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Law

Law: Legal Aspects of Supply Chains

Global supply chains have increasingly come into the legal spotlight. They raise complex questions in terms of corporate governance, compliance, and due diligence. The course addresses these questions from different perspectives, focussing, inter alia, on current legal aspects of supply chains in Southeast Asia and Africa. 

Part 1 - Potential and Pitfalls: The Current Legal Aspects of Supply Chains in Southeast Asia Managing Islamic and Human Rights Requirements of Supply Chains in the Region

Asia in general, and Southeast Asia in particular with the ASEAN countries leading the development, have become a global manufacturing destination owing to Asia’s lower production costs, the availability of labour and land, and its reputation as established manufacturing base.  Governments of various Asian countries are furthermore increasing their attractiveness for this foreign investment by providing incentives such as land and tax benefits hoping for more economic development and growth within their countries.

These opportunities are, however, not without significant risks to the due diligence expected by companies relying on products produced in the region in their supply chain. Human rights issues such as labour regulations and environmental issues are regularly sparking international outrage and requests of more regulation for companies producing in the region with especially European countries (the German Lieferkettengesetz 2021; the French Corporate Duty of Vigilance Law 2017, and of course the new EU directive on Corporate Due Diligence and Corporate Accountability) requiring the companies to act.

Apart from these conventional global supply chain and its (legal) challenges, the region is also home and partaking in the global halal economy. The region is home to the majority of the global Muslim population which is estimated to have spent $2.02 trillion in 2019 across various sectors (foods, pharmaceutical, travel, fashion, media) all of which are regulated by Islamic faith-inspired regulations and ethical consumption needs. In essence, catering for the Muslim consumer will have financial, physical and legal implications for the supply chains. For companies not versed in the Islamic economy and its legal rules, issues of adherence to Islamic regulation especially in its supply chains can pose significant risks.

The seminar series will provide an introduction to legal aspects of supply chains in selected Asian countries with individual case studies on particular human rights challenges (labour law & environmental law). It will also cover the potential and challenges of participating in the Islamic economy with a view of the issues of supply chains.

Part 2 - From a Factory to Your Home: Contracts of Sale and Contracts for Carriage as Fundamental Elements of Supply Chains

No matter how complex the supply chain may be, its primary aim is that the goods produced in a factory reach the end-user. Achieving this aim requires various contracts at different stages of the production and distribution process, of which two types come to the fore: the contract of sale and the contract of carriage. Under a contract of sale, the manufacturer buys raw materials, materials, and semi-finished products, then sells the manufactured goods to a distributor, and finally, under the same type of contract, the consumer purchases the goods from the retailer (often, of course, the chain of contracts is much longer). Each of the contracts of sale concluded may be subject to a different regime. Significant differences particularly concern contracts concluded between traders (professional entities) and contracts concluded with consumers.

Similarly, a contract of carriage is very often concluded. Raw materials, materials, and semi-manufactured goods are transported to a factory, the manufactured goods to a distributor, and then to a retailer or a consumer purchasing the goods online. Contracts of carriage may involve transportation by a variety of modes – sea vessels, aircraft, trucks, rail. Often, goods are also transported in containers, under a so-called multimodal contract of carriage.

The workshop aims to familiarise participants with the legal regulations concerning a contract of sale and a contract of carriage. With regard to the contract of sale, both the Convention on Contracts for the International Sale of Goods as well as the consumer protection rules in the contract of sale (mainly based on EU law) will be presented. As far as the contract of carriage is concerned, the focus will be on conventions concerning the carriage of goods by various means of transport. The legal aspects of multimodal transport will also be discussed. Its growing popularity is related, among other reasons, to its recognition as the most environmentally friendly mode of transport.

Part 3 - Global Supply Chains and the Challenges of Human Rights in Africa

Many of Africa’s 55 states are rich in natural and mineral resources and the costs of labour is low when compared with wages in Western states. That makes this an attractive region for multinational corporations and their subsidiaries. Many of these are engaged in transporting raw materials used for producing tea, coffee, and chocolate (cocoa), and extracting oil, gas, cobalt, coltan and wood, among others, for worldwide export. Adding to the attraction, African states generally import processed goods. 

Multinational corporations and their subsidiaries can contribute to state economies, sustainable development, and improvement of local working practices in African states. However, some are linked to serious violations of human rights including forced labour, human trafficking, and child labour as well as hazardous working conditions (Cote d’Ivoire, Democratic Republic of the Congo, Ethiopia, Ghana, Kenya, Nigeria, and Zimbabwe). Corporations operating in the extractive industries have been linked to environmental degradation and forced displacement (Nigeria and Zambia), and to resources wars (Angola, Democratic Republic of the Congo, and Nigeria).

Placing limits on corporate behaviour is of critical importance for the African region. That is reflected in the support of the African Commission on Human and Peoples’ Rights for a binding treaty on business and human rights. It is also reflected in the African Union’s Malabo Protocol (2014, not yet in force) under which corporations which engage in human rights violations or encourage such during armed conflict could be tried for crimes against humanity. Yet, few states have so far adopted actions plans on business and human rights (Uganda and Kenya). 

This seminar series will consider the African regional framework for corporate governance, standards and institutions which enforce and monitor compliance, and highlight key differences with regulatory frameworks at the international level. It will consider the challenges some African states face in meeting and enforcing relevant standards, as well as the challenges local populations in obtaining legal remedies against multinational corporations and their subsidiaries. 

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