Editors: Larry Catá Backer and Claire Methven O’Brien
CONTENTS
PART I. INTRODUCTION: TEXT AND CONTEXT
Chp 1: The Current State, and Future Trajectories, of Human Rights Due Diligence Laws — Larry Catá Backer and Claire Methven O’Brien
Part II. HRDD in & BEYOND THE UNGPs– SOURCES AND FRAMEWORKS
Chp 2: Human Rights Due Diligence in the UNGPs – Larry Catá Backer
Chp 3: Relationship to Human Rights Due Diligence in International Human Rights Law – Maria Monnheimer
Chp 4: Relationship to Human Rights Due Diligence in International Environmental, Climate and Sustainability Law – Sara Seck
Ch.5: Relationship of Human Rights Due Diligence to Civil and Tort Law – TBC
Part III. THE LEGALIZATION OF HRDD IN DOMESTIC LEGAL ORDERS
Chp 6: French Due Diligence Law – Jeremy Gilbert and Cannelle Lavite
Chp 7: Supply Chain Due Diligence Law in Germany – Birgitte Spiesshofer
Chp 8: EU Due Diligence Legislation – Claire Methven O’Brien
Chp 9: US measures on Human Rights Due Diligence – Carlos Manuel Vázquez and Eric R. Biel
Chp 10: HRDD in Contract Law– Susan Maslow, Patrick Miller, and David Snyder
Chp 11: Sector and Thematic Due Diligence Laws – Justine Nolan and Shelley Marshall
Chp 12: Human Rights Due Diligence and Public Procurement – Olga Martin-Ortega
Chp 13: Human Rights Due Diligence and Disclosure Regimes – Rachel Chambers and Anil Yilmaz Vastardis
Chp 14: Human Rights Due Diligence and the OECD Guidelines for Multinational Enterprises – Jernej Letnar Černič
Chp.15: Human Rights Due Diligence and Foreign Liability Claims – Lucas Roorda
Part IV. Conclusion
Ch.14 Legalising Due Diligence: Larry Catá Backer and Claire Methven O’Brien
INDEX
Chapter Abstracts
Part I. Introduction: Text and Content
Chapter 1: The Current State and Future Trajectories of Human Rights Due Diligence Laws…………………………………………………………………………………………………….. #
Larry Catá Backer and Claire Methven O’Brien
In this initial chapter, the project editors undertake a deeper conceptual study of the phenomenon of legalization of due diligence. They then seek the frame the issues and future course of the development of due diligence as a concept, as a process and as a tool of policy and implementation of this project. In the process they situate due diligence within the broader conversations about the governmentalization of private actors, the projection of state power as participants in private markets, the relationship between due diligence, state regulatory authority, and compliance oriented systems, and lastly the development of specific instances of state, international and private measures to apply these concepts on the ground. The contributions in the volume are then synthesized and from then a set of core insights are derived.
Part II. HRDD In & Beyond the UNGPs – Sources and Frameworks
Chapter 2: Human Rights Due Diligence in the UNGPs……………………………………….. #
Larry Catá Backer
This chapter seeks to situate the concept of due diligence from its origins in the UN Guiding Principles for Business and Human Rights. The development of the concept is examined with reference to its development between 2006 and the start of the mandate of John Ruggie as Special Representative to the UN Secretary General to the unanimous endorsement of the UNGP in 2011 by the Human Rights Council. The transformation of the concept from an operational level mechanism at the core of the corporate responsibility to respect human rights in the UNGP 2nd Pillar to its key role as the embodiment of compliance based legality respecting the management of global production is then considered. Due diligence has become more than a method for more efficient operation of markets driven nudging (and thus disciplining) of economic behaviors. Due diligence has assumed a normative role as well. It serves as the means through which economic actors may become embedded in complex webs of interlinked administrative legalities that start with international normative projects, their transposition into domestic (or multilateral) legal orders, and their delegation first to the national administrative apparatus and then in its operational elements to the private actors who are expected to serve as the front line administrators of a global multi-layered system. The relationship between the precisely drawn 2nd Pillar due diligence concept, and the 1st Pillar state duty to protect human rights, along with the 3rd Pillar remedial obligation is considered. The transposition of these mechanisms to other regulatory frameworks is then explore.
Chapter 3: Relationship to Human Rights Due Diligence in International Human Rights Law…………………………………………………………………………………………………………..#
Maria Monnheimer
Due diligence is among the most ambiguous terms employed in international law. While being referred to in a growing number of international legal instruments and proceedings, no overall definition has been agreed upon. Especially in the business and human rights context, “due diligence” is at the heart of many controversial debates and very recent political developments. It is exactly in the business and human rights context, though, that the term “due diligence” is used even more ambiguously than in other areas of international law. This is due to the fact that two different forms of obligations lie at its core: due diligence obligations of states to respect, protect and promote human rights on the one hand; and due diligence obligations of businesses to adequately address human rights risks within their supply chains on the other. Important international and domestic legal instruments invoke both forms of obligations without clarifying their precise content and relation to each other. Such confusion creates uncertainty about the extent of the respective obligations and responsibilities. To ensure the effective implementation of business and human rights instruments, it is, therefore, necessary to explain how due diligence emerged as a standard of conduct in public international law as opposed to its rather procedural understanding in the private business context. Clarifying these different concepts of due diligence will allow us to discuss how they influence and complement each other in the business and human rights context and to determine in a more precise manner what is expected of states and business to ensure effective human rights protection.
Chapter 4: Relationship to Human Rights Due Diligence in International Environmental, Climate, and Sustainability Law………………………………………………….. #
Sara Seck
The concept of due diligence has a long history in international environmental law. It is often associated with the ‘do no harm’ principle expressed in 1972 in Principle 21 of the Stockholm Declaration and moderately revised in the 1992 Rio Declaration on Environment and Development: ‘States have … the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction.’ While this principle could be interpreted to impose an obligation of result, it has generally been understood as an obligation of due diligence. It is often described as a norm of customary international law and has been incorporated into many multilateral environmental agreements. The do no harm principle also underlies the influential work of international legal bodies, notably the International Law Commission’s Draft Articles on the Prevention of Transboundary Environmental Harm. This chapter will trace the history of due diligence in international environmental law, beginning with the do no harm rule but moving beyond to consider related principles including precaution (Rio Principle 15), environmental impact assessment (Rio Principle 17), and procedural environmental rights to information, participation, and justice (Rio Principle 10). The chapter will then consider the relationship between due diligence and related norms of international environmental law (climate law, biodiversity law, and pollution law – the triple planetary crisis) and the emergence of human rights due diligence laws in the business and human rights context.
Chapter 5: Relationship of Human Rights Due Diligence to Civil and Tort Law…… #
Carola Glinski
Human rights (and sustainability) due diligence of corporations and other economic actors have for long been discussed in the international arena but has only recently, with national codifications based upon the UN Guiding Principles led to binding legal outcomes, such as in France (2017), Germany (2021) and the EU (draft). At the same time, long-standing attempts to hold companies liable under tort law for damages caused by their subsidiaries or suppliers abroad are now seeing some success, following in particular the English rulings in Chandler v. Cape and Lungowe v Vedanta.
Indeed, the duty of care in the tort of negligence has always provided for a doctrinal basis and for relevant criteria to hold companies liable for not having carried out due care (or due diligence) within their sphere of impact, and thus for a valuable source of law for human rights due diligence. In its first part, the chapter highlights the doctrinal parallels and the mutual impact between human rights due diligence and tort law, as discussed in literature and case law.
In its second part, the chapter turns to the new due diligence laws. These take different approaches to the issue of liability, by either codifying liability, excluding liability, or remaining silent on the issue. The chapter analyses the changes caused by these codifications in the relation between human rights due diligence and tort law.
Part III. The Legalization of HRDD In Domestic Legal Orders
Chapter 6: French Due Diligence Law…………………………………………………………………. #
Jeremie Gilbert and Cannelle Lavite
This chapter focuses on the French Corporate Duty of Vigilance Law. It will offer an analysis of its contents and mechanisms and adopt an ‘in practice’ approach by analyzing some of the ongoing cases concerning its implementation and interpretation by the courts. The chapter will focus on issues of enforcement, extraterritoriality, and causation, and examine some of the ongoing cases brought on the basis of this law concerning the action of French companies abroad. It will notably focus on the Unión Hidalgo case against EDF which illustrates many of the challenges faced by individuals affected by corporate misconduct in global supply chains in claiming remedy and rights before the courts.
Chapter 7: Supply Chain Due Diligence Law in Germany……………………………………. #
Birgit Spiesshofer
On July 22, 2021, the Act on Corporate Due Diligence Obligations in Supply Chains (Supply Chain Act) was published in the German Federal Law Gazette and will come into force on Jan. 1, 2023. Roma locuta, causa finita? Not at all. The German Supply Chain Act is only a further milestone in the regulatory program laid down in particular in the UN Guiding Principles on Business and Human Rights (UNGP), the OECD Guidelines for Multinational Enterprises, and the National Action Plan for Business and Human Rights (NAP) – international and national soft law – and paves the way for corresponding EU supply chain legislation and its Europe-wide implementation.
The Act establishes the responsibility of companies for the implementation of human rights and environmental due diligence in their own organization and group of companies as well as in their supply chains as their own duty of care, the key elements of which are laid down in §§ 3 et seq. Supply Chain Act. The human rights and environmental due diligence introduced by the Supply Chain Act raises many questions, both in principle and in detail. One of the key issues is whether the due diligence obligations are (merely) procedural obligations, in particular, whether they require (only) to undertake best efforts, or, whether at least some of the provisions contain a duty to achieve results.
The draft EU Corporate Sustainability Due Diligence Directive takes up the basic conceptual features of the Supply Chain Act. However, it does contain significant deviations that may lead to an adjustment and revision of the Supply Chain Act.
Chapter 8: EU Due Diligence Legislation…………………………………………………………….. #
Claire Methven O’Brien
In 2022, the two successive draft texts were published for a European Union corporate sustainability due diligence directive, first, by the European Commission, and then by the European Council. This chapter first presents the background and context for these proposals, both of which anticipate due diligence duties for large companies relating to corporate harms to human rights and the environment, as well as climate change. This part also addresses the process relating to the draft laws in the EU Regulatory Scrutiny Board. Next, the chapter outlines the main features of the regulatory scheme envisaged in the EU’s 2022 draft due diligence laws. The chapter then evaluates the draft Directives’ approach on important elements from point of view of human rights standards, including the UNGPs, as well as wider European human rights jurisprudence and tort law. Finally, the chapter identifies key transformations and deformations implicit in the EU’s putative approach to the legalization of the corporate human responsibility to respect human rights and due diligence and highlights associated challenges for implementation, remediation, and accountability.
Chapter 9: US Measures on Human Rights Due Diligence……………………………………. #
Carlos Manuel Vázquez and Eric R. Biel
Much of the examination of emerging legal regimes on human rights due diligence (HRDD) has focused on activities in the European Union (EU), centering on the European Commission’s adoption in February 2022 of a draft directive on “corporate sustainability due diligence” – as well as initiatives at the member state level, notably in Germany. This in turn has led to a natural interest in whether the United States might at some point develop a similar HRDD model as a centerpiece of a broader strategy to promote and enforce standards for responsible business conduct.
Our analysis of U.S. measures to give legal effect to HRDD concludes that any expectation of a U.S. legal framework similar in structure to that of the EU is unlikely for a variety of reasons. Rather, the U.S. approach to advancing the objectives of HRDD to date has been – and in our view will continue to be – driven by a series of separate initiatives, only loosely and informally coordinated under the ambit of a National Action Plan (NAP) on Responsible Business Conduct due to be finalized by mid-2023. (This will be the second U.S. NAP, following one issued at the very end of the Obama Administration in December 2016.)
Key elements of the U.S. approach include trade measures such as enforcement of Section 307 of the Tariff Act of 1930, as amended in 2016; the Uyghur Forced Labor Prevention Act, signed into law in December 2021; and the novel factory-level “rapid response mechanism” procedure under the US-Mexico-Canada Agreement. Another area currently receiving increased attention – including in the context of the NAP – is public procurement, where there can be both “carrots” and “sticks” to incentivize and/or punish corporate performance.
These, of course, differ considerably from an EU-type reporting and disclosure model. In the United States, reporting and disclosure efforts have been led at the state level, notably in California. However, there now is a range of work at the Securities and Exchange Commission (SEC) centered on the different pillars of Environmental Social and Governance (ESG): the criteria used in particular by investors to assess companies’ “sustainability” behavior and the attendant risks of investing in them.
SEC regulatory activity is much further along to date on the “E” and “G” elements – environmental and governance – with the “S” as a significant laggard. But there is now a heightened focus on what has been termed “human capital” disclosure – which, depending on its scope, could reach beyond a company’s own operations to also cover labor rights issues in its supply chains. If sustained advocacy from civil society organizations succeeds in prompting greater interest from both executive and legislative branch officials, and if some businesses see focused human rights/labor measures as in their own interest (as has happened in the EU), we could see an SEC-enforced HRDD disclosure process as a more focused U.S. approach that is most comparable to the EU’s regulatory measures.
Chapter 10: Human Rights Due Diligence in Contract Law…………………………………. #
Susan Maslow, David Snyder, and Patrick Miller
Human rights due diligence norms can be legalized, as well as operationalized, through contractual commitments. The contractual obligation is binding as a matter of contract law regardless of whether any obligation is imposed by legislative act or judicial decision. By entering into contracts requiring HRDD, companies can turn soft law, or even mere norms, into hard-law obligations. To facilitate these contracts, a working group of the American Bar Association Business Law Section published Model Contract Clauses reflecting the UN Guiding Principles and the OECD Guidance on HRDD, enabling companies to make HRDD “legally effective and operationally likely.” This chapter will explain the role that contracts can play in providing enforceable HRDD obligations. While in many cases these contractual obligations may be considered self-imposed, several jurisdictions now explicitly or implicitly require the use of HRDD contracts. Even older strict liability laws (like the US import ban for goods made with forced labor) effectively push parties toward HRDD contracts: traditional contractual approaches centered on “representations and warranties” and infamous “tickbox” questionnaires are notoriously ineffective, meaning that import will be prohibited. Moving contracts to the more effective HRDD regime allows for better supply chain control. The greater effectiveness derives in part from the operational as well as the legal role of contracts: HRDD contracts set forth the parties’ expectations, telling the supplier what it must do, and often how to do it, in order to be paid. Such contracts and the HRDD reporting requirements they impose increase the likelihood of compliance, successful import, and better human rights outcomes.
Chapter 11: Sector and Thematic Due Diligence Laws…………………………………………. #
Justine Nolan and Shelley Marshall
This paper assesses whether human rights due diligence (HRDD) is being institutionalized in such a way to foster robust mechanisms to address human rights abuses in supply chains, particularly in regions human rights are not respected and enforced. We consider the power of HRDD regulation as a stand-alone mechanism or as a complement to other approaches.
The emergence and development of HRDD in the business and human rights field in the last ten years has led to some subtle and not-so-subtle shifts in approaches from government, business, civil society, trade unions, and workers in how they identify and communicate risk and impact around human rights. For some, HRDD might be seen as a transformative concept that can revitalize and formalize corporate accountability for human rights, but for others, it might be viewed more as a risk management tool that will superficially but not substantively address rights abuses in supply chains. What is clear, is that while the concept of HRDD has increased in prominence in recent years, there remains significant ambiguity around its preventative value and potential to address corporate human rights harms in supply chains.
The development of HRDD stems from decades of increasing pressure on companies and states to tackle labor rights abuses in supply chains. Business and human rights regulatory approaches have long been dominated by a reliance on self-regulation and broad top-down approaches that often fail to substantively engage rights holders or consider sectoral synergies and dissonance. Will emerging HRDD initiatives be any different?
HRDD was first formally articulated in the United Nations Guiding Principles on Business and Human Rights in 2011 as an expected standard of conduct for business, but its form and implementation are open to multiple interpretations. It has since been incorporated into subsequent regional and international documents in the business and human rights field, as well as mandated in national legislation. Several of these initiatives have a sector-specific or thematically focused approach.
This paper begins by canvassing the purpose and framework of key regulatory HRDD initiatives with an emphasis on sectoral or thematic approaches to regulating corporate conduct. This is followed by a critical analysis of varieties of HRDD as evidenced in these approaches.
Chapter 12: Human Rights Due Diligence and Public Procurement……………………… #
Olga Martin-Ortega
Global supply chains are organized to deliver goods and services in a fast, efficient, and cost-effective way. They are not designed to protect human rights or fulfill decent working conditions and decent lives for those working on them. Complex processes and stages, often with hundreds of companies and entities involved across a number of states and jurisdictions involve millions of workers exposed to hazardous working conditions, excess—and often compulsory—overtime, low wages, discriminatory practices, and abusive and fraudulent labor recruitment, which even lead to bonded labor, forced labor, and human trafficking. To address these issues, which the international human rights and international labor rights regimes have so far failed to resolve, it is essential to devise how to extend human and labor rights protection beyond individual states’ borders and how to remedy violations that take place away from where the decision maker sits. Human Rights Due Diligence is currently being relied upon as a regulatory instrument to fulfill corporate responsibilities to protect human rights beyond their direct impacts, including for the actions of their business partners and in their global supply chains. However, there are no similar provisions for states, even if states’ supply chains overlap with private supply chains; human rights abuses are linked to the products the private sector buys as much as those that the state purchases. In international law, states’ duties to protect human rights from violations caused by third parties, including businesses, continue to be restricted to protecting those under their jurisdiction. Whilst the UNGPs contain a non-committal reference to extraterritoriality, which could be argued has done more harm than good to the development of the role of the state in regulating and monitoring global supply chains, they contain a provision that is often overlooked and, this chapter argues, could hold the key to the use of public procurement as a tool to protect, promote and potentially remedy such abuses.
Associating the award of public contracts to the protection of human rights and promotion of decent work in supply chains provides a clear opportunity for states to exercise their duty to protect human rights. The question arises, do states have an obligation to procure goods, services, and works that are delivered under conditions that respect human rights? And if so, what does it entails and how should it be articulated in the framework of a legal system, public procurement law, which prioritizes efficiency, non-discrimination of economic actors, competition, and value for money? This chapter considers whether the state-business nexus can extend to public procurement and how can due diligence in public supply chains be articulated to promote human rights protection beyond states’ borders through purchasing from companies that ensure human rights are respected throughout the whole supply chain contribute to supply chains which do not violate human rights.
Chapter 13: Human Rights Due Diligence and Disclosure Regimes………………………. #
Rachel Chambers and Anil Yilmaz Vastardis
In this chapter, we address the legalization of human rights due diligence (HRDD) via disclosure requirements, the interactions between these areas, and the consequences of their conjunction.
Within business and human rights, disclosure and transparency measures were among the first standards to be legalized through legislation, such as Dodd-Frank section 1502 (2010), EU Non-Financial Reporting Directive 2014, and the California Supply Chain Transparency Act 2012. It was expected under these laws that companies would carry out HRDD prior to issuing disclosures. The experience with the legalization of disclosure standards provides valuable lessons for understanding the impact of legalization itself and the effectiveness of various types of legalizations in this area, but also for understanding how far mandatory disclosure requirements can go in indirectly imposing HRDD requirements on companies.
In order to analyze the relationship between disclosure rules and HRDD, this chapter will consider this early conjunction between disclosure and HRDD, and the latest iteration, namely disclosure obligations as part of HRDD laws such as the French Law on the Corporate Duty of Vigilance. With the seeming progression of legalization of business and human rights norms from disclosure obligations to process obligations (HRDD), there remains an enduring role of disclosure, for instance in securities laws in the United States. We ask: how can disclosure promote HRDD, and how can HRDD elevate the quality of disclosure?
Chapter 14: Human Rights Due Diligence and the OECD Guidelines for Multinational Enterprises…………………………………………………………………………………… #
Jernej Letnar Černič
Doing business increasingly requires meeting minimum human rights and environmental standards. In recent years, states have adopted National Action Plans to implement the United Nations Guiding Principles for Business and Human Rights. Rights holders have in the past faced difficulties in enforcing accountability for business-related human rights abuses. Therefore, much effort in business and human rights has been placed into measures preventing human rights violations. In the last decade, human rights due diligence have become an emerging standard of responsible business conduct. Human rights due diligence create an obligation of conduct for companies to identify, manage and respond to human rights risks. OECD Guidelines for Multinational Guidelines are pioneering international documents regulating business conduct in human rights, environment, and anti-corruption. They required corporations based in OECD member states to respect and protect human rights when doing business extraterritorial. In the past decade, OECD Guidelines have propelled the development of sectoral human rights due diligence guides. Also, the OECD Guidelines have established a unique quasi-judicial mechanism to enforce its potential violations in the form of a National Contact Point placed in the public administration of the OECD Member State. This chapter discusses the normative framework of due diligence under the OECD Guidelines. After that, it analyzes the recent case law of the selected National Contact Point concerning human rights due diligence. Equipped with the knowledge, the chapter proposes some normative ideas for strengthening human rights due diligence processes in practice.
Chapter 15: Human Rights Due Diligence and Foreign Liability Claims…………….. #
Lucas Roorda
An increasing number of states are adopting mandatory human rights due diligence (mHRDD) legislation, a development which may gain a significant boost once the European Union adopts its Directive on Corporate Sustainability Due Diligence. The current proposal for the Directive contains a provision that would allow victims to sue parent or lead companies within the scope of the Directive for harms arising out of insufficient due diligence policies or practices, regardless of where those harms actually took place. The Directive is still under negotiation and its scope and content may be subject to change, but in broad terms, civil liability for failing to do proper human rights due diligence has broad support: not just in the EU, but also globally given its inclusion in drafts of the proposed binding instrument on business and human rights.
This contribution maps the potential impact of such provisions on existing litigation against corporate human rights abuses, which mostly consists of ‘foreign direct liability’ (FDL) lawsuits. Specifically, it discusses how civil liability for violating mHRDD provisions affects procedural obstacles in FDL cases: adjudicative jurisdiction, applicable law, disclosure and access to information, and financing. While none of these obstacles are intentionally or explicitly addressed by the proposed Directive, nor by other domestic mHRDD instrument, the construction of their respective liability provisions can result in indirect impacts on how victims experience and overcome such obstacles. The contribution identifies which parameters determine the effectiveness of these indirect impacts from the perspective of the victims’ right of access to court, and closes with a general reflection on the desirability of these indirect results versus more explicit amendments to civil procedure and practice.
Part IV. Conclusion
Chapter 15: Legalizing Due Diligence………………………………………………………………….. #
Larry Catá Backer and Claire Methven O’Brien
looks to the future of the project of due diligence legalization. The object here is to take stock of measures and regulatory trajectories that have emerged especially in the second and third decades of this century. That stock taking then serves as the basis for considering where these legalization trajectories may take the project. Here one explores the relationship between due diligence as stand along legislative projects and their attempted embedding in an international instrument for business and human rights. One here considers, as well, the value of a focus on human rights in a context in which human rights itself may be operating within a broader regulatory ecology of sustainability, climate change, and bio-diversity. Lastly the relationship between this due diligence legalization project and the transformation of the structures, manifestations, operations, and conceptualizations of globalization must be taken into account. The old project grounded in the fundamental principle of legalized convergence, since the start of the second decade of the 21st century appears to be giving way to a more fractured and regionalized set of systems. The issues then are reframed from one seeking a single center around which due diligence may be conceptualized and applied, to one based on a multi-polar framing and a priority focus on the way these systems may be coordinated.
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