Opinio Juris

One has a nagging suspicion that human rights litigation against corporations is a proxy fight in which the accomplice is pursued while the principal evades punishment. Indeed, if a corporation is accused of "aiding and abetting" human rights abuses, this is all but a concession that the corporate actor is not the principal wrongdoer. It is of course possible that this controversial trend toward corporate responsibility may reflect a genuine concern about corporate abuse of power. But more likely it reflects an abiding frustration that the primary perpetrators-sovereigns-are beyond the reach of most victims. If victims cannot pursue claims against the principal, they will resign themselves to pursue claims against those who aid and abet.

How have we come to this state of affairs, in which the corporation is pursued while the sovereign evades punishment? Why should the corporate accomplice alone be found liable if the sovereign is the primary malfeasor? For the first time in scholarly literature, this Article suggests an alternative approach, a solution to this conundrum. It suggests that corporations have existing tools to remedy the situation, drawing on principles derived from human rights, contract law, and arbitration. The essential idea is that if a corporation is found liable for aiding and abetting human rights abuse, it may invoke contractual provisions in the agreement with the sovereign to arbitrate the question of shared responsibility. While the victims may not pursue the sovereign, there is no impediment for a corporation that is found liable to pursue the sovereign in arbitration to secure its share of liability, either in the form of contribution or indemnification. In short, human rights litigation against the corporation could lead to "who pays" arbitration against the sovereign….

The purpose of this Article is not to affirm or disaffirm this trend of holding corporations liable under international law. Rather its purpose is to recognize an observable trend in human rights litigation patterns and consider its ramifications. If corporations increasingly are subject to international responsibility, then this portends new avenues for holding sovereigns responsible for their share of the liability….

Human rights litigation followed by "who pays" arbitration is a two-step process that overcomes the traditional immunity that sovereigns enjoy in human rights litigation. Thus far, human rights litigants have attempted to scale an impregnable wall of sovereign immunity by relying on awkward FSIA tools such as commercial activity or implied waivers. But corporations have no such difficulties. They can invoke provisions in their contracts that were specifically drafted to fulfill the relatively straightforward FSIA exceptions of express waiver and arbitration. Corporations typically cannot implead and crossclaim against the sovereign in the underlying litigation. But they can do the next best thing by arbitrating the question of who pays for the human rights abuses. Effectively, the arbitration procedure operates as a second-tier cross-claim by one malfeasor against the other.

What is particularly important about this paradigm shift is that heretofore human rights abuse has been a relatively cost-free enterprise for perpetrators, particularly sovereigns…. But with corporate liability that equation changes dramatically. To use Guido Calabresi's scheme of cost avoidance, monetary incentives are placed on corporations to change their conduct so as to reduce the number and severity of human rights violations…. And by imposing a cost on corporations that aid and abet sovereign abuse, those corporations will become cost avoiders…. Holding corporations liable and then arbitrating who pays is a mechanism of imposing costs and then spreading the costs, resulting in the corporation and the sovereign becoming cost avoiders. By imposing and spreading costs to the secondary and primary perpetrators, greater fairness between the malfeasors is achieved and deterrence from human rights abuse is enhanced. Contractual arbitration between the corporation and the sovereign over who pays transfers costs imposed on the corporation and creates shared incentives to implement and enforce human rights obligations.

73. The corporate responsibility to respect human rights includes avoiding complicity. The concept has legal and non-legal pedigrees, and the implications of both are important for companies. Complicity refers to indirect involvement by companies in human rights abuses - where the actual harm is committed by another party, including governments and non-State actors. Due diligence can help a company avoid complicity.

74. The legal meaning of complicity has been spelled out most clearly in the area of aiding and abetting international crimes, i.e. knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime, as discussed in the 2007 report of the Special Representative. The number of domestic jurisdictions in which charges for international crimes can be brought against corporations is increasing, and companies may also incur non-criminal liability for complicity in human rights abuses.

75. In non-legal contexts, corporate complicity has become an important benchmark for social actors, including public and private investors, the Global Compact, campaigning organizations, and companies themselves. Claims of complicity can impose reputational costs and even lead to divestment, without legal liability being established. In this context, allegations of complicity have included indirect violations of the broad spectrum of human rights - political, civil, economic, social, and cultural.

76. Owing to the relatively limited case history, especially in relation to companies rather than individuals, and given the substantial variations in definitions of complicity within and between the legal and non-legal spheres, it is not possible to specify definitive tests for what constitutes complicity in any given context. But companies should bear in mind the considerations set out below.

77. Mere presence in a country, paying taxes, or silence in the face of abuses is unlikely to amount to the practical assistance required for legal liability. However, acts of omission in narrow contexts have led to legal liability of individuals when the omission legitimized or encouraged the abuse. Moreover, under international criminal law standards, practical assistance or encouragement need neither cause the actual abuse, nor be related temporally or physically to the abuse.

78. Similarly, deriving a benefit from a human rights abuse is not likely on its own to bring legal liability. Nevertheless, benefiting from abuses may carry negative implications for companies in the public perception.

79. Legal interpretations of “having knowledge” vary. When applied to companies, it might require that there be actual knowledge, or that the company “should have known”, that its actions or omissions would contribute to a human rights abuse. Knowledge may be inferred from both direct and circumstantial facts. The “should have known” standard is what a company could reasonably be expected to know under the circumstances.

80. In international criminal law, complicity does not require knowledge of the specific abuse or a desire for it to have occurred, as long as there was knowledge of the contribution. Therefore, it may not matter that the company was merely carrying out normal business activities if those activities contributed to the abuse and the company was aware or should have been aware of its contribution. The fact that a company was following orders, fulfilling contractual obligations, or even complying with national law will not, alone, guarantee it legal protection.

81. In short, the relationship between complicity and due diligence is clear and compelling: companies can avoid complicity by employing the due diligence processes described above - which, as noted, apply not only to their own activities but also to the relationships connected with them.