International Regulatory Enforcement (PHIRE)

European Council Takes Significant Actions on Global Human Rights

December 09, 2020

Nicola Bonucci, Tara Giunta, Jon Drimmer and Quinn Dang

On December 7, 2020, the European Council, the EU’s highest body, adopted a decision and regulation establishing the first EU global human rights sanctions regime.  The framework, which is similar to the U.S. Global Magnitsky Act, will allow the EU to target individuals and entities associated with serious human rights violations and abuses with sanctions, including a ban on travel and freezing of funds.

The European Council action establishes a framework to address serious human rights violations, which include genocide, crimes against humanity, torture, slavery, enforced disappearance of persons, and arbitrary arrests or detentions, as well as trafficking in human beings, sexual and gender-based violence, violations or abuses of freedom of peaceful assembly and of association, violations or abuses of freedom of opinion and expression, and violations or abuses of freedom of religion and belief.

The sanctions authorized under the action include freezing all funds and economic resources belonging to the individual or entity and prohibiting funds or economic resources from being made available directly or indirectly to or for the benefit of the sanctioned person or entity.  It also calls on Member States to take necessary measures to “prevent the entry into, or transit through, their territories” of persons responsible for human rights violations.
These sanctions developments come on the heels of the European Council’s approval of conclusions calling on member states and the European Commission to promote human rights in global supply chains.  Notably, for the first time, the European Council asks the European Commission for an EU legal framework on sustainable corporate governance, including cross-sector corporate due diligence obligations.
The European Council's “Conclusions on Human Rights and Decent Work in Global Supply Chains” (available here) highlight the challenges posed by the COVID-19 pandemic for the global workforce, particularly for women, children, and migrant workers who face disproportionate human and labor rights abuses.  It calls attention to the role that global supply chains have in economic activities across the globe, given that these “networks make up 80 percent of global trade.”  The key to responsible supply chain management, according to the European Council, is corporate due diligence, and in particular human rights due diligence.
Acknowledging that voluntary measures have been important but insufficient to address the problem to date, the European Council calls on the European Commission to introduce “a proposal for an EU legal framework on sustainable corporate governance, including cross-sector corporate due diligence obligations along global supply chains.”  The European Council specifies that the proposal could include a “definition of what kind of risk management process companies need to follow to identify, prevent, mitigate and account for its adverse human and labour rights and environmental impacts.”  However, the Council has not set any specific time line for such a proposal.

These European Council actions are to be read in conjunction with the Commission initiative announced in September of this year that proposes to require that companies conduct mandatory human rights due diligence,[1] an important tool to identify and mitigate risks in the corporate global supply chain.  Taken together, these developments signal that the promotion and protection of human rights will remain a top EU priority.   Multinational companies are well advised to prioritize human rights compliance and due diligence, as the EU, U.S., U.K. and Canada have now all adopted a form of the Magnitksy sanctions regime.  Moreover, the risks of trafficking and forced labor identified in both the EU sanctions action and due diligence conclusions have become more acute in the wake of the economic crisis caused by the pandemic, and as national governments seek to enact laws to eliminate forced labor in the supply chain.

[1]See  https://www.paulhastings.com/publications-items/blog/international-regulatory-enforcement/international-regulatory-enforcement/2020/09/11/the-eu-human-rights-due-diligence-legislative-initiative-and-the-business-and-human-rights-treaty and https://www.paulhastings.com/en-GB/publications-items/details/?id=da731c70-2334-6428-811c-ff00004cbded

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