Human Rights and Privatisation

Amnesty International

Table of Contents

Human Rights and Privatisation

Amnesty International

The State has the primary responsibility to respect, protect, fulfil and promote human rights. Access to certain services is so essential that denial of access to such services can constitute violation of human rights.

While governments are required to ensure access, international human rights instruments do not require that governments must own the production or delivery systems of essential services. This means that the State, can be, but does not have to be the sole provider of essential services.¹Court judgments in India and South Africa, have shown that private actors can indeed play a role in the realisation of human rights.²

Nor does human rights law say that human rights can best be realised only under a particular economic or political system.³The Limburg Principles on the Implementation of the ICESCR state: “There is no single road to their full realisation. Successes and failures have been registered in both market and non-market economies, in both centralised and decentralised political structures.”⁴

In addressing the delivery of essential services therefore, states must bear in mind their obligations under international human rights standards, including the Universal Declaration of Human Rights⁵, and the International Covenants of Civil and Political Rights⁶and Economic, Social and Cultural Rights⁷. These international instruments lay down the state’s obligations to respect, protect, promote and fulfil human rights. The ICESCR, moreover, requires states to progressively realise the ESC rights.

AI is particularly concerned with access to services which are essential for the enjoyment of human rights. If individuals and communities are denied such access because of their economic status, ethnic origin, gender, sexual orientation, religious persuasion, or any other arbitrary, discriminatory measure, then that action constitutes a grave violation of their human rights.⁸

Denial of access to these services could cause grave violations of physical and mental integrity of individuals and groups, and would thus constitute a human rights violation. Access to basic necessities of life is critical to sustain any society based on human dignity, and the State has an obligation to provide such services.

Privatising the delivery of essential services has often led to the false assumption that the state is no longer responsible for the realisation of rights, and that the responsibility has been sub-contracted to the private sector provider. While the private sector provider remains responsible for his legal responsibility, the state continues to be primarily accountable for the human rights responsibility.⁹

Just as the State creates institutions such as courts of law to guarantee fulfilment of civil and political rights, the State is expected to progressively realise economic, social and cultural rights. This obligation has been recognised in by the Committee on Economic, Social and Cultural Rights (CESCR) as well as under the International Covenant of Economic, Social and Cultural Rights (ICESCR).

Rights enshrined under the covenant cannot be enjoyed fully without access to certain services. For example, the right to housing depends on “sustainable access to natural and common resources, safe drinking water, energy for cooking, heating and lighting, sanitation and washing facilities, means of food storage, refuse disposal, site drainage and emergency services”.¹⁰

Where the service itself is a right, the state has to ensure that there is no discrimination in access to specific services, and there is no denial of the service itself. Services which are rights by themselves include water, education and housing. The right to water is contained in the right to life¹¹. The right to education and housing are explicitly stated in the ICESCR.

But there are other rights related to access. Proper provision of sanitation is important, for example, to fulfil the right to health. Similarly, provision of electricity is important to fulfil a range of rights, including health (heating in winter), life (modern life-saving instruments run on electricity), and education. Access to roads is important to realise the right to adequate standard of living and free movement.

All activities considered “services”¹²are not necessarily critical for the enjoyment of human rights. Similarly, the human rights impact of privatisation is less acute when there are competing, affordable alternatives available to the society¹³. But when critical infrastructure services are privatised, and if the service itself is a natural monopoly¹⁴, then the human rights context gains critical importance.

The State’s Obligations, and how they translate in the context of ESC Rights

The state’s obligations are to respect, protect, fulfiland promote human rights. States are accountable for their human rights record. In the context of economic, social and cultural rights, states have to report periodically to the CESCR, where their performance is reviewed and recommendations made so that the states can progressively realise these rights.

In some states, such as South Africa, India, and Australia, citizens have been able to proceed against the state by using legal means for the fulfilment of their ESC rights. National and legal frameworks and mechanisms exist, which in the event of a violation allow the violated party to take the specific violatorto court, and seek a legal remedy. The judicial process makes governments accountable, and that accountability is rooted in public recognition of the primacy of human rights.

All individuals are equal before the law; the rule of law is based on the right of non-discrimination and equality before law. A group of people evicted from public property where the group had squatted for years was able to secure remedy from the Indian Supreme Court, which asked the state to provide alternate accommodation to the concerned people, before moving them¹⁵.

The State’s obligations are derived from four key principles.¹⁶These are:

• Equality and non-discrimination, which require the State to take measures to prevent discrimination, including taking affirmative measures¹⁷,

• Indivisibility and interdependence of rights,

• Accountability¹⁸, and

• Participation, which requires that policies must be devised, implemented and monitored in a manner that allows for popular participation.

Obligation to Respect:

In the context of delivering essential services, the duty to respect means that the State is responsible for ensuring the enjoyment of human rights relevant to the concerned service.¹⁹If a state privatises a particular service, then the agreement with the private service providers must be structured such that the language is consistent with relevant human rights norms. The state must stipulate accountability measures for the private service providers and benchmarks for measuring their performance within the contracts. It must also enact legislation to ensure consumer and environmental protection, and to regulate the conduct of the private service deliverers with regard to disconnection and pricing policies. If the private sector provider fails to deliver its contractual obligations, then the State must take immediate steps to maintain access to the service, and seek compensation from the service provider by imposing penalties stipulated in the contract. The state must place similar conditions for service provision on publicly-owned service providers.

Obligation to Protect:

The State has an obligation to protect citizens from human rights violations. The duty to protect requires that vulnerable groups be given special protection. In relation to protecting people with disabilities, for example, the CESCR has stated: “In a context in which arrangements for the provision of public services are increasingly being privatised and in which the free market is being relied upon on to an ever greater extent, it is essential that private employers, private suppliers of goods and services, and other non-public entities be subject to both non-discrimination and equality norms in relation to persons with disabilities.”²⁰In the case of water supply, the State has an obligation to prevent third parties from “compromising equal, affordable, and physical access to sufficient, safe and acceptable water”.²¹

Obligations to Fulfil and to Promote:

The State’s duty to fulfil includes the duty to promote, essential to ensuring effective public participation and access to information. The obligation to fulfil requires the adoption of positive measures that enable and assist individuals and communities to enjoy their rights.²²Additionally, there is an obligation to provide the right when individuals or groups are unable to realise the right by their own means. In relation to the right to water, for instance, the CESCR has stated: “Any payment for water services has to be based on the principle of equity, ensuring that these services, whether privately or publicly provided, are affordable for all, including socially disadvantaged groups. Equity demands that poorer households should not be disproportionately burdened with water expenses as compared to richer households.”²³

Privatisation, then, does not allow the state to abdicate its responsibility to respect, protect, fulfil and promote human rights. The state has the duty to ensure that ownership of the delivery system – public or private – does not compromise accessibility, availability, quality and acceptability of basic services. Most importantly, privatisation must not result in denial of access to vulnerable and poor people to socio-economic rights. Regulatory mechanisms of private actors and assistance measures must be put in place for the state to discharge its obligations.

Responsibilities of Non-State Actors, including Companies

Do human rights obligations apply to companies? Some companies have argued that human rights treaties are signed by states, and states are primarily accountable for human rights. Being non-state actors, companies argue, they have no legal obligations towards protection of human rights. They may choose to protect human rights voluntarily, but they are not obliged under international law.

This is not true. The UDHR applies to every individual and every organ of society. The phrase, “every organ of society”, includes non-state actors, such as companies, public and private. In Aug 2003, the Sub-Commission for the Protection and Promotion of Human Rights unanimously agreed to the text of Norms on Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights²⁴.

The norms emerged out of the growing recognition in recent years that human rights responsibilities apply to companies as well. In the context of civil and political rights, for example, companies recognise that their legal responsibilities include proper training of their security forces, and that they must not violate international and national labour laws, regarding the use of forced labour and exploitative child labour. The tripartite declaration of the International Labour Organisation applies to companies. Similarly, companies are covered by sector-specific mechanisms, such as Responsible Care for the chemical industry, Forest Stewardship Programme in forest management, and the Kimberley Process Certification Scheme to regulate the trade in rough diamonds.

Over time, companies have recognised some of their responsibilities voluntarily, and established codes of conduct to govern their behaviour. While such voluntary initiatives are a good starting point towards respect of human rights, they are not sufficient. Normative approaches, like the UN Norms cited above, increasingly matter. As recent human rights literature however suggests, voluntary approaches are a necessary starting point, but companies’ obligations go beyond voluntary approaches.²⁵Companies participating in the Global Compact²⁶, an initiative of the UN Secretary-General, Kofi Annan are expected to promote human rights, and not be complicit in human rights violations²⁷. Private service providers therefore have the duty to refrain from interfering in the enjoyment of ESC rights, and an obligation to ensure that they do not jeopardise the quality, accessibility and availability of the services when they assume control.

Human rights law is based on a normative framework and privatisation, like any other public policy, must comply with human rights obligations. Ttthe Office of the High Commissioner for Human Rights has stated: “In setting comprehensive objectives for trade liberalisation that go beyond commercial objectives, a human rights approach examines the effect of trade liberalisation on individuals and seeks trade law and policy that take into account the rights of all individuals, in particular vulnerable individuals.”²⁸

How do states achieve this? The Office of the High Commissioner advises that they can do so by looking beyond “narrowly-defined economic yardsticks and commercial objectives”, such as recovering costs, obtaining a particular return on investment, and so on. In so doing, the State should bear in mind the needs of not only those citizens who can afford the services, but also of those who can least afford to do so, such as poor, marginalised, vulnerable and disadvantaged individuals and groups. This stems directly from the idea that the human person is the central subject of human development without discrimination.²⁹

This does not mean equal treatment of everybody. Exceptions are made to allow for preferential treatment for the poor, disabled, or disadvantaged, as in affirmative action programmes. Under trade law, the State cannot distinguish between a large corporation and a marginal farmer; but interpreting human rights obligations, and taking into account the doctrine of progressive realisation under the ICESCR, the State can discriminate in favour of the marginal farmer³⁰.

In the context of delivering essential services, this would mean that the State may privatise the supply of water, but it would remain under obligation to make sure that the poor are not deprived of the quantum of water they need for their survival and to maintain an adequate standard of living³¹. In fact, under the Maastricht Guidelines, the State has an obligation to refrain from interfering with the enjoyment of ESC rights; to prevent third parties from violating such rights; and to take measures towards the full realisation of ESC rights.

AI’S HUMAN RIGHTS PRINCIPLES CONCERNING DELIVERY OF ESSENTIAL SERVICES:

1. PROTECT RIGHTS:

States have the duty to formulate appropriate national development policies that aim at the constant improvement of the well-being of the entire population and of all individuals, on the basis of their active, free and meaningful participation in development and in the fair distribution of the benefits resulting from development.³²The Office of the High Commissioner of Human Rights³³at the United Nations encourages States to ensure that they retain flexibility to use development tools to exercise their obligation by formulating policies that lead to constant improvement of the entire population. The guiding principle, then, should always be improvement of the current condition. The OHCHR³⁴says that developing countries in particular should therefore assess the human rights impact of obligations they are likely to take on, if they are privatising activities traditionally performed by states.

2. REGULATE:

Privatisation is the means, not an end. As noted earlier, even if the State does not own the delivery system of a service, it still has an obligation to regulate that industry or service. This means if the State has decided to privatise a particular service, it does not absolve the State; it will remain responsible for regulating the conduct of that industry or service. In order to regulate and manage the services, the State must establish a clear and transparent regulatory framework. Privatised entities must remain accountable to the State and its regulators. Just as privatisation does not liberate a State from its responsibility to regulate, it does not absolve the privatised service providers from human rights obligations that the entity is expected to meet.

3. MAINTAIN ACCESS:

States are expected to realise fulfilment of ESC rights progressively. But it also means that the State should make every effort to fulfil these rights. As the United Nations Development Programme’s annual Human Development Index reports show, in many countries where the State continues to own production and distribution of manufacture and services, these rights are not currently being respected. The effect of continuing these activities may cause significant fiscal problems for the States, and in some cases, lead to informal alternatives, such as private sector providing the service when the state has failed to do so.

4. NON-DISCRIMINATION:

Not only should privatised entities not discriminate between consumers of their services or products, they should also not discriminate in recruiting new staff, or in laying off their existing staff. The obligation to maintain access also means that in the event of the privatisation process failing, the State will remain under obligation to maintain the provision of essential services. If the privatised company goes bankrupt, or if the service provider pulls out of the contract, service provision and must not be affected, to ensure the protection of human rights, particularly of the poor, marginalised, vulnerable and disadvantaged individuals and groups, and they should be protected from the burden of the cost of renegotiating the contract, and the penalties that the State or the private party may have to pay. The State should impose penalties for non-performance. It must ensure that in drawing up the privatisation contract, adequate care has been taken to make sure that the State will take adequate legal steps to minimise losses and recover costs from the contracting party³⁵.

5. ASSESS IMPACT:

Adapting the policy to privatise a particular service has major ramifications, as noted earlier. Given that, the State has an obligation to conduct a thorough and proper assessment of the human rights impact of its action. Similar exercise should be undertaken if the State decides to take over services performed by a private sector provider. The intent should be to improve the human rights situation of the society. This assessment should be conducted in a fair and transparent manner, with full consultation with the affected communities, companies, and other relevant stakeholders, including workers. A paper from the OHCHR, too, recommends that States undertake human rights impact assessment before making major shifts in policy.³⁶

6. BE TRANSPARENT:

The process of privatisation must be open, fair, and transparent. It must be free of corruption. Recent experience from the Russian Federation, other states in the former East Bloc countries, and from Southeast Asia shows instances where decisions to privatise certain industries or services have been reached by governments behind closed doors, in an opaque manner. The resulting corruption has distorted economic choices and led to misallocation of resources³⁷.

The State should also require the privatised utility to report in a transparent manner. Regulators who require information about the pricing and costing of privatised entities must be provided full access. Privatised companies cannot absolve themselves from such reporting requirements citing commercial confidentiality.

This stems from the State’s obligation to ensure the community’s right to participation and the right to know. Citizens and civil society organisations should have full access to the deliberations of the regulatory authority on matters that affect them, and must have the right to representation in such matters. Decisions taken by the regulatory authority must be made in a fair and transparent manner. In order for its citizens to participate meaningfully on matters affecting them, the State must respect and ensure their right to know, by providing full access to relevant documents, contracts, and arguments justifying the decision to privatise a utility. This means the State must ensure freedom of expression and opinion, and take no steps to curb any peaceful demonstrations or opposition against privatisation.

7. PROVIDE SAFETY NET:

Privatised entities providing essential services have an obligation to guarantee access to all, particularly the poor, marginalised, vulnerable and disadvantaged individuals and groups. The right to life can be exercised only if individuals have access to certain goods and services essential for survival, and essential to prevent the violation of their physical and mental integrity. This includes the right to food, the right to appropriate clothing to guard against inclement weather, and the right to shelter. The right to food includes the right to water³⁸. The right to life also includes the right to health, and hence, access to basic health services. In places with extreme climates, the right to life includes protection from extreme cold or hot weather. All individuals should enjoy these rights, irrespective of their ability to afford the means to enjoy these rights. The State has an obligation to respect and fulfil these rights. Even if the State decides to fulfil these rights by privatising these utilities or services, it remains obligated to protect such rights. And as a corollary, companies or privatised entities, which take over the provision of such rights, have an obligation to ensure access to the poor, marginalised, vulnerable and disadvantaged individuals and groups. In providing such access, the company or the privatised entity should not discriminate between users.³⁹

The State must ensure safety net to absorb the social costs of privatisation. In some cases, privatisation leads to job losses. States have an obligation to ensure that every individual can enjoy an adequate standard of living⁴⁰, and as such, the State has an obligation to create a social safety net to protect those who lose their jobs. In appropriate cases, the State should consider providing retraining to the workers so that they could be re-deployed in other industries or services. In all cases, the State must make sure that workers and their representatives as appropriate, and their right to protest peacefully is protected.

Finally, the State should protect vulnerable sections of the population from privatisation and acquisition costs. The State has an obligation to ensure that the privatised entity does not pass on the cost of the contract and the acquisition of the right to manufacture the products or provide services, to consumers and users.