'Muddying the Waters: The Concept of a ‘Safe Harbour’ in Understanding Human Rights Due Diligence', 9 February 2023

...It was reported that during the negotiations between EU Member States regarding the EC Draft Directive, a German proposal for a ‘a get out of jail free card’, described as ‘an amendment that would allow companies to be largely exempt from liability if they were part of an industry initiative to address issues along the value chain’ did not ‘get much traction and is unlikely to be included in a new compromise text’...

This article considers what is meant by a ‘safe harbour’ in this context, and how this concept differs from the concept of mHREDD as a legal standard of care which forms the basis of a legal defence to liability...

An approach which automatically exempts companies which undertake ‘tick-box’ approaches were expressly rejected by stakeholders during the EC study. It was pointed out that this approach detracts resources away from those issues which are really at risk in the circumstances, towards those which are listed in the standard or instrument. Rather, stakeholders preferred a general duty which references a standard of care that would take into account the specific circumstances applicable to each company’s operating context.

A ‘tick-box’ approach is understood to refer to a list of criteria that applies across the board to companies and is unrelated to their real human rights risks or the quality of their due diligence processes. This approach allows a company to meet the legal requirement by simply ‘ticking off’ these criteria superficially, without consideration of the company’s real adverse human rights impacts and whether they are being addressed. If the relevant evaluating body does not evaluate the effectiveness of these efforts, then the company can avoid liability by simply having them in place, regardless of their adequacy, how well they are implemented in practice or their actual impacts on the lives of rights-holders...

Accordingly, these external measures are not capable of being used as ‘safe harbour’ type substitutes for the individual, ongoing HRDD that is required of each company in terms of the UNGPs. Rather, in assessing the sufficiency of a company’s actions (and its potential legal liability) reference to a company’s adherence to an MSI standard, a third-party verification, its public statement or contractual clauses, would need to comprise important parts of a context-specific review of the particular circumstances....

Again noting the dangers of the ‘tick-box’ approach, the OHCHR Report on the relevance of HRDD to determinations of corporate liability notes that whilst a due diligence defence could ‘incentivize companies to meaningfully engage’ in human rights due diligence and ‘have important preventative effects’, it raises some serious concerns in ‘cases where superficial “check box” approaches to human rights due diligence might be used as a reference point instead of genuine attempts to identify, mitigate, and address human rights risks as contemplated in the UNGPs’...

As mentioned above, ‘safe harbour’ exemptions can operate in a way that excludes a right to action where the statutory criteria have been met. (This is contrasted with the legal standard of care where the appropriateness and sufficiency of the company’s due diligence process is evaluated as part of the court enquiry.) For example, the kind of ‘safe harbour’ provisions like the one which was envisaged in the above-mentioned German Draft Key Points would actually remove access to existing civil remedies. Rights-holders wishing to access remedy would have been in a worse position than they would have been, had they still been able to rely on the existing tort law framework...

[access restricted]

See here for an earlier version of the paper.