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Social movements, extraterritorial corporate regulation and the limits of legalization:
a case study from India
Swann Bommier (CERI-Sciences Po, ESSEC IRENE)
Making multinational corporations accountable for their negative impacts on human
rights is a major challenge in today’s global economy. Among the existing global corporate
governance initiatives, the OECD Guidelines stand out for providing an extraterritorial
However, when a transnational social movement makes use of this mechanism to
challenge corporate practices in a given country, one wonders how the proceedings alter
power relations, stakeholder engagement and human rights enforcement on the field.
This paper analyzes the impact of this extraterritorial mechanism by looking at a
specific case where a coalition of French and Indian NGOs challenged the investment of a
French multinational corporation in India.
Drawing upon extensive field research in India and in France, we argue that the
mechanism challenges corporate practices and stakeholder policies but faces structural
hurdles which undermine its legitimacy and enforcement capacity: it has a country-specific
institutional setting and it promotes legalization informally.
On July 9 2012, a transnational consortium of French and Indian civil society
organizations (CSOs) filed a specific instance at the French National Contact Point (NCP)
instituted by the intergovernmental Organisation for Economic Co-operation and
Development (OECD) to challenge the investment and the practices of Michelin – a French-
based multinational corporation – in the Indian State of Tamil Nadu.
The CSOs argued that Michelin had violated the OECD “Guidelines for Multinational
Enterprises” 1 and asked the NCP to constrain Michelin to fulfill a three-step process: 1) to
stop the construction works and to wait for the fulfillment of the decisions taken by the
Madras High Court; 2) to engage with the local communities affected by the Michelin
investment to define the terms and conditions of a social, human rights and environmental
impact assessment; and 3) to conduct these impact assessments to identify the risks and the
negative impacts of the company’s investment on the local communities and ecosystems 2 .
The conflict that had opposed the Tamil Nadu government and Michelin to local
communities since 2007 was thereby shifting towards a “global public domain” 3 where one
witnessed the intertwining of an hortatory code of conduct published by the OECD, a French
extraterritorial grievance mechanism set-up in reference to the OECD Guidelines,
transnational CSOs and an MNC.
How did the NCP, an extraterritorial grievance mechanism addressing business-
CSO conflicts, emerge? How did the French NCP manage the specific instance filed by
the CSO consortium? Which outcome did it produce? What does this case study tell us
about “struggles for justice in a globalizing world” 4 ?
We answer to these questions successively, and analyze in detail the conflict which
opposed CSOs to Michelin at the French NCP between July 2012 and September 2013. This
will help us understand how local business-community conflicts reach the transnational arena
1 OECD, “OECD Guidelines for Multinational Enterprises,” 2011.
2 CCFD et al., “Saisine Du Point de Contact National Français Dans Le Cadre de La Mise En Oeuvre
Des Principes Directeurs de l’OCDE - Circonstance Specifique,” 74–76.
3 Ruggie defines a global public domain as follows: “an arena of discourse, contestation and action
organized around global rule making – a transnational space that is not exclusively inhabited by states,
and which permits the direct expression and pursuit of human interests, not merely mediated by the
state”. See Ruggie, “Taking Embedded Liberalism Global: The Corporate Connection,” 104.
4 Fraser, “Reframing Justice in a Globalizing World,” 17.
and which challenges lay ahead to achieve an effective and legitimate global corporate
We argue that to transnational grievance mechanisms addressing corporate
accountability issues require to undertake “meta-political reforms” 5 to acquire a cosmopolitan
democratic representation and to ensure popular accountability beyond States’ economic
1) The OECD Guidelines, its National Contact Points and the 2011 reform
a) The OECD Guidelines for Multinational Enterprises
The Organization for European Economic Cooperation (OEEC) was founded in April
1948 to administer the Marshall Plan. The organization counted 18 member States and aimed
for “the promotion of cooperation and commerce among Europe’s reconstructed economies,
the development of a European customs union, and, ultimately, a free trade area” 6 . With the
creation of the European Union in 1957, the OEEC lost its purpose.
In 1961, in a Cold War context, the organization was renamed as the Organization for
Economic Co-operation and Development (OECD) and was revamped by shifting from a
European to a world membership, with the United States and Canada joining in. Its mandate
however remained the one of an economic intergovernmental organization “dedicated to the
principles of market economies, economic growth, and world trade” 7 .
When the topic of FDI and of MNCs’ impact on international relations made it to the
international headlines in the 1970s and led to the establishment of the UN Center on
5 Ibid., 16.
6 Salzman, “Decentralized Administrative Law In The Organization For Economic Cooperation And
7 Ibid., 191. Article 1 of the Convention on the OECD signed on December 14 1960 states: “The aims
of the Organisation for Economic Co-operation and Development (hereinafter called the
"Organisation") shall be to promote policies designed: (a) to achieve the highest sustainable
economic growth and employment and a rising standard of living in Member countries, while
maintaining financial stability, and thus to contribute to the development of the world economy; (b) to
contribute to sound economic expansion in Member as well as non-member countries in the process of
economic development; and (c) to contribute to the expansion of world trade on a multilateral, non-
discriminatory basis in accordance with international obligations”. See OECD, “Convention on the
Organisation for Economic Co-Operation and Development,” para. Article 1.
Transnational Corporations and of the UN Commission on transnational corporations 8 , the
OECD looked into the issue. In 1976, “in response to the adversarial attitude of many
countries to [MNCs’] activities” 9 , the OECD published the Declaration on International
Investment and Multinational Enterprises, which, accompanied by a series of Guidelines,
aimed for easing FDI, securing investors’ rights, facilitating the development of economic ties
and expanding trade across the OECD States 10
. Among those Guidelines, the “Guidelines for
Multinational Enterprises” (hereafter “the Guidelines”) stood out for instituting a voluntary
and non-binding code of conduct promoting self-regulation and transparency for multinational
The Guidelines thus emerged as a voluntary code of conduct that delineated a “non-
binding collection of principles and standards for responsible business conduct” 12
. Since the
Guidelines stated explicitly that “observance of the Guidelines is voluntary and not legally
, no enforcement mechanism was created to ensure compliance.
The soft law character of the Guidelines was a major hurdle for their diffusion. In 1984,
the OECD Committee on International Investment and Multinational Enterprises (CIME) thus
required each OECD State to set-up a National Contact Point (NCP). The NCPs were housed
in a government ministry and meant at “undertaking promotional activities, handling
enquiries and for discussions with the parties concerned on all matters related to the
8 Sagafi-Nejad, The UN and Transnational Corporations: From Code of Conduct to Global Compact;
Hamdani and Ruffing, United Nations Centre on Transnational Corporations: Corporate Conduct and
the Public Interest.
9 Sagafi-Nejad, The UN and Transnational Corporations: From Code of Conduct to Global Compact,
10 Murray, “A New Phase in the Regulation of Multinational Enterprises: The Role of the OECD,”
258. According to the OECD, the Declaration and its Guidelines aim for “the liberalisation of policies
towards international capital movements, international direct investment and multinational
enterprises and trade in services”. See http://www.oecd.org/daf/inv/oecdinvestmen