CS3D applies to create clarity and predictability on the applicable law (see paragraph 10 below).
C. Increased predictability for companies as a result of the current CS3D.
9. Article 29 CS3D reduces the unpredictability of the ordinarily applicable rules in a number of ways. 10. Firstly and importantly, by obliging Member States to treat their implementation of the CS3D as ‘overriding mandatory law’ where the law applicable to claims to that effect is not the national law of a Member State ( Article 29(7) CS3D). 11. Next, the introduction of a minimum statute of limitation, and the introduction of other requirements related to procedure, such as the provision relating to disclosure of evidence, take away some of the incentives for forum shopping by claimants 5 in the EU. 12. Further, the substantive obligations of the Directive, coupled with Article 29(1)’s liability requirement, effectively introduce a harmonised corporate duty of care in the supply chain. This neutralises many diverging and unpredictable approaches to this issue in the various national laws . 13. Article 29(7) leads to predictability for companies as well as for injured parties. For individuals suffering harm that occurred outside of the EU, it ensures that the Directive’s protective provisions and recognition of substantive obligations apply to the claim, regardless of the varying level of protection provided in the otherwise applicable (non-EU) laws. For companies, Article 29(7) ensures a common standard against which their actions are tested, regardless of where the harm has allegedly occurred. It is the existence of Article 29(7) which ensures that companies know exactly what to do to manage litigation risks: to conduct appropriate due diligence as set out in the CS3D. Article 29(7) also clarifies that qualification of national implementation as overriding mandatory law is limited to situations where the applicable law is that of a third State. Where it is the law of another EU Member States which applies, the overriding mandatory law mechanism arguably cannot be used.
D. The Omnibus proposals reintroduce uncertainty
14. The European Commission's so-called Omnibus package of 26 February 2025 to amend among others Article 29 of the CS3D, 6 would in essence take away most of the predictability the CSD3D has introduced in international litigation of this kind.
5 Claimants often structure their claim and the defendant(s) to it in such a way as to have the case heard before a court that will be of practical or other interest to them. That phenomenon is generally known as ‘forum shopping’. 6 COM(2025) 81 https://tinyurl.com/4u4rnwd7
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