Implementation and Monitoring of the OECD Guidelines

The OECD Guidelines have received much of their praise and critique in relation to their implementation process. The three key bodies in the promotion and implementation of the Guidelines are the NCPs, the OECD Investment Committee and the Working Party on Responsible Business Conduct of this Committee. The NCPs, which the Guidelines directly oblige adhering states to establish within their jurisdiction, nationally promote the OECD Guidelines, answer enquiries regarding

515 ibid IV 39.

516 ibid I 4.

517 ibid.

518 ibid I 20.

519 ibid I 18.

520 ibid IV 5.

521 Ashley L Santner, ‘A Soft Law Mechanism for Corporate Responsibility: How the Updated OECD Guidelines for Multinational Enterprises Promote Business for the Future’ (2011) 43 The George Washington International Law Review 375, 384.

the OECD Guidelines, but most importantly resolve complaints regarding non-compliance of corporate actors in specific processes.

The implementation procedures of the OECD Guidelines are binding on states, and participating states must establish NCPs within their jurisdiction. Although they are functionally equivalent in various countries, there is in practice a fair amount of leeway in the manners in which the NCPs wish to operate. The structures and forms of the NCPs are left to the determination of each state. In some countries, various stakeholder groups are included in the review of specific instances and in others the NCP represents more of a governmental agency. The NCPs report annually to the Committee, which is responsible for answering requests regarding the interpretation of the Guidelines, issuing clarifications and reviewing the Guidelines.⁵²² It is important to note that the Committee cannot review complaints, as that is solely under the competence of the NCP.

Any individual or legal person is entitled to submit a complaint to the NCP in accordance with the Specific Instance Procedure of the OECD Guidelines. Initially the complaint mechanism was solely open for trade organisations, but it was extended to individuals in the 2000 revision. A multinational corporation which operates in or is from an OECD country may be directly addressed with complaints and the complaint may regard any of the matters covered by the Guidelines. The NCP makes an initial assessment of the specific instance, in which they decide whether the case in question should be further investigated. When making the initial assessment, the NCP takes into account the parties’ identities and interests;

whether the issue is material or substantiated; the existence of a link between the corporate activity and the possible issue; similar issues reviewed in other domestic or international proceedings; and the contribution the specific instance would make to the purposes and effectiveness of the Guidelines.⁵²³

The NCPs operate by adhering to the criteria of visibility, accessibility, transparency and accountability. However these criteria are not completely met with the specific instances process. Firstly, the entire process is confidential and the protection of sensitive business or other stakeholder information is taken into consideration at the conclusion of the procedure.⁵²⁴ There is conflict between the confidentiality of business operations, and the requirements of transparency and evidentiary.⁵²⁵ Even the identity of the parties can be left undisclosed, but the Commentary on the Implementation Procedures of the OECD Guidelines for

522 OECD, ‘The OECD Guidelines for Multinational Enterprises: Frequently Asked Questions’ <www.oecd.org/

corporate/mne/theoecdguidelinesformultinationalenterprisesfrequentlyaskedquestions.htm>. (last visited on January 16, 2018)

523 OECD Guidelines (n 512) I 25.

524 ibid C 3.

525 Gefion Schuler, ‘Effective Governance through Decentralized Soft Implementation: The OECD Guidelines for Multinational Enterprises’ (2008) 9 German Law Journal 1753, 1775; Maheandiran (n 462) 237.

Multinational Enterprises notes that the parties should be identified.⁵²⁶ Secondly, if the parties do not reach an agreement, the NCP can issue a statement and make recommendations.⁵²⁷ The release of public statements can however be only undertaken after consulting both parties. In a number of countries the NCPs do not actually determine publicly whether there was a breach of the Guidelines in the final statement.

Thirdly, the NCP’s role can be described as merely mediatory. The OECD Guidelines ask NCPs to offer ‘good offices’ to help resolve the various issues.⁵²⁸ One of the key complexities is that NCPs are not juridical bodies and hence do not possess their capabilities. They do not have the authority to order compensation or adjudge sanctions. They can conduct fact-finding and request data from the parties, but they are in no way entitled to demand such information to be given to them, and the parties of the process cannot be obliged to hand over information. NCPs clearly carry out certain judicial assignments, but none of their decisions are legally binding. Also there exists no authority which could over-rule the decisions of a NCP. For example, the Investment Committee can only clarify the Guidelines and cannot act as an appeal court or a remedy for victims. Fourthly, NCPs have a great deal of flexibility regarding the initial assessments of cases, their examination and the final statements. In various countries, this has led the companies not being held accountable for breaches of the Guidelines. For example, between 2012 and 2014 there was a growing trend amongst NCPs to reject specific instances if ‘successful mediation is unlikely’ and ‘to rather accept easy cases’.⁵²⁹

Each member state has plenty of leeway in how they establish their NCP. Some are independent actors from the government whilst others exist within governmental agencies. As mentioned by John Ruggie, the housing of a number of NCPs within governmental departments which, for example, also promote business and trade, raises a red flag regarding conflicts of interest.⁵³⁰ The process and actions of the NCPs have vast differences. One of the major problems of NCPs is that without specific instructions, they could make different initial assessments or recommendations of the same exact case. Some have said that the ‘ambiguous and vague content, legal construction and legal commitment have led to uneven expectations and multiple approaches to this unique dispute resolution mechanism’.⁵³¹ Specifically, the corporate social responsibility content of the Guidelines, which we know to

526 OECD Guidelines (n 512) Commentary on the Implementation Procedures of the OECD Guidelines for Multinational Enterprises 35.

527 ibid C 3.

528 ibid C 2.

529 OECD Watch, ‘Assessment of NCP Performance in the 2013–2014 Implementation Cycle’ (2014) 19.

530 Protect, Respect and Remedy Framework (n 238) 98.

531 Leyla Davarnejad, ‘In the Shadow of Soft Law: The Handling of Corporate Social Responsibility Disputes under the OECD Guidelines for Multinational Enterprises’ (2011) 2 Journal of Dispute Resolution 351, 352.

be abstract with a soft-law nature, have led to distinct means of compliance and implementation.⁵³²

The number of instances can appear significantly and surprisingly low when compared to the number of multinational corporations to which the OECD Guidelines are applicable. Between 2000 and 2007, 156 requests to consider specific instances were filed with various NCPs⁵³³ and between 2000 and 2014 an estimated 399 complaints were filed.⁵³⁴ By 2011 thirty-one of the forty-two NCPs had handled specific instances, with the workload of certain NCPs being significantly bigger than others.⁵³⁵ By 2010 49% of instances alleged human rights violations,⁵³⁶ with complaints ranging from use of forced or child labour to violations of general policies, such as human rights. Most complaints in relation to human rights relate to the due diligence requirement.⁵³⁷

Leyla Davarnejad, who researched the varying practices of NCPs, found severe inconsistency in their practice. For example, NCPs have widely different practices regarding the necessity of publishing statements and content.⁵³⁸ Oschoa Sanzhec notes that in Australia, Mexico and the US, the NCPs’ main function is to offer good offices, but they do so without thorough examination or conclusions on the observance of the Guidelines.⁵³⁹ This widely differs from the UK and Norway where NCPs have the authority to examine all facts and make conclusions on possible breaches of the Guidelines.⁵⁴⁰ He specifically found dissimilarities in the competence NCPs had to appropriately inspect the matter,⁵⁴¹ the issuing of final statements and their content⁵⁴² and how NCPs were willing to proceed with cases when the company was unwilling to participate in the mediation. As an example, Finland is committed to the OECD Guidelines and Finland’s NCP was mandated to be the Committee on Corporate Social Responsibility. The first case was brought to its attention in 2011 against Pöyry Plc regarding its dam project in Laos and

532 ibid.

533 OECD, ‘OECD Guidelines For Multinational Enterprises: 2005 Annual Meeting Of The National Contact Points: Report By The Chair’ (2005) 14 <www.oecd. org/dataoecd/20/13/35387363.pdf>.

534 Ruggie and Nelson (n 509) 107.

535 Davarnejad (n 531) 366.

536 Joris Oldenziel and Joseph Wilde-Ramsing, 10 Years on: Assessing the Contribution of the OECD Guidelines for Multinational Enterprises to Responsible Business Conduct (2010).

537 Ruggie and Nelson (n 509) 116.

538 Davarnejad (n 531) 372.

539 Juan Carlos Ochoa Sanchez, ‘The Roles and Powers of the Oecd National Contact Points Regarding Complaints on an Alleged Breach of the Oecd Guidelines for Multinational Enterprises by a Transnational Corporation’

(2015) 84 Nordic Journal of International Law 89, 124.

540 ibid.

541 ibid 113.

542 ibid 101.

its possible violations of the OECD Guidelines.⁵⁴³ The claim specifies that Pöyry would have committed violations against the due diligence obligations which are specified in the provisions of human right protection. On June 10, 2013 the NCP stated in the Final Statement that Pöyry had not breached the Guidelines.⁵⁴⁴ In this instance Pöyry’s answers to the instance were deemed confidential.⁵⁴⁵

It is extremely difficult to review the cases of NCPs, as most of them solely note the specific instance as either “concluded” or “in progress”.⁵⁴⁶The best example of this troubling trend is the NCP in the US. In the US twenty-seven requests in specific instances were filed with the NCP, which is the highest number of complaints in all OECD countries.⁵⁴⁷ It is common for the NCP to withhold the names of companies or any specific details of the possible violations. Of the sixteen mentioned, only six were even published, but most of them do not contain the resolution or its grounds, but merely state that the ‘parties reached an agreement’. It appears that in the US the NCP are focused on protecting the confidentiality of the parties more than on having a transparent mediation process.⁵⁴⁸ There is suspicion on the NCPs’ part towards the Guidelines and a clear attempt to ‘protect national corporations from potential unsubstantiated criticisms’.⁵⁴⁹