Governing Corporate Accountability: Extraterritoriality and the Effectiveness of NCP Mediation

Abstract

As dominant actors in a globalised economy, multinational corporations can evade responsibility for labour and human rights violations and other misconduct within their own operations, those of their clients, or across supply chains. To address this challenge, OECD governments established the Guideline for Multinational Enterprises on Responsible Business Conduct, aiming to promote corporate responsibility and mitigate adverse impacts. The OECD Guidelines’ enforcement mechanism is the non-judicial system of National Contact Points (NCPs), which mediates disputes between corporations and affected parties. Notably, NCPs can accept complaints concerning corporate conduct beyond their own jurisdiction, raising questions about whether extraterritorial cases are resolved as effectively as domestic ones. This paper examines the impact of extraterritoriality on NCP effectiveness, understood as the likelihood of mediation reaching an agreement, using a mixed-method approach. A logistic regression analysis of 233 NCP cases (2000–2022) finds that extraterritorial cases are less likely to result in an agreement. A comparative case study further reveals that extraterritoriality may weaken NCP effectiveness both directly, through the complexity of evidence—its availability and interpretability—and indirectly, via intercultural and language challenges that affect trust between parties. These findings underscore the need to strengthen NCP capacity to address the unique challenges of mediating transnational disputes.