Business activity today stretches across borders, supply chains and communities. While it generates growth and opportunity, it can also lead to unsafe working conditions, environmental damage, displacement of communities and violations of basic rights.

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When such issues arise, the question of access to justice comes to mind. Business and Human Rights (BHR) Arbitration is one possible answer.

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BHR Arbitration

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BHR Arbitration refers to the use of arbitration to resolve disputes arising from business-related human rights impacts. Unlike traditional litigation, which takes place in courts, arbitration is a private dispute resolution process where parties agree to submit their dispute to an independent tribunal.

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In the BHR context, this mechanism is adapted to address disputes involving:

1. labour rights violations

2. environmental harm

3. displacement of communities

4. discrimination and unsafe working conditions

5. It is designed to offer a forum where such claims can be heard more efficiently, with greater procedural flexibility.

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Where do the Hague Rules on Business and Human Rights Arbitration fit in?

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The development of BHR Arbitration is closely linked to the Hague Rules on Business and Human Rights Arbitration (2019). Developed under the auspices of The Hague by an international working group, these Rules are based on the UNCITRAL Arbitration Rules. They are guided by the UN Guiding Principles on Business and Human Rights and are tailored to address disputes involving human rights impacts. At their core, they are voluntary and apply where parties consent to arbitration.

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What distinguishes the Hague Rules is their attempt to balance two competing concerns:

1. the flexibility and efficiency of arbitration

2. the need for fairness, transparency and participation in human rights disputes

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They include provisions that allow for greater transparency of proceedings and enable participation by affected stakeholders, while also incorporating safeguards to address inequality between parties.

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How is this different from traditional arbitration?

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While commercial arbitration typically focuses on disputes between businesses, BHR Arbitration expands that scope.

It introduces public interest considerations, rather than purely private disputes. It also incorporates procedural safeguards to account for power imbalances and greater transparency, where appropriate. In doing so, it adapts arbitration, traditionally a private law mechanism, to a context that involves broader questions of justice.

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In some respects, BHR Arbitration may appear similar to forms of international labour arbitration, particularly where disputes involve workplace conditions or the rights of workers across borders. However, the comparison is limited. Unlike traditional labour arbitration, which often operates within established institutional frameworks or collective bargaining systems, BHR Arbitration is not yet embedded in a uniform structure and must address questions of consent, representation and enforcement more directly. It also extends beyond labour disputes to encompass a broader range of human rights impacts, including environmental harm and community displacement. As a result, while there are points of overlap, BHR Arbitration represents a distinct and still-evolving approach to resolving business-related human rights disputes.

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Why does BHR Arbitration matter?

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For many affected individuals and communities, accessing justice through courts can be difficult due to delays, costs, jurisdictional challenges, power imbalances between parties and limited awareness of rights and remedies. BHR Arbitration, therefore, offers an additional pathway, one that provides a quicker and more flexible forum, and in some cases a more accessible alternative. 

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Importantly, it is not intended to replace courts. Rather, it exists alongside them, as part of a wider ecosystem of remedies.

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Looking Ahead

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BHR Arbitration is not a complete solution, but it may be a necessary addition. It is an evolving field and has yet to gain meaningful traction in India. Its effectiveness will depend on how it is understood, adapted and implemented within domestic legal and policy frameworks.

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For countries like India, where economic growth is increasingly tied to global supply chains, the challenge lies in recognising such mechanisms and making them more accessible to those affected by business activity. 

As conversations around corporate accountability, ESG obligations and responsible business conduct continue to develop, BHR Arbitration presents an opportunity to rethink how justice is delivered in this space.