BHR Symposium: Business and Human Rights in Armed Conflicts—Exclusion of Corporate International Criminal Liability from the Second Draft Treaty

[Jelena Aparac is lecturer and legal advisor in international law with a focus on Business and Human Rights in Armed Conflicts. Dr. Aparac is also an expert member of the UN Working Group on the Use of Mercenaries.]

The Open-ended Intergovernmental Working Group on Transnational Corporations and Other Businesses with Respect to Human Rights (“IGWG”) was mandated by the Human Rights Council (res 26/9) to draft a legally binding instrument on business and human rights. To date, the IGWG has held four sessions between 2015 and 2018. The Fifth session marked the beginning of direct intergovernmental negotiations on the basis of the revised draft instrument.

Business and Human Rights in Armed Conflicts is a new branch within the “Business and Human Rights” field. The United Nations Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises identified conflict zones as the most vulnerable context for corporate human rights abuses as early as 2011 (para 5). However, this topic has only recently received broader attention. Since then, there have been two major developments regarding corporate responsibility. The first is inspired by the Guiding Principles based on corporate human rights due diligence. The second is more critical of the Guiding Principles and is based more firmly in international criminal corporate liability. The IGWG’s second revised draft seems to be aligned with the former, while making compromises with respect to the latter.

The current draft treaty only creates obligations for future State parties and recognizes their pre-exiting obligations under the human rights law (HRL). However, the draft remains unclear as to the concise legal obligations of corporations. In its draft article 3(1), the second revised draft treaty states that it “shall apply to all business enterprises”. Yet the document fails to establish obligations relevant to corporations. Furthermore, draft article 6(1) requires that States “take all necessary and legal measures” to ensure that corporations “respect all internationally recognized human rights and prevent and mitigate human rights abuses throughout their operations”. But in draft article 6(2), the only obligation on corporations is the human rights due diligence under a domestic legal regime.

While it is important to reiterate the importance of businesses to engage in due diligence, the language of the draft treaty, as written, only provides for limited corporate responsibility. First, due diligence should be mandatory in order for courts to exercise jurisdiction for the purpose of accountability. State parties must recognize, at the very least, the mandatory nature of the due diligence regime for corporations. Second, the responsibility in that case can only be triggered for the failure to engage in due diligence (like in a French law on corporate due diligence). This does not carry the same weight as the violation of the human right itself and does not have the same implications for victims in terms of the procedure and the reparation. Third, the violation of due diligence would rarely fall under criminal procedure. Not incorporating the failure of due diligence under criminal law will leave all the potential cases related to murder, forced disappearances, torture or sexual violence without any prosecution. Due diligence is the obligation of means not the result. Therefore, if the corporation can establish that it took all necessary measures to prevent abuses and respect human rights (e.g. in the form of internal guidelines) they cannot be hold accountable. Finally one of the major disadvantages of the draft’s approach to due diligence is that the burden of proof always falls on the victims.

While the draft acknowledges the possible negative impact of business operations in the contexts of armed conflicts and occupation (see art. 6(2)(c) and (g); see also the reference to international humanitarian law (IHL) in the preamble), it ignores the applicability of the law of armed conflicts—IHL and international criminal law (ICL)—to the corporations as non-states actors (ex. see here and here para 38). This unfortunate position means that only States have direct obligations under international law under the current draft. It is also a missed opportunity to adapt contemporary international law to modern developments related to corporate accountability. In particular, the treaty should be cognizant of at minima the greave breaches of IHL that would amount to war crimes (see article 8 of the Rome Statute of the International criminal Court (ICC)). This type of corporate criminal accountability has been recognized since Nuremberg.

It should be recalled that States have recognized corporations as rights holders under international economic law, including the right to act before the international courts, namely the International Centre for Settlement of Investment Disputes. Similarly, the European Court of Human Rights has not only recognized the “human rights” of corporations but also their jus standi, the right to have their human rights protected by the court (see here art. 1, see here art. 34, see here para.67, here para 41; see also here para 29 for the IACHR). This shows the clear contemporary imbalance between the international rights and obligations of corporations. The revised draft perpetuates this imbalance by failing to impose an accountability regime against corporations.

This traditional position also has a direct impact on the choice of jurisdiction. The second revised draft excludes any international corporate liability, be that before international human rights mechanisms, the ICC or by establishing a novel court in which to review claims of human rights abuses by businesses. Draft article 15 on the institutional arrangements excludes any corporate responsibility for assuring compliance with human rights norms.  For example, there is no required reporting by corporations, and victims are excluded from accessing oversight mechanism to raise claims against corporate abuses. This leaves only national courts to exercise jurisdiction over claims of corporate human rights abuses. Even though many delegations requested more clear and precise language on the type of liability (civil, criminal or administrative), this is not yet integrated into the second version. As a result, mechanisms for holding businesses accountable, even in a domestic context, remain confusing and incoherent between key provisions (namely articles 4, 8 and 15). If the reference point for legal obligations continues to only be “due diligence”, it is very unlikely that States will adopt criminal legislation to hold corporations accountable for human rights abuses under domestic criminal law. Furthermore, even if States adopt criminal legislation designed to hold corporation accountable for human rights violations, the domestic corporate proceedings by themselves may be limited by various procedural obstacles, including diplomatic relations and mutual legal assistance, as was demonstrated in the Lafarge case.

While the draft treaty does not recognize international responsibility of corporations, it could potentially open the door to additional Rome Statute negotiations. Article 8(9) in fine supports the idea that another (Rome Statute?) instrument may be complementary to the current instrument. This would be desirable because the current negotiations on corporate liability would be complementary, rather than fragmented. The legal fragmentation could be avoided if one instrument, such as the second revised draft treaty, reinforces only domestic legislations and procedures while paving the way for the international criminal liability to be integrated into the Rome Statute. By setting up different oversight mechanisms and legal procedures, a piecemeal approach to legal liability could only make fragile the notion of corporate accountability, just as fragmented voluntary initiatives did to corporate social responsibility (CSR). CSR ended up to be mostly inefficient. Indeed, one thing is certain: no State or court alone can deal with the complex transnational activities and crimes of corporations, particularly during times of war.

Draft article 8(2) contains one of the most fundamental provisions that should be maintained, namely separation of the responsibilities of natural and legal persons. Contrary to the French proposal (art 23(5) and (6)) to the Rome Statute that was never integrated, the introduction of this provision would contain several advantages. First, it leaves the States satisfied with retaining control over the criminal prosecution of natural persons in accordance with the principle of complementarity. It is worth noting that, to this day, only two corporate directors have ever been prosecuted for their involvement in international war crimes: Guus Kouwenhoven and Van Anraat. Furthermore, this formulation recognizes the complexity of the links within the multinational enterprise. It adapts to the phenomenon of a multinational company as a group made up of a multitude of superior-subordinate relationships and between subsidiaries within a single entity, in addition to a multitude of nationalities.

Pointing the finger at the natural person who, at the highest level of the hierarchy, might be held responsible when the crime is the product of a business dynamic may prove to be complex, while the evidence may be sufficient to show that the company, as a legal person, participated in international crime bypassing the complex constructions of corporate organization. When it comes to proving the subjective element of the crime, it may be easier to prove the knowledge of the company’s board of directors rather than that of a specific natural person whose mens rea should be attributed to the company. In addition, in the internal network of the company, the holders of power are no longer necessarily natural persons, but other abstract entities.

Draft article 8(3) contains a second fundamental provision necessary for the success of any future litigation: the separation of civil from criminal procedures. Again, several advantages can be identified: victims’ representatives may have limited resources, while the public prosecutor may have more success in obtaining the evidence. Moreover, if the criminal proceedings fail, victims can always pursue their case before civil courts. In addition, State courts have more experience establishing corporate civil or commercial responsibility, while the ICC may be more equipped to have jurisdiction over complex criminal cases stretching over several jurisdictions.  

Finally, the draft is inspired by ICL because it encompasses modes of liability from a simple complicity to direct participation, by acts or omissions. It is also infused with principles of command responsibility reflected in article 8(7) that could be used to establish the control of the parent company over its subsidiary. However, the way it is designed in the current draft, the concept of control can go beyond international corporate structure to include any business relationship. This might not be a realistic approach. These two types of relationships should be clearly separated: on one side are business relationships inside the multinational structure or a group, and on the other side are business relationships outside of the group, such as a supply chain. In either case, the construct of control cannot be identical.

War is the biggest business of today generating billions of dollars for the multinational corporations. And yet, the realities of corporate involvement in armed conflicts are still excluded from the draft. States, victims and even business can all benefit from a well structured and clear treaty that reflects the business realities of today and tomorrow, including when the corporations contribute to the most egregious human rights abuses amounting to international crimes.