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Investor-state arbitration (ISA) used to be a pretty obscure field.  Many free trade agreements include provisions that allow foreign investors to take a government to international arbitration if they're treated unfairly, such as if their property is expropriated.

Recently, however, multinational corporations have tried to use ISA to challenge environmental and human rights policies of developing countries, such as mining companies' attack on South Africa's black empowerment laws, Chevron's claim against the Ecuadorian government for alleged unfair treatment in environmental litigation in the Amazon, and Pacific Rim Mining's suit against El Salvador for refusing to issue exploration permits.

Now the Australian government has announced that it will no longer seek to include ISA clauses in trade and investment agreements.  Apparently the government is worried that its own policies might be at risk from challenges by foreign investors, but its statement expressly warns Australian businesses that "they will need to make their own assessments" about the risks of investing abroad.

I hope this is the start of a trend, as governments realize that giving corporations the right to challenge public policy in an international arbitration forum is maybe not such a good idea.

Before ISA, such cases could only be pursued internationally if the investor's claims were "espoused" by their own government--for example, the U.S. government could challenge Ecuador's actions if they thought Chevron was being treated unfairly, but Chevron could not.  This meant that such challenges were uncommon and they were subject to international political constraints.

On Wednesday night, I attended the premier annual event of the DC environmental activist community: the Goldman Prize ceremony, held each year to recognize a half-dozen grassroots environmental heroes selected from hundreds of nominees from around the world. As always, hearing the recipients share the stories of their lives, and their transformations into eco-warriors, brought tears to my eyes – sometimes of joy and sometimes of sorrow. Each and every one of them gave me a poignant reminder of the power of people!

Below are their stories.

Dmitry Lisityn, from Sakhalin Island in Siberia, was honored for the work he’s done to protect the ecology of that island, and the populations, human and otherwise, who call the island and its surrounding waters home. The island is being threatened by massive oil development and logging. Although he started out thinking that “regular people” like himself don’t make a difference, he became the leader of Sakhalin Environment Watch and a recognized expert on regional environmental protection. His collaboration with indigenous villagers, fishermen, scientists, government leaders, and industry representatives have led to the cancellation of a planned underwater pipeline which would have disrupted critical Western Pacific gray whale habitat, put constraints on logging, in order to protect one of the oldest populations of spawning salmon in the world, and increased the rights and benefits enjoyed by the island’s indigenous population.

Chiquita paid paramilitaries for security services and intelligence on guerilla groups, with full knowledge of who and what they were funding and with the intention of receiving their support services, according to a trove of documents recently made public by the the National Security Archive.  Many of these documents, which the NSA – cooperating with the Public Justice Clinic at the George Washington University School of Law – obtained through Freedom of Information Act (FOIA) requests, directly contradict claims Chiquita has made that it paid the AUC paramilitaries under duress and received no benefits from those payments.

The NSA plays a critical role in US civil society: it uses governmental public disclosure laws to their fullest effect, to shed light on dark spots in national and world history and expose truths that the US government would often prefer to remain hidden.  To obtain these documents, NSA’s Mike Evans and his GW student partners tangled with several federal agencies, including the State Department, the Department of Justice, and the FBI – and in some cases took them to federal court – in order to prevent them from witholding public documents.  As a result of their efforts, we now have a valuable window into the role of US businesses in the ebbs and flows of the Colombian civil war over the past two decades.  Moreover, the plaintiffs in ERI’s case against Chiquita have new ammunition to prove that Chiquita was knowingly and intentionally complicit in state-sponsored human rights abuse by Colombian paramilitaries.

In February I noted that a Brazilian court had suspended plans to build the Belo Monte dam, a giant project in the heart of the Amazon.  Back in November, several groups also filed a complaint with the Inter-American Commission on Human Rights charging that the dam would violate indigenous rights and other human rights protections.  This week, we learned that the Inter-American Commission issued a preliminary order requesting that Brazil suspend the project; our partner Amazon Watch issued a press release yesterday.

The Inter-American Commission is one of the two major human rights bodies of the Organizational of American States (OAS).  The Inter-American Commission has jurisdiction over all OAS states--which includes nearly every country in the Western hemisphere--but its decisions are not legally binding.  Many countries do take the Commission's findings seriously, but only the Inter-American Court of Human Rights can issue binding judgments.

On the Belo Monte dam, the Commission issued what are known as "precautionary measures."  Essentially, they are asking Brazil to take steps to avoid causing harm to the petitioners before the Commission can have a full hearing on the case.  We hope that Brazil follows the Commission's guidance; mega-dams projects should not be rushed into, especially in a region as ecologically fragile and with such human significance as the Amazon.

In my post yesterday, I covered what I like about Prof. Ruggie's Guiding Principles.  In this post, I'll talk about what's not covered by the GPs – what I consider to be a missed opportunity to clarify central legal principles on the application of the international human rights regime to corporations.  It’s important to note that Ruggie is not claiming that the GPs are a statement of legal principles, but I would have liked to see them reflect the current law.

In the Ruggie framework, states have a duty to protect human rights and to remedy their violations, while businesses have a moral “responsibility” and expectation to respect human rights.  So far, so good, and pretty non-controversial.  But Prof. Ruggie leaves open – and  studiously avoids – the questions that would potentially incur the opposition of the companies whose consensus he has sought.

Does international law impose human rights obligations (as opposed to just expectations) on companies, in addition to states?  How far does the state duty to protect and provide remedies extend, and could a state violate its international legal obligations by failing to enact laws or declining to reduce barriers to accessing such remedies?  What is the status of the requirement of due diligence – is it a legal defense, a proactive duty, or simply a good idea?  And would international law ever require, rather than permit, a state to exercise extraterritorial jurisdiction over its own companies’ actions?

I can think of a number or reasons why the GPs decline to address these questions.  First, the “pragmatic approach” counsels against tackling such issues – why chase after ephemeral and controversial points of international law when there are concrete gains to be made now through win-win, collaborative efforts?

Second, Prof. Ruggie was not given the mandate to develop new legal norms, but rather to identify what already exists; if he were to take positions on controversial legal questions, he could be accused of pushing beyond his mandate and risk losing support for what he has already achieved.

And third, the old trial lawyer’s advice: never ask a question whose answer you don’t know in advance.  Maybe he fears that if he were to turn over such dangerous stones, human rights groups wouldn’t like the answers he came up with.

In December, when Prof. John Ruggie, the UN Secretary-General’s Special Representative for Business and Human Rights, came out with a discussion draft of his Guiding Principles – the culmination of six years of work on the question of what and how human rights obligations apply to businesses – much of civil society was dissatisfied. 

Ruggie was blasted for taking retrograde stances on a number of issues, most prominently extraterritorial jurisdiction (my colleagues and I believe that in at least some cases, States have an obligation to regulate and provide remedies for the actions of their companies abroad; Ruggie identified no such principle).  He did make clear that his principles were not a legal document, but we believed it would be better if the GPs reflected the law.

Now that his final version has been publicly released, I see some major positive developments.  Knowing all the consultation and cogitation that went into them, I think the GPs are a pretty impressive document.  They set out a plausible framework for dividing responsibility between governments and businesses on human rights issues, provide commonsense suggestions on the range of grievance mechanisms and remedies that are necessary to effectively address human rights impacts, and assist companies to construct due diligence regimes. 

The very fact that Prof. Ruggie was able to get companies and governments to sit down and discuss these issues rationally – let alone to agree on doing something about them – is a tremendous achievement.  I don’t necessarily agree with all his conclusions, but then again, I’m sure the companies don’t, either.  Hopefully, the GPs represent the start of a process and not an end in themselves.

In particular, Prof. Ruggie has consistently and forcefully pushed the envelope on corporations' internal responsibilities, i.e., the things they should do to in terms of corporate policy and structure to prevent human rights impacts, address them when they occur, and do right by individuals and communities who are aggrieved as a result of corporate activities. 

This week, Prof. John Ruggie, the UN Secretary-General’s Special Representative for Business and Human Rights, released the final version of his Guiding Principles – the culmination of six years of work on the question of what and how human rights obligations apply to businesses.  I will review the final GPs in this post and two that will follow next week.

ERI commented extensively on the discussion draft of the GPs, which was circulated back in December.  In particular, we were pleased to see that Prof. Ruggie had taken a holistic approach to the issue of business and human rights, recognizing that both states and enterprises have the ability to infringe on the full range of internationally recognized human rights and, therefore, have parallel responsibilities to prevent human rights impacts and remediate them when they occur.  We voiced concern, however, on a number of points. 

In the final version of the GPs, Prof. Ruggie addresses some of ERI's recommendations.  Notably, the final version clarifies that enterprises should avoid involvement in all gross human rights abuses, rather than limiting its scope to the somewhat debatable category of international crimes; that states may incur international liability when businesses they own or control commit abuses; and that states may have an affirmative obligation to enact laws to protect human rights.

On the other hand, Prof. Ruggie declined to take up ERI's invitation to make clear the fact that international law does, in some cases, extend direct obligations to corporations. (Specifically, that international law imposes on legal persons the same obligations that apply to natural persons.)  Instead, Prof. Ruggie chose to focus on a non-legal corporate “responsibility to respect” and did not address enterprises' legal obligations at all.  (More on this in a future post.)

I just read that Ricardo Alberto Sierra, a lawyer in Medellín who was helping Colombians to seek justice against Colombian paramilitary groups, was assassinated on Monday in front of several members of his family. This blog post is dedicated to Mr. Sierra and the courageous people – lawyers, activists, and victims alike – who continue to face intimidation and violence in Colombia as a result of their efforts to bring to light the atrocities committed by paramilitaries during the country’s long civil war.

I didn’t know Mr. Sierra personally, but I know lawyers in Colombia who do similar work. Mr. Sierra had worked with the Public Defense System for the Judicial Representation of Victims since 2007, and represented people whose family members were killed by the AUC, the principal paramilitary group in Colombia from 1997 to 2004. These victims of violence are participating in the Justicia y Paz (“Justice and Peace”) process, an initiative by which paramilitaries agree to lay down their arms, make full confessions of their crimes, and pay reparations to their victims in exchanged for reduced penal sentences. With Mr. Sierra’s assistance, Colombians were able to stand up and seek the truth – they could present testimony and evidence to the tribunals, ask questions of the defendants, and seek compensation for their injuries.

For people across Colombia who were traumatized and frightened into silence for so long, Justicia y Paz promises to provide a platform from which to tell their own stories and learn what happened to their loved ones. But as the murder of Mr. Sierra shows, the threat is still very much present. Today, we in the US tend to hear much about how the security situation in Colombia is drastically improved, except in isolated pockets of the country. This may or may not be true, but human rights defenders, social activists and trade unionists in Colombia are still threatened and/or killed at an alarming rate.

I've been traveling a bit recently, so I haven't been blogging about ongoing developments in the Chevron/Ecuador litigation and the Kiobel corporate human rights case. Below are updates on both.

Chevron in Ecuador: A Verdict, An Injunction, and New Corruption Evidence

As Jonathan noted a few weeks ago, the plaintiffs won an $8 billion verdict against Chevron in Ecuadorian court for contaminating the Amazon.  On Monday of this week, however, federal judge Lewis Kaplan in New York issued a preliminary injunction that seeks to prevent the plaintiffs and their lawyers from enforcing the judgment.  (This replaces the restraining order that I discussed earlier.)

But that's not all.  Although there have long been allegations that Chevron's hands are not clean when it comes to the Ecuador case, some more hard evidence of improper conduct recently surfaced.  California's legal paper, the Daily Journal, reported yesterday that Chevron's lawyers have been paying huge sums--between $170,000 and $340,000--to Diego Borja, one of the men who apparently tried to entrap the Ecuadorian judge into accepting bribes.

The Daily Journal article linked above requires a subscription, but it implicates Bob Mittelstaedt, the lead lawyer at Jones Day, one of the firms defending Chevron: "Mittelstaedt has been one of the partners facilitating Chevron's payments to Borja." Paying a witness beyond necessary costs is generally highly unethical for a lawyer, and potentially criminal. (Bob Mittelstaedt and Jones Day also defended Chevron in the Bowoto v. Chevron litigation.)

The international community can make it harder for the generals in Burma to steal the proceeds of the country's natural gas exports, EarthRights International Senior Consultant Matthew Smith wrote in an op-ed for the Wall Street Journal (WSJ subscription required; PDF below) last Monday . The article explains that preventing corruption and money laundering can be accomplished through existing but unenforced U.S. legislation, and that steps to prevent this massive corruption are a reasonable response to the serious and growing problem of the looting of Burma's natural wealth.

Coming on the heals of global asset seizures of the Mubarak family, momentum is building for banks to lift the veil of secrecy that enables the looting of vast sums of natural resource wealth by autocratic leaders. Although banks have a responsibility to know their customers, ultimately, each country's monetary authorities have a responsibility to ensure their country does not become an country of prime money-laundering concern. ERI is pleased to hear that banks in Singapore have begun refusing some Burmese accounts related to regime cronies, and looks forward to more such action in the near future.