Five on Friday – Five Recent Developments that We’ve Been Watching Closely

It’s Friday and time for another overview of developments in the field of business and human rights that we’ve been monitoring.

This week’s post includes: new private and public initiatives on recruitment fees, including a proposal to further amend the U.S. Government’s Federal Acquisition Regulation to provide a clear definition of such fees; the dismissal of a lawsuit brought by victims of the Rana Plaza factory collapse; and an update to the U.K. Government’s National Action Plan to implement the U.N. Guiding Principles on Business and Human Rights.

  • On May 9, the Second Circuit denied a request for en banc review of its December 2015 decision in In Re: Arab Bank, PLC Alien Tort Statute Litigation. In the December decision, the Second Circuit dismissed plaintiffs’ claims, relying on its 2010 decision in Kiobel v. Royal Dutch Petroleum (2d Cir. 2010) (“Kiobel I“) in holding that the law of the Circuit still holds that plaintiffs cannot bring claims against corporations pursuant to the Alien Tort Statute. This month’s decision, which includes four separate opinions, reflects a deeply divided court, with those supporting en banc review arguing that “this circuit yet again misses an opportunity to correct” Kiobel I, while those in favor of the denial suggest that the court in In Re: Arab Bank could have — and should have — relied on the Supreme Court’s decision inKiobel v. Royal Dutch Petroleum (S. Ct. 2013) (“Kiobel II“) to dismiss the case. Ultimately, those in favor of the denial prevailed while suggesting both that”the Arab Bank panel opinion steered deliberately into controversy” and that en banc review “would do nothing but supply catnip for law clerks looking to teach.”
  • On May 4, a federal District Court judge in Delaware dismissed a lawsuit brought by victims of the April 2013 Rana Plaza factory collapse against J.C. Penney, The Children’s Place, and Wal-Mart. The court found that Bangladesh law governs with regard to the statute of limitations applicable to plaintiffs’ claims as Bangladesh as the “most significant relationship” to the claims at issue. The Bangladesh Limitation Act imposes a one-year statute of limitations for personal injury and wrongful death claims arising from alleged negligence. Plaintiffs filed suit in July 2015 and thus, the Court found, plaintiffs’ claims must be dismissed. The Court also found that plaintiffs had failed to state a prima facie case for negligence as they did not demonstrate that defendants owed a legal duty of care to plaintiffs under Delaware law.
  • On May 4, five companies announced the formation of a new initiative, the Leadership Group for Responsible Recruitment. The five founding companies of the Leadership Group are The Coca-Cola Company, HP Inc., Hewlett Packard Enterprise, IKEA, and Unilever. At the core of the initiative is the “Employer Pays Principle” which states that the costs of recruitment should be borne by employers and not by workers. The companies have committed to championing this Principle within their respective industries, including by developing a practical roadmap for companies seeking to implement the Principle with suppliers and sub-contractors. The Leadership Group was convened by the Institute for Human Rights and Business. Other founding members including the Interfaith Center for Corporate Responsibility, the International Organization for Migration, and Verité.
  • On May 11, the U.S. Department of Defense, the General Services Administration, and NASA issued a notice of proposed rulemaking to amend the Federal Acquisition Regulation (“FAR”) to provide further definition of “recruitment fees.” The proposed change would further strengthen implementation of Executive Order 13627 (“Strengthening Protections Against Trafficking in Persons in Federal Contracts”) and Title XVII of the National Defense Authorization Act for Fiscal Year 2013 (“Ending Trafficking in Government Contracting”). The notice of proposed rulemaking cites the need for greater clarity on the definition of recruitment fees, which are prohibited pursuant to amendments to the FAR released in January 2015. Those amendments established new anti-human trafficking requirements for U.S. government contractors. Comments on the notice are requested on or before July 11, 2016.
  • The U.K. Government recently published an update to its National Action Plan to implement the U.N. Guiding Principles on Business and Human Rights. The update outlines what the United Kingdom has done to implement its plan since its original publication in 2013 and looks ahead to what it will do going forward. It also observes that “[s]ince the UK’s National Action Plan was published there has been an increased emphasis within the business community on the importance of reporting, benchmarking companies’ social and ethical performance, and corporate transparency.” Throughout the update, the United Kingdom emphasizes its commitment to encouraging U.K. companies to respect human rights — citing its intention to ensure that the E.U. Directive on non-financial disclosure is effectively implemented in the United Kingdom as one example of this commitment.