The Corporate Sustainability Due Diligence Directive and the Doctrine of Privity of Contract

In the European Union (EU), all Member States adhere to the general principle of privity of contract in business-to-business contracts within the law of obligations. This principle serves to protect legal certainty in the business-to-business relationship, implying that rights and obligations only exist inter partes. So far, there have been different kinds of exemptions in lex specialis, whether codified or not, across the Member States, e.g., to protect the weaker contracting party or secure critical resources. The adoption of the Directive on Corporate Sustainability Due Diligence creates a legal instrument that companies comprised within its scope can use to establish rights and obligations for both direct and indirect contractual parties in the chain of activity, in order to protect against actual and potential human rights and environmental adverse impacts. The directive expands the use of already known exemptions and adds new exemptions to confer obligations to indirect business parties in the chain of activity. These new exemptions include the use of contractual assurance and targeted and proportionate support to SMEs. Thus, the directive serves as the first lex generalis exemption to the principle of privity of contract in business-to-business contracts. If a company sets aside/fails to meet its obligations in accordance with the directive, potential remedies from a civil law perspective comprise both public law and private law remedies within the chain of activity, such as contractual remedies, as well as access to claim damages outside the chain of activity.