THE NETHERLANDS COUNTRY REPORT
A) The Dutch Child Labour Due Diligence Act (hereinafter: CLDD Act)
Voorstel van wet van het lid Van Laar houdende de invoering van een zorgplicht ter voorkoming van de levering van goederen en diensten die met behulp van kinderarbeid tot stand zijn gekomen (Wet Zorgplicht Kinderarbeid)631
1. Area of Regulatory Framework
Legislation in relation to rights of the child and child law
2. Scope
a. Rationale given by the MP for the regulation (or lack of regulation)
The CLDD bill was introduced in June 2016 as a Private Member’s bill in the Dutch House of Representatives, by an MP from the Dutch Labour Party. It was adopted by the Dutch House of Representatives in February 2017 and by the Dutch Senate in May 2019. Essentially, the CLDD Act seeks to introduce a due diligence obligation for companies bringing goods or services onto the Dutch market to prevent the use of child labour. It however connects (or better perhaps: rephrases) this aim to that of consumer protection. The original bill’s preamble stated in this respect:
“[…] that it is desirable to prevent people in the Netherlands from purchasing goods and services that have been produced using child labour and that it is therefore desirable to provide a statutory basis for the corporate duty to take due care [zorgplicht] to prevent the supply of goods and services that have been produced using child labour”.632
In the most recent version of the bill, which is the version the Dutch Senate adopted in May 2019, this has been (slightly) altered to:
“[…] a statutory basis for the requirement that companies selling goods and services on the Dutch market take all reasonable measures to prevent the use of child labour in the production of those goods and services is desirable in order to ensure that consumers can purchase those goods and services in good conscience”.633
b. Size and type of business covered, including level of turnover, particular industry sectors and type of supply chain, and whether public procurement is included
The CLDD Act pertains to every company (whether domiciled in the Netherlands or abroad) that supplies goods or services to Dutch end-users. It defines end-users as ‘the natural or legal persons that use or use up the goods or make use of the services’.634 It defines company as ‘a company in the sense of art. 5 of the Dutch Commercial Register Act 2007 or any other entity that engages in economic activities, regardless of its legal form and the way in which it is financed’.635 Art. 5 of the Dutch Commercial Register Act 2007 sets out the categories of companies that should be registered in the Dutch Commercial Register. These include all businesses and legal entities in the Netherlands, such as private and public limited companies (BVs and NVs), sole traders, associations, foundations, professionals, and owners’ associations. 636 Also included are foreign companies that have a branch or structurally conduct business in the Netherlands.637
630 This section is largely based on Enneking 2019 (forthcoming) I.
631 See for the current version: Kamerstukken I, 2016/17, 34 506, A. Available at zoek.officielebekendmakingen.nl/kst-34506-
A.html. See for the original version: Kamerstukken II, 2015/16, 34 506, nr. 2. Available at zoek.officielebekendmakingen.nl/kst-34506-2.html.
632 Preamble CLDD Bill (original version). 633 Preamble CLDD Act.
634 Id.
635 Art. 1(b) CLDD Act.
636 Art. 5a Dutch Commercial Register Act 2007 (Handelsregisterwet 2007). See also e-
justice.europa.eu/content_business_registers_in_member_states-106-nl-en.do.
The Act contains a number of exemptions. First of all, it is evident from the description of its scope that companies that do not supply goods or services to Dutch end-users are not bound by the obligations set out in it. Secondly, it provides that companies that merely transport the goods that are to be supplied are exempted from compliance with the Act.638 Furthermore, it leaves open the possibility that certain other categories of companies can also be exempted by General Administrative Order.639 These other categories of companies may include for instance small companies and companies from low risk sectors.
c. Extent of human rights, environmental, climate change, sustainability and governance matters covered, and whether the regulation uses the terminology of human rights (see above)
The CDLL Act pertains to child labour specifically. It defines child labour along the lines of ILO Conventions C138 (the Minimum Age Convention 1973) and C182 (the Worst Forms of Child Labour Convention 1999).640
d. Jurisdictional extent of business covered, including whether it includes activity by subsidiaries or business relations of corporate nationals located in a different State and operating outside the State of the regulation
The CLDD Act pertains to every company that supplies goods or services to Dutch end- users (see also under 2b). As such, it may pertain not only to companies that are registered in the Netherlands, but also to companies that are registered abroad. The due diligence requirement that is the focal point of the Act requires these companies to conduct due diligence throughout the supply chain to find out whether the production of the goods and services to be supplied has involved child labour (see also under 3). As such, it may pertain to the activities of any natural or legal person throughout the supply chain, even though the actual obligation (and enforcement thereof) is aimed at the company that supplies the goods or services to Dutch end-users.
e. Civil, criminal and administrative scope
A public supervisor, which will have to be appointed by General Administrative Order,641 is to monitor and enforce compliance with the provisions set out in the CLDD Act (see also under 4).642 Additionally, criminal sanctions can be imposed on (officers of) companies that are repeat offenders (see also under 4).643
3. Content of Regulation
a. Overview and description of the required measures for business
1) The CLDD Act requires every company (whether domiciled in the Netherlands or not) that supplies goods or services to Dutch end-users to issue a declaration that it conducts due diligence with a view to preventing child labour from being used in the production of those goods and services.644
2) In tandem with the declaration requirement, the Act contains an (implicit) requirement for the companies involved to conduct due diligence (gepaste
zorgvuldigheid) with a view to preventing child labour from being used in the production
of the goods and services they supply to Dutch end-users.645
638 Art. 4(4) CLDD Act. 639 Ibid., art. 6. 640 Ibid., art. 2. 641 Ibid., art. 1(d).
642 Ibid., art. 3 and art. 1(b). 643 Ibid., art. 9.
644 Ibid., art. 4. 645 Ibid., art. 5.
Note that due to the way in which these two requirements are set out in the CLDD Act (see below), it is in essence an example of due diligence legislation rather than of transparency legislation (contrary to first appearances, perhaps).
b. Key legal elements of the obligation
1) The declaration has to be submitted with the aforementioned public supervisor, which would publish the declarations in an online registry on its website.646 Said declaration have to be sent promptly after a company has become registered in the Dutch Commercial Register. Companies that are already registered would have to send in their declarations no later than six months after entry into force of the proposed act. Companies that are not domiciled in the European part of the Netherlands647 and that are not registered in the Dutch Commercial Register have to send in their declarations within six months of supplying goods or services to Dutch end-users for the second time in a year.
The Act contains no further requirements as to the form and contents of such declarations, but does provide that further requirements on these issues may be set by General Administrative Order.648 It has been noted during the parliamentary discussions that under the Act’s current wording, if a General Administrative Order setting out further requirements stays out, a one-sentence declaration would suffice.
Companies that only buy goods or services from suppliers that have submitted declarations with respect to those goods or services along the lines set out in the Act are not required to issue a declaration themselves.649
2) According to the Act, “[t]he company that […] investigates whether there is a reasonable presumption that the goods and services to be supplied have been produced using child labour, and that draws up and carries out an action plan in case there is such a reasonable presumption, conducts due diligence [gepaste zorgvuldigheid] [translation by the author]”.650 The Act follows up by providing that companies that buy goods or use services from a supplier that has submitted a declaration with respect to those goods or services along the lines set out in the Act, are also assumed to have conducted due diligence with respect to those goods or services. Moreover, companies that only buy such goods or services are not required to issue a declaration themselves.651
The due diligence requirement is not defined further in the Act, save for the fact that it also mentions that more detailed requirements with respect to both the investigation and the action plan will be set by General Administrative Order, taking account of the existing ILO-IOE Child Labour Guidance Tool for Business.652 With respect to the investigation, the Act provides that it will need to be based on sources that can reasonably be known to and accessed by the company.653
According to the Act, the Dutch Minister for Foreign Trade and Development Companies can approve a joint action plan that is concluded between one or more civil society organizations, trade unions and/or employers’ organizations and that aims to make the participating companies conduct due diligence in order to prevent the use of child labour in the production of goods and services. Any company that conducts its business in accordance with such a joint action plan is assumed to conduct due diligence along the lines set out in the Act.654
646 Ibid., art. 4(1) and 4(5).
647 The phrase ‘the European part of the Netherlands’ excludes the overseas regions of the Kingdom of the Netherlands, i.e.
Bonaire, Saba and Sint-Eustatius.
648 Art. 4(3) CLDD Act. 649 Ibid., art. 5(1)-5(3). 650 Ibid., art. 5(1). 651 Id. 652 Art. 5(2) CLDD Act. 653 Ibid., art. 5(1). 654 Ibid., art. 5(4).
c. Obligations in relation to subsidiaries and business relationships in the supply chain, including the legal test and its factors used to ascribe liability to parent companies for the impacts of subsidiaries and suppliers (if any)
The CLDD Act’s obligations (declaration and due diligence) address companies that deliver goods or services to Dutch end-users. As such, they specifically target the last tier in the supply chain, i.e. the tier closest to the Dutch end-users of the goods and services supplied. The scope of the obligations imposed on these companies under the Act is not limited to certain tiers of the supply chain, however, as the companies involved are expected to investigate whether there is a reasonable presumption that the goods and services to be supplied have been produced using child labour. This essentially means that they will have to cover the entire supply chain. It is important to note that the last tier companies that are the primary addressees of the Act can fulfill their obligations by purchasing the goods or services they mean to supply to Dutch end- users from companies that have issued a declaration with respect to those goods or services along the lines set out in the Act (see under 3b). The reasoning behind this is that this provision will incentivize the last tier companies addressed to deal only with lower tier companies that also live up to the obligations set out in the Act, which will in practice have the effect of ‘pushing’ the Act’s obligations ‘down’ the supply chain.
d. Requirements for an external control or evaluation of the human rights or environmental due diligence exercise, including key elements of a grievance mechanism or whistle blower mechanism
Any natural or legal person whose interests have been affected by the (in)actions of a company in complying with the provisions as set out in the Act, can file a complaint with the aforementioned public supervisor, but only if and insofar as there are specific indications of non-compliance by a specific company.655
e. Implementation of internal processes by business, including operational- level grievance mechanisms
The public supervisor will only respond to complaints that have first been filed with the company, but that have not been dealt with by the company within 6 months or have not been dealt with satisfactorily.656
4. Monitoring, sanction and enforcement a. Monitoring body
A public supervisor, which will have to be appointed by General Administrative Order, is to monitor and enforce compliance with the provisions set out in the CLDD Act.657
b. Form of monitoring/evaluation, timelines for investigating complaints, procedures for review
Any natural or legal person whose interests have been affected by the (in)actions of a company in complying with the provisions as set out in it can file a complaint with the supervisor, but only if and insofar as there are specific indications of non-compliance by a specific actor (see above under 3e). The supervisor will only respond to complaints that have first been filed with the company, but that have not been dealt with by the company within 6 months or have not been dealt with satisfactorily (see above under 3g). The supervisor can in response to a complaint issue a binding order to a company that fails to comply with the provisions set out in the proposed act, and can also set a deadline for compliance with that order.658
c. Form of sanctions
655 Ibid., art. 3(2) and 3(3). 656 Ibid., art. 3(4).
657 Ibid., art. 1(d) and art. 3(1). 658 Ibid., art. 7(4)
If the company does not comply with the supervisor’s order, the supervisor can impose a administrative fines: 1) of up to €4,100 for non-compliance with the duty to file a declaration (or, if this amount is not considered appropriate, a fine of up to €8,200); and 2) of up to €820,000 for non-compliance with the duty to conduct due diligence along the lines set out in the bill (or, if this amount is not considered appropriate, a fine of up to 10% of the company’s annual turnover).659 Additionally, criminal sanctions can be imposed on (officers of) companies that are repeat offenders. If, within 5 years of imposition of an administrative fine, a similar transgression is committed by the company by order or under supervision of the same (de facto) director, this is considered a criminal offence. If this second transgression was committed without intent, it is considered a misdemeanor, punishable by a maximum of 6 months’ detention and a €20,500 fine. If the second transgression was committed with intent, it is considered a crime, punishable by a maximum of 2 years’ imprisonment and a €20,500 fine.660
d. Incentives or implications, such as link to procurement, licensing or export credit
The CLDD Act contains an implicit link to the Dutch IRBC-covenants. According to the Act, the Dutch Minister for Foreign Trade and Development Companies can approve a joint action plan concluded between one or more civil society organizations, trade unions and/or employers’ organizations that aims to make the participating companies conduct due diligence in order to prevent the use of child labour in the production of goods and services. Any company that conducts its business in accordance with such a joint action plan is assumed to conduct due diligence along the lines set out in the Act.661
5. Procedural Framework
c. Competent Court or other body
A public supervisor, which will have to be appointed by General Administrative Order, is to monitor and enforce compliance with the provisions set out in the CLDD Act (see above under 4a). The envisioned criminal sanctions can be imposed under the Dutch Economic Offences Act (Wet op de Economische Delicten), which may be enforced by the Dutch public prosecutor before (in many cases) the police court for economic offences or the economic division of the competent court.
d. Standing (including participation of foreign plaintiffs/representative entities such as NGOs or trade unions)
Any natural or legal person whose interests have been affected by the (in)actions of a company in complying with the provisions as set out in it can file a complaint with the supervisor, but only if and insofar as there are specific indications of non-compliance by a specific actor (see above under 4b).
6. Available Remedies
a. Civil, criminal and administrative remedies
See above under 4(c). The CLDD Act does not contain provisions relating to access to remedy for the actual victims of child labour. This is related to the fact that the stated aim of the Act is the protection of Dutch consumers, rather than the protection of the actual victims of child labour. As mentioned under 4b, the Act allows any natural or legal person whose interests have been affected by the (in)actions of a company in complying with the provisions as set out in the proposed act, to file a complaint with the supervisor. However, whereas the Act provides a range of administrative law and criminal law enforcement options aimed at non-adhering companies, it does contain any
659 Ibid., arts. 7(1)-7(3). 660 Ibid., art. 9. 661 Ibid., art. 5(4).
specific provisions aimed at providing or improving access to remedies for the actual victims of child labour. They will therefore have to rely on existing generic legal bases for claims in Dutch civil law and possible also criminal law (see below under III).
Although Dutch law already contains a number of provisions relating to unfair commercial practices and misleading advertisement (based on EU norms) that could also be of relevance in the IRBC-context, these are also generally aimed at the protection of consumers and/or competitors. As such, also these provisions only provide recourse for consumers or competitors who have suffered harm as a result of (for instance) misleading statements by the company relating to working conditions in the supply chain, and do not provide access to remedies for the actual victims of (for instance) those poor working conditions in the supply chain.662
Note that due to the requirement of relativity in Dutch tort law (requiring that the norm breached served to protect against damage such as that suffered by the person sustaining the loss)663, the actual victims will, in civil liability cases based on Dutch tort law, not be able to base their claims directly on the violation of the CLDD Act.664 They can rely on it indirectly, however, if and insofar as the violation of the Act can be constructed as an indication that an unwritten norm pertaining to proper societal conduct (i.e., a duty of care or zorgplicht vis-à-vis these victims) has been violated by the company in question.665 In cases where an infringement of the norms set out in the Act also constitutes an infringement of the OECD Guidelines for Multinational Enterprises and involves a Dutch multinational enterprise, stakeholders can (under certain circumstances) also file a notification with the Dutch NCP. If the NCP considers that further consideration of the specific instance is warranted, it will assist the parties involved to come to a mutually agreed solution of the issue in question through dialogue or mediation by the NCP, or via an external mediator.666
b. Whether sanctions include compensation No
7. Costs of enforcement of regulation of standards per annum (a) to State and b) to companies, either individually or collectively) (public information, estimated opinion)
No estimate available as of yet.
8. Impact of the Regulation
There is no information available as of yet with respect to the impact of the CLDD Act on, for instance, the behaviour of the companies involved or the rights of the child. In line with its stated main aim of consumer protection rather than protection of the actual