Freedom of Contract in the Crosshairs of CSDDD
(2025) JURM02 20251Department of Law
Faculty of Law
- Abstract
- The newly adopted Directive on Corporate Sustainability Due Diligence (CSDDD) necessitates companies operating on the internal market of the Eu-ropean Union to incorporate a risk-management regime to account for their businesses’ effects on, inter alia, human rights. To the backdrop of an increasing fragmentation of laws on the internal market, CSDDD introduces obligations for companies to identify, prevent, mitigate, end, and minimise their businesses’ harms on human rights worldwide. Some of the due diligence obligations seemingly regulates the way companies act in their contractual relations. At the same time, freedom of contract, as enshrined in Article 16 of the Charter of Fundamental Rights of the European Union (CFR, or the... (More)
- The newly adopted Directive on Corporate Sustainability Due Diligence (CSDDD) necessitates companies operating on the internal market of the Eu-ropean Union to incorporate a risk-management regime to account for their businesses’ effects on, inter alia, human rights. To the backdrop of an increasing fragmentation of laws on the internal market, CSDDD introduces obligations for companies to identify, prevent, mitigate, end, and minimise their businesses’ harms on human rights worldwide. Some of the due diligence obligations seemingly regulates the way companies act in their contractual relations. At the same time, freedom of contract, as enshrined in Article 16 of the Charter of Fundamental Rights of the European Union (CFR, or the Charter), requires any secondary legislation to be compatible with that right. Thus, posing the question of if the obligations imposed by CSDDD impacts the freedom of contract as guaranteed by Article 16 CFR.
This thesis aims to examine whether the obligations of CSDDD impact the freedom of contract as protected by the Charter. The thesis proceeds in three steps. First, it systematically identifies the obligations imposed by CSDDD, exploring both their nature and extent, and assessing how they affect the contractual autonomy of companies within its scope. Second, it examines the legal contours of Article 16 CFR, focusing on the protection it affords to freedom of contract as an element of the broader right to conduct a business. Finally, by mapping out the fundamental guarantees enshrined in Article 16 CFR, the thesis evaluates whether the procedural and substantive constraints on freedom of contract introduced by the CSDDD fall within its protective sphere.
Following this research, the impacts of CSDDD on companies’ contractual autonomy is found to be mainly through the application of Articles 10(6) and 11(7) CSDDD. The provisions require companies to refrain from further engagement and suspend or terminate a contract. However, disengagement is a last resort and the due diligence obligations of CSDDD are found to be intrinsically connected, meaning that the application of Articles 10(6) and 11(7) will depend on the preceding obligations in primarily Articles 8–11. Subsequently, the obligations’ intrinsic connectivity needs to be accounted for when considering Articles 10(6) and 11(7) in light of Article 16 CFR.
Regarding Article 16 CFR, the analysis shows that freedom of contract is a right, not merely a guiding principle, safeguarding companies’ autonomy in choosing contractual partners, defining terms, and deciding when to enter or terminate contracts. This right underpins the broader freedom to conduct a business, shielding market actors from both lawful and unlawful interferences. At the same time, Article 16 CFR must be considered in light of its social function and is subject to limitations. While the protective sphere of freedom of contract as enshrined in Article 16 CFR could be identified, the precise scope of the limitations remains ambiguous under current law, as this thesis has found the right to surrounded by possible incongruities and controversy.
Nevertheless, turning to CSDDD, the thesis finds that its due diligence obligations do indeed impact freedom of contract as guaranteed by Article 16 CFR, by limiting that freedom. Thus, one must ask whether those limitations are compatible with Article 16’s guarantees. While it can be established that the essence of the freedom to conduct a business remains intact, questions persist over the proportionality of Articles 10(6) and 11(7) CSDDD in relation to their objectives. Ultimately, however, the thesis concludes that when viewed through the key interpretive lenses identified in the thesis those provisions are most likely proportionate and therefore consistent with Article 16 CFR. Leading to the conclusion of the obligations imposed on companies by CSDDD limit and thereby impact the freedom of contract as guaranteed by Article 16 CFR, but the limitations are compatible with Article 16 CFR. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9189051
- author
- Toresson, Oliver LU
- supervisor
- organization
- course
- JURM02 20251
- year
- 2025
- type
- H3 - Professional qualifications (4 Years - )
- subject
- keywords
- EU law, freedom of contract, corporate sustainability due diligence directive, Charter of fundamental rights
- language
- English
- id
- 9189051
- date added to LUP
- 2025-06-09 10:22:23
- date last changed
- 2025-06-09 10:22:23
@misc{9189051,
abstract = {{The newly adopted Directive on Corporate Sustainability Due Diligence (CSDDD) necessitates companies operating on the internal market of the Eu-ropean Union to incorporate a risk-management regime to account for their businesses’ effects on, inter alia, human rights. To the backdrop of an increasing fragmentation of laws on the internal market, CSDDD introduces obligations for companies to identify, prevent, mitigate, end, and minimise their businesses’ harms on human rights worldwide. Some of the due diligence obligations seemingly regulates the way companies act in their contractual relations. At the same time, freedom of contract, as enshrined in Article 16 of the Charter of Fundamental Rights of the European Union (CFR, or the Charter), requires any secondary legislation to be compatible with that right. Thus, posing the question of if the obligations imposed by CSDDD impacts the freedom of contract as guaranteed by Article 16 CFR.
This thesis aims to examine whether the obligations of CSDDD impact the freedom of contract as protected by the Charter. The thesis proceeds in three steps. First, it systematically identifies the obligations imposed by CSDDD, exploring both their nature and extent, and assessing how they affect the contractual autonomy of companies within its scope. Second, it examines the legal contours of Article 16 CFR, focusing on the protection it affords to freedom of contract as an element of the broader right to conduct a business. Finally, by mapping out the fundamental guarantees enshrined in Article 16 CFR, the thesis evaluates whether the procedural and substantive constraints on freedom of contract introduced by the CSDDD fall within its protective sphere.
Following this research, the impacts of CSDDD on companies’ contractual autonomy is found to be mainly through the application of Articles 10(6) and 11(7) CSDDD. The provisions require companies to refrain from further engagement and suspend or terminate a contract. However, disengagement is a last resort and the due diligence obligations of CSDDD are found to be intrinsically connected, meaning that the application of Articles 10(6) and 11(7) will depend on the preceding obligations in primarily Articles 8–11. Subsequently, the obligations’ intrinsic connectivity needs to be accounted for when considering Articles 10(6) and 11(7) in light of Article 16 CFR.
Regarding Article 16 CFR, the analysis shows that freedom of contract is a right, not merely a guiding principle, safeguarding companies’ autonomy in choosing contractual partners, defining terms, and deciding when to enter or terminate contracts. This right underpins the broader freedom to conduct a business, shielding market actors from both lawful and unlawful interferences. At the same time, Article 16 CFR must be considered in light of its social function and is subject to limitations. While the protective sphere of freedom of contract as enshrined in Article 16 CFR could be identified, the precise scope of the limitations remains ambiguous under current law, as this thesis has found the right to surrounded by possible incongruities and controversy.
Nevertheless, turning to CSDDD, the thesis finds that its due diligence obligations do indeed impact freedom of contract as guaranteed by Article 16 CFR, by limiting that freedom. Thus, one must ask whether those limitations are compatible with Article 16’s guarantees. While it can be established that the essence of the freedom to conduct a business remains intact, questions persist over the proportionality of Articles 10(6) and 11(7) CSDDD in relation to their objectives. Ultimately, however, the thesis concludes that when viewed through the key interpretive lenses identified in the thesis those provisions are most likely proportionate and therefore consistent with Article 16 CFR. Leading to the conclusion of the obligations imposed on companies by CSDDD limit and thereby impact the freedom of contract as guaranteed by Article 16 CFR, but the limitations are compatible with Article 16 CFR.}},
author = {{Toresson, Oliver}},
language = {{eng}},
note = {{Student Paper}},
title = {{Freedom of Contract in the Crosshairs of CSDDD}},
year = {{2025}},
}