On 2 December 2020, the House of Lords is due to debate the draft Conflict Minerals (Compliance) (Northern Ireland) (EU Exit) Regulations 2020. The draft regulations were laid before Parliament on 15 October 2020 under the draft affirmative procedure. Therefore, both Houses must approve the draft regulations before they can be brought into force.

What is due diligence in the mineral supply chain?

The Organisation for Economic Co-operation and Development (OECD) defines ‘due diligence’ in the context of mineral supply chains as:

An on-going, proactive and reactive process through which companies can ensure that they respect human rights and do not contribute to conflict.

In April 2016, the OECD published guidance which provided a framework to assist companies in conducting due diligence. Its purpose is to help companies identify risks and take steps to prevent or reduce the impact of their sourcing decisions, including their choice of suppliers. The guidance stresses that all companies should carry out due diligence to ensure they do not contribute to human rights abuses or conflict.

On 17 May 2017, the European Parliament and Council passed regulation (EU) 2017/821. The regulation established supply chain due diligence obligations on importers of tin, tantalum, tungsten, their ores and gold originating from conflict-affected and high-risk areas. The regulation put the OECD’s guidance onto a “mandatory footing” for the largest importers of conflict materials. The regulations set out the scope for which importers fall into this category. It is determined by businesses’ annual import volumes, which are set by the EU. The thresholds are listed in annex 1 of the EU regulation.

Parts of the EU regulation applied from 9 July 2017, including obligations on the EU Commission to determine the scope of the regulation and to develop guidance. However, the UK Government has noted that the “key operative provisions” of the regulations do not apply until 1 January 2021, after the expiry of the transition period. These provisions include: due diligence obligations on businesses; and obligations on authorities in EU member states responsible for the “effective and uniform implementation” of the regulation.

What does the instrument do?

The Conflict Minerals (Compliance) (Northern Ireland) (EU Exit) Regulations 2020 would implement EU regulation 2017/821 in respect of Northern Ireland from 1 January 2021.

The instrument is being made under section 8C of the European Union (Withdrawal) Act 2018 to meet the UK’s obligations under the Northern Ireland Protocol. According to the draft regulations’ explanatory memorandum, the instrument is “necessary” due to the inclusion of the EU regulation in annex 2 of the Protocol as one of the provisions of EU law that shall apply to and in the UK, in respect of Northern Ireland. The explanatory memorandum also noted that the “key operative” provisions of the EU regulation will not take effect in Great Britain and will not form an operative part of retained EU law. The instrument makes provision for the application of those provisions in respect of Northern Ireland only.

What parliamentary scrutiny has there been?

The Joint Committee on Statutory Instruments drew the draft regulations to the special attention of both Houses on the grounds that they were “defectively drafted”. The Foreign, Commonwealth and Development Office had acknowledged that the draft regulations were “defective”. In its report discussing the draft regulations, the committee stated that regulation 8 enables the secretary of state to serve a notice requiring a person to provide information on imports, where necessary. This may be imposed on, but is not limited to, EU importers. In addition, regulations 14 and 15, and the schedule to the regulations, contain provisions for enforcing the obligations found in the regulations. However, this is limited to obligations imposed on EU importers. Therefore, the committee argued that the regulations “contain no provisions” for enforcing a requirement found under regulation 8 on an individual who is not a EU importer.

In a memorandum under appendix 4 of the committee’s report, the Foreign, Commonwealth and Development Office acknowledged that regulation 8 was only enforceable against EU importers. Consequently, the department outlined that it would “bring forward amending legislation as soon as possible” and that the secretary of state will not exercise the power to require production of information under regulation 8 against anyone other than EU importers.

The Secondary Legislation Scrutiny Committee considered the draft regulations, but did not raise any concerns.

A date has not yet been scheduled for the draft regulations to be debated in the House of Commons.

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