Elise Groulx is a recognised business and human rights lawyer (ranked at the very top, as an eminent practitioner, by Chambers and Partners) and also an international mediator with more than 10-year experience on issues of responsible business conduct and legal liability, and also international labour conflicts. Also specialist of conflict affected areas and weak governance zones as an international criminal lawyer. Also experts in access to remedy and dispute resolution.
Patrick Miller is an international commercial lawyer concentrating on dispute resolution, with an emphasis on business & human rights issues. He works primarily with nonprofits and social impact companies – and has worked with international firms in the US, Europe and Asia. Given his experience abroad, his involvement in the social business movement and his commercial background, he is able to provide strategic guidance that addresses his clients’ legal objectives—while also focusing on companies’ responsible business commitments.
Pam Ly is an attorney licensed in New York and Washington, D.C. and a CEDR-Accredited Mediator based in San Diego, California. Pam has nearly 20 years of experience serving in various capacities within the legal profession across both public and private sectors and is the founder of LYNC Mediation Global, LLC. The practice focuses on advisory and mediation services committed to resolving a broad range of business-related disputes—particularly in regions where access to remedy is limited for affected stakeholders.
Introduction
Human rights and environmental due diligence (HREDD) is increasingly becoming utilized by companies to address their regulatory obligations to avoid importing products that have ties to forced labor arising from regulations such as: Section 307 of the US Tariff Act; the Uyghur Forced Labor Prevention Act; and the EU Forced Labor Ban.
More importantly, HREDD is fast becoming a regulatory requirement by virtue of regulations such as: the German Supply Chain Due Diligence Act; the French Duty of Vigilance; the Corporate Sustainability Due Diligence Directive (CSDDD); and other similar laws on the verge of being adopted in Europe and elsewhere.
While there has been ample written about undertaking effective HREDD, much less discussion took place as to how to resolve the disputes which will inevitably arise once human rights and/or environmental issues are uncovered.
This article aims to introduce the Model Contract Clauses as a helpful framework which allows for effective HREDD, remediation, and dispute resolution; as well as the Conflict Management Committee system, which is specifically designed to anticipate, prevent, and resolve human rights and environmental disputes in large infrastructure projects. It focuses on mapping the risks and engaging with vulnerable stakeholders from the inception of the project. Mediation is strongly encouraged when the dispute persists.
Overview of the Model Contract Clauses
The Model Contract Clauses to Protect Workers in International Supply Chains (MCCs) drafted by an American Bar Association Business Law Section working group, as well as those provided in the Responsible Contracting Project’s toolkit, are key tools to operationalize a company’s responsible procurement strategy.
These frameworks help to establish a relationship that facilitates compliance with the various human rights and environmental obligations that companies have taken on of their own accord, as well as those prescribed by various regulations around the world. They do this primarily by setting out a comprehensive set of obligations facilitating effective HREDD.
Importantly, when proper HREDD is undertaken, it is inevitable that certain issues will be uncovered given the state of various international supply chains. For this reason, the contractual frameworks also allow for effective remediation as well as dispute resolution.
For example, the MCCs include a number of clauses which set out how an issue must be remediated, who has responsibility for such remediation, how it will be monitored, and who will decide when remediation is complete.
The MCCs also provide for an orderly dispute resolution system which call for negotiations at both the operational and executive levels, before any formal procedures are commenced.
There is also a provision on mediation before invoking more adversarial procedures such as arbitration or litigation. Because such contracts will generally involve international commerce, one would expect the vast majority of dispute resolution clauses to direct the parties to arbitration and the MCCs is proposing a more effective and fairer way to deal with such disputes.
Although all parties seek to avoid adversarial procedures, one of the chief functions of a contract is to allow an efficient process to enforce obligations, particularly where there are over-arching compliance obligations requiring an incentive structure to prevent and/or mitigate harm.
Establishing Conflict Management Committees
To comply with the evolving universe of hard law and soft law obligations, respect for both “People and Planet,” and help corporate actors and investors move forward, the OHADAC/CARO Centre (Regional Arbitration Centre of the Organization for the Harmonization of Business Law in the Caribbean) supported, together with the European Union, a team of international experts to conceive and draft a new proactive, solutions-oriented dispute resolution framework with its set of rules and procedures in late 2022. The Conflict Management Committee (CMC) was launched in the fall of 2023. The objective was to advance the UN Sustainable Development Goals (UN SDGs). The CMC and its rules (CMC Rules) introduce a new generation of Dispute Board that engages stakeholders’ (especially the affected communities) participation in the conflict anticipation, prevention, and resolution process. The inclusion of “conflict management committees” in international project development agreements will help anticipate, prevent, mitigate, resolve, and remediate conflicts and harms identified before or during project development. It is also conceived to uphold the remedy pillar of the United Nations Guiding Principles on Business and Human Rights (UNGPs). The CMC proposes a system to identify harms before they degenerate and poison the realization of the project(s). It also proposes a peaceful process to remedy harms and dysfunctions early in the business relationship and to ensure the rights and interests of affected stakeholders.
The CMCs are designed to mutually benefit all relevant stakeholders – communities, companies, and investors alike – to collaborate creatively on problem-preventing and problem-solving while reducing the uncertainty and the risks that come from the unintended consequences of doing business in large global operations while ensuring an ongoing “social license to operate.” It allows businesses to identify and engage with local stakeholders and gain their trust through real and meaning participation throughout the entire project realization and business relationship cycle.
In recent years, organizations’ operational-level grievance mechanisms (OLGMs) are growing in terms of their existence and presence in many companies that adopt HREDD frameworks. They are designed to offer remedy in case of negative impact involving commercial activities. However, while OLGMs might be useful, it is quite challenging for a corporation to create its own OLGM in an effective and sustainable way. Specifically,OLGMs do not offer the neutrality necessary for the contracting parties, often between private actors, to gain trust and establish full credibility and legitimacy with the affected communities and workers due to the constant appearance and risk of actual bias in favor of the corporation that formalized these internal grievance mechanism procedures. The presence of a neutral entity with the power to investigate allegations of severe violations of human rights and environmental issues and make recommendations independent of corporate interests is key to developing trust and maintaining a sustainable license to operate over time. Mediation can also be introduced to resolve most disputes.
How Does Conflict Management Committees Work?
The CMC Rules give equal respect to the interests and concerns of local communities and businesses alike. Moreover, contracting parties can resolve their own contracting issues and ensure that affected relevant stakeholders work with CMC-qualified neutrals to achieve fair transition, sustainability, and inclusive development. This framework can be adapted globally and used effectively in a wide variety of project settings, including: energy and renewable energy (e.g., wind, solar, and hydroelectric); large infrastructure; mining, oil, and gas extraction; and mega-construction projects, such as sports facilities. For example, the social and environmental impact of large infrastructure projects have been at times the theater of “disastrous unfolding” (e.g., hydroelectric projects in North America, wind farms in Norway, and extractive projects in Latin America and Africa) where their destructive patterns and the risks they pose to local communities undermine the legitimacy, particularly in terms of health and safety, to the vulnerable populations concerned. To ensure that these projects do not result in work paralysis, the CMC framework provides a “horizon scanning” that identify problems on the various aspects of the project early in the contract negotiation stage, with full participation from indigenous people (also identified as rightsholders) and relevant stakeholders affected by the projects. Moreover, the CMC process offers strict monitoring that aligns with the public sentiment expressed by the United Nations Secretary-General, Antonio Guterres, that “the extraction of critical minerals for the clean energy revolution – from wind farms to solar panels and battery manufacturing – must be done in a sustainable, fair and just way.”
Member Composition
The CMC is composed of three neutral experts where the contracting parties to the agreement and relevant stakeholders closely collaborate to: anticipate and prevent conflict, identify harms as soon as they occurred, design a negotiated remediation process that is tailored to the parties’ business needs and simultaneously respecting local stakeholder and rightsholder interests, and carry out its implementation when a dispute arises. The CARO Centre appoints the third expert, also a subject matter expert on issues related to environmental, social, and governance (ESG), labor law, and human rights, to preside over the CMC.
The CMC Process
The process for selecting and appointing CMC neutrals should be established and confirmed by the contracting parties before the project gets started. Upon confirmation, the CMC’s initial tasks are to convene one or more organizational meetings to set the agendas, provide any impact statements, and develop a joint stakeholder engagement plan. Community interests – whether based on environmental damages, economic or social harms, or other concerns – are addressed at the very inception of the CMC process and incorporated in a stakeholder engagement plan, which provides a relationship path for contracting parties and relevant stakeholders alike, with firm commitments monitored by the CMC, and a roadmap of the recommended grievance mechanism process.
Neutrality and trust are at the heart of the CMC process. Persons serving on the CMC, whether appointed by the contracting parties or the CARO Centre, must sign an oath asserting their independence and impartiality and comply with the confidentiality requirements are expressly stated in Article 9 of the CMC Rules. Under Article 6 of the CMC Rules, a CMC-qualified neutral has an ongoing duty to disclose any conflict of interest, including social and/or economic ties to the contractual parties and/or communities where the business operations are located. Most notably, by enabling active, ongoing dialogue among all the relevant stakeholders under Article 14 of the CMC Rules, this process will foster a better understanding of the different conflict risks associated with the business operations and a more collaborative relationship with thorough consideration given to local stakeholder and rightsholder interests and needs.
The CMC’s real-time assessment and proposed resolutions throughout the project’s lifecycle also provide for a more inclusive, accessible, and affordable mediation process. This distinguishing feature is of great significance to vulnerable communities whose lives can be irreparably affected by harms suffered if left unattended. The CMC also tries to ensure that unnecessary delays are avoided and that the project moves forward according to best corporate standards and business practices.
Under Article 12 of the CMC Rules, the CMC controls the process (albeit informally), but it does not render an award. The CMC neutrals possess the authority to settle conflicts as well as the power to make recommendations in the form of a written opinion (e.g., including recourse in favor of formal mediation instead of a more lengthy and costly litigation). The CMC’s written opinion includes more than a standard non-binding opinion and would be given persuasive authority in the event of an unresolved dispute. In such case, the next course of action would be for the relevant parties to proceed towards formal mediation. The mediator assigned to the case would first review the CMC’s written opinion and follow the standard mediation process. If the mediation fails, the written opinion will then be reviewed by the relevant actors appointed to the litigation or arbitration process. Nothing in the CMC Rules forecloses the ability of the contracting parties to seek an adjudicative remedy if one is desired, with their rights to attorney representation and attorney-client privilege remaining intact, except when such privilege is waived by the parties. Arbitration also remains an option.
Administrative and Other Costs
The CMC process is not designed to represent another administrative burden and a cumbersome process. Under Article 20 of the CMC Rules, fees and expenses are shared equally by the contracting parties. While other stakeholders or workers are not expected, unless agreed otherwise, to share in those costs, the affected communities are highly unlikely to be able to afford a lengthy adjudication or prolonged waiting period to obtain compensation. Further, the reason for this specific fee arrangement is the immediate financial benefit to the contracting parties, especially when the project in question can still be delivered on time and at planned cost, with little to no risk of disruptions due to stakeholder protests or interference.
Conflict Management Committees Gaining International Recognition
In recent years, close collaboration among several international organizations, lawyers, neutrals, and other stakeholders have gained momentum and ongoing discussions are being held across the globe to address the effectiveness of governments and businesses to meet their obligations to provide adequate and effective remedy for human rights harms caused by business activities according to the expectations of the third pillar of the UNGPs. Among them is the CARO Centre whose work to establish the CMC Rules and its implementation are already being contemplated in several extractive energy disputes that have endured longstanding social and environmental problems. To date, the CARO Centre’s work is being recognized by the United Nations Commission on International Trade Law (UNCITRAL), which encourages states to utilize this framework as a dispute prevention/anticipation tool within the Investor State Dispute Settlement (ISDS) process, a mechanism that allows foreign investors to bring claims in arbitration directly against states for monetary damages arising out of allegedly wrongful state actions. The CMC Rules are now cited in two instruments that UNCITRAL will soon consider for adoption: the Draft Toolkit on prevention and mitigation of international investment disputes and the Draft Guidelines on prevention and mitigation of international investment disputes.
Conclusion
Agreeing to well-crafted contractual frameworks allows both parties to understand and appreciate their roles and responsibilities for ensuring that human rights and environmental issues are avoided or remedied. They also ensure that when disputes do arise, they are resolved through an orderly system rather than ad hoc procedures. This is why companies should be encouraged to incorporate contractual frameworks like the MCCs or the Responsible Contracting Project’s toolkit, with consideration for model clauses that establishes the CMC, in their international supply agreements.
The CARO Centre’s creative, dynamic, and adaptative CMC process for preventing, mitigating, resolving, and remediating disputes among affected stakeholders provides for a sustainable social license to operate and successful design and implementation of international development and large infrastructure projects. Support for the CMC Rules is gaining momentum as the ABA House of Delegates adopted, on 3rd February 2025, Resolution 607, officially endorsing the CMC framework as part of ABA policies and mechanisms that can ensure sustainable development.
Suggested citation: E. Groulx Diggs, P. Miller, P. Ly, ‘How Can Innovative Dispute Resolution Frameworks in Human Rights and Environmental Conflicts Deliver Success’,NOVA BHRE Blog, 25 October 2025