Positive human rights obligations for transnational corporations?


05 September 2016 – In June 2014, the UN Human Rights Council established an intergovernmental working group with the mandate to “elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises”. The first session of this working group took place in July 2015, the deliberations of which were captured in this report. The second session is fast approaching and will take place in October 2016. In a build up to the second session of the working group, consultations and discussions are underway all over the world, but especially among countries and organisations in the global south, many of which have strongly supported the treaty process.

A crucial issue has been whether corporations should be obligated under the proposed treaty to refrain from causing harm (negative obligations) or should in addition be obligated to perform specific tasks to promote human rights (positive obligations). The traditional view, both in the Corporate Social Responsibility literature and in the Business and Human Rights (BHR) movement (particularly in the UN Guiding Principles, the most recent authoritative statement on BHR), is that corporations have only negative obligations, that they should merely refrain from doing harm through their commercial activities.

But over the last decade, a number of arguments have been put forward for the imposition of positive obligations. The state, through its legislators, recognises the utility of corporations for commercial activity and confers on them a number of benefits that facilitate this activity, such as limited liability and separate legal personality. In exchange, legislators are entitled to require corporations to contribute positively to the welfare of society. For example, the state can require corporations engaged in paper-manufacturing to ensure that they plant trees in deforested areas. In addition, corporations possess specific and unique capabilities to promote development in their particular industry. Hence, a pharmaceutical corporation may rightly be obligated to provide vaccines to rural communities where there is limited access to health facilities. The carrying out of these obligations will invariably require the state to work in collaboration with corporations for reasons of coordination and efficiency.

There is however some opposition to these arguments. This article looks at some of the principled objections to positive obligations in the treaty and suggests that it is not the appropriate channel through which these obligations should be imposed.

In most common-law jurisdictions, the state imposes a positive obligation on a person only where that person is in some special position or relationship: parent–child, employer–employee, doctor–patient, and others. The general rule is that an individual has no positive obligation to care for those persons who do not fall into these circumscribed categories.

It may be argued that the treaty could state in general terms that corporations have positive obligations to ensure the fulfilment of socio-economic rights for individuals within their sphere of influence. It could then leave the task of legislating on the specifics of corporate spheres of influence and the models of enforcement to states. This, however, would not solve the problem. First, national jurisdictions may end up adopting differing and incompatible standards with respect to corporate spheres of influence. This would go against a key aim of the treaty, which is to create universalised standards to bind corporations. Corporations could be subjected to incompatible regimes of law both for states with differing socio-economic needs and for states with similar socio-economic challenges.

Second, a problem of uncertainty would also arise. The provision of services for the enjoyment of rights is a revolving target that escapes the precision required of legislation. Concerns about when a corporation has fulfilled its duty to realise a human right cannot be measured with ease. Thus, any attempt at holding them liable would in consequence be controversial.

It may be argued that the basis on which to impose positive obligations on corporations could be capacity rather than sphere of influence. The treaty could require corporations that are considered highly capable (having expertise, profitability, etc.) to fulfil certain positive obligations in respect of human rights. However, to create an obligation on the basis of capability gives rise to a number of concerns. First and fundamentally is whether the obligation to realise human rights is attached to the corporation as corporation or to the corporation as a powerful or influential entity. If the answer is the latter, then it would be particularly difficult not to insist that individuals with power, influence and expertise should also be required by international law to realise human rights. If the answer is the former, then a concern of essentialism arises: it is dubious to assume that all corporations (simply because they are corporations) are capable and should therefore carry out certain positive obligations. Corporations differ considerably in size, influence and profitability. And profitability, in particular, is constantly changing. Thus, unlike negative obligations which would always be applicable irrespective of corporate criteria such as profitability, positive obligations would require continual adjustment. This is an impossible task for legislators at national level to fulfil and perhaps impracticable at international level through a treaty.

And, unlike the state, corporations are by nature non-permanent institutions existing at the will of its incorporators. The permanence of the state guarantees a level of stability to its programmes of human development. Such programmes demand substantial financial outlays, expertise and time, especially in the field of socio-economic rights. Though some corporations have access to the financial means and expertise necessary for these projects, they lack the permanence of the state that over time oversees the successful completion of these programmes of human development.

Shareholders of corporations could also raise the objection that the imposition of positive obligations would burden then unfairly. Businesses are skilled at the pursuit of a single goal: profit. This may not work well for the fulfilment of positive human rights obligations. A process of weighing up and balancing the rights of the community in question would be required. This is an exercise that is foreign to business planning and demands an extensive outlay of resources and expertise accessible only to states.

The imposition of positive obligations on corporations to fulfil human rights would invariably involve private entities. Three problems arise. First, directors of corporations are not democratically elected representatives entitled to exercise public power. They would thus not be accountable to the electorate in the same manner as political leaders. Second, there is a high probability that the provision of public goods could be subjected to corporate goals. This could lead to the entrenchment of corporate capture of government functions. Finally, the provision of goods and services by corporations to realise human rights may exacerbate situations where governments are unwilling to fulfil their duties.

To conclude, the goal of creating obligations that bind corporations in respect of human rights is at this stage unquestionable. There is broad consensus on the imposition of negative obligations. However, there are doubts about whether positive obligations should be included in the binding instrument. There would be a lack of consistency and clarity in their application. Worse, we are still searching for a moral justification for subjecting corporations — or only some corporations — to them. And finally, there are concerns about the legitimacy and accountability of private entities performing public functions.

John Paul Ongeso

About John Paul Ongeso

John Paul is from Nairobi, Kenya and is the Director of Corporate Accountability for the African Legal Centre. He is a lecturer at Strathmore Law School, Strathmore University in Nairobi. He obtained his LLM in International Law in 2012 and his LLB with distinction from Wits University in 2011. He is currently pursuing his PhD in International Criminal Law at the same university. John Paul has worked as a Senior Research & Teaching Associate and has taught Customary law, Jurisprudence and Public International law as a Sessional Lecturer at Wits Law School. He also runs a university residence in Johannesburg which aims at promoting academic and professional excellence among its students. John Paul enjoys the outdoors and playing basketball.