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FOR THE ISSUES OF LAW AND MORALITY IN THE BUSINESS ETHICS

FOR THE ISSUES OF LAW AND MORALITY IN THE BUSINESS ETHICS
Irma Bagrationi, doctor of philosophy

Koba Jabua, lawyer, georgian bar association

Batumi Shota Rustaveli State University, Georgia

Conference participant

UDC 1+14+17+340+349+34.09   
 
The present paper outlines four arguments:the argument from norm development, the argument from competing obligations, the argument from bindingness and the argument from access to remedies – that straddle the boundaries of both law and morality – for why a treaty is necessary. The arguments all are rooted in a common normative understanding of fundamental rights and seek to ensure that they are accorded the importance they deserve in this increasingly globalized world. Whilst each argument on its own has strength and could be developed in more detail, this paper aims to emphasize the cumulative strength that the four arguments presented lend in favour of a treaty. The emphasis throughout is also upon why a binding legal instrument is particularly important for international law, as opposed to softer forms of regulation. Having outlined the case for the treaty, the paper then turns to some of the difficulties identified by the Code of Ethics. The paper attempts to show why none of these objections provides good reason to abandon the idea of a treaty as well as why it would be unfortunate to proceed with an alternative, more restrictive proposal for a treaty that only addresses ‘gross’ human rights violations.
Keywords: Business law, business ethics, philosophical, professional ethics, worldviews, moral obligations, legal necessity, corporation, regulations.
 
Even once we recognize that corporations have certain legal obligations in relation to fundamental rights, many questions remain concerning the exact nature and extent of these obligations. This problem flows from the fact that fundamental rights themselves provide entitlements but do not specify exactly what any particular agent must do. The primary focus must be on the realization of these rights: who exactly must do so and what they are required to do requires further specification. In specifying the exact obligations of business in relation to fundamental rights, there is a need for much development both at the international and national levels. It is best known, that the Human Rights Council passed a resolution that establishes „an intergovernmental working group on a legally binding instrument on transnational corporations and other business enterprises with respect to human rights“. The resolution – sponsored by Ecuador and South Africa. The voting patterns reflect a split between developed countries and developing countries as well as between more established economic powers such as the United States and European Union and emerging economic powers. In the face of this global split, John Gerard Ruggie – An American Lawyer, Professor in Human Rights and International Affairs at Harvard Law School and University of California, the former Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises – has recently issued a number of online interventions in which he focuses on the difficulties of actually achieving a binding international human rights treaty on business and fundamental rights and the flaws in the current resolution.   Thus far, Ruggie has essentially set the agenda for discussion with academics responding to arguments that he has provided against the treaty initiative [1, pp. 17-18]; yet, in a certain sense, this debate commences from the wrong starting point. The first step, in our view, in engaging with a proposal for a treaty on business and human rights is to consider the reasons for it, not the difficulties associated with achieving it. Identifying the purpose and goal of such a treaty is important in outlining a vision of where we should aim at in this field as well as determining the possible content of any such instrument. In approaching this task, it is necessary to investigate some of the reasons why the current primary instrument in this field – the Guiding Principles on Business and Human Rights – does not adequately address several problems in international law. Understanding the lacunae that exist can help identify the key roles that a treaty can play. With a clear vision in mind, it then becomes possible to address the difficulties that may arise in implementing it.
Interestingly, the Guiding Principles on Business and Human Rights do not adequately address this difficult question. Corporations generally have a responsibility to respect human rights – this means, that as Associate Professor in the faculty of Law at the University of California, Deputy Director of Australian Human Rights Centre Justine Nolan points out, „they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved“  [2, pp. 23-24]. As both international, regional and domestic institutions and courts recognize, the mere infringement of a fundamental right is not sufficient to determine that a wrong has been done: a further step is necessary, namely, determining whether the infringement lacks a strong justification which can be said to be proportional to the benefits sought to be achieved.  Moreover, in relation to corporations, there is also a prior question, namely, whether the infringement of rights flows from an obligation that falls upon or applies to a corporation. Both questions are elided by a simple focus on a “responsibility to respect fundamental rights“ [2, pp. 44-45]. Consider a company policy that bans its employees from downloading pornographic material onto the laptops they receive from the company, whether at work or home. Let us also consider that this takes place in a jurisdiction where the state is prohibited from preventing individuals from downloading adult pornographic material onto their computers. Does the company policy violate the right to free speech of employees? The first question to determine is whether the right to free speech includes an obligation upon a corporation to allow its own property to be used for the purpose of downloading pornography. A court or adjudicatory body would need to consider various arguments to determine the interpretation of the right to free speech and its implications for the company in question [2, pp. 71-72]. It is not clear whether a company has any obligation to avoid such a policy until it is determined that such a policy restricts the right in a manner that violates the company’s obligations. 
Here it needs to be noticed, that even if it is determined that the right to free speech of employees does include a prima facie obligation upon corporations to permit them to download pornographic material, that does not end the matter. The question then arises as to whether there is any legitimate justification for the infringement in this scenario. From the point of English Barrister and Professor of International Economic Law Convene Peter Muchlinski, “different constitutional systems address this inquiry into justification in different ways: the trend in such jurisdictions as Canada and South Africa is to consider the purpose of the limitation on the right first. A proportionality test is then applied which involves weighing up the benefits of the infringing measure against the harms caused to the fundamental rights concerned. This example, which is designed to provide an analogue to controversial issues arising in the context of state obligations, raises the fact that the application of existing rights to companies is a complex matter and will require the development of a jurisprudence which considers a number of issues: the application of particular rights to corporations; the interpretation and meaning of the obligations imposed by particular rights upon corporations and the determination of when corporations may justifiably limit fundamental rights. The example above also raises the question of determining the application and limitation of fundamental rights in relation to a negative obligation that corporations may have not to harm fundamental rights. A further and related question concerns the nature and extent of the positive obligations corporations have for the realization of fundamental rights [3, pp. 90-91].
We have argued previously that there are good reasons why corporations should indeed be recognized as having positive obligations in relation to fundamental rights. Clearly, corporations can be powerful change agents in the quest for improving global realization of fundamental rights; at the same time, it is clear that significant questions arise in determining the nature and scope of such obligations so as not to elide the distinctive nature of business entities for which profit must remain a significant motivation. All these questions about the exact nature and extent of the obligations corporations have in relation to fundamental rights motivate for a mechanism that can develop international law in this regard. One of the prime functions that a treaty could perform would be to provide such a mechanism for the development of international standards surrounding business and human rights. If we look to other international human rights treaties, we see that they establish committees who perform similar tasks. The International Covenant on Civil and Political Rights, for instance, establishes a Human Rights Committee which is required to consider reports by states but also „such general comments as it may consider appropriate“ [3, pp. 104-105]; these various bodies have employed the General Comments to provide clarification, development and persuasive interpretations of the obligations imposed in the covenants. There would be a need to develop a similar mechanism in any treaty on business and human rights that could issue General Comments and thus assist in the application of international human rights to companies. Such a treaty and international body would not only be of importance to the development of international human rights law but could also help influence the development of these norms at a national level too. The express recognition that corporations are themselves legally bound by fundamental rights norms and that they have particular obligations could itself have an important effect on the manner in which corporate obligations are interpreted at a national level. Indeed, many constitutions allow for the direct application of international law whilst others require that it be used as an interpretive aid in national systems [3, pp. 111-112]. As such, the clarification and progressive development of international law in this area could help develop the law in domestic jurisdictions and, at least, be considered persuasive authority at a national level.
It is interesting for us, that the need for a recognition of binding obligations on corporations in respect of human rights and an understanding of the nature and extent of these obligations becomes all the more important when we consider developments in international law relating to international trade and investment. International trade regimes and bilateral and multilateral investment treaties are all enacted through binding legal frameworks and provide adjudicatory mechanisms to address disputes. These fields of law have the potential to raise concerns relating to fundamental rights. In relation to law of World Trade organization, for instance, a major dispute arose concerning the patent protections provided to pharmaceutical companies and whether these could be used to prevent governments from providing life-saving medication to their people [4, pp. 40-41]; these legal regimes have, however, often developed in a manner that is quite separate from human rights law. What matters in this context is the fact that there are potential conflicts that can arise between these regimes and the demands of human rights law. As we have seen, a key important role for a treaty on business and human rights would be the express recognition by states that businesses have legal obligations in relation to fundamental rights. In this context, that would involve the recognition that fundamental rights impose a similar level of legal bindingness as do obligations in relation to commercial regimes [4, pp. 50-51]; this would enable the recognition that the human rights obligations could well conflict with commercial treaty obligations in international law. As such, this might require dispute resolution mechanisms to address how to balance the commercial interests at play against the equally weighty fundamental rights obligations that arise in a specific context. At present, with no clarity as to the legal obligations of corporations in international law, and with most statements of responsibility existing in instruments that are at best soft-law, commercial obligations will be likely to trump those flowing from fundamental rights in most cases. Further analysis is necessary as to how international trade and investment treaties intersect with human rights law and how conflicts can be addressed  the important point here is that a treaty could help ensure that human rights obligations of business should have at least equal status as their commercial international law obligations.
Alleguedly, a key concern in the field of business and human rights is the ability to gain access to remedies for victims of human rights violations by companies. It is important to recognize that three related legal doctrines create particular problems in ensuring access to remedies where multi- national corporations are concerned. First, we have what we might term the jurisdictional challenge: in international law, each state is generally regarded as sovereign with jurisdiction over its own internal affairs [5, pp. 62-63]. If we have a corporation that has subsidiaries across multiple borders, and it fails to meets its human rights obligations in several jurisdictions, the question arises whether one may found jurisdiction in one particular jurisdiction or whether one is only able to claim access to a remedy where the harm was caused. Secondly, there is the problem of weak governance zones: there are parts of the world in which laws are not properly enforced and courts lack independence. How can one ensure that individuals can gain access to a remedy against corporations that violate fundamental rights in these contexts? Finally, there is the problem of the corporate structure itself: where businesses operate as companies, they are generally treated as separate legal persons with limited liability [5, pp. 69-70]; there is in fact no one entity known as a multi-national corporation: rather, there are multiple separate corporations each constituted in different countries. How does one hold the main corporate structure accountable for its failure to meet its human rights obligations where it is divided into distinct legal entities across national borders?
We note, that the main alternative possibility to close the accountability gap would be to create an international mechanism or court which could adjudicate on civil and/or criminal claims against corporations where they have violated fundamental rights. Such a mechanism would thus be an international forum that could hold jurisdiction over corporations that operate in multiple jurisdictions and where the judicial system is not operating effectively. Developing such a mechanism would seriously help reduce the accountability gap in the world: it would be a less unwieldy solution to the problem than the home state liability solution which would require laws to be passed in every country that would inevitably vary in their content and effect. Such a mechanism would thus provide a forum to give effect to the right to have access to a remedy in a globalized world. It need not, however, be considered the exclusive forum in which such matters could be resolved and local courts could still play an important role in this regard. Moreover, it would assist in the process of norm development discussed above as particular cases brought before it would help develop our understanding of the application of fundamental rights to corporations. 
Thus, we have thus far considered four arguments for why a business and human rights treaty would address serious problems in international law that have arisen with the growth and power of business in a global economic environment. In light of these arguments, it is now useful to turn to some of the objections lodged by John Ruggie against an overarching treaty and attempt to evaluate whether they negate or call into questions any of the arguments already provided in its favour. The Human Rights Council resolution that has initiated discussions around the proposed treaty focuses on regulating in „international human rights law, the activities of transnational corporations and other business enterprises“ [6, pp. 77-79]; In a footnote, „other business enterprises are defined as all business enterprises that have a transnational character in their operational activities and does not apply to local businesses registered in terms of relevant domestic law“[6, pp. 81-82] John Ruggie raises the question of the scope of any business and human rights treaty and criticises the resolution for restricting its focus only to transnational corporations. In response to this challenge, it is important to recognise that there are good reasons why international law might devote specific attention to transnational corporations. As we have seen, it is transnational corporations that are often involved in arbitrations against particular governments where bilateral or multi-lateral investment treaties are signed which often fail to take account of fundamental rights; and it is such bodies which are best able to exploit the weaknesses of the current international legal system to avoid accountability for violations of fundamental rights in weak governance zones. The international system indeed creates the very conditions in which such entities become viable and hence can be seen to have a responsibility to ensure effective regulation in this regard. As such, in certain respects, there is a principled case for why states should seek to find a treaty-based solution to the problems caused for the regulation of transnational corporations by the very structure of international law itself. Whilst there is some case for an international law treaty   to focus on transnational corporations, it is important, “to recognise that fundamental rights are concerned with the protection of the interests of individuals and impose some obligations on all agents who can  affect  those  interests.  If it  is possible to  develop  a treaty that  would  bind  all corporations, that should be done with particular consideration of course given to the particularities of transnational corporations” [7, pp. 141-142]; throughout the process, it should be clear that the logic of fundamental rights does not distinguish between transnational corporations and local corporations: any corporation would be bound by its obligations in relation to such rights.
Reasoning from the previously mentioned we may conclude, that our research attempts to show that there are powerful reasons as to why the international community should take forward the resolution of the Code of Ethics and develop a treaty on business and human rights. The objections that have been lodged against such a development can all be countered and are, generally, developed at the level of pragmatic realpolitik rather than principle. There is also no reason why developments in international law cannot occur together with other forms of  ‘polycentric governance’. Problems of international law need to be solved legally and cannot be addressed effectively in any other way. It is hard to understand barrister’s implacable opposition to this worthy initiative which can complement his own contributions in this area. It is also hard to see why a proposed treaty on business and human rights has attracted such strong opposition from developed countries. The only possible reasons for the latter appear to be ones of expediency and self-interest which are indeed powerful forces. Yet, when they are pitted against the real pressing fundamental interests of individuals, it should be clear to all states and enlightened corporations that the case for such a treaty should prevail. The impact of such a treaty will also not fundamentally constrain the pursuit of business activity; rather, it will produce the necessary international regulatory framework to ensure that the pursuit of commercial activity does not conflict with and enhances fundamental human dignity and development.  It is hoped that the intellectual case for such an instrument can help to overcome the reluctance in some quarters and be the basis for a strong campaign that will eventually see the coming into fruition of this vital part of international governance.
 
References:
1. Ruggie John Gerard, Report on the Special Representative of the Secretary-General on the Issues of Human Rights and Transnational Corporations and other Business Enterprises, Human Rights Council, Series “Progress in Postwar International Relations”, New York, “Columbia University Press”, 2009 (In English).
2. Nolan Justine, The Corporate Responsibility to Respect Rights: Soft Law or Not Law? In the Book: Business and Human Rights: from Principles to Practice, Co-edited with Dorothee Baumann-Pauly, New York, “Routledge Publishing”, 2014 (In English).
3. Muchlinski Peter, Limited Liability and Multinational Enterprises: A Case for Reform, “Journal of Economics”, №5, Cambridge, 2010 (In English).
4. On the Philosophical Justification for Fundamental Rights, see: David Bilchitz, “Poverty and Fundamental Rights: the Justification and Enforcement of Socio-economic Rights, Rochester, Hardcover Book Printing, 2007 (In English). 
5. Newton Lisa, Business Ethics in the Social Context: Law, Profits, and the Evolving Moral Practice of Business, New York City, “Springer Publishing“, 2014 (In English). 
6. Ruggie John Gerard, Business and Human Rights: Guiding Principles for a Socially Sustainable Globalization, Publisher: the United Nations High Commissioner for Human Rights, Geneva, “Palace of Nations”, 2010 (In English).
7. Miller Roger Leroy & Jentz Gaylord, Business Law Today, 9th Edition, Boston, “Cengage Learning Copyright”, 2009 (In English).
UDC 1+14+17+340+349+34.09   
 
The present paper outlines four arguments:the argument from norm development, the argument from competing obligations, the argument from bindingness and the argument from access to remedies – that straddle the boundaries of both law and morality – for why a treaty is necessary. The arguments all are rooted in a common normative understanding of fundamental rights and seek to ensure that they are accorded the importance they deserve in this increasingly globalized world. Whilst each argument on its own has strength and could be developed in more detail, this paper aims to emphasize the cumulative strength that the four arguments presented lend in favour of a treaty. The emphasis throughout is also upon why a binding legal instrument is particularly important for international law, as opposed to softer forms of regulation. Having outlined the case for the treaty, the paper then turns to some of the difficulties identified by the Code of Ethics. The paper attempts to show why none of these objections provides good reason to abandon the idea of a treaty as well as why it would be unfortunate to proceed with an alternative, more restrictive proposal for a treaty that only addresses ‘gross’ human rights violations.
Keywords: Business law, business ethics, philosophical, professional ethics, worldviews, moral obligations, legal necessity, corporation, regulations.
 
Even once we recognize that corporations have certain legal obligations in relation to fundamental rights, many questions remain concerning the exact nature and extent of these obligations. This problem flows from the fact that fundamental rights themselves provide entitlements but do not specify exactly what any particular agent must do. The primary focus must be on the realization of these rights: who exactly must do so and what they are required to do requires further specification. In specifying the exact obligations of business in relation to fundamental rights, there is a need for much development both at the international and national levels. It is best known, that the Human Rights Council passed a resolution that establishes „an intergovernmental working group on a legally binding instrument on transnational corporations and other business enterprises with respect to human rights“. The resolution – sponsored by Ecuador and South Africa. The voting patterns reflect a split between developed countries and developing countries as well as between more established economic powers such as the United States and European Union and emerging economic powers. In the face of this global split, John Gerard Ruggie – An American Lawyer, Professor in Human Rights and International Affairs at Harvard Law School and University of California, the former Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises – has recently issued a number of online interventions in which he focuses on the difficulties of actually achieving a binding international human rights treaty on business and fundamental rights and the flaws in the current resolution.   Thus far, Ruggie has essentially set the agenda for discussion with academics responding to arguments that he has provided against the treaty initiative [1, pp. 17-18]; yet, in a certain sense, this debate commences from the wrong starting point. The first step, in our view, in engaging with a proposal for a treaty on business and human rights is to consider the reasons for it, not the difficulties associated with achieving it. Identifying the purpose and goal of such a treaty is important in outlining a vision of where we should aim at in this field as well as determining the possible content of any such instrument. In approaching this task, it is necessary to investigate some of the reasons why the current primary instrument in this field – the Guiding Principles on Business and Human Rights – does not adequately address several problems in international law. Understanding the lacunae that exist can help identify the key roles that a treaty can play. With a clear vision in mind, it then becomes possible to address the difficulties that may arise in implementing it.
Interestingly, the Guiding Principles on Business and Human Rights do not adequately address this difficult question. Corporations generally have a responsibility to respect human rights – this means, that as Associate Professor in the faculty of Law at the University of California, Deputy Director of Australian Human Rights Centre Justine Nolan points out, „they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved“  [2, pp. 23-24]. As both international, regional and domestic institutions and courts recognize, the mere infringement of a fundamental right is not sufficient to determine that a wrong has been done: a further step is necessary, namely, determining whether the infringement lacks a strong justification which can be said to be proportional to the benefits sought to be achieved.  Moreover, in relation to corporations, there is also a prior question, namely, whether the infringement of rights flows from an obligation that falls upon or applies to a corporation. Both questions are elided by a simple focus on a “responsibility to respect fundamental rights“ [2, pp. 44-45]. Consider a company policy that bans its employees from downloading pornographic material onto the laptops they receive from the company, whether at work or home. Let us also consider that this takes place in a jurisdiction where the state is prohibited from preventing individuals from downloading adult pornographic material onto their computers. Does the company policy violate the right to free speech of employees? The first question to determine is whether the right to free speech includes an obligation upon a corporation to allow its own property to be used for the purpose of downloading pornography. A court or adjudicatory body would need to consider various arguments to determine the interpretation of the right to free speech and its implications for the company in question [2, pp. 71-72]. It is not clear whether a company has any obligation to avoid such a policy until it is determined that such a policy restricts the right in a manner that violates the company’s obligations. 
Here it needs to be noticed, that even if it is determined that the right to free speech of employees does include a prima facie obligation upon corporations to permit them to download pornographic material, that does not end the matter. The question then arises as to whether there is any legitimate justification for the infringement in this scenario. From the point of English Barrister and Professor of International Economic Law Convene Peter Muchlinski, “different constitutional systems address this inquiry into justification in different ways: the trend in such jurisdictions as Canada and South Africa is to consider the purpose of the limitation on the right first. A proportionality test is then applied which involves weighing up the benefits of the infringing measure against the harms caused to the fundamental rights concerned. This example, which is designed to provide an analogue to controversial issues arising in the context of state obligations, raises the fact that the application of existing rights to companies is a complex matter and will require the development of a jurisprudence which considers a number of issues: the application of particular rights to corporations; the interpretation and meaning of the obligations imposed by particular rights upon corporations and the determination of when corporations may justifiably limit fundamental rights. The example above also raises the question of determining the application and limitation of fundamental rights in relation to a negative obligation that corporations may have not to harm fundamental rights. A further and related question concerns the nature and extent of the positive obligations corporations have for the realization of fundamental rights [3, pp. 90-91].
We have argued previously that there are good reasons why corporations should indeed be recognized as having positive obligations in relation to fundamental rights. Clearly, corporations can be powerful change agents in the quest for improving global realization of fundamental rights; at the same time, it is clear that significant questions arise in determining the nature and scope of such obligations so as not to elide the distinctive nature of business entities for which profit must remain a significant motivation. All these questions about the exact nature and extent of the obligations corporations have in relation to fundamental rights motivate for a mechanism that can develop international law in this regard. One of the prime functions that a treaty could perform would be to provide such a mechanism for the development of international standards surrounding business and human rights. If we look to other international human rights treaties, we see that they establish committees who perform similar tasks. The International Covenant on Civil and Political Rights, for instance, establishes a Human Rights Committee which is required to consider reports by states but also „such general comments as it may consider appropriate“ [3, pp. 104-105]; these various bodies have employed the General Comments to provide clarification, development and persuasive interpretations of the obligations imposed in the covenants. There would be a need to develop a similar mechanism in any treaty on business and human rights that could issue General Comments and thus assist in the application of international human rights to companies. Such a treaty and international body would not only be of importance to the development of international human rights law but could also help influence the development of these norms at a national level too. The express recognition that corporations are themselves legally bound by fundamental rights norms and that they have particular obligations could itself have an important effect on the manner in which corporate obligations are interpreted at a national level. Indeed, many constitutions allow for the direct application of international law whilst others require that it be used as an interpretive aid in national systems [3, pp. 111-112]. As such, the clarification and progressive development of international law in this area could help develop the law in domestic jurisdictions and, at least, be considered persuasive authority at a national level.
It is interesting for us, that the need for a recognition of binding obligations on corporations in respect of human rights and an understanding of the nature and extent of these obligations becomes all the more important when we consider developments in international law relating to international trade and investment. International trade regimes and bilateral and multilateral investment treaties are all enacted through binding legal frameworks and provide adjudicatory mechanisms to address disputes. These fields of law have the potential to raise concerns relating to fundamental rights. In relation to law of World Trade organization, for instance, a major dispute arose concerning the patent protections provided to pharmaceutical companies and whether these could be used to prevent governments from providing life-saving medication to their people [4, pp. 40-41]; these legal regimes have, however, often developed in a manner that is quite separate from human rights law. What matters in this context is the fact that there are potential conflicts that can arise between these regimes and the demands of human rights law. As we have seen, a key important role for a treaty on business and human rights would be the express recognition by states that businesses have legal obligations in relation to fundamental rights. In this context, that would involve the recognition that fundamental rights impose a similar level of legal bindingness as do obligations in relation to commercial regimes [4, pp. 50-51]; this would enable the recognition that the human rights obligations could well conflict with commercial treaty obligations in international law. As such, this might require dispute resolution mechanisms to address how to balance the commercial interests at play against the equally weighty fundamental rights obligations that arise in a specific context. At present, with no clarity as to the legal obligations of corporations in international law, and with most statements of responsibility existing in instruments that are at best soft-law, commercial obligations will be likely to trump those flowing from fundamental rights in most cases. Further analysis is necessary as to how international trade and investment treaties intersect with human rights law and how conflicts can be addressed  the important point here is that a treaty could help ensure that human rights obligations of business should have at least equal status as their commercial international law obligations.
Alleguedly, a key concern in the field of business and human rights is the ability to gain access to remedies for victims of human rights violations by companies. It is important to recognize that three related legal doctrines create particular problems in ensuring access to remedies where multi- national corporations are concerned. First, we have what we might term the jurisdictional challenge: in international law, each state is generally regarded as sovereign with jurisdiction over its own internal affairs [5, pp. 62-63]. If we have a corporation that has subsidiaries across multiple borders, and it fails to meets its human rights obligations in several jurisdictions, the question arises whether one may found jurisdiction in one particular jurisdiction or whether one is only able to claim access to a remedy where the harm was caused. Secondly, there is the problem of weak governance zones: there are parts of the world in which laws are not properly enforced and courts lack independence. How can one ensure that individuals can gain access to a remedy against corporations that violate fundamental rights in these contexts? Finally, there is the problem of the corporate structure itself: where businesses operate as companies, they are generally treated as separate legal persons with limited liability [5, pp. 69-70]; there is in fact no one entity known as a multi-national corporation: rather, there are multiple separate corporations each constituted in different countries. How does one hold the main corporate structure accountable for its failure to meet its human rights obligations where it is divided into distinct legal entities across national borders?
We note, that the main alternative possibility to close the accountability gap would be to create an international mechanism or court which could adjudicate on civil and/or criminal claims against corporations where they have violated fundamental rights. Such a mechanism would thus be an international forum that could hold jurisdiction over corporations that operate in multiple jurisdictions and where the judicial system is not operating effectively. Developing such a mechanism would seriously help reduce the accountability gap in the world: it would be a less unwieldy solution to the problem than the home state liability solution which would require laws to be passed in every country that would inevitably vary in their content and effect. Such a mechanism would thus provide a forum to give effect to the right to have access to a remedy in a globalized world. It need not, however, be considered the exclusive forum in which such matters could be resolved and local courts could still play an important role in this regard. Moreover, it would assist in the process of norm development discussed above as particular cases brought before it would help develop our understanding of the application of fundamental rights to corporations. 
Thus, we have thus far considered four arguments for why a business and human rights treaty would address serious problems in international law that have arisen with the growth and power of business in a global economic environment. In light of these arguments, it is now useful to turn to some of the objections lodged by John Ruggie against an overarching treaty and attempt to evaluate whether they negate or call into questions any of the arguments already provided in its favour. The Human Rights Council resolution that has initiated discussions around the proposed treaty focuses on regulating in „international human rights law, the activities of transnational corporations and other business enterprises“ [6, pp. 77-79]; In a footnote, „other business enterprises are defined as all business enterprises that have a transnational character in their operational activities and does not apply to local businesses registered in terms of relevant domestic law“[6, pp. 81-82] John Ruggie raises the question of the scope of any business and human rights treaty and criticises the resolution for restricting its focus only to transnational corporations. In response to this challenge, it is important to recognise that there are good reasons why international law might devote specific attention to transnational corporations. As we have seen, it is transnational corporations that are often involved in arbitrations against particular governments where bilateral or multi-lateral investment treaties are signed which often fail to take account of fundamental rights; and it is such bodies which are best able to exploit the weaknesses of the current international legal system to avoid accountability for violations of fundamental rights in weak governance zones. The international system indeed creates the very conditions in which such entities become viable and hence can be seen to have a responsibility to ensure effective regulation in this regard. As such, in certain respects, there is a principled case for why states should seek to find a treaty-based solution to the problems caused for the regulation of transnational corporations by the very structure of international law itself. Whilst there is some case for an international law treaty   to focus on transnational corporations, it is important, “to recognise that fundamental rights are concerned with the protection of the interests of individuals and impose some obligations on all agents who can  affect  those  interests.  If it  is possible to  develop  a treaty that  would  bind  all corporations, that should be done with particular consideration of course given to the particularities of transnational corporations” [7, pp. 141-142]; throughout the process, it should be clear that the logic of fundamental rights does not distinguish between transnational corporations and local corporations: any corporation would be bound by its obligations in relation to such rights.
Reasoning from the previously mentioned we may conclude, that our research attempts to show that there are powerful reasons as to why the international community should take forward the resolution of the Code of Ethics and develop a treaty on business and human rights. The objections that have been lodged against such a development can all be countered and are, generally, developed at the level of pragmatic realpolitik rather than principle. There is also no reason why developments in international law cannot occur together with other forms of  ‘polycentric governance’. Problems of international law need to be solved legally and cannot be addressed effectively in any other way. It is hard to understand barrister’s implacable opposition to this worthy initiative which can complement his own contributions in this area. It is also hard to see why a proposed treaty on business and human rights has attracted such strong opposition from developed countries. The only possible reasons for the latter appear to be ones of expediency and self-interest which are indeed powerful forces. Yet, when they are pitted against the real pressing fundamental interests of individuals, it should be clear to all states and enlightened corporations that the case for such a treaty should prevail. The impact of such a treaty will also not fundamentally constrain the pursuit of business activity; rather, it will produce the necessary international regulatory framework to ensure that the pursuit of commercial activity does not conflict with and enhances fundamental human dignity and development.  It is hoped that the intellectual case for such an instrument can help to overcome the reluctance in some quarters and be the basis for a strong campaign that will eventually see the coming into fruition of this vital part of international governance.
 
References:
1. Ruggie John Gerard, Report on the Special Representative of the Secretary-General on the Issues of Human Rights and Transnational Corporations and other Business Enterprises, Human Rights Council, Series “Progress in Postwar International Relations”, New York, “Columbia University Press”, 2009 (In English).
2. Nolan Justine, The Corporate Responsibility to Respect Rights: Soft Law or Not Law? In the Book: Business and Human Rights: from Principles to Practice, Co-edited with Dorothee Baumann-Pauly, New York, “Routledge Publishing”, 2014 (In English).
3. Muchlinski Peter, Limited Liability and Multinational Enterprises: A Case for Reform, “Journal of Economics”, №5, Cambridge, 2010 (In English).
4. On the Philosophical Justification for Fundamental Rights, see: David Bilchitz, “Poverty and Fundamental Rights: the Justification and Enforcement of Socio-economic Rights, Rochester, Hardcover Book Printing, 2007 (In English). 
5. Newton Lisa, Business Ethics in the Social Context: Law, Profits, and the Evolving Moral Practice of Business, New York City, “Springer Publishing“, 2014 (In English). 
6. Ruggie John Gerard, Business and Human Rights: Guiding Principles for a Socially Sustainable Globalization, Publisher: the United Nations High Commissioner for Human Rights, Geneva, “Palace of Nations”, 2010 (In English).
7. Miller Roger Leroy & Jentz Gaylord, Business Law Today, 9th Edition, Boston, “Cengage Learning Copyright”, 2009 (In English).
UDC 1+14+17+340+349+34.09   
 
The present paper outlines four arguments:the argument from norm development, the argument from competing obligations, the argument from bindingness and the argument from access to remedies – that straddle the boundaries of both law and morality – for why a treaty is necessary. The arguments all are rooted in a common normative understanding of fundamental rights and seek to ensure that they are accorded the importance they deserve in this increasingly globalized world. Whilst each argument on its own has strength and could be developed in more detail, this paper aims to emphasize the cumulative strength that the four arguments presented lend in favour of a treaty. The emphasis throughout is also upon why a binding legal instrument is particularly important for international law, as opposed to softer forms of regulation. Having outlined the case for the treaty, the paper then turns to some of the difficulties identified by the Code of Ethics. The paper attempts to show why none of these objections provides good reason to abandon the idea of a treaty as well as why it would be unfortunate to proceed with an alternative, more restrictive proposal for a treaty that only addresses ‘gross’ human rights violations.
Keywords: Business law, business ethics, philosophical, professional ethics, worldviews, moral obligations, legal necessity, corporation, regulations.
 
Even once we recognize that corporations have certain legal obligations in relation to fundamental rights, many questions remain concerning the exact nature and extent of these obligations. This problem flows from the fact that fundamental rights themselves provide entitlements but do not specify exactly what any particular agent must do. The primary focus must be on the realization of these rights: who exactly must do so and what they are required to do requires further specification. In specifying the exact obligations of business in relation to fundamental rights, there is a need for much development both at the international and national levels. It is best known, that the Human Rights Council passed a resolution that establishes „an intergovernmental working group on a legally binding instrument on transnational corporations and other business enterprises with respect to human rights“. The resolution – sponsored by Ecuador and South Africa. The voting patterns reflect a split between developed countries and developing countries as well as between more established economic powers such as the United States and European Union and emerging economic powers. In the face of this global split, John Gerard Ruggie – An American Lawyer, Professor in Human Rights and International Affairs at Harvard Law School and University of California, the former Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises – has recently issued a number of online interventions in which he focuses on the difficulties of actually achieving a binding international human rights treaty on business and fundamental rights and the flaws in the current resolution.   Thus far, Ruggie has essentially set the agenda for discussion with academics responding to arguments that he has provided against the treaty initiative [1, pp. 17-18]; yet, in a certain sense, this debate commences from the wrong starting point. The first step, in our view, in engaging with a proposal for a treaty on business and human rights is to consider the reasons for it, not the difficulties associated with achieving it. Identifying the purpose and goal of such a treaty is important in outlining a vision of where we should aim at in this field as well as determining the possible content of any such instrument. In approaching this task, it is necessary to investigate some of the reasons why the current primary instrument in this field – the Guiding Principles on Business and Human Rights – does not adequately address several problems in international law. Understanding the lacunae that exist can help identify the key roles that a treaty can play. With a clear vision in mind, it then becomes possible to address the difficulties that may arise in implementing it.
Interestingly, the Guiding Principles on Business and Human Rights do not adequately address this difficult question. Corporations generally have a responsibility to respect human rights – this means, that as Associate Professor in the faculty of Law at the University of California, Deputy Director of Australian Human Rights Centre Justine Nolan points out, „they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved“  [2, pp. 23-24]. As both international, regional and domestic institutions and courts recognize, the mere infringement of a fundamental right is not sufficient to determine that a wrong has been done: a further step is necessary, namely, determining whether the infringement lacks a strong justification which can be said to be proportional to the benefits sought to be achieved.  Moreover, in relation to corporations, there is also a prior question, namely, whether the infringement of rights flows from an obligation that falls upon or applies to a corporation. Both questions are elided by a simple focus on a “responsibility to respect fundamental rights“ [2, pp. 44-45]. Consider a company policy that bans its employees from downloading pornographic material onto the laptops they receive from the company, whether at work or home. Let us also consider that this takes place in a jurisdiction where the state is prohibited from preventing individuals from downloading adult pornographic material onto their computers. Does the company policy violate the right to free speech of employees? The first question to determine is whether the right to free speech includes an obligation upon a corporation to allow its own property to be used for the purpose of downloading pornography. A court or adjudicatory body would need to consider various arguments to determine the interpretation of the right to free speech and its implications for the company in question [2, pp. 71-72]. It is not clear whether a company has any obligation to avoid such a policy until it is determined that such a policy restricts the right in a manner that violates the company’s obligations. 
Here it needs to be noticed, that even if it is determined that the right to free speech of employees does include a prima facie obligation upon corporations to permit them to download pornographic material, that does not end the matter. The question then arises as to whether there is any legitimate justification for the infringement in this scenario. From the point of English Barrister and Professor of International Economic Law Convene Peter Muchlinski, “different constitutional systems address this inquiry into justification in different ways: the trend in such jurisdictions as Canada and South Africa is to consider the purpose of the limitation on the right first. A proportionality test is then applied which involves weighing up the benefits of the infringing measure against the harms caused to the fundamental rights concerned. This example, which is designed to provide an analogue to controversial issues arising in the context of state obligations, raises the fact that the application of existing rights to companies is a complex matter and will require the development of a jurisprudence which considers a number of issues: the application of particular rights to corporations; the interpretation and meaning of the obligations imposed by particular rights upon corporations and the determination of when corporations may justifiably limit fundamental rights. The example above also raises the question of determining the application and limitation of fundamental rights in relation to a negative obligation that corporations may have not to harm fundamental rights. A further and related question concerns the nature and extent of the positive obligations corporations have for the realization of fundamental rights [3, pp. 90-91].
We have argued previously that there are good reasons why corporations should indeed be recognized as having positive obligations in relation to fundamental rights. Clearly, corporations can be powerful change agents in the quest for improving global realization of fundamental rights; at the same time, it is clear that significant questions arise in determining the nature and scope of such obligations so as not to elide the distinctive nature of business entities for which profit must remain a significant motivation. All these questions about the exact nature and extent of the obligations corporations have in relation to fundamental rights motivate for a mechanism that can develop international law in this regard. One of the prime functions that a treaty could perform would be to provide such a mechanism for the development of international standards surrounding business and human rights. If we look to other international human rights treaties, we see that they establish committees who perform similar tasks. The International Covenant on Civil and Political Rights, for instance, establishes a Human Rights Committee which is required to consider reports by states but also „such general comments as it may consider appropriate“ [3, pp. 104-105]; these various bodies have employed the General Comments to provide clarification, development and persuasive interpretations of the obligations imposed in the covenants. There would be a need to develop a similar mechanism in any treaty on business and human rights that could issue General Comments and thus assist in the application of international human rights to companies. Such a treaty and international body would not only be of importance to the development of international human rights law but could also help influence the development of these norms at a national level too. The express recognition that corporations are themselves legally bound by fundamental rights norms and that they have particular obligations could itself have an important effect on the manner in which corporate obligations are interpreted at a national level. Indeed, many constitutions allow for the direct application of international law whilst others require that it be used as an interpretive aid in national systems [3, pp. 111-112]. As such, the clarification and progressive development of international law in this area could help develop the law in domestic jurisdictions and, at least, be considered persuasive authority at a national level.
It is interesting for us, that the need for a recognition of binding obligations on corporations in respect of human rights and an understanding of the nature and extent of these obligations becomes all the more important when we consider developments in international law relating to international trade and investment. International trade regimes and bilateral and multilateral investment treaties are all enacted through binding legal frameworks and provide adjudicatory mechanisms to address disputes. These fields of law have the potential to raise concerns relating to fundamental rights. In relation to law of World Trade organization, for instance, a major dispute arose concerning the patent protections provided to pharmaceutical companies and whether these could be used to prevent governments from providing life-saving medication to their people [4, pp. 40-41]; these legal regimes have, however, often developed in a manner that is quite separate from human rights law. What matters in this context is the fact that there are potential conflicts that can arise between these regimes and the demands of human rights law. As we have seen, a key important role for a treaty on business and human rights would be the express recognition by states that businesses have legal obligations in relation to fundamental rights. In this context, that would involve the recognition that fundamental rights impose a similar level of legal bindingness as do obligations in relation to commercial regimes [4, pp. 50-51]; this would enable the recognition that the human rights obligations could well conflict with commercial treaty obligations in international law. As such, this might require dispute resolution mechanisms to address how to balance the commercial interests at play against the equally weighty fundamental rights obligations that arise in a specific context. At present, with no clarity as to the legal obligations of corporations in international law, and with most statements of responsibility existing in instruments that are at best soft-law, commercial obligations will be likely to trump those flowing from fundamental rights in most cases. Further analysis is necessary as to how international trade and investment treaties intersect with human rights law and how conflicts can be addressed  the important point here is that a treaty could help ensure that human rights obligations of business should have at least equal status as their commercial international law obligations.
Alleguedly, a key concern in the field of business and human rights is the ability to gain access to remedies for victims of human rights violations by companies. It is important to recognize that three related legal doctrines create particular problems in ensuring access to remedies where multi- national corporations are concerned. First, we have what we might term the jurisdictional challenge: in international law, each state is generally regarded as sovereign with jurisdiction over its own internal affairs [5, pp. 62-63]. If we have a corporation that has subsidiaries across multiple borders, and it fails to meets its human rights obligations in several jurisdictions, the question arises whether one may found jurisdiction in one particular jurisdiction or whether one is only able to claim access to a remedy where the harm was caused. Secondly, there is the problem of weak governance zones: there are parts of the world in which laws are not properly enforced and courts lack independence. How can one ensure that individuals can gain access to a remedy against corporations that violate fundamental rights in these contexts? Finally, there is the problem of the corporate structure itself: where businesses operate as companies, they are generally treated as separate legal persons with limited liability [5, pp. 69-70]; there is in fact no one entity known as a multi-national corporation: rather, there are multiple separate corporations each constituted in different countries. How does one hold the main corporate structure accountable for its failure to meet its human rights obligations where it is divided into distinct legal entities across national borders?
We note, that the main alternative possibility to close the accountability gap would be to create an international mechanism or court which could adjudicate on civil and/or criminal claims against corporations where they have violated fundamental rights. Such a mechanism would thus be an international forum that could hold jurisdiction over corporations that operate in multiple jurisdictions and where the judicial system is not operating effectively. Developing such a mechanism would seriously help reduce the accountability gap in the world: it would be a less unwieldy solution to the problem than the home state liability solution which would require laws to be passed in every country that would inevitably vary in their content and effect. Such a mechanism would thus provide a forum to give effect to the right to have access to a remedy in a globalized world. It need not, however, be considered the exclusive forum in which such matters could be resolved and local courts could still play an important role in this regard. Moreover, it would assist in the process of norm development discussed above as particular cases brought before it would help develop our understanding of the application of fundamental rights to corporations. 
Thus, we have thus far considered four arguments for why a business and human rights treaty would address serious problems in international law that have arisen with the growth and power of business in a global economic environment. In light of these arguments, it is now useful to turn to some of the objections lodged by John Ruggie against an overarching treaty and attempt to evaluate whether they negate or call into questions any of the arguments already provided in its favour. The Human Rights Council resolution that has initiated discussions around the proposed treaty focuses on regulating in „international human rights law, the activities of transnational corporations and other business enterprises“ [6, pp. 77-79]; In a footnote, „other business enterprises are defined as all business enterprises that have a transnational character in their operational activities and does not apply to local businesses registered in terms of relevant domestic law“[6, pp. 81-82] John Ruggie raises the question of the scope of any business and human rights treaty and criticises the resolution for restricting its focus only to transnational corporations. In response to this challenge, it is important to recognise that there are good reasons why international law might devote specific attention to transnational corporations. As we have seen, it is transnational corporations that are often involved in arbitrations against particular governments where bilateral or multi-lateral investment treaties are signed which often fail to take account of fundamental rights; and it is such bodies which are best able to exploit the weaknesses of the current international legal system to avoid accountability for violations of fundamental rights in weak governance zones. The international system indeed creates the very conditions in which such entities become viable and hence can be seen to have a responsibility to ensure effective regulation in this regard. As such, in certain respects, there is a principled case for why states should seek to find a treaty-based solution to the problems caused for the regulation of transnational corporations by the very structure of international law itself. Whilst there is some case for an international law treaty   to focus on transnational corporations, it is important, “to recognise that fundamental rights are concerned with the protection of the interests of individuals and impose some obligations on all agents who can  affect  those  interests.  If it  is possible to  develop  a treaty that  would  bind  all corporations, that should be done with particular consideration of course given to the particularities of transnational corporations” [7, pp. 141-142]; throughout the process, it should be clear that the logic of fundamental rights does not distinguish between transnational corporations and local corporations: any corporation would be bound by its obligations in relation to such rights.
Reasoning from the previously mentioned we may conclude, that our research attempts to show that there are powerful reasons as to why the international community should take forward the resolution of the Code of Ethics and develop a treaty on business and human rights. The objections that have been lodged against such a development can all be countered and are, generally, developed at the level of pragmatic realpolitik rather than principle. There is also no reason why developments in international law cannot occur together with other forms of  ‘polycentric governance’. Problems of international law need to be solved legally and cannot be addressed effectively in any other way. It is hard to understand barrister’s implacable opposition to this worthy initiative which can complement his own contributions in this area. It is also hard to see why a proposed treaty on business and human rights has attracted such strong opposition from developed countries. The only possible reasons for the latter appear to be ones of expediency and self-interest which are indeed powerful forces. Yet, when they are pitted against the real pressing fundamental interests of individuals, it should be clear to all states and enlightened corporations that the case for such a treaty should prevail. The impact of such a treaty will also not fundamentally constrain the pursuit of business activity; rather, it will produce the necessary international regulatory framework to ensure that the pursuit of commercial activity does not conflict with and enhances fundamental human dignity and development.  It is hoped that the intellectual case for such an instrument can help to overcome the reluctance in some quarters and be the basis for a strong campaign that will eventually see the coming into fruition of this vital part of international governance.
 
References:
1. Ruggie John Gerard, Report on the Special Representative of the Secretary-General on the Issues of Human Rights and Transnational Corporations and other Business Enterprises, Human Rights Council, Series “Progress in Postwar International Relations”, New York, “Columbia University Press”, 2009 (In English).
2. Nolan Justine, The Corporate Responsibility to Respect Rights: Soft Law or Not Law? In the Book: Business and Human Rights: from Principles to Practice, Co-edited with Dorothee Baumann-Pauly, New York, “Routledge Publishing”, 2014 (In English).
3. Muchlinski Peter, Limited Liability and Multinational Enterprises: A Case for Reform, “Journal of Economics”, №5, Cambridge, 2010 (In English).
4. On the Philosophical Justification for Fundamental Rights, see: David Bilchitz, “Poverty and Fundamental Rights: the Justification and Enforcement of Socio-economic Rights, Rochester, Hardcover Book Printing, 2007 (In English). 
5. Newton Lisa, Business Ethics in the Social Context: Law, Profits, and the Evolving Moral Practice of Business, New York City, “Springer Publishing“, 2014 (In English). 
6. Ruggie John Gerard, Business and Human Rights: Guiding Principles for a Socially Sustainable Globalization, Publisher: the United Nations High Commissioner for Human Rights, Geneva, “Palace of Nations”, 2010 (In English).
7. Miller Roger Leroy & Jentz Gaylord, Business Law Today, 9th Edition, Boston, “Cengage Learning Copyright”, 2009 (In English).
UDC 1+14+17+340+349+34.09   
 
The present paper outlines four arguments:the argument from norm development, the argument from competing obligations, the argument from bindingness and the argument from access to remedies – that straddle the boundaries of both law and morality – for why a treaty is necessary. The arguments all are rooted in a common normative understanding of fundamental rights and seek to ensure that they are accorded the importance they deserve in this increasingly globalized world. Whilst each argument on its own has strength and could be developed in more detail, this paper aims to emphasize the cumulative strength that the four arguments presented lend in favour of a treaty. The emphasis throughout is also upon why a binding legal instrument is particularly important for international law, as opposed to softer forms of regulation. Having outlined the case for the treaty, the paper then turns to some of the difficulties identified by the Code of Ethics. The paper attempts to show why none of these objections provides good reason to abandon the idea of a treaty as well as why it would be unfortunate to proceed with an alternative, more restrictive proposal for a treaty that only addresses ‘gross’ human rights violations.
Keywords: Business law, business ethics, philosophical, professional ethics, worldviews, moral obligations, legal necessity, corporation, regulations.
 
Even once we recognize that corporations have certain legal obligations in relation to fundamental rights, many questions remain concerning the exact nature and extent of these obligations. This problem flows from the fact that fundamental rights themselves provide entitlements but do not specify exactly what any particular agent must do. The primary focus must be on the realization of these rights: who exactly must do so and what they are required to do requires further specification. In specifying the exact obligations of business in relation to fundamental rights, there is a need for much development both at the international and national levels. It is best known, that the Human Rights Council passed a resolution that establishes „an intergovernmental working group on a legally binding instrument on transnational corporations and other business enterprises with respect to human rights“. The resolution – sponsored by Ecuador and South Africa. The voting patterns reflect a split between developed countries and developing countries as well as between more established economic powers such as the United States and European Union and emerging economic powers. In the face of this global split, John Gerard Ruggie – An American Lawyer, Professor in Human Rights and International Affairs at Harvard Law School and University of California, the former Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises – has recently issued a number of online interventions in which he focuses on the difficulties of actually achieving a binding international human rights treaty on business and fundamental rights and the flaws in the current resolution.   Thus far, Ruggie has essentially set the agenda for discussion with academics responding to arguments that he has provided against the treaty initiative [1, pp. 17-18]; yet, in a certain sense, this debate commences from the wrong starting point. The first step, in our view, in engaging with a proposal for a treaty on business and human rights is to consider the reasons for it, not the difficulties associated with achieving it. Identifying the purpose and goal of such a treaty is important in outlining a vision of where we should aim at in this field as well as determining the possible content of any such instrument. In approaching this task, it is necessary to investigate some of the reasons why the current primary instrument in this field – the Guiding Principles on Business and Human Rights – does not adequately address several problems in international law. Understanding the lacunae that exist can help identify the key roles that a treaty can play. With a clear vision in mind, it then becomes possible to address the difficulties that may arise in implementing it.
Interestingly, the Guiding Principles on Business and Human Rights do not adequately address this difficult question. Corporations generally have a responsibility to respect human rights – this means, that as Associate Professor in the faculty of Law at the University of California, Deputy Director of Australian Human Rights Centre Justine Nolan points out, „they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved“  [2, pp. 23-24]. As both international, regional and domestic institutions and courts recognize, the mere infringement of a fundamental right is not sufficient to determine that a wrong has been done: a further step is necessary, namely, determining whether the infringement lacks a strong justification which can be said to be proportional to the benefits sought to be achieved.  Moreover, in relation to corporations, there is also a prior question, namely, whether the infringement of rights flows from an obligation that falls upon or applies to a corporation. Both questions are elided by a simple focus on a “responsibility to respect fundamental rights“ [2, pp. 44-45]. Consider a company policy that bans its employees from downloading pornographic material onto the laptops they receive from the company, whether at work or home. Let us also consider that this takes place in a jurisdiction where the state is prohibited from preventing individuals from downloading adult pornographic material onto their computers. Does the company policy violate the right to free speech of employees? The first question to determine is whether the right to free speech includes an obligation upon a corporation to allow its own property to be used for the purpose of downloading pornography. A court or adjudicatory body would need to consider various arguments to determine the interpretation of the right to free speech and its implications for the company in question [2, pp. 71-72]. It is not clear whether a company has any obligation to avoid such a policy until it is determined that such a policy restricts the right in a manner that violates the company’s obligations. 
Here it needs to be noticed, that even if it is determined that the right to free speech of employees does include a prima facie obligation upon corporations to permit them to download pornographic material, that does not end the matter. The question then arises as to whether there is any legitimate justification for the infringement in this scenario. From the point of English Barrister and Professor of International Economic Law Convene Peter Muchlinski, “different constitutional systems address this inquiry into justification in different ways: the trend in such jurisdictions as Canada and South Africa is to consider the purpose of the limitation on the right first. A proportionality test is then applied which involves weighing up the benefits of the infringing measure against the harms caused to the fundamental rights concerned. This example, which is designed to provide an analogue to controversial issues arising in the context of state obligations, raises the fact that the application of existing rights to companies is a complex matter and will require the development of a jurisprudence which considers a number of issues: the application of particular rights to corporations; the interpretation and meaning of the obligations imposed by particular rights upon corporations and the determination of when corporations may justifiably limit fundamental rights. The example above also raises the question of determining the application and limitation of fundamental rights in relation to a negative obligation that corporations may have not to harm fundamental rights. A further and related question concerns the nature and extent of the positive obligations corporations have for the realization of fundamental rights [3, pp. 90-91].
We have argued previously that there are good reasons why corporations should indeed be recognized as having positive obligations in relation to fundamental rights. Clearly, corporations can be powerful change agents in the quest for improving global realization of fundamental rights; at the same time, it is clear that significant questions arise in determining the nature and scope of such obligations so as not to elide the distinctive nature of business entities for which profit must remain a significant motivation. All these questions about the exact nature and extent of the obligations corporations have in relation to fundamental rights motivate for a mechanism that can develop international law in this regard. One of the prime functions that a treaty could perform would be to provide such a mechanism for the development of international standards surrounding business and human rights. If we look to other international human rights treaties, we see that they establish committees who perform similar tasks. The International Covenant on Civil and Political Rights, for instance, establishes a Human Rights Committee which is required to consider reports by states but also „such general comments as it may consider appropriate“ [3, pp. 104-105]; these various bodies have employed the General Comments to provide clarification, development and persuasive interpretations of the obligations imposed in the covenants. There would be a need to develop a similar mechanism in any treaty on business and human rights that could issue General Comments and thus assist in the application of international human rights to companies. Such a treaty and international body would not only be of importance to the development of international human rights law but could also help influence the development of these norms at a national level too. The express recognition that corporations are themselves legally bound by fundamental rights norms and that they have particular obligations could itself have an important effect on the manner in which corporate obligations are interpreted at a national level. Indeed, many constitutions allow for the direct application of international law whilst others require that it be used as an interpretive aid in national systems [3, pp. 111-112]. As such, the clarification and progressive development of international law in this area could help develop the law in domestic jurisdictions and, at least, be considered persuasive authority at a national level.
It is interesting for us, that the need for a recognition of binding obligations on corporations in respect of human rights and an understanding of the nature and extent of these obligations becomes all the more important when we consider developments in international law relating to international trade and investment. International trade regimes and bilateral and multilateral investment treaties are all enacted through binding legal frameworks and provide adjudicatory mechanisms to address disputes. These fields of law have the potential to raise concerns relating to fundamental rights. In relation to law of World Trade organization, for instance, a major dispute arose concerning the patent protections provided to pharmaceutical companies and whether these could be used to prevent governments from providing life-saving medication to their people [4, pp. 40-41]; these legal regimes have, however, often developed in a manner that is quite separate from human rights law. What matters in this context is the fact that there are potential conflicts that can arise between these regimes and the demands of human rights law. As we have seen, a key important role for a treaty on business and human rights would be the express recognition by states that businesses have legal obligations in relation to fundamental rights. In this context, that would involve the recognition that fundamental rights impose a similar level of legal bindingness as do obligations in relation to commercial regimes [4, pp. 50-51]; this would enable the recognition that the human rights obligations could well conflict with commercial treaty obligations in international law. As such, this might require dispute resolution mechanisms to address how to balance the commercial interests at play against the equally weighty fundamental rights obligations that arise in a specific context. At present, with no clarity as to the legal obligations of corporations in international law, and with most statements of responsibility existing in instruments that are at best soft-law, commercial obligations will be likely to trump those flowing from fundamental rights in most cases. Further analysis is necessary as to how international trade and investment treaties intersect with human rights law and how conflicts can be addressed  the important point here is that a treaty could help ensure that human rights obligations of business should have at least equal status as their commercial international law obligations.
Alleguedly, a key concern in the field of business and human rights is the ability to gain access to remedies for victims of human rights violations by companies. It is important to recognize that three related legal doctrines create particular problems in ensuring access to remedies where multi- national corporations are concerned. First, we have what we might term the jurisdictional challenge: in international law, each state is generally regarded as sovereign with jurisdiction over its own internal affairs [5, pp. 62-63]. If we have a corporation that has subsidiaries across multiple borders, and it fails to meets its human rights obligations in several jurisdictions, the question arises whether one may found jurisdiction in one particular jurisdiction or whether one is only able to claim access to a remedy where the harm was caused. Secondly, there is the problem of weak governance zones: there are parts of the world in which laws are not properly enforced and courts lack independence. How can one ensure that individuals can gain access to a remedy against corporations that violate fundamental rights in these contexts? Finally, there is the problem of the corporate structure itself: where businesses operate as companies, they are generally treated as separate legal persons with limited liability [5, pp. 69-70]; there is in fact no one entity known as a multi-national corporation: rather, there are multiple separate corporations each constituted in different countries. How does one hold the main corporate structure accountable for its failure to meet its human rights obligations where it is divided into distinct legal entities across national borders?
We note, that the main alternative possibility to close the accountability gap would be to create an international mechanism or court which could adjudicate on civil and/or criminal claims against corporations where they have violated fundamental rights. Such a mechanism would thus be an international forum that could hold jurisdiction over corporations that operate in multiple jurisdictions and where the judicial system is not operating effectively. Developing such a mechanism would seriously help reduce the accountability gap in the world: it would be a less unwieldy solution to the problem than the home state liability solution which would require laws to be passed in every country that would inevitably vary in their content and effect. Such a mechanism would thus provide a forum to give effect to the right to have access to a remedy in a globalized world. It need not, however, be considered the exclusive forum in which such matters could be resolved and local courts could still play an important role in this regard. Moreover, it would assist in the process of norm development discussed above as particular cases brought before it would help develop our understanding of the application of fundamental rights to corporations. 
Thus, we have thus far considered four arguments for why a business and human rights treaty would address serious problems in international law that have arisen with the growth and power of business in a global economic environment. In light of these arguments, it is now useful to turn to some of the objections lodged by John Ruggie against an overarching treaty and attempt to evaluate whether they negate or call into questions any of the arguments already provided in its favour. The Human Rights Council resolution that has initiated discussions around the proposed treaty focuses on regulating in „international human rights law, the activities of transnational corporations and other business enterprises“ [6, pp. 77-79]; In a footnote, „other business enterprises are defined as all business enterprises that have a transnational character in their operational activities and does not apply to local businesses registered in terms of relevant domestic law“[6, pp. 81-82] John Ruggie raises the question of the scope of any business and human rights treaty and criticises the resolution for restricting its focus only to transnational corporations. In response to this challenge, it is important to recognise that there are good reasons why international law might devote specific attention to transnational corporations. As we have seen, it is transnational corporations that are often involved in arbitrations against particular governments where bilateral or multi-lateral investment treaties are signed which often fail to take account of fundamental rights; and it is such bodies which are best able to exploit the weaknesses of the current international legal system to avoid accountability for violations of fundamental rights in weak governance zones. The international system indeed creates the very conditions in which such entities become viable and hence can be seen to have a responsibility to ensure effective regulation in this regard. As such, in certain respects, there is a principled case for why states should seek to find a treaty-based solution to the problems caused for the regulation of transnational corporations by the very structure of international law itself. Whilst there is some case for an international law treaty   to focus on transnational corporations, it is important, “to recognise that fundamental rights are concerned with the protection of the interests of individuals and impose some obligations on all agents who can  affect  those  interests.  If it  is possible to  develop  a treaty that  would  bind  all corporations, that should be done with particular consideration of course given to the particularities of transnational corporations” [7, pp. 141-142]; throughout the process, it should be clear that the logic of fundamental rights does not distinguish between transnational corporations and local corporations: any corporation would be bound by its obligations in relation to such rights.
Reasoning from the previously mentioned we may conclude, that our research attempts to show that there are powerful reasons as to why the international community should take forward the resolution of the Code of Ethics and develop a treaty on business and human rights. The objections that have been lodged against such a development can all be countered and are, generally, developed at the level of pragmatic realpolitik rather than principle. There is also no reason why developments in international law cannot occur together with other forms of  ‘polycentric governance’. Problems of international law need to be solved legally and cannot be addressed effectively in any other way. It is hard to understand barrister’s implacable opposition to this worthy initiative which can complement his own contributions in this area. It is also hard to see why a proposed treaty on business and human rights has attracted such strong opposition from developed countries. The only possible reasons for the latter appear to be ones of expediency and self-interest which are indeed powerful forces. Yet, when they are pitted against the real pressing fundamental interests of individuals, it should be clear to all states and enlightened corporations that the case for such a treaty should prevail. The impact of such a treaty will also not fundamentally constrain the pursuit of business activity; rather, it will produce the necessary international regulatory framework to ensure that the pursuit of commercial activity does not conflict with and enhances fundamental human dignity and development.  It is hoped that the intellectual case for such an instrument can help to overcome the reluctance in some quarters and be the basis for a strong campaign that will eventually see the coming into fruition of this vital part of international governance.
 
References:
  • 1. Ruggie John Gerard, Report on the Special Representative of the Secretary-General on the Issues of Human Rights and Transnational Corporations and other Business Enterprises, Human Rights Council, Series “Progress in Postwar International Relations”, New York, “Columbia University Press”, 2009 (In English).
  • 2. Nolan Justine, The Corporate Responsibility to Respect Rights: Soft Law or Not Law? In the Book: Business and Human Rights: from Principles to Practice, Co-edited with Dorothee Baumann-Pauly, New York, “Routledge Publishing”, 2014 (In English).
  • 3. Muchlinski Peter, Limited Liability and Multinational Enterprises: A Case for Reform, “Journal of Economics”, №5, Cambridge, 2010 (In English).
  • 4. On the Philosophical Justification for Fundamental Rights, see: David Bilchitz, “Poverty and Fundamental Rights: the Justification and Enforcement of Socio-economic Rights, Rochester, Hardcover Book Printing, 2007 (In English). 
  • 5. Newton Lisa, Business Ethics in the Social Context: Law, Profits, and the Evolving Moral Practice of Business, New York City, “Springer Publishing“, 2014 (In English). 
  • 6. Ruggie John Gerard, Business and Human Rights: Guiding Principles for a Socially Sustainable Globalization, Publisher: the United Nations High Commissioner for Human Rights, Geneva, “Palace of Nations”, 2010 (In English).
  • 7. Miller Roger Leroy & Jentz Gaylord, Business Law Today, 9th Edition, Boston, “Cengage Learning Copyright”, 2009 (In English).

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