For Human Rights Beyond Borders

Human Rights have been locked up behind domestic bars to prevent their universal application to globalization and its much needed regulation. Extraterritorial obligations (ETOs) unlock human rights.

Toggle Feature

CESCR elaborates on States’ ETOs in the context of business activities in new General Comment 24

Building on its 2011 Statement on the obligations of States Parties regarding the corporate sector and economic, social and cultural rights, the UN Committee on Economic, Social and Cultural Rights released last week General Comment No. 24 which intends to clarify States’ obligations under the International Covenant on Economic, Social and Cultural Rights (ICESCR) in the context of business activities.

With the issue of business and human rights currently being addressed in multiple fora and through different types of regulations, action plans and self-imposed codes of conduct, the General Comment seeks to recall and clarify what is already obligatory for States and define their role in regulating corporate conduct, according to Committee member Zdzislaw Kedzia in a CESCR press release.

The General Comment dedicates an entire section (Part III. C.) to clarifying States’ extraterritorial obligations in the context of business activities. Paras. 25-27 set out to justify the extraterritorial nature of States’ obligations under the Covenant by pointing to the fact that there is no territorial or jurisdictional restriction under the ICESCR and that “article 2 (1) of the Covenant refers to international assistance and cooperation as a means of fulfilling economic, social and cultural rights” (para.27). The General Comment furthermore outlines the situations under which States have extraterritorial obligations with regard to business activities: “Extraterritorial obligations arise when a State Party may influence situations located outside its territory, consistent with the limits imposed by international law, by controlling the activities of corporations domiciled in its territory and/or jurisdiction, and thus may contribute to the effective enjoyment of economic, social and cultural rights outside its territory” (para. 28).

As part of their extraterritorial obligation to respect economic, social and cultural rights (para. 29) the General Comment stipulates that “States must ensure that they do not obstruct another State from complying with its obligations under the Covenant”. It highlights that this obligation is particularly relevant to the negotiation and conclusion of trade and investment agreements, to financial and tax treaties and to judicial cooperation.

States’ extraterritorial obligation to protect (paras. 30-35), according to the General Comment, extends “to any business entities over which States parties may exercise control, in accordance with the Charter of the United Nations and applicable international law”. It entails the regulation of “corporations that are domiciled in their territory and/or jurisdiction: this includes corporations incorporated under their laws, or which have their statutory seat, central administration or principal place of business on their national territory” (para. 31). The General Comment furthermore emphasizes the importance of international cooperation to protect ESC rights especially in transnational cases: “Improved international cooperation should reduce the risks of positive and negative conflicts of jurisdiction, which may result in legal uncertainty and in forum-shopping by litigants, or in the inability for victims to obtain redress” (para. 35).

Finally, the General Comment deals with the issue of abusive tax practices and financial secrecy policies when elaborating on States’ extraterritorial obligation to fulfil. As part of this obligation, States must avoid contributing to the race to the bottom by lowering the rates of corporate taxes which “ultimately undermines the ability of all States to mobilize resources domestically to realize Covenant rights” (para. 37). Excessive protection of bank secrecy and permissive rules on corporate tax can affect the ability of States where economic activities take place to meet their obligation to mobilize the maximum available resources for the implementation of Covenant rights.

Read General Comment No. 24 in our library

Read the press release of the CESCR here