Canada Strengthens Transnational Business and Human Rights Oversight

by Bennett Jones LLP

Bennett Jones LLP

The Canadian federal government has announced the creation of an Ombudsperson for "responsible enterprise", an office to be housed within Global Affairs Canada. Known formally as the Canadian Ombudsperson for Responsible Enterprise, the office will be accompanied by a multi-stakeholder Advisory Body on responsible business.

The role of the Ombudsperson, as announced, is to receive and investigate allegations of human rights abuses stemming from the activities of Canadian companies operating abroad. The Ombudsperson’s mandate will be multi-sectoral but will initially focus on the mining, oil and gas and garment sectors, with the expectation that it will be expanded to other business sectors within a year.

Federal Minister of International Trade François-Philippe Champagne stated this is part of Canada’s “commitment to advance human rights and assist Canada in fulfilling its international human rights obligations.”

The New Ombudsperson

The Ombudsperson will have the authority to conduct independent investigations into alleged incidents involving Canadian corporate activity abroad. Complaints may be submitted by any member of the public through an online portal. The Ombudsperson will mediate disputes, make recommendations and monitor the implementation of recommendations. Full details of the Ombudsperson’s mandate will be set out in an Order-in-Council, expected to be made by the Federal Cabinet later this year.

It is anticipated that the Ombudsperson’s investigatory powers will include the authority to compel evidence and potentially even testimony from Canadian companies under the Federal Inquiries Act. Once investigations are complete, the Ombudsperson will have the ability to issue public reports.

In making any findings, the Ombudsperson is expected to make reference to various international norms including the UN Guiding Principles on Business and Human Rights. The guiding principles are a set of 31 principles that clarify the duties and responsibilities of both states and corporations to protect and respect human rights in the context of business activities.

If adverse findings are made, the Ombudsperson will have the authority to apply sanctions which may include withdrawal of diplomatic support, government funding and any other assistance provided by the government of Canada. It will also be able to refer possible criminal conduct to law enforcement authorities such as the RCMP.

The mandate of the Ombudsperson, if implemented as expected, responds to perceived shortcomings in the process of its predecessor, the Office of the Extractive Sector Corporate Social Responsibility Counsellor. That office faced criticism for being unable to compel the participation of all stakeholders in its investigative process, and for lacking enforcement mechanisms.

The Ombudsperson will not be the only mechanism in Canada to examine standards of overseas corporate responsibility. The OECD National Contact Point will continue operating to resolve allegations of corporate non-compliance with the OECD Guidelines for Multinational Enterprises. The government sees the mandates of the Contact Point and the Ombudsperson as complementary.

The New Advisory Body

The federal government also announced the establishment of a multi-stakeholder Advisory Body. This new body is to advise the government and the Ombudsperson on the development and implementation of laws, policies, and practices that concern responsible business conduct. The government may be signaling that it could adopt additional measures to safeguard against human rights abuses linked to Canadian corporations abroad. Legislation targeting slavery and forced labour in supply chains may be a likely candidate for future action in light of the recent implementation of such laws in several other countries (e.g., the United Kingdom, France, California, and shortly in Australia).

What Is Next?

Critical milestones to come include the Federal Cabinet’s Order-in-Council, the selection of the Ombudsperson and the appointment of officials to staff the office.

The concrete impact of this week’s announcement will depend on the Ombudsperson’s powers to investigate and ability to achieve fair and timely results.

Industry is hopeful that the office will, like the transparency initiative, quickly set the record straight on activities of Canadian business abroad and dismiss the spurious complaints swiftly, while providing a mechanism to review complaints that have substance. Industry is also concerned about maintaining competitiveness. Only experience will demonstrate the efficacy of a new process.

For its part, the global business and human rights movement will continue its push for enhanced expectations and legal standards, pointing to the UN Guiding Principles on Business and Human Rights. In that campaign, multinational supply chains are now coming under increasing scrutiny, as are sources of financing, corporate disclosures to shareholders and other stakeholder communications.

The federal announcement has also occurred against the backdrop of a growing number of lawsuits in Canadian courts commenced by foreign litigants against Canadian companies, alleging abuse of human rights abroad. As those Canadian lawsuits are ongoing, judicial guidance on possible legal exposure for companies is at a relatively early stage.

All of this provides an impetus for companies to better equip themselves to stay out of the courtroom. Bennett Jones lawyers have prepared detailed advice to assist our clients in minimizing risk and solidifying their reputations, including:

  • focused reviews of company policies to encourage adherence to the UN Guiding Principles on Business and Human Rights;
  • in transactions, particularly those with an overseas component, when considering the scope of human rights due diligence to identify and begin to address any risks;
  • development of more fulsome disclosure regarding the company’s impact on human rights and steps taken to pursue improved community conditions;
  • advice on internal company processes, such as ensuring effective internal communications, upward reporting and grievance mechanisms that will expose the risks of potential adverse impacts on human rights and enable management to take appropriate steps to prevent situations from occurring or escalating; and
  • provisions for inclusion in supplier agreements, joint venture agreements, and other contracts, to share the compliance burden.

We also advise and represent clients in urgent situations where their reputations are at stake, and in litigation in Canadian courts based on alleged violations of human rights standards overseas.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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