The Role of Business in War: A Different Defense to Corporate Complicity? Part II: A Different Defense

[Maya Nirula is a dual-qualified international human rights lawyer with multi-jurisdictional experience consulting and litigating on issues of business and human rights]

Recapitulation 

This is the second of a two-part series, the Role of Business in War. Part I: The Old Offense evaluated the interaction between International Humanitarian Law (IHL), International Human Rights Law (IHRL), and International Criminal law (ICL) in governing gross human rights abuses and corporate complicity.

Part II: A Different Defense will examine a potential new defense to such complicity that requires businesses to integrate IHL and ICL into their due diligence and subsequently manage any identified risks. Incorporating such measures could negate the knowledge and foreseeability element required for a finding of complicity. 

Introduction

Businesses aim to avoid legal liability, reputational damage, and shareholder and investor dissatisfaction. The price for a finding in complicity is high – millions of dollars in fines, criminal liability for employees, potential striking off for the business, a plummeting share price, and disgruntled stakeholders. Given these risks, it seems counterintuitive for businesses not to take preventative measures. Beyond the traditional, rarely invoked defenses, the law offers a simple solution – heightened due diligence integrating IHL and IHRL. Why, then, do businesses neglect IHL considerations in conducting due diligence of their operations in conflict-affected areas? 

Different Defense: The Know and the Show 

MNCs should be encouraged to engage in human rights risk assessment prior to investing in a country where there is corruption or repression emanating from the state. It is relevant to any inquiry about accomplice liability to determine what knowledge existed at the beginning of a business relationship and then, what knowledge was acquired over time. 

Businesses remain largely unaware that integrating IHL and ICL into their due diligence may shield them from liability, or, at a minimum, “minimize a company’s chances of legal accountability”. In other words, while businesses can still be found complicit, those that conduct adequate due diligence may be able to use their assessments to negate the knowledge and foreseeability element required for a finding of complicity. For instance, a business can either conduct due diligence, and other fact-finding risk assessments, or not. Choosing not to may be viewed as them “avoiding knowing too much – or anything”, which is not rewarded by the law and “will increase the zone of legal risk”. Conversely, if a company chooses to carry out due diligence, and identifies salient risks, it can better determine responsible next steps on “whether to remain or exit”. Ideally, a company should seek to prevent and mitigate these risks (and track and communicate the effectiveness of their measures). If risks can be adequately addressed, a company should implement “responsible remaining” frameworks, or, alternatively, consider responsibly ceasing or suspending operations. However, if the company knowingly participates in an activity despite recognizing severe risks, it can and should be held liable for complicity. 

Admittedly, the blanket alternative solution of ceasing operations in a conflict zone is not feasible for many businesses that have already injected significant sums of money, sent across teams of employees and personnel, and built extensive infrastructure in pursuit of their projects. These companies should therefore conduct heightened due diligence and integrate IHL considerations into their policies and processes. A company should only exit if it determines that it cannot continue operations without contributing to gross human rights abuses and other international crimes.

Defense in Practice: Negating Knowledge 

A criminal court will not take a company’s claim that it had no knowledge at face value. While international criminal laws do often require that a company had actual knowledge of possible consequences, a court may imply or impute from the circumstances that the company did have knowledge.

The knowledge and foreseeability element does not require a desire to cause harm; responsibility may arise if it was known that a course of conduct would likely contribute to international crimes. In the instance of superior responsibility, foreseeability is sufficient to attract accessory liability. The test for individual criminal responsibility requires evidence that company officials subjectively knew that their conduct may contribute to gross human rights abuses. Notably, objective facts are used to determine the subjective mental state, analogous to a determination of mens rea. Factors, including due diligence exercises, risk assessments, and public information, are taken into consideration to ascertain whether they knew. For certain violations of IHL, “the publicity of certain war crimes and atrocities may be sufficient to establish mens rea of a MNC”. Crucially, the courts are unwilling to accept “we did not know” on face value and willful blindness is not an accepted defense. 

Complicity: In Practice 

Currently, there is no exhaustive list of instances where a company or its officials would be found liable for corporate complicity, nor is there definitive guidance as to when a company, despite its participation, would not be complicit. However, a review of case history and the evolution of complicity law reveals multiple ways in which a business could participate in the commission of gross human rights abuses. Given there is a high likelihood of complicity in instances where a business has physical operations in a conflict zone – as has been confirmed in the recent cases of LaFarge in Syria and Lundin in South Sudan – businesses are encouraged to take steps to eliminate their facilitation of a crime (i.e., by suspending or ceasing physical operations whilst an area is in conflict). In instances where a business is remotely providing services to the State and/or rebel groups – as in BNP Paribas’ provision of financial services to Sudan – a business should conduct adequate fact-finding exercises and, importantly, prevent and mitigate risks before they convert into actual impacts. In the event that a business is unable to appropriately manage its risks, as with Van Anraat’s provision of Mustard Gas to the Saddam regime, it should cease services. Lastly, in instances where a business provides remote services to the populous of a conflict-area, such as Novo Nordisk’s supply of pharmaceuticals or PepsiCo’s supply of beverages in Russia, it should conduct extensive due diligence and take steps to ensure that its services does not support the further commission of gross human rights violations. 

Recommendations 

Liability is tied to diligence in fact-finding and efforts in managing risks – the know and show – instead of the resulting harm. While there is no exact formula, there is guidance on a set of minimum standards and best practices that a company should consider when revising their policies and processes. Even though “integrating IHL into human rights due diligence and risk management processes does not ipso facto absolve a company of legal liabilities, doing so would reflect the company’s commitment to adopting best practices, ameliorating their human rights impacts in conflict-affected areas”.  As discussed above, adequate due diligence may additionally act as a defense to corporate complicity (or individual criminal liability), subject to the findings of fact and the specific mitigatory measures adopted. Businesses’ internal policies and processes should also be tailored to conservative risk management strategies for each specific conflict area, and such efforts should be externally communicated in a transparent manner. Several authoritative sources have published detailed guidance with recommendations on how best to integrate IHL into the policies of a business. Companies should consult such guidance as minimum standards that must be employed in relation to conflict-affected areas, and adapt their policies and processes accordingly.