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With Claes Cronstedt
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Claes Cronstedt is an international lawyer and member of the Swedish Bar. He is one of the pioneers on Business and Human Rights. He founded the Stockholm Corporate Social Responsibility (CSR) Practice Group. He is on the Board of Directors for the Non-Violence Project Foundation (NVP) - a non-profit organization whose mission is to inspire, motivate, and engage young people on how to solve conflicts peacefully. It holds violence prevention and nonviolence education programs for schools and sports clubs around the world.
With Claes Cronstedt
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Claes Cronstedt is an international lawyer and member of the Swedish Bar. He is one of the pioneers on Business and Human Rights. He founded the Stockholm Corporate Social Responsibility (CSR) Practice Group. He is on the Board of Directors for the Non-Violence Project Foundation (NVP) - a non-profit organization whose mission is to inspire, motivate, and engage young people on how to solve conflicts peacefully. It holds violence prevention and nonviolence education programs for schools and sports clubs around the world.
With Claes Cronstedt
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Claes Cronstedt is an international lawyer and member of the Swedish Bar. He is one of the pioneers on Business and Human Rights. He founded the Stockholm Corporate Social Responsibility (CSR) Practice Group. He is on the Board of Directors for the Non-Violence Project Foundation (NVP) - a non-profit organization whose mission is to inspire, motivate, and engage young people on how to solve conflicts peacefully. It holds violence prevention and nonviolence education programs for schools and sports clubs around the world.
With Claes Cronstedt
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Major banks and financial institutions, including state-owned and multilateral institutions are complicit with clients who commit serious violations of human rights linked to deforestation, land grabs, major dam and mining projects displacing indigenous peoples and turning a blind eye to child labour. The UN’s Office of the High Commissioner for Human Rights (OHCHR) has firmly established that banks have human rights responsibilities also for the impacts by companies which they finance.
JF - What are the remedies for human rights violations by corporations and the banks that finance them when present legal systems are inadequate? Can the latest Hague mechanism be an effective road to justice?
CC - At present, access to justice in national courts remains a problem as domestic laws may not apply to international disputes and courts often lack jurisdiction to try cases against far-flung multinationals. Overloaded judges may take years to reach a decision, adding to the suffering of the abused. Human rights disputes often occur in regions where national courts are dysfunctional, corrupt, politically influenced or simply unqualified which could lead to unpredictable results (as an alarming example, see the Chevron/Texas oil pollution case in Ecuador).
Commercial arbitration is not a possible alternative as the issues and parties involved in human rights disputes are different from those in typical of commercial disputes. Hence, existing arbitration rules do not provide an adequate framework.
Given the many current obstacles in bringing human rights conflicts to justice the recently formed non state-based grievance mechanism - the Hague Rules on Business and Human Rights Arbitration is a path forward. It provides tailor-made arbitration rules and expert arbitrators and mediators that could have a significant impact in ensuring the right to remedy for those abused.
JF – What would be required of banks and institutions for the Hague Rules to work?
CC - In order for the Hague Rules to work, contractual provisions in the finance agreement between the bank and the borrower would have to include that the latter agrees to arbitrate disputes on alleged violations of human rights. The agreement should include a third-party beneficiary clause offering the alleged victims the rights to enter into or initiate mediation and arbitration as plaintiffs against the bank or its client, or against both.
The Hague Rules could also address, for instance, rules on transparency, engaging expert arbitrators and mediators, protection of claimants, witnesses and counsel.
JF – What is the incentive for corporations to comply with these rules?
CC – Although the rules are not compulsory, it is still of interest to the corporations in that they would have a way to prevent and rapidly resolve disputes that, if allowed to fester, would expose companies to significant legal, regulatory, operational and reputational risks. There is also growing pressure from the public for corporations to be held accountable and to demonstrated that they are changing their ways.
JF – Many of the victims do not have access to the funds to support litigation. How do the Hague Rules handle the lawyers’ fees and other costs that the parties may be unable to afford?
CC - This is archived by using a “legal aid” system contingency funding, or an agreement on an asymmetric distribution of costs. Subsidies from non-governmental organizations and private donors could also be expected. Arbitration proceedings can be held at any location in the world that the parties select, irrespective of where the alleged abuse took place. This, together with the speed of the proceedings, will reduce costs and enhance accessibility for all participants. The arbitral decisions would be enforceable in national courts across the world in any of the 156 states that are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is in stark contrast to national court judgments, which do not travel easily in our globalized world.
JF – Are there any other methods to support access and transparency?
CC - The Permanent Court of Arbitration (PCA), who administers the proceedings under the Hague Rules, has access to a worldwide network of hearing facilities and experience with hearings and other means that do not require a physical presence. Moreover, arbitration under the Hague Rules are transparent by default with all orders, decisions and awards published by the PCA on its website. The PCA will also publish general information about arbitration under the Hague Rules, including industry sector, names of the arbitrators, outcome of the cases and costs in order to serve as a source of continued learning in keeping with the UN Guiding Principles on Business and Human Rights (the Protect, Respect and Remedy framework).
Arbitration applying the Hague Rules, is the most promising way to support human rights in the interest of both the victims and the corporations. “Justice, once there is a procedure for its delivery, is prone to have its own momentum.” (Geoffrey Robertson, King’s Counsel KC).
JF – What is your hope for the future?
CC – My hope is that society continues to demand that corporations take greater responsibility for their actions and that we see a future where human rights are protected at all levels of industry. The Hague Rules will be an effective tool to achieve this.
Claes Cronstedt is an international lawyer and member of the Swedish Bar. He is one of the pioneers on Business and Human Rights. He founded the Stockholm Corporate Social Responsibility (CSR) Practice Group. He is on the Board of Directors for the Non-Violence Project Foundation (NVP) - a non-profit organization whose mission is to inspire, motivate, and engage young people on how to solve conflicts peacefully. It holds violence prevention and nonviolence education programs for schools and sports clubs around the world.