7. ACCESS TO REMEDIES: NON-JUDICIAL MECHANISMS
HING Vandanet, RADU Mares
Access to remedies is a human right, a legal principle and a mark of good governance. When it comes to business and human rights, there is a high number of non-judicial mechanisms at international level. This corresponds to the high number of soft law instruments (chapter 2) and multistakeholder partnerships in CSR (chapter 5) and the corresponding dearth of hard law (chapters 1, 3, 4) and weak judicial mechanisms (chapter 6) to hold business accountable. The problem with these mechanisms is that they are overwhelmingly of the mediation-type, meaning they cannot reach binding decisions. Companies are able to disregard them completely and not even to participate in proceedings not to mention abiding by the recommendations issued. Sanctions can be in the form of de-listing from partnerships (e.g. Global Compact) or bad publicity (OECD system). The most well-known are the OECD mediation system and the World Bank’s investigation and mediation system. The OECD system has overall had limited success with high variations between the 40 countries where such arrangements are in place; to some extent this track-record reflects the inherent limitations of a mediation mechanism. The World Bank system has delivered rigorous and critical assessment of how the World Bank Group has at times failed to follow its own policies, and the management at times ignores these findings of the Bank’s own inspection body. The UNGPs emphasized the importance of the OECD system and of National Human Rights Institutions, an innovation of the human rights system since the 1990s. Furthermore the UNGPs identify criteria that help evaluating the design of a non-judicial remedial mechanism. Multistakeholder initiatives developed within specific sectors also have mediation mechanisms; the influence that member companies (international brands and retailers) have meant issues could be resolved quickly. Companies have also realized that having their own complaint-handling mechanisms is helpful in diffusing local tensions and an indicator if their due diligence systems work as intended or not (chapters 10-11). There is currently little but growing academic literature on non-judicial mechanisms for business and human rights.
- Relation with judicial remedies (adjudication)
- Remedy as process (grievance mechanisms) and outcome (remediation)
- Functions of remediation (feedback to HRDD, early warning, reparations)
- Criteria to assess complaint mechanisms (KPI – key performance indicators)
- Assessing process and outcomes of complaint mechanisms
- Direct (individual) and indirect (systemic) effects of remedial mechanisms
- Issues (labour relations, non-discrimination, consumer protection, privacy, environmental protection, water, health)
- Mediation (e.g. OECD system)
- National human rights institutions
- Dispute resolution
Remediation and remedy refer to both the processes of providing remedy for an adverse human rights impact and the substantive outcomes that can counteract, or make good, the adverse impact. These outcomes may take a range of forms, such as apologies, restitution, rehabilitation, financial or non-financial compensation, and punitive sanctions (whether criminal or administrative, such as fines), as well as the prevention of harm through, for example, injunctions or guarantees of non-repetition.
Q: What if an enterprise agrees that it has caused or contributed to an impact but does not agree with those affected on the appropriate remedy?
A: If the enterprise and those affected cannot reach agreement on the appropriate remedy, it may prove necessary either to involve a neutral third party as a mediator or to turn to adjudication.
Any third-party mediator should be freely accepted by all involved. The mediator’s role is to assist the parties in the search for an agreed solution and no party to mediation can be forced to accept a particular outcome. If they do agree on an outcome, the parties are free to agree also that it will be binding on them.
Adjudication does not require the parties’ agreement to the outcome and is often binding. It could take place through the courts, a governmental or statutory body such as an ombudsman or a national human rights institution, or another mechanism that has jurisdiction or is agreed upon by the enterprise and those affected.
6. State-based non-judicial mechanisms may take many different forms. In most jurisdictions, a range of mechanisms with a role to play in the handling of complaints and/or resolving disputes arising from business-related human rights abuses may be identified. Such mechanisms can be found at all levels of government: local, regional and national. While some have mandates relating to all human rights, many are specialized bodies that focus on specific human rights-related themes, such as labour rights, non-discrimination, consumer rights, the right to privacy, environmental rights, or the rights to water or to health. Common examples of relevant State-based non-judicial mechanisms include labour inspectorates; employment tribunals; consumer protection bodies (often tailored to different business sectors); environmental tribunals; privacy and data protection bodies; State ombudsman services; public health and safety bodies; professional standards bodies; and national human rights institutions.
7. In addition to the above-mentioned categories, States may innovate further to respond to specific business-related human rights risks within their jurisdictions, and in some cases have done so by establishing specialized mechanisms aimed at the protection of groups identified as being at a heightened risk of vulnerability or marginalization, such as women, children, migrant workers, persons with disabilities, victims of modern slavery or bonded labour practices, or members of indigenous communities.
9. These mechanisms are also diverse in their functions and powers; for instance, some are regulatory and/or adjudicative-type mechanisms, while others provide conciliation and/or mediation services. Some have self-executing powers (for example, to compel participation, to require production of information or to enforce remedial outcomes), whereas others rely on the cooperation of the parties involved. Some have the authority to conduct investigations on their own initiative, while the procedures followed by others can only be activated by specific complaints or disputes.
10. State-based non-judicial mechanisms can be broken down into five broad categories:
- Complaint mechanisms (1)
- Inspectorates (2)
- Ombudsman services (3)
- Mediation or conciliation bodies (4)
- Arbitration and specialized tribunals (5)
(1) Typically operated by a State-appointed, State-supported and/or State-approved body with public regulatory and enforcement responsibilities.
(2) Typically operated by a State-appointed, State-supported and/or State-approved body with public regulatory and enforcement responsibilities and a range of enforcement functions and powers, including powers of investigation and to prescribe penalties and/or remedial action. Such a mechanism may take action on its own initiative or in response to a complaint, or both. It may also have education and awareness-raising functions.
(3) Typically with a specialized mandate associated with specific interest groups, regulatory themes or commercial sectors. Such mechanisms are charged with receiving, investigating and resolving disputes between individuals and business enterprises, and frequently draw on mediation and/or conciliation techniques to do so.
(4) Similar to ombudsman services, and aimed at finding a mutually acceptable outcome rather than the apportionment of blame. Mediation and conciliation techniques are often used in the resolution of consumer, employment or environment disputes and may be the precursor to more formal processes (for example, arbitration and conciliation).
(5) Oversee dispute resolution processes that are adversarial and/or inquisitorial in nature. Such mechanisms often have a high degree of procedural formality. Some have investigative powers that can be used on their own initiative. They may have the power to make legally binding determinations.
22. Where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes.
Even with the best policies and practices, a business enterprise may cause or contribute to an adverse human rights impact that it has not foreseen or been able to prevent.
Where a business enterprise identifies such a situation, whether through its human rights due diligence process or other means, its responsibility to respect human rights requires active engagement in remediation, by itself or in cooperation with other actors. (…)
Where adverse impacts have occurred that the business enterprise has not caused or contributed to, but which are directly linked to its operations, products or services by a business relationship, the responsibility to respect human rights does not require that the enterprise itself provide for remediation, though it may take a role in doing so. (…)
State-based non-judicial grievance mechanisms
27. States should provide effective and appropriate non-judicial grievance mechanisms, alongside judicial mechanisms, as part of a comprehensive State-based system for the remedy of business-related human rights abuse.
Non-State-based grievance mechanisms
28. States should consider ways to facilitate access to effective non-State-based grievance mechanisms dealing with business-related human rights harms.
One category of non-State-based grievance mechanisms encompasses those administered by a business enterprise alone or with stakeholders, by an industry association or a multistakeholder group. They are non-judicial, but may use adjudicative, dialogue-based or other culturally appropriate and rights-compatible processes. These mechanisms may offer particular benefits such as speed of access and remediation, reduced costs and/or transnational reach. (…)
29. To make it possible for grievances to be addressed early and remediated directly, business enterprises should establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted.
Operational-level grievance mechanisms perform two key functions regarding the responsibility of business enterprises to respect human rights.
- First, they support the identification of adverse human rights impacts as a part of an enterprise’s on-going human rights due diligence. They do so by providing a channel for those directly impacted by the enterprise’s operations to raise concerns when they believe they are being or will be adversely impacted. By analyzing trends and adapt their practices accordingly.
- Second, these mechanisms make it possible for grievances, once identified, to be addressed and for adverse impacts to be remediated early and directly by the business enterprise, thereby preventing harms from compounding and grievances from escalating. (…)
Operational-level grievance mechanisms can be important complements to wider stakeholder engagement and collective bargaining processes, but cannot substitute for either. They should not be used to undermine the role of legitimate trade unions in addressing labour-related disputes, nor to preclude access to judicial or other non-judicial grievance mechanisms.
Principle 31: Effectiveness criteria for non-judicial grievance mechanisms
In order to ensure their effectiveness, non-judicial grievance mechanisms, both State-based and non-State-based, should be:
(a) Legitimate: enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes;
(b) Accessible: being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particular barriers to access;
(c) Predictable: providing a clear and known procedure with an indicative timeframe for each stage, and clarity on the types of process and outcome available and means of monitoring implementation;
(d) Equitable: seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms;
(e) Transparent: keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake;
(f) Rights-compatible: ensuring that outcomes and remedies accord with internationally recognized human rights;
(g) A source of continuous learning: drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms;
Operational-level mechanisms should also be:
(h) Based on engagement and dialogue: consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances.
Implementation in Specific Instances [complaint procedure]
The National Contact Point [set up by each OECD member state] will contribute to the resolution of issues that arise relating to implementation of the Guidelines in specific instances in a manner that is impartial, predictable, equitable and compatible with the principles and standards of the Guidelines. [Upon receiving a compliant] the NCP will:
1. Make an initial assessment of whether the issues raised merit further examination and respond to the parties involved.
2. Where the issues raised merit further examination, offer good offices to help the parties involved to resolve the issues. For this purpose, the NCP will consult with these parties and where relevant:
- seek advice from relevant authorities, and/or representatives of the business community, worker organisations, other nongovernmental organisations, and relevant experts;
- consult the NCP in the other country or countries concerned;
- seek the guidance of the Committee if it has doubt about the interpretation of the Guidelines in particular circumstances;
- offer, and with the agreement of the parties involved, facilitate access to consensual and non-adversarial means, such as conciliation or mediation, to assist the parties in dealing with the issues.
3. At the conclusion of the procedures and after consultation with the parties involved, make the results of the procedures publicly available, taking into account the need to protect sensitive business and other stakeholder information, by issuing:
a) a statement when the NCP decides that the issues raised do not merit further consideration. The statement should at a minimum describe the issues raised and the reasons for the NCP’s decision;
b) a report when the parties have reached agreement on the issues raised. The report should at a minimum describe the issues raised, the procedures the NCP initiated in assisting the parties and when agreement was reached. Information on the content of the agreement will only be included insofar as the parties involved agree thereto;
c) a statement when no agreement is reached or when a party is unwilling to participate in the procedures. This statement should at a minimum describe the issues raised, the reasons why the NCP decided that the issues raised merit further examination and the procedures the NCP initiated in assisting the parties. The NCP will make recommendations on the implementation of the Guidelines as appropriate, which should be included in the statement. Where appropriate, the statement could also include the reasons that agreement could not be reached.
In 2017, NCPs globally concluded 18 OECD Guidelines cases filed by NGOs or communities. (…) [Out of the 18 cases], just five generated some kind of positive outcome. In four of those five cases, the positive outcome was a determination or policy change – a positive step, but one that does not signify a tangible change of circumstances for the complainants. (…)
Former employees v. Heineken (Netherlands NCP)
The complaint alleged that Bralima, a subsidiary of Heineken, caused between 1999 and 2003 a massive, unfair, and unlawful retrenchment of employees in the Democratic Republic of Congo, and miscalculated and failed to pay a final settlement for some of the workers. The complaint asserted that Heineken, which closely cooperated with Bralima at that time, must have known and should have used its influence to prevent further damage to the former employees. The Dutch NCP accepted the case and the parties held mediation meetings in Uganda and Paris that led to an agreement. The NCP issued a final statement which stated that the parties wished to keep their agreement confidential. However, news reports published on the same day confirmed that Heineken had voluntarily paid over €1 million to the former employees. Heineken also agreed to develop a new policy and due diligence protocol for operating in conflict-affected areas. This result is enormously significant because it is one of the only OECD Guidelines cases ever to have achieved compensation for complainants as an outcome. (…)
Finance and Trade Watch Austria et al v. Andritz AG (Austria NCP)
The complainants alleged that poor design of the Mekong Delta Xayaburi dam in Laos would impede fish migration and sediment flow, causing extinction of species and impoverishment and malnourishment of downstream farm communities dependent upon sediment-enriched soils. The Austrian NCP accepted the case, and three years of mediation ensued. Some of the complainants left the process due to concerns over confidentiality restrictions, and others left feeling the process was not achieving a positive outcome. However, two complainants persisted. The parties reached an agreement and issued a joint statement in which Andritz committed to strengthen its internal corporate social responsibility, disclosure, and due diligence policies. Such outcomes do not immediately, and indeed may never, benefit the complainants. Without doubt, alterations to the dam design to mitigate foreseen impacts, or compensation for economic and human rights harms, would have been a stronger outcome. Nevertheless, policy changes do have the potential to help companies avoid repeating mistakes and prevent additional harm in the future
Sherpa et al v. Socfin Group/Socapalm (France and Belgium NCPs)
The case was initially filed in 2010 with three NCPs – the French, Belgian, and Luxembourgian – concerning allegations against the oil company SOCAPALM and four of its holding companies. The complainant Sherpa argued that SOCAPALM had caused negative human rights and environmental impacts by diminishing local communities’ access to natural resources and public services, polluting the water and air, and subjecting workers to precarious work and living conditions and physical abuse from security agents. The French NCP accepted the case and took the important step of issuing a determination in 2013 finding that SOCAPALM had indeed breached the Guidelines, and that all four holding companies had too, due to their business relationship with SOCAPALM, in respect of their disclosure policies. After initial foot-dragging, the French holding company Bolloré agreed to mediation and helped develop a remediation action plan that Socapalm and its Belgian parent company Socfin also accepted. However, Socfin blocked implementation of that plan, causing the French NCP to turn to the Belgian and Luxembourgian NCPs, in 2015, for help. The Belgian NCP successfully coaxed Socfin to join several mediations in 2016, but was unable to convince it to implement the action plan. Socfin did publically commit to adopt several notable changes to its responsibility and transparency policies. But in 2017 the Belgian NCP closed the case on grounds that Socfin was unwilling to adhere to the NCP’s requests and implement the agreed action plan. Therefore, the attempted agreement on a remediation plan was never ultimately realized for the case.
Jamaa Resources Initiative v. US Company (USA NCP)
The complainants alleged that a US Company’s subsidiary in Kenya caused loss of livelihood for local farmers and severe environmental and health impacts when it used an economically sensitive wetland for rice cultivation, an irrigation and hydropower project, a tilapia fish aquaculture farm, and other projects. The US NCP accepted the case for mediation, but the US Company refused to participate citing ongoing legal proceedings, and the US NCP closed the case. As a result, no remedy was achieved for complainants.
The National Contact Point (NCP) intervention has brought about many positive impacts such as agreements between parties (in one specific instance including payment of compensation and in other specific instances other forms of direct remedy), changes in management practices, clarification of the OECD Guidelines for Multinational Enterprises (Guidelines) and a catalyst for the use of leverage by the company involved.
That said, the NCP function also faces some challenges. These are, amongst others, significant variations in the practice of NCPs in applying the guidance for specific instances, accessibility and overly stringent interpretation of criteria “material and substantiated” resulting in a high rate of non-acceptance of specific instances for further examination, overly restrictive definitions (such as the term “multinational enterprises”, “adverse impact”, “business relationship”), costs for parties to participate in mediation, good faith behaviour of the parties to the specific instance, parallel proceedings, delays, insufficient use of recommendations or determinations in final statements, and lack of clear or equitable procedures. Furthermore balancing confidentiality and transparency, cooperation between NCPs, and resource constraints are identified.
ILO Committee on Freedom of Association, Compilation of Decisions
(…) there are three bodies which are competent to hear complaints alleging infringements of trade union rights that are lodged with the ILO, viz. the Committee on Freedom of Association set up by the Governing Body, the Governing Body itself, and the Fact-Finding and Conciliation Commission on Freedom of Association. (…)
[The CFA] does not level charges at, or condemn, governments. (…) The mandate of the Committee consists in determining whether any given legislation or practice complies with the principles of freedom of association and collective bargaining laid down in the relevant Conventions.(…) The Committee always takes account of national circumstances, such as the history of labour relations and the social and economic context, but the freedom of association principles apply uniformly and consistently among countries.
In cases where the governments implicated are obviously unwilling to cooperate, the Committee may recommend, as an exceptional measure, that wider publicity be given to the allegations, to the recommendations of the Governing Body and to the negative attitude of the governments concerned.
1. The Committee on Freedom of Association (CFA) is a tripartite body set up in 1951 by the Governing Body (GB) of the International Labour Organization (ILO). The CFA examines alleged infringements of the principles of freedom of association and the effective recognition of the right to collective bargaining enshrined in the Constitution of the International Labour Organization (Preamble), in the Declaration of Philadelphia and as expressed by 1970 ILC Resolution. (…) By membership of the International Labour Organization, each member State is bound to respect a certain number of principles, including the principles of freedom of association which have become customary rules above the Conventions [thus even if the state has not ratified the freedom of association ILO Conventions 87 and 98].
3. The conclusions issued by the CFA in specific cases are intended to guide the governments and national authorities for discussion and the action to be taken to follow-up on its recommendations (…). The object of the CFA complaint procedure is not to blame or punish anyone, but rather to engage in a constructive tripartite dialogue to promote respect for trade union rights in law and practice. When doing so, the CFA is cognizant of different national realities and legal systems.
7. The conclusions and recommendations of the CFA [3,200 cases over 65 years by year 2016] have been developed on the basis of complaints made by organizations of workers or of employers.(…) The CFA’s decisions drawn from previous conclusions compiled herein can also apply, mutatis mutandis, to organizations of employers. (…)
39. States parties must provide appropriate means of redress to aggrieved individuals or groups and ensure corporate accountability. This should preferably take the form of ensuring access to independent and impartial judicial bodies: the Committee has underlined that “other means [of ensuring accountability] used could be rendered ineffective if they are not reinforced or complemented by judicial remedies”.
53. While they generally should not be seen as a substitute for judicial mechanisms (which often remain indispensable for effective protection against certain violations of Covenant rights), non-judicial remedies may contribute to providing effective remedy to victims whose Covenant rights have been violated by business actors and ensuring accountability for such violations. These alternative mechanisms should be adequately coordinated with available judicial mechanisms, both in relation to the sanction and to the compensation for victims.
54. States parties should make use of a wide range of administrative and quasi-judicial mechanisms, many of which already regulate and adjudicate aspects of business activity in many States parties, such as labour inspectorates and tribunals, consumer and environmental protection agencies and financial supervision authorities. States parties should explore options for extending the mandate of these bodies or creating new ones, with the capacity to receive and resolve complaints of alleged corporate abuse of certain Covenant rights, to investigate allegations, to impose sanctions and to provide for and enforce reparations for the victims. National human rights institutions should be encouraged to establish appropriate structures within their organizations in order to monitor States’ obligations with regard to business and human rights, and they could be empowered to receive claims from victims of corporate conduct.
1. A national institution shall be vested with competence to promote and protect human rights. (…)
A national institution may be authorized to hear and consider complaints and petitions concerning individual situations. Cases may be brought before it by individuals, their representatives, third parties, non-governmental organizations, associations of trade unions or any other representative organizations. In such circumstances, and without prejudice to the principles stated above concerning the other powers of the commissions, the functions entrusted to them may be based on the following principles:
(a) Seeking an amicable settlement through conciliation or, within the limits prescribed by the law, through binding decisions or, where necessary, on the basis of confidentiality;
(b) Informing the party who filed the petition of his rights, in particular the remedies available to him, and promoting his access to them;
(c) Hearing any complaints or petitions or transmitting them to any other competent authority within the limits prescribed by the law;
(d) Making recommendations to the competent authorities, especially by proposing amendments or reforms of the laws, regulations and administrative practices, especially if they have created the difficulties encountered by the persons filing the petitions in order to assert their rights.
Kenya National Commission on Human Rights
The Kenyan National Commission on Human Rights has used its formal powers of investigation to address alleged human rights abuses relating to a range of business sectors. For example, in 2005, the Commission undertook a public inquiry into alleged human rights abuses by salt mining companies in collusion with public authorities, in the Magarini, Malindi district. The Inquiry resulted in the publication of a special report, ‘Economic interests versus social justice: Public inquiry into salt manufacturing in Magarini, Malindi District’ (2006), presented to the President and National Assembly. In 2012 the Commission held follow-up meetings with local communities to identify whether the recommendations made in the Report had been implemented. Subsequently, in 2013 the Commission exercised its powers to litigate in the public interest, and filed a case against the companies in question in relation to violations of land rights and the right to a clean environment.
Human Rights Commission of Sierra Leone
The Human Rights Commission of Sierra Leone has undertaken a number of initiatives on business and human rights, including a formal investigation into mining-related human rights abuses in the Bumbuna, Tonkolili District in 2012. The investigation by the Commission consisted of a document review, oral and written statements from affected individuals and expert opinions, as well as focus group meetings and a public hearing. (…)
Prompted by the incidents leading to this investigation, as well as other reports to the Commission of business-related human rights abuses, the Commission decided to develop a Monitoring Tool, that can be used in future investigations and dialogues with companies, as well as other actors, to assess company conduct against human rights standards. Development of the Monitoring Tool has involved dialogue with government, business and civil society representatives. The finalised Monitoring Tool will include specific questions and indicators outlining the human rights laws and standards relevant to a number of business-unit functions, including human resources, environment and communities, security, government relations and procurement.
The Office of the Compliance Advisor Ombudsman (CAO) was created in 1999 by the World Bank Group as the independent recourse and accountability mechanism of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) for environmental and social concerns. CAO is an independent office that reports directly to the President of the World Bank Group (the President).
CAO has three complementary roles:
The Complaints Process
Approaches to dispute resolution
CAO and the relevant stakeholders may use a number of different approaches in attempting to find resolution of the issues. Each approach will be chosen in consultation with the parties, and may include:
Facilitation and information sharing: In many cases, the complaint will raise questions of fact regarding current or anticipated impacts of a project. The CAO Dispute Resolution team may be able to help complainants obtain information or clarifications that result in resolution from the perspective of complainants.
Joint fact-finding: Joint fact-finding is an approach that encourages the parties to jointly agree on the issues to be examined; the methods, resources, and people that will be used to conduct the examination; and the way that information generated from the process will be used by the parties.
Dialogue and negotiation: Where communication among parties has been limited or disrupted, the CAO Dispute Resolution team may encourage the parties to engage directly in dialogue and negotiation to address and resolve the issues raised in the complaint. The CAO Dispute Resolution team may offer training and/or expertise to assist the parties in this process.
Mediation and conciliation: Mediation involves the intervention by a neutral third party in a dispute or negotiation with the purpose of assisting the parties in voluntarily reaching their own mutually satisfying agreement. In conciliation, the third-party neutral may make recommendations to the participants in the conciliation process.
The focus of CAO Compliance is on IFC and MIGA, not their client. (…) CAO assesses how IFC/MIGA assured itself/themselves of the performance of its business activity or advice, as well as whether the outcomes of the business activity or advice are consistent with the intent of the relevant policy provisions. In many cases, however, in assessing the performance of the project and IFC’s/MIGA’s implementation of measures to meet the relevant requirements, it will be necessary for CAO to review the actions of the client and verify outcomes in the field.
When conducting compliance appraisals and investigations, CAO will consider how IFC/MIGA assured itself/themselves of compliance with national law, along with other compliance investigation criteria. CAO Compliance role follows a two-step approach. The first step is a compliance appraisal. The second is a compliance investigation. (…)
The Investigation Report will be prepared by CAO Compliance team with the use of information gathered by expert panel members, as needed. The report will typically include:
- A brief description of the project.
- A description of the underlying issues that gave rise to the investigation.
- The objectives and scope of the investigation.
- The criteria against which the investigation was conducted.
- The findings of the investigation with respect to noncompliance and any adverse environmental and/or social outcomes, including the extent to which these are verifiable.
This compliance investigation relates to IFC investments in Delta Wilmar in Ukraine (“DW” or “the client”). IFC approved two loans to Delta Wilmar: one of $17.5 million in 2006 to establish a greenfield palm oil refinery in Ukraine; and a second of $45 million to expand the Ukraine refinery in 2008. DW is a joint venture, co-owned by the Wilmar Group, a large agribusiness conglomerate specializing in the production and trade of palm oil and operating in Asia, Eastern Europe, and Africa.
The Wilmar-03 complaint raises concerns about the environmental and social (“E&S”) impacts of DW’s supply chains in Indonesia with a focus on land issues. The complaint raises specific concerns regarding PT Asiatic Persada (“PT AP”), a company that operated an oil palm plantation in Jambi (Sumatra), and was, until 2013, owned by Wilmar International (“Wilmar” or “the parent company”).
CAO Complaints Regarding Wilmar
|CAO Case||Wilmar-01/West Kalimantan||Wilmar-02/Sumatra||Wilmar-03/Jambi|
|Date of Complaint||7/18/2007||12/19/2008||11/9/2011|
|Concerns||– Illegal use of fire to clear lands.|
– Clearance of primary forests.
– Clearance of areas of high conservation value.
– Take over of indigenous peoples’ customary lands without due process.
– Failure to carry out free, prior and informed consultations with indigenous peoples leading to broad community support.
– Failure to negotiate with communities or abide by negotiated agreements.
– Failure to establish agreed areas of smallholdings.
– Social conflicts triggering repressive actions by companies and security forces.
– Failure to carry out or wait for approval of legally required environmental impact assessments.
– Clearance of tropical peat and forests without legally required permits.
|Similar to Wilmar-1, with additional mention of land conflict between communities and a number of Wilmar subsidiaries as the result of non-compliance with PS5.||– Social conflicts triggering repressive actions by companies and security forces.|
– Imposing a settlement on the communities that is viewed both contrary to IFC Performance Standards and with the use of coercive measures.
– Serious human rights abuses and forced evictions of local community members by PT AP staff and PT AP contracted Mobile Police Brigade (BRIMOB).
– Clearance and planting of estates without paying compensation for lands and other properties so taken.
– Land acquisition and dispute resolution problems in Wilmar’s other subsidiaries.
Conclusions are presented as answers to the questions formulated in the Terms of Reference for this compliance investigation.
Question 1: Did IFC adequately assure itself that the environmental and social CODs [conditions of disbursement] of its loans to DW were in fact met prior to disbursement in January 2010?
IFC did not assure itself that the E&S [environmental and social] CODs were met prior to the 2010 disbursement of its loans to the client. IFC did not ensure that a supply chain risk analysis as required by PS1 [IFC Performance Standard 1] was conducted prior to disbursement, and instead sought to address supply chain issues with the parent company on a voluntary basis. This decision was inconsistent with IFC’s E&S policies. (…)
Question 3: Did IFC adequately assure itself that DW conducted a supply chain analysis in accordance with the requirements of Performance Standard 1?
IFC did not require DW to conduct a supply chain analysis, despite the advances made at a strategic level on supply chain issues, and despite specific information about Wilmar’s Indonesia supply chain risks which emerged from: (a) the Consultant Review of the parent company’s Indonesia plantations; and (b) the Wilmar-03 complaint to CAO. (…)
Question 6: Did IFC respond adequately to the issues raised by the Wilmar-03 complaint in the context of DW’s E&S obligations to IFC?
The IFC project team responsible for day-to-day supervision of the DW loans were not familiar with the issues raised by the Wilmar-03 complaint and did not respond to assist their client to address the issues raised.
5.4. Underlying Causes of Non-Compliance
CAO’s Terms of Reference for this compliance investigation provide that its scope should include “developing an understanding of the immediate and underlying causes for any noncompliance identified by the CAO.” As outlined above, CAO finds that IFC did not correctly apply the supply chain requirements of PS1 to its supervision of the DW loans. (…) Five interrelated causes for this non-compliance are identified:
1. Persistent belief that the agreements governing the investments did not require DW to take any action to address supply chain issues: IFC did not engage the client to undertake a supply chain analysis as required by PS1. (…) The project team’s interpretation of PS1 suggested that a lack of control and influence over a supply chain would excuse the client from the requirement to analyze or mitigate its supply chain risks. (…)
2. Preference for addressing the Indonesia palm oil supply chain issues with the parent company on a voluntary basis and outside of the E&S requirements of the DW loans: (…). IFC staff with direct knowledge of the project explained to CAO that there were concerns that a more compliance based approach could be counter-productive. Rather, management sought to maintain a good relationship with the parent company, as a potentially important partner for IFC’s future engagement in the sector. (…)
4. Insufficient understanding of palm oil supply chain issues in general, and of Wilmar’s supply chain in particular: (…) CAO also notes that IFC continued to rely significantly on the parent company’s membership of RSPO [Round Table on Sustainable Palm Oil], and its participation in the RSPO certification process as a supply chain risk management measure. CAO notes IFC’s view that Wilmar International’s engagement with the RSPO provided considerable comfort that it was working to improve the E&S performance of its Indonesia plantations. (…) Although undertaking RSPO certification of Wilmar plantations could have contributed to risk reduction, it should not have been seen as a substitute for the supply chain analysis and risk management measures required by PS1.
FLA’s Third Party Complaint procedure was established as a means for any person, group or organization to report serious violations of workers’ rights in facilities used by any company that has committed to FLA labor standards. (…) This process is an added precaution and is not intended to replace or undermine existing internal grievance channels in factories, or legal remedies available at the country level. Rather, the complaint procedure is intended as a tool of last resort when other channels have failed to protect workers’ rights. (…)
When a complaint is lodged, FLA first verifies whether the factory in question produces for any participating companies or university licensees, and whether the complaint contains specific and verifiable allegations of noncompliance with FLA’s Workplace Code of Conduct. FLA also considers whether local dispute resolution mechanisms were used to resolve the issues and what results they achieved. If the complaint meets the above criteria, FLA accepts the complaint for review and contacts participating companies sourcing from the factory in question. The FLA-affiliated company has 45 days to conduct an assessment and develop a remediation plan. If warranted, the FLA may intervene by engaging a third party to investigate the allegations and recommend corrective action to the affiliated company. The company is then required to develop a plan to address any noncompliance issues.
Example of a complaints procedure illustrated in Anglo American’s tool
In his reflection on the research around the UNGPs, Ruggie explicitly states that the “most underdeveloped component of remedial systems in the business and human rights domain is grievance mechanisms at company’s operational level.” While the statement referred to the practical and factor phenomenon of NSBGM, it holds also true with respect to a relative lack of treatment in the theoretical, conceptual, analytical and empirical academic literature. (…)
We undertook a comprehensive and systematic review of the available literature, drawing on university libraries, academic journal archives, the internet and the grey literature of the ‘owners’ of grievance mechanisms, such as NGOs, trade unions, and companies. (…)
Although there is a substantial amount of case-based literature available on the different types of NSBGM, there is a dearth of information on processes, outcomes and the performance of grievance mechanisms. Especially companies appear to shield off requests for information by referring to the necessity to treat this information as confidential or to non-disclosure agreements. Some companies publish selective information online, while other organisations, for example the international development finance institutions, make their case registers available online. (…)
After an initial literature review, it was decided to divide the description and analysis of NSBGM according to the following four categories:
1) company and corporate level grievance mechanisms (CCGMs) (…);
2) grievance mechanisms of international development finance institutions (IDFIs);
3) grievance mechanisms related to international framework agreements (IFAs) concluded by multinational companies and trade unions;
4) multi-actor initiatives.
Table 1 below shows the criteria we developed as we analysed the NSBGM based on desk research (…):
1. General information, including the history of and the background to establishing the grievance mechanism;
2. Design features of the grievance mechanism, including information on the initiative to establish and ownership of the grievance mechanism and accessibility by design;
3. Coverage, with respect to the characteristics of the duty bearer and the rights holders as well as the covered human rights issues, temporal issues and whether cross-border cases could be covered potentially;
4. Processes, including filing a grievance, retrieving and processing information, and the respective decision-making processes;
5. Outcomes, which include the type and character of remedy, the transformative, learning related character for management, enforceability and transparency;
6. Evaluation, which includes the relevance and impact of the grievance mechanisms for victims; the usefulness as determined by internal performance indicators to the owners of the mechanism; and an evaluation of the usefulness of the mechanism as part of providing access to remedy more generally;
7. Linkages to other grievance mechanisms
Issues where clarification appears to be needed: (…)
KPIs needed:Related to this question of framing NSBGM, key performance indicators (KPIs) are still needed to assess whether NSBGM are fulfilling their intended role as described under the UNGPs, which incorporates also the perspective of those seeking access to remedy. Currently there are no authoritative or widely used KPIs that help determine the effectiveness of an offered NSBGM. Building understanding and then consensus around what these KPIs should be would facilitate 1) companies in understanding what is working and what is not; 2) public institutions and civil actors in monitoring and valuing the performance of companies. For example, could the number of cases as measured over a period of years be an indicator, in part, as to the GM’s effectiveness?
The UNGPs envision that NSBGMs, while providing companies with the feedback loop they need and early warning system, can also help fill the ‘access to remedy’ gaps that we find among state-based mechanisms. NSBGMs can be flexible with how they formulate remedy – more akin to what international human rights standards would recognise as remedy, and they can work across borders seamlessly. (…)
[The effects of non-judicial mechanisms (NJM)] are grouped into two broad categories: (i) ‘individual remedy’ (predominantly through problem-solving and mediated settlement), and (ii) ‘other’ (incorporating normative and systemic effects).]
Individual remedy is understood as redress for specific individuals in a particular case in response to a human rights violation. (…)
Beyond the results of formal mediations or settlements, the relationships formed between stakeholders, evidence gained, public exposure of practices, and experience gained in a non-judicial redress mechanism process can contribute to other kinds of positive effects. This includes empowering communities or worker’s groups; influencing other decision-makers to precipitate a change in policy; drawing public attention to a problem; and shifting power dynamics between companies and communities or workers. Engaging with non-judicial redress mechanisms can also have negative effects. This includes reinforcing existing power dynamics and further disenfranchising workers or communities; entrenching existing business positions and practices (e.g., allowing a project to go ahead) which can lead to perverse responses (e.g. withdrawal of orders rather than helping a supplier fix a problem); and taking significant resources and time away from other organising strategies. (…)
The long term effects of engaging with non-judicial redress mechanisms can be subtle. It includes empowering communities and shifting the power dynamics (even slightly) which can contribute to different outcomes regardless of more short term access to redress. However, these kinds of effects are, by their nature, uncertain and rely heavily on arduous work by communities and their allies. These kinds of shifts in power were more visible in our case studies in the garments industry where workers are progressively empowered over time, especially through the long-term foundation of union and worker organising. In tea plantations and stone quarries, we did not find the same effects on the longer-term power of the workers from engaging with a NJM. (…)
The solution of conflict outside the judicial system, which is known as an Alternative Dispute Resolution (ADR) is not new in Cambodia. Cambodian people have long been solving their disputes outside the Court. In principle, and according to current practice, dispute resolution outside the Court in Cambodia is conducted based on the following methods:
Negotiation is the most common form of ADR in Cambodia that parties use to resolve disputes directly without assistance of a third party through compromise. Negotiation is allowed under Cambodian Law, for example, Article 20 of the (…) Cambodian Investment Law when investment disputes happen.
Conciliation or mediation is part of Cambodian Culture and Legal system. Conciliation is traditionally conducted by the third party, namely a monk, an Achar (knowledgeable expert) or a (prominent) person the parties trust, and a King and formally it is conducted by a public officer appointed by the Government and the Judge. In practice, a settlement of disputes through the conciliation is conducted in daily life and people never think of criminal or civil cases. If it is not severe enough harm their interests they prefer compromise instead of bringing cases to the authorities or the Courts. According to the Cambodian legal framework, conciliation is permitted and found in various laws (…)
There are two arbitration which are labor arbitration and commercial arbitration:
Labor Arbitration is regulated under Chapter 12 of Labor Law and Prakas of the Ministry in charge of Labor – see Cambodian Labor Law, Art 309 (1997), and Prakas 099 on Arbitration Council dated 21 April 2004. Cambodian labor arbitration body is known as the Arbitration Council is a tripartite system composed of arbitrators from three lists, the employer’s list, the employee’s list and the government’s list or neutral list. The Arbitration Council has handled 2684 cases from 2003-2017 (July) according to the statistics recorded by the Secretariat of Arbitration Council. The Labor Arbitration is compulsory but the arbitral award in non-binding. The binding award can happen only when parties agree to choose binding or when there is no opposition of the arbitral award after eight days (12). The enforcement of binding arbitral award is made via the Compulsory Execution under the Code of Civil Procedures (…)
No end in sight: no dispute resolution mechanisms: There are five conflict resolution mechanisms in existence in Cambodia: the Commune Councils, the Administrative Committees, the Cadastral Commission, the National Authority for Land Conflict Resolution, and the judiciary. The Administrative Committees operate when there is a dispute arising during the land registration process but has no power to make binding decisions. If the Administrative Committee does not manage to settle the dispute, the conflict goes to the Cadastral Commission, which can only hear disputes related to unregistered land. In those cases, if a land dispute arises, it has to go first through the District Cadastral Commission, then the Provincial Cadastral Commission and finally the National Cadastral Commission as a last resort. In case of dissatisfaction with the decision of the National Cadastral Commission, an appeal must be lodged within the court system. Disputes related to registered land must be heard by the judiciary directly. Finally, in 2006, the National Authority on Land Dispute Resolution was established by a Royal Decree. Unfortunately, its role, mandate, and functioning remain unclear and very little information about proceedings are available to the public.
Any dispute relating to a promoted investment established in the Kingdom by a Cambodian or a foreign national concerning its rights and obligations set forth in the Law shall be settled amicably as far as possible through consultation between the parties in dispute. Should the parties failed to reach an amicable settlement within two months from the date of the first written request to enter such consultations, the dispute shall be brought by either party for:
- conciliation before the Council which shall provide its opinion or
- refer the matter to the court of the Kingdom of Cambodia, or
- refer to any international rules to settle the disputes as agreed by both parties.
Chapter XII: Settlement of Labor Disputes
Section 1: Individual disputes
Article 300: An individual dispute is one that arises between the employer and one or more workers or apprentices individually, and relates to the interpretation or enforcement of the terms of a labor contract or apprenticeship contract, or the provisions of a collective agreement as well as regulations or laws in effect. Prior to any judicial action, an individual dispute can be referred for a preliminary conciliation, at the initiative of one of the parties, to the Labor Inspector of his province or municipality.
Article 301: On receipt of the complaint, the Labor Inspector shall inquire of both parties to elicit the subject of the dispute and then shall attempt to conciliate the parties on the basis of relevant laws, regulations, or collective agreements, or the individual labor contract. To this effect, the Labor Inspector shall set a hearing that is to take place within three weeks at the latest upon receipt of the complaint. The parties can be assisted or represented at the hearing. The results of the conciliation shall be contained in an official report written by the Labor Inspector, stating whether there was agreement or non-conciliation. The report shall be signed by the Labor Inspector and by the parties, who receive a certified copy. An agreement made before the Labor Inspector is enforceable by law. In case of non-conciliation, the interested party can file a complaint in a court of competent jurisdiction within two months, otherwise the litigation will be lapsed.
Section 2: Collective disputes (Art 302 – 317)
Article 302: A collective labor dispute is any dispute that arises between one or more employers and a certain number of their staff over working conditions, the exercise of the recognized rights of professional organizations, the recognition of professional organizations within the enterprise, and issues regarding relations between employers and workers, and this dispute could jeopardize the effective operation of the enterprise or social peacefulness.
Clause 24 The arbitration panel has the power to obtain information on the economic situation of the enterprises and the social situation of the employees involved in the dispute. It may conduct any inquiry with respect to enterprises or professional organisations and require the parties to present any document or economic, accounting, statistical, financial or administrative information that might be useful for the accomplishment of its mission. The arbitration panel may also solicit the assistance of experts.
Chapter 5: Arbitral Award
Clause 40 Each of the parties may lodge an opposition to the arbitral award by informing the Minister of Social Affairs, Labour, Vocational Training, and Youth Rehabilitation by registered letter or any other reliable means, within eight calendar days of notification. If the last day of this period is not a working day for civil government officials then the period shall be extended to include the next working day. If either party to a dispute lodges such an opposition within the specified timeframe, the award shall be unenforceable. In this case, if the dispute is about a right relating to the application of a rule of law (for example, a provision of the Labour Law, of a collective bargaining agreement, or an arbitral award that takes the place of the collective bargaining agreement) the disputant party may bring the case before the court of competent jurisdiction for final resolution.
Clause 47 (Enforcement of the Award) A party can only avoid the recognition and enforcement of a final and binding award if that party provides to the court proof that the award of the Arbitration Council was unjust on the grounds that:
A. that party was not properly involved in the selection of arbitrators or was not given proper notice of the arbitral proceedings or was unfairly prevented from making a full presentation of his case;
B. there was non-compliance with procedures indicated in the Labour Law or this Prakas in connection with the making of the award; or
C. the Arbitration Council rendered an award which went beyond the power given to it by the Labour Law and this Prakas.
Section 6: Solution of Local Conflicts
Article 89: The council shall take appropriate actions to solve local conflicts within its jurisdiction.
Article 90: Local conflict is a private conflict between citizens in the jurisdiction of the same or different councils.
Article 91: Solution to conflict shall be based on written complaints of both or any parties to the conflict submitted to the council, where the party or parties permanently reside(s) in the jurisdiction of that council.
Article 92: The council shall mediate to solve local conflict to reach a solution that is acceptable by all parties to the conflict.
In event that any party to the conflict does not accept the proposed solution, the council shall advise the party on legal procedures for continuing to solve the conflict.
Chapter 4: District/Khan Level Conciliation
Article 7. The Ministry of Land Management and Urban Planning and Construction (MLMUPC) shall determine the complaint form. The District/Khan Cadastral Commission (DKCC) shall register and open a file for all disputes submitted to it. The DKCC shall explain the procedure to the parties in conflict and inquire if they accept to resolve through conciliation following these procedures or not.
Article 8. The DKCC shall investigate the dispute. The investigation includes specifying the location of the disputed parcel and parties concerned with the object of the dispute and collecting available documents, witness statements and information related to the disputed parcel. The DKCC shall make and certify copies of any document to be kept in the file and return the originals to the parties in conflict. The DKCC shall make and enter this investigation documentation in the dispute file.
Article 9 The DKCC shall conciliate the disputes other than those specified in article 10. The conciliation shall be conducted according to the guidelines on conciliation provided by the Ministry of Land Management, Urban Planning and Construction.
Article 10. After the investigation, the DKCC shall submit the dispute file to the PMCC if the Chief determines, by the Chief’s own initiative or at the request of both parties, that it is impossible that an equitable resolution can be reached at the District/Khan level for the following reasons: (1) One person claims several parcels that are also claimed by small possessors; (2) One of the parties is a high-ranking authority; (3) There is a conflict of interest with the Chief of the DKCC; (4) The dispute involves State public land;
Article 11. If a settlement is reached through the unanimous agreement among the parties in dispute the DKCC shall report to the PMCC and shall submit a copy to the District/Khan Office of Land Management, Urban Planning, Construction and Land Administration so that it begins the process of conducting the registration procedure of the parcel over which the dispute had been resolved already. If a settlement cannot be reached the DKCC shall submit the dispute together with a written report of the conciliation to the Provincial/Municipal Cadastral Commission (PMCC).
In this case, the workers of Can Sport Shoes Co., Ltd. (the “Claimants”) brought four claims against the respondent Can Sport Shoes Co., Ltd. (the “Employer”) demanding improvement of four working conditions.
Of the four claims in this case, one was settled by mutual agreement during the arbitration process and the Arbitration Council considered only the three remaining claims. This case note will examine one claim regarding the Employer’s management prerogative where workers were required to wear covered sandals with a strap to ensure their safety and prevent work-related accidents at the workplace.
The Employer’s enterprise practice was to require the workers to wear covered sandals with a strap to ensure their safety and prevent them from such work related-accidents such as slipping, objects falling on legs and toes, electrical shocks, etc. The workers were required to purchase the sandals at their own expense. The Claimants argued that they could not afford the sandals, reasoning that they were not only expensive, but also easily damaged as the straps broke off. Further, as it was the Employer’s requirement, the Employer should be responsible for purchasing and providing the sandals for the workers, and that if the Employer refused to do so, the workers demanded the Employer allow them to wear sandals without a strap.
The Arbitration Council’s consideration and subsequent view that the supervision and direction of the workers to wear covered sandals with a strap at the workplace was not made in accordance with the law, and was unreasonable because the Employer failed to prove it was a necessary measure to improve worker safety and protect them from work-related accidents.
The Arbitration Council was of the opinion that to protect the safety of the workers at the workplace, the Employer should have taken other proper measures in line with the provisions of the Labour Law rather than require the workers to wear covered sandals with a strap.
Pursuant to Article 34, Point D, of Prakas No. 099 on the Arbitration Council, dated 21 April 2004, the Arbitration Panel has the power and authority to order immediate cessation of any illegal conduct.
This case highlighted that the Employer has the right and power to supervise and direct the enterprise or establishment; however, this supervision and direction must be made in accordance with the law and be reasonable. In this respect, the Labour Law clearly states that it is the Employer’s burden and obligation to introduce measures to ensure worker safety and protect them from work-related accidents. The supervision and direction of the measures shall respond to actual situations and safety needs with regard to working conditions, as well as production lines of the Employer. The Employer’s failure to provide sufficient evidence to add weight to its demand meant the Arbitration Council could not make a decision as demanded by the Employer. Moreover, the burden of the cost of the sandals shouldn’t fall on the workers in order for the Employer to meet its responsibility to take measures to protect the safety and prevent work-related accidents, which are the obligation of the Employer.
The RGC continues to solve land disputes more effectively and fairly based on existing laws and regulations by using both mechanisms inside and outside the A/HRC/WG.6/32/KHM/1 19 court system. For the long-term goal, the royal government will speed up the allocation of social land concession to people who are landless by using land stock withheld from inactive companies, and state’s land remained from locations under directive no. 01 and land remained from mine clearance. The RGC continues to postpone economic land concession program or permanent rental of land in order to strengthen the management of such lands in accordance with laws, regulations and contracts.
The United Nations country team stressed that Cambodia had experienced significant deforestation and forest degradation in recent years, the main causes of which included conversion to commercial agriculture, mining, economic and social land concessions, legal and illegal settlements and farmland, large-scale infrastructure and hydropower development, road construction, legal and illegal logging, fuelwood harvesting and forest fires. The Special Rapporteur on the situation of human rights in Cambodia highlighted issues with resettlement and compensation packages offered to persons and communities displaced by land concessions, including the adequacy of compensation and the appropriateness of relocation sites. She stressed that more needed to be done to ensure that compensation packages were fully understood by potential recipients and that all land disputes were resolved through a process free from threats, violence and intimidation. The United Nations country team indicated that business enterprises continued to have an important role in promoting the economic growth of Cambodia, which could affect the enjoyment of human rights, such as land and housing rights, rights in the workplace and gender equality, among other rights. That highlighted the Government’s role to protect human rights.
Noted that thousands of families across four Cambodian provinces (Koh Kong, Kampong Speu, Oddar Meanchey, and Preah Vihear) still awaited proper redress for their loss of land, homes, livelihoods, and other harm suffered as a result of the massive expansion of the Cambodian sugar industry. It noted with concern that community representatives advocating for adequate redress and effective remedies for their communities have faced intimidation, imprisonment, and violence, and have been coerced into accepting inadequate compensation for their losses. It recommended that Cambodia ensure that communities receive adequate compensation for their loss of land and other damages, and when possible, be allowed to return to their original lands and rebuild their homes.
In February 2014, CAO received a complaint from local members of fifteen villages in the Cambodian Ratanakiri Province (“Complainants”) with the support and assistance of five Cambodian NGOs. The complaint raises concerns about Hoang Anh Gia Lai’s (HAGL) Cambodia operations’ impacts on seventeen local villages, including impacts on water sources and fish resources, loss of land, lack of compensation, lack of information disclosure and engagement with the people, threat to spiritual, cultural and indigenous practices amongst other issues. CAO determined that the complaint met its three eligibility criteria, as per its Operational Guidelines, and began an assessment of the complaint. During the assessment process, the Complainants and HAGL have agreed to engage in a voluntary dispute resolution process facilitated by CAO. This Assessment Report provides an overview of the assessment process, including a description of the project, the complaint, the assessment methodology, and next steps.
The purpose of this CAO assessment is to clarify the issues and concerns raised by the Complainants, to gather information on how other stakeholders see the situation, and to determine whether the Complainants and HAGL would like to pursue a voluntary dispute resolution process under the auspices of CAO Dispute Resolution or if the complaint should be transferred to CAO Compliance for appraisal of IFC’s performance (see Annex A for CAO’s complaint handling process). The CAO does not gather information to make a judgment on the merits of the complaint during its assessment.
During CAO’s assessment, community members highlighted the following areas of concern:
- Impacts on communities’ lands
- Loss of identify and culture
- Additional impacts on community livelihoods
- Conduct of Company workers
- Lack of Trust
- Company’s perspective
- Areas of agreement
In January of 2019, HAGL informed CAO of its decision to withdraw from the CAO-convened dispute resolution process, and to instead seek the support of the government for resolution of the communities’ outstanding concerns. In October 2019, HAGL indicated an interest in re-engaging in dialogue. In December 2019, CAO met separately with HAGL and the complainants, and both confirmed their commitment to resolving outstanding issues in dispute through a CAO-convened dispute resolution process. In February 2020, CAO released a progress report which provides an overview of the dispute resolution process and outlines the efforts made to date by the parties. The report is available in English and Khmer.
This Specific Instance outlines breaches of the OECD Guidelines for Multinational Enterprises by Bonsucro Ltd, a UK-registered non-profit company and multi-stakeholder initiative for the sugar industry. The complainants are Inclusive Development International (IDI), Equitable Cambodia (EC) and the Cambodian League for the Promotion and Defense of Human Rights (LICADHO) on behalf of approximately 3000 affected people from the five villages (…). This specific instance concerns the failure of Bonsucro to comply with the OECD Guidelines vis-à-vis its business relationship with one of its members, Thai company Mitr Phol Group, Asia’s largest sugar producer, which is responsible for forced evictions and other human rights violations in Oddar Meanchey. (…)
Bonsucro claims to be “a multi-stakeholder organization that exists to promote sustainable sugarcane production around the world,” with a mission “to ensure that responsible sugarcane production creates lasting value for the people, communities, businesses, economies and eco-systems in all cane-growing regions.”5 By design, Bonsucro confers a public stamp of approval on its members, who, by joining the initiative, commit to, inter alia, uphold the law and respect human rights in the production of sugarcane. Bonsucro conferred this public prestige on Mitr Phol by, not only awarding it membership, but by doubling down on its public endorsement of the company’s social and environmental performance by bestowing it with a Sustainability Award. The week the present complaint was filed, Bonsucro was set to showcase Mitr Phol as a “leading member” at its annual “Bonsucro Global Week.”6 All of this is deeply offensive to the Cambodian communities who have suffered so greatly as a result of Mitr Phol’s human rights violations. (…)
Request for United Kingdom NCP assistance
On behalf of the approximately 711 affected families from the villages of O’Bat Moan, Khtum, Taman, Bos and Trapaing Veng, IDI and EC request the UK NCP to offer its good offices to resolve this dispute with the Respondents consequent to their failure to comply with OECD Guidelines.
The complainants have undertaken efforts to engage with Bonuscro, including via its own grievance mechanism, since 2011. These efforts have not resulted in remediation for the complainants due to the ineffectiveness of Bonsucro’s grievance mechanism.
The communities we represent recognize that Bonsucro is a multi-stakeholder initiative and not directly responsible for the forced evictions and harms they suffered. However, as explained above, as the sugar industry’s leading multi-stakeholder initiative, Bonsucro bears a special responsibility in relation to this matter.
We therefore request that the UK NCP investigate this complaint and make specific recommendations to bring Bonsucro into compliance with the OECD Guidelines with respect to the Mitr Phol case in particular, and more generally with respect to its Code of Conduct, Production Standard, due diligence processes for accepting new members, and grievance mechanism.
The gap between the theory and practice of dispute resolution mechanisms. In practice, the use and implementation of the mechanisms described above remain limited due to a number of factors. First, the wide range of dispute resolution bodies and the lack of clarity over the jurisdiction of each mechanism have been cited as sources of confusion for potential complainants. Other deterring factors include poor access to dispute resolution mechanisms by impacted individuals and communities, time-consuming administrative and procedural burdens, and financial costs associated with submitting a complaint. In addition, complainants have reported that decisions issued by existing dispute resolution bodies are inconsistent and subject to political pressures. Further, one study commissioned by the World Bank Centre for Advance Study and GTZ found that Cadastral Commissions have a better record of resolving conflicts over small parcels of land, but struggle to resolve complex cases, particularly those involving multiple parties and parties with connections to the government or the military. The same report implies that while cases may fall under the jurisdiction of the Cadastral Commissions, weaker parties may not file cases due to lack of faith in the process and outcome. This study also reports that 27% of all parties surveyed reported that informal fees or gifts changed hands in relation to their case before the [Cadastral Commission]. Another World Bank study further found that people involved in land disputes avoid filing complaints because “formal institutions of justice such as the Cadastral Commissions or the courts were perceived as costly, time consuming and biased toward the rich.
Land grabbing in poor countries by transnational corporations has been increasing, causing great concern over human rights violations in countries where states often lack the ability or will to regulate the conduct of foreign owned companies. Civil society organizations have played a significant role in attempts to hold companies from Organization for Economic Co-operation and Development (OECD) countries accountable for human rights violations by their subsidiaries in poor countries. However, civil society pressure for accountability from companies whose home base is in non-OECD, middle income, countries is rare. This paper explores the human rights impacts of the Cambodian operations of Vietnam’s Hoang Anh Gia Lai (HAGL) company, and how affected communities and NGOs in Cambodia have tried to hold HAGL accountable for its wrongdoing through approaching the Office of the Compliance Advisor Ombudsman of the International Finance Corporation. This is an initial attempt to examine how civil society and affected communities have challenged a Vietnamese company with no prior record of engaging with players from outside its home territory about the human rights impacts of its investments in Cambodia. The Office of the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC) has a problem-solving function, which mediates conflicts between affected communities and clients of the IFC, and a compliance review function (Compliance Advisor Ombudsman, 2015). Where TNCs have business relationships with international finance institutions that have safeguard policies and grievance mechanisms to ensure compliance with existing policies, there is space for CSOs to demand corporate accountability. Where an MDB is identified as an investor or financier, IAMs such as the CAO provide an avenue for affected people to lodge complaints and have their claims adjudicated. However, the CAO’s problem-solving process through mediation is conducted on a voluntary basis. Although not all investors are responsive to CSO campaigns, complementary advocacy strategies such as lobbying with a range of investors is important for trying to keep HAGL engaging in the process in good faith. Because the CAO mediation process has not yet been concluded, it remains to be seen whether this is an effective mechanism for gaining redress.
The International Organisation for Standardisation and its International Guidance Standard on Organization Social Responsibility or better known as ISO 26000, is popular amongst the ASEAN countries. The ISO 26000 “helps clarify what social responsibility is, helps businesses and organizations translate principles into effective actions and shares best practices relating to social responsibility. The success of the ISO 26000 within the context of ASEAN could be explained by the fact that, being a private initiative, it is not comprised of a remedy framework, not even a non-judicial mechanism such as a mediation or arbitration mechanism. Those mechanisms, however, are part of the recent improvement of workers’ rights in Cambodia.
- What are the most effective international non-judicial mechanisms?
- What are the non-judicial mechanisms for conflict resolution in Cambodia?
- How legitimate are these non-judicial mechanisms and how do you assess their effectiveness?
- Do Cambodian non-judicial mechanisms meet the criteria of the UNGPs?
- Should an NGO trying to support victims spend its scarce resources on using non-judicial mechanisms or it is better to concentrate all resources on judicial mechanisms?
- Can a complaint mechanism set up by a company ever deliver justice to victims?
- In what industries can we find non-judicial mechanisms and why not in all industries?
- OECD Watch, Case Database www.oecdwatch.org/cases.
- UN, Report of the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises (2017) https://undocs.org/A/72/162.
- Steven L.B. Jensen, Lessons From Research On National Human Rights Institutions – A Desk Review on findings related to NHRI Effectiveness (2018) www.humanrights.dk/sites/humanrights.dk/files/media/dokumenter/udgivelser/research/workingpaper_lessons_research_nhris_web_2018.pdf.
- OECD, Implementing the OECD Guidelines for Multinational Enterprises: The National Contact Points from 2005-2015 (2016) https://mneguidelines.oecd.org/oecd-report-15-years-national-contact-points.pdf .
- OECD, Guide for National Contact Points on Structures and Activities, OECD Guidelines for Multinational Enterprises (2019) https://mneguidelines.oecd.org/Guide-for-National-Contact-Points-on-Structures-and-Activities.pdf.
- IFC, Grievance Mechanism Toolkit, www.cao-grm.org.
- World Bank, CAO Investigation of IFC Environmental and Social Performance in relation to Amalgamated Plantations Private Limited (APPL), India (2016) http://accountabilitea.org/wp-content/uploads/2016/11/CAO-Investigation-Report-of-IFC-investment-in-APPL_EN.pdf.
- Ombudsman Finds the IFC Failed to Comply with Its Investment Standards in Colombia (2016) http://www.aida-americas.org/release/ombudsman-finds-the-ifc-failed-to-comply-with-its-investment-standards-in-colombia.
- Fair Labor Association, Third-Party Complaint Tracking Chart, www.fairlabor.org/third-party-complaint-tracking-chart.
- ENODO Rights, An Independent Assessment of the Porgera Remedy Framework (2016) https://barrick.q4cdn.com/788666289/files/porgera/Enodo-Rights-Porgera-Remedy-Framework-Independent-Assessment.pdf.
- Barrick Gold, The Porgera Joint Venture – Remedy Framework (2014) https://barrick.q4cdn.com/788666289/files/porgera/Porgera-Joint-Venture-Remedy-Framework-Dec1-2014.pdf.
- German Institute for Human Rights, Closing Protection Gaps in the Human Rights and Business Context – What Transnational Cooperation between the National Human Rights Institutions of Germany and Colombia has achieved (2018) https://www.institut-fuer-menschenrechte.de/fileadmin/user_upload/Publikationen/Information/Information_14_Promising_Practice_Closing_protection_gaps_in_the_human_rights_Business_context.pdf.
- International Federation for Human Rights (FIDH), Corporate Accountability for Human Rights Abuses – A Guide for Victims and NGOs on Recourse Mechanisms (2016) www.fidh.org/IMG/pdf/corporate_accountability_guide_version_web.pdf.
- Shift, Remediation, Grievance Mechanisms and the Corporate Responsibility to Respect Human Rights (2014) www.shiftproject.org/media/resources/docs/Shift_remediationUNGPs_2014.pdf.
- Heng Nida, ‘Alternative Dispute resolution: Cambodia and Japan’, Parliamentary Institute of Cambodia, Senate Commission 1 on Human Rights, Complaint Reception and Investigation (2016) https://www.pic.org.kh/images/2016Research/20170523%20ADR%20in%20Cambodia&Japan_Eng.pdf.
- Human Rights Resource Center, Business and Human Rights in ASEAN: A Baseline Study (2013) http://hrrca.org/wp-content/uploads/2015/09/Business-and-Human-Rights-in-ASEAN-Baseline-Study-ebook.pdf.
- Has Khuneary, Land Dispute Resolution Mechanisms in Cambodia, Briefing Note, Commission on Human Rights Reception of Complaints, Investigation and National Assembly-Senate Relations of the National Assembly of Cambodia, Parliamentary Institute of Cambodia (PIC) (2016) https://www.pic.org.kh/images/2016Research/20160805%20Land%20Dispute%20Resolution%20Mechanism_Eng.pdf.
- Cambodian Center for Human Rights (CCHR), Business and Human Rights Handbook for Cambodia (2016) https://cchrcambodia.org/admin/media/report/report/english/2016_Handbook_BHR_English.pdf.
- Karin Lukas, Barbara Linder, Astrid Kutrzeba, Corporate Accountability: The Role and Impact of Non-Judicial Grievance Mechanisms, Edward Elgar Publishing (UK, 2016), full book not available, see https://books.google.com.kh/books?hl=en&lr=&id=9vR-DQAAQBAJ&oi=fnd&pg=PR1&dq=Access+to+Remedy+non+judicial+mechanism+in+Cambodia&ots=RfYBk0K8ON&sig=F8ZyktrnTvy2dXkd42B-2ql7TvI&redir_esc=y#v=onepage&q=Access%20to%20Remedy%20non%20judicial%20mechanism%20in%20Cambodia&f=false.
- Kate Hodal, ‘European Union Agrees to Investigate Cambodian Sugar Industry’ (2014) The Guardian (11 December 2014) https://www.theguardian.com/world/2014/dec/10/european-union-cambodia-sugar-industry-human-rights.
- The Arbitration Council, https://www.arbitrationcouncil.org/.
- The National Commercial Arbitration Center of Cambodia, https://app.glueup.com/org/ncac/about/.
Compliance Advisor Ombudsman (CAO), http://www.cao-ombudsman.org/.
 UN Office of the High Commissioner of Human rights, The Corporate Responsibility To Respect Human Rights – An Interpretive Guide (2011) http://www.ohchr.org/Documents/Issues/Business/RtRInterpretativeGuide.pdf.
 UN High Commissioner for Human Rights, Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse through State-Based Non-Judicial Mechanisms (2018) http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/38/20.
 UN Guiding Principles on Business and Human Rights (2011) http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.
 OECD Watch, The State of Remedy under the OECD Guidelines (2018) www.oecdwatch.org/publications-en/Publication_4429/@@download/fullfile/The%20State%20of%20Remedy%20under%20the%20OECD%20Guidelines.pdf.
 Martijn Scheltema and Constance Kwant, ‘Alternative Approaches to Strengthen the NCP Function’, in H. Mulder et al (eds), OECD Guidelines for Multinational Enterprises: A Glass Half Full, OECD (2018) http://www.oecd.org/investment/mne/OECD-Guidelines-for-MNEs-A-Glass-Half-Full.pdf (references omitted).
 ILO Committee on Freedom of Association, Freedom of Association – Compilation of Decisions (2018) www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/freedom-of-association/WCMS_632659/lang–en/index.htm.
 Committee on Economic, Social and Cultural Rights, General Comment No. 24 (2017) on State obligations under the International Covenant on Economic, Social and Cultural Rights in the context of business activities (2017) http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=E%2fC.12%2fGC%2f24&Lang=en.
 UN, Principles relating to the Status of National Institutions (The Paris Principles), A/RES/48/134 (1993) www.ohchr.org/EN/ProfessionalInterest/Pages/StatusOfNationalInstitutions.aspx.
 International Coordinating Committee of National Human Rights Institutions (ICC) and Danish Institute for Human Rights, Business And Human Rights – A Guidebook For National Human Rights Institutions (2013) www.humanrights.dk/sites/humanrights.dk/files/media/dokumenter/udgivelser/bhr_guidebook_for_nhris_2013_eng.pdf.
 IFC Compliance Advisor Ombudsman, Compliance Investigation: IFC Investment in Delta-Wilmar – Complaint No. 3 (2016) www.cao-ombudsman.org/cases/document-links/documents/CAOFinalComplianceInvestigationReportWilmar3-ENG.pdf.
 ICMM, Human Rights in the Mining & Metals Industry, Handling and Resolving Local Level Concerns & Grievances (2009) www.icmm.com/website/publications/pdfs/social-and-economic-development/691.pdf.
 Stefan Zagelmeyer et al., Non-State Based Non-Judicial Grievance Mechanisms (NSBGM): An Exploratory Analysis (2018) www.ohchr.org/Documents/Issues/Business/ARP/ManchesterStudy.pdf.
 May Miller-Dawkins et al., Beyond Effectiveness Criteria: The possibilities and limits of transnational non-judicial redress mechanisms (2016) http://corporateaccountabilityresearch.net/njm-report-i-beyond-the-uns-effectiveness-criteria.
 Council of ASEAN Chief Justices, ASEAN Judiciaries Portal: the Gateway to ASEAN Legal Systems, https://cacj-ajp.org/web/cambodia/dispute-resolution-processes.
 CCHR, Cambodia: Land in Conflict – An Overview of the Land Situation (2013) https://cchrcambodia.org/admin/media/report/report/english/CCHR%20Report%20%20Cambodia%20Land%20in%20Conflict%20An%20Overview%20of%20the%20Land%20Situation%20ENG.
 Cambodia, Law on the Investment of the Kingdom of Cambodia (1994) https://www.wto.org/english/thewto_e/acc_e/khm_e/WTACCKHM3A3_LEG_45.pdf.
 Cambodia, Prakas on the Arbitration Council, No. 99 MOSALVY (2004) http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=82037.
 Cambodia, Law on Administrative Management of the Capital, Provinces, Municipalities, Districts and Khans, Royal Kram No. NS/RKM/0508/017 (2008) http://seaknowledgebank.net/e-library/cambodia-law-administrative-management-capital-provinces-municipalities-districts-and.
 Cambodia, Sub-Decree on Organization and Functioning of the Cadastral Commission, No. 47 ANK.BK (2002) https://www.sithi.org/admin/upload/law/Sub-decree%20No%2047%20on%20the%20Organization%20and%20Functionning%20of%20the%20Cadastral%20Commission%20(2002).ENG.pdf.
 Arbitration Council, Responsibilities on Workplace Safety Measures (2018) https://www.arbitrationcouncil.org/responsibilities-on-workplace-safety-measures/.
 Royal Government of Cambodia, National Report Submitted in Accordance with Paragraph 5 of the Annex to Human Rights Council Resolution 16/21, Cambodia, Universal Periodic Review (2018) https://documents-dds-ny.un.org/doc/UNDOC/GEN/G18/341/00/PDF/G1834100.pdf?OpenElement.
 OHCHR, Working Group on the Universal Periodic Review: Compilation on Cambodia Report of the Office of the United Nations High Commissioners for Human Rights (2019) https://documents-dds-ny.un.org/doc/UNDOC/GEN/G18/337/25/PDF/G1833725.pdf?OpenElement.
 Human Right Council, Summary of Stakeholders’ Submissions on Cambodia, Report of the Office of the United Nations High Commissioner for Human Rights (2018) https://documents-dds-ny.un.org/doc/UNDOC/GEN/G18/333/54/PDF/G1833354.pdf?OpenElement.
 Compliance Advisor Ombudsman (CAO), CAO Assessment Report: Complaint Regarding IFC’s VEIL II Project (20926) (May 2014) http://www.cao-ombudsman.org/cases/document-links/documents/VEILII-01FinalAssessmentReportMay2014.pdf; for additional documents relating to the case, see also
 UK National Contact Point (NCP) for the OECD Guidelines, Specific Instance against Bonsucro Ltd, Concerning Its Conduct in Relation to Its Member, Mitr Phol Group (11 March 2019) https://complaints.oecdwatch.org/cases/Case_534/1788/at_download/file.
 Cambodian Centre for Human Rights (CCHR), The Failure of Land Dispute Resolution Mechanism, Briefing Note (2014) https://cchrcambodia.org/admin/media/analysis/analysis/english/2014_07_28_CCHR_Briefing_Note_The_Failure%20of_Land_Dispute_Resolution_Mechanisms_(ENG).pdf.
 Ratha Thuon, ‘Holding Corporations from Middle Countries Accountable for Human Rights Violations: A Case Study of the Vietnamese Company Invest in Cambodia’, Globalizations, 17:4 (2015), pages 698-713, https://www.tandfonline.com/doi/pdf/10.1080/14747731.2017.1370897?needAccess=true.
 Celine Martin, Business and Human Rights in ASEAN: Case Study of Cambodia, European, International and Comparative Law Center (undated) https://www.academia.edu/13889632/Business_and_Human_Rights_in_ASEAN_Case_study_of_Cambodia.
Copyright © 2023 RAOUL WALLENBERG INSTITUTE.
All rights reserved