New Arbitration Rules for the Resolution of Business and Human Rights Disputes Unveiled

Arent Fox

Arent Fox

The release on December 12, 2019, of the Hague Rules on Business and Human Rights Arbitration (the BHR Rules) offers a new and innovative dispute resolution option in the field of corporate responsibility. As self-described, the BHR Rules broadly provide “a set of procedures for the arbitration of disputes related to the human rights impacts of business activities.”

Designed with flexibility and adaptability in mind, the BHR Rules can be applied to settle a variety of disputes, such as those between business partners along a supply chain or between a business and an individual or group of individuals impacted by the business’s conduct.

The BHR Rules are based on the 2013 UNCITRAL Arbitration Rules — a set of procedures well known to the business community — with important modifications to account for the potentially unique conditions of BHR arbitration. These include provisions that: ensure arbitrator expertise in BHR issues; allow for the application of both law and BHR best practices; level any potential imbalance of power between the parties, both in terms of representation and evidence gathering; enhance the enforceability of awards; and promote transparency in the arbitral process.

In the broader context, the BHR Rules may serve as a useful means of implementing the directives of the UN Guiding Principles on Business and Human Rights, a global standard predicated on three conceptual pillars: (I) States’ obligations to protect human rights; (II) businesses’ responsibility to respect human rights; and (III) accessibility to effective remedies for parties adversely impacted by business activities. According to commentary on the BHR Rules, business and human rights arbitration “can assist businesses to meet their responsibilities under the UN Guiding Principles, both to respect human rights (Pillar II) and to provide a remedy to victims (Pillar III),” as well to comply with other business and human rights standards.

The BHR Rules are novel and untested, yet they provide new options for managing the risks of negative human rights impacts that companies may wish to consider in a changing world where their conduct is increasingly under scrutiny.

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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