The Duty of Vigilance for parent companies was introduced into the French Commercial Code by the Duty of Vigilance Law on 27 March 2017. Said Law provides that French corporations with over 5,000 employees in France and/or over 10,000 employees worldwide (including affiliates' employees) shall set up, publish and implement a "vigilance plan". Such a plan is intended to identify, anticipate and prevent human rights violations that might result from the activities of the parent company, its subsidiaries and controlled affiliates, as well as suppliers and subcontractors.
Case law uncertainty
As the Duty of Vigilance Law does not provide for any special jurisdiction rules for disputes related to vigilance plans, this has given rise to conflicting interpretations in case law: while the Versailles Court of Appeal considered that commercial courts had jurisdiction on 10 December 2020, the Nanterre Judicial Court declared it had jurisdiction on 11 February 2021.
The recent French Supreme Court’s ruling
In a decision dated 15 December 2021, the French Supreme Court acknowledged jurisdiction of the Nanterre Civil Court in the scope of an action brought by an association in relation to alleged issues with a corporate vigilance plan.
While plaintiffs had initiated proceedings before the Nanterre Civil Court, the Versailles Court of appeal had ruled that commercial courts have jurisdiction, arguing that the development and implementation of the vigilance plan was directly affecting the activity of companies and therefore their management.
This decision was overturned by the French Supreme Court which first ruled that the vigilance plan was not a "commercial action" and considered that although the establishment and implementation of a vigilance plan had a direct connection with the management of the company, which could justify the jurisdiction of the Commercial Court, the non-commercial plaintiffs nevertheless had the choice of bringing their case either before the Commercial Court or the Civil Court. Therefore, the case was referred to the first-instance court, i.e. the Nanterre Civil Court, to be examined on the merits.
This decision will put an end to the debate concerning the jurisdiction of courts for Duty of Vigilance disputes, at least as the law currently stands.
The Law building confidence in the justice system
Although generally consistent, such a decision is not completely aligned with the provision of the new Law building confidence in the justice system. The latter confers on the Paris Civil Court exclusive jurisdiction for matters related to the duty of vigilance.
As discussed in our previous article "Duty of Vigilance: the French Parliament confers jurisdiction on the Paris Civil Court only", following fierce debates between MPs and senators, the Law building confidence in the justice system eventually decided to confer exclusive jurisdiction on the Paris Civil Court for matters involving the duty of vigilance (future Article L. 211-21 of the French Code of Judicial Organisation).
Although this Law was validated by the French Constitutional Council on 17 December 2021, it will enter into force the day following its publication in the French Official Journal.
As a result, as soon as the Law building confidence in the justice system will enter into force, only the Paris Civil Court will have jurisdiction to rule on future Duty of Vigilance cases in the scope of first instance proceedings. As to pending cases, this will need to be analysed on a case by case basis depending of the stage of the proceedings and, in some cases, their transfer to the Paris Civil Court could be contemplated. A Decree could bring additional guidance in the coming months.
Please contact a member of Hogan Lovells’ Business and Human Rights group or your usual Hogan Lovells contact if you wish to discuss this development. We stand ready to assist companies from all industry sectors to assess how to adjust their processes and operations in this context.
Authored by Christelle Coslin and Margaux Renard.