CHAPTER 6 IMPACT OF THE NEW ETHICS OF HUMAN RIGHTS ON INTERNATIONAL ENERGY AND MINERAL PROJECTS

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
CHAPTER 6
IMPACT OF THE NEW ETHICS OF HUMAN RIGHTS ON INTERNATIONAL ENERGY AND MINERAL PROJECTS
Christian Leathley, Rafael Mendes Gomes, Karla Pascarella, Ina Popova and Florencia Villaggi ¹

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RAFAEL MENDES GOMES is the Chief Governance and Compliance Officer at Petrobras. He is a graduate of the Law School of the University of São Paulo (USP) and holds a post graduate degree in Corporate Law from the Pontifical Catholic University of São Paulo (PUC-SP) and in Business in the Digital Age from the Getúlio Vargas Foundation, in São Paulo (FGV/SP). In 2009, he completed the Advanced Management Program, of the IESE Business School, University of Navarra, and obtained a Professional Certificate in Compliance and Ethics (CCEP) from the Society of Corporate Compliance and Ethics. He served as a lawyer at the Tozzini, Freire Advogados corporate law firm, and as the Legal Director and Assistant General Counsel at Sun Microsystems. He served as the Legal Vice-President, General Counsel, and Chief Ethics and Compliance Officer of Walmart Brasil Ltda. Before joining Petrobras he was a senior partner at Chediak Advogados, responsible for the Compliance and Investigation practice.

KARLA PASCARELLA is a Partner in Peckar & Abramson's Austin office where she represents a range of international and domestic corporate clients and construction professionals. Her practice is primarily concentrated on construction law, corporate compliance and governance, and commercial litigation/complex dispute resolution. Fluent in both Spanish and English, she regularly handles multi-national transactions and disputes and assists corporate clients with strategic legal decisions and global business matters. Prior to joining Peckar & Abramson, Ms. Pascarella served as General Counsel for the North American affiliate of a $2.1 billion international engineering, procurement, and construction company. She routinely counseled senior executives and executive committees on legal strategies and the implementation of key business decisions across the globe, including implementation of a new code of ethics and compliance to meet international standards. As General Counsel, she handled an impressive range of legal disputes on multiple high-profile projects and oversaw the company's legal approach for all lines of business, including renewable energy (wind and solar), major infrastructure works, and transmission and distribution. An adept litigator and negotiator, Ms. Pascarella has successfully handled a diverse range of contract disputes and business-related torts at state and federal court levels. She regularly manages domestic and international transactions and negotiates complex contracts for publicly and privately financed infrastructure projects. Born in Guatemala and a native Spanish speaker, Ms. Pascarella often serves as the go-to counsel for highly intricate international transactions and legal matters. Her strong negotiating skills and tactful appreciation of diverse cultures allow her to manage and resolve disputes across a range of industries. She has represented Fortune 500 clients in North American Free Trade Agreement (NAFTA) negotiations and served as a Delegate of the American Bar Association's Section of International Law and Practice, International Legal Exchange Program - Central America Delegation. Ms. Pascarella serves as the current Chair of the International Human Rights Committee of the International Law Section of the State Bar of Texas, as well as the Chair of the Committee for Women in the Profession of the State Bar of Texas. She is also a member of the Austin chapter of Women of Renewable Industries and Sustainable Energy (WRISE).

INA C. POPOVA is a partner in the International Dispute Resolution Group at Debevoise and Plimpton, LLP. Ms. Popova focuses on international arbitration and litigation and public international law, with particular experience in matters in the mining, energy, and media sectors. She represents individuals, corporations, and States and has broad experience under the rules of the major arbitral institutions and several regional institutions, as well as serves in a number a number of leadership positions, including as a member of the International Court of Arbitration of the International Chamber of Commerce (ICC) and the Court of the Casablanca International Mediation and Arbitration Center (CIMAC). She also advises parties in international litigations involving proceedings in foreign and domestic courts, and has represented parties before the federal and state courts in the United States, including the United States Supreme Court. She has assumed leadership positions in various international arbitration organizations, including as a member of the ICC Court of Arbitration. Additionally, she is a past Co-Chair of the Annual Meeting of the American Society of International Law. She has also served on the 2018 ICCA Program Committee, as Advisory Board member of the Institute for Energy Law, and as rapporteur for the ASIL-ICCA Joint Task Force on Issue Conflicts in Investor-State Arbitration. She is also a member of the IBA International Commercial Arbitration Case Law Subcommittee and the IBA Working Group on the UNIDROIT Principles (2016). She has taught law at the Institut d’Études Politiques de Paris (Sciences Po) and is a Fellow of the Société de Législation Comparée. Ms. Popova leads matters throughout the world, including in particular disputes arising out of Africa and Latin America. Ms. Popova is fluent in French, Spanish, Italian, and Bulgarian, and is proficient in Portuguese. She is admitted to practice in New York and Paris.

FLORENCIA VILLAGGI is an attorney at Herbert Smith Freehills in New York. She practices international law, with particular focus on international disputes in the energy and mining sectors, representing clients in commercial and investment international arbitrations. Before HSF, she worked for several years as in Argentina. Florencia obtained her lawyer degree and a postgraduate degree in Oil & Gas Law from the University of Buenos Aires and a Master degree in International Dispute Resolution from Queen Mary University of London (LLM), where she was a Chevening scholar (UK Foreign and Commonwealth Office).

I. Introduction

The obligations and expectations incumbent upon businesses regarding human rights have experienced a steady evolution over the course of the last decades. The 2000s ushered a rise in non-binding soft law instruments and initiatives under which companies are expected to conduct human rights due diligence, report violations, and facilitate investigatory oversight. Now, the same norms contained in those instruments are increasingly being codified in national legislation, with significant implications for the nature of companies' obligations and the penalties for failure. This is particularly important for energy and mineral business projects, which may be subject to these obligations while also depending more broadly on a social license.

In this article, we review the transformation of soft laws pertaining to corporate human rights responsibilities into hard laws, and address the corresponding costs of non-compliance. We also discuss five best practices for building responsible business conduct and minimizing risk in light of this new legal environment.

II. Human Rights Obligations as the Product of Soft Law

For many years, business and human rights ("BHR") has been marked by a combination of soft law instruments and non-judicial enforcement.

A. Soft Law Instruments

Over time, corporations have increasingly committed to, or are guided by, human rights instruments and initiatives. These soft law instruments subject businesses to varying due diligence, reporting, and investigatory oversight requirements.

The UN Guiding Principles on Business and Human Rights, endorsed by the UN Human Rights Council in June 2011, serve as the global reference point in questions of BHR. They identify several concrete steps that businesses should take, such as making and publishing a policy commitment to respect human rights;² having in place processes to remediate adverse human

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rights impacts resulting from their operations;³ and having in place a "human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights."⁴

Similar obligations are set out in the OECD Guidelines for Multinational Enterprises.⁵ Building on the principle that companies should undertake human rights due diligence in respect of their operations, the OECD has published detailed recommendations and guidance for due diligence in general,⁶ and specifically with respect to conflict minerals.⁷

In the extractive and energy industries, companies also look to the Voluntary Principles on Security and Human Rights.⁸ Established in 2000, the Voluntary Principles are designed to guide extractive sector companies in maintaining the safety and security of their operations in a way that respects human rights. Other instruments cover a range of industries and areas of focus including, for example:

• International Labor Organization Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (ILO MNE Declaration), ⁹

• Ethical Trading Initiative Base Code (ETI Base Code), ¹⁰

• Fair Labour Association Workplace Code of Conduct (FLA Code of Conduct), ¹¹

• Global Network Initiative Principles on Freedom of Expression and Privacy (GNI Principles), ¹²

• International Finance Corporation Performance Standards on Environmental and Social Sustainability (IFC-PS), ¹³ and

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• Kimberley Process Certification Scheme, ¹⁴

Generally, these instruments and initiatives require businesses to recognize rights under the Universal Declaration of Human Rights (UDHR),¹⁵ the International Convention on Civil and Political Rights (ICCPR),¹...