The OECD Guidelines for Multinational Enterprises (the Guidelines) have been updated. These are government-backed non-binding recommendations, principles, and standards for responsible business conduct (also referred to as RBC) for multinationals operating in or from adhering countries. The Guidelines are the only multilaterally agreed and comprehensive code of responsible business conduct that governments have committed to promoting. The most significant updates are included in chapter six of the Guidelines, which revolves around the environment. For example, multinationals should now carry out risk-based due diligence to assess and address adverse environmental impacts.
Each of the 51 countries adhering to the Guidelines is required to establish a National Contact Point (NCP) to promote and implement the Guidelines. Multinationals can be brought before NCPs for alleged violations of the Guidelines and this is happening with increasing frequency. The mandate of an NCP is twofold: i) to promote the Guidelines; and ii) to handle cases referred to the NCP as ‘specific instances’ between a ‘complainant’ and a ‘respondent’ as a non-judicial grievance mechanism, so as to contribute to the resolution. These terms are chosen deliberately because the ordinary legal terms ‘legal procedure’, ‘claimant’ and ‘defendant’ do not fit the mandate given to NCPs.
In the past, we have seen climate change litigation unfold before the Dutch NCP. In 2019, Friends of the Earth Netherlands et al. complained to the Dutch NCP that the Dutch bank ING Group violated the Guidelines by allegedly contributing to specific adverse environmental, human rights, and labor rights impacts caused by subsidiaries of ING Group’s clients active in the palm oil sector. No agreement was reached between parties in this NCP procedure. A similar complaint regarding palm oil was brought against Dutch bank Rabobank, resulting in an agreement, among other things, to maintain a critical view on the sustainability of palm oil production.
In this blog, we describe in more detail what NCPs are, what a Dutch NCP procedure looks like, discuss more examples of specific instances in front of the Dutch NCP procedures and we briefly look to the future.
Unlike legal proceedings, which are generally supported by detailed and sophisticated rules on venue and jurisdiction, specific instances are generally dealt with by the NCP of the country in which the underlying issues have arisen. However, NCPs may also assume ‘jurisdiction’ if the involved enterprise domiciles in their country even if the issues have arisen in another country, provided that the addressed NCP has coordinated in good faith with other relevant NCPs and determined that it will fulfill the role of ‘lead NCP’.
Complainants, the majority of whom are NGOs, make use of this flexible ‘jurisdictional assumption’, as the (procedural) differences between NCPs can be beneficial to them. For example, some NCPs are better equipped to handle specific instances, are more transparent in the way they deal with those instances and/or communicate more actively and openly. Also, some NCPs are more complainant friendly than others. For example, precedent shows that whilst the Dutch and UK NCP judge that the respondent has or has not acted in line with the Guidelines, other NCPs – like the German NCP – tend to use a more distant, neutral approach. An NCP judgment stating that the respondent has breached the Guidelines, can – under certain circumstances – be used by the complainant in civil follow-on proceedings against the involved enterprise.
Dutch NCP procedure
The specific instance procedure aims to offer a non-judicial alternative to resolving issues regarding the Guidelines. The engagement in this procedure is meant to be voluntary and in good faith. The indicative timeframe for the process is between twelve to fourteen months, but this is contingent on the specifications of each case.
Each NCP has its own procedure based on the Procedural Guidelines issued by the OECD. Therefore, NCP procedures in different jurisdictions look similar.
A Dutch NCP procedure can be divided into six stages:
The process starts with the submission of a complaint, after which the NCP sends an acknowledgement of receipt to the complainant(s). The NCP will subsequently assess the admissibility of a complaint trough an “initial assessment”, using specific criteria. At this stage, the NCP also considers whether the complaint requires coordination/collaboration with other NCPs. The procedure ends if the NCP declares the complaint inadmissible. If the NCP determines that the case is admissible, it extends its ‘good offices’ to the involved parties. This means that it will offer to serve as a mediator to facilitate a dialogue with a view to seeking an agreed solution. External mediation is also a possibility. The remainder of the NCP procedure depends on whether the good offices are accepted by the parties. If parties accept the good offices, the NCP will examine the complaint based on the dialogue between parties. Prior to the dialogue, agreements will be made between the parties regarding the desired goal, timetable and confidentiality and public comments. If parties do not accept the good offices or the dialogue fails, the NCP will, in principle, undertake further examination to determine whether the enterprise concerned breached the Guidelines on the grounds put forward in the notification.
The NCP will conclude the proceedings through a ‘final statement’, in which the NCP can include a determination of the extent to which the enterprise has breached the Guidelines. The final statement may also contain recommendations and appropriate courses of follow-up. All NCP procedures result in a final statement, even the unsuccessful ones. As a rule, one year after issuing its final statement, the NCP publishes an evaluation of the implementation of the agreement(s) made and/or its recommendations.
Examples of specific instances in front of the Dutch NCP
Until now, several large enterprises (e.g. energy and oil companies, banks, consumer goods companies and breweries) have been brought before the Dutch NCP. For example, and in addition to the ING Group and Rabobank examples mentioned above, Shell (including its subsidiaries) has been brought before the Dutch NCP eight times in relation to a variety of alleged breaches of the Guidelines, ranging from alleged adverse human rights impacts in the Obelle community in Nigeria due to an oil eruption, to the alleged withholding of information from local residents and employees about the environmental, health and safety impacts of Shell’s Pandacan oil depot in the Philippines. All complaints against Shell were either rejected, withdrawn or remain unresolved. Lastly, a confidential agreement was reached between Dutch brewer Heineken and complainants who argued that Heineken allegedly was responsible for unlawful dismissals of former employees of its Congolese subsidiary.
Look to the future
The ongoing debate about the responsible conduct of enterprises combined with the rapid evolution of climate litigation leads to the inevitable conclusion that enterprises will be presented with more NCP procedures in the future, especially regarding their environmental conduct due to the amended chapter six of the Guidelines. It is also anticipated that NGOs will continue to engage with NCPs best suited for their complaint in order to achieve their social and environmental goals.