Corporate Sustainability Due Diligence and the Legal Paradigm Shift: Implications for Business Liability in the Global Supply Chain

Abstract

               The European Union's Corporate Sustainability Due Diligence Directive (CSDDD) is not merely an addition to the legal obligations of the business sector; it represents a paradigm shift that challenges the foundational principles of corporate law, international law, and global governance in an unprecedented manner. This article aims to provide an in-depth analysis of the complex legal challenges and implications arising from the CSDDD.
               It begins by exploring the legal foundations and evolution paved by landmark judgments in the United Kingdom and France's Loi de Vigilance, which have established the groundwork for the directive's extraterritorial application. This approach leverages the economic power of the European market, the so-called "Brussels Effect" as an instrument to regulate global business activities. Subsequently, the article delves into the core of the directive: the due diligence duty stipulated in Articles 5 - 11, comparing it with existing international frameworks such as the UNGPs and OECD Guidelines, while also examining the practical impediments to its implementation within complex supply chains.
               Furthermore, the article analyzes critical jurisprudential issues, including the transformation of directors' duties from Milton Friedman's "Shareholder Capitalism" paradigm to "Stakeholder Capitalism," and the potential for conflict of laws where CSDDD requirements contradict the local laws of third countries. A pivotal aspect of the analysis is the civil liability mechanism under Article 29, which allows victims from around the globe to bring direct legal action against parent companies in European courts. This gives rise to formidable challenges concerning the burden of proof, causation, and choice of law in transnational litigation.
               Finally, the article concludes that the CSDDD is not just creating rules but is forging a new "Legal Ecosystem" of accountability and remedy. This will inevitably lead to new interpretations, legal debates, and litigation that will fundamentally reshape the landscape of multinational corporate accountability.