IS THE PRESUMPTION OF CORPORATE IMPUNITY DEAD?

Author:Scheffer, David
Position::Corporations on Trial: International Criminal and Civil Liability for Corporations for Human Rights Violations
 
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Subsequent to the delivery of this address of September 15, 2017, the Supreme Court delivered its judgment in Jesner v. Arab Bank on April 24, 2018. (1) In a 5 to 4 vote, Justice Kennedy, writing for the majority of Justices Roberts, Alito, Thomas, Gorusch, and himself, held that corporations are not subject to the jurisdiction of the Alien Tort Statute ("ATS"). (2) Justice Sotomayer, writing for the minority of Justices Ginsburg, Breyer, Kagan, and herself, argued that corporations can be held liable under the ATS. (3) The author aligns himself with the views expressed by Justice Sotomayer in the dissenting opinion.

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Keynote Address by Ambassador David Scheffer * at Corporations on Trial: International Criminal and Civil Liability for Corporations for Human Rights Violations The Frederick K. Cox International Law Center Conference Case Western Reserve University School of Law September 15, 2017

The dialogue at this conference focuses on three broad areas relating to corporate liability for human rights violations: accountability, transparency, and morality. I will bore into accountability, while recognizing up front that impunity for corporate behavior in the realm of human rights is being challenged with legislative and stakeholder initiatives in reporting transparency and development of guidelines, and by expressions of morality at the CEO level. I point to just one example of guidelines, namely "The Corporate Crimes Principles," issued in October 2016 by the International Corporate Accountability Roundtable in Washington and by Amnesty International. (4) It is an extremely useful set of ten principles to guide those who aim to hold corporations accountable. My colleagues in the profession, James G. Stewart and Alex Whiting, served as experts in the preparation of the principles.

But the force of morality can be stronger than anything we legislate, anything we uphold in the courts of law globally, and anything we mandate for reports and other instruments of transparency, including an aggressive mainstream media and Fifth Estate. None of us are naive enough to think that corporate impunity is somehow gasping its last breath, far from it. But the tide is turning. The pathway to corporate responsibility, which is being built in bold defiance of impunity, is not a straight line and it does not and should not traverse only courtrooms. The issue of overcoming corporate impunity for human rights violations and how we frame our analysis of it is, and must be, multidimensional. Professor Caroline Kaeb, who joins us at this conference, is pioneering innovative ways to achieve corporate responsibility with non-litigious methodologies. (5) But I speak here today of two developments in the field of accountability.

I begin with the notable case of Jesner v. Arab Bank, which will be argued before the Supreme Court on October 11, 2017. (6) Full disclosure: I filed an amicus brief on behalf of the petitioners in the case. (7) While the case concerns civil rather than criminal liability, the fate of corporate liability under the Alien Tort Statute, (8) and how such liability is framed by egregious human rights violations, hangs in the balance, unless the Supreme Court simply invokes the presumption against extraterritorial application of U.S. law in favor of Arab Bank. I doubt that particular outcome because the Supreme Court presumably granted certiorari only for the purpose of addressing the issue of corporate liability; repeating the Kiobel II (9) exercise of raising the issue of corporate liability only to bury it under the presumption against extraterritorial application of U.S. law would be an odd undertaking and outcome for the Supreme Court. There is a clear circuit split on the issue of corporate liability, reaffirmed by the 2nd Circuit in Jesner, so the battle lines are drawn and the time has arrived. The Alien Tort Statute either covers, as violators of the law of nations or U.S. treaties, corporations as well as natural persons or it only covers natural persons. The relatively recent split in the circuits must be repaired.

In my amicus brief I examine two issues that the Supreme Court justices should take note of during their deliberations. First, the Second Circuit and the respondent continue to rely on the Rome Statute of the International Criminal Court (hereafter the "Rome Treaty") (10) and the negotiations leading to its conclusion to deny liability for corporations. Take it from someone who was there throughout the U.N. talks: There is simply no basis in the history of the negotiations leading to the Rome Treaty that prohibits civil liability of corporations for commission of or complicity in the commission of genocide, crimes against humanity, or war crimes, the most egregious types of human rights violations. Our relatively brief discussions about the status of criminal liability of corporations for commission of or complicity in atrocity crimes led to a dead end, but that only speaks to the issue of criminal liability. We were not discussing civil liability, which is the only form of liability under the Alien Tort Statute, but has no application whatsoever, even for natural persons, under the Rome Treaty.

Let me bore into this a bit because this issue remains central at least to the issue of civil liability for corporations under the Alien Tort Statute, and if that is eviscerated by the Supreme Court, thus immunizing corporations, then I suggest that criminal liability will be much harder to establish in the years ahead. We may need to strengthen the foundation for civil liability first before building new frameworks for criminal liability.

The Second Circuit and the respondent assume--incorrectly--that the Rome Treaty, which exclusively and deliberately focused on the establishment of a criminal court, purposely reflected a widely accepted international consensus against all criminal and civil liability of corporations for crimes against the law of nations, as if corporations essentially are immunized from any legal liability in their operations. That incorrect assumption is flatly refuted by the history of the Rome negotiations and the structure of the Rome Treaty itself, both of which expressly and solely address criminal liability. The Second Circuit also wrongly assumes that this purported...

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