The Evolving Landscape of Transnational Business and Human Rights Law: Advocating for an Active Role of National Courts

Law-making in transnational Business and Human Rights Law (BHRL) denotes the process of “norm-setting” in this area.¹ National courts, as the judicial organs of the States, are duty-bound to perform judicial functions, which do not include norm-setting but interpreting the existing laws, applying them in particular cases, creating a general practice, etc, rather than active participants in norm-setting. In the ever-changing realm of transnational (BHRL), the question of whether national courts should actively contribute to its creation has sparked significant debate. At the core of this discourse is the concept of “norm-setting” — the intricate process through which legal frameworks for BHRL are established. 

This article delves into the intriguing intersection of national courts and transnational BHRL, arguing that while national courts may not directly engage in the creation of these norms, their judicial roles wield considerable influence, both directly and indirectly. Practice shows that they play an indirect role in creating transnational BHRL. This paper argues that they should be more active in that process. This paper will discuss those issues in two parts, eg the Courts are playing an indirect role in the process, and the courts should play a more active role.

1. The National Courts are playing an Indirect role in the creation of transnational Business and Human Rights Law:

This part will evaluate the role of the national courts in influencing corporations to undertake self-regulatory measures by adopting, updating, or improving company policies that are recognized as “soft law” or “informal law-making” in the transnational BHRL field.² Judith and Wettstein conducted an empirical study on transnational litigations till 2015. Most of the litigations were dismissed, and no litigation found the corporations guilty of human rights violations.³ Though most cases are either dismissed or settled in an out-of-court settlement, it indirectly influences the making of the defendant corporations’ or their peers’ self-regulation policies.⁴ Here, the courts play a very passive role in the process of informal norm-setting; only the institution of litigation leads the corporations to update their policies and take additional measures during or shortly after the filing of the litigations to cope with their human rights obligations. Such soft-law regulations positively uplift human rights as they create consciousness and lead corporations to behave more responsibly.⁵

Judith and Florian showed that more than two-thirds of defendant corporations introduced specific human rights policies after the litigation.⁶ For instance, ExxonMobil and Chevron introduced human rights policies and other Corporate Social Responsibility (CSR) measures during or just after being sued in Nigeria and Indonesia, respectively.⁷ The corporations emphasized CSR publications and implementation of human rights training for “offices and filed employees in overseas operations” and monitoring measures just after being sued and started a dialogue with NGOs to respect human rights.⁸ They also found that 70% of the reviewed corporations joined various multistakeholder initiatives, soft law regimes like UN Global Compact, etc, on security and human rights just after being sued for human rights violations.⁹ They found that an increase in the transnational BHR litigation may potentially influence the firms yet to be litigated. ‘Threat to litigation’ may change their behaviour and take defensive policies in protecting human rights and security because it will provide them a competitive advantage in terms of reputation over their peers facing litigation.¹⁰ Besides the litigation risks, the behavioural changes by the defendant corporations by changing their human rights stand influence their peers not facing litigation to follow their procedure and correct their industry norms accordingly.¹¹       

2. The National Courts should play a more active role in the creation of transnational business and human rights law:

Transnational litigation is one of the few avenues to make multinational corporations accountable for their human rights violations worldwide. Because a global regulatory regime is absent to make them accountable, as is evident from the discussion in the last section, it can indirectly participate in rule making, contributing a lot. To protect human rights against these multinational corporations, the Court should take an active and direct role instead of playing a very passive role as mentioned in the previous section in the creation of transnational BHRL by scrutinising the “soft laws” or the business policies of defendant corporations in light of the domestic and international human rights standards and other laws. If the Courts find them insufficient, inadequate, or reluctant in terms of human rights commitment, it will ultimately lead the companies to adopt or update policies in light of the court’s decision. For example, in Milieudefensie v Royal Dutch Shell Case, the District Court of Hague critically scrutinized the decarbonization policies of the defendant company to assess the protection of human rights against the dangerous impacts of climate change.¹² After finding Shell’s carbon strategy insufficient, the Court ordered to reduce carbon intensity by a net 45% by the end of 2030.¹³ During the trial, Shell adopted a new system that showed its voluntary commitment to reduce the carbon intensity of its products by 20% by 2030, 45% by 2035, and 100% by 2050.¹⁴ Here, the Court emphasized “ a ‘global’ reduction obligation, which affects the policy of the entire Shell group” even though it operated outside the jurisdiction of the Court.¹⁵ So, the Court did not only talk about Shell’s obligation within Dutch territory but also about its business throughout the world. Thus, a national court’s assessment of a corporation’s voluntary human rights commitment in light of its human rights obligation may lead it to adopt a new commitment according to the decision. In such a way, the Court may take an active role in the process of the creation of transnational BHRL. Thus, the national courts, as the judicial organ of a state, should take a proactive role to support the States in the fulfilment of their “duty to protect” “against human rights abuse within their territory and jurisdiction by third parties, including business enterprises” which is the one pillar of the UNGPs.¹⁶ By such a proactive and innovative role in creating transnational BHRL, the national Courts may contribute to developing transnational Business and Human Rights (BHR) jurisprudence. Their active participation may influence domestic, transnational, and international levels. For the development of this newly emerged underdeveloped area, the domestic courts could and should play an active role in inventing new principles, practices, precedents, etc. which may influence national, transnational, or international courts in several ways given below:

Firstly, by exercising its traditional role as an “interpreter of the law,” the domestic court may set a new rule of transnational BHR by interpreting domestic and international human rights law.¹⁷ For example, the US judges started to apply the Alien Torts Act “to determine what constitutes customary international law in a wide range of issues from torture (Filartiga v Pena Irala) to employing workers in inhuman conditions (Doe v Unocal)”¹⁸ Where there is a conflict of norms, judges may choose to uphold the transnational BHR norms over others through the interpretation and based on their discretionary power. It will influence other courts within the same jurisdiction to follow such a route.

Secondly, domestic judges may participate in law-making through a transnational judicial dialogue with their peers in other jurisdictions. In this process, courts may cite foreign judgment in interpreting an existing law by consulting BHR-related rulings of foreign courts.¹⁹ For example, a UK court may follow the jurisprudence of a US decision in deciding a similar BHR-related dispute. Thus, the domestic courts can influence their peers in other jurisdictions.

Thirdly, the domestic court’s decision is considered an essential source of “state practice” and “opinio juris” and thus may create a customary transnational rule of BHRL.²⁰ Thus, a national court decision on transnational BHRL may influence an international court in applying the rule of customary international law in a dispute related to the transnational BHR.

Concluding Remarks:

The first section showed how litigation in national courts could influence the behaviour of both defendant corporations and their peers and lead them to undertake human rights defensive policies, join multistakeholder initiatives, and implement training sessions for overseas employees and offices regarding human rights and security, and finally to inform public about their policies in a transparent way.²¹ Thus, the Court passively played a general regulatory function. The second part has shown how the court could accelerate this process. Such a proactive role will ensure the three pillars of the United Nations Guiding Principles on Business and Human Rights (UNGP)s, eg the state’s duty to protect human rights, corporates’ responsibility to respect human rights, and providing access to remedy. For this reason, the court should take a proactive role. However, there are some concerns regarding the encouragement of such transnational litigation. The strategy of litigations shows that the victims of the global south sue the defendant corporations in their home states, the global north.²² Some commentators discourage this approach as it may retard the “development and capacity of the legal systems of host countries, particularly developing nations, to address rogue TNC activity.” Similarly, Keenan J observed in Union Carbide Case that the exercise of the jurisdiction in New York would be imperialistic.²³ In response to this view, I would mention that there may not have an efficacious remedy in victims’ home States to make the corporations liable, and it would be easy to enforce the decision in the corporations’ home states where the maximum of their assets are situated. I think the transnational BHR litigation should be encouraged, and the court should play an active role in the creation of the law process, though indirectly.

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1. Diego Mauri, ‘Direct and Indirect Involvement of Companies in the Development of Business and Human Rights Law: Insights from Practice’ in Martina Buscemi and others (eds), Legal Sources in Business and Human Rights (BRILL NIJHOFF 2020) 123.
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2. Ibid 125. ↩︎
3. Judith Schrempf-Stirling and Florian Wettstein, ‘Beyond Guilty Verdicts: Human Rights Litigation and Its Impact on Corporations’ Human Rights Policies’ (2015) 145 Journal of Business Ethics 545 <https://link.springer.com/article/10.1007%2Fs10551-015-2889-5> accessed 8 June 2022.
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4. Angela Lindt, ‘Transnational Human Rights Litigation: A Means of Obtaining Effective Remedy Abroad?’ (2020) 4 Journal of Legal Anthropology 57, 58.
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5. Judith Schrempf-Stirling and Florian Wettstein (n 3) 547.
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6. Ibid, 549.
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7.  Ibid, 548.
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8. Ibid, 549, 554.
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9. Ibid, 554.
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10.  Ibid, 557.
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11. Ibid, 558.
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12. Milieudefensie et al. v Royal Dutch Shell PLC <https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBDHA:2021:5339> accessed 8 June 2022.
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13. Ibid, para 5.3.
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14. ‘Shell’s Sustainability Report 2020’. <https://reports.shell.com/sustainability-report/2020/achieving-net-zero-emissions/our-climate-target/our-approach.html#:~:text=Shell%E2%80%99s%20target%20is%20to%20become%20a%20net-zero%20emissions,amount%20of%20greenhouse%20gases%20%28GHGs%29%20in%20the%20atmosphere.> accessed 8 June 2022. ↩︎
15.  Milieudefensie et al. v Royal Dutch Shell PLC (n 12) para 4.5.54.
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16.  See, UN Guiding Principles on Business and Human Rights, Principle 1.
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17. Filiz Kahraman, Nikhil Kalyanpur and Abraham L Newman, ‘Domestic Courts, Transnational Law, and International Order’ (2020) 26 European Journal of International Relations 184, 194.
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18.  Ibid.
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19. Ibid 194.
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20. See, Conclusions 5 and 10 of the Draft conclusions on identification of customary international law <https://legal.un.org/ilc/texts/instruments/english/draft_articles/1_13_2018.pdf> accessed 8 June 2022.
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21. Judith Schrempf-Stirling and Florian Wettstein (n 3) 558.
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22. Angela Lindt (n 4) 60.
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23. Ibid. ↩︎