On 12 February 2020, the United Nations High Commissioner for Human Rights (Commissioner) issued a report on all business enterprises involved in certain activities relating to Israeli settlements in the Occupied Palestinian Territory (OPT) (Report). The Report contains a database of 112 businesses that the Commissioner has reasonable grounds to conclude have been involved in certain activities in Israeli settlements in the West Bank.

The first blog post explored the diverse reactions to the Report and set out its scope and purpose. This blog considers the potential effects of the Report and its significance in the broader context of responsible business conduct (RBC) and holding businesses to account for their complicity in human rights violations. 

The Direct and Indirect Effects of the Report

The Report has no direct legal effect on businesses listed in the database. Indeed, the Report notes that the database “is not, and does not purport to constitute, a judicial or quasi-judicial process of any kind or legal characterization of the listed activities or business enterprises’ involvement therein.” The database is merely a list of business enterprises that the Commissioner has factually determined as being involved in the listed activities. Accordingly, the Report is not in any sense a “blacklist” of listed businesses (as labelled by Israel’s Ministry of Foreign Affairs), nor is it intended to brand such businesses as ‘illegal’ or operating in an illegal manner.

Nonetheless, the Report may have indirect non-legal and quasi-legal effects for listed business enterprises, particularly well-known businesses domiciled outside of Israel that operate in markets in which consumers and stakeholders are concerned about RBC and sustainable investment. In relation to potential, non-legal effects of the database, listed businesses may experience a backlash as a result of public mobilisation. As pointed out in the Ruggie Framework, failure to meet the “baseline responsibility” of companies to respect human rights “can subject companies to the courts of public opinion – comprising employees, communities, consumers, civil society, as well as investors”. The ‘courts of public opinion’ (better known as bad press) may encourage businesses listed on the database to, ultimately, divest from or cease their activities in the Israeli settlements.

Indeed, the Report provides a mechanism for listed businesses to be removed from the database, which is not static but rather is updated annually. Listed businesses may provide information to the Commissioner indicating that they are no longer involved in a listed activity and, if the Commissioner has reasonable grounds to believe that this is the case, the business can be removed from the database. Similarly, businesses that commence one or more listed activities may be subsequently added to the database. Accordingly, business activity in the OPT is and will continue to be closely monitored by the Commissioner and civil society.

Perhaps the Report will add fuel to the fire of the Boycott, Divest and Sanctions (BDS) movement, which aims to discourage companies and other stakeholders from supporting the Israeli government and investing in the Israeli settlements in the OPT. Certainly, the identification of specific companies by the UN, the most influential intergovernmental organisation in the world, has been heralded by the BDS movement as “a first significant and concrete step by any UN entity towards holding to account Israeli and international corporations that enable and profit from Israel’s grave violations of Palestinian rights.” Only time will tell if or how states and stakeholders (including consumers, shareholders, institutional shareholders and civil society) will utilise the database for their own ends.

Proactive governments may also put pressure on companies operating in the OPT to cease their operations. Government may leverage their considerable economic power to encourage companies to engage in RBC, including human rights due diligence (HRDD). For example, states can implement policies requiring businesses to have in place satisfactory HRDD processes to be eligible for public procurement contracts. However, the effectiveness of such policies in the case of businesses operating in the OPT may be limited, for the simple reason that the majority of listed businesses in the database are domiciled in Israel and therefore in all probability less likely to bid for European or US procurement contracts. However, requiring HRDD processes may be an effective strategy in relation to businesses listed in the database operating in the infrastructure and construction industries, such as those domiciled in France (Egis Rail), the Netherlands (Tahal Group International B.V., Altice Europe N.V., Kardan N.V.) and the UK (JC Bamford Excavators Ltd, Greenkote P.L.C.). Interestingly, these jurisdictions have been at the forefront of the push towards incorporating corporate social responsibility, including HRDD, into national legislation.

Additionally, the Report may have indirect quasi-legal effects for listed businesses. In jurisdictions that have implemented legislation in accordance with the United Nations Guiding Principles (UNGPs) and OECD’s Guidelines for Multinational Enterprises (OECD Guidelines), it is possible that quasi-legal action may be commenced against businesses listed in the database. For example, a complaint may be made by a NGO to a National Contact Point (NCP) that a listed business operating in the OPT has not complied with the OECD Guidelines. NCPs are not legal entities in the strictest sense – they rarely issue final determinations and cannot sanction companies for non-compliance with national and international law – but they are quasi-legal in that that they are empowered to issue persuasive, albeit non-binding, recommendations to businesses. In fact, in 2013 a Palestinian NGO successfully complained to the UK NCP that G4S, a global security company contracted by the Israeli government and operating in the West Bank,  had not met its obligation to address the impacts of its business relationship with that government, inconsistent with G4S’s duty to respect human rights under the OECD Guidelines. Successful claims such as these may inspire similar claims in other countries. As such, the Report may not have any legal effect, but it may indirectly support any quasi-legal claim made against a listed business in relation to their operations in the OPT.

A ‘Significant’ and ‘Concrete’ Step Forward

The Council will consider the Report during its 43rd Regular Session, from 24 February to 20 March 2020. Hopefully the Council will provide some guidance to states and listed businesses concerning their responsibilities and obligations under international law, as a result of the Report. Such guidance has been sought by Valentina Azarova in order to clarify the law as it stands for all concerned parties, as well as to ensure the effectiveness, integrity and transparency of the Council. It is essential for the responsibilities and duties of states and businesses to be crystal clear if the UNGPs are to be effectively incorporated into national law and, most importantly, if businesses are to comply with that law. The theory of the UNGPs and the rhetoric contained in the Report must be translated into practical guidance for companies to follow, in order that they may comply with and hopefully exceed their duty to respect human rights.

It has been almost 12 years since the release of the Ruggie Framework and 9 years since the adoption of the UNGPs by the Council. While the Guiding Principles remain just that – non-binding principles that seek to shape national and international legal developments – each year their persuasive influence increases. Slowly but surely, the UNGPs are permeating into the international legal framework – the Report is the most recent example of the normalisation of the notion of RBC. The release of the database is also indicative of what may be described as a shift away from the traditional focus of international law of holding states to account, to the focus on companies and their duties and responsibilities under international  human rights law. In the absence of concrete and effective action by the ‘international community’ to long-standing and ongoing human rights violations, human rights advocates are seeking new mechanisms to hold states and businesses accountable. While these mechanisms are certainly not perfect, it is important to keep in mind that we are in the very early stages of a monumental shift in international law.

The Report is indeed a significant and concrete step towards holding businesses to account for their complicity in human rights violations. While the Report has no direct legal effects, its potential indirect effects should be of serious concern for companies operating in the OPT. Listed businesses have been put on notice – on the international stage no less – that their actions are being monitored and may be contrary to national (and perhaps someday international) law. 

Katharine Booth is currently working with the Asser Institute in The Hague. She holds a LLM, Advanced Programme in European and International Human Rights Law from Leiden University, Netherlands and a LLB and BA from the University of New South Wales, Australia. She previously worked for a Supreme Court Justice and as lawyer in Australia. Katharine would like to thank Antoine Duval for his comments on her draft blog post, a version of which was originally published on the Doing Business Right blog.

Editor’s note: The topic of business responsibility within the Israeli settlements in the Occupied Palestinian Territory has been further explored in the Business and Human Rights Journal by Valentina Azarova (DOI: https://doi.org/10.1017/bhj.2018.14 – also cited above) and Marya Farah and Maha Abdallah in relation to security firms (DOI: https://doi.org/10.1017/bhj.2018.27).