The Development of Corporate Criminal Liability over the Years Possible Extension of the Jurisdiction of the International Criminal Court to Corporations.
Name: Sarah Hupkens Supervisor: Mw. Dr. A. van Verseveld Master track: Strafrecht (Publiekrecht) Date of submission: 9 July 2018
Table of Contents
Abstract 4
Chapter 1 - Introduction 5 1.1 Motivation for this research question 5 1.2 The International Criminal Court – legal framework 6 1.3 Research question 8 1.4 Research method and structure of the research 8
Chapter 2 - Historical developments 10 2.1 The International Military Tribunal in Nuremberg 1945 10 2.2 Rome Statute negotiations of 1998 11 2.3 Reasons for the exclusion of legal persons from the jurisdiction of the ICC 13
Chapter 3 - The necessity for international criminal liability for corporations 15 3.1 Main objections against corporate criminal liability 15 3.2 Corporations and the growing importance of criminal liability 15 3.3 Examples of corporate involvement in international crimes 18 3.3.1 Nuremberg examples 18 3.3.2 US Alien Tort Claims Act, part of the Judiciary Act of 1789 (ATS) 20 3.4 Necessity of CCL in the light of the existing remedies available 21 3.4.1 Is the liability of natural persons sufficient? 21 3.4.2 Is tort liability sufficient? 24 3.5 Conclusion 24
Chapter 4 - Revisiting the question of corporate liability before the ICC in light of the current developments 25 4.1 Different attribution models 25 4.1.1 Vicarious liability model 25 4.1.2 The identification approach 26 4.1.3 The aggregation model 26 4.1.4 Organizational liability 27 4.2 Conclusion 27
2
Chapter 5 - Legal framework: criminal liability of corporations 28 5.1 Legal framework: criminal liability of corporations 28 5.2 Regulation at the domestic level of corporate criminal liability 28 5.2.1 The common law traditions 28 5.2.2 The civil law traditions 32 5.3 International developments, does the complementarity problem still exist? 34 5.4 Conclusion 36
Chapter 6 - Recommendations and conclusion: Future possibility, extension of the jurisdiction of the ICC to corporations? 37
Bibliography 40
3 Abstract The legal debate over corporate criminal liability (hereinafter: CCL) has been around for a long time and is still of great importance. International criminal law focuses mainly on natural persons. However, due to globalization and privatization the importance and the power of corporations within the international legal framework is increasing. The purpose of this research is to discuss the necessity and possibility of criminal liability for corporations under the legal framework of the ICC. The main research question is: To what extent is it feasible and necessary within the current developments to extend the jurisdiction of the International Criminal Court to corporations? During the development of the Rome Statute, the complementarity principle was one of the main reasons to not extend the jurisdiction of the ICC to corporations. The research therefore also addresses the influences of the complementarity principle as part of the discussion. This research gives a critical analysis of the applicable international and national criminal law for CCL and its implementation in practice. The first part provides a general understanding of the main concept of this research, CCL. Thereafter, the second chapter outlines the historical development of criminal liability for corporations, including the initial attempt to criminalise collectives and the Rome Statute negotiations of 1998. Chapter three lists the main objections against CCL and subsequently focuses on the necessity for CCL due the increasingly important role of corporations in a globalised and privatised international economy over the last couple of years. This is illustrated on the basis of some examples of corporate involvement in international crimes. Chapter four provides a comprehensive overview of the different applicable attribution models to corporations. Thereafter, chapter five further examines these attribution models, by looking at the how different countries apply the (combined) attribution models at the domestic level. To conclude this research, chapter six outlines the findings, points out a number of recommendations and answers the main research question. Based on the findings of this research, it is important to further explore the concept of CCL and the possible extension of the jurisdiction of the ICC to corporations. The challenge is a question of political will. Therefore it is of great importance to look at the increasing development of different forms of CCL within domestic jurisdictions and the growing importance of holding corporations liable for corporate involvement in international crimes. It is not only desirable but also necessary to be able to hold corporations liable, as human rights violations should not be the inevitable consequence of the economic development and increasing economic and political power of corporations.
4 Chapter 1 – Introduction LONDON/LAGOS (Reuters) – Amnesty International has called for a criminal investigation into the alleged role of Royal Dutch Shell in human rights abuses in Nigeria’s oil-rich Ogoniland in the 1990s, accusations the Anglo-Dutch oil company has denied.1
The legal debate over corporate criminal liability (hereinafter: CCL) has been around for a long time and is still of great importance. The issue is whether a corporation can and should be punished for its wrongful, unlawful and harmful actions. This research therefore refers to the possible responsibilities, obligations and liabilities under international criminal law of legal persons, more specifically: corporations. This research will only focus on (multinational) corporations; other legal persons do not fall within the scope of this research. This research will outline the development of CCL over the years and more specifically it will discuss the possible extension of the jurisdiction of the International Criminal Court (hereinafter: ICC or Court) to corporations. The research will address the influence of the complementarity principle as part of the discussion.
1.1 Motivation for this research International criminal law focuses mainly on natural persons, i.e. the individual. The Nuremberg International Military Tribunal (hereinafter: IMT) against German war criminals marks the beginning of the increased focus on individual criminal responsibility, which opposed the common notion at the time that only States were responsible for gross human rights violations.2 In the Tribunals’ famous words: ‘[c] rimes against international law are committed by men, not by abstract entities, and only by punishing individuals who commit such crimes can the provisions of international law be enforced.’3 This has been one of the legacies of Nuremberg, relevant to the development of international criminal law, a clear model of accountability: individual criminal liability.4 However, due to globalization and privatization there is an increasing importance and power of corporations, which should not be ignored.5 The growing influence of (multinational) corporations in the past decades increased the concerns about the consequences of the lack of corporate accountability for the
1 George 2017. 2 Fauchald and Stigent 2009 at 1035. 3 Trial of the Major War Criminals Before the International Military Tribunal 1946 (1947) Vol I Nuremberg at 223. 4 Stahn and Van den Herik 2010 at 508. 5 Kremnitzer 2010 at 909-910.
5 human rights protection worldwide.6 Companies with activities crossing state borders do often have financial and political powers and can play an important role within states. Although those organizations play an important role in promoting social economic development worldwide, the downside may be that they might be violating human rights. Corporations expand their commercial activities for financial reasons to some of the most unstable regions of the world, even to places of war or places where widespread violence against civilians occur. Some corporations are known to have been directly involved in, inter alia, gross human rights violations such as forced labour, torture, killings and the displacement of some populations.7 Others help sustain the environment that is necessary for the commission of grave human rights violations under international criminal law, by being a source of arms, providing military equipment and money to violent governments or opposition groups.8
Corporations do enjoy rights under international law, including rights under human rights treaties. For example, corporations have rights under the European Convention for the Protection of Human Rights and Fundamental Freedoms9 and they have brought claims that these rights have been violated before the European Court of Human Rights (hereinafter: ECHR).10 Assigning corporations rights under international (human rights) law on the one hand and allowing them to avoid international criminal responsibility under the same body of law for crimes of concern to the international community, such as genocide, war crimes, crimes against humanity and the crime of aggression, is a topic for discussion.11
1.2 The International Criminal Court – legal framework The ICC is the world’s first permanent international criminal court with worldwide jurisdiction over persons. The ICC has jurisdiction over ‘the most serious crimes of concern to the international community as a whole’.12 Those crimes are: genocide, crimes against humanity, war crimes and aggression.13 The Court only has jurisdiction over natural persons, not over legal persons or, more specifically, corporations.14 Consequently, while individual
6 Stoitchkova 2010 at 1. 7 ibid 2-10. 8 ibid 1-2. 9 ECHR 1950. 10 Slye 2008 at 955, 958. 11 ibid 959. 12 ICC Statute 2002, Preamble. 13 ICC Statute 2002, art 5. 14 ibid art 25.
6 employees of a corporation or corporate directors could be prosecuted before the ICC, the corporate entity itself cannot be the subject of prosecution.15
Punishing a person involves deprivations of someone’s interests and thus requires justification. Criminal law is also a tool to be employed to achieve certain purposes.16 Retribution that focuses on the necessity of punishing those who violated norms, regardless of the future benefits, is based on the fact that perpetrators deserve punishment for what they have done.17 Deterrence implies that punishment is imposed to prevent the offender and others from engaging in the prohibited conduct in the future.18 These objectives of international criminal law are the justifications for punishment and show the purposes these objectives of international criminal law seeks to achieve and are thus also important for the prosecution of legal persons.19
As already mentioned, financial gain, whether from acquisition of natural resources or from arms trading, might be the cause of atrocities being committed in conflicts or the reason for their continuation. Accountability for grave breaches would possibly be increased if it were possible to prosecute corporations directly for participating in such crimes.20
Although there was support at the Rome Conference for including legal entities in the final Rome Statute of the International Criminal Court (hereinafter: Rome Statute),21 an agreement on the matter was not reached.22 One of the objections during the making of the Rome Statute at the Rome Conference concerned the complementarity principle, which entails that the ICC is intended to be a court of last resort, supplementing not supplanting national jurisdiction. The Preamble to the ICC Statute states that it is ‘the duty of every State to exercise its criminal jurisdiction over those responsible for international crimes’.23 The idea to extend the jurisdiction of the ICC to corporations was said to negatively affect the complementarity principle, as some states did not domestically recognize criminal liability of corporations and
15 Kyriakakis 2008 at 116. 16 Cryer and others 2014 at 28. 17 ibid at 30. 18 ibid at 32. 19 ibid at 28. 20 Cryer and others 2014 at 592. 21 ICC Statute 2002. 22 Lee 1999 at 199. 23 ICC Statute 2002, Preamble.
7 would therefore be unable to assert their right to be the first to investigate and prosecute the possible perpetrators. This is known as the complementarity objection.24
1.3 Research question This research will discuss the possibility of extending the jurisdiction of the ICC to legal persons, more specific corporations, within the legal framework of the Rome Statute. The main research question therefore seeks to answer the following: To what extent is it feasible and necessary within the current developments to extent the jurisdiction of the International Criminal Court to corporations? This research is focussing on the increasing role and power of corporations as current developments. During the establishment of the Rome Statute the complementarity principle was one of the main reasons not to extend the jurisdiction to corporations. Therefore, the second research question is: to what extent does the complementarity principle still constitute an obstacle to this extension?
1.4 Research method and structure The purpose of this research is to discuss the necessity and possibility of criminal liability for corporations under the legal framework of the ICC: the Rome Statute. This research gives a critical analysis of the applicable international and national criminal law for criminal liability of corporations and its implementation in practice. It therefore uses the internal perspective. The research describes and analyses the law from a normative perspective, by examining the current possibilities of CCL in order to reduce atrocities by corporations. The first method consists of the description of existing law concerning a particular topic, criminal liability, by using legislative history, prior case law, and legal literature.25 Then the research uses a normative standard, as it is based on a normative interpretation of the current situation in relation to the law of criminal liability of corporations (in) directly participating in human rights cruelties.
The following chapter outlines the history of criminal liability for corporations. It first touches upon the initial attempt to criminalise collectives, which was made at the Nuremberg trials. Then it outlines the Rome Statute negotiations of 1998 and the difficulties of CCL, in particular with respect to the complementarity principle. Chapter three lists the main
24 Kyriakakis 2008 at 117. 25 Rijpkema 2016 at 9.
8 objections against CCL and subsequently focuses on the necessity for international criminal liability for corporations and why the liability of natural persons or tort based litigation against corporations for human rights violations abroad might not be sufficient. It discusses the increasingly important role of corporations in a globalised and privatised international economy over the last couple of years. In addition, the allegations that corporations have participated in serious international crimes and therefore the increasing importance of examining the possibility of extending the jurisdiction of the ICC to corporations in order to improve the accountability of corporations to human rights conduct will be discussed. This importance will be illustrated on the basis of some examples of corporate involvement in international crimes. Chapter four provides a comprehensive overview of the different applicable attribution models to corporations. The development of the attribution models over the years shows the different possibilities to implement CCL into criminal legal systems. Chapter five further examines these attribution models, by looking at how different countries apply the (combined) attribution models at the domestic level. More specifically, it discusses the changing regulation of criminal liability within common and civil law traditions and therefore also addresses the complementarity principle. Chapter six summarizes this research, outlines the findings, points out a number of recommendations and answers the main research question.
9 Chapter 2 - History/background: This chapter outlines the historical context of the evolvement of CCL. First, it touches on the idea to focus on organizations in addition to natural persons in the context of prosecuting international crimes, which derives from the Nuremberg trials after World War II. Then, it discusses the diplomatic conferences in Rome 1998 along with the proposal on criminal responsibility of legal persons and the objections against CCL within the Rome Statute.
2.1 The International Military Tribunal in Nuremberg 1945 The idea of focussing on organizations in the context of prosecuting international crimes additionally to natural persons derived from the IMT. The IMT focused on the trial of German war criminals after the Second World War. In order to bring a multitude of second-level defendants within the scope of the Tribunal, the concept of ‘criminal organisations’ was accepted. Articles 9 and 10 of the Charter of the IMT established the power to declare organizations criminal.26 Thereafter, national military tribunals could try individuals for their membership of these organizations pursuant to Control Council Law No. 10. The idea was to speed up national trials by avoiding that the same evidence had to be presented every time. Consequently it would be possible to try many individuals solely on the accusations of criminal membership.27 However, the Tribunal used a restrictive interpretation due to the potential conflict with the fundamental criminal law principle of personal fault.28 Also the Tribunal exercised caution to avoid mass punishment, as it determined that membership of a criminal organization alone was not sufficient to establish criminality. It stated: ‘[s]ince the declaration with respect to the organizations and groups will, as has been pointed out, fix the criminality of its members, that definition should exclude persons who had no knowledge of the criminal purposes or acts of the organization and those who were drafted by the state for membership, unless they were personally implicated in the commission of acts declared criminal by Article 6 of the Charter as members of the organization. Membership alone is not enough to come within the scope of these declarations.’29
26 Stoitchkova 2010 at 46-48. 27 Stahn and Van den Herik 2010 at 351. 28 ibid. 29 Trial of the Major War Criminals Before the International Military Tribunal 1946 (1948) Vol XXII Nuremberg at 500.
10 In accordance with this cautious approach, the IMT only declared the leadership of the Gestapo, the Sicherheitsdienst des Reichführers (SD) and the Schutzstaffel (SS) to be criminal. However, these organizations were not declared criminal as a whole. The tribunal only determined which individuals fell within the realm of the criminal group.30 It was therefore not possible to hold corporations or directors accountable based on membership of the corporation on the national level. However, individual businessmen were prosecuted on their own account in subsequent secondary proceedings before national military tribunals pursuant to control Council Law No. 10.31 In these subsequent secondary proceedings before national courts and tribunals, the concept of criminal groups and organizations was extensively relied upon. The national courts aimed not to base individual convictions on the membership alone, and confirmed the required mens rea, the mental element of a person’s intention to commit a crime, at the level of ‘known’ or ‘must have known’.32 This collective criminality model with regard to the military and political groups was also potentially applicable to corporations, due to the business involvement in Nazi crimes during the Second World War.33 The decisions concerning economic actors were, despite their caution, as a whole, unique and provided a pioneering outlook on organized entities. This, however, did not signal a shift in the traditional focus on individuals as the object of international criminal law. Nevertheless, these judgements are a useful starting point for the current discussion on CCL. The decisions show an express recognition of the reality of corporate involvement in international crimes.34
2.2 Rome Statute negotiations of 1998 The question whether to include criminal responsibility of legal entities (particularly corporations) alongside that of individuals or natural persons was one of the difficulties in the making of the Rome Statute. The delegations were strongly divided about this inclusion of legal persons, as it was difficult to accept for representatives of countries whose legal system did not provide for the criminal responsibility of legal entities, which would have far-reaching consequences for the complementarity principle.35
30 Trial of the Major War Criminals Before the International Military Tribunal 1946 (1947) Vol I Nuremberg at 267, 268, 273. 31 Stahn and Van den Herik 2010 at 352. 32 Stoitchkova 2010 at 49. 33 ibid at 50. 34 ibid at 61-63. 35 Lee 1999 at 199.
11 The draft statute at the beginning of the Rome Conference contained in parentheses that the Court did not only have jurisdiction over natural persons, but also over legal persons. The jurisdiction over legal persons would exist alongside criminal responsibility of natural persons, so that in case of CCL this would not necessarily exclude criminal responsibility of natural persons. Article 23 on individual criminal responsibility stated: ‘[5. The Court shall also have jurisdiction over legal persons, with the exception of States, when the crimes committed were committed on behalf of such legal persons or by their agencies or representatives. 6. The criminal responsibility of legal persons shall not exclude the criminal responsibility of natural persons who are perpetrators or accomplices in the same crimes.]’36 The provision, however, was placed between brackets due to the fact that the delegations strongly disagreed on the issue. During the 1998 Rome Conference, which followed the final text of the Preparatory Committee, the first question within the Committee of the Whole at its first meeting was whether the parenthesised proposal including legal persons within the jurisdiction of the ICC should be maintained and how.37 France introduced a proposal, which was more in line with the Nuremberg Trial. The proposal implied that the Court could declare an organization criminal if a crime was committed ‘on behalf or with the assent of a group or organization’.38 Instead of CCL as such, it provided for a supplementary offence of ‘being a criminal organisation’.39 The question was sent to the Working Group on General Principles of Criminal Law, which determined that France would hold informal consultations to make a formulation that could be proposed to the Committee of the Whole for adoption by the whole Rome Conference.40 The Working Group preferred the term ‘juridical person’ over ‘legal person’ in the proposal and further advised that it should be only possible to prosecute juridical persons additionally to natural persons for the same crime. Furthermore, it added some restrictive criteria in order to hold a corporation criminally liable, due to the reluctance of many delegations to include CCL.41 The final proposal was therefore limited to private corporations, excluding States and non-profit organizations. Without prejudice to individual criminal responsibility of natural persons, the Court could also have jurisdiction over a juridical person for a crime under the Statute, if the natural person charged ‘was in a position
36 UN Doc A/Conf.183/2/Add.1. 37 Stahn and Van den Herik 2010 at 353. 38 UN Doc A/Conf.183/C.1/L.3 16 June 1998. 39 De Schutter 2006 at 50. 40 Clapham 2000 at 147. 41 Stahn and Van den Herik 2010 at 353.
12 of control within the juridical person’ at the time the crime was committed. The crime was committed by the natural person ‘acting on behalf of and with the explicit consent of that juridical person and in the course of its activities’ and finally the natural person ‘has been convicted of the crime charged.’42
2.3 Reasons for the exclusion of legal persons from the jurisdiction of the ICC There was a general agreement on the advantages of including legal persons in the jurisdiction of the Court such as the assurance of compensation to victims, as some individual criminals may not have the means to pay reparation to victims; in order to ensure criminalization and corresponding disapproval of any entity, natural or legal person, involved in the perpetration of international crimes; and finally the possibility of serving a deterrent aim of creating more caution in decision-making causing potential criminal action.43 Although the inclusion became acceptable among a broader group of States, presumably a broad majority of the Rome Conference, time was running out according to Per Saland, the chairman of the working group.44 Despite this general agreement, all efforts (especially of France) and restrictive conditions, it proved impossible to satisfy all delegations in the short period left. France finally withdrew the proposal when it was recognized that it could not be settled by consensus.45
The arguments made against CCL were diverse. For instance, it was argued that including legal persons would deviate from the jurisdiction of the Court, which concerns individual natural persons. Furthermore, the Court would be confronted with overwhelming evidentiary problems regarding the CCL due to the differences in evidentiary standards among members. And finally there were structural differences among member States that recognize CCL within their legal systems on the legal codification of CCL.46 The fact that some member States lacked any legal codification of CCL, was argued to possibly violate the complementarity principle and was therefore one of the major objections against CCL.47 The complementarity principle implies that the Court is based on the premise that its jurisdiction shall be complementary to national criminal jurisdiction.48 Article 17 elaborates on this by
42 UN Doc A/Conf.183/C.1/WGGP/L.5/Rev.2, 3 July 1998. 43 Clapham 2000 at 147. 44 Lee 1999 at 199. 45 Ambos 1999 at 7. 46 ibid. 47 ibid. 48 ICC Statute 2002, Preamble para 10 and art 1.
13 determining that a case is only admissible when State Parties are ‘unable or unwilling’ to prosecute.49 Once the jurisdiction of the Court would be extended to corporations, it was argued that States that do not recognize CCL would be unable to prosecute the corporation, and the Court would automatically have the authority to pursue the corporation under Article 17. It was therefore stated that including corporations into the jurisdiction of the Court would have an undue influence on the complementarity relationship between State Parties and the Court, as States not recognizing CCL would be unable to assert their right to be the first to investigate and prosecute the possible perpetrators.50
The lack of an international standard in relation to CCL between State Parties, which was manifested by the deviation among the member States that recognize CCL and those that do not, was therefore an import obstacle. Furthermore the State Parties who did recognize CCL used different attribution models, in other words: there was no uniform approach.51
This chapter provided insights in the historical context of the evolvement of CCL. It first described the idea of the Nuremberg trial of focussing on juridical persons in the context of prosecuting international crimes additionally to natural persons. Then it outlined the making of the Rome Statute and the difficult question of including criminal responsibility of legal entities within the jurisdiction of the Court. The proposal was finally withdrawn. The main objections against CCL consisted of the lack of an international standard concerning criminal liability and therefrom-resulting possible violation of the complementarity principle. Those remain the most important reasons for not including legal persons to the jurisdiction of the Court. The chapters 4 and 5 will therefore focus on revisiting the question of CCL before the ICC by looking at the most workable attribution models in the light of the current developments within State Parties.
49 ICC Statute 2002, art 17(1)(a). 50 Kyriakakis 2008 at 117. 51 Brodowski and others 2014 at 285.
14 Chapter 3 - The necessity for international criminal liability for corporations This chapter illustrates the main objections against CCL on the one hand and on the other the necessity of international criminal liability for corporations. It outlines the latter by the increasing role of corporations in this globalised and privatised international economy. The chapter provides examples of corporate involvement in international crimes. It furthermore discusses the question as to why the liability of natural persons alone and tort liability is not sufficient.
3.1 Main objections against corporate criminal liability The main objections against corporate criminal responsibility emanating from criminal law are threefold: firstly, it is submitted that corporations as legal fictions cannot act independently; secondly it is argued that corporations do not have their own will and cannot be blamed morally; and finally it is argued that they cannot be punished.52 These objections are described in the famous expression ‘no soul to damn: no body to kick’.53 The objections indicate that international criminal law is traditionally based on the assumption that individuals are ‘autonomous actors with a free will, who can act and be blamed and punished for their actions.’ On the contrary, corporations are perceived as non-moral abstract entities, for which making profit is the primary aim.54 Moral blame is one of the essential elements of criminal law, because after all: how can we attach a guilty mind to an abstract entity such as a corporation as it has no conscience. This objection regarding the mens rea of the corporation is one the most important objections against CCL.55 However, these objections are not insurmountable, as is discussed in the following chapters. Furthermore, the growing importance of CCL is discussed in the following paragraphs.
3.2 Corporations and the growing importance of criminal liability In the last decades the economic and political influence of transnational corporations on States has increased.56 Within the context of these contemporary global economies, accusations of corporate involvement in violations of international human rights standards are not uncommon. Companies, whose activities go beyond state borders, have financial and political powers. Although they promote global socioeconomic development, their activities
52 Stahn and Van den Herik 2010 at 363. 53 Coffee 1981 at 386-459. 54 Stahn and Van den Herik 2010 at 363. 55 ibid. 56 Nolan 2005 at 581.
15 might also have a downside, such as: environmental pollution; poor working conditions; intrusion in domestic political processes; and complicity in gross human rights violations.57 As these companies’ activities respond to market demands and are driven by financial profit, many of these corporations work in instable regions, even in areas of war, which can result in widespread violence against civilians.58 Therefore the issues of CCL need to be considered in the light of the changing nature of state power and the influence in the international system and growing power of corporations.59
Due to these far-reaching negative consequences and because many countries are not able or willing to control these transnational corporations it is necessary to regulate these actions at the international level. The need to regulate corporate involvement in international crimes occurs only when domestic legal systems fail to control such corporations.60 The duty to exercise criminal jurisdiction over those responsible for international crimes and to prosecute companies under criminal law is located primarily within the national legal systems of States themselves.61 However, the judiciary of some States is not able to effectively control powerful corporations. Another reason, if states do have the judicial capacity, is that they might not want to act or sanction corporations for their criminal behaviour, as they could profit from or participate in the corporations’ actions and states might want to keep an investor-friendly environment to attract foreign investors.62 Furthermore, it can be difficult to regulate the behaviours of transnational corporations, as their activities take place in different States.63
Due to the increasing reliance on foreign direct investment of corporations in host states (the State in which the corporations operate) it might be insufficient to leave the regulation of corporate criminal behaviour to States. These strong corporations are often more powerful than developing States. Developing host states may be unwilling or unable (under contractual terms)64 to fully exercise their laws against foreign corporations investing within their territory. Transnational corporations may end business dealings in the sanctioning host State and settle themselves in a more ‘corporate-friendly’ State, which could discourage host States
57 Stoitchkova 2010 at 1. 58 ibid. 59 Wells and Elias 2005 at 143. 60 Fauchald and Stigent 2009 at 1027. 61 International Criminal Court 2011at 1. 62 Fauchald and Stigent 2009 at 1028. 63 Fauchald and Stigent 2009 at 1027-1028. 64 Amnesty International UK 2005.
16 that need those investments for economic development.65 Powerful corporations,66 (multinational) corporations with growing economic and political power, can thus use their power to discourage vulnerable States to adopt regulatory regimes to enforce human rights against corporations.67 In addition to enormous economic power, corporations increasingly engage in state-like activities due to the privatization of traditional State functions and the tendency of corporation to operate in instable regions where State power is weak.68 Corporations have become increasingly transnational in a globalized economy with the erosion of national boundaries and the movement of economic activities across national boundaries.69 Another possibility is that host states are unwilling to genuinely investigate international crimes due to the fact that the State itself or its agents may have participated in the crimes, or that the State is unable due to unstable internal conditions.70 Some States may lack the legal machinery to unravel the complex structure of a criminal enterprise.71 Despite the fact that these shortcomings of regulatory regimes within the host states (the State in which the corporations operate) might in theory be complemented by regulation of the home state, (the State of incorporation, which is usually a developed nation) there are no general legal obligations for them to do so.72 However, there are some examples of such regulations in domestic legal systems, such as the Alien Torts Claims Act in the US.73 This Act allows certain courts to hear foreign complainants for alleged extraterritorial breaches of human rights law caused by for example corporate defendants. Australia, Belgium, Canada, the Netherlands, the United Kingdom, France, Norway, India, Japan etc. also have introduced some or all of the international crimes of the Rome Statute into their national laws as applicable to legal persons.74 Home State extraterritorial regulation of their corporations increases the actual accountability for their violation of human rights. However, States are not held responsible for the actions of their non-government citizens, including their corporations, abroad. As states are not compelled to surrender corporate offenders to the Court, it remains to be seen whether regulating rules will be applied, as home States are reluctant to do so, as
65 Joseph 2000 at 78. 66 Wells and Elias 2005 at 147-148. 67 ibid. 68 Slye 2008 at 961. 69 Wells and Elias 2005 at 147-148. 70 Kyriakakis 2008 at 146. 71 Joseph 2000 at 78-79. 72 ibid at 79-80. 73 28 U.S.C. §1350. 74 Kyriakakis 2008 at 147.
17 they observe that such regulation puts their corporations in an adverse competitive position with companies from other countries.75 National jurisdiction are therefore either reluctant to or experience difficulties in regulating corporate behaviour.
It can therefore be concluded that the growing economic power of multinational corporations due to economic globalization in an increasing interdependent world, makes it more difficult for States to regulate criminal misbehaviour of corporations within their territory. States prioritize attracting international capital over regulating it.76
3.3 Examples of corporate involvement in international crimes As discussed earlier, corporate involvement in international crimes is unfortunately not uncommon and not limited to white-collar crimes. Some corporations have been directly involved in gross human rights violations, including forced labour, torture, killings.77 Other corporations help sustain the infrastructure, which is necessary for the commission of international crimes by supplying arms, military equipment or money to violent governments and opposition rebel groups.78 The role of powerful corporations in the exploitation of natural resources in conflict areas illustrates the corporate involvement in international crimes. This chapter therefore focuses on three cases in the aftermath of the IMT, tried by the US Military Tribunal in Nuremberg in which German industrialists were prosecuted for the severe harm they had inflicted through a corporation and therefore illustrate cases of corporate involvement in international crimes. Thereafter it outlines a well-known case of a corporation involved in human rights violations under the US Alien Tort Claims Act.
3.3.1 Nuremberg examples A well-known and important subsequent Nuremberg case is the I.G. Farben Trial 1948, which was held by the US Military Tribunal.79 In this case Carl Krauch and twenty-two others charged in this trial, were all officials of I.G. Farben Industrie A.G. This case included allegations of planning, preparations, initiation and waging wars of aggression and invasions of other countries, as a result of which incalculable destruction was wrought throughout the
75 Joseph 2000 at 80. 76 Wells and Elias 2005 at 147. 77 Stoitchkova 2010 at 2-10. 78 ibid at 2. 79 The I.G. Farben Trial Case no 57 (14 August 1947 – 29 July 1948) US Military Tribunal Nuremberg.
18 world, millions of people were killed and suffered deportation to slave labour, ill-treatment, terrorisation, torture and murder of numerous persons, plunder and spoliation in the invaded countries, as well as other crimes such as the production and supply of poison gas for experimental and extermination purposes in concentration camps etc.80 Even though the corporation itself was not indicted in this trial, it was alleged by the prosecution that the persons accused ‘acting through the instrumentality of Farben and otherwise’ had committed crimes against peace, war crimes and crimes against humanity and membership of an organisation declared criminal by the IMT (the S.S.).81 Their theory implied ‘that the defendants individually and collectively used the Farben organisation as an instrument by and through which they committed the crime enumerated in the indictment.’82 Despite the fact that the Tribunal stated that Farben was not before the bar of this tribunal and could not be subjected to criminal penalties in these proceedings, it did in fact treat Farben as a legal entity (‘juristic person’) capable of violating the laws of war.83 An important distinction in this case is that on the one hand, the work of the IMT declaring certain political organizations criminal and thereby making many individuals criminally liable for their membership of these organizations, and on the other hand, the US Military Tribunal findings. The US Military Tribunal found that industrialists were members of an industrial organization, which was connected with the commission of a war crime.84 This judgement can therefore be read as implying that the Farben company itself had committed the relevant war crime, even though the Tribunal had no jurisdiction to prosecute Farben as such.85
Additional cases under Law No. 10 tried by the US Military Tribunal included allegations of war crimes by corporate entities included the Flick trial and Krupp case. In 1947, the US Military Tribunal found Friedrich Flick, the head of a large group of industrial enterprises, guilty of war crimes so far as the counts related to the employment of slave labour of a great number of civilians and spoliation of public and private property in occupied territories. In addition, he was also convicted of financial support to a criminal
80 ibid at 1. 81 The United Nations War Crimes Commission Law Reports of Trials of War Criminals. Volume X The I.G. Farben and Krupp Trials (1949) at 3. 82 Trials of War Criminals Before the Nuerenberg Military Tribunals under Control Council Law No. 10 Vol VIII The I.G. Farben Case at 1108. 83 ibid at 1132-1133. 84 A Clapham 2000 at 170. 85 ibid at 171.
19 organisation, the S.S., which is in itself a crime subject to the contributor having knowledge of the criminal aims and activities of the organisation.86 Subsequently, Krupp and multiple other officials of the Krupp munitions corporation were convicted for supplying Nazi Germany with armament during the war and they were therefore accused of committing crimes against peace, war crimes and crimes against humanity, and participated in a common plan and conspiracy as defined in Law No. 10. The indictment included: ‘planning, preparation, initiation and waging aggressive war; plunder and spoliation; crimes involving prisoners of war and slave labour; common plan or conspiracy.87
Although the defendants in these cases were individuals and no legal persons were held responsible at the IMT, as they had no jurisdiction over them as such, these cases are of great importance as they show the involvement of corporations in international crimes.88
3.3.2 US Alien Tort Claims Act, part of the Judiciary Act of 1789 (ATS) The Alien Torts Claims Act (ATCA) of 1789 under US Law, grants US federal courts jurisdiction over ‘any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.’89 This Act allows certain courts to hear foreign complainants for alleged extraterritorial breached of human rights law caused by, for example, corporate defendants.
Shell’s alleged involvement in crimes against humanity in Nigeria An important example of corporate involvement in international crimes is the well-known case of Shell’s alleged involvement in crimes against humanity in Nigeria.90 It concerned three lawsuits filed against various legal persons of the Shell concern: Royal Dutch Shell (hereinafter: Shell), its subsidiary Shell Nigeria and their CEO Brian Anderson in the US under the ATCA. The complaint included inter alia: summary execution; crimes against humanity; torture; cruel and degrading treatment; arbitrary arrest and detention and violation
86 Trial of Friedrich Flick and Five Others Case no 48 (20 April – 22 December 1948) US Military Tribunal Nuremberg at 1-2. 87 The United Nations War Crimes Commission Law Reports of Trials of War Criminals. Volume X The I.G. Farben and Krupp Trials (1949) at 69-71. 88 A Clapham 2000 at 171. 89 28 U.S.C. §1350 Alien’s action for tort. 90 Wiwa et al v Royal Dutch Shell Co. 96 Civ. 8386 (2009).
20 of rights to life.91 However, on June 8, 2009, Shell agreed to pay $15.5 million to settle the case.92 The facts in this case are as follows. In the 1950’s Shell began extracting oil in the Niger Delta in Nigeria for oil production. This caused increasing resistance among the Ogani population, a tribe of indigenous people, as the oil production resulted into pollution of the local water supply and the land upon which the economy of the Ogani people was based.93 Therefore, in 1990 the NGO ‘Movement for the Survival of the Ogani People’ (hereinafter: MOSOP) was founded. Under the leadership of Ken Saro-Wiwa, they protested against the many oil-spills and gas flares, polluting their land, water and air. As the resistance grew, Shell was accused of working together with the dictatorial Nigerian military regime of the Nigerian government to supress demonstrations carried out in opposition to Shell’s activities.94 A special military task force was created in 1994 to deal with the Ogani crisis and allegedly engaged in many human rights violations. Human rights groups documented inter alia detentions, harassment and extrajudicial executions.95 In 1995 the ‘Ogani 9’ – a group of activists - was hanged, one of them was leader of MOSOP Ken Saro-Wiwa. There had been a “trial” before a special tribunal appointed by the military government, whose procedures obviously violated international standards of due process.96
3.4 Necessity of CCL in the light of the existing remedies available 3.4.1 Is the liability of natural persons sufficient? ‘Corporate bodies are more corrupt and profligate than individuals, because they have more power to do mischief, and are less amenable to disgrace or punishment. They neither feel shame, remorse, gratitude nor goodwill.’97
Even in the last and the most developed draft text on the proposal to include legal persons in the jurisdiction of the Court, the prosecution of the legal persons was based on the guilt of a natural person in a position of control within the legal person.98 Is it desirable, however, that all corporate crime is reduced to its individual actors? According to Fisse and Braithwaite this view is not correct, as corporate responsibility is not merely an acclamation of individual
91 ibid at 1. 92 Mouawad 2018. 93 Brodowski and others 2014 at 282. 94 Human Rights Watch 1995. 95 Manby 2000 at 5-6. 96 ibid at 1. 97 Hazlitt 1825 at 194. 98 UN Doc A/Conf.183/C.1/WGGP/L5/Rev. 2 3 July 1998.
21 responsibility.99 Individuals within a corporation may contribute to collective decision- making processes, without full awareness of the totality of it. Each individual within a corporation is a part of a whole that no one fully comprehends.100 Despite the fact that criminal law focuses on individuals, CCL could be of great interest to international criminal law. Therefore it is important to discuss whether corporations are subject to regulation under international law. This could be argued to be the case for several reasons. Firstly, corporations do enjoy rights under international law, including human rights under international human rights treaties, such as the ECHR, and corporations have brought claims alleging that their rights have been violated.101 Subsequently, corporations are directly and indirectly subject to obligations under international law. Examples of indirect obligations is found in the preamble of the United Nations Universal Declaration of Human Rights which states that ‘every individual and every organ of society shall strive to promote respect for these rights and freedoms’ in the declaration.102 Given that corporations have rights under international law, and as corporations are subject to obligation (in) directly under international law, it could be concluded that corporations should be subject to certain duties and obligations under international criminal law, as they are granted rights under international law and they could otherwise avoid responsibility for violations under the same body of law.103
Corporations should, in addition to natural persons, be held criminally liable for the following reasons: first of all, collective action through a corporation is likely to result in greater harm than individual action as corporations have huge economic power and therefore may cause significant harm. Besides this economic power, corporations increasingly take part in state- like activities due to the privatization of traditional government functions and the fact that corporations choose more often to operate in environments in which the state power is weak or non-existent.104 Furthermore, while international criminal law has addressed the collective nature of these crimes by enhancing individual criminal liability, in some cases it fails to capture all the crimes committed by groups or more specific corporations.105 Therefore in some cases CCL is not only suitable but also essential in order to do justice. In cases where the commission of the
99 Fisse and Braithwaite 1993 at 31. 100 ibid. 101 Slye 2008 at 958. 102 UDHR 1948. 103 Slye 2008 at 959. 104 Slye 2008 at 961. 105 ibid at 962.
22 crime has been facilitated by an explicit and collective decision of the management of a corporation, it could be impossible to pinpoint one individual that could be held responsible.106 For example, imagine a situation in which a corporation violates human rights that cause suffering to individuals and there is no question that the corporation has committed the harm. However, because there is no single individual that acted with the requisite mens rea and actus reus in order to be held criminally liable even though the acts together may add up to a criminal act. This idea, that the whole may be greater than the sum of its parts, with respect to liability is not new.107 Charles Abbott stated that ‘a corporate organization is something more than a number of persons.’108 In this case it could be necessary to hold the corporation itself responsible rather than a corporate official.
In addition, by holding an official of the corporation responsible for the criminal act it does not exhaust the contribution of the corporation to this criminal activity by its officials. The person who commits the crime acts in the interest of enriching the corporation, which makes it easier to commit a crime. Organizational decisions therefore do not necessarily reflect the preference of any individual within the corporation. Corporations often make a decision based on a process of negotiations and concessions between different interest groups.109 Additionally, the structure of authority within the company could also stimulate the commission of crimes and therefore making it difficult to refuse.110 Furthermore, the organisation of corporations (i.e. the separation of power), makes it more difficult to detect a crime, to prove its commission and makes it easier to hide the criminal act and therefore to escape individual liability. This structure within corporations reduces the personal blame of individual perpetrators who commit a crime in the context of the corporation responsibility; therefore it is indispensable to impose criminal liability on corporations.111 Furthermore, by holding corporate officials and employees criminally liable, it may not adequately deter certain corporate misbehaviour and it is therefore insufficient to address international crimes committed or assisted by corporations. By sanctioning the corporation itself for its actions resulting in harm, the future behaviour of corporations, such as the decision-making process, would be effectively influenced.
106 Report of the International Commission of Jurists Expert 2008. 107 Slye 2008 at 962. 108 Abbott 1936 at 15. 109 Slye 2008 at 963. 110 Kremnitzer 2010 at 912. 111 ibid.
23 Finally, an important argument is that CCL would allow access to corporate assets for the benefit of reparations to victims.112
3.4.2 Is tort liability sufficient? Although civil law remedies are often thought to be more appropriate in cases involving corporate crimes, due to the main objections mentioned in the first paragraph of this chapter, international criminal law might still be important for several reasons. Firstly, some human rights violation and war crimes are currently only addressed under international criminal law, as it contributes to the fight against impunity and the establishment of the rule of law by ensuring that the most severe crimes do not go unpunished and by promoting respect for international law.113 Secondly, national jurisdiction may derive from an international treaty obligation within international criminal law and in these circumstances there could be an insufficient jurisdictional link for a civil case.114 States may believe that private parties, such as powerful corporations, exercise their power only because of their consent, and may even legislate to this effect, but this may not provide an accurate account of where power lies in global political and legal order.115 Thirdly, international criminal law will relieve the victims of the heavy burden involved in bringing a civil case against a huge corporation by involving the State machinery. Finally there is still a certain mark of disgrace attached to a guilty verdict and the classification of a person as criminal. This could affect the economic and financial success of a corporation once the court finds that it committed an international crime.116
3.5 Conclusion Based on the abovementioned, it can be concluded that despite the stated objections against CCL, the increasing economic and political power of multinational corporations; the multiple examples of corporate involvement in international crimes; the fact that individual responsibility or tort based litigation is insufficient to address the international crimes committed or assisted by corporations shows the necessity and desirability of CCL.
112 Kyriakakis 2009 at 150. 113 Clapham 2000 at 139. 114 ibid at 140. 115 Mills 2014 at 236. 116 ibid at 140.
24 Chapter 4 - Revisiting the question of corporate liability before the ICC in light of the current developments The question of corporate liability before the ICC must be revisited in light of the recent developments within state practice and the judicial developments mentioned in the previous chapter. This chapter focuses on the different attribution models to corporations and the important obstacle of the mens rea ("guilty mind") element to legal persons.
4.1 Different attribution models CCL differs between modern domestic legal systems. Some countries do not recognize any form of CCL. Other countries, which do not include CCL, do however provide legal regimes whereby administrative penalties may be imposed on corporations for criminal acts. The countries that provide for a form of CCL adopt different approaches to the form and scope of criminal liability.117 The coming paragraphs shall set apart the most common attribution models for CCL. These are the vicarious liability model; the identification model (and the expanded identification approach); the aggregation model; and more recently the organizational liability model. States often use combinations of these various models.118
4.1.1 Vicarious liability model This first approach is derived from the doctrine of respondeat superior. Within this approach the act of any employee can be attributed to the corporation, it is therefore a form of derivative liability.119 The requirements for a corporation to be liable under this approach are ‘an agent of the corporation commits a crime; the crime is committed while the individual is acting within the scope of their employment; and the crime is committed with an intent (not necessarily the sole intent) of benefiting the corporation.’120 This model thus considers the acts of all corporate officials, regardless of their position within the corporation. Imposing this liability occurs through the structure of the legal fiction that implies that whatever a person does through an agent, he is supposed to have done it himself. In other words: the act of an official can be seen as an act of the principal or employer, and the knowledge of the official is the knowledge of the principal or employer.121 Courts broadened this scope by extending the liability on a human principal or human employer for the acts of an agent or employee, to
117 Robinson 2008 at 4. 118 ibid. 119 Slye 2008 at 964. 120 Robinson 2008 at 6. 121 Lederman 2000 at 652.
25 cases where the principal or employer is a legal body.122 The American Supreme Court stated that in order to supervise the behaviour of the agent they go a step further ‘by imputing his act to his employer and imposing penalties upon the corporation for which he is acting in the premises.’123 However, if an individual acts in conflict with the internal policy of the company or outside its authority, the corporation is not allowed to cite its internal rules as a defence. This might encourage companies to make sure that their rules are enforced and it prevents the company from avoiding liability by prohibiting certain activities in theory but allowing it in practice.124 This vicarious liability model has been criticized for being too narrow – in demanding that liability flow through an individual, however great the fault of the corporation – and for being too broad – in blaming the corporation whenever the individual employee is at fault, even in the absence of corporate fault.125 These drawbacks clearly show the famous problem in any discussion of CCL: how to conceptualize corporate fault. ‘Should corporations be liable because of their own wrongdoing or because they are in a better position to control (or to be seen as responsible for) the wrongdoing of others?’126
4.1.2 The identification approach The identification approach is also a derivative model. In this theory, only acts of certain people can be attributed to corporations. It states that ‘directors and senior managers are the corporations’ directing mind and will and their conduct and state of mind is thus the conduct and state of mind of the corporation itself.’127 In other words, only the acts of officials with decision-making authority can be ascribed to the corporation and may lead to CCL and the acts of low-level employees will not be attributed to the corporation.128
4.1.3 The aggregation model This theory is a result of the developments of federal courts in the US of the vicarious liability theory. The aggregation model does not compete with the other theories, but complements them in the situations that are not covered by the other models.129 This model was developed as there was a need for identifying a collective responsibility of individuals within a legal
122 ibid at 653. 123 New York Central R. Co. v United States 212 (1909) US 481. 124 Slye 2008 at 964. 125 Wells 2000 at §6.4. 126 Wells 2001 at 154. 127 Robinson 2008 at 6. 128 Slye 2008 at 965. 129 Lederman 2000 at 662.
26 person, rather than identifying one individual wrongdoer, as this latter option was not able to reflect the complexity of the structure and decision-making within modern corporations.130 This model focuses on the combined and cumulative actions that ultimately lead to the violation. The actions and thoughts of different officials of a corporation can be linked, which creates crimes and the required mental element. Under this model it is possible that innocent acts of employees turn into criminal corporate acts or omissions.131
4.1.4 Organizational liability This form of liability, the organisation model or also known as the self-identity doctrine, is explicitly focused on the acts and omissions of the corporation itself. Under this theory, the corporation is not being held liable for acts of individual offenders, but because of its ‘corporate policies, procedures, practices and attitudes; deficient chains of command and oversight; and corporate ‘cultures’ that tolerate or encourage criminal offences. So called ‘corporate culture’ provisions fall within the rubric of ‘organisational’ liability.’132 This theory uses the dissimilarities between individual human beings and group entities, in contrast to the derivative forms of liability. The legal entity exists in and of itself and can therefore commit crimes, irrespective of the involvement of individuals.133
4.2 Conclusion This chapter provided a comprehensive overview of the different applicable attribution models. These models show a development of the different possibilities to apply CCL. Chapter five further examines these attribution models, by looking at how different countries apply the (combined) attribution models at the domestic level. More specifically it discusses the shift of regulation of criminal liability within common and civil law traditions and therefore also addresses the complementarity principle.
130 Vermeulen, De Bondt and Ryckman 2012 at 60. 131 ibid. 132 Robinson 2008 at 4-6. 133 Vermeulen, De Bondt and Ryckman 2012 at 61-62.
27 Chapter 5 - Legal framework: criminal liability of corporations Regarding the proposal to include legal persons into the jurisdiction of the Court, one of the counter arguments concerned the lack of an international standard due to the different approaches between State Parties accepting CCL. Some of the State Parties did not provide for CCL within their national legal systems, which was said to be a violation of the complementarity principle.134 However, a shift has taken place in recent years with regard to CCL, many national jurisdictions do now include some form of CCL.135 Amongst the States that recognize the concept, there are different attribution models between the States, which are used to attribute criminal liability to corporations. There are thus considerable differences regarding the nature and scope of the liability. Since there is a plea for incorporation of CCL into the jurisdiction of the Court, it is required to do research into the diverging approaches of CCL within domestic legal systems. This chapter therefore focuses on this shift towards the inclusion of CCL within national jurisdictions. It discusses which of the possible (combined) attribution models – discussed in chapter 4 - are applied within different countries.
5.1 Legal framework within the Rome Statue The Rome Statute of the ICC does not provide for a provision on CCL. The Rome Statute only authorizes the Court to prosecute natural persons, Article 25(1) states: ‘The Court shall have jurisdiction over natural persons pursuant to this Statute.’136 The question whether it is possible to prosecute corporate perpetration in atrocity crimes before the Court, should however be affirmed with respect to corporate officers responsible for their corporation’s criminal conduct. However, investigation and prosecution of corporations themselves as legal persons requires amendments to the Statute.137
5.2 Regulation at the domestic level of corporate criminal liability Between common law and civil law jurisdictions there is a broad historical division on CCL. This paragraph outlines the different adoptions of CCL in both common law as well as civil law countries.
5.2.1 The common law traditions
134 Kyriakakis 2009 at 333. 135 ibid at 334, 336-339, 340, 342. 136 ICC Statute 2002, art 25. 137 D Scheffer ‘Corporate Liability under the Rome Statute’ (2016) Harvard International Law 57 at 35.
28 This paragraph discusses the legal principles in the common law jurisdiction of the United States (hereinafter: US), England (hereinafter: UK), Canada, New Zealand and Australia. The US and Australia have both federal and state criminal laws in which different corporate liability rules apply at those levels. The vast majority of the common law jurisdictions have embraced CCL already for over 150 years and therefore overcame the legislative and judicial reluctance regarding the introduction of CCL much earlier than civil law jurisdictions. This may have resulted from earlier experiences of fast industrialisation and its corresponding effects. However, despite their common basis, their current attribution models differ between States.138 In general it can be said that the federal rules in the US and in Australia are the broadest, while the UK has the narrowest.139 This paragraph provides an overview of some of these important common law traditions.
US The growing industrialisation of the nineteenth century influenced the countries, which were first touched by this economic change: the UK, US and Canada. This pressure of the economy removed the reluctance of the courts, which started with the acceptance of corporate liability in the case of breach of a statutory duty, later expanding it to vicarious liability.140 Within the US it is important to make a distinction between state and federal jurisdictions. The current worldwide trend towards CCL has its origin in the common law jurisdictions. The United States Supreme Court, has been the first to adopt this theory in which a corporation can be treated like a natural person,141 and later in 1909 the Supreme Court held in its landmark decision, New York Central R. Co. v United States, that a corporation can be held liable when an employee commits a crime within the scope of her employment and, in some variations, with the intent to benefit the corporation.142
Federal courts have in general adopted the vicarious liability model, also known as the respondeat superior principle.143 This model attributes criminal liability to corporations for all offences, even those involving intent. Within the vicarious model the act of any employee can be attributed to the corporation, it is therefore a form of derivative liability.144
138 Kyriakakis 2009 at 336. 139 Wells 2001 at 127. 140 Stessens 1994 at 495. 141 Santa Clara County v. Southern Pacific R. Co. 118 (1886) US 394. 142 New York Central R. Co. v United States 212 (1909) US 481. 143 Lederman 2000 at 654. 144 Slye 2008 at 964.
29 Corporations may be held criminally liable for the acts of any of its agents if an agent commits a crime within the scope of his employment145 and with the intent to benefit the corporation.146 The condition that the offence must be committed within the scope of the official’s employment has been given a wide reach.147 Traditionally, liability is imposed on the corporation if the natural person was acting within the scope of its authority of the corporation and acting in accordance with his powers within the corporation, however under US federal law the corporation can be held liable for the act of an employee even if there is a specific internal provision prohibiting the act.148 The requirement of intent to benefit the corporation has also been interpreted broadly.149 Furthermore, the position of this official within the corporations’ hierarchy is not important. Corporations are recognized as aggregate bodies with collective knowledge, which implies that it is not necessary to prove either which official had the intent, or whether any particular official had the intent. Collective knowledge means that information known partially to different actors within the corporation, but not fully known to one actor could be aggregated and may be attributed to the corporation.150 This wide liability regime for corporations is mitigated by its relationship with prosecution and sentencing policies.151
UK English courts originally rejected the idea of CCL based on the following three famous theoretical grounds. As a corporation is a legal fiction, it can do only such acts as it is legally empowered to do so (otherwise it is ultra vires). In addition corporations did not have the required mens rea and finally it was difficult to apply sanctions on corporations.152 However, the pressure of the changing economy removed the reluctance of the courts.153 The UK uses the ‘identification’ model for serious offences such as fraud, theft, and manslaughter. One of the objections for holding corporations liable for such offences was that they required proof of a mental element of intention, recklessness, or negligence. Therefore, within this theory, only certain officials are said to act as the company, rather than on behalf
145 New York Central R. Co. v United States 212 (1909) US 481 at 494-495. 146 United States v Cincotta 689 (1982) at 241-242. 147 Wells 2001 at 135. 148 US v Hilton Hotels Corp 467 F 2d 1000 (1972). 149 Wells 2001 at 135. 150 ibid at 134. 151 ibid 135-136. 152 Stessens 1994 at 495. 153 ibid at 496.
30 of it, as is the case within the vicarious liability model.154 Only the conduct of persons who control and direct the activities of the corporation can be attributed to the corporations, based on the fact that they are considered to be the embodiment of the corporation and to represent the company’s’ ‘directing mind and will’.155 The idea behind this is that company agents can be divided into those who act as the ‘hands’ and those who are the ‘brains’ of the corporation.156
This identification theory is the basis in many common law jurisdictions, however is it often broader interpreted such as in some American States, Canada, New Zealand and state jurisdiction in Australia as is discussed in more detail in the following paragraphs.157
Canada The Canadian Supreme Court has expanded identification liability, by recognizing that corporations may have more than one directing mind. The question is whether the identity of the directing mind and the corporation correspond when he/she is acting within its assigned working area.158 The Canadian Law Reform Commission 1987 stated a corporation is liable for conduct if it is ‘committed on its behalf by its directors, officers or employees acting within the scope of their authority and identifiable as persons with authority over the formulation or implementation of corporate policy.’159
New Zealand The Privy Council saying that there is no general rule that requires the court to isolate the ‘controlling mind’ of a corporation has also broadened the original identification theory under the jurisdiction of New Zealand.160 Whether an official acted as the corporation depends on different aspects such as ‘structure of the company, the functions performed by the company and who performs them in practice and the policy underpinning the law being enforced.’161
Australia
154 Wells and Elias 2005 at 157. 155 Kyriakakis 2009 at 337. 156 Tesco Supermarkets Ltd v Nattrass [1972] AC 153. 157 Wells 2001 at 130. 158 ibid. 159 Report Recodifying Criminal Law 1987 at 26. 160 Meridian Global Funds Management Asia Ltd v The Securities Commission UKPC 5 (1995) §23. 161 Wells 2001 at 131.
31 Most criminal law in Australia is State law, and federal criminal offences are limited to matters in which the Commonwealth does have legislative power. Initially, Australian Courts relied on principles of vicarious liability, but they applied the identification theory after it was introduced in the UK. However, the most important development within CCL are the provisions providing for organisational liability in relation to federal offences.162 The theory locates the corporate blame in the procedures, operating systems, or culture of a company, also known as ‘company culture theory’.163 The Australian Criminal Code Act of 1995 is perhaps the most permissive.164 It elaborates that the act of an ‘employee, agent or officer of a body corporate acting with the actual or apparent scope of his or her employment’,165 must be attributed to the corporation if the corporation ‘expressly, tacitly or impliedly authorised or permitted the commission of the offence.’166 Authorization or permission hereof is established if the board of directors, a high managerial agent, carried out the conduct, or authorised or permitted the commission of the act;167 or a corporate culture within the corporation directed, encouraged, tolerated or led to non-compliance;168 or the corporation failed to create and maintain a corporate culture that required compliance with the relevant provision.169 The latter two grounds provide for organisation models of corporate fault. In these models the fault of the corporations is not in the hands of one individual of the corporation, but within the ‘corporate culture’.170 Corporate culture implies an attitude, policy, rule, course of conduct or practice existing within the corporation generally or in the part of the corporation in which the relevant activities take place.171
5.2.2 The civil law traditions The civil law jurisdictions have been more reluctant to include CCL into their criminal law systems. However, despite what was once considered a persistent legal culture against CCL, there has been a rapid expansion the last couple of years under civil law countries introducing CCL in their juridical systems.172 As the continental economy also became more industrialised, courts were forced to deviate from their refusal to punish businesses other than
162 Robinson 2008 at 10. 163 Wells and Elias 2005 at 156. 164 Fafo-report 2006 at 13. 165 Criminal Code Act 1995 No 12 of 1995 (Australia) S division 12.2. 166 ibid 12.3(1). 167 ibid 12.3(2)(a)(b). 168 ibid (c). 169 ibid (d). 170 Kyriakakis 2009 at 339. 171 Fafo-report 2006 at 14. 172 Kyriakakis 2009 at 340.
32 through tort liability due to the increased participation of corporations in domestic economies.173 A comprehensive survey in 2006 among 16 countries indicated that among 11 of the countries the prevailing practice is to apply criminal liability to legal persons. Among those countries are many civil law jurisdictions including European countries: France and the Netherlands.174 During the last decades also Luxembourg (March 2010) and Spain (June 2010) joined their European state parties and now recognize CCL. The question within civil law jurisdictions therefore is no longer whether to have CCL, but rather what form it should take.
France The French Penal Code, Code Pénal, was amended in 1992, which made it possible to hold legal bodies criminal liable. Before this, corporations could only be held criminally liable in a few situations envisaged by special laws. However as a general rule, legal persons could not be held criminally liable. According to the penal code ‘legal persons, with the exception of the State, are criminally liable for the offences committed on their account by their organs or representatives.’175 From 1994 until 2005, the penal code adopted the ‘special principle’ by which the liability of legal persons was limited to certain offences mentioned in the law or in a regulation.176 However the law of 9 March 2004 removed this principle of specialty, making it a general principle of criminal liability of legal persons. Currently natural and legal persons are criminally liable for any criminal violation of French law.177
The Netherlands In 1976 the Dutch parliament introduced a provision concerning general CCL. Previously, it existed under the Act on Economic Crimes, however it had more limited application to ‘economic offences’. According to Article 51 subsection 1 of the Dutch Penal Code ‘offences can be committed by natural persons and legal persons.’178 If a legal person commits an offence, the prosecution service will determine whether the legal person will be prosecuted, or any other natural or legal person for ordering or controlling the offence.179 Subsection 2
173 Stessens 1994 at 498. 174 Fafo-report 2006 at 13. 175 Code Pénal 2005 / French Criminal Code art 121-2. 176 Code Pénal 1994 / French Criminal Code art. 121-2. 177 Act law no 2004-204 of 9 March 2004 (French Criminal Code). 178 Criminal Code of the Kingdom of the Netherlands (1881) art 51(1). 179 Keulen and Gritter 2010 at 3.
33 provides for secondary liability if an offence is committed by a legal person, it covers natural and legal persons who order the commission of an offence, and persons who ‘actually control’ the commission of the offence. This is not limited to formal officers such as directors, officials without any authority may also be held criminally liable within the framework of Article 51(2) DPC.180 The Dutch Supreme Court provided a clarifying, general ruling on how CCL should be established (actus reus part of the offence).181 In this case the Dutch Supreme Court stated that a corporation could only be held criminally liable if there is an illegal act or omission that can be ‘reasonably’ imputed to the corporation.182 The concept of CCL is not controversial in the Netherlands. The flexible approach to CCL adopted by the Supreme Court corresponds with the views of most leading authors on substantive criminal law.183
Germany Germany is an exception compared to most civil law jurisdictions, as it has never recognized CCL. Corporations can therefore not be held criminally liable under its legal system, as they adhere to the societas delinquere non potest principle. Instead Germany applies a system of administrative penalties on the wrongful conduct of corporations. Under this system a legal person whose representative has committed a crime or and administrative offence may be held liable for payment of the monetary penalty imposed upon such representative.184
5.3 International developments, does the complementarity problem still exist? The corporate world has changed dramatically over the past years, due to globalisation and the increasing power of corporations worldwide, which makes it necessary to regulate corporate behaviour on an international level. This is emphasized by examples of corporate involvement in international crimes mentioned in chapter three. Most common law jurisdictions have integrated corporate responsibility into their criminal legal systems for a long time. Civil law jurisdictions were more reluctant to incorporate CCL into their criminal legal systems and instead referred to administrative fines for a long time.185 However, since 1990 there has been a shift towards CCL and many countries introduced a form of CCL into
180 ibid at 4. 181 HR 21 October 2003, NJ 2006, 328 (Drijfmest). 182 HR 21 October 2003, NJ 2006, 328 (Drijfmest) §3.4. 183 Keulen and Gritter 2010 at 11. 184 Act on Regulatory Offences of 1 October 1968 (Germany) Section 30. 185 Brodowski and others 2014 at 56.
34 their jurisdiction, particularly in Europe.186 Even restrictive jurisdictions, which were originally against CCL for decades, have incorporated some form of CCL, such as Switzerland since 2003 and Austria since 2006. This development has been accelerated due to the rise of CCL at the international level. Even though these instruments do not oblige domestic systems to introduce effective and dissuasive sanctions, they are implemented the most effectively if States accept a form of CCL instead of civil or administrative regulation.187 However, the exact status of CCL within the different domestic legal systems at this moment is difficult to answer. It is not recognized in all legal systems, but it is important to notice the increasing acceptance amongst States of CCL.188 As Stephens stated: ‘[i]n all legal systems, corporations are held accountable in some way.’189 This is important because the complementarity principle is founded on the premise that the jurisdiction of the court will supplement, or be complementary to state’s national criminal jurisdictions. The principle implies that a case is only admissible when a State is unwilling or unable to conduct a prosecution.190 It was therefore argued that the absence of CCL in many States would make the complementarity principle unworkable.191It is therefore important to focus on the fact that some States do not recognize CCL in their domestic systems and the subsequent question is whether this lack of a uniform CCL mechanism causes a fundamental problem of the complementarity principle of the ICC.
According to Kyriakakis192 and Benzing193 the complementarity principle must be understood as balancing two different underlying interests: the interests of state sovereignty and achieving effective international criminal justice. The first protects and serves the sovereignty of States, by giving States the right to exercise criminal jurisdiction over acts within their jurisdiction. The second purpose is to ensure effective international criminal justice, by ensuring that States abide by that duty, by prosecuting the perpetrators themselves or by providing for an international prosecution in case of their failure to do so.194 These two values may overlap and compete with each other; they compete especially when the focus is on the traditional sovereignty aspect. According to the traditional sovereignty value, CCL could
186 Vermeulen, De Bondt and Ryckman 2012 at 9-10. 187 Brodowski and others 2014 at 56-57. 188 Kyriakakis 2008 at 117. 189 Stephens 2002 at 64. 190 ICC Statute 2002, art 17(1)(a). 191 Ambos 1999 at 7. 192 Kyriakakis 2008 at 116. 193 Benzing 2003 at 595. 194 ibid at 596.
35 infringe the State’s discretion in exercising criminal jurisdiction.195 However, State parties to the ICC recognized that the grave crimes addressed in the Statute ‘threaten the peace, security and well-being of the world’196; that ‘the most serious crimes of concern to the international community as a whole must not go unpunished;’197 and that they are ‘determined to put an end to impunity for the perpetrators of these crimes and thus to contribute to the prevention of such crimes.’198 As stated by Kyriakakis the complementarity principle is therefore not exclusively the interpretation of State sovereignty alone. In order to determine whether corporations should be included in the jurisdiction of the Court, they must balance the two values: ‘effective criminal justice and an end to impunity, with a preference for a state based system. But this preference is not, and never was, envisaged as absolute. The legal persons proposal does not jeopardise the complementarity regime of the Court.’199 It can even be argued that the complementarity principle itself calls for the adjustment of adding CCL to the jurisdiction of the ICC, as currently almost all States do recognize CCL and the extension of the Courts’ jurisdiction to corporations would only stimulate the applications to the gravest human rights violations.200
5.4 Conclusion This chapter has aligned the different applications of CCL in countries, as these countries use different attribution models to hold corporations liable. In criminal law there was a distinction between common law jurisdictions on the one hand which – although in different forms – accepted corporations as subjects of criminal law, and on the other hand civil law jurisdiction which adhered the principle of societas delinquere non potest, which implies that corporations cannot be held responsible.201 However, due to the industrialisation process of the nineteenth century and the economic pressure the common law courts to overcame the three main theoretical objections against CCL. The civil law jurisdiction eventually also accepted some form of CCL as a reaction to the increased participation in their domestic economies.202
195 Kyriakakis 2008 at 121-122. 196 ICC Statute 2002, Preamble §3. 197 ibid §4. 198 ibid §5. 199 Kyriakakis 2008 at 151. 200 ibid. 201 Weigend 2008 at 927-945. 202 Stessens 1994 at 495-496.
36 Chapter 6 - Recommendations and conclusion: Future possibility, extension of the jurisdiction of the ICC to corporations? Having set aside one of the main objections against CCL, the complementarity principle, it is important to examine the theoretical objections against CCL in the current situation in which corporations take an important role in our society. Against the first objection that legal fictions cannot act independently, it can be argued that there are many forms of liability based upon corporate action. For example: corporations are being held liable under tort law.203 Furthermore within the ICC Statute in Article 25 natural persons can act ‘through’ another person. Similar developments have taken place under domestic legal systems, for example the ‘functional approach’ to the perpetration of crimes in the Netherlands.204 However, the second objection that corporations do not have their own will and cannot be blamed morally is more difficult. Social scientists do not see corporations as the aggregation of a number of individuals, but as a corporate culture with their own policy and conditions, getting individuals to act in a way that they would not do outside the company.205 In these corporations, with complex internal structures, it is difficult to identify the guilt within a specific individual; it is rather within the corporation as a whole. Prosecuting one individual may therefore not include all the facts and may therefore not address the criminal offence completely, and perhaps most importantly, does not hold the actual culprit responsible.206 Some domestic legal systems acknowledge this already, e.g. Australia, and provide for an autonomous concept of CCL, which does not depend on one specific individual within a corporation.207 The argument that corporations cannot be punished as they ‘have no body to kick’208 and therefore cannot feel or experience pain or unpleasant consequences, can also be refuted. Most domestic jurisdictions include penalty systems for corporations. Additionally, criminal law systems provide many penalties, including for natural persons that are not always limited to a prison sentence. This follows from the fact that a punitive penalty with the aim to have a deterrent effect must be seen as a criminal penalty.209 Furthermore, sanctions such as financial sanctions, negative publicity or eventually dissolution can be seen as unpleasant consequences. These sanctions might differ from for example imprisonment,
203 Swart 2008 at 958. 204 ibid at 951. 205 Fisse and Braithwaite 1993 at 21-22. 206 Stahn and Van den Herik 2010 at 365. 207 Stahn and Van den Herik 2010 at 365. 208 Coffee 1981 at 386-459. 209 Özturk v Germany A No 73 (1984) EHHR.
37 however these are unpleasant consequences for the corporation concerned. They all achieve the same purposes of retribution and deterrence.210 It can therefore be concluded that the theoretical objections against CCL can be refuted.
Future possibility: extension of the jurisdiction of the ICC to corporations? Constructing a feasible form of CCL for international crimes presents an enormous challenge as we have seen in chapter two. However, CCL for international crimes is not legally impossible. It has been concluded that the complementarity principle of the ICC lost its main relevance due to inter alia the increasing trend in domestic legal systems of some form of corporate liability – chapter five. Furthermore, the three theoretical objections are also no longer insurmountable. Despite the fact that not all domestic legal systems accept CCL, at the international level corporate involvement in international crimes, such as was alleged in the Shell case,211 should be subjected to criminal law rather than administrative law. This is indispensable due to the need for social disapproval for corporate involvement in the most far-reaching human rights violations – chapter three.212 The possibility of including CCL into the jurisdiction of the Court implies the liability of corporations in addition to the liability of individuals. There is no shift from individuals to corporations, as in most situations corporations are not the most responsible for international crimes. However, in cases in which it is necessary to hold a corporation liable for an international crime, as there is no other option, there must be a working legal framework available.213
It is important to further explore this concept of CCL and the possible extension of the jurisdiction of the ICC to corporations. The challenge here is a question of political will as well as the acknowledgement that there are fewer options to deal with corporate crimes than at the domestic level. With regard to this it is of great importance to look at the increasing development of different forms of CCL within domestic jurisdictions and the growing importance of holding corporations liable for corporate involvement in international crimes. From this it can be concluded that it is not only desirable but also necessary to be able to hold
210 Stahn and Van den Herik 2010 at 367. 211 Wiwa et al v Royal Dutch Shell Co. 96 Civ. 8386 (2009). 212 Stahn and Van den Herik 2010 at 367. 213 ibid.
38 corporations liable, as human rights violations should not be the inevitable consequence of the economic development and increasing economic and political power of corporations.
39
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47