Human rights due diligence for corporations: From voluntary standards to hard law at last?

Netherlands Quarterly of Human Rights

Volumn 32, Issue 1, 2014, Pages 44-74

  Martin Ortega, Olga ^a  

^a UNIVERSITY OF GREENWICH   (United Kingdom)

Author keywords

Business and human rights; Conflict minerals; Dodd frank act; Due diligence; Oecd; Ruggie; The democratic republic of the congo

Indexed keywords

EID: 84896308977     PISSN: 01693441     EISSN: None     Source Type: Journal    
DOI: 10.1177/016934411403200104     Document Type: Article

References (255)

1. Paul Collier and Anke Hoeffler, 'On Economic Causes of Civil War' (1998) 50 Oxford Economic Papers 563-573
2. Mats R Berdan and David M Malone (eds), Greed and Grievance, Economic Agendas in Civil War (Lynne Rienner Publishers 2000)
3. Karen Ballentine and Jake Sherman, The olitical Economy of Armed Conflict: Beyond Greed and Grievance (Lynne Rienner Publishers 2003).
4. Michael Rosss chapter in the same volume: 'Oil, Drugs and Diamonds: The Varying Roles of Natural Resources in Civil Wars' 47-70.
5. Richard Auty Sustaining Development in Mineral Economics: The Resource Curse Thesis (Routledge 1993)
6. Gilles Carbonnier, 'Extractive industries in fragile states and the role of market incentives and regulation' (2010) 5 The Economics of Peace and Security Journal 30-31.
7. Olga Martin-Ortega, 'Business under Fire: Transnational Corporations and Human Rights in Conflict Zones' in Noëlle Quenivet and Shilan Shah-Davis (eds), International Law and Armed Conflicts. Challenges in the XXst Century (TCM Asser 2010) 189-207.
8. Olga Martin-Ortega, 'Business and Human Rights in Conflict' (63
9. 2008) 22 Ethics and International Affairs 273-283.
10. This article uses alternatively the terms business, company, corporation and corporate actor.
11. Michael Nest, François Grignon and Emizet F Kisangani, The Democratic Republic of Congo: Economic Dimensions of War and Peace (Lynne Rienner Publisher 2006).
12. Chandra Lekha Sriram, Olga Martin-Ortega and Johanna Herman, War and Human Rights (Routledge 2014) 116-135.
13. Report of the Panel of the Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of the Congo (13 November 2001) UN Doc S/2001/1072, paras 28, 125 ['2001 Report'].
14. Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of the Congo (16 October 2002) UN Doc S/2002/1146, paras 22-131.
15. See, for example, 2001 Report (n 7) paras 37-38. Several years later, the Office of the United Nations High Commissioner for Human Rights (OHCHR) documented further the link between natural resources and human abuses producing a map of one whole decade of violations: Report of the Mapping Exercise Documenting the Most Serious Violations of Human Rights and International Humanitarian Law Committed within the Territory of the Democratic Republic of the Congo between March 1993 and June 2003, August 2010 (Unofficial translation from the French original version).
16. The first list was published as Annex I to the 2001 Report (n 7). The Final Report, in 2003, contains a significantly shorter list of companies, Final Report of the Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of the Congo (23 October 2003) UN Doc 2003/1027, Annex I. Th is was reportedly due to the pressure from the UNSC and home governments of business to 'clear' corporations names in the last report of the Panel, see,
17. Papaioannou Asimina-Manto, 'The Illegal Exploitation of Natural Resources in the Democratic Republic of Congo: A Case Study on Corporate Complicity in Human Rights Abuses', in Olivier de Schutter, Transnational Corporations and Human Rights (2006) 276, 282.
18. UNSC Res 1457 (24 January 2003) UN Doc S/RES/1457
19. UNSC Res 1856 (22 December 2008) UN Doc S/RES/1856
20. UNSC Res 1952 (29 November 2010) UN Doc S/RES/1856, state that the plundering of natural resources is one of the main elements fuelling the conflict. Th is article does not assess whether the exploitation is taking place in a legal or illegal way, but rather focuses on its connections with armed groups, violence and the horrific human rights consequences that this brings. It exceeds its scope to analyse the concept of illegal exploitation of natural resources, however, as some of the initiatives to regulate conflict minerals are taking place in the framework of the fight against this kind of exploitation it is important note the different definitions used by the bodies in question. The UN Expert Panel defined illegality of exploitation in the DRC, see, 2001 Report (n 7) para 15 as: a) Violation of sovereignty (activities without the consent of the legitimate government)
21. b) Failure to respect existing national or local regulatory framework that governs the use or exploitation of resources
22. (c) Use and abuse of power by some actors, including forced monopoly in trading, the unilateral fixing of prices of products by the buyer, the confiscation or looting of products from farmers, and the use of military forces in various zones to protect some interests or to create a situation of monopoly
23. (d) Violation of international law including soft law. The ICGLR Protocol on the Illegal Exploitation of Natural Resources, analysed below, defines illegal exploitation as 'any exploration, development, acquisition and disposition of natural resources that is contrary to the law, custom, practice, or principle of permanent sovereignty over natural recourses, as well as the provisions of this Protocol', art 1.
24. 12 UNSC Res 1533 (13 March 2004) UN Doc S/RES/1533.
25. 13 The electronic industry is understood broadly to include the producers of a wide range of equipment and products from industrial to automotive to consumer electronics, see, GHGm, 'Social and Environmental Responsibility in Metals Supply to the Electronic Industry' (20 June 2008) 8. For a description of the specific uses of each metal
26. Global Witness, Faced with a Gun, What Can You Do? War and the Militarisation of Mining in Eastern Congo (2009) 20-21
27. John Prendergast, 'Can You Hear Congo Now? Cell Phones, Conflict Minerals, and the Worst Sexual Violence in the World' (2009) (The Enough Project).
28. International statistics of the metals production are available from different sources
29. US Geological Survey, Mineral Commodity Summaries, available at http://minerals.usgs.gov/minerals/pubs/commodity.
30. Most of DRC gold is smuggled out of the country and there are hardly any reliable statistics of the amount of production
31. ICGLR, Regional Initiative on Natural Resources Newsletter (February 2012) 1.
32. GHGm (n 13) iv. For mining condition
33. Global Witness (n 13) 24.
34. MONUSCO and UNHCHR 'Report of the Human Rights Joint Office on Human Rights Violations Perpetrated by Soldiers of the Congolese Army and Combatants of the M-23 in Goma and Sake, North Kivu Province and in and around Minova, South Kivu Province, from 15 November to 2 December 2012' (May 2013), detailing mass rape, killings and arbitrary executions, and violations resulting from widespread looting in Eastern Congo.
35. All the UN Group of Experts Reports for NGO accounts see, for example, Human Rights Watch, The Course of Gold (2005)
36. Global Witness (n) 13
37. Global Witness, Congo's Mineral Trade in the Balance: Opportunities and obstacle to demilitarisation (2011)
38. John Prendergast, A Comprehensive Approach to Conflict Minerals (2009) (The Enough Project).
39. Global Witness (n 13) 24. It is impossible to know the exact number of people, including children, working in the mines as they are not registered.
40. Global Witness (n) 13
41. Shawn Blore and Ian Smillie, Taming the resource course: Implementing the ICGLR Certification Mechanisms for Conflict-prone minerals (Partnership Africa Canada, 2011)
42. Steven Spittaels and Filip Hilgert, Accompanying note on the interactive map of militarised mining areas (IPIS 2009)
43. International Alert, The complexity of resources governance in a context of state fragility: An analysis of the mining sector in the Kivu Hinterland (2010). The UN Expert Group on DRC has classified the involvement of armed actors in the mineral trade as: illegal taxation, protection, commercial control and coercive control. See, UN Expert Group on DRC, 'Final Report of the Expert Group on DRC' (29 November 2010) UN Doc S/2010/596, paras 173ff['2010 Final Report'].
44. Christiana Ochoa and Patrick Keenan, 'Regulating Information Flows, Regulating conflict: An analysis of United States conflict Minerals Legislation' (2011) 3 Gottingen Journal of International Law 13.
45. International Financial Action Task Force on Money Laundry (FATF), 40 Recommendations on money laundering (1990)
46. International Association of Oil and Gas Producers, Guidelines for Reputational Due Diligence (Report No 356, September 2004)
47. Wolfsberg Anti-Money Laundering Principles for Private Banking (2000). The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997) does not contain a reference to due diligence in its text but it does in Annex II on Good Practice Guidance on Internal Controls, Ethics and Compliance.
48. UN Sub-Commission on the Promotion and Protection of Human Rights 'Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights' (26 August 2003) UN Doc E/CN.4/Sub.2/2003/12/Rev.2. The commentary to art 1 established that to conduct due diligence was the standard of responsibility of companies to ensure that their activities do not either directly or indirectly contribute to, or benefit from, human rights abuse.
49. Rebecca Wallace and Olga Martin-Ortega, 'The UN Norms: A First Step to Universal Regulation of Transnational Corporations' Responsibilities for Human Rights?' (2004) 26 Dublin University Law Journal 304-319.
50. UNHRC 'Protect, Respect and Remedy: a Framework for Business and Human Rights, Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises' (7 April 2008) UN Doc A/HRC/8/5
51. UNHCR 'Guiding Principles on Business and Human Rights: Implementing the United Nations "Protect, Respect and Remedy" Framework, Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises' (21 March 2011) UN Doc A/HRC/17/31.
52. The Framework and Guiding Principles were developed under the mandate first of the Commission on Human Rights and latter the Human Rights Council, from 2005 to 2011. The Guiding Principles were further endorsed by the UN Human Rights Council in UN Doc 17/4 (6 July 2011) UN Doc A/ HRC/RES/17/4.
53. UN Doc A/HRC/8/5 (n 23) para 56.
54. Ibid paras 57-63. In this report the SRSG did not set the scope of due diligence but referred to some of its constitutive elements to be later developed in the Guiding Principles.
55. Robert McCorquodale, 'Corporate Social Responsibility and International Human Rights Law' (2009) 87 Journal of Business Ethics 392
56. Mark B Taylor, 'The Ruggie Framework: Polycentric Regulation and the Implications for Corporate Social Responsibility' (2011) 5 Nordic Journal for Applied Ethics 15.
57. Ibid McCorquodale. As Tineke Lambooy suggests, through the use of the term due diligence the SRSG has established a link between two areas of law previously considered unrelated, human rights and corporate law
58. Tineke Lambooy, 'Corporate Due Diligence as a Tool to Respect Human Rights' (2010) 28 Netherlands Quarterly of Human Rights 446.
59. Linda Spedding, Due Diligence and Corporate Governance (LexisNexis UK 2004) 3.
60. The origin of due diligence in corporate governance can be traced back to the US Securities Act of 1939 Section 11(b)(3) provided a defence of due diligence to those who had made reasonable investigation into matters contained in a prospectus for the issue of securities.
61. Ibid 2-3.
62. Lambooy (n 27) 406-417.
63. Ibid 409.
64. Spedding (n 28) 2-3.
65. As Lambooy explains a due diligence assessment typically consists of a factual investigation of the resources of the company involved and a desk research of the relevant documents. A legal due diligence will also examine the legal, tax and financial structure of the company or project involved in the operation or transaction
66. ibid 415-416.
67. McCorquodale (n 26) 392.
68. Spedding (n 28) 3-5, points out that due diligence has become the norm in corporate decision making the fields of joint venture, merger and acquisitions, selecting appropriate partners, choosing the right jurisdiction or location and buying and selling assets.
69. Spedding (n 28) 3-5.
70. Lambooy (n 27) 409.
71. Spedding (n 28) 2.
72. Ibid 4.
73. International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts (adopted 28 January 2002) UNGA Res 56/83 art 2. Acts that shall be considered acts of a State are those of its organs, even in the case of excess of authority or contravention of instructions, and those of persons or entities exercising elements of governmental authority (arts 4, 5, 7). See also Case Concerning the Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia and Montenegro) (Merits) [2007] ICJ Rep, General List No 91 [385]-[393].
74. Ibid International Law Commission art 8.
75. Case Concerning Military and Paramilitary Activities In and Against Nicaragua (Nicaragua v United States of America) [1986] ICJ Rep 14 [75]- [86], [106]- [17], [115]- [116].
76. In the case of State-owned or controlled companies the conduct of the company has been attributed to the State when there was evidence that it was exercising public powers or that the State was using its ownership interest in or control to achieve a particular result, see, James Crawford, The International Law Commission's Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge University Press 2002) 112-113. It is also arguable that the acts of private military and security companies (PMSCs) can be attributed to the State when they have been incorporated into the armed forces and are under their command and control or have been directly instructed by the State
77. Mirko Sossai, 'Status of Private Military and Security Company Personnel in International Law of Armed Conflict' in Francesco Francioni and Natalino Ronzitti (eds), War by Contract, Human Rights, Humanitarian Law and Private Contractors (Oxford University Press 2011) 197-217.
78. Robert Barnidge, 'The Due Diligence Principle under International Law' (2006) 8 International Community Law Review 81.
79. International Law Commission (n 38) art 2 and commentary, para 3.
80. Barnidge (n 41). As Crawford and Olleson point out, 'they [the ICL Draft Articles Responsibility of States for Internationally Wrongful Acts] do not seek to articulate the so-called primary or substantive obligations of States, but to form a framework for the application of these obligations, whatever they may be', James Crawford and Simon Olleson, 'The Continuing Debate on a UN Convention on State Responsibility' (2005) 54 International and Comparative Law Quarterly 968.
81. James Crawford and Simon Olleson, 'The Nature and Forms of International Responsibility' in Malcolm Evans (ed), International Law (Oxford University Press 2005) 454
82. Barnidge (n 41) 95.
83. Different primary rules of international law foresee different standards to measure such breach, ranging from due diligence to strict liability. Crawford (n 40) 13. The Commentary to art 2 lists the other standards: fault, culpability or negligence (para 3). The theoretical discussions regarding the concept of due diligence are embedded in the more general debate about whether international law has a general requirement of fault, which the Draft Articles avoid to engage with
84. ibid Crawford and Olleson 457-456.
85. Barnidge (n 41) 92-99.
86. ibid 81-121.
87. Malcom Shaw, International Law (Cambridge University Press 2008) 855.
88. Barnidge refers to it as a rule of reasonableness (n 41) 101, 120.
89. Velasquez Rodriguez v Honduras, (Merits) Inter-American Court of Human Rights Series C No 4 (29 July1988) para 172, see also, para 176.
90. UN Committee on the Elimination of Discrimination Against Women (CEDAW), 'General Recommendation No 19' in 'CEDAW General Recommendations Nos 19 and 20 Adopted at the Eleventh Session Violence against women' (1992) UN Doc A/47/38, para 9.
91. UNGA Res 48/104 (20 December 1993) UN Doc A/RES/48/104, art 4(c)
92. Inter-American Convention on the Prevention, Punishment and Eradication of Violence against Women (adopted 9 June 1994, entered into force 5 March 1995), explicitly mentions the obligation of apply due diligence to prevent, investigate and impose penalties for violence against women, see, art 7(b). See also UNCHR 'Report of the Special Rapporteur on violence against women, its causes and consequences' (20 January 2006) UN Doc E/CN.4/2006/61.
93. ICCPR, 'General Comment No 31 [80]' (26 May 2004) UN Doc CCPR/C/21/Rev.1/Add.13, para 8.
94. In 2008 and 2009 the Court issued two landmark rulings respectively, recognising the standard of due diligence with regards to the positive obligation of the State to protect individuals under its jurisdiction from the harmful acts of private persons.
95. Bevacqua and S v Bulgaria, App No 71127/01 (ECtHR, 12 June 2008)
96. Opuz v Turkey, App No 33401/02 (ECtHR 9 June 2009).
97. For a comprehensive study of UN Treaties and treaty bodies commentaries' definition of the State responsibility to protect human rights against third parties and the specific references to corporate actors see,
98. Andrew Clapham, Human Rights Obligations of Non-State Actors (Oxford University Press 2006) 317-346.
99. Nicola Jägers, Corporate Human Rights Obligations: in Search of Accountability (Intersentia 2002) 13-174
100. UNHRC 'Addendum to the Final Report of the Special Representative of the Secretary-General on Human Rights and Transnational Corporations and Other Business Enterprises on State Responsibilities to Regulate and Adjudicate Corporate Activities under the United Nations Core Human Rights Treaties: An Overview of Treaty Bodies Commentaries, Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises' (2007) UN Doc A/HRC/435/Add.1.
101. UN Committee on the Rights of the Child 'General Comment No 16 on state obligations regarding the impact of the business sector on children's rights' (2013) UN Doc CRC/C/GC/16, para 28. For an analysis of the Commentary
102. Olga Martin-Ortega and Rebecca Wallace, 'Business, Human Rights and Children: the Developing Agenda' (2013) 25 The Denning Law Journal 107-127.
103. The Committee also considers the responsibilities of corporations themselves with regards to children's rights, including exercising due diligence to identify, prevent and mitigate their impact on children's rights including across their business relationships and within global operations, see, para 62.
104. UNHRC (n 23) para 14.
105. In his framework Ruggie explicitly uses a distinctive language to remark the lack of legal nature of corporate duties, that is whilst States' duties are referred as obligations, corporate one's are regarded as responsibilities. As Jägers has sustained the lack of elaboration on the legal foundations of the responsibility to respect in the Guiding Principles comes as a result of an effort to remove it from the realm of law
106. Nicola Jägers, 'UN Guiding Principles on Business and Human Rights: Making a Headway towards Real Corporate Accountability?'(2011) 29 Netherlands Quarterly of Human Rights 159-163.
107. McCorquodale (n 26) 385-400
108. Taylor (n 26) 9-30
109. Radu Mares, 'Business and Human Rights Aft er Ruggie: Foundations, the Art of Simplification and the Imperative of Cumulative Progress' in Radu Mares (ed), The UN Guiding Principles on Business and Human Rights: Foundations and Implementations (Brill 2012) 1-51.
110. Ibid Principle 15.
111. Ibid Principle 17(a).
112. Ibid Principle 17. The subsequent principles elaborate on how to identify risk and asses impact (Principle 18), integrate the findings and take appropriate action (Principle 19) and track the effectiveness of their response (Principle 20). The specific principle dealing with businesses' activities in conflict affected areas only deals with the duty of the State to ensure business are not involved in abuses. Th is duty includes supporting business to perform due diligence (Principle 7).
113. Ibid Principle 22.
114. Ibid Principles 15 and 17(b)-(c), which insists on the ongoing nature of the process.
115. The burden on establishing effective remedies and guaranteeing access falls within the State (Principles 25-27), but companies should also provide operational-level grievances mechanisms for individuals and communities who may be adversely impacted by their activities (Principles 30-31).
116. An interesting debate arises on the issue of the extent to which standards endorsed by a UN Human Rights Council resolution could be merely considered social expectations. Th is endorsement may provide these standards with more normative force than merely policy recommendations, which contrasts with the insistence of the Principles on their lack of legal nature.
117. OECD Guidelines for Multinational Enterprises were first passed in 1976 as part of the Declaration on International Investment and Multinational Corporations. The current revised version was adopted by the OECD Investment Committee on 25 May 2011.
118. In 2002 it published its first working paper on the matter, OECD Directorate for Financial, Fiscal and Enterprise Affairs, 'Multinational Enterprises in Situations of Violent Conflict and Widespread Human Rights Abuses' Working Paper on International Investment No I (2002).
119. OECD, 'Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones' (adopted by the OECD Council 8 June 2006).
120. Ibid 13.
121. Due diligence is mentioned in other sections regarding managerial care and corruption and money laundry.
122. Martin-Ortega 'Business under Fire' (n 3) 195.
123. There is a sharp contrast between this document and its previous version with regard to how prominently human rights considerations now feature in the Guidelines. In the 1976 and 2000 versions these references were by no means so central.
124. The 2000 version of the Guidelines did not contain any reference to due diligence, but National Contact Points (NCP) had already started making reference to it. In 2008, the UK NCP sustained that the British company Afrimex had 'practiced insufficient due diligence on the supply chain, sourcing minerals from mines that used child and forced labour, who work under unacceptable health and safety practices' in the DRC.
125. OECD, 'Final Statement by the UK National Contact Point for the OECD Guidelines on Multinational Corporations: Afrimex (UK) Ldt' (28 August 2008).
126. Other sections that also consider due diligence are Employment Relations (Section V, para 50, commentary) and Combating Bribery, Bribe Solicitation and Extortion (Section VII, para 4).
127. Ibid Section II General Policies, para 10.
128. Ibid commentary paras 14, 45.
129. Ibid Section IV Human Rights, para 5.
130. Ibid Commentary para 45-46.
131. Ibid para 46.
132. OECD, 'Recommendation of the Council on Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Affected and Risk Areas' (adopted by the Council at Ministerial level 25 May 2011) C/MIN(2011)12/FINAL. The document also contains a Model Supply Chain Policy (Ann II) and a Suggested Measures for Risk Mitigation and Indicators for Measuring Improvement (Ann III).
133. The Tin, Tungsten and Tantalum Supplement to the OECD Due Diligence Guidelines was adopted simultaneously whilst the Gold Supplement was approved and endorsed in February 2012.
134. OECD Due Diligence Guidance (n 79) 12.
135. Ibid 16.
136. Ibid 9.
137. Ibid 13.
138. Ibid 15.
139. Ibid 13.
140. Ibid Ann 1.
141. The Tin, Tungsten and Tantalum Supplement defines upstream as the mineral supply chain from the mine to smelters/refiners. Upstream companies include miners, local traders or exporters from the country of mineral origin, international concentrate traders, mineral re-processors and smelters/refiners. Downstream means the minerals supply chain from smelters/refiners to retailers.
142. Downstream companies include metal traders and exchanges, component manufacturers, product manufacturer, original equipment manufacturer and retailers, (n 80) 32.
143. OECD, Implementing the OECD Due Diligence Guidance, available at , for the results of the first pilot implementation project involving 82 companies (2011-2013).
144. UN Expert Group on DRC, 'Final Report of the Expert Group on DRC' (2 December 2011) UN Doc S/2011/738 ['2011 Final Report'] para 335. Both documents have been developed in parallel and in consultation with each other.
145. UN Expert Group on DRC, 'Final report of the Group of Experts on the DRC' (12 December 2008) UN Doc S/2008/773, paras 131-134.
146. UNSC Res 1896 (7 December 2009) UN Doc S/RES/1896, para 7.
147. 2010 Final Report (n 19) paras 303ff.
148. UN Expert Group on DRC, 'Interim Report of the Expert Group on DRC' (7 June 2011) UN Doc S/2011/345, Ann 1, 30ff, contains the consolidated version of due diligence guidelines provided by the 2010 Final Report, (n 19) paras 327-369.
149. The UNSC has supported taking forward the Group's guidelines, UNSC Res 1952 (29 November 2010) (n 11) p 8.
150. UNSC Res 1857 (22 December 2008) UN Doc S/RES/1857, para 15.
151. UNSC Res 1952 (29 November 2010) (n 11) para 9.
152. 2011 Final Report (n 90) paras 332-405.
153. Ibid 5.
154. UN Doc A/HRC/17/31 (n 23) Principle 1.
155. 2011 Final Report (n 90) paras 388, 400-405, for progress in the United Kingdom, China, South Africa, Malaysia, United Arabs Emirates and Germany.
156. The Europe 2020 strategy links economic growth with resource efficiency, transparency and a raw materials strategy in line with development and good governance objectives. See, European Commission, 'The raw materials initiative: meeting our critical needs for growth and jobs in Europe' (4 November 2008) COM(2008) 699
157. European Commission, 'Europe 2020: A strategy for smart, sustainable and inclusive growth' (3 March 2010) COM(2010) 2020
158. European Commission, 'A resource-efficient Europe: flagship initiative under the Europe 2020 strategy' (26 January 2011) COM(2011) 21
159. European Commission, 'Tackling the challenges in commodity markets on raw materials' (2011) COM(2011) 245. The Africa-EU Joint Strategy 2011-2013 also considers the issues of enhancing transparency on raw materials, improving traceability and managing natural resources in conflict and post-conflict areas.
160. European Commission, COM(2011)25, 16. The development of due diligence and reporting requirement by companies which are part of the supply chain of raw materials similar to those established by the Dodd Frank Act are being considered, ibid 15, fn 39, European Commission Directorate-General for Trade, 'EU Trade Policy for Raw Materials - Second Activity Report' (2012) 25
161. European Commission, 'Proposal Directive on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings' (25 October 2011) COM(2011) 684.
162. At the time of writing the Commission has not announced any results on the consultation or taken any decision in this respect, see, Public consultation on a possible EU initiative on responsible sourcing of minerals originating from conflict-affected and high-risk areas, available at http://trade.ec.europa.eu/consultations/?consul_id=174.
163. UNSC Res 1857 (22 December 2008) (n 97) para 15
164. UNSC Res 1896 (7 December 2009) (n 93) para 14.
165. UNSC Res 1952 (29 November 2010) (n 11) para 8.
166. UNSC Res 1857 (22 December 2008) (n 97) paras 15, 16.
167. UNSC Res 1952 (29 November 2010) (n 11) para 19.
168. Ochoa and Keenan (n 20) 143.
169. The UK based NGO Global Witness challenged the UK government in court for ignoring the UNSC recommendations and failing to submit names of British entities trading in conflict minerals. The litigation was ultimately unsuccessful
170. Global Witness, 'Global Witness Takes UK Government to Court for Failing to List UK Companies Trading Congo Conflict Minerals for UN Sanctions' (26 July 2010).
171. Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub.L 111-203, H.R 4173).
172. Ochoa and Keenan (n 20) 134.
173. Companies with more than $10 million in assets and a class of non-exempt equity securities held by more than five hundred owners
174. Jonathan C Drimmer and Noah Joshua Phillips, 'Sunlight for the Heart of Darkness: Conflict Minerals and the First Wave of SEC Regulation of Social Issues' (2010) 6 Human Rights and International Legal Discourse 145-146
175. citing 15 U.S.C §§781(g)780(d), Relief from Reporting by Small Issuers, 17 C.R.R parts 240, 249, Release No 34-37157, File No S7-16-95, 1.
176. Ibid 140
177. Shannon Raj, 'Blood Electronics: Congo's Conflict Minerals and the Legislation that Could Cleanse the Trade' (2011) 84 Southern California Law Review 1002-1005.
178. SEC 17 CFR PARTS 240 and 249b, Conflict Minerals, Final Rule, (August 2012). In December 2010 the SEC published and opened for consultation a Proposed Rule (17 CFR Parts 229, 249). Numerous NOGs, companies and business associations participated in the consultation and engaged in intense lobbying. The final version of the Rule should have been passed by April 2011.
179. Section 1502(b)(p)(1)(A) and (b)(p)(2). In its Proposed Rule the SEC estimated that 5,994 issuers will be affected by the new obligations but only 1, 199 will be obligated to furnish reports, SEC Proposed Rule, (n 115) 80966.
180. Section 1502(e)(4), the provision also includes 'any other mineral or its derivatives determined by the Secretary of State to be financing the conflict in the DRC or an adjoining countries.' For the definition of adjoining countries see, Section 1502(e)(1).
181. Section 1502(b)(p)(1)(A)(ii)
182. Section 1502(b)(p)(1)(D).
183. Th is is clearly established in the Final Rule (n 115) 20-32.
184. Section 1502(b)(p)(1)(A) and (b)(p)(2). Section 1502 does not define what 'necessary to the functionality or production' of a product means. The Final Rule also considers that this determination depends on the circumstances thus abstains to provide a definition, but at least contains certain guidance to issuers.
185. Final Rule (n 115) 25.
186. Section 1502(b)(p)(1)(A) and Final Rule (n 115) 26. The Final Rule clarifies that if during the due diligence exercise it determines that its necessary minerals do not originate from DRC or come from recycled or scrap sources a full Conflict Minerals Report is not necessary.
187. Section 1502(b)(p)(1)(A), (B)
188. Final Rule (n 115) 183.
189. SEC Proposed Rules (n 115) 80961-80962.
190. See the 'Joint Letter from the ICGLR, OECD and UN Group of Experts: Multi -stakeholder Letter to the US Securities and Exchange Commission' (July 2011), expressing the support from the civil society, industry and trade organizations that participate in the multi-stakeholder forum for conflict-free mineral supply chains convened by the three bodies.
191. Global Witness, 'Briefing Document: The Dodd Frank Act's Section 1502 on Conflict Minerals' (16 September 2011).
192. Final Rule (n 115) 206. The OECD Due Diligence Guidelines are also suggested as the framework to be used by the independent auditor when determined whether the issuer followed national or international standards of due diligence, 214.
193. Section 502(b)(p)(1)(E).
194. Ochoa and Keenan (n 20), suggest it could potentially be used for litigation under the Alien Tort Claims Act, 146.
195. Final Rule (n 115) 117.
196. Section 1502 (c).
197. Section 1502 (c) (1) (B)(ii).
198. Section 1502 (c) (1) (B)(iii).
199. Ochoa and Keenan (n 20) 142-143.
200. The main aim of securities regulation is to protect investors, whilst the rationale behind Sections 1502, 1503 and 1504 is clearly different, see, for example, Drimmer and Phillips (n 113) 150-153 and Raj (n 114) 1006.
201. Several NGOs have organised public awareness campaigns and citizens petitions and engaged in intensive lobby towards the SEC.
202. SEC, Memorandum, Public Comment File on Dodd-Frank Act Implementation (18 November 2010)
203. Enough Project, 'SEC Recommends Rules on Conflict Minerals Regulation' (18 December 2010).
204. The industry asked for implementation to be delayed arguing that they need more time to prepare for the new disclosure requirements and insisted on the difficulty and cost of tracing minerals and exercising chain of custody due diligence on the ground.
205. IPC: Association Connecting Electronics Industries, 'Letter to the SEC, RE: Cost Estimates for Section 1502 of the Dodd-Frank Act (conflict minerals)' (14 February 2012).
206. Civil society has questioned the industries claims
207. Global Witness, 'Briefing Document' (n 126).
208. Raj (n 114) 1011-1014.
209. David Aronson, 'How Congress Devastated Congo' (New York Times, 7 August 2011).
210. Global Witness, 'Briefing Document, supra note 126
211. Enough Project, Understanding Conflict Minerals Provisions' (no date). For an exchange between a company on the ground and a local representative see OECD Insights Blog, available at http://oecdinsights.org/2011/10/26/conflict-minerals-congo-communities-say-support-dodd-frank/ (10 October and response 26 October 2011).
212. Global Witness, has sustained that there has been considerable fear-mongering and spreading of misinformation about the Act's requirement and likely impact.
213. 2011 Final Report (n 90) 333.
214. Ibid paras 368ff.
215. ICGLR, 'Pact on Security, Stability and Development in the Great Lakes Region' (adopted 14- 15 December 2006, entered into force on 21 June 2008)
216. ICGLR, 'Protocol Against the Illegal Exploitation of Natural Resources' (30 November 2006).
217. Chaloka Beyani, 'Introductory Note on the Pact on Security, Stability and Development in the Great Lakes Region' (2007) 46 International Law Materials 173-174.
218. The ICGLR was created in 2000 and is composed by the 11 African States of the region- Angola, Burundi, Central African Republic, Congo, DRC, Kenya, Rwanda, Sudan, Uganda, Tanzania and Zambia.
219. Art 8, on the issue of the definition of illegal exploitation of natural resources see, (n 11).
220. Art 8(2).
221. See, the studies cited in (n 53).
222. Art 8(3).
223. Art 9.
224. OHCHR (n 9) and Global Witness, 'Congo's Minerals Trade in Balance' (n 17) 14-15.
225. Arts 12 (a)-(f), 13 (a)-(c) establishes another set of acts that States should establish as criminal offences, specifically related with the laundering of proceeds of illegal exploitation of natural resources.
226. Art 12(g).
227. Art 15(1).
228. Art 17.
229. Arts 15(2), 7(4).
230. Art 17(4).
231. Art 16.
232. Art 17(3).
233. Art 22.
234. The regional initiative was designed in 2006, ICGLR, Regional Programme of Action for the Promotion of Democracy and Good Governance, Project No 2.2.2, Regional Initiative on Natural Resources (September 2006) and formally adopted by the Heads of State and Government by the Lusaka Declaration on Illegal Exploitation of Natural Resources (15 December 2010).
235. Ibid Disposition 2.
236. Protocol, art 11 and Certification Manual, available at www.oecd.org/dataoecd/3/0/49111368.pdf.
237. ICGLR, RINR Newsletter (n 14).
238. 2011 Final Report (n 90) para 410.
239. ICGLR, 'Regional Mine Site Database' available at https://icglr.org/spip.php?article94.
240. According to the ICGLR, RINR website, available at https://icglr.org/spip.php?article3, draft model legislation is being prepared to facilitate the domestication of the legal provisions of the Protocol into the national systems and making the certification mandatory for all companies operating in the region. For the developments in Rwanda
241. Ministerial Regulations No 002/2012/Minirena on the Regional Certification Mechanism for Minerals, 28/03/2012. According to this regulation, from December 15, 2012, designated minerals will only be able to be exported aft er a duly authorized government agent has inspected the mineral shipment and issued an ICGLR Certificate. For developments in Burundi, see ICGLR, RINR Newsletter, (n 14), whose new mining code was to be amended to comply with the Protocol.
242. Following the signature of a memorandum of understanding between the OECE and the ICGLR in 2010 the latter endorsed the OECD Due Diligence Guidance in its Lusaka Summit, see, ICGLROECD-UN Meeting on implementing due diligence recommendations for responsible mineral supply chains, (5-6 May 2011), 'Action plan for the implementation of the Guidance'
243. 2011 Final Report (n 90) para 407.
244. 2011 Final Report (n 90) para 375-379.
245. There is however ongoing problems of minerals from the DRC fraudulently tagged as being of Rwandan origin ibid para 345.
246. For critique of a certification scheme for minerals from the DRC
247. Pelin Ekmen, 'From Riches to Rags- The Paradox of Plenty and its Linkage to Violent Conflict' (2011) 3 Goettingen Journal of International Law 473-493.
248. For a discussion of the need to have a different approach than that of the Kimberley Process for the Certification of Rough Diamonds
249. Blore and Smillie (n 19)
250. Raj (n 114) 994-1000.
251. The OECD Guidelines, in the commentary to the human rights section, refers to 'integrating and acting upon the findings [of these actual and potential human rights impact assessments].' 172 The UN Guiding Principles do not expressively mention it, as the other documents do, but it clearly States that the aim of the Principles is to establish guidance (Introduction, para 11) and they do not create new international law obligations (General Principles).
252. As the OECD Due Diligence Guidelines themselves remark (n 79) Foreword 3.
253. The Canadian Bill C-300, which was ultimately not adopted, included a different approach: extraterritorially regulating mining activities through restricting access to export credits. On C-300
254. Daniel Firger, 'Transparency and the Natural Resource Course: Examining the new extraterritorial information forcing rules in the Dodd-Frank Wall Street Reform Act of 2010' (2010) 41 Georgetown Journal of International Law 1090-1093.
255. Th is is a recurrent stated aim in international policy and voluntary instruments, including the OECD Due Diligence Guidelines and its Supplements.