Call for EU Human Rights Due Diligence Legislation: What Can Be Learnt from France and the Netherlands?
Dr Ekaterina Aristova, Postdoctoral Fellow in Human Rights and Practice, Bonavero Institute of Human Rights
This blog is part of a series 'Towards Mandatory Human Rights Due Diligence'.
Following a series of events ‘Human Rights Due Diligence in Law and Practice’ organised in Oxford in early 2020, Dr Ekaterina Aristova reflects on the lessons learnt from the French and Dutch experience of embedding corporate respect for human rights into legal frameworks (see also part 1 and part 2).
French Corporate Duty of Vigilance Law
The French Corporate Duty of Vigilance Law sets an obligation for the largest French companies to establish and effectively implement a vigilance plan to identify and prevent human rights violations and environmental damage. The law applies to the activities of the company itself; subsidiaries under its direct and indirect control; subcontractors and suppliers with whom it maintains an ‘established business relationship’. The French Law endorses a two-fold enforcement mechanism. In a first step, a party with standing can serve the company a three-month official notice for breach of its vigilance obligations irrespective of whether actual harm has occurred. Upon expiration of the notice period and in case of continued non-compliance, the party can apply to the competent court for an injunction with a potential periodic penalty payment. The French Law also establishes a remediation mechanism allowing individuals to file a civil liability claim if the failure to comply with the vigilance obligations caused damage, which could have been otherwise prevented had the company complied.
Since 2019, the first step of the enforcement mechanism has been triggered at least in five instances. One of the most prominent cases relates to two oil-related projects of Total in Uganda. Several French and Ugandan NGOs allege that construction and development of these projects will have an adverse impact on the local communities including forced eviction and threat to their traditional livelihood, yet the company’s vigilance plan does not adequately identify and address these risks. Total was served formal notice in June 2019, and – following Total’s failure to revise the content and implementation of its plan – the complainants applied to court for an injunction. Juliette Renaud (Friends of the Earth France) explained that Total challenged almost every point in the NGOs’ submission except for agreeing that it maintains an established business relationship with the sub-contractors responsible for the projects’ implementation. On 30 January 2020, the Nanterre High Court controversially decided that the case did not fall within its jurisdiction and should be heard by the Commercial Court instead.
The French Law is a ground-breaking step towards changing the culture of corporate impunity. Yet, Elsa Savourey (Herbert Smith Freehills) argued that challenges in both theory and practice remain. It is difficult to identify companies under the scope of the French Law due to a lack of publicly available information. In 2019, civil society organisations launched a dedicated website to identify French companies subject to the law and verify their compliance with vigilance obligations. Monitoring the implementation of the French Law is, therefore, very much in hands of NGOs with limited financial and operational capacity and who often experience difficulties with collecting evidence and proving standing to trigger the enforcement mechanism.
Dutch Child Labour Due Diligence Law
The Dutch Child Labour Due Diligence Law was adopted in 2019, but has a tentative enforcement date of 1 January 2020. It introduced a duty for companies to investigate whether there is a ‘reasonable suspicion’ that their goods or services have been produced using child labour, and – if so – to develop and implement an action plan to address identified risks.
The Dutch Law has a few notable distinctions from the French law. Despite its limited material coverage and focus on child labour, it has a wider personal scope and different enforcement measures. The due diligence obligation covers all companies that provide goods and services to Dutch end-users. The enforcement mechanism is also different. The implementation of the Dutch Law will be overseen by a regulator. As a first step, affected parties can lodge a complaint with the company if there is a concrete indication of non-compliance. Failure of the company to respond or adequately address the identified breaches within 6 months then triggers involvement of the regulator. If the regulator finds that the company failed to carry out an investigation, produce an action plan or publish the statement, or if the investigation or the action plan are inadequate, the regulator may impose a fine. In cases of continuous non-compliance with the Dutch Law, the company may face criminal penalties.
The practical implications of the Dutch Law are yet to be seen, but Anneloes Hoff (University of Oxford) warned about its potential limitations. Several aspects of the law (e.g. specific requirements to the action plan and the identity of the regulator) are yet to be determined by separate implementing decrees (GAOs) leaving ample room for the business lobby. The due diligence obligations of the companies remain relatively vague and the exact parameters of ‘reasonable suspicion’ are unknown. Companies are required to publish a declaration of compliance only once which goes against the ongoing nature of corporate due diligence obligations under the UNGPs. Finally, the Dutch Law is framed through the lens of consumer protection rather than protection of child labour victims. Mariëtte van Huijstee (SOMO) confirmed that the push for a wider HRDD legislation in the Netherlands gaining momentum. The limitations of the Dutch Law and a broad range of questions still to be clarified by the GAOs means there is a need for further advocacy. In this context, the Dutch Christian Union has already proposed a new legislative initiative with a broader scope setting an obligation to conduct human rights and environmental due diligence in accordance with the OECD Guidelines and making it a continuous and result-oriented process.
A way forward
Following the recent commitment of the European Commission to legislation on mandatory HRDD, a debate on the preferable model and key elements of new initiative is more topical than ever. Antonie Fountain (VOICE Network) suggested that there are at least two topics for further discussion. First, how to make sure that companies do not end up with a check-box exercise and engage in appropriate and systematic due diligence. Second, determining the scope of the activities covered by a company’s due diligence obligations under such a law. Phil Bloomer (BHRRC) also noted that laws can and should send signals to both irresponsible companies, stopping them from further externalisation of human rights and the environment on society, as well as responsible companies, valuing their existing efforts towards human rights protection. In Phil’s words, “mandatory HRDD is not panacea, but it is one of the acupuncture points that’s worth getting a needle and inserting it hard over the coming years”.