Traditionally, companies cannot be prosecuted for human rights violations under international criminal law: individuals, not legal entities, are its subject. It is generally accepted that corporate officials could face trial for criminal activity committed abroad. But does this imply that corporations cannot be held accountable for human rights abuses committed outside their home country? No international criminal tribunal yet has jurisdiction to prosecute a company as a legal entity. However, national legal systems often include legal entities, including companies, in the list of potential criminal perpetrators. As various countries take steps to incorporate international criminal law into their national legal systems, business entities could increasingly face the risk of prosecutions for such crimes in national courts. National legislation that holds corporations liable for human rights violations committed outside its national jurisdiction is unusual. The only exception internationally, is the Alien Tort Claims Act of 1789 (ATCA), which grants jurisdiction to US Federal Courts over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” This statute is notable for allowing US courts to hear human rights cases brought by foreign citizens for conduct committed outside the US. This is a unique instrument in international law and in the world, since it gives the US jurisdiction over civil actions against foreigners for violations of “the law of nations” anywhere in the world.In the Kiobel v. Royal Dutch Petroleum Co. case , various US courts ruled that corporate liability is possible under the Alien Tort Statute. In Sosa v. Alvarez-Machain the U.S. Supreme Court held that the ATCA provides a cause of action for violations of international norms that are as “specific, universal, and obligatory”. Courts have found torture, cruel, inhuman, or degrading treatment, genocide, war crimes, crimes against humanity, summary execution, prolonged arbitrary detention, and forced disappearance to be actionable under the ATCA. To consider whether corporations can be held accountable for human rights abuses committed abroad, let us take a closer look at the recent case of Sarei v. Rio Tinto. The mining company headquartered in London and Melbourne, faces charges of alleged human rights violations in the Panguna mine in Papua New Guinea (PNG). This mine is operated by Bougainville Copper Ltd, with Rio Tinto holding a 54 percent stake. Bougainville Copper Ltd ceased its activities at the mine in 1989 due to violent conflicts with local communities. Bougainville residents revolted against Rio Tinto in 1988 amid human rights and environmental complaints. It is claimed that at Rio Tinto’s request, the PNG military put down the revolt, and soon thereafter, imposed a military blockade on Bougainville to secure the mine. Shortly after this incident, a decade-long civil war erupted. A group of islanders has been suing the company since 2000. Based on alleged gross human rights violations related to the
mine’s activities, the group is trying to organize a class action lawsuit on behalf of 10,000 people. The complaint states that Rio Tinto supported and encouraged PNG’s blockade that “prevented medicine, clothing and other essential items from reaching the people of Bougainville.” The plaintiffs allege that the PNG government, using Rio Tinto helicopters and vehicles, killed about 15,000 people in an effort to put down the revolt. They claim that the blockade caused the death of more than 10,000 Bougainvilleans, including more than 2,000 children in the first two years of the ten-year siege. The allegations in the case Sarei v. Rio Tinto include :
complicity in war crimes and genocide committed by the PNG army; violation of international law by environmental impacts that harmed the health of the people of Bougainville; engagement in racial discrimination against black workers. The lawsuit has been ongoing for eleven years, and has been heard twice before the US Ninth Circuit Court of Appeals. On October 25, 2011 the Court of Appeals reversed the lower court’s dismissal of the case. The court upheld the dismissal of the claims regarding racial discrimination and crimes against humanity, but it reversed on the plaintiffs’ claims regarding genocide and war crimes. The case will return to the district court for further proceedings.
SNS Asset Management officially excluded Rio Tinto from investments in 2008, for what we considered to be fierce and structural violations of environmental standards and human rights. As a responsible investor, we hold the view that corporations should comply with international law and globally accepted norms and values, and that they should be held accountable for theiractions, be it at home or abroad. If it is established that a company is responsible for (being an accomplice of) serious and structural breaches of fundamental human rights norms, among which genocide, war crimes and crimes against humanity, SNS Asset Management chooses to exclude that company from investment. Since SNS Asset Management considers exclusion of investment as the ultimate remedy and a serious sanction, it is important to base this decision on established facts, not on allegations, and apply the principle of audi alteram partem (hear the other side).
The outcome of the Sarei v. Rio Tinto case, highly interesting from the international legal perspective, could further inform SNS Asset Management’s divestment decision. At the same time, the Kiobel v. Royal Dutch Petroleum Co case, could be decisive for future investment decisions regarding Shell. In this case, twelve Nigerian nationals are sueing Royal Dutch Petroleum and two other oil companies alleging that they aided and abetted human rights abuses committed in the Ogoni Region of Nigeria in the early 1990s. The defendants have long been involved in oil exploration and production activities in the Ogoni region. To protest the environmental degradation caused by those activities, Nigerian residents organized the “Movement for Survival of Ogoni People.” The plaintiffs allege that the defendants responded by enlisting the Nigerian government to suppress the Ogoni activists. In 1993 and 1994, the Nigerian military was involved in a variety of human rights abuses – shooting, killing, beating, raping, and arresting residents, as well as destroying and looting property – allegedly with the
assistance of the defendants. Should involvement in gross human right violations be established in this case, we will look at the remedial measures, and the actions, policies and management systems Shell has implemented. Only when it is assured that systems are in place to minimize the likelihood of future human rights violations, will investment in Shell be allowed. As long as SNS Asset Management is of the opinion that social and environmental business practices leave room for improvement, then we strive to engage the company in a process of constructive dialogue geared toward clear, short, medium and long-term objectives.The application and precise scope Alien Tort Claims Act are still being determined by case law. From a legal perspective, this development is of eminent importance, as the Rio Tinto and Shell cases illustrate. Should these companies be held accountable for their actions abroad, this would set precedents against which the corporate behaviour of other corporations would be measured and sanctioned in the future. This could be the dawn of an era of increased corporate responsibility to respect, protect and fulfil human rights in international business operations.
Yvonne Janssen is Account manager ESG research and Manuel Adamini is Head of ESG-research at SNS Asset Management