On 28 February 2023, the Judicial Court of Paris (the “Court”) issued an interim order (the “Order”) in the context of a judicial dispute concerning compliance with the French Law n°2017-399 of 27 March on the Duty of Vigilance (the “French Vigilance Law”). This decision is the result of a lengthy judicial process that started back in 2019 when the defendant was summoned by several NGOs before the Court for an alleged lack of compliance with its obligation of vigilance.
Three years later, the Court has declared this action inadmissible. In a nutshell, the Court considered that an essential procedural requirement of the French Vigilance Law, namely that the plaintiff must issue a formal notice to the concerned company urging it to comply with its obligation of vigilance before summoning the concerned company before Court, had not been complied with. Indeed, even if the plaintiffs did issue such a formal notice back in 2019, the complaints and requests developed in that notice would have substantially changed when the Court was called to decide on the case. For the Court, the absence of a formal notice on the alleged breaches, therefore, rendered the action inadmissible.
Although the case was decided on admissibility and concerned a request for interim measures, the decision remains ground-breaking as the first of its kind in France, with potential implications for other pending French vigilance cases. In particular, it clarifies (to some extent) the requirements to be met by plaintiffs for their actions to be deemed admissible.
Moreover, the case highlighted that the Court will seek to ensure that the dispute remains within procedural boundaries so that the judge does not excessively infringe on corporate management. The Court emphasised that the legislator has only set framework rules on the duty of vigilance, while also inviting companies to a dialogue with the stakeholders. This first case-law is, therefore, the opportunity for the Court to erect procedural safeguards to restrain the intervention of the judge.
The French Vigilance Law
The French Vigilance Law aims to prevent serious harm to human rights and the environment by establishing a duty of vigilance with regard to parent companies, with an extended scope that also includes (to some extent) the activities of their subsidiaries, subcontractors and suppliers.
The duty of vigilance is materialised by an obligation to adopt a vigilance plan. Given its generality, the French Vigilance Law raises many essential questions, on which clarification by courts has long been awaited, on issues such as: the information needed to be covered by the vigilance plan; the extent to which companies need to take action to mitigate risks or prevent serious harm; the level of detail required in the vigilance plan; and whether companies can be criticised for the efficiency of the measures identified in their vigilance plan. Although the Order does not address all of these issues, key lessons can be extracted from it.
Key lessons from the Order
- The requirements of the French Vigilance Law are general, but the legislator intended that the elaboration of a vigilance plan result from collaboration with stakeholders
The Court observed that the French Vigilance Law is vague and that the decree intended to ensure its implementation has not yet been adopted. Noting the lack of guiding principles and/or established international standards on how to elaborate a vigilance plan, the Court considered that the French legislator did not intend to give precise directions to companies on the measures to be taken. However, the Court sought it critical that the legislator “expressly intended to see the vigilance plan elaborated with stakeholders in a collaborative manner and within a dialogue between stakeholders and the concerned company“. Such concertation should help with “better defining the perimeter of vigilance” and should “considerably reduce the risk of litigation“. This is ultimately, according to the Court, a means to ensure the effectiveness of the “monumental goals” set by the French Vigilance Law.
- The French Vigilance Law encourages and favors the dialogue between concerned companies and stakeholders rather than the pursuit of judicial proceedings
The French Vigilance Law has this particularity of requiring prior procedural steps before a possible intervention of the judge. In the Order, the Court provided a constructive interpretation of these procedural requirements. The Court did so by giving a concrete meaning to the obligation of the plaintiff to issue a formal notice to the concerned company that it complies with its vigilance obligations and that it observes a period of three months before initiating legal action.
The Court considered that the mechanism of a formal notice is aimed at “establishing a mandatory step for dialogue during which the company will be able to respond to the criticism formulated against its vigilance plan“. The Court went on to state that the notice must meet the objective of “legal certainty and to the development of alternatives to dispute resolution“. In this regard, the Order specified that such formal notice shall be “sufficiently firm and precise to identify the shortcoming attributed to the plan to allow amicable settlement“. It is worth noting that this interpretation of the formal notice requirement was likely influenced by the strong expertise of the first vice-president of the Court in this field.
Importantly, the Court also considered that this mechanism “can only have the aim to allow the company to place itself in a situation of compliance” with its vigilance obligation. This is the reason why a formal notice to comply with the duty of vigilance must exist and its content be aligned on the requests and complaints of the plaintiff, without which the judge cannot intervene. As a consequence, a lack of formal notice will trigger the inadmissibility of the action.
One lesson for similar legal actions will be for the plaintiffs to ensure that all of their requests and complaints be notified in a formal notice and that the defendant is given the opportunity to respond.
- In a procedure for an interim order, the judge exercises limited control and will not assess whether the measures adopted in the vigilance plan are reasonable
The Court recalled that the procedure that was followed for the Order could have only resulted in a limited review of the vigilance plan. In such a procedure, the judge will limit its control to verify that a vigilance plan exists, that the five items required by law are covered, and that each item is sufficiently developed so that the plan is not considered superficial. Indeed, it is not within the powers of the Court deciding under the procedure for an interim order to “assess the reasonableness of the measures adopted in the vigilance plan, when this assessment requires an in-depth examination of the elements of the cases falling with the sole power of the Court deciding under the ordinary procedure“.
Future decisions on ordinary procedures should, therefore, be scrutinised to assess the extent to which French courts will indeed enter into a review of the content and merits of vigilance plans set up by the concerned companies. In that regard, the EU Corporate Sustainability Due Diligence Directive, (“CSDDD“), once adopted, may provide an operative benchmark against which French courts could conduct their review (for more information on the EU CSDDD, read our earlier blog posts here, here and here). In the meantime, companies are left with a great level of uncertainty, given the lack of implementing legislation or guidance.
Implications and potential appeal
This decision was long awaited in a context of great uncertainty with respect to the French Vigilance Law. As several other cases are pending before the Court, the Order may have implications on the admissibility and chances of success of these other cases. Importantly, the Order is subject to an appeal, which may be the opportunity for the plaintiffs to challenge this interpretation of the French Vigilance Law.
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