On 7 November 2018, the UK NCP issued its Initial Assessment of a complaint from the Bahrain Institute for Rights and Democracy (BIRD) against HPower Group Limited (HPG), which organises events worldwide, and two other multinational enterprises (MNEs).
The complaint alleged that the companies had acted inconsistently with the OECD Guidelines (the Guidelines) – the set of voluntary standards for MNEs which encourage responsible business conduct across a range of topics including human rights. Under the Guidelines, MNEs are required to ensure that they consider the effects of their operations on human rights, that these rights are respected and that they encourage such respect in their business relationships. Business relationships include ‘relationships with business partners or entities in the supply chain and any other non-State or State entities directly linked to its business operations, products or services’.
The UK NCP’s role is to consider complaints alleging breach of the Guidelines by an MNEs. An Initial Assessment is the first step in this process and it is used to determine whether the issues raised in the complaint are material enough to merit further investigation.
The Complaint
BIRD, a Non-Governmental Organisation promoting democracy and human rights in Bahrain, alleged that the relevant companies had failed to consider the human rights impact of their business relationship with the Bahraini authorities, and as a result were linked to human rights abuses carried out in the course of organising and sponsoring the Royal Windsor Horse Show (RWHS).
BIRD alleged that in the process of organising the RWHS and arranging financial sponsorship to support the event, HPG failed to consider the human rights impact of its business relationship with the Bahraini authorities, and that it did not follow any appropriate due diligence process.
It also stated that as sponsors of the RWHS, the provision of funds by the other two companies ensured the financial viability of the event and allowed their brands to be associated with the Bahraini authorities.
In particular, all three companies –
- presented a view to the world that the Bahrain authorities were conducting ‘business as usual’ contrary to the reality of the continuing human rights abuses in the country,
- created further opportunities for human rights violations to occur in connection with RWHS, including the detention of individuals related to UK activists at the time the event took place, and
- prevented demonstrations at the RWHS.
The complainant provided a number of documents relating to the existence of human rights issues within Bahrain and the UK NCP accepted these. To rectify and avoid these failings in the future, BIRD called for the companies to put in place sufficient human rights policies, facilitated by the NCP.
In its response to the initial complaint, HPG argued that the Guidelines do not apply to it as it is not an MNEs. The UK NCP did not accept that position. It noted that the OECD has previously taken a flexible approach to the jurisdiction of the Guidelines and has been willing to apply them to companies which, while not meeting the exact definition of a MNEs, have a recognised international impact. The UK NCP considered that HPG fell within this extended jurisdiction.
The two other MNEs to the complaint, who had a role in sponsoring the RWHS, also disputed the claims due to the belief that the sponsorship agreement(s) did not contribute to any adverse human rights impacts. One suggested that the complaint against it was inappropriate as it is based outside the UK and it has no formal relationship with the Bahraini authorities.
The UK NCP’s Decision
The UK NCP came to the conclusion that BIRD had not adequately demonstrated that the practices of the three companies constituted an infringement of human rights. The need to remedy the alleged harms caused by the companies was therefore rejected.
The UK NCP did accept that HPG may be acting inconsistently with the Guidelines as there was a business relationship between it and the Bahraini authorities in the organising of the RWHS, and the Bahraini authorities were involved in adverse human rights impacts. Because of this, further examination of HPG’s business practices in relation to the handling of human rights impacts and due diligence in the course of its business relationships is merited.
However, the other two companies involved were not sufficiently linked to the party causing the alleged harm as their business relationship with the Bahraini authorities was substantially different to that of HPG. As the companies had limited ability to ‘effect change in the wrongful practices of the entity that causes the harm’ (the Bahraini authorities), the Guidelines did not apply to them in this instance and no valid complaint could be brought against them.
Next Steps
BIRD and HPG will now be asked to engage in mediation or conciliation in order to determine how the issues accepted by the UK NCP can be rectified. The UK NCP noted that HPG is a small company and the Guidelines indicate that any actions taken should be proportionate to a company’s size, the nature and context of its operations, as well as the severity of the risks related to any adverse human rights impacts.
If the resolution process is successful, the UK NCP will not be required to come to a final determination as to whether HPG has acted inconsistently with the guidelines. If unsuccessful, the UK NCP will undertake further investigation into the issues with a view to a final determination.