Arbitration and ESG Disputes: Revisiting the Hague Rules Post-Cisco SCOTUS Decision

The U.S. Supreme Court’s recent decision in Cisco Systems, Inc. v. Doe, 609 U.S. ___ (2026), narrows one path for human rights litigation in U.S. federal court. The Court held that the Alien Tort Statute (ATS) does not authorize courts to create new causes of action for violations of international law and rejected aiding-and-abetting theories under both the ATS and the Torture Victim Protection Act (TVPA). For U.S. companies, the decision may reduce certain tort-based litigation risks but should not be read as a broad shield against ESG-related disputes—disputes for which alternative resolution strategies and tools, such as arbitration, remain relevant.

Why Arbitration Remains Relevant for ESG Disputes

The Cisco decision is important, but its reach is limited. The ruling addresses tort claims brought under U.S. federal statutes; it does not eliminate contractual obligations that companies may assume in supply agreements, financing documents, sustainability commitments, or other commercial arrangements. Nor does it displace non-U.S. regulatory regimes, including laws in jurisdictions where companies conduct business or maintain supply chains.

That distinction matters in the ESG context, as those representations (particularly those addressing human rights, labor practices, sourcing, environmental attributes, carbon credits, or supply-chain due diligence) can create contractual exposure even where tort law claims face significant barriers. Depending on the wording in the relevant contracts, a claimant may frame the dispute as a breach of representation, warranty, covenant, reporting obligation, or third-party beneficiary right.

In the context of such potential disputes, companies may find arbitration to be a preferable form of dispute resolution, as it can provide a neutral forum, specialized decision-makers, and an award that is often easier to enforce internationally than a court judgment. Launched in 2019, the Hague Rules on Business and Human Rights Arbitration are designed specifically for disputes involving the human rights impacts of business activities and may be incorporated into commercial contracts where parties want a tailored procedural framework.

Whether the Hague Rules May Be the Right Fit

The Hague Rules may be useful where parties anticipate disputes involving human rights-related commitments, community impacts, labor standards, or supply-chain obligations. Potential advantages include enforceability of arbitral awards under the New York Convention, flexibility in selecting arbitrators with relevant expertise, and procedures that account for a broader range of participants, including individuals, trade unions, community organizations, businesses, states, and civil society organizations. The Rules also contemplate other dispute resolution tools, such as mediation and conciliation, which may be valuable where parties seek a practical solution rather than only a final award.

The Hague Rules are not a one-size-fits-all solution, however. Companies should evaluate the transparency provisions carefully. While confidentiality is often viewed as a key advantage of arbitration, the Hague Rules permit varying degrees of public transparency depending on the circumstances. In some matters, transparency may create reputational, commercial, or litigation risk. In others, it may benefit a company by allowing a favorable decision or responsible remediation process to become public.

Companies should also consider cost, procedure, stakeholder participation, emergency relief, third-party funding, and whether the Rules align with the parties’ commercial relationship. Because U.S. case law applying the Hague Rules remains limited, parties should draft with precision rather than rely on later interpretation. In many circumstances, the better approach is not simply to accept or reject the Hague Rules wholesale, but to decide which provisions fit the risk profile of the transaction.

Practical Takeaways

The Hague Rules may serve as a useful “gap filler” in the right transaction, but they should be adopted only after careful consideration of transparency, enforceability, stakeholder participation, and the company’s broader ESG risk strategy. In particular, companies may wish to:

• Review ESG-related representations, warranties, covenants, and reporting obligations to determine whether they could support breach-of-contract claims.
• Consider whether human rights, labor, climate, carbon market, or supply-chain disputes should be subject to arbitration and, if so, under what rules.
• Address confidentiality and transparency expressly, particularly where reputational sensitivity or public-interest concerns may be present.
• Specify arbitrator qualifications where subject-matter expertise is important.
• Evaluate whether mediation, conciliation, or stepped dispute resolution procedures should precede arbitration.

Clark Hill’s ESG & Sustainability and Business & Human Rights teams consist of attorneys and professionals throughout the U.S., Mexico, and Ireland, including experienced Litigation and International Arbitration attorneys. If you have questions or would like to discuss this alert, please contact the author directly or your usual Clark Hill contact.

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