Final statement: Parallel Mining Corporation and United Tegaru Canada

1. On September 10, 2022, Canada’s National Contact Point (NCP) received a request for review from United Tegaru Canada (the Notifier), a non-government organization based in Toronto. The request for review concerned observance of the OECD Guidelines for Multinational Enterprises (the “Guidelines”) by Parallel Mining Corporation (the Respondent), an enterprise based in Vancouver and focused on mineral exploration projects in Ethiopia.
2. The Notifier’s request for review raised issues concerning paragraphs 1 and 2 of Chapter IV (Human Rights) of the Guidelines. Specifically, the Notifier claimed that by paying taxes/licensing fees to the Government of Ethiopia, the Respondent was or had been contributing to adverse human rights impacts allegedly caused by government forces in the context of the Tigray conflict. The Notifier also questioned whether the Respondent had a policy commitment to human rights (Chapter IV, paragraph 4), and whether the Respondent was undertaking appropriate human rights due diligence (Chapter IV, paragraph 5). The Notifier did not claim that the Respondent itself had abused human rights in the context of its activities in Ethiopia.
3. The Notifier asked the NCP to provide a forum for constructive dialogue on these issues.
4. The NCP Secretariat held separate exchanges with both parties during the initial assessment. The Respondent was invited to provide a written response to the NCP regarding the Notifier’s request for review but did not do so.
5. A draft of the NCP’s initial assessment was shared with the parties for their review. The parties were given an opportunity to provide comments. A finalized version was sent to the parties on December 14, 2023. The initial assessment has been published as a separate document (initial assessment).
6. Further to its initial assessment, Canada’s NCP offered its good offices to facilitate a dialogue regarding the issues raised in connection with Chapter IV, paragraphs 4 (policy commitment to human rights) and 5 (human rights due diligence). The NCP did not offer good offices concerning the issues raised with respect to paragraphs 1 and 2 of Chapter IV of the Guidelines.
7. The NCP emphasizes that a decision to offer (or not offer) good offices does not represent a determination as to whether an enterprise has observed the Guidelines. The NCP’s initial assessment and final statement should not be seen as validating to any degree – one way or the other – claims made by either the Notifier or Respondent.
8. Both parties were given an opportunity to review and comment on this final statement prior to its publication.

Good offices

9. The NCP secretariat engaged both parties to schedule a dialogue for February 27, 2024. However, the Respondent’s representative was absent when the dialogue began, and subsequently informed the secretariat that he would be unable to participate as planned. The NCP followed up with the Respondent in subsequent months to identify a new date for the dialogue.
10. The NCP secretariat facilitated a dialogue between the parties on October 24, 2024. Overall, the NCP secretariat observed a constructive discussion that contributed to greater mutual understanding between the parties.
11. During the dialogue, the Notifier expressed its concerns about the human rights situation in the region and shared its views on the need for enhanced human rights due diligence by enterprises active there.
12. The Respondent outlined its history in the area, including its decision to suspend exploration activity and invoke force majeure on its exploration licences following the outbreak of conflict in 2020. The Respondent also described its ongoing engagement with stakeholders and efforts to build and maintain positive relationships with the local community.
13. The Respondent emphasized its existing commitment to responsible business conduct and respect for human rights, though recognized that it could look to elaborate more formally on this commitment in its corporate policies/procedures. The Respondent also acknowledged a potential role for providing more information on activities related to due diligence and responsible business conduct in future public communications.

Recommendations

14. The NCP welcomes the Respondent’s expression of commitment to elaborate on and articulate more explicitly its policy commitment to respect human rights in relevant corporate policies/procedures. The NCP recommends that the Respondent seek to advance this work, informed by paragraph 4 of Chapter IV (Human Rights) and commentary paragraph 49 of the Guidelines.
15. The NCP also recommends that the Respondent look to communicate more about its human rights due diligence in the future, as appropriate to the scope and nature of its operations. The NCP is of the view that greater public communication and disclosure of information about the Respondent’s due diligence activities in this regard, such as stakeholder engagement, has potential to reinforce the Respondent’s approach to recommendations in Chapter III (Disclosure) and Chapter IV, paragraph 5 (Human Rights) of the OECD Guidelines.
16. The NCP will follow-up with the parties about its recommendations within 6 months of the publication of this final statement. The NCP will publish a statement describing its follow-up.

Additional issues raised by the Notifier with the NCP

17. After receiving the NCP’s initial assessment, the Notifier raised questions and a new issue with the NCP in relation to this specific instance. The NCP seeks to address these below.

Decision not to offer good offices on issues raised concerning Chapter IV, paragraphs 1 and 2

18. The Notifier questioned the NCP’s decision not to offer good offices regarding the issues raised in connection with paragraphs 1 and 2 of Chapter IV. To recall, the Notifier claimed that the Respondent had been or was contributing to adverse impacts allegedly caused by government forces by virtue of paying taxes and other State-imposed fees incidental to its operations. According to the Notifier, “any operation” of the Respondent in Ethiopia would see it “contribute” to adverse impacts allegedly caused by government forces.
19. The NCP declined to offer its good offices on this issue. 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.
20. 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.
21. 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.

Alleged link to adverse impacts through a business relationship

22. 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.
23. 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.
24. 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.

Timeline

September 10, 2022 Notifier’s request for review received.

October 4, 2022 Conference call between the NCP secretariat and the Notifier.

October 21, 2022 Respondent notified of the request for review.

November 1, 2022 Initial phone call between NCP secretariat and the Respondent.

October 17, 2023 Draft initial assessment sent to the parties.

December 14, 2023 Finalized initial assessment sent to the parties.

January 26, 2024 NCP secretariat call with the Respondent.

February 9, 2024 After confirming the availability of both parties, the NCP schedules a dialogue for February 27.

February 27, 2024 The NCP secretariat convenes the dialogue. While the Notifier’s representatives are present, the Respondent’s representative is absent. The secretariat immediately contacts the Respondent and is informed that the Respondent is unable to participate as planned.

February – September 2024 The NCP secretariat engages the Respondent to reschedule the dialogue.

October 24, 2024 Facilitated dialogue between the parties.

January 17, 2025 Draft final statement shared with the parties.