The web of liability is expanding. The legal liabilities of a company operating internationally are not limited to the domestic laws in host countries. Laws at home and in third countries may also apply. This web site lists activities which should raise a 'red flag' of warning to companies of possible legal risks, and the need for urgent action.
The activities identified below are drawn from a review of existing international law and court cases in more than a dozen jurisdictions. Each red flag is hyperlinked to a summary of the relevant laws and a selected case or two. Additional resources for companies, governments, affected communities and researchers can be found here as well.
The threat or use of violence to force people out of their communities can be a crime under international law. A company may face liability if it has gained access to the site on which it operates, where it builds infrastructure, or where it explores for natural resources, through forced displacement.
A Japanese company was sued in Japan for its involvement in the alleged involuntary resettlement of people in Indonesia prior to the building of a dam. The company has challenged the claims and the case is pending.
Companies using people working against their will through the threat or use of violence may face liability. The use of such labour by a joint venture partner or state security forces may also pose a liability risk.
An American oil company was sued in the United States for the alleged use of forced labour by the Burmese military prior to the construction of an oil pipeline. The company challenged the claims in court. The parties ultimately reached an out of court settlement.
Receiving funds which may have been associated with criminal activities exposes companies and individuals to legal risks. Holding, managing or hiding such funds, including funneling suspicious funds into legitimate financial channels, may result in prosecution and lawsuits.
In 2005, an American bank pled guilty in a US court and paid a $16 million fine to clear up criminal charges laid in relation to suspicious transactions involving the assets of Chilean dictator Augusto Pinochet.
Any significant off-the-book financial transactions may create legal liabilities under laws against corruption or bribery. Charges may be brought outside the country where the transaction takes place. Even where corruption is a common occurrence, a liability risk remains.
In 2003, an American company executive was charged in the US for allegedly arranging for $78 million in kickbacks to Kazakh officials in order to obtain oil and gas contracts in Kazakhstan. The accused is challenging the charges and the case is pending.
The use of disproportionate force by government or private security forces acting on behalf of a company can create liabilities for the company itself. These liabilities may rise even where the actions of the security forces (e.g. killing, beating, abduction, rape) were neither ordered nor intended by the company. Legal risks may be greater where security forces have a history of abusive conduct.
A US oil company operating in Nigeria was sued in a US court after government soldiers engaged to provide security to the company allegedly shot demonstrators at an off-shore oil platform they had occupied and allegedly destroyed two villages following protests. The company challenged the claims and was acquitted by a jury.
A company may be held liable for buying, selling or transporting products, commodities or assets originating from or going to a country, group or individual under international sanctions. The most common embargo is on arms, but increasingly sanctions are imposed on specific commodities, such as diamonds, timber, and on financial assets.
A court in the Netherlands temporarily imprisoned a Dutch businessman for alleged violations of UN sanctions against Liberia by arranging for arms imports. The conviction was overturned on appeal but the high court has ordered the appeal to be heard again.
Businesses may face liabilities if they provide weapons or dual-use equipment to governments or armed groups who use those products to commit atrocities. This may be the case even where import and export regulations are fully respected.
A court in the Netherlands imprisoned a Dutch businessman for providing chemical components which the Iraqi military used against Kurdish civilians in 1988. The accused challenged the allegations. On appeal, the court confirmed the conviction, increasing the sentence to 17 years.
Company facilities and equipment used in the commission of international crimes can create liability for the company, even if it did not authorise or intend such use of those assets.
Indonesian villagers sued an American oil company in a US court, claiming they were tortured by Indonesian armed forces protecting the oil company’s facilities, and that come of the abuses took place on the company’s facilities. The company has challenged the claims. The case is pending.
Providing financial resources to those who commit international crimes may result in liability, if those resources substantially contribute to those crimes being committed. The risk of liability increases if the company persists in doing business with the violators, particularly once the violations are common knowledge.
A German businessmen who made contributions to the SS during World War II was convicted after the war of being an accessory to a criminal organisation. An indictment by an international tribunal is still pending against a Rwandan businessman connected to the Interahamwe during the 1994 genocide. In 2007, a US company pled guilty under US anti-terrorism laws for making a payment to a Colombian militia known to be a violent paramilitary organisation.
"A company risks enabling mass atrocities when it
provides resources, goods, services, or other forms
of practical support that help sustain crimes against
humanity or genocide." Human Rights First has released advice to companies on the risks of contributing to the world's worst crimes.
A plane sits on the tarmac in Bangkok waiting to take alleged arms dealer Victor Bout to the US. But Bout is at the centre of a Russia-U.S. tug of war being played out in a Thai court. Al Jazeera English reports:
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See also a BBC report "From Our Own Correspondent".
As US Judge has ruled that a lawsuit filed by a group of former Iraqi detainees against US military contractors can proceed to the discovery stage. The lawsuit was filed in the US under the Alien Tort statute and alleges that L-3 Services, Inc. violated US and international law by directing and participating in abuses at Abu Ghraib and other Iraqi prisons.
"Global Witness has applied to the UK High Court for a judicial review of the Government's failure to investigate a number of British companies and individuals known to have been trading in minerals sourced from war-torn eastern Congo. Extensive evidence from Global Witness, the UN Group of Experts and others, shows that British companies have supported armed groups by purchasing minerals from areas under their control in the DRC. Despite this, the UK government has never put any of them forward for sanctions."
A new U.S. law requires publicly traded companies to disclose to the SEC whether their products contain gold, tin, tungsten or tantalum from Congo or adjacent countries. If so, they have to describe what measures they are taking to trace the minerals' origin. The State and Treasury departments are examining the possibility of future sanctions against U.S. companies that use "conflict minerals."
A Swedish prosecutor has opened a preliminary investigation into claims that Lundin Oil was involved in war crimes in Sudan. The news comes in the wake of a report by a group of aid agencies alleging "possible complicity" on the part of a consortium of oil companies in connection with the commission of war crimes and crimes against humanity.
A report out this week from Fafo, Amnesty International, and the Norwegian Peacebuilding Centre identifies obstacles to judicial remedies for business involvement in human rights abuses and sets out a series of reforms. The report argues governments need to take urgent action.
A court in India has convicted Union Carbide's Indian subsidiary and seven of its employees with "death by negligence" in connection with the 1984 leak of toxic gas that killed an estimated 15,000 people in the world's worst industrial disaster. The ruling will be appealed and is being criticized by community activists who claim it is too little too late.
The ECCHR has filed a complaint with German prosecutors against two executives of the engineering company Lahmeyer International in connection with its role in the Merowe dam project in Northern Sudan. The project is estimated to have displaced 4,700 people.
The Dutch Supreme Court has ruled that appeals judges erred when they threw out the case against the former head of the Oriental Timber Company, Guus van Kouwenhoven. The Supreme Court ruled that the appeals court should have allowed the prosecution's request to hear the evidence of two new witnesses in the case which involves arms deals in connection with Charles Taylor's regime in Liberia.
