I. What happened so far

It took Ministers Heil (Labour, SPD), Müller (Development, CSU) and Altmaier (Economy, CDU) 18 months to agree on a draft for the Lieferkettengesetz (Supply Chain Law) to be presented soon to the German Bundestag for legislative debates. For an overview of the different proposals put forward by the Ministries and NGOs, and political discussion surrounding them, please check my previous blogs, which you can find here and here. You can also watch the panel discussion on the Lieferkettengesetz that we organized in November 2020 with Cornelia Heydenreich (Germanwatch), Miriam Saage-Maaß (European Centre for Constitutional and Human Rights), and Christopher Patz (European Coalition for Corporate Justice).

On 15 February 2021 the government’s “final” draft was published – the so-called “Referentenentwurf”. This initial agreement was met with relief from all parties involved, as it was preceded by a long-lasting deadlock. At first, Minister for Economic Affairs, Peter Altmaier, blocked Cabinet meetings so that the government position paper (“Eckpunkteplan”) published by Ministers Heil and Müller could not be discussed. Afterwards, Altmaier again blocked a compromise proposal brought forward by Müller and Heil in Cabinet. The matter went up to the “Koalitionsausschuss”, the committee that negotiates if members of the coalition parties cannot reach an agreement. This committee failed to come to an agreement. The issue of civil liability and the scope of application were the most controversial points. Thereafter, the matter reached the “Chefetage”, Angela Merkel. She sat down with the three ministers involved and Olaf Scholz, Vice-Chancellor and Minister for Finance (SPD), and tried to mediate between the different positions. The group met twice before, eventually, an agreement was reached resulting in the Referentenentwurf of 15 February 2021. The agreement did not last for long. Peter Altmaier withdrew (again) his support for the draft just after it had been circulated.

On 28 March 2021, another “final” draft was published. Those two drafts differ in subtle but impactful aspects. This blog post was originally based on the first draft; its text has been amended to integrate the changes introduced in the second draft. The second Referentenentwurf is the one signed off by Cabinet on 3 March 2021. In this blog, I will first summarize the main points of the draft(s), and afterwards review the various critical points raised against it.More...

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project

On 27 November 2020, the T.M.C Asser Institute hosted an online roundtable discussion on the German Supply Chain Law (Lieferkettengesetz). The full recording of the event can be seen here:

The three panelists, Cornelia Heydenreich from Germanwatch, Miriam Saage-Maaß from the ECCHR and Christopher Patz from the ECCJ reflected on the political framework surrounding the debate, current drafts, and Germany’s role in the European discussion on binding due diligence legislation.

I. The pathway to a Lieferkettengesetz 

As Heydenreich pointed out, civil society’s role in the struggle for a Lieferkettengesetz can barely be overstated. When in 2011, the UNGPs were passed, Germany was in no rush to implement binding due diligence legislation. Instead, the German legislators waited for their European counterparts to come forward with an action plan. It was in 2013 when a new – more left-leaning – government first voiced the idea that a national action plan should be drawn up. In 2015, consultations began. The consultation process was a dialogue, the drafting process itself was not. Even though the monitoring methodology fell short of civil society’s expectations, the result of the monitoring process was shocking nonetheless: Only 13-17% of companies complied with the National Action Plan. 

It became clear that the government needed to implement binding due diligence regulation. It also became clear that the drafting process would have to begin as soon as possible for a law to be passed before the general election in September 2021. 

II. Current drafts

Saage-Maaß turned to the different proposals for a Lieferkettengesetz: The government’s position paper from the Ministry of Development and the Ministry of Labour as well as civil society’s model law. Contrary to what the government currently envisages, Saage-Maaß emphasized the need to include small or medium-sized companies that operate in high-risk areas. 

The role of private international law must not be neglected. The question turns on whether or not the whole of the Lieferkettengesetz will be an overriding mandatory provision, or merely the due diligence obligation itself. 

Civil society organizations are particularly critical of so-called “safe harbor” provisions. These safe harbor provisions allow companies to be exempted from liability if they are part of certain multi-stakeholder initiatives (MSIs). All panelists agree, however, that as of today, no MSI meets the standards set out by the OECD. In its report, the Institute for Multi-Stakeholder Initiative Integrity (MSI Integrity) comes to the same conclusion: “MSIs are not effective tools for holding corporations accountable for abuses, protecting rights holders against human rights violations, or providing survivors and victims with access to remedy.” 

For an overview of other aspects of the legislative proposals, such as the burden of proof, please see the foregoing blog series “Corporate (Ir)responsibility Made in Germany”. 

III. EU-wide discussion

In April 2020, European Commissioner for Justice, Didier Reynders, announced that the Commission commits to legislation on mandatory due diligence. Patz emphasizes the positive impact Germany’s Council Presidency, beginning July 2020, has had on the endeavor. Germany’s Council Presidency stands out because of its strong affirmative call for a supply chain law and for reforms of directors’ duties. At the beginning of December, the Council published its Conclusion on Human Rights and Decent Work in Global Supply Chains, where it calls on the European Commission to launch an EU Action Plan by 2021 (n. 45) and to table a proposal for an EU legal framework on corporate due diligence (n. 46). According to Patz, this constitutes a strong political signal. This strong call is reinforced by three Committees, the Human Rights Committee, Development Committee, and the Legal Affairs Committee, that also spoke out in favor of civil liability. 

Another strong political signal was sent by the EU Fundamental Rights Agency, which in its report “Business and Human Rights – Access to Remedy” called for significant changes pertaining to the reversal of the burden of proof, class actions and procedural mechanisms in order to facilitate access to justice for those affected. 

The work of German MEP Anna Cavazzini (Greens) should be highlighted, too. In the European Parliament she pushed for an additional enforcement mechanism in the form of trade restrictions. Products that benefitted from human rights abuses along the supply chain should not have access to the European single market. In order for the trade restrictions to be lifted, remediation ought to be paid. This initiative counters criticism from civil society that points out that due diligence laws often have the effect of targeting whole sectors of one particular economy. Adopting additional trade restrictions allows for a much more targeted approach. 

In her report on an anti-deforestation legal framework, Delara Burkhardt(S&D) also advocated for civil liability. Companies that exercise control over companies should be held liable, even where it was not directly them, but the other company that committed an unlawful act. In order for this liability mechanism to be effective, Burkhardt advocates for a presumption in favor of control. This helps to balance the information deficit litigants suffer because they do not have access to internal corporate documentation. 

IV. Conclusion 

At the beginning of the roundtable discussion, Duval pointed out that Germany’s stance on any binding due diligence regulation will be decisive. Germany’s role in the EU-wide discussion can hardly be overstated. Germany amounts to 30% of all EU exports, and to 20% of all imports. Factoring in France’s loi de vigilance, both countries together could put enough pressure on the European legislators to push for an EU-wide mandatory due diligence regulation. 

Germany is as close as it has ever been to adopting a Lieferkettengesetz. Yet, the process has come to a halt. The government position paper should have been discussed in the Cabinet at the end of last year for the law to be adopted in 2021. All ministers have to agree, afterwards the proposition will go to Parliament. Heydenreich said that the law will have to be adopted in May, or June the latest; Parliamentary session ends in July. 

At least Germany’s involvement in the EU-wide debate looks promising. Germany’s Council Presidency as well as individual German MEPs have had a tremendous impact on the adoption of an EU-wide due diligence regulation.

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.

In Part II of this blog series, I intend to outline the different proposals for a Lieferkettengesetz. First, the Initiative Lieferkettengesetz’s model law, secondly the proposal submitted by the Ministry for Labour and Social Affairs and the Ministry for Economic Cooperation and Development, and lastly, I will present the amendments pushed by the business sector and the Ministry for Economic Affairs and Energy.More...

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.

On the international stage, Germany presents itself as a champion for human rights and the environment. However, as this blog will show, when it comes to holding its own corporations accountable for human rights violations and environmental damage occurring within their global supply chains, it shows quite a different face.

In recent years, German companies were linked to various human rights scandals. The German public debate on corporate accountability kickstarted in earnest in September 2012, when a factory in Karachi, Pakistan, burned down killing almost 300 people. The factory had supplied KiK, Germany’s largest discount textile retailer with cheap garments. Then, over a year and a half ago, a dam broke in Brazil, killing 257 people. The dam had previously been certified to be safe by TÜV Süd Brazil, a subsidiary of TÜV Süd, a German company offering auditing and certification services. There are many more examples of incidents in which German companies were involved in human rights violations occurring within their supply chains, yet eight years after the factory in Pakistan burned down, and nine years after the unanimous endorsement of the UN Guiding Principles on Business and Human Rights by the UN Human Rights Council, there is still no binding German legislation imposing some type of liability onto companies that knowingly, or at least negligently, fail to uphold human and labor rights in their supply chain.

This is despite the fact that Germany, the third-largest importer worldwide, with its economic power and negotiation strength on the international stage, could have a dramatic impact on business practices if it were to embrace a stronger approach to business and human rights.  

In the coming two blogs I am to take a critical look at Germany’s recent policies related to corporate accountability and discuss the current developments (and roadblocks) linked to the potential adoption of a Lieferkettengesetz (Supply Chain Law). In this first post, I focus on the effects of the National Action Plan 2016-2020, building on recently released interim reports. In my second blog, I will then turn to the various proposals and political discussions for mandatory due diligence regulation (Lieferkettengesetz).More...

The collapse of the Rana Plaza building on 24 April 2013 in Bangladesh left at least 1,134 people dead and over 2,500 others wounded, while survivors and the families of the dead continue to suffer trauma in the aftermath of the disaster. This first blog of our special series assesses the extent to which litigation and particular "soft" mechanisms have secured justice and compensation for victims and brought the relevant actors – whether global brands or individuals – to account for their alleged culpability for the collapse. To do this, it firstly examines the avenues that have been taken to hold corporations legally accountable in their home jurisdictions for their putative contributions to the collapse on the one hand, and individuals (particularly local actors) legally accountable before the courts in Bangladesh on the other. It then considers the effects of softer mechanisms aimed at compensating victims and their dependants. More...

Editor's note: Morshed Mannan is a Meijers PhD candidate at the Company Law department of Leiden Law School. He received his LL.M. Advanced Studies in International Civil and Commercial Law (cum laude) from Leiden University and has previously worked as a lawyer and lecturer in Dhaka, Bangladesh. Raam Dutia is currently an intern with the Doing Business Right team at the Asser Institute. He recently received his LL.M. Advanced Studies in Public International Law (cum laude) from Leiden University and has worked at an international law firm in London on a range of debt capital markets transactions.

For many, Uber epitomises the "move fast and break things" ethos of successful Silicon Valley start-ups. The company enters new markets before regulators are ready, capitalising on regulatory bottlenecks and uncertainties in numerous jurisdictions – only to enlist its enthusiastic customer base and other means to challenge regulators when they catch up. The backlash against this mode of operation has been severe, and boycotts and a litany of lawsuits appear to have dented Uber's image and plunged the company into crisis.[1] Elisa Chiaro’s recent blogpost discussed the implications of platform economy enterprises, such as Uber, on the rights and protections of workers. In this, the first of a series of blogposts, we will take a broader view by exploring whether the company’s concerted efforts to conduct operations in a way that avoids or attempts to undermine local, state and national regulations shapes the law across the markets in which it operates. This will be done by appraising the growing literature on the effect of its regulatory arbitrage[2] and evaluating whether the company’s use of algorithms, in conjunction with standardized service agreements, rider agreements and other contracts to govern the relationships between various stakeholders, establishes it as a source of transnational lawmaking within a large network of well-defined stakeholders: drivers, riders and civil society. Uber’s business practices and litigation in the UK will be used as a case study that is illustrative of broader trends. By doing so, we hope to contribute a deeper understanding of the patterns that have emerged through Uber’s local activities in several jurisdictions. In later entries, we will examine the response to these attempts at regulatory arbitrage and private ordering as well as the repercussions this has on the contemporary regulation of the platform economy. More...

Editor's Note: Catherine Dunmore is an experienced international lawyer who practised international arbitration for multinational law firms in London and Paris. She recently received her LL.M. from the University of Toronto and her main fields of interest include international criminal law and human rights. Since October 2017, she is part of the team of the Doing Business Right project at the Asser Institute.

Introduction

This report compiles all relevant news, events and materials on Doing Business Right based on the daily coverage provided on our twitter feed @DoinBizRight. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

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The Headlines

Landmark High Court case against UK mining company over alleged Sierra Leone worker abuse

On 29 January 2018, a landmark six week hearing began at the High Court in London in a case brought by 142 claimants from Sierra Leone against Tonkolili Iron Ore, a subsidiary of the UK based African Minerals. The case involves allegations of worker abuse in 2010 and 2012 at the Tonkolili Iron Ore Mine in Sierra Leone, including complicity in rape, assault, false imprisonment and the police murder of a protestor complaining over pay and conditions. Human Rights Watch previously reported how the government and African Minerals forcibly relocated hundreds of families from verdant slopes to a flat, arid area, thereby removing their ability to cultivate crops and engage in income generating activities. The claimants’ lawyers, Leigh Day, stated that the case “demonstrates that those companies headquartered in the UK that operate abroad in rural and isolated environments can be held to account when their operations face serious allegations of human rights abuses”. Tonkolili Iron Ore denies responsibility for the incidents against workers and villagers and claims full responsibility lies with the Sierra Leone police. Unusually, the trial will see the judge, Mr Justice Turner, travelling to Freetown for two weeks so that evidence can be taken from witnesses in person, after some witnesses were unable to obtain visas for the United Kingdom.

West Kalimantan villagers file complaint against the Roundtable on Sustainable Palm Oil

On 23 January 2018, a complaint was filed with the Organization for Economic Cooperation and Development’s national contact point in Switzerland by an Indonesian community rights group against the Roundtable on Sustainable Palm Oil for its failure to address complaints made by residents of two West Kalimantan villages. The indigenous Dayak community in Kerunang and Entapang villages had previously filed an urgent complaint with the RSPO accusing one of its members, Malaysian palm oil giant Sime Darby, of stealing their tribal land through its subsidiary Mitra Austral Sejahtera. They allege that Mitra Austral Sejahtera breached the RSPO Principles and Criteria for the Production of Sustainable Palm Oil relating to commitment to transparency, compliance with applicable laws and regulations and responsible consideration of employees, and of individuals and communities affected by growers and mills. It is alleged that the RSPO failed to respond to the request for the return of tribal lands and accordingly failed to meet its obligations under the OECD Guidelines for Multinational Enterprises. Sime Darby has stated that the land dispute has been discussed at the RSPO's annual meetings since 2012, and that it looks “forward to the cooperation of the communities towards ensuring that the eventual return of their land is socially, environmentally and economically viable”. More...

Editor’s Note: Elisa Chiaro is a legal consultant focussing on Business and Human Rights and International Criminal Law. In 2016 she completed an LL.M. at SOAS, University of London. Before that she worked for five years as international corporate lawyer both in Italy and UK. She is admitted to the Bar in Italy.

1.      Introduction

In current discourse, the most pressing issues concerning human rights and business are often associated with the developing countries to which manufacturing is outsourced. However, the “western world” also faces new challenges as far as workers’ rights are concerned.

It is cheap and convenient for people to book a car ride or order their favourite takeaway meal at a few swipes of their smartphone. App-based service companies are thus very popular among consumers – and are consequently flourishing. Conversely, some doubts have been cast on the fairness of the working conditions of people contracted by these companies. A central issue in this respect relates to the status of their workers, who on paper are self-employed, but in reality are subject to the control of the company, a condition which clashes with being independent. This post aims firstly to analyse the labour conditions of gig economy workers in Europe, with a focus on some of the main service platforms, namely Uber, Deliveroo, Foodora, and Hermes Parcels: the majority of these companies, Uber in particular, are transnational, operating in many national markets and adopting the same business model based on flexible work and lack of security for workers in each market. Secondly, it will scrutinise how National and European institutions and courts are augmenting gig economy workers’ conditions for the better. The issue is crucial in the UK, especially following September’s decision by Transport of London (“TFL”) to reject Uber’s application for a new London license, but legal disputes have also started in other countries (in, among others, the UK, Italy and the USA). The UK Parliament is also discussing the matter, and the EU Commission has started a round table with trade unions and employers to find new solutions to address the issue. More...

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.

Concerns about adverse human rights impacts related to FIFA's activities have intensified ever since its late 2010 decision to award the 2018 and 2022 World Cup to Russia and Qatar respectively. However, until recently, the world's governing body of football had done little to eliminate these concerns, thereby encouraging human rights advocates to exercise their critical eye on FIFA. 

In response to growing criticism, the Extraordinary FIFA Congress, held in February 2016, decided to include an explicit human rights commitment in the revised FIFA Statutes which came into force in April 2016. This commitment is encapsulated in Article 3 which reads as follows: ''FIFA is committed to respecting all internationally recognized human rights and shall strive to promote the protection of these rights''. At around the same time, Professor John Ruggie, the author of the United Nations Guiding Principles on Business and Human Rights ('UN Guiding Principles') presented in his report 25 specific recommendations for FIFA on how to further embed respect for human rights across its global operations. While praising the decision to make a human rights commitment part of the organization's constituent document, Ruggie concluded that ''FIFA does not have yet adequate systems in place enabling it to know and show that it respects human rights in practice''.[1]

With the 2018 World Cup in Russia less than a year away, the time is ripe to look at whether Ruggie's statement about FIFA's inability to respect human rights still holds true today. This blog outlines the most salient human rights risks related to FIFA's activities and offers a general overview of what the world's governing body of football did over the past twelve months to mitigate these risks. Information about FIFA's human rights activities is collected primarily from its Activity Update on Human Rights published alongside FIFA's Human Rights Policy in June 2017. More...

Doing Business has been a (if not the) core concern for the post-WWII world order, leading up to contemporary economic globalisation and the ‘free’ movement of goods, capital and ideas across the globe. With our research project, and the launch of this companion blog, we aim to shift the focus towards Doing Business Right. Thanks to the financial crisis in 2008, there is growing awareness of the fact that Doing Business can lead to extremely adverse social and economic consequences. The trust in Doing Business as a cure-all to modernize, democratize, or civilize the world is fading. Moreover, the damaging externalities prompted by the operation of transnational economic activity are more and more visible. It has become harder, nowadays, to ignore the environmental and social consequences triggered elsewhere by our consumption patterns or by our reliance on certain energy industries. What does Doing Business Right mean? How does the law respond to the urge to do business right? What are the legal mechanisms used, or that could be used, to ensure that business is done in the right way? Can transnational business activity even be subjected to law in a globalized world?

This blog will offer an academic platform for scholars and practitioners interested in these questions. With your help we aim to investigate the multiple legal and regulatory constructs affecting transnational business conduct - ranging from public international law to internal corporate practices. We will do so by hosting in-depth case studies, but also more theoretical takes on the normative underpinnings of the idea of Doing Business Right. We aim to be inclusive in methodological terms, and believe that private and public, as well as national and international, legal (and...) scholars should come together to tackle a genuinely transnational phenomenon. Future posts will cover issues as diverse as national, EU, international, transnational regulations - including self-regulation, voluntary codes, and market-based regulatory instruments  - applying to transnational business conduct. Case law from the CJEU, international tribunals (ICJ, arbitral tribunals) and national courts, as well as decisions from international organisations, national agencies (such as competition authorities) will be recurring objects of discussion and analysis. Yet, our perspective is not solely focused on the (traditional) law: management practices of  companies and their effects will also be scrutinized.

This blog is thought as an open discursive space to engage and debate with a wide variety of actors and perspectives. We hope to get the attention of those who care about Doing Business Right, and to provide useful intellectual and legal weapons for their endeavours.

The Editors:

Antoine Duval is a Senior researcher at the Asser Institute since 2014. He holds a PhD from the European University Institute in Florence in which he scrutinized the interaction between EU law and the transnational private regulation of world sport, the lex sportiva. His research is mainly focused on transnational legal theory, international arbitration, and private regulation.  

Enrico Partiti is researcher at the Asser Institute since 2017. He holds a PhD from the University of Amsterdam on private standards for sustainability. His research interest lies at the intersection of EU and international economic law on the one hand, and private regulation for sustainability on the other. He studies the interactions and reciprocal influence between transnational public and private norms, and how they determine and impact on social and environmental sustainability in global value chains.