A Paper by Spyridon Bazinas (Greece), Senior Legal Officer, United Nations, delivered at the 10th Rhodes Forum on October 6, 2012
My topic is “Business and Human Rights: the contribution of UNCITRAL”. Typically, the topic is associated with the impact of the activities of organizations, such as the WTO, the IMF or the World Bank, or multinational corporations, on human rights, or generally State obligations versus private rights and obligations. I would like to introduce a new perspective, the relationship between human rights and sustainable and equitable development, which requires, inter alia, fair, stable and predictable trade law frameworks. This perspective was most recently re-affirmed in the Declaration of the High-level Meeting of the General Assembly on the Rule of Law at the National and International Levels. I will first briefly introduce the United Nations Commission on International Trade Law (UNCITRAL), and then discuss the relevance of its work to the topic to the UN Guiding Principles on Business and Human Rights and UNCITRAL's contribution. I will conclude with some remarks about the conclusions of a high-level meeting held at the United Nations Headquarters in New York on 24 September on the rule of law at the national and international levels.
UNCITRAL has the mandate to further the progressive harmonization and unification of the law of international trade. This relates to the law regulating commercial relations of private parties, such as business enterprises. Its activities encompass: (a) rule-formulating activities (preparation of conventions, model laws, uniform laws and other international commercial law standards in such areas of commercial law as sales of goods, dispute resolution, electronic commerce, procurement, security interests, insolvency and transport); (b) promoting wider acceptance of international trade law standards; (c) coordinating the work of organizations active in the field of international trade law and encouraging cooperation among them; and (d) promoting ways and means of ensuring effective implementation and uniform interpretation and application of international commercial law standards.
The secretariat of UNCITRAL (the International Trade Law Division of the United Nations Office of Legal Affairs) has received a broad mandate to facilitate the work of UNCITRAL.
UNCITRAL’s work and human rights
As already mentioned, trade law is not commonly associated with human rights and rule of law issues. Yet, General Assembly resolutions on UNCITRAL-related agenda items have repetitively highlighted the role of UNCITRAL in the promotion of the rule of law in commercial relations, the impact of the Commission's work on the well-being of all people and its significant contribution to universal economic cooperation among all States on a basis of equality, equity, common interest and respect for the rule of law. This is particularly the case since the discussion by UNCITRAL of the UN Global Compact in 2009, and has become a high priority after the debt crisis.
Of particular relevance to the issues identified in the Guiding Principles in the context of general State regulatory and policy functions (principle 3), the State-business nexus (principles 5 and 6), human rights due diligence (principles 17-21) and access to remedy (principles 25-27) is UNCITRAL’s work in the areas of public procurement, privately-financed infrastructure projects/public-private partnerships, insolvency law, security interests and dispute resolution.
Public procurement law reforms are relevant to reform of public administration to ensure good governance, integrity, and transparency in public administration (as well as promoting efficient management of public finances). Some provisions of the UNCITRAL public procurement instruments, when enacted at the national level, can also be used to monitor the human rights track record of businesses interested in supplying goods, providing services or performing work to Governments. For example, non-compliance with human rights standards of the State can be a legitimate ground for exclusion of a supplier from the procurement proceedings (see article 9 (2) (b) of the 2011 UNCITRAL Model Law on Public Procurement).
Provisions of that Model Law allowing set-aside programs and margins of preference can be used for implementing States’ programs aimed at special protection of rights of particularly disadvantaged groups of people (indigenous peoples, women, national or ethnic, religious and linguistic minorities, displaced persons or persons with disabilities) (articles 8-11).
In addition, the transparency mechanisms and disclosure requirements of the Model Law are directly supported by mandatory access by the public to the records of the procurement proceedings – an important innovation through which public oversight over decisions and activities of public procuring entities and their contracting partners from the private sector is ensured (article 25). Finally, a chapter of the Model Law addressing challenge proceedings provides for efficient and effective judicial and non-judicial dispute resolution mechanisms.
Similar provisions may be found in the UNCITRAL instruments on privately-financed infrastructure projects, which also address such issues (particularly relevant to general State regulatory and policy functions and human rights due diligence) as project risks, rights of consumers or users of infrastructure facilities, compulsory acquisition of private property and environmental protection.
Moreover, issues raised in reports dealing with business and human rights may also soon become subject of consideration in UNCITRAL in the context of a project in the area of public-private partnerships. Dispute resolution and oversight mechanisms are among issues identified for future work in that area.
Aspects of general State regulatory and policy functions, human rights due diligence and access to remedy are also touched upon in the UNCITRAL Legislative Guide on Insolvency Law, which refers to the need of States to establish an insolvency legal framework that would be compliant with that State’s human rights obligations. Such references are found in the context of the rights of a natural person debtor in insolvency proceedings, in particular in the context of exemption of certain personal assets from insolvency proceedings. It is specifically noted there that such rights may be affected by obligations of States under international and regional treaties such as the International Covenant on Civil and Political Rights and the European Convention on Human Rights.
In addition, the current work of UNCITRAL Working Group V (Insolvency Law) on directors’ responsibilities and liabilities in insolvency and pre-insolvency cases is also relevant to the issue of human rights and transnational corporations and other business enterprises, including directors’ duties.
While the efforts to create a broad, internationally enforceable right to property have been unsuccessful to date, there is an emerging international property law. The right to property and the right to economic freedom are addressed in the United Nations Convention on the Assignment of Receivables in International Trade, the UNCITRAL Legislative Guide on Secured Transactions (the “Guide”) and the Supplement on Security Interests in Intellectual Property. The Guide contains commentary and recommendations with respect to the full range of policy issues that must be addressed in a modern secured transactions law (that is, a law dealing with security interests in movable property).
Here are some examples of how the Guide may affect the rights of individuals, in particular consumers. While the Guide covers consumer transactions, it does not affect consumer protection law under which certain assets of a debtor (e.g. employment benefits or household items) may not be encumbered (recommendation 2, subparagraph (b)).
In addition, if such types of asset are not transferable, they may not be encumbered (recommendation 18). Moreover, if a security interest in such types of asset may be created, it may not be enforced if: (a) in the case of judicial enforcement, civil procedure law does not permit enforcement in such types of asset (recommendation 142); and (b) and, in the case of extra-judicial enforcement, such enforcement is not permitted according to the principles of good faith and commercial reasonableness or there is no adequate debtor notification or consent by the debtor in the security agreement and at the time of enforcement (see recommendations 131 and 147).
Alternative dispute resolution
Alternative dispute resolution mechanisms are relevant to court and police reforms in the enforcement of property rights. The UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules are part of the trademark of UNCITRAL.
In addition, the current work of UNCITRAL Working Group II (Arbitration and Conciliation) on transparency in treaty-based investor-State arbitration is relevant to the principles for responsible contracts. This project has undoubtedly benefited from the input made to the project by representatives of the Office of the High Commissioner for Human Rights (OHCHR).
The current work of UNCITRAL on microfinance also has human rights implications. This work focuses on three topics. First, poverty alleviation through easier access to credit by individual entrepreneurs and microenterprises. Second, avoidance of abusive lending and collection practices. And third, effective mechanisms for resolution of disputes.
The contribution of UNCITRAL
The examples just mentioned show that issues of human rights are factored in the work and in the resulting legal instruments of UNCITRAL where relevant and as appropriate. This is largely ensured by States and observer organizations participating in the work of UNCITRAL as well as by the UNCITRAL secretariat that regularly monitors developments related to all subjects included in the UNCITRAL program of work.
The UNCITRAL secretariat will continue bringing the Guiding Principles and the relevant reports on this subject to the attention of UNCITRAL and its working groups when they elaborate international legal standards touching on the relevant issues. For example, this has been done in the context of the commentary to article 9 of the 2011 UNCITRAL Model Law on Public Procurement.
The UNCITRAL secretariat will continue inviting the OHCHR and international organizations, such as UNCTAD, UNDP, UNIDO, UNODC and the World Bank Group, as well as relevant non-governmental organizations, to sessions of the Commission and its working groups. This would allow representatives of the OHCHR and all these organizations to bring to the attention of the Commission and its working groups any developments as regards the advancement of the business and human rights agenda and the dissemination and implementation of the Guiding Principles and to make suggestions for possible contribution of UNCITRAL in this respect.
With its technical cooperation and assistance program, the UNCITRAL secretariat will continue assisting States in their trade law reform projects and in building local capacity, although, due to the lack of sufficient resources, UNCITRAL’s outreach is limited. But UNCITRAL and its parent body, the General Assembly, will continue calling for additional resources and better coordination and cooperation of all concerned, including within the United Nations system, in order to avoid duplication of efforts and to achieve efficiency, consistency and coherence in the outreach to end-users.
The Member States
UNCITRAL has been considering the issue of the relationship between business and human rights in the context of its discussion of the UN Global Compact since 2009. At its forty-fifth session this year, UNCITRAL took note of the Guiding Principles. Through the report of UNCITRAL, information on the Guiding Principles is expected to reach the intended addressees – private enterprises and business associations, such as chambers of commerce - since most delegations of States and observer organizations to UNCITRAL are comprised of people with a close association to business.
At its 2012 session, the Commission agreed that it would be represented at a high-level meeting on the rule of law that took place on 24 September 2012. At the high-level meeting, the Chairman of UNCITRAL had a unique opportunity to present the rule of law from a perspective not commonly associated with the rule of law, that is, from a commercial and trade point of view.
In his message, the Chairman of UNCITRAL highlighted the relevance of UNCITRAL’s work to the UN rule of law agenda, proposing steps for enhancing the capacity of States to comprehensively promote rule of law in the broader context, including in the economic field.
A key point made by the Chairman of UNCITRAL is that rule of law is not only about issues of public international law, human rights, criminal law and transitional justice. It also concerns the recognition and enforcement of property rights and contracts, guaranteeing the legal security required to promote entrepreneurship, investment and job creation, as well as the capacity of States to mobilize resources for rule-of-law fundamentals such as due process and judicial and legal infrastructure, including well-trained lawyers and judges. Promoting the rule of law in commercial relations must therefore become, as the General Assembly itself has acknowledged on numerous occasions, an integral part of the broader UN agenda to promote rule of law at the national and international levels.
The high-level meeting considered and adopted a declaration. With the declaration, States echoed UNCITRAL's messages by recognizing that the rule of law and development are strongly interrelated and mutually reinforcing, and that this interrelationship should be considered in the post-2015 international development agenda. They have highlighted the importance of fair, stable and predictable legal frameworks for generating inclusive, sustainable and equitable development, economic growth and employment and facilitating entrepreneurship and investment. In this connection, States commended the work of UNCITRAL in modernizing and harmonizing international trade law.
The views expressed in this article are the personal views of the author and do not necessarily reflect the views of the United Nations or UNCITRAL.