Sophie Scemla
Gide Loyrette Nouel, Paris

Following the Rana Plaza tragedy in Bangladesh on 24 April 2013,¹ corporate social, environmental and societal issues have been increasingly taken into account both by society and by companies. 

In France, NGOs, trade unions and elected officials advocated for the creation of a specific regulation extending the civil liability of French parent companies for human rights and environmental violations committed by their subsidiaries or their suppliers, both in France and abroad.

After years of legislative debates, French Law No. 2017-399 of 27 March 2017 on the duty of vigilance of parent companies and contracting companies (the 'Duty of Vigilance Law' or the 'Law') was adopted on 27 March 2017. 

Since environmental, social and governance (ESG) topics are increasingly scrutinised, many legal actions have been initiated against French companies by NGOs, trade unions and individuals, on the basis of non-compliance with the Duty of Vigilance Law. No decisions have been issued yet on the merits of these cases. However, since these organisations are very active on social media and in the press, these kinds of legal proceedings have proven to be very detrimental to companies’ reputation and image.

The Scope and Nature of Obligations Imposed on Companies under the Duty of Vigilance Law

The Duty of Vigilance Law applies to companies and groups based in France,² which have a legal form of 'sociétés anonymes, sociétés en commandite par actions' or 'sociétés par actions simplifies' and employ either more than 5,000 employees in France, or more than 10,000 worldwide for two consecutive years. 

Companies falling within the scope of the Law must establish, publish, implement and monitor a 'Vigilance Plan' to identify and prevent risks of severe violations of human rights and fundamental freedoms, health and safety of individuals and to the environment.

The Vigilance Plan must cover risks arising from the activities of the subject company, the companies it directly or indirectly, exclusively or possibly jointly³ controls, and the operations of their subcontractors and suppliers with whom they have an established commercial relationship,⁴ when such operations derive from this relationship, 'irrespective of their workforce, their activity, their economic weight and their location'.⁵ 

The Vigilance Plan encapsulates five obligations: (i) establishing a risk mapping document; (ii) with dedicated procedures assessing risks associated with subsidiaries, subcontractors and suppliers with whom the company has an established business relationship, (iii) providing adapted due vigilance actions and remedies to mitigate identified risks and to prevent serious harm, (iv) providing an alert mechanism to collect reports on risks of infringements, and (v) implementing a monitoring mechanism to evaluate the effectiveness of enacted measures.

The Vigilance Plan must be established in consultation with the company's 'stakeholders'. The list of stakeholders can be very broad, according to the NGO Sherpa,⁶  and could include employees and management, but also consumers, NGOs, international organisations and trade unions.

Companies are also required to publish their Vigilance Plan as well as regular reports on its implementation. 

In the absence of a Decree specifying the nature of these measures and the scope of the Law, the details of the obligations imposed on companies remain uncertain. Since the companies and NGOs do not agree on the effect and extent of  these measures, many claims have been raised by NGOs on the basis of potential violations of the Law.

Sanctions for Potential Violations of the Duty of Vigilance Law

If a company falling under the scope of the Duty of Vigilance Law fails to establish, implement or publish an appropriate Vigilance Plan, any concerned parties can file a claim with the Paris judicial court, which has exclusive jurisdiction on this matter. 

After receiving formal notice to comply with the Law, companies are given a three-month period to meet their vigilance obligations. If the company still fails to meet its obligations after the three-month period is over, a judge can force the company to publish a Vigilance Plan or to modify its incomplete Plan. The court may also impose a penalty for each day of non-compliance until remedial measures are taken. 

Plaintiffs can also bring a civil lawsuit (based on French tort law) to seek damages resulting from a company's failure to comply with its vigilance obligations, where compliance would have prevented the harm. Therefore, French courts may order the company to compensate for the harm that the performance of its vigilance obligations would have helped avoid. 

However, under French tort law, in order to obtain compensation, the victim will have to demonstrate both the existence of a fault committed by the company and a causal link between the damage caused and the company's failure to comply with its vigilance obligations. According to law professors,⁷ it will be difficult to establish the existence of a direct link between the fault committed by the company (failure to establish a proper Vigilance Plan) and the damage suffered by victims.

To date, no decision has yet been issued on this legal basis but several actions have been initiated.

In addition, Article L 2141-7-1 of the French Public Procurement Code provides that companies failing to comply with their duty of vigilance obligations in the year preceding the publication of the notice of tender, may be excluded from the tendering process by the public buyer. 

Several legal actions have been Initiated by NGOs and trade unions on the basis of alleged breaches of the Duty of Vigilance Law

A fair number of companies have been served with formal notices to comply with their legal obligations from NGOs or trade unions, without necessarily having been followed by a summons. NGOs have targeted a wide variety of sectors (energy, banking, agriculture, food, logistics, etc.). NGOs have especially called out banks for their contribution to climate change through their financing and investment activities in fossil fuels.

To this day and to our knowledge, around fifteen summonses have been issued and made public. A decision on the merits has not been issued yet by French courts. However, one case has given rise to a summary judgment and two others to orders by a pre-trial judge. These rulings have helped specify procedural requirements for legal actions initiated on the basis of the duty of vigilance.

In two first-ever rulings dated 28 February 2023,⁸ the First Vice-President of the Paris judicial court declared inadmissible the claims brought by associations against a French energy company in  summary proceeding on the ground that the company had not been properly served with a prior formal notice. The judge insisted on the fact that the Vigilance Plan must be established in collaboration with the company's stakeholders and that sending a formal notice criticising a Vigilance Plan contributed to this dialogue. It was therefore determined that claimants had to address a new formal notice to the company if, during proceedings, the company publishes new Vigilance Plans amending the Plan that was the subject of the initial formal notice. The judge also noted that, in the absence of any specific criteria in the law on applicable standards and the typology of the rights concerned, it was up to judges to assess the 'reasonableness' of the measures provided for in the Vigilance Plan, a notion which to date remains 'imprecise, vague and flexible'.

Two subsequent decisions confirmed this solution. On 1 June 2023,⁹ a case involving a French water supply company on the one hand and French and Chilean associations on the other, the judge held that, even if the grievances relating to the new Vigilance Plan are identical to those already formulated in the formal notice relating to the inadequacy of a previous Vigilance Plan, plaintiffs must issue a new formal notice relating to the new Vigilance Plan. Then, in a ruling dated 6 July 2023,¹⁰ a pre-trial judge confirmed that demands formulated by NGOs in a summons based on the duty of vigilance of a French energy company must be identical to those formulated in the prior formal notice. 

Judges also encourage companies and plaintiffs to resort to alternative dispute resolution mechanisms such as mediation, as they allow space to discuss and negotiate with the company's stakeholders in order to draft an improved or more comprehensive Vigilance Plan. Recently, a case involving a biometrics company and French and international NGOs became the first successful mediation and resulted in changes in the company's Vigilance Plan regarding identified risks as well as mitigation and corrective measures.¹¹

Considering the impact these cases can have on the reputation of companies and the public interest in ESG issues, the number of claims based on the duty of vigilance will surely increase in the coming years, especially with the implementation of the CSDDD.

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1  A building, which housed garment factories subcontracting for major Western clothing brands collapsed, killing over a thousand workers.
2  Even if they are the subsidiary of a foreign company. 
3  
4  The notion of 'established commercial relationship' is referred to in Article L 442-1 of the French Commercial Code, and case law specifies that the relation shall be 'usual, stable and regular'.
5  French Constitutional Council, DC No 2017-750 of March 23, 2017, §11, available here.
6  See: https://www.asso-sherpa.org/accueil.
7  See: S. Brabant et E. Savourey, Loi relative au devoir de vigilance – Des sanctions pour prévenir et réparer ? : Rev. int. Compliance 2017, comm. 44; A. Danis-Fatôme et G. Viney, La responsabilité civile dans la loi relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre : Dalloz, 2017, p. 1610; P. Métais et E. Valette, Le devoir de vigilance et les enjeux en matière de responsabilité civile : Rev. Lamy dr. aff. nov. 2019, n° 153.
8  Paris judicial court, 28 February 2023, nos 22/53942 and 22/53943.
9  Paris judicial court, 1 June 2023, n° 22/07100.
10 Paris judicial court, 6 July 2023, n° 22/03403..
11 Data Rights press release, 'NGOs and IDEMIA agree to Vigilance Plan Improvements in Settlement over Kenyan Digital ID Human Rights Challenge', 24 July 2023.