Since the adoption of the 2017 Duty of vigilance law, claimants have faced multiple procedural obstacles leading to the dismissal of their cases. In particular, judges have misinterpreted the obligation for claimants to give formal notice to companies prior to filing a complaint, using a flawed interpretation of the legislator’s intention to establish dialogue between companies and their stakeholders. Such misapplication of the law was rightfully overruled by the Paris court of appeal in two key rulings (here and here) on June 18, 2024.
The first case was filed against EDF for alleged failure to respect the right to free, prior and informed consent of a Mexican indigenous community in the implementation of a wind farm project. The second case was filed against TotalEnergies for alleged failure to address greenhouse gas emissions related to its activities. Both were dismissed by the Paris civil court based on the absence of appropriate formal notice.
Purpose of the formal notice
Under the Duty of vigilance law, when a company fails to establish and implement an effective vigilance plan, the company can be put on formal notice to comply with its obligations. If after a three-month period the company does not comply, the judge can, following a request of any person with legitimate interest in this regard, urge said company, under financial compulsion if appropriate, to comply with its obligations.
In 2023 in other cases, the Paris civil court controversially found that the formal notice mechanism was the expression of a collaborative process between companies and their stakeholders, the purpose of the formal notice being to allow companies to comply with their obligations within a framework of dialogue.
The court of appeal notes that “even though the formal notice can be used as a means for dialogue before referral to the judge, the law does not make it a prerequisite for the opening of negotiations between the company and stakeholders [emphasis added], but a call from any party with an interest in acting, under the terms of which a request for compliance is notified within a three month period” (EDF, p18). This three-month period aims to allow the company, if it deems it necessary, to comply with its obligations in order to avoid referral to the court (TotalEnergies, p24).
Content of the formal notice and the request for an injunction
Companies have long argued that because the formal notice was the prerequisite for the request for an injunction, both needed to refer to the same vigilance plan.
Although the formal notice must clearly state the alleged breaches and include a firm call to the company (TotalEnergies, p24), the court of appeal explains that “while the subject of the formal notice must correspond substantially to that of the request for an injunction, and notably must refer to the same risks, serious harms and obligations, …, in the absence of precision in the law, it cannot be required as a condition of admissibility of the action for an injunction that the formal notice and the summon refer exactly to the same vigilance plan, in particular in terms of date [emphasis added], the company having been able to change it in subsequent publications, without however removing the non-compliance with the obligations mentioned in the formal notice, which it is up to the judge to verify in the context of the action for an injunction” (EDF, p19 and TotalEnergies, p26).
The request for injunction must refer in substance to the same obligations as those in the formal notice by being linked to them with a sufficient connection, i.e., referring to the same categories of risk, serious harms and obligations. “The possible addition of obligations linked to categories of risks not forming part of the scope of the formal notice would however only affect the admissibility of the said requests and in no way that of the requests included in the formal notice” (TotalEnergies, p26). Further, the fact that the summon contains great details regarding the measures deemed necessary to comply with the obligation of due diligence compared to the formal notice does not affect the admissibility of the action (TotalEnergies, p28).
Parties to the action for an injunction
In both cases, companies argued that claimants who did not sign the formal notice could not be parties to the action for an injunction.
As recalled by the court of appeal, the law states that “the competent court may, at the request of any person justifying an interest in acting” order the company to comply with its obligations. Therefore, the law does not limit the right to seek an injunction to the signatories of the formal notice but requires that an interest in acting be justified (EDF, p24, TotalEnergies, p29).
Standing to defend
In a third ruling, the court of appeal did not focus on the content of the formal notice, but rather on the standing of the recipient, which was later the recipient of the summon.
The case was filed against Suez for its alleged role in water contamination in Chile. In a previous ruling, the Paris civil court found that Vigie Groupe, successor in title to Suez Groupe SAS, a subsidiary of Suez SA, did not have standing to defend.
According to the court of appeal, there is an irrefutable presumption that a company is exempted from establishing a vigilance plan if its parent company establishes it. However, if the parent company fails to do so, its subsidiary (meeting the threshold set by the law) has the obligation to establish it (p13).
In this case, claimants sent the formal notice to “Suez Group’s executive director.” The court points out the imprecision of the recipient’s name as “Suez Group” does not clearly designate any legal entity. The court also notes that while evoking the name of the subsidiary, the formal notice, using general terms, induced a reference to the parent company (p14).
While the court agrees that the subsidiary did not help clarify which company was the author of the vigilance plan, it considers that claimants should have further investigate the matter before the summon and that such investigation would have led them to identify the author of the plan, the parent company (p14-16). Therefore, the court confirms that Vigie Groupe lacks standing to defend.
Conclusion
Until now, the judge was misled by companies’ arguments pushing for an interpretation of the law preventing its effective implementation. The clarifications provided by the court of appeal in the EDF and TotalEnergies cases finally open doors for accountability. By abiding by the text of the law and putting a stop to improvised interpretations, the court restores hopes that the formal notice mechanism can be efficient to compel companies to comply with their obligations.
However, one can only hope that the conclusion reached in the Suez case will not incentivise companies to take advantage of the complexity of corporate international structure.
Disclaimer: The author worked for one year in one of the companies mentioned but was not involved in any way in the handling of the case.