How Can We Hold Corporations Accountable? Proposals for the Future

Allison Fleming

Vol. 42 Associate Editor

As the number of transnational-corporations (TNCs) climbs, legal recourse for wrongs committed by corporations is increasingly limited by the narrow focus of domestic courts, representing a slap on the hand for multi-billion-dollar entities. This brief blog post examines the possibility of holding TNCs criminally liable on a global level, and due to a number of difficulties, settles on an expansion of civil liability globally as a more realistic and effective solution.   Criminal Liability for the Corporate ‘Person’   The idea that corporations are people, although accepted in the United States, is not accepted internationally.[1] The concept of legal personhood confers certain rights upon corporations, rights that work in favor of corporations, notably the freedom of speech.[2] At the same time, legal personhood also confers liabilities on the corporation as a whole, including criminal penalties. Thus, in the United States, a corporation qua corporation can be charged with a crime, as opposed to holding only directors or management criminally liable as is the case in many other jurisdictions. Although there has been much debate about the policy implications of the personhood of corporations, the consequences of criminal action against a corporation undeniably have benefits that are beyond the reach of civil claims. For example, while both civil and criminal claims can result in fines, the reputational costs of criminal charges may hold more weight for a corporation than civil fines.[3] In thinking about possible ways to hold TNCs accountable for wrongdoing on a global scale, one possibility is somehow gaining jurisdiction over TCNs in an international criminal tribunal, the International Criminal Court. The ICC, unlike the US court system, is an international body. It was created by the Rome Statute which was ratified in 1992. The court’s jurisdiction is defined by the terms of the statute, which include parties to the statute [4] In his discussion of corporate criminality and the ICC, Professor David Scheffer gives a number of reasons for the Rome Statute not including judicial persons within the jurisdiction of the ICC.[5] The majority of states in talks during the formation of the Rome Statute did not recognize corporations as legal persons with criminal liability,[6] and this “proposal would have imperiled the ratification of the treaty by many governments given the novelty of corporate exposure to criminal liability before the ICC.”[7] Merely 27 years later, it seems unlikely that these positions will have changed drastically enough to amend the statute.   Expansion of Jurisdiction of International Civil Courts   Civil liability, as opposed to criminal liability, can be adjudicated widely in both domestic and international courts. In the US, as in many other jurisdictions, there are limits as to what kinds of corporations operating in certain areas can be held liable. For example, recent Supreme Court cases have limited the extent to which corporations can be sued for wrongs committed extraterritorially using domestic statutes such as the Alien Tort Statute.[8] Similarly to international criminal law, international civil law is mainly adjudicated in one court – the International Court of Justice (ICJ)[9] And, like with the ICC, the ICJ also adjudicates claims between states and not corporations. Article 36 includes cases that state members bring before it, and paragraph one “provides that the jurisdiction of the Court comprises all matters specially provided for in treaties and conventions in force.”[10] There are a number of treaties that govern the activities of TCNs operating in member states.   The Outlook   Recognizing corporations as under the jurisdiction of an international body, whether as a person who can be held criminally liable, or for civil liability, would require an amendment to the statute. However, because civil liability against a company is more widely accepted internationally than criminal liability, and does not come with awarding rights to a corporation, this approach seems the more logical to pursue. Of course, amending the Statute of the ICJ would be a formidable task. A successful movement to do so would require years of lobbying and legal work. In the meantime, activists and lawyers can work within the domestic sphere to increase liability for corporations, as well as non-legal means of influencing corporate behavior such as awareness and divestment campaigns. Additionally, there is ongoing litigation to determine the extent to which US corporations can be held criminally liable under the Alien Tort Statute and if aiding and abetting human rights abuses is enough to satisfy the test of extraterritorial jurisdiction proscribed by the Supreme Court in Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013).[11] Acts of bribery committed abroad by US corporations are routinely prosecuted by the Department of Justice under the Foreign Corrupt Practices Act (FCPA).[12] Despite the potential for growth in this area of domestic law, it has the same limitations mentioned earlier in this article, particularly limited scope. A more radical proposal could be creating a tribunal specifically for corporate violations of criminal law. This would of course require much more than a blog post to develop and would be even more arduous of a process than amending current statutes. Depending on the amenability of UN member states, this might be an option in the future.   Despite the obstacles to creating change, corporations do not need to escape liability for crimes by virtue of their broad, multinational operations.  Large corporations, even more than some small states, play a role in how the world operates. For the wellbeing of individuals subject to the actions of these corporations, as well as for long term sustainable economic growth and prosperity, it is important to have checks on the actions of corporations on a global level.

[1] See Vikramaditya Khanna, Corporate Criminal Liability: What Does it Do?, 109 Harv. L. Rev. 1477, 1490 (1996). [2] Citizens United v. Federal Elections Commission, 558 U.S. 310 (2010). [3] Khanna, supra note 1, at [4] Rome Statute of the Int’l Crim. Ct., art. 25, 17 July, 1998, 2187 U.N.T.S. 90. [5]  David Scheffer, Corporate Liability under the Rome Statute, 57 Harv. J. Int’l L. 35 SPRING 2016, ONLINE SYMPOSIUM [6] Id. at 38. [7] Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013) [8] Jesner v. Arab Bank, PLC, 138 S. Ct. 1386 (2018) [9] Int’l Law and Just., United Nations, https://www.un.org/en/sections/issues-depth/international-law-and-justice/index.html (last accessed Nov. 10, 2020). [10] Basis of Jurisdiction, International Court of Justice, https://www.icj-cij.org/en/basis-of-jurisdiction (last visited Nov. 20, 2020). [11] Nestlé USA, Inc. v. Doe I, Oyez, https://www.oyez.org/cases/2020/19-416 (last visited Nov 22, 2020). [12] Foreign Corrupt Practices Act, Department of Justice, https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act (last accessed Nov. 22, 2020). The views expressed in this post represent the views of the post’s author only.