The Asser Institute today is hosting the event Towards Criminal Liability of Corporations for Human Rights Violations: The Lundin Case in Sweden. Below is some relevant background to the case.

The Case:

Following its initiation in June 2010, the Swedish Prosecution Authority (SPA) recently concluded its investigation into the Swedish oil company Lundin Petroleum SA for aiding and abetting war crimes and crimes against humanity. 

Alex Schneiter (Lundin’s current CEO and head of exploration at the time of the harms) and Ian Lundin (Chairman and son of its founder) have received the final notice of the case from the SPA. The Swedish government approved the request to indict by prosecutors (as is necessary under Swedish law when investigating extraterritorial offences). The trial is projected to start in the summer of 2019, and the two men face life sentences if convicted.

While the two businessmen face personal charges, the company itself, Lundin Petroleum, also received a notification from the Swedish Prosecution Authority on 1 November 2018 that the company may be liable to a corporate fine and forfeiture of economic benefits. According to Miriam Ingeson and Alexandra Lily Kather, in the Swedish context “a corporate fine is not considered a penalty for a crime but is an extraordinary legal remedy serving as a repressive sanction supplanting corporate criminal liability.”^[1]

In 2019, the Supreme Administrative Court denied Lundin’s appeal to override the Swedish Government’s decision to allow the prosecution, and Swedish police have opened a criminal investigation into harassment of witnesses in the case.

The 'Unpaid Debt' Report:

The case arose from a report by European Coalition on Oil in Sudan (ECOS) entitled Unpaid Debt. According to the Unpaid Debt report, a group of Sudanese civil society organisations called upon European Coalition on Oil in Sudan to assist with their pursuit of compensation and reparation for the harms perpetrated during Sudan’s oil wars.

The Accusations:

The Unpaid Debt report links Lundin Consortium’s commencement of oil exploitation with sparking war in Block 5A, and the company's construction of infrastructure with aiding in crimes against local communities and their consequent displacement. 

In February 1997, the Lundin Group signed an agreement for exploration and production rights in Block 5A in Southern Sudan. This oil concession area was located south of Bentiu on the West Bank of the White Nile in Western Upper Nile/Unity State. A Lundin subsidiary, IPC, was head of the consortium set up to explore the 5A oil field (40.4% stake). Malaysia’s Petronas Carigali Overseas (26.1%), Austria’s OMV (Sudan) Exploration (26.1%) and Sudan’s Sudapet (5%) composed up the remainder of the consortium.^[2] 

“They signed a contract with the Government for the exploitation of oil in the concession area called Block 5A that was not at that time under full Government control. The start of oil exploitation set off a vicious war in the area. Between 1997 and 2003, international crimes were committed on a large scale in what was essentially a military campaign by the Government of Sudan to secure and take control of the oil fields in Block 5A.” [p 5 Unpaid Debt]

The Consortium worked on a road and an airstrip in collaboration with the Sudanese military, which allowed “systematic attacks” on villages that have been described as “an orgy of raiding and looting”.^[3] The damages listed include forced displacement (changes in farming activity 1994-2003 evidence displacement from Block 5A); deaths; destruction of dwellings; destruction of livelihood; and looting and destruction of cattle. Lundin sold out of the area in question (what was then Sudan) in 2003.

PAX has stated:

“The crimes alleged in the Lundin case include the intentional targeting of civilians, violent displacement, deliberate destruction of livelihoods, rape, torture, arson, pillage, and the use of child soldiers. An estimated 12,000 people died and 160,000 were displaced in the area were the Lundin Consortium, which included Petronas from Malaysia and OMV from Austria, was active between 1997 and 2003.”

Lundin’s response:

Lundin has a SKr95.6bn ($10.6bn) market capitalisation, and 27.7 per cent of the company is owned by the Lundin family trust.^[4]  

Concerning the ‘Unpaid Debt’ report: “This report makes false and baseless allegations against the Company when its subsidiary was the operator of Block 5A in Sudan between the period 1997 to 2003. The Prosecution Authority has evidently decided to largely take this report, as well as other reports written by different NGOs, at face value. These reports contain many inaccuracies and deficiencies with multiple layers of hearsay and information taken from propaganda materials and sources, which was a common theme of the conflict in the wider country”

Concerning the case: “The suspicions are based on a biased and wrongful perception of criminal liability for conducting legitimate business activities and, as far as we are aware, this has never been previously tried in any national or international court. The Prosecution Authority is looking to establish a test case by applying a standard which extends beyond international law for responsibility of individuals and companies for alleged actions of a sovereign state. Far from being indifferent to the conflict, which erupted in the region during the period, the Company did everything in its power to promote peace through peaceful means.”

The Country:

Swedish prosecutors have universal jurisdiction for particular international crimes – it was used in past to prosecute three individuals involved in the Rwandan genocide, and The Stockholm District Court has tried several cases of war crimes and crimes against humanity committed during the Balkan Wars. The first case in Sweden convicting an individual for violations of international criminal or humanitarian law was that of Jackie Arklöv by the Stockholm district court on 18 December 2006 for crimes perpetrated against prisoners of war in the Balkan conflict.

Government authorisation is necessary in these cases for prosecution due to extraterritorial elements:

“The requirement of authorization is due to the structure of the rules on extraterritorial jurisdiction enshrined in the second chapter of the Penal Code. Chapter 2, Section 3 provides for extraterritorial jurisdiction for war crimes based on the universality principle, as well as for any grave crime carrying a minimum penalty of four years in prison. The latter category enables Sweden to fulfill obligations in international cooperation and proactively pursue violations of national interest based on the passive nationality and protective principle.” ^[5]

In this case, Lundin appealed the government’s decision, however this appeal was unsuccessful. 

Wider interest:

Prosecutions for the involvement of corporate actors in international crimes are rare, so this case is being observed closely. Though the Swedish system does not allow for criminal liability for the corporation itself, the closest punitive equivalent is being levelled at Lundin, and company directors are facing criminal prosecution. Between this and the French Lafarge case concerning corporate criminal liability for international crimes in Syria,^[6] it appears that some European courts are becoming more willing to draw the line between far-off international crimes and their own European-headquartered companies.

For more context concerning the historical liability of corporate actors under international criminal law, see the parts one and two of this blog’s International Criminal Law and Corporate Actors series. 

^[1] Miriam Ingeson and Alexandra Lily Kather, ‘The Road Less Traveled: How Corporate Directors Could be Held Individually Liable in Sweden for Corporate Atrocity Crimes Abroad’.

^[2] See https://www.newframe.com/lundins-south-sudan-ties-hit-south-african-shores/

^[3] Unpaid Debt report, p 31.

^[4] See https://www.ft.com/content/c7295ae6-d2cf-11e8-a9f2-7574db66bcd5

^[5] Miriam Ingeson and Alexandra Lily Kather, ‘The Road Less Traveled: How Corporate Directors Could be Held Individually Liable in Sweden for Corporate Atrocity Crimes Abroad’.

^[6] For more background on this case, see the previous Doing Business Right post by Alexandru Tofan.

Five years ago, the Rana Plaza building collapsed, taking with it at least 1134 innocent lives and injuring more than 2000 others. This industrial tragedy of incomparable scale constitutes a milestone in the business and human rights discussion. There will always be a 'before' and an 'after' Rana Plaza. Its aftershock triggered potentially seismic changes in the regulation of transnational corporations, such as the much-discussed French law on the ‘devoir de vigilance’. It is, therefore, essential to scrutinize with great care the aftermath of the tragedy: the innovations it triggered in the transnational regulation of the garment supply chain, the different processes initiated to compensate the victims, and in general the various hard and soft, private and public, legal and non-legal initiatives stemming from the urge to tackle a fundamental injustice. Thus, in the days to come we will feature a series of blogs on Rana Plaza and its consequences prepared by our outstanding interns: Raam Dutia and Abdurrahman Erol.

The Doing Business Right research team aimed to contribute to this necessary appraisal by organising on 12 April (with the support of the Bangladeshi embassy in The Netherlands) a day of discussions on Rana Plaza with a wide range of participants coming from different geographical and professional horizons (you can find our background paper for the discussions here and the programme of the day here). We divided the discussion into three broad themes. The first was dedicated to the victims: the injured and the families of those who died. Who are they to turn to in order to find justice? How can they locate legal (and/or moral) responsibility? When global brands are pressuring their Bangladeshi suppliers to keep prices down and satisfy their customers, who is responsible if garment factories in Bangladesh do not invest sufficiently to keep their factories from collapsing? The Bangladeshi government, the Mr. Ranas of this world, the profit-seeking brands, the conflict-ridden auditors, or the consumer in pursuit of ever-cheaper clothing? Those were the difficult questions we have struggled with and will continue struggling with in the years to come. As will be comprehensively shown in Raam’s first blog, victims of Rana Plaza have been rather unsuccessful in locating anyone (besides Mr. Rana himself) liable to start compensating the immense losses they have suffered. Western courts have simply refused to hold western brands (or auditors) accountable for the collapse. Nor have Bangladeshi courts yet proven able to provide justice to the victims. While international solidarity (maybe based on a feeling of moral responsibility) in the form of the Rana Plaza Arrangement, has offered some financial compensation to the victims, this is a far cry from a full-fledged legal responsibility recognized in court. Rana Plaza reminds us that in our world of organised irresponsibility, as the late Ulrich Beck would call it, law (and private international law in particular) can be used to immunise global brands and final consumers from the externalities they cause far from home.

The second panel of the conference tackled the transnational responses borne of the need to ensure that such a tragedy never again recurs. While nobody was willing to acknowledge their own responsibility for the Rana Plaza collapse, everybody was ready to accept that never again should such a tragedy take place. However, disagreements quickly emerged as to how to ensure this. Three different, at times competing, initiatives were introduced. They were set up in very different fashions. One, the Bangladesh Accord, is a multi-stakeholder collaboration involving NGOs, Brands, and Unions. The other, the Alliance for Bangladesh Worker Safety, is corporation-led, and primarily controlled by North-American brands. Finally, the National Tripartite Plan of Action on Fire Safety and Structural Integrity in the Garment Sector of Bangladesh is a government-led initiative supported by the ILO and foreign states. Altogether, these initiatives have led to quantifiable improvements of the security of workers in garment factories in Bangladesh (see the recent reports here and here). In his blog, Abdurrahman derives some comparative lessons from their parallel operations and raises some pointed critiques with regard to their institutional structures and long-term effects. In any event, they constitute an interesting new type of transnational administrative legal construct, raising many questions in terms of their legitimacy, effectiveness, and durability.

Finally, our last panel touched upon the national responses to the tragedy in Bangladesh as well as in Europe. What has changed in the way France and the Netherlands regulate corporations doing business in Bangladesh? What has changed in the way Bangladesh regulates its economically vital ready-made garment sector? Even in a globalizing world, states still have a decisive influence on the companies they bring to life (through their corporate law) or let operate in their territory. On the one hand, the French Loi relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre reminds us that a state can impose certain hard/legal responsibilities on local companies doing business abroad, such as in this case the obligation to produce a due diligence plan to deal with human rights risks. In theory, noncompliance with the law could lead to civil liability for the damages caused by a specific human rights violation. On the other, the Dutch Agreement Agreement on Sustainable Garment and Textile offers another (perhaps competing) alternative for national governments to drive corporations active on local markets to engage in (mildly) binding human rights due diligence with regard to their supply chain (on the detailed functioning of the Agreement see our paper here). Both solutions are country specific and their practical effects highly context-dependent. It is not yet clear whether they will dramatically improve the fates of Bangladeshi workers. Nonetheless, they need to be thoroughly scrutinized for their actual effects (or the lack thereof). In any case, they are part and parcel of the legacy of Rana Plaza. 

I will end this blog on a personal note. In a way, the days after the Rana Plaza collapse brought me back a decade earlier to the state of shock triggered by 9/11. This was a truly global tragedy. I had a similar feeling of powerlessness in front of dusty images of suffering. A similar tireless search for survivors was going on, with similar walls of pictures of missing persons. And yet, it was radically different. The towers of the World Trade Center were hit by two planes before collapsing; Rana Plaza simply collapsed. The tragedy could not be blamed on terrorists. It was the result of greed, of cold economical cost-cutting. By Mr. Rana, the factory owner, by the multiple brands whose logos and tags were littering the ruins of Rana Plaza, and at the end of the chain by myself as a consumer of those brands. I believe this painful feeling of distant complicity (made immediately visible) was shared widely across the globe and fuelled much of the initiatives that were put in place in the aftermath of the tragedy. I think it rightly tells us that the responsibility to ensure that we never again face a Rana Plaza lies not only there, in Bangladesh, but also here in the boardrooms of our favourite brands as well as in our very own shopping carts. It is this feeling that drives the Doing Business Right project.