RESPONSIBILITY RISING FROM THE RUBBLE: LESSONS FROM THE BANGLADESH ACCORD FOR ARBITRATION OF BUSINESS AND HUMAN RIGHTS DISPUTES.

• Author: Levine, Judith

I INTRODUCTION

The focus of this article is a recent development in international dispute resolution that arises in the context of the challenging world of fast fashion, global supply chains and worker safety rights. That development is the settlement in July 2018 of two claims brought by global unions UNI and IndustriALL against fashion brands pursuant to an arbitration clause in the 2013 Accord on Fire and Safety in Bangladesh (Accord'). (1) The two cases ('Bangladesh Accord Arbitrations) were heard by an arbitral tribunal with registry assistance from the Permanent Court of Arbitration in The Hague ('PCA'). (2)

Part II of this article places the Bangladesh Accord Arbitrations against the background of the expanding range of multi-stakeholder disputes that the PCA has administered within its mandate. Part III reviews basic concepts of business of human rights, describing why arbitration may be an attractive form of dispute resolution to different players in that space. It also sets out the background to the Bangladesh Accord. Part IV reflects on three key lessons learned from the Bangladesh Accord Arbitrations with particular resonance in business and human rights disputes.

Finally, in Part V of the article, we observe that arbitration is gaining traction as a potential route to remedy for business and human rights violations, not just within the ready-made garment industry in Bangladesh, but also, in the future, beyond fashion. In our conclusions, we link developments in business and human rights to the theme of the 78th ILA Biennial Conference: 'developing international law in a challenging world.' (3)

II THE PCA'S EVOLVING MANDATE AND MULTI-STAKEHOLDER DISPUTES

International arbitration has long been recognised as a peaceful means of dispute resolution. (4) At the close of the nineteenth century when Europe was on the brink of war, Tsar Nicholas II of Russia, concerned about the financial and human cost of an arms race, invited other world leaders to a diplomatic conference 'seeking the most objective means of ensuring to all peoples the benefits of a real and lasting peace...'. (5) One enduring result of the peace conference that convened in The Hague in 1899 was the Hague Convention on the Pacific Settlement of International Disputes ('1899 Convention'). (6) The 1899 Convention recognised arbitration as the most 'effective' and 'equitable' means of settling legal disputes which diplomacy had failed to settle. (7) The 1899 Convention set out key features of arbitration--a process that involves parties' consent to have their differences 'finally settled' by decision-makers 'of their choice' on the basis of 'respect for the law' and according to procedures agreed by the parties. (8) Additionally, the 1899 Convention established the PCA as an institution to be 'accessible at all times' for 'immediate recourse' to facilitate the referral of international disputes to arbitration. Pursuant to the treaty framework, the PCA comprises its member States (currently 122 contracting parties), a standing body of available arbitrators, (9) and its international bureau, headquartered in The Hague, which serves as the registry for arbitral proceedings. (10)

On marking the centenary of the 1899 Convention, then UN Secretary General Kofi Annan remarked that the PCA had 'evolved into a modern-multi-faceted arbitral institution providing a wide variety of dispute resolution services to the international community...' (11) He noted that greater recourse to the PCA's services would help 'fill gaps concerning arbitrations involving private parties and international organizations', observing that 'developing countries, in particular, could well find the flexible instruments of dispute resolution to be an invaluable asset.' (12) Annan's words of encouragement appear to have been effective, as illustrated by the below graph of PCA case activity since 1900:

Figure 1 illustrates that the PCA's activities have increased at an exponential rate in the last twenty years. In large part, the steep incline is due to the PCA's contracting parties confirming that the PCA's mandate encompasses not just State-to-State arbitrations but mixed arbitrations between private parties and public entities, including investor-State arbitration and contract disputes and, more recently, private disputes with a public interest element.

Today, the PCA's registry caseload comprises 163 cases, including three inter-State disputes, 106 cases between foreign investors and governments under treaties and 54 other disputes based on agreements between a mix of private companies, international organisations and States or State-controlled enterprises. (13)

As mentioned above, and as will be essential to recall in discussing arbitration of business and human rights disputes, consent is crucial to any arbitration procedure. In the more traditional category of inter-State disputes, the consent of parties to refer their disputes to arbitration may take different forms. First, the consent to arbitrate could be in a compromis or special agreement, reached after a dispute has already arisen, as was the case in the Iron Rhine (Netherlands/Belgium), Railway Land (Malaysia/Singapore) and Land and Maritime Boundary (Croatia/Slovenia) arbitrations. (14) Second, an arbitration clause might appear in a bilateral treaty, providing in advance for recourse to arbitration should any disputes arise in the future in connection with the treaty. This was the case for example in the Indus Waters Treaty Kishenganga Arbitration (Pakistan v India), (15) and two recent arbitrations between Timor Leste and Australia. (16) Third, advance consent to arbitrate may be found in a clause in a multilateral treaty, as it is, for example, in Part XV of the UN Convention on the Law of the Sea ('UNCLOS'), which includes heavily negotiated binding dispute settlement procedures applicable to all parties. (17) A substantial portion of recent inter-State cases administered by the PCA have been brought pursuant to the default arbitration provision in UNCLOS referring to Annex VII arbitration, dealing with a wide range of law of the sea issues such as maritime delimitation, marine protection, ships and right to protest at sea. (18)

The PCA is not expressly mentioned in the bilateral or multilateral treaties mentioned above, which leave questions of procedure (including case administration) to party agreement or the discretion of the tribunal. For example, the Indus Waters Treaty provides that the tribunal shall 'at its first meeting... establish its secretariat' and 'shall determine its procedure'. (19) UNCLOS provides expressly only for the formation of the tribunal, leaving the question of a registry for the tribunal to decide within its general power to 'determine its own procedure'. (20) In practice, however, States and tribunals have proved reluctant to manage a complex arbitral proceeding without the assistance of an experienced registry. The PCA offers the parties the convenience of arbitrating at a permanently established institution, providing a neutral channel for communications, maintaining an archive of documents, offering access to the hearing facilities of the Peace Palace, arranging venues for proceedings worldwide, (21) managing the deposit for fees and expenses, (22) and providing support throughout the proceedings to members of the tribunal, experts, parties, and their representatives. The effect of this support is both to streamline the proceedings and, ultimately, to reduce the parties' costs by lightening the tribunal's administrative load. Accordingly, PCA administration has generally been agreed on early in the proceedings, either directly between the States concerned or at the instance of the tribunal in its first communications with the parties.

These same features have attracted parties in 'mixed arbitrations' to approach the PCA for registry services. The first case of this kind was Radio Corporation of America v China, which arose from a special agreement to refer to arbitration a dispute in the 1930s which, as Figure 1 shows, was during a period of relative inactivity for the institution. The PCA's Administrative Council confirmed that assistance to the arbitral tribunal in such a dispute fell within the organisation's mandate. (23) This paved the way for the increased growth many decades later in mixed disputes, including where consent to the arbitration might be found in contractual provisions, (24) and over 20 disputes involving international organisations. The overwhelming majority of mixed arbitrations administered by the PCA, however, have arisen out of bilateral or multilateral investment treaties, many providing foreign investors with the option of referring disputes against host States to arbitration under the UNCITRAL Arbitration Rules. The PCA has administered over 180 such disputes in the last 15 years. (25) Notable examples include the three arbitrations brought by former shareholders of Yukos Oil Company against the Russian Federation; (26) Chevron v Ecuador; (27) Philip Morris Asia v Australia; (28) and a number of cases under the NAFTA. (29)

The PCA's case activities have continued to evolve to cover less traditional types of international dispute resolution. This includes standing tribunals for multiple claims, such as the Eritrea-Ethiopia Claims Commission (30) and the Bank for International Settlements. (31) It also has extended to an 'intra-State' dispute between the Government of Sudan and the Sudanese People's Liberation Movement/Army; (32) and more recently, the South Sudan Peace Agreement signed on 12 September 2018 provides for the possibility of resorting to arbitration under the auspices of the PCA in relation to the demarcation activities of tribal areas of South Sudan. (33)

The international community has also evinced a growing appetite for alternative forms of dispute settlement. The PCA has offered its registry services to two...