The OECD´s Guidelines for Multinational Corporations has existed in its present form since 2000. It represents one of several quasi-public efforts to create soft law frameworks for developing a customary consensus and culture of appropriate corporate behavior. One of its unique features is its enforcement procedures. These posit the creation of quasi-judicial organs whose purpose is to apply the Guidelines to the actions of multinational corporations. These panels, national contact points, are constituted whenever there is a complaint lodged. These complaints may be lodged by civil society actors. Recently two panel statements illustrate the growing maturity of this system and suggest the way in which these soft law systems can become effective mechanisms for developing global regulatory cultures of corporate behavior. The output of quasi judicial and interpretive statements, like those of the two cases discussed below, will continue to contribute, incrementally, to the institutionalization of transnational systems of multinational regulation, systems that will have legal effect, whether to not this is law, classically understood. These cases continue an effective process of operationalizing soft law to produce the effects of hard law beyond the state, but without challenging state authority directly. For the great projects of corporate governance currently being developed, including those associated with the United Nations Global Compact, these efforts should be instructive.
What follows is a close analysis of these two panel statements. The final version of this paper will be published soon. Comments and reactions welcome.
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SMALL STEPS TOWARD AN AUTONOMOUS TRANSNATIONAL LEGAL SYSTEM FOR THE REGULATION OF MULTINATIONAL CORPORATIONS:
RIGHTS AND ACCOUNTABILITY IN DEVELOPMENT (RAID) V DAS AIR (21 JULY 2008) (1)
and
GLOBAL WITNESS V AFRIMEX (28 AUGUST 2008) (2)
ABSTRACT: The enforcement framework for the MNE Guidelines has long been the subject of criticism, especially by representatives of private and public actors. But two recent cases have suggested the ways in which enforcement actions arising from civil society efforts to utilize the national contacts points complaint system may be slowly influencing the emerging discourse of corporate behavior in ways that will have substantial effect. Beyond evidence of a more muscular institutional transnational enforcement structure for soft law codes, the cases serve to outline a framework for the interaction of transnational and national systems of corporate regulation. The multilateral system for governing multinational corporate behavior will affect not only that behavior but also the rules through which corporations may be governed as to their internal affairs and with respect to the character of their legal personality. This case note first briefly describes the institutional and regulatory framework within which the cases arose. It then reviews the cases themselves, drawing out the more relevant arguments. Lastly contextualizes those arguments and positions within national and transnational corporate and international legal regimes. The cases illustrate the way in which advances in governance issues are being crafted, step-by-step, from out of a system that, while formally non-binding, is increasingly developing the characteristics of a binding governance system. The cases suggest the parameters within which the MNE Guidelines are beginning to serve as the focal point for the construction of an autonomous transnational governance system that is meant to serve as the touchstone for corporate behavior in multinational economic relationships. They continue an effective process of operationalizing soft law to produce the effects of hard law beyond the state, but without challenging state authority directly in parallel to similar efforts through the U.N. Global Compact.
CONTENTS
I. Introduction
II. The Regulatory Context
III. The Cases
A. Rights and Accountability in Development (RAID) v DAS Air
B. Global Witness v Afrimex
IV. The Analytical Context
A. The Construction of an Interlinked System of International and Municipal Hard and Soft Law
B. Corporate Law Challenges
C. Procedural Issues
V. Conclusion
I. INTRODUCTION.
The problem of the multinational corporation has been at the center of transnational policy discussion for the greater part of the last half-century.(3) For the last decade, attempts to create hard law and harmonized regulatory structures for multinational corporations have been effectively blocked by a great alliance of business and developed state interests.(4) The most prominent among these failures has been the U.N.’s Norms.(5) Moreover, attempts to stretch national law to bring the transnational activities of multinational corporations under the regulatory control of at least some states has been largely unsuccessful, except perhaps within the academic literature.(6)
This breach in regulation has been filled with a variety of soft law efforts.(7) Prominent among them has been the U.N.’s successor regulatory strategy to the Norms—the U.N. Global Compact.(8) But powerful regional state-private sector organizations have also sought to create soft law regulatory networks that might contribute to a set of behavior norms among multinational enterprises. Among these has been the Organization for Economic Cooperation and Development. (9) It has been at the forefront of developing and creating implementary frameworks of soft law for corporate governance. (10)
Prominent among the OECD’s soft law codes is its Guidelines for Multinational Enterprises (MNE Guidelines).(11) The MNE Guidelines are the only multilaterally endorsed and comprehensive code that governments are committed to promoting.(12) The MNE Guidelines are said to express the shared values of the governments of countries that are the source of most of the world’s direct investment flows and home to most multinational enterprises.(13) They are meant to be applied to the world wide operations of businesses that might be subject to its provisions.(14) They are enforced through organizations called National Contact Points (NCP), established usually within one of the trade or commerce ministries of the adhering states.(15) These NCPs are meant to foster respect for the MNE Guidelines (as well as the other related work of the OECD) and provide the institutional framework through which interested stakeholders, usually elements of civil society, can bring allegations of breaches of the behavior provisions of the MNE Guidelines against businesses subject thereto.(16)
The enforcement framework for the MNE Guidelines has long been the subject of criticism, especially by representatives of private and public actors.(17) Much of this criticism has focused on the purported capture of the OECD Guidelines systems by business interests, and the weakness of the enforcement mechanisms, both in terms of procedure and delay.(18) The focus of these efforts is bent to the production of national or global systems of hard law aimed at achieving any number of regulatory goals.(19) In addition, developing states have criticized the approach as both reflecting on the views and values of developed states and as imposed, in fact, on developing states for their own good but without their consent.(20)
But two recent cases have suggested the ways in which enforcement actions arising from civil society efforts to utilize the national contacts points complaint system may be slowly influencing the emerging discourse of corporate behavior in ways that will have substantial effect. One, brought by Rights and Accountability in Development (RAID), a civil society actor,(21) against DAS Air, determined that the activities of a U.K. undertaking outside of the U.K. violated the Guidelines because they constituted breaches of international conventions to which its home country adhered.(22) The other, brought by Global Witness, another civil society actor,(23) against Afrimex, Ltd., determined that the activities of a group of corporations were related as a consequence of which the U.K. undertaking either failed to properly oversee the operations of its supply chain or participated as part of an enterprise in the violation of the Guidelines.(24)
These cases are ripe with possibility. Beyond evidence of a more muscular institutional transnational enforcement structure for soft law codes, the cases serve to outline a framework for the interaction of transnational and national systems of corporate regulation. The multilateral system for governing multinational corporate behavior will affect not only that behavior but also the rules through which corporations may be governed as to their internal affairs and with respect to the character of their legal personality. (25) And this without regard to the law of either home or host state, but instead grounded on transnational law principles derived from out of the soft law regime within which the cases arose. But they do more than that. Arising in the course of global efforts to manage the regional conflict in the Democratic Republic of the Congo, (26) the cases also suggest the strength of what may become a consensus on the applicability of international law directly to non-sovereign entities like multinational corporations. (27) This case note first briefly describes the institutional and regulatory framework within which the cases arose. It then reviews the cases themselves, drawing out the more relevant arguments. Lastly contextualizes those arguments and positions within national and transnational corporate and international legal regimes. These cases suggest an effective method for operationalizing a soft law system to produce the effects of hard law beyond the state, but without challenging state authority directly. The OECD system is moving forward through this form of institutionalizing quasi-judicial organs in parallel with other soft law implementation endeavors, principally those under the umbrella of the U.N. Global Compact. For this reason alone, the cases are important as an instance of developing the law of multinational obligation and the system under which such obligations are overseen.
II. THE REGULATORY CONTEXT
The MNE Guidelines are recommendations on responsible business conduct addressed by governments to multinational enterprises operating in or from adhering countries.(28) The theme of the OECD Ministerial level meeting that approved the revised Guidelines in 2000 was “Shaping Globalization”.(29) The integration of national economies into one global economy is accelerating and intensifying, driven by new technologies and new opportunities.(30) These new opportunities are not only to reap profit, but also to stimulate development and improved social conditions around the world.(31) The revised Guidelines will be an important instrument for shaping globalization.(32) They provide a government-backed standard of good corporate conduct that will help to level the playing field between competitors in the international market place.(33) They will also be a standard that corporations themselves can use to demonstrate that they are indeed important agents of positive change throughout the developing as well as the developed world.(34)
The MNE Guidelines are framed as recommendations addressed by governments to multinational enterprises operating in or from adhering countries. “Although endorsed by adhering Governments, the Guidelines are voluntary and are not intended to override local laws and legislation. The Guidelines are not intended to introduce differences of treatment between MNEs and domestic enterprises – they reflect good practice for all.”(35) They provide voluntary principles and standards for responsible business conduct in a variety of areas including employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation. (36)
The enforcement and naturalization work of the OECD are affected through its system of national contact points. These entities are established through government ministries and are charged with the implementation of adhering state obligations under the MNE Guidelines and other relevant soft law produced through the OECD. The NCPs serve several purposes. With respect to the MNE Guidelines, a principal obligation is the establishment of procedures for handling complaints brought by proper parties alleging violations by multinational corporations of their obligations under the Guidelines.(37) These procedures vary widely,(38) but all include provisions for complaint intake, mediation, and ultimately more formal hearing on complaints.(39) But because the MNE Guidelines are not legally binding, the usual protections accorded in binding proceedings are not necessarily observed. However, because of the potentially severe consequences to a determination of violation—including adverse consequences with investors and consumers,(40) as well as the possibility that the findings might lead to formal charges of violations of law—multinational entities tend to take these proceedings seriously.(41)
The national contact point structure, however, has come under increasing criticism from civil society actors. (42) They see the structure of the Guidelines and its enforcement mechanisms as a potential means for effecting the creation of a soft law consensus on regulatory frameworks for multinational corporations, and from that to build a hard law transnational regulatory framework. As a consequence they have been working to increase both the visibility and legitimacy of the enforcement mechanisms of these soft law systems. (43) But at the same time, such actors have increasingly turned to the mechanisms of MNE Guidelines enforcement to bring pressure on multinationals to conform to what is hoped to be an increasingly harmonized and consensus standard of global business behavior based on a specific interpretation of the MNE Guidelines.
In the United Kingdom, the U.K. National Contact Point (“UK-NCP”) “is bipartite, consisting of officials from the Department for Business, Enterprise, and Regulatory Reform (BERR), and the Department for International Development (DFID).”(44) The UK-NCP is one of several entities within the U.K. government concerned with overseeing policy on corporate social responsibility. (45) External members of the UK-NCP include elements from trade unions, business and civil society,(46) who are extensively consulted in all aspects of UK-NCP activities.(47) RAID, for example, has been an active stakeholder in the work of the UK-NCP in the United Kingdom. (48)
The procedures for handling complaints from start to finish, along with bureaucratic commitments respecting to time decision and the like are set forth in a set of published procedures available from the internet site of the UK-NPC.(49) In keeping with the structure of the MNE Guidelines, the UK-NPC’s focus had been on mediation, though it has been turning more often to the assessment process as of late.(50) To date it has considered about fifteen specific instances of complaints brought by elements of civil society.(51)
The intake procedure adopted by the UK-NCP is fairly simple. To commence the process a simple amount of rudimentary information is required. (52) The information provided on the form made available by the UK-NCP (53) is used to make an initial assessment of the strength of the claim and the value of going forward with mediation efforts.(54) The UK-NPC contemplates a multistage procedure consisting of an initial assessment,(55) mediation or examination,(56) and drafting and publication of the final statement.(57) The rules do not contemplate the application of the law of either the place where the purported breaches occurred or the law of the place where the undertaking has its headquarters or is chartered. Neither do the rules impose other rules or procedures that mimic judicial or administrative proceedings with legal effect. And of course, it is precisely because these proceedings are administrative but not binding that this sort of flexibility is possible. As will become apparent, that flexibility permits any NCP to utilize a rules framework detached from municipal law. Indeed, these proceedings suggest the way in which the MNE Guidelines serve as something like an autonomous transnational system, (58) grounded in its own terms and drawing on municipal and international law as a basis for the application of its own norms.
III. The Cases.
The U.K. National Contact Point decisions in Afrimex and DAS Air are described below. The object is not merely to describe the proceedings and outcome, but to suggest a way of reading the Statements that suggest the important developments of each case.
A. Rights and Accountability in Development (RAID) v DAS Air (21 July 2008). (59)
The complaint brought by RAID in 2005(60) was grounded in allegations arising from a purported violation by DAS Air of certain U.N. embargoes within a conflict zone in the eastern region of the Democratic Republic of the Congo (DRC). (61) RAID pointed to a list of specific activities that, it argued, constituted breaches of a number of the general prohibitions of the MNE Guidelines. (62) Much of this was fueled by the worldwide demand for the mineral coltan. “Coltan is the colloquial African name for columbite-tantalite, a metallic ore used to produce the elements niobium and tantalum.”(63) The specific activities at the heart of the complaint included operating aircraft in aid of the Ugandan invasion of DRC territory, air transport into DRC occupied by the Ugandan military during 2000-2001, operating civilian aircraft in a conflict zone, and the “transport of coltan from Kigali in Rwanda and the transport of cobalt from Entebbe in Uganda which had a reasonable probability of originating in eastern DRC during the conflict period.”(64)
It was brought against DAS Air in the United Kingdom because, though the activities giving rise to the complaint occurred in the regions around the DRC, the undertaking itself was registered in the United Kingdom.(65) During the course of the complaint resolution process, however, DAS Air and its related entities had become subject to a ban on operations within E.U. airspace (66), as a consequence of which (in part) DAS Air’s assets became subject to liquidation in 2007.(67) This had a substantial effect on the proceedings. From the time of its cessation of operations, DAS Air also ceased participating in the proceedings in late October 2006.(68) That, however, served as no impediment to the proceedings, or the determination of a breach by DAS Air;(69) the proceedings continued with the assistance of RAID only, though the remedies available were accordingly limited.(70) Whether that conclusion to the proceedings serves as an impediment to the use of the conclusions in other cases in the U.K. or by other National Contact Points in their deliberations is another matter.(71)
RAID’s complaint cast its net broadly, seeking a declaration of violation for substantially all of the period of the current conflict in the DRC during which DAS Air operated in the region, commencing in 1998 (the start of the second conflict) to December 2001 (when the airline stopped flying).(72) However, the MNE Guidelines under which the complaint was made did not become effective until 2000, and the UK-NCP would have been required to apply to earlier version of the MNE Guidelines to those flights absent consent form the company, a consent that in this case was not forthcoming.(73) The solution was relatively straightforward. The emphasis of the UK-NCP was on the three flights that occurred after June 2000, when the current version of the Guidelines were released. The other thirty-two flights that constituted the bulk of the evidence of breach were used as circumstantial evidence of continued breach.(74) But the MNE Guidelines themselves were not applied directly with respect to the pre 2000 flights to avoid retroactive application without consent.(75)
The UK-NCP relied heavily in support of its conclusions on factual determinations that appeared to have been generated through the investigative work of an international and a national commission. The first was the work of the UN Panel of Experts on the Illegal Exploitation of Natural Resources and other Forms of Wealth of the Democratic Republic of Congo (the “UN DRC Panel”). (76) The second was the work of the Ugandan Judicial Commission under Justice Porter, commonly known as the Porter Commission.(77) RAID had relied on three key elements of these reports. The first was a political conclusion of the UN DRC Panel with respect to the character of the conflict in DRC and its relationship to natural resource exploitation. (78) The second was the UN DRC Panel’s recounting of a belief in DAS Air’s participation. (79) The last was the Porter Commission conclusion that Ugandan military bases were being used to hide civilian incursions into the conflict zone. (80)
The later assertions were drawn from supporting records included in the Porter Commission Report.(81) The UK – NCP rejected DAS Air’s initial response that the Porter Commission data was fabricated for failure to provide any proof beyond its statement to that effect.(82) The proof that DAS Air flights occurred were the crucial foundation to the UK-NCP findings. From the fact of the flights, breach could be inferred in the following way. First, international law required that governments close the air space between Uganda and DRC during the relevant period.(83) Second, the Ugandan Government through its “Porter Commission Report concluded that it is likely that civilian flights did take place between DRC and Uganda during the period of the conflict in direct contravention of International Conventions.”(84) And third, relying on the data supplied in the Porter Commission Report, the UK-NCP determined that the DAS Air flights during the relevant period were civilian in nature. (85)
The UK-NCP lastly considered the internal operations of DAS Air within the DRC in connection with its transport activities.(86) The UK – NCP first accepted the conclusion by UN DRC Panel that the DRC conflict was fueled by the desire to exploit natural resources in the area and the private sector’s responsibility in those activities.(87) It presumed an obligation on the part of private undertakings to exercise heightened care in such situations to avoid complicity in lawless or illegal activity.(88) It then considered the extent of the influence that DAS Air could have had in its contracts with third parties to transport coltan from Kigali to Europe.(89) The MNE Guidelines commentary suggested a contextual analysis for determination of obligation.(90) The UK-NCP found that DAS Air undertook insufficient due diligence on the supply chain because it failed to question the source of the materials it transported.(91)
On this basis, the UK-NCP concluded that DAS Air had failed to meet the requirements of the Guidelines.(92) The UK-NCP’s affirmed an expectation that all UK MNEs abide by international conventions including the Convention on International Civil Aviation.(93) In addition, the mislabeling of flights as military, when they were not, by UK MNE’s is also prohibited.(94) Lastly, and perhaps of most note is the UK-NCP’s adoption of UN Resolution 1592 as being a “business requirement” that companies operating in the area must adhere to, despite the fact that the resolution is intended for nations, and not corporations.(95)
B. Global Witness v Afrimex (28 August 2008) (96).
The complaint, brought by Global Witness in February 2007, (97) was also fueled by the global markets for coltan and the turbulence in the DRC. Global Witness alleged that Afrimex paid taxes to rebel forces in the Democratic Republic Congo and that it practiced insufficient due diligence on the supply chain by sourcing minerals from mines which used child labor. (98) These activities were said to constitute breaches of a number of the provisions of the MNE Guidelines.(99) Afrimex vigorously contested the allegations as well as the conclusions suggested therefrom based on its own version of its conduct.(100)
As in the DAS Air proceedings, (101) the complaint sought to bring in activities that occurred before June 2000, when the current version of the MNE Guidelines came into force. Global Witness looked to activities that took place between 1998 (the start of the second conflict in the DRC) and February 2007 (when the complaint was filed). (102) The UK-NCP considered this activity indirectly. It limited its findings to those activities that took place after adoption of the current version of the MNE Guidelines, but considered pre-2000 activity as circumstantial evidence relevant to post 2000 conduct as the UK-NCP determined appropriate. (103)
The complaint was brought against Afrimex, a U.K. registered company founded in 1984. (104) The determination was based on the confluence of two streams of analysis. The first related to the situation in the relevant territory—the conflict zone of the DRC.(105) The second focused on the relationship among a group of entities that together were responsible for the actions at issue, for the purpose of assigning responsibility to any one or more of them.(106) The conclusions and data produced through the field work of United Nations officials proved crucial in making fact determinations and in supporting the UK-NCP’s conclusions about the state of affairs in the region at the time. It was particularly important in the determination of the character and effect of the relationship among Afrimex and to other companies, Société Kotecha (107) and SOCOMI. (108)
As in DAS Air, (109) the work of the UN Panel of Experts on the Illegal Exploitation of Natural Resources and other Forms of Wealth of the Democratic Republic of Congo played a critical role.(110) The reports provided the source for the presumption that the conflict in the DCR was in part about the control of the rights to exploit the region’s natural resources, and that “Companies trading minerals, which the Panel considered to be “the engine of the conflict in the Democratic Republic of Congo”, have prepared the field for illegal mining activities in the country.””(111) Among these was included the direct trade of arms for natural resources by international corporations doing business within the DRC.(112) In a crucial part of the report, Afrimex was one of the named companies included in this report.
Afrimex was first mentioned as a company of concern in the Panel’s first report and was subsequently listed in Annex III of the October 2002 report, as the Panel considered Afrimex to be in violation of the OECD Guidelines. After dialogue with Afrimex, the UN classified Afrimex in Category 1, a “resolved” case that required no further action. The discussions that took place between Afrimex and the UN following this report are summarized in the letter that Ketan Kotecha sent the UN. (113)
In addition, the UK-NCP took note of other U.N. activity related to the conflict in DRC to support the presumption of the “the explicit link between minerals and funding of rebel groups.”(114) They also noted the resolutions of the U.S. Security Council that also went to the issue of the conflict situation in DRC. (115)
Having satisfied itself of the nature of the context in against which corporate activity of Afrimex was to be judged, the UK-NCP reached the central issue of the case—the connection of Afrimex to both the DRC and the suspect activity—a connection Afrimex vigorously contested.(116) For that purpose it would be necessary to connect Afrimex to two other entities—Société Kotecha and SOCOMI.(117) Although Afrimex was able to present enough evidence to convince the panel that there was clear separation between the businesses,(118) the overlap between the directors of each respective corporation was enough to convince the UK-NCP that Afrimex “was in a position to significantly influence Société Kotecha and SOCOMI.”(119) It would thus treat the three companies as “linked,”(120) a ambiguous term, because it neither suggested that the companies were substantially each other’s alter ego nor that one necessarily dominated the other, but that they might tend in that direction sufficiently, at least for the analysis that followed.
Having determined the “link,” the UK – NCP then applied the MNE Guidelines requirements on the amalgamated entity (whatever the legal nature of their formal or effective connection) in the factual context of the conflict situation in that part of the DRC in which the complained events occurred.(121) The UK-NCP was of the belief that Afrimex was in a strong position to influence SOCOMI with respect to the issue of the character of the taxes and licensing fees paid to RCD-Goma, a rebel group that operated within the DRC conflict zone.(122) The Panel then concluded that Afrimex failed to apply due pressure to SOCOMI to stop these practices.(123)
Because SOCOMI was not the only supplier to Afrimex, the UK – NCP also considered the issue of the violation of the supply chain conduct rules of the MNE Guidelines.(124) The UK-NCP also found that Afrimex failed to conduct a “due diligence” inquiry to the supply chain relation among these entities.(125) The UK-NCP looked to the work of the U.N. Special Representative to the Secretary General on the Global Compact, John Ruggie (126), for a transnational definition of the term due diligence for application in the context of the MNE Guidelines.(127) Because Afrimex had such influence over its suppliers that it could have required greater compliance with the Guidelines, the UK-NCP considered that Afrimex failed to perform the sufficient due diligence required when dealing with its suppliers in a conflict zone as the DRC.(128) Indeed, the dangers inherent in doing business in the conflict zone itself evidenced the need for greater scrutiny.(129) But it chose to apply a monitoring standard that, while perhaps acceptable outside of conflict zones, was insufficient in areas where government authority is weak.(130) “The NCP does not consider the suppliers’ statements constitute sufficient due diligence, particularly as it does not deal with rents extracted through the supply chain.”(131) Furthermore, the UK-NCP found that Afrimex failed to encourage its business partners to apply principles of corporate conduct compatible with the Guidelines.(132) The UK-NCP lastly rejected the assertion that Afrimex engaged in conduct that amounted to bribery.(133)
On the basis of this analysis, the UK-NCP, concluded that Afrimex was well aware of the situation in the DRC and especially in the conflict zone.(134) Afrimex was active in the conflict zone during relevant periods, and though it paid no taxes, its associated enterprises did, constituting a breach of the MNE Guidelines.(135) Afrimex also breached its MNE Guidelines obligations by failing to encourage its business partners to embrace the conduct norms of the MNE Guidelines.(136) The UK – NCP also determined that Afrimex failed to appropriately discipline its supplier chain. “The UK NCP expects UK business to respect human rights and to take steps to ensure it does not contribute to human rights abuses.”(137)
The UN –NCP offered a slew of recommendations. (138) These included several that required Afrimex to directly apply a number of international norms and standards. Afrimex offered to formulate a corporate responsibility document under which to better operate in the future. (139) The UK-NCP noted the relevance of the OECD Risk Awareness Tool for MNEs in Weak Governance Zones, which were developed as part of the OECD’s Investment Committee’s follow up to the Guidelines. (140) This decision by the UK-NCP stresses the growing importance that the Guidelines have in influencing corporate behavior across state lines. In particular, corporations may be held responsible for the actions of third parties in their supply chains if they fail to apply a due diligence check on said supply chain. Most importantly, it suggests the importance of soft law principles especially as a substitute for hard law in weak government areas and the power of transnational legal standards to supplement and supplant national standards. (141)
IV. THE ANALYTICAL CONTEXT.
The cases present an interesting advance in both the jurisdiction and jurisprudence. Together they illustrate the way in which advances in governance issues are being crafted, step-by-step, from out of a system that, while formally non-binding, is increasingly developing the characteristics of a binding governance system.(142) They suggest that the political economy of governance no longer necessarily depends on the state and “law” but now functions in a regulatory context in which municipal and international law converge within hybrid systems of regulation that is not formally law but provides a functionally similar normative framework.(143) But the governance framework is neither municipal nor international, it draws on soft law produced through the organs of the United Nations,(144) the work of the International Court of Justice,(145) and the findings of other national contact points,(146) as permitted under the MNE Guidelines themselves. Instead, the MNE Guidelines are beginning to serve as the focal point for the construction of an autonomous transnational governance system that is meant to serve as the touchstone for corporate behavior in multinational economic relationships. (147)
That transnational system is acquiring its own unique qualities that distinguish it from both the municipal and international law systems from which it draws. There are a number of common, if conventional, points worth stressing relating to that point. First, the cases evidence the way in which international law rules are coming to have a direct effect on multinational transactions. Second, they suggest the way in which governance systems imply an obligation on the part of enterprises to undertake sovereign responsibilities under certain circumstances. Third, the cases point to the process rules being developed for the processing of complaints against multinational corporations. And lastly, the cases suggest the sometimes significant variance there may be developing between the application of MNE Guidelines and the corporate law of the municipalities within which the activities at issue may have occurred.
Ultimately, under the guise of “soft” law, the OECD may be able to construct a system of customary law and practice as binding as any hard law system because it is hard wired into the practices and routines of the corporate environment in which it is deployed. There is irony here. Through “voluntary” guidelines, the OECD framework may be able to accomplish what was so fiercely resisted in the form of the more formally binding and institutionalized model of the Norms.(148) But critical to this effort are the quasi-judicial work of the National Contact Points that are meant to serve as the sort of nascent common law courts of this rising customary law transnational system.(149) It is in that respect that the objectives of the Norms might well be realized in a more binding manner than under the more formally binding but disruptive framework of the Norms. This section provides a brief unpacking of these necessarily preliminary but potentially complex interactions between the MNE governance framework and the legal systems against which they operate.
A. The Construction of an Interlinked System of International and Municipal Hard and Soft Law.
The two cases highlight four central issues of any supra-national enterprise regulatory scheme: first the conceptual difficulties of direct imposition of international law on non state actors; second, the imposition of soft as well as hard law norms in equal measure; and third, the deputization of civil society actors as a critical element in the enforcement of soft law principles; and fourth, the role of the National Contact Points in a quasi-judicial role unsupported by traditional rule of law limits.(150) In each of these issues, the cases suggest the ways in which, while loudly proclaiming the ineffectiveness of MNE Guidelines proceedings in law, each has been made more effective in fact.(151)
While the MNE Guidelines themselves describe a soft relationship between international law norms, the entities subject to the MNE Guidelines and the state,(152) the National Contact Point in each of the cases appeared to suggest that DAS Air and Afrimex had direct obligations under international law, the breach of which ran contrary to their obligations under the MNE Guidelines.(153) Of course, this presumption would be untenable under traditional notions of international law,(154) and are problematic even under the more ambiguous provisions of the MNE Guidelines. Thus, for example, in the consideration of breaches of the MNE Guidelines by DAS Air, the UK-NCP noted that the “issue that the NCP considered for the purpose of this specific instance is whether DAS Air participated in these flights which would have been in direct contravention of International Aviation Conventions leading to a failure to meet the expectations of paragraphs 1.7 and II.5 of the Guidelines.”(155) Moreover Afrimex was to be mindful of the effects of its business practices on indirectly violating the arms embargo in the DRC conflict zone. (156) But this suggests a direct relationship between the private actor and international law a relationship about which states had strongly objected. (157)
But the National Contact Points in both cases were able to do what the United Nations establishment was unable to accomplish through the Norms structure precisely because the method used was soft rather than hard law. Because neither are technically law, both could serve as the basis for behavior regulation in effect. The technical monopoly power of the state over law was not affected by regulatory systems that do not bind in law and could thus have an equivalent effect, at least as far as the entity subject to National Contact Point proceedings is concerned. Thus the increasing power of soft law, it is formally non-existent yet can become a powerful effective force of substantive behavior regulation. The MNE Guidelines represent the contemporary way in which soft law systems can create hard international law.(158) The MNE Guidelines thus clearly provide a consensus making formula that eventually will be translated into legislation acceptable to all those stakeholders that have contributed to its terms and whose values are reflected therein. There is irony here.
Critical in that development, of course, is the work of the National Contact Points, the royal courts of this developing common law. This is well understood by the civil society actors that have become a decisive element in pushing this framework forward in its institutionalization.(159) Indeed, civil society actors have played as increasingly large role in managing the development of soft law in the public and private sector across a large variety of subject areas.(160) In this case, the civil society actors, RAID and Global Witness, used these actions to help construct international values and norms through an interpretive elaboration of the MNE Guidelines. They meant to continue to transform moral/ethical consensus into formally binding form, first within bureaucratized systems of soft law and then ultimately into instruments of law in form as well as fact. (161) The cases, then, suggest their power in their form: an institutionalization of dispute resolution in which elements of civil society undertake the traditional enforcement role of the state.(162) The state provides the judge, but not the law. Civil society provides the enforcement mechanism. Economic enterprises serve as both objects and subjects of a law that is derived from both the obligations of states and the presumed rules produced by international actors. (163)
But the cases raise a larger and more potent issue with respect to the division of power between states and private undertakings—the governance role of private economic actors within territories in which state power is weak or illegitimate. (164) In that context, the National Contact Points in both cases suggested that the OECD principles themselves imposed on private undertakings the obligations to like a state and in lieu of the state. In effect, for purposes of the cases, in lawless areas like the DRC-Goma, both DAS Air and Afrimex were meant to operate as the state for purposes of ordering their conduct and the conduct of those they might influence. The relationship between DAS Air and Afrimex (and especially Afrimex) and its controlled entities, and those entities they controlled, thus becomes regulatory rather than commercial in character.(165) “MNCs have always been powerful players in the international society and have since long been accepted as partners in the conclusion of ‘internationalized’ contracts with states. In such cases, many have argued, they are endowed with a kind of derived [international legal personality].”(166) The two cases both take small steps in the effectuation of this reality.
Thus, the National Contact Points would, though an interpretive application of the OECD Risk Awareness Tool (167), serve as both undertaking and state—regulator and participant in the markets in a territory in which the state is, to some extent, absent.(168) Multinational enterprises have been asserting this authority on their own for a number of years.(169) What is different here is the incorporation of this idea within the soft law quasi legal framework of the MNE Guidelines framework. We move from private, contract based non-state systems, to hybrid public-private governance framework; another step toward the formal recognition of entities as proper subjects of international law.
Lastly, from a more global perspective, these cases can be understood not so much as efforts to develop systems of transnational regulation of multinational corporations, but as efforts to comprehensively regulate the rules for warfare and violence among state and non-state actors. Both of the cases had much in common on that score. They focused on the conflict in the Eastern DRC both as an internal matter and in the context of foreign invasion. The situation provided an important opportunity to add to the legal mechanisms through which warfare is managed, and constrained by rules.(170) For civil society actors in these cases, the MNE Guidelines provided a means of extending the scope of that regulatory environment both to non state actors indirectly involved by the invocation of and strengthening of the mechanisms of soft law control.(171) And that is perhaps the greatest insight that can be drawn from these cases in the context of international law: both Afrimex and DAS Air cases suggest the way in which international soft and hard law, national law, and transnational custom and customary normative frameworks (institutionalized or not) are converging within a dynamic matrix where each, developing separately, come together to coordinate and resolve issues that arise beyond the state.(172) The MNE Guidelines enterprise thus fits in nicely with what Gunther Teubner describes as polycentric globalization.(173)
B. Corporate Law Challenges.
As interesting as the effects of the cases on the construction of complex transnational governance systems might are, the cases also evidence potentially important engagements with traditional notions of corporate law and regulation. These are explored briefly here. There were two potentially significant issues that might affect the way in which corporate law principles are understood and applied under municipal law. These approaches are important if only because they either challenge the supremacy of municipal law as the source of corporate law norms or they will serve as a strong incentive to harmonize these corporate law principles. (174) The first deals with the law respecting the separate corporate existence of separately constituted undertakings. The second concerns an understanding of enterprise liability.
i. Respect for the Separate Legal Personality of Separately Constituted Undertakings. Within Anglo-American corporate law, the protection of the separate legal personality of economic entities operating in corporate form has been strongly defended.(175) Most states have developed rules for the protection of that autonomy, both from people who seek to impose responsibility on shareholders (and object stakeholders) for the obligations running to corporations, and also from people who seek to impose responsibility on corporations for the acts of their stakeholders (principally shareholders).(176) Most states also have quite complicated rules for determining when those rules can be avoided, by “piercing the veil” of autonomy of these separate legal actors.(177) At the same time, states have been more willing to try to seek to extend their authority over elements of corporate activity stretching across borders when it serves their interests.(178)
Yet, despite the nod to municipal law in the MNE Guidelines, neither National Contact Point panel considered either the law of corporate autonomy nor the rules by which that autonomy could be disregarded under either the law of the home or host states. Instead, the panels relied on the construction of its own standards for making that determination, grounded in something that appeared to mimic English and American equity practice, but subject to its own internal logic. The consideration of the relationship among Afrimex, Société Kotecha and SOCOMI is telling. (179) Because the “law” of the MNE Guidelines forms part of the arrangements among the relevant stakeholders, municipal law appears irrelevant, “they are waived by the parties to the contract. However, it is not clear that the board of directors may waive the limited liability rights of shareholders without their consent. Such a power may be beyond the reach of the board or its officers.”(180)
Still, the MNE Guidelines are now read as making hard law municipal provisions irrelevant to their determination. On one level that makes sense: the MNE Guidelines are without legal effect and self referential with respect to the obligations they impose on its community of actors. On the other hand, the MNE incorporates national and international hard and soft law by reference. (181) It is hard to understand that incorporation as so selective as to permit national contact points to choose from among them. But that is precisely what the national contact point does in Afrimex, at least to the extent it first determines the associated status of the three entities and then imposes collective liability on them for actions in a foreign jurisdiction (whose own law of corporate aggregation is disregarded as well). The result, then, can be enforced only unofficially—or through transnational mechanisms. It is unlikely to find enforcement in states, like the United States, where such determinations might be deemed inconsistent with state corporate law, absent modification of municipal law.(182) More likely, the result serves another purpose: “The legal foundations of the ‘legitimating’ effect of international declarations regarding the conduct of MNEs are most readily apparent where these declarations, or instruments adopted in reference thereto, affirmatively recommend the transformation of their contents into enforceable rules of domestic law.”(183)
And indeed, it might be possible to consider the National Contact Point cases as important points in the production of a stream of semi-public pronouncements that could lead to the discovery (or evolution) of what, as customary international law, might then be imposed on host and home states. This is an “alternative mechanism for global legislation . . . custom may serve as a pathfinder for later established more specific treaty rules.”(184) The substance of the Norms’ project is now furthered through the institutionalization of soft power mechanisms that affect a governance regime different from that of home or host state law.
ii. Enterprise Liability. One of the more closely guarded legal protections of state law is its rules for avoiding liability between separately constituted parts of a large economic enterprise operating through a large number of subsidiaries. But states have also have tentatively sought to find circumstances under which the aggregate parts of a multi-corporate enterprise can be held collectively liable for the acts of any of its respective parts.(185) And most states recognize the tension between corporate structures that take advantage of the benefits of asset protection under the rules of limited liability and separate legal personality of corporations (and similar entities) and the business organization of the aggregate entity.(186)
The supplier chain governance rules, especially as applied against Afrimex, (187) suggest the construction of a new set of enterprise liability norms in which regulatory responsibility becomes the foundation for regulation of the legal relationships between unrelated companies. Indeed, though the notion of supply chain is itself contested,(188) the National Contact Point assumed that SOCOMI might be part of Afrimex’s supply chain (189), and that the comptoirs used by Afrimex were (as did Afrimex).(190) It is true enough that this sort of regulatory enterprise model is already fairly well advanced, as system, in the construction of contract based private regulatory systems of multinational enterprises.(191) But that sort of private regulatory systems takes on something of a different character when it emanates from the state. The difference, of course, is that the enterprise liability contemplated in cases like Afrimex are also coupled with the transformation of the corporation into a quasi state actor, an entity with publicly infused regulatory obligations, the failure of which to assert correctly can lead consequences.(192)
From a perspective of international law, the formalities remain clear—states remain sovereign, corporations serve in a subordinate capacity as agents, whose powers may increase as the ability of the state to project power diminishes, and in any case, the corporation must “think like a state” in devising it commercial relationships with other actors. That was, in essence, the perspective of the Afrimex National Contact Point Panel. (193) But the consequences for the municipal regulatory control of corporations—and especially core state public policy about the fundamental character of entities as profit or wealth maximizing private actors—can be significant. (194) Not that the results are “bad” or unwarranted—but that the failure to discuss and the absence of the state from these developments seems awkward at best.
C. Procedural Issues.
One of the more interesting aspects of the cases has been the freedom with which the National Contact Points have fashioned their own procedural and evidentiary rules. These tend to deepen both the institutional legitimacy of the process and its separation (autonomy) from the municipal and international law systems which are referenced in its substantive rules. (195) A fully developed and autonomous system of dispute resolution contributes greatly to the autonomy of rule systems. “To the extent that states discharge their responsibility by taking the difficult political decisions which are needed to formulate new legal principles, they strengthen the process of adjudication by providing courts and tribunals with a legitimate basis for their decisions.”(196) The two cases point to the development of this autonomy, especially in the freedom with which the National Contact Points sought to develop their own rules for burdens of proof, sufficiency of evidence, applicability of the rules, and issues of mootness are illustrative.
Both the Afrimex and DAS Air panels considered the effects of instances of rule violation that occurred before the adoption of the MNE Guidelines in the current form. (197) Both reached the same conclusion, reasonable in the context of English jurisprudence, that only those actions that occurred after the adoption of the rules would be the subject of consideration. But the panels did not disregard prior conduct completely. Instead they determined that such conduct was pertinent in considering the behavior of the entities. The distinction, thus, made little difference in the proceedings. For all practical effects, prior conduct was dispositive in both cases, though they were not the direct subjects of the complaints. This procedural rule might well be in accord with the rules recognizable in English courts. But the panels did not stop long enough to consider that issue. Instead, they made their determination on the basis of their consideration of the objectives, principles and context of the MNE Guidelines themselves—without reference to the law of the state in which they sat. The fig leaf over this determination, of course, was that the proceedings had no formal legal effect. But they did have substantive effect that in some respects mimicked proceedings before a state tribunal. In that context, assertion of a power to determine the effects of evidentiary facts is strong evidence of the autonomy of the rule system grounded in the MNE Guidelines.
The National Contact Point panels asserted a similar autonomy in constructing rules of burdens of proof without reference to those either of the establishing institution (the OECD) or the home or host state. Thus, for example, in Afrimex, the National Contact Points panel suggested that Afrimex had the burden of proving that its minerals were not sourced from mines that used child or forced labor rather than the complainant, Global Witness, bearing the burden of proving that they were sourced from such operations. (198) There was no basis for this determination other than the principles inherent in the MNE Guidelines framework, perhaps. In DAS Air, the panel determined that the failure of DAS Air to respond, principally because the company was being liquidated, would not affect the evidentiary determinations, or better, might be read against them, was also made without reference to procedural rules outside of those constructed by the panel. (199)
This is not meant as a criticism of the procedural choices of the panels, but rather as a suggestion that the freedom of those panels to choose the procedural rules under which their consideration of the complaints would proceed suggest an autonomy that begins to more clearly establish the autonomy of the normative systems within which these entities were judged. And it was clear that procedural autonomy was on the minds of the panel. This is nicely illustrated by those instances in which the panel was quite sensitive to the applicability of the host state process rules in arriving at their own determinations. For example, in DAS Air, the panel gave greater weight to evidence offered by RAID produced by the Ugandan Porter Commission because it “gathered extensive documentation. It worked only with sworn evidence given in public. The Commission adhered to the Evidence Act in its proceedings.”(200) But an international imprimatur was important as well.(201) On the other hand, in the Afrimex complaint, the National Contact Point was satisfied to judge the credibility of evidence produced through a Belgian NGO by the receipt of assurances from the Belgian National Contact Point “who confirmed the credibility of the organization and its work.”(202) Contrast the same panel’s consideration of the issue of mootness.(203) This was striking in the DAS Air panel statement, with respect to the basis for the panel determination in which the panel determined to give no effect to the liquidation of the entity in proceeding with the complaint.(204)
V. CONCLUSION.
“If a proper balance is to be achieved, the law must continue to develop to reflect the reality of TNC operations and adapt to counter TNC methods of avoiding legal responsibility.”(205) The idea of state intervention in transnational private activity, and the understanding of private economic activity as laced with public policy ramifications, and burdens, has been growing as the economic crisis has deepened after 2005. Indeed, in early 2009, the G-7 ministers declared an intention to work toward “setting up a set of common principles on integrity, transparency and propriety in global financial and business transactions.”(206)
The OECDs soft law initiatives, and importantly its growing body of interpretive reviews of complaints through its National Contact Points, will likely be influential in developing these attempts to renew efforts at global harder governance of multinational corporations and other economic activity.(208) But the efforts will be uneven.(209) The OECD, itself, will be examining its own regulatory posture, taking advantage of the insights and opportunities presented by the global economic downturn. “The OECD will be looking at existing legal instruments, guidelines and conventions in the coming months to see if they need to be improved or extended.”(210)
For all that, the output of quasi judicial and interpretive statements, like those of the U.K National Contact Point in the matters of DAS Air and Afrimex, will continue to contribute, incrementally, to the institutionalization of transnational systems of multinational regulation, systems that will have legal effect, whether to not this is law, classically understood. These cases continue an effective process of operationalizing soft law to produce the effects of hard law beyond the state, but without challenging state authority directly. (211) The OECD system is moving forward through this form of institutionalizing quasi-judicial organs in parallel with other soft law operationalizing endeavors, principally those under the umbrella of the U.N. Global Compact. (212)
RAID hailed the DAS Air case for its transnational elements. (213) But the case, along with Afrimex will have significantly broader and deeper implications. It is clear that this approach will be changing, in favor of more direct regulation. There was a sense that the political had to defer to the economic and social sectors on the basis of a markets ideology that appeared to restrict political power to its territorial limits and insist on global regimes of lightly fettered free movement of capital. (214) No longer. Whether it comes in the form of harmonized transnational standards to be implemented by national governments, or by the adoption of an international convention for that purpose, it is clear that attempts will be made to move from voluntary to more coercive legal regimes. Indeed, for some elements of civil society, that day is effectively here. (215)
In the process more than a regulatory framework for the regulation of multinational enterprises will be affected. As the two cases reviewed make clear, all of the fundamentals of national corporate law—from piercing the corporate veil, to notions of enterprise liability, to that great issue of the direct relationship between international law and private economic actors (without the shield of the state standing between entity and obligation)—will be part of the regulatory reform conversation. In the process state corporate law will likely be internationalized in the way in which, in federal states like the United States, it has slowly been moving from states to the national government as a consequence of regulatory responses to crisis. (216)
Larry Catá Backer (217)
ENDNOTES
1. Statement By The United Kingdom National Contact Point (NCP) For OECD Guidelines For Multinational Enterprises (NCP): Das Air, available http://www.berr.gov.uk/files/file47346.doc (accessed Dec. 29, 2008).
2. Final statement by the UK national contact point for the OECD guidelines for multinational enterprises: Afrimex (UK) Ltd, Available http://www.berr.gov.uk/files/file47555.doc (accessed Dec. 29, 2008) (Global Witness v Afrimex (28 August 2008).
3. See, e.g., PETER MUCHLINSKI, MULTINATIONAL ENTERPRISES AND THE LAW (Oxford, Eng: Blackwell, 1999); PHILIP I. BLUMBERG, THE MULTINATIONAL CHALLENGE TO CORPORATION LAW (New York: Oxford University Press, 1993); DAVID C. KORTEN, WHEN CORPORATIONS RULE THE WORLD (2d ed., San Francisco: Kumarian Press, 2001); Fleur Johns, The Invisibility of the Transnational Corporation: An Analysis of International Law and Theory, 19 MELBOURNE UNIVERSITY LAW REVIEW 893 (1994).
4. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287-389 (2006).
5. See Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights, U.N. Comm. on Human Rights, Sub-Comm. on the Promotion and Prot. of Human Rights, Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights, E/CN.4/Sub.2/2003/L.8 (7 August 2003) available at http://www.unhchr.ch/huridocda/huridoca.nsf/Documents?OpenFrameset (hereafter “the “Norms”). The Norms were effectively abandoned in early 2005, and efforts to formally regulate transnational corporations transferred to other United Nation’s offices. For a discussion of the Norms in the context of global movements for harmonized corporate social responsibility regimes, see, e.g., JENNIFER A. ZERK, MULTINATIONALS AND CORPORATE SOCIAL RESPONSIBILITY: LIMITATIONS AND OPPORTUNITIES IN INTERNATIONAL LAW (Cambridge, England, Cambridge University Press 2006).
6. See, e.g., Larry Catá Backer, Multinational Corporations as Objects and Sources of Transnational Regulation, 14 ILSA JOURNAL OF INTERNATIONAL AND COMPARATIVE LAW 499, 500-508 (2008).
7. Cf. T. Gruchella-Wesierski, A Framework for Understanding Soft Law, 30 MCGILL LAW JOURNAL 37 (1984); Hans Baade, Legal Effects of Codes of Conduct, in LEGAL PROBLEMS OF CODES OF CONDUCT FOR MULTINATIONAL ENTERPRISES (The Hague: Kluwer, 1980).
8. See United Nations, Global Compact, available at http://www.unglobalcompact.org/ (accessed Feb. 11, 2009) (“The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption.” U.N. Global Compact, Overview of the U.N. Global Compact, available http://www.unglobalcompact.org/AboutTheGC/index.html). As late as early 2008, United Nations through the special representative of the Secretary General for the Global Compact, John Ruggie, had been happy to make the best of the deal that seemed firmly in place--a regime of voluntary standards applicable to multinational enterprises. See John Ruggie, Protect, Respect and Remedy: A Framework for Business and Human Rights, A/HRC/8/5 (April 7, 2008).
9. The Organization for Economic Co-operation and Development (OECD) brings together the governments of countries committed to democracy and the market economy from around the world for a variety of development regulatory and harmonization purposes. See OECD, About OECD, available http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html, (accessed Jan. 12, 2009). Thirty three nations are currently members of the OECD, including Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States. See http://www.oecd.org/document/58/0,3343,en_2649_201185_1889402_1_1_1_1,00.html (last visited February 28, 2009). Eleven other states are not members but have adhered to the OECD Guidelines, including Argentina, Brazil, Chile, Estonia, Egypt, Israel, Latvia, Lithuania, Peru, Romania & Slovenia. CITE.
10. See, e.g., OECD Principles of Corporate Governance (2004), available http://www.oecd.org/document/49/0,3343,en_2649_34813_31530865_1_1_1_1,00.html (last visited February 28, 2009). It has been described as “The Principles are a living instrument offering non-binding standards and good practices as well as guidance on implementation, which can be adapted to the specific circumstances of individual countries and regions.” Id. at 4.
11. See OECD Guidelines for Multinational Enterprises (2000), available http://www.berr.gov.uk/files/file46192.pdf (accessed Feb. 1, 2009). The relevant provisions are discussed infra at Section II. Following the adoption of the Revised OECD Guidelines for Multinational Enterprises on the occasion of the OECD's annual Council meeting at ministerial level in Paris on 27 June 2000, the OECD published a booklet which comprises the following elements: revised text and commentary, implementation procedures and the Declaration on International Investment and Multinational Enterprises. The Guidelines can be found online at http://www.oecd.org/dataoecd/56/36/1922428.pdf.
12. Id.
13. Id.
14. Id.
15. See MNE Guidelines at Procedural Guidance, 35, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited February 28, 2009).
16. See id.
17. “In February 2007, the Special Representative of the Secretary General, John Ruggie, stated in his report to the Human Rights Council in Geneva, that “some NCPs have also become more transparent about the details of complaints and conclusions, permitting greater social tracking of corporate conduct, although the NCPs’ overall performance remains highly uneven.” OECD Watch, Model National Contact Point (Sept. 2007) at 24 & n. 2, available http://www.transparency.de/fileadmin/pdfs/intern/Corporate_Accountability/1_The_Model_European_National_Contact_Point.pdf.
18. OECD Observer, Cleaner Business, can be found online at: http://www.oecdobserver.org/news/fullstory.php/aid/1173/Cleaner_business.html (last visited on February 28, 2009). There is irony here. “The development and enforcement of OECD Guidelines for Multinational Enterprises provides an example of how institutions can seek the support of NGOs in their relationship with principals. NGOs have been involved in the drafting of the Guidelines and promote them in a larger endeavor to increase corporate social responsibility.” Ingo Venzke, International Bureaucracies From a Political Science Perspective—Agency, Authority, and International Institutional Law, 9 GERMAN LAW REVIEW 1401, 1420 (2008).
19. Thus for example, see , Jackson, James K., CRS Report for Congress: The OECD, can be found online at http://www.fas.org/sgp/crs/misc/RS21128.pdf (last visited February 28, 2009). See also L. Dhooge, Beyond Volunteerism: Social Disclosure and France’s Nouvelles Regulations Economiques, 21ARIZONA JOURNAL OF INTERNATIONAL AND COMPARATIVE LAW 441 (2004).
20. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287-389 (2006) (“This form of “volunteerism” has been criticized by developing countries as lacking input from representatives of developing states. Though crafted by developed countries as voluntary standards, such volunteerism is binding in fact for developing states.” Id., at --; citing Fidel Castro Ruz, Speech at the Great Hall of the Central University of Venezuela: Una Revolucion Solo Puede Ser Hija de la Cultura y de las Ideas (Feb. 3, 1999), available at http://www.cuba.cu/gobierno/discursos/1999/esp/f03299e.html.)
21. “We are a research and advocacy NGO based in Oxford, U.K. that promotes respect for human rights and responsible conduct by companies abroad. In September 2003, we became a fully independent organisation. RAID, Who We Are, available http://raid-uk.org/about_us.htm (accessed Feb. 10, 2009) (We were founded by Patricia Feeney and Tom Kenny in 1997, while they worked with the Refugee Studies Centre, Queen Elizabeth House, University of Oxford. . . We are run by Patricia Feeney, who undertakes research and advocacy work internationally. RAID’s Senior Research Consultant is Tom Kenny.” Id.). According to its website, “RAID's mission is to promote a rights-based approach to development. RAID works to advance corporate accountability, fair investment and good governance to ensure the human rights of people living in poverty are respected by the private sector, international financial institutions and governments.” Id., Our Work, available http://raid-uk.org/work.htm (accessed Feb. 10, 2009).
22. Statement By The United Kingdom National Contact Point (NCP) For OECD Guidelines For Multinational Enterprises (NCP): Das Air, 21 July 2008, available http://www.berr.gov.uk/files/file47346.doc (accessed Dec. 29, 2008) (Rights And Accountability In Development (RAID) v DAS Air (21 July 2008)). The complaint alleged breaches under a variety of provisions of the MNE Guidelines resulting from DAS Air’s failure to apply due diligence when transporting minerals between Entebbe and Kigali, which had a reasonable probability of being sourced from the conflict zone in the Democratic Republic of Congo (DRC) and its commercial flight activities between Entebbe airport and the conflict zone in eastern Democratic Republic of the Congo coinciding with an occupation of the area by the Ugandan military. A flight ban between DRC and Entebbe was in place during the applicable period, violations of which were in direct contravention of international aviation conventions (the Chicago Convention). The UK-National Contact Point (UK-NCP) determined that the complaints were valid. Id., at ¶¶47-50.
23. “Global Witness exposes the corrupt exploitation of natural resources and international trade systems, to drive campaigns that end impunity, resource-linked conflict, and human rights and environmental abuses.” Global Witness, About Us, available http://www.globalwitness.org/pages/en/about_us.html (accessed Feb. 10, 2009). It was founded in 1993 and now has offices in London and Washington, D.C. Id., History, available http://www.globalwitness.org/pages/en/about_us.html (accessed Feb. 10, 2009).
24. Final statement by the UK National Contact Point for the OECD guidelines for multinational enterprises: Afrimex (UK) Ltd, URN 08/1209 28 August 2008, available http://www.berr.gov.uk/files/file47555.doc (accessed Dec. 29, 2008) (Global Witness v Afrimex (28 August 2008)). The complaint alleged the violation of a variety of provisions in the MNE Guidelines grounded in the charge that Afrimex paid taxes to rebel forces in the Democratic Republic of Congo and practiced insufficient due diligence on the supply chain, sourcing minerals from mines that used child and forced labour, who work under unacceptable health and safety practices. The UK-NCP upheld the majority of the allegations brought by Global Witness. These violations occurred through the actions of Afrimex and what the UK-NCP determined to be a group of companies operating as an enterprise in the business of purchasing natural resources from mines within a conflict zone in the Democratic Republic of the Congo. The UK-NCP determined that Afrimex failed to contribute to the sustainable development in the region, to respect human rights, to influence business partners and suppliers to adhere to the Guidelines, to apply sufficient due diligence to the supply chain, and to take adequate steps to contribute to the abolition of child and forced labor in the mines or to take steps to influence the conditions of the mines. The UK-NCP, however, also determined that Afrimex and its related undertakings did not engage in activities that could be characterized as corruption or bribery or otherwise improperly involve themselves in local politics.
25. This was made quite clear in the context of the near adoption of the U.N. Norms and is equally applicable in this context. See, Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287, 357-374 (2006).
26. See, e.g., Relief Web, The Curse of Gold: Democratic Republic of Congo, can be found online at: http://www.reliefweb.int/rw/RWB.NSF/db900SID/RMOI-6CY3E5?OpenDocument, (last visited February 28, 2009). All were cited in the discussions of the cases. See text and notes --, infra.
27. Cf. M. Mertus, Considering Non-State Actors in the New Lillenium: Towards Expanded Participation in Norm Creation and Norm Application, 32 INTERNATIONAL LAW & POLITICS537 (2000); J. Johnson, Public-Private Convergence: How the Private Actor Can Shape Public International Law Labour Standards, 24 BROOKLYN JOURNAL OF INTERNATIONAL LAW 291 (1998); Jordan Paust, Human Rights Responsibilities of Private Corporations, 35 VANDERBILT JOURNAL OF INTERNATIONAL LAW (2002).
28. OECD Guidelines, at p. 5, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited on Jan. 12, 2009).
29. Guidelines, at p. 5, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited on Jan. 12, 2009) at 3.
30. Id.
31. Id.
32. Id.
33. Id.
34. OECD Guidelines, at p. 3, see n. 2, supra.
35. Government of Canada, Canada’s National Contact Point (NCP) for the OECD Guidelines for MNEs, What Are the Guidelines?, available, http://www.international.gc.ca/trade-agreements-accords-commerciaux/ncp-pcn/guidelines-principes.aspx?lang=eng (accessed Feb,. 15, 2009)
36. For a discussion of the MNE Guidelines, see, e.g. The Business and Industry Advisory Committee to the OECD, Business Briefs for the OECD MNE Guidelines, http://www.biac.org/pubs/briefs_mne_guidelines.htm, (last visited February 28, 2009).
37. MNE Guidelines, Procedural Guidance, 35, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited February 28, 2009).
38. OECD Policy Brief: The OECD Guidelines for Multinational Enterprises, (June 2001), can be found online at: http://www.oecd.org/dataoecd/12/21/1903291.pdf (last visited on March 5, 2009).
39. Id.
40. On the importance of soft consequences to multinational enterprises and their effect in disciplining their behavior, see Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007).
41. Manfred Schekulin, Federal Ministry for Economic Affairs and Labour of Austria, Vienna, Putting the OECD Guidelines for MNEs into Practice, OECD Watch Conference, (April 1, 2005), can be found online at: http://www.union-network.org/UNIMultinationals.nsf/0/2B65E61BEABDE342C1256FE00046E22A (last visited on March 5, 2009).
42. “It is seven years since the review of the OECD Guidelines and there is a growing consensus among policymakers, trade unions, business and NGOs that OECD governments need to improve the policies and procedures of their National Contact Points (NCPs).” OECD Watch, Model National Contact Point (Sept. 2007) at 5, available http://www.transparency.de/fileadmin/pdfs/intern/Corporate_Accountability/1_The_Model_European_National_Contact_Point.pdf.
43. One the more prominent civil society critics has been RAID itself, the entity that brought the complaint in DAS Air. See RAID, Fit for Purpose? A Review of the UK National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises 2008, available http://www.business-humanrights.org/Links/Repository/579377/jump (accessed Feb. 11, 2009).
44. United Kingdom, Department for Business Enterprise and Regulatory Reform, UK National Contact Point for the OECD Guidelines: Annual Return to the OECD Investment Committee-2007/2008 (Dec. 2008) URN 09/589, at 1 available http://www.berr.gov.uk/files/file49810.pdf (accessed Feb. 20, 2009). It serves as an umbrella organization for a number of soft aw initiatives which have the support of the government. “NCP promoted other corporate social responsibility initiatives such as the Global Compact, EITI and the OECD Risk Awareness Tool for MNEs when promoting the Guidelines.” Id., at 3.
45. “The NCP participates in the Government-wide Inter-Departmental Group on Corporate Social Responsibility. Through these contacts the NCP ensures that the Guidelines feature prominently in wider UK policy on corporate social responsibility.” Id. The government continues to express it commitment to the OECD Guidelines and their effectuation by donating its staff for that purpose. “The UK Government is fully committed to this important work, and has increased the NCP resources. From March 2008, 2 BERR officials are now working full time, plus 20% of DFID official on the Guidelines.” Id., at 2.
46. Id.
47. See, e.g., UK-NCP Stakeholder Consultation 2006, http://www.corporate-accountability.org/eng/documents/2006/uk_national_contact_point2006.pdf, (last visited February 28, 2009).
48. See RAID, and The Corner House, The UK National Contact Point’s Promotion and Implementation of the OECD Guidelines for Multinational Enterprises, Response to the Stakeholder Consultation, (Jan. 12, 2006), available http://www.thecornerhouse.org.uk/pdf/document/OECDguid.pdf (accessed Feb. 10, 2009). “Between them, RAID and The Corner House have filed more than 12 complaints with the UK and four other NCPs and thus have substantial experience upon which to draw in making their own recommendations. The Corner House and RAID, The UK National Contact Point's Promotion and Implementation of the OECD Guidelines for Multinational Enterprises Response to the Stakeholder Consultation, Summary, available http://www.thecornerhouse.org.uk/summary.shtml?x=523532 (accessed Feb. 14, 2009). These elements of civil society have recommended broader and more autonomous power for national contact points and a more effective system of enforcement of the Guidelines. “The submission raises several concerns about the implementation of the complaints procedure in the UK. It recommends that the NCP's office be given the status of an ombudsman; independence of any government department; and responsibility for mediating between a company and complainant and for determining compliance.” Id.
49. See Department for Business Enterprise and Regulatory Reform (BERR), UK NCP Procedures for Dealing with Complaints Brought Under the OECD Guidelines for Multinational Enterprises URN 08/920, available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html accessed Feb. 12, 2009) (hereafter UK-NCP Procedures).
50. See United Kingdom, Department for Business Enterprise and Regulatory Reform, UK National Contact Point for the OECD Guidelines: Annual Return to the OECD Investment Committee-2007/2008 (Dec. 2008) URN 09/589, at 6 available http://www.berr.gov.uk/files/file49810.pdf (accessed Feb. 20, 2009). The procedures of the UK – NCP for dealing with complaints include a multi stage procedure. See UK NCP procedures for dealing with complaints brought under the OECD guidelines for multinational enterprises, available http://www.berr.gov.uk/files/file46072.pdf (accessed Feb. 19, 2009). Other national contact points follow a similar regime. The Canadian NPC, for example, has resorted to mediation as a first, and often crucial step, in virtually all of the four complaints lodged since 2001. See, Canada, Canada’s National Contact Point, Specific Instances, available, http://www.international.gc.ca/trade-agreements-accords-commerciaux/ncp-pcn/specific-specifique.aspx?lang=eng&menu_id=7&menu=R (accessed Feb,. 15, 2009) (“Since 2000, the Canadian NCP has received seven submission from interested stakeholders regarding corporate conduct and the OECD Guidelines for MNEs. As of December 2008, four of these have been considered by the Canadian NCP as specific instances.” Id.).
51. See United Kingdom, Department for Business Enterprise and Regulatory Reform, UK National Contact Point for the OECD Guidelines: Annual Return to the OECD Investment Committee-2007/2008 (Dec. 2008) URN 09/589, at 6 available http://www.berr.gov.uk/files/file49810.pdf (accessed Feb. 20, 2009), at 7-11.
52. The website describes these as follows: “your identity and your interest in the matter; name of the company; the location of the activity; which part of the Guidelines is considered relevant; description of the activity with any supporting evidence; what can be revealed to the company e.g. identity of originator, documentary evidence etc.” Department for Business Enterprise and Regulatory Reform (BERR), The UK’s National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises Raising a Complaint, available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 5, 2009).
53. Department for Business Enterprise and Regulatory Reform (BERR), Bringing a complaint under the OECD guidelines for multinational enterprises [complaint form] PDF document SB7 (08), (11 June 2008) available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 20, 20009).
54. “Clearly the more information we have, the easier it will be for the NCP to follow up on the complaint.” Department for Business Enterprise and Regulatory Reform (BERR), The UK’s National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises Raising a Complaint, available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 5, 2009).
55. UK-NCP Procedures, supra note --, Section 3. These are identified as Stage 1 proceedings. It is possible for the UK NCP to decline to proceed after this initial review stage. If it considers the information received to warrant further examination, then the proceedings will move to stage 2.
56. Id., Section 4. This is referred to as Stage 2 of the proceedings. Because the preferred outcome is agreement among the parties, the next stage starts with facilitated mediation. Id, at Section 4.1.1-4.1.2. The procedures for mediation are elaborated at id., Sections 4.2 – 4.4. If mediation fails, then the proceedings move to an examination stage. Id., at 4.1.3. “The objective of the examination is for the NCP to investigate the complaint in order to assess whether the complaint is justified.” Id., at Section 4.5.1. The procedures are flexible and under the control of the UK-NCP examiners. “The examination is likely to involve the NCP collecting further information or statements from the complainant or the Company. It may also seek advice from other relevant government departments, UK diplomatic missions or overseas DFID offices, business associations, NGOs or other agencies. If appropriate it will seek informed independent opinion.” Id., at Section 4.5.3.
57. Id., at Section 5. This is Stage 3 of the proceedings. Id. After review the final statement is lodged with the House of Commons and House of Lords Library and passed to the Minister. Id., at Section 5.2. The procedures provide a ten day period to seek review of either the Statement or any earlier determination to decline to examine the complaint. Id., at Section 5.3.
58. See, e.g., Gunther Teubner, Societal Constitutionalism: Alternatives to State-Centered Constitutional Theory, in TRANSNATIONAL GOVERNANCE AND CONSTITUTIONALISM (Christian Joerges, Inger-Johane Sand and Gunther Teubner, eds.) 3-28 (Oxford & Portland Oregon: Hart Publishing, 2004); Peer Zumbansen, Transnational Law, in ENCYCLOPEDIA OF COMPARATIVE LAW 738 (Jan M. Smits ed., 2006).
59. Statement By The United Kingdom National Contact Point (NCP) For OECD Guidelines For Multinational Enterprises (NCP): Das Air, available http://www.berr.gov.uk/files/file47346.doc (accessed Dec. 29, 2008) (hereafter “NCP-DAS Air Statement”).
60. Id., at 1.
61. Id.
62. These general provisions included: (1) Paragraph 1.7 (supremacy of municipal regulation of multinational corporations within their territories “subject to international law” and an obligation, when multinational enterprises are subject to conflicting requirements by adhering countries, of good faith cooperation among states); (2) Paragraph II.1 (obligating multinational corporations to contribute to economic, social and environmental progress with a view to achieving sustainable development); (3) Paragraph II.2 (obligating multinational enterprises to respect the human rights of those affected by their activities but only as consistent with the host government’s international obligations and commitments); (4) Paragraph II.5 (requiring such entities to refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to environmental, health, safety, labour, taxation, financial incentives, or other issues) and (5) Paragraph II.10 (requiring such enterprises to encourage business partners to apply compatible principles of corporate conduct). See id., at ¶ 11.
63. Id., at ¶ 12. The price of the material had increased enormously as its demand for use in capacitors increased wit the surge in the demand for small hand held electronics. See id.
64. Id., at ¶ 10.
65. DAS Air was described as “a long established UK based air freight services business operating routes between Europe and West Africa and between East Africa and the Middle East.” Id., at ¶ 7.
66. The ban applied to DAS Air and a number of related entities and went into effect in 2006. See Commission Regulation (EC) No 1543/2006 of 12 October 2006 amending Regulation (EC) No 474/2006 establishing the Community list of air carriers which are subject to an operating ban within the Community referred to in Chapter II of Regulation (EC) No 2111/2005 of the European Parliament and of the Council and as amended by Regulation (EC) No 910/2006 (Text with EEA relevance), Official Journal of the European Union, L283, 14 Oct. 2006, p. 28 (“There is evidence that the operator DAS Air Cargo (DAZ) certified in Kenya is a subsidiary of Dairo Air Services (DSR) certified in Uganda. The two carriers operate the same aircraft. Therefore, any measure decided with regard to DSR should equally be applicable to DAZ.”).
67. See NCP-DAS Air Statement at ¶ 8.
68. “The last letter between the parties was exchanged on 18 October 2006.” Id., at ¶ 25.
69. “However DAS Air did not go into administration until September 2007 and so there was sufficient time for it to rebut RAID’s allegations.” Id.
70. “The NCP analysis is made with the understanding that the specific instance process further to the complaint was not completed due to DAS Air going into administration.” Id., at ¶ 25.
71. It was enough, the UK-NCP suggested, that they attempted to contact the liquidators without success. “Since May 2008, the NCP has attempted to contact Das Air through its liquidators to see if they have any comments on this issue. No response has been received.” Id., at ¶ 16. See also discussion, infra at Part IV.
72. Id., at ¶ 9.
73. See Department for Business Enterprise and Regulatory Reform, Approach Of The NCP To Any New Complaint That Alleges A Breach Of The OECD Guidelines Taking Place Before June 2000, URN 08/1208 (21 August 2008), available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 13, 2009) (“If after 21 August the NCP receive a complaint about the activities of a multinational enterprise that takes place before June 2000, the NCP will consider the complaint in accordance with the revision of the Guidelines in effect at the time in question, unless the parties to the complaint consent to the application of the current revision of the Guidelines.”)
74. “The NCP did not make a determination on the 32 flights that took place before the current version of the Guidelines came into force but did consider these flights when determining the status of the 3 flights that took place after June 2000. The NCP believes that past behaviour is pertinent to the analysis.” Id. at ¶ 39; see also ¶ 16.
75. Id. at ¶ 16.
76. Id., at ¶¶ 17-20. Its purpose was to collect information on illegal exploitation of resources in DRC and the possible implications for DRC sovereignty as well as to evaluate the veracity of allegations that such activity prolonged the conflict there. . http://daccessdds.un.org/doc/UNDOC/GEN/N03/567/36/IMG/N0356736.pdf?OpenElement. It published its first report on 12 April 2001. http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/DRC%20S%202001%20357.pdf . The second report was published 13 November 2001. http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/DRC%20S%202001%201072.pdf, (last visited February 29, 2009).
77. NCP-DAS Air Statement , supra note --, at ¶¶ 21-24. The purpose of the Porter Commission was “to look into allegations made in the UN Report, specifically about Uganda.” Id., at 21.
78. See Id., at ¶ 18.
79. See Id., at ¶ 19 (“DAS Air, a Ugandan-owned freight company, is also believed to be transporting coltan from Bukavu and Goma to Europe via Kigali.” Id.).
80. See Id., at ¶ 23 (“Porter found that, ‘trade through the Military Air Base was being hidden…’” Id.).
81. These were “records sourced from the Porter Commission archives that indicated that DAS Air had undertaken 35 flights from Entebbe to DRC during the period of the conflict, when this air space was closed.” Id., at ¶ 27.
82. See id., at ¶ 29.
83. The UK-NCP pointed to the requirements of the Convention on International Civil Aviation (CICA) commonly known as the Chicago Convention (available http://www.icao.int/icaonet/dcs/7300_cons.pdf). “The Convention consists of a number of principles and arrangements to which governments have agreed “in order that international civil aviation may be developed in a safe and orderly manner and that international civil air transport services may be established on the basis of equality of opportunity and operated soundly and economically”. (Preamble, CICA, 2006 version.)” NCP-DAS Air Statement , supra note --, at ¶¶ 30. This prohibition had been recognized by the Ugandan government at the time, according to evidence credited by the UK-NCP. See, id., ¶ 31. Air space was reopened upon the signing in 2004 of a Memorandum of Understanding between the two states. Id.
84. Id., at ¶ 35. .” Porter Commission Report determined with respect to flights from the military use portions of their airports “that ‘if the operator was private and not military, and the aircraft was not chartered to MOD, then it should not be allowed to fly, as it came under Civil Aviation Authority rules’.”Id., at ¶ 32.
85. “Having reviewed the Porter Commission report the NCP accepts its conclusions and considers that the flights undertaken by DAS Air between Entebbe and DRC were likely to have been civil flights defined as military to circumvent International Aviation Conventions.” Id., at ¶ 35 Crucial to this conclusion, as well as to the determination that the flights contributed to human rights abuses, were the records of flight activity before mid 2000. See id., ¶ 36-40.
86. Id., at ¶¶ 41-46. “RAID alleges that this coltan and cobalt was sourced from the conflict zone in Eastern DRC. DAS Air stated they were merely contracted by the freight forwarders to transport the minerals; that all merchandise transported by DAS Air is customs-cleared before it is transported and DAS Air had not at any time been aware that any coltan transported by it originated from DRC.” Id., ¶¶ 41.
87. Id., at ¶ 42, see also ¶ 17-20.
88. Id., at ¶ 43.
89. Id. at ¶ 44.
90. It stated “the extent of these limitations depends upon sectoral, enterprise and product characteristics such as the number of suppliers or other business partners, the structure and complexity of the supply chain and the market position of the enterprise…”Id.
91. Id.
92. NCP-DAS Air Statement , supra note --, at Summary.
93. Id., at ¶ 51.
94. Id. at ¶52.
95. Id. at ¶ 53.
96. Final statement by the UK national contact point for the OECD guidelines for multinational enterprises: Afrimex (UK) Ltd, Available http://www.berr.gov.uk/files/file47555.doc (accessed Dec. 29, 2008) (Global Witness v Afrimex (28 August 2008) (hereafter NCP-Afrimex Statement).
97. Id., at ¶ 6. The UK NCP noted that “The parties entered into mediation and met 3 times. They were unable to agree a mediated settlement and the process subsequently moved to an NCP determination. Mediation is a confidential process between the parties and the NCP will not comment on the discussions that took place during these sessions.” Id., at 28.
98. Id. at ¶ 6.
99. Id., at ¶ 13 (“Global Witness alleges that Afrimex (UK) Ltd did not comply with Chapter II (General Policies), Chapter IV (Employment and Industrial Relations) and Chapter VI (Combating bribery) of the Guidelines”).
100. Id., at ¶¶ 14-16.
101. See discussion, supra, at text and notes ---.
102. Id. at ¶ 7.
103. NCP-Afrimex Statement, at ¶ 7 (it “considers that past behaviour is pertinent when considering behaviour that occurred after June 2000” Id.).
104. Id., at ¶ 21.
105. See id., at ¶¶ 8-12.
106. See id., at ¶¶ 17-26.
107. See id., at ¶¶ 58-62.
108. Id.
109. See NCP-DAS Air Statement , supra note --, at ¶¶ 17-20 and discussion, infra at text and notes ---.
110. See NCP-Afrimex Statement, supra, note --, at ¶ 9.
111. Id., at ¶ 9.
112. Id.
113. Id., at ¶. The letter in question could be found on line at www.publications.parliament.uk/pa/cm200506/cmselect/cmintdev/923/923we11.htm. Id. at note 2. The resolution was itself based on information provided by the company, information that was at variance with the materials submitted to the UK-NCP in the instant proceedings. As a consequence, the credibility of the Afrimex submissions suffered. See id., at ¶ 20 (“Afrimex has told the NCP that this letter “was perhaps misjudged” but the NCP considers it to indicate that Afrimex has either misdirected the UN or the NCP in regards to the relationship between these companies”). Indeed, one of the great problems that this case presented the UK NCP was the credibility of the evidence presented by Afrimex. “The NCP has struggled with the inconsistencies put forward by Afrimex in its evidence.” Id., at 44.
114. NCP-Afirmex State, supra, note -, at ¶ 11 (referring to the post 2004 work of “the Group of Experts on the Democratic Republic of Congo.) Their reports are accessible at: [www.un.org/sc/committees/1533/egroup.shtml].” Id.)
115. Among these were the 2003 arms embargo “on all foreign and Congolese armed groups and militias operating in the territory of North and South Kivu and Ituri and on groups not party to the Global and All-inclusive agreement in the Democratic Republic of the Congo on 28 July 2003 with the adoption of resolution 1493.” Id., at ¶ 12. As well as the extension and expansion of these measures through action in 2008. Id.
116. “In regards to the supply chain for the sourcing of minerals, Afrimex explained they have never bought minerals directly from the mine. They described the supply chain for minerals as extremely fractured, with Afrimex several steps removed from the mines.” Id., at ¶ 16.
117. NCP-Afrimex Statement, supra, note --, at ¶¶ 17-21.
118. Id. at ¶ 22.
119. Id. at ¶ 27. For that purpose, the UK-NCP applied something like either a veil piercing or enterprise analysis. It spoke the traditional language of common law equity in this sort of corporate law determination, but without dereference to a standard for determination within the municipal law of the United Kingdom (or any of its parts) or that the DRC or Uganda. Thus, , the “In considering whether these companies were associated, the NCP considered a variety of factors. The NCP did not find this relationship clear cut.” Id., at ¶ 26. It looked to five factors that it found dispositive: (1) interlocking directors, (2) common shareholders, (3) familial relationship among shareholders and directors (father son relationship), (4) economic relationship between Afrimex and Société Kotecha (principal customer), and (5) merger of operational activities (providing services relating to the checking and coordinating of mineral deliveries). Id.
120. Id.
121. Id., at ¶¶ 29-57.
122. Id. at ¶ 38. “The information received from IPIS implies that Afrimex was SOCOMI’s only export customer during the period of the statistics collected in 2000/01. If this is the case, Afrimex was the reason that SOCOMI traded in minerals and therefore Afrimex is responsible for SOCOMI paying the license fees and taxation to RCD-Goma.” Id.
123. Id. at ¶ 39. The UK-NCP considered that SOCOMI, an associated company, had an obligation, on Afrimex’s behalf, to cease operations (trading minerals) while the RD-Goma was involved in conflict. Id.
124. Id., at ¶ 40.
125. Id., at ¶¶ 40-57.
126. “In July 2005, Kofi Annan appointed Professor John G. Ruggie to be Special Representative of the UN Secretary-General on business & human rights.” Business and Human Rights Resource Center, U.N. Special Representative on Business and Human Rights, available http://www.business-humanrights.org/Gettingstarted/UNSpecialRepresentative (accessed Feb. 1, 2009).
127. The scope of the due diligence requirement for human rights “is determined by the context in which a company is operating, its activities, and the relationships associated with those activities.” Id. at ¶ 41 (quoting John Ruggie, Protect, Respect and Remedy: a Framework for Business and Human Rights Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, A/HRC/8/5, 7 April 2008 available www.reports-and-materials.org/Ruggie-report-7-Apr-2008.pdf (accessed Jan. 30, 2009). This standard was emphasized in the conclusions of the UK-NCP. See, UK-NCP Afrimex statement, supra, note --, at 77.
128. UK NCP Afrimex Statement, at ¶ 50.
129. As the UK NCP noted
“Mr Kotecha confirmed to the IDC that he had never visited a mine to determine whether forced labour occurred and that his business practices were based on the assurances provided by his suppliers. . . . This is due to continued insecurity and lawlessness in these areas. Instability and fighting between Congolese army and insurgents in North Kivu province have led to a very high number of civilians being displaced. The NCP fully understands why Mr Kotecha would be unwilling to visit the mines to establish the conditions but that in itself illustrates the requirement for increased due diligence.” Id., at ¶ 56.
130. “The reliance on oral assurances from the suppliers and the subsequent written statements amount to insufficient due diligence for a company sourcing minerals in the conflict zone in Eastern DRC. The NCP is concerned that these assurances lack substance and are not underpinned by any checks.” Id., at 57, see also id., at ¶¶ 47-49, 54-55.
131. Id. at ¶ 50.
132. Id. at ¶ 61.
133. Id., at ¶ 52 (“As the NCP has accepted that Afrimex did not pay taxes in DRC, the NCP did not uphold this element of the complaint.” Id.). See also id., at ¶ 60.
134. Afrimex had been doing business in the DRC since the time of the Mobutu regime in the 1980s. And, in any case, it had been the object of investigative activity of the United Nations and a British television report. See d., at ¶ 58.
135. Id., at ¶ 59 (the actions violated provisions requiring MNEs to respect human rights consistent with the host government’s legal obligations (MNE Guidelines II.1), and contributes to progress with a view to sustainable development (MNE Guidelines II.2).
136. Id., at ¶61, this constituting a breach of MNE Guidelines II.1, II.2, and II.10, id.
137. Id., at ¶ 62 (“Afrimex did not take steps to influence the supply chain and to explore options with its suppliers exploring methods to ascertain how minerals could be sourced from mines that do not use child or forced labour or with better health and safety. The assurances that Afrimex gained from their suppliers were too weak to fulfil the requirements of the Guidelines.” Id.). These actions (or inactions) constituted breaches of MNE Guidelines IV.1.b (“Contribute to the effective abolition of child labour”); IV.1.c (“Contribute to the elimination of all forms of forced or compulsory labour”); IV.4.b (“Take adequate steps to ensure occupational health and safety in their operations.” Id.).
138. See id., at ¶¶ 63-77.
138. Id. at ¶¶ 63-67. The corporate responsibility document, it was suggested, was to draw on the work of operationalizing the U.N.’s Global Compact standards. See, id., at ¶ 64.
140. Id. at ¶ 67 (“The Risk Awareness tool consists of a list of questions that companies should ask themselves when considering actual or prospective investments in weak governance zones. These questions cover obeying the law and observing international relations; heightened managerial care; political activities; knowing clients and business partners; speaking out about wrongdoing; and business roles in weak governance societies – a broadened view of self interest.”). See also id., at ¶¶ 67-70. For the relevant standard, see OECD, OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones (2006), available www.oecd.org/dataoecd/26/21/36885821.pdf (accessed Jan. 30, 2009). In fashioning this too, the OECD Council “recognised that creating the conditions for progress in zones where authorities are unable or unwilling to assume their responsibilities is an important international policy objective and that governments, international organisations and multinational enterprises can each draw on their distinctive competences to contribute to the efforts of strengthening governance in such zones.” Id., at 5.
141. As the UK-NCP declared:
The UK Government expects British companies to exercise the highest levels of due diligence in situations of widespread violence and systematic human rights abuse, such as that which prevails in Eastern DRC. The NCP urges UK companies to use their influence over contracting parties and business partners, when trading in natural resources from this region, to ensure that due diligence is applied to the supply chain. Id., at ¶¶ 76-77.
142. “Bureaucracies interpret statutory provisions to their advantage. This is in particular the case where more specific procedural norms are lacking and it is a common characteristic of constituent documents of international organizations or mandating resolutions.” Ingo Venzke, International Bureaucracies From a Political Science Perspective—Agency, Authority, and International Institutional Law, 9 GERMAN LAW REVIEW 1401, 1419-20 (2008).
143. “This essay, then, has come full circle. The effort to make government through markets true—to discipline markets by an external standard that comports with our own sense of truth, thereby relieving the sense of alienation—has led us back toward whatever truth may be possible through market participation. ” DAVID R. WESTBROOK, CITY OF GOLD: AN APOLOGY FOR GLOBAL CAPITALISM IN A TIME OF DISCONTENT 248 (New York: Routledge 2004). Westbrook thus suggests, with telling relevance to the MNE Guidelines regulatory project: “Political economy thus becomes constitutional, not only in trying to shape society through markets, but in deciding what sort of market participation will be made available, that is, what a good government through markets might be, a government that one might hope would be so popular, even loved, that its inhabitants would not be alienated.” Id., at 249. ”
144. See, NCP-Afrimex Statement, supra, note --, at ¶ 41, 54.
145. See, NCP-DAS Air Statement, supra, note --, at ¶ 36.
146. See NCP-Afrimex Statement, supra, note --, at ¶ 37.
147. In this respect it represents another, and potentially important, method, for solidifying transnational governance in the face of the traditional failure of either international or local law to meet the challenge. See, Larry Catá Backer, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations, 39 GEORGETOWN JOURNAL FO INTERNATIONAL LAW 591 (2008). For a discussion of the significance of private-group-network norm-making, see Robert B. Ahdieh, The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, 6 CHI. J. INT'L L. 231 (2005).
148. See, Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287, 374-88 (2006).
149. On the general relationship of law to the state apparatus through which it might be effected, see Larry Catá Backer, Symposium: Law and the State in the Transnational Legal Order: Reifying Law: Understanding Law Beyond the State, 26(3) PENN STATE INTERNATIONAL LAW REVIEW 521 (2008). The relationship to the early English common law is unmistakable: as a “body of general rules enforced by the ordinary royal courts, and characterized by the development of its own principles in actual legal controversies by the procedure of trial by jury, and the doctrine of the supremacy of law.” ARTHUR R. HOGUE, ORIGINS OF THE COMMON LAW 190 (Indianapolis, IN: Liberty Fund, 1986).
150. See Mattias Goldmann, Inside Relative Normativity: From Sources to Standard Instruments for the Exercise of International Public Authority, 9 GERMAN LAW JOURNAL 1865 (2008) (“The proceedings before National Contact Points established under the OECD Guidelines for Multinational Enterprises are a fine example of such quasi-judicial settlements. The sanction consists in the issuance and publication of a statement by a National Contact Point. For enterprises with a reputation to lose this outlook might amount to a substantial threat. Again, who may trigger the procedure becomes a matter of great significance.” Id., at 1889). He also notes, “These statements are not subject to hard enforcement and therefore cannot be considered binding law. Nevertheless, they are rendered within an elaborate non-binding legal framework and use legal discourse to resolve a dispute. One could have doubts about the international character of these statements because they are rendered by national administrations. However, in doing so, the National Contact Points act purely on the basis of binding and non-binding international law.” Id., at 1892.
151. This is not an isolated pattern by any means. Consider Erika de Wet, Governance Through Promotion and Persuasion: The 1998 ILO Declaration on Fundamental Principles and Rights at Work, 9 GERMAN LAW JOURNAL 1429 (2008).
152. See Gefion Schuler, Effective Governance Through Decentralized Implementation: The OECD Guidelines for Multinational Enterprises, 9 GERMAN LAW JOURNAL 1753 (2008) (“For future enhancement it is necessary that the implementation of the basic prerequisites for the institutional set up prescribed by the OECD, viz. (namely) visibility, accessibility, transparency and accountability, is enhanced. In particular transparency needs to be implemented more vigorously. This leads to the first proposition of this study. Effective governance is achieved through cooperation. In the future, adhering governments need to enhance cooperation with the OECD and secure effective implementation of the basic prescriptions.” Id., at 1777).
153. See, NCP-DAS Air Statement, supra, note --, at ¶ 53 (“The NCP notes that this resolution is directed towards states but considers this resolution highlights the requirement for business to undertake heightened awareness when trading or investing in natural resources in this region.” Id., citing U.N. Res. 1592 (30 March 2005) recit. 10). The distinction the NCP attempts to make is substantially one without a difference.
154. See, e.g., Fleur Johns, The Invisibility of the Transnational Corporation, 19 MELB. U. L. REV. 893, 912-14 (1994)
155. UK-NCP DAS Air Statement, at ¶ 35.
156. Id., at ¶ 71-74. For that purpose, Afrimex was to rely on a number of studies and advisories put out by government agencies with an interest in the management of the conflict. Id.
157. This was only recently demonstrated in the chorus of objections ot the Norms by the representatives of most of the Member States of the European Union as well as the United States. See, e.g., Memorandum from U.S. Mission to Int’l Organizations, Memorandum to Mr. Dzidek Kedzia Chief Research and Right to Development ranch, Office of the United Nations High Commissioner for Human Rights, re: Note Verbale from the OHCHR of August 3, 2004 (GVA 2537) (Sept. 30, 2004), available http://www.ohchr.org/english/issues/globalization/business/contributions.htm (“By attempting to establish duties and obligations for business entities, which are non-State actors, this exercise goes well beyond the present state of international law as well as international legal process.”).
158. Consider the developing common understanding of the relationship between soft and hard law beyond the state. “As with the drafting of almost all human rights treaties, the United Nations begins with declarations, principles, or other soft-law instruments. Such steps are necessary to develop the consensus required for treaty drafting.” David Weissbrodt & Muria Kruger, Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights, 97 AM. J. INT’L L. 901, 914 (2003). It is also required for the development of supra-national hard law standards for corporate regulation.
159. See, e.g., See RAID, and The Corner House, The UK National Contact Point’s Promotion and Implementation of the OECD Guidelines for Multinational Enterprises, Response to the Stakeholder Consultation, (Jan. 12, 2006), available http://www.thecornerhouse.org.uk/pdf/document/OECDguid.pdf (accessed Feb. 10, 2009) (proposing a number of modifications to the National Contact Points complaint process that would effectively move it toward greater institutionalization as a quasi-judicial organ; id., at 21-24).
160. See, e.g., L. David Brown, Sanjeev Khagram, Mark H, Moore and Peter Frumkin, Globalization, NGOs and Multisectoral Relations, in GOVERNANCE IN A GLOBALIZING WORLD 271, 283-85 (Joseph S. Nye, Jr., John D. Donahue, eds., Washington, D.C.: Brookings Institute, 2000). “Increasingly during the past decade, transnational civil society alliances have been central to campaigns to formulate and enforce global public policies in response to critical problems.” Id., at 284.
161. It is in this sense that one can see an application of the notion of norms as patterns of rationally governed behavior maintained in groups by acts of conformity. See, STEVEN A. HATCHER, NORMS IN A WIRED WORLD 17 (Cambridge: Cambridge University Press, 2004). The form of that conformity is the object of law, the imposition of effective patterns of governance, irrespective of form, is the object of transnational actors who do not need the legitimating forms of the state to effect binding patterns of governance.
162. Cf. Isabella D. Bunn, Global Advocacy For Corporate Accountability: Transatlantic Perspectives From the NGO Community, 19 AM. U. INT’L. L. REV. 1265 (2004).
163. As one commentator recently noted: “international private governance is not just an abstract possibility, it is an increasingly important reality. One could also say that we are facing the emergence of new forms of polity, closely associated with the creation of new public arenas and populated by a variety of new political constituencies.” Franco Furger, Global Markets, New Games, New Rules: The Challenge of International Private Governance, in RULES AND NETWORKS: THE LEGAL CULTURE OF GLOBAL BUSINESS TRANSACTIONS 201, 226 (Richard Applebaum, William L.F. Felstiner and Volkmar Gessner, eds., Oxford: Hart Publishing, 2001). The MNE Guidelines structure is certainly an important element in that global matrix of new regulatory systems.,
164. See the excellent discussion in Naomi Cahn and Anthony Gambino, Towards a Typology of Corporate Responsibility in Different Governance Contexts: What to do in the Absence of Responsible Country Governance?, 39 GEO. J. INT’L L. 655 (2008).
165. Consider in this regard especially the nature of the relationship required by the National Contact Point between Afrimex and its unrelated suppliers—grounded in an understanding of the political situation and an obligation to contribute directly to the management of that situation, to the extent of their powers, for a political end. See NCP Afrimex Statement, supra, note --, at ¶¶ 65-66.
166. JANNE ELISABETH NIJMAN, THE CONCEPT OF INTERNATIONAL LEGAL PERSONALITY: AN INQUIRY INTO THE HISTORY AND THEORY OF INTERNATIONAL LAW 347, 354 (The Hague: TMC Asser Press, 204).
167. OECD, OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones (2006), supra, note --. The explanatory materials explain the relationship between people, state and entity in weak governance zones: “The Tool is based on the premise that a durable exit from poverty will need to be driven by the leadership and the people of the countries concerned – only they can formulate and implement the necessary reforms. Companies play important supporting roles and this Tool seeks to raise awareness of these roles and to help companies play them more effectively.” Id., Introduction, at 9. But however characterized, the role envisioned in regulatory rather than participatory. The entity, in effect is presumed to be required to substitute its apparatus for that of the (missing) state. On the Risk Awareness Tool in the context of OECD governance see, e.g., Nigel D. White and Sorcha MacLeod, EU Operations and Private Military Issues of Corporate and Institutional Responsibility, 19 EUROPEAN JOURNAL OF INTERNATIONAL LAW 965 (2008) (“While some are pushing for a general review of the Guidelines, the 2006 Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones represents important progress, as it applies to states which are 'unable or unwilling to assume their obligations' under international law and refers to the 'positive contributions' that corporations can make to 'social progress' among other things in such zones. Such a tool appears to bring PMCs firmly within the remit of the OECD. Notwithstanding the stakeholder participation approach utilized by the OECD, the fact remains that the Guidelines are voluntary in nature and limited in scope and that their value is predicated upon the effectiveness of the NCPs.” Id., at 978).
168. See, e.g., See, NCP-Afrimex Statement, supra, note --, at ¶ 68-70. See also, Michael K. Aldo, Human Rights and Transnational Corporations, in, HUMAN RIGHTS STANDARDS AND THE RESPONSIBILITIES OF TRANSNATIONAL CORPORATIONS 3, 9 (Michael K. Addo, ed., 1999) (on the merger of the economic and social roles of these corporations); David Kinley & Junko Tadaki, From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law, 44 VA. J. INT’L L. 931, 933 (2004).
169. For a discussion of one version of these private self referencing regulatory systems grounded in the regulatory power inherent in the supply chain, see, Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007).
170. Thus, for example, in both cases, the emphasis on both the conflict and the conflict management rules that arose in consequence thereof. See discussion, supra, at text and notes ---.
171. Thus, for example, Global Witness, the complainant against Afrimex, “exposes the corrupt exploitation of natural resources and international trade systems, to drive campaigns that end impunity, resource-linked conflict, and human rights and environmental abuses. Global Witness was the first organisation that sought to break the links between the exploitation of natural resources, and conflict and corruption.” Global Witness, About Us, available http://www.globalwitness.org/pages/en/about_us.html (accessed Feb. 11, 2009).
172. It has been suggested that companies are now more likely to have to “take into account so-called soft law arising from the growing international web of multi-stakeholder initiatives and public and private codes and norms. Although these norms are technically voluntary, they have significant bite in practice, as a result of the absence of a centralized command and control system of international law.” John F. Sherman III and Chip Pitts, Human Rights Corporate Accountability Guide: From Law to Norms to Values, Harvard Kennedy School Mossavar-Rahmani Center for Business and Government (Dec. 2008) available http://www.hks.harvard.com/m-rcbg/CSRI/pub_reports.html (accessed Jan. 2, 2009).
173. See Gunther Teubner, Societal Constitutionalism: Alternatives to State-Centered Constitutional Theory, in TRANSNATIONAL GOVERNANCE AND CONSTITUTIONALISM 3, 13–15 (Christian Joerges et al. eds., 2004). Teubner describes a critical effect of the sort of globalization advanced by the civil society actors and corporate stakeholders within the MNE Guidelines system as “a polycentric process in which simultaneously differing areas of life break through their regional bounds and each constitute autonomous global sectors of themselves.” Id. at 13.
174. The fear that such soft regulatory systems might serve as a basis to displace municipal law, to the benefit of multinational corporations, has already been raised. See, e.g., Alan C. Neal, Corporate Social Responsibility: Governance Gain or Laissez-Faire Figleaf?, 29 COMP. LAB. & POL’Y J. 459, 471-472 (2008).
175. The germinal English case is Salomon v. Salomon & Co., Ltd., [1897] AC 22. For a discussion of the notion from an American perspective, see Larry Catá Backer, The Autonomous Global Corporation: On the Role of Organizational Law Beyond Asset Partitioning and Legal Personality, 41(4) TULSA LAW JOURNAL 541 (2006).
176. For a foundational discussion, see I. MAURICE WORMSER, DISREGARD OF THE CORPORATE FICTION AND ALLIED CORPORATE PROBLEMS 42-86 (New York: Baker, Voorhis & Co., 1927).
177. See, e.g., Nicole Rosenkrantz, The Parent Trap: Using the Good Samaritan Doctrine to Hold Parent Corporations Directly Liable for their Negligence, 37 B.C. L. REV. 1061, 1986-87 (1996); Stephen Bainbridge, Abolishing Veil Piercing, 26 J. CORP. L. 479, 506-14 (2001); Henry Hansmann & Reiner Kraakman, Toward Unlimited Shareholder Liability for Corporate Acts, 100 YALE L.J. 1879, 1919-20 (1991). To similar effect in Australia, see, e.g., In Ramsewy & David Noakes, Piercing the Corporate Veil in Australia, 19 COMPANY & SECURITIES L.J. 250 (2001),.
178. See, e.g., R. Vernon, Codes on Transnationals: Ingredients for an Effective International regime, in TRANSNATIONAL CORPORATIONS: THE INTERNATIONAL LEGAL FRAMEWORK 69, 72 (A.A. Fatouros, ed., 1994); Marc Galanter, Law’s Elusive Problem: Learning From Bhopal, in TRANSNATIONAL LEGAL PROCESSES: GLOBALIZATION AND POWER DISPARITIES 172 (Michael B. Likosky, ed., 2002).
179. See discussion, supra, at text andnotes --.
180. Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation’s Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility as International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287, 364-65 (2006) (citing Delaware statute).
181. See, e.g., D’Amato, Anthony & Engel Kirsten (Eds.), International Environmental Law Anthology, Chapter 5: Soft Law, Anderson Publishing:, Cincinnati (2001), can be found online at: http://anthonydamato.law.northwestern.edu/IELA/Intech05-2001-edited.pdf (last visited March 5, 2009); Halina Ward, The OECD Guidelines for Multinational Enterprises and nonadhering countries Opportunities and Challenges of engagement, Introduction, can be found online at: http://www.oecd.org/dataoecd/6/62/33807204.pdf (last visited March 5, 2009).
182. See, e.g., Alissa Mickels, Note: Beyond Corporate Social Responsibility: Reconciling the Ideals of a For-Benefit Corporation With Director Fiduciary Duties in the U.S. and Europe, 32 HASTINGS INT’L & COMP. L. REV. 271, 282-294 (2009).
183. Hans W. Baade, The Legal Effects of Codes of Conduct for MNEs, in LEGAL PROBLEMS OF CODES OF CONDUCT FOR MULTINATIONAL ENTERPRISES 212, 230 (Norbert Horn, ed., 1980).
184. George Norman & Joel Trachtman, The Customary International Law Game, 99 AM. J. INT’L L. 541, 569 (2005).
185. See, e.g., Peter Muchlinski, supra, note --, at 123-57; Melvin Eisenberg, Corporate Groups, in The LAW RELATING TO CORPORATE GROUPs 1 (M. Gilhooly, ed., Sydney: Federation Press, 1993).
186. See, e.g., PHILIP I. BLUMBERG, THE MULTINATIONAL CHALLENGE TO CORPORATION LAW 73-152 (New York: Oxford University Press, 1993).The “Australian position is that where the group has a centralized senior management and a divisional business unit structure, there is an inevitable tension between the business organizational structure and the corporate structure.” Robert P. Austin, Corporate Groups, in CORPORATE PERSONALITY IN THE 20TH CENTURY 71, 74 (Charles E.F. Rickett and Ross B. Grantham, eds., Oxford: Hart Publishing, 1998).
187. See discussion, supra, at text and notes ---.
188. Compare John H. Blackstone Jr., and James F. Cox III, American Production and Inventory Control Society Dictionary (12th ed. APICS) (“the global network enabling products and services to be supplied from raw materials to final customers”) with John T. Mentzer, WEilliam DeWitt, James S. Keebler, Nancy Nix, Carlo D. Smith and Zach Z. Zacharia, Defining Supply Chain Management, 22(2) Journal of Business Logistics (2001) (a “set of three or more entities (organizations or individuals) directly involved in the upstream or downstream flows of products, services”).
189. See, NCP-Afrimex Statement, supra, note --, at ¶ 34-39.
190. See, NCP-Afrimex Statement, supra, note --, at ¶ 16.
191. See discussion in Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007); Larry Catá Backer, Multinational Corporations as Objects and Sources of Transnational Regulation, 14 ILSA JOURNAL OF INTERNATIONAL & COMPARATIVE LAW 499 (2008).
192. See, NCP-Afrimex Statement, supra, note --, at ¶ 54 (“Afrimex questioned whether they could contribute to the abolition of child and forced labour considering that they were several steps removed from the mine in the supply chain. . . . If sufficient due diligence is applied to the supply chain, then the CP considers that Afrimex can make a contribution.” Id.). The NCP cross referenced the work, not of the English courts, but of the Special Representative of the Secretary General of the United Nations on the issue of human rights and corporations, John Ruggie, for an appropriate understanding of due diligence applied as a matter of the internal governance regime under the MNE Guidelines. See, id., at ¶ 41.
193. See discussion, id., at text and notes ---.
194. See, e.g., Yoshiro Miwa, Corporate Social Responsibility: Dangerous and Harmful, Though Maybe not Irrelevant, 84 Cornell L. Rev. 1227, 1250-53 (1999). Thus, critics of the movement for greater corporate social responsibility within legal frameworks have suggested that the result of the current project “represents at least as much a perversion of the corporation’s function as it does an abdication of responsibility by the state.” Delissa A. Ridgeway & Mariya A. Talib, Globalization and Development—Free Trade, Foreign Aid, Investment and the Rule of Law, 33 CAL. WESTERN INT’L L.J. 325, 332 (2003).
195. “Adjudication is authoritative because the decision is reasoned and the jurisdiction of the tribunal has been accepted by the parties. . . . However this will only be achieved if the court pays scrupulous attention to the demands of its role.” J.G. MERRILLS, INTERNATIONAL DISPUTE SETTLEMENT 295 (Cambridge: Cambridge University Press, 1998).
196. Id., at 310.
197. See discussion, supra at text and notes ---.
198. See, NCP-Afrimex Statement, supra, note --, at ¶ 57.
199. See, See, NCP-DAS Air Statement, supra, note --, at ¶ 25 (determining that the failure to answer would be read against DAS Air, because there had been “sufficient time for it to rebut RAID’s allegations” before the commencement of proceedings in liquidation. Id. ).
200. See NCP-DAS Air Statement, supra, note --, at ¶ 36.
201. See id. (“The International Court of Justice has acknowledged the evidentiary value of the Porter Commission. . . The ICJ had tested the evidence the evidence collected by the Porter Commission and considered it stood up to scrutiny.”). Is this English law or the law of the MNE Guidelines framework, likely the latter?
202. See NCP-Afrimex Statement, supra, note --, at ¶ 37.
203. Mootness refers to a case that may no longer be timely. However, at least in American constitutional law, courts will hear otherwise moot cases on occasion where the facts are “capable of repetition yet evading review.” Southern Pacific Terminal Co. v. ICC 498, 515 (1911).
204. See, NCP-DAS Air Statement, supra, note --, at ¶ 15-16.
205. Richard Meeran, The Unveiling of Transnational Corporations: A Direct Approach, in HUMAN RIGHTS STANDARDS AND THE RESPONSIBILITIES OF TRANSNATIONAL CORPORATIONS 161, 161 (Michael K. Addo, ed., 1999).
206. OECD, OECD’s Gurría welcomes G7 move to establish set of ethical principles on global Business (Feb. 16, 2009) available http://www.oecd.org/document/48/0,3343,en_2649_34487_42181872_1_1_1_1,00.html.
207. Larry Catá Backer, (Un?)Intended Regulatory Consequences of the Financial Crisis: Multinational Corporations and Sovereign Wealth Funds, LAW AT THE END OF THE DAY, Oct. 5, 2008, available http://lcbackerblog.blogspot.com/2008/10/predictions-for-unintended-regulatory.html (“For those who have always been suspicious of market independence, or who held to an ideology of the subordination of economic and social to political power, the financial collapse offered the perfect pretext for righting the course of current globalization by seeking to assert the dominance of political collectives over global economic and social sectors.” Id.).
208. “The mandate from finance ministers is based on a proposal for a ‘global standard’ of principles by Italian Economy and Finance Minister Giulio Tremonti. As the initial building blocks for the core principles, Mr Tremonti pointed to instruments, signed by OECD governments and by a number of non-member countries, covering bribery, corporate governance, responsible business conduct, money laundering and taxes.” OECD, OECD’s Gurría welcomes G7 move to establish set of ethical principles on global Business (Feb. 16, 2009) available http://www.oecd.org/document/48/0,3343,en_2649_34487_42181872_1_1_1_1,00.html.
209. Gefion Schuler, Effective Governance Through Decentralized Implementation: The OECD Guidelines for Multinational Enterprises, 9 GERMAN LAW JOURNAL 1753, 1776 (2008) (noting the wide differences in the activities of national contact points).
210. OECD, OECD’s Gurría welcomes G7 move to establish set of ethical principles on global Business (Feb. 16, 2009) available http://www.oecd.org/document/48/0,3343,en_2649_34487_42181872_1_1_1_1,00.html. “‘We have to review some of the instruments in the light of the crisis. How can we increase their compatibility and coherence? What needs to be improved for more stringent implementation? How can we establish a strong unified monitoring mechanism?’ Mr Gurría added.” Id.
211. Tom Buergenthal put this nicely n the context of the realization of international soft law frameworks of human rights:
Although the six treaty bodies in existence today are not judicial institutions, they have had to interpret and apply their respective conventions in reviewing and commenting on the periodic reports the states parties must submit to them, and in dealing with individual complaints that some treaty bodies are authorized to receive. This practice has produced a substantial body of international human rights law. While one can debate the question of the nature of this law and whether or not it is law at all, the fact remains that the normative findings of the treaty bodies have legal significance, as evidenced by references to them in internationla and domestic judicial decisions.
Thomas Buergenthal, The Evolving International Human Rights System, 100 American Journal fo International Law 783, 789 (2006).
212. See John Ruggie, “Protect, Respect and Remedy: a Framework for Business and Human Rights” (A/HRC/8/5, June 2008) (presenting “a conceptual and policy framework to anchor the business and human rights debate, and to help guide all relevant actors.”).
213. ““This is a major breakthrough and sets an important precedent” said Patricia Feeney, RAID’s Executive Director. “For the first time a foreign company has been held to account by its own government for its part in fueling a war that has cost the lives of an estimated 5.4 million people – the highest civilian death toll since World War II.’” OECD Watch, British NCP Finds DAS Air Breached Guidelines, July 21, 2008, available at http://oecdwatch.org/news-en/government-condemns-british-aviation-company-for-fueling-congo2019s-war/ (accessed Feb. 18, 2009).
214. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287-389 (2006).
215. See Yann Queinnec, The OECD Guidelines for Multinational Enterprises: An Evolving Legal Status, Sherpa (June 2007) (suggesting that the MNE Guidelines “have entered the sphere of application of Customary law” Id., at 4). He notes that the MNE Guidelines “restate or else are an extension of heterogeneous existing fundamental notions of international law, relating to customary law, general legal principles pr practice.” Id., at 8. The two cases considered here are certainly evidence of the value of this insight. They also suggest that this heterogeneous collection is becoming formed into its own internally consistent set of rules for governing the global community of multinational corporations and their related entities—precisely the objective of the Norms, now realized through the device of ostensibly non binding regulatory regimes.
216. See Larry Catá Backer, The Sarbanes-Oxley Act: Federalizing Norms for Officers, Lawyer and Accountant Behavior, 76 ST. JOHN’S LAW REVIEW 897 (2002).
217. Professor of Law, Pennsylvania State University, University Park, Pennsylvania; Director, Coalition for Peace & Ethics, Washington, D.C. The author may be contacted at lcb911@gmail.com. My thanks to Augusto Molina (Penn State 2009) for exceptional research assistance on this project.
What follows is a close analysis of these two panel statements. The final version of this paper will be published soon. Comments and reactions welcome.
___________
SMALL STEPS TOWARD AN AUTONOMOUS TRANSNATIONAL LEGAL SYSTEM FOR THE REGULATION OF MULTINATIONAL CORPORATIONS:
RIGHTS AND ACCOUNTABILITY IN DEVELOPMENT (RAID) V DAS AIR (21 JULY 2008) (1)
and
GLOBAL WITNESS V AFRIMEX (28 AUGUST 2008) (2)
ABSTRACT: The enforcement framework for the MNE Guidelines has long been the subject of criticism, especially by representatives of private and public actors. But two recent cases have suggested the ways in which enforcement actions arising from civil society efforts to utilize the national contacts points complaint system may be slowly influencing the emerging discourse of corporate behavior in ways that will have substantial effect. Beyond evidence of a more muscular institutional transnational enforcement structure for soft law codes, the cases serve to outline a framework for the interaction of transnational and national systems of corporate regulation. The multilateral system for governing multinational corporate behavior will affect not only that behavior but also the rules through which corporations may be governed as to their internal affairs and with respect to the character of their legal personality. This case note first briefly describes the institutional and regulatory framework within which the cases arose. It then reviews the cases themselves, drawing out the more relevant arguments. Lastly contextualizes those arguments and positions within national and transnational corporate and international legal regimes. The cases illustrate the way in which advances in governance issues are being crafted, step-by-step, from out of a system that, while formally non-binding, is increasingly developing the characteristics of a binding governance system. The cases suggest the parameters within which the MNE Guidelines are beginning to serve as the focal point for the construction of an autonomous transnational governance system that is meant to serve as the touchstone for corporate behavior in multinational economic relationships. They continue an effective process of operationalizing soft law to produce the effects of hard law beyond the state, but without challenging state authority directly in parallel to similar efforts through the U.N. Global Compact.
CONTENTS
I. Introduction
II. The Regulatory Context
III. The Cases
A. Rights and Accountability in Development (RAID) v DAS Air
B. Global Witness v Afrimex
IV. The Analytical Context
A. The Construction of an Interlinked System of International and Municipal Hard and Soft Law
B. Corporate Law Challenges
C. Procedural Issues
V. Conclusion
I. INTRODUCTION.
The problem of the multinational corporation has been at the center of transnational policy discussion for the greater part of the last half-century.(3) For the last decade, attempts to create hard law and harmonized regulatory structures for multinational corporations have been effectively blocked by a great alliance of business and developed state interests.(4) The most prominent among these failures has been the U.N.’s Norms.(5) Moreover, attempts to stretch national law to bring the transnational activities of multinational corporations under the regulatory control of at least some states has been largely unsuccessful, except perhaps within the academic literature.(6)
This breach in regulation has been filled with a variety of soft law efforts.(7) Prominent among them has been the U.N.’s successor regulatory strategy to the Norms—the U.N. Global Compact.(8) But powerful regional state-private sector organizations have also sought to create soft law regulatory networks that might contribute to a set of behavior norms among multinational enterprises. Among these has been the Organization for Economic Cooperation and Development. (9) It has been at the forefront of developing and creating implementary frameworks of soft law for corporate governance. (10)
Prominent among the OECD’s soft law codes is its Guidelines for Multinational Enterprises (MNE Guidelines).(11) The MNE Guidelines are the only multilaterally endorsed and comprehensive code that governments are committed to promoting.(12) The MNE Guidelines are said to express the shared values of the governments of countries that are the source of most of the world’s direct investment flows and home to most multinational enterprises.(13) They are meant to be applied to the world wide operations of businesses that might be subject to its provisions.(14) They are enforced through organizations called National Contact Points (NCP), established usually within one of the trade or commerce ministries of the adhering states.(15) These NCPs are meant to foster respect for the MNE Guidelines (as well as the other related work of the OECD) and provide the institutional framework through which interested stakeholders, usually elements of civil society, can bring allegations of breaches of the behavior provisions of the MNE Guidelines against businesses subject thereto.(16)
The enforcement framework for the MNE Guidelines has long been the subject of criticism, especially by representatives of private and public actors.(17) Much of this criticism has focused on the purported capture of the OECD Guidelines systems by business interests, and the weakness of the enforcement mechanisms, both in terms of procedure and delay.(18) The focus of these efforts is bent to the production of national or global systems of hard law aimed at achieving any number of regulatory goals.(19) In addition, developing states have criticized the approach as both reflecting on the views and values of developed states and as imposed, in fact, on developing states for their own good but without their consent.(20)
But two recent cases have suggested the ways in which enforcement actions arising from civil society efforts to utilize the national contacts points complaint system may be slowly influencing the emerging discourse of corporate behavior in ways that will have substantial effect. One, brought by Rights and Accountability in Development (RAID), a civil society actor,(21) against DAS Air, determined that the activities of a U.K. undertaking outside of the U.K. violated the Guidelines because they constituted breaches of international conventions to which its home country adhered.(22) The other, brought by Global Witness, another civil society actor,(23) against Afrimex, Ltd., determined that the activities of a group of corporations were related as a consequence of which the U.K. undertaking either failed to properly oversee the operations of its supply chain or participated as part of an enterprise in the violation of the Guidelines.(24)
These cases are ripe with possibility. Beyond evidence of a more muscular institutional transnational enforcement structure for soft law codes, the cases serve to outline a framework for the interaction of transnational and national systems of corporate regulation. The multilateral system for governing multinational corporate behavior will affect not only that behavior but also the rules through which corporations may be governed as to their internal affairs and with respect to the character of their legal personality. (25) And this without regard to the law of either home or host state, but instead grounded on transnational law principles derived from out of the soft law regime within which the cases arose. But they do more than that. Arising in the course of global efforts to manage the regional conflict in the Democratic Republic of the Congo, (26) the cases also suggest the strength of what may become a consensus on the applicability of international law directly to non-sovereign entities like multinational corporations. (27) This case note first briefly describes the institutional and regulatory framework within which the cases arose. It then reviews the cases themselves, drawing out the more relevant arguments. Lastly contextualizes those arguments and positions within national and transnational corporate and international legal regimes. These cases suggest an effective method for operationalizing a soft law system to produce the effects of hard law beyond the state, but without challenging state authority directly. The OECD system is moving forward through this form of institutionalizing quasi-judicial organs in parallel with other soft law implementation endeavors, principally those under the umbrella of the U.N. Global Compact. For this reason alone, the cases are important as an instance of developing the law of multinational obligation and the system under which such obligations are overseen.
II. THE REGULATORY CONTEXT
The MNE Guidelines are recommendations on responsible business conduct addressed by governments to multinational enterprises operating in or from adhering countries.(28) The theme of the OECD Ministerial level meeting that approved the revised Guidelines in 2000 was “Shaping Globalization”.(29) The integration of national economies into one global economy is accelerating and intensifying, driven by new technologies and new opportunities.(30) These new opportunities are not only to reap profit, but also to stimulate development and improved social conditions around the world.(31) The revised Guidelines will be an important instrument for shaping globalization.(32) They provide a government-backed standard of good corporate conduct that will help to level the playing field between competitors in the international market place.(33) They will also be a standard that corporations themselves can use to demonstrate that they are indeed important agents of positive change throughout the developing as well as the developed world.(34)
The MNE Guidelines are framed as recommendations addressed by governments to multinational enterprises operating in or from adhering countries. “Although endorsed by adhering Governments, the Guidelines are voluntary and are not intended to override local laws and legislation. The Guidelines are not intended to introduce differences of treatment between MNEs and domestic enterprises – they reflect good practice for all.”(35) They provide voluntary principles and standards for responsible business conduct in a variety of areas including employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation. (36)
The enforcement and naturalization work of the OECD are affected through its system of national contact points. These entities are established through government ministries and are charged with the implementation of adhering state obligations under the MNE Guidelines and other relevant soft law produced through the OECD. The NCPs serve several purposes. With respect to the MNE Guidelines, a principal obligation is the establishment of procedures for handling complaints brought by proper parties alleging violations by multinational corporations of their obligations under the Guidelines.(37) These procedures vary widely,(38) but all include provisions for complaint intake, mediation, and ultimately more formal hearing on complaints.(39) But because the MNE Guidelines are not legally binding, the usual protections accorded in binding proceedings are not necessarily observed. However, because of the potentially severe consequences to a determination of violation—including adverse consequences with investors and consumers,(40) as well as the possibility that the findings might lead to formal charges of violations of law—multinational entities tend to take these proceedings seriously.(41)
The national contact point structure, however, has come under increasing criticism from civil society actors. (42) They see the structure of the Guidelines and its enforcement mechanisms as a potential means for effecting the creation of a soft law consensus on regulatory frameworks for multinational corporations, and from that to build a hard law transnational regulatory framework. As a consequence they have been working to increase both the visibility and legitimacy of the enforcement mechanisms of these soft law systems. (43) But at the same time, such actors have increasingly turned to the mechanisms of MNE Guidelines enforcement to bring pressure on multinationals to conform to what is hoped to be an increasingly harmonized and consensus standard of global business behavior based on a specific interpretation of the MNE Guidelines.
In the United Kingdom, the U.K. National Contact Point (“UK-NCP”) “is bipartite, consisting of officials from the Department for Business, Enterprise, and Regulatory Reform (BERR), and the Department for International Development (DFID).”(44) The UK-NCP is one of several entities within the U.K. government concerned with overseeing policy on corporate social responsibility. (45) External members of the UK-NCP include elements from trade unions, business and civil society,(46) who are extensively consulted in all aspects of UK-NCP activities.(47) RAID, for example, has been an active stakeholder in the work of the UK-NCP in the United Kingdom. (48)
The procedures for handling complaints from start to finish, along with bureaucratic commitments respecting to time decision and the like are set forth in a set of published procedures available from the internet site of the UK-NPC.(49) In keeping with the structure of the MNE Guidelines, the UK-NPC’s focus had been on mediation, though it has been turning more often to the assessment process as of late.(50) To date it has considered about fifteen specific instances of complaints brought by elements of civil society.(51)
The intake procedure adopted by the UK-NCP is fairly simple. To commence the process a simple amount of rudimentary information is required. (52) The information provided on the form made available by the UK-NCP (53) is used to make an initial assessment of the strength of the claim and the value of going forward with mediation efforts.(54) The UK-NPC contemplates a multistage procedure consisting of an initial assessment,(55) mediation or examination,(56) and drafting and publication of the final statement.(57) The rules do not contemplate the application of the law of either the place where the purported breaches occurred or the law of the place where the undertaking has its headquarters or is chartered. Neither do the rules impose other rules or procedures that mimic judicial or administrative proceedings with legal effect. And of course, it is precisely because these proceedings are administrative but not binding that this sort of flexibility is possible. As will become apparent, that flexibility permits any NCP to utilize a rules framework detached from municipal law. Indeed, these proceedings suggest the way in which the MNE Guidelines serve as something like an autonomous transnational system, (58) grounded in its own terms and drawing on municipal and international law as a basis for the application of its own norms.
III. The Cases.
The U.K. National Contact Point decisions in Afrimex and DAS Air are described below. The object is not merely to describe the proceedings and outcome, but to suggest a way of reading the Statements that suggest the important developments of each case.
A. Rights and Accountability in Development (RAID) v DAS Air (21 July 2008). (59)
The complaint brought by RAID in 2005(60) was grounded in allegations arising from a purported violation by DAS Air of certain U.N. embargoes within a conflict zone in the eastern region of the Democratic Republic of the Congo (DRC). (61) RAID pointed to a list of specific activities that, it argued, constituted breaches of a number of the general prohibitions of the MNE Guidelines. (62) Much of this was fueled by the worldwide demand for the mineral coltan. “Coltan is the colloquial African name for columbite-tantalite, a metallic ore used to produce the elements niobium and tantalum.”(63) The specific activities at the heart of the complaint included operating aircraft in aid of the Ugandan invasion of DRC territory, air transport into DRC occupied by the Ugandan military during 2000-2001, operating civilian aircraft in a conflict zone, and the “transport of coltan from Kigali in Rwanda and the transport of cobalt from Entebbe in Uganda which had a reasonable probability of originating in eastern DRC during the conflict period.”(64)
It was brought against DAS Air in the United Kingdom because, though the activities giving rise to the complaint occurred in the regions around the DRC, the undertaking itself was registered in the United Kingdom.(65) During the course of the complaint resolution process, however, DAS Air and its related entities had become subject to a ban on operations within E.U. airspace (66), as a consequence of which (in part) DAS Air’s assets became subject to liquidation in 2007.(67) This had a substantial effect on the proceedings. From the time of its cessation of operations, DAS Air also ceased participating in the proceedings in late October 2006.(68) That, however, served as no impediment to the proceedings, or the determination of a breach by DAS Air;(69) the proceedings continued with the assistance of RAID only, though the remedies available were accordingly limited.(70) Whether that conclusion to the proceedings serves as an impediment to the use of the conclusions in other cases in the U.K. or by other National Contact Points in their deliberations is another matter.(71)
RAID’s complaint cast its net broadly, seeking a declaration of violation for substantially all of the period of the current conflict in the DRC during which DAS Air operated in the region, commencing in 1998 (the start of the second conflict) to December 2001 (when the airline stopped flying).(72) However, the MNE Guidelines under which the complaint was made did not become effective until 2000, and the UK-NCP would have been required to apply to earlier version of the MNE Guidelines to those flights absent consent form the company, a consent that in this case was not forthcoming.(73) The solution was relatively straightforward. The emphasis of the UK-NCP was on the three flights that occurred after June 2000, when the current version of the Guidelines were released. The other thirty-two flights that constituted the bulk of the evidence of breach were used as circumstantial evidence of continued breach.(74) But the MNE Guidelines themselves were not applied directly with respect to the pre 2000 flights to avoid retroactive application without consent.(75)
The UK-NCP relied heavily in support of its conclusions on factual determinations that appeared to have been generated through the investigative work of an international and a national commission. The first was the work of the UN Panel of Experts on the Illegal Exploitation of Natural Resources and other Forms of Wealth of the Democratic Republic of Congo (the “UN DRC Panel”). (76) The second was the work of the Ugandan Judicial Commission under Justice Porter, commonly known as the Porter Commission.(77) RAID had relied on three key elements of these reports. The first was a political conclusion of the UN DRC Panel with respect to the character of the conflict in DRC and its relationship to natural resource exploitation. (78) The second was the UN DRC Panel’s recounting of a belief in DAS Air’s participation. (79) The last was the Porter Commission conclusion that Ugandan military bases were being used to hide civilian incursions into the conflict zone. (80)
The later assertions were drawn from supporting records included in the Porter Commission Report.(81) The UK – NCP rejected DAS Air’s initial response that the Porter Commission data was fabricated for failure to provide any proof beyond its statement to that effect.(82) The proof that DAS Air flights occurred were the crucial foundation to the UK-NCP findings. From the fact of the flights, breach could be inferred in the following way. First, international law required that governments close the air space between Uganda and DRC during the relevant period.(83) Second, the Ugandan Government through its “Porter Commission Report concluded that it is likely that civilian flights did take place between DRC and Uganda during the period of the conflict in direct contravention of International Conventions.”(84) And third, relying on the data supplied in the Porter Commission Report, the UK-NCP determined that the DAS Air flights during the relevant period were civilian in nature. (85)
The UK-NCP lastly considered the internal operations of DAS Air within the DRC in connection with its transport activities.(86) The UK – NCP first accepted the conclusion by UN DRC Panel that the DRC conflict was fueled by the desire to exploit natural resources in the area and the private sector’s responsibility in those activities.(87) It presumed an obligation on the part of private undertakings to exercise heightened care in such situations to avoid complicity in lawless or illegal activity.(88) It then considered the extent of the influence that DAS Air could have had in its contracts with third parties to transport coltan from Kigali to Europe.(89) The MNE Guidelines commentary suggested a contextual analysis for determination of obligation.(90) The UK-NCP found that DAS Air undertook insufficient due diligence on the supply chain because it failed to question the source of the materials it transported.(91)
On this basis, the UK-NCP concluded that DAS Air had failed to meet the requirements of the Guidelines.(92) The UK-NCP’s affirmed an expectation that all UK MNEs abide by international conventions including the Convention on International Civil Aviation.(93) In addition, the mislabeling of flights as military, when they were not, by UK MNE’s is also prohibited.(94) Lastly, and perhaps of most note is the UK-NCP’s adoption of UN Resolution 1592 as being a “business requirement” that companies operating in the area must adhere to, despite the fact that the resolution is intended for nations, and not corporations.(95)
B. Global Witness v Afrimex (28 August 2008) (96).
The complaint, brought by Global Witness in February 2007, (97) was also fueled by the global markets for coltan and the turbulence in the DRC. Global Witness alleged that Afrimex paid taxes to rebel forces in the Democratic Republic Congo and that it practiced insufficient due diligence on the supply chain by sourcing minerals from mines which used child labor. (98) These activities were said to constitute breaches of a number of the provisions of the MNE Guidelines.(99) Afrimex vigorously contested the allegations as well as the conclusions suggested therefrom based on its own version of its conduct.(100)
As in the DAS Air proceedings, (101) the complaint sought to bring in activities that occurred before June 2000, when the current version of the MNE Guidelines came into force. Global Witness looked to activities that took place between 1998 (the start of the second conflict in the DRC) and February 2007 (when the complaint was filed). (102) The UK-NCP considered this activity indirectly. It limited its findings to those activities that took place after adoption of the current version of the MNE Guidelines, but considered pre-2000 activity as circumstantial evidence relevant to post 2000 conduct as the UK-NCP determined appropriate. (103)
The complaint was brought against Afrimex, a U.K. registered company founded in 1984. (104) The determination was based on the confluence of two streams of analysis. The first related to the situation in the relevant territory—the conflict zone of the DRC.(105) The second focused on the relationship among a group of entities that together were responsible for the actions at issue, for the purpose of assigning responsibility to any one or more of them.(106) The conclusions and data produced through the field work of United Nations officials proved crucial in making fact determinations and in supporting the UK-NCP’s conclusions about the state of affairs in the region at the time. It was particularly important in the determination of the character and effect of the relationship among Afrimex and to other companies, Société Kotecha (107) and SOCOMI. (108)
As in DAS Air, (109) the work of the UN Panel of Experts on the Illegal Exploitation of Natural Resources and other Forms of Wealth of the Democratic Republic of Congo played a critical role.(110) The reports provided the source for the presumption that the conflict in the DCR was in part about the control of the rights to exploit the region’s natural resources, and that “Companies trading minerals, which the Panel considered to be “the engine of the conflict in the Democratic Republic of Congo”, have prepared the field for illegal mining activities in the country.””(111) Among these was included the direct trade of arms for natural resources by international corporations doing business within the DRC.(112) In a crucial part of the report, Afrimex was one of the named companies included in this report.
Afrimex was first mentioned as a company of concern in the Panel’s first report and was subsequently listed in Annex III of the October 2002 report, as the Panel considered Afrimex to be in violation of the OECD Guidelines. After dialogue with Afrimex, the UN classified Afrimex in Category 1, a “resolved” case that required no further action. The discussions that took place between Afrimex and the UN following this report are summarized in the letter that Ketan Kotecha sent the UN. (113)
In addition, the UK-NCP took note of other U.N. activity related to the conflict in DRC to support the presumption of the “the explicit link between minerals and funding of rebel groups.”(114) They also noted the resolutions of the U.S. Security Council that also went to the issue of the conflict situation in DRC. (115)
Having satisfied itself of the nature of the context in against which corporate activity of Afrimex was to be judged, the UK-NCP reached the central issue of the case—the connection of Afrimex to both the DRC and the suspect activity—a connection Afrimex vigorously contested.(116) For that purpose it would be necessary to connect Afrimex to two other entities—Société Kotecha and SOCOMI.(117) Although Afrimex was able to present enough evidence to convince the panel that there was clear separation between the businesses,(118) the overlap between the directors of each respective corporation was enough to convince the UK-NCP that Afrimex “was in a position to significantly influence Société Kotecha and SOCOMI.”(119) It would thus treat the three companies as “linked,”(120) a ambiguous term, because it neither suggested that the companies were substantially each other’s alter ego nor that one necessarily dominated the other, but that they might tend in that direction sufficiently, at least for the analysis that followed.
Having determined the “link,” the UK – NCP then applied the MNE Guidelines requirements on the amalgamated entity (whatever the legal nature of their formal or effective connection) in the factual context of the conflict situation in that part of the DRC in which the complained events occurred.(121) The UK-NCP was of the belief that Afrimex was in a strong position to influence SOCOMI with respect to the issue of the character of the taxes and licensing fees paid to RCD-Goma, a rebel group that operated within the DRC conflict zone.(122) The Panel then concluded that Afrimex failed to apply due pressure to SOCOMI to stop these practices.(123)
Because SOCOMI was not the only supplier to Afrimex, the UK – NCP also considered the issue of the violation of the supply chain conduct rules of the MNE Guidelines.(124) The UK-NCP also found that Afrimex failed to conduct a “due diligence” inquiry to the supply chain relation among these entities.(125) The UK-NCP looked to the work of the U.N. Special Representative to the Secretary General on the Global Compact, John Ruggie (126), for a transnational definition of the term due diligence for application in the context of the MNE Guidelines.(127) Because Afrimex had such influence over its suppliers that it could have required greater compliance with the Guidelines, the UK-NCP considered that Afrimex failed to perform the sufficient due diligence required when dealing with its suppliers in a conflict zone as the DRC.(128) Indeed, the dangers inherent in doing business in the conflict zone itself evidenced the need for greater scrutiny.(129) But it chose to apply a monitoring standard that, while perhaps acceptable outside of conflict zones, was insufficient in areas where government authority is weak.(130) “The NCP does not consider the suppliers’ statements constitute sufficient due diligence, particularly as it does not deal with rents extracted through the supply chain.”(131) Furthermore, the UK-NCP found that Afrimex failed to encourage its business partners to apply principles of corporate conduct compatible with the Guidelines.(132) The UK-NCP lastly rejected the assertion that Afrimex engaged in conduct that amounted to bribery.(133)
On the basis of this analysis, the UK-NCP, concluded that Afrimex was well aware of the situation in the DRC and especially in the conflict zone.(134) Afrimex was active in the conflict zone during relevant periods, and though it paid no taxes, its associated enterprises did, constituting a breach of the MNE Guidelines.(135) Afrimex also breached its MNE Guidelines obligations by failing to encourage its business partners to embrace the conduct norms of the MNE Guidelines.(136) The UK – NCP also determined that Afrimex failed to appropriately discipline its supplier chain. “The UK NCP expects UK business to respect human rights and to take steps to ensure it does not contribute to human rights abuses.”(137)
The UN –NCP offered a slew of recommendations. (138) These included several that required Afrimex to directly apply a number of international norms and standards. Afrimex offered to formulate a corporate responsibility document under which to better operate in the future. (139) The UK-NCP noted the relevance of the OECD Risk Awareness Tool for MNEs in Weak Governance Zones, which were developed as part of the OECD’s Investment Committee’s follow up to the Guidelines. (140) This decision by the UK-NCP stresses the growing importance that the Guidelines have in influencing corporate behavior across state lines. In particular, corporations may be held responsible for the actions of third parties in their supply chains if they fail to apply a due diligence check on said supply chain. Most importantly, it suggests the importance of soft law principles especially as a substitute for hard law in weak government areas and the power of transnational legal standards to supplement and supplant national standards. (141)
IV. THE ANALYTICAL CONTEXT.
The cases present an interesting advance in both the jurisdiction and jurisprudence. Together they illustrate the way in which advances in governance issues are being crafted, step-by-step, from out of a system that, while formally non-binding, is increasingly developing the characteristics of a binding governance system.(142) They suggest that the political economy of governance no longer necessarily depends on the state and “law” but now functions in a regulatory context in which municipal and international law converge within hybrid systems of regulation that is not formally law but provides a functionally similar normative framework.(143) But the governance framework is neither municipal nor international, it draws on soft law produced through the organs of the United Nations,(144) the work of the International Court of Justice,(145) and the findings of other national contact points,(146) as permitted under the MNE Guidelines themselves. Instead, the MNE Guidelines are beginning to serve as the focal point for the construction of an autonomous transnational governance system that is meant to serve as the touchstone for corporate behavior in multinational economic relationships. (147)
That transnational system is acquiring its own unique qualities that distinguish it from both the municipal and international law systems from which it draws. There are a number of common, if conventional, points worth stressing relating to that point. First, the cases evidence the way in which international law rules are coming to have a direct effect on multinational transactions. Second, they suggest the way in which governance systems imply an obligation on the part of enterprises to undertake sovereign responsibilities under certain circumstances. Third, the cases point to the process rules being developed for the processing of complaints against multinational corporations. And lastly, the cases suggest the sometimes significant variance there may be developing between the application of MNE Guidelines and the corporate law of the municipalities within which the activities at issue may have occurred.
Ultimately, under the guise of “soft” law, the OECD may be able to construct a system of customary law and practice as binding as any hard law system because it is hard wired into the practices and routines of the corporate environment in which it is deployed. There is irony here. Through “voluntary” guidelines, the OECD framework may be able to accomplish what was so fiercely resisted in the form of the more formally binding and institutionalized model of the Norms.(148) But critical to this effort are the quasi-judicial work of the National Contact Points that are meant to serve as the sort of nascent common law courts of this rising customary law transnational system.(149) It is in that respect that the objectives of the Norms might well be realized in a more binding manner than under the more formally binding but disruptive framework of the Norms. This section provides a brief unpacking of these necessarily preliminary but potentially complex interactions between the MNE governance framework and the legal systems against which they operate.
A. The Construction of an Interlinked System of International and Municipal Hard and Soft Law.
The two cases highlight four central issues of any supra-national enterprise regulatory scheme: first the conceptual difficulties of direct imposition of international law on non state actors; second, the imposition of soft as well as hard law norms in equal measure; and third, the deputization of civil society actors as a critical element in the enforcement of soft law principles; and fourth, the role of the National Contact Points in a quasi-judicial role unsupported by traditional rule of law limits.(150) In each of these issues, the cases suggest the ways in which, while loudly proclaiming the ineffectiveness of MNE Guidelines proceedings in law, each has been made more effective in fact.(151)
While the MNE Guidelines themselves describe a soft relationship between international law norms, the entities subject to the MNE Guidelines and the state,(152) the National Contact Point in each of the cases appeared to suggest that DAS Air and Afrimex had direct obligations under international law, the breach of which ran contrary to their obligations under the MNE Guidelines.(153) Of course, this presumption would be untenable under traditional notions of international law,(154) and are problematic even under the more ambiguous provisions of the MNE Guidelines. Thus, for example, in the consideration of breaches of the MNE Guidelines by DAS Air, the UK-NCP noted that the “issue that the NCP considered for the purpose of this specific instance is whether DAS Air participated in these flights which would have been in direct contravention of International Aviation Conventions leading to a failure to meet the expectations of paragraphs 1.7 and II.5 of the Guidelines.”(155) Moreover Afrimex was to be mindful of the effects of its business practices on indirectly violating the arms embargo in the DRC conflict zone. (156) But this suggests a direct relationship between the private actor and international law a relationship about which states had strongly objected. (157)
But the National Contact Points in both cases were able to do what the United Nations establishment was unable to accomplish through the Norms structure precisely because the method used was soft rather than hard law. Because neither are technically law, both could serve as the basis for behavior regulation in effect. The technical monopoly power of the state over law was not affected by regulatory systems that do not bind in law and could thus have an equivalent effect, at least as far as the entity subject to National Contact Point proceedings is concerned. Thus the increasing power of soft law, it is formally non-existent yet can become a powerful effective force of substantive behavior regulation. The MNE Guidelines represent the contemporary way in which soft law systems can create hard international law.(158) The MNE Guidelines thus clearly provide a consensus making formula that eventually will be translated into legislation acceptable to all those stakeholders that have contributed to its terms and whose values are reflected therein. There is irony here.
Critical in that development, of course, is the work of the National Contact Points, the royal courts of this developing common law. This is well understood by the civil society actors that have become a decisive element in pushing this framework forward in its institutionalization.(159) Indeed, civil society actors have played as increasingly large role in managing the development of soft law in the public and private sector across a large variety of subject areas.(160) In this case, the civil society actors, RAID and Global Witness, used these actions to help construct international values and norms through an interpretive elaboration of the MNE Guidelines. They meant to continue to transform moral/ethical consensus into formally binding form, first within bureaucratized systems of soft law and then ultimately into instruments of law in form as well as fact. (161) The cases, then, suggest their power in their form: an institutionalization of dispute resolution in which elements of civil society undertake the traditional enforcement role of the state.(162) The state provides the judge, but not the law. Civil society provides the enforcement mechanism. Economic enterprises serve as both objects and subjects of a law that is derived from both the obligations of states and the presumed rules produced by international actors. (163)
But the cases raise a larger and more potent issue with respect to the division of power between states and private undertakings—the governance role of private economic actors within territories in which state power is weak or illegitimate. (164) In that context, the National Contact Points in both cases suggested that the OECD principles themselves imposed on private undertakings the obligations to like a state and in lieu of the state. In effect, for purposes of the cases, in lawless areas like the DRC-Goma, both DAS Air and Afrimex were meant to operate as the state for purposes of ordering their conduct and the conduct of those they might influence. The relationship between DAS Air and Afrimex (and especially Afrimex) and its controlled entities, and those entities they controlled, thus becomes regulatory rather than commercial in character.(165) “MNCs have always been powerful players in the international society and have since long been accepted as partners in the conclusion of ‘internationalized’ contracts with states. In such cases, many have argued, they are endowed with a kind of derived [international legal personality].”(166) The two cases both take small steps in the effectuation of this reality.
Thus, the National Contact Points would, though an interpretive application of the OECD Risk Awareness Tool (167), serve as both undertaking and state—regulator and participant in the markets in a territory in which the state is, to some extent, absent.(168) Multinational enterprises have been asserting this authority on their own for a number of years.(169) What is different here is the incorporation of this idea within the soft law quasi legal framework of the MNE Guidelines framework. We move from private, contract based non-state systems, to hybrid public-private governance framework; another step toward the formal recognition of entities as proper subjects of international law.
Lastly, from a more global perspective, these cases can be understood not so much as efforts to develop systems of transnational regulation of multinational corporations, but as efforts to comprehensively regulate the rules for warfare and violence among state and non-state actors. Both of the cases had much in common on that score. They focused on the conflict in the Eastern DRC both as an internal matter and in the context of foreign invasion. The situation provided an important opportunity to add to the legal mechanisms through which warfare is managed, and constrained by rules.(170) For civil society actors in these cases, the MNE Guidelines provided a means of extending the scope of that regulatory environment both to non state actors indirectly involved by the invocation of and strengthening of the mechanisms of soft law control.(171) And that is perhaps the greatest insight that can be drawn from these cases in the context of international law: both Afrimex and DAS Air cases suggest the way in which international soft and hard law, national law, and transnational custom and customary normative frameworks (institutionalized or not) are converging within a dynamic matrix where each, developing separately, come together to coordinate and resolve issues that arise beyond the state.(172) The MNE Guidelines enterprise thus fits in nicely with what Gunther Teubner describes as polycentric globalization.(173)
B. Corporate Law Challenges.
As interesting as the effects of the cases on the construction of complex transnational governance systems might are, the cases also evidence potentially important engagements with traditional notions of corporate law and regulation. These are explored briefly here. There were two potentially significant issues that might affect the way in which corporate law principles are understood and applied under municipal law. These approaches are important if only because they either challenge the supremacy of municipal law as the source of corporate law norms or they will serve as a strong incentive to harmonize these corporate law principles. (174) The first deals with the law respecting the separate corporate existence of separately constituted undertakings. The second concerns an understanding of enterprise liability.
i. Respect for the Separate Legal Personality of Separately Constituted Undertakings. Within Anglo-American corporate law, the protection of the separate legal personality of economic entities operating in corporate form has been strongly defended.(175) Most states have developed rules for the protection of that autonomy, both from people who seek to impose responsibility on shareholders (and object stakeholders) for the obligations running to corporations, and also from people who seek to impose responsibility on corporations for the acts of their stakeholders (principally shareholders).(176) Most states also have quite complicated rules for determining when those rules can be avoided, by “piercing the veil” of autonomy of these separate legal actors.(177) At the same time, states have been more willing to try to seek to extend their authority over elements of corporate activity stretching across borders when it serves their interests.(178)
Yet, despite the nod to municipal law in the MNE Guidelines, neither National Contact Point panel considered either the law of corporate autonomy nor the rules by which that autonomy could be disregarded under either the law of the home or host states. Instead, the panels relied on the construction of its own standards for making that determination, grounded in something that appeared to mimic English and American equity practice, but subject to its own internal logic. The consideration of the relationship among Afrimex, Société Kotecha and SOCOMI is telling. (179) Because the “law” of the MNE Guidelines forms part of the arrangements among the relevant stakeholders, municipal law appears irrelevant, “they are waived by the parties to the contract. However, it is not clear that the board of directors may waive the limited liability rights of shareholders without their consent. Such a power may be beyond the reach of the board or its officers.”(180)
Still, the MNE Guidelines are now read as making hard law municipal provisions irrelevant to their determination. On one level that makes sense: the MNE Guidelines are without legal effect and self referential with respect to the obligations they impose on its community of actors. On the other hand, the MNE incorporates national and international hard and soft law by reference. (181) It is hard to understand that incorporation as so selective as to permit national contact points to choose from among them. But that is precisely what the national contact point does in Afrimex, at least to the extent it first determines the associated status of the three entities and then imposes collective liability on them for actions in a foreign jurisdiction (whose own law of corporate aggregation is disregarded as well). The result, then, can be enforced only unofficially—or through transnational mechanisms. It is unlikely to find enforcement in states, like the United States, where such determinations might be deemed inconsistent with state corporate law, absent modification of municipal law.(182) More likely, the result serves another purpose: “The legal foundations of the ‘legitimating’ effect of international declarations regarding the conduct of MNEs are most readily apparent where these declarations, or instruments adopted in reference thereto, affirmatively recommend the transformation of their contents into enforceable rules of domestic law.”(183)
And indeed, it might be possible to consider the National Contact Point cases as important points in the production of a stream of semi-public pronouncements that could lead to the discovery (or evolution) of what, as customary international law, might then be imposed on host and home states. This is an “alternative mechanism for global legislation . . . custom may serve as a pathfinder for later established more specific treaty rules.”(184) The substance of the Norms’ project is now furthered through the institutionalization of soft power mechanisms that affect a governance regime different from that of home or host state law.
ii. Enterprise Liability. One of the more closely guarded legal protections of state law is its rules for avoiding liability between separately constituted parts of a large economic enterprise operating through a large number of subsidiaries. But states have also have tentatively sought to find circumstances under which the aggregate parts of a multi-corporate enterprise can be held collectively liable for the acts of any of its respective parts.(185) And most states recognize the tension between corporate structures that take advantage of the benefits of asset protection under the rules of limited liability and separate legal personality of corporations (and similar entities) and the business organization of the aggregate entity.(186)
The supplier chain governance rules, especially as applied against Afrimex, (187) suggest the construction of a new set of enterprise liability norms in which regulatory responsibility becomes the foundation for regulation of the legal relationships between unrelated companies. Indeed, though the notion of supply chain is itself contested,(188) the National Contact Point assumed that SOCOMI might be part of Afrimex’s supply chain (189), and that the comptoirs used by Afrimex were (as did Afrimex).(190) It is true enough that this sort of regulatory enterprise model is already fairly well advanced, as system, in the construction of contract based private regulatory systems of multinational enterprises.(191) But that sort of private regulatory systems takes on something of a different character when it emanates from the state. The difference, of course, is that the enterprise liability contemplated in cases like Afrimex are also coupled with the transformation of the corporation into a quasi state actor, an entity with publicly infused regulatory obligations, the failure of which to assert correctly can lead consequences.(192)
From a perspective of international law, the formalities remain clear—states remain sovereign, corporations serve in a subordinate capacity as agents, whose powers may increase as the ability of the state to project power diminishes, and in any case, the corporation must “think like a state” in devising it commercial relationships with other actors. That was, in essence, the perspective of the Afrimex National Contact Point Panel. (193) But the consequences for the municipal regulatory control of corporations—and especially core state public policy about the fundamental character of entities as profit or wealth maximizing private actors—can be significant. (194) Not that the results are “bad” or unwarranted—but that the failure to discuss and the absence of the state from these developments seems awkward at best.
C. Procedural Issues.
One of the more interesting aspects of the cases has been the freedom with which the National Contact Points have fashioned their own procedural and evidentiary rules. These tend to deepen both the institutional legitimacy of the process and its separation (autonomy) from the municipal and international law systems which are referenced in its substantive rules. (195) A fully developed and autonomous system of dispute resolution contributes greatly to the autonomy of rule systems. “To the extent that states discharge their responsibility by taking the difficult political decisions which are needed to formulate new legal principles, they strengthen the process of adjudication by providing courts and tribunals with a legitimate basis for their decisions.”(196) The two cases point to the development of this autonomy, especially in the freedom with which the National Contact Points sought to develop their own rules for burdens of proof, sufficiency of evidence, applicability of the rules, and issues of mootness are illustrative.
Both the Afrimex and DAS Air panels considered the effects of instances of rule violation that occurred before the adoption of the MNE Guidelines in the current form. (197) Both reached the same conclusion, reasonable in the context of English jurisprudence, that only those actions that occurred after the adoption of the rules would be the subject of consideration. But the panels did not disregard prior conduct completely. Instead they determined that such conduct was pertinent in considering the behavior of the entities. The distinction, thus, made little difference in the proceedings. For all practical effects, prior conduct was dispositive in both cases, though they were not the direct subjects of the complaints. This procedural rule might well be in accord with the rules recognizable in English courts. But the panels did not stop long enough to consider that issue. Instead, they made their determination on the basis of their consideration of the objectives, principles and context of the MNE Guidelines themselves—without reference to the law of the state in which they sat. The fig leaf over this determination, of course, was that the proceedings had no formal legal effect. But they did have substantive effect that in some respects mimicked proceedings before a state tribunal. In that context, assertion of a power to determine the effects of evidentiary facts is strong evidence of the autonomy of the rule system grounded in the MNE Guidelines.
The National Contact Point panels asserted a similar autonomy in constructing rules of burdens of proof without reference to those either of the establishing institution (the OECD) or the home or host state. Thus, for example, in Afrimex, the National Contact Points panel suggested that Afrimex had the burden of proving that its minerals were not sourced from mines that used child or forced labor rather than the complainant, Global Witness, bearing the burden of proving that they were sourced from such operations. (198) There was no basis for this determination other than the principles inherent in the MNE Guidelines framework, perhaps. In DAS Air, the panel determined that the failure of DAS Air to respond, principally because the company was being liquidated, would not affect the evidentiary determinations, or better, might be read against them, was also made without reference to procedural rules outside of those constructed by the panel. (199)
This is not meant as a criticism of the procedural choices of the panels, but rather as a suggestion that the freedom of those panels to choose the procedural rules under which their consideration of the complaints would proceed suggest an autonomy that begins to more clearly establish the autonomy of the normative systems within which these entities were judged. And it was clear that procedural autonomy was on the minds of the panel. This is nicely illustrated by those instances in which the panel was quite sensitive to the applicability of the host state process rules in arriving at their own determinations. For example, in DAS Air, the panel gave greater weight to evidence offered by RAID produced by the Ugandan Porter Commission because it “gathered extensive documentation. It worked only with sworn evidence given in public. The Commission adhered to the Evidence Act in its proceedings.”(200) But an international imprimatur was important as well.(201) On the other hand, in the Afrimex complaint, the National Contact Point was satisfied to judge the credibility of evidence produced through a Belgian NGO by the receipt of assurances from the Belgian National Contact Point “who confirmed the credibility of the organization and its work.”(202) Contrast the same panel’s consideration of the issue of mootness.(203) This was striking in the DAS Air panel statement, with respect to the basis for the panel determination in which the panel determined to give no effect to the liquidation of the entity in proceeding with the complaint.(204)
V. CONCLUSION.
“If a proper balance is to be achieved, the law must continue to develop to reflect the reality of TNC operations and adapt to counter TNC methods of avoiding legal responsibility.”(205) The idea of state intervention in transnational private activity, and the understanding of private economic activity as laced with public policy ramifications, and burdens, has been growing as the economic crisis has deepened after 2005. Indeed, in early 2009, the G-7 ministers declared an intention to work toward “setting up a set of common principles on integrity, transparency and propriety in global financial and business transactions.”(206)
Though there are great differences between political camps--all agree that the state--that is the collective holders of political power, have a duty to intervene directly, and in a coercive manner, in the markets. That intervention is necessary because the effects of market collapse are no longer merely social and economic but political as well. Financial sector collapse would result in political instability. In that context intervention is necessary for the state to protect itself--even if it had no interest in protecting economic and social actors. (207)
The OECDs soft law initiatives, and importantly its growing body of interpretive reviews of complaints through its National Contact Points, will likely be influential in developing these attempts to renew efforts at global harder governance of multinational corporations and other economic activity.(208) But the efforts will be uneven.(209) The OECD, itself, will be examining its own regulatory posture, taking advantage of the insights and opportunities presented by the global economic downturn. “The OECD will be looking at existing legal instruments, guidelines and conventions in the coming months to see if they need to be improved or extended.”(210)
For all that, the output of quasi judicial and interpretive statements, like those of the U.K National Contact Point in the matters of DAS Air and Afrimex, will continue to contribute, incrementally, to the institutionalization of transnational systems of multinational regulation, systems that will have legal effect, whether to not this is law, classically understood. These cases continue an effective process of operationalizing soft law to produce the effects of hard law beyond the state, but without challenging state authority directly. (211) The OECD system is moving forward through this form of institutionalizing quasi-judicial organs in parallel with other soft law operationalizing endeavors, principally those under the umbrella of the U.N. Global Compact. (212)
RAID hailed the DAS Air case for its transnational elements. (213) But the case, along with Afrimex will have significantly broader and deeper implications. It is clear that this approach will be changing, in favor of more direct regulation. There was a sense that the political had to defer to the economic and social sectors on the basis of a markets ideology that appeared to restrict political power to its territorial limits and insist on global regimes of lightly fettered free movement of capital. (214) No longer. Whether it comes in the form of harmonized transnational standards to be implemented by national governments, or by the adoption of an international convention for that purpose, it is clear that attempts will be made to move from voluntary to more coercive legal regimes. Indeed, for some elements of civil society, that day is effectively here. (215)
In the process more than a regulatory framework for the regulation of multinational enterprises will be affected. As the two cases reviewed make clear, all of the fundamentals of national corporate law—from piercing the corporate veil, to notions of enterprise liability, to that great issue of the direct relationship between international law and private economic actors (without the shield of the state standing between entity and obligation)—will be part of the regulatory reform conversation. In the process state corporate law will likely be internationalized in the way in which, in federal states like the United States, it has slowly been moving from states to the national government as a consequence of regulatory responses to crisis. (216)
Larry Catá Backer (217)
ENDNOTES
1. Statement By The United Kingdom National Contact Point (NCP) For OECD Guidelines For Multinational Enterprises (NCP): Das Air, available http://www.berr.gov.uk/files/file47346.doc (accessed Dec. 29, 2008).
2. Final statement by the UK national contact point for the OECD guidelines for multinational enterprises: Afrimex (UK) Ltd, Available http://www.berr.gov.uk/files/file47555.doc (accessed Dec. 29, 2008) (Global Witness v Afrimex (28 August 2008).
3. See, e.g., PETER MUCHLINSKI, MULTINATIONAL ENTERPRISES AND THE LAW (Oxford, Eng: Blackwell, 1999); PHILIP I. BLUMBERG, THE MULTINATIONAL CHALLENGE TO CORPORATION LAW (New York: Oxford University Press, 1993); DAVID C. KORTEN, WHEN CORPORATIONS RULE THE WORLD (2d ed., San Francisco: Kumarian Press, 2001); Fleur Johns, The Invisibility of the Transnational Corporation: An Analysis of International Law and Theory, 19 MELBOURNE UNIVERSITY LAW REVIEW 893 (1994).
4. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287-389 (2006).
5. See Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights, U.N. Comm. on Human Rights, Sub-Comm. on the Promotion and Prot. of Human Rights, Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights, E/CN.4/Sub.2/2003/L.8 (7 August 2003) available at http://www.unhchr.ch/huridocda/huridoca.nsf/Documents?OpenFrameset (hereafter “the “Norms”). The Norms were effectively abandoned in early 2005, and efforts to formally regulate transnational corporations transferred to other United Nation’s offices. For a discussion of the Norms in the context of global movements for harmonized corporate social responsibility regimes, see, e.g., JENNIFER A. ZERK, MULTINATIONALS AND CORPORATE SOCIAL RESPONSIBILITY: LIMITATIONS AND OPPORTUNITIES IN INTERNATIONAL LAW (Cambridge, England, Cambridge University Press 2006).
6. See, e.g., Larry Catá Backer, Multinational Corporations as Objects and Sources of Transnational Regulation, 14 ILSA JOURNAL OF INTERNATIONAL AND COMPARATIVE LAW 499, 500-508 (2008).
7. Cf. T. Gruchella-Wesierski, A Framework for Understanding Soft Law, 30 MCGILL LAW JOURNAL 37 (1984); Hans Baade, Legal Effects of Codes of Conduct, in LEGAL PROBLEMS OF CODES OF CONDUCT FOR MULTINATIONAL ENTERPRISES (The Hague: Kluwer, 1980).
8. See United Nations, Global Compact, available at http://www.unglobalcompact.org/ (accessed Feb. 11, 2009) (“The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption.” U.N. Global Compact, Overview of the U.N. Global Compact, available http://www.unglobalcompact.org/AboutTheGC/index.html). As late as early 2008, United Nations through the special representative of the Secretary General for the Global Compact, John Ruggie, had been happy to make the best of the deal that seemed firmly in place--a regime of voluntary standards applicable to multinational enterprises. See John Ruggie, Protect, Respect and Remedy: A Framework for Business and Human Rights, A/HRC/8/5 (April 7, 2008).
9. The Organization for Economic Co-operation and Development (OECD) brings together the governments of countries committed to democracy and the market economy from around the world for a variety of development regulatory and harmonization purposes. See OECD, About OECD, available http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html, (accessed Jan. 12, 2009). Thirty three nations are currently members of the OECD, including Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States. See http://www.oecd.org/document/58/0,3343,en_2649_201185_1889402_1_1_1_1,00.html (last visited February 28, 2009). Eleven other states are not members but have adhered to the OECD Guidelines, including Argentina, Brazil, Chile, Estonia, Egypt, Israel, Latvia, Lithuania, Peru, Romania & Slovenia. CITE.
10. See, e.g., OECD Principles of Corporate Governance (2004), available http://www.oecd.org/document/49/0,3343,en_2649_34813_31530865_1_1_1_1,00.html (last visited February 28, 2009). It has been described as “The Principles are a living instrument offering non-binding standards and good practices as well as guidance on implementation, which can be adapted to the specific circumstances of individual countries and regions.” Id. at 4.
11. See OECD Guidelines for Multinational Enterprises (2000), available http://www.berr.gov.uk/files/file46192.pdf (accessed Feb. 1, 2009). The relevant provisions are discussed infra at Section II. Following the adoption of the Revised OECD Guidelines for Multinational Enterprises on the occasion of the OECD's annual Council meeting at ministerial level in Paris on 27 June 2000, the OECD published a booklet which comprises the following elements: revised text and commentary, implementation procedures and the Declaration on International Investment and Multinational Enterprises. The Guidelines can be found online at http://www.oecd.org/dataoecd/56/36/1922428.pdf.
12. Id.
13. Id.
14. Id.
15. See MNE Guidelines at Procedural Guidance, 35, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited February 28, 2009).
16. See id.
17. “In February 2007, the Special Representative of the Secretary General, John Ruggie, stated in his report to the Human Rights Council in Geneva, that “some NCPs have also become more transparent about the details of complaints and conclusions, permitting greater social tracking of corporate conduct, although the NCPs’ overall performance remains highly uneven.” OECD Watch, Model National Contact Point (Sept. 2007) at 24 & n. 2, available http://www.transparency.de/fileadmin/pdfs/intern/Corporate_Accountability/1_The_Model_European_National_Contact_Point.pdf.
18. OECD Observer, Cleaner Business, can be found online at: http://www.oecdobserver.org/news/fullstory.php/aid/1173/Cleaner_business.html (last visited on February 28, 2009). There is irony here. “The development and enforcement of OECD Guidelines for Multinational Enterprises provides an example of how institutions can seek the support of NGOs in their relationship with principals. NGOs have been involved in the drafting of the Guidelines and promote them in a larger endeavor to increase corporate social responsibility.” Ingo Venzke, International Bureaucracies From a Political Science Perspective—Agency, Authority, and International Institutional Law, 9 GERMAN LAW REVIEW 1401, 1420 (2008).
19. Thus for example, see , Jackson, James K., CRS Report for Congress: The OECD, can be found online at http://www.fas.org/sgp/crs/misc/RS21128.pdf (last visited February 28, 2009). See also L. Dhooge, Beyond Volunteerism: Social Disclosure and France’s Nouvelles Regulations Economiques, 21ARIZONA JOURNAL OF INTERNATIONAL AND COMPARATIVE LAW 441 (2004).
20. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287-389 (2006) (“This form of “volunteerism” has been criticized by developing countries as lacking input from representatives of developing states. Though crafted by developed countries as voluntary standards, such volunteerism is binding in fact for developing states.” Id., at --; citing Fidel Castro Ruz, Speech at the Great Hall of the Central University of Venezuela: Una Revolucion Solo Puede Ser Hija de la Cultura y de las Ideas (Feb. 3, 1999), available at http://www.cuba.cu/gobierno/discursos/1999/esp/f03299e.html.)
21. “We are a research and advocacy NGO based in Oxford, U.K. that promotes respect for human rights and responsible conduct by companies abroad. In September 2003, we became a fully independent organisation. RAID, Who We Are, available http://raid-uk.org/about_us.htm (accessed Feb. 10, 2009) (We were founded by Patricia Feeney and Tom Kenny in 1997, while they worked with the Refugee Studies Centre, Queen Elizabeth House, University of Oxford. . . We are run by Patricia Feeney, who undertakes research and advocacy work internationally. RAID’s Senior Research Consultant is Tom Kenny.” Id.). According to its website, “RAID's mission is to promote a rights-based approach to development. RAID works to advance corporate accountability, fair investment and good governance to ensure the human rights of people living in poverty are respected by the private sector, international financial institutions and governments.” Id., Our Work, available http://raid-uk.org/work.htm (accessed Feb. 10, 2009).
22. Statement By The United Kingdom National Contact Point (NCP) For OECD Guidelines For Multinational Enterprises (NCP): Das Air, 21 July 2008, available http://www.berr.gov.uk/files/file47346.doc (accessed Dec. 29, 2008) (Rights And Accountability In Development (RAID) v DAS Air (21 July 2008)). The complaint alleged breaches under a variety of provisions of the MNE Guidelines resulting from DAS Air’s failure to apply due diligence when transporting minerals between Entebbe and Kigali, which had a reasonable probability of being sourced from the conflict zone in the Democratic Republic of Congo (DRC) and its commercial flight activities between Entebbe airport and the conflict zone in eastern Democratic Republic of the Congo coinciding with an occupation of the area by the Ugandan military. A flight ban between DRC and Entebbe was in place during the applicable period, violations of which were in direct contravention of international aviation conventions (the Chicago Convention). The UK-National Contact Point (UK-NCP) determined that the complaints were valid. Id., at ¶¶47-50.
23. “Global Witness exposes the corrupt exploitation of natural resources and international trade systems, to drive campaigns that end impunity, resource-linked conflict, and human rights and environmental abuses.” Global Witness, About Us, available http://www.globalwitness.org/pages/en/about_us.html (accessed Feb. 10, 2009). It was founded in 1993 and now has offices in London and Washington, D.C. Id., History, available http://www.globalwitness.org/pages/en/about_us.html (accessed Feb. 10, 2009).
24. Final statement by the UK National Contact Point for the OECD guidelines for multinational enterprises: Afrimex (UK) Ltd, URN 08/1209 28 August 2008, available http://www.berr.gov.uk/files/file47555.doc (accessed Dec. 29, 2008) (Global Witness v Afrimex (28 August 2008)). The complaint alleged the violation of a variety of provisions in the MNE Guidelines grounded in the charge that Afrimex paid taxes to rebel forces in the Democratic Republic of Congo and practiced insufficient due diligence on the supply chain, sourcing minerals from mines that used child and forced labour, who work under unacceptable health and safety practices. The UK-NCP upheld the majority of the allegations brought by Global Witness. These violations occurred through the actions of Afrimex and what the UK-NCP determined to be a group of companies operating as an enterprise in the business of purchasing natural resources from mines within a conflict zone in the Democratic Republic of the Congo. The UK-NCP determined that Afrimex failed to contribute to the sustainable development in the region, to respect human rights, to influence business partners and suppliers to adhere to the Guidelines, to apply sufficient due diligence to the supply chain, and to take adequate steps to contribute to the abolition of child and forced labor in the mines or to take steps to influence the conditions of the mines. The UK-NCP, however, also determined that Afrimex and its related undertakings did not engage in activities that could be characterized as corruption or bribery or otherwise improperly involve themselves in local politics.
25. This was made quite clear in the context of the near adoption of the U.N. Norms and is equally applicable in this context. See, Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287, 357-374 (2006).
26. See, e.g., Relief Web, The Curse of Gold: Democratic Republic of Congo, can be found online at: http://www.reliefweb.int/rw/RWB.NSF/db900SID/RMOI-6CY3E5?OpenDocument, (last visited February 28, 2009). All were cited in the discussions of the cases. See text and notes --, infra.
27. Cf. M. Mertus, Considering Non-State Actors in the New Lillenium: Towards Expanded Participation in Norm Creation and Norm Application, 32 INTERNATIONAL LAW & POLITICS537 (2000); J. Johnson, Public-Private Convergence: How the Private Actor Can Shape Public International Law Labour Standards, 24 BROOKLYN JOURNAL OF INTERNATIONAL LAW 291 (1998); Jordan Paust, Human Rights Responsibilities of Private Corporations, 35 VANDERBILT JOURNAL OF INTERNATIONAL LAW (2002).
28. OECD Guidelines, at p. 5, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited on Jan. 12, 2009).
29. Guidelines, at p. 5, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited on Jan. 12, 2009) at 3.
30. Id.
31. Id.
32. Id.
33. Id.
34. OECD Guidelines, at p. 3, see n. 2, supra.
35. Government of Canada, Canada’s National Contact Point (NCP) for the OECD Guidelines for MNEs, What Are the Guidelines?, available, http://www.international.gc.ca/trade-agreements-accords-commerciaux/ncp-pcn/guidelines-principes.aspx?lang=eng (accessed Feb,. 15, 2009)
36. For a discussion of the MNE Guidelines, see, e.g. The Business and Industry Advisory Committee to the OECD, Business Briefs for the OECD MNE Guidelines, http://www.biac.org/pubs/briefs_mne_guidelines.htm, (last visited February 28, 2009).
37. MNE Guidelines, Procedural Guidance, 35, can be found online at: http://www.oecd.org/dataoecd/56/36/1922428.pdf (last visited February 28, 2009).
38. OECD Policy Brief: The OECD Guidelines for Multinational Enterprises, (June 2001), can be found online at: http://www.oecd.org/dataoecd/12/21/1903291.pdf (last visited on March 5, 2009).
39. Id.
40. On the importance of soft consequences to multinational enterprises and their effect in disciplining their behavior, see Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007).
41. Manfred Schekulin, Federal Ministry for Economic Affairs and Labour of Austria, Vienna, Putting the OECD Guidelines for MNEs into Practice, OECD Watch Conference, (April 1, 2005), can be found online at: http://www.union-network.org/UNIMultinationals.nsf/0/2B65E61BEABDE342C1256FE00046E22A (last visited on March 5, 2009).
42. “It is seven years since the review of the OECD Guidelines and there is a growing consensus among policymakers, trade unions, business and NGOs that OECD governments need to improve the policies and procedures of their National Contact Points (NCPs).” OECD Watch, Model National Contact Point (Sept. 2007) at 5, available http://www.transparency.de/fileadmin/pdfs/intern/Corporate_Accountability/1_The_Model_European_National_Contact_Point.pdf.
43. One the more prominent civil society critics has been RAID itself, the entity that brought the complaint in DAS Air. See RAID, Fit for Purpose? A Review of the UK National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises 2008, available http://www.business-humanrights.org/Links/Repository/579377/jump (accessed Feb. 11, 2009).
44. United Kingdom, Department for Business Enterprise and Regulatory Reform, UK National Contact Point for the OECD Guidelines: Annual Return to the OECD Investment Committee-2007/2008 (Dec. 2008) URN 09/589, at 1 available http://www.berr.gov.uk/files/file49810.pdf (accessed Feb. 20, 2009). It serves as an umbrella organization for a number of soft aw initiatives which have the support of the government. “NCP promoted other corporate social responsibility initiatives such as the Global Compact, EITI and the OECD Risk Awareness Tool for MNEs when promoting the Guidelines.” Id., at 3.
45. “The NCP participates in the Government-wide Inter-Departmental Group on Corporate Social Responsibility. Through these contacts the NCP ensures that the Guidelines feature prominently in wider UK policy on corporate social responsibility.” Id. The government continues to express it commitment to the OECD Guidelines and their effectuation by donating its staff for that purpose. “The UK Government is fully committed to this important work, and has increased the NCP resources. From March 2008, 2 BERR officials are now working full time, plus 20% of DFID official on the Guidelines.” Id., at 2.
46. Id.
47. See, e.g., UK-NCP Stakeholder Consultation 2006, http://www.corporate-accountability.org/eng/documents/2006/uk_national_contact_point2006.pdf, (last visited February 28, 2009).
48. See RAID, and The Corner House, The UK National Contact Point’s Promotion and Implementation of the OECD Guidelines for Multinational Enterprises, Response to the Stakeholder Consultation, (Jan. 12, 2006), available http://www.thecornerhouse.org.uk/pdf/document/OECDguid.pdf (accessed Feb. 10, 2009). “Between them, RAID and The Corner House have filed more than 12 complaints with the UK and four other NCPs and thus have substantial experience upon which to draw in making their own recommendations. The Corner House and RAID, The UK National Contact Point's Promotion and Implementation of the OECD Guidelines for Multinational Enterprises Response to the Stakeholder Consultation, Summary, available http://www.thecornerhouse.org.uk/summary.shtml?x=523532 (accessed Feb. 14, 2009). These elements of civil society have recommended broader and more autonomous power for national contact points and a more effective system of enforcement of the Guidelines. “The submission raises several concerns about the implementation of the complaints procedure in the UK. It recommends that the NCP's office be given the status of an ombudsman; independence of any government department; and responsibility for mediating between a company and complainant and for determining compliance.” Id.
49. See Department for Business Enterprise and Regulatory Reform (BERR), UK NCP Procedures for Dealing with Complaints Brought Under the OECD Guidelines for Multinational Enterprises URN 08/920, available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html accessed Feb. 12, 2009) (hereafter UK-NCP Procedures).
50. See United Kingdom, Department for Business Enterprise and Regulatory Reform, UK National Contact Point for the OECD Guidelines: Annual Return to the OECD Investment Committee-2007/2008 (Dec. 2008) URN 09/589, at 6 available http://www.berr.gov.uk/files/file49810.pdf (accessed Feb. 20, 2009). The procedures of the UK – NCP for dealing with complaints include a multi stage procedure. See UK NCP procedures for dealing with complaints brought under the OECD guidelines for multinational enterprises, available http://www.berr.gov.uk/files/file46072.pdf (accessed Feb. 19, 2009). Other national contact points follow a similar regime. The Canadian NPC, for example, has resorted to mediation as a first, and often crucial step, in virtually all of the four complaints lodged since 2001. See, Canada, Canada’s National Contact Point, Specific Instances, available, http://www.international.gc.ca/trade-agreements-accords-commerciaux/ncp-pcn/specific-specifique.aspx?lang=eng&menu_id=7&menu=R (accessed Feb,. 15, 2009) (“Since 2000, the Canadian NCP has received seven submission from interested stakeholders regarding corporate conduct and the OECD Guidelines for MNEs. As of December 2008, four of these have been considered by the Canadian NCP as specific instances.” Id.).
51. See United Kingdom, Department for Business Enterprise and Regulatory Reform, UK National Contact Point for the OECD Guidelines: Annual Return to the OECD Investment Committee-2007/2008 (Dec. 2008) URN 09/589, at 6 available http://www.berr.gov.uk/files/file49810.pdf (accessed Feb. 20, 2009), at 7-11.
52. The website describes these as follows: “your identity and your interest in the matter; name of the company; the location of the activity; which part of the Guidelines is considered relevant; description of the activity with any supporting evidence; what can be revealed to the company e.g. identity of originator, documentary evidence etc.” Department for Business Enterprise and Regulatory Reform (BERR), The UK’s National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises Raising a Complaint, available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 5, 2009).
53. Department for Business Enterprise and Regulatory Reform (BERR), Bringing a complaint under the OECD guidelines for multinational enterprises [complaint form] PDF document SB7 (08), (11 June 2008) available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 20, 20009).
54. “Clearly the more information we have, the easier it will be for the NCP to follow up on the complaint.” Department for Business Enterprise and Regulatory Reform (BERR), The UK’s National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises Raising a Complaint, available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 5, 2009).
55. UK-NCP Procedures, supra note --, Section 3. These are identified as Stage 1 proceedings. It is possible for the UK NCP to decline to proceed after this initial review stage. If it considers the information received to warrant further examination, then the proceedings will move to stage 2.
56. Id., Section 4. This is referred to as Stage 2 of the proceedings. Because the preferred outcome is agreement among the parties, the next stage starts with facilitated mediation. Id, at Section 4.1.1-4.1.2. The procedures for mediation are elaborated at id., Sections 4.2 – 4.4. If mediation fails, then the proceedings move to an examination stage. Id., at 4.1.3. “The objective of the examination is for the NCP to investigate the complaint in order to assess whether the complaint is justified.” Id., at Section 4.5.1. The procedures are flexible and under the control of the UK-NCP examiners. “The examination is likely to involve the NCP collecting further information or statements from the complainant or the Company. It may also seek advice from other relevant government departments, UK diplomatic missions or overseas DFID offices, business associations, NGOs or other agencies. If appropriate it will seek informed independent opinion.” Id., at Section 4.5.3.
57. Id., at Section 5. This is Stage 3 of the proceedings. Id. After review the final statement is lodged with the House of Commons and House of Lords Library and passed to the Minister. Id., at Section 5.2. The procedures provide a ten day period to seek review of either the Statement or any earlier determination to decline to examine the complaint. Id., at Section 5.3.
58. See, e.g., Gunther Teubner, Societal Constitutionalism: Alternatives to State-Centered Constitutional Theory, in TRANSNATIONAL GOVERNANCE AND CONSTITUTIONALISM (Christian Joerges, Inger-Johane Sand and Gunther Teubner, eds.) 3-28 (Oxford & Portland Oregon: Hart Publishing, 2004); Peer Zumbansen, Transnational Law, in ENCYCLOPEDIA OF COMPARATIVE LAW 738 (Jan M. Smits ed., 2006).
59. Statement By The United Kingdom National Contact Point (NCP) For OECD Guidelines For Multinational Enterprises (NCP): Das Air, available http://www.berr.gov.uk/files/file47346.doc (accessed Dec. 29, 2008) (hereafter “NCP-DAS Air Statement”).
60. Id., at 1.
61. Id.
62. These general provisions included: (1) Paragraph 1.7 (supremacy of municipal regulation of multinational corporations within their territories “subject to international law” and an obligation, when multinational enterprises are subject to conflicting requirements by adhering countries, of good faith cooperation among states); (2) Paragraph II.1 (obligating multinational corporations to contribute to economic, social and environmental progress with a view to achieving sustainable development); (3) Paragraph II.2 (obligating multinational enterprises to respect the human rights of those affected by their activities but only as consistent with the host government’s international obligations and commitments); (4) Paragraph II.5 (requiring such entities to refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to environmental, health, safety, labour, taxation, financial incentives, or other issues) and (5) Paragraph II.10 (requiring such enterprises to encourage business partners to apply compatible principles of corporate conduct). See id., at ¶ 11.
63. Id., at ¶ 12. The price of the material had increased enormously as its demand for use in capacitors increased wit the surge in the demand for small hand held electronics. See id.
64. Id., at ¶ 10.
65. DAS Air was described as “a long established UK based air freight services business operating routes between Europe and West Africa and between East Africa and the Middle East.” Id., at ¶ 7.
66. The ban applied to DAS Air and a number of related entities and went into effect in 2006. See Commission Regulation (EC) No 1543/2006 of 12 October 2006 amending Regulation (EC) No 474/2006 establishing the Community list of air carriers which are subject to an operating ban within the Community referred to in Chapter II of Regulation (EC) No 2111/2005 of the European Parliament and of the Council and as amended by Regulation (EC) No 910/2006 (Text with EEA relevance), Official Journal of the European Union, L283, 14 Oct. 2006, p. 28 (“There is evidence that the operator DAS Air Cargo (DAZ) certified in Kenya is a subsidiary of Dairo Air Services (DSR) certified in Uganda. The two carriers operate the same aircraft. Therefore, any measure decided with regard to DSR should equally be applicable to DAZ.”).
67. See NCP-DAS Air Statement at ¶ 8.
68. “The last letter between the parties was exchanged on 18 October 2006.” Id., at ¶ 25.
69. “However DAS Air did not go into administration until September 2007 and so there was sufficient time for it to rebut RAID’s allegations.” Id.
70. “The NCP analysis is made with the understanding that the specific instance process further to the complaint was not completed due to DAS Air going into administration.” Id., at ¶ 25.
71. It was enough, the UK-NCP suggested, that they attempted to contact the liquidators without success. “Since May 2008, the NCP has attempted to contact Das Air through its liquidators to see if they have any comments on this issue. No response has been received.” Id., at ¶ 16. See also discussion, infra at Part IV.
72. Id., at ¶ 9.
73. See Department for Business Enterprise and Regulatory Reform, Approach Of The NCP To Any New Complaint That Alleges A Breach Of The OECD Guidelines Taking Place Before June 2000, URN 08/1208 (21 August 2008), available http://www.berr.gov.uk/whatwedo/sectors/sustainability/nationalcontactpoint/page45873.html (accessed Feb. 13, 2009) (“If after 21 August the NCP receive a complaint about the activities of a multinational enterprise that takes place before June 2000, the NCP will consider the complaint in accordance with the revision of the Guidelines in effect at the time in question, unless the parties to the complaint consent to the application of the current revision of the Guidelines.”)
74. “The NCP did not make a determination on the 32 flights that took place before the current version of the Guidelines came into force but did consider these flights when determining the status of the 3 flights that took place after June 2000. The NCP believes that past behaviour is pertinent to the analysis.” Id. at ¶ 39; see also ¶ 16.
75. Id. at ¶ 16.
76. Id., at ¶¶ 17-20. Its purpose was to collect information on illegal exploitation of resources in DRC and the possible implications for DRC sovereignty as well as to evaluate the veracity of allegations that such activity prolonged the conflict there. . http://daccessdds.un.org/doc/UNDOC/GEN/N03/567/36/IMG/N0356736.pdf?OpenElement. It published its first report on 12 April 2001. http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/DRC%20S%202001%20357.pdf . The second report was published 13 November 2001. http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/DRC%20S%202001%201072.pdf, (last visited February 29, 2009).
77. NCP-DAS Air Statement , supra note --, at ¶¶ 21-24. The purpose of the Porter Commission was “to look into allegations made in the UN Report, specifically about Uganda.” Id., at 21.
78. See Id., at ¶ 18.
79. See Id., at ¶ 19 (“DAS Air, a Ugandan-owned freight company, is also believed to be transporting coltan from Bukavu and Goma to Europe via Kigali.” Id.).
80. See Id., at ¶ 23 (“Porter found that, ‘trade through the Military Air Base was being hidden…’” Id.).
81. These were “records sourced from the Porter Commission archives that indicated that DAS Air had undertaken 35 flights from Entebbe to DRC during the period of the conflict, when this air space was closed.” Id., at ¶ 27.
82. See id., at ¶ 29.
83. The UK-NCP pointed to the requirements of the Convention on International Civil Aviation (CICA) commonly known as the Chicago Convention (available http://www.icao.int/icaonet/dcs/7300_cons.pdf). “The Convention consists of a number of principles and arrangements to which governments have agreed “in order that international civil aviation may be developed in a safe and orderly manner and that international civil air transport services may be established on the basis of equality of opportunity and operated soundly and economically”. (Preamble, CICA, 2006 version.)” NCP-DAS Air Statement , supra note --, at ¶¶ 30. This prohibition had been recognized by the Ugandan government at the time, according to evidence credited by the UK-NCP. See, id., ¶ 31. Air space was reopened upon the signing in 2004 of a Memorandum of Understanding between the two states. Id.
84. Id., at ¶ 35. .” Porter Commission Report determined with respect to flights from the military use portions of their airports “that ‘if the operator was private and not military, and the aircraft was not chartered to MOD, then it should not be allowed to fly, as it came under Civil Aviation Authority rules’.”Id., at ¶ 32.
85. “Having reviewed the Porter Commission report the NCP accepts its conclusions and considers that the flights undertaken by DAS Air between Entebbe and DRC were likely to have been civil flights defined as military to circumvent International Aviation Conventions.” Id., at ¶ 35 Crucial to this conclusion, as well as to the determination that the flights contributed to human rights abuses, were the records of flight activity before mid 2000. See id., ¶ 36-40.
86. Id., at ¶¶ 41-46. “RAID alleges that this coltan and cobalt was sourced from the conflict zone in Eastern DRC. DAS Air stated they were merely contracted by the freight forwarders to transport the minerals; that all merchandise transported by DAS Air is customs-cleared before it is transported and DAS Air had not at any time been aware that any coltan transported by it originated from DRC.” Id., ¶¶ 41.
87. Id., at ¶ 42, see also ¶ 17-20.
88. Id., at ¶ 43.
89. Id. at ¶ 44.
90. It stated “the extent of these limitations depends upon sectoral, enterprise and product characteristics such as the number of suppliers or other business partners, the structure and complexity of the supply chain and the market position of the enterprise…”Id.
91. Id.
92. NCP-DAS Air Statement , supra note --, at Summary.
93. Id., at ¶ 51.
94. Id. at ¶52.
95. Id. at ¶ 53.
96. Final statement by the UK national contact point for the OECD guidelines for multinational enterprises: Afrimex (UK) Ltd, Available http://www.berr.gov.uk/files/file47555.doc (accessed Dec. 29, 2008) (Global Witness v Afrimex (28 August 2008) (hereafter NCP-Afrimex Statement).
97. Id., at ¶ 6. The UK NCP noted that “The parties entered into mediation and met 3 times. They were unable to agree a mediated settlement and the process subsequently moved to an NCP determination. Mediation is a confidential process between the parties and the NCP will not comment on the discussions that took place during these sessions.” Id., at 28.
98. Id. at ¶ 6.
99. Id., at ¶ 13 (“Global Witness alleges that Afrimex (UK) Ltd did not comply with Chapter II (General Policies), Chapter IV (Employment and Industrial Relations) and Chapter VI (Combating bribery) of the Guidelines”).
100. Id., at ¶¶ 14-16.
101. See discussion, supra, at text and notes ---.
102. Id. at ¶ 7.
103. NCP-Afrimex Statement, at ¶ 7 (it “considers that past behaviour is pertinent when considering behaviour that occurred after June 2000” Id.).
104. Id., at ¶ 21.
105. See id., at ¶¶ 8-12.
106. See id., at ¶¶ 17-26.
107. See id., at ¶¶ 58-62.
108. Id.
109. See NCP-DAS Air Statement , supra note --, at ¶¶ 17-20 and discussion, infra at text and notes ---.
110. See NCP-Afrimex Statement, supra, note --, at ¶ 9.
111. Id., at ¶ 9.
112. Id.
113. Id., at ¶. The letter in question could be found on line at www.publications.parliament.uk/pa/cm200506/cmselect/cmintdev/923/923we11.htm. Id. at note 2. The resolution was itself based on information provided by the company, information that was at variance with the materials submitted to the UK-NCP in the instant proceedings. As a consequence, the credibility of the Afrimex submissions suffered. See id., at ¶ 20 (“Afrimex has told the NCP that this letter “was perhaps misjudged” but the NCP considers it to indicate that Afrimex has either misdirected the UN or the NCP in regards to the relationship between these companies”). Indeed, one of the great problems that this case presented the UK NCP was the credibility of the evidence presented by Afrimex. “The NCP has struggled with the inconsistencies put forward by Afrimex in its evidence.” Id., at 44.
114. NCP-Afirmex State, supra, note -, at ¶ 11 (referring to the post 2004 work of “the Group of Experts on the Democratic Republic of Congo.) Their reports are accessible at: [www.un.org/sc/committees/1533/egroup.shtml].” Id.)
115. Among these were the 2003 arms embargo “on all foreign and Congolese armed groups and militias operating in the territory of North and South Kivu and Ituri and on groups not party to the Global and All-inclusive agreement in the Democratic Republic of the Congo on 28 July 2003 with the adoption of resolution 1493.” Id., at ¶ 12. As well as the extension and expansion of these measures through action in 2008. Id.
116. “In regards to the supply chain for the sourcing of minerals, Afrimex explained they have never bought minerals directly from the mine. They described the supply chain for minerals as extremely fractured, with Afrimex several steps removed from the mines.” Id., at ¶ 16.
117. NCP-Afrimex Statement, supra, note --, at ¶¶ 17-21.
118. Id. at ¶ 22.
119. Id. at ¶ 27. For that purpose, the UK-NCP applied something like either a veil piercing or enterprise analysis. It spoke the traditional language of common law equity in this sort of corporate law determination, but without dereference to a standard for determination within the municipal law of the United Kingdom (or any of its parts) or that the DRC or Uganda. Thus, , the “In considering whether these companies were associated, the NCP considered a variety of factors. The NCP did not find this relationship clear cut.” Id., at ¶ 26. It looked to five factors that it found dispositive: (1) interlocking directors, (2) common shareholders, (3) familial relationship among shareholders and directors (father son relationship), (4) economic relationship between Afrimex and Société Kotecha (principal customer), and (5) merger of operational activities (providing services relating to the checking and coordinating of mineral deliveries). Id.
120. Id.
121. Id., at ¶¶ 29-57.
122. Id. at ¶ 38. “The information received from IPIS implies that Afrimex was SOCOMI’s only export customer during the period of the statistics collected in 2000/01. If this is the case, Afrimex was the reason that SOCOMI traded in minerals and therefore Afrimex is responsible for SOCOMI paying the license fees and taxation to RCD-Goma.” Id.
123. Id. at ¶ 39. The UK-NCP considered that SOCOMI, an associated company, had an obligation, on Afrimex’s behalf, to cease operations (trading minerals) while the RD-Goma was involved in conflict. Id.
124. Id., at ¶ 40.
125. Id., at ¶¶ 40-57.
126. “In July 2005, Kofi Annan appointed Professor John G. Ruggie to be Special Representative of the UN Secretary-General on business & human rights.” Business and Human Rights Resource Center, U.N. Special Representative on Business and Human Rights, available http://www.business-humanrights.org/Gettingstarted/UNSpecialRepresentative (accessed Feb. 1, 2009).
127. The scope of the due diligence requirement for human rights “is determined by the context in which a company is operating, its activities, and the relationships associated with those activities.” Id. at ¶ 41 (quoting John Ruggie, Protect, Respect and Remedy: a Framework for Business and Human Rights Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, A/HRC/8/5, 7 April 2008 available www.reports-and-materials.org/Ruggie-report-7-Apr-2008.pdf (accessed Jan. 30, 2009). This standard was emphasized in the conclusions of the UK-NCP. See, UK-NCP Afrimex statement, supra, note --, at 77.
128. UK NCP Afrimex Statement, at ¶ 50.
129. As the UK NCP noted
“Mr Kotecha confirmed to the IDC that he had never visited a mine to determine whether forced labour occurred and that his business practices were based on the assurances provided by his suppliers. . . . This is due to continued insecurity and lawlessness in these areas. Instability and fighting between Congolese army and insurgents in North Kivu province have led to a very high number of civilians being displaced. The NCP fully understands why Mr Kotecha would be unwilling to visit the mines to establish the conditions but that in itself illustrates the requirement for increased due diligence.” Id., at ¶ 56.
130. “The reliance on oral assurances from the suppliers and the subsequent written statements amount to insufficient due diligence for a company sourcing minerals in the conflict zone in Eastern DRC. The NCP is concerned that these assurances lack substance and are not underpinned by any checks.” Id., at 57, see also id., at ¶¶ 47-49, 54-55.
131. Id. at ¶ 50.
132. Id. at ¶ 61.
133. Id., at ¶ 52 (“As the NCP has accepted that Afrimex did not pay taxes in DRC, the NCP did not uphold this element of the complaint.” Id.). See also id., at ¶ 60.
134. Afrimex had been doing business in the DRC since the time of the Mobutu regime in the 1980s. And, in any case, it had been the object of investigative activity of the United Nations and a British television report. See d., at ¶ 58.
135. Id., at ¶ 59 (the actions violated provisions requiring MNEs to respect human rights consistent with the host government’s legal obligations (MNE Guidelines II.1), and contributes to progress with a view to sustainable development (MNE Guidelines II.2).
136. Id., at ¶61, this constituting a breach of MNE Guidelines II.1, II.2, and II.10, id.
137. Id., at ¶ 62 (“Afrimex did not take steps to influence the supply chain and to explore options with its suppliers exploring methods to ascertain how minerals could be sourced from mines that do not use child or forced labour or with better health and safety. The assurances that Afrimex gained from their suppliers were too weak to fulfil the requirements of the Guidelines.” Id.). These actions (or inactions) constituted breaches of MNE Guidelines IV.1.b (“Contribute to the effective abolition of child labour”); IV.1.c (“Contribute to the elimination of all forms of forced or compulsory labour”); IV.4.b (“Take adequate steps to ensure occupational health and safety in their operations.” Id.).
138. See id., at ¶¶ 63-77.
138. Id. at ¶¶ 63-67. The corporate responsibility document, it was suggested, was to draw on the work of operationalizing the U.N.’s Global Compact standards. See, id., at ¶ 64.
140. Id. at ¶ 67 (“The Risk Awareness tool consists of a list of questions that companies should ask themselves when considering actual or prospective investments in weak governance zones. These questions cover obeying the law and observing international relations; heightened managerial care; political activities; knowing clients and business partners; speaking out about wrongdoing; and business roles in weak governance societies – a broadened view of self interest.”). See also id., at ¶¶ 67-70. For the relevant standard, see OECD, OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones (2006), available www.oecd.org/dataoecd/26/21/36885821.pdf (accessed Jan. 30, 2009). In fashioning this too, the OECD Council “recognised that creating the conditions for progress in zones where authorities are unable or unwilling to assume their responsibilities is an important international policy objective and that governments, international organisations and multinational enterprises can each draw on their distinctive competences to contribute to the efforts of strengthening governance in such zones.” Id., at 5.
141. As the UK-NCP declared:
The UK Government expects British companies to exercise the highest levels of due diligence in situations of widespread violence and systematic human rights abuse, such as that which prevails in Eastern DRC. The NCP urges UK companies to use their influence over contracting parties and business partners, when trading in natural resources from this region, to ensure that due diligence is applied to the supply chain. Id., at ¶¶ 76-77.
142. “Bureaucracies interpret statutory provisions to their advantage. This is in particular the case where more specific procedural norms are lacking and it is a common characteristic of constituent documents of international organizations or mandating resolutions.” Ingo Venzke, International Bureaucracies From a Political Science Perspective—Agency, Authority, and International Institutional Law, 9 GERMAN LAW REVIEW 1401, 1419-20 (2008).
143. “This essay, then, has come full circle. The effort to make government through markets true—to discipline markets by an external standard that comports with our own sense of truth, thereby relieving the sense of alienation—has led us back toward whatever truth may be possible through market participation. ” DAVID R. WESTBROOK, CITY OF GOLD: AN APOLOGY FOR GLOBAL CAPITALISM IN A TIME OF DISCONTENT 248 (New York: Routledge 2004). Westbrook thus suggests, with telling relevance to the MNE Guidelines regulatory project: “Political economy thus becomes constitutional, not only in trying to shape society through markets, but in deciding what sort of market participation will be made available, that is, what a good government through markets might be, a government that one might hope would be so popular, even loved, that its inhabitants would not be alienated.” Id., at 249. ”
144. See, NCP-Afrimex Statement, supra, note --, at ¶ 41, 54.
145. See, NCP-DAS Air Statement, supra, note --, at ¶ 36.
146. See NCP-Afrimex Statement, supra, note --, at ¶ 37.
147. In this respect it represents another, and potentially important, method, for solidifying transnational governance in the face of the traditional failure of either international or local law to meet the challenge. See, Larry Catá Backer, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations, 39 GEORGETOWN JOURNAL FO INTERNATIONAL LAW 591 (2008). For a discussion of the significance of private-group-network norm-making, see Robert B. Ahdieh, The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, 6 CHI. J. INT'L L. 231 (2005).
148. See, Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287, 374-88 (2006).
149. On the general relationship of law to the state apparatus through which it might be effected, see Larry Catá Backer, Symposium: Law and the State in the Transnational Legal Order: Reifying Law: Understanding Law Beyond the State, 26(3) PENN STATE INTERNATIONAL LAW REVIEW 521 (2008). The relationship to the early English common law is unmistakable: as a “body of general rules enforced by the ordinary royal courts, and characterized by the development of its own principles in actual legal controversies by the procedure of trial by jury, and the doctrine of the supremacy of law.” ARTHUR R. HOGUE, ORIGINS OF THE COMMON LAW 190 (Indianapolis, IN: Liberty Fund, 1986).
150. See Mattias Goldmann, Inside Relative Normativity: From Sources to Standard Instruments for the Exercise of International Public Authority, 9 GERMAN LAW JOURNAL 1865 (2008) (“The proceedings before National Contact Points established under the OECD Guidelines for Multinational Enterprises are a fine example of such quasi-judicial settlements. The sanction consists in the issuance and publication of a statement by a National Contact Point. For enterprises with a reputation to lose this outlook might amount to a substantial threat. Again, who may trigger the procedure becomes a matter of great significance.” Id., at 1889). He also notes, “These statements are not subject to hard enforcement and therefore cannot be considered binding law. Nevertheless, they are rendered within an elaborate non-binding legal framework and use legal discourse to resolve a dispute. One could have doubts about the international character of these statements because they are rendered by national administrations. However, in doing so, the National Contact Points act purely on the basis of binding and non-binding international law.” Id., at 1892.
151. This is not an isolated pattern by any means. Consider Erika de Wet, Governance Through Promotion and Persuasion: The 1998 ILO Declaration on Fundamental Principles and Rights at Work, 9 GERMAN LAW JOURNAL 1429 (2008).
152. See Gefion Schuler, Effective Governance Through Decentralized Implementation: The OECD Guidelines for Multinational Enterprises, 9 GERMAN LAW JOURNAL 1753 (2008) (“For future enhancement it is necessary that the implementation of the basic prerequisites for the institutional set up prescribed by the OECD, viz. (namely) visibility, accessibility, transparency and accountability, is enhanced. In particular transparency needs to be implemented more vigorously. This leads to the first proposition of this study. Effective governance is achieved through cooperation. In the future, adhering governments need to enhance cooperation with the OECD and secure effective implementation of the basic prescriptions.” Id., at 1777).
153. See, NCP-DAS Air Statement, supra, note --, at ¶ 53 (“The NCP notes that this resolution is directed towards states but considers this resolution highlights the requirement for business to undertake heightened awareness when trading or investing in natural resources in this region.” Id., citing U.N. Res. 1592 (30 March 2005) recit. 10). The distinction the NCP attempts to make is substantially one without a difference.
154. See, e.g., Fleur Johns, The Invisibility of the Transnational Corporation, 19 MELB. U. L. REV. 893, 912-14 (1994)
155. UK-NCP DAS Air Statement, at ¶ 35.
156. Id., at ¶ 71-74. For that purpose, Afrimex was to rely on a number of studies and advisories put out by government agencies with an interest in the management of the conflict. Id.
157. This was only recently demonstrated in the chorus of objections ot the Norms by the representatives of most of the Member States of the European Union as well as the United States. See, e.g., Memorandum from U.S. Mission to Int’l Organizations, Memorandum to Mr. Dzidek Kedzia Chief Research and Right to Development ranch, Office of the United Nations High Commissioner for Human Rights, re: Note Verbale from the OHCHR of August 3, 2004 (GVA 2537) (Sept. 30, 2004), available http://www.ohchr.org/english/issues/globalization/business/contributions.htm (“By attempting to establish duties and obligations for business entities, which are non-State actors, this exercise goes well beyond the present state of international law as well as international legal process.”).
158. Consider the developing common understanding of the relationship between soft and hard law beyond the state. “As with the drafting of almost all human rights treaties, the United Nations begins with declarations, principles, or other soft-law instruments. Such steps are necessary to develop the consensus required for treaty drafting.” David Weissbrodt & Muria Kruger, Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises With Regard to Human Rights, 97 AM. J. INT’L L. 901, 914 (2003). It is also required for the development of supra-national hard law standards for corporate regulation.
159. See, e.g., See RAID, and The Corner House, The UK National Contact Point’s Promotion and Implementation of the OECD Guidelines for Multinational Enterprises, Response to the Stakeholder Consultation, (Jan. 12, 2006), available http://www.thecornerhouse.org.uk/pdf/document/OECDguid.pdf (accessed Feb. 10, 2009) (proposing a number of modifications to the National Contact Points complaint process that would effectively move it toward greater institutionalization as a quasi-judicial organ; id., at 21-24).
160. See, e.g., L. David Brown, Sanjeev Khagram, Mark H, Moore and Peter Frumkin, Globalization, NGOs and Multisectoral Relations, in GOVERNANCE IN A GLOBALIZING WORLD 271, 283-85 (Joseph S. Nye, Jr., John D. Donahue, eds., Washington, D.C.: Brookings Institute, 2000). “Increasingly during the past decade, transnational civil society alliances have been central to campaigns to formulate and enforce global public policies in response to critical problems.” Id., at 284.
161. It is in this sense that one can see an application of the notion of norms as patterns of rationally governed behavior maintained in groups by acts of conformity. See, STEVEN A. HATCHER, NORMS IN A WIRED WORLD 17 (Cambridge: Cambridge University Press, 2004). The form of that conformity is the object of law, the imposition of effective patterns of governance, irrespective of form, is the object of transnational actors who do not need the legitimating forms of the state to effect binding patterns of governance.
162. Cf. Isabella D. Bunn, Global Advocacy For Corporate Accountability: Transatlantic Perspectives From the NGO Community, 19 AM. U. INT’L. L. REV. 1265 (2004).
163. As one commentator recently noted: “international private governance is not just an abstract possibility, it is an increasingly important reality. One could also say that we are facing the emergence of new forms of polity, closely associated with the creation of new public arenas and populated by a variety of new political constituencies.” Franco Furger, Global Markets, New Games, New Rules: The Challenge of International Private Governance, in RULES AND NETWORKS: THE LEGAL CULTURE OF GLOBAL BUSINESS TRANSACTIONS 201, 226 (Richard Applebaum, William L.F. Felstiner and Volkmar Gessner, eds., Oxford: Hart Publishing, 2001). The MNE Guidelines structure is certainly an important element in that global matrix of new regulatory systems.,
164. See the excellent discussion in Naomi Cahn and Anthony Gambino, Towards a Typology of Corporate Responsibility in Different Governance Contexts: What to do in the Absence of Responsible Country Governance?, 39 GEO. J. INT’L L. 655 (2008).
165. Consider in this regard especially the nature of the relationship required by the National Contact Point between Afrimex and its unrelated suppliers—grounded in an understanding of the political situation and an obligation to contribute directly to the management of that situation, to the extent of their powers, for a political end. See NCP Afrimex Statement, supra, note --, at ¶¶ 65-66.
166. JANNE ELISABETH NIJMAN, THE CONCEPT OF INTERNATIONAL LEGAL PERSONALITY: AN INQUIRY INTO THE HISTORY AND THEORY OF INTERNATIONAL LAW 347, 354 (The Hague: TMC Asser Press, 204).
167. OECD, OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones (2006), supra, note --. The explanatory materials explain the relationship between people, state and entity in weak governance zones: “The Tool is based on the premise that a durable exit from poverty will need to be driven by the leadership and the people of the countries concerned – only they can formulate and implement the necessary reforms. Companies play important supporting roles and this Tool seeks to raise awareness of these roles and to help companies play them more effectively.” Id., Introduction, at 9. But however characterized, the role envisioned in regulatory rather than participatory. The entity, in effect is presumed to be required to substitute its apparatus for that of the (missing) state. On the Risk Awareness Tool in the context of OECD governance see, e.g., Nigel D. White and Sorcha MacLeod, EU Operations and Private Military Issues of Corporate and Institutional Responsibility, 19 EUROPEAN JOURNAL OF INTERNATIONAL LAW 965 (2008) (“While some are pushing for a general review of the Guidelines, the 2006 Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones represents important progress, as it applies to states which are 'unable or unwilling to assume their obligations' under international law and refers to the 'positive contributions' that corporations can make to 'social progress' among other things in such zones. Such a tool appears to bring PMCs firmly within the remit of the OECD. Notwithstanding the stakeholder participation approach utilized by the OECD, the fact remains that the Guidelines are voluntary in nature and limited in scope and that their value is predicated upon the effectiveness of the NCPs.” Id., at 978).
168. See, e.g., See, NCP-Afrimex Statement, supra, note --, at ¶ 68-70. See also, Michael K. Aldo, Human Rights and Transnational Corporations, in, HUMAN RIGHTS STANDARDS AND THE RESPONSIBILITIES OF TRANSNATIONAL CORPORATIONS 3, 9 (Michael K. Addo, ed., 1999) (on the merger of the economic and social roles of these corporations); David Kinley & Junko Tadaki, From Talk to Walk: The Emergence of Human Rights Responsibilities for Corporations at International Law, 44 VA. J. INT’L L. 931, 933 (2004).
169. For a discussion of one version of these private self referencing regulatory systems grounded in the regulatory power inherent in the supply chain, see, Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007).
170. Thus, for example, in both cases, the emphasis on both the conflict and the conflict management rules that arose in consequence thereof. See discussion, supra, at text and notes ---.
171. Thus, for example, Global Witness, the complainant against Afrimex, “exposes the corrupt exploitation of natural resources and international trade systems, to drive campaigns that end impunity, resource-linked conflict, and human rights and environmental abuses. Global Witness was the first organisation that sought to break the links between the exploitation of natural resources, and conflict and corruption.” Global Witness, About Us, available http://www.globalwitness.org/pages/en/about_us.html (accessed Feb. 11, 2009).
172. It has been suggested that companies are now more likely to have to “take into account so-called soft law arising from the growing international web of multi-stakeholder initiatives and public and private codes and norms. Although these norms are technically voluntary, they have significant bite in practice, as a result of the absence of a centralized command and control system of international law.” John F. Sherman III and Chip Pitts, Human Rights Corporate Accountability Guide: From Law to Norms to Values, Harvard Kennedy School Mossavar-Rahmani Center for Business and Government (Dec. 2008) available http://www.hks.harvard.com/m-rcbg/CSRI/pub_reports.html (accessed Jan. 2, 2009).
173. See Gunther Teubner, Societal Constitutionalism: Alternatives to State-Centered Constitutional Theory, in TRANSNATIONAL GOVERNANCE AND CONSTITUTIONALISM 3, 13–15 (Christian Joerges et al. eds., 2004). Teubner describes a critical effect of the sort of globalization advanced by the civil society actors and corporate stakeholders within the MNE Guidelines system as “a polycentric process in which simultaneously differing areas of life break through their regional bounds and each constitute autonomous global sectors of themselves.” Id. at 13.
174. The fear that such soft regulatory systems might serve as a basis to displace municipal law, to the benefit of multinational corporations, has already been raised. See, e.g., Alan C. Neal, Corporate Social Responsibility: Governance Gain or Laissez-Faire Figleaf?, 29 COMP. LAB. & POL’Y J. 459, 471-472 (2008).
175. The germinal English case is Salomon v. Salomon & Co., Ltd., [1897] AC 22. For a discussion of the notion from an American perspective, see Larry Catá Backer, The Autonomous Global Corporation: On the Role of Organizational Law Beyond Asset Partitioning and Legal Personality, 41(4) TULSA LAW JOURNAL 541 (2006).
176. For a foundational discussion, see I. MAURICE WORMSER, DISREGARD OF THE CORPORATE FICTION AND ALLIED CORPORATE PROBLEMS 42-86 (New York: Baker, Voorhis & Co., 1927).
177. See, e.g., Nicole Rosenkrantz, The Parent Trap: Using the Good Samaritan Doctrine to Hold Parent Corporations Directly Liable for their Negligence, 37 B.C. L. REV. 1061, 1986-87 (1996); Stephen Bainbridge, Abolishing Veil Piercing, 26 J. CORP. L. 479, 506-14 (2001); Henry Hansmann & Reiner Kraakman, Toward Unlimited Shareholder Liability for Corporate Acts, 100 YALE L.J. 1879, 1919-20 (1991). To similar effect in Australia, see, e.g., In Ramsewy & David Noakes, Piercing the Corporate Veil in Australia, 19 COMPANY & SECURITIES L.J. 250 (2001),.
178. See, e.g., R. Vernon, Codes on Transnationals: Ingredients for an Effective International regime, in TRANSNATIONAL CORPORATIONS: THE INTERNATIONAL LEGAL FRAMEWORK 69, 72 (A.A. Fatouros, ed., 1994); Marc Galanter, Law’s Elusive Problem: Learning From Bhopal, in TRANSNATIONAL LEGAL PROCESSES: GLOBALIZATION AND POWER DISPARITIES 172 (Michael B. Likosky, ed., 2002).
179. See discussion, supra, at text andnotes --.
180. Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation’s Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility as International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287, 364-65 (2006) (citing Delaware statute).
181. See, e.g., D’Amato, Anthony & Engel Kirsten (Eds.), International Environmental Law Anthology, Chapter 5: Soft Law, Anderson Publishing:, Cincinnati (2001), can be found online at: http://anthonydamato.law.northwestern.edu/IELA/Intech05-2001-edited.pdf (last visited March 5, 2009); Halina Ward, The OECD Guidelines for Multinational Enterprises and nonadhering countries Opportunities and Challenges of engagement, Introduction, can be found online at: http://www.oecd.org/dataoecd/6/62/33807204.pdf (last visited March 5, 2009).
182. See, e.g., Alissa Mickels, Note: Beyond Corporate Social Responsibility: Reconciling the Ideals of a For-Benefit Corporation With Director Fiduciary Duties in the U.S. and Europe, 32 HASTINGS INT’L & COMP. L. REV. 271, 282-294 (2009).
183. Hans W. Baade, The Legal Effects of Codes of Conduct for MNEs, in LEGAL PROBLEMS OF CODES OF CONDUCT FOR MULTINATIONAL ENTERPRISES 212, 230 (Norbert Horn, ed., 1980).
184. George Norman & Joel Trachtman, The Customary International Law Game, 99 AM. J. INT’L L. 541, 569 (2005).
185. See, e.g., Peter Muchlinski, supra, note --, at 123-57; Melvin Eisenberg, Corporate Groups, in The LAW RELATING TO CORPORATE GROUPs 1 (M. Gilhooly, ed., Sydney: Federation Press, 1993).
186. See, e.g., PHILIP I. BLUMBERG, THE MULTINATIONAL CHALLENGE TO CORPORATION LAW 73-152 (New York: Oxford University Press, 1993).The “Australian position is that where the group has a centralized senior management and a divisional business unit structure, there is an inevitable tension between the business organizational structure and the corporate structure.” Robert P. Austin, Corporate Groups, in CORPORATE PERSONALITY IN THE 20TH CENTURY 71, 74 (Charles E.F. Rickett and Ross B. Grantham, eds., Oxford: Hart Publishing, 1998).
187. See discussion, supra, at text and notes ---.
188. Compare John H. Blackstone Jr., and James F. Cox III, American Production and Inventory Control Society Dictionary (12th ed. APICS) (“the global network enabling products and services to be supplied from raw materials to final customers”) with John T. Mentzer, WEilliam DeWitt, James S. Keebler, Nancy Nix, Carlo D. Smith and Zach Z. Zacharia, Defining Supply Chain Management, 22(2) Journal of Business Logistics (2001) (a “set of three or more entities (organizations or individuals) directly involved in the upstream or downstream flows of products, services”).
189. See, NCP-Afrimex Statement, supra, note --, at ¶ 34-39.
190. See, NCP-Afrimex Statement, supra, note --, at ¶ 16.
191. See discussion in Larry Catá Backer, Economic Globalization and the Rise of Efficient Systems of Global Private Law Making: Wal-Mart as Global Legislator, 39(4) UNIVERSITY OF CONNECTICUT LAW REVIEW 1739 (2007); Larry Catá Backer, Multinational Corporations as Objects and Sources of Transnational Regulation, 14 ILSA JOURNAL OF INTERNATIONAL & COMPARATIVE LAW 499 (2008).
192. See, NCP-Afrimex Statement, supra, note --, at ¶ 54 (“Afrimex questioned whether they could contribute to the abolition of child and forced labour considering that they were several steps removed from the mine in the supply chain. . . . If sufficient due diligence is applied to the supply chain, then the CP considers that Afrimex can make a contribution.” Id.). The NCP cross referenced the work, not of the English courts, but of the Special Representative of the Secretary General of the United Nations on the issue of human rights and corporations, John Ruggie, for an appropriate understanding of due diligence applied as a matter of the internal governance regime under the MNE Guidelines. See, id., at ¶ 41.
193. See discussion, id., at text and notes ---.
194. See, e.g., Yoshiro Miwa, Corporate Social Responsibility: Dangerous and Harmful, Though Maybe not Irrelevant, 84 Cornell L. Rev. 1227, 1250-53 (1999). Thus, critics of the movement for greater corporate social responsibility within legal frameworks have suggested that the result of the current project “represents at least as much a perversion of the corporation’s function as it does an abdication of responsibility by the state.” Delissa A. Ridgeway & Mariya A. Talib, Globalization and Development—Free Trade, Foreign Aid, Investment and the Rule of Law, 33 CAL. WESTERN INT’L L.J. 325, 332 (2003).
195. “Adjudication is authoritative because the decision is reasoned and the jurisdiction of the tribunal has been accepted by the parties. . . . However this will only be achieved if the court pays scrupulous attention to the demands of its role.” J.G. MERRILLS, INTERNATIONAL DISPUTE SETTLEMENT 295 (Cambridge: Cambridge University Press, 1998).
196. Id., at 310.
197. See discussion, supra at text and notes ---.
198. See, NCP-Afrimex Statement, supra, note --, at ¶ 57.
199. See, See, NCP-DAS Air Statement, supra, note --, at ¶ 25 (determining that the failure to answer would be read against DAS Air, because there had been “sufficient time for it to rebut RAID’s allegations” before the commencement of proceedings in liquidation. Id. ).
200. See NCP-DAS Air Statement, supra, note --, at ¶ 36.
201. See id. (“The International Court of Justice has acknowledged the evidentiary value of the Porter Commission. . . The ICJ had tested the evidence the evidence collected by the Porter Commission and considered it stood up to scrutiny.”). Is this English law or the law of the MNE Guidelines framework, likely the latter?
202. See NCP-Afrimex Statement, supra, note --, at ¶ 37.
203. Mootness refers to a case that may no longer be timely. However, at least in American constitutional law, courts will hear otherwise moot cases on occasion where the facts are “capable of repetition yet evading review.” Southern Pacific Terminal Co. v. ICC 498, 515 (1911).
204. See, NCP-DAS Air Statement, supra, note --, at ¶ 15-16.
205. Richard Meeran, The Unveiling of Transnational Corporations: A Direct Approach, in HUMAN RIGHTS STANDARDS AND THE RESPONSIBILITIES OF TRANSNATIONAL CORPORATIONS 161, 161 (Michael K. Addo, ed., 1999).
206. OECD, OECD’s Gurría welcomes G7 move to establish set of ethical principles on global Business (Feb. 16, 2009) available http://www.oecd.org/document/48/0,3343,en_2649_34487_42181872_1_1_1_1,00.html.
207. Larry Catá Backer, (Un?)Intended Regulatory Consequences of the Financial Crisis: Multinational Corporations and Sovereign Wealth Funds, LAW AT THE END OF THE DAY, Oct. 5, 2008, available http://lcbackerblog.blogspot.com/2008/10/predictions-for-unintended-regulatory.html (“For those who have always been suspicious of market independence, or who held to an ideology of the subordination of economic and social to political power, the financial collapse offered the perfect pretext for righting the course of current globalization by seeking to assert the dominance of political collectives over global economic and social sectors.” Id.).
208. “The mandate from finance ministers is based on a proposal for a ‘global standard’ of principles by Italian Economy and Finance Minister Giulio Tremonti. As the initial building blocks for the core principles, Mr Tremonti pointed to instruments, signed by OECD governments and by a number of non-member countries, covering bribery, corporate governance, responsible business conduct, money laundering and taxes.” OECD, OECD’s Gurría welcomes G7 move to establish set of ethical principles on global Business (Feb. 16, 2009) available http://www.oecd.org/document/48/0,3343,en_2649_34487_42181872_1_1_1_1,00.html.
209. Gefion Schuler, Effective Governance Through Decentralized Implementation: The OECD Guidelines for Multinational Enterprises, 9 GERMAN LAW JOURNAL 1753, 1776 (2008) (noting the wide differences in the activities of national contact points).
210. OECD, OECD’s Gurría welcomes G7 move to establish set of ethical principles on global Business (Feb. 16, 2009) available http://www.oecd.org/document/48/0,3343,en_2649_34487_42181872_1_1_1_1,00.html. “‘We have to review some of the instruments in the light of the crisis. How can we increase their compatibility and coherence? What needs to be improved for more stringent implementation? How can we establish a strong unified monitoring mechanism?’ Mr Gurría added.” Id.
211. Tom Buergenthal put this nicely n the context of the realization of international soft law frameworks of human rights:
Although the six treaty bodies in existence today are not judicial institutions, they have had to interpret and apply their respective conventions in reviewing and commenting on the periodic reports the states parties must submit to them, and in dealing with individual complaints that some treaty bodies are authorized to receive. This practice has produced a substantial body of international human rights law. While one can debate the question of the nature of this law and whether or not it is law at all, the fact remains that the normative findings of the treaty bodies have legal significance, as evidenced by references to them in internationla and domestic judicial decisions.
Thomas Buergenthal, The Evolving International Human Rights System, 100 American Journal fo International Law 783, 789 (2006).
212. See John Ruggie, “Protect, Respect and Remedy: a Framework for Business and Human Rights” (A/HRC/8/5, June 2008) (presenting “a conceptual and policy framework to anchor the business and human rights debate, and to help guide all relevant actors.”).
213. ““This is a major breakthrough and sets an important precedent” said Patricia Feeney, RAID’s Executive Director. “For the first time a foreign company has been held to account by its own government for its part in fueling a war that has cost the lives of an estimated 5.4 million people – the highest civilian death toll since World War II.’” OECD Watch, British NCP Finds DAS Air Breached Guidelines, July 21, 2008, available at http://oecdwatch.org/news-en/government-condemns-british-aviation-company-for-fueling-congo2019s-war/ (accessed Feb. 18, 2009).
214. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law, 37 COLUMBIA HUMAN RIGHTS LAW REVIEW 287-389 (2006).
215. See Yann Queinnec, The OECD Guidelines for Multinational Enterprises: An Evolving Legal Status, Sherpa (June 2007) (suggesting that the MNE Guidelines “have entered the sphere of application of Customary law” Id., at 4). He notes that the MNE Guidelines “restate or else are an extension of heterogeneous existing fundamental notions of international law, relating to customary law, general legal principles pr practice.” Id., at 8. The two cases considered here are certainly evidence of the value of this insight. They also suggest that this heterogeneous collection is becoming formed into its own internally consistent set of rules for governing the global community of multinational corporations and their related entities—precisely the objective of the Norms, now realized through the device of ostensibly non binding regulatory regimes.
216. See Larry Catá Backer, The Sarbanes-Oxley Act: Federalizing Norms for Officers, Lawyer and Accountant Behavior, 76 ST. JOHN’S LAW REVIEW 897 (2002).
217. Professor of Law, Pennsylvania State University, University Park, Pennsylvania; Director, Coalition for Peace & Ethics, Washington, D.C. The author may be contacted at lcb911@gmail.com. My thanks to Augusto Molina (Penn State 2009) for exceptional research assistance on this project.
