French National Assembly Adopts Corporate Duty of Vigilance Law

This post was prepared by Corentin Chevallier, an attorney in Foley Hoag’s Paris office. A French language copy is available here.

On February 21, 2017, the French National Assembly (Assemblée nationale) adopted proposed legislation defining a duty of vigilance for parent companies and their subcontractors.

The law provides that multinational firms carrying out all or part of their activity on French territory shall establish mechanisms to prevent human rights violations and environmental damages throughout their supply chain.

The law applies to large French companies. Specifically, companies covered by the law include companies operating in full or in part on French territory and counting (within their own company and on their direct and indirect subsidiaries) with at least 5,000 employees when their head office is located in France; or 10,000 employees when their head office is located abroad.  It is estimated that between 150 and 200 companies will be directly covered.

Companies subject to the legislation must establish and effectively implement a vigilance plan, which shall include reasonable vigilance measures seeking to identify and prevent human rights violations, breaches of fundamental freedoms, violations of health and safety rights of people, as well as environmental damages. The plan should cover the parent company, companies under its control, as well as the suppliers and subcontractors with whom the parent company or any of its subsidiaries have established a commercial relationship. The content of this plan may also be specified by a judicial decree.

If the company does not prepare the vigilance plan and fails to comply with the formal judicial notice, it may be sanctioned with a civil fine of up to € 10 million. The amount of this fine may reach up to € 30 million if failure to develop a plan leads to injuries that could have otherwise be prevented.

The law is not yet applicable nor in force, as on February 23, several Members of Parliament requested the Constitutional Council to examine the law’s compatibility with the French Constitution.

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