Systems of International Corporate Criminal Liability or Lack Thereof

By Ahmed Darwish

Abstract

In an age of globalisation and increasing transnational and multinational business, there exists a gap in the enforceability of human rights and international criminal law. International enforcement mechanisms can only hold states or natural persons liable for human rights violations However, legal persons cannot be held liable for human rights violations on an international level. The international community leaves the responsibility of enforcement to national legal systems. Domestic frameworks alone are insufficient, as they can be more vulnerable to corruption and can be avoided through complex multinational corporate structures Therefore, there exists a need for a system for corporate criminal liability on an international level However, the development of a novel system for international corporate criminal liability has proven to be a daunting process of diplomacy. This begs the question: what can be done in the meantime?

The International Criminal Court must be diligently used as a forum for investigating and prosecuting corporate officers, exercising its existing jurisdiction over natural persons. National legal systems must undergo significant development to ensure that domestic courts are capable of holding corporations criminally liable. The development of platforms for international cooperation in investigating and prosecuting multinational corporations is also integral in the fight to bring multinational corporations with complex corporate structures to justice.

I. Introduction

In the modern world, systems have been developed to hold individuals liable for human rightsviolations andinternationalcrimes. Governmentscan alsobeheld liableforhumanrights violations,whether thatisfor theirparticipationorfor their lackof investigation orprosecution. However, there exists a gap in the enforcement of human rights against corporations. The systems that are currently in place for the enforcement of human rights on an international level were not intended to hold corporations liable. The procedures that enforcement bodies have established were tailored to the prosecution of states or individuals and cannot serve as a basis for prosecuting a corporation. The international community largely forgoes this responsibility and leaves it to national systems to prosecute corporations.

This note aims to identify this gap and the reasons for its existence. Through an analysis of relevant case law, international treaties, and protocols, this note seeks to assess the steps or initiatives that have been taken by international bodies to remedy the gap and allow for the prosecution of corporations.

II. Identifying the gap

In 2006, Esther Kiobel and other Nigerian petitioners brought a case to the United States District Court for the Southern District of New York, attempting to bring the Shell Petroleum Development Company to justice for alleged human rights abuses.1 Kiobel, who had sought asylum in the United States, claimed that the Shell Petroleum Development Company had aided and abetted the Nigerian government in their violent suppression of dissidents.2 According to the petitioners, these suppressions had violated fundamental human rights, as innocent Nigerians were killed, tortured, raped, and unlawfully detained by the Nigerian military and police forces.3 The petitioners alleged that the Shell Petroleum Development Company had aided the Nigerian forces by providing the necessary food, transportation, and compensation.4 Additionally, it was alleged that the Shell Petroleum Development Company had allowed the Nigerian forces to use their premises as a staging ground for their brutal attacks.5 The putative class action aimed to hold the Shell Petroleum Development Company liable for violating the law of nations through the Alien Tort Statute. After the case was dismissed by the District Court and the U.S. Court of Appeals for the Second Circuit, it was brought to the Supreme Court of the United States. The Supreme Court concluded that the matter did not ‘touch or concern’ the territory of the United States with sufficient force to prompt extraterritorial application.6 The judgment of the Court of Appeals was affirmed, and the case of Kiobel v Royal Dutch Petroleum was ultimately dismissed.7

1 Kiobel, et al. v. Royal Dutch Petroleum Co. et al, 569 U.S. 108 (2013).

2 Kiobel, et al. 569 U.S. at 108.

3 Kiobel, et al. 569 U.S. at 109.

4 ibid.

5 ibid.

Thiscase isin noway an anomaly.Corporationshave repeatedlybeen accused ofintentional violations of fundamental human rights that amount to international crimes. Many reputable human rights organisations have called for a more robust system for corporate liability.8 However, there continues to be a substantial gap in corporate criminal liability on the international level. Many of the crimes perpetrated by multinational corporations may materially fall under the jurisdiction of the International Criminal Court (hereinafter ‘ICC’).9 However, Article 25(1) of the Rome Statute explicitly states that the court shall have jurisdiction over natural persons.10 Although this may allow the court to prosecute specific corporate executives or officers, it definitively eliminates the possibility of holding legal persons, such as corporations, liable for grave human rights violations that amount to international crimes.

The international community, therefore, effectively leaves the enforcement of human rights against corporations to national legal systems. This is a considerable barrier to the enforcement of human rights, as some jurisdictions do not even have a system for holding corporations criminally liable and must solely rely on civil or tortious liability.11 Furthermore, multinational corporations can utilize their complex corporate structures to separate parent companies from criminal activities committed through multiple subsidiaries. This obstructs national legal systems from effectively enforcing international criminal law. This gap can leave corporations

6 Kiobel, et al. 569 U.S. at 121.

7 ibid.

8 Arvind Ganesan, ‘Why Laws Are Needed to Avoid Corporate Rights Abuses’ (Human Rights Watch, 1 July 2021) <www.hrw.org/news/2021/07/01/why-laws-are-needed-avoid-corporate-rights-abuses> accessed

11 November 2022; ‘Corporate Crime: New Principles Will Help Governments and Law Enforcement Tackle Corporate Abuse’ (Amnesty, 6 October 2016) <www.amnesty.org/en/latest/press-release/2016/10/corporatecrime-new-principles-will-help-governments-and-law-enforcement-tackle-corporate-abuse/> accessed with a sufficient sense of impunity while committing illegal acts abroad. National systems have also been heavily criticised for their propensity for corruption. This can take two main forms. The first form is if the government and the corporation are co-perpetrators of the same violation. Recalling the Kiobel v Royal Dutch Petroleum case, the Nigerian government was unlikely to fairly prosecute the case in its courts as the regime itself was a co-perpetrator in the alleged attacks.12 The second form of corruption is when the corporation uses its power over the country’s economy to persuade the government to avoid prosecution. For these reasons, national legal systems may be unable to properly prosecute grave violations of human rights in certain cases.

11 November 2022.

9 JayaBordeleau-Cass,‘The“AccountabilityGap”:HoldingCorporations LiableforInternationalCrimes,’(2019) 3 PKI Global Justice Journal 65.

10 Rome Statute of the International Criminal Court (adopted 17 July 1998, entered into force 1 July 2002) 2187 UNTS 3 art 25(1).

11 L H Leigh, ‘Criminal Liability of Corporations and Other Groups - A Comparative View’ (1982) 80 Michigan Law Review 1508; Zulfita Zahra, ‘Corporate Criminal Liability in Criminal Acts on The Position in an Automotive Company’ (2018) 5 Jurnal Hukum Prasada 100.

It would be incorrect to claim that national legal systems are completely incapable of prosecuting corporations for human rights violations. However, in an age of globalisation and increasing transnational and multinational business, national legal systems may be left unable to sufficiently enforce human rights against corporations. A system for corporate criminal liability on an international level is needed. Fortunately, this gap in accountability has been identified by multiple international organisations, and efforts to bridge this gap and create an international system for corporate criminal liability have been encouraged.13

III. Efforts to bridge the gap

Although hard law does not adequately provide a forum for corporate criminal liability on an international level, numerous attempts have been made through soft law.14 Several international law instruments have recognised the need to hold corporations accountable for international crimes and human rights violations. An example of such an attempt can be found in the United Nations’ International Convention for the Suppression of the Financing of Terrorism (hereinafter, ‘Convention’).15 Article 5 of the Convention requires its state parties, of which there are 189, to take “necessary measures to enable a legal entity located in its territory or organized under its laws to be held liable(…)”.16 The Article continues to specify that this liability may be criminal or civil.17 Many instruments apply similar rules. As of 2018,

12 Kiobel, et al. 569 U.S.

13 ‘Holding Companies to Account: Momentum Builds for Corporate Human Rights Duties’ (Human Rights Watch) <www.hrw.org/world-report/2020/country-chapters/global-2> accessed 11 November 2022.

14 Bordeleau-Cass (n 9).

15 International Convention for the Suppression of the Financing of Terrorism (adopted 9 December 1999, opened for signature 10 January 2000) (2000) 39 ILM 270.

16 ibid, art 5.

17 ibid.

17 multilateral international mechanisms included corporate criminal liability.18 However, these instruments are non-binding soft law and, once again, leave it to national legal systems to bear the burden of enforcement.

Some advancements have been made by international and regional courts to bring attention to the gap in corporate criminal liability. Supported by multiple international organisations, the African Court of Justice and Human Rights brought forward the Malabo Protocol (hereinafter ‘Protocol’) in 2014.19 The Protocol contains key provisions that attempt to expand its jurisdiction to criminal liability over legal persons. This Protocol is set to come into force 30 days after 15 member states have ratified it. As of 2022, the African Union has been unable to reach this number of ratifications.20 Furthermore, a decision by the Special Tribunal for Lebanon has also pioneered the concept of jurisdiction over legal persons. In the case of Prosecutor v Al Khayat in 2014, the Appeals Chamber of the Special Tribunal for Lebanon held a corporation in contempt of court.21 Although this decision was merely a contempt charge and the decision did not necessarily enforce a human right, it serves as an auspicious basis for the inclusion of legal persons within the meaning of ‘persons’ in international instruments. The court cited the Guiding Principles on Business and Human Rights, specifically stating that “there is an emerging shared international understanding on the need to address corporate responsibility” and that the court does “consider that international human rights standards and the positive obligations arising therein are equally applicable to legal entities”.22

IV. The issue with amending the Rome Statute

Bearing this in mind, many have called for the amendment of the Rome Statute to include legal persons under the International Criminal Court’s jurisdiction. This option was rejected by the United Nations during its negotiations in July 1998.23 The consensus remained that the court was originally conceived to hold natural persons liable and that it must strictly adhere to that rule.24 However, it is necessary to understand that at the time this option was rejected, the state of the world had been different. According to David Scheffer, the chief US negotiator of the Rome Statute, one of the reasons this decision had been rejected was that many national jurisdictions did not have a system for holding corporations liable under their national criminal law.25 In keeping with the principle of complementarity, the Rome Statute would have been unable to introduce the concept, without a sufficient basis in national criminal law to complement.26 Since then, the number of states with a legal basis for holding corporations criminally liable has grown substantially; this can be partially attributed to soft law instruments.27 The world has become more globalised. The number of multinational companies has skyrocketed. The application of the principle of complementarity, in amending the Rome Statute to include jurisdiction over legal persons, is now more plausible than ever before. However, significant barriers to this opportunity still lie in the world of diplomacy, as states may be reluctant to expose huge multinational companies that bolster their economic health to the jurisdiction of the International Criminal Court.28

18 Bordeleau-Cass (n 9).

19 Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human Rights (adopted 27 June 2014, date of last signature: 2 April 2019) African Union (Malabo Protocol); Eric A Witte and Clair Duffy, ‘Options For Justice: A Handbook for Designing Accountability Mechanisms for Grave Crime’ (Open Society Foundations, 2018) 135-137.

20 Bordeleau-Cass (n 9).

21 Prosecutor v New TV SAL and Al Khayat Decision on interlocutory appeal concerning personal jurisdiction in contempt proceedings) STL-14-05/PT/AP/AR126.1 (2 October 2014).

22 ibid, para 46.

23 David Scheffer ‘Corporate Liability under the Rome Statute’ (2016) 57 Harvard International Law Journal 35, 38.

V. Conclusion

A clear gap exists in the international enforcement of human rights. The international systems of human rights enforcement do not allow for the prosecution of legal persons. International organisations have taken several initiatives in an attempt to develop a system for prosecuting corporations. Although these initiatives alone are insufficient, they serve as recognition that a gap does, in fact, exist in the effective enforcement of human rights on an international level. The hope for an international system for corporate criminal liability burns brighter than ever before, but it still faces significant challenges. Through the creation of a completely new system or through amending existing systems, the international community must continue to promote and build an international system for corporate criminal liability. However, the question arises: what can be done in the meantime?

In the face of significant diplomatic barriers, the international community must use the avenues that are currently available to hold corporations liable. The International Criminal Court must be diligently used as a forum for investigating and prosecuting corporate officers, exercising its existing jurisdiction over natural persons.29 National legal systems must undergo significant development to ensure that domestic courts are capable of holding corporations criminally liable.30 The development of platforms for international cooperation in investigating and prosecuting multinational corporations is also integral in the fight to bring multinational corporations with complex corporate structures to justice. These steps must be taken with a sense of urgency in order to eliminate a significant current barrier to the effective enforcement of human rights.