Editor's Note: Alexandru Rares Tofan recently graduated with an LLM in Transnational Law from King’s College London where he focused on international human rights law, transnational litigation and international law. He is currently an intern with the Doing Business Right project at the Asser Institute in The Hague. He previously worked as a research assistant at the Transnational Law Institute in London on several projects pertaining to human rights, labour law and transnational corporate conduct.

The Romanian Institute for Human Rights (‘Institutul Român pentru Drepturile Omului’, hereinafter RIHR) was established on 30 January 1991 on the basis of Law No 9/1991. It is an independent public body that has as its main purposes the promotion of human rights education and the monitoring of compliance with human rights in Romania (see Art. 2). The duties of the institute include carrying out research, disseminating information, organising events and conferences for capacity-building and awareness raising, advising the legislative branch on human rights aspects of new enactments, and reporting on compliance with human rights (see Art. 3). The RIHR’s status as a national human rights institution is currently being transferred to the People’s Advocate Institution (see here), which is an ombudsman institution with general jurisdiction. The process for obtaining accreditation from GANHRI is currently in its incipient stages pending the approval by the Senate of Law 382/2018 concerning the amendment of the law governing the People’s Advocate Institution. In view of this development, this article undertakes a forward-looking approach by analysing RIHR’s current efforts on business and human rights as well as any foreseeable changes.

This article analyses two types of actions in order to observe the extent to which the RIHR has assumed its role in promoting access to remedy in business and human rights cases. According to the 2010 Edinburgh Declaration of the International Co-ordinating Committee of National Institutions for the Promotion and Protection of Human Rights (ICC), the participation of NHRIs in the remedial process may be either direct or indirect. As stated above however, the RIHR lacks a complaints mechanism. For this reason, this article will adopt a forward-looking analysis by looking at the complaint mechanism of the People’s Advocate Institution (PAI) to ascertain whether this new procedure complies with the vision for NHRIs under the UNGPs. As will be shown, the field of business and human rights has not been at the top of the RIHR’s agenda. Worryingly, the forthcoming transfer of NHRI status to PAI may in fact represent a step back in this sense.

The Paris Principles (PP) dictate that national human rights institutions may directly participate in providing access to justice by hearing and considering complaints. While this does not fall in the competences of the RIHR, it is interesting to analyse whether its successor’s complaints mechanism is aligned with the PPs in its current form. According to the current legislative proposal, the PAI would have the authority to decide over complaints alleging any violation of human rights but only to the extent that the respondent is a public authority, including public companies (see Art. 11 (c)). Should it satisfy itself that a right has been breached, it may request the public authority to take compensatory measures and it may award reparation.

Restricting the complaints mechanism’s jurisdiction to cover only public authorities severely limits its usefulness in business and human rights cases. It means that victims of corporate human rights abuses by private companies will not able to enjoy a routinized alternative to instituting legal proceedings. This limited jurisdictional reach also obstructs the fulfilment of the institution’s role as a mediatory or conciliatory body in business and human rights cases. While it is commendable that the PAI may handle cases alleging violations of any human rights, the ratione personae jurisdiction is too limited to foster the achievement of its envisioned purposes under the UNGPs. Extending the scope of the complaints mechanism to cover private persons as offenders would enable its alignment with both the Paris Principles and the UNGPs. It would also in all likeliness lead towards the bettering of its accreditation status under the GANHRI (the RIHR was previously given C-status).

As to indirect participation, the RIHR has only marginally addressed the field of business and human rights in its activities. For instance, in 2014 and 2015, it has conducted research and organised debates based on the UNGPs, the European Strategy for CSR and the Action Plan of the European Network of NHRIs. These debates included talks of a national action plan in which to set out the priorities of the Romanian government in this field. The RIHR has further held separate conferences on business and human rights (such as the one held together with the UNESCO Office for Human Rights, Democracy, Peace and Tolerance) or as part of its annual conferences (see the 2016 conference where business and human rights was treated as a new challenge to the field of human rights). The RIHR is also a founding member of the CLARITY project alongside eleven other national human rights institutions from the EU. This project aims to raise awareness and enhance the general public’s knowledge about their fundamental rights and related enforcement mechanisms. Since March 2018, CLARITY has begun work on a project focusing on access to remedy improvements in business and human rights cases. On the other hand, the activities of the People’s Advocate Institution do not currently encompass the field of business and human rights at all. This means that the sporadic involvement of the Romanian NHRI in the field of business and human rights will in all likelihood diminish in the future.

To conclude, the field of business and human rights has not been at the top of the RIHR’s agenda in its almost thirty years of activity. Nor is this likely to change under the auspices of its successor – the People’s Advocate Institution. The latter institution does not have a mandate to handle human rights complaints against private companies, and the field of business and human rights is not in its sight. This forthcoming transfer of responsibility may therefore, at least in the short run, not be a good news for access to remedy in business and human rights cases in Romania.

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.

In 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.

Initiative Lieferkettengesetz model law

The Initiative 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.”

The 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 consequences.

The 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) Modern 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.

In 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.

The 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.

The 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.

Initiative 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.

Civil 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’.

German 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.

Considering 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.

Crucially, 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.

Government’s position paper (Eckpunkte)

During 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.

They intended 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.

Their 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 exclaimed that with such a law, he would already have ‘one foot in prison’.

In 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.

Due 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. 

Claimants 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 passed. 

The 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 2021.

Even 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.

The 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.

Nevertheless, 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.

Conclusion

There 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.

In 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.

The 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.