ARTICLES

BUSINESS AND HUMAN RIGHTS AS A GALAXY OF NORMS

ELISE GROULX DIGGS*, MITT REGAN**, AND BEATRICE PARANCE***

ABSTRACT

In the last several years, there has been an increasing tendency to view the

impacts of transnational business operations through the lens of human rights

law. A major obstacle to holding companies accountable for the harms that they

impose, however, has been the separate legal identity of corporate subsidiaries

and of contractors in a company’s supply chain. France’s recently enacted duty

of vigilance statute seeks to overcome this obstacle by imposing a duty on compa-

nies to identify potential serious human rights violations by their subsidiaries

and by companies with which they have an “established commercial relation-

ship.” Failure to engage in such vigilance can subject a company to liability for

damages resulting from such failure.

This Article situates the new French duty of vigilance within a broader set of

norms that can be characterized as the Business and Human Rights Galaxy.

This Galaxy consists of five rings that represent standards and expectations

ranging from classic enforceable “hard law” to voluntary principles generated

by private parties, multi-stakeholder initiatives, and international organiza-

tions. The provisions in these rings are related in fluid and dynamic ways and

exert varying degrees of gravitational influence on one another. Thus, for

* Avocate à la Cour, Barrister & Solicitor (Paris, Québec); Associate Tenant Doughty Street

Chambers (London, United Kingdom); Principal, BI for Business Integrity & Partners

(Washington, D.C.); Co-Director Program Lawyers, Business and Human Rights, Center on

Ethics & the Legal Profession, Georgetown University Law Center. We would like to acknowledge

the important contribution of Ms. Eve Tessera, Attorney at law both in Paris (France) and Verona

(Italy) in helping us conceive and realize the diagrams presented in this Article. We would also

like to acknowledge the contribution of Mr. Anthony Cooper, J.D. Tulane (L.A.) and member of

the New York Bar, for his precious assistance in helping update this Article throughout the review

process. Finally, we would like to express our appreciation to Aure Demoulin-Bouchier,

Georgetown University Law Center class of 2018, for her excellent assistance with this Article.

VC 2019, Elise Groulx Diggs, Mitt Regan, and Beatrice Parance.

** McDevitt Professor of Jurisprudence; Director, Center on Ethics and the Legal Profession,

Georgetown University Law Center.

*** Associate Professor, UPL, Law School University Paris 8 Vincennes – Saint – Denis, France;

Director of the Research or Research Director Center in Private Law and Health Law (EA number

1581˚); Member of the French National Commission for Ethics and Warnings in terms of Public

Health and Environment.

309

instance, what are conventionally regarded as forms of hard law may draw on

voluntary private standards in setting expectations for behavior, and soft law

norms may be incorporated into legally enforceable contract provisions between

companies and their suppliers. This Article suggests that appreciation of these

dynamics can furnish guidance in interpreting the novel duty of vigilance that

the new French statute establishes. In particular, the common law duty of care

and the United Nations Guiding Principles on Business and Human Rights

can illuminate the nature and scope of the duty of vigilance. At the same time,

the introduction of the new French statute into the Business and Human

Rights Galaxy means that it too has the potential to influence provisions in

other rings of the Galaxy.

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

II. THE U.N. GUIDING PRINCIPLES ON BUSINESS AND HUMAN RIGHTS 315 III. CONCENTRIC RINGS IN THE GALAXY . . . . . . . . . . . . . . . . . . . . . . 318

A. Ring One: Legal Responsibility for Outcomes. . . . . . . . . . . . 319 B. Ring Two: Legal Responsibility for Reporting . . . . . . . . . . . 321 C. Ring Three: Legal Responsibility for Process . . . . . . . . . . . . 324 D. Ring Four: Private Voluntary Initiatives. . . . . . . . . . . . . . . 332 E. Ring Five: International Soft Law . . . . . . . . . . . . . . . . . . . 339

IV. GRAVITATIONAL FORCES IN THE GALAXY . . . . . . . . . . . . . . . . . . . 340 V. THE DUTY OF VIGILANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345

A. Subsidiaries, Subcontractors, and Suppliers . . . . . . . . . . . . 346 B. The Vigilance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 C. Reasonableness and Foreseeability . . . . . . . . . . . . . . . . . . . 353 D. Extraterritorial Application of the Duty. . . . . . . . . . . . . . . . 354

VI. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358 APPENDIX: BUSINESS AND HUMAN RIGHTS GALAXY DIAGRAMS. . . . . . . . . 360

I. INTRODUCTION

Business enterprises over the past few decades increasingly operate

in multiple countries around the globe, manufacturing their products

and acquiring resources in jurisdictions where they find the best

returns on investment. Those returns are affected by the costs of com-

plying with regulations regarding matters such as working conditions,

employee compensation, and the impact of operations on the environ-

ment and local communities. Wide variations in the strength of these

regulations across the world thus create incentives to conduct activities

in countries where legal requirements are least demanding. This cre-

ates a “governance gap” with respect to “the prevention of, and

accountability for, direct or indirect corporate human rights abuses in

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310 [Vol. 50

host states and the provision of redress to victims of such abuses.”1 This

enables companies to reap financial benefits from their operations

without being responsible for many of the adverse impacts of their

activities.

One way to close this gap would be for companies that control multi-

ple entities in various countries to be subject to regulation by the coun-

tries in which they are incorporated and have their headquarters.

These, generally, are jurisdictions in which regulatory obligations are

more demanding.2 A major obstacle to this, however, is the insulation

of a parent company from liability for the harms inflicted by its subsid-

iaries or by companies that are part of its supply chain.3 The doctrine of

limited liability based on separate legal identity provides that, notwith-

standing their status as members of a corporate family, subsidiaries are

distinct entities that bear sole responsibility for their operations.4

Similarly, suppliers are simply third parties who are engaged in contrac-

tual relationships with parent companies. The result has been to limit

recovery to the assets of the subsidiary or supplier. Perhaps even more

important, it also subjects any claims to review in the legal system in the

jurisdiction in which these entities are incorporated.5 In developing

countries that lack a robust judicial system and rule of law, this can cre-

ate substantial obstacles to any redress.

In 2017, France took a major step toward reducing this impediment

to accountability by enacting a statute that imposes a “duty of vigilance”

on companies with a substantial presence in France.6

Code de Commerce [C. com.] [Commercial Code] art. L. 225-102-4, https://www.business-

humanrights.org/sites/default/files/documents/Texte%20PPL_EN-US.docx (Fr.). Article 1 of

the new Code provides that the law applies to “any company that employs, at the end of two

consecutive years, at least five thousand employees within itself, as well as within its direct or

indirect subsidiaries headquartered on French territory, or at least ten thousand employees

within itself, as well as within its direct or indirect subsidiaries headquartered on French territory

or abroad.” Stéphane Brabant & Elsa Savourey, French Law on the Corporate Duty of Vigilance, a

Such companies

1. PENELOPE SIMONS & AUDREY MACKLIN, THE GOVERNANCE GAP: EXTRACTIVE INDUSTRIES,

HUMAN RIGHTS, AND THE HOME STATE ADVANTAGE 9 (2014).

2. See generally id.

3. Gwynne Skinner, Rethinking Limited Liability of Parent Corporations for Foreign Subsidiaries’

Violations of International Human Rights Law, 72 WASH. & LEE L. REV. 1769 (2015); Régis Bismuth,

La responsabilité (limitée) de l’entreprise multinationale et son organisation juridique interne – Quelques

réflexions autour d’un accident de l’histoire, L’ENTREPRISE MULTINATIONALE ET LE DROIT

INTERNATIONAL, SFDI, PARIS, PEDONE 429 (2017) (Fr.).

4. Meredith Dearborn, Enterprise Liability: Reviewing and Revitalizing Liability for Corporate Groups,

97 CAL. L. REV. 195, 199 (2009) (“This governing principle [of limited liability] of the parent-

subsidiary relationship has influenced corporate law throughout the fifty states, and most

practitioners, judges, and commentators take it for granted.”).

5. Skinner, supra note 3, at 1787-99.

6.

BUSINESS AND HUMAN RIGHTS AS A GALAXY OF NORMS

2019] 311

Practical and Multidimensional Perspective, 50 Revue International de la Compliance et de

l’éthique des Affaires (2017); Claire Bright, Creating a Legislative Level-Playing Field in Business

and Human Rights at the European Level: Is the French Law on the Duty of Vigilance the Way

Forward?, SSRN (Aug. 8, 2018), https://ssrn.com/abstract=3262787; Anne Triponel & John

Sherman, Legislating Human Rights Due Diligence: Opportunities and Potential Pitfalls to the

French Duty of Vigilance Law, Int’l Bar Ass’n (May 17, 2017), https://www.ibanet.org/Article/

Detail.aspx?ArticleUid=e9dd87de-cfe2-4a5d-9ccc-8240edb67de3.

are required to establish and implement a “vigilance plan.”7

Code de commerce [C. com.] [Commercial Code] art. L. 225-102-4, https://www.business-

humanrights.org/sites/default/files/documents/Texte%20PPL_EN-US.docx (Fr.).

This plan

must include:

[R]easonable vigilance measures to allow for risk identification

and for the prevention of severe violations of human rights and

fundamental freedoms, serious bodily injury or environmental

damage or health risks resulting directly or indirectly from the

operations of the company and of the companies it controls . . .

as well as from the operations of the subcontractors or suppli-

ers with whom it maintains an established commercial relation-

ship, when such operations derive from this relationship.8

A plan must include the following measures:

1.

A mapping that identifies, analyses and ranks risks;

2. Procedures to regularly assess, in accordance with the risk

mapping, the situation of subsidiaries, subcontractors or

suppliers with whom the company maintains an established

commercial relationship;

3. Appropriate action to mitigate risks or prevent serious

violations;

4. An alert mechanism that collects reporting of existing or

actual risks, developed in working partnership with the

trade union organizations’ representatives of the company

concerned;

5. A monitoring scheme to follow up on the measures imple-

mented and assess their efficiency.

The vigilance plan and its effective implementation report

shall be publicly disclosed[.]9

Companies that fail to meet their vigilance obligation will be respon-

sible for the damage that “the execution of these obligations could

7.

8. Id.

9. Id.

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have prevented.”10 The French Constitutional Court held that authority

in the statute for a court to impose a civil penalty of between e10–e30

million was unconstitutional, because the scope of the duty was not suf-

ficiently precise as the basis for a fine.11

Conseil constitutionnel [CC] [Constitutional Court] decision No. 2017-750DC, March 23,

2017 (Fr.), https://www.conseil-constitutionnel.fr/decision/2017/2017750DC.htm (French law

on the duty of vigilance of parent corporations and contracting companies).

It otherwise upheld the law.

Parties who claim harm resulting from breach of the duty of vigilance

may file a claim under French tort law.12 Since the duty is an obligation

of process (obligation de moyens) and not of outcomes (obligation de résul-

tat), a plaintiff has the burden of proving that failure of the law led to

the harms that occurred.13

Assemblée Nationale, PPL relative au devoir de vigilance des sociétés mères et des entreprises

donneuses d’ordre no. 2578 (Feb. 11, 2015), http://www.assemblee-nationale.fr/14/propositions/

pion2578.asp (explanatory statement in support of the French law, according to the United

Nations Guiding Principles on Business and Human Rights (UNGPs) adopted unanimously by the

Human Rights Council of the United Nations in June 2011 and according also to the OECD

Guidelines for Multinationals as revised in 2011. The draft legislation was designed to impose a

“duty of vigilance” on multinational enterprises. It was framed to cover both parent companies in

France and major French purchasers of goods manufactured in global supply chains, to establish a

degree of liability for multinational corporations acting in France or abroad, and to secure some

compensation for the victims in case of human rights violations and damage to the environment.).

The statute thus represents a potential major step in holding transna-

tional companies responsible for operations by entities with which they

are closely associated, notwithstanding those entities’ separate legal

identity.14

The German Ministry for Economic Cooperation and Development also is reportedly in

the process of drafting similar legislation applicable to German companies and their foreign

subsidiaries and contractors, which would “require companies to carry out internal supply chain

risk assessments, appoint a compliance officer to monitor compliance with the law’s

requirements, as well as establish an effective complaints mechanism for foreign workers.” German

Development Ministry Drafts Law on Mandatory Human Rights Due Diligence for German Companies,

BUS. & HUMAN RIGHT RES. CTR. (Feb. 12, 2019), https://www.business-humanrights.org/en/

german-development-ministry-drafts-law-on-mandatory-human-rights-due-diligence-for-german-

companies.

As the Constitutional Court’s decision suggests, however, the

law leaves important issues open for interpretation. Its novelty means

that there is no jurisprudence with respect to a comparable statute that

may be helpful in interpreting the law. This does not mean, however,

that there are no sources of guidance available, or that the law that

develops around the statute should proceed in a self-contained way.

10. Id. art. 2.

11.

12. CODE CIVIL [C. CIV.] [CIVIL CODE] art. 1240 (Fr.). According to article 1240 of the French

Civil Code, a person who causes damage to another person by his/her act or omission is bound to

provide remedy when fault is established.

13.

14.

BUSINESS AND HUMAN RIGHTS AS A GALAXY OF NORMS

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This Article suggests that the French law should be seen as part of what

we call a Business and Human Rights “Galaxy” of norms that has been

emerging over the past several years.15 Various norms in this Galaxy can

offer guidance on how the French duty of diligence should be con-

strued and applied.

The Oxford English Dictionary defines a galaxy as a “system of mil-

lions or billions of stars, together with gas and dust, held together by

gravitational attraction.”16

Galaxy, OXFORD ENGLISH DICTIONARY, https://en.oxforddictionaries.com/definition/

galaxy (last visited Mar. 31, 2019).

As we describe below, the Business and

Human Rights Galaxy is comprised of numerous norms that take the

form of measures such as statutes, regulations, reporting requirements,

common law duties, private voluntary standards, corporate codes of

conduct, non-governmental organization (NGO) best practices, inter-

national organization handbooks and checklists, and other sources. As

we will describe, these norms can be conceptualized as occupying dis-

tinctive concentric rings around a core ring of enforceable “hard” law.

The metaphor of a galaxy underscores that the norms in each ring, and

the rings themselves, exert various degrees of gravitational force on

one another. This can blur sharp distinctions between enforceable

“hard” law on the one hand and voluntary standards and “soft law” on

the other.

As we discuss below, this Galaxy may contain multiple potential sour-

ces of guidance in interpreting the French duty of diligence. Of particu-

lar note, we suggest that duties of care and vigilance occupy a similar

position in the Galaxy that mediates between voluntary and enforcea-

ble obligations. Recognizing the existence of this Galaxy, and the ways

in which norms within it may inform the understanding of the duty of

vigilance, illuminates how international law on the human rights

impacts of business operations is emerging as a distinctive domain.

Part II of this Article will first situate the French duty of vigilance in

the context of the concept of human rights due diligence articulated in

the United Nations Guiding Principles on Business and Human Rights.

Parts III and IV will then describe the norms that occupy positions in

the five concentric rings of the Business and Human Rights Galaxy.

Finally, Part V will suggest how norms in various rings of this Galaxy

may provide guidance on how the duty of vigilance should be inter-

preted and applied.

15. See infra app. at 59-61.

16.

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314 [Vol. 50

II. THE U.N. GUIDING PRINCIPLES ON BUSINESS AND HUMAN RIGHTS

The U.N. Guiding Principles on Business and Human Rights

(UNGP) were unanimously adopted by the U.N. Human Rights

Council in 2011.17 That same year, the Organisation for Economic Co-

operation and Development (OECD) Guidelines for Multinational

Enterprises were revised to incorporate these Principles.18

Les principes directeurs de l’OCDE à l’intention des entreprises multinationals (2011),

www.oecd.org/fr/investissement/mne/2011102-fr.pdf.

In just a few

years, an international consensus has been coalescing around these

instruments as expressions of the basic norms that define responsible

corporate behavior.

The UNGPs declare that the fundamental responsibility of busi-

ness organizations is to respect human rights. The Commentary to

Article 11 says that this responsibility is “a global standard of

expected conduct for all business enterprises wherever they oper-

ate,” which “exists over and above compliance with national laws and

regulations protecting human rights.”19 The commentary to Article

12 says that an authoritative list of “the core internationally recog-

nized human rights” is set forth in the International Bill of Rights

and the International Labor Organization’s (ILO) Declaration on

Fundamental Principles and Rights at Work. The former consists of

the Universal Declaration of Human Rights, the International

Covenant on Civil and Political Rights, and the International

Covenant on Economic, Social, and Cultural Rights.20 Article 13 of

the UNGPs says that the responsibility to respect human rights

requires that companies: “(a) [a]void causing or contributing to

adverse human rights impacts through their own activities, and

address such impacts when they occur,” and “(b) [s]eek to prevent

or mitigate adverse human rights impacts that are directly linked to

their operations, products or services by their business relationships,

even if they have not contributed to those impacts.”21

A crucial means of fulfilling these responsibilities is the conduct of

“human rights due diligence.”22 The commentary to Article 18 of the

UNGPs says:

17. UNITED NATIONS GUIDING PRINCIPLES ON BUSINESS AND HUMAN RIGHTS, HR/PUB/11/04

(2011) [hereinafter UNGP]; LES PRINCIPES DIRECTEURS DE L’OCDE �A L’INTENTION DES ENTREPRISES

MULTINATIONALS, OECD (2011).

18.

19. UNGP, supra note 17, art. 11, Commentary.

20. Id. art. 12, Commentary.

21. Id. art. 13.

22. Id. art. 17.

BUSINESS AND HUMAN RIGHTS AS A GALAXY OF NORMS

2019] 315

The initial step in conducting human rights due diligence is to

identify and assess the nature of the actual and potential

adverse human rights impacts with which a business enterprise

may be involved. The purpose is to understand the specific

impacts on specific people, given a specific context of

operations.23

The commentary emphasizes that due diligence is an ongoing

process:

Because human rights situations are dynamic, assessments of

hu