Guidelines For Multinational Enterprises Research Articles

Shedding New Light on Multinational Corporations and Human Rights: Promises and Limits of “Blockchainizing” the Global Supply Chain

Over the last few decades, advances in transportation and production technology, in conjunction with economic globalization and the emergence of multinational corporations, have consolidated fragmented production processes into long and complex supply chains across jurisdictions. While there are benefits to such global supply chains (“GSCs”), the prevalence of human rights violations attributable to information asymmetry, as well as rule of law gaps between different jurisdictions, has been a constant challenge. Modern slavery, child abuse, harsh working conditions, low wages, and other problems have reoccurred in the factories of upstream suppliers in the global South and have been systemically ignored by buyers in the global North. As such, how to alleviate human rights abuses along GSCs is indeed a daunting problem. Today, various public, private, and hybrid approaches have been designed and implemented at different levels by different actors to address GSC human rights challenges, such as the United Nations’ Guiding Principles on Business and Human Rights (“UNGPs”), the Organization for Economic Co-operation and Development’s (“OECD”) Guidelines for Multinational Enterprises, the United Kingdom’s Modern Slavery Act, the United States’ Dodd-Frank Act, the Responsible Business Alliance Codes of Conduct, and the Social Accountability 8000 International Standard. However, these public, private, and hybrid governance mechanisms have grown more ineffective and inefficient due to—again—information asymmetry, and rule of law gaps. A stronger approach that is premised upon transparency and traceability in the GSC is urgently needed. To fill these gaps, the recent emergence of distributed ledger technologies (commonly referred to as blockchain) may offer a promising disintermediation step toward a “technological fix” to GSCs’ human rights challenges. To assess such a possibility from both a theoretical and a practical perspective, we first examine in Section II the characteristics, benefits, and cross-border spillover effects of GSCs, as well as human rights violations by multinational corporations and their power and responsibilities. Section III illuminates the ineffectiveness of existing governance models and regulatory measures, at both the international and national levels, and identifies information asymmetry and rule of law gaps as fundamental flaws. This finding leads us to examine the extent to which blockchain can serve as a governance tool along GSCs. Section IV discusses how the key features of blockchain—transparency, traceability, data consistency and security, authenticity, and completeness—can alleviate problems of information asymmetry, rule of law gaps, and corporate compliance along GSCs, further helping to ameliorate transnational human rights issues. Nevertheless, while “blockchainizing” GSCs seems to have the potential to overcome challenges of public and private governance, some normative and technical limits and risks remain to be addressed, such as adequate infrastructural support, scalability, cybersecurity, and the “garbage in, garbage out” conundrum.

Is Soft Law Making Hard Law Too Hard?

Soft laws are created for many reasons to serve various purposes. This article focuses on acts of soft law that are adopted to facilitate the process of applying hard law (or complying with it) and to standardize the understanding of international agreements. In the field of customs law, one can point, for instance, to opinions adopted by the World Customs Organisation. The Organisation for Economic Co-operation and Development (the OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and the Commentary to the OECD Model Tax Convention on Income and on Capital are globally recognized examples of the tax arena. The side effects of the application of acts of soft law in the fields of tax law and customs law are presented and analysed. Interpretative problems are observed at the international level, whereas clear-cut side effects often occur domestically. customs classification – World Customs Organisation (WCO) – double taxation conventions – Organisation for Economic Co-operation and Development (the OECD) – Model OECD – OECD Transfer Pricing Guidelines – OECD Commentary – interpretation

OECD National Contact Points as Sites of Effective Remedy: New Expressions of the Role and Rule of Law within Market Globalization?

AbstractNational Contact Points (NCPs), which support the OECD Guidelines for Multinational Enterprises, are often invoked as a reliable state-based mechanism for holding transnational corporations accountable for business-related human rights abuses. The objective of this article is to scrutinize the ability of NCPs to offer effective remedy through the lens of an often-quoted success story (the case of the post-colonial brewery Bralima-Heineken at the Dutch NCP) and through a few existing studies that examine factors that curtail or enhance the possibility of NCP mechanisms to deliver effective remedy. Based on these findings, we suggest specific ‘actions for effectiveness’ in the form of recommendations for improving NCPs as a tool to deliver effective remedy. Zooming out, we extend some general observations on how our findings illustrate that NCPs are expressions of a larger systemic problem surrounding the role of law within market globalization and the impact of economic liberalization on the making of norms, changing legal authority and basic fairness under conditions of stark power imbalance. Supporting this approach are historical factors which make the OECD Guidelines and NCPs ripe for such conceptualization.

The Divergent Practices of ncp s under oecd Guidelines for Multinational Enterprises: Time for a More Uniform Approach?

The Divergent Practices of ncp s under oecd Guidelines for Multinational Enterprises: Time for a More Uniform Approach?

Responsible Business in a Digital World – What’s International Law Got to Do With It?

The observation that digital transformation challenges some of the underpinnings of traditional international law and regulation also applies to responsible business conduct. The Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises are the most comprehensive international standard on responsible business conduct. This article discusses the impacts of digitalisation on responsible business conduct and the relevant case law by OECD National Contact Points and shows that as a sui generis instrument of international law the Guidelines can play an important role in accommodating business as the key driver of digital transformation and in addressing the related risks on people, the environment and society. However, several shortcomings of the existing regulatory framework are identified, particularly with regard to the imbalance of state and business responsibilities and the challenges for adequate regulatory responses in a highly dynamic environment where developments are driven by the private sector. Therefore, a holistic approach, based on 'Responsible Business Conduct by Design' both in technology and regulation is suggested. Given the specific features and impacts of digitalisation on responsible business conduct, such an approach would need to be of a hybrid nature by including a variety of actors and models of regulation beyond the state. To create a safe space for experimenting and testing new regulations and for mutual learning the article concludes with call for a new interface and for exploring a 'regulatory sandbox' at the international level.

Contributory Fault under International Law: A Gateway for Human Rights in ISDS?

Abstract The intersection between foreign investment and human rights is gaining attention, as is evident from an increasing number of investment treaty awards analysing legal issues relating to human rights. In the recent International Centre for the Settlement of Investment Disputes (ICSID) arbitration of Bear Creek v Peru, Philippe Sands QC posited, in a dissenting opinion, that the investor’s contribution to events—ie protests against its allegedly adverse environmental impact and disregard of indigenous rights, namely resulting from its ‘inability to obtain a “social licence”’—which led to the unlawful expropriation of its investment, was ‘significant and material’. He further noted that the investor’s ‘responsibilities are no less than those of the government’ and found that damages should thus be reduced. Last year, the Netherlands adopted a new model bilateral investment treaty (BIT), which allows tribunals to ‘take into account non-compliance by the investor with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises’ when assessing damages. These recent developments shed light on how states and tribunals, as part of their decision-making process, can take into account human rights in practice, and crucially in respect of damages analyses. By first dissecting the concept of contributory fault, then shedding light on the intersection of investment treaty law and human rights, as elucidated in recent jurisprudence, this article questions whether there now exists a gateway for human rights obligations (soft or hard) in the investment treaty arbitration realm through the concept of contributory fault.

Supranational grievance mechanisms and firm‐level employment relations

AbstractThe dynamics of regulation of employment relations in the global supply chains of multinational enterprises (MNEs), including the growth of various forms of private regulation, has attracted significant scholarly attention. However, the role of international organisations in supporting supranational institutional pathways for social contestation of business practices has been neglected. This study addresses this gap by analysing cases lodged by national and global unions through the specific instances mechanism of the OECD Guidelines for MNEs. It reveals the design and operational deficiencies of this mechanism but also points to the current and future opportunities for firm‐level labour grievances and justice claims to be addressed at the supranational scale.

The Case of the Irish National Contact Point for the OECD Guidelines for Multi National Enterprises: Challenges and Opportunities for the Business and Human Rights Landscape in Ireland

The “Zero Draft” Treaty on Business and Human Rights was published in July 2018. Similar to earlier manifestations of treaty discussions, this draft places the right of and access to remedy at the center of negotiations. In this way, this treaty follows an analogous pathway to the United Nations Guiding Principles on Business and Human Rights (UNGPs); namely, that victims of human rights impacts should have access to an effective remedy. The draft does not however, discuss in detail how remedy might be enforced. To understand how remedy enforcement may work in practice, the UNGPs offer some guidance. They point to the National Contact Point (NCP). NCPs are a product of the OECD Guidelines for Multinational Enterprises and provide victims of human rights violations with a platform to lodge a complaint against a corporation. The NCP’s role is to investigate this complaint and where appropriate, mediate on a solution, and act as an enforcer. This is not the NCP’s only role, but it is the aspect of its activities on which the UNGPs focus. The global experience of the NCP has been varied with promotion of the NCP’s activities differing depending on the nation state. Despite this, the UNGPs have continued to endorse the NCPs as both a potential route to effective remedy and as an enforcement mechanism. In this article, we look at the legal framework on business and human rights in Ireland. We note that whereas the proposed draft treaty does not explicitly reference NCPs in its current form, the language contained within mirrors that of the UNGPs and the OECD (to a lesser extent) suggesting a role for the NCP moving forward. Therefore, we propose a list of recommendations to enhance the existing NCP framework, thus ensuring that, should the proposed treaty be developed (in line with the current draft) Ireland can fulfill its obligations and offer clear guidance for victims needing to engage the NCP framework.

The National Contact Points for the oecd Guidelines for Multinational Enterprises: A global "network" for a responsible agri-food supply chain

The National Contact Points for the oecd Guidelines for Multinational Enterprises: A global "network" for a responsible agri-food supply chain

Taxation, General Anti-Avoidance Rules and Corporate Social Responsibility

As a result of the OECD/G20 project on base erosion profit shifting as well as the adoption of the EU anti-tax avoidance directive, many countries have recently introduced or strengthened general anti-avoidance rules (GAARs) in their tax treaties and domestic tax legislations. Arguably, such general anti-avoidance rules are turning the responsibility to obey the spirit of the law from a CSR expectation into a legal obligation. Against this background, it is discussed whether CSR can or should (still) play an important role with respect to measuring and guiding MNEs’ tax planning behaviour. It is concluded that the widespread use of GAARs cannot be expected to eliminate or significantly reduce the need for CSR considerations and guidance – at least not in the foreseeable future, inter alia because these provisions bring along significant interpretive uncertainty and cannot be expected to prevent all tax planning that compromises the spirit of the tax legislation. Accordingly, instead of downplaying the role of CSR and responsible business conduct, it is suggested to update the chapter on taxation in the OECD Guidelines for Multinational Enterprises in order to provide better and more detailed guidance on how MNEs should strike a proper balance between tax planning and CSR.

Corporate codes of conduct: Are three generations sufficient to ensure the effective enforcement of labour rights?

In the 1970s, the number of reports concerning unethical or illegal activities of multinational corporations increased and led to discussions within international organisations. In 1976, the OECD was first to adopt its Guidelines for Multinational Enterprises. The ILO adopted its Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy in 1977, and UN issued the Global Compact in 2000. Subsequently, many codes of conduct have been established to provide a stable framework in which MNEs conduct their business. The purpose of this paper is to assess, through the prism of three generations of codes, if self-regulation is sufficient to ensure the effective enforcement of labour rights. I fill the gap in existing research by providing a comprehensive explanation for the shortcomings of this instrument. Research indicates that there is a lack of involvement of social partners in the decision-making process leading to the adoption of codes of conduct. Once adopted, they impose lower standards than the public regulatory frameworks. They are more selective in their choice of labour rights. There are also many difficulties in implementing, monitoring and enforcing a corporate code of conduct. These tools mainly address marketing aims and respond to the unfavourable publicity produced by the media about the inconsistency of certain corporate policies with international labour standards. I conclude by discussing how codes of conduct could be transformed to more eƒectively address workers’ rights.

International Law and Corporate Social Responsibility: The Potential of OECD’s MNE Guidelines for Advancing Social Benefits in the Context of Natural Resource Exploitation in the Arctic, with Particular Regard to Greenland

This article takes point of departure in the case of Greenland to examine how public authorities in Arctic societies may deploy the ideas inherent in Corporate Social Responsibility (CSR) to engage multinational corporations or national companies in contributing to addressing societal needs. Drawing on the emergent international law regime on CSR, it discusses the role of OECD’s Guidelines for Multinational Enterprises to encourage companies explicitly or implicitly to contribute to societal needs. The discussion points to similarities between social and environmental impact assessment and the risk-based due diligence approach recommended by OECD’s Guidelines. It also points to similarities between Impact Benefit Agreements and the Guidelines’ recommendations for companies’ contributions to host societies through employment of local labour and transfer of skills. This focus fits closely with public policy objectives expressed by Greenland’s Self-Government in regard to mining and underscores the pertinence for Greenland to consider acceding to the Guidelines.

Analysing OECD National Contact Point Statements for Guidance on Human Rights Due Diligence: Method, Findings and Outlook

ABSTRACTThis article examines statements issued by National Contact Points (NCPs) under the OECD’s Guidelines for Multinational Enterprises. Applying the term ‘risk-based due diligence’, the OECD’s Guidelines have adopted the human rights due diligence concept introduced by the UN Framework and elaborated by the UN Guiding Principles. OECD NCPs de facto serve as remedy institutions for those instruments. The analysis aims to identify and glean insights provided by NCPs on human rights due diligence. It identifies and analyses specific instances that have addressed due diligence in regard to state guidance for companies operating in conflict areas and the identification of a business relationship as ‘directly linked’ in the terms of the UNGPs and the Guidelines. It also considers steps that form part of due diligence, particularly stakeholder engagement, the exercise of influence through leverage, and integrating and acting upon findings on impact. The article finds that final statements and recommendations issued by NCPs can serve as sources of norms for human rights/risk-based due diligence. It also finds that there appears to be scope for a larger number of NCPs to deliver guidance through their final statements.

Revolutionary Changes to the Arm’s Length Principle under the OECD BEPS Project: Have CFC Rules Become Redundant?

Title question of the article is deliberately provocative. The subject of interactions between Controlled Foreign Company (CFC) regulations and transfer pricing (TP) regulations is a complex topic that has been bringing divergent opinions over many decades (In United States, from where both CFC regime and TP regime originated, the literature on this subject has been present at least since 1969, being no more than one year after the introduction of detailed US TP regulations (1968). CFC regulations – Subpart F – was introduced therein in 1962. See for instance: L. Kauder, Taxation of Domestically Controlled Foreign Corporations: A Comparative Study of Subpart F and Section 482, 14(2) Villanova L. Rev. (1969)). The polemic in this regard has, however, acquired a new dimension together with the OECD’s adoption of modifications to the arm’s length principle as referred to in Article 9 of the OECD Model Convention under the Base Erosion and Profit Shifting (BEPS) project, which led to publishing the 2017 TP Guidelines for Multinational Enterprises and Tax Administration (OECD, 2017 TP Guidelines for Multinational Enterprises and Tax Administration, available at http://www.oecd.org/tax/transfer-pricing/oecdtransfer- pricing-guidelines-for-multinational-enterprises-and-tax-administrations-20769717.htm). These amendments, which involve the expansion of the guidelines on the relationship between (1) the legal title to the asset, and (2) the eligibility of a cross-border group of related entities to recognize the corresponding income generated by that asset, has led to an unobservable earlier approximation of the scope of CFC and TP regimes. It is therefore the study question of this article to verify whether the enhanced TP regulations are capable of replacing CFC regulations.

Dispute Settlement for Labour Provisions in EU Free Trade Agreements: Rethinking Current Approaches

While labour provisions have been inserted in a number of EU free trade agreements (FTAs), extant clauses are widely perceived as ineffective. This article argues that there is a need to rethink the dispute settlement mechanisms related to labour provisions if their effectiveness is to be increased. It proceeds in three steps. First, we look at the current state of the art of labour provisions in EU FTAs in terms of legal design and practice and argue that the current arrangements are ill-equipped to foster compliance with labour standards. Second, we explore avenues to enhance the design of FTA labour provisions by reconsidering basic elements of the dispute settlement structure. Examining US FTA labour provisions, we highlight the importance of a formal complaint mechanism, on the one hand, and the availability of economic sanctions, on the other. Based on a review of existing practice, we contend, however, that these elements alone are not sufficient to effectively enforce FTA labour provisions. We argue that for FTA labour provisions to be effective, the current state-to-state model of dispute settlement needs to be complemented by a third-party-state dimension and that, additionally, there are good reasons to consider a third party–third party dispute settlement component. We ground these reflections in experiences with already existing instruments in other areas, namely investor-state dispute settlement and voluntary sustainability standards. Thirdly, we discuss options to better connect the dispute settlement mechanisms of FTA labour provisions to other international instruments for labour standards protection with a view to creating synergies and avoiding fragmentation between the different regimes. The focus here is on the International Labour Organization’s supervisory mechanism and the framework of the OECD Guidelines for Multinational Enterprises.

A Proposal for Enhancing Dispute Resolution Functions and the Governance of Korea National Contact Point (NCP) to the OECD Guidelines for Multinational Enterprises

A Proposal for Enhancing Dispute Resolution Functions and the Governance of Korea National Contact Point (NCP) to the OECD Guidelines for Multinational Enterprises

Corporate accountability in the Samarco chemical sludge disaster

PurposeThe purpose of this paper is to explore avenues of corporate accountability in disasters, using the Samarco chemical sludge disaster, which took place in 2015 in Brazil, as case study.Design/methodology/approachThe paper considers possible ways of enhancing corporate accountability in disasters, focusing on one particular international mechanism on multinational enterprises (MNEs), which addresses both human rights and environmental issues. The research is based on the location and assessment of a variety of written sources (i.e. normative instruments, academic literature, publications by practitioners, civil society organizations, and the media). The paper makes suggestions on the potential of using existent international accountability mechanisms in similar disasters.FindingsThe paper identifies key measures taken by national authorities to address the disaster. It also considers how the Organization for Economic Cooperation and Development Guidelines for MNEs could be used to pursue corporate accountability.Research limitations/implicationsThis is a desk-based research, chiefly conducted on documental analysis rather than fieldwork.Practical implicationsThe paper might provide useful insights for organizations and communities facing similar challenges linked to multinational corporate activities that adversely affect human rights and the environment.Originality/valueThe study brings to attention normative standards relatively unknown to the disaster community, which may help raise interest on them, and lead to their potential use in future disaster situations. Furthermore, to date the Samarco chemical sludge has received scant attention from the academic literature.

Corporate Governance and Corporate Social Responsibility of Multinational Enterprises and Transnational Law The FIFA Case

Transnational law is a fertile ground for the development of corporate governance and corporate social responsibility (CSR) worldwide, where multinational enterprises (MNEs) have a central position. The private governance system involving MNEs entails two roles: as object and as subject of transnational law. Such a framework is presented herein against the case analysis of Federation Internationale de Football Association (FIFA) and the World Cup tournaments. With this purpose in mind, this paper explores the governance structure of FIFA and the steps of the World Cup bidding process and certain facts of interest related to the Brazil, Russia and Qatar World Cups. This study engaged into a functional approach to the problem if FIFA could be deemed a MNE; FIFA was considered in a broad sense, involving both its MNE and public natures. The global regulation of MNE’s corporate governance is formed mainly by soft law instruments, and their governance model encompasses the shareholders’ primacy versus the stakeholders’ principle traditional corporate governance debate. Hence, this paper describes two material instruments for CSR regulation: the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights (UNGP) against FIFA’s activities. Finally, FIFA’s accountability is further analysed in view of the level of power the entity has over the international community, pointing out an enforcement system comprised mainly by monitoring, surveillance and disclosure.

Corporate Social Responsibility in India: A Human Rights Perspective

CSR – Corporate Social Responsibility has become the buzzword for corporate sector. Often CEOs of the companies use this abbreviation in their speech to speak about their companies’ social concerns. CSR is no longer only associated with the philanthropic functions of a company; rather it has acquired an ingrained status in the corporate culture. CSR has become a barometer to test the permeation of a company into society. Society, now, to an extent judges a company on the basis of its CSR Quotient. CSR now is turning to Corporate ‘Strategic’ Responsibility, where a corporate does a strategic investment in its CSR initiatives. No longer has it remained a voluntary exercise; and at times even is pressurized by various stakeholders. CSR is a container concept which encompasses many different ecological, social and economic issues. Human Rights as a CSR concept took prominence during 1990s as oil, gas and mining companies expanded into increasingly difficult areas. In 2005 UN Secretary General Kofi Annan appointed Harvard Professor John Ruggie to present a report on the issue of human rights and transnational corporations and other business enterprises. Ruggie presented his Guiding Principles, popularly known as ‘Ruggie Framework’ (Protect, Respect and Remedy) which was endorsed by UN Human Rights Council. The basic approach of Ruggie Framework is that “the corporate responsibility to respect human rights cannot be met by words alone; it requires specific measures by means of which companies can ‘know and show’ that they respect rights”. The responsibility of the corporation to respect human rights forms one of the three pillars of Ruggie Framework, the other two being, the duty of the State to protect against human rights abuses and the shared duty to remedy. OECD Guidelines for Multinational Enterprises (2011) also advocates for respect for human rights. It may be noted here that the term “responsibility” rather than “duty” is meant to indicate that respecting rights is not currently an obligation that international human rights law generally imposes directly on companies, although elements of it may be reflected in domestic laws. A company’s responsibility to respect applies across its business activities and through its relationships with third parties connected with those activities – such as business partners, entities in its value chain, and other non-State actors and State agents. In India, over the last two-three years there has been debate over the compulsory CSR initiatives and in fact the Draft Companies Bill 2011 provides for a constitution of a CSR Committee for companies having net worth of Rs. 500 crore or more or turnover of Rs. 1000 crore or more or a net profit of Rs. 5 core or more (Clause 135). Ministry of Corporate Affairs came up with the Corporate Social Responsibility Voluntary Guidelines in 2009 which has been developed further as “National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (2011)” which has nine principles, one of which is “Business should respect and promote human rights”. There is a development from one line to a page on human rights in the guidelines. The present paper would examine these developments and the prospective actualization of the concept in Indian context particularly in light of human rights abuses involving corporations (e.g. Union Carbide Bhopal, Enron’s Dabhol power project, Tata’s Singur, Vendanta in Orissa).

Rule Intermediaries in Global Labor Governance

The International Labour Organization’s (ILO’s) Declaration on Fundamental Principles and Rights at Work is a “canon” in the global governance of labor rights. The ILO has its own implementation, monitoring, and enforcement system in place to foster compliance with the declaration. However, other transnational regulatory initiatives also integrate the declaration into their standards and procedures, leading them to become nondelegated intermediaries. We analyze and compare two such cases: the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the Fair Wear Foundation (FWF). The case studies show two distinct approaches, which differ significantly in operation and the involvement of other intermediaries. The two initiatives also differ in effectiveness. We suggest that this is related to how they involve different intermediaries and how they relate to the targets. The OECD involves few intermediaries, and these play passive roles with little interaction with targets, while the FWF involves many intermediaries, which play diverse roles and constantly engage targets.