Post on 25-Mar-2020
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Social movements, extraterritorial corporate regulation and the limits of legalization:
a case study from India
Swann Bommier (CERI-Sciences Po, ESSEC IRENE)
Abstract
Making multinational corporations accountable for their negative impacts on human
rights is a major challenge in today’s global economy. Among the existing global corporate
governance initiatives, the OECD Guidelines stand out for providing an extraterritorial
grievance mechanism.
However, when a transnational social movement makes use of this mechanism to
challenge corporate practices in a given country, one wonders how the proceedings alter
power relations, stakeholder engagement and human rights enforcement on the field.
This paper analyzes the impact of this extraterritorial mechanism by looking at a
specific case where a coalition of French and Indian NGOs challenged the investment of a
French multinational corporation in India.
Drawing upon extensive field research in India and in France, we argue that the
mechanism challenges corporate practices and stakeholder policies but faces structural
hurdles which undermine its legitimacy and enforcement capacity: it has a country-specific
institutional setting and it promotes legalization informally.
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Introduction
On July 9 2012, a transnational consortium of French and Indian civil society
organizations (CSOs) filed a specific instance at the French National Contact Point (NCP)
instituted by the intergovernmental Organisation for Economic Co-operation and
Development (OECD) to challenge the investment and the practices of Michelin – a French-
based multinational corporation – in the Indian State of Tamil Nadu.
The CSOs argued that Michelin had violated the OECD “Guidelines for Multinational
Enterprises”1 and asked the NCP to constrain Michelin to fulfill a three-step process: 1) to
stop the construction works and to wait for the fulfillment of the decisions taken by the
Madras High Court; 2) to engage with the local communities affected by the Michelin
investment to define the terms and conditions of a social, human rights and environmental
impact assessment; and 3) to conduct these impact assessments to identify the risks and the
negative impacts of the company’s investment on the local communities and ecosystems2.
The conflict that had opposed the Tamil Nadu government and Michelin to local
communities since 2007 was thereby shifting towards a “global public domain”3 where one
witnessed the intertwining of an hortatory code of conduct published by the OECD, a French
extraterritorial grievance mechanism set-up in reference to the OECD Guidelines,
transnational CSOs and an MNC.
How did the NCP, an extraterritorial grievance mechanism addressing business-
CSO conflicts, emerge? How did the French NCP manage the specific instance filed by
the CSO consortium? Which outcome did it produce? What does this case study tell us
about “struggles for justice in a globalizing world”4?
We answer to these questions successively, and analyze in detail the conflict which
opposed CSOs to Michelin at the French NCP between July 2012 and September 2013. This
will help us understand how local business-community conflicts reach the transnational arena
1 OECD, “OECD Guidelines for Multinational Enterprises,” 2011.
2 CCFD et al., “Saisine Du Point de Contact National Français Dans Le Cadre de La Mise En Oeuvre
Des Principes Directeurs de l’OCDE - Circonstance Specifique,” 74–76.
3 Ruggie defines a global public domain as follows: “an arena of discourse, contestation and action
organized around global rule making – a transnational space that is not exclusively inhabited by states,
and which permits the direct expression and pursuit of human interests, not merely mediated by the
state”. See Ruggie, “Taking Embedded Liberalism Global: The Corporate Connection,” 104.
4 Fraser, “Reframing Justice in a Globalizing World,” 17.
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and which challenges lay ahead to achieve an effective and legitimate global corporate
regulation.
We argue that to transnational grievance mechanisms addressing corporate
accountability issues require to undertake “meta-political reforms”5 to acquire a cosmopolitan
democratic representation and to ensure popular accountability beyond States’ economic
interests.
1) The OECD Guidelines, its National Contact Points and the 2011
reform
a) The OECD Guidelines for Multinational Enterprises
The Organization for European Economic Cooperation (OEEC) was founded in April
1948 to administer the Marshall Plan. The organization counted 18 member States and aimed
for “the promotion of cooperation and commerce among Europe’s reconstructed economies,
the development of a European customs union, and, ultimately, a free trade area”6. With the
creation of the European Union in 1957, the OEEC lost its purpose.
In 1961, in a Cold War context, the organization was renamed as the Organization for
Economic Co-operation and Development (OECD) and was revamped by shifting from a
European to a world membership, with the United States and Canada joining in. Its mandate
however remained the one of an economic intergovernmental organization “dedicated to the
principles of market economies, economic growth, and world trade”7.
When the topic of FDI and of MNCs’ impact on international relations made it to the
international headlines in the 1970s and led to the establishment of the UN Center on
5 Ibid., 16.
6 Salzman, “Decentralized Administrative Law In The Organization For Economic Cooperation And
Development,” 190.
7 Ibid., 191. Article 1 of the Convention on the OECD signed on December 14 1960 states: “The aims
of the Organisation for Economic Co-operation and Development (hereinafter called the
"Organisation") shall be to promote policies designed: (a) to achieve the highest sustainable
economic growth and employment and a rising standard of living in Member countries, while
maintaining financial stability, and thus to contribute to the development of the world economy; (b) to
contribute to sound economic expansion in Member as well as non-member countries in the process of
economic development; and (c) to contribute to the expansion of world trade on a multilateral, non-
discriminatory basis in accordance with international obligations”. See OECD, “Convention on the
Organisation for Economic Co-Operation and Development,” para. Article 1.
4
Transnational Corporations and of the UN Commission on transnational corporations8, the
OECD looked into the issue. In 1976, “in response to the adversarial attitude of many
countries to [MNCs’] activities”9, the OECD published the Declaration on International
Investment and Multinational Enterprises, which, accompanied by a series of Guidelines,
aimed for easing FDI, securing investors’ rights, facilitating the development of economic ties
and expanding trade across the OECD States10
. Among those Guidelines, the “Guidelines for
Multinational Enterprises” (hereafter “the Guidelines”) stood out for instituting a voluntary
and non-binding code of conduct promoting self-regulation and transparency for multinational
enterprises11
.
The Guidelines thus emerged as a voluntary code of conduct that delineated a “non-
binding collection of principles and standards for responsible business conduct”12
. Since the
Guidelines stated explicitly that “observance of the Guidelines is voluntary and not legally
enforceable”13
, no enforcement mechanism was created to ensure compliance.
The soft law character of the Guidelines was a major hurdle for their diffusion. In 1984,
the OECD Committee on International Investment and Multinational Enterprises (CIME) thus
required each OECD State to set-up a National Contact Point (NCP). The NCPs were housed
in a government ministry and meant at “undertaking promotional activities, handling
enquiries and for discussions with the parties concerned on all matters related to the
Guidelines”14
.
8 Sagafi-Nejad, The UN and Transnational Corporations: From Code of Conduct to Global Compact;
Hamdani and Ruffing, United Nations Centre on Transnational Corporations: Corporate Conduct and
the Public Interest.
9 Sagafi-Nejad, The UN and Transnational Corporations: From Code of Conduct to Global Compact,
111.
10 Murray, “A New Phase in the Regulation of Multinational Enterprises: The Role of the OECD,”
258. According to the OECD, the Declaration and its Guidelines aim for “the liberalisation of policies
towards international capital movements, international direct investment and multinational
enterprises and trade in services”. See http://www.oecd.org/daf/inv/oecdinvestmentcommittee.htm
accessed June 29 2015.
11 Sagafi-Nejad, The UN and Transnational Corporations: From Code of Conduct to Global Compact,
111.
12 Cernic, “Corporate Responsibility for Human Rights: A Critical Analysis of the OECD Guidelines
for Multinational Enterprises,” 79.
13 OECD, “OECD Guidelines for Multinational Enterprises,” June 21, 1976, para. 6.
14 OECD, “Second Revised Decision of the Council on the Guidelines for Multinational Enterprises,”
para. 1.
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Each NCP was therefore acting as a “clearinghouse”15
for the CIME: it was responsible
for the national diffusion of the Guidelines and for clarifying the content of the Guidelines to
the companies and unions that asked for guidance and advice in interpreting them. By the
1990s, despite these efforts of publicity, the Guidelines had fallen into disarray. A
commentator noted in 2001:
“Since the 1990s, the Guidelines have slumped into disuse. An indication of their
irrelevance is the fact that no mention is made of them in a recent encyclopedic survey
[by Braithwaite and Drahos16
] of rules governing business at the transnational level”17
Between 1996 and 1998, the OECD was confronted with a prolonged and vocal NGO
campaign against its Multilateral Agreement on Investment (MAI)18
. With the failure of the
MAI in 1998, the OECD needed to regain legitimacy in the public arena and “reassess its
relationships with NGOs beyond TUAC and BIAC in order to prevent future high-profile
casualties”19
. Revising the OECD Guidelines became an instrument in that direction.
b) The OECD Guidelines’ 2000 reform and the NCP creation as
an extraterritorial grievance mechanism
In November 1998, a conference was organized in Budapest to launch the revision of
the OECD Guidelines. Moving beyond the bureaucratic model of negotiations that had taken
place for the MAI, the Guidelines’ review was launched with members from “25 States
(including 3 OECD non-Members), 21 corporate and 12 labour representatives, 10
intergovernmental organisations such as the International labour Organisation (ILO) and six
non-governmental organisations”20
.
15 Salzman, “Decentralized Administrative Law In The Organization For Economic Cooperation And
Development,” 214.
16 Murray refers here to the work of Braithwaite and Drahos. See Braithwaite and Drahos, Global
Business Regulation.
17 Murray, “A New Phase in the Regulation of Multinational Enterprises: The Role of the OECD,”
260.
18 The MAI was meant “to provide a comprehensive framework for international investment,
institutionalizing liberalization while providing for the protection of investment and the resolution of
disputes. The MAI was to provide the framework for international investment that the General
Agreement on Tariffs and Trade (GATT) provided for international trade”. See Kobrin, “The MAI and
the Clash of Globalizations.”
19 Salzman, “Decentralized Administrative Law In The Organization For Economic Cooperation And
Development,” 200.
20 Tully, “The 2000 Review of the OECD Guidelines for Multinational Enterprises,” 495.
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On June 27 2000, this consultation process came to an end with the publication of a
revised edition of the OECD Guidelines. The Guidelines remained a soft law hortatory
instrument21
wherein major changes were balanced with conservative provisions22
. The
Secretary-General of the OECD’s Trade Union Advisory Committee thus described the
revised Guidelines as a “compromise framework”23
. This “compromise” was best illustrated
by the circumscription of corporate responsibility on human rights matters to national
frameworks. International human rights treaties and supply chain responsibility were thus
cited as mere addendums. In the General Policies, the Guidelines indeed stated:
“Enterprises should respect the human rights of those affected by their activities
consistent with the host government’s international obligations and
commitments”24
Despite this important limitation with regard to the universal application of a
responsible business conduct, the 2000 revision constituted a major shift in the corporate
accountability debate. The system of NCP was indeed revamped as a “soft whistle-blowing
facility”25
:
With regard to accessibility, NCPs ceased to be a promotional and
clearinghouse institution for the OECD Investment Committee and became a
dispute resolution instrument accessible to the civil society: CSOs could reach
out to the NCPs and require them though “specific instances” to
“contribute to the resolution of issues that arise relating to implementation of
the Guidelines in specific instances”26
21 Murray, “A New Phase in the Regulation of Multinational Enterprises: The Role of the OECD,”
265.
22 For a detailed review of these changes, see Tully, “The 2000 Review of the OECD Guidelines for
Multinational Enterprises.”
23 Ibid., 403.
24 OECD, “OECD Guidelines for Multinational Enterprises,” 2000, para. General Policies art.2. This
was confirmed with regard to Environment as well as Employment and Industrial Relations: “[MNCs
should] observe standards of employment and industrial relations not less favourable than those
observed by comparable employers in the host country”; “where these proposed activities may have
significant environmental, health, or safety impacts, and where they are subject to a decision of a
competent authority, prepare an appropriate environmental impact assessment” (emphasis added).
25 Salzman, “Decentralized Administrative Law In The Organization For Economic Cooperation And
Development,” 214.
26 OECD, “OECD Guidelines for Multinational Enterprises,” 2000, para. Procedural Guidance I.
7
While Keohane, Moravcsik and Slaughter consider transnational dispute
resolutions as instances where a third-party tribunal is mandated to solve a case
between a non-state and a state27
, the revision instituted the NCPs as unique
third-party institutions mandated to resolve trans-national cases between two
non-state actors – namely CSOs and MNCs.
With regard to territorial applicability, the Guidelines ceased to be
circumscribed to the OECD countries. In the overarching Declaration within
which the Guidelines fit, adhering governments “recommend[ed] to
multinational corporations operating in or from their territories the observance
of the Guidelines”28
. NCPs were thereby gaining the status of an extraterritorial
grievance mechanism29
, the Guidelines applying “to the global operations of
MNEs based in adhering countries”30
:
“In the event Guidelines-related issues arise in a non-adhering country, NCPs
will take steps to develop an understanding of the issues involved. While it may
not always be practicable to obtain access to all pertinent information, or to
bring all the parties involved together, the NCP may still be in a position to
pursue enquiries and engage in other fact finding activities”31
These revisions were extremely innovative and promising for the proponents of an
enhanced corporate accountability32
:
Between 2001 and 2004, the number of cases filed by CSOs to NCPs increased
greatly: 4 cases were filed in 2001; 8 in 2002; 12 in 2003; 21 in 200433
.
27 Keohane, Moravcsik, and Slaughter, “Legalized Dispute Resolution: Interstate and Transnational,”
459.
28 OECD, “OECD Guidelines for Multinational Enterprises,” 2000, para. Declaration.
29 Murray, “A New Phase in the Regulation of Multinational Enterprises: The Role of the OECD,”
263.
30 Salzman, “Decentralized Administrative Law In The Organization For Economic Cooperation And
Development,” 214.
31 OECD, “OECD Guidelines for Multinational Enterprises,” 2000, para. Concepts and principles;
Commentaries on Procedural Guidance.
32 Vendzules, “The Struggle for Legitimacy in Environmental Standards Systems: The OECD
Guidelines for Multinational Enterprises,” 463.
33 OECD Watch, “Ten Years on: Assessing the Contribution of the OECD Guidelines for
Multinational Enterprises to Responsible Business Conduct,” 9.
8
The extraterritorial applicability of the Guidelines was also helpful in making
corporations accountable for their deeds abroad: 72 per cent of the specific
instances filed by CSOs between 2000 and 2010 concerned alleged breaches of
the Guidelines in non-adhering developing countries34
c) Limits of the OECD Guidelines, of the NCPs and the 2011
revision
Throughout the 2000s, examples however flourished of NCPs acting in breach of the
Guidelines or being subject to conflicts of interest. A thorough study of the US NCP thus
revealed how it violated the OECD call for guaranteeing the NCP’s visibility, accessibility,
transparency and accountability35
. Other studies stressed that NCPs were biased in favor of
businesses36
, that the Guidelines’ procedural guidance was not enforced in terms of
transparency and accountability37
, that their independence was compromised by being
“usually located in ministries of economics”38
.
In 2010, OECD Watch thus qualified the track-record of the NCPs as “erratic,
unpredictable and largely ineffectual”39
. While the NCPs were thus gradually losing
legitimacy and proving irrelevant in rendering MNCs accountable transnationally, the
34 Ibid., 10.
35 Kita, “It’s Not You, It’s Me: An Analysis of the United States’ Failure to Uphold Its Commitment to
OECD Guidelines for Multinational Enterprises in Spite of No Other Reliable Alternatives.”
36 Cernic notes that “since most of the NCPs are located within business or industry departments of
governments, it appears that they are more inclined to support business activities. For example, the
UK NCP until recently discussed the initial assessment of a complaint with the companies first and
only later with the complainant. There is no simultaneous discussion and companies have been given
higher degree of access to the NCP”. See Cernic, “Corporate Responsibility for Human Rights: A
Critical Analysis of the OECD Guidelines for Multinational Enterprises,” 94.
37 While the Guidelines require the NCPs to publish a final report and issue recommendations when
the parties do not reach an agreement, Davarnejad notes that out of roughly 300 specific instances filed
“the NCPs have published final statements or reports in no more than fifty-seven specific instances
[…] there are remarkable variations concerning the precision of the information on parties and issues
provided in final statements […] Furthermore, it is not possible to identify the issue in 11 of 57 final
statements […] NCPs’ public statements lack uniformity, even though the Guidelines are exceptionally
clear on issuing statements because they require the publication of statements for cases in which
NCPs conduct a “further examination””. See Davarnejad, “In the Shadow of Soft Law: The Handling
of Corporate Social Responsibility Disputes under the OECD Guidelines for Multinational
Enterprises,” 367–368.
38 Ibid., 361.
39 OECD Watch, “Ten Years on: Assessing the Contribution of the OECD Guidelines for
Multinational Enterprises to Responsible Business Conduct,” 11.
9
“Protect, Respect and Remedy” Framework published by John Ruggie in 200840
at the end of
his mandate as Special Representative to the UN Secretary-General on the issue of human
rights and transnational corporations and other enterprises acted as a wake-up call.
John Ruggie indeed argued that (1) an update of the OECD Guidelines “would be
timely” on human rights and supply chain matters41
; (2) a major reform of the NCPs was
needed to ensure that they would function as legitimate, accessible, predictable, equitable and
transparent non-judicial grievance mechanisms42
. These two recommendations resonated with
Fraser’s analysis of the challenges of “reframing justice in a globalized world”43
:
The advocacy for a human rights and supply chain reform was meant at solving
an issue of “misframing”, i.e. of extraterritoriality:
“Here the injustice arises when the community’s boundaries are drawn in such
a way as to wrongly exclude some people from the chance to participate at all in
its authorized contests over justice”44
The advocacy for a reform of the NCPs towards increased independence was
meant at solving an issue of “meta-political misrepresentation”, i.e. of
democratic representation and popular accountability in the way through which
the extraterritorial grievance mechanisms are set-up:
“Exemplified by undemocratic processes of frame-setting, this injustice consists
in the failure to institutionalize parity of participation at the meta-political level,
40 Ruggie, “Protect, Respect and Remedy”: A Framework for Business and Human Rights.
41 Ruggie noted : “the OECD Guidelines are currently the most widely applicable set of government-
endorsed standards related to corporate responsibility and human rights. Most recently updated in
2000, their current human rights provisions not only lack specificity, but in key respects have fallen
behind the voluntary standards of many companies and business organizations. A revision of the
Guidelines addressing these concerns would be timely”. See Ibid., para. 46.
42 Ruggie’s Framework read as follows: “The NCPs are potentially an important vehicle for providing
remedy. However, with a few exceptions, experience suggests that in practice they have too often
failed to meet this potential. […]Alternative suggestions have included placing NCPs under the
legislative branch or within a NHRI [National Human Rights Institution]. OECD and adhering States
should consider these and other options for addressing current deficits”. See Ibid., para. 98–99.
43 Fraser, “Reframing Justice in a Globalizing World.”
44 Ibid., 8.
10
in deliberations and decisions […] that determine the authoritative division of
political space”45
Criticized by the Ruggie Framework, the OECD launched a process to revise the
Guidelines in 201046
. In its 2011 revised edition, the universal respect for human rights was
now clearly asserted, without restricting the corporate responsibilities to the “host’s
government international obligations”. The Guidelines now asserted that
“In countries where domestic laws and regulations conflict with internationally
recognized human rights, enterprises should seek ways to honour them to the fullest
extent which does not place them in violation of domestic law […] In all cases and
irrespective of the country or specific context of enterprises’ operations, reference
should be made at a minimum to the internationally recognised human rights expressed
in the International Bill of Human Rights” 47
These reforms thus substantially strengthened the Guidelines by applying Fraser’s “all-
affected principle” and by instituting a “post-Westphalian framing” to matters of corporate
accountability for all OECD-based MNCs48
.
However, with regard to issues of “meta-political representation”, the NCP reform
called for by John Ruggie, OECD Watch, scholars and trade unions did not take place. In the
Terms of Reference, the OECD member States had agreed to “update the Procedural Guidance
[…] to give greater guidance to the institutional structure and functioning of NCPs”49
. In
response, the revised Guidelines provided an additional set of recommendations with regard
to the publication and implementation of final statements50
.
45 Ibid., 16.
46 OECD, “Terms Of Reference For An Update Of The Oecd Guidelines For Multinational
Enterprises.”
47 OECD, “OECD Guidelines for Multinational Enterprises,” 2011, sec. IV.38–IV.39.
48 Fraser, “Reframing Justice in a Globalizing World,” 13–15.
49 OECD, “Terms Of Reference For An Update Of The Oecd Guidelines For Multinational
Enterprises,” 5–6.
50 The Procedural Guidance thus noted that “at the conclusion of the procedures and after consultation
with the parties involved, make the results of the procedures publicly available […] by issuing: a) a
statement when the NCP decides that the issues raised do not merit further consideration […]; b) a
report when the parties have reached agreement on the issues raised […]; c) a statement when no
agreement is reached or when a party is unwilling to participate in the procedures”. See OECD,
“OECD Guidelines for Multinational Enterprises,” 2011, sec. Procedural Guidance. Implementation in
specific instances.
11
The Terms of Reference however also stressed that the reform would “maintain the
rights of adhering countries to adopt the NCP structure that best fits their individual
circumstances”51
. While calling the NCPs to “operate in an impartial manner”, the Guidelines
stressed that the new institutional arrangements were expected to “maintain an adequate level
of accountability to the adhering government”52
.
Thereby, the reform of the NCP seemed, to a large extent, a cosmetic effort touching
upon specific procedures without challenging the structural flaws identified under the
previous Guidelines’ edition. OECD member States indeed remained sovereign in deciding
the level of independence they wished to grant to their respective NCPs.
The 2011 reform of the Guidelines had thus been conducted halfway-through: on the
one hand, with regard to misframing, the revised Guidelines ensured that CSOswould be able
to question the role and the responsibility of MNCs beyond territorial distinctions, national
human rights frameworks and supply chain architectures. On the other hand, with regard to
meta-political representation, CSOs would be doing so in an arena set-up and controlled by a
bureaucracy capable of pressurizing and/or of reforming the NCPs without – national or,
ideally, international – legislative oversight.
Despite this limitation, transnational social movements hoped to make the best out of
the new political opportunities offered by the extraterritorial applicability of the Guidelines
and of human rights treaties.
2) The NCP procedure: mediation or judicialization?
a) Filing a specific instance at the French NCP
In 2007, the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) – the
public body managing Tamil Nadu’s industrial parks53
– had shown interest for the forest and
common lands of Thervoy, a rural village located 50 kilometers away from Chennai, the
capital city of the Tamil Nadu state. When villagers had learnt that the SIPCOT was planning
51 OECD, “Terms Of Reference For An Update Of The Oecd Guidelines For Multinational
Enterprises,” 5–6.
52 OECD, “OECD Guidelines for Multinational Enterprises,” 2011, sec. Procedural Guidance.
Institutional arrangements.
53 Totally, the SIPCOT manages 53 square kilometers of industrial parks on which 1650 have invested.
There are 19 industrial parks spread around Chennai and around the largest cities of the Tamil Nadu
State. See SIPCOT, SIPCOT – Driving Force for Industrial Growth.
12
to set-up an industrial park on their land, a delegation had met local authorities, the population
had conducted a hunger strike and was finally assured that the administration was cancelling
the project54
.
However, the SIPCOT was not ceasing from taking potential investors to Thervoy. In
August 2008, when Michelin and the State government reached an informal agreement and
communicated in the media about the future investment, the mobilization of the Thervoy
villagers started anew, the population launching public demonstrations, facing police
intimidation and initiating judicial actions to challenge the deeds of the SIPCOT55
. From 2008
to 2011, a social movement originating from Thervoy adopted various judicial and political
contentious strategies to alter the SIPCOT’s and Michelin’s project. In the early months of
2012, this contentious strategy was proving ineffectual, the new Tamil Nadu government
signing new contracts with Indian and foreign investors.
From 2009 onwards, a French development NGO having contacts with the Indian CSOs
involved in the Thervoy social movement had tried to negotiate with the Michelin HQ in
France to solve the conflict. In 2012, these negotiations had similarly reached a stalemate, the
company refusing to cease its construction works to conduct an independent human rights and
environmental impact assessment.
On July 9 2012, a CSO consortium clubbing together French and Indian CSOs was thus
filing a specific instance at the French OECD NCP. The shift towards the NCP constituted a
way to overcome the existing stalemate the French and Indian CSOs were confronted with:
indeed, if the NCP considered after its initial assessment that the issue did “merit further
consideration”56
, two options would be left opened57
:
1. If the consortium and Michelin “reached an agreement”, the NCP would publish
a report describing the agreement;
54 National Commission for Scheduled Castes, Representation Dated 19/04/2007 Received from
Village Populace, N° 29, Thervoy Kandigai, Madhapakkam via Gummidipoondi Tk, Thiruvallur Dt
601202 - Proposed Land Acquisition by SIPCOT for Industrial Park at Lands Bearing Survey N°s
33/2 & 33/2 at Thervoy Kandigai – Request to Restrain SIPCOT from Doing so.
55 High Court of Judicature, Petition Sangam vs State of TN (May 12 2009); High Court of Judicature,
Petition Sangam vs State of TN (May 27 2009); High Court of Judicature, Petition Sangam vs State of
TN (September 16 2009); High Court of Judicature, Petition Sangam vs State of TN (August 25 2009).
56 OECD, “OECD Guidelines for Multinational Enterprises,” 2011, sec. Procedural Guidance.
Implementation of specific instances. 1.
57 See above the description of the Procedural Guidance on the publication of a final statement.
13
2. If an agreement “could not be reached”, the NCP would publish a final
statement with “recommendations on the implementation of the Guidelines […]
[and with] the reasons that agreement could not be reached”58
These options seemed promising for the CSO consortium: the CSOs considered that if
they were unable to reach an agreement with Michelin, the NCP’s final statement would
acknowledge Michelin’s violations of the Guidelines and legitimize their demands to stop the
works and conduct an independent impact asessment. The NCP was thus expected to act as a
legitimate third-party in solving this conflict:
“When I advocated in favor of filing a specific instance at the NCP, I was very
optimistic about the NCP […] I was absolutely convinced that, based on the 2011
edition of the Guidelines, the NCP would say “yes indeed, there is a problem”. Which
type of problem, I did not know, I did not know up to which point we could push, but I
thought the NCP’s stand would help the Indian communities. That was our goal
initially. I thought we could contribute through our advocacy and help the Indian
community and the Indian CSOs reach an agreement with Michelin” (Interview with a
CCFD employee involved in the NCP process, May 2014)
The CSOs thus hoped that the reputational risks and the media pressure created by the
filing of the specific instance would lead Michelin towards a “mutually hurting stalemate”,
i.e. of a stalemate that the company would find too costly to leave unresolved:
“The concept is based on the notion that when the parties find themselves locked
in a conflict from which they cannot escalate to victory and this deadlock is painful to
both of them (although not necessarily in equal degree or for the same reasons), they
seek an alternative policy or Way Out. The catastrophe provides a deadline or a lesson
indicating that pain can be sharply increased if something is not done about it now”59
On September 20 2012, the French NCP contacted the CSO consortium and Michelin to
inform them that they considered the specific instance did “merit further consideration”. As
per its mandate, the NCP was thus expected to “offer its good offices”
58 CCFD et al., “Saisine Du Point de Contact National Français Dans Le Cadre de La Mise En Oeuvre
Des Principes Directeurs de l’OCDE - Circonstance Specifique.”
59 Zartman, “The Timing of Peace Initiatives: Hurting Stalemates and Ripe Moments,” 8.
14
“to help the parties involved to resolve the issues […] [by] seeking advice from
relevant authorities […] and relevant experts and [by] facilitating access to consensual
and non-adversarial means, such as conciliation or mediation”60
b) Promoting the NCPs as mediation institutions
Since the 2011 revision of the OECD Guidelines did not undertake a meta-political
reform of the NCP’s functioning, governments adhering to the OECD Guidelines benefited
from a great leeway in setting-up their respective NCP:
“An NCP can consist of senior representatives from one or more Ministries, may
be a senior government official or a government office headed by a senior official, be
an interagency group, or one that contains independent experts. Representatives of the
business community, worker organisations and other non-governmental organisations
may also be included”61
Thus, the 42 NCPs vary widely in terms of institutional set-up: some of them are
constituted exclusively by independent experts (Norwegian NCP) or by civil servants (British
NCP, US American NCP); some work under a tripartite model clubbing together civil
servants, union members and business associations (French NCP); some are constituted under
a quadripartite model with civil servants, unions, business associations and CSOs (Finnish
NCP)62
.
This diversity was also found in implementing the “good office” process: while some
NCPs contracted the conflict resolution to professional and independent mediators (British,
Luxembourgian, Norwegian NCPs), others carried out the “good offices” process by
themselves (French NCP). Moreover, while the call for “consensual and non-adversarial”
conflict resolution was clearly set out in the Guidelines, a major debate existed among the
60 OECD, “OECD Guidelines for Multinational Enterprises,” 2011, sec. Procedural Guidance.
Implementation in specific instances. 2.
61 Ibid., sec. Procedural Guidelines. Institutional Arrangements. 2.
62 In mode details, in 2012, there were 20 monopartite NCPs (constituted of one ministry only) ; 8
interagency NCPs (representatives of one or more government ministries); 1 bipartite NCP
(constituted of civil servants and business associations OR union members); 3 tripartite NCPs (France,
Belgium, Sweden); 2 quadripartite NCPs (Finland and Latvia) and 3 independent expert bodies
(Denmark, the Netherlands, Norway). See OECD, “Annual Report on the OECD Guidelines for
Multinational Enterprises 2012: Mediation and Consensus Building,” 16.
15
NCPs between proponents of a “collaborative dispute resolution” and proponents of a
legalistic “examination” perspective63
.
In light of this great institutional diversity and conceptual disagreements, the 2012
OECD Guidelines’ annual report noted that “improving mediation skills has been identified as
a high priority for NCPs”64
. To harmonize the “good offices” procedures and avoid major
inconsistencies across NCPs, the Norwegian, the Dutch and the British NCP contracted a
study to the Consensus Building Institute (CBI) to issue an “NCP mediation manual”. The
study was subsequently endorsed by the OECD in its 2012 annual report on “Mediation and
Consensus Building” 65
.
At the report’s inception, the CBI noted that fact-finding and mediation were two
conceptually different instruments: “while formal findings processes provide a means of
assigning responsibility, conciliation and mediation can help parties develop mutually
satisfactory solutions to problems”66
.
Mediation consists in a consensual and non-adversarial process whereby conflicting
parties reach out to an impartial third-party who helps them “reach their own agreements,
rebuild relationships, and, if possible, generate lasting solutions to their disputes”67
. It can be
broadly defined as follows:
“Mediation is generally defined as the intervention in a negotiation or a conflict
of an acceptable third party who has limited or no authoritative decision-making
power, who assists the involved parties to voluntarily reach a mutually acceptable
settlement of the issues in dispute. In addition to addressing substantive issues,
mediation may also establish or strengthen relationships of trust and respect between
the parties or terminate relationships in a manner that minimizes emotional costs and
psychological harm”68
63 Davarnejad, “In the Shadow of Soft Law: The Handling of Corporate Social Responsibility Disputes
under the OECD Guidelines for Multinational Enterprises,” 364; 372–384.
64 OECD, “Annual Report on the OECD Guidelines for Multinational Enterprises 2012: Mediation and
Consensus Building,” 43.
65 OECD, “Annual Report on the OECD Guidelines for Multinational Enterprises 2012: Mediation and
Consensus Building.”
66 CBI, “NCP Mediation Manual,” 20.
67 As per the Association for Conflict Resolution, cited in Ibid., 44.
68 Moore, The Mediation Process: Practical Strategies for Resolving Conflict.
16
In the context of a mutually hurting stalemate, and in the absence of a hard law on
extraterritorial corporate regulation, the CBI noted that mediation appeared as “the preferred
form of informal problem solving”69
. This is in accordance with theories about the legitimacy
of transnational decision-making processes. Dryzek notes, for example, that
"[In a transnational society], the essence of democratic legitimacy is to be found
not in voting or representation of persons of interests, but rather in deliberation. In this
light, an outcome is legitimate to the extent its production has involved authentic
deliberation on the part of the people subject to it […] Deliberation and
communication, in contrast, can cope with fluid boundaries, and the production of
outcomes across boundaries”70
The CBI and the OECD Guidelines thus asked NCPs to provide parties with an
opportunity for an “authentic deliberation” through mediation before turning towards fact-
finding and responsibility assignment71
.
c) Handling the Michelin specific instance: the French NCP’s
judicial procedure
As per the Guidelines and CBI recommendations, the NCP was thus tasked with
initiating pre-mediation meetings to “help the parties identify and clarify the issues […]
describe joint problem-solving possibilities […] [and] select a mutually acceptable
intermediary”72
. The latter issue was crucial for the French NCP.
Indeed, as a tripartite body, the French NCP clubbed together civil servants from five
different Ministries73
, unions members from six different unions74
and a representative from
69 CBI, “NCP Mediation Manual,” 22.
70 Dryzek, “Transnational Democracy,” 44.
71 In this regard, the CBI noted: “Not every case will result in successful mediation. For one thing,
some specific instances are not deemed appropriate for mediation in the first place. In other cases, a
mediation may be unsuccessful because parties who are initially willing to enter mediation withdraw
in the middle of the process [...] This type of unsuccessful mediation can be, though is not always,
transferred to the NCP findings process, and the Final Statement issued contains the NCP’s findings
and recommendations on the implementation of the Guidelines as appropriate”. See CBI, “NCP
Mediation Manual,” 56.
72 Ibid., 30;36.
73 The five civil servants represent 1) the Economy and Finance Ministry; 2) Social Affairs and Health
Ministry; 3) Labour, Employment and Social Dialogue Ministry; 4) Foreign Affairs and International
Development Ministry; 5) Ecology, Sustainable Development and Energy Ministry.
17
one major business association75
. The President and the Secretary-General of the NCP were
both civil servants of the Ministry of Economics and Finance, and more precisely of the
Treasury. As such, the President of the NCP was a civil servant who had worked across the
globe in the diplomatic Economic Services responsible with supporting French corporations
export to and/or invest in these countries.
Almost every NCP member thus represented a specific interest and raised questions of
conflict of interest: the CGT union was part of the CSO consortium which had filed the
specific instance; the CFDT union was the prime union among Michelin’s management; the
Ministry of Economics and Finance tried through their Economic Services to support French
MNCs abroad76
; the Foreign Affairs and International Development Ministry participated
regularly to India-France summits to promote economic cooperation and cross-investments77
,
the MEDEF was the primary lobby of large French businesses and MNCs.
In this context, it seemed appropriate for the NCP to conduct pre-mediation meetings to
select an independent mediator capable of engaging with the parties to help them decide if
they wished to enter into mediation or if they wanted to rely exclusively on the NCP’s fact-
finding mission and final statement publication. The CBI indeed noted:
“To be convincing about the merits of informal problem-solving […] any NCP
member whose involvement raises even the appearance of a conflict of interest,
[should] not be involved in the handling of a particular specific instance. The issue is
not whether NCPs themselves may have the capacity and skill to perform these tasks.
The question is whether the parties accept the NCP (or a particular individual in the
NCP function) as a mediator”78
74 The six union members represent : 1) the CFDT ; 2) the CGT ; 3) FO ; 4) CFE-CGD ; 5) CFTC ; 6)
UNSA.
75 The business association is the MEDEF.
76 On December 6 2012, the French Ministry of Economy and Finance Christine Lagarde was in Delhi
commenting upon Michelin’s investment in Thervoy. See The Hindu, “Indo-French Investments to
Get a Boost: Anand Sharma.”
77 Manmohan Singh had thus visited France as India’s Prime Minister in September 2008 and July
2009. In 2010, the French President Sarkozy did visit India
78 CBI, “NCP Mediation Manual,” 31.
18
Ignoring these recommendations, the French NCP immediately initiated the stakeholder
assessment, hearing both parties separately in November 201279
. During these first auditions,
a member of the NCP describes well the adversarial dynamic and judicial process that was
building up:
“For the plaintiffs, we were the substitute to a tribunal, a substitute to a “naming
and shaming”. At the Michelin audition, there was an armada of grey suits, with
Sustainable Development Director, Legal Affairs Director, Michelin India’s CEO, it
was really serious […] Michelin came with a big file. They tried to deconstruct point by
point the plaintiffs’ specific instance. It was a judicial strategy, a quarrel of experts and
NGOs” (Interview with an NCP member, September 2014)
Since the NCP was conducting the stakeholder assessment by itself, the French NCP
was not considering the reservation expressed by the CBI in having the NCP acting
simultaneously at the stakeholder assessment and, possibly, at the future fact-finding and final
statement publication. The CBI had indeed noted in May 2012:
“There are several steps and consideration involved in conducting a stakeholder
assessment […] Although it is not impossible, NCPs should be aware that their dual
role (reverting to a formal findings role if informal problem solving fails) may lead
stakeholders to be less forthcoming if they suspect that information they provide could
be used “against them” in a findings process”80
On the contrary, the French NCP was seeking both incriminating and exculpatory
evidence throughout the stakeholder assessment, considering the procedure as a fact-finding
mission. As such, the NCP was contacting experts, asking for counter-reports, asking the
parties to divulge additional documents, asking the ministries for their own opinions etc81
. A
member of the NCP described well the fact-finding mission underway and the NCP’s self-
perception as an investigating magistrate:
79 The French NCP noted in its final statement: “The NCP promptly held a joint hearing of the Indian
and French claimants. It then met with the company and the manager of the plant under construction in
Tamil Nadu”. See French NCP, “Michelin Group in India. Specific Instance Withdrawn by the
Claimants on September 23, 2013. Statement of the French National Contact Point for the OECD
Guidelines for Multinational Enterprises.,” 2.
80 CBI, “NCP Mediation Manual,” 37.
81 In this regard, the NCP was already asking the French Economic Services based in Pondicherry
(Tamil Nadu) to conduct fact-finding missions on behalf of the NCP, despite its evident conflict of
interest in the process.
19
“The importance of fact-finding versus mediation varies on a case-by-case basis.
On the Michelin specific instance, there was clearly a need to first state upon the
Guidelines’ potential violations. We had to solve this, otherwise we could not proceed
with a mediation. Michelin wanted to hear that they were vindicated, and the plaintiffs
wanted to hear that Michelin was culprit of everything. Only under this condition there
was a possibility to enter into a mediation” (Interview with an NCP member, May
2014)
The French NCP was thus adopting an adversarial logic, seeking to establish “facts”
and to “judge” upon the “allegations” in a judicial setting. Thus, between the filing of the
specific instance in July 2012 and April 2013, Michelin and the CSO consortium did not
meet.
In April 2013, eight months after the filing of the specific instance, the NCP finally
organized a meeting with both parties to invite them to enter into a mediation to decide upon
the criteria for conducting a human rights and an environmental impact assessment. The
CSOs confirmed their interest for mediation, but stressed that the discussions should also
address the question of stopping the construction works and the criteria for people’s
participation82
. The debates were, therefore, still centered around the initial conflict on the
requirements of due diligence, public participation and access to remedies.
In this context, the NCP unilaterally decided that moving towards a mutually acceptable
agreement83 was impossible and that mediation was inappropriate. The NCP thus shifted
towards an arbitrage strategy by working on the publication of a final statement.
The decision to issue a final statement in the absence of a mediated outcome signaled
that the NCP was now shifting towards an arbitrage strategy, asserting its power in the public
arena:
“[The arbitrator] may also judge that the time is ripe to make an assertion of his
leadership and to show that he has the resources to enforce his will, if that proves
necessary. In other words, an arbitrated decision is not merely a means of keeping
82 CCFD, Sherpa, and La CGT, “Dysfonctionnements Du Point de Contact National de l’OCDE En
France,” 9.
83 French NCP, “Michelin Group in India. Specific Instance Withdrawn by the Claimants on
September 23, 2013. Statement of the French National Contact Point for the OECD Guidelines for
Multinational Enterprises.,” 2–3.
20
order: it is also a means of broadcasting messages that the leader’s political credit is
good”84
Yet, doing so without informing the CSO consortium beforehand and without openly
discussing about the difficulties of conducting mediation in this highly contentious context
was a politically risky decision. Indeed, the NCP was taking the risk of disappointing a party
and of inviting critique:
“The very act of announcing that the leader will arbitrate, rather than mediate,
mortgages resources which have to be held in readiness for enforcing the decision, should
that prove necessary […] Mediation is cheap, for one reason, because if it is successful both
parties consent and, in theory at least, are ready to co-operate from that time onwards.
Arbitration, insofar as both parties are invited to state their case, has some element of this,
but there is in the end a greater risk that one litigant will be disappointed, will resent being
forced to carry out the decision, will withdraw the political credit that he had given to the
leader and, if he can, leave the group”85
Moreover, by setting itself as an arbitrage body, despite the conflicts of interests of its
members, the NCP arbitrage was opened to criticism based on its “ethics” and
“impartiality”86
.
3) NCP impartiality and the need for meta-political reforms
a) Analyzing the Final Statement draft
On July 2 2013, the NCP agreed on a final statement’s draft. On July 31 2013, the draft
was sent to the parties for comments. Overall, the NCP Final Statement summarized its fact-
finding as follows:
“The NCP confirmed that the Michelin Group has generally respected the
Guidelines but noted cases of inadequate or incomplete compliance with some of the
recommendations in the Guidelines”87
84 Bailey, Stratagems and Spoils. A Social Anthropology of Politics, 64.
85 Ibid., 64;66.
86 Rogers, Ethics in International Arbitration.
87 The Statement then went on:
“Further to a long and detailed study of the file and consultations with the parties and experts:
21
As per the French NCP’s Rules of Procedures, the NCP decisions were expected to be
taken by consensus. If a consensus failed to be secured, the NCP President was expected to
take a stand on the matter.
Out of the 25 decisions taken by the French NCP with regard to the diverse allegations
raised in the specific instance, only 15 had secured a consensus. Eight had secured a
consensus “with the exception of one member of the trade union group”, namely the CGT,
who was also part of the CSO consortium. More controversial, two decisions relating to the
due diligence requirements for human rights, the environment and community participation
did not secure this consensus “with the exception of” the CGT. These two decisions related to
the core issues and central allegations of the specific instance, namely to the General
Policies88
and to the Human Rights chapter89
.
In response to these issues, the NCP President evoked in passing “inadequacies” with
due diligence requirements and evoked Michelin’s commitment to implement the NCP
recommendations to avoid stressing out Michelin’s former violations90.
An NCP member analyzed the decisions taken by the NCP President with mixed
feelings, stressing out their controversial nature:
“Without entering into the debates that took place, there was the issue raised by
the plaintiffs to stop the construction works. And Michelin was saying “oh no, we don’t
stop the construction works, we go on”. It raised a huge debate, because it is not
written specifically that the company shall stop its activities. But I agree with the
plaintiffs, because logically, due diligence has to be done beforehand. If it was not done
beforehand, logically, it has not much effect, it is not due diligence anymore. It is
- The NCP believes that the establishment and operation of the Michelin Group in Tamil Nadu have
not involved violations of the Guidelines with respect to the alleged violations of the Guidelines
suggested by the claimants.
- The NCP has noted three inadequacies and partial compliance with four OECD recommendations”.
See French NCP, “Michelin Group in India. Specific Instance Withdrawn by the Claimants on
September 23, 2013. Statement of the French National Contact Point for the OECD Guidelines for
Multinational Enterprises.,” 4.
88 General Policies, articles A10, A11 and A12.
89 Human Rights chapter, article 1.
90 French NCP, “Michelin Group in India. Specific Instance Withdrawn by the Claimants on
September 23, 2013. Statement of the French National Contact Point for the OECD Guidelines for
Multinational Enterprises.,” 8–9.
22
remediation, at the most. And this is completely different” (Interview with an NCP
member, April 2014)
The second controversial decision relating to human rights adopted a diplomatic stand
that violated the concept of corporate complicity defined since 2008 by John Ruggie91. The
NCP President indeed stated:
“The transformation of the environment and of the resources necessary to the
local community's lifestyle seems to have had a strong impact on the life of the
surrounding community. However, the NCP believes that the creation of the Thervoy
industrial park is a decision of the Tamil Nadu Government, taken in application of its
industrial development policy. It is not up to the NCP to express an opinion on such
decisions. Consequently, the NCP believes that it is not up to the Michelin Group either
to address the adverse impacts caused by this political decision”92
Beyond these two controversial decisions, the wording of the Final Statement was
extremely diplomatic and consensual, perverting to a great extent the expertise provided by its
own members93
.
Despite these flaws, the NCP concluded its Final Statement with a set of four
recommendations. It asked Michelin:
to pressurize the Tamil Nadu government and the SIPCOT to fulfill the Madras
High Court orders;
to conduct a human rights and environmental impact assessment;
to formally engage with the affected communities and to allow the population to
have access to a “more appropriate mechanism to follow up on human rights
matters”;
to renounce to implement the labor reforms set out in the MoU which went
against ILO standards94
.
91 Ibid., 6.
92 Ibid.
93 Mediapart, “Usine Michelin En Inde : Tout va Bien (ou Presque)”; MEDDE, “Propositions de
Synthèse Du Ministère de l’Environnement, Du Développement Durable et de l’Energie -
Circonstance Spécifique Michelin En Inde.”
94 French NCP, “Michelin Group in India. Specific Instance Withdrawn by the Claimants on
September 23, 2013. Statement of the French National Contact Point for the OECD Guidelines for
Multinational Enterprises.,” 11–12.
23
In this regard, the NCP was not vindicating Michelin altogether: it required the
company to fulfill a certain number of actions and stressed that it would “ensure follow-up in
this respect”95
.
Yet, in reading the final statement, CSOs felt that the NCP was protecting Michelin and
failing to act as a neutral, impartial body. It also felt that the decisions and the wording
illustrated the inability of the institution to produce a legitimate decision through a fair and
equitable deliberation process.
b) Controversy on the NCP’s impartiality and corporate capture
Greatly disappointed by the draft proposal, wondering which long-term impact such a
report would have on the interpretation of due diligence and corporate complicity and
concerned about the harm that the publication could produce to the interests of Thervoy in
their struggle for compensation and remedies96
, the CSOs sent a letter to the NCP to withdraw
their specific instance on September 24 2013. Simultaneously, they communicated in the
media and through their websites to explain why they were “withdrawing the political credit
that they had granted to the NCP. Several documents were thus issued to document, among
others, the diverse flaws analyzed above97
.
Three days after the withdrawal of the specific instance and in the midst of the media
campaign calling for an NCP reform98
, while the CSOs thought that they had cancelled the
NCP procedure, the NCP decided to publish the contested Final Statement.
The NCP was thereby placing itself in a politically very difficult position: it faced a
situation where the strongest competitor in the conflict had broken the rules; it had failed to
reach an internal consensus on a final statement; and the weakest party in the conflict had
denounced the procedure as partial, unfair and flawed by vested interests. Yet, it was
95 Ibid., 12.
96 A CCFD member involved in the NCP process explains: “We thought it was not interesting to have
a publication by the NCP which was bad and which vindicated completely the responsibility of
Michelin and of the SIPCOT. We feared that the publication would impact the judicial processes
underway in India and would influence the Tamil Nadu government by letting them think they had
been vindicated by a supposedly international and impartial institution” (Interview with a CCFD
member involved in the NCP process, May 2014)
97 Mediapart, “Usine Michelin En Inde : Tout va Bien (ou Presque)”; CCFD, “Usine Michelin En
Inde : Les Plaignants Dessaisissent Le Point de Contact National de l’OCDE”; CCFD, Sherpa, and La
CGT, “Dysfonctionnements Du Point de Contact National de l’OCDE En France.”
98 FCRSE, “Propositions D’amélioration Du Point de Contact National Français.”
24
publishing a report acknowledging inconsistencies, but failing to qualify these inconsistencies
as a breach of the Guidelines. The NCP was thus acting as a “moral consultant and public
relations man to the stronger leader”:
“Now suppose the reverse situation: the stronger competitor is also the man who
has broken the rules. If the umpire commands no resources, then he is better out of the
situation, for if his decision is ignored with impunity then both he and the rules are
tarnished. If he bends the rules and decides in favour of the stronger, then he becomes a
partisan and ceases to be an umpire: which is bad for the role of umpire but may not be
bad for the political actor concerned. In effect he earns himself a job as a kind of moral
consultant and public relations man to the stronger leader”99
And indeed, following this publication, conservative and business media quickly
reported on the issue to depict the NCP process as a legal procedure that had vindicated
Michelin. The process was thus presented within a Manichean win-lost judicial paradigm that
did neither invoke the NCP recommendations nor the NCP’s future follow-up100
. Thus, one of
France’s leading economy newspapers stated simply:
“After a year of investigations [sic], the [NCP] institution decided in favour of
Michelin, leading the plaintiffs to withdraw their complaint. Antonio Manganella, in
charge of the case for the CCFD, rises up by stressing that this case reveals the
“malfunction” of the NCP. According to him, the institution has highlighted a wide
range of breaches perpetrated by Michelin with regard to the local communities but
was incapable of condemning the company. Today, the situation around the plant seems
to have calmed down”101
(emphasis added)
More striking, though, was the use by the Michelin management of the NCP Final
Statement to reframe the CSOs allegations as unfair and incomprehensible. Referring to the
controversial decisions taken by the NCP President in the absence of a consensus, Michelin
pictured effectively the NCP as a “moral consultant and public relations man” that fully
vindicated the company against the allegations brought by “a small group of residents from
99 Bailey, Stratagems and Spoils. A Social Anthropology of Politics, 140.
100 Le Figaro, “Michelin : Nouvelle Usine En Inde.”
101 This article does not go into more details about the final statement, the lack of consensus, the
leaked expertise reports, the NCP follow-up. The journalist uses a judicial rhetoric and only refers to
the broad conclusion that states that “the Michelin Group has not violated OECD Guidelines”. See Les
Echos, “Michelin Sur La Route Des Indes.”
25
Thervoy, one of the 31 villages concerned by the creation of an industrial park where
Michelin has set up operations”102
.
While Moore defines mediation as a process that can “establish or strengthen
relationships of trust and respect between the parties or terminate relationships in a manner
that minimizes emotional costs and psychological harm”103
, the NCP had reinforced
adversarial logics, allowed for an “insider/outsider dichotomy”104
to be institutionalized in the
NCP hearings, and adopted decisions on corporate complicity and due diligence requirements
that were highly controversial and tainted by doubts on the conflicts of interests that the NCP
President carried with him.
A year after the end of the procedure, testimonies from some of the main protagonists
in the process typified this clash and illustrated vividly the failure of the French NCP to
resolve conflicts and demonstrate its legitimacy:
“Whether right or wrong, we withdrew our specific instance to avoid that you
[the NCP] publish a final statement that would go against the interests of the local
communities. I consider that when the NCP published this statement, the NCP wanted
to defend the interests and the reputation of the company, because the NGOs and the
union involved had communicated widely on the specific instance […] Today, the
NGOs who are part of the [Citizen’s Forum on CSR] and who filed the specific
instance wonder what is the use of the NCP […] The Michelin specific instance most
likely broke something in the relationship. Our approach towards the NCP was rather
optimistic, and one shall stress that since July 2012, no specific instance has been
filed by French NGOs. This is something you will have to deal with105
” (Speech of a
CCFD member involved in the specific instance during the Annual Meeting of the
French NCP, May 2014)
102 Michelin, “Registration Document 2013,” 171.
103 Moore, The Mediation Process: Practical Strategies for Resolving Conflict.
104 Horowitz, “Interpreting Industry’s Impacts: Micropolitical Ecologies of Divergent Community
Responses.”
105 At the time of writing, in July 2015, three years after the filing of the Michelin specific instance, no
other specific instance has been filed by members of the FCRSE at the French NCP. The specific
instances filed from July 2012 onwards were all filed by unions and/or by workers on labour issues,
testifying that French CSOS involved on business and human rights issues in non-OECD countries do
not rely on the French NCP anymore.
26
“For the human rights impact assessment, we told to the CCFD “we agree to do
it”, but they said “you have to stop the construction works”. But this is none of their
business. [These CCFD employees], I don’t know if they instrumentalized Thervoy or if
they are instrumentalized, but what is their added value for all the bustle they
performed? […] They do not want to work with us, they do not want to enter into a
dialogue, they say we should stop the works. But this is unrelated. They are dishonest
people. They live in a dream, they imagine a different world and waste money without
achieving any result. What is their added value in society?” (Interview with a Michelin
high-ranking executive involved in the Thervoy project, July 2014)
The Michelin specific instance had been the first controversy to which the French NCP
had been confronted with. Moreover, it revealed that Fraser was right in contending that
“struggles for justice in a globalizing world cannot succeed unless they go hand in hand with
struggles for meta-political democracy”. And indeed:
On the one hand, the Michelin case revealed that the former issue of
“misframing” had been effectively reformed by the UN and the OECD. The
French NCP had indeed recognized that the issue did “merit further
consideration”. Moreover, the four final recommendations made to Michelin
testified, mildly, that French MNCs were now asked to perform human rights
and environmental impact assessments when investing in industrial parks owned
and managed by public bodies to avoid charges of complicity. Moreover, by
asking the corporation to formally engage with the surrounding communities, it
granted credit to the concept of an “all-affected principle” where local
communities, beyond formal legal entitlements, constituted a legitimate public
that companies had to consult because of their “co-imbrication in a common set
of structures and/or institutions that affect their lives”106
On the other hand, the lack of impartiality of the French NCP, its lack of respect
for the OECD Guidelines and CBI recommendations, its diplomatic and
consensual wording, and its decision to publish a final statement that, overall,
did vindicate the company in its preamble, conclusion, and in controversial
decisions on key elements relating to the interpretation of due diligence and
106 Fraser, “Transnationalizing the Public Sphere: On the Legitimacy and Efficacy of Public Opinion
in a Post-Westphalian World,” 22.
27
corporate complicity signaled a corporate capture and a governmental business-
friendly policy that failed to produce legitimate outcomes through “authentic
deliberation”.
Following this NCP failure, several documents published by public bodies advocated in
favor of a meta-political reform of the NCP: on October 24 2013, the French National
Consultative Commission on Human Rights (CNCHD) published a report asking 1) for the
inclusion of independent experts in the NCP decision-making; 2) for ensuring the
independence of the NCP from the Treasury and from the Economy and Finance Ministry;
and 3) to avoid consensual and diplomatic wording by privileging an “explicit” publication107
.
Similarly, the French Foreign Trade Minister Nicole Bricq announced on March 31 2014 a
series of proposals to guarantee the future impartiality of the NCP and its role as a “mediator
for responsible trade”108
.
The reform was welcomed by CSOs involved in corporate accountability issues as an
“important step forward”109
. However, two days later, following a change of Prime Minister,
Nicole Bricq was dismissed, and the reform abandoned110
.
Yet, this failed reform signaled a growing stakeholder consensus, in France, about the
need to engage into a meta-political reform of this institution to enable the “possibility of new
institutions of post-Westphalian democratic justice”111
.
In the following months, the mobilization for a transnational democratic justice through
judicial and non-judicial mechanisms persisted: after an intense lobbying, the French National
Assembly adopted on March 30 2015 a law defining due diligence as a corporate duty that
CSOs could invoke to sue French MNCs for their extraterritorial misconduct112
. To date, the
French Senate still needs to vote on this matter, and the government would then need to
107 CNCDH, “Entreprises et Droits de L’homme : Avis Sur Les Enjeux de L’application Par La France
Des Principes Directeurs Des Nations Unies,” para. 71–84.
108 Bricq and Ploumen, “Appel à Un Partenariat Mondial Pour Un Commerce Responsable.”
109 CCFD, Sherpa, and Collectif Ethique sur l’etiquette, “Réforme Du PCN : Des Mesures Bienvenues
Mais à Quand Une Responsabilité En Droit Des Multinationales ?”
110 In 2014, a new NCP President was appointed. The President was, again, a civil servant working for
the Treasury.
111 Fraser, “Reframing Justice in a Globalizing World,” 16.
112 French National Assembly, “Entreprises : Devoir de Vigilance Des Entreprises Donneuses
D’ordre”; Libération, “Le «devoir de Vigilance» Des Multinationales Voté à l’Assemblée.”
28
publish the law. Therefore, a long road still lies ahead113
. Yet, we see in this recent vote at the
French National Assembly that the French civil society is growing increasingly efficacious114
on extraterritorial corporate accountability.
As such, one could expect extraterritorial corporate regulation to gain legitimacy by
enabling conflicting parties to effectively enter into “authentic deliberation”115
or to be faced
with an arbitrage body that is impartial and complies with the ethical principles of
international arbitrage116
. Opening the International Court of Justice (ICJ), national and
regional human rights Courts such as the European Human Rights Court of Justice to
extraterritorial corporate accountability would provide such opportunities117
. Mechanisms,
institutions and guidelines thus exist and opened up the promise of rendering extraterritorial
corporate regulation effective. States now have to agree on losing their hold upon these
institutions and on granting them the independence that they require to function as impartial,
independent and legitimate bodies in the corporate global governance.
Conclusion
In 2000, while civil regulation was rising, and confronted with harsh criticism after the
MIA demise, the OECD updated the Guidelines and transformed the NCPs into trans-
national grievance mechanisms: the Guidelines applied beyond OECD countries to all
OECD-based MNCs and CSOs from the whole world could access NCPs to call the MNCs’
HQ to account for the deeds of their subsidiaries and supply chain relationships.
Extraterritorial corporate regulation had thus emerged among the countries adhering to the
OECD Guidelines.
While initially promising, by 2008, the Guidelines had fallen behind most of the civil
regulation instruments and the NCPs were plagued by inconsistencies, partiality, opacity and
arbitrariness. In the Ruggie Framework, it was thus noted that the OECD Guidelines and the
113 The conservative party and center parties have voted against the law, evoking the need for a
European law on this matter instead of coercing French MNCs unilaterally.
114 Efficacity is defined by Fraser as a process whereby “public opinion is considered efficacious if and
only if it is mobilized as a political force to hold public power accountable, ensuring that the latter’s
exercise reflects the considered will of civil society”. See Fraser, “Transnationalizing the Public
Sphere: On the Legitimacy and Efficacy of Public Opinion in a Post-Westphalian World,” 22.
115 Dryzek, “Transnational Democracy,” 44.
116 Rogers, Ethics in International Arbitration.
117 Kuper, “Redistributing Responsibilities - The UN Global Compact with Corporations.”
29
NCPs needed to be reformed to fulfill the promises they had represented at the turn of the
millennium. In 2011, a new edition of the Guidelines was published.
These revised Guidelines had succeeded in responding to the “misframing” issues that
restricted the scope of the Guidelines to national human rights frameworks. Yet, the NCPs
had not been substantially revised and the “meta-political reforms” required to ensure their
transparency, impartiality, accountability and independence had been neglected. NCPs were
thus tasked with mediating CSO-business conflicts but remained under the sovereign power
of their governments.
Despite the limitations of this reform conducted halfway through, transnational social
movements tried to call corporations to account by filing specific instances at the NCPs. As
such, a consortium clubbing together French and Indian CSOs filed a specific instance at the
French NCP in July 2012 to alter Michelin’s strategy and operations in Thervoy.
Adopting an adversarial and judicial setting and acting as an investigating magistrate,
the French NCP was not complying with the mediations recommendations issued by the
OECD and the Consensus Building Institute. Therefore, when the NCP published its Final
Statement, it got embedded into debates about its partiality and the various conflicting
interests to which it was subject. The CSOs thus withdrew their specific instance and
denounced the lack of effectiveness and legitimacy of this institution.
As such, the OECD Guidelines and the French NCP testified that, in the absence of a
“meta-political reform”, the risk of seeing the NCPs develop into partial, biased institutions
captured by diplomatic, economic and business interests is real. In France, proposals were
thus made on various occasions to undertake this reform, but remained, to date, unfruitful.
This article has thus revealed that while extraterritorial corporate regulation emerged
over the last decades and opened up new avenues towards corporate accountability,
democratizing these corporate accountability instruments and shielding them from conflicts of
interests is still necessary to render them legitimate and effective. Therefore, governments
need to agree on setting up national, regional and international mediation institutes and Courts
that abide by the principles of independent mediation and arbitrage.
30
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