Flavio Frasca, LLM

The exact status of multinational corporations under international law is the object of much debate among academics, having some important practical consequences on the effectiveness of international law in regulating multinational behaviours and in holding such corporations accountable.

However, in order to establish an effective legal regime capable of dissuading corporations from committing international crimes, there are more relevant issues that should be addressed. This paper will investigate some of these issues from a pragmatic point of view and provide a general overview of the current situation with respect to the international responsibility of corporations. In the first part a brief overview of the academic debate over the international legal personality of multinational corporations will be provided. Then, the role played by states in regulating and making MNEs accountable will be examined, outlining both advantages and disadvantages of this approach. Afterwards, the proliferation of soft law instruments in this area will be discussed, pointing out its shortcomings. Finally, some emerging trends in the field of criminal responsibility of multinational corporations will be explored while also providing some insights on these issues.

Debate over the international statehood of multinational enterprises (MNEs).

The thorny issue of the international criminal responsibility of MNEs is closely linked to the widely- known academic debate over whether MNEs possess an international legal personality. This conceptual problem poses obstacles to the enforcement of international criminal law with regard to business players. However, the practical relevance of this debate should not be overestimated. According to some scholars, a new approach to the concept of international legal personality is necessary in order to reduce the current trend of using legal terms inaccurately. Terms such as participants and non-state actors are proliferating in the international legal debate[1], under the influence of the traditional state-centred approach to international law.

It is worth noting that there is no generally accepted definition of “subjects” of international law among scholars. The International Court of Justice (ICJ), in the Reparation for Injuries case, gave a conventional definition of “subjects” of international law by defining a “subject” as an entity possessing international rights and duties, endowed with the capacity to defend its rights by bringing international claims. Moreover, the Court emphasized the historical and relative nature of the definition of “subject” in any legal system, arguing that subjects of different nature exist within each legal system, depending upon the needs of  the community. In that case, it concluded in favour of the personhood of the United Nations.

One question in order to determine whether MNEs should be recognised as subjects of international law would thus be whether the actual needs of the international community call for such a recognition?

Some authors argue that the powerful role played by MNEs in the contemporary international community – including their participation in international law-making such as the adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) – makes the case for the recognition of their international personhood.

Nevertheless, the desirability of such a normative and structural change of the international law system is contested by other scholars,[2] who point out that the inclusion of MNEs among the subjects of international law could trigger unintended results. In particular, it has been argued that the abstract finding that MNEs are subjects of international law is likely only to strengthen their power, without imposing them the corresponding duties. The absence of both an effective legal regime and an international court to hold MNEs accountable for human rights violations cannot be replaced by the mere abstract recognition of the international legal personality of MNEs.[3]

Thus, it can be argued that the most controversial issue to be urgently addressed is of a political nature, as it involves the will of states to effectively regulate MNEs’ activities and hold them accountable for their wrongful acts affecting human rights and the environment, both via national and international law. Indeed, the need for international legal rules regulating MNEs behaviour arises when national regimes prove inadequate to this end, and some states take advantage by not regulating MNEs.

However, this doctrinal argument over the legal personality of MNEs is not particularly compelling. Indeed, it is possible to make internationally accountable even those entities whose international legal personality is disputed, such as individuals before the International Criminal Court (ICC). It can thus be concluded that the debate over the international legal personality of MNEs is not a crucial obstacle for the establishment of both a legal regime and an international court with the aim of holding MNEs accountable for human rights abuses.

The role of states in making MNEs accountable

A different approach to the problem emphasizes the primary role played by states in regulating and making MNEs accountable. This is the core argument that underpins the UN Guiding Principles on Business and Human Rights (UNGP), adopted in 2011, which emphasize states’ duty to prevent, investigate, punish and redress private actors’ human rights abuses. However, such a perspective fails to address some of the main issues on which the idea of making MNEs internationally accountable is grounded. Generally, national legal systems are not adequately    equipped to deal with international legal crimes committed by MNEs for a number of reasons. Firstly,  the very nature of these crimes, which always comprise transnational actions, raises problems of extra-territorial jurisdiction as well as difficulties in carrying out extra-territorial investigations. Moreover, “home states” (where the mother company is incorporated) generally fail to prevent extra- territorial abuses by their corporations, and the duty of home states to act in preventing abuses is debated, as recognized in the UNGP. On the other hand, “host states”, which are usually developing countries, are frequently unable or unwilling (borrowing two concepts from the ICC Statute) to prevent and regulate human rights abuses within their jurisdiction.

Secondly, national legal systems diverge in their approaches towards corporate criminal responsibility. This concept is generally recognized in common law systems, but it is absent in many civil law jurisdictions, which resort to administrative and tort law. The existence of these differences is also reflected in international instruments that accommodate the diversity of approaches. The Draft Articles on Prevention and Punishment of Crimes Against Humanity adopted by the International Law Commission (ILC) in 2019 establish in article 6(8) that each state shall take measures, where appropriate, to impose liability upon any legal person for crimes against humanity. However, this provision also allows states to choose between different forms of liability, criminal, civil or administrative,, according to their national legal order.

The soft law

The shortcomings of legal norms as well as the lack of personhood of MNEs have triggered a proliferation of soft law instruments such as the ILO Declaration on Fundamental Principles and Rights at Work adopted in 1998 and the OECD Guidelines for Multinational Enterprises revised in

2011.The UNGP (also a soft law instrument) provide that MNEs have a corporate responsibility both to  respect all internationally recognized human rights and to prevent or mitigate adverse human rights impacts linked to their business, even when they did not directly contribute to those impacts. In 2015, the UN Reporting Framework was launched, a guidance for companies to report on how they respect human rights and meet the standard set out in the UNGP.

The effective implementation of these soft law instruments is, ultimately, subject to the will of companies. Hence, despite the important role played by soft law in the interpretation of international and municipal law as well as in the emergence of new customary norms, its relevance should not be overestimated in providing an effective deterrent against corporate crimes.

This approach has been largely criticized as amounting to an abdication by states of their power to regulate the conduct of MNEs.

The international criminal responsibility of MNEs: debated issues

Is the extension of the ICC’s jurisdiction to MNEs a viable and effective tool in order to prevent human rights abuses and to establish a reliable regime of accountability?

This pathway has been discussed at the Rome Conference, when the French delegation proposed to include “legal persons” within the ICC jurisdiction. This proposal, however, did not achieve consensus among states and it was withdrawn.[4] In particular, those states whose legal systems did not recognize corporate criminal liability expressed concerns about the application of the complementarity principle.[5]

Twenty-three years have passed since the Rome Conference and it seems that a greater concern about the conduct of corporations may facilitate the task of bringing them within the ICC’s jurisdiction. The renaissance of the idea of making MNEs internationally accountable is evident from several developments. For example, the decision of the Appeals Panel of the Special Tribunal for Lebanon (STL) in the case against New TV S.a.l. and Mr. Al Khayat (confirmed in the case against Akhbar Beirut S.A.L. & Mr. Al Amin) marks the first verdict in which a hybrid criminal tribunal envisages the possibility of making a corporation criminally liable. The Appeals Panel proceeded for contempt against two legal persons, specifying that holding someone to account under articles 2 and 3 of the Statute is a very different question.[6] Despite its limited scope, this sentence is of the utmost importance as it admits the possibility of using international jurisdiction to hold MNEs criminally accountable. The judges reached this conclusion by interpreting Rule 60 bis of the Tribunal’s Rules of Procedure and Evidence in light of the object and purpose of the STL, considering the term “persons” as comprising legal persons. They notably relied on the “international trend toward criminal liability for legal person” as well as on the fact that limiting criminal liability for contempt to individual persons would risk undermining the justice process.

Further evidence demonstrating the decreasing relevance of the traditional rule societas delinquere non potest is the adoption of the Protocol on Amendments to the Protocol on the Statute of the African Court of Justice and Human Rights, (the so-called Malabo Protocol) in 2014. This instrument has limited effectiveness since it has not been ratified by any state. However, it is the first international statutory instrument that expressly establishes, in its article 46C, that an international court shall have    criminal jurisdiction over legal persons, with the exception of states. The Malabo Protocol attributes criminal responsibility to MNEs adopting an “organisational model” approach. This means that rather than focusing upon the conduct and state of mind of specific individuals within the corporation, corporate culpability is deemed to be situated in the corporation itself.  Culpability is reflected in the MNEs’ formal and informal policies and via aggregation of knowledge across the full range of corporate personnel, which is then attributed to the company.[7] This “collective approach” to corporate criminal responsibility leaves some issues open to debates and is in contrast with the other pathway for international criminal liability, as defined by Carsten Stahn, who distinguishes “collective” and “individual” responsibility.[8]

The individual approach to corporate criminal responsibility is grounded on the liberal tradition, which is based on the idea that the involvement in crime is the consequence of the interaction among self-determined individuals who are, in the end, solely responsible for their actions. It is uncontroversial that individual corporate agents may be criminally responsible as direct perpetrators, and making them accountable is essential to avoid criminal responsibility becoming a hazy and abstract concept. Nevertheless, the idea of collective accountability is particularly useful from a retributive and restorative perspective, as it is often the only way to provide victims with commensurate reparation. Both of these approaches should arguably be merged in order to find a satisfactory pathway towards the goal of holding MNEs internationally accountable for crimes.

Concluding Remarks

This essay has shed some light over the main debated issues relating to the complex topic of corporate criminal responsibility. It has emerged that several approaches could be adopted to tackle this issue, and that each of these strategies possess advantages and disadvantages.

The establishment of a comprehensive international legal regime encompassing both the civil and criminal responsibility of MNEs as well as some specific substantive norms applying to MNEs, is crucial in order to reduce misconducts and human rights abuses brought about by corporations. Nevertheless, establishing such a legal framework is a challenging goal, which will probably be reached only in the long run.

It must be borne in mind that international law is the result of both the conduct and the will of states. This is why the first step towards a more coherent legal regime for MNEs should be the political will of some influential states, particularly at the regional level, to hold MNEs accountable, in the hope that this would provide an example for other nations to follow. The key role of states is expressly emphasized in the UNGP, which is grounded on the premise that states’ international law obligations require that they respect, protect and fulfil the human rights of individuals within their territory (and/or jurisdiction), including the protection against abuses by MNEs.

However, the jurisdiction of states, hence the effectiveness of national legislation, is limited. One possible approach to overcome this issue would be the application of the principle of universal civil jurisdiction over the grave breaches of international human rights law (IHRL) committed by MNEs. This would constitute a deterrent for corporations, which would then be subject to prosecution by different countries, facing a greater risk of being held liable. Moreover, as regards criminal jurisdiction, it would be useful to extend the scope of extra-territorial jurisdiction criteria by elaborating treaties that allocate jurisdiction in cases of MNEs responsibility for grave breaches of IHRL.

In conclusion, it can be argued that even states’ role should not be overestimated. This is to say that only if coordinated actions are undertaken by a substantial number of states can a process of change of the existing international legal regime be boosted. Thus, the traditional motto “the whole is greater than the sum of its parts” should be kept in mind so as to promote cooperation among nations in order to protect the values of the international community against the abuses of MNEs.

  • See Nehal Bhuta, ‘The Role International Actors Other Than States can Play in the New World Order’, in Antonio Cassese (ed), Realizing Utopia: The Future of International Law (Oxford University Press 2012) 61.
  • Ibid 75
  • See Andrew Clapham, ‘The Question of Jurisdiction Under International Criminal Law Over Legal Persons: Lessons from the Rome Conference on an International Criminal Court’, in Menno T. Kamminga and Saman Zia-Zarifi (eds), Liability of Multinational Corporations under International Criminal Law (Kluwer 2000) 139-195.
  • See Kathryn Haigh, ‘Extending the International Criminal Court’s Jurisdiction to corporations: overcoming  complementarity concerns (2008) 14(1) Australian Journal of Human Rights 199-219.
  • Article 2 determines the applicable criminal law and article 3 sets forth the criteria to establish when a person is individually responsible for crimes.
  • See Joanna Kyriakakis, ‘Corporate Criminal Liability at the African Criminal Court’, Briefing Paper, ACRI Meeting, Arusha 2016, §12.
  • See Carsten Stahn, ‘Liberals vs Romantics: Challenges of an Emerging Corporate International Criminal  Law’ (2018) Case Western Reserve Journal of International Law, 91-12