Civil Liability Under Sustainability Due Diligence Legislation: A Quiet Revolution?

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DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author(s).

Notes

1 World Benchmarking Alliance, ‘Corporate Human Rights Benchmark—Key Findings’ (2020) <https://assets.worldbenchmarkingalliance.org/app/uploads/2020/11/WBA-2020-CHRB-Key-FindingsReport.pdf> accessed 3 October 2022.

2 European Commission Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and Amending Directive (EU) 2019/1937, Brussels, 23.2.2022 COM (2022) 71 final 2022/0051 (COD).

3 Juan Jose Alvarez Rubio and Katerina Yiannibas, ‘Human Rights in Business: Removal of Barrier to Access to Justice in the European Union—Executive Summary’ [2017] Institute for Democratic Governance <http://humanrightsinbusiness.eu/wp-content/uploads/2016/09/EXECUTIVE_SUMMARY_HRB_Research_Results.pdf> accessed 29 March 2023, 11–17.

4 Jesper v Arab Bank 584 U.S. (2018), 13; Kiobel v Royal Dutch Petroleum Co., 569 U. S. 108, 621 F 3.d, 118.

5 See Richard Meeran, ‘Tort Litigation Against Multinational Corporations for Violations of Human Rights: An Overview of the Position outside the United States’ (2011)3(1) City University of Hong Kong Law Review 1, 3. However, see Nevsun Resources Ltd. v Araya 2020 SCC 5, (28 February 2020), para. 4 < https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/18169/index.do> accessed 29 March 2023, were liability for breach of customary international may be developed in common law under domestic law.

6 For instance, few of the cases which were brought before the English court concerned the joinder of the out of jurisdiction subsidiary with proceedings against the parent under Article 3.1(3) of practice direction 6B, which required a showing that ‘there is between the claimant and the parent a real issue which it is reasonable for the court to try. This involved a showing that the parent company was negligent, and as part of the enquiry that they owed a duty of care to the claimant. See Vedanta Resources PLC and another v Lungowe and others [2019] UKSC 20, paras 61; Okpabi and others v Royal Dutch Shell Plc and another [2021] UKSC 3 On appeal from: [2020] EWCA Civ 191, para 153.

7 On pushing the goals of the UNGPs see Doug Cassel ‘Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence’ (2016) 1(2) Business and Human Rights Journal 179.

8 Donoghue v Stevenson [1932] AC 562, at 580.

9 Ibid.

10 Caparo Industries Plc v Dickman [1990] 2 AC 605.

11 See Guardian Article on the Claims brought against Tesco in the UK by Mae Sot immigrant workers: Emily Dugan, ‘How Big Brands like Tesco are Drawn to ‘Wild West of Global Supply Chain’ The Guardian (London, 19 December 2022) <https://www.theguardian.com/world/2022/dec/19/how-big-brands-like-tesco-are-drawn-to-wild-west-of-global-supply-chain>.

12 Friday Alfred Akpan et al v Royal Dutch Shell PLc et al Case C/09/337050/HA ZA 09-150 [District Court of The Hague, 30 January 2013].

13 Filartiga v Pena-Irala, 630 F.2d 876, 890.

14 AngloAmerican, ‘Group Human Rights Policy’ (2021) <https://www.angloamerican.com/∼/media/Files/A/Anglo-American-Group/PLC/sustainability/approach-and-policies/hr-policy-document-english-oct-2021.pdf>.

15 Caparo Industries Plc v Dickman [19n90] 2 AC 605, 633.

16 Michael and Another v Chief Constable of South Wales Police [2015] UKSC 2, Para 97. Common law does not generally impose liability for ‘pure commissions’. See Hopkins R., ‘Civil Liability for Human Rights Violations: A Handbook for Practitioners’ (Bonavero Institute of Human Rights 2022) <https://www.law.ox.ac.uk/sites/default/files/2022-10/9._civil_liabilities_for_human_rights_violations_england_and_wales.pdf> accessed 30 July 2023, para 28. Though the term ‘pure omissions’ should be understood along the line that the law often imposes a duty not to make things worse, by rarely imposes a duty to make things better. See Begum (on behalf of Md Khalil Mollah) v Maran (UK) Ltd [2021] EWCA Civ 326, per Coulson LJ, para 60.

17 Chandler v Cape PLC, No. [2012] EWCA Civ 525, para 80.

18 Vedanta v Lungowe (n 6).

19 Friday Alfred Akpan et al v Royal Dutch Shell PLc et al Case C/09/337050/HA ZA 09-150 [District Court of The Hague, 30 January 2013].

20 This reflects the third prong of the famous English Court of Appeal Decision in Caparo Industries Plc v Dickman [1990] 2 AC 605. It is worthwhile pointing out that the Dutch court did not hesitate in the same proceedings to find that subsidiary owed a duty of care to the claimants and found it liable under the tort of negligence. See David Ong, ‘Regulating environmental responsibility for the multinational oil industry: Continuing challenges for international law’ (2015) 11(2) International Journal of Law in Context 153, 166.

21 Cassel (n 7) 196–197.

22 Caparo Industries Plc v Dickman [1990] 2 AC 605.

23 Vedanta v Lungowe (n 6), paras 61. See also Okpabi v Royal Dutch Shell (n 6), para 153.

24 See generally Okpabi v Royal Dutch Shell (n 6), para 153; and Vedanta v Lungowe (n 6), para 61.

25 Vedanta v Lungowe (n 6), para 53.

26 Hopkins (n 16), para 51.

27 Vedanta v Lungowe (n 6), para 54.

28 Fidelis Ayoro Oguru et al v Shell Petroleum Nv, Royal Dutch Shell Plc, Shell Petroleum Development Company Of Nigeria Ltd, Case numbers C/09/365498 / HA ZA 10-1677 (case a) + C/09/330891 / HA ZA 09-0579 (case b), (January 29, 2021) <https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:GHDHA:2021:132&showbutton=true>; Friends of the Earth Netherlands (Milieudefensie) v Royal Dutch Shell, District Court The Hague, (26 May 2021), English translation at <http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2021:5339>.

29 Ibid. Fidelis Ayoro Oguru et al v Shell Petroleum Nv, Royal Dutch Shell Plc (n 28) paras 3.30–3.31.

30 Smith v Littlewoods [1987] AC 241.

31 Vedanta v Lungowe (n 6), paras 53–54.

32 Per Lord Goff in Smith v Littlewoods (n 29).

33 Begum (on behalf of Md Khalil Mollah) v Maran (UK) Ltd [2021] EWCA Civ 326, para 60–64.

34 Ibid, Begum v Maran, para 65.

35 Graham Virgo, ‘Characterisation, Choice of Law and Human Rights’, in Craig Scott (ed), Torture as Tort: Comparative Perspectives on the Development of Transnational Human Rights Litigation (Hart 2001) 325, 335.

36 Hopkins (n 17) para 7.

37 Lord Justice Scarmann reasoned that ‘There is here no novelty: but merely the application of the principle ubi jus ibi remedium’ [for every wrong, the law provides a remedy]. Sidaway v Board of Governors of the Bethlem Royal Hospital, [1985] 1 A.C. 871, at p. 884 (H.L.)

38 Nevsun Resources Ltd. v Araya (n 5).

39 Ibid, para 63–64.

40 Ibid, para 106–107.

41 Ibid, para 113. It is important to note that four justices out of a court composed of nine justices in a dissenting opinion argued that corporations may not be civilly liable in Canada for a breach of customary international law norms, (Brown and Rowe JJ. Dissenting in part and Moldaver and Côté JJ. Dissenting).

42 Nevsun Resources Ltd. v Araya (n 5). Supreme Court agreeing with the Appeal court, para 20.

43 Ibid, para 122. See also Malcolm Rogge, ‘Nevsun Puts Canada's Corporate Decision Makers in The Human Rights Zone’ (2020) Working Paper No 70, Corporate Responsibility Initiative, p 2.

44 28 US Code & 1350. also called the Alien Tort Claims Act (ATCA).

45 70 F.3d 232 (2nd. Cir. 1995).

46 Ernest A Young, ‘Universal Jurisdiction, the Alien Tort Statute, and the Transnational Public-Law Litigation After Kiobel’ (2015) 64 Duke Law Journal 1023, 1052.

47 See Amicus brief by the United Kingdom, and the Netherlands before the Supreme Court in Kiobel v Royal Dutch Petroleum (n 4) . See also Young, ibid, 1098. US courts give the plaintiff procedural advantages which are not available in other systems. Furthermore, US court unlike many other jurisdictions is able to award punitive damages.

48 Sosa v Alvarez-Machain, 542 U.S. 692 (2004), 714.

49 Ibid.

50 Ibid.

51 Erie R. Co. v Tompkins 304 U.S. 64 (1938).

52 Sosa v Alvarez-Machain (n 47).

53 Jesner v Arab Bank, Plc, No 16-499, 584 U.S. (2018).

54 Kiobel v Royal Dutch Petroleum (n 4) (quoting Sosa (n 47) 732.

55 Jesner v Arab Bank (n 52).

56 Kiobel v Royal Dutch Petroleum 456 F.Supp.2d 457 (2006).

57 Ibid.

58 Ibid.

59 Ibid, 1661.

60 Ibid, 1663.

61 Ibid, 1662.

62 Cardona v Chiquita Brands International, Inc., 760 F.3d 1185 (11th Cir. 2014).

63 Ibid, 10.

64 Ibid.

65 See Baloco v Drummond Co., 767 F.3d 1229, 1238 (2014).

66 Al Shimari v CACI Premier Technology, Inc., 758 F.3d 516 (4th Cir. 2014), 528-529.

67 Ibid, 528.

68 Nestle U.S.A., Inc. v Doe, 141 S.Ct. 1931 (2021).

69 Ibid. See Stephan Statsko, ‘The Expectation Game: The Alien Tort Statute, Corporate Liability, and the International Law Forum After Nestle’ (2022) SSRN <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4115075>.

70 Gabrielle Holly and Claire Methven O'Brien ‘Human Rights Due Diligence Laws: Key Considerations Briefing On Civil Liability For Due Diligence Failures’ (2021) The Danish Institute for Human Rights, 7.

71 UN Working Group on Business and Human Rights ‘Raising the Ambition—Increasing the Pace: UNGPs 10+ A Roadmap for the Next Decade of Business and Human Rights’ (2021), 30; Axel Marx and others, ‘Access to Legal Remedies for Victims of Corporate Human Rights Abuses in Third Countries’ (2019) Study commissioned by the European Parliament's Sub-Committee on Human Rights, 14–16.

72 Some of the due diligence laws currently in force include the French Duty of Vigilance Law 2017, the German Supply Chain Act 2021, the United States' Uyghur Forced Labour Prevention Act 2021, the UK Modern Slavery Act 2015, the Australian Modern Slavery Act 2018, the Dutch Child Labour Due Diligence Law, Norwegian Transparency Act 2021, the California Transparency in the Supply Chain 2010, the EU Sustainable Finance Disclosure Regulation. Upcoming legislations include the imminent proposed EU Corporate Sustainability Due Diligence Directive, Austria's Supply Chain Act Motion, Belgium's Proposal on Duty of Vigilance, Spain's Bill on the Protection of Human Rights, Sustainability and Due Diligence in Transnational Business Activities.

73 Ibid.

74 For instance, issue-specific legislations such as supply chain-focused legislation including those currently in force in England, Germany, Australia and the United States and the upcoming Canadian supply chain legislation fail to match due diligence requirements with procedure for their enforcement, especially from the point of view of harmed individuals.

75 Act on Corporate Due Diligence Obligations in Supply Chains of 16 July 2021 <https://www.csr-in-deutschland.de/SharedDocs/Downloads/EN/act-corporate-due-diligence-obligations-supply-chains.pdf?__blob=publicationFile>.

76 Dutch Child Labour Due Diligence Law 2019 <https://www.amfori.org/sites/default/files/amfori-2020-26-02-Dutch-Child-Labour-Due-Diligence-Law.pdf>.

77 Australia Modern Slavery Act 2018 <https://www.legislation.gov.au/Details/C2018A00153>.

78 UK Modern Slavery Act 2015 <https://www.legislation.gov.uk/ukpga/2015/30/contents/enacted>.

79 California Transparency in Supply Chains Act of 2010 <http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0651-0700/sb_657_bill_20100930_chaptered.pdf>.

80 Nicolas Bueno and Claire Bright ‘Implementing Human Rights Due Diligence through Corporate Civil Liability’ (2020)69 ICLQ 789, 800-806.

81 Art. L. 225-102-4 of the French Commercial Code (French Duty of Vigilance Law).

82 CSDDD (n 2).

83 Belgian Proposal on Duty of Vigilance introduced before the Belgian Chamber of Representatives in April 2021 <https://www.lachambre.be/FLWB/PDF/55/1903/55K1903001.pdf>.

84 Austrian Motion for a Resolution on Supply Chain concerning a Supply Chain Act for a social, human-rights-compliant and sustainable production methods submitted to the Austrian Parliament 25 March 2021 <https://www.parlament.gv.at/dokument/XXVII/A/1454/fnameorig_935996.html>.

85 Dutch Proposal on Responsible and Sustainable International Business Conduct submitted to the Dutch House of Representatives by coalition parties on 2 November 2022.

86 France Duty of Vigilance Law (n 80).

87 See Article 1 of the Art. L. 225-102-4 of the Commercial Code (French Duty of Vigilance Law).

88 While the EU and the German versions include a fairly limited list of treaties that define the scope of ‘environmental’ and ‘human rights’ harms, the French law covers all ‘severe violations of human rights and fundamental freedoms, serious bodily injury or environmental damage or health risks’.

89 France Duty of Vigilance Law (n 80), Articles 1 and 2.

90 See Friends of the Earth Paris and Others v TotalEnergies SE No. RG 22/53942 - No. Portalis 352J-W-B7G-CXB4, M No.: 2/MC, (Tribunal Judiciaire de Paris, 28 February 2023) <https://www.amisdelaterre.org/wp-content/uploads/2023/02/decisiontj-paris-totalouganda-28fev2023.pdf> accessed 24 March 2023.

91 Ibid, 6.

92 Ibid, 23.

93 Ibid, 19.

94 Ibid, 20.

95 Ibid.

96 Les Amis De La Terre France ‘Total's Tilenga and EACOP Projects: the Paris Civil Court dodges the issue’ (2023) <https://www.amisdelaterre.org/communique-presse/totals-tilenga-eacop-projects-paris-civil-court-dodges-issue/> accessed 24 March 2023.

97 Yenkong Ngangjoh-Hodu and others, ‘The Proposed EU Corporate Sustainability Due Diligence Directive and its Impact on LDCs’ (Finnish Ministry of Foreign Affairs, 2023) 90.

98 Ibid, notably chapter 4 (Environment and Climate Change).

99 Vedanta Resources Plc and another v Lungowe and others [2019] UKSC 20 (UK Supreme Court) and Okpabi and others v Royal Dutch Shell [2021] UKSC 3 (UK Supreme Court).

100 Ibid (Vedanta Resources), para 95. 

101 Ibid at para. 1.

102 Nevsun Resources Ltd v Araya, 2020 SCC 5 (Supreme Court of Canada) at para. 105–112; See also, Barnali Choudhury, ‘Enforcing International Human Rights Law Against Corporations’ (July 26, 2023) available at SSRN: <https://ssrn.com/abstract=4522094>.

103 Ibid (Nevsun Resources), paras 11–13.

104 Surya Deva, ‘Mandatory Human Rights Due Diligence Laws in Europe: A Mirage for Rightsholders?’ (2023) Leiden Journal of International Law, 19. See generally Elsa Savourey and Stéphane Brabant ‘The French Law on the Duty of Vigilance: Theoretical and Practical Challenges Since its Adoption’ (2021) 6 Business and Human Rights Journal 141–52.

105 Ibid.

106 Emilie Vasseur and others., ‘Business and Human Rights: First French Case-law on the Duty of Vigilance—Judges Adopt a Cautious Approach to Avoid Judicial Interference in Corporate Management’ (Mayer Brown, 14 March 2023) <https://www.eyeonesg.com/2023/03/business-and-human-rights-first-french-case-law-on-the-duty-of-vigilance-judges-adopt-a-cautious-approach-to-avoid-judicial-interference-in-corporate-management/> accessed 24 March 2023.

107 CSDDD (n 2).

108 Stephane Brabant and others, ‘Enforcing Due Diligence Obligations the Draft Directive on Corporate Sustainability Due Diligence (Part 2)’ Verfassungsblog (March 2022).

109 LG Dortmund, judgment of 10.01.2019 - 7 O 95/15 https://openjur.de/u/2155292.html accessed 25 October 2022 mentioned in Stephane Brabant and others (n 107).

110 Ibid, paras 4–17.

111 Ibid, para 45.

112 Friends of the Earth France, Survie, et al v Total, filed in October 2019 and borders on the allegations of Total's non-compliance with its legal obligations to prevent human rights abuses and environmental damage in the context of its Tilenga oil mega-project in Uganda; ProDESC and the European Centre for Constitutional and Human Rights (ECCHR) v EDF filed in October 2020 and borders on alleged failure by the Respondent to comply with its duty of vigilance; International Federation for Human Rights (FIDH), the French League for Human Rights (LDH) v Suez filed in June 2021; and Notre Affaire à Tous, Sherpa, ZEA, Eco Maires and France Nature Environnement (FNE) v Total filed in January 2020 and is the first climate litigation case in France aimed at raising the climate ambitions of a multinational oil company; and (OPIAC, COIAB, FEPIPA and FEPOIMT), as well as French and American NGOs (Canopée, CPT, Envol Vert, Mighty Earth, Notre Affaire à Tous, France Nature Environnement and Sherpa) v Casino Group.

113 France Duty of Vigilance Law (n 80), Art. 225-102-5. Note that although this provision on remediation has been declared unconstitutional by the French Constitutional Court, it remains part of the Law.

114 Lise Smit and others, ‘Study on Due Diligence Requirements through the Supply Chain’ (European Commission, 2023) 68.

115 CSDDD (n 2), Recital 61.

116 European Parliament Committee on Legal Affairs, Draft Report on the Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937, (7 November 2022), proposed Article 22(2)1(e).

117 Yenkong Ngangjoh-Hodu and others (n 96), part 7.2.

118 European Parliament Committee on Legal Affairs (n 115), proposed Article 22(2)1(d).

119 Yenkong Ngangjoh-Hodu and others (n 96), part 7.2.

120 Ibid, part 4.3.

121 See the European Parliament Committee on Legal Affairs (n 115), 141–2.

122 CSDDD (n 2).

123 Ibid.

124 Shift ‘The EU Commission's Proposal for a Corporate Sustainability Due Diligence Directive: Shift's Analysis’ (2022) <https://shiftproject.org/resource/eu-csdd-proposal/shifts-analysis/> 4–6.

125 Gabrielle Holly and others, Legislating for Impact: Analysis of the Proposed EU Corporate Sustainability Due Diligence Directive (2022) at <https://www.humanrights.dk/publications/ legislating-impact-analysis-proposed-eu-corporate-sustainability-due-diligence>.

126 Shift (n 123) 6.

127 United Nations General Principles on Business and Human Rights, (2011), UNGP 17.

128 Gabrielle Holly and others (n 124) 22.

129 See paragraph 56 of the CSDDD's preamble (n 2).

130 The reader should note that there is no consensus on this matter, and the EU Council is advocating to remove the words ‘should have been identified’ from the CSDDD text. See Yenkong Ngangjoh-Hodu (n 96), part 4.5.