Switzerland

Switzerland

Summary of developments:
  • Responsible Business Initiative (RBI): general mandatory HRDD and parent company liability (under debate).
  • Public Prosecutor v. Von Roll: Proof of due diligence by company's executive body can act as defense in criminal cases (1996)
  • Parliamentary initiative for mandatory HRDD: counter-proposal to the RBI, under debate.
  • Law on private and military security companies (PMSC): sector-focused mandatory HRDD (2015).
  • Government announces to consider regulation on companies respect for human rights if progress is not satisfactory in the coming years (2017).
  • Government states that principle of separate legal entities must not be used to circumvent human rights and environmental standards (2014).

Legal Developments

Responsible Business Initiative (RBI)

 

In a nutshell

In more detail

Name of Legislation

Responsible Business Initiative

"L’initiative pour des multinationales responsables"

Area of Law

Tort law, company law

Proposal for a constitutional amendment: introduction of a new article establishing a company’s obligation to respect human rights and environmental standards. If accepted, lawmakers will have the discretion tim implement the appropriate statute.

Jurisdiction

National

 

Current Stage

November 2017:

Government recommends to Parliament and citizens to vote "no" but the respective parliamentary committee makes a counter-proposal.

October 2016: Coalition of 85 civil society organisations (CSOs) file the proposal for a constitutional amendment ("popular initiative”) which will lead to a binding referendum. But first government and Parliament issue their recommendations.

January 2017: overnment issues its recommendation to Parliament and citizens. It recommends rejecting the proposal and does not make a counter-proposal.

September 2017: Government publishes its detailed reasoning (dispatch to Parliament). Despite the negative recommendation, it recognizes the importance of the topic.

November 2017: Legal Affairs Committee of the Council of States (upper house) decides by 8:1 to propose a counter-proposal (see Parliamentary Initiative 17.498)

Next steps:

December 2017 - 2018: Parliament will further discuss the initiative and potential counter-proposal

2018/2019: Citizens vote on the initiative (or potential counter-proposal).

Requirement

Duty of care incorporating mandatory human rights due diligence (mHRDD).

Primary obligation: responsibility to respect translated into a specific legal duty of care incorporating due diligence obligations.

Due diligence obligation with the following key elements: (1) to assess risks; (2) to prevent or cease existing violations; and (3) to account for the actions taken.

Material Scope

All human rights and international environmental standards.

At a minimum human rights obligations as defined in the UNGPs: International Bill of rights and international Labour Organisation core Conventions.

Environmental impacts based on international environmental standards (i.e. Montreal Protocol for the protection of the ozone layer or emissions limits set by the World Health Organization ((WHO)). Swiss legislators would have the discretion to define further and in more detail.

Personal Scope

All companies with registered office/central administration/principal place of business in Switzerland.

Definition is based on international private law according to the Lugano Convention (Convention on jurisdiction and enforcement of judgements in civil and commercial matters).

Enforcement

Civil liability and remedies under tort law and shifting the burden of proof for subsidiaries and controlled companies.

Due diligence defense: the parent company is responsible for its violation unless it can prove that it took all due care, or that the violation/damage would have occurred even if all due care had been taken. Based on the “principal liability” provision in the Swiss Civil Code.

Control: includes “legal” and “de facto”control. To be determined by factual circumstances. Based on leading Swiss academic literature on corporate groups.

Transparency: mandatory due diligence includes reporting obligations (details to be defined by the lawmaker).

Reach of the requirements

Due diligence: corporate group and supply chain.

Parent company liability: corporate group ("controlled entities").

The proposal for human rights and environmental  due diligence is based on the UNGPs and the OECD guidelines.

Resources

♦ Website of the Swiss Coalition for Corporate Justice (SCCJ); full text of the initiative, updates: English, German, French, Italian.

♦ Detailed legal briefing, by SCCJ (French).

♦ Press article including polling results, 8. November 2017 (French).

Government’s dispatch on the Responsible Business Initiative

The Federal Council of the Government of Switzerland answered to the proponents of a citizen initiative legislative on Responsible Business in 2017 with a commitment to:

"...regularly verify the implementation of action plans and will adapt their content if necessary. It keeps the possibility of taking other measures if the ones adopted by companies do not meet its expectations. It could go so far as to consider the development of legally binding instruments".

Resources

♦ Text of the dispatch.

Parliamentary initiative for mHRDD (counter-proposal to RBI)

 

In a nutshell

In more detail

Name of Legislation

Parliamentary Initiative 17.498

 

Area of Law

Company law, tort law, criminal law

 

Jurisdiction

National

 

Current Stage

Pending

 

13 November 2017: Legal Affairs Committee of the Council of States decides by 8:1 vote to make a counter-proposal to the RBI and defines basic parameters.

11 December 2017: Legal Affairs Committee of the National Council to decide whether to support the Council of States (requires drafting of a detailed bill) or whether to dismiss (the parliamentary initiative would then return to the Council of States)

Requirement

Mandatory due diligence

 

Requirement to conduct human rights and environmental due diligence in accordance with the UNGPs and the OECD Guidelines for Multinational Enterprises

Material Scope

Human Rights and Environmental standards

Requirement to conduct human rights and environmental due diligence according to the UNGP and the OECD Guidelines.

Personal Scope

Large companies

SMEs active in risk sectors

Large companies: companies subject to ordinary revision under Swiss company law (listed companies and companies meeting two of the following three criterias more than 250 employees, more than 20 million CHF in revenue, more than 40 million CHF in turnover).

Risk sectors: to be defined by the lawmaker.

Enforcement

Control and sanction mechanisms.

For most serious violations, parent company liability under tort law or corporate criminal liability.

The Bill outlines "control and sanction mechanisms" that "could be sector-specific". Specifically, parent company liability for the most serious violations; civil liability of parent companies where a subsidiary causes death or serious bodily harm (modelled after employers’ liability). Alternatively it could be proposed to integrate such violations into existing corporate criminal liability for economic crimes.

Reach of the requirements

Mandatory due diligence: corporate group and supply chain. 
Liability: corproate group.

UNGPs and OECD Guidelines provide the reach and scope of the duty of due diligence.

Regarding liability, the lack of detail likely likely implies the traditional concept of ‘legal control’.

Resources

♦ Full text of the Bill.

♦ "Paradise Papers fuel Swiss better business initiative - for now", at  Swissinfo.ch, 16 November 2017.

Federal Act on Private Security Services provided Abroad (PSSA)

 

In a nutshell

In more detail

Name of Legislation

Federal Act on Private Security Services provided Abroad (PSSA)

 

 

Area of Law

Administrative law

 

Jurisdiction

National

 

Current Stage

In force

Adopted by the Federal Assembly on 27 September 2013. It entered into force on 1 September 2015

Requirement

Prohibition of direct and indirect participation in hostilities.

Prohibition of engagement in activities that seriously threaten or violate human rights.

Disclosure requirement.

Primary obligation: private security services providers are prohibited from directly or indirectly participating in hostilities.

If private security services providers sell their services abroad, they are obliged to disclose to the competent authority the nature of the activity, the provider, the place of the performance, the recipient, and the personnel to be deployed in the activity

Material Scope

Private security services provided abroad.

 

Personal Scope

Any legal entity involved in providing private security services abroad.

Any legal entity which provides private security services abroad from Switzerland, or provides services in Switzerland in connection with services provided abroad, or exercises control over a company that provides, from Switzerland, private security services abroad, or in Switzerland, in connection with services provided abroad.

Reach of the requirements

Disclosure of the nature of the activity, the provider, the place of performance, the recipient of the service, personnel to be employed, and the identity of all the persons bearing responsibility for the company.

 

Enforcement

Custodial sentence or monetary penalty.

Transparency: the competent authority shall publish a report on its activities.

Enforcement:  any person who carries out an activity prohibited by the Federal Act is liable to a custodial sentence not exceeding three years or to a monetary penalty.

Any person who fails to declare the activity may service a custodial sentence not exceeding one year or face a fine.

Resources

Activity report 2015/2016 on the implementation of the Federal Act on Private Security Services Provided Abroad, 26 April 2017.

Case Law

Public Prosecutor v. Von Roll (1996)
 

In a nutshell

In more detail

Name of Case

Public Prosecutor v. Von Roll

Public Prosecutor v. Von Roll, BGE 122 IV 103, E.

Area of Law

Criminal law

Criminal Liability for individual company executives

Jurisdiction

National

 

Current Stage

Decision issued on 1 Feb 1995

 

Requirement/Result

The court found that the Swiss Federal Act on War Material imposes a due diligence obligation on the members of corporations producing war material (weapons etc) to ensure the legality of war material exports.

The court held that the executive director of the corporation, Von Roll, was required to take all the necessary organisational arrangements to ensure the prevention of material offences contained within the relevant law concernng the export of war materials, by correctly selecting, monitoring, and instructing employess and ancillary staff.

It held that the executive manager acted negligently and by omission and that he was liable to one-month custodial sentence and a fine o 25,000 CHF.

Scope

Criminal liability for company executives

 

Enforcement/ Penalty

Under the Swiss Federal Act on War Material, individuals including corproate executives can be criminally liable up to three years of imprisonment or a fine not exceeding 500,000 CHR. Negligence reduces the sanction and proff of due diligence can be used as a defense.

The decision was made before the introduction of article 102 concerning corproate criminal liability in the Swiss Criminal Code.

Broader Application to Other Jurisdictions

The Council of Europe Convention on the Protection of the Environment through Criminal Law (1998) recommends establishing criminal liability for legal persons (corporations), with a due diligence defense.

 

Policy Developments

Government report on mandatory human rights and environmental due diligence

In 2014, the Swiss Government published a report comparing existing legislation around Europe establishing corproate due diligence requirements. The document included a paragraph affirming that:

"The density of multinational companies based in Switzerland is particularly high. We could therefore ask ourselves whether Switzerland should take on a leading role in the implementation of the United Nations Guiding Principles on Business and Human Rights (...) Each subsidiary is then (in principle) solely responsible for its obligations, including in respect of damages resulting from unlawful acts. While this system encourages entrepreneurship by limiting economic risk-taking through the creation of a legal entity, it should not be misused, for example in order to neglect its rights-based obligations humans and the protection of the environment."

Resources

♦ Text of the report.

  • Law
  • Legal Case
  • Policy development