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Due Diligence and Transnational Ecological Conflicts

This blog post aims to provide readers with a snapshot of the role of due diligence (DD) in the governance of transnational ecological conflicts. This post provides an overview of how DD is used to hold both states and corporations accountable for detrimental environmental impacts. The post finally invites a more fine-grained analysis of the elements of due diligence frameworks, and how they are applied in practice by courts. This can ultimately provide a better understanding of what is due behaviour in the context of an ecological conflict.

Recent studies point out that the concept of due diligence as an ‘obligation’ (or, in other words, a standard of legal care) can trace back its origins to Roman law where it was used as an objective standard both in contract and tort law, detailing the standard of conduct expected from an alleged wrongdoer to avoid liability. Although terminologies vary (and the norm remains fairly context-specific), the principle that a person should exercise a certain standard of care in order not to harm another is still commonly recognised in legal systems across the world. This concept inspired the development of DD frameworks in the international legal order, helping to define what is demanded from certain actors when faced with ecological risks, hazards or harms, and informing responsibility thresholds in the context of transnational ecological conflicts.

In Public International Law, DD is a notion that is present in a rich array of contexts in the international legal order, being characterised by different meanings by different scholars. DD has been referred to as a ‘concept’, a ‘doctrine’, a ‘test’, a ‘duty’, a ‘general principle’ a ‘standard’ and even ‘an obligation’. This range of classifications denotes the difficulty to conceptualise due diligence in international legal discourse, however, this debate is beyond the scope of this blog. In any case, this post sides with recent literature that describes DD in the context of inter-state relations as a qualifier of behaviour. DD allows judges to qualify whether a certain behaviour was diligent or negligent – it is not a free-standing obligation, but a modality attached to some duty of care for someone or something else.

Its traditional field of application has been the international customary ‘no harm’ rule/ principle (neminem laedere) and its progeny. Here, DD serves both as a tool to restrict accountability of states by exonerating states that acted diligently enough (this is, with ‘due’ diligence), but also as a tool to create accountability (by attributing responsibility even in the absence of harms, as long as there are procedural flaws in the conduct of a state) [1]. Even though in this legal domain the law is effectively blurred by inconclusive International Court of Justice (ICJ) decisions and a lack of practice, DD acts as a tool to address the accountability of states for environmental damages and risks, as evidenced by the jurisprudence of the ICJ in Pulp Mills and Costa Rica v Nicaragua/Nicaragua v. Costa Rica.

In the context of transnational ecological conflicts, DD allows assessing whether a state acted diligently enough when faced with certain ecological risks or hazards, capable of being detrimental to the interests of other states. Moreover, in international environmental law, and when these risks are ‘material’ or ‘significant’, the prevention principle would allow rightsholders (states potentially affected) to require specific action in the form of an environmental impact assessment, notification and consultation in specific cases (as pointed out here).

In the context of corporate accountability, DD assumes a fundamental role in the regulation of corporate activities.

One influential framework is contained in UN Guiding Principles on Business and Human Rights (UNGPs), and is focused on human rights DD. According to the UNGPs, whenever corporate activities cause, contribute or are linked to adverse human rights impacts, then, corporations are expected to take certain actions to mitigate or address those impacts. In the context of transnational ecological conflicts, the enjoyment of certain human rights (for example, the right to life, respect for private and family life, and property) can be seriously disrupted by detrimental environmental impacts. Consequently, whenever corporate activities cause, contribute or are linked to adverse human rights impacts, and these impacts are tied to environmental factors that adversely affect the fruition of those rights, then, the UNGPs would seem to suggest that corporations are expected to take certain actions to address or mitigate such impacts.

Other international frameworks on DD which are aligned with the UNGPs, such as the OECD Guidelines for Multinational Enterprises (OECD Guidelines), extend DD to impacts not only concerning human rights, but also the environment itself.

DD in this context is of a voluntary nature and has a non-binding character. DD is a managerial process a corporation puts in place to deal with risks. The view that considers it as a standard of care to discharge corporate responsibility is thus in tension with this one, creating uncertainty about the extent of corporate responsibility to respect human rights (and the environment) or the consequences for breaches (as pointed out elsewhere). The non-binding nature of these frameworks on DD would suggest the role they have to play is limited. Still, they are used to hold corporations accountable for environmental impacts at least in two ways. First, whenever compliance committees evaluate whether the conduct of a corporation complied with DD recommendations contained in a specific DD framework. Secondly, whenever judges decide to use DD frameworks as yardsticks to inform the interpretation of other legal obligations.

To illustrate this, the construction of a hydropower plant in Laos allegedly contributed to severe environmental damage and the displacement of local communities, affecting their right to family life. Numerous NGOs lodged a complaint with the Austrian OECD National Contact Point Enterprises against an Austrian supplier of hydropower turbines who participated in the construction and operation of the plant. The central claim in this dispute is precisely a lack of respect concerning due diligence recommendations contained in the OECD Guidelines.

Differently, in the Netherlands, several NGOs representing 17,379 individuals successfully sued Shell for the role its activities play in aggravating the effects of climate change. Here, the question was not whether Shell complied with a certain DD recommendation. However, to interpret a legal standard of duty of care contained in Dutch law, the court referred to the DD framework contained in the UNGPs (cf. sections 4.4.11 and following of the judgment).

Similarly, some national legislative initiatives are adopting statutory obligations of corporate human rights and environmental DD (such as the French ‘Duty of Vigilance’ Law). It is unclear whether courts will use the UNGPs or other DD frameworks as yardsticks for inspiration or interpretation of the obligations, or, on the contrary, will develop their understandings of the concept.

The vague nature of DD appears to leave significant leeway for courts to define its scope in practice. As such, it remains unclear what kinds of behaviour from corporations and states would be considered diligent/ not diligent. Further research is needed to understand how different normative frameworks on DD are being applied in practice by courts and implemented by states and corporations. It is still unclear whether DD frameworks resemble each other in content, or, on the contrary, possess completely different elements. Elements here are defined as the diverse types of actions/ inactions that can be carried out to classify a certain behaviour as diligent or omitted to classify a behaviour as non-diligent. To enumerate some general types, these actions are due in the form of notifications, information, communications, consultations, assessments, warnings, general monitoring, or other specific safeguard or mitigation measures. Whenever judges or compliance committees are called to decide on whether a state or corporation can be held accountable for detrimental environmental impacts, their analysis of what was the due/ undue behaviour in a certain situation is a relevant source of data to understand which elements of conduct are relevant to qualify a behaviour as diligent or not diligent. In the context of the ERC Curiae Virides project, different transnational ecological conflicts are being mapped and analysed. To understand the role of DD in the transformation and governance of these conflicts, the project will look at specific actions implemented by corporations or states and whether these actions suffice to classify their behaviour as diligent (whenever DD frameworks are being analysed by courts or compliance committees). More research is needed to categorize and describe what these actions are but such an exercise can provide clarity to debates around DD and a framework to evaluate legal decisions on the subject. Similarly, it can provide a clearer framework for analysis of similarities/dissimilarities between several frameworks and open the door for debates on the challenges or opportunities they might bring for the governance of transnational ecological conflicts.

Blog post written by João Teixeira de Freitas

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