All eyes are on France as the enforcement mechanism provided in the French Law on the Corporate Duty of Vigilance (the “Vigilance Law”) is now set in motion. After a first blog post describing the enforcement mechanism, current cases and trends, this post highlights some of the main challenges related to the triggering of the mechanism. With new cases likely to be introduced in 2020, these challenges will also be of particular relevance for a number of stakeholders concerned by these future cases.

1.            Challenges for the parties

1.1          Requesting parties

A first challenge for requesting parties is to identify the cases and companies to be targeted by the enforcement mechanism. This choice, of course, depends on the requesting parties’ strategy. One should however keep in mind that the first cases will send a strong signal as to the strength and actionability of the enforcement mechanism at a time when the mechanism is still in its infant period.

Thus, very careful thought should be given when initiating such an action: how would the triggering of the enforcement mechanism serve a specific situation of actual or potential adverse impact on human rights or the environment? How could the triggering of the enforcement mechanism ensure the enforceability of the Vigilance Law and of its sanction regime? In that regard, it is perhaps surprising that the first enforcement cases targeted companies which already had vigilance plans, as opposed to companies who did not issue one despite falling within the scope of the Vigilance Law. This situation may be connected to the difficulty faced by third parties in identifying with certainty which companies fall into the scope of the Vigilance Law in the absence of any official list.[i]

A second challenge rests on the fact that the triggering of the enforcement mechanism relies on the actions of parties with standing. However, a number of these entities may have limited financial and operational capacity, which may generate difficulties for the triggering of both stages of the enforcement mechanism.

Even if the requesting parties had the capacity to trigger the mechanism, a third challenge is for them to prove they have standing under French law to bring a case in front of the court as required by part of stage two of the enforcement mechanism. This issue was already discussed at the hearing for Total in relation to Uganda and is likely to be on the front line for other cases, especially cases involving NGOs.

A related challenge is the protection of the parties having engaged this mechanism (and individuals more or less closely related to the procedure). These parties and individuals could be subject to additional pressures or dangers, especially in a context where environmental and human rights defenders are increasingly being threatened – a situation both parties and the courts should consider carefully.[ii]

1.2          Companies

On the companies’ side, the triggering of the enforcement mechanism makes the possibility of a potential periodic penalty payment more tangible and could result in companies taking the vigilance plan exercise more seriously.

However, this mechanism and potential triggering should also not discourage or disincentivise companies from actually trying to improve their vigilance plans and develop processes in accordance with the Vigilance Law and international standards on business and human rights. In particular, having better visibility on the actionability of the mechanism should not result in some companies viewing the Vigilance Law purely as a matter of calculated legal and financial risks, thereby decreasing the incentive to have detailed vigilance plans and effective implementation. Besides, it should also not result in companies preferring to wait until an injunction is ordered to then put in place the required measures.

Additionally, all companies subject to the Vigilance Law should be reminded that they may also be subject to the enforcement mechanism even if they have less public exposure, are relatively smaller from an economic standpoint, or if they have tried to remain under the vigilance radar by not establishing a vigilance plan at all.

2.            Some other challenges relating to the process and substance of the cases

2.1          On the process

At stage one of the enforcement mechanism, the number of formal notices to comply issued, and the variety of parties involved, is a positive signal. It shows that stage one is operational. However, it is yet to be seen to what extent stage one can allow both the requesting parties and the company involved to actually engage in a constructive two-way dialogue and address issues without having to escalate to stage two of the enforcement mechanism. The answer to this question also rests on the positioning of both parties and their willingness to open a dialogue.

As to stage two of the enforcement mechanism, the first cases brought before the court will send an important signal as to the actionability of the enforcement mechanism. As could have been anticipated in the Total Uganda case, and as is likely to happen again, companies will make submissions to the courts regarding the choice of the competent court.

Companies would try to have the commercial court [tribunal de commerce] found competent instead of the civil court [in that event the Tribunal de Grande Instance]. Indeed, it could be argued that judges from the commercial court are more specialised in the conduct of business by companies and thus better equipped to understand companies’ constraints. This debate on competence is likely to draw attention as the Vigilance Law does not expressively set out which court is competent.[iii]

Focusing on competence may be a normal course of action for litigation lawyers. But in the specific case of disputes related to business and human rights, this approach may, in some cases, prove counterproductive for the companies, including vis à vis their various stakeholders. It inevitably delays the judicial process and may affect the companies’ demonstrated willingness to comply with the Vigilance Law. Besides, once attention has been drawn to a case, the targeted company will nevertheless have to take action and have processes in place, either as a result of the injunction of the court or of the pressure from the company’s stakeholders. Further, no matter the judicial process, we can anticipate that companies will increasingly have to prove they have processes in place such as the ones mandated by the Vigilance Law. This may especially be the case as a result of possible upcoming legislation on mandatory human rights due diligence at the level of the EU and of several countries.

2.2          On the substance

Moving to the substance, the first cases will likely assess whether the obligations set forth in the Vigilance Law (the “Vigilance Obligations”) have been complied with or not. Evaluating the comprehensiveness of a vigilance plan and how effectively it is implemented may prove challenging, and even more so for cases concerning situations taking place in remote regions. Further, it remains to be seen whether the courts will clarify the level of comprehensiveness expected in the vigilance plans, including in relation to specific projects.

The first cases will also provide information on whether courts will, through injunctions, require that companies deploy detailed measures to comply with their Vigilance Obligations. We also expect the first cases to provide clarity on the quantum of the potential periodic penalty payment and the timeline for the competent courts to decide on the cases.

Once an injunction is ordered, if at all, it remains to be seen how the courts will determine when a company can be considered to have complied with the injunction. Last but not least, a development to watch out for will be the articulation between the injunction process in front of the courts and the remediation process provided under the Vigilance Law for the same adverse impacts. A thorough analysis of the legal stakes at stage two of the enforcement process will be developed in an upcoming article.

As cases will be argued and decided, the legal profession in general may have little familiarity with the Vigilance Law, its process-based approach and the general landscape or galaxy of business and human rights. In particular, they may have little knowledge of the United Nations Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises and related standards and practices. These texts, however, have inspired the Vigilance Law and should serve as guidance to the implementation and interpretation of the Vigilance Law.

A related challenge is for the legal profession involved in enforcement cases to have a full grasp of the actors at stake, their perceived legitimacy and the authority of their work. These actors and their work are and will be referred to in the parties’ oral and written arguments. Acquiring such an understanding would be extremely helpful as the Vigilance Law builds on a multi-stakeholder landscape where a growing number of actors are involved, with their own agendas, and a more or less comprehensive understanding of the Vigilance Law and French law in general.

Elsa Savourey is a lawyer, member of the Paris Bar, specialised in business and human rights. She also acts as firm-wide coordinator of the Global Business and Human Rights Practice at Herbert Smith Freehills. She is grateful to Stéphane Brabant for his support and fruitful conversations while preparing this post and to Adèle Bourgin and Marie Badr for their research and comments on the preliminary versions of this post.

[i] CCFD Terre Solidaire & Sherpa, Le radar du devoir de vigilance – Identifier les entreprises soumises à la loi, Juin 2019 ; Letter from 21 NGOs to the French minister of economy and finances following up on the implementation of the Vigilance Law (in French), 19 Dec. 2019.

[ii] On the situation of human rights defenders, see generally resources from the BHRRC, Business, Civic Freedoms & Human Rights Defenders Portal; on the contribution of businesses to the protection of human rights defenders and civic society, see Bennett Freeman, Shared Space Under Pressure: Business Support for Civic Freedoms and Human Rights Defenders, Sept. 2018.

[iii] The interpretation from the courts will rest on the rules governing jurisdiction applicable to a given case.