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Germany: Draft key points of a mandatory human rights due diligence law

"Draft key points of a Federal law on strengthening corporate due diligence to prevent human rights violations in global value chains (Due Diligence Act)", 10 March 2020

1. MAIN CONTENTS OF THE LAW

The law is intended to oblige companies based in Germany with more than 500 employees to meet their responsibilities in the value chain...

The criterion of "residency" means that there is a strong domestic connection and that entrepreneurial management decisions are taken in Germany. Mere commercial activities in Germany are not sufficient...

The corporate due diligence obligations defined in the law will be derived from the requirements of the UN Guidelines for Business and Human Rights (and) the OECD Guidelines for Multinational Enterprises... 

The principle of empowerment before withdrawal applies...

2. PRINCIPLE OF APPROPRIATENESS

The required risk management is designed to be appropriate, i.e. proportionate and reasonable, in view of the nature and scope of the business activity...

3. ENFORCEMENT

a) Civil liability...

A violation of the law can be the basis for actions for damages brought by private parties before German courts within the scope of their international jurisdiction...

A company is liable for an impairment which was foreseeable and avoidable when fulfilling the due diligence obligation. In principle, the burden of proof lies with the plaintiff. A company is not liable if did the appropriate within the limits of factual and legal possibilities... (obligation of effort)...

4. SAFE HARBOUR

Companies that join and implement an officially recognised (industry) standard can limit their civil liability to intent and gross negligence...

The company's compliance with the standard is externally audited... 

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