Germany: Legal opinion finds current framework for due diligence oversight does not meet CSDDD requirements
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'Legal Opinion on Administrative Independence in the CSDDD'
Summary
As the Federal Office for Economic Affairs and Export Control (BAFA) [overseeing implementation of the German Supply Chain Due Diligence Act] is subject to the technical and legal supervision of the Federal Ministry for Economic Affairs and Energy (BMWE) and is therefore subject to its authority to issue instructions, the current structure of regulatory oversight of mandatory due diligence obligations does not meet the requirements of the CSDDD under European law regarding regulatory independence and must therefore be adapted as part of the implementation of the CSDDD.
The CSDDD requires the competent supervisory authority to be legally, functionally and financially independent, which prohibits it from seeking or accepting instructions. Consequently, the authority responsible for enforcing the CSDDD must not be subject to any supervision by the highest federal authorities or the government. The only forms of oversight permitted are parliamentary and judicial supervision.
[Only if] the authority is established as... highest federal authority [this] definitively precludes supervision and direction by ministries or the government and thus ensures legal certainty in accordance with the requirements of European law and Article 24(9) of the CSDDD....
The German constitutional prohibition of vacuums of ministerial oversight does not preclude the existence of a supreme federal authority that is not subject to ministerial instructions, as it must give way to the requirements of European law due to the primacy of European law. Under the principle of democracy in European law, an unbroken chain of legitimacy back to the sovereign cannot be guaranteed solely through ministerial supervision....
In order to meet the requirements of Articles 24 and 25 of the CSDDD regarding regulatory independence, the structural autonomy and fundamental safeguarding of the supervisory authority or the body responsible for monitoring and enforcing statutory due diligence obligations should also be enshrined in law.
See also German CSOs set out expectations regarding independence of CSDDD supervisory authority