Part 5: The MNE Guidelines' remedial architecture.
This series builds on some ideas I have been working through for a number of years relating to a fundamental shift in the approaches to corporate governance that broaden the ambit of corporate governance issues from a singular focus on internal governance (the relationships among officers, shareholders and directors) to one that includes corporate behavior and the standards by which officers, directors and shareholders exercise their respective governance authority. This shift also changes the scope of what is understood as "law" to be applied to issues of corporate governance, from one principally focused on national law to governance norms that may be sourced in the declarations and other governance interventions of public and private international bodies. Lastly, it appears to point to an evolution to the role of the state from the principal source of standards and enforcer of law to a vehicle for the implementation of international standards in which enforcement power is left to global market actors--principally consumers and investors function of the decisions of global actors. All of this is inconsistent with traditional notions of the role of law, the scope of corporate governance and the nature of corporate social responsibility int he United States. The extent to which the United States participates in the construction of these autonomous international systems may suggest the direction in which government policy may be moving away from the traditional consensus of corporate responsibility to something perhaps entirely new.
This post focuses on the remedial architecture of the Guidelines for Multinational Enterprises (2011) (MNE Guidelines) of the Organization for Economic Cooperation and Development, and the central role of the National Contact Point system. Subsequent posts will consider the American National Contact Point and review of the way in which the U.S. National Contact Point has functioned within this system.
Part 5: The MNE Guidelines' remedial architecture.
Part II of the MNE Guidelines focuses on the remedial provisions of the Guidelines. Originally a very small portion of the governance architecture. Its objectives were modest: "to enhance procedures by which consultations may take place on matters covered by these Guidelines and to promote the effectiveness of the Guidelines". (MNE Guidelines Part II, Preamble). Yet over the last decade, the remedial framework has become an increasingly important part of the MNE Guidelines. The remedial architecture of the MNE Guidelines has proven to be a flexible procedural device for effecting something like a functionally equivalent quasi-judicial process that is serving a critical role in the transformation of the MNE Guidelines from a set of free floating standards and principles to a normative standard against which corporate activity might be assessed and corporate behavior disciplined.
The Investment Committee of the OECD is charged with the political work of the OECD and the promotion of the MNE Guidelines.
The Committee shall engage with non-adhering countries on matters covered by the Guidelines in order to promote responsible business conduct worldwide in accordance with the Guidelines and to create a level playing field. It shall also strive to co-operate with non-adhering countries that have a special interest in the Guidelines and in promoting their principles and standards. (MNE Guidelines Part II, Sec. II.3).
It shall, in particular, seek opportunities to collaborate with the advisory bodies, OECD Watch, other international partners and other stakeholders in order to encourage the positive contributions that multinational enterprises can make, in the context of the Guidelines, to economic, environmental and social progress with a view to achieving sustainable development, and to help them identify and respond to risks of adverse impacts associated with particular products, regions, sectors or industries. (Ibid; II.8)
The center piece of the remedial architecture of the MNE Guidelines is the National Contact Point (NCP). A NCP is an agency established by adhering states to fulfill their obligations under the MNE Guidelines. Adhering states are accorded flexibility in the organization of NCPs,
An NCP can consist of senior representatives from one or more Ministries, may be a senior government official or a government office headed by a senior official, be an interagency group, or one that contains independent experts. Representatives of the business community, worker organisations and other non-governmental organisations may also be included. (MNE Guidelines, Part II, Procedural Guidance, Part I.A.2).
Its principal role is to "further the effectiveness" of the MNE Guidelines. (MNE Guidelines Part II, Chp I.1) To that end it is tasked with an informational role as well as a dispute resolution role. Effectiveness is thus furthered:
by undertaking promotional activities, handling enquiries and contributing to the resolution of issues that arise relating to the implementation of the Guidelines in specific instances, taking account of the attached procedural guidance.(Ibid.).
The MNE Guidelines set out a fairly specific set of procedural guidance for NCPs in its dispute resolution role among parties--so-called specific instance actions. . These are grounded in core operational criteria: "NCPs will operate in accordance with core criteria of visibility, accessibility, transparency and accountability to further the objective of functional equivalence." (MNE Guidelines Part II, Procedural Guidance I.). In addition, specific instance activity must be undertaken in a manner that suggests the quasi-judicial character of the activity: "The National Contact Point will contribute to the resolution of issues that arise relating to implementation of the Guidelines in specific instances in a manner that is impartial, predictable, equitable and compatible with the principles and standards of the Guidelines." (Ibid., I.C.). But these proceedings are also meant to serve as a forum for discussion to deal with the issues raised "in an efficient and timely manner and in accordance with applicable law" (Ibid). The last phrase is a bit confusing since the standards of the MNE Guidelines are, in some large measure, beyond the law of many of the OECD adhering states with obligations to facilitate the implementation of the Guidelines. The effect is a tense polycentricity--using states agencies to further the project of a set of Guidelines that may not be compatible with or identical with the laws of the adhering state.
The procedural rules are fairly straightforward:
1. Make an initial assessment of whether the issues raised merit further examination and respond to the parties involved.
2. Where the issues raised merit further examination, offer good offices to help the parties involved to resolve the issues. For this purpose, the NCP will consult with these parties and where relevant:
a) seek advice from relevant authorities, and/or representatives of the business community, worker organisations, other non- governmental organisations, and relevant experts;3. At the conclusion of the procedures and after consultation with the parties involved, make the results of the procedures publicly available, taking into account the need to protect sensitive business and other stakeholder information, by issuing:
b) consult the NCP in the other country or countries concerned;
c) seek the guidance of the Committee if it has doubt about the interpretation of the Guidelines in particular circumstances;
d) offer, and with the agreement of the parties involved, facilitate access to consensual and non-adversarial means, such as conciliation or mediation, to assist the parties in dealing with the issues.
a) a statement when the NCP decides that the issues raised do not merit further consideration. The statement should at a minimum describe the issues raised and the reasons for the NCP’s decision;
b) a report when the parties have reached agreement on the issues raised. The report should at a minimum describe the issues raised, the procedures the NCP initiated in assisting the parties and when agreement was reached. Information on the content of the agreement will only be included insofar as the parties involved agree thereto;
c) a statement when no agreement is reached or when a party is unwilling to participate in the procedures. This statement should at a minimum describe the issues raised, the reasons why the NCP decided that the issues raised merit further examination and the procedures the NCP initiated in assisting the parties. The NCP will make recommendations on the implementation of the Guidelines as appropriate, which should be included in the statement. Where appropriate, the statement could also include the reasons that agreement could not be reached.
The NCP will notify the results of its specific instance procedures to the Committee in a timely manner. (Ibid., I.C1-3 )
These procedures tend to privilege mediation, and they tend to avoid the outward forms of judicial determination. Cooperation is enhanced by a willingness to protect confidentiality (Ibid; C.4). Rather than a finding of breach, the procedures speak to recommendations on implementation, and there is a tentative openness to permitting review if the issues arise in non adhering states (Ibid., C.5). But this has not stopped NCPs from taking a more aggressive approach. See, Larry Catá Backer, Case Note: Rights And Accountability In Development (Raid) V Das Air (21 July 2008) And Global Witness V Afrimex (28 August 2008); Small Steps Toward an Autonomous Transnational Legal System for the Regulation of Multinational Corporations, Melbourne Journal of International Law 10(1):258-307 (2009).