Switzerland
Last updated 30/11/2020
Summary of developments:
- Responsible Business Initiative (RBI): general mandatory HRDD and parent company liability (dismissed Nov. 2020, gained majority of popular votes but not cantons).
- Parliamentary counter-proposal (I) to the RBI: general mandatory HRDD and parent company liability (dismissed June 2020, gained repeated support in one chamber, but not the other).
- Parliamentary counter-proposal (II) to the RBI: non-financial reporting and issue-specific mandatory HRDD (adopted June 2020).
- Law on private and military security companies (PMSC): sector-focused mandatory HRDD (2015).
- A government report states that principle of separate legal entities must not be used to circumvent human rights and environmental standards (2014).
- Public Prosecutor v. Von Roll: Proof of due diligence by company's executive body can act as defense in criminal cases (1996)
Legal Developments
Responsible Business Initiative (RBI)
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In a nutshell |
In more detail |
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Name of Legislation |
Responsible Business Initiative |
"L’initiative pour des multinationales responsables" |
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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. |
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Jurisdiction |
National |
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Current Stage |
RBI finally narrowly dismissed, despite gaining majority of popular votes (but not cantons) in 2020 referendum |
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: government 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). 11 December 2017: Legal Affairs Committee of the National Council decides 14:10 not to support the counter-proposal of its sister committee. 2 May 2018: Legal Affairs Committee of the National Council revises its position and proposes by 14:10 a concrete counter-proposal I to the National Council (see here). 14 June 2018: the National Council adopts counter-proposal I by 121:74 without changes. 20 February 2019: Legal Affairs Committee of the Council of States decides to support counter-proposal I with a range of amendments by 6:4. 12 March 2019: the Council of States recommends to citizens to vote 'no' on the RBI by 25:14. The Council of States also narrowly refuses to enter into discussion on counter-proposal I by 22:20. 13 June 2019: the National Council insists on its counter-proposal I by 109:69. 3 September 2019: the Legal Affairs Committee of the Council of States decides by 7:5 to support counter-proposal I in a revised version. 26 September 2019: Council of States postpones decision to December 18 December 2019: Council of States now enters into discussion but adopts a new, less ambitious counter-proposal II focused on reporting and due diligence for selected issues (child labour, conflict minerals) only. 4 March 2020: National Council insists on its counter-proposal I by 102:91. At the same time it recommends to citizens to vote 'no' on the RBI by 105:83 October 2020: initiators publish (non-binding) proposal how to concretely implement the constitutional text of the RBI at the statutory level: Model law. 29 November 2020: Responsible Business Initiative gains a majority of votes (50.7%), but because of a lack of double-majority (only 8.5 out of 12 necessary cantons adopted the RBI), the initiative finally fails. Nevertheless the RBI gained unusual high support: from 1893-2020 Switzerland voted on 222 popular initiatives, thereof only 22 got double-majority, 200 failed and only 2 of them because of a majority of votes but minority of cantons (incl. the RBI). Given this result, the parliament's and government's counter-proposal II will enter into force during 2021. |
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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. |
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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. |
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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). |
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Enforcement |
Civil liability and remedies under tort law and shifting the burden of proof for subsidiaries and controlled companies.
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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). |
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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.
♦ Model Law to implement the constitutional provisions of the RBI, proposal by the initiators, October 2020: English, full study in German.
♦ Comparative table by the Federal Office of Justice: RBI | counter-proposal I | counter-proposal II in French or German.
♦ Official post-election survey assessing the most prominent arguments (Jan 2021): in French (short/ full) or German (short/ full)
♦ Business committee in support of the RBI (300 entrepreneurs), French or German
♦ Polling data (May 2020)
♦ Detailed legal briefing, by SCCJ (French).
♦ Nicolas Bueno, The Swiss Popular Initiative on Responsible Business: From Responsibility to Liability, 2018.
♦ Press article including polling results, 8. November 2017 (French).
♦ Text of governments the dispatch on the RBI.
Parliamentary counter-proposal (I) to the RBI
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In a nutshell |
In more detail |
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Name of Legislation |
Parliamentary counter-proposal to the Responsible Business Initiative RBI (citizen initiative) |
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Area of Law |
Company Law (original 1st bill: Company Law, Tort Law, International Private Law) |
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Jurisdiction |
National |
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Current Stage |
While one chamber of parliament develops and adopts an ambitious bill to counter the Responsible Business Initiative, the other chamber suggests a less ambitious regulation and finally succeeds in 2020. |
13 November 2017: Legal Affairs Committee of the Council of States decides by 8:1 vote to propose a counter-proposal to the RBI and defines basic parameters (Parliamentary Initiative 17.498). 11 December 2017: Legal Affairs Committee of the National Council decides 14:10 not to support the counter-proposal of its sister committee. 2 May 2018: Legal Affairs Committee of the National Council revises its position and proposes by 14:10 a concrete legal proposal (accompanied by an explanatory report in French and German) to the National Council (counter-proposal I) 14 June 2018: the National Council adopts counter-proposal I by 121:74 without changes. 20 February 2019: Legal Affairs Committee of the Council of States decides to support counter-proposal with a range of amendments by 6:4. 12 March 2019: the Council of States narrowly refuses to enter into discussion on the counter-proposal I by 22:20. (If National Council insits, the Council of States must vote again. If it refuses a second time, the bill is cancelled) 13 June 2019: the National Council insists on its counter-proposal I by 109:69. 3 September 2019: the Legal Affairs Committee of the Council of States decides by 7:5 to support counter-proposal I in a revised version. 26 September 2019: Council of States postpones decision to December 18 December 2019: Council of States now enters into discussion but adopts a new, alternative counter-proposal II focused on reporting and due diligence for selected issues (child labour, conflict minerals) only. 4 March 2020: National Council insists on its own counter-proposal I by 102:91. At the same time it recommends to citizens to vote No on the RBI by 105:83. 9 March 2020: Council of States sticks to its new counter-proposal II by 25:16. 11 March 2020: National Council insists on its counter-proposal I by 97:92. --- final decisions in March postponed because of COVID-19 crises ---- June 2020: the chambers narrowly agree to dismiss the initial ambitious counter-proposal I and to adopt the less ambitious counter-proposal II, focused on reporting and due diligence for selected issues (child labour, conflict minerals) only. The law enters into force in case the Responsible Business Initiative is dismissed in the popular vote. 29 November 2020: the RBI is narrowly dismissed (details here) 2021: expected entry into force, implementing decree pending. |
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Requirement |
horizontal mandatory due diligence |
Requirement to conduct human rights and environmental due diligence and to remedy violations in accordance with the UNGPs and the OECD Guidelines for Multinational Enterprises, including public reporting on risks and effectiveness of measures taken. |
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Material Scope |
Human rights and environmental standards |
Requirement to conduct human rights and environmental due diligence according to the UNGP and the OECD Guidelines. |
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Personal Scope |
Large companies (except companies restricted to particular low risk activities), SMEs active in risk sectors |
Large companies: companies exceeding two of the following three criterias (including its subsidiaries at home and abroad): more than 500 employees, more than 40 million CHF in revenue, more than 80 million CHF in turnover. Low risk/ high risk activities to be defined in a governmental decree. |
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Enforcement |
Control and sanction mechanisms. For most serious violations, parent company liability under tort law. |
Parent company liability: civil liability of parent company (modelled after employers’ liability) where a subsidiary causes damage to life and limb or property. The company can defend itself by demonstrating appropriate due diligence. |
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Reach of the requirements |
Mandatory due diligence: corporate group and value chain. Liability: corporate group. |
UNGPs and OECD Guidelines provide the reach and scope of the duty of due diligence. Parent companies are liable for damage caused by entities over which they actually exercise legal control. |
Resources
♦ Full text of the first version of counter-proposal I, published 4 May 2018 (unofficial translation) and explanatory report in French or German.
♦ Comparative table by the Federal Office of Justice: RBI | counter-proposal I | counter-proposal II in French or German.
♦ Timeline of the parliamentary process by SCCJ (May 2020)
♦ Comparison of counter-proposal and popular initiative (RBI) by SCCJ (June 2018).
♦ Business statements in support of counter-proposal (I): 8 major business associations incl. the Groupement des Entreprises Multinationales (GEM), the Geneva Chamber of Commerce, several retail sector associations as well as the textile sector and ICT associations (27 May 2020, German); business association GEM, representing 92 MNE (20 April 2018, French); öbu, association for sustainable business, representing 350 MNE and SME (20 April 2018, German).
♦ Website of the Committee 'Yes to the counter-proposal on corporate responsibility' (legal experts, business people, former politicians) in French and German, including a timeline in English.
♦ "Responsible Business debate could cause ripple effects globally", at Swissinfo.ch, 14 June 2018.
♦ "Paradise Papers fuel Swiss better business initiative - for now", at Swissinfo.ch, 16 November 2017.
♦ "Business and Human Rights - What Swiss companies need to know", at Lexology, 23 November 2017.
♦ Statement on Swiss Citizens‘ Initiative, John G. Ruggie, Former UN Special Representative on Business & Human Rights, 10 June 2018
Parliamentary counter-proposal (II) to the RBI
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In a nutshell |
In more detail |
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Name of Legislation |
Parliamentary counter-proposal II to the Responsible Business Initiative RBI (citizen initiative) |
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Area of Law |
Company Law |
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Jurisdiction |
National |
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Current Stage |
While one chamber of parliament develops and adopts an ambitious counter-proposal to the Responsible Business Initiative (RBI), the other chamber suggests a less ambitious regulation and finally succeeds in 2020. |
2017-2019: The National Council develops an ambitious counter-proposal (I) to the Responsible Business Initiative (RBI), but the Council of States refuses to back this. 18 December 2019: Council of States now enters into discussion but adopts a new, alternative counter-proposal II focused on reporting and due diligence for selected issues (child labour, conflict minerals) only. 4 March 2020: National Council insists on its own counter-proposal I by 102:91. At the same time it recommends to citizens to vote No on the RBI by 105:83. 9 March 2020: Council of States sticks to its new counter-proposal II by 25:16. 11 March 2020: National Council insists on its counter-proposal I by 97:92. --- final decisions in March postponed because of COVID-19 crises ---- June 2020: the chambers narrowly agree to dismiss the initial ambitious counter-proposal I and to adopt the less ambitious counter-proposal II, focused on reporting and due diligence for selected issues (child labour, conflict minerals) only. The law enters into force in case the Responsible Business Initiative is dismissed in the popular vote. 29 November 2020: the RBI is narrowly dismissed (details here) 2021: expected entry into force, implementing decree pending. |
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Requirement |
Reporting regulation and selective mandatory due diligence |
Reporting regulation according to EU NFR directive (2014) and selected due diligence obligations for (1) conflict minerals and (2) child labour risks in supply chain. |
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Material Scope |
conflict minerals and child labour |
Requirement to conduct due diligence regarding (1) conflict minerals and (2) child labour risks in supply chain. |
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Personal Scope |
Public interest entities, conflict minerals importers, companies with risk of child labour in their supply chain |
Thresholds for import of conflict minerals to be defined, exceptions for SME and 'companies with low risk for child labour in their supply chain' to be defined. |
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Enforcement |
Fine for false reporting |
False reporting can lead to a fine limited to 100'000 Swiss francs. |
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Reach of the requirements |
Supply chain |
Supply chain |
Resources
♦ Full text of the (final) counter-proposal II, expected to enter into force during 2021, available in French or German.
♦ Comparative table by the Federal Office of Justice: RBI | counter-proposal I | counter-proposal II in French or German.
♦ Timeline of the parliamentary process by SCCJ (May 2020)
Federal Act on Private Security Services provided Abroad (PMSC)
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In a nutshell |
In more detail |
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Name of Legislation |
Federal Act on Private Security Services provided Abroad (PSSA) |
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Area of Law |
Administrative law |
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Jurisdiction |
National |
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Current Stage |
In force |
Adopted by the Federal Assembly on 27 September 2013. It entered into force on 1 September 2015 |
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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 |
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Material Scope |
Private security services provided abroad. |
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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. |
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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. |
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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
♦ Government website including the legal text and annual reports on the implementation
Case Law
Public Prosecutor v. Von Roll (1996)
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In a nutshell |
In more detail |
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Name of Case |
Public Prosecutor v. Von Roll |
Public Prosecutor v. Von Roll, BGE 122 IV 103, E. |
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Area of Law |
Criminal law |
Criminal Liability for individual company executives |
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Jurisdiction |
National |
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Current Stage |
Decision issued on 1 Feb 1995 |
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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. |
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Scope |
Criminal liability for company executives |
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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. |
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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 corporate 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.