Version en anglais - 2017-750 DC

Decision no. 2017-750 DC of 23 March 2017 - Law on the duty of oversight of parent companies and commissioning enterprises)

THE CONSTITUTIONAL COUNCIL WAS SEIZED OF AN APPLICATION in the conditions provided for by Article 61 of the Constitution relating to the Law on the duty of oversight of parent companies and commissioning enterprises under no. 2017-750 DC on 23 February 2017 by: Mr. Bruno RETAILLEAU, Mr. Pascal ALLIZARD, Mr. Gérard BAILLY, Mr. François BAROIN, Mr. Philippe BAS, Mr. Christophe BÉCHU, Mr. Jérôme BIGNON, Mr. Jean BIZET, Mr. François BONHOMME, Mr. Gilbert BOUCHET, Mr. François-Noël BUFFET, Mr. François CALVET, Mr. Christian CAMBON, Ms. Agnès CANAYER, Mr. Jean-Pierre CANTEGRIT, Mr. Jean-Noël CARDOUX, Mr. Jean-Claude CARLE, Ms. Caroline CAYEUX, Mr. Gérard CÉSAR, Ms. Anne CHAIN-LARCHÉ, Mr. Patrick CHAIZE, Mr. Pierre CHARON, Mr. Daniel CHASSEING, Mr. Alain CHATILLON, Mr. François COMMEINHES, Mr. Gérard CORNU, Mr. Pierre CUYPERS, Mr. Philippe DALLIER, Mr. René DANESI, Mr. Mathieu DARNAUD, Ms. Isabelle DEBRÉ, Mr. Francis DELATTRE, Mr. Robert del PICCHIA, Mr. Gérard DÉRIOT, Ms. Catherine DEROCHE, Ms. Jacky DEROMEDI, Ms. Marie-Hélène DES ESGAULX, Ms. Chantal DESEYNE, Ms. Catherine DI FOLCO, Mr. Éric DOLIGÉ, Mr. Philippe DOMINATI, Mr. Alain DUFAUT, Ms. Nicole DURANTON, Mr. Louis DUVERNOIS, Mr. Jean-Paul ÉMORINE, Ms. Dominique ESTROSI SASSONE, Mr. Hubert FALCO, Mr. Michel FORISSIER, Mr. Alain FOUCHÉ, Mr. Bernard FOURNIER, Mr. Jean-Paul FOURNIER, Mr. Christophe-André FRASSA, Ms. Joëlle GARRIAUD-MAYLAM, Mr. Jacques GENEST, Ms. Frédérique GERBAUD, Mr. Bruno GILLES, Ms. Colette GIUDICELLI, Mr. Alain GOURNAC, Mr. Jean-Pierre GRAND, Mr. Daniel GREMILLET, Mr. François GROSDIDIER, Mr. Jacques GROSPERRIN, Ms. Pascale GRUNY, Mr. Charles GUENÉ, Mr. Alain HOUPERT, Mr. Benoît HURÉ, Mr. Jean-François HUSSON, Ms. Corinne IMBERT, Mr. Alain JOYANDET, Ms. Christiane KAMMERMANN, Mr. Roger KAROUTCHI, Ms. Fabienne KELLER, Mr. Guy-Dominique KENNEL, Mr. Marc LAMÉNIE, Ms. Élisabeth LAMURE, Mr. Robert LAUFOAULU, Mr. Daniel LAURENT, Mr. Antoine LEFÈVRE, Mr. Jacques LEGENDRE, Mr. Dominique de LEGGE, Mr. Jean-Pierre LELEUX, Mr. Jean-Baptiste LEMOYNE, Mr. Jean-Claude LENOIR, Mr. Gérard LONGUET, Ms. Vivette LOPEZ, Mr. Michel MAGRAS, Mr. Claude MALHURET, Mr. Didier MANDELLI, Mr. Alain MARC, Mr. Jean-François MAYET, Ms. Colette MÉLOT, Ms. Marie MERCIER, Ms. Brigitte MICOULEAU, Mr. Albéric de MONTGOLFIER, Ms. Patricia MORHET-RICHAUD, Mr. Jean-Marie MORISSET, Mr. Philippe MOUILLER, Mr. Philippe NACHBAR, Mr. Louis NÈGRE, Mr. Jean-Jacques PANUNZI, Mr. Philippe PAUL, Mr. Jackie PIERRE, Mr. François PILLET, Mr. Rémy POINTEREAU, Mr. Ladislas PONIATOWSKI, Mr. Hugues PORTELLI, Ms. Sophie PRIMAS, Mr. Jean-Pierre RAFFARIN, Mr. Henri de RAINCOURT, Mr. Michel RAISON, Mr. Jean-François RAPIN, Mr. Charles REVET, Ms. Marie-France de ROSE, Mr. Bernard SAUGEY, Mr. René-Paul SAVARY, Mr. Michel SAVIN, Mr. Bruno SIDO, Mr. André TRILLARD, Ms. Catherine TROENDLÉ, Mr. Michel VASPART, Mr. Alain VASSELLE, Mr. Hilarion VENDEGOU, Mr. Jean-Pierre VIAL and Mr. Jean-Pierre VOGEL, Senators.

It was also seized on 23 February 2017 by Mr. Christian JACOB, Mr. Bernard ACCOYER, Mr. Jean-Pierre BARBIER, Mr. Jacques-Alain BÉNISTI, Mr. Sylvain BERRIOS, Mr. Luc CHATEL, Mr. Gérard CHERPION, Mr. Guillaume CHEVROLLIER, Mr. Alain CHRÉTIEN, Mr. Éric CIOTTI, Mr. Philippe COCHET, Mr. François CORNUT-GENTILLE, Ms. Marie-Christine DALLOZ, Mr. Bernard DEBRÉ, Mr. Bernard DEFLESSELLES, Mr. Rémy DELATTE, Ms. Sophie DION, Mr. Julien DIVE, Mr. Jean-Pierre DOOR, Mr. Dominique DORD, Ms. Virginie DUBY-MULLER, Mr. Daniel FASQUELLE, Ms. Marie-Louise FORT, Mr. Yves FOULON, Mr. Marc FRANCINA, Mr. Laurent FURST, Mr. Alain GEST, Mr. Daniel GIBBES, Mr. Franck GILARD, Mr. Charles-Ange GINESY, Mr. Philippe GOSSELIN, Mr. Jean-Claude GUIBAL, Mr. Michel HEINRICH, Mr. Michel HERBILLON, Mr. Patrick HETZEL, Mr. Philippe HOUILLON, Mr. Guénhaël HUET, Mr. Denis JACQUAT, Mr. Christian KERT, Mr. Jacques KOSSOWSKI, Mr. Marc LAFFINEUR, Mr. Jean-François LAMOUR, Ms. Laure de LA RAUDIÈRE, Mr. Guillaume LARRIVÉ, Mr. Charles de LA VERPILLIÈRE, Ms. Isabelle LE CALLENNEC, Mr. Pierre LEQUILLER, Mr. Céleste LETT, Mr. Lionnel LUCA, Mr. Thierry MARIANI, Mr. Olivier MARLEIX, Mr. Alain MARSAUD, Mr. Philippe MARTIN, Mr. Patrice MARTIN-LALANDE, Mr. Alain MARTY, Mr. Jean-Claude MATHIS, Mr. Jean-Claude MIGNON, Mr. Alain MOYNE-BRESSAND, Mr. Bernard PERRUT, Mr. Jean-Frédéric POISSON, Ms. Josette PONS, Mr. Didier QUENTIN, Mr. Bernard REYNÈS, Ms. Sophie ROHFRITSCH, Mr. Thierry SOLÈRE, Mr. Lionel TARDY, Mr. Guy TEISSIER, Mr. Jean-Marie TETART, Mr. Dominique TIAN, Ms. Catherine VAUTRIN, Mr. Patrice VERCHÈRE, Mr. Arnaud VIALA, Mr. Philippe VITEL and Ms Marie-Jo ZIMMERMANN, Members of the National Assembly.

In light of the following texts:

- the Constitution;
- Ordinance no. 58-1067 of 7 November 1958 as amended, concerning the basic law on the Constitutional Council;
- the Civil Code;
- the Commercial Code;
- the observations of the Government, registered on 14 March 2017;

And having heard the Rapporteur;

THE CONSTITUTIONAL COUNCIL CONCLUDES AS FOLLOWS:

1. The applicant Members of the National Assembly and Senators have referred to the Constitutional Council the Law on the duty of oversight of parent companies and commissioning enterprises. They dispute the constitutionality of Articles 1, 2 and 4.

Article 1:

2. Article 1 of the Law referred introduces an Article L. 225-102-4 into the Commercial Code. Paragraph I thereof requires certain companies to draw up an «oversight plan? and to implement it effectively. Paragraph II thereof punishes the breach of the obligations laid down by paragraph I.

3. According to paragraph I, companies that have their registered office in France and that, at the end of two consecutive financial years, employ at least five thousand employees within their company and branches in France or that employ at least ten thousand employees within their company and branches both in France and abroad are subject to an obligation to draw up an oversight plan. The oversight plan entails «reasonable oversight measures that are capable of identifying risks and preventing serious harm to rights and fundamental freedoms, the health and safety of individuals and the environment? as a result of the operations of the company that drew up the plan, the companies that it controls and the sub-contractors and suppliers with which these companies have an established commercial relationship. This plan, which may be drawn up in conjunction with the «company stakeholders? and the report concerning its effective implementation must be published and included in its annual management report. A decree adopted within the Conseil d'État may supplement the measures of oversight mentioned above and state the manner in which the oversight plan is to be drawn up and implemented.

4.Paragraph II of Article L. 225-102-4 of the Commercial Code provides that a company that breaches the obligations incumbent upon it under paragraph I may be ordered to comply with them, following the issue of formal notice. The final paragraph provides that it may also be ordered to pay a civil fine of a maximum of ten million euros.

. The objection alleging a violation of the principle of no punishment without law:

5. The applicant Senators argue that the contested provisions violate the principle of no punishment without law. On the one hand, the constituent elements of the violation punished by the last subparagraph of paragraph II are alleged not to be precisely defined. Specifically, the «normative reference? with regard to which the risks to be identified and the serious breaches to be avoided must be assessed is purportedly imprecise. The obligations resulting from the measures of oversight specified in subparagraphs 1 to 5 of paragraph I are not defined with sufficient clarity. Finally, the legislator cannot grant authority to adopt regulations in order to «complete? these measures of oversight. On the other hand, the sanction is not sufficiently defined, given the failure by the legislator to specify whether it applies to each breach or once only, irrespective of the number of breaches. The applicant Members of the National Assembly raise the same objections and assert that the contested provisions violate the principles of the necessity and proportionality of punishment.

6. According to Article 8 of the Declaration of the Rights of Man and the Citizen of 1789: "The law shall only establish penalties that are strictly and clearly necessary, and one shall only be punished under a law that has been established and enacted prior to the criminal offence, and that is legally applicable". The principles laid down by this Article apply not only to punishment ordered by the criminal courts but also to any sanction of a punitive nature.

7. By the contested provisions, the legislator has first established a new obligation under private law and secondly associated it with a sanction of a punitive nature.

8. Whilst the legislator is free to subject the companies that fall within the scope of paragraph I of Article L. 225-102-4 of the Commercial Code to different obligations with the aim of promoting respect by these companies and their business partners for various rights and freedoms, since it has associated the obligations imposed by it with a sanction of a punitive nature, it is necessary for it to define these sanctions with sufficient clarity and precision.

9. Firstly, the contested provisions require the companies in question to establish and implement effective «measures of reasonable oversight?, which must in particular take the form of «actions capable of mitigating risks or of preventing serious breaches?.

10. Secondly, these measures must - without further clarification by the legislator, and moreover subject to «completion? by a decree of the Conseil d'État - identify all risks to and prevent all serious breaches of all «human rights? and «fundamental freedoms? resulting from the operations not only of the company that is under an obligation to draw up a plan but also from those of some of its business partners.

11. Thirdly, the perimeter of the business partners of the company that are subject to the obligation to draw up an oversight plan pursuant to the contested provisions includes all companies controlled directly or indirectly by this company as well as any sub-contractors and suppliers with which they have established commercial relations, irrespective of the nature of the operations of these enterprises, their workforce, their economic weight or their location of establishment.

12. Finally, the legislator has not specified whether the sanction is incurred for each breach of the obligation defined by it or once only irrespective of the number of breaches.

13. Taking account of the general nature of the terms used by it, the broad and indeterminate nature of the reference to «human rights? and «fundamental freedoms? and the perimeter of the companies, enterprises and operations that fall within the scope of the oversight plan established by it, the legislator could not stipulate that any company that has committed a breach defined with such inadequate clarity and precision may be required to pay a fine of up to ten million euros without violating the requirements resulting from Article 8 of the 1789 Declaration, notwithstanding the objective of general interest pursued by the law referred.

14. Consequently, the last subparagraph of Article 1 of the contested law should be declared unconstitutional. The same is the case for the third subparagraph of Article 2 and Article 3, which are inseparable from the former.

. The objection alleging the violation of freedom of enterprise:

15. The applicant Senators argue that, by imposing an enhanced requirement of oversight on parent companies and commissioning enterprises in respect of the operations of their subsidiaries, their sub-contractors and their suppliers, the contested provisions violate their freedom of enterprise. The obligation to publish the oversight plan and report concerning its implementation are also claimed to result in an excessive violation of freedom of enterprise as the companies that are subject to the rules laid down by the law referred are purportedly required to disclose information relating to their industrial and commercial strategy.

16. The legislator is free to subject the freedom of enterprise, as resulting from Article 4 of the 1789 Declaration, to limitations associated with constitutional requirements or which are justified by the public interest, provided that this does not result in harm that is disproportionate to the objective pursued.

17. Firstly, whilst the contested provisions subject certain companies to an obligation to draw up an oversight plan and to adopt internal control measures in order to prevent the risks caused by their operations and those of the companies controlled by them and of some of their sub-contractors and suppliers, they do not grant them any prerogative of such a nature as to violate the freedom of enterprise of the latter.

18. Secondly, the contested provisions do not require the companies that are obliged to draw up such a plan to publish information concerning their industrial or commercial strategy, in particular insofar as they oblige such companies to include different categories of measures within the oversight plan.

19. Consequently, the contested provisions do not cause any violation to freedom of enterprise.

. The other objections:

20. The applicant Members of the National Assembly and Senators assert that the definition of the scope of Article L. 225-102-4 violates the principle of equality. They also object that the contested provisions violate the objective of the constitutional value of accessibility and comprehensibility of the law.

21. In the first place, in limiting the scope of the persons that are subject to the obligations laid down by Article L. 225-102-4 of the Commercial Code introduced by the contested provisions only to companies that exceed the thresholds specified therein, the legislator has adopted criteria and categories that are commensurate with the objective set by it. Moreover, the exclusion from the scope of the oversight plan of sub-contractors and suppliers that do not have an «established commercial relationship? with the company that is under an obligation to draw up such a plan and the companies controlled by it is also commensurate with this objective. Consequently, the distinctions made by the legislator, which correspond to different circumstances, do not violate the principle of equality before the law.

22. Secondly, although for the reasons indicated above some of the concepts used by the legislator are not sufficiently precise in order to be able to establish the type of breach that is capable of justifying a sanction of a punitive nature, they are not however unintelligible in nature. Moreover, the concept of an «established commercial relationship? provided for under the contested provisions, which is already used by Articles L. 420-2 and L. 442-6 of the Commercial Code, is sufficiently precise. Finally, the issue of formal notice and the application to the court with competence to issue an order as provided for under paragraph II of Article L. 225-102-4 of the Commercial Code may only be carried out by a person with a legitimate interest and the provisions according to which the oversight plan should be elaborated with the «company stakeholders? are intended to encourage such an outcome. Under these conditions, the legislator did not violate the objective of the constitutional value of accessibility and comprehensibility of the law.

23. It follows from the foregoing that, with the exception of the provisions of the last subparagraph, the provisions of Article 1 of the contested law, which do not infringe upon any other requirement of constitutional law, should be ruled constitutional.

The remainder of Article 2:

24. Article 2 of the Law referred introduces an Article L. 225-102-5 into the Commercial Code. The first subparagraph thereof stipulates that the breach of the obligations laid down in paragraph I of Article L. 225-102-4 will establish liability for the party in breach and oblige it to compensate the losses in accordance with the conditions laid down by Articles 1240 and 1241 of the Civil Code. The third subparagraph provides that a liability action may be brought by «any person who is able to establish an interest in taking action?.

25. According to the applicant Members of the National Assembly and Senators, these provisions establish liability for the actions of another person, in breach of the principle that each person is responsible for his own actions. The applicant Members of the National Assembly assert that these provisions also violate the right to effective judicial relief by allowing third parties to initiate liability actions without having received any mandate from the victims. Finally, the applicant Senators criticise the lack of precision within the contested provisions, which define with insufficient clarity the situations in which liability may be engaged for losses arising abroad and the concept of «person who is able to establish an interest in taking action?.

26. According to Article 4 of the 1789 Declaration: "Liberty consists in being able to do anything that does not harm another". In principle, it follows from these provisions that anyone who does harm to another must make reparations for it. The ability to act responsibly applies to this constitutional requirement.

27. By referring in the new Article L. 225-102-5 of the Commercial Code to Articles 1240 and 1241 of the Civil Code, the legislator merely sought to stress that the liability of the company as a result of the breach of the obligations laid down by the oversight plan will be engaged under the conditions provided for under ordinary French legislation, that is where a direct causal link is established between the breach and the losses. The contested provisions do not therefore establish a regime of liability for the actions of others, as is moreover apparent from the preparatory works within Parliament. Consequently, these provisions in any case to not violate the principle that each person is responsible for his own actions.

28. Since the legislator has limited itself to confirming the application of the general rules of the law on liability, the contested provisions cannot enable an individual to launch an action on behalf of the victim, which alone has an interest in acting. They enable the liability of the company to be engaged, on the basis of the provisions, on account of losses arising abroad, as the case may be. The objections alleging a violation of the right to effective judicial relief and the objective of constitutional value of accessibility and comprehensibility of the law must therefore be rejected.

29. Consequently, the remainder of Article 2, which does not violate any other constitutional requirement, is constitutional.

Article 4:

30. The applicant Senators and Members of the National Assembly assert that Article 4, which lays down the procedures governing the application over time of the law deferred, is imprecise and ambiguous. This is claimed to violate the objective of constitutional value of accessibility and comprehensibility of the law.

31. With the exception of those relating to the «report? concerning the effective implementation of the oversight plan contained in the second-last subparagraph of paragraph I of Article L. 225-102-4, the provisions of paragraph I apply to the financial year during which the law referred was published. The provisions concerning the «report? mentioned above, the remainder of this Article (L. 225-102-4) and Article L. 225-102-5 apply with effect from the annual management report relating to the first financial year starting after the publication of the law referred.

32. The provisions of Article 4, which do not violate the constitutional value of accessibility and comprehensibility of the law or any other constitutional requirement, are constitutional.

THE CONSTITUTIONAL COUNCIL RULES:

Article 1. - The following provisions of the Law on the duty of oversight of parent companies and commissioning enterprises are unconstitutional.
- the last subparagraph of Article 1;
- the third subparagraph of Article 2;
- Article 3.

Article 2. The following provisions of the same Law are constitutional:
- the remainder of Article 1;
- the remainder of Article 2;
- Article 4.

Article 3. - This decision shall be published in the Journal Officiel of the French Republic.

Deliberated by the Constitutional Council in its session of 23 March 2017, in attendance: Mr. Laurent FABIUS, President, Ms. Claire BAZY MALAURIE, Ms. Nicole BELLOUBET, Mr. Michel CHARASSE, Mr. Jean-Jacques HYEST, Mr. Lionel JOSPIN, Ms. Corinne LUQUIENS, Ms. Nicole MAESTRACCI and Mr. Michel PINAULT.

Announced on 23 March 2017.