Arbitration and human rights

Human rights and arbitration are often cast as opposing juridical worlds. One evokes public values, vulnerable claimants and state power; the other, contractual consent, private adjudication and commercial disputes. But that contrast obscures the question: when business activity causes human rights harm across borders, should effective remedy depend upon the institutional label of the forum? It should not. What matters is whether the mechanism can deliver legitimate, accessible and effective redress.

The European Law Institute's "Business and Human Rights: Access to Justice and Effective Remedies" Report presents a formidable objection. It calls the Bangladesh Accords and the Hague Rules on Business and Human Rights Arbitration "impressive and welcome", while cautioning that consensual mechanisms depend upon party consent and may be vulnerable to stronger parties without external control. It therefore favours public-facing mechanisms possessing coercive authority. That concern is legitimate. Yet it does not establish arbitration's irrelevance.

Indeed, the Report's treatment of contractual cascading points towards a more intriguing possibility. It proposes contractual mechanisms through which human-rights due-diligence responsibilities can extend through transnational supply chains, coupled with access to courts. If private ordering can carry substantive human rights responsibilities across borders, why should it become irrelevant when the question changes from who bears responsibility to how that responsibility may be contested and enforced? This does not displace courts; it asks that contractual responsibility and access to remedy be considered together.

That proposition encounters a fundamental limit: substantive obligation is not arbitral jurisdiction. An affected worker, community or other rightsholder does not acquire a right to arbitrate merely because two corporations have contracted. A credible model must address consent, standing, participation, applicable law and enforcement. Where appropriate, contractual arrangements may confer defined third-party rights and establish a legally cognisable basis for participation.

The Hague Rules address this problem at the procedural level. Based on the UNCITRAL Arbitration Rules, they adapt procedure to business-and-human-rights disputes. Their framework can accommodate different claimant and respondent configurations, while consent remains its cornerstone. The Rules therefore do not create substantive rights or conjure jurisdiction where none exists; they demonstrate instead that arbitral procedure can be adapted beyond the conventional commercial paradigm.

Nor does the UN Guiding Principles framework reserve effective remedy to courts. It recognises judicial and non-judicial mechanisms and subjects non-state-based mechanisms to criteria including legitimacy, accessibility, predictability, equity, transparency and rights-compatibility. This is not an endorsement of arbitration as such. It is a functional standard against which arbitration must prove its worth.

That scrutiny must remain exacting. Arbitration cannot cure unequal bargaining power by invocation alone. Cost, evidentiary asymmetry, confidentiality, collective claims, third-party participation and enforcement may determine whether a formally available remedy is genuinely accessible. Courts remain indispensable where public coercive authority is required, consent is absent or mandatory law reserves the matter for judicial determination. An arbitration clause must never become a contractual alibi for extinguishing substantive rights or insulating corporate conduct from legitimate public oversight.

But these limitations establish the conditions of legitimate arbitration; they do not establish its irrelevance.

The better conception is neither courts versus arbitration nor private ordering versus public authority, but a plural remedial architecture in which institutional form follows remedial need. Courts possess coercive authority and public legitimacy that certain disputes require. Arbitration, where jurisdiction is validly constituted and safeguards exist, can offer a potentially neutral transnational forum, procedural adaptability and an enforceable determination.

Arbitration is no panacea. But excluding it from the remedial repertoire would be an untenable dogma.