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GB.270/18
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EIGHTEENTH ITEM ON THE AGENDA
Report of the Subcommittee on Multinational Enterprises
1. The Subcommittee on Multinational Enterprises met on 14 November 1997, chaired by Ms. J. Perlin (Government, Canada). The Employer Vice-Chairperson was Mr. B. Noakes (Employer, Australia) and the Worker Vice-Chairperson was Mr. A. Baldassini (Worker, Argentina).
2. The Chairperson welcomed the members of the Subcommittee and noted that there was only one item on the agenda -- a request for an interpretation of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. She invited the representative of the Director-General (Mr. Abate, Chief, Bureau for Multinational Enterprise Activities) to introduce the Office paper.(1)
3. The representative of the Director-General recalled that, in accordance with the rules, only titular members or their substitutes could be present at the discussions.(2) Introducing the Office paper, which dealt with a request for interpretation of the Tripartite Declaration of Principles submitted by the Government of Belgium and supported by the workers' organization, he observed that the objective of the request from the Government was not to find a solution to the problem at hand but, on the basis of what had actually happened, to obtain an interpretation of a general nature in order to draw lessons for the future. He recapitulated the facts of the case as well as the chronology of events and the outcome of the meetings of the Officers of the Subcommittee to consider the request,(3) including their last meeting on 4 November 1997, at which they were unable to reach a unanimous decision on the question of receivability. The point of divergence between the Officers was the result of the interpretation each gave to paragraph 1 of the procedure. Their respective opinions on the matter were contained in Appendices I, II and III to the Office paper.
4. Consequently, in accordance with paragraph 4 of the procedure, the matter was being referred to the full Subcommittee for decision. Paragraphs 17, 18, 19 and 20 of the document presented two alternative interpretations of paragraph 1. He underlined that matters of substance were not to be the subject of discussion. The focus was to be on procedural issues. He drew attention to paragraph 24 of the Office paper, which stated that "Apart from the intrinsic importance of the receivability of the request in terms of the credibility of the interpretation procedure (and thus of the Declaration itself), the manner in which these questions are settled is also important in so far as it will constitute precedents which, directly or by implication, will influence the future operation of the procedure." The outcome therefore had implications for the application of the procedure in the future and indeed the very use of the Tripartite Declaration. Referring to paragraph 25, he noted that the Subcommittee had two choices. The first would be to refer to the Governing Body, for final decision, the matter of principle which involved the interpretation of paragraph 1 of the procedure (paragraph 25(a)). The second would be to accept either the Employer Vice-Chairperson's recommendation that the request was not receivable (paragraph 25(b)(i)) or the recommendation of the Worker Vice-Chairperson that the request was receivable (paragraph 25(b)(ii)).(4)
5. The Employer Vice-Chairperson stated that his group did not support referral of the matter to the Governing Body since, in their opinion, the Subcommittee was the appropriate body in which such matters should be decided. In the Employers' view the request was not receivable.
6. The Worker Vice-Chairperson stated that the opinion of the Workers' group was clearly presented in Appendix III. The purpose of the meeting was to decide on the receivability of the request and the Subcommittee was, according to paragraph 4 of the interpretation procedure, competent to take that decision. The request had been submitted by the government of a member State, and it was legitimate and in keeping with paragraph 5(a) of the procedure. Therefore the Office could give an interpretation. Under paragraph 1 of the procedure, requests may be considered receivable as long as there were disputes with regard to a situation relating to the content of the Tripartite Declaration. There was a real situation and the fact that there was a "social solution" was irrelevant. The principles of the Tripartite Declaration were involved, and the interpretation of principles in international labour standards ought to be "broad and democratic". The Workers' group was therefore in favour of the option in paragraph 25(b)(ii).
7. After noting that both Vice-Chairpersons were of the opinion that the Subcommittee was the appropriate body to deal with the question of receivability, the Chairperson invited the representatives of governments to make known their views.
8. The representative of the Government of the United States asked whether the Subcommittee was being asked to interpret paragraph 1 of the procedure in order to determine the receivability of the request. He noted that a decision to accept the recommendation in paragraph 25(a) would therefore mean referring the interpretation of the procedure to the Governing Body, and that would amount to referring the decision on receivability to the Governing Body. If that were to be the case, it would be a regrettable precedent for the Subcommittee. It would be more appropriate for the question of receivability to be dealt with by the Subcommittee. His Government was therefore in favour of proceeding with the discussion under paragraph 25(b).
9. The representative of the Government of Italy was in favour of discussing the question in the Subcommittee, which was a special body set up to deal with matters pertaining to multinational enterprises (MNEs). Only in the event of extreme disagreement and if the matter were to assume exceptional dimensions, should it be referred to the Governing Body. However, under present circumstances, it was a question of deciding on the receivability of a request to be examined on the basis of paragraph 1 of the procedure. His Government was in favour of having the Subcommittee take a decision in that regard.
10. The representative of the Government of Canada supported the view that the receivability of the request should be discussed in the Subcommittee.
11. The representative of the Government of Japan shared the views expressed by the previous speakers from the Government group.
12. The Legal Adviser of the ILO, in response to observations made by the representative of the Government of the United States, noted that for the record, it had to be clear that the proposal in paragraph 25(a) did not mean that the matter was to be referred to the Governing Body to decide on receivability as such. Rather it had to do with referring to the Governing Body the preliminary question of the proper interpretation to be given to paragraph 1 of the procedure.
13. Given the unanimous view that the Subcommittee was the competent body to deal with the issue at hand, the meeting then turned its attention to paragraph 25(b)(i) and (ii).
14. The Employer Vice-Chairperson thanked Mr. Abate for his opening remarks. He referred to paragraph 21, which stated in part that "... the company in question in no way argues that the request is irreceivable [sic] ...", and noted that neither had the company said that the request was receivable. It had made no reference to the question of the receivability of the Government's request. He referred to the Employers' views in Appendix II: the question before the Subcommittee did not involve only the interpretation of part of paragraph 1 of the procedure as paragraphs 17 to 20 implied. Paragraph 1 had to be considered in its entirety and every word had a particular meaning. It was not just a question of deciding whether there was an actual situation. The paragraph also contained the words "when needed", which meant that an interpretation had to be necessary. It stated that the interpretation must be "needed to resolve a disagreement", which meant that there must be an actual disagreement, and not a hypothetical or abstract situation. The disagreement must be about the meaning of the provisions of the Declaration, and it must be "between the parties to whom the Declaration is commended". In the Employers' opinion, when the paragraph was read as a whole, the only conclusion could be that the request was not receivable. There was no longer an "actual situation", since the company and workers had reached an agreement. Since there was no longer a dispute, there was no practical benefit to be gained from having an interpretation. It was therefore not needed to resolve a disagreement. Moreover, it was not in the spirit of the Tripartite Declaration, nor was it in keeping with the workings of the Subcommittee, for a government to take an issue to different jurisdictions in search of a solution. There had been a ruling by the Organisation for Economic Co-operation and Development (OECD) on the matter which was now the subject of the request for interpretation in the ILO. Furthermore, since the Belgian and French courts had ruled on the question pertaining to the compliance of the enterprise with national legislation, the Government should not be allowed to raise the matter again in the ILO. There was no dispute over whether or not the enterprise must comply with the laws of the host country as recommended in paragraph 8 of the Tripartite Declaration. It was not possible to determine any disagreement over the meaning of the Tripartite Declaration on the basis of the Government's request or the company's reply. The question for interpretation was proposed in very "general and loose" terms, and the Government acknowledged that it was seeking an interpretation in order to be able to draw lessons for the future, and not to find a solution to a problem arising from an "actual situation". There was no disagreement over paragraph 10 of the Tripartite Declaration. As regards paragraph 51, the Government wanted to know whether workers' representatives could demand that representatives of management of the parent company should be present during discussions on matters concerning the closure of the enterprise. Paragraph 51 of the Tripartite Declaration, which concerned the process of collective bargaining, did not specify the matters for negotiation, nor did it suggest that the closure of enterprises should be a subject of such negotiation.(5) With respect to paragraphs 25 and 26, which dealt with security of employment and the provision of reasonable notice of changes that would have major employment effects and particularly in cases of closures involving collective lay-offs or dismissals, he noted that the MNE in question had given five months' notice. That was unlike the enterprise in the previous case referred to in paragraph 20, which had given one day's notice. In addition, the question of notification was one on which the OECD had given a clarification. Consequently, an interpretation of paragraph 26 was not needed. The interpretation procedure should not permit "forum shopping". A different opinion was being sought from the ILO, and it would be very serious if the ILO were to give an interpretation that differed from the OECD's clarification. The Government was being selective in its arguments and seeking to extend the meaning of the Tripartite Declaration. The Employers' group had strong reservations about the possible misuse of the interpretation procedure and believed that such misuse was not in the spirit of the Tripartite Declaration. The Subcommittee should therefore adopt paragraph 25(b)(i), which stated that the request from the Government of Belgium was not receivable. That decision should be indicated in the report to the Governing Body.
15. The Chairperson reminded members of the Subcommittee that substantive issues should not be discussed at the present stage. They should concentrate on the procedural questions.
16. The Worker Vice-Chairperson said that he would not go into the substantive issues at that point. He drew attention to the Workers' opinion in Appendix III. As regards the argument that there was no "actual situation" and that paragraph 1 of the interpretation procedure was therefore not applicable, the terms "actual situation" and "concrete situation" should not be confused. The "actual situation" did exist and so too did its consequences, which were evident. The question of whether or not the situation was "actual" had to do with the question of "time". The expression "actual situation" could not be used to go against the provision of paragraph 1 of the procedure. The actual facts existed. They were not taking place at the moment, but the impact of the situation was "real" and "actual". With respect to the OECD, the decision of the Subcommittee could not be linked to that which had been taken by that organization, which had its own mandate, terms of reference and rules. The OECD's decision could not be binding on the ILO, nor could it serve as a precedent for the ILO's action with respect to the request for interpretation. The ILO could not renounce its responsibility or commitments. It had to interpret its own rules. Tripartism was a distinctive characteristic of the ILO. The ILO's role and mandate had nothing to do with those of the OECD. It was therefore not a solid argument to state that the OECD's decision on the matter should serve as a precedent. The Government had submitted a legitimate request in keeping with the rules of the ILO. If the ILO were to refuse the request on the grounds that a decision on the matter had been given by another organization, the ILO would be violating the fundamental right of an ILO member State to have recourse to the Organization. That would set a bad precedent, and the refusal to accept requests for interpretation from member States might oblige them to go to another organization. The argument that the OECD had already taken a decision on the matter was therefore untenable, even though the dispute involving the enterprise had been settled with the conclusion of a "social plan" that was of no relevance to the application of the Tripartite Declaration and to the matter under discussion. The Tripartite Declaration was a code of conduct to be respected by MNEs. It was not a code for resolving specific problems that might arise in particular circumstances as a result of the violation of its principles. He recalled that the Government's intention was not to seek a solution to the problem but to obtain a general interpretation of certain paragraphs of the Tripartite Declaration as a result of the conduct of the management of the enterprise. In a context of increasing economic globalization and international capital flows, it was imperative to have very clear standards concerning the attitudes to be adopted by enterprises operating outside their home countries. Modern codes of conduct were needed to deal with developments, which included the relocation of enterprises. The request for interpretation was of historic significance and of great importance for the future for all concerned. He noted that paragraphs 8, 10, 25, 26 and 51 of the Tripartite Declaration were of particular interest to the Government of Belgium, and reiterated the Government's view that "... inaction by the Organization could lead to a lack of credibility in its role in the social arena". That observation was significant, and the ILO's credibility would indeed be called into question if the Subcommittee did not act in accordance with the ILO standards and rules which it was being asked to interpret. Apart from the Workers' arguments in Appendix III, his additional observations were fundamental to an understanding of his group's conviction that the request was receivable. The interpretation of international labour standards and principles, such as those in the Tripartite Declaration, concerned people, institutions and countries. Consequently, the interpretation must be broad in scope. It would be an error for the Subcommittee to decide that the request was not receivable, thereby missing the opportunity to engage in a debate on issues of great interest to the international community and from which lessons might be drawn for the future. The Workers' arguments were solid and valid, and that the request for interpretation should be considered receivable.
17. The representative of the Government of Italy stated that the Tripartite Declaration was a code of conduct and an instrument of great value. He asked whether, under paragraph 1 of the interpretation procedure, the Subcommittee was to be restricted to dealing only with ongoing controversies, or whether it could also give an opinion when matters had been settled but there remained substantive issues to be resolved. It was not for the Subcommittee to decide whether the substantive issues raised in the Government's request were right or wrong. Those matters would be addressed at a later stage. There had been a disagreement over principles and rights and it persisted even after the dispute involving the company had been settled. Under the Tripartite Declaration, the Subcommittee had sufficient authority to intervene and settle such matters. He accepted the arguments presented in paragraph 20; the Subcommittee should give its opinion on the question of receivability and then proceed to deal with the substantive questions.
18. The representative of the Government of the Russian Federation noted that the matter under consideration was extremely difficult. He thanked the Employer Vice-Chairperson for his statement, which had helped to shed light on the issues at stake -- i.e. to decide on the receivability of the Government's request. He asked whether an ILO member State should be denied the right to request an interpretation, and noted that the aim of the Government's request was not to find a solution to the problem arising from the closure of the enterprise, but rather to obtain an interpretation of a general nature of certain paragraphs of the Declaration. His Government was in favour of considering the request because the Government of Belgium should not be denied the right to submit the request.
19. The representative of the Government of Canada said that, based on the considerations contained in paragraphs 18, 19 and 21 of her Government supported the receivability of the request for interpretation. Her Government was concerned that the narrow interpretation of the Tripartite Declaration would deprive the procedure and the Declaration of a major part of their value. It would also deprive the ILO of an important opportunity to demonstrate its role and relevance in a matter of critical and current economic and social significance. The Government wished to comment on the issue of "forum shopping" with the hope of setting a clear precedent on the particular question. The Government of Canada shared the opinion of the Worker Vice-Chairperson that if the ILO did not consider the request receivable, it would be relinquishing its competence and negating the existence and use of its own instrument. It was regrettable that the matter would be dealt with again in the ILO after there had been a clarification by the OECD, and that there was the possibility of duplication. Nevertheless, it was important to consider the request receivable. The Government supported the recommendation by the Worker Vice-Chairperson in paragraph 25(b)(ii).
20. The representative of the Government of Japan found the discussion on receivability and the meaning of paragraph 1 of the interpretation procedure very interesting. However, the Subcommittee should deal with unresolved matters, and a case that had been settled should not be reopened. If a dispute had been resolved and yet the Subcommittee were to decide that it was receivable, then in the extreme case it might be argued that any past issue could be considered receivable. Past questions should not be the subject of discussion. There was the risk of creating new and complicated situations. The arguments of the Workers' group were appreciated. However, the ILO should not spend its energies on matters that had already been resolved. It should be tackling issues of current concern.
21. The representative of the Government of the United States noted that the statement by the representative of the Government of Italy aptly conveyed the significance of the Tripartite Declaration, and his Government shared those views and the conclusions. The Government of the United States was of the opinion that the request was receivable.
22. The Chairperson noted that there was a clear majority in favour of the receivability of the request for interpretation. She recalled that there were two points which the Subcommittee wished to have highlighted in the report to the Governing Body. The first concerned the interpretation of the meaning of the term "actual situation" and the Subcommittee's decision in that regard. The second related to the issue of "forum shopping". It should be clearly recorded that members of the Subcommittee expressed views on those issues.
23. The Employer Vice-Chairperson pointed out that, while views had been expressed on those subjects, the Subcommittee had not taken decisions on them. The Subcommittee had made a decision on the matter that had been brought before it for decision and that concerned only one point. The report of the meeting of the Subcommittee would contain the views expressed by members on all aspects of the discussions.
24. The Chairperson stated that the intention was to note that the discussion of the two issues would have to he highlighted in the report. She asked the Subcommittee whether it wished to invite the Governing Body to accept the points that had been made as regards the term "actual situation", as constituting an interpretation of the meaning of the term.
25. The Employer Vice-Chairperson noted that the decision that had been made by the Subcommittee concerned only paragraph 25(b)(ii).
26. The Chairperson concluded that the Subcommittee had, on the basis of a majority opinion which had supported the arguments put forward in this document for receivability, decided in favour of the recommendation of the Worker Vice-Chairperson presented in Annex III of GB.270/MNE/1, and declared receivable the request for interpretation submitted by the Government of Belgium.
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Geneva, 17 November 1997. |
(Signed) Jean Perlin, |
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Chairperson. |
1. GB.270/MNE/1.
2. GB.216/17/7, para. 9(a).
3. GB.270/MNE/1, paras. 4-14.
4. Original numbering 25(b)(b) subsequently corrected to read 25(b)(ii).
5. "Multinational enterprises should enable duly authorised representatives of the workers in their employment in each of the countries in which they operate to conduct negotiations with representatives of management who are authorised to take decisions on the matters under negotiation" (para. 51).