- Date filed
- 10 September 2022
- Keywords
- Countries of harm
- Current status
-
No resolution
- Sector
- NCP
Allegations
On 10 September 2022, United Tegaru Canada (UTC), an NGO founded in response to the conflict in Ethiopia’s Tigray region, filed complaints against three Canadian mining companies, East Africa Metals Inc., Sun Peak Metals Corporation, and Parallel Mining Corporation, at the Canadian NCP. UTC claims that the companies are contributing to adverse human rights impacts allegedly committed by the Ethiopian government in the Tigray conflict by paying taxes/licensing fees to that government. UTC also questioned whether the companies had human rights policies and whether they were undertaking appropriate human rights due diligence. UTC asks the NCP to assist by providing a forum for constructive dialogue on the issues raised.
Relevant OECD Guidelines
- Chapter IV
- Chapter IV Paragraph 1
- Chapter IV Paragraph 2
- Chapter IV Paragraph 4
- Chapter IV Paragraph 5
Outcome
On 17 November 2023, the Canadian NCP published its initial assessment offering its good offices only in relation to the company’s policy commitment to human rights and the adequacy of its human rights due diligence, not its contribution to the Tigray conflict. The NCP decided, “The language of the Guidelines and accompanying commentary suggests that the payment of taxes/licence fees to a government is not alone sufficient to substantiate a claim that the enterprise is contributing to or is involved in adverse impacts linked to violations committed by that government.” There was therefore not enough to substantiate the claim that the company was contributing to the human rights violation through its business activities. The NCP also noted that the Guidelines do not call on companies to avoid operating in a country due to the fact that the relevant government may be failing to protect human rights. “This reflects the distinction between the State’s duty to protect human rights and the enterprise’s responsibility to respect human rights, and speaks to the Guidelines’ being concerned more with how multinational enterprises operate, not where they operate (and to which governments they must therefore pay taxes or licence fees). Issues around the ultimate use of State tax revenue will typically not be material to the Guidelines.”
Later, in its final statement (see below), the NCP elaborated on its decision to not accept the complainant’s argument of contribution:
As noted in the NCP’s initial assessment, the use of tax revenue is essentially an issue of government policy. Duly paying taxes and other fees required under local law cannot be considered a “contribution” to adverse impacts potentially connected with government spending decisions. The Guidelines recognize that the first obligation of enterprises is to obey domestic law (chapter I, paragraph 2). The Guidelines also underscore the importance of enterprises contributing to the public finances of host countries by making timely payment of their tax liabilities (chapter XI, paragraph 1). The NCP does not see the Guidelines calling on enterprise to avoid such obligations in particular circumstances. As noted in chapter I, the Guidelines “should not and are not intended to place an enterprise in situations where it faces conflicting requirements.” The fact that paragraph A.10 of chapter II does not apply to chapter XI (taxation) further reinforces the principle that paying taxes is not an area where enterprises face the risk of “contributing” to adverse impacts covered by the Guidelines.
Ultimately, the Notifier’s interpretation of the Guidelines suggests that multinational enterprises necessarily “contribute” to any adverse impacts caused by governments to which the enterprises pay taxes or other State-mandated fees incidental to their operations. In the NCP’s view, this interpretation would create an unduly expansive and unworkable expectation for enterprise accountability that is incompatible with the purposes and intent of the Guidelines.
The Guidelines do recognize the possibility of an enterprise “contributing” to adverse impacts caused by a “State entity”. In these situations, enterprises are indeed called upon to cease or prevent their contribution and to use leverage to mitigate any remaining impact to the greatest extent possible. For the reasons outlined above, the NCP does not see this recommendation as relevant to the issue raised by the Notifier. Even if this were not the case, it was still unclear how the payments cited by the Notifier would have represented a “contribution” by the Respondent “through” or in the “context of its own activities” to the adverse impacts allegedly caused by government forces. The concept of “contribution” in the Guidelines connotes a certain proximity between the enterprise’s activities and the alleged adverse impacts that was not evident based on the available information.
The NCP only offered to facilitate a single mediation session for the parties to share perspectives that may be useful to informing and potentially enhancing the company’s approach to its human rights policy and due diligence.
In February 2024, the parties participated in a mediation during which they discussed the Tigray conflict, the company’s activities in Ethiopia, and its corporate social responsibility activities. They also discussed the company’s communication of its operations and due diligence activities to local stakeholders and the broader public.
On 16 May 2024, the NCP published its final statement concluding the complaint. The NCP recommended for the company to communicate more about its human rights due diligence and wider responsible business conduct activities. It also recommended for the company to consider how its commitment to human rights are communicated and fulfilled in the context of its business relationships.
The NCP will follow up on its recommendations six months after the publication of its final statement.
The final statement also elaborated on another aspect of the complainant’s argument:
After receiving the NCP’s initial assessment, the Notifier raised a new issue by asserting that the Respondent’s operations, products, or services were directly linked to the adverse impacts through a “business relationship” (chapter IV, paragraph 3) with the government, apparently embodied in its payments of taxes and licensing fees. The Notifier claimed that the Respondent should attempt to exercise leverage to influence the Government of Ethiopia to prevent or mitigate the adverse impacts allegedly caused by its armed forces. The Notifier asked the NCP to offer good offices to facilitate dialogue on this issue.
The NCP takes note of commentary paragraph 14 of the Guidelines, which states that “business relationships” can include “relationships with… State entities directly linked to the [the enterprise’s] business operations, products or services”. However, the NCP does not see how the payment of taxes and other mandatory fees – “imposed by the State” according to the Notifier – would constitute a “business relationship” within the meaning of the Guidelines. The term “business relationship” implies arrangements of a discretionary and commercial nature. This does not seem to describe the relationship between the Respondent and local government in this instance.
The NCP believes it would be inconsistent with the purposes and coherence of the Guidelines to conflate the concept of a “business relationship” with an enterprise’s general adherence to local laws and regulations, including the payment of taxes and other State-imposed fees incidental to its operations. Accordingly, the NCP did not offer good offices on this issue.
More details
- Defendant
- Company in violation
- Other companies involved
- Complainants
- Affected people
- Date rejected / concluded
- 16 May 2024
Related complaints
- United Tegaru Canada vs. Parallel Mining Corporation
- United Tegaru Canada vs. Sun Peak Metals Corporation