The Bangladesh Accords - A Sustainable Model For Business And Human Rights Disputes
Author: LawSphereX
Category: Constitutional & Human Rights
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THE BANGLADESH ACCORDS: A SUSTAINABLE MODEL
FOR BUSINESS AND HUMAN RIGHTS DISPUTES?
Bhumika Sanyal, BA LLB, O.P Jindal Global University
ABSTRACT
The Rana Plaza building collapse in 2013 highlighted the dire working conditions in Bangladesh's garment industry, prompting the creation of the Bangladesh Accord on Fire and Building Safety. This paper examines the Accord's two-step Dispute Resolution Process (DRP) involving arbitration, and aims to determine whether such an alternative to conventional systems of grievance redressal is a suitable and sustainable model to resolve similar disputes in the Business and Human Rights (BHR) arena. BHR disputes are complex and sensitive, given their multiple players, interests, and locations, making their resolution challenging. Thus, there is an urgent need for innovation in BHR disputes given their frequency in an evolving corporate world with capitalist ideals, which often places profit incentives in conflict with individual rights and liabilities.
Third-world countries in the global supply chain have tended to face the brunt of such disputes, especially due to their weak regulatory mechanisms. An analysis of the Accord’s advantages as well as its drawbacks can serve as a precedent to advocate or limit such alternate dispute resolution mechanisms, and determine the effectiveness of binding, inclusive and enforceable governance agreements set up by private ordering. Keywords: Bangladesh Accord, Business and Human Rights, Dispute Resolution Process, Arbitration, Transnational Disputes, Corporate Social Responsibility, Governance Framework, Sustainability.
I.
INTRODUCTION
The Rana Plaza building in Dhaka, Bangladesh began exhibiting cracks on April 23, 2013. The clothing factories in the building housed major global brands such as Walmart, H&M, and Primark. The workers there were told to report back to work the next day or risk losing a month's wages, while some other businesses in the building immediately closed. The building ultimately collapsed on April 24th, leaving over 2,000 people critically injured and 1,134 people dead. Later, it was found that the factories' floors had been constructed without a proper permit. Not only was the collapse of the Rana Plaza building the deadliest accident to ever occur in a garment factory, but it was also the deadliest structural failure accident in the annals of modern human history1.
Such incidents are increasingly common in a rapidly globalising world, where the regime of profit in a capitalist society drives Multinational Companies (MNCs) to countries where they can outsource resources, from raw material to labour. These companies, which are largely based in developed countries, look outside the boundaries of their own countries with strict regulations and expensive markets, to jurisdictions majorly in developing countries, for obtaining resources at a cheaper price and in larger quantities. They establish sweatshops, which are particularly prevalent in the Ready-made Garment Industry (RMGs), where factories employ manual workers at extremely low wages and for long hours, and under very poor conditions.
Thus, there are growing concerns regarding the working of such factories in the global supply chain, and the externalities that they pose, both positive and negative in nature. There are complex dilemmas, where the outsourcing countries deal with balancing employment, investment, and income, with labour, human rights, and environmental concerns. This has led to the growing arena of Business and Human Rights (BHR) disputes which deal with these negative externalities of global businesses on the Human Resources. The issue then arises with how to resolves such complex disputes, involving multiple claims that can often not even be tangibly represented in terms of their impact; different laws and jurisdictions; and the numerous stakeholders with multifaceted interests, who are often in an unbalanced position to have their grievances addressed.
The Rana Plaza incident led to the 1 Maweni R and Maweni R, Arbitrating Human Rights Disputes: The Proposal for Business and Human Rights Center on Sustainable Investment), https://ccsi. columbia. edu/news/arbitrating-human-rights-disputes-proposalbusiness-and-human-rights-arbitration-rules-and.
formulation of the “Bangladesh Accord on Fire and Building Safety” (the “Accord”). This “Bangladesh Safety Program is a legally binding Global Framework Agreement between global brands, retailers, and trade unions to ensure worker health and safety in the Bangladeshi textile and garment industry”2. The signatories to the agreement committed to the “goal of a safe and sustainable Bangladeshi RMG and other related industries in which no worker needs to fear industrial accidents that could be prevented with reasonable health and safety measures. ”3 Among the various features of the Accord, is the introduction of a provision for a two-step Dispute Resolution Process (DRP), wherein the ultimate resolution is provided by a ‘final and binding arbitration process.
’ This is a first of its kind solution for BHR disputes, and there are two disputes that have already been successfully settled through such arbitration as per the Accord. The Accord thus provides an alternate to conventional grievance redressal mechanisms involving issues of global players in a globalised economy, leading to the ultimate question this paper aims to explore, that whether arbitration of such Business and Human Rights issues is a suitable and sustainable model for dispute resolution? II.
CHALLENGING
CONVENTION
THROUGH
INNOVATION
IN
RESOLUTION
A. Wide reach:
Various international players recognise the need for states and business to provide effective remedies, whether judicial or otherwise, to tackle the violations in the growing BHR dispute arena, which severely lacks governance. In the case of the Rana Plaza tragedy, businesses came together to produce the Bangladesh Accord for effective grievance redressal. Along with numerous trade unions, including two international trade unions and eight Bangladeshi trade unions, the Accord was voluntarily signed by more than 220 international apparel brands, retailers, and members of over 20 countries in Europe, North America, Asia, and Australia4. It includes two million workers and more than 1,600 factories in Bangladesh. This indicates the willingness of individuals and corporations to embrace alternate dispute resolution mechanisms
2 Accord on Fire and Building Safety in Bangladesh, 2018.
3 Accord on Fire and Building Safety in Bangladesh, 2018.
4 Maweni R and Maweni R, Arbitrating Human Rights Disputes: The Proposal for Business and Human Rights Center on Sustainable Investment), https://ccsi.columbia.edu/news/arbitrating-human-rights-disputes-proposalbusiness-and-human-rights-arbitration-rules-and.
and the system’s ability to cater to mass claims, and not just individual, specialised claims.
B. Scope:
The Accord places an obligation on companies that are signatories to the agreement to bear the costs of improving fire and safety standards by accepting 'safety inspections, remediations and fire safety training' in the factories where they source their supplies based on a tier system. In the event that signatory corporations fail to fulfil their commitments under the Accord to provide and maintain safe and non-hazardous working conditions, the DRP provides for a twostep process where wherein signatory labour unions may file claims. Initially, the Steering Committee (SC) led by a representative of the International Labour Organisation (ILO) and made up of representatives from international brands and trade unions determine the claims.
A member of the Accord secretariat also conducts an initial investigation on behalf of the parties and presents the facts and recommendations, to supports the Committee’s decision-making. The DRP also includes the option for parties to engage in mediation. The committee's decisions can then be appealed by either party through a ‘final and binding arbitration process’ as the final step5. This DRP is thus comprehensive and considers the interests of both public and private adversarial parties. Both sides are given the opportunity to be heard and represented in the Committee, while also abiding by international conventions through a non-legal and stakeholder driven process. It allows for party autonomy by giving them the chance to resolve the dispute on their own terms and with a more favourable outcome for both.
Arbitration is the last resort subject to a party being dissatisfied with the Committee’s decisions. International arbitration in itself, offers parties the autonomy and flexibility to modify procedures to adapt to the needs of their specific dispute, while also selecting an independent neutral body where they can choose their own decision-makers. Thus, the Accord acknowledges both the public and private roles of international arbitration by expanding its scope to include State and non- State stakeholders as partners in guaranteeing uniform fire and building safety practices of 5 Maweni R and Maweni R, Arbitrating Human Rights Disputes: The Proposal for Business and Human Rights Center on Sustainable Investment), https://ccsi. columbia. edu/news/arbitrating-human-rights-disputes-proposalbusiness-and-human-rights-arbitration-rules-and.
supply chain operators, such as those in Bangladeshi garment manufacturing6. C. Remedying procedures:
The 2013 Accord suffered from certain procedural fallacies, many of which have since been remedied and amended upon the renewal of the Accord in 2018, pursuant to the two arbitration disputes. Two non-governmental labour union federations, IndustriALL Global Union, and UNI Global Union (the "Claimants"), filed notices of arbitration against two international fashion brands (the "Respondents") in July and October of 2016. The Parties decided to combine both arbitrations while maintaining their formal distinction, which would be heard by the same three-person tribunal. Together, they applied to the Permanent Court of Arbitration (PCA) for resolution. The arbitration was suspended in 2018 after reaching settlements in both cases.
The decision permitted the claims brought by the unions against the Respondents to remediate their facilities to comply with fire and building safety as provided for in the Accord, and to provide hazard pay for workers, while rejecting the Respondents’ objection to jurisdiction and admissibility7. The 2013 Accord's Article 58 remained silent on the method of the appointment of arbitrators9. Having each nominated one arbitrator to the three-member tribunal, the Parties to arbitrations were unable to reach a consensus regarding the appointment of a presiding arbitrator. An appointing authority may designate the presiding arbitrator in the event of a deadlock, but the name of this appointing authority was absent.
The applicable procedural rules may provide a default appointing authority that may designate an appointing authority if parties have neglected to choose one in their arbitration agreement10. Article 5 provided that the 6 Desierto DA, Gibson CH and Stipanowich TJ, A Model for Business and Human Rights through International Arbitration under the Bangladesh Accord: The 2017 Decision on Admissibility Objection in Industrial Global Union and UNI Global Union) (Nov. 12, 2017) (Kluwer Arbitration Blog), https://arbitrationblog. kluwerarbitration. com/2017/11/28/model-business-human-rights-international-arbitrationbangladesh-accord-2017-decision-admissibility-objection-industrial-global-union-uni-global-union/> accessed
10 April 2024.
7 Desierto DA, Gibson CH and Stipanowich TJ, A Model for Business and Human Rights through International Arbitration under the Bangladesh Accord: The 2017 Decision on Admissibility Objection in Industrial Global Union and UNI Global Union) (Nov. 12, 2017) (Kluwer Arbitration Blog), https://arbitrationblog.kluwerarbitration.com/2017/11/28/model-business-human-rights-international-arbitrationbangladesh-accord-2017-decision-admissibility-objection-industrial-global-union-uni-global-union/> accessed
10 April 2024.
8 The Bangladesh Accord on Fire and Building Safety, 2013.
9 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135.
10 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135.
UNCITRAL Model Law on International Commercial Arbitration shall govern the arbitration, however, since the UNCITRAL Model Law was not intended to serve as a stand-alone set of arbitration rules, and is simply meant to guide states in "reforming and modernising their laws in arbitral procedure,” it is not useful in establishing an appointing authority11. This was remedied by the Parties agreeing to apply the 2010 UNCITRAL Arbitration Rules to the arbitrations. Subsequently, the Parties asked the PCA Secretary-General to assume the role of appointing authority in compliance with a mutually agreed list procedure. Other vital procedural omissions in the Article were the administrating arbitral institution, the law that would apply to the interpretation of the Accord, and the seat of the arbitration. The Parties' agreement remedy these to some extent.
The Parties consented to Hague serving as the arbitration's seat and to the PCA's administration of the dispute. These procedural decisions have been added to the 2018 Accord, which also provides that it “shall be governed by the law of the Netherlands”12. Apart from clarifying such procedural issues, the arbitration agreement also lends clarity to the arbitration process itself. It held that arbitration is available as recourse to either party wishing to appeal, irrespective of the SC producing a tie, majority, or unanimous decision, and that it would involve the “full fact-finding and law-deciding authority of standard arbitral processes”13.
D. Transparency:
The arbitration agreement also dealt with issues of transparency, since arbitration is generally confidential in nature, unless parties consent to them the proceedings being public. The Claimants sought “full transparency” due to the public interest nature of the dispute, while the Respondents sought “full confidentiality” as per conventions of international commercial arbitration and for protecting their reputations. Recognising the unique nature of the dispute that could not be characterised as a purely public law dispute, a traditional commercial arbitration, or a typical labour dispute, and considering the ‘genuine public interest in the Accord’14, the Tribunal refrained from blanket confidentiality, which was confined only to the
11 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135.
12 Accord on Fire and Building Safety in Bangladesh, 2018.
13 Procedural Order No. 2 (4 September 2017) 14 Procedural Order No. 2 (4 September 2017) [93-94]. The Tribunal noted a ‘number of features distinguish the Accord from such categorizations, including (a) the creation of the Accord in the wake of the Rana Plaza tragedy; (b) the number of signatories to the Accord
identity of the respondent companies, and most of the procedural aspects and decisions were publicised. It thus maintained a “balance between protecting the interests of the brands and disclosing information that is in the interest of third-party stakeholders”15. This is a fine line difficult to draw in BHR Disputes, which should ideally follow a full transparency regime due to public interest and stakeholder concerns, however certain discretion must be allowed to Tribunals to decide the level of transparency as per nature of the disputes and the parties involved, to make arbitration a favourable form of dispute resolution for both parties.
E. Enforcement:
The Accord resolves the common issue of enforceability of arbitral awards by expressly stipulating that awards “shall be enforceable in a court of law of the domicile of the signatory against whom enforcement is sought and shall be subject to the New York Convention where applicable”16. This creates a structural difference between earlier paradigms aiming to tackle the issue of negative externalities of global supply chains, like through corporate social responsibility, by presenting a new alternative in the form of a binding and enforceable contract which directly benefits the workers in the supplying factories. It is thus “inclusive of thirdworld actors and allows them to enforce the agreement,” and replaces “the earlier reliance on lack of privity by proactive private ordering”17.
This inclusive paradigm creates a more equitable system for workers in third-world countries who can have their interests represented and grievances addressed through a neutral and independent process.
F. Landscape:
Arbitration as a DRP in the Accord is particularly significant given the geopolitical climate and other socio-economic factors in Bangladesh, which contributed to the frequency of garment sector disasters in the country.
“The rule of law is seriously wanting: ‘The judiciary is not (over 200 as at the date the arbitrations were commenced); (c) the number of supplier factories affected by the Accord (over 1600); (d) the number of workers in the [RMG] industry protected by the Accord (over 2 million); (e) the involvement of international organizations in the negotiation and governance of the Accord (including the ILO); (f) the involvement of States and State entities in the negotiation and oversight of the Accord (including the government of Bangladesh); (g) the involvement of Bangladeshi and international nongovernmental organizations as witnesses to the Accord and in an advisory capacity; and (h) the public nature of the Accord itself and many associated documents, as well as detailed information about factory remediation under the Accord’
15 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135.
16 Accord on Fire and Building Safety in Bangladesh, 2018.
17 Salminen J, The Accord on Fire and Building Safety in Bangladesh: A New Paradigm for Limiting Buyers’ Liability in Global Supply Chains? (2018) 66 The American Journal of Comparative Law 449.
independent. Contract enforcement and dispute settlement are inefficient. Corruption and criminality, weak rule of law, limited bureaucratic transparency, and political polarisation have undermined government accountability. ’ The garment manufacturing sector is vast and powerful. It accounts for more than 80 per cent of total exports. Bangladesh is also a very lowwage economy. ”18 This indicates that conventional judicial methods may be inefficient in resolving such mass claims in transnational litigation involving multiple players with various interests, especially when they include powerful, private global entities. International law as a soft law instrument has also lacked in providing effective redressal to victims.
In such a scenario, the Accord allows the private ordering of such BHR Disputes, which is more likely to ensure compliance, especially through binding and enforceable contracts, thus also working in favour of labourers and public entities. Therefore, the Bangladesh Accord does provide a sustainable model for resolving BHR disputes through arbitration, by providing a binding, enforceable and inclusive governance contract benefitting both parties. III.
RESOLVING PRACTICAL UTOPIA
A. Procedural omissions:
The Accord Arbitrations showcased some of the procedural shortcomings of the 2013 Accord. As for the governing law of the Accord, the Respondents claimed it to be governed by Bangladeshi law, while the Claimants claimed application of Dutch law. As a result, the Parties were unable to agree on which law would apply to the dispute. The Tribunal was not required to decide on this matter as the Accord Arbitrations were terminated. From the foregoing discussion, it is clear that parties, at the time of conclusion of commercial contracts and agreements with Business and Human Rights aspect, should ensure the following items are covered by the arbitration clause: “(i) the law applicable to the dispute; (ii) the seat of the arbitration; (iii) a trusted appointing authority; and (iv) administrative support from experienced arbitral institutions.
”19 A number of these issues were settled by agreement between the Parties to the Accord Arbitrations, relieving the Tribunal or the Secretary-General 18 Dunning G, The Bangladesh Accord – a Model for Environmental Dispute Resolution? (Sept. 7, 2018) (The Environmental Pollution and Small States Conference), accessed 4 April 2024.
19 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135.
of the PCA in his capacity as appointing authority of the responsibility to decide on the validity and efficacy of the arbitration clause20. However, this is an ideal situation, which may not be true for other cases, where letting adversarial parties determine the arbitration's parameters in a contentious environment, given the dispute, could present challenges such as delays in arbitration. B. Party autonomy:
A vital element of arbitration is party autonomy, which includes consent of both parties for
arbitration. In the present case, there were situation specific factors which led to the signing of the Bangladesh Accord by global brands, retailers, and labour unions. The US legal system, particularly the easy access to funded class actions, and the possibility of liability attaching not only for breaching the terms of the Accord but also for damages directly resulting from supply chain incidents like the Rana Plaza disaster, contributed to many large US brands choosing not to sign the Accord21. Thus, in other circumstances or industries as well, it is unclear whether powerful MNCs find agreements like the Accord, a sufficient incentive to participate in such a DRP and hold themselves accountable, especially in a manner that allows their workers in supplying factories to enforce these contracts against them. C. Mass claims:
The arbitrability of mass claims is also contentious, given its multiple players and interests, especially in transnational disputes. In the present arbitrations, the Parties in the two disputes deciding to join their proceedings “ensured that similarly situated aggrieved workers and factories would be subject to consistent outcomes and interpretations of the relevant instrument.”22 Other technical issues still had to be decided by the Tribunal, involving jurisdiction, liability of the Respondents, or the imposition of costs and distribution of compensation, such as hazard pay to workers or remediation amounts to individual factories. The calculation of these sums involving intangible damages and placing a price on human life;
20 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135. 21 Dunning G, The Bangladesh Accord – a Model for Environmental Dispute Resolution? (Sept. 7, 2018) (The Environmental Pollution and Small States Conference), accessed 4 April 2024.
22 Levine J and Ambast A, The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights
Disputes (2020) 1 Transnational Commercial Law Review 122. DOI:10.26494/TCLR12020116-135.
and ensuring that such amounts are equitably distributed and actually received by those affected poses a challenge.
D. Confidentiality:
The realities of worker remedies are also murky give the lack of transparency in these contracts. It is undetermined if the intended third-party beneficiaries would be aware of the rights provided in the Accord or by the arbitration agreements, let alone be able to exercise them. The outcome of these disputes and whether the Accord actually offers a reasonable and fair adjudication of business and rights-related issues is undecided as a result of this lack of transparency23. The Accord expressly refers to the need for balancing “transparency and commercial sensitivity”24, and the agreement too ultimately kept the identities of the respondent companies confidential, making the information about safety compliance by workplaces public, while keeping the performance of companies itself private.
“The Respondents argued the irreparable reputational damage that the ‘mere disclosure of the existence of the arbitrations’ might bring to them. ”25 These measures go against accountability by MNCs for their profit motive, and disallows workers autonomy to choose what company to produce for. The accountability and disproportionate power balance is exacerbated given that the Accord is almost entirely privately funded and operated, existing independently of domestic and international laws.
E. Specificity:
There were certain factors specific to Bangladesh that contributed to the Accord’s success. Political, commercial, and moral pressure to address BHR impacts such as safety and working conditions of the RMG industry have been underway for decades, which reached its peak after the Rana Plaza tragedy. Other industries have lacked the same pressure in terms of duration and intensity, which questions the likelihood of MNCs willingly undertaking arbitration of such sensitive disputes on a global-scale26. The pressure was also heightened here, given the popular 23 Maweni R and Maweni R, Arbitrating Human Rights Disputes: The Proposal for Business and Human Rights Center on Sustainable Investment), https://ccsi.columbia.edu/news/arbitrating-human-rights-disputes-proposalbusiness-and-human-rights-arbitration-rules-and.
24 Accord on Fire and Building Safety in Bangladesh, 2018.
25 Procedural Order No. 2 (4 September 2017) 26 Maweni R and Maweni R, Arbitrating Human Rights Disputes: The Proposal for Business and Human Rights
brands involved and the scale of the disaster. “The problem of poor safety conditions was also concentrated in a single and relatively geographically confined territory”27, which made the issue easier to tackle. The Accord also hinges on collective action by private companies, which at the international level, is even harder to achieve. Despite recognising its importance, global governance without global government structures to support it is a challenge, and lacks accountability. In the Accord, “the signatory companies took it upon themselves to internalise the cost of cheap and unregulated labour in Bangladesh, and were prepared to do so (in part) because their competitors were also doing so”28, which questions the intentions of the companies to actually right their wrongs.
F. Transitory:
The hazardous working conditions in Bangladesh’s RMG sector were never intended to be permanently resolved through the Bangladesh Accord. As a stopgap measure to improve working conditions and safety, it was intended to be used until national labor standards were raised and the regulation of the RMG industry could be safely transferred to a national regulatory body. Therefore, the Accord’s success is dependent on its renewal subject to agreement by signatories, which may be prone to variations. G. Liability control:
The ability to control the liability that is permitted by an enforceable governance agreement like the Accord may be greater than the ability to do so in rigid privity contracts. From this angle, the Accord can be criticised as the beginning of a new corporate social responsibility (CSR) paradigm that gives purchasers additional tools for managing liability across their international supply chains. Furthermore, there is a whitewashing effect of the new paradigm towards adjudicators, regulators, and consumers. It can be argued that it targets first-world consumers with its promises of decent labour conditions, but in practice, these mechanisms are non-binding, at least as far as third-world labourers’ realities are concerned. The integrity of Center on Sustainable Investment), https://ccsi. columbia.
edu/news/arbitrating-human-rights-disputes-proposalbusiness-and-human-rights-arbitration-rules-and. 27 Dunning G, The Bangladesh Accord – a Model for Environmental Dispute Resolution? (Sept. 7, 2018) (The Environmental Pollution and Small States Conference), accessed 4 April 2024. 28 Dunning G, The Bangladesh Accord – a Model for Environmental Dispute Resolution? (Sept. 7, 2018) (The Environmental Pollution and Small States Conference), accessed 4 April 2024.
the four-corners private ordering of transnational contracts, like the Accord, may be valued by courts and arbitral tribunals more highly than domestic legal safeguards29. Therefore, the fairness of mechanisms like the Accord can be questioned, for it fails to recognise its inherent power structures. Therefore, while the Bangladesh Accord provides an innovative alternative to conventional dispute resolution, the realities of its working, in terms of its practicality and who its ultimate beneficiaries are can be questioned, which damages its sustainability as a model for resolving BHR disputes. IV.
CONCLUSION
Various international players have deemed the Bangladesh Accords a great success, evident from the multiple global brands and retailers that have signed it, along with labour unions, indicating terms agreeable to both parties’ interests. There has also been a marked improvement in working conditions in Bangladesh, with a considerable decrease in incidents like the Rana Plaza disaster, which were earlier commonplace in the RMG industry. The Accord has also largely abided by its terms, with many factories having undergone inspection and remediation, and its workers having been provided training and grievance redressal mechanisms. This demonstrates how legally binding processes can make multinational corporations answerable, and the settlements reached prove the legitimacy of the arbitration procedure provided by the Accord.
The voluntary codes of conduct and monitoring systems that brands and retailers continue to use around the world as their main means of controlling the reputational risk arising from the subpar working conditions in the nations from which they choose to source their clothing are being challenged by providing an alternative that is enforceable and inclusive, allowing workers in third-world countries a stake in their own well-being. They are equal right bearers with a role in decision-making, which is especially important in regulating BHR disputes. It creates an obligation on the part of powerful MNCs to have a certain mandatory due diligence when it comes to essential matters affecting human rights, such as workplace safety.
Even if the intent of MNCs is to control liability or protect reputation, some liability and 29 Salminen J, The Accord on Fire and Building Safety in Bangladesh: A New Paradigm for Limiting Buyers’ Liability in Global Supply Chains? (2018) 66 The American Journal of Comparative Law 411.
accountability is better than none. In the larger scheme of labour rights, a mechanism that ensures their safety in the workplace is more essential than the publicity of non-complying companies. In a profit driven world, MNCs can view remediation costs as an investment in terms of the returns available through the long-term viability of suppliers, and by saving huge costs resulting from non-compliance. Moreover, purchasers are increasingly concerned about brand image and values, which influence their consumer behaviour. The Accord also allows these private players to set the terms of their own compliance, so though there is an underlying power imbalance tilted against workers, there is some assured redressal due to the binding and inclusive nature of the agreement.
The parties’ interests are adequately represented through arbitration, and it allows them flexibility to tailor the procedures as per BHR disputes, which are sensitive and complex in nature. The Accord’s success is proof that collective action is attainable, and that BHR disputes having public interest can be arbitrated as long as there is collective agreement to set up contractual terms and obligations that will have binding character. It also establishes governance structures for supply chain management, which are particularly lacking in these third-world supplier countries with weak regulatory mechanisms. The wider reach of this Accord can be observed by the 2018 version providing for its application in ‘other related industries’ as well.
More significantly, the Bangladesh Accord was adopted into the “International Accord for Health and Safety in the Textile and Garment Industry”30 in 2021, which is of a global character, and not just limited to Bangladesh. Thus, the innovation of this Accord as a DRP through arbitration is worth serious consideration and has great scope for wider application in the BHR space. Any innovation is subject to shortcomings, and must have a degree of idealism. These shortcomings can be remedied and the mechanism can be made more practical with time and its increased usage, so that specific faults can be addressed. It is a viable alternative to conventional systems of adjudication, which can always serve as a recourse for intervention in case of any violations.
Moreover, in cases where these judicial and government authorities are lacking, which is common in BHR disputes, these mechanisms serve as an effective substitute to ensure at least some remedy to victims. Considering the sui generis category of BHR disputes which have distinct procedural
30 The International Accord for Health and Safety in the Textile and Garment Industry, 2023.
considerations, the flexibility offered by arbitration proves it is a valuable and sustainable model for their resolution, especially in the evolving corporate world.