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This chapter first analyses the legal functions of due diligence, notably risk-management and securing accountability, defining audits and impact assessments, or operationalising obligations of progressive realisation. The chapter interprets the rise of due diligence as a response to, a manifestation of, and a catalyst for structural change in international law. These changes include proceduralisation, pluralisation of legal subjects, de-constitutionalisation, and more proactive risk management. The chapter traces understandings of due diligence throughout the different areas of international law and across different types of legal persons. It concludes that due diligence has quite diverse meanings and functions depending on the legal context, and can therefore hardly be qualified as an overarching principle of international law. While due diligence shapes the international law of a global risk society and helps to secure accountability, it also menaces to mellow firm obligations and thus bears the risk to undermine the international rule of law.

Clauses guaranteeing investor ‘full protection and security’ are included in most bilateral and multilateral investment treaties. They require not only abstention by the host State from physically damaging foreign investment, but also positive measures to protect foreign investment, in particular against harm caused by private actors. This chapter shows the importance of and need for a comparative legal approach in order to understand what a guarantee of ‘full protection and security’ means today, in customary international law, but also in bilateral and multilateral investment treaties. It starts with an analysis of the origins of the clauses in customary international law and its importance for the understanding of their content under investment treaties, before analysing investment law jurisprudence on this basis. The applicable standard of protection in investment treaties is clarified in comparative perspective, in particular as regards human rights protection systems, with a view to developing general principles of law.

The introductory chapter sets the scene for this book and establishes an analytical framework for the sector-specific chapters. It traces the etymological roots of the notion of due diligence and discusses its scope of application, normative functions, and contents in various areas of international law. It furthermore highlights recurring issues which the sector-specific contributions of the book address, including the key question from which legal source due diligence obligations can be derived and to what extent these obligations are binding. The introductory chapter also maps the commonplace diligence requirements in international legal texts and briefly outlines the book chapters.

This chapter analyses the prominent role of due diligence in international investment law. It points out that due diligence was relevant in this field as an element of customary law norms requiring compliance with an international minimum standard for the treatment of aliens and prohibiting denial of justice, before modern day investment treaties were concluded. The chapter’s analysis reveals that due diligence underlies host states’ obligation to provide full protection and security and fair and equitable treatment. It underlines that also investors carry a responsibility of due diligence throughout the whole period of their investment and that an investor’s negligence can lead to loss of protection under investment treaties. The chapter argues that due diligence has emerged as a balancing paradigm between protection of foreign investors and regulatory freedom of host states.

Private equity (PE) due diligence is important because when done properly, it can create a clear opinion about a future transaction for a PE firm and save the firm money by revealing potential risks. The objective of due diligence is to provide investors with greater assurance they will realize the value of investments. Due diligence is no longer an isolated step but is now integrated throughout the investment process. The chapter highlights the importance that due diligence plays in a PE transaction, the roles of both limited partners (LPs) and general partners (GPs), and the involvement of different parties in the due diligence process. The chapter also describes the steps in the due diligence process, challenges facing LPs investing in PE funds and PE firms investing in operating (target) companies, and different types of due diligence.

This chapter sheds light on the role that due diligence played throughout the drafting history of the International Law Commission’s (ILC) Articles on the Responsibility of States for Internationally Wrongful Acts (ARSIWA). It argues that the narrative that due diligence developed as a notion in the realm of the so-called ‘secondary rules’ of the law of state responsibility—before then later migrating into the domain of ‘primary rules’—needs to be qualified to some extent. An exegesis of the mostly overlooked work of the first Special Rapporteur on State Responsibility of the ILC, F. V. García-Amador, shows that due diligence was already a central notion of this field before the ILC took the turn towards redefining state responsibility as comprising only ‘secondary rules’. The chapter demonstrates that, despite the ILC decision to define the notion of state responsibility as objective, not all traces of subjectivity—to which the category of due diligence belongs—disappeared from the work of the ILC.

Dragons' Den is a reality television series in which entrepreneurs pitch their business ideas to a panel of rich venture capitalists in the hope of securing investment finance. This chapter explores the economics of Dragons' Den by setting up a model in which an entrepreneur decides how detailed preparations to make before pitching their business idea to a venture capitalist dragon. Basically the model is of a principal—agent problem with possible shirking and costly state verification. If the dragon (the principal) wants to find out whether the entrepreneur (the agent) is well prepared then they must spend time questioning the entrepreneur. The preparation of the entrepreneur depends both on the generosity of the financing terms offered by the dragons and, crucially, on the number of dragons relative to entrepreneurs in the venture capital market. An example of the insights from Dragons Denis investors wanting a financial adviser to undertake due diligence on any new investment opportunities they propose.

This chapter assesses due diligence in international humanitarian law. It identifies international humanitarian law rules governed by due diligence in the fields of the duty to ensure respect for international humanitarian law, the conduct of hostilities, the protection of civilians and persons hors de combat, and the administration of occupied territory. It is argued that international humanitarian law embodies both obligations of result (for instance, negative obligations) and obligations of diligent conduct. In order to identify the obligations of diligent conduct, the chapter relies on state practice and relevant case law, as well as on textual indications embodied in the relevant international humanitarian law provisions. Finally, the chapter argues that the inclusion of some due diligence obligations in international humanitarian law strengthens states’ implementation of this branch of international law.

This chapter analyses the application of the principle of due diligence with regard to cyber activities. Both states and non-state actors have been actively engaged in cyber operations, causing significant transboundary harm. Cyber security has hence become one of the top national security priorities for states across the international community. The chapter argues that the lack of acceptance of a robust due diligence principle with respect to cyber activities is currently creating an extremely dangerous and uncontrolled cyber environment that leaves the international community at risk of significant cyber consequences. The acceptance of a more robust application of cyber due diligence would dramatically decrease the instability of the cyber environment and strengthen international peace and security. The chapter points out that such an acceptance would carry certain risks, including the potential of states using the duty to prevent harm as an authorisation for repression of human rights, but argues that its potential benefits would far outweigh such risks.

This chapter discusses the circumstances under which states can be held accountable for a breach of the ius ad bellum, when the acts in question were performed by a private military and security company (PMSC). The definition of the ius ad bellum itself is reconsidered as a corpus of norms, including a prohibition of the use of force but also encompassing obligations to prevent this use of force by private actors such as PMSCs. This lato sensu definition may lead to a recognition of state responsibility irrespective of whether or not the acts of private contractors are attributable to the state. It is argued that when a state cannot be held accountable for the violation of ius ad bellum stricto sensu by a PMSC, as a next step in determining state responsibility, respect of the due diligence principle needs to be examined. Moreover, states may have a duty to harmonise their national legal systems in order to prevent ius ad bellum violations by private actors.

This chapter analyses the historical roots of the due diligence standard. It looks at early examples of primary obligations with a due diligence component in the law pertaining to the protection of foreigners and representatives of foreign states, in the law of neutrality, and in early international humanitarian law. The chapter identifies a series of criteria for the application of due diligence which are still widely relevant today, such as the means at the disposal of a concerned state, a state’s control over its territory, or the predictability of harm.

This chapter focuses on the application, acceptance, and implementation of human rights due diligence obligations in UN peacekeeping operations. It points to growing, but uneven, evidence of the development of standards and measures by the UN that would fit the meaning and purpose of due diligence, although there are very few instances of due diligence being used as a term within the UN. The chapter argues that due diligence obligations are applicable either through customary human rights law, or the internal law of the UN, or both due to the fact that the UN’s principles of peacekeeping are themselves based on general principles of international law. The chapter stresses that the UN should have due diligence obligations especially as there is a gap between the commissioning of peacekeeping operations by the UN and the day-to-day control of peacekeepers by the UN.

Chapter 3 examines the customary and treaty obligations to prevent international terrorism with a view to identifying both the scope of due diligence required for compliance and any difficulties with assessing non-compliance. It further explores the treaty obligations to extradite or submit terrorist actors to prosecution, and considers the possibility of concurrent individual and State responsibility for terrorism through an examination of the applicability of State immunity to terrorism prosecutions. Finally, Chapter 3 assesses the impact of the self-determination debate on the scope of the international terrorism suppression conventions through an analysis of their exclusion clauses. In particular, Chapter 3 treats the proposed distinction between terrorism and self-determination as a question of regime interaction between humanitarian law and the criminal law enforcement conventions applicable to international terrorism.

The international climate change regime has evolved over time to include a wider spectrum of obligations—substantive and procedural, as well as obligations of conduct and result. The increasing salience of obligations of conduct, privileging greater flexibility and autonomy for all Parties and permitting increased dynamism in the regime, has created greater scope for ‘due diligence’ to play a role in international climate change law. This chapter identifies the central obligations of conduct (fleshing out due diligence requirements of states) and of result in international climate change law. It analyses the nature and extent of due diligence required of states and highlights the numerous factors, such as the expectation of good faith or common but differentiated responsibilities, influencing it. The chapter concludes with reflections on the promise and perils of relying on norms of due diligence to deliver on the ambition of the climate change regime.

This chapter assesses and analyses elements of due diligence in existing international trade agreements. It highlights due diligence obligations in this field, such as obligations to cooperate, to negotiate in good faith, or to notify about measures which could be harmful to other countries. The chapter also discusses elements applicable to the negotiation and implementation of trade agreements, especially with regard to the requirements of human rights and sustainable development impact assessments. The chapter argues that, even though due diligence is not a term of art in international trade law, it could be seen as a cornerstone of the international trade regime.

The question for discussion in this chapter is: under what substantive constraints can autonomous agents be penalized for a public welfare offence? The chapter offers a nonutilitarian justification for dispensing with a subjective fault requirement for public welfare offences. It then derives from the real autonomy paradigm alternative constraints on penal action, namely, an injunction against strict liability, an injunction against imprisoning for negligent breaches of regulatory statutes, and a prescription for a general defence of nonnegligent ignorance of regulatory law. It concludes that the fair-opportunity-to-comply constraint on punishment that Hart proposed for the penal law as a whole properly applies only to public welfare offences.

This chapter proposes a theory of excuse that, without blending it into exculpation, avoids the condonation of crime. The question it takes up is: given that neither compulsion by circumstances nor by human threats removes the legal reason for punishing, how can its exonerating force be rendered compatible with the state's general duty to punish the guilty? The chapter criticizes various proposals for reconciling excuse with the duty to punish the guilty, including the moral involuntariness theory, the concession to frailty theory, the conformity to moral expectation theory, and the suspension of law's threat theory. It then proposes a solution: moral blamelessness exonerates because it simulates the conditions for legal exculpation. Just as the exculpated actor acknowledges the legal norm of mutual respect for agents, so does the excused actor acknowledge the public reason of the self-sufficient political community of which the legal norm is a part. The chapter argues that this theory would excuse the altruistic no less than the self-preferring murderer. It also offers a unifying explanation for the excusing force of entrapment, due diligence, and officially-induced error. Finally, it explains partial excuses as moral analogues of partial exculpations.

This chapter analyses the duty of due diligence in the field of environmental protection. It provides a fine-grained analysis of the main legal bases for the determination of due diligence in this field. It shows that the progressive recognition of this duty has evolved hand in hand with the recognition of the need to protect the environment per se, and not as a private (whether state or individual) interest that would be protected in a horizontal (tort-like) form. The chapter argues that the consolidation of due diligence thus reflects the deeper transformation of international law from a horizontal inter-state body of norms to an increasingly vertical one, where duties do not merely arise from the interests of other subjects.