Several points should be clarified with regard to the principle of active personality:
- the meaning of nationality and how it is acquired;
- extending the principle of active personality to residents;
- double criminality; and
- requirements that the suspect be present on the territory of the forum court.
When applied to corporations, these issues are particularly complex.
The meaning of nationality and how it is acquired
The use of “nationality” as a connecting factor may be problematic in corporate criminal liability cases because the nationality of legal persons is conferred differently than that of individuals.
The concept of nationality in relation to companies does not have the legislative basis in national laws which exists in the case of individuals, and is thus much more open to a pragmatic assessment on the basis of the extent of a company’s attachment to a state”. 1
Determining a company’s nationality involves identifying the “legal State from which the company receives its legal personhood and under the influence of which it is organised and operates.” 2 According to the International Court of Justice ruling of 5 February 1970 in Barcelona Traction, Light and Power Company, “international law is based, but only to a limited extent, on an analogy with the rules governing the nationality of individuals. The traditional rule attributes the right of diplomatic protection of a corporate entity to the State under the laws of which it is incorporated and in whose territory it has its registered office.” 3 In reality, public international law appears to have expressed no preference for any criteria at all. As in adopting rules governing the nationality of individuals, it is up to each State to decide under what conditions a company with its “nationality” must respect the rules that apply to all its nationals, regardless of where they work. 4
Under the general rules of private international law, corporations hold the nationality of either the place of registration or the State in which they are headquartered. There are a variety of opinions on the deciding factor. The control test, which is based on the nationality of the majority shareholders or on the nationality of the persons who actually run the company, could also be used to establish the company’s nationality. 5 The same goes for the place of the company’s core activity. 6
The application of the nationality criteria, even when clearly established by law, can be controversial. 7
Belgium has changed its approach from the doctrine of the real seat to the doctrine of the statutory seat. With this new theory, Belgium joins various countries that have already been applying this doctrine, such as the UK, the Netherlands, Switzerland or the United States. The new Belgian Code on Companies and Association offers the possibility to opt for the application of this Code by electing an address in Belgium as the company’s headquarter. 8 This modification was justified to make Belgium more attractive as a country of establishment and a gateway to the European market.
French law argues that a corporation with its actual headquarters in France is French, even if it is controlled by foreigners. 9 However, when there is a dissociation between the statutory seat and the real seat, third-parties are given the choice of applying one or the other. 10
Because the rules governing the nationality of companies vary widely from country to country, applying the principle of active personality to corporations could create numerous conflicts of jurisdiction. 11 Several States have also extended the principle of active personality to persons who acquire nationality after the Commission of an offence. In 1990, the Council of Europe responded by stating that “when establishing jurisdiction over legal persons on the basis of the principle of active personality, the legislature should clearly identify the standards by which it considers those persons to be its citizens”. 12 The Council added that in the absence of such clarifications, “for the sake of predictability, the location of a legal person’s headquarters appears to be the only acceptable criterion.” 13
Extending the principle of active personality to residents
The current trend is to extend active personality jurisdiction beyond the question of nationality to links resulting from the suspect’s habitual residence or principal residence in the State attempting to exercise extraterritorial jurisdiction. 14
The Scandinavian countries generally apply the active personality residence principle.
The Swiss Criminal Code allows the residence principle to be applied in certain cases where the extradition of the perpetrator is not justified. 15
The United Kingdom and Belgium apply the residence principle to alleged perpetrators provided they are suspected of violating international humanitarian law. 16
Finally, in a genocide case, the German Federal Supreme Court held that German courts have jurisdiction when the defendant has lived in Germany for several months, has established a base in Germany for his or her activities and has been arrested in Germany. 17
This extension is logical when the State where the crime was committed experiences difficulty in obtaining extradition.
Identifying the primary residence of a multinational: Total in Burma
In a 5 May 2004 decision in the “Total in Burma” case, the Belgian Court of Cassation ruled that “Total, the multinational, may not, as is argued, be deemed to have “its primary residence in Belgium due to the incorporation of its co-ordination centre in Brussels,” when it is established pursuant to Royal Decree No. 187 of 30 December 1982, that the co-ordination centre is registered as a limited liability company under Belgian law and that it carries its own legal personhood and therefore cannot be regarded as the head office or place of business of the separate company TotalFinaElf.” 18 The court added that, under Articles 24 and 62bis of the Belgian Code of Criminal Procedure, it is the location of the headquarters or place of business which determines the rules of jurisdiction and admissibility for prosecuting crimes and misdemeanours committed outside of Belgium. The court ruled that the conditions required to implement the principle of active personality, as enumerated in the Belgian law of 5 August 2003 relating to serious violations of international humanitarian law, had not been met and thus that Total SA’s headquarters was not in Belgium, but in France.
The work done in preparation of the law of 5 August 2003 offers no clarity on the scope of a legal person’s primary residence, and by analogy, to a multinational group. Although it is difficult to draw parallels with companies, the guidelines put forth to determine the primary residence of individuals are “fact-based”. 19
Because the notion of “principal residence” is a factual concept, the plaintiffs used actual evidence to argue that Total Group’s principal residence was that of its co-ordination centre in Brussels. By virtue of their name, co-ordination centres co-ordinate and serve as a hub for the administrative and financial activities of multinationals. In terms of finance, Total Group’s co-ordination centre in Brussels houses the group’s centralised payments operations, banking administration, cash management operations and finance and investment operations for the group’s companies. Focusing on the group’s centralised co-ordination centre rather than the headquarters of several individual companies which make up the group and were involved in the alleged infractions provided the plaintiffs with what they held to be a unifying, legitimate and pertinent connecting factor. While debatable, the Court of Cassation’s ruling stemmed from its confirmation that under no circumstances may a multinational group be targeted as a whole. Moreover, although both the parent company of Total Group and its subsidiary in Burma were specifically mentioned in the complaint, the parent company’s residence could not be established in Belgium because, although it was the headquarters of the group, the Belgian company was a legally separate company.
With regard to the legal certainty of the legal persons involved, it would be more appropriate to employ the concept of domicile, rather than that of nationality, as an alternative connecting factor, as defined in Article 60 of EC Regulation No 44/2001 of 22 December 2000 on jurisdiction, recognition and enforcement of judgments in civil and commercial matters. Domicile is defined as the place of a legal person’s registered office, headquarters or principal place of business (see Section II-Part I).
Once again, the scope of these terms is not entirely clear and it appears that they partially overlap. It is unclear how they differ and whether they are a preferable approach to that of the “actual headquarters” criteria which some States use to determine the nationality of legal persons. The various approaches employed in different EU Member States complicate legal proceedings and serve to maintain jurisdictional conflicts.
In general, prosecutions for offences committed abroad are subject to the principle of double criminality, in application of the “legality of crimes and punishments” rule (a fundamental principle under which a court cannot sentence a person if the offence is not proscribed by law). The concept of double criminality requires to verify “whether the event which the proceedings examine is punishable both under the law of the State where the offence was committed and under the law of the State in which jurisdiction is seized. 20
In criminal proceedings against companies, the question remains whether double criminality concerns only the illegality of the crime abroad (double criminality in abstracto) or the ability to hold a particular suspect liable as well (double criminality in concreto 21 ). Some argue in favour of the second alternative in which corporations cannot be held liable abroad and that only individuals may be prosecuted for violations. 22 The difficulty for victims, again, lies in the fact that not all countries have agreed to hold legal persons criminally liable, and that among those countries that do, some hold corporate criminal prosecutions to be the exception, rather than the rule.
When the offence is particularly serious, some Member States do not condition the use of active personality on the existence of double criminality.
This is the case in France when a French national is the primary perpetrator of a crime in a third country. However, for misdemeanors, the French Criminal Code requires the condition of the double criminality. 23
Belgium also grants active personality jurisdiction in its courts, without requiring double criminality, in cases of serious violations of international humanitarian law. Because these offences are constitutive of jus cogens, it is often believed that their prohibition applies by necessity to all persons – both natural and legal – regardless of the inclusion of specific offences under various national criminal laws. 24
Greece and Portugal also do not require double criminality when the territory on which the offence was committed lacks a “State organisation” or the “power of law enforcement”.
Complaint in France against the leaders of Total for kidnapping crimes committed by a subsidiary in Burma
For a time, US, French and Belgian courts simultaneously investigated human rights violations linked to the Yadana pipeline in Burma operated by joint venture partners Unocal (US), Total (France), MOGE (Burma) and PTT (Thailand). Total, which originally faced civil proceedings in California alongside Unocal, 25 benefitted from a 1997 amicus curiae brief filed on behalf of France in Los Angeles federal court. The brief argued that “France respectfully objects to the exercise of personal jurisdiction by this court over Total, a corporate citizen of France, on the ground that it would conflict with the sovereignty and laws of France” and therefore the “maintenance of this action against Total in the United States courts will conflict with France’s foreign policy interests.” 26 On 26 August 2002, two Burmese refugees filed a complaint in Paris under the principle of active personality against two leaders of Total, for kidnapping crimes.
The factual and legal basis of the complaint 27
From its inception in 1992, the pipeline project has been strongly criticised by several human rights organisations 28 who argued that at every stage of its work, Total SA (like Unocal) would have to maintain a close partnership with the dictatorial regime of Myanmar. The militarisation of an area 63km long (starting in 1995) for the purpose of “securing” the pipeline required population displacement, forced labour to construct Burmese Army infrastructure (camps, roads, airstrips) and the requisition of civilians to clear the way for future roads and to demine certain zones by stepping on explosive devices. Testimonies from Burmese civilians and military personnel who fled the country tend to show that Total had precise knowledge of these killings and that the company oversaw some of the work for which soldiers were paid through the Burmese company MOGE.
It was in this context that the two plaintiffs, refugees in Thailand, say the Burmese army forced them to leave their villages in late 1995 to work on the construction of the Yadana pipeline. They were forced to “work under the constant threat of violence from the battalions that trained them if they did not perform the tasks assigned to them, and claim to have witnessed abuse and violence committed by these battalions against other workers on the same site.” 29 One witness claims to have seen about 300 workers build a heliport for Total’s dedicated use. 30 Citing in particular the testimony of deserted soldiers and Unocal executives, the plaintiffs reproached Total for having recruited and paid the junta’s battalions (workers nicknamed them “Total battalions”), monitoring facilities 31 and having knowingly benefitted from forced labour on the worksite despite repeated protests from the International Labour Organisation and the United Nations Commission on Human Rights that the crime of forced labour in Burma was systemic and occurring on a massive scale.
In the absence of a specific offence under French law, the plaintiffs argued that the forced labour they had suffered for the benefit of Total was tantamount to the crime of kidnapping as defined by the French Penal Code: Forced requisition by the military to perform unpaid work between 1995 and 1998, with the requirement to work and reside on the project site without food or health care (which is an aggravating circumstance under the crime of kidnapping), for a given time and without any possibility of escape (threats of abuse). 32
The principle of “the exception” which governed corporate criminal liability in France at the time the complaint was filed, however, precluded Total from being prosecuted. The law did not provide that corporations be held liable for kidnapping. Without excluding the individual liability that resulted from the court’s investigation, including that of multiple operational leaders and private contractors employed locally by the company, the plaintiffs identified several individuals as being responsible for the violations. These individuals included Thierry Desmarest, Chairman and CEO of Total SA and the person primarily responsible for the Yadana project as director of the Exploration and Production division from July 1989 to 1995. The plaintiffs also identified Herve Madéo, director of Total’s subsidiary, Myanmar Exploration and Production (METR) from 1992 to 1999, as being responsible.
The investigation began in October 2002 and in October 2003 the examining court heard Madéo as an “assisted witness” (an intermediate between that of a mere witness and an indicted person). On 11 January 2005, the Examining Chamber of the Versailles Court of Appeals 33 rejected a motion for dismissal by the Nanterre prosecutor. 34 During oral argument, the French lawyers of the two Burmese plaintiffs referred to the US proceedings, noting that “Unocal, which is less engaged in this project than Total, chose to settle rather than risk a trial. This means that the evidence brought forth by the plaintiffs created a fear of conviction.” 35
The court, however, dismissed the case on 10 March 2006, citing a lack of adequate criminality. The ruling states that “the elements which constitute the crime of kidnapping were not present in this case.” Under French law, forced labour, when successfully proven, could only be a “factual element likely to corroborate the crime of kidnapping […], and not the crime itself”. In fact, “despite France’s international commitments, forced labour does not constitute any criminal offence under domestic law.” Furthermore, “because criminal law requires a narrow reading, a line of reasoning which assimilates forced labour into the crime of kidnapping is impossible in the absence of express statutory provisions.” The court added that “despite reports from international organisations, human rights organisations, and the parliamentary committee on oil companies, the legislature clearly did not intend to legislate on this issue.” The court stressed however that “the allegations of the eight plaintiffs who said they were victims of forced labour […] are consistent with each other and were confirmed by several witnesses,” concluding that “the facts reported cannot be doubted.” 36
The transactional process
Before the case was stayed by the Court and as part of an agreement made public on 29 November 2005, Total, like Unocal, agreed to establish a solidarity fund of 5.2 million Euros to be used largely for local humanitarian efforts in Burma, namely housing, health and education. 37 Although the Group reiterated a categorical denial of the forced labour allegations, the fund provides up to 10,000 Euros 38 in compensation to each plaintiff and all other persons who can justify having been in a similar situation in the area near the construction site of the Yadana pipeline. All efforts to move funds were to be carried out under the supervision of international humanitarian organisations unanimously selected by the parties.
Although the agreement implicitly sought to have the charges dropped, the court was in no way bound by the transactional process. The withdrawal of the complaint following the agreement, however, may have compromised its future. On 10 March 2006, the court said in its dismissal, “due to this withdrawal, hearing the plaintiffs, even as witnesses like other people named in the complaint, […] will be impossible,” because they are still “in hiding on Thai soil” where they are refugees. Such hearings would have been essential to “corroborate the crime,” given that the eight Burmese plaintiffs are the only ones able to provide “factual elements establishing the kidnapping”. 39