An international supply chain is the chain of suppliers and subcontractors that deliver products or services to an end customer. At Musch Legal, we observe that the legal responsibility for what happens within that chain is steadily increasing. ESG rules, sanctions legislation, EUDR, and CSDDD make a well-considered legal approach to the supply chain indispensable. Anyone who fails to structure their chain contractually bears liability for violations many links down the line.
What is the legal problem? (Why is supply chain control so burdensome?)
Supply chains have many links in different countries. A misstep by a sub-sub-supplier can lead to reputational damage, fines, and legal liability for you as the main party. At the same time, you actually have little control over the entire chain. International rules regarding human rights, the environment, and sanctions require due diligence and accountability. Without cascading contracts, you run an unprotected risk.
What does the law say? (Which frameworks affect supply chains?)
EU CSDDD (Directive (EU) 2024/1760, in force 25 July 2024) mandates supply chain due diligence for human rights and the environment, phased in from 2027. EUDR (Regulation (EU) 2023/1115) prohibits imports of products from deforested land (from 30 December 2025 for large enterprises, 30 June 2026 for SMEs). The German Supply Chain Act (2021) and the French Vigilance Act (2017) are precursors. EU sanctions (Regulation 833/2014) and export control (Regulation 2021/821) apply throughout the entire chain.
Conflict Minerals Regulation (Regulation (EU) 2017/821) and CSRD (Directive 2022/2464) impose additional obligations.
Regulations
Applicability
Main obligation
CSDDD 2024/1760
Large EU enterprise from 2027
Due diligence + remediation
EUDR 2023/1115
Importers of high-risk raw materials
Proof of non-deforested land
Conflict Minerals 2017/821
Importers of 3TG minerals
Due diligence chain
German Supply Chain Act
German-established companies
Human rights + environment
EU sanctions 833/2014
All EU companies
No supply to sanctioned
Regulations
Applicability
Main obligation
CSDDD 2024/1760
Large EU enterprise from 2027
Due diligence + remediation
EUDR 2023/1115
Importers of high-risk raw materials
Proof of non-deforested land
Conflict Minerals 2017/821
Importers of 3TG minerals
Due diligence chain
German Supply Chain Act
German-established enterprises
Human rights + environment
EU sanctions 833/2014
All EU enterprises
No supply to sanctioned
What risks do companies face? (What threatens in the event of a chain breach?)
Fines under Article 27 of the CSDDD up to 5 percent of global turnover. Civil liability for damage in the chain under Article 29 of the CSDDD. Exclusion from government markets. Reputational damage affects customers, financing, and insurability. Sanctions against parties elsewhere in the chain can render your finished products illegal. Without contractual cascading of obligations, actual enforcement power over deeper layers is lacking.
Practical example from our practice (How do we save a minerals supply chain?)
Musch Legal advised a Dutch electronics company that purchased components from an Asian tier-1 supplier. A Tier 3 supplier was found to be using minerals from a conflict zone in violation of Regulation 2017/821. Under CSDDD, fines and exclusion from the EU market were imminent. Upon renegotiation, we incorporated a Supplier Code of Conduct, a cascading clause extending up to Tier 3, audit rights via Nedap, termination upon violation, and certification via the Responsible Minerals Initiative. The subsequent audit confirmed full compliance.
What can you do? (How do you structure your supply chain legally?)
Implement a Supplier Code of Conduct and incorporate it into every contract. Require transfer obligations to subcontractors (cascading). Incorporate audit, reporting, and termination rights. Align with CSDDD, EUDR, sector requirements, and sanctions. Work with certifications (OECD guidelines, ISO, sector labels). Train procurement on due diligence. Engage Musch Legal for a supply chain compliance package.
Supply chain contracts from a legal perspective