Fifteen Eighty Four

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Why Arbitration in Business and Human Rights Disputes Enhances Labor Rights

Ilias Bantekas, Michael Ashley Stein

While many human rights lawyers might legitimately think that consensus submitting all business-related disputes to arbitration was never in doubt, they will be surprised to discover that this was not in fact the case. It took several landmark judgments in the US and elsewhere to slowly push the idea forward that an arbitral process vested with party equality guarantees and where the parties did not intend to conceal illegal conduct was in fact in the interest of the state. This was particularly the case as regards the contractual dimension of anti-trust disputes and later employment and class action/consumer disputes. Arbitration has evolved into a transnational multi-billion- dollar enterprise and many states have reformed their civil justice architecture in order to attract arbitral proceedings as well as allow their civil courts to compete with arbitration. In the process, the right to fair trial in arbitral proceedings has been inextricably linked with transnational human rights mechanisms, such as the European Convention and Court of Human Rights.

All these developments have culminated in a unique model of business justice at the transnational law level that is entrenched within fundamental human rights. In this context, it is not a far leap to suggest that business and human rights (BHR) disputes are gradually removed from local courts and into the arbitral realm. There are two developments that have already paved the way for such transition. The first, although very much spasmodic and knee jerk-based, was the use of Permanent Court of Arbitration (PCA) arbitration for the resolution of the Rana Plaza incident, which caused the lives of hundreds of Bangladeshi workers (also known as the Bangladesh Accord Arbitrations). Although this was not replicated, it did set a standard. The second development has been the recent adoption of the Hague Rules on Business and Human Rights Arbitration.

Despite qualms that BHR-related arbitration will tend to favor large corporations or powerful and largely authoritarian host states, in fact, the potential for enhanced protection for workers is significant. The civil justice systems in most authoritarian/developing states are weak and workers ‘imported’ to work in such, are either unable to access justice or when they do the courts are disinclined from dispensing fair outcomes. There is also the fear that judgments in favor of workers (e.g. concerning poor health and safety) deter investors and act as bad publicity for the host state. The confidential nature of arbitration bad publicity and enhances access to fair and speedy justice. Moreover, the inclusion of arbitration clauses in the contracts of workers with private corporations sub-contracted by host states ensure that even if fundamental human rights are absent or unenforceable in the host state (eg collective bargaining, access to affordable healthcare, health and safety, right to industrial action, secured wages etc) these will be entrenched contractually and enforced through arbitration. Finally, BHR arbitration may ensure that important rights that are non-existent in the host state are catered for in the employment contract. Disability-related rights are important in this respect, as many states choose to either pay lip service or ignore them. The authors have undertaken an extensive study on the issue.

On the basis of the above, the problem is not that arbitration is injurious to the rights of workers in their relationship with employers; rather, there is little desire on the part of corporations to forego the many privileges granted to them under the law of host states and instead create a new set of costly labor rights by means of contract and arbitration.

The Cambridge Companion to Business and Human Rights Law by Ilias Bantekas and Michael Ashley Stein

About The Authors

Ilias Bantekas

Ilias Bantekas is Professor of Transnational Law at Hamad bin Khalifa University (Qatar Foundation), College of Law and Adjunct Professor in the Edmund E. Walsh School of Foreign S...

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Michael Ashley Stein

Michael Ashley Stein is the co-founder and Executive Director of the Harvard Law School Project on Disability, and a Visiting Professor at Harvard Law School since 2005. He teaches...

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