Mediation As Problem-Solving

The Organizational for Economic Cooperation and Development (OECD) is trying to hold multinational corporations to appropriately high standards of corporate social responsibility. OECD member states include thirty of the major economies of the world. Ten years ago, they adopted guidelines regarding human rights, environmental protection, the rights of workers and child protection. Now they are in the throes of a ten year review. Every member country has appointed an NCP -- a National Contact Point -- to investigate claims that multinational corporations headquartered in their country, or their subsidiaries wherever they might be located, have violated the guidelines. The NCPs have investigated as best they can (often with very limited staff and budget). The assumption is that being called out by a national government will push multinationals to correct whatever guideline infractions they or their subsidiaries may have committed. Unfortunately, it has been hard for the NCPs to complete many of the needed investigations, particularly those filed by unions or NGOs in far off corners of the world. On some occasions, NCPs have not found sufficient evidence that the guidelines have been violated, but there are clearly circumstances that needed attention. At a recent meeting of all the NCPs and some of their constituent organizations (including their Trade Union Advisory Group, their Business and Industry Advisory Group, and OECDWatch) the NCPs were reminded that their goal should be to rectify inappropriate practices, not just determine whether the guidelines have been violated. More generally, the NCPs were urged to step back from their adjudicatory (or investigatory) efforts and build their problem-solving capabilities. In particular, they were urged to take their mediation mandate seriously.

I am very supportive of a "problem-solving" view of mediation. In too many situations, mediation is viewed as the last step in adjudication (i.e. when impasse has been reached), rather than as the first step in a collaborative effort to head off a problem or work out a creative solution. When a complaint is filed, an NCP must determine whether the charges should be taken seriously. It sometimes does this by asking its national embassy to "make inquiries" about the reputation of the company against whom a complaint has been filed. Then, it might follow up with a call to the company and ask for "its version" of the story. In short, the NCP tries to determine whether the company has, in fact, violated the OECD corporate social responsibility guidelines. They proceed this way because their primary goal is to determine the legitimacy of the claims that are brought. If, however, the NCP's goal were to correct inappropriate practices or implement appropriate remedies, it might, instead, select a qualified mediator -- located in the place where the infraction presumably occurred -- to meet informally with the relevant parties and see what might be worked out. The more informal the interaction, the less likely the parties are to overstate their claims or react defensively. If such problem-solving fails, the NCP can always revert to its investigatory role.

If you were a company accused of violating OECD guidelines, wouldn't you prefer to meet privately with a neutral party (who would keep what you said confidential) than to have to defend yourself in a public way as an official investigation gets underway? From the standpoint of preserving your corporate image, mediation is certainly preferable. If you were a trade union or an environmental NGO concerned about the actions of a company in your area, wouldn't you prefer to have a professional mediator bring everyone together to respond to your concerns than to wait a year or longer while an invisible agency (often in another part of the world) determines whether OECD guidelines have been violated and then writes a report?Adjudication in the absence of enforcement (and that is the situation in globally) won't guarantee change. Mediation leading to voluntary agreements will almost always guarantee compliance with whatever has been worked out.

Mediation as problem-solving requires three things: (1) a willingness on the part of all the relevant stakeholders to work together to resolve the problem or deal with the situation; (2) the availability of a trusted "neutral" with sufficient knowledge and skill to manage difficult conversations; and (3) an agreement on procedural ground rules (i.e., confidentiality, timetable, agenda, good faith effort, etc.). OECD and its NCPs are seriously considering emphasizing problem-solving mediation in the years ahead.

Resolving Complaints About Irresponsible Corporations

Corporations are supposed to pay attention to environmental, health, safety, labor, tax, consumer protection, information disclosure, and human rights laws wherever they set up shop. But, we've all seen and heard stories about multinationals guilty of violations in far-away places. They have been charged with allowing unsafe working conditions, blocking legitimate unionization efforts; ignoring environmental and health standards, bribing officials, and turning a blind eye to human rights violations. Developing countries are often ambivalent about holding violators to account: they can't afford to lose the investments and the jobs, and they often lack enforcement muscle even if they want to act.

The 30 member nations in the Organization for Economic Cooperation and Development (OECD) -- mostly developed countries -- have agreed to press multinationals based within their borders to conduct themselves responsibly and abide by applicable laws wherever their far-flung business interests may take them. There are lots of voluntary guidelines that seek to impose similar norms of socially-responsible corporate behavior, but the OECD Guidelines for Multinational Enterprises cover 85% of all foreign direct investment in the world. They also put countries in a quasi-enforcement role which most voluntary codes of ethics don't do.

Every OECD country is required to appoint a National Contact Point (NCP). All complaints about foreign-controlled corporations are channeled through the (home country) NCPs, regardless of where an alleged infraction take place. So, for example, if an environmental group in the Philippines thinks a Dutch-based multinational is operating inappropriately in the Philippines, it can file a complaint with the NCP in the Netherlands. While the NGO can also bring a lawsuit against the Dutch subsidiary in the Philippines, getting the Dutch NCP involved brings an entirely different level of international attention to the complaint. If after an investigation, the NCP in the Netherlands is unable to get the parties to settle their differences, it is empowered to issue a statement of findings -- either giving the company a "clean bill of health" or stipulating (1) that the guidelines have been breached and (2) how the company's conduct must change in the future. Neither the NCP or the OECD can shut a company down or fine them for breaking the rules. However, the NCP might be in a position in some countries to punish a non-complier by forbidding them to do business with their home country government. Any company named as a non-complier by an NCP will take a serious reputational hit (which could affect its market value) in national and international circles.

While the OECD guidelines have been in effect for a number of years, only a few hundred notifications have been sent to NCPs worldwide. Recently, though, the Dutch and Canadian NCPs (in anticipation of an upcoming OECD review of the guidelines) asked whether those of us who help to mediate CSR disputes would offer suggestions for improving the "system." On November 31st, the Dutch and Canadian NCPs met with a group of experienced international dispute resolvers at Harvard Law School to share ideas.

We heard about a number of cases. The Dutch NCP tries hard to resolve complaints behind the scenes without ever having to issue formal statements, but this is not always possible. When they try to mediate disputes, they encounter three sets of obstacles or concerns. The first relates to the roles and responsibility of NCPs. Exactly what authority do they have? The Dutch NCP is independent. While it is appointed by the Dutch government, it is made up of four individuals who represent labor unions, corporations, environmental groups and academia. All other NCPs are government officials. When they receive a notification, they must investigate. But, its hard to gather first-hand evidence in another part of the world with a small staff and a limited budget. Should they proceed if charges are pending in court or being pursued in parallel in another country? Different NCPs think differently about this. How should they decide which standards of performance to use in evaluating specific corporate actions? Does it matter whether the complainant is truly representative of the people or group it alleges to represent? What if the corporate subsidiary being charged is truly independent, and the multinational parent company has little or no control over its behavior?

A second set of obstacles or issues revolves around the rights of companies against whom complaints have been lodged as well as the rights of individuals or groups who file notices of complaint. Should companies that are charged with violations have a right to confront the evidence against them and to cross-examine their accusers? This would pit small NGOs against some of the worlds' richest companies. But, if unsubstantiated charges are publicized and used to blemish the reputation of a company, does an NCP have a responsibility to protect the company's good name? And, if someone files a complaint, is it the responsibility of the NCP to protect them from any kind of retaliation? The current OECD guidelines are not as explicit as they might be; on the other hand, maybe its better to let each NCP proceed in whatever way makes the most sense in its legal and cultural context. Does fairness require that NCPs all over the world keep a record of their findings and decisions, that repeat (global) offenders be held to higher standards or that similar charges be treated in the same way every where?

The third set of questions focuses on the roles and responsibilities of intermediaries trying to resolve CSR disputes. If the NCP promises confidentiality to get people to talk freely, can it then use what it learns if a voluntary settlement is not reached and it has to issue a statement of findings? What ethical code should govern NCP settlement efforts? Should NCPs try to mediate disputes themselves; or, as is the case in the United Kingdom, should they hire professional mediators who are not government employees? Is it really possible to create a wall between one part of an NCP that is trying to settle a dispute and another that has to pursue its investigatory obligations and issue a formal statement of findings?

As more groups around the world find out about the OECD system, and the number of notifications increases, it will be important to have effective dispute resolution procedures in place. You should contact the NCP in your country. Offer comments and suggestions (by January 25, 2010) that can be incorporated into the upcoming review of the OECD guidelines. You can view the guidelines at www.oecd.org. You also might want to read the report prepared by OECD Watch entitled Five Years On: A Review of the OECD Guidelines and National Contact Points, 2005 available at http://foci.org/en/resources/publications/economic-justice-resisting-neoliberalism/2000-2007/pagesfiveyears.pdf.view.