Transnational Corporate Accountability: How to Finish Unfinished Business?

Franziska Oehm is a PhD candidate at the University of Erlangen-Nürnberg. Her research focuses on the intersection of human rights protection and corporate liability in international and transnational criminal law.

Unfinished business”, the subtitle of Leora Bilsky’s “The Holocaust, Corporations and the Law” not only refers to corporate accountability for crimes committed during the Holocaust but stresses the importance of continuing scholarly engagement with practitioners’ efforts to dismantle barriers to accountability for corporate involvement in mass atrocities today. From a criminal law perspective, the lack of more recent engagement with corporate international crimes, for instance at the International Criminal Court, is often seen as a systematic failure in the international criminal justice system to examine conflict situations holistically. Apart from some recent transnational lawsuits, for example regarding the situation in Syria, corporate crime is rarely in the spotlight during post-conflict legal proceedings or during debates about transitional justice.

The Nuremberg industrialist trials, however, at least selectively addressed industrialists’ involvement in the Third Reich and the Holocaust, and thereby established a basis of reference in search of a corporate accountability system. One could think of recommencing this line of cases now in line with the recent resumption of criminal prosecutions conducted against former Nazi concentration camp guards in Germany (see for instance here), which rely on the abolition of the statute of limitations for the offence of murder. While similar prosecutions could technically be initiated against former Nazi business leaders, procedural hurdles make them rather unlikely, because corporate criminal liability is not included in German criminal law. In addition, the passing of time makes locating living representatives of high-ranking Nazi industrialists who were responsible for international crimes improbable.

Against this background, Bilsky advocates for transnational class action litigation and settlement as a well-suited and possibly more effective approach to addressing corporate involvement in large-scale human rights violations nowadays. Transnational class action litigation and settlement derives from a series of lawsuits in the 1990s against a variety of corporations that were involved in the Holocaust and Bilsky ably conceptualized these cases as Transnational Holocaust Litigation (THL). Parts of her excellent book rely on comparisons, similarities and synergies of transnational class action settlement and criminal law, that prompt me to offer some reflections on the transferability and comparability of the THL approach to other transnational human rights litigation cases.

First, in my understanding the transnational element stems from the often-occurring geographic discrepancy between the location of the corporation’s seat and the atrocities’ effects, the nature of the atrocity, and the forum of the lawsuit. In such transnational civil lawsuits, both national and international law can be applicable to substantive questions, whereas procedural rules will derive from the domestic forum of the lawsuit. The international community lacks a supranational institution competent to deal with class action lawsuits concerning corporate human rights abuses. Therefore, transnational settlement litigation can only take place within the jurisdiction of national courts. National jurisdictions continue to determine the procedural framework for transnational class action settlement, since it is a procedural tool for collective representation in cases of comparable allegations against the same defendant.

However, many national jurisdictions – especially traditional civil law jurisdictions – do not provide for class action. In Germany, for instance, due to a current wave of consumer claims in the automotive sector, a new class action law (Musterfeststellungsklage) came into effect at the end of last year. Although broadening the recognition of collective redress, the new law is not nearly as far reaching as the class action in the U.S. system. It is restricted to consumer-professional relationships and requires prior registration to create binding effects of the ruling that constitutes the alleged violation of law. Furthermore, participants must individually claim the amount of compensation, each with the burden of proof to prove individual damages regardless of prior registration. While those requirements could diminish the concept’s potential success in human rights cases in Germany, this example also illustrates that even if a jurisdiction provides for some sort of class action, the qualification of transnational class action settlement as the better-suited tool to address corporate involvement in mass atrocities may hold for the U.S. or similar legal systems, but would perhaps require a broader global comparative assessment to determine the potential for transnational human rights litigation.

Second, Bilsky elaborates on the victim driven nature of class action lawsuits as one of the advantages compared to criminal proceedings, where the prosecutor adopts the investigative role. She concludes that civil class actions would be the more victim-oriented, participatory approach. While this assumption may hold true for cases where victims of massive human rights violations belong to a well-identifiable group and have had a chance to organize and start a lawsuit, it could also prove otherwise. This could particularly be true for scenarios with a non-identifiable group of victims, or where no representational organization advocates in the victims’ collective interest. In such cases, the prosecutor’s investigative role can be extremely valuable. Furthermore, many international criminal statutes foresee victims’ participation at a later stage during trial, and some national jurisdictions even provide for victims to initiate criminal proceedings, as well as a continuing investigative role during the trial. Such instruments should serve as a model for a more participatory process that points to the role of victims in international, national and possibly transnational criminal proceedings without losing the potential benefit of criminal investigations.

Overall, both the potential of criminal proceedings that derive from prosecutorial investigations, as well as the limitations class action suits throughout the world pose should not be ignored. However, the effectiveness of transnational remedies probably requires a case by case evaluation. Bilsky’s groundbreaking work on transnational class action lawsuits and settlement as a remedy that has indeed largely been ignored in the context of regulatory approaches to corporate accountability will enrich debates and hopefully lead to further development in that aspect of the field.