Author:Kelly, Michael J.
Position:Corporations on Trial: International Criminal and Civil Liability for Corporations for Human Rights Violations

Corporations have been around for centuries. Their entire operating principle is to generate profit. All other purposes are ancillary. However, people within corporations and running corporations make decisions for these entities and sometimes those decisions lead to criminal conduct in pursuit of that profit motive. History provides several examples of such conduct playing out in egregious ways, from the time of the British East India Company's exploitation of the Asian Indian subcontinent in support of Great Britain's colonial expansion to the time of I.G. Farben's exploitation of slave labor during World War II in support of German military efforts. Efforts today to hold corporations accountable for international crimes such as genocide are informed by these historical examples and arguments to finally do something about it are buttressed by them as well.


Corporations have been around a long time--certainly since the time of the Roman Empire. (1) As long as they have been around, some have invariably engaged in egregious conduct in furtherance of their central driving animus--profit. While many early corporations were formed to carry out the public good, today the vast majority of corporations are private entities designed to maximize profit for their shareholders. (2) A few private companies with medieval origins are still in business, in one form or another, and remain engaged in an array of economic activity:

The world's oldest family business, Kongo Gumi, started to build and restore temples in 578 in Japan. Europe's oldest business is a winery in France, Goulaine, which set up shop around the year 1000. The oldest corporation run in a more sophisticated way, comparable to large corporations today, is Stora Kopparberg, a Swedish mine that was granted a charter from King Magnus II of Sweden in 1347. (3) To be sure, corporate business combinations have brought much good to the world--both for the people they employ and the skilled jobs they create, and for the societies that benefit from their innovation and wealth creation. Corporations are the key component in capitalist systems. Indeed, the capitalist model, now well proven to be the best economic paradigm, is the most widely adopted model, and undergirds the entire global economic system. Economic benefits would not flow without corporations as a central feature in this process.

Moreover, the vast majority of companies go about their business in a very benign way--engaging in the economic activity for which they are chartered. However, as is the case with any group of people or entities, a few will always choose to take the path of illegal conduct that yields large short-term gains at the expense of moral integrity and societal well-being. An individual defrauding a bank is no different from a corporation defrauding an investor. The first is a natural person, the second, an artificial person. Both are answerable to the law for their actions.

This is not a new phenomenon. Criminal conduct has been regulated for as long as societies have existed and, most probably, even before civilization itself. (4) Part of a well-ordered society is a general agreement about social conduct that is reflected in the law of that society (5). Transgressors are punished--whether by a term of years, fines, or some other more extreme form. Companies, as citizens of these societies, are also potential transgressors. As such, they should not escape punishment for wrongdoing.

This article provides critical historical context for understanding the legal treatment of companies that commit such wrongdoing. Moreover, the examples explored in this article demonstrate that lack of criminal enforcement against such companies as companies cripple the effort to seek justice against them.

Section I traces the experience of two early joint ventures--the Dutch East India Company and the British East India Company. Both were founded as the Dutch and British Empires were expanding rapidly into Asia. (6) The home powers needed an economic arm to develop their far-flung colonies and work cooperatively with national military and diplomatic corps that were on site. (7) The mission of these companies was to establish stable colonial economic units, found new profitable trade routes, and secure monopolies on key commodities. (8) The brutality with which both companies pursued these objectives led to human rights abuses, slavery, and ultimately, genocide. (9) Eventually, the weight of negative public opinion in the Netherlands and Great Britain brought them both down. (10)

Section II discusses the role of corporations in the context of wartime in the early twentieth century. In both world wars, companies were major players furthering the efforts of their home states. (11) But the German corporations displayed a much more egregious callousness toward humanity than other companies in other warring states. Developing poison gas for battlefield use in World War I, and deploying gas to the extermination camps and openly using slave labor in World War II, sets German companies apart from the rest generally and the I.G. Farben firm in particular.

Section III provides the most recent update on civil liability within the United States of foreign corporations engaged in tortious conduct abroad via the Kiobel case. (12) While prosecution of corporations for criminal conduct has been possible in the United States for the past century, it's rarely used. (13) When it is, the target is typically an American firm, not a foreign one. (14) The prosecution of British Petroleum is a notable exception.15 Cases brought under the Alien Tort Statute by foreign plaintiffs against foreign firms for atrocities abroad proliferated in the 1990s and the 2012 decision in Kiobel are the latest articulation by the U.S. Supreme Court on this legal pathway to enforce the law on corporations.

In each section, the legal result proves unsatisfactory. Despite occasional show trials of individual officers directing unspeakable brutality toward native populations, the Dutch and British East India Companies were dismantled by parliamentary actions demanded by political pressure, not legal resolution. (16) The decision not to prosecute I.G. Farben and other German companies after the fall of the Third Reich was, again, a political decision. (17) When postwar trials were conducted against individual officers of these firms in the American occupation sector, the prosecution was unable in many instances to make allegations against each officer stick. (18) Had those allegations been compounded collectively and alleged against a corporate body, they likely would have stuck. Finally, Kiobel significantly narrowed the scope of future civil litigation in the United States against foreign corporations engaged in atrocities by requiring a new minimum contacts test that will make it more difficult to bring such actions. (19)


    History presents multiple examples of atrocities committed or aided by corporate entities. (20) The largest multinational companies during the period of European colonization--the Dutch and British East India Companies--rank among the chief corporate culprits. Working in tandem with the military forces of their respective home governments, these corporations wrought havoc with local populations in their colonies on many levels. (21) Both were implicated in well-known genocides (22).

    1. Dutch East India Company

      The Dutch East India Company (Vereenigde Oost-Indische Compagnie; VOC) was considered to be the first international mercantile joint stock enterprise and the first multinational corporation. (23) The VOC was founded by the Estates-General of the Netherlands in 1602, and was headed by a group of directors, the Seventeen Gentlemen. (24) The VOC held a Dutch monopoly of trade in Asian waters from the Cape of Good Hope onward. (25) It was organized as a joint stock company formed from several smaller companies. The Dutch created a structure of modern colonialism under which businessmen would work in conjunction with their home country, raising capital for ventures by pooling their individual assets under a single company. (26) Investors received transferrable shares of stock in the company and received profits according to their proportion of shares, thus forming an early form of limited liability. (27)

      This unique joint-stock structure allowed the VOC to be a dominant global force for over two centuries. (28) Image 1, below, demonstrates the scale and reach of VOC operations. The sheer magnitude of the VOC, and the diffusion of liability which initially made it powerful, ultimately led to structural and organizational deficiencies. (29) These internal deficiencies weakened the VOC in the face of its competitors, primarily the British East India Company (EIC), and ultimately led to the company's demise. (30) The VOC eventually declared bankruptcy and was dissolved in 1798. (31)

      The VOC was established with the purpose of opening up trade to India, Persia, Japan, and eventually China. (32) Becoming profitable almost instantly, the VOC achieved much of its success through abuse of indigenous populations. The VOC "maintained] coercive or inequitable relationships with local populations" and was thus able to build its business by "buying low and selling high." (33) The VOC was also known for establishing its global stronghold by force, carrying on Holland's war with Portugal to establish its initial footholds in the East Indies. (34) In 1620, the VOC forcibly evicted the English from the Banda Islands and captured a monopoly over nutmeg and cloves as part of their lucrative spice trade that resulted in the elimination of all local trade and the subjugation of local islanders who came under Dutch "protection" as the chief source of labor. (35) This laid the groundwork for the VOC's first genocidal episode.

      In 1621, the indigenous...

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