties in obtaining legal redress in the country where the harm occurred. This is due to a variety of reasons, which include a lack of due process, political interference and a dysfunctional or corrupt judiciary. Under these circumstances, victims often turn to other countries to seek justice, especially countries where the companies involved in the abuses are headquartered (the home states). However, many obstacles to remedy also exist in home states, often resulting in a lack of remedy for claimants and impunity for companies, with no state taking responsibility for this major accountability gap. Legal changes are needed to remove existing barriers to remedy and accountability.

Amnesty International and Business & Human Rights Resource Centre (the Resource Centre) recently published the briefing Creating a paradigm shift: Legal solutions to improve access to remedy for corporate human rights abuse. In this publication, we put forward concrete legal proposals to tackle hurdles to remedy associated with, among others, the “corporate veil” between parent companies and their subsidiaries and the lack of access to information relevant to effectively protect human rights. We outline below some of these recommendations, which are intended for legal experts, legislators, policy-makers and civil society actors working to improve access to remedy.

Parent or controlling company liability

To hold parent companies accountable for human rights abuses committed by their subsidiaries, victims face the hurdle of the “separate legal personality” doctrine (or “corporate veil”). Parent companies can shield themselves from liability for abuses committed by their subsidiaries or other entities they control because each separately incorporated member of a corporate group is considered a distinct legal entity with its own and separate liabilities. This was the essence of the ruling in the UK High Court of Justice decision early this year in Emere Godwin Bebe Okpabi vs Royal Dutch Shell. The shield holds even when parent companies are in a position of control, or could have exercised control over the decisions and activities of their subsidiaries.

To overcome this challenge, Amnesty International and the Business and Human Rights Resource Centre recommend that states pass laws imposing on parent companies or companies with the ability to control members of the group an express duty of care (or equivalent legal notion such as a “duty to prevent” human rights harm) towards individuals and communities whose human rights are affected by their operations. To refute or limit liability, parent or controlling companies should demonstrate that they took every reasonable step (defined by reference to rigorous human rights due diligence standards) to avoid the harm caused by the activities of a subsidiary or controlled company. In certain situations, such as where the risk of harm is high or because of the seriousness of the possible harm, the law should also establish a presumption of liability against the parent or controlling company and place on it the burden of proving that it should not be held legally accountable. Such a presumption was included in the initial proposal of the French Duty of Vigilance law adopted early this year, but was abandoned due to the opposition of some MPs and businesses.

States could also seek to impose human rights due diligence obligations through administrative or public law regimes. Whichever avenue is chosen, it is critical that the law allows for victims to claim reparations for human rights harm resulting from a lack of adequate due diligence.

Access to information, disclosure & discovery

People affected by corporate activities often experience great difficulty in defending their rights due to the unavailability, inaccessibility or unreliability of key information. Part of the problem is that certain critical information, such as human rights impacts assessments, is often not produced. Also, much of the information available is in the hands of companies who, in the absence of adequate disclosure laws, do not publish it or select what information to publish and how they will do so. One particularly pernicious result of this is that when human rights abuses do occur, those affected lack the necessary information to assess the nature and extent of the harm they have suffered, what caused it and who was responsible. This has a direct and detrimental effect on their ability to claim reparations.

We recommend that states enact laws requiring companies to generate and maintain information that is relevant for a full understanding of the actual and potential adverse human rights impacts of their activities or projects. This information should be reliable, accessible, intelligible, and useful to affected communities. Therefore, the law should prescribe safeguards in relation to how the information is both gathered and disclosed, such as by requiring close consultation with communities. Timely disclosure to those potentially affected should be considered an integral part of an adequate human rights due diligence process. Communities themselves hold valuable information, including in relation to changes occurring in their environment due to companies’ operations. Community-held information should be included and given due weight in risk and impact assessment processes, including in the evaluations that regulators and courts make of the extent and nature of human rights harm.
Additionally, freedom of information laws should be designed and implemented in a way that ensures timely and effective access to information held by companies that is critical for the effective protection of human rights. Companies should not be able to invoke general claims of corporate confidentiality to withhold information. The principle should be disclosure – and non-disclosure a strictly defined exception.

The degree of access to information relevant to substantiate claims of corporate wrongdoing is also determined by differences in evidence rules between countries. States need to enact broad discovery procedures or strengthen existing ones to allow greater access to information held by corporate defendants or third parties where this information is relevant for substantiating a claim. They should draw from existing discovery regimes that are more responsive to the needs of victims of corporate abuse. In 2015, an Ontario court hearing a claim against mining company Hudbay Minerals over alleged rapes and shootings in Guatemala ordered the company to disclose internal information about its subsidiaries and corporate policies. The plaintiffs’ lawyer stressed the value of these documents as they could “show that the company is in fact and in law responsible… in Canada, for the devastating events in Guatemala.” More permissive and flexible discovery procedures can help rebalance the huge disparity in access to information that exists between communities and corporations, and ensure a level playing field during proceedings.

Much can be done to improve the ability of individuals and communities affected by corporate human rights abuse to access an effective remedy. As clearly stated by the latest report of the UN Working Group on Business and Human Rights, rights-holders and their needs and expectations must be put at the centre of all remedy-related processes, including any legal reforms to improve access to remedy.

The focus of the forthcoming UN Forum on Business and Human Rights on “Realising Access to Remedy” will provide an unprecedented opportunity to understand what rights-holders and affected communities need and expect in relation to remedy. Let’s not miss this unique opportunity and make sure we all listen very carefully.

Gabriela Quijano is Legal Advisor on business and human rights at Amnesty International and Elodie Aba is Interim Corporate Legal Accountability Project Manager at Business & Human Rights Resource Centre.

Comments

  1. Dear Gabriela and Elodie

    This is a really interesting and very helpful blog. I agree that Parliament in the UK should be moving towards the creation of a generalised ‘failure to prevent’ type offence, perhaps building on the model in S.7 of the Bribery Act.

    However, I would not be quite so pessimistic about the use of litigation to achieve the same result. Whilst the corporate veil does create difficulties for ascribing liability to parent companies for the wrongdoing of subsidiaries, it is not a blanket prohibition. Okpabi was indeed a set back, but it did not dislodge the 4 part test set down by Arden LJ in the 2012 Chandler v Cape Appeal Court decision. These are not easy tests to meet, but they do provide a route to liability if the proximity between the parent and subsidiary is sufficiently close etc.

    Good luck with the work, it is something I have been focussing on for some time and would be happy to share insights if you are interested.

    James

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