How can human rights help businesses?

Companies have human rights too: they can protect businesses from unlawful interference by States and State authorities, including legislators and regulators.   

Which human rights can businesses rely on?

The Convention is an international treaty that protects a number of human rights that are likely to be highly relevant in a commercial context.

Protecting your property (Article 1 of Protocol No. 1)

The Convention protects a person’s right to the peaceful enjoyment of their possessions (ie. property), which is a very broad category of interests covering not only real property but, for example: goodwill, IP, and business licences, and even in some circumstances, the expectation of obtaining a property right.

It is illegal for the State to deprive a person of their possessions or to control their use unless it is in the public interest, proportionate and lawful. The classic example of State interference with property rights is the direct and formal expropriation of property, but other actions, including by regulators, may sufficiently limit enjoyment of a possession as to amount to expropriation or, at least, an interference requiring justification.

Unjustified control of use of shareholders’ property: Yukos v. Russia (2011)

• Tax assessment and enforcement proceedings were brought against the Russian oil giant Yukos for tax evasion, which led to its liquidation in 2007.

• The Court found that the Russian authorities’ measures against Yukos (the forced sale of Yukos’ most profitable subsidiary, swift enforcement proceedings, a disproportionate enforcement fee etc.) did not constitute direct expropriation but did amount to an unjustified control of use of the shareholders’ property.

• The Court awarded significant damages of 2 billion euros to the Applicants.

Suspension and revocation of business licences: Svit Rozvag, Tov v Ukraine (2019)

• Ukraine suspended all gambling licences and then banned gambling altogether. The Applicants’ gambling licences were first suspended, then revoked under the new law.

• The Court found that the manner of the suspension/revocation amounted to a violation of the Applicants’ property rights.

  • The suspension of the second Applicant’s licence did not meet the conditions for suspension under the new law.

  • The revocation of the Applicants’ licences was not proportionate to Ukraine’s aim of preventing crime and addiction.

  • The Applicants were not paid compensation (despite it being an expectation based on the previous law).

  • The legislature did not explain why it had banned gambling altogether when there were a range of available options.

• The Court awarded damages to all the Applicants.

Securing a fair trial (Article 6)

The Convention requires that where there is a determination of a person’s civil rights or obligations they have the right to a fair trial in front of an unbiased tribunal.

Unfair annulment of a debt judgment: Merchant v. Ukraine (2011)

• In 2006, Merchant obtained a debt judgment in its favour against Naftogaz before the Supreme Court of Ukraine. Merchant then successfully applied to the UK High Court to recover UK assets owned by Naftogaz and obtained a judgment in its favour.

• In response, Naftogaz applied for, and was granted, an annulment of the original debt judgment by the Supreme Court of Ukraine.

• Merchant applied to the Court arguing that the process by which the annulment was granted seriously breached its Article 6 rights.

• Naftogaz applied to the UK court to set aside the judgment in Merchant’s favour but the UK Court refused on the basis that the annulment was in “flagrant” breach of Article 6 of the Convention. The human rights strand of the work was therefore critical to Merchant’s success in defending that application.

• Merchant ultimately succeeded in recovering its judgment debt in the UK.

Protecting your right to communicate (Article 10)

Commercial freedom of expression is also protected under the Convention. Companies have previously argued – with limited success – that, for example, logos and branding are part of their right to commercial freedom of expression. However, there has been more success in relying on Article 10 in a media context as the Convention requires States to protect media pluralism.

The obligation to ensure media pluralism: Centro Europa v. Italy (2012)

• The Applicant company had received a licence to operate an analogue television network under which it was entitled to several frequencies but they were never actually allocated to it by the relevant regulatory authority.

• The Court found that the State, by failing to enable the Applicant to operate its television broadcasting licence, had breached the company’s right to impart information, thereby breaching Article 10 of the Convention (freedom of expression). This also amounted to a failure by the State to comply with its positive obligation under the Convention to guarantee effective media pluralism.  

• The Court stressed the need to guarantee diversity of overall programme content, reflecting as far as possible the variety of opinions encountered in the relevant society.

Why the  Court rather than domestic courts?

Domestic courts of Contracting States to the Convention can and do enforce human rights obligations – for example by way of judicial review and under the Human Rights Act in the UK.

In some cases domestic claims may be ineffective, either because the domestic court system has not applied the Convention correctly or because it cannot provide a remedy. 

The Court can award damages against the State but can also find that primary legislation violates the Convention, which requires a State to take action, This has heightened significance in the UK after Brexit as Acts of Parliament can no longer be struck down using EU law. They can still, however, be found to be incompatible with the Convention.

What can the Court do?

The Court has the discretion to award damages compensating an Applicant for a violation of the Convention. This can include damages for past losses as well as future gains. In recent years, the Court has demonstrated that it is not afraid to award significant damages to companies whose rights have been breached: in Yukos v. Russia (discussed above), the Applicant was awarded 2 billion euros in damages, the largest sum to date, alongside its legal costs and other fees.

It is also possible to obtain interim relief from the Court when the Applicant faces an imminent risk of irreparable damage.

Even the finding of a violation itself may be valuable in some circumstances, for example because it may exert pressure on the relevant State to modify its conduct and/or to address institutional or legislative issues identified by the Court.  

Who can bring a claim under the Convention?

Any individual, company (regardless of citizenship / place of incorporation) or Contracting State can bring a claim as long as it has been directly impacted by the actions of a Contracting State or public body in violation of the Convention. In other words, a company does not have to be incorporated in a Contracting State to bring a claim. 

Against which States can you bring a Convention claim?

Claims can be brought against any of the (now) 46 Contracting States to the Convention. Note that Russia ceased to be a Contracting State in September 2022, and claims can no longer be brought against this State. However the Court can still hear any applications relating to conduct that occurred before it ceased to be a party.

A claim may derive from the actions of an entity emanating from the State, such as a regulatory body or State-owned entity.

Geopolitical risk in the geographical area covered by the Convention has spiked in recent years (due to, for example, economic uncertainty, the risk of conflict and climate change politics), increasing the relevance of the Court as a forum to resolve commercial disputes.

When is the Court an effective forum to resolve a commercial dispute with a State?

The Court can be a particularly effective mechanism (on its own or as part of a wider strategy):

• against States where public bodies or State institutions do not comply with the rule of law;

• to obtain damages in situations where other legal mechanisms, such as investor-state arbitration, are restricted or unavailable;

• to apply political pressure on a State through filing (or threatening to bring) a claim;

• to enforce judgments against Convention States that are candidates for European Union membership and are therefore strongly incentivised to comply with the Convention; and/or

• as part of a wider strategy in an ongoing dispute to obtain a favourable result against a State party.

Isn’t the Court known to be particularly slow at handing down its judgments?

Yes. While the Court tries to deal with cases within 3 years after they are brought, the importance and urgency of the issues raised will determine the course and speed of proceedings.

The Court has made reforms to expedite cases based on categories of importance which has accelerated their processing time. Most recently, the Court has introduced a priority system by which “impact cases”, i.e. cases that touch on moral or social issues, are particularly important for the development of human rights protections and/or which raise new questions concerning the interpretation and application of the Convention or domestic legislation, are prioritised.

Interim relief can also be obtained on a priority basis when the Applicant faces an imminent risk of irreparable damage. For example, in Novaya Gazeta v. Russia (2019), the Applicant obtained (pursuant to their right to freedom of expression) an order from the Court inviting the Russian government to abstain from blocking and terminating the activities of the Applicants, two media companies which were reporting on the invasion of Ukraine.

How much does it cost to bring a claim?

Bringing a claim is relatively inexpensive as there is no filing fee and the Court usually decides a case on the written submissions alone without holding a public hearing. An Applicant can also seek to recover its legal costs and fees, as well as travel and subsistence expenses. If the Court finds no violation, the Applicant is not liable for the State’s legal expenses.  

Aren’t judgments of the Court difficult to enforce in practice?

Enforcement of Court judgments is more feasible in practice than judgments from other international judicial bodies because judgments are both legally binding on Contracting States to the Convention and because they have political weight (and States can, and do, put pressure on one another to comply with judgments of the Court). The Committee of Ministers of the Council of Europe supervises the enforcement of Court judgments and infringement proceedings can be brought against a State which refuses to comply with a judgment.

Some States, such as the UK, have a good track record of enforcing judgments.

Even though the Council of Europe is not a European Union institution, there are strong ties between the European institutions and the Council as well as many parallels in the legal principles and case law of the EU and the Convention. This means that a State seeking EU membership will be under pressure to comply with Court judgments. A State that regularly obstructs enforcement of Convention judgments can also face exclusion from the Council of Europe, which exerts political pressure to comply. 

Authored by Charles Brasted, Dervla Simm, Katie Duval, and Auriane Negret.