US National Contact Point Issues Final Statement in Dispute against Multinational under the OECD Guidelines

The statement highlights a little-known mechanism under the OECD Guidelines, called the “specific instance” process, which is increasingly being used to challenge the business practices of multinational enterprises. It is therefore important that multinational enterprises operating in or from the United States, as well as interested parties, including labor unions and public interest groups, understand what the OECD Guidelines are, the nature of the “specific instance” process under the OECD Guidelines, and the consequences of that process for their business operations.

What are the OECD Guidelines?

The OECD Guidelines are voluntary principles and standards of responsible business conduct for multinational enterprises operating in the global market. The OECD Guidelines address a broad range of issues, including human rights, employment and industrial relations, environment, anti-corruption, consumer interests, science and technology, competition, and taxation. The OECD Guidelines are non-binding recommendations developed and adhered to by governments “to strengthen the basis of mutual confidence between enterprises and the societies in which they operate, to help improve the foreign investment climate and to enhance the contribution to sustainable development made by multinational enterprises.”

What is the “Specific Instance” Process?

The OECD Guidelines require that each adhering government establish a National Contact Point (NCP). The NCP has responsibility, among other things, for facilitating the resolution of issues that arise relating to implementation of the OECD Guidelines in specific instances. To this end, the NCP offers a forum in which interested parties may submit a “specific instance” request to address the business practices of multinational enterprises that are operating in or from the adhering government’s territory. As part of the “specific instance” process, the NCP makes an initial assessment of whether the issues raised merit further examination and, if so, offers its good offices to help the parties resolve the issues. At the end of the process, after consultation with the parties, the NCP issues a final statement on the results of the process.

What are the Consequences of the Specific Instance Process?

The NCP’s final statement is made publicly available and may have an impact on a multinational enterprise’s reputation and good standing. The recent decision of the US NCP in the specific instance involving Nissan shines a light on the ongoing dispute between the company and two international unions — the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), and the IndustriALL Global Union. The NCP’s Final Statement describes the positions of the parties on the substance of the allegations and their willingness to engage in alternative dispute resolution to settle the issues, and also makes recommendations.

According to the Final Statement, the two international labor unions alleged that Nissan’s conduct was inconsistent with the employment and industrial relations principles of the OECD Guidelines. In particular, the unions asserted that Nissan interfered with its employees’ trade union rights in the United States. Nissan denied the allegations, asserting in part that its practices were consistent with US law and international labor standards, that its corporate policy respects employee rights, and that it offers recourse to internal complaint mechanisms to address potential problems.

The Final Statement also states that, while the unions were willing to mediate the issues as part of the NCP’s offer of good offices, Nissan declined. In support of its position, Nissan asserted that the unions had initiated the “specific instance” process as part of a global campaign to publicly discredit Nissan for the sole purpose of “forcing Nissan to engage with the UAW [union] despite a lack of interest by Nissan’s employees.” The Final Statement expresses the NCP’s regrets that Nissan’s unwillingness to participate in mediation caused the “specific instance” process to be concluded.

Finally, the Final Statement directs a number of recommendations at Nissan encouraging the company to conduct a labor rights review process, consistent with the OECD Guidelines, to further evaluate the unions’ allegations, and to further consider alternative dispute resolution to resolve the issues.

Increasingly, the business practices of multinationals are coming under scrutiny through the “specific instance” processes of countries like the United States that have adhered to the OECD Guidelines. Arent Fox’s Corporate Social Responsibility team has hands-on experience with the US “specific instance” process.