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.

Editor's note: Sara Martinetto is a research intern at the T.M.C. Asser Institute. She has recently completed her LLM in Public International Law at the University of Amsterdam. She holds interests in Migration Law, Criminal Law, Human Rights and European Law, with a special focus on their transnational dimension.

Having explained the Italian legal trajectory of the Ilva case, this second post focuses on the transnational reach of the case. Two main actors have played (or play) a crucial role: the European Union (especially the EU Commission) and the European Court of Human Rights (ECtHR). Both have tackled the Ilva case from different perspectives, depending on their competences. The Commission even dealt with the case from two distinctive viewpoints, as it started infringement proceedings related environmental protection state and aid.

The European Union and the Ilva case

As previously discussed in Part I, the EU has a prominent role in determining the environmental policy of the Member States: in particular, the EU issued a number of Directives, which provide for a general legal framework with regard to industrial pollution. Yet, Taranto’s disaster has also attracted special attention from the EU institutions. Specifically, the Commission has opened several infringement procedures against Italy in the matter. The measures undertaken at the EU level can be divided in two categories: measures on environmental protection, and measures regarding state aid. 

Infringement of EU environmental law

The first infringement procedure opened by the European Commission relating to the Ilva steel plant dates back to 2008. The Commission submitted that Italy did not fulfil its obligations under the Integrated Pollution Prevention and Control (IPPC) Directive,[1] by failing to bring the old permits awarded to the Ilva plant in compliance with the new norms. The Commission referred the issue to the CJEU, which found a violation of Art. 5(1) of the Directive.[2]

Simultaneously to the first provisory measures in the ‘Environment for sale’ trial, the European Parliament adopted a Resolution, which called on both the Italian authorities and the EU institutions to tackle the situation in Taranto. In turn, the EU Commission opened another infringement procedure in 2013. According to the related press release, Italy was deemed again in violation of the IPPC Directive (which would then be replaced by the Industrial Emissions Directive (IED) from January 2014) and the Environmental Liability Directive (ELD) prescribing the ‘polluters pay’ principle. The Commission recalled the extensive evidence of pollution caused by Ilva, and submitted that IPPC permits should be issued only if plants comply with the specific requirements set out in the Directive. Moreover, it reminded that the ELD provides for strict liability in case of environmental damage: once a causal link is established between the activity and the damage, there is no need to prove fault. For these reasons, the Italian authorities had to take steps to bring the Ilva plant in compliance with EU law and adapt national legislation in order to provide redress for ongoing violations. After a second letter of formal notice in 2014, the Commission issued a reasoned opinion pursuant to Art. 258 TFEU, stating that violation of the IED and ELD Directives have not ceased. However, the CJEU has still not been seized on the matter.

Infringement of State aid rules

As previously stated, Ilva has been a State-owned enterprise for more than thirty years and it has always been considered part of Italian strategic national interests: for this reason, the financing of the plant with public funds has been a long standing problem, and it has become even more so with the latest temporary receivership.[3]

In 2016, the Commission opened an infringement procedure for State aid against Italy, which has allegedly granted Ilva around 2 billion € for the rehabilitation of the plant. This contributions are not only the result of direct funding, but also of a law granting loans to Ilva a priority status in case of bankruptcy, including over debt to public entities; a law allowing Ilva access to funds seized during ongoing criminal proceedings against Ilva's shareholders and former management before those proceedings have established who owns these funds; and the favourable settlement of a long standing dispute between State-owned Fintecna and Ilva.[4] The procedure was then extended to cover the new 300 million € subvention provided in Law Decree 191/2015.

In this regard, Commissioner Vestager has recognised the delicate state of the steel plant, and the urgent need to proceed with the depollution of the area. Theoretically, the State can provide funding to accelerate such process, but the funds must be reimbursed by Ilva, pursuant to the ‘polluters pay’ principle.

The procedures are still on-going. Indeed, there is no easy solution to both claims raised by the Commission, especially if the main goal of the Italian Government is to keep the plant open. Albeit the Government must implement EU Directives into national law, the issuing of the IPPC permit (AIA) partly depends on the margin of appreciation entrusted to administrative authorities. Such a margin is likely to be exploited to its full extent in order to avoid the shutdown of the factory. Furthermore, public financing seems necessary to proceed with the clean-up of the area. However, it is hard to see how this amount could be then reimbursed in the short run, since the plant was only recently sold to Am Investco Italy, a joint venture of Marcegaglia Group and ArcelorMittal. The new owner is planning to invest more than one billion euros tp depollute the area, in conformity with the new AIA, but it is likely to require some time. In the meantime, the multiple Government interventions have put Ilva in a privileged position.

The Ilva case at the European Court of Human Rights

The previous sections have shown the multiple conflicts caused by the Ilva case among institutions at different levels. However, the victims of the Ilva plant have not been able, up to now, to actually get redress or to see a significant improvement of their living conditions. That is what drew citizens to file recourse to the ECtHR, in an attempt to hold Italy responsible for the Ilva case.

A first application was filed by Ms Smaltini in 2009, who died of leukaemia during the proceeding. The applicant submitted there was a causal link between her disease and the Ilva emissions and hence Italy violated Art. 2 ECHR (right to life). However, the Court declared the case inadmissible because manifestly ill-founded. In its decision,[5] the ECtHR noted that the applicant had previously initiated a proceeding in domestic courts, which was then discontinued due to lack of evidence regarding the link between the polluting activities and her illness. In fact, the evidentiary report carried out by Italian authorities showed that the percentage of people affected from leukaemia in Taranto was not higher than in other areas. Therefore, the Court held that the applicant had access to a fair process, which was carried out in the light of the scientific data available at the time of the complaint. Thus, Ms Smaltini failed to prove Italian authorities breached the procedural aspects of her right to life, thus rendering the case inadmissible. Ms Smaltini failed to argue, more generally, that the State did not fulfil its positive obligation in ensuring her right to life, and limited her complaint to the determination of the causal link between her disease and Ilva’s activities.  The Court ruling was strongly criticised by many commentators,[6] who were unconvinced by its decision to limit its reasoning to the legal claims raised by the complainant. Indeed, in Guerra v. Italy,[7] the ECtHR stated that it is not bound by what the applicant asks, but that it can amend the legal characterisation given by the parties pursuant to the principle ‘iura novit curia’ (‘the Court knows the law’). Thus, theoretically, the Court could have rephrased the legal arguments brought by the applicant and applied its previous jurisprudence under Art. 2 and 8 ECHR vis-à-vis environmental matters.

Building on the legacy of this ruling, two other applications were filed to the ECtHR, and are now being examined jointly before the Court. The first recourse was filed in 2013 by a group of 52 applicants, represented by Sandro Maggio, and promoted by the Committee “Legamjonici”, a non-profit association dealing with environmental issues in Taranto. The second one was filed in 2015, and involves 130 citizens of Taranto, who are represented by the Roman law firm Saccucci & Partners. Due to the extreme importance and urgency of the case, the Court has decided – on 4^th February 2016 – to prioritize the case, pursuant to Art. 41 of the Rules of the Court. On 27^th April 2016, the Court found the case non-manifestly inadmissible and accepted to rule on the merit. However, the Italian Government has asked for multiple delays, lengthening the procedure. A final ruling is expected in 2017.

The aim of such applications is not only to obtain compensation for the victims but to compel Italy to create a legal framework to be applied in case of environmental disasters. The main legal argument of the complainants is that Italy has not put in place a normative and administrative structure capable to prevent and address the great damage generated by the Ilva plant. In order to do this, they submit the violation of Art. 2 (right to life), Art. 8 (right to family and private life), and Art. 13 ECHR (right to an effective remedy).

The claims under Art. 2 and 8 are supported by a great body of ECtHR jurisprudence in environmental cases: since the ECHR does not include an autonomous provision on the right to a healthy environment, the Court has progressively expanded its interpretation of these Articles to address claims connected to environmental damage. In this proceeding, Art. 2 came into play at a later stage: firstly, the Court focuses on including the right to a healthy environment into the right to private and family life under Art. 8 ECHR. The first case in this regard is Lopez Ostra v. Spain (1994), in which the Court found that the Spanish Government did not succeed in striking a fair balance between the rights of the applicant under Art. 8 and the economic well-being of the country (§58).

As far as Art. 2 is concerned, Öneryildiz v. Turkey (2004) should be regarded as the landmark case. Drawing from Osman v. United Kingdom (1998) (§115-116), the ECtHR held that Art. 2 entails “a primary duty on the State to put in place a legislative and administrative framework designed to provide effective deterrence against threats to the right to life” (§89). Moreover, the Court took up its previous jurisprudential distinction[8] between the substantial and procedural limbs of Art. 2: the State has not only the positive duty to safeguards lives within their jurisdiction, but also to set up a framework which would guarantee the prevention and punishment of violations (§91). This is where Art. 2 gets intertwined with Art. 13 ECHR, the right to an effective remedy. Indeed, in the Ilva case, the victims are still awaiting a final judgement and have not received any kind of compensation. Moreover, the judicial measures aimed at stopping production were seriously impaired by the Government.

Therefore, the ECtHR has in place the legal means to require Italy both to provide compensation for victims and to reform its national law, as well as further clarify the extent of State obligations with regard to environmental disasters caused by private actors incorporated in their territory.

Conclusions: Between national impotence and transnational redress

The more one dives into the Ilva case, the more worrisome the picture gets. Many actors have continuously tried to address a tragedy that has been dragging along for more than fifty years. However, the opposing interests in play have driven institutions to step on each other’s feet, to adopt measures in response of narrow concerns, and to the detriment of others. These conflicting instances are reflected in the infringement procedures initiated by the Commission. Ultimately, the European Court of Human Rights is called now to give victims an answer which is not likely to be granted at the national level. In particular, an ECtHR ruling could respond to different needs: it could grant relief to the victims; it could force the State to put in place an adequate normative framework to tackle this crisis; it could further elaborate on the State obligations related to environmental harm caused by private actors. There are great expectations upon non-national actors to break an impasse which national authorities seem incapable, or unwilling, to solve. While the Ilva case showcases the incapacity of Italian authorities to tackle an environmental matter of life and death, transnational legal interventions are an external disruption hopefully capable to drive change. To this extent, the additional level of protection offered by EU and ECHR rules can be of invaluable assistance to the victims of Ilva. In the meantime, the ‘Environment for sale’ trial will continue to try to determine the criminal responsibility of a network of public and private actors who contributed to harm Taranto and its citizens. 

[1] The Directive established that all industries presenting an environmental risk should be granted a permit by public authorities in order to produce. Such permit is conditional on the compliance with Best Available Techniques (BATs).

[2] Art. 5(1) obliges Member States to review all the permits previously issued in the light of the new requirements. In particular, the Court held that a mere revision of previous permit aimed at correcting only manifest violation of the new Directive could not be considered sufficient to fulfil the obligations therein prescribed (§36). CJEU, C-50/10, Commission v. Italy, 31 March 2011

[3] See the Commissions proceedings related to the financing of ILVA by IRI in 1993

[4] EU Commission, Press Release, State aid: Commission opens in-depth investigation into Italian support for steel producer Ilva in Taranto, Italy, 20 January 2016

[5] ECtHR, Smaltini v. Italy, 16 April 2015

[6] A. Mascia, Nel Caso Smaltini C. Italia La Corte Europea Dei Diritti Dell’uomo Ha Ritenuto Che Le Emissioni Provenienti Dallo Stabilimento Ilva Di Taranto Non Siano State La Causa Dell’insorgenza Della Malattia Mortale Contratta Dalla Ricorrente, 4 May 2015; M. Alagna, Smaltini C. Italia: Irricevibilità Del Ricorso O Rigidità Del Giudice?, in Ordine Internazionale e diritti umani, 2015

[7] ECtHR, Guerra v. Italy, 19 February 1998 (§44)

[8] Among others, see McCann v. United Kingdom, 25 September 1995