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Muddying the Waters: The Concept of a ‘Safe Harbour’ in Understanding Human Rights Due Diligence

Published online by Cambridge University Press:  09 February 2023

Lise Smit Open the ORCID record for Lise Smit [Opens in a new window] ,
Claire Bright Open the ORCID record for Claire Bright [Opens in a new window]  and
Stuart Neely
Lise Smit*
Affiliation:
British Institute of International and Comparative Law
Claire Bright
Affiliation:
Nova University Lisbon Centre for Business, Human Rights and the Environment
Stuart Neely
Affiliation:
Norton Rose Fulbright
*
*Corresponding author. Email: l.smit@biicl.org
Get access Rights & Permissions [Opens in a new window]

Abstract

The concept of a ‘safe harbour’ has been mentioned in several contexts during ongoing discussions around regulatory developments towards mandatory human rights and environmental due diligence (mHREDD) which continue at international, European and national levels. This article analyses the concept of a ‘safe harbour’ and how it relates to human rights due diligence (HRDD) as described in the UN Guiding Principles on Business and Human Rights (UNGPs). It discusses examples of other types of safe harbours which were recognized in legislation and case law; considers that a safe harbour could result in a ‘tick-box’ approach; highlights the implications for access to remedy; and distinguishes a safe harbour exemption from a defence of having undertaken HRDD in accordance with an expected standard of conduct.

Keywords

Civil liabilityDue diligence defenceMandatory due diligenceMHREDDSafe harbour
Type
Scholarly Article
Information
Business and Human Rights Journal , Volume 8 , Issue 1 , February 2023 , pp. 1 - 17
Copyright
© The Author(s), 2023. Published by Cambridge University Press

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References

1 Lise Smit, Claire Bright, Robert McCorquodale, Matthias Bauer, Hanna Deringer, Daniela Baeza-Breinbauer, Francisca Torres-Cortés, Frank Alleweldt, Senda Kara and Camille Salinier and Héctor Tejero Tobed for the European Commission DG Justice and Consumers, Study on Due Diligence Requirements Through the Supply Chain: Final Report (24 February 2020), https://op.europa.eu/en/publication-detail/-/publication/8ba0a8fd-4c83-11ea-b8b7-01aa75ed71a1/language-en (EC study); Chiara Macchi and Claire Bright, ‘Hardening Soft Law: the Implementation of the UNGPs in Domestic Legislations’, in Martina Buscemi, Nicole Lazzerini, Laura Magi and Deborah Russo (dir.), Legal Sources in Business and Human Rights – Evolving Dynamics in International and European Law (Brill, 2020), 218–247.

2 European Coalition for Corporate Justice (ECCJ), ‘Over 100 Civil Society Organisations Demand Human Rights and Environmental Due Diligence Legislation’ (2 December 2019), https://corporatejustice.org/news/16800-over-100-civil-society-organisations-demand-human-rights-and-environmental-due-diligence-legislation.

3 European Trade Union Confederation (ETUC), ‘ETUC Position for a European Directive on Mandatory Human Rights Due Diligence and Responsible Business Conduct’ (18 December 2019), https://www.etuc.org/en/document/etuc-position-european-directive-mandatory-human-rights-due-diligence-and-responsible#:~:text=The%20ETUC%20calls%20for%20a,their%20supply%20and%20subcontracting%20chains.

4 See for instance Amfori, ‘Human Rights Due Diligence Legislation in Europe: Recommendations for a European Approach, Taking into Account Key Principles of Due Diligence’, Position Paper (February 2020), https://www.amfori.org/sites/default/files/amfori-2020-12-02-Position-Paper-Human-Rights-Due-Diligence.pdf.

5 Business and Human Rights Resource Centre (BHRRC), ‘Making EU Legislation on Mandatory Human Rights and Environmental Due Diligence Effective’ (8 February 2022), https://media.business-humanrights.org/media/documents/Business_Statement_EU_Due_Diligence_Feb_2022.pdf; Lise Smit, Claire Bright, Irene Pietropaoli, Juliannes Hughes-Jennett and Peter Hood, ‘Business Views on Mandatory Human Rights Due Diligence Regulation: A Comparative Analysis of Two Recent Studies’ (2020) 5:2 Business and Human Rights Journal 261–269.

6 Smit et al, note 1.

7 Ibid, at 153.

8 Ibid, at 142.

9 European Working Group on Responsible Business Conduct, ‘European Commission promises Due Diligence Legislation in 2021’ (30 April 2020), https://responsiblebusinessconduct.eu/wp/2020/04/30/european-commission-promises-mandatory-due-diligence-legislation-in-2021/.

10 European Parliament Resolution of 10 March 2021 with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL)).

11 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 (23 February 2022) (EC Draft Directive).

12 UNGP 17.

13 ILO, Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration, 5th edn, 2017), General Policy 10.

14 OECD Guidelines for Multinational Enterprises, http://mneguidelines.oecd.org/guidelines/.

15 UN Human Rights Council, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework’, A/HRC/17/31 (21 March 2011).

16 Commentary to UNGP 12.

17 Draft key points of a Federal law on strengthening corporate due diligence to prevent human rights violations in global value chains (Due Diligence Act) (July 2020), https://www.rph1.rw.fau.de/files/2020/06/key-points-german-due-diligence-law.pdf.

18 Gesetzentwurf der Bundesregierung – Entwurf eines Gesetzes über die unternehmerischen Sorgfaltspflichten in Lieferketten (19/30505), adopted 11 June 2021.

19 ‘Mandatory Human Rights Due Diligence: building out the key components of effective legislation’, 2020 UN Forum on Business and Human Rights, 17 November 2020, http://webtv.un.org/search/mandatory-human-rights-due-diligence-forum-on-business-and-human-rights-2020/6210362214001/?term=&lan=english&cat=Meetings%2FEvents&page=2.

20 International Organisation of Employers, Business at OECD (BIAC) and BusinessEurope, ‘Position on the Third Revised Draft of the Legally Binding Instrument to Regulate in International Human Rights Law, the Activities of Translational Corporations and other Business Enterprises’ (13 October 2020), https://www.ioe-emp.org/index.php?eID=dumpFile&t=f&f=156161&token=6f0147b79ecee2cfe786632f50818144e4bc00c1, 10: ‘The draft includes the publishing, by the company, of “actual and potential human rights abuses that may arise from their own business activities or from business relationships”. The reference to “potential” abuses make this too broad. Whilst business attempts to make all efforts to avoid possible human rights abuses, this requires supposition/prediction by a business as to future events, which is very difficult to assess. This risk is heightened when factoring in the responsibilities regarding business relationships. Given the penalties provided in 6.7, a company could be found to have not reported on something which it did not predict, which would open it up to legal liability, in particular given the removal of the safe harbour provision.’

21 János Allenbach-Ammann, ‘EU Member States Fight Over Scope of Due Diligence Directive’, Euractiv (17 November 2022), https://www.euractiv.com/section/economy-jobs/news/eu-member-states-fight-over-scope-of-due-diligence-directive/.

22 Ibid.

23 For example, see Human Rights Watch, ‘EU: Disappointing Draft on Corporate Due Diligence’ (28 February 2022), https://www.hrw.org/news/2022/02/28/eu-disappointing-draft-corporate-due-diligence#, which states about the EC Draft Directive: ‘However, civil liability is currently restricted to direct suppliers, shielding companies from liability for abuses committed further down the chain and hence preventing access to justice for victims’.

24 California Supply Chain Transparency Act 2010 Cal. Civ.Code § 1714.43.

25 Barber v Nestlé USA Inc 154 F. Supp. 3d 954, 958 (C.D. Cal. 2015).

26 Including the California Business and Professions Code §§ 17200 et seq (the Unfair Competition Law or ‘UCL’), §§ 17500 et seq (the False Advertising Law or ‘FAL’) and the California Civil Code §§ 1750 et seq (the Consumers Legal Remedies Act or ‘CLRA’). See also Lise Smit, Gabrielle Holly, Robert McCorquodale and Stuart Neely ‘Human Rights Due Diligence in Global Supply Chains: Evidence of Corporate Practices to Inform a Legal Standard’ (2020) International Journal of Human Rights.

27 Barber v Nestlé USA Inc, note 25, 961.

28 Ibid, 962.

29 Case No. C-362/14, Schrems v Data Protection Commissioner, Judgment of the Court (Grand Chamber) (E.C.J. 6 Oct 2015) (Schrems I).

30 General Data Protection Regulation (EU) 2016/679 (GDPR).

31 Note 29, para 95.

32 Ibid.

33 Draft key points of a Federal law on strengthening corporate due diligence to prevent human rights violations in global value chains (Due Diligence Act) (July 2020), https://www.rph1.rw.fau.de/files/2020/06/key-points-german-due-diligence-law.pdf.

34 See note 18.

35 The clause also provides that compliance with the standard would be ‘externally audited’, and adds that ‘[t]he Safe Harbour option provides positive incentives for exemplary conduct’.

36 See below, section III, “Safe Harbour’ and External Verification Methods’.

37 John Ruggie, ‘Transcript of the Keynote Speech delivered at the webinar on Corporate Due Diligence and Civil Liability’, Nova Centre on Business, Human Rights and the Environment Blog (23 February 2021).

38 EC study, note 1, 260.

39 European Commission, note 11.

40 The EC study (note 1), at 266: ‘[A] due diligence standard should not operate to hold companies liable for systemic issues, which cannot be remedied by a single company, if the company has done all it can do prevent harms resulting from its own operations’.

41 The EC study (ibid) at 262: ‘Due diligence expects companies to assess for themselves their risks, prevent such risks from taking place, and mitigate any damages which have already occurred. The occurrence of a harm suggests that the company would be liable, unless it could show that it has done everything that could have been reasonable expected in the circumstances. In this way, the due diligence standard incentivises effective, high quality and practical due diligence processes which target real risks and priorities’.

42 Moreover, even with strict liability, defendants still have access to civil defences in court, including for example that the alleged harm did not take place as alleged or that the defendant party is not the correct party to sue.

43 Euractiv, ‘Upping the Ante on Human Rights Due Diligence’, Event Report (March 2019), https://en.euractiv.eu/wp-content/uploads/sites/2/special-report/EURACTIV-Event-Report-Upping-the-ante-on-human-rights-due-diligence.pdf.

44 EC study, note 1, 111.

45 Vedanta Resources PLC and another v Lungowe and others [2019] UKSC 20.

46 EU Parliament Press Release, ‘Sustainable Economy: Parliament Adopts New Reporting Rules of Multinationals’ (10 November 2022), https://www.europarl.europa.eu/news/en/press-room/20221107IPR49611/sustainable-economy-parliament-adopts-new-reporting-rules-for-multinationals.

47 Ibid, 107.

48 EC study (ibid) at 269: ‘If companies were required to “tick off” such lists regardless of whether these risks even apply to the particular company in question, the law would possibly operate in a prohibitively burdensome way. The OHCHR has warned against the risks of a duty that is “overly detailed and proscriptive” as this may lead to narrow, compliance-orientated, “check-box” processes.’

49 Case No. C-311/18, Data Protection Commissioner v Facebook Ireland Ltd and Maximilian Schrems (‘Schrems II’) (E.C.J. 16 July 2020)

50 Ibid at 134.

51 Stuart Neely and Michael Wiedmann, ‘European Commission Tables Long-Awaited Human Rights and Environment Due Diligence Law’, Norton Rose Fulbright (February 2022), https://www.nortonrosefulbright.com/en-gb/knowledge/publications/5c62993b/european-commission-tables-long-awaited-human-rights-and-environment-due-diligence-law#.YhicsrDhS3c.linkedin.

52 Shift, ‘The EU Commission’s Proposal for a Corporate Sustainability Due Diligence Directive’, (March 2022), https://shiftproject.org/wp-content/uploads/2022/03/Shift_Analysis_EU_CSDDProposal_vMarch01.pdf.

53 Article 22(1)(a).

54 Shift, note 52.

55 [2021] EWCA Civ 326.

56 Ibid, para 76.

57 Ibid, para 67.

58 EC study, note 1, 110.

59 UK Ministry of Justice, ‘The Bribery Act 2010: Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bringing’, https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf at 21.

60 See the UK Crown Prosecution Service, ‘Crown Prosecution Service’s Legal Guidance on Corporate Prosecutions’ (12 October 2021), https://www.cps.gov.uk/legal-guidance/corporate-prosecutions.

61 UK Competition and Markets Authority ‘CMA’s Guidance as to the Appropriate Amount of a Penalty’ (18 April 2018), https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/700576/final_guidance_penalties.pdf at 12, fn 33.

62 Smit et al, note 1, 264–265.

63 The EC Directive in Articles 7(1) and 8(1) refers to the adverse human rights and environmental risks that ‘have been, or should have been identified’.

64 Smit et al, note 1, 264–265.

65 Commentary to UNGP 17.

66 OHCHR, Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse: The Relevance of Human Rights Due Diligence to Determinations of Corporate Liability, UN Doc A/HRC/38/20/Add.2, 1 June 2018.

67 Irene Pietropaoli, Lise Smit, Julianne Hughes-Jennett and Peter Hood, ‘A UK Failure to Prevent Mechanism for Corporate Human Rights Harms’ (11 February 2020), https://www.biicl.org/documents/84_failure_to_prevent_final_10_feb.pdf at 52.

68 Ibid, 52.

69 Ibid.

70 MSI Integrity, ‘Not Fit-for-Purpose: The Grand Experiment of Multi-Stakeholder Initiatives in Corporate Accountability, Human Rights and Global Governance’ (July 2020), https://www.msi-integrity.org/wp-content/uploads/2020/07/MSI_Not_Fit_For_Purpose_FORWEBSITE.FINAL_.pdf at 11, 218.

71 Ibid, 9: ‘Eine pauschale Erfüllung der Sorgfaltspflichten von Unternehmen kann die Teilnahme an MSI aufgrund der bereits beschriebenen Herausforderungen jedoch keinesfalls bedeuten’; and at 3: ‘Die Teilnahme an MSI kann dabei nicht ohne Weiteres als Nachweis der Erfüllung menschenrechtlicher und umweltbezogener Sorgfaltspflichten gewertet werden’.

72 Smit et al, note 1, 264–265.

73 Ibid, 264.

74 Smit et al, note 1, 152.

75 UN Office of the High Commissioner for Human Rights (OHCHR), The Corporate Responsibility to Respect Human Rights: An Interpretive Guide (2012), HR/PUB/12/02, 6.

76 Blyth v Birmingham Waterworks Company [1856] EWHC Exch J65.

77 Note 75.

78 OHCHR, ‘Improving accountability and access to remedy for victims of business-related human rights abuse: The relevance of human rights due diligence to determinations of corporate liability’ (1 June 2019), A/HRC/38/20/Ass.2.

79 Ibid, 8.

80 Commentary to UNGP 26.

81 Commentary to UNGP 27.

82 See for instance Axel Marx, Claire Bright and Jan Wouters, ‘Access to Legal Remedies for Victims of Corporate Human Rights Abuses in Third Countries’, study requested by the European Parliament (March 2019), https://www.europarl.europa.eu/thinktank/en/document.html?reference=EXPO_STU(2019)603475. Many of these cases were brought in tort law, and it is assumed that where a statute expressly rules out a specific cause of action, plaintiffs’ attempts at bringing claims are even more likely to be struck out ab initio.

83 Lise Smit, ‘The importance of civil liability for a corporate human rights duty’, Webinar on Corporate Due Diligence and Civil Liability, Nova Centre on Business, Human Rights and the Environment (March 2021), https://novabhre.novalaw.unl.pt/importance-civil-liability-corporate-human-rights-duty/.

84 Article 47 of the EU Charter of Fundamental Rights provides: ‘Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article. Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented. Legal aid shall be made available to those who lack sufficient resources in so far as such aid is necessary to ensure effective access to justice’.

85 Schrems, note 29, para 64.

86 Ibid, para 65.