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: Law at the End of the Day

OECD Guidelines for Multinational Enterprises ? What every international lawyer needs to know about possible upcoming changes

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I recently wrote about the International Bar Association Corporate Social Responsibility Section's excellent program: Corporate Social Responsibility at the International Bar Association Annual Meeting in Vancouver, Canada.

John Sherman and Craig Phillips, Co-Chairs of the International Bar Association corporate Social Responsibility Committee organized the panel, OECD Guidelines for Multinational Enterprises ? what every international lawyer needs to know about possible upcoming changes, on which I participated. The panel description gives a good idea of the scope of discussion:

Are the OECD Guidelines for Multinational Enterprises still relevant to today?s global economy? Do they provide adequate guidance to companies? Does their complaint process work? What are the proposals for their reform? This session will attempt to answer these and other questions.

The Guidelines were last revised in 2001, and cover a wide range of business conduct in such areas as disclosure, employment, environment, anti-corruption, consumer interest, science and technology, competition and taxation. They are now being scrutinised for changes in response to concerns that they are outdated and don?t reflect the concerns of the current global economy in a variety of areas, including human rights, supply chains, distance selling, climate change, and anti-corruption, among others. In addition, National Contact Points (NCPs) ? appointed in each OECD country to resolve allegations that companies have violated the Guidelines ? have been criticised as underutilised and ineffective.

An IBA Working Group has submitted comments both to the UK NCP and to the OECD to revise the Guidelines and improve the NCP process. Other groups, including business, labour, and civil society, have filed their own comments.

The panelists included: Janine Elliott former Senior Legal Counsel at Shell International Limited, London; Rodrigo Muñoz of the law firm of Nuñez Muñoz & Cia Ltda Abogados, Santiago Chile; Martijn Scheltema, of the law firm of Pels Rijcken & Droogleever Fortuijn NV, Gravenhage, Netherlands; Edward J. Waitzer of the law firm of Stikeman Elliott LLP, Toronto, Canada. John Sherman moderated and presented a set of introductory materials on the OECD framework for multinational corporate governance.

A summary draft outline of my presentation, entitled Coherence in Governance System for Multinational Corporations: The OECD Guidelines for Multinational Corporations, the National Contact Points, Corporate and Stakeholder Actors Between Public and Private Spheres, follows:

Summary Draft Outline
October 5, 2010
The presentation looks to the systemic effects of recent U.K. National Contact Point decisions (with an eye to the project of OECD revisions of the Guidelines for Multinationals). I will be considering the way in which the emerging actions of the NCPs contribute to the creation of a coherent jurisprudence with the assumption that Ed may be looking more closely to the substantive issues that are touched on by the Guidelines and the cases.
I. Introduction
A. Brief overview of NCP system within context of Guidelines
B. Thesis?jurisprudence suggests the construction of a coherent governance framework that may serve as the foundation for customary principles of behavior
C. Consequence: lawyers are now facing the emergence of multiple sources of law on the basis of which company transactions and relationships can be challenged simultaneously in multiple jurisdictions each with potentially distinct soft and hard law standards.

D. This will require lawyers to recognize their role in counseling clients with respect to corporate obligations under two distinct governance frameworks--those of the domestic legal orders of home and host states, and those of transnational governance orders that can affect the functional operation of corporate entities.
II. The cases and their respective contributions.

A. Supply Chains and weak states
?Afrimex
?DAS Air

B. Multiple Law Sources (Polycentricity)
?Vedanta
?Khanewal
?Sewri
?T&G Peugeot
?Rahim Yar Khan
C. Appeals
?BTC Pipeline
D. Inducement to Settle, Current and Prior Procedure
?Anglo American
?G4S

III. Drawing the Pieces Together
A. Governance themes emerging
1. Polycentricity and standing
2. Supply chain responsibility
3. Direct application of human rights instruments (entities as subjects of international law)
B. The Problem of Sources of Givernance
1. External sources for internal governance
2. Ruggie Principles
3. Norway SWF and other CSR motivated institutional investors.
C. Institutional Elements
1. Role of the NCP
2. Role of Civil Society Stakeholders
3. Transparency, mediation and dispute Resolution
4. Role of investment community
?Sovereign Wealth Funds as indirect governance element
?Institutional investors and investment media as consensus shapers
IV. Looking Foreword
A. Guidelines Revisions
?Make it easier to invoke procedure; issue of asymmetric availability among OECD members
B. NGO interventions
?implications of broadened standing
?Role in developing common standards within NCP system
C. Disclosure implications
?risk management and implications for financial disclosure
D. Strategic implications: uses as part of a multi-jurisdictional multi-forum strategy (courts, NCPs).
?Suggest the possibilities of a coordinated litigation-mediation-conflict strategy by non-shareholder stakeholders
?Vedanta: use of NCP procedure to put pressure on host state;
?Sewri, Khanewal: use of NCP procedure to put pressure to settle beyond requirements of host state law requirements.

V. Conclusion
A. Coherence or wishful thinking?
B. Coupling with other governance norms?interlocking systems or communication?
C. Forms of dispute resolution?mediation and its transparency implications. D. Role for Lawyers changing and broadening from formal law to governance and its implications for business relationships and liability exposure.

The PowerPoint presentation may be accessed here. For further reading, see, e.g.,
1. Backer, Larry Catá, Rights and Accountability in Development (Raid) V Das Air and Global Witness V Afrimex: Small Steps Toward an Autonomous Transnational Legal System for the Regulation of Multinational Corporations, 10(1) Melbourne Journal of International Law 258 (2009);
2. Backer, Larry Catá, On the Evolution of the United Nations? 'Protect-Respect-Remedy' Project: The State, the Corporation and Human Rights in a Global Governance Context (June 3, 2010). Santa Clara Journal of International Law, Vol. 9, No.1, 2010.
3. Backer, Larry Catá, Private Actors and Public Governance Beyond the State: The Multinational Corporation, the Financial Stability Board and the Global Governance Order (August 13, 2010).

Full post as published by Law at the End of the Day on October 09, 2010 (boomark / email).