Editor's note: Mercedes
is a recent graduate of the LL.B. dual-degree programme English and
which is taught jointly by University College London (UCL) and the
of Cologne. She will sit the German state exam in early 2022. Alongside
studies, she is working as student research assistant at the Institute
and Foreign Private Law in Cologne. Since September 2020, she joined the
Asser Institute as a research intern for the Doing Business Right project.
Part II of this blog series, I intend to outline the different proposals for a
Lieferkettengesetz. First, the Initiative Lieferkettengesetz’s model
law, secondly the proposal
submitted by the Ministry for Labour and Social Affairs and the Ministry for Economic
Cooperation and Development, and lastly, I will present the amendments pushed
by the business sector and the Ministry for Economic Affairs and Energy.
Lieferkettengesetz model law
Lieferkettengesetz, a consortium of over 110 NGOs, presented their model
law in early 2020. It draws inspiration from the ECCJ’s position paper “Key
Features of Mandatory Human Rights Due Diligence.”
scope of application of the model law covers companies with over 250 employees.
However, if a business operates in a high-risk sector, it would have to implement
human rights due diligence into its global supply chain even if it employs
fewer than 250 people. Examples of high-risk sectors include the manufacturing
of arms, the chemical and automotive industry, financial services and many
others. Initiative Lieferkettengesetz also advocates for certification
and auditing services to be included in the list of sectors that pose great
risk for human rights and the environment; this is because this sector lacks
adequate regulation, is prone to corruption and errors – with often devastating
Initiative Lieferkettengesetz demands that not only companies that have
their seat in Germany be covered by Supply Chain Regulation. Instead, all
companies that show a ‘genuine link’ to Germany should be included in the scope
of application. They argue for the clause to be drafted similarly to sec 54(12)
Slavery Act 2015, adding the following clarification: The company must
either have an administrative seat, permanent establishments (i.e. branches,
factories, storage facilities etc.), permanent representatives on German
territory or provide German companies with some form of service at least twice
a year. Foreign companies, the shares of which are sold on the German stock
market, should also be covered by the model law. Initiative
Lieferkettengesetz explicitly excludes mere investments in Germany.
outlining the due diligence requirement, Initiative Lieferkettengesetz builds
on the individual aspects set out in the UNGPs: (1) policy statement; (2) risk
analysis; (3) countermeasures; (4) reporting; (5) grievance mechanism.
risk analysis should be carried out once a year at the minimum. Ideally, it
ought to be carried out before every strategic decision. It encompasses factual
and potential risks to human rights and the environment. Risks need to be
assessed according to how likely they are to occur, the extent of potential
damage caused, the importance of the legal interest that needs to be protected,
and the scope for restitution. On the basis of this risk analysis, businesses
should implement countermeasures to prevent or mitigate any harm to human
rights and the environment caused by their business activity.
scope of the duty covers human and labor rights as well as environmental
standards. The model law explicitly refers to the Universal
Declaration of Human Rights, the International
Covenant on Civil and Political Rights, nine ILO
Conventions, and four UN Conventions. Where
company’s business activity is linked to production of arms or surveillance
technologies, the scope of duty should also cover the Geneva
Conventions with their additional protocols. The necessary
standard of care to be adopted in the due diligence analysis hinges upon the
term ‘appropriateness’. The ‘appropriateness’ of a measure depends on size,
business activity, nexus between business activity and risk, and the severity
of the threat to human rights and the environment. There is not one ready-made
solution for every risk occurring in supply chains; that is why the model law provides
some flexibility to companies in order to determine the most efficient measure
that needs to be implemented. Initiative Lieferkettengesetz emphasizes that
it is not enough to take part in multi-stakeholder sectorial initiatives or outsource
their obligation to auditing or certification services in order to discharge
the duty to implement countermeasures. Moreover, companies should internally
document their risk analysis and countermeasures and should also regularly
submit reports to the Government.
Lieferkettengesetz proposes an array of sanctions in case of breach of
duty: fines, exclusion from public procurement and foreign trade promotion, and
crucially, civil liability.
liability in German law is based on § 823(1) of the Civil Code (BGB), which
protects narrowly interpreted legal interests –bodily integrity, health,
liberty, property and ‘others’, i.e. privacy.
The Initiative Lieferkettengesetz proposes to add a clause in the
model law which states that human and labor rights, found in the treaties
ratified by Germany, ought to be integrated to the legal interests protected by
§ 823(1) BGB. Where necessary, they should fall under ‘other’.
scholars often criticize
that human rights do not have any legal ‘contours’; that they are too vague to
justify civil liability. The Initiative Lieferkettengesetz counterargues
by comparing them to other ‘vague’ legal interests such as privacy. In order to
determine if someone’s right to privacy was breached, courts engage in an
analysis of proportionality: the finding that a breach of privacy occurred
depends on how likely, severe, foreseeable and avoidable any harm caused was.
how difficult it is for the claimant to gather evidence in the case of human
rights atrocities occurring in global supply chains, Initiative
Lieferkettengesetz suggests that the claimant should benefit from a
reversed burden of proof: It ought to be upon the company to prove that the
harm to human rights or the environment was neither foreseeable nor avoidable
by implementing appropriate measures.
the supply chain law should be characterized as overriding mandatory provision
in line with Article 16 Rome II. As a result, even if rules of private
international led to the application of foreign tort law, the provisions of the
Lieferkettengesetz would still be given effect to.
position paper (Eckpunkte)
their party conferences in November and December 2019, both the CDU (Christian
Democratic Union) and the SPD (Social
Democratic Party) came out in support for the Lieferkettengesetz. Ministers
Hubertus Heil (Minister of Labour and Social Affairs, SPD) and Gerd Müller
(Minister for Economic Cooperation and Development, CSU [Christian Social
Union, the CDU’s Bavarian affiliate]) took it upon them to draft the
government’s position paper (Eckpunkteplan) which would eventually serve as
basis for any further draft.
to present their paper to the public on 10 March 2020 and had already scheduled
a press conference. After pressure from the Chancellery (Ministry that supports
Chancellor Merkel in the execution of her duties), which in turn appeared to
have been pressured by
the business sector, they cancelled the press conference.
internal position paper, however, leaked in
February 2019, causing outrage among German business representatives. It was portrayed as
‘harmful’ and based on ‘arbitrary monitoring’. The president of the Federal
Employers’ Association (Bundesvereinigung der Deutschen Arbeitgeber) even
with such a law, he would already have ‘one foot in prison’.
June 2020, the two Ministries published a new
version of the position
paper. If one compares the position paper to the model law
presented by Initiative Lieferkettengesetz, it becomes clear that Heil
and Müller opted for a watered-down version of the law. The scope of
application is limited to companies with over 500 employees. It does not
account for smaller businesses, which operate in particularly high-risk
industries. The Lieferkettengesetz will only be applicable to companies
that either have their seat in Germany or which can show a ‘strong link’ to
Germany. The position paper further clarifies that the requirement of a ‘strong
link’ is fulfilled if businesses make strategic decisions in Germany; mere
business activity does not suffice.
diligence comprises four aspects: (1) risk analysis; (2) effective
countermeasures; (3) grievance mechanism; (4) reporting. Just like with the
model law, companies will have to analyze how their business activity affects
human rights internationally. However, the Eckpunkteplan does not refer
to human rights treaties. Instead, it points to human rights risks:
forced labor, child labor, discrimination, freedom of association, workers’
rights, violation of property rights. Protection is limited to the particular
legal interests enshrined in § 823(1) BGB (bodily integrity, health, liberty,
property and privacy). Crucially, environmental damage and corruption are in themselves
not part of the risk analysis; they merely constitute factors to
consider. Furthermore, the companies’ human rights due diligence does not
include any obligation to engage with relevant stakeholders.
do not benefit of a reversed burden of proof. Commentators further
criticize that the position paper includes a possibility for
companies to limit their liability to cases of gross negligence or intent by
participating in state-accredited sectoral initiatives. This is considered
regrettable because sectoral initiatives such as the ‘Green Button’ have proven
to be of limited
impact. Such a provision opens a way for businesses to
relatively easily escape liability altogether. Lastly, the position paper
provides for the law to come into force three years after it had been
position paper should have been presented to the Cabinet in March 2020, but the
Cabinet’s meeting was
postponed due to Covid. Peter Altmaier, Minister of
Economic Affairs and Energy (CDU), does not seem to be in a rush to discuss the
Eckpunkteplan. He blocked another
meeting in August. This is particularly problematic because proper procedure
demands that the position paper is discussed before drafting begins. If Cabinet
does not discuss the position paper this autumn, there will be no possibility
to adopt the Lieferkettengesetz before the general election in autumn of
if Altmaier cannot postpone its passing, he at least tries to ensure the law is
further watered down beyond recognition. Altmaier forcefully demands that the
scope of application is limited to companies with over 5,000 employees – of
which only 250 exist in Germany. While one can argue that the number of
employees is open to compromise, there are aspect of the law that are
non-negotiable. Altmaier strongly opposes any imposition of civil liability and
exclusion from public procurement. NGOs fear that by giving in to these
demands, the Lieferkettengesetz will become toothless.
current political situation shows how much power the Ministry of Economic
Affairs and Energy holds. Altmaier comes close to having a veto right – even
though officially, all ministries carry equal weight in the negotiations. This
is particularly dangerous because, as official
documents show, the Ministry of Economic Affairs and Energy has
close personal ties to industry representatives and business lobby groups.
there are reasons to remain hopeful. Looking at the political and societal context
prevailing in France before the loi de vigilance was passed, one can
draw many parallels to the situation in Germany: Even though Altmaier seems to
believe that global markets can self-regulate and that voluntary commitments
are enough, many other Ministries and, crucially, Chancellor
Merkel, do not. Furthermore, there is a strong NGO alliance mobilizing
the German public in favor of binding legislation – and it is currently supported
by 76% of the public. Public campaigns, protests and conferences put
pressure on politicians. Thanks to the French campaigners in the early 2010s,
it is now clear that binding legislation is achievable. Despite the lack of
cooperation from the Ministry of Economic Affairs and Energy, a Lieferkettengesetz
is as close as it has ever been.
are reasons to believe that the Lieferkettengesetz is not only feasible,
but also in sight. While NGOs provided a very ambitious and thorough model law,
the government’s position paper would also constitute a step into the right
direction – at least if Altmaier and the Ministry of Economic Affairs and
Energy fail in bending the text further towards businesses’ needs.
order for the Lieferkettengesetz to be passed this term, Cabinet will
need to discuss the position paper this autumn. Timing is of particular
importance: While Chancellor Merkel has
come out in support of binding legislation, it is unclear whether her
successor will do so, too.
German debate has also important repercussions at the European level, as Germany
is currently occupying the Presidency of the Council of the EU. In this
context, the German government has publicly committed to pushing for
substantive, cross-sectoral and mandatory human rights due diligence
regulation. If the German public keeps the pressure on and the political stars
align, 2020 could even be remembered as the birth year of a new brand of corporate
responsibility made in Germany.