Corporate criminal liability: article 10 of the convention against transnational organized crime.

AuthorMattar, Mohamed

The UN Convention against Transnational Organized Crime (UNCTOC) establishes criminal liability of the corporation as a legal entity in addition to the individual liability of persons who may be acting on behalf of the corporation. The purpose of this article is to address corporate criminal liability for illicit business practices that may be committed by a corporation in violation of international human rights law. This article will discuss corporate criminal liability under international conventional law and will discuss the extent to which U.S. domestic laws recognize corporate criminal liability. The article will highlight new trends in international law related to corporate liability, as well as instances where the legitimacy of corporate liability has been legally denied. Using Article 10 and domestic precedent, this article will argue that the role corporations play in international trade and development warrants their accountability and responsibility once they are involved in illicit business practices.



According to Article 10 of the UNCTOC a corporation may be held liable for n organized crime including participation in an organized criminal group, laundering of proceeds of crime, corruption, and obstruction of justice. (1) Corporate liability may be civil, criminal, or administrative provided that the sanctions are effective, proportionate, dissuasive, and it may be established without prejudice the criminal liability of a natural person. The sanctions may include a fine, forfeiture, confiscation, restitution, or closure of the legal entity. (2) Other sanctions that are designed to influence corporate behavior are disincentives such as suspension of a right or prohibition of a certain activity. (3) However, liability of a corporation is subject to the legal principles that apply to a legal person in a particular national system.

The Legislative Guide for the Implementation of the UNCTOC provides the justification for establishing liability of legal persons by stating that:

Serious and sophisticated crime is frequently committed through or under the cover of legal entities, such as companies or charitable organizations. Complex corporate structures can effectively hide the true ownership, clients or particular transactions related to crimes ranging from smuggling to money-laundering and corrupt practices. Individual executives may reside outside the country where the offence was committed and responsibility for specific individuals may be difficult to prove. Thus, the view has been gaining ground that the only way to remove this instrument and shield of transnational organized crime is to introduce liability for legal entities. (4) LIABILITY OF CORPORATIONS IN ACCORDANCE WITH INTERNATIONAL CONVENTIONAL LAW

There are several international and regional conventions that call for the liability of corporations that commit criminal offenses. For instance, the Council of Europe Convention on Action against Trafficking in Human Beings states that legal persons are liable for committing offenses such as recruiting, transporting, transferring, harboring, or obtaining a person through illegal means for the purpose of exploitation, forms of sexual exploitation, forced labor, slavery or practices similar to slavery, servitude, or the removal of organs. (5) The Convention establishes this liability when a natural person is acting on behalf of the legal person or when the legal person does not exercise the necessary steps of supervision or control. Such liability is to be imposed in addition to the liability of the natural person who committed the offense. (6) The Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions provides for the liability of legal persons for bribery of foreign public officials as long as such liability is recognized within the legal principles of domestic laws. (7) The Criminal Law Convention on Corruption provides for the liability of persons with a leading position within the corporation to include persons with the power of representation, decision-making authority, authority to exercise control, or any person who instigates acts in accordance with the Convention. (8)

The Convention on the Protection of the Environment through Criminal Law calls for each state to enact the necessary measures to ensure corporate liability. (9) The UN International Convention for the Suppression of the Financing of Terrorism states that "each State Party, in accordance with its domestic legal principles, shall take the necessary measures to enable a legal entity located in its territory or organized under its laws to be held liable when a person responsible for the management or control of that legal entity has, in that capacity, committed an offence." (10) The UN Convention on the Law of the Sea states that it applies to "natural or juridical persons" i.e., corperations. (11) Finally, the Convention on Civil Liability for Oil Pollution Damage defines a person as "any individual or partnership or any public or private body, whether corporate or not, including a State or any of its constituent subdivisions." (12)

However, the Statute of the International Criminal Court (ICC) does not provide for the liability of legal persons, reflecting a dispute among legal systems as to whether such liability should be established, since some domestic laws do not allow for corporate criminal liability. Under Article 17 of the Statue, the ICC defers to the national system "unless the State is unwilling or unable genuinely to carry out the investigation or prosecution." (13) Article 25 states that "the Court shall have jurisdiction over natural persons pursuant to this Statute." (14) It has been argued that under the complementarity principle of the ICC, coupled with the fact that not every legal system recognizes corporate criminal liability, the ICC should be limited to the liability of the natural person. (15)

Nonetheless, corporations may be indirectly addressed by an international convention. For instance, the UN Convention against Corruption calls upon states to take the necessary measures to "prevent corruption and ... enhance accounting" within the private sector and to ensure that corporations adhere to "codes of conduct for the correct, honourable and proper performance of the activities of business and all relevant professions and the prevention of conflicts of interest, and for the promotion of the use of good commercial practices among businesses and in the contractual relations of businesses with the State." (16) International Labour Organization (ILO) Convention 181 on Private Employment Agencies calls upon states to "determine and allocate, in accordance with national law and practice, the respective responsibilities of private employment agencies." (17)


In Magnifico v. Villaneuva, a case decided in 2011, eighteen plaintiffs from the Philippines were allegedly recruited by Star One Staffing Inc., a corporation based in Miami, Florida, through illegal measures including forged visa applications, false claims, and misrepresentation of the employment contract. (18) The plaintiffs claimed they were subject to conditions of forced labor and human trafficking, including long work hours in hotels and country clubs in New York and Florida, over-crowded housing, threats of imprisonment, cancellation of visas, and deportation. Additionally, the plaintiffs asserted that large fees for food, housing, transportation, and services that were promised free of charge were deducted from their monthly paychecks. The court denied the defendant's request for dismissal concluding that the passage of the U.S. Trafficking Victims Protection Act (TVPA) did not preclude the application of the Alien Tort Statute (ATS), stating that "absent any evidence that Congress intended to prevent litigants from being able to bring claims for human trafficking and forced labor under both statutes, this court declines to amend the Alien Tort Statute by implication" and held that by passing the TVPA, Congress implicitly supplanted claims for human trafficking and forced labor under the ATS (19) The court also highlighted the differences between the two statutes. While the Trafficking Victims Protection Reauthorization Act (TVPRA), a reauthorization of the TVPA, applies to U.S. citizens plaintiffs, the ATS may be asserted by an alien. In addition, the TVPRA is subject to the statute of limitations, while the ATS is not. (20) The court also noted that the TVPA defines trafficking in persons and forced labor, unlike the ATS, which refers to the law of nations in its definitions. (21)

Other statutes have been used to establish liability. In the case of Doe v. Reddy, the plaintiffs, young Indian women, accused Reddy, a landlord and restaurateur in California, of smuggling Indian girls into the United States for use as cheap labor and sex slaves. (22) The plaintiffs filed suit against Reddy under the Alien Tort Statute for the use of forced labor. Reddy was sentenced to eight years in prison and ordered to pay $2 million in restitution. In the case of Chellen v. John Pickle Co., the plaintiffs, Indian nationals, claimed they were brought to the United States and forced to live in slave-like conditions at the John Pickle manufacturing plant in Oklahoma. (23) They accused the defendant of confiscating their immigration documents, restricting their movement, and paying them only $3.20 an hour. The plaintiffs sued using the Fair Labor Standards Act, citing racial discrimination, false imprisonment, deceit, and intentional infliction of emotional distress. The court ruled in favor of the plaintiffs.

Similarly, in Adhikari v. Daoud & Partners, the defendant, a contractor of the U.S. government, recruited Nepalese...

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