A Framework for Regulation - Private Security Monitor

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10 PRIVATE MILITARY AND SECURITY COMPANIESclients and states would balance out industrymembership fees, enabling the framework tomaintain its independence. This report estimatesthat the secretariat would cost c. $1.5 million perannum (c. $900,000 personnel costs, $300,000operating costs, and $300,000 overhead), notincluding the costs of auditing teams. These wouldbe separately budgeted and should be covered byservice fees.What are the Barriers?The Montreux Document provides importantguidance on how states should expect PMSCs to vettheir personnel, manage them, and deal with allegationsof misconduct. 19 These might provide thebasis for an accreditation regime. However, someindustry actors may seek greater specificity in thesestandards before they are willing to participate inan accreditation regime that creates markettransparency and market signaling mechanisms.Accordingly, it may be useful—though it may notbe necessary—to supplement existing standardswith a code of conduct, as the basis of an accreditationregime.Effective auditing will depend on substantial buyinfrom both industry and from clients, since it mayraise significant issues of national security, clientconfidentiality, and privacy. Yet precedents likethose in the diamond and chemical industriesdemonstrate that with sufficient industry buy-in,certification, auditing, and inspection protocols canbe developed that satisfy such concerns.An accreditation regime would need to functionquickly as well as effectively. It could use a tieredcertification scheme, with PMSCs’ compliance withthe most important standards of human rights andIHL assessed first, providing a preliminary certificationallowing PMSCs to bid for contracts whilestill applying for complete certification.What are the Benefits?Even a voluntary GSI accreditation regime, if robustand credible, would begin to institutionalize theconnection between standards implementation,market access, and performance incentives. Itsratings could be picked up and used as the basis ofcontracting and regulating decisions by GSI clients,regulators, financiers, and civil society. And it couldbe set up now on the basis of existing standards.3. AN ARBITRAL TRIBUNALA GSI arbitral tribunal would provide an industrytailoredforum for dealing with the labor, contractual,and other disputes—not including serioushuman rights violations—that occur in thisindustry across multiple jurisdictions every day. Itwould help create a level global playing-field for theindustry, reducing administrative costs and regulatoryarbitrage, encouraging cross-border professionalization,and facilitating enforcement cooperationby different states. It could also generate anacquis of practice encouraging rising managerialstandards within PMSCs around the world. Themajor precedent for such a forum is the Court ofArbitration for Sport, but it could also draw on theInterpretation Procedure of the InternationalLabour Organization’s Tripartite Declaration. 20Such an arbitral tribunal could be set up immediately,on the basis of existing law and standards.Once the infrastructure and personnel were inplace, the arbitral tribunal would be “activated” bystakeholders granting it jurisdiction over casesthrough references in their contracts, regulations,and investment agreements.How Would it Work?A GSI arbitral tribunal would serve as a forum inwhich contractual parties could enforce the termsof their contract, or from which state regulatorscould seek advisory opinions or decisions inspecific cases.• PMSCs and their clients, and PMSCs and theirpersonnel, would specifically consent to submitto the arbitral tribunal’s jurisdiction in theircontracts.• States could mandate the jurisdiction of thearbitral tribunal over certain types of labor orcontractual disputes relating to the industry,regardless of such inclusion by private parties.• These contractual and regulatory referenceswould also give binding force to the standards—19 Montreux Document on Pertinent International Legal Obligations and Good Practices for States Related to the Operations of Private Military and Security CompaniesDuring Armed Conflict, Part II: Procedure for the Selection and Contracting of PMSCs, available at www.eda.admin.ch/psc.20 The Declaration is a set of voluntary principles to guide multinational enterprises, governments, and employers’ and workers’ organizations in adopting socialpolicies and developing good practices. The Interpretation Procedure can be activated by any of these stakeholders in the instance of a dispute regarding theapplication of the Declaration. For more detail, see Part IV of Cockayne, Mears, et al., Beyond Market Forces.
James Cockayne and Emily Speers Mears 11such as the relevant provisions of the MontreuxDocument, the ILO Conventions and relevantRecommendations, and relevant internationallaw—compliance with which the arbitral tribunalwould assess.• Rather than conducting its own investigations,signatories and complainants would be requiredto provide information to the arbitral tribunalupon request. This information would remainconfidential, unless both parties agreed to itsrelease. The outcome of the tribunal processwould be made public, though written decisionsmight be made available only to the parties.• The tribunal would provide needs-basedassistance for those bringing claims, which wouldbe particularly important for PMSC employeesand smaller PMSCs.• The decisions of a GSI arbitral tribunal would beenforced through states’ domestic jurisdiction, aswith other international arbitration arrangements.• An annual digest of the decisions of the tribunalcould be prepared by the secretariat, as the sourceof an acquis to provide guidance to industrystakeholders.Governance StructureArbitrators would be chosen for either their arbitralexperience, or their GSI-related legal experience,and appointed for a renewable term of four years.They would be entered into a database by a smallsecretariat, which would receive and processcomplaints. Both parties to the dispute would selectone arbitrator from the database, and agree collectivelyon a third independent arbitrator, or have thethird panel member appointed by the framework’ssecretary-general.The secretariat would be staffed by a secretarygeneraloverseeing the secretariat’s daily operations,engaging in strategic outreach with stakeholders,and representing the regime to the broader internationalcommunity; one full-time administrator toprovide administrative support to the arbitralprocess, maintain its database of arbitrators, andreceive and process complaints and requests forneeds-based assistance; one outreach officercharged with developing the tribunal’s website andoutreach materials and dealing with the media, aswell as working with the administrator to overseeassistance to parties; one counselor, with dualresponsibility for providing legal advice to thesecretary-general and administrator, particularly toensure respect for the arbitral regime, and forpreparing an annual digest of arbitral decisions andnotes on the developing acquis. These four substantivepositions would be supported by a director offinance and administration and two clerical staff,for a total of seven staff.FinanceMost of the expenses related to a GSI arbitraltribunal would be borne by the parties. However,states and industry actors might be required toprovide voluntary contributions to a fund to coverthe costs of PMSC personnel complainants, and/orsmall PMSCs. These contributions would also needto cover the operating costs of a small secretariat, topublicize the arbitral tribunal and encourageprivate parties to incorporate references to it andthe standards it enforces in their private legalarrangements; maintain the lists of potentialarbitrators; serve as administrative support to thearbitral process; manage the provision of assistanceto claimants; and prepare an annual digest ofarbitral decisions and acquis. This report estimatesthe annual costs of such an enterprise to be approximately$900,000 per annum ($600,000 personnelcosts, $150,000 operating costs, and $150,000overhead).What are the Barriers?A GSI arbitral tribunal would not deal directly withthe key regulatory problem for the GSI: preventingand remedying PMSC violations of human rightsand IHL. It may not, therefore, receive muchsupport from civil society. But its encouragement ofcross-border harmonization in labor managementpractices and facilitation of sanctioning of contractualunderperformance might indirectly assist withimproving respect for other standards in the GSI.What are the Benefits?The tribunal would offer industry-sensitive, timeefficient, and cross-border harmonized resolutionof complaints regarding adherence to labor andcontractual standards. It would significantly reducetransaction and dispute-resolution costs for allindustry stakeholders, assist states by supplementingtheir domestic enforcement options, andencourage improved respect for other standards in
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