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It’s time to build a global arbitration system to defend workers’ rights

Multinational corporations dominate the global economy, but labour laws exist at national level, with no international body to defend workers from violations in supply chains. There are growing calls worldwide for basic workers’ rights to be universally recognised and respected.Unions need to help shape this call into a global system that can hold capital to account and deliver justice to workers everywhere. How do we seek justice and remedy for the world’s workers?

Guest blog by Walton Pantland, director for organizing and campaigns and shipbuilding and shipbreaking for IndustriALL Global Union.

Many consumers are appalled to learn that the products they buy are produced by exploited workers, and have demanded action from companies and governments; the result has been a growing body of legislation governing global supply chains.

The most advanced of these is the German supply chain legislation, the Lieferkettengesetz. From 1 January 2023, workers and their advocates will be able to sue German companies in German courts for environmental and human rights breaches, including breaches of workers’ rights.

Similar legislation, less ambitious but with the same goal, exists in other countries too, and the European Commission has proposed a Directive on due diligence. If this is passed by the European Parliament, it will be transposed into the national legislation of member states.

Another avenue for remedy is the OECD Guidelines for Multinational Enterprises. The Guidelines are not legally binding, but each of the 50 adhering countries has a National Contact Point which handles grievance resolution. Negotiations are also underway for a UN Binding Treaty on Business and Human Rights.

IndustriALL’s action plan, adopted at its Congress in 2021, calls for the development of an International Labour Conciliation and Arbitration (ILCA) mechanism to enforce binding agreements between global unions and multinational corporations.

In 2016, IndustriALL and UNI Global filed an arbitration case with the Permanent Court of Arbitration (PCA) against two garment brands for violations of the Bangladesh Accord, which was initiated by the two Global Unions and ensured legally binding commitments to workplace safety in Bangladesh’s garment and textile factory following the Rana Plaza disaster in 2013. [Editor’s note: The Bangladesh Accord has now been expanded into an International Accord, focusing on health and safety in the sector. The terms of the International Accord make it legally binding because it is enforceable in the signatories’ home country.]

Based in The Hague, the PCA is an international arbitration service that can resolve contract disputes through arbitration, conciliation and mediation. The Bangladesh case was the first time it was used to resolve a dispute between global unions and multinational corporations. The first brand reached a settlement in December 2017, and the second in January 2018. In 2018, the PCA closed the case as the brands met all terms of the settlements, including paying more than US$2.3 million towards remediating unsafe conditions in Bangladesh ready-made garment factories. The Accord distributed the money to eligible factories.

While the victory was important, the process was expensive, time consuming and complex, showing that we need a better way to resolve international labour disputes. In the settlement, the brands also contributed to the global unions’ Supply Chain Worker Support Fund. This was used to fund the development of a more appropriate tool – an ILCA mechanism, based on The Hague Rules on Business and Human Rights Arbitration. The Hague Rules put into practice the UN Guiding Principles on Business and Human Rights, creating a robust tool, in line with international standards, that can be included in agreements between global unions and multinational companies.

Global Framework Agreements and a ‘patchwork of mechanisms’

The labour movement has taken national collective bargaining to a global level through Global Framework Agreements (GFAs) with multinationals. Since the first GFA was signed between the food workers’ global federation, the IUF, and the Spanish-French food giant Danone in 1988, many of these agreements have been signed.

GFAs use the collective bargaining power of the union in a multinational’s home country to extend workers’ rights to other countries where the company operates, usually guaranteeing – as a minimum – neutrality and no attempts to stop workers from unionising. However, although some GFAs have a legal basis under national law, it is difficult to enforce them in all jurisdictions. In some cases, there is no sanction for violation, except withdrawal from the agreement.

To create legally binding GFAs with a mechanism for resolving disputes, an ILCA mechanism needs to be included in global agreements. But companies are reluctant to sign binding agreements, seeing them as restrictive measures that add liabilities without adding benefit.

The closest thing to an international labour court is the International Labour Organization’s (ILO) Committee on the Application of Standards (CAS), which hears reports of workers’ rights violations during the International Labour Conference every summer. But CAS only hears complaints against governments, not companies, and has little power to sanction.

It is technically feasible for the ILO to manage global labour arbitration through an international agreement, such as the UNPCCC agreement on emissions (the Paris Agreement) or the Universal Declaration of Human Rights. However, this depends on political will from member states, which is currently lacking.

The absence of a single global system has led to a patchwork of mechanisms to hold companies to account. This patchwork is growing increasingly dense and more complex, and innovative work is being done to piece together global grievance mechanisms from existing components.

The most effective way is to negotiate global agreements that include the ILCA. But even in the absence of this, unions have been able to win justice for workers by combining legislation, OECD Guidelines, commitments made in collective agreements, company codes of practice and so on.

In the textile and garment sector, for example, there are a number of tools that unions use:

• The legally binding International Accord, which has been signed by 174 brands • The ILCA, which Accord members can use to resolve disputes • GFAs between global unions and brands • Trade union networks, which allow home country unions to raise issues on behalf of unions in producer countries • Legislation in a growing number of countries that require brands to demonstrate due diligence

Because many developing countries don’t have well developed industrial relations or social security systems, some brands have partnered with unions to develop tripartite social dialogue through the Action, Collaboration, Transformation (ACT programme. ACT includes a grievance resolution mechanism, which the parties involved – global brands, supplier factories, global unions and national unions – have agreed to accept as binding.

Many other sectors have their own components which can be brought together to address grievances in a similar way. As this increasingly dense network of laws, agreements and mechanisms grows, the framework for a global system begins to take shape.

Building political will for a global system

A challenge for a global grievance mechanism made up of a patchwork of national laws and agreements is that they are binding only in some jurisdictions. This arguably gives a competitive advantage to companies based in countries where they are free to violate workers’ rights, and creates an expensive disadvantage for companies which need to demonstrate due diligence. The most obvious example is China, where many of the world’s products are produced by workers who have no right to independent representation.

However, we should not forget that the USA has failed to ratify core ILO Conventions. Many US states have restrictive anti-union laws, and North American companies have generally failed to sign the International Accord, GFAs and other global agreements.

In the short to medium term, the focus of unions must be on building an increasingly dense network of laws, agreements and obligations to hold companies to account, including integrating the ILCA into GFAs. The more these tools are used, the more precedents will be set.

In the long term, however, we need a binding UN treaty and an ILO Convention on supply chains, as well as a global system of arbitration, managed through the ILO or a separate panel along the lines of the IPCCC. The best way to achieve the political will for this is to demonstrate that a global system is less complex and more just than a patchwork of cobbled together standards.

It is in the interests of companies and countries to insist on a level playing field for workers’ rights, in the same way that the World Trade Organization does for trade.

The best dispute resolution is local. A global arbitration system would function by supporting the development of robust national arbitration systems, with independent unions, employers’ associations and national governments aiming to resolve disputes at the lowest level possible: ideally at the workplace, through the involvement of the union. If this fails, remedy could be sought through the national arbitration system, and only as a last resort through the global system.

For this to work, countries also need to develop social security systems that can distribute remedies to workers, as well as unemployment payments, pensions and so on.

There are growing calls worldwide for basic workers’ rights to be universally recognised and respected. Many workers in developed countries have seen the link between exploitation in developing countries, and lower wages and the erosion of their rights at home. Global labour standards stop the race to the bottom and protect workers everywhere.

Unions need to help shape this call into a global system that can hold capital to account and deliver justice to workers everywhere.

First published in Equal Times, reused with permission of the author.


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