Background
Within the EU, France was the first country to adopt mandatory human rights due diligence obligations with the enactment of French Law no. 2017-399 of 27 March 2017 on Duty of Vigilance. Said Law provides that French corporations with over 5,000 employees in France and/or over 10,000 employees worldwide (including affiliates' employees) are required to set up, publish and implement a "vigilance plan". Vigilance plans aim at identifying, anticipating and preventing human rights violations that might result from the activities of the parent company but also the activities of the group, as well as suppliers and subcontractors along the value chain.
In case the Duty of Vigilance Law is not complied with, parent companies in scope for this statute may be put under formal notice to establish, publish and implement a vigilance plan by any interested parties. Stakeholders may also seek injunctive relief in the scope of summary proceedings if their formal notice is left unanswered for 3 months, with the potential application of a recurring financial penalty to secure enforcement of the court order. Furthermore, in the scope of civil proceedings on the merits, parent companies might also face tort actions where their civil liability could be sought for failing to prevent human rights violations through the effective implementation of a reasonable and suitable vigilance plan.
Since 2019, around a dozen legal actions have been initiated against major French corporations on the ground of this French statute, mainly against companies in the oil industry, banks and leading food manufacturers and retail businesses.
Initially, as the Duty of Vigilance Law did not provide for jurisdictional rules regarding this type of proceedings, this gave rise to conflicting decisions in this respect, wavering between the jurisdiction of civil or commercial courts (see here an update on this question). However, French Law no. 2021-1729 of 22 December 2021 building confidence in the justice system gave exclusive jurisdiction to the Paris Civil Court in the first instance for matters related to the duty of vigilance as of 24 December 2021.
First court decision on an application for injunctive relief
On 28 February 2023, the Paris Civil Court handed down in summary proceedings the first decision ever relating to the application of the French Duty of Vigilance Law.
Several NGOs had initiated proceedings considering that the targeted company had not prepared an adequate vigilance plan and applied so that the company be ordered to take urgent measures to remedy the situation.
In a nutshell, the Paris Civil Court held that the application for an injunction had to be declared inadmissible because the NGOs had not complied with a procedural prerequisite before referring their claims to the court.
To reach this conclusion, the court proceeded with a thorough analysis of the French statute, and upheld the objective to preserve legal safety for businesses in light of the large scope of the French statute.
More precisely, the court noted that:
- The vigilance obligation created by this Law does have a very extended scope, not limited to the activities of the parent company, but covering the entire group’s activities as well as the activities of the parent company’s suppliers and subcontractors.
- The measures to be implemented as part of the vigilance plan are defined in a high-level fashion and the Law does not refer to any standards or source that would be more specific in terms of companies’ actual diligence to be carried out.
- No authority or third party is appointed with the mission to monitor conformity of the vigilance plans (or even their publication).
- This duty of vigilance is to be considered in light of the ambitious (“monumental” said the court) objectives assigned by the Law to parent companies, i.e., preserving human rights and the environment.
Concretely, the court acknowledged that the Law set forth one practical requirement, which is to elaborate the vigilance plans in collaboration with stakeholders. Even if there is no definition of the relevant stakeholders or any precise collaborative process prescribed in the Law, the court saw in this requirement a need for “co-construction and dialogue between stakeholders and parent companies”. Such requirement aims to achieve the best possible implementation of the Law as well as more effective vigilance plans in practice.
The court decided that the requirement to send a prior formal notice several months before initiating court proceedings is part of this dialogue phase because it will allow parent companies to understand the grievances from stakeholders and address them. The underlying wish is to avoid litigation wherever possible and give priority to amicable discussions and settlement of issues given the large scope and objectives of the Law without detailed guidance being provided by the lawmaker in terms of actual diligence expected from parent companies.
This led the court to declare that in the specific case at hand, the NGOs had not complied with the requirement of sending a formal notice prior to initiating legal proceedings, because their grievances had changed in the course of the proceedings and applied to the 2021 vigilance plan and no longer the initial vigilance plan (2019) of the company in question.
In addition, superabundantly, the court noticed that as it had been referred the matter in the scope of summary proceedings (and not common proceedings), classic procedural rules applicable to this procedural path were to be applied. As a result, the court opined that in summary proceedings, its powers mostly relate to determining whether a vigilance plan had actually been issued and published (and checking that such plan was not so limited that it could be considered that there was no plan at all) as well as verifying whether there was any obvious breach of law in relation thereto.
Consequences in a broader landscape
This decision is not only interesting because it gives a first (very detailed) interpretation of the Law on the Duty of Vigilance. It will likely set the tone for other pending cases, especially bearing in mind that the same court has exclusive jurisdiction over this type of claims.
Both parent companies and stakeholders should revisit their approach and reflect notably on the strong focus put by the court on the need for “co-construction of the plan” and consequences of a potential lack of dialogue when designing the measures composing their vigilance plan.
In the future, NGOs could also prefer to choose a different procedural path, i.e., common proceedings on the merits, in order for the court to have greater powers in terms of assessing in depth the vigilance plan. Summary proceedings seem advisable only in a limited type of cases where the Law is very blatantly breached.
Finally, the impact of this decision will probably have to be nuanced once the EU will have adopted a directive that is currently being prepared. Indeed, the European Commission released a year ago, on 23 February 2022, a proposal for a Directive on Corporate Sustainability Due Diligence, which lays down due diligence obligations for EU and non-EU companies to identify, prevent and mitigate actual and potential human rights and environmental adverse impacts (see here for more information on this proposal). Discussions on this proposal are ongoing but will likely require an update of the French Law on the Duty of Vigilance and any other similar statutes adopted in other Member States. Most recently and significantly, in the same vein, Germany has adopted the German Act on Corporate Due Diligence in Supply Chains of 16 July 2021, which entered into force on 1st January 2023 (see here for more information).
