GERMANY Law and Practice Contributed by: Jan-Ove Becker and Lukas Heber, Littler
fails to exercise the due diligence required in the course of business ( verkehrsübliche Sorg- falt ). The general due diligence requirements are primarily based on local law. As it is generally the case, it must be considered whether the human rights violation actually took place in Germany. This is because the decisive factor in determining whether German tort law applies is whether the human rights violation took place abroad. If so, the applicability of German tort law is doubtful due to the principle of the place of effect according to Article 4 (1) Rome II Regulation. In any case, however, there is a serious risk of liability under foreign law. Contractual liability is also possible under gen - eral German liability principles – eg, if compa - nies that are part of a supply chain have com - mitted themselves to respecting human rights. The extent to which individuals can take action against companies on the basis of contractual liability is controversial and has not yet been conclusively clarified. Interestingly, the LkSG itself does not pro - vide for civil liability on the part of companies for breaches of their due diligence obligations according to the LkSG and thus of human rights. However, the LkSG also does not exclude the above-mentioned liability of companies under general German liability principles. The due dili - gence obligations established by the LkSG may also be relevant when assessing which obliga - tions the company concerned had violated in a specific case (see above). Apart from this, the LkSG is also of particular importance for the civil liability of companies as it allows for so-called “process standing” ( Prozessstandschaft ). In German civil proceed - ings, a lawsuit must generally be brought by
the person whose rights have been violated. In cases of human rights violations in international business relations, this is often not possible (distance from the place of court, language bar - riers, fear of reprisals, high legal costs). To over - come these practical barriers, the LkSG enables affected parties to authorise German non-gov - ernmental organisations (NGOs) or trade unions to bring legal action before a German court. Unlike the LkSG, the CSDDD provides for civ - il liability. In the event of breaches of the due diligence obligations that result in violations of the legal interests protected by the CSDDD, companies may face civil claims for damages if they have acted intentionally or negligently. The decisive factor is likely to be the extent to which a company has taken “appropriate measures” within the meaning of the CSDDD that effec - tively address the most serious and likely risks. However, it is currently still unclear whether civil liability under the CSDDD will be amended after all (see 2.2.8 Regulatory Change ). 3.2 Director and Officer Liability If a company violates human rights or human rights-related due diligence obligations, eg, under the LkSG, members of the management must expect that a fine will be imposed not on the company (see 3.1 Criminal and Civil Corpo- rate Liability ), but on them personally. In princi - ple, an authority is free to demand the fine from the company or a member of the management. In addition to the imposition of a fine, there is also the risk of civil liability – if the company is required to pay a fine to the authority or dam - ages to the victim of a human rights violation, it can, in principle, seek compensation from the member of the management. However, civil external liability – ie, the direct liability of a mem -
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