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Can a Corporation Be a Criminal Enterprise?

By Marissa Florio

Under international and U.S. law, individuals can be prosecuted for membership in criminal enterprises. But what do we mean by “criminal enterprise”? The FBI defines a criminal enterprise as “a group of individuals with an identified hierarchy, or comparable structure, engaged in significant criminal activity.” Typically, we think of drug cartels, racketeering enterprises, or even the Gestapo. But what about corporations? They have shown themselves to be capable of egregious and criminal behavior: insidiously evading regulations or instigating and carrying out violent acts. Corporations should likewise be eligible to be labelled as criminal enterprises, as they are groups of individuals with an identified hierarchy that can engage in significant criminal activity. Corporate directors and officials could thus then be found guilty for the corporation’s bad acts much more easily, which I find appropriate.

Both international law and U.S. domestic law provide for criminal liability for membership in a criminal enterprise. Simply being a member in such a group is enough to warrant prosecution, without further evidence that a specific individual committed any other crime. Domestically, membership in an enterprise that participates in racketeering activity is penalized under the Racketeer Influenced and Corrupt Organizations Act (RICO). Internationally, at the Nuremburg trials, the Gestapo was declared a criminal enterprise and all members were automatically penalized. Similarly, in the ICTR, a defendant can be found guilty for the acts of others under the theory of extended joint liability for a joint criminal enterprise. What would it take for a corporation to be deemed a “criminal enterprise”?

 

Domestic Law

In Doe I v. Unocal Corp., the Ninth Circuit assessed whether there was a genuine issue of material fact as to whether Unocal, as a corporation, aided and abetted the Myanmar military’s perpetration of forced labor, murder, and rape. The Myanmar military was providing security and other services for Unocal’s project of producing, transporting, and selling natural gas deposits off the nation’s coast. Allegedly, the military was committing human rights violations in connection with the project, forcing men to work on the project under threat of violence, killing those who tried to escape from the forced labor program, and torturing their families:

“For instance, Jane Doe I testified that after her husband, John Doe I, attempted to escape the forced labor program, he was shot at by soldiers, and in retaliation for his attempted escape, that she and her baby were thrown into a fire, resulting in injuries to her and the death of the child. Other witnesses described the summary execution of villagers who refused to participate in the forced labor program, or who grew too weak to work effectively. Several Plaintiffs testified that rapes occurred as part of the forced labor program. For instance, both Jane Does II and III testified that while conscripted to work on pipeline-related construction projects, they were raped at knife-point by Myanmar soldiers who were members of a battalion that was supervising the work.”

The Circuit court assessed Unocal’s knowledge that the Myanmar military was allegedly committing human rights violations in connection with this project. The court found there to be sufficient evidence of knowledge to withstand summary judgment. The court stated,

[E]ven before Unocal invested in the Project, Unocal was made aware – by its own consultants and by its partners in the Project – of this record that the Myanmar Military might also employ forced labor and commit other human rights violations in connection with the Project. And after Unocal invested in the Project, Unocal was made aware – by its own consultants and employees, its partners in the Project, and human rights organizations – of allegations that the Myanmar Military was actually committing such violations in connection with the project.

The parties in Unocal settled shortly after this ruling on summary judgment. However, had the case gone to trial, could plaintiffs have presented an argument that Unocal was a criminal enterprise?

In domestic cases, the answer is no. The Ninth Circuit held that RICO could not be argued, as the statute did not apply extraterritorially. (For more on the presumption against extraterritoriality in U.S. domestic law, see also EEOC v. Arabian American Oil Co.)

 

International Law

Could international law be applied in these types of cases to hold a corporation as a whole liable as a criminal enterprise, and therefore extending criminal liability to its officers without proving personal involvement in specific acts? Several international tribunals do just that.

The Nuremburg Charter provides: “At the trial of any individual member of any group or organisation the Tribunal may declare . . . that the group or organisation of which the individual was a member was a criminal organisation.” This declaration is final and cannot be challenged in subsequent cases against other members of the same organization: “In cases where a group or organisation is declared criminal by the Tribunal, the competent national authority of any Signatory shall have the right to bring individuals to trial for membership therein before national, military or occupation courts. In any such case the criminal nature of the group or organisation is considered proved and shall not be questioned.”

The Nuremburg Tribunal is not the only international tribunal that can find a group to be a criminal enterprise in this fashion. A recent International Criminal Tribunal for Rwanda (ICTR) ruling could lay the groundwork for the International Criminal Court (ICC) to similarly use the theory of a criminal enterprise to find greater liability for a corporation’s wrongdoing. (The ICTR rulings can have some precedential value for the ICC under the Rome Statute.)

In Edouard Karemera and Matthieu Ngirumpatse v. The Prosecutor, the ICTR found two politicians culpable under a seldom-used theory of liability, whereby the defendants were found guilty for the acts of others, because they participated in a scheme that had a plausible consequence of certain human rights violations. The ICTR found two high-ranking politicians from Rwanda’s 1994 interim government liable for human rights atrocities during the Rwandan genocide, specifically the mass rape, mutilation, and sexual assault of thousands of Tutsi women and girls. There was no evidence that either defendant personally perpetrated rape, mutilation, or sexual assault, or even that either politician ordered such acts to be committed. They were convicted on the grounds of extended liability for joint criminal enterprise. Id.

Under extended liability for joint criminal enterprise, a defendant must be found liable for participating in a “basic” joint criminal enterprise (here, the destruction of the Tutsi people) and significantly contributing therein. The defendant can then be found liable for a crime outside of the purpose of the basic joint criminal enterprise that was committed by another joint criminal enterprise member, so long as it was “foreseeable that the extended crime was a possible consequence of the implementation of the basic [joint criminal enterprise].” A defendant could similarly be found liable for the acts of a non-member of the original joint criminal enterprise if: (1) the non-member has the requisite intent to participate in and significantly contribute to the joint criminal enterprise, (2) it was foreseeable that the non-member would commit the extended crime in the execution of the common purpose of the joint criminal enterprise, and (3) the defendant knew the extended crime was a possible consequence of the implementation of the common purpose of the joint criminal enterprise and he willingly took the risk it would be committed.

Were this same theory to be applied to a corporation, a corporate official could be found liable for participating in such a joint criminal enterprise, such enterprise being the corporation. Therefore, even if a corporation were being prosecuted as a person/entity independent of its officers, as in Unocal, the corporate structure could still be used as a framework around which to build cases against individual officers, specifically in establishing duties to know and act, and knowledge of improper actions.

 

Moving Forward

International law thus appears to be better suited than U.S. domestic law to finding that a corporation is a criminal enterprise, since Ninth Circuit precedent now blocks RICO from applying in all cases where the bad acts occurred outside of the United States. If a case with facts similar to Unocal did emerge and the corporation therein was declared to be a criminal enterprise under an international tribunal, would this be a move in the right direction? Should the U.S. defer to the jurisdiction of international tribunals in cases like Unocal, making it possible to penalize corporate officers? Could the U.S. defer jurisdiction? How far could this theory go: could all employees of a corporation become criminally liable, regardless of their involvement or personal knowledge of the extent to which the corporation was involved in illegal activities? Is this just?

Marissa Florio is a 2016 J.D. candidate at Harvard Law School and a Feature Editor of the Harvard International Law Journal Online.

Online Scholarship

Facing the Human Rights Challenge of Prisoners’ and Detainees’ Hunger Strikes at the Domestic Level

Prisoners’ hunger strikes and the issue of force-feeding have become a matter of concern for many Western countries. The widespread and repeated nature of this situation, as well as its influence on prisoners’ and detainees’ fundamental rights, have troubled human rights scholars, governments, and international institutions and tribunals. Though their roles are not often discussed, in practice, policymakers and various state officials face serious complexities around the management of hunger strikes and have a critical part in their resolution. This Article provides an in-depth analysis and a critical examination of the international human rights norms that govern hunger strike situations and assesses their application in domestic settings. Based on this analysis, the Article offers practical recommendations and guidance for state officials to enhance the protection of this distinct group of persons and to assure the development of human rights-based national policies.

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Content, Op-Ed, Student Features

Sovereignty Cannot Hold Back the Power of Humanity

By Lucas Bento

At the heart of the current refugee crisis affecting Europe’s borders is the poor exercise of sovereign judgment.  Sovereignty, as a fundamental principle of international law, implies that countries have absolute control over what happens within its borders, free from foreign interference.  A state’s power to exclude people from crossing its borders flows directly from this power.  Whether it is Hungary’s use of tear gas against asylum seekers, Slovakia’s decision to only accept Christian refugees, or Croatia’s separation of refugee families, the use of sovereign powers in this crisis raises important questions about the role and responsibilities of states as members of the international community.

Most legal scholars and political scientists trace the right to sovereignty to the Peace of Westphalia in 1648, which put an end to Europe’s brutal Thirty Years’ War and laid the foundations for respecting the territorial integrity of states.  Europe has since been at the forefront of defining and refining the meaning and practice of “sovereignty,” with the fall of empires and independence of new states, the origination of two world wars, and ultimately the creation of a European Union that partly absorbed the sovereignty of individual member states.

In light of its historical role, Europe should be leading by example.  The refugee crisis may be challenging established notions of sovereignty by forcing states to consider the extent to which they are bound by extraterritorial obligations.  The right to sovereignty should not be taken for granted.  A state cannot have its cake and eat it too.  In practice, the right to sovereignty entails significant responsibilities, and must thus be counterbalanced by values such as respect for human rights and the protection of minorities.

Take, for example, the founding text of the European Union.   Article 2 of the European Union Treaty proclaims that the European Union is “founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities.”  Yet the refugee crisis has shown that many European states are failing to uphold these values.

The right to asylum is a basic “human right”, enshrined in international conventions and protocols, such as the 1951 Refugee Convention.  Using violence on those fleeing persecution is also an infringement on the “human dignity” of the victims.  Hungary’s enactment of a law allowing the army to use rubber bullets, tear gas grenades and net guns against refugees is a saddening example of democratically legitimizing bad policy.  While a state’s right in using force to repel foreign invasion is well-established under international law, it was never designed to be unleashed on non-combatants, let alone asylum seekers looking for a safe haven.  Cherry-picking which asylum seekers to let in based on their religious belief blatantly undermines any attempt to create a Europe that promotes “equality”.

Sadly, refugees flee violence and discrimination in their homeland only to encounter more of it in Europe.

Of course, Europe should not open its borders without controls.  It should monitor, register, document and process all asylum seekers that come in to ensure that asylum applications are based on a well-founded fear of persecution, rather than on economic or as some have noted, more nefarious, reasons.  But for some states to close their borders in the hopes that the crisis will go away or that someone else will collect the tab is preposterous.  Europe needs a unified solution.  As the United Nations High Commissioner for Refugees (UNHCR) noted, “individual measures taken by countries will make an already chaotic situation worse, furthering suffering and increasing tensions among States at a time when Europe needs solidarity.”  The agreement for a relocation quota is a step in the right direction, though it has been criticized as insufficient by the UNHCR, and may face enforcement issues as some states, like Slovakia, have already vowed not to implement the measures.

Others should drop the xenophobic and hyperbolic rhetoric.  Viktor Orban, Hungary’s Prime Minister, unhelpfully described the inflow of migrants as “breaking the doors” and “running over us.”  Refugees are running away from harm, seeking safety abroad when there is none at home, hoping to receive an acknowledgment of their humanity where the alternative includes slavery, rape, and death.

In many ways, Europe’s approach to the refugee crisis demonstrates the poverty of philosophy in European political circles.  Germany’s backpedaling from a message of absolute solidarity to one of controlled migration would make Immanuel Kant weep in disappointment.  Kant believed in a cosmopolitan world, where individuals as “citizens of the earth” enjoyed rights of hospitality, and where states had no right to refuse visitors if it would lead to the latter’s demise.  Europe cannot let the repercussions of ISIS brutality become a humanitarian tragedy for Europe.  Enough with the violence and discrimination.  This is the time for European leaders to demonstrate their commitment to “human dignity,” “human rights,” “equality,” and “the protection of minorities.”  The true indicia of humanity comes not in how much we say we care (though compassion is necessary) but in how much we care to share: our time, our land, and our resources.  Here, actions speak louder than words.

Europe should be doing more on a global level to form partnerships and alliances with others in the international community to find a coordinated solution to this crisis.  It should reach out to Brazil, whose President has recently stated that the country is welcoming refugees “with open arms.”  It should also leverage diplomatic channels to put pressure on the United States to take on more refugees, and demand greater support from countries in the Gulf that have been criticized for their “tepid” response to the crisis.  It should also listen to its own citizens who are helping refugees at train stations, providing shelter and food to those in need, and even developing mobile applications á-la Airbnb to help good Samaritans share their homes with refugees.

Whereas ISIS preaches violence and discrimination, Europe should fight back, if only ideologically, by standing united in solidarity with those in need.  Sovereignty should not be used as a weapon of oppression and exclusion, but as an emancipatory reminder that states are members of a community striving for a more peaceful world.   Of course, the exercise of sovereign power will always trigger a division of opinions.  But in a world where states are increasingly sharing power with non-state actors, the sword of sovereignty should be raised wisely, wielded responsibly, and seldom left to the discretion of political expediencies.

 

Lucas Bento is an associate at the New York office of Quinn Emanuel Urquhart & Sullivan, LLP.

News, Student Features

A Fly in the Ointment: The TPP’s Investor-State Dispute Settlement Clause

By Josh Macfarlane

The Trans-Pacific Partnership (TPP) has had quite the summer. With the help of some adroit political maneuvering and an unexpected alliance between President Obama and congressional Republicans, Congress just managed to pass the necessary legislation to advance the trade deal to the next state of negotiations. The TPP, an international trade deal representing 40% of global GDP, is particularly divisive within the President’s own party. Many criticize the deal for neglecting labor rights, sacrificing American jobs, and the clandestine nature of the negotiations. But it is the Investor-State Dispute Settlement (ISDS) clause that perhaps provokes the most ire.

The ISDS provision essentially allows investors from one country to file claims against the government of another. Controversially, an international tribunal, which operates outside the confines of domestic courts and laws, adjudicates the claims. For supporters, the tribunal promotes neutrality, fairness, and predictability. For critics, it represents an unprecedented cession of power to an unaccountable body.

Critics argue that the ISDS provision allows investors, including multinational corporations, to circumvent United States law, thereby undermining national sovereignty. There is some truth to this. After all, the tribunal’s decision cannot be appealed in a nation’s courts. Making matters worse, foreign investors do not even need to file a claim to get their way. Merely threating to bring a claim has proven sufficient. Earlier this year, the Guardian reported that an American tobacco company effectively threatened the Canadian government with an ISDS claim, forcing them to withdraw a proposal that would require plain packaging on tobacco products. Critics see this as the beginning of the end: the TPP will enable foreign corporations to bring claims against the government—at the state, federal, and local levels—on the grounds that a domestic law is discriminatory. To put it another way, a Japanese corporation could bring a claim against the government of Billings, Montana on the grounds that a local ordinance gives a marginal advantage to local manufacturers.

Supporters see things differently. They argue that while trade agreements facilitate cross-border investment, foreign investors require (and even deserve) access to an impartial adjudicatory body to protect their interests. There is a long history of courts favoring the home team – it is one of the reasons we have diversity jurisdiction in the United States. This problem is only amplified when a nation’s courts are charged with adjudicating between a domestic defendant and a foreign claimant, particularly when the defendant happens to be the government. The solution? An independent tribunal. The ISDS provision is thus a means of ensuring that investors operating abroad have protection and recourse against discrimination, uncompensated expropriation of property, and denial of justice.

In response to critics’ admonition that the TPP will result in a deluge of claims against the United States, Mr. Obama’s administration regularly cites facts and figures: over 3,000 international agreements include ISDS provisions, of which the United States is party to 50. Take NAFTA as an example, where only 20 claims have been brought against the United States, none of which has been successful. (It should be noted that these figures do not address those instances in which an investor threatened to bring a claim but never did.) But, critics argue, things will be different under the TPP. Countries like Australia and Japan, two TPP members, are home to corporations with the necessary resources to aggressively pursue claims. This is debatable. The United States already has existing trade agreements, containing ISDS provisions, with six of the eleven other TPP members. This includes countries like Canada, Singapore and Mexico, which have their fair share of wealthy corporations.

Interestingly, it was not the ISDS provision that stymied negotiations between TPP members this summer. Rather, it was differences over sugar and dairy exports, among other things. What seems to matter most to the critics is not what is holding up the talks. This is largely because those seated at the negotiating table accept that an ISDS provision is critical to a final deal; they feel that critics have overblown its implications.

If negotiators cannot resolve their differences, discussions may be indefinitely postponed. The upcoming Canadian general election and the 2016 U.S. Presidential race have been identified as possible roadblocks on account of candidacy ambivalence towards the TPP. Time is of the essence, and September is likely to be a pivotal month. Perhaps that local ordinance in Billings will not be challenged after all.

 

Josh Macfarlane is a 2017 J.D. candidate at Harvard Law School and a Feature Editor of the Harvard International Law Journal Online.

Content, Online Scholarship

How Anti-Blasphemy Laws Engender Terrorism

The tragic events of the past months, including the Taliban’s murder of 132 schoolchildren in Peshawar, Boko Haram’s mass slaughter of civilians in Nigeria, and Al Qaeda’s massacre of the staff of Charlie Hebdo in Paris, have re-ignited a debate about the root causes of terrorism and its prevention. The debate centers largely on efforts by foreign governments in the Islamic world to effectively execute counter-terrorism measures against known terrorist organizations, including defeating their weaponry and propaganda. But little has been written on what is, arguably, the most potent instrument fueling the perpetrators’ terrorism: anti-blasphemy laws. A closer look at the anti-blasphemy laws of Pakistan, Indonesia, and Nigeria helps illustrate a potentially significant correlation: nations that criminalize blasphemy tend to foster an environment where terrorism is more prevalent, legitimized and insidious.

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The Sanctions Theory: A Frail Paradigm for International Law?

The paradigm that has shaped around economic sanctions suffers from profound contradictions. The aim of this piece is to dissect and deconstruct the sanctions theory, and to show its paradox and normative inconsistencies. The first section narrates the logic supporting sanctions. The following section shows the weaknesses of the logic of sanctioning. The last section shows normative and theoretical shortcomings of the sanctions theory vis-à-vis international relations theories.

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