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The Hague Rules on Business and Human Rights Arbitration
The Hague Rules on Business and Human Rights Arbitration
6 January 2020
Series
Blogs
6 January 2020
On 12 December 2019, the launch of The Hague Rules on Business and Human Rights Arbitration (the “Hague Rules”) took place at the Peace Palace in The Hague, The Netherlands. As described in an earlier post (click here), The Hague Rules provide a set of rules for arbitration in relation to business and human rights (“BHR”) disputes. A copy of the Hague Rules, including a commentary per provision and various model arbitration clauses, is available online (click here)
The Hague Rules
The Hague Rules are based on the UNCITRAL Rules (2013), i.e. including the Rules on Transparency in Treaty-based Investor-State Arbitration. However, the Hague Rules deviate from the UNCITRAL Rules (2013) where needed to address issues/concerns that may arise in BHR disputes. The introductory note in the commentary to the Hague Rules clarifies that BHR-related terms as used in the Hague Rules (e.g., “human rights”) generally have the same meaning as similar terms used in the UN Guiding Principles on Business and Human Rights. The drafters envisaged that the Hague Rules will be used in commercial, business-to-business, arbitrations that also involve human rights-related issues such as, for example, arbitrations in relation to certain supply chain contracts. However, it seems that most of the characteristic features of the Hague Rules anticipate the Rules’ application to arbitrations by which individuals seek redress for alleged human rights violations. In order to capture the main characteristic features of the Hague Rules, the below sets out the most notable differences between the UNCITRAL Rules (2013) and the Hague Rules.
- Article 18(5): allows the tribunal to keep the identity of a person confidential where this may be sensitive or cause prejudice.
- Article 19: regards “multiparty claims” and, for example, also allows for the joinder of a “third party beneficiary of the underlying legal instrument”, in relation to which the parties’ agreement to the Hague Rules implies a consent to such third party potentially becoming an additional party to the arbitration.
- Article 26: based on various other arbitration rules, facilitates a tribunal’s expedited disposal of claims that are “manifestly without merit” in a manner that aims to prevent costly litigation and reputational damage caused by unfounded claims.
- Article 27: with a view to encouraging tribunals to proactively manage the written submissions so as to ensure efficiency and equality of arms, inter alia, clarifies that the tribunal may set requirements regarding the length and form of written submissions.
Conduct of proceedings in conformity with BHR (related) standards
Various provisions require that the arbitration takes place in a “culturally appropriate” and “rights-compatible” manner, for example, regarding the general conduct of the proceedings (Article 18(1)), the taking and production of evidence (Article 32), and the organisation of the hearing (Article 33(2)). Moreover, Article 46(4) requires tribunals, in deciding on the dispute, to take into account also “usage of trade applicable to the transaction, including any business and human rights standards or instruments that may have become usages of trade.”
Talking points at the launch of the Hague Rules
At the launch of the Hague Rules, the main point of discussion concerned how often the Hague Rules would be applied to disputes in practice. On the one hand, from the perspective of potential individual (non-corporate) users, critical views were expressed as to the accessibility of the Hague Rules for such individuals (e.g. in light of funding), the possibility of “opting-out” of certain provisions that were considered to favour these individual users, and the use of the Hague Rules absent global and binding instruments imposing (high) BHR-standards, including a direct right to claim (vis-à-vis, for example, parent companies). On the other hand, in view of the increasing emphasis on CSR-values within globally acting corporates as well as governmental efforts to ‘impose’/’export’ BHR-standards globally by governments (e.g. in the ‘new’ generation investment and trade treaties), it was considered that the Hague Rules may well become part of this global sustainability-trend, as part of the procedural framework for the enforcement of BHR-standards. However, acknowledging that the Hague Rules may need further fine-tuning in light of the interests and concerns of the (possible) future actors, the drafting committee encouraged further input from potential users and practitioners.
To learn more about our BHR practice at Linklaters please click here.