Companies should obey the law in lawless lands

In the gallons of ink spilled in the debates over business and human rights, one assumption has remained uncontested: companies should obey the laws in the jurisdictions in which they operate. In the words of the International Chamber of Commerce: “All companies are expected to obey the law, even if it is not enforced, and to respect the principles of relevant international instruments where national law is absent.”

While the debates have raged over what it means exactly to respect international human rights law, national laws around the world have evolved. Almost unnoticed over the past 10 years, states have been slowly turning their national laws into mechanisms to control the worst forms of human rights abuses. The result is that today any multinational operating in a high-risk area – such as a war zone or in a country ruled by a repressive regime – may face liabilities elsewhere for a range of international crimes.

How are national laws becoming tools for protecting human rights worldwide? Four things have been happening. The first is that, since 1998, some 105 countries have ratified the Rome Statute of the International Criminal Court (ICC), which governs genocide, war crimes, crimes against humanity, including inter alia torture and enslavement, and many have set about integrating those laws to their own domestic penal codes. The effect has been to globalise criminal law protections against the worst forms of human rights abuse via domestic jurisdictions.

The second is that, in implementing the Rome Statute, countries have had to implement provisions enabling extraterritorial jurisdiction. Although different in each jurisdiction, the evolution of extraterritorial jurisdiction has, in effect, extended the reach of domestic criminal laws to those places where previously the laws were ‘not enforced’. Even places that reject the ICC, such as the US or India, have their own laws that cover much the same substance and provide for similar jurisdictional reach.

Third, this evolution has created the potential for the extension of criminal law jurisdiction to include companies. The diplomats who negotiated the Rome Statute were divided over whether to include legal persons in the court’s jurisdiction. Most national laws have no such exclusion, making it possible for domestic courts to prosecute individuals or potentially legal entities, such as companies, for international crimes.

Finally, the new substantive and jurisdictional provisions have been integrated alongside long- established criminal law provisions concerning aiding and abetting or complicity. For companies operating alongside wars and repressive regimes, existing complicity provisions suggest that, what may appear to be normal business activities, may also be acts that constitute aiding and abetting under criminal law. Cases based on exactly these questions are already proceeding in US civil litigation under the Alien Tort Claims Act and through criminal prosecutions in several other countries.

In short, when it comes to human rights abuses, the law-free zones are shrinking. For all of us concerned with ending impunity for human rights abuse, that is good news. It remains to be seen how the national courts and legislators interpret these provisions with respect to business activities, but for the legal counsel of multinational corporations, as well as for government prosecutors, it means a new transnational legal terrain is opening up.

Our new ‘Red Flags’ guide helps companies identify the risks of liability when operating in high-risk zones. But while Red Flags should be an important part of any company’s due diligence in this area, they are only part of the solution.