Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

Since the release of the first draft of the BHR Treaty (from herein referred to as the ‘treaty’), a range of views have been exchanged by commentators in the field in relation to the content of the treaty (a number of them are available on a dedicated page of the Business and Human Rights Resource Centre’s website). While many have stated that the treaty is a step in the right direction to imposing liability on businesses for human rights violations, there are a number of critiques of the first draft, which commentators hope will be rectified in the next version.

This second blog of a series of articles dedicated to the proposed BHR Treaty provides a review of the key critiques of the treaty. It will be followed by a final blog outlining some recommendations for the working group’s upcoming negotiations between 15 to 19 October 2018 in Geneva.

Critiques of the Treaty

Scope

As stated in the first blog post, the treaty applies to ‘business activities of a transnational character’. This aspect of the treaty has been criticised by many for being too limited as it makes a distinction between businesses that have activities abroad and those that do not, and it only imposes obligations on States to implement the treaty requirements with respect to the former.[1] By doing so, the treaty does not align with the UN Guiding Principles on Business and Human Rights (UNGPs) and suggests that all businesses should not be held equally responsible.

Larry Catá Backer, Professor at Pennsylvania State University, comments that the limitation of the scope of the treaty detracts from the assertion in the preamble that human rights are ‘universal, indivisible, interdependent and inter-related’ as the scope is ‘defined in a way to effectively protect local business …from effective compliance with thew high values’. [2] He notes that cynics may see this as ‘an effort to protect the local economies of certain states’ and perhaps a confirmation that ‘only certain states and their citizens [are] mature enough to undertake the burdens of legal responsibility, in this case for human rights.’[3]

The Business & Human Rights Resource Centre’s experience has shown that ‘allegations of corporate abuse are made against both national and international companies and national laws currently too often provide no adequate protection or remedy from either source of abuse.’[4] Accordingly, if the scope of the treaty is not altered, it will effectively deprive victims of human rights violations committed by businesses with exclusively domestic activities from obtaining redress under the treaty.

With respect to the definition of ‘business activities of a transnational character’, Professor John Ruggie notes that it is unclear and unnecessarily narrow such that it will be difficult to operationalise as it is ‘nowhere defined in the law or the social sciences’.[5] Accordingly, there may be difficulties in ‘monitoring and attributing legal liability’, particularly given the complex nature of global supply chains. [6] He also states that it could ‘exclude state-owned enterprises (SOEs) engaged in transnational business activity whose mission is not strictly profit-driven’.[7] As Professor Baker notes, ‘SOEs occupy an increasingly important place in the global economic order’ and the lack of clarity as to whether covered by the scope of the treaty is ‘troublesome’.[8]

Scale

The treaty has been criticised for its scale, that is, ‘the magnitude of the task at hand in seeking to regulate transnational business enterprises or ‘activities’.’ [9] Despite the lack of clarity surrounding the definition of ‘business activities of a transnational character’, it would capture a large number of businesses and their operations and activities. Professor Ruggie notes that it should be ensured that the ‘instrumentalities for monitoring and provisions for attributing legal liability are up to the magnitude of the task.’ [10] Surya Deva, Associate Professor of the School of Law of the City University of Hong Kong, notes that the number of entities captured could not be ‘regulated effectively by each state acting alone’; therefore, he suggests that States take collective action under the treaty. [11] 

Imposition of obligations on businesses

To date, the international legal personality of corporations and the ability to hold corporations responsible for human rights violations under international law is not settled. Accordingly, the treaty does not impose human rights obligations directly on businesses; instead it seeks to indirectly impose obligations on businesses by providing States with the primary responsibility to adopt legislation that is consistent with the treaty requirements.[12] Professor Nicolás Carrillo-Santarelli, Professor of Law at La Sabana University, notes that ‘this approach coincides with the archetype of international law dealing with non-state conduct indirectly, through the mediation of required domestic law and State action’.[13] It has been argued that the treaty ‘fail[s] to genuinely innovate beyond existing principles of public international law’ and, as a result, give corporations the ability to continue to ‘hide their failure to act behind the alleged shortcomings of states’.[14] Associate Professor Deva argues that the treaty ‘should state explicitly the obligation of businesses to respect of internationally recognised human rights’, and that the treaty, as currently drafted, ‘will not work’ as the treaty provides for legal liability but does not clearly impose a corporate obligation to respect human rights.[15]

Notably, the preamble of the treaty states that all businesses shall respect human rights, regardless of their ‘size, sector, operational context, ownership and structure’, which Professor Carrillo-Santarelli considers could suggest that the direct corporate obligations exist because the word ‘shall’ has a ‘strong obligation connotation’.[16] He also points out that it could be read that ‘all corporations … are under binding responsibilities to respect human rights.’[17] However, on the face of the treaty, it is unclear. Nonetheless, ratification of the treaty may be viewed as ‘expression of certain opinio juris on the existence of corporate duties that are implicitly and indirectly’ in the treaty.[18]

Intersection with investment law

Another critique of the treaty is how it deals with trade and investment treaties. Pursuant to article 13(3), the treaty does not have any primacy over existing State obligations under relevant treaties.[19] Accordingly, victims of human rights abuses that arise in the context of those trade and investment treaties will not be able to rely on the treaty. As noted by Carlos Lopez, the treaty pays ‘scant attention to the role of the State and the need for accountability and remedy in that context’.[20] Nonetheless, pursuant to article 13(6), new trade and investment treaties must not contain any provisions that conflict with the implementation of the treaty and should “[uphold] human rights in the context of business activities by parties benefiting from such agreements.”

Due diligence

The treaty has been praised for including an article on prevention of human rights violations which imposes a prescriptive list of measures to be undertaken by businesses in order to conduct due diligence (for example, reporting publically and periodically on non-financial matters). Associate Professor Deva argues that, in addition to ensuring that the due diligence process in the treaty aligns with the UNGPs, it should also be informed by best practice recommendations, for example, the European Coalition for Corporate Justice’s Position Paper on the ‘Key Features of Mandatory Human Rights Due Diligence Legislation’, to ensure that consistent processes are implemented by businesses.[21]

Nonetheless, the due diligence article (article 9) have been critiqued because it departs from the human rights due diligence process set out in the UNGPs. The UNGPs defines the parameters of human rights due diligence and sets out a four-step process to be carried out by businesses. Businesses should ‘identify, prevent, mitigate and account for how they address their adverse human rights impacts’.[22] While the treaty broadly covers each of these steps (for example, It requires businesses to identify and assess human rights violations), it goes further than the UNGPs and requires businesses to undertake a number of other measures, including reflecting due diligence requirements in their contractual relationships. In practice, this diversion may cause confusion for businesses that have implemented due diligence processes that align with the UNGPs.

Further, the ability for State Parties to exempt small and medium-sized businesses from the due diligence requirements in the treaty (article 9(5)) has been criticised on the basis that it ‘may be abusively taken advantage of by developing or other States in order to favor the “impunity” of abuses perpetrated or assisted by ‘strategic’ corporations or in ‘strategic sectors’.’ [23]

Separately, Professor Ruggie notes that a very high standard is imposed with respect to prevention of harm – the treaty requires businesses “to prevent” harm, which is ‘an extremely tall order for any due diligence requirement, which typically is expressed as “seek to prevent,” suggesting a standard of conduct.’[24] This language is reflected in article 13 of the UNGPs, which calls on businesses to ‘seek to prevent or mitigate adverse human rights impacts’ and, accordingly, use of this language in the treaty would align it with the UNGPs.

Legal liability

As stated in the first blog post, article 10.6 of the treaty provides three grounds upon which businesses may be held civilly liable for human rights violations in connection with their activities, namely:

a. to the extent it exercises control over the operations; or

b. to the extent it exhibits a sufficiently close relation with its subsidiary or entity in its supply chain and where there is strong and direct connection between its conduct and the wrong suffered by the victim; or

c. to the extent risk have been foreseen or should have been foreseen of human rights violations within its chain of economic activity. 

This article has been criticised due to its lack of clarity, particularly with the use of the following words and phrases: ‘control’, ‘sufficiently close’, ‘strong and direct connection’ and ‘foreseen’.[25] None of these words or phrases are defined in the treaty, and no guidance is provided on how they should be interpreted. Doug Cassel, Professor Emeritus of Law at the University of Notre Dame, has stated that the language needs to be ‘made more precise … to avoid clashing with entrenched national law doctrines that limit piercing of the corporate veil.’[26]

With respect to criminal liability, as Professor Carrillo-Santarelli notes, it is disappointing that State Parties would only be required, pursuant to article 10(8), to ‘provide measures under domestic law to establish criminal liability for all persons with business activities of a transnational character’, as violations of human rights are violations regardless of whether they are committed through domestic or transnational business activities. [27] Further, it is unclear from the face of the treaty as to whether businesses will be held criminally liable under the treaty, or only individuals. Nadia Bernaz, Associate Professor of Law of Wageningen University, notes that if the treaty does not include corporate criminal liability, there is a greater likelihood that it will be accepted.[28] However, she also argues that ideally international corporate criminal liability for international crimes should be included in the treaty, particularly given that the treaty does not impose direct corporate liability.[29]

Rights of victims

While the treaty’s focus on the rights of victims is likely to be viewed as its ‘key positive feature’, Professor Backer argues that the definition of the term ‘victims’ may ‘cause some concern’. [30] ‘Victims’ are defined to mean ‘persons who individually or collectively alleged to have suffered harm, including physical or mental injury’ (article 4). Professor Backer claims that this definition could ‘appear to divide the world between victims … and everyone else’ and that it seems to ‘incapacitate’ victims as a class because it suggests that they are ‘not individuals who can act but who must be guided and protected like children’.[31] He suggests that victims should be identified as ‘individuals to which certain rights vest’, that is, as rights holders.[32] 

Additionally, commentators have also criticised article 8(5)(d) which states that ‘in no case shall victims be required to reimburse any legal expenses of the other party to the claim.’ Professor Lopez notes that this article ‘may be seen as an incentive to frivolous litigation’.[33] Professor Carrillo-Santarelli agrees with Professor Lopez’s comment and adds that article 8(5)(d) along with article 8(6) (which states that ‘States shall not require victims to provide a warranty as a condition for commencing proceedings’) ‘could be taken advantage of to smear the reputation of some corporations when there are no grounds.’[34]

Enforcement

The treaty does not establish any sort of international enforcement or complaint mechanism to provide victims with redress. However, the absence of such mechanisms is said to be likely to make the treaty more attractive to State Parties.[35]

Although there is no international mechanism, the Optional Protocol has attempted to address concerns relating to lack of enforcement by requiring State Parties to establish a National Implementation Mechanism ‘to promote compliance with, monitor and implement’ the treaty. Further details on the role and function of this mechanism are set out in the first blog post.

Conclusion

Despite the flaws of the treaty that have been noted by commentators, overall commentators have welcomed the introduction of a treaty on business and human rights. The treaty is viewed as a step forward in addressing critical issues including preventing human rights violations by businesses and ensuring access to remedy for victims of such violations. However, it is clear that the treaty will need to be refined and clarified before it has any chance of being adopted by States.

[1] Alison Berthet, Peter Hood and Julianne Hughes-Jennett (Hogan Lovells), ‘UN treaty on business and human rights: Working Group publishes draft instrument’; Carlos Lopez, ‘Towards an International Convention on Business and Human Rights (Part I)’; Nicolás Carrillo-Santarelli, ‘Some Observations and Opinions on the “Zero” Version of the Draft Treaty on Business and Human Rights (Part I)’; Phil Bloomer and Maysa Zorob (Business & Human Rights Resource Centre), ‘Another Step on the Road? What does the “Zero Draft” Treaty mean for the Business and Human Rights movement?’; Sara McBreaty, ‘The Proposed Business and Human Rights Treaty: Four Challenges and an Opportunity’.

[2] Larry Catá Backer, Making Sausages?: Preliminary Thoughts on the "Zero-Draft," the first official draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

[3] Ibid.

[4] Phil Bloomer and Maysa Zorob (Business & Human Rights Resource Centre), ‘Another Step on the Road? What does the “Zero Draft” Treaty mean for the Business and Human Rights movement?’.

[5] John Ruggie, ‘Comments on the “Zero Draft” Treaty on Business & Human Rights’.

[6] Ibid.

[7] Ibid.

[8] Larry Catá Backer, Making Sausages?: Preliminary Thoughts on the "Zero-Draft," the first official draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

[9] John Ruggie, ‘Comments on the “Zero Draft” Treaty on Business & Human Rights’.

[10] Ibid.

[11] Surya Deva, ‘The Zero Draft of the Proposed Business and Human Rights Treaty, Part II: On the Right Track, but Not Ready Yet’.

[12] Nadia Bernaz, ‘The Draft UN Treaty on Business and Human Rights: the Triumph of Realism over Idealism’.

[13] Nicolás Carrillo-Santarelli, ‘Some Observations and Opinions on the “Zero” Version of the Draft Treaty on Business and Human Rights (Part I)’.

[14] Charlie Holt, Shira Stanton and Daniel Simons (Greenpeace), ‘The Zero Draft Legally Binding Instrument on Business and Human Rights: Small Steps along the Irresistible Path to Corporate Accountability’.

[15] Surya Deva, ‘The Zero Draft of the Proposed Business and Human Rights Treaty, Part II: On the Right Track, but Not Ready Yet’; European Coalition for Corporate Justice’s Position, ‘Key Features of Mandatory Human Rights Due Diligence Legislation’ (June 2018).

[16] Nicolás Carrillo-Santarelli, ‘Some Observations and Opinions on the “Zero” Version of the Draft Treaty on Business and Human Rights (Part I)’.

[17] Ibid.

[18] Ibid.

[19] Doug Cassel, ‘At Last: A Draft UN Treaty on Business and Human Rights’.

[20] Carlos Lopez, ‘Towards an International Convention on Business and Human Rights (Part I)’.

[21] Surya Deva, ‘The Zero Draft of the Proposed Business and Human Rights Treaty, Part II: On the Right Track, but Not Ready Yet’.

[22] UNGPs, principle 17.

[23] Nicolás Carrillo-Santarelli, ‘Some Observations and Opinions on the “Zero” Version of the Draft Treaty on Business and Human Rights (Part II)’.

[24] John Ruggie, ‘Comments on the “Zero Draft” Treaty on Business & Human Rights’.

[25] Doug Cassel, ‘At Last: A Draft UN Treaty on Business and Human Rights’; John Ruggie, ‘Comments on the “Zero Draft” Treaty on Business & Human Rights’.

[26] Ibid.

[27] Nicolás Carrillo-Santarelli, ‘Some Observations and Opinions on the “Zero” Version of the Draft Treaty on Business and Human Rights (Part I)’.

[28] Nadia Bernaz, ‘The Draft UN Treaty on Business and Human Rights: the Triumph of Realism over Idealism’.

[29] Ibid.

[30] Larry Catá Backer, Making Sausages?: Preliminary Thoughts on the "Zero-Draft," the first official draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

[31] Ibid.

[32] Ibid.

[33] Carlos Lopez, ‘Towards an International Convention on Business and Human Rights (Part II)’.

[34] Nicolás Carrillo-Santarelli, ‘Some Observations and Opinions on the “Zero” Version of the Draft Treaty on Business and Human Rights (Part II)’.

[35] Doug Cassel, ‘At Last: A Draft UN Treaty on Business and Human Rights’; Surya Deva, ‘The Zero Draft of the Proposed Business and Human Rights Treaty, Part II: On the Right Track, but Not Ready Yet’.

Editor’s note: Constance Kwant is an experienced international lawyer who has worked as in-house senior legal counsel for a top tier international financial institution in both Hong Kong and the Netherlands. She has a specific interest in sustainable business and human rights, including responsible finance.

Introduction

This post aims to outline, briefly analyse and to provide a critical comment in relation to striking a balance between confidentiality and transparency in the procedure followed by the Dutch National Contact Point (‘NCP’) in the Specific instance procedure filed in December 2015 by three former employees (‘Representatives’) on behalf of a group of 168 former employees of Heineken’s subsidiary Bralima SA (‘Bralima’) in Bakavu, located in the eastern part of the Democratic Republic of Congo (‘DRC’).

The case, finalised in August 2017, concerns alleged violations of labour and human rights by Bralima in the period 1999-2003, a period during which the DRC was a highly volatile and conflict-affected country, where the eastern part of the DRC was effectively under control of rebel movement DRC-Goma.The complaint also alleged that Bralima had cooperated with DRC-Goma in a number of ways throughout this period. On the basis of the alleged violations, the Representatives sought financial compensation by filing its notification with the NCP.

Since the allegations were brought forward to the NCP under the OECD Guidelines for Multinational Enterprises, this post will first provide short background information on the OECD Guidelines and the workings of the Dutch NCP, subsequently moving through the proceedings, its outcome, and a brief analysis with a critical note.

The OECD Guidelines for Multinational Enterprises

The Organisation for Economic Co-operation and Development (‘OECD’) finds its roots in the Organisation for European Economic Cooperation (‘OEEC)’, which was established in 1948 to run the US-financed Marshall Plan for the economic reconstruction of the European continent after World War II. Due to the recognition by governments of the interdependence of their economies and OEEC’s success, Canada and the US joined the 18 OEEC member countries by signing the new OECD Convention on 14 December 1960. The OECD was formally established on 30 September 1961, when the Convention entered into force. To date, the OECD has 35 member countries and a number of adhering non-member countries.[1]

The OECD Guidelines for Multinational Enterprises were originally adopted in 1976 as part of the Declaration on International Investment and Multinational Enterprises (‘Guidelines’). These Guidelines are recommendations addressed by governments to multinational enterprises operating in or from adhering countries and provide voluntary principles and standards for responsible business conduct. They are the only multilaterally endorsed and comprehensive code that governments are committed to promoting. Various reviews since then have taken place, in 1979,1982, 1984,1991, 2000 with the most recent update in 2011. The revision of the year 2000 Guidelines provided for further clarification of the roles and responsibilities of the National Contact Points (‘NCPs’) by the incorporation of a section relating to the Procedural Guidance on implementation procedures. [2] Since then, the Guidelines constitute the only international instrument regulating transnational corporations with a built-in grievance mechanism as it provides a mediation and conciliation platform for resolving issues that arise from alleged non-observance of the Guidelines through the NCPs. The most recent update in 2011 not only provides a reinforced procedural guidance to strengthen the role of the NCPs and improve their performance, it also contains an entirely new Chapter on Human Rights in line with the Ruggie Principles.[3]

The National Contact Point of The Netherlands

The Dutch National Contact Point was established in 2000 as an independent entity, responsible for its own procedures and decision making. Its functioning falls under the political responsibility of the Minister for Foreign Trade and Development Cooperation and its Secretariat is hosted by the Ministry of Foreign Affairs. Since its restructuring in 2007, the NCP consists of four independent members and four advisory members, the latter from the Ministries of respectively Social Affairs and Employment, of Economic Affairs, of Foreign Affairs and of Infrastructure and Environment.

The NCP has two core tasks: (i) raising awareness of the Guidelines with businesses, trade unions and non-governmental organisations (‘NGOs’); and (ii) contributing to the resolution of issues that arise from the alleged non-observance of the Guidelines in specific instances. It states “The NCP can assist the involved parties to find a solution in order to avoid further escalation or reputational damage”. This can be done in an informal process, or it may be through a formal notification of a specific instance. [4] Each specific instance procedure with the NCP follows a standard procedure including a confidentiality policy applicable to both the NCP and the parties involved.

The Bralima and Heineken case: specific instance procedure with the Dutch NCP

Background of the case

On 14 December 2015, the NCP received a notification of specific instance in relation to alleged violations of the 2000 Guidelines by Bralima SA (‘Bralima’), Bakavu, Democratic Republic of Congo and its ultimate parent company Heineken N.V. (‘Heineken’), based in Amsterdam, the Netherlands. The notification was filed by three former employees of Heineken’s subsidiary on behalf of a group of 168 former employees who had been made redundant in several rounds in the period 1999-2003.

In its Initial Assessment on the notification regarding the former employees of Bralima versus Bralima and Heineken of 28 June 2016, the NCP summarises the alleged violations under the Guidelines (version 2000) as follows:

• Violations of the human rights of their own workers in the Bralima company in Bakavu, RDC in the period 1999-2003
• Cooperation with the rebel movement of RCD-Goma from 2000-2003 in RDC and the consequences for the workers of Bralima at Bakavu, RDC and their families”
• Illegitimate dismissals of 168 employees of Bralima, Bakavu, RDC between 1999-2003
• Irregularities and deliberate omissions in the individual redundancy schemes of the dismissed worker 
• Serious errors concerning mass dismissals in the period 1999-2003 contrary to the Congolese law by Bralima
• Taking the above into account Bralima and Heineken should pay two hundred million (200.000.000) euros to the former employees and their families as a compensation for the damages

In relation to the alleged violations of the Guidelines, it is argued that in particular the following Chapters of the Guidelines were violated: Chapter I. (Concept and Principles), Chapter II. (General Policies, paragraphs 1, 2, 5, 6, 9, 10, 11), Chapter IV. (Employment and Industrial Relations, paragraph 6) and Chapter VI. (Combating Bribery, paragraph 6). [5]

The NCP Procedure from receipt of the notification until the Initial Assessment

The NCP acknowledged receipt of the notification on 18 December 2015 and informed Heineken. The following steps were subsequently taken:

1. 21 January 2016: the NCP spoke with the Representatives by phone, further communication (questions and answers) took place via email;
2. 10 February 2016: the NCP had a meeting with Heineken during which Heineken asked for and was granted two weeks to determine its position;
3. 10 February 2016: the NCP received an initial response from Heineken on the notification that its Code of Business Conduct and its underlying policies (including on Employees and Human Rights, Bribery and Improper Advantages and the Supplier Code) and other instruments apply to all companies within the Heineken Group, including Bralima, in more than 70 countries in which the companies of the Heineken Group operate; that Heineken indirectly holds 95% of the shares in Bralima; and Bralima stayed in the DRC because the business case continued to be valid.
4. End of February 2016: the NCP supported Heineken’s proposal to first have the Representatives hold a meeting with the management of Bralima without interference of the NCP;
5. 13 April 2016: the meeting was held in Bakavu, DRC. Both parties informed the NCP that the meeting had not divulged anything new;
6. 31 May 2016: draft version of NCP’s initial assessment was sent to the parties with the request to submit any comments within two weeks;
7. 28 June 2016: the NCP published its initial assessment on its website.

The Initial Assessment of the specific instance by the NCP

Since the DRC is not a member of the OECD, it has no National Contact Point. According to the NCP’s notification policy, in such case, a notice of specific instance can be submitted to the NCP where the multinational enterprise involved is seated.

The NCP, based on this, considered itself competent to offer its good offices and to initiate a dialogue since Heineken is based in Amsterdam. Both parties accepted NCP’s good offices and requested the appointment of a third-party mediator. Also, an expert in Congolese law was appointed. According to the Initial Assessment, Heineken stated that it “is of the opinion that there is no breach of the OECD Guidelines, […..] concerning the dismissals in the period 1999-2003 the existing procedures have been followed carefully,[…..] it has always been of the opinion that it was a case for Bralima, but it did follow the case, […..]  the specific instance procedure is a forward looking process in which the NCP may try to verify the facts and organise interaction between the parties aimed at addressing the issues raised”.[6] The NCP concluded that in accordance with the Guidelines (2000), and its own Specific Instance Procedure, the notification merited further examination. Thereafter, parties entered into agreements on confidentiality and transparency on mediation and further examination while in the process, in accordance with the NCP's procedure.[7]

In the course of the procedure after the publication of the NCP’s Initial Assessment of 28 June 2016, several meetings were held in the period up to 18 July 2017. In January 2017, the parties agreed to the framework surrounding the dialogue. To further facilitate the dialogue and mediation process, shortly thereafter, meetings were also held at the Dutch embassies in respectively Kampala, Uganda, and Paris, France. These meetings were monitored by the NCP. In Kampala, the meeting between parties took place with the mediator, in Paris, with the externally appointed expert in Congolese labour law.^[8]

To further facilitate the dialogue and mediation process, shortly thereafter, meetings were also held at the Dutch embassies in respectively Kampala, Uganda, and Paris, France. These meetings were monitored by the NCP. In Kampala, the meeting between parties took place with the mediator, in Paris, with the externally appointed expert in Congolese labour law.^[9]

The NCP’s Final Statement and the scope of application of the Guidelines

According to the NCP’s Final Statement on the notification in Former employees Bralima vs Bralima and Heineken of 18 August 2017, the Guidelines (2000) equally apply to Heineken, not just Bralima, on the basis of Chapter II. General Policies, paragraph 1 of the Guidelines (2000).[10]

In this context, the NCP noted: “the Guidelines (2000) do not mention enterprise groups”. Based on Chapter II. paragraph 1 however, it concluded that the Guidelines do apply because Heineken held (and still holds) indirectly 95% of the shares in Bralima, implying a very strong business relationship.

The NCP’s recommendations

In general terms, the NCP encourages Heineken to draw up a policy, including guidelines as to how Heineken is to conduct business and operate in volatile and conflict-affected areas. In addition, according to the NCP, the specific instance procedure highlights the need to ensure ongoing internal analysis of Heineken's existing policies and processes not only in the context of the Guidelines (2011) but also in relation to the UN Guiding Principles on Business and Human Rights (‘Ruggie Principles’).

The specific Recommendations adopted by the NCP relate to Chapter IV. (Employment and Industrial Relations), paragraph 3 of the Guidelines (2000) and state that Heineken is to “provide information to employees and their representatives which enables them to obtain a true and fair view of the performance of the entity or, where appropriate, the enterprise as a whole”. [11] Moreover, based on this and on Chapter IV. (Employment and Industrial Relations), paragraph 6 of the Guidelines (2000) the NCP recommends:

1. transparency and communication to employees be part of enterprises’ policies for dealing with conflict settings; and
2. the handling of complaints should be monitored and evaluated within company groups as part of applying corporate governance principles and practices throughout the group.[12]

Subsequently, the NCP concluded on the basis of its monitoring role that “all parties have participated in a proper and fair way”.[13] In addition, it stressed the useful support of an external third party mediator, the involvement of an external expert on Congolese law and the Dutch embassies in Kampala and Paris having facilitated meetings outside the DRC. [14] The parties accepted the offer from the NCP to conduct a dialogue on the implementation of its recommendations, scheduled for the summer of 2018.[15] However, the final statement indicates also that both parties wanted to keep confidentiality on the agreement/outcome and “the NCP regrets this”.^[16]

Comments: Transparency matters

The NCP has been transparent in publishing the procedural steps it has taken in both its Initial Assessment and its Final Statement. Nevertheless, we face a total lack of transparency on what was finally agreed upon between the former employees of Bralima and Heineken. This is in itself a missed opportunity to provide a learning curve for the Investment Committee of the OECD, governments, multinational enterprises and civil society. This lack of transparency regarding the actual outcome of the Bralima and Heineken procedure leads to uncertainty on what agreements have or have not been reached and seems to severely contradict the spirit and possibly even undermine the effectiveness of the OECD Guidelines.

In order to ensure that all NCPs operate in a comparable way, the Guidelines (2000) incorporated the concept of “functional equivalence” in the Procedural Guidance for NCPs, meaning that in order to achieve comparable functioning, the Guidelines provide for so-called Core Criteria for NCPs which relate to Visibility, Accessibility,Transparency and Accountability, based on which the NCP accordingly established its own Core Values.

However, as far as the Core criterion Transparency is concerned, the Guidelines state that “outcomes will be transparent unless preserving confidentiality is in the best interests of effective implementation of the Guidelines”.[17] It is remarkable that the NCP itself regretted that both parties wanted to keep confidentiality on the outcome of the mediation, while not motivating its decision to ‘allow’ for confidentiality in the outcome of this case. It seems that the actual settlement of the dispute prevailed over ‘Transparency’ as one of the key Core Values under the OECD Guidelines. Did the “effective implementation” of the Guidelines with regards to Heineken truly require this lack of transparency regarding the final settlement? Or, isn’t it rather otherwise, that the effective implementation of the Guidelines, viewed from a general point of view, requires transparency as a default solution, with limited and strict exceptions that need to be properly justified?

[1] See http://www.oecd.org/about/membersandpartners/. In addition, the Supplementary Protocol No.1 to the OECD Convention the signatories to the Convention agreed that the European Commission participates in the work of the OECD. The European Commission however does not have the right to vote and does not officially take part in the adoption of legal instruments, http://www.oecd.org/general/supplementaryprotocolno1totheconventionontheoecd.htm.

[2] See http://www.oecd.org/corporate/mne/1922428.pdf, at page 33-35.

[3] On 16 June 2011, the United Nations Human Rights Council unanimously endorsed the Guiding Principles for Business and Human Rights: ‘Implementing the United Nations “Protect, Respect and Remedy” Framework’, which seek to provide a global standard for all businesses in preventing and addressing the risk of adverse human rights impact linked to business activity.

[4] On specific instances, see https://www.oecdguidelines.nl/notifications/submitting-a-specific-instance.

[5] See the NCP’s Initial Assessment, 28 June 2016, at page 2-3.

[6] Ibid, at page 4.

[7] Ibid, at page 5.

[8] See NCP, Final Statement, 18 August 2017, at page 4.

[9] Ibid.

[10] This provision states: “…..[…..] Enterprises should…[…] ‘Encourage, where practicable, business partners, including suppliers and sub-contractors, to apply principles of corporate conduct compatible with the Guidelines’”.

[11] See the 2000 OECD Guidelines for Multinational Enterprises, at page 17.

[12] Heineken does have a Speak Up Policy as part of its Code of Business Framework, see https://secure.ethicspoint.com/domain/media/en/gui/25903/index.html.

[13] See NCP, Final Statement, 18 August 2017, at page 6, paragraph 10.

[14] Ibid, paragraphs 13-14.

[15] Ibid, at page 7.

[16] Ibid, at page 5, paragraph 5.

[17] Ibid, at page 57, paragraph 2.