European human rights litigation and global corporate responsibility

A shift in favour of human rights protection is motivating policy and legal changes around the world, seen in Australia’s Modern Slavery Act 2018 (Cth). In Europe, we are seeing an increase in human rights-based litigation as mandatory due diligence in the supply chain is expanding beyond modern slavery laws, and Australia may not be far behind.

European civil society organisations are increasingly pursuing parent companies in their home jurisdictions for the alleged adverse human rights impacts of their subsidiaries abroad. A significant case relates to charges of terrorism financing and crimes against humanity against Lafarge and its directors, which came to a head in November 2019. The case had been before the courts since 2016 when former employees, with the European Centre for Constitutional and Human Rights (ECCHR) and its French sister organisation Sherpa, filed a complaint for alleged abuses committed in Syria by Lafarge’s subsidiary Lafarge Cement Syria (LCS).[1]

LCS allegedly paid up to €13 million to armed groups to guarantee access to raw materials and access to its factory during the Syrian civil war in 2013 and 2014. ECCHR and Sherpa allege that these payments made Lafarge and its former directors complicit in crimes against humanity which were allegedly committed by these armed groups. On 7 November 2019, the Investigation Chamber of the Paris Court of Appeals confirmed the charges of financing terrorism, deliberately endangering the lives of others and violating a trade embargo, but dropped the charges of crimes against humanity. Sherpa and the ECCHR are planning to appeal the decision.

Recent investigations in Europe are also pointing to liability for human rights violations downstream from the point of supply. On 5 September 2019, the Munich Public Prosecutor’s Office announced that it was investigating the former CEOs of cyber surveillance companies FinFisher GmbH, FinFisher Labs GmbH and Elaman GmbH over the sale of spyware to the Turkish government without obtaining an export license.[2] The investigation was prompted by a criminal complaint from the ECCHR, which claimed that the Turkish government used the spyware to track opposition protesters and monitor their conversations. Similar accusations against companies are on the increase worldwide, including in Australia, and reflect increasing scrutiny and pressure on companies to exercise vigilance over the intended use of products and services by their clients and customers.

Apart from the reputational risk associated with allegations of human rights violations, and the fact that human rights violations should not occur, litigation is expensive. In the United Kingdom, Camellia Plc announced in a trading update in January 2020 that it was investigating complaints of assault and sexual misconduct committed by employees of its African subsidiaries.[3] On 7 May 2020, it announced that it spent £3.5 million in legal fees related to these complaints since the claims were notified to the end of March 2020.[4] Camellia’s legal expenses evidence the costliness of investigating allegations of human rights abuses and the importance of strong preventative measures.

The intense focus on human rights across Europe and the United Kingdom is also reflected by activist litigation against governments. On 20 December 2019, the Supreme Court of the Netherlands handed down its landmark ruling in Urgenda,[5] which requires the Dutch State to cut greenhouse gas emissions by 25% by 2020 as compared to 1990 levels. The case argued that the Dutch Government had a legal duty to prevent dangerous climate change and was decided under Article 2 (Right to Life) and Article 8 (Right to Respect for Private and Family Life) of the European Convention on the Protection of Human Rights and Fundamental Freedoms.[6] The case has inspired climate change cases in Belgium, Canada, Colombia, Ireland, Germany, France, New Zealand, the UK and Switzerland,[7] and demonstrates that civil society organisations are becoming increasingly agile in their use of international human rights law to place pressure on governments and corporates alike.

The trend towards increased human rights litigation will only continue if the proposal to introduce mandatory human rights due diligence across the European Union in 2021 is successful. On 29 April 2020, EU Commissioner for Justice Didier Reynders made a commitment to introduce mandatory corporate environmental and human rights due diligence.[8] On 22 June 2020, a joint hearing of the three committees of the European Parliament considered briefings on the substantive elements and scope of the proposed regulation.[9] We anticipate that this reform will require businesses registered or operating within the European Union to undertake measures of human rights due diligence on their supply chains and operations, and will provide fresh avenues for strategic human rights litigation against large corporations and their officers.

Looking ahead

Human rights litigation is an ever-growing risk for corporates operating in jurisdictions with limited human rights oversight. In Europe, courts are displaying an increasing willingness to hear cases regarding human rights violations on an extra-territorial basis. Although we are not yet seeing the same volume of such litigation in Australia, cases of climate change litigation are on the rise, and it is possible that we may also see a similar increase in human rights litigation here.

Parent companies seeking to manage the risk of adverse human rights litigation are advised to carry out thorough human rights due diligence on their supply chains and operations, including the operations of their foreign subsidiaries. Australian businesses undertaking due diligence on their risks of modern slavery should consider expanding the scope of their investigations to broader human rights impacts across the length of the value chain as corporates are increasingly held to account for the uses of their products and services by their clients and customers.