Susan is preparing for trial next week, so she hasn’t been able to post as much on the Second Circuit’s recent decision in Kiobel v. Royal Dutch Petroleum. I recently had a chance to get her thoughts on the decision and thought I’d share some of that discussion. (My questions are in bold.)
What would you say to those that agree with Kiobel – to those that say there should not be any corporate liability under international law?
None? Ever? What if a corporation takes over a state, de facto, although none of their people are nominally holding the major government positions? What if Nauru still had phosphate and essentially sold all major state operations off to a mining company?
An interesting question.
I just don’t see the whole bright line supposedly created by being a “corporation.” If individuals can integrate with a state and violate international law, or if instrumentalities of states or international organizations can violate international law, why the hell can’t a corporation? I mean, branches of states have been held to violate international law, but responsibility always cuts back to the sovereign. My only point is the idea that a non-individual can be in violation of international law is not as far out crazy as it’s being made out to be. Heck, even the East India Company had to abide by international law. Well. Not that it did.
Really? Was the corporate entity ever held responsible, or just the people running it?
Well, the problem with the early corporate cases is that it’s all sorta piratey stuff…. which is always kinda its own brand of international law. But come on, corporations basically invented law of the sea. Why do you think Grotius wrote his treatise on the law of capture? ‘Cause a corporation paid him to. Seriously. He wrote Mare Liberum as an advocacy piece for the Dutch East India Co.
So . . . why isn’t it enough to impose individual liability given that corporations are legal fictions anyway?
Well, that’s kinda the point. Corporations are made up doohickeys, they don’t actually exist. But the law of nations, old school international law, basically understood them to be domestic constructs, and they sure as hell didn’t let states or entities weasel out of violations of international law because some state told them “oh hey you’re incorporated.” (1) Because enterprise liability is a recognized concept under international law, (2) those individuals are liable themselves but they are merely agents of a legal construct, (3) and corporations are created to funnel their profits to a diversified source. So [under the opposing view], a state entity can create a complicated legal structure that allows people to invest and profit in violations of international law, and they can recover their investment because they were deliberately and carefully shielded from actual knowledge.
Can’t you create some type of willful blindness liability? That an individual who invests in a corporate structure with full knowledge that it is intended to shield the individual from knowledge of violations of international law has a sufficiently culpable state of mind to impose individual liability?
But see, international law has never ever gone there before. Willful blindness liability is a totally new concept. Why not just use corporations? Corporations have never been given unique immunity status under international law until recent times. Also come on. Most stocks are owned by other corporations. And also states will NEVER allow their citizens to be found guilty of genocide because they happened to have the wrong stock picked out by their adviser for their 401K.
But you’re taking money from stockholders because the corporate entity committed an independent act.
So what? They invested their money in something that broke the law. This is not an uncommon occurrence. Companies are fined for breaking the law allllll the time. Including international law, albeit not customary international law. Plus: ATS cases can be brought under treaties. Some treaties do regulate corporate behavior. The 2nd Circuit opinion would, unintentionally I think, ’cause problems there too.
I guess my ultimate point is, a unilateral domestic act — the creation of corporations — cannot create a blanket financial immunity for its citizens/self for violations of international law. If corporations didn’t exist — say, Shell was just a business, all in one dude’s name — all that money would be recoverable. So why can England/Holland immunize that money by taking a slip of paper and writing “Articles of Incorporation” on it?
*I also noted an issue that has since been raised by Kevin Jon Heller over at Opinio Juris: it seems like corporate acts can still violate international law, it’s just that there is no jurisdiction to impose liability for those violations. Susan doesn’t think that distinction has any relevance, but I think it remains to be seen whether that is an important distinction.