7 September 2020

Since the adoption of the UN Guiding Principles on Business and Human Rights the relationship between human rights due diligence (HRDD) and corporate liability has been a source of legal uncertainty. In order to clarify this relationship, this article compares and contrasts civil liability provisions aiming at implementing HRDD. It explains the legal liability mechanisms in the draft Treaty on Business and Human Rights and in domestic mandatory HRDD legislation and initiatives such as the French Duty of Vigilance Law and the Swiss Responsible Business Initiative. It compares these developments with the emerging case law on parent company and supply chain liability for human rights abuses. It explores the potentially perverse effects that certain civil liability provisions and court decisions might have on companies’ practices. Finally, it makes recommendations for the design of effective liability mechanisms to implement HRDD...

...Ultimately, there are several options for designing a liability provision aiming at implementing HRDD. A strict liability for controlled companies with a due diligence defence, as discussed in Switzerland, or a fault-based liability, as in France, may be used and complement each other. We argue that a strict liability for controlling companies with a due diligence defence, provided the notion of control is well defined for both parent and lead companies, should be encouraged. It alleviates the practical difficulties that claimants may face in proving that there was negligent conduct by the company. Any regulation that links HRDD and legal liability... should nonetheless make it clear that conducting due diligence as a tick-box exercise will not be sufficient to avoid liability in the event of harm...