Eric Allen Engle, Extraterritorial Corporate
Criminal Liability: A Remedy for Human Rights
Violations? 20 St. John's J. Legal Comment.,
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Many business opportunities in the third
world are of questionable legality (e.g. child labor) or are
formally illegal (e.g., bribery). 1
Political instability often implicates corporations with *288
brutal regimes and even
illegal acts. 2
When can a corporation be implicated as a criminal for such
acts? This article examines the criminal liability of the
corporation itself for violations of international law and of
U.S. law outside of U.S. territory. It also examines the
history of the rise of corporate criminal liability in the
common law and civil law as well as theories of imputed
liability in order to show the existence of corporate criminal
liability under customary international law. The conclusion is
that U.S. companies are subject to the law of their host, U.S.
law, and international law. To reach this conclusion, this
article makes some novel arguments about international and
Domestic U.S. laws which this paper
examines include the Racketeering Influenced and Corrupt
Organizations Act (RICO), the Foreign Corrupt Practices Act
(FCPA), as well as Securities and Exchange Commission (SEC)
regulations and laws. These are the principal domestic
criminal laws whose application to overseas transactions heard
before U.S. courts are likely to involve corporations. This
paper argues that these laws have extraterritorial effects and
that they can be applied not only to the persons representing
or constituting the corporation but also to the corporation
I. History and Theory of Corporate Criminal Liability
A. History of Corporate Criminal Liability
1. Corporations as Criminals in the Common
Law and Civil Law
Historically a corporation could not be
criminally liable in national law because the corporation was
a legal fiction with no *289
independent will. 3
In Anglo-American common law Blackstone wrote that a
corporation cannot commit "treason, or felony, or other crime,
in its corporate capacity." 4
In continental civil law this was also true 5
following the maxim "societas delinquere non-potest." 6
One must distinguish between the two different legal systems.
However both the civil law (e.g., France, Sweden, Denmark,
and the common law independently evolved from a principle of
no corporate liability toward a principle that recognizes that
corporations can be guilty of committing crimes 9
in national and international law. 10
Corporate criminal liability
in both the common law and in civil law evolved from
recognizing individual criminal liability for wrongful acts of
the corporation (first recognizing liability of directors,
then of officers and finally of employees) until finally
recognizing the criminal liability of the corporation itself.
This is an example of the contemporary trend toward a
convergence of the common law and civil law.
This evolution may have occurred because
until the twentieth century the principle remedy for crime was
imprisonment, corporal punishment or execution. 12
Obviously such punishments could not be applied in any
meaningful sense to a corporation. However, punishment for
crime now includes lesser penalties such as fines, public
service, and other non-carceral remedies. Corporations can
also be punished for crimes by being denied the right to do
business with the government or even by revocation of the
company's articles of incorporation. 13
Thus, as criminal punishment evolved, the principle of "no
criminal liability" also evolved dialectically into its
opposite. In principle, corporations today are subject to
criminal law in the common law, in civilian legal systems, and
by extension in international law. 14
Although it is widely acknowledged that corporations are
non-state actors (and for this reason too were not subject to
international criminal law like individuals), 15
they can now be liable for crimes under *291
international law. 16
Recognized customary international crimes include piracy,
slave trading, war crimes, crimes against humanity (that are
part of systematic conduct), genocide, and torture. 17
At least those crimes are subject to universal jurisdiction 18
- meaning any state may punish them. 19
The United Nations Convention Against Transnational Organized
Crime defines further international crimes: participation in
an organized criminal group, money laundering, corruption, and
obstruction of justice. 20
State parties must establish criminal, civil, or
administrative liability for legal persons (including
corporations) who commit these crimes. 21
Environmental crimes 22
and air piracy may be in the midst of becoming crimes under
customary international law.
2. Corporate Criminals at the Nuremberg
The evolution, from a principle of "no
criminal liability" to a principle where corporations are
capable of committing crimes under international law is
revealed in the war crimes trials at Nuremberg. 23
In the Krupp trial 24
it is clear that the corporation *292
was implicated in the crimes
of its directors. 25
Because of the Krupp firm's desire to employ compulsory labor
the tribunal imputed criminal intent to the corporation -
although the court did not actually declare the Krupp
Corporation a criminal organization. 27
The Farben trial 28
also implicated corporations as criminal instrumentalities. In
Farben the court refers to corporate obligations 29
and treats the corporation as a criminal instrument. 30
Moreover, Nuremberg also recognized that a corporate body -
the state security service (the SD) could be guilty of a
Thus the Nuremberg trials mark a shift from a principle of "no
criminal liability" of corporations to the view that
corporations may be culpable 32
due to the actions (in historical order of recognition in
domestic law) of their board of directors or of their officers
or even, most recently, of their employees. 33
B. Legal Bases of Corporate
1. Mens Rea 34
as a Basis of Corporate Criminal Liability?
Though customary international law is a
reflection of state practice, 35
common law jurists cannot presume that international law
contains common law concepts because the structure and sources
of international law are radically different from the common
law. International law, in its sources and structures,
parallels the civilian legal systems. 36
Mens rea, actus reus, and ultra vires are basic concepts of
common law. Because they are Latin terms we might be tempted
to presume that they are also found in civilian legal systems
and, by extension, in international law. Surprisingly, this
does not seem to be the case! Thus, we explore these concepts
comparatively to see whether they apply to international law
and how they might be found in international law.
In the common law 37
crimes are defined as the union of mens rea (a criminal
intent) and actus reus (a criminal act) 38
in one legal person. The burden of proof in criminal law lies
with the prosecution. 39
However, knowledge of criminality may be imputed via a "knew
or should have known" standard. 40
In criminal law it is common to impute criminal knowledge to a
defendant in cases of their
willful blindness as to wrongful activity. 41
This is because subjective states of mind are impossible to
prove and can only be inferred from objective manifestations.
In the corporate context, if the costs of labor or goods are
so low as to indicate to the corporation that it should have
exercised due diligence to determine that the goods were not
in fact the product of slave or child labor then liability can
be imposed. 42
Knowledge will likewise be imputed in cases of complicity and
is defined as actual or constructive knowledge; that is, the
accomplice knew or had reason to know that their act would
assist the perpetrator in the commission of the crime. 43
Historically, one argument against
corporate criminal liability was that the corporation was only
a legal person and thus incapable of forming mens rea for the
corporation has no will independent of its employees and
Today, however, most jurisdictions now attribute mens rea to a
corporation via its employees, directors or shareholders. 45
But one can doubt whether there is a requirement of mens rea
in international law at all. Although the concept of mens rea
does exist in Quebec law 46
(a civil law jurisdiction like Louisiana and France), criminal
law in Canada is federal and thus much more *295
influenced by common law than
civil law. 47
One finds the term mens rea only rarely in French and German
continental jurisprudence and usually only in comparative
of domestic law and the common law 49
and in fact not at all in criminal law or corporate criminal
law. The concept of mens rea, however, is entering into the
legal thought of the European Union 50
and into international practice 51
largely due to international criminal tribunals. Thus mens rea
in international law may be de lege ferenda - but it is
probably not lex lata. 52
The common law and civil law did
independently evolve from the position that corporations
cannot be liable as criminals toward a common position that
they can. 53
So the more logical argument for international corporate
criminal liability is based not in a common concept of mens
rea but in customary international law: almost all states
recognize a domestic criminal *296
liability of corporations 54
- and that can be seen as the state practice and opinio juris
needed to form an international custom. A similar evolution
may be occurring as to the concept of mens rea. However it is
questionable whether such an evolution has occurred with the
concept of ultra vires.
Any criminal act imputed to the corporation
will in fact have been done by a natural person or persons. If
the corporation is to be liable as a criminal then the
wrongful act of a human must somehow be attributed to the
corporation. Criminal liability can be imputed to a
corporation based on a theory of agency, or on a theory of
identity, or through accomplice liability (complicity). 55
The theory of agency 56
imposes liability on the company for the wrongful acts of its
employees. This is also known as vicarious liability 57
or attribution theory. 58
This theory permits the corporation to be sued for mala
Alternatively, the theory of identification 60
imputes liability on the corporation for blameful conduct of
an officer or director, thereby allowing *297
prosecution for mala in se. 61
In a theory of identification the corporate veil is pierced.
This means the distinction between the corporation and its
officers, directors and even shareholders may be ignored. In
civilian jurisdictions as well, criminal liability can be
imputed to corporations under various statutes in 62
for criminal acts which are mala in se. 63
A corporation, just like a natural person,
may be liable directly (via the agency and identity theories)
or as an accomplice for violations of international law, 64
as expressed in custom, treaty, or jus cogens. 65
The theory of complicity is more complex than the agency or
identity theory, and I will therefore explore it more
thoroughly in the following paragraphs.
Corporations can be criminally liable as an
accomplice to criminal acts of others (aiding and abetting the
commission of a crime). 66
Culpable actions may range from indirect complicity to direct
complicity to actual commission of wrongful acts. 67
Accomplice liability will arise out of "practical assistance,
encouragement, or moral support" 68
in obtaining the criminal *298
object. There are three types
of complicity under which a corporation can be held liable. 69
In descending order of likelihood of criminal conviction these
are: 1) direct corporate complicity, 2) beneficial complicity,
and 3) silent complicity. Direct corporate complicity 70
occurs when a corporation directly participates in illegal
acts that involve intentional participation - the intent to
commit the act, but not necessarily the consequences of the
In beneficial complicity, corporations may also be liable as
accomplices merely due to benefiting 72
from the principal's acts. Corporations could even be liable
for merely passively, but knowingly, benefiting from a regime
that systematically violates human rights. Finally, silent
occurs where a corporation does not verify complaints of human
rights abuses or protest against human rights abuses. Of the
three forms of complicity, silent complicity is least likely
to support a criminal conviction. 74
Active complicity will be more culpable than passive
complicity when endeavouring to find criminal liability. 75
Although assistance does not need to be the causae sine qua
of the principal's criminal act, 77
the accomplice must have had a substantial effect on the
commission of the crime. 78
liability also arises in the context of intentional torts. In
Doe v. Unocal, 79
the court held that a corporation could be liable in tort
under the Alien Tort Claims Act for aiding and abetting a
government's use of forced labor. Active participation was not
necessary for guilt to be imputed to the corporation. 80
A prosecutor could argue by analogy that this holding should
apply to a criminal case against a corporation.
Guilt as an accomplice necessarily implies
a principal perpetrator. However, a corporation can be held
liable as an accomplice to crime even where the identity of
the principal perpetrator is unknown. 81
This is true in both common law and civilian legal systems 82
and will therefore likely be true in international law as
b. Limitations of Accomplice Liability
There are however, limitations on corporate
accomplice liability. 83
Not every immoral action will give rise to guilt as an
accomplice. For example, a banker lending money to a criminal
will not necessarily be liable as an accomplice for the crimes
of his debtor. This was demonstrated at Nuremberg, 84
and has been affirmed more recently in litigation over dormant
Swiss bank accounts held by victims of the National Socialist
In both cases, the creditor was exonerated from criminal
The distinctive regulatory problem posed by
MNCs [Multi-National Corporations] is their ability to operate
an integrated command and control system through two
disaggregated institutional structures. The first of these
structures is the collection of discrete corporate units -
parent, subsidiary, sister, and cousin companies - that make
up the MNC group. The second disaggregated structure housing
the MNC is the global system of separate nation-states in
which those corporations are registered and do business. 86
Corporate entities often try to structure
their operations to disguise the fact that they profit from
human rights abuses 87
by using subsidiary business associations or by
sub-contracting illegal acts. However, courts are willing to
pierce the corporate veil 88
and impute legal responsibility to a holding company or its
managers, directors, and employees for the acts of its
either in crime, tort, or both. The problem of outsourcing
crime through sub-contracting can be addressed through a
theory of accomplice liability. Head office liability for acts
of subsidiaries and subcontractors is fair because "many MNCs
[Multi-National Corporations] can and do operate their many
parts with a coherence . . . that resembles a single entity .
. . controlled neither by international law nor the legal
norms of *301
any single state." 90
Thus, it is not a case of multiple theories of liability
imposed on one entity (tort/human rights; respondeat
superior/complicity); rather, it is a case of imposing
liability where otherwise none would exist, namely over
multinational enterprises. 91
In sum, U.S. corporations can be criminally
liable before a U.S. court for its illegal acts overseas.
However, criminal liability of head offices for crimes
committed in the underdeveloped world by their partners,
subsidiaries, or host governments is in practice the
This may be because prosecutors are unaware of just how far
the long arm of the law reaches.
C. Ultra Vires as a Basis of Corporate Criminal Liability under
1. Theoretical Arguments for Corporate
a. The Contract and Delegation Theories
One theory to justify imposing criminal
liability on corporations is the theory of delegation or
The delegation theory argues that because the state delegates
its authority to the corporation, the corporation must not act
contrary to the norms that bind the state. 94
As a creation of the state, the corporation is bound by at
least those norms that bind its creator. The essence of this
theory is that a state may not accomplish indirectly what it
is forbidden to do directly. 95
Similarly, the contractual
theory argues that corporations make a contract with the
state: In exchange for limited liability, the corporation
agrees to act legally and to serve the public interest which
includes the protection of human rights. 96
b. Ultra Vires as a Contract Theory
Ultra vires 97
is an expression of a contractual theory of the corporation.
Literally, it means the corporation may not act beyond its
powers. That is, ultra vires is a principle of common law in
which a corporation may not undertake any acts not authorized
by its articles of incorporation or any acts that are illegal
because the corporation's privileges (legal personality, and
limited liability) were granted by the state the corporation
may not violate the laws of the state, 99
including the states' obligations under international law. 100
From this perspective the corporation has a duty to act
lawfully even outside the jurisdiction where it is
and thus can be held liable within its jurisdiction of
incorporation for its unlawful foreign acts.
2. Problems with Ultra Vires in
a. The Contract and Delegation Theories
Invert the Historical Argument against Corporate Criminal
One possible argument against basing
corporate liability on a theory of ultra vires (that the
corporation could not commit the act that was beyond the scope
of its powers) is that historically, the legal concept of
ultra vires was exactly the justification for finding that the
corporation would not be liable. The logic was *303
that the corporation could
not even commit an act for which it was not empowered 102
and thus the criminal act could not be imputed to the
corporation. The result was that liability would only be found
among the natural persons. Contemporary law has inverted this
so the argument, though logical, will not likely be accepted.
b. Common Law Concepts are not an Integral
Part of International Law
The problem with arguing for ultra vires as
a basis of criminal liability in international law is that
though ultra vires is an integral part of the common law it is
not part of the civilian legal system. International law
parallels civilian legal systems, not the common law. The
hierarchy of norms in international law - the sources and
weights of legal authority - is very different than in
domestic U.S. law. 104
General principles of law, which exist only vestigially, if at
all, in equity's legal maxims, are a key element of
international law where they are a source of law. 105
Legal scholarship is also a source of international law. There
is no doctrine of stare decisis in international law. Each
case in international law addresses only the parties before
it. At best, international case law is merely evidence of
international custom or treaty. 106
If ultra vires is not found in the civilian legal systems then
that is a strong argument that it does not exist in
international law either.
3. Arguing for Ultra Vires in
The best ways to find a rule in
international law that corporations must obey the laws of
their chartering states wherever they operate would be to
argue from the general principles of law, specifically the
duty of good faith and fair dealing and the principle of
legality. Alternatively or additionally one could argue by
analogies from the common law. These arguments follow.
a. Arguing for Ultra Vires from General
Principles of International Law
The general principles of law are a source
of law in public international law (jus gentium 107
and the civilian legal system. A plausible argument could be
made that a common law proposition is an expression of some
general principle of law though not articulated as such in the
common law. By linking the common law concept to a general
principle of international law a common law concept not found
in civilian law systems could be found to exist in
international law. 108
This creative argument is not made because the general
principles of law are not a source of law in the domestic
legal order of the common law jurisdictions and so common law
lawyers are unfamiliar with the general principles of law as a
source of law.
b.Arguing for Ultra Vires as a Part of
Another argument for finding a common law
concept in international law would be to look at the common
law as evidence of international customary law. Customary
international law consists of two elements: practice (what
states actually do) and opinio juris (what states believe they
ought to do). 109
Domestic law is evidence of both opinio juris and state *305
If an overwhelming majority of states recognize corporate
criminal liability in their domestic law (and they do), then a
very good argument can be made that corporations can also be
criminally liable under customary international law.
a. The Status of Ultra Vires in
International Law is Unresolved
The status of ultra vires in international
law is not resolved and is still being discussed in
comparative law literature. 111
Ultra vires is not a principle of German corporate law. 112
The idea of "ultra vires" has only been recognized in German
law for public law entities. 113
Moreover, ultra vires does not appear to exist in French law
(the maxim "ultra vires hereditatis" exists in *306
French law), 114
and unlike legal maxims in common law, which only have legal
weight before a court of equity, the legal maxims in French
law are evidence of the law. The French legal maxim, however,
refers not to a principle of corporate or municipal law, but
rather to the principle that an heir or corporate associate
will be liable for the debts of their legator or other
Although ultra vires may not exist in international law, the
"general principle of legality" (principe généraux de la
does exist as a general principle of law in French law and in
international law. The general principle of legality under
international law applies to corporations. 117
The legal concept of ultra vires forces a
corporation chartered under the common law to obey domestic
and customary international law outside of U.S. territory, and
even the law of the host jurisdiction and international
One cannot presume, however, that a similar rule exists in
other states. One must prove it through painstaking
comparative scholarship through the examination of state
practice, as well as case law and the works of scholars
secondarily. One would have to ask whether, for example, an AG
or a SARL 120
operating outside of *307
Germany or France,
respectively, must obey the laws of its chartering
jurisdiction, its host jurisdiction, or both. Multi-national
corporations often include parent companies in, say, the U.S.
and a subsidiary in Germany so this question is not merely of
It would be desirable, of course, to find a
principle like ultra vires in the general principle of
legality. Requiring corporations to obey the laws of both its
host jurisdiction and domestic jurisdiction (ignoring, for the
moment, collisions of those rules) would serve the best
interest of the shareholders 121
and the public because the corporation would no longer be free
to abuse the law. Finding ultra vires internationally through
the general principle of legality would increase the security
of transactions and reduce abuses of human rights. 122
However, the existence of ultra vires (or mens rea) as legal
concepts in international law cannot simply be presumed
because that would ignore: 1) whether other national legal
orders even have such a principle; 2) whether a state applies
the principle outside of its own territory; and, 3) if so,
whether, in determining an act to be ultra vires or finding
mens rea, the state in question uses its own law, the law of
the corporation's state of incorporation, or the law of the
place of the transaction or international law.
b. Ultra Vires in International Law is at
Best de Lege Ferenda
Internationally, ultra vires and mens rea
are probably de lege ferenda 123
and not de lege lata. 124
Without specific proof of such a principle existing in the
national legal orders of civil law *308
jurisdictions or existing
under international law, these principles would only be
persuasive arguments of what the law should be as opposed to
what it actually is. The better argument is to rely directly
on the general principles of international law.
D. Arguments Against Corporate Criminal Liability
Theoretical objections to transnational
corporate liability can be found. These objections include
economic and moral arguments. Neither are they particularly
The common law has not encouraged the idea
that a corporation owes any duty to society, 125
other than to maximize profit of its shareholders. 126
Milton Friedman agrees with this early view of general
corporate immunity and argues that in a world of competition
and self-interest, there is one and only one social
responsibility of business, which is to increase profits. 127
The corporation, however, must act legally. 128
Further, in Herald Co. v. Seawell, 129
the federal appellate court held that among a court's
discretionary powers is the power to act in the public
interest, even if that negatively impacts shareholder
distributions. This demonstrates that courts impute legal
duties to corporations beyond that of profit maximization. 130
A more sophisticated view looks beyond
Friedman's neo-classical theory and empirically examines what
businesses do in practice. An examination of business practice
reveals that *309
corporations are increasingly
socially conscious. 131
However social policy is ambiguous and verifying whether
directors are implementing these policies in the public
interest is difficult. 132
The extreme view of Professor Milton Friedman is that
corporations have only one duty of profit maximization, which
is empirically untrue. 133
Corporations do not only exist to make money; they also exist
to produce goods, to pay their employees and even, shockingly,
to do charitable works (particularly where those are
compensated by tax advantages). Friedman's view simply ignores
the social functions of a corporation and wrongly ascribes a
single-minded purpose to what is obviously a multi-faceted
In practice, corporate liability exists and
is expanding. This can be seen in imputed liability of a
corporation for the acts of its employees via respondeat
in the nullification of the fellow servant rule (wherein an
employee victim of a tort would have no remedy against the
employer where the tort-feasor was a "fellow servant"), 135
and in strict products liability in tort. 136
Just as formalistic procedural obstacles, such as sovereign
immunity and the act of state doctrine, have been increasingly
qualified or even abandoned in national and even international
law, so also *310
has the scope of legal
protection of human rights broadened by the recognition of
corporate criminal liability. 137
Economic arguments cut both ways.
Corporate criminal liability can be justified for reasons of
economic efficiency. Criminal liability forces corporations to
internalize external costs, which they would otherwise
externalize on third parties. 138
However, this is inefficient for the market as a whole. 139
If the only moral duty of a corporation is to make a profit,
then there would be no need for legal regulation at all.
Because corporations have legal duties other than profit
maximization, Professor Friedman"s extreme theory of corporate
irresponsibility does not correspond to empirical reality and
must be rejected. The very fact that corporations seriously
argue for no regulation whatsoever should raise suspicions.
More sophisticated arguments against
corporate criminal liability adopt positions that are more or
less consciously based on moral relativism. The least
self-conscious relativist argument, like Friedman's, states
that corporations lack the resources or expertise needed to
make moral judgements. 140
Another relativist argument is that the corporation should
remain neutral in the political and cultural affairs of its
host state, except in as far as they directly affect business.
An extreme and *311
duplicitous argument is that
corporations' interference in their host states internal
politics would be cultural imperialism. That concern only
seems to arise when the "interference" would be unprofitable;
in other words, when such "interference" is profitable no one
complains. None of these arguments are particularly persuasive
because corporations have plenty of resources and are not
blind or run by idiots with no moral compass. Corporations
regularly intervene in domestic affairs of host nations. 142
E. Theoretical and Practical Explanations for the Rise of
Corporate Criminal Liability
1. Theories Justifying Corporate Criminal
The usual justifications for corporate
criminal liability, whether in national or international law,
are generally referred to as retribution, deterrence, 143
and sometimes restitution or compensation; 144
although, these last two justifications occur more often in
tort law. 145
The significance of these categories is that in civilian legal
systems criminal laws do not generally have a compensatory
function and tort laws (delicts) do not generally have a
punitive function. 146
Because international law parallels civilian legal systems it
also assigns tort law a compensatory function and criminal law
a punitive function and applies a strict *312
dogmatic separation between
the rules and interpretations of tort and criminal law. 147
2. Practical Justifications for the Rise
of Criminal Liability of the Corporation
The previous discussion explains that
there are several theoretical and practical justifications for
imposing criminal and civil liability on non-state actors
under transnational law. There are also practical explanations
for the rise of corporate criminal liability. The expansion of
corporate liability may be primarily due to globalization. The
world is growing smaller and international civil and criminal
liability is expanding. Criminal liability for corporations is
justified on a practical level because, while holding
directors and managers liable may punish the individual, the
corporate entity remains free to continue with profitable
Criminal sanctions are also justified because they are a more
effective deterrent than civil sanctions, as well as being
reprehensible to potential wrongdoers. 149
Moreover, there are several advantages to imposing criminal
liability on a corporation from the plaintiff's perspective:
1) Criminal jurisdiction is easier to obtain than a civil
2) Corporate liability is also more likely to adequately
compensate victims than liability of individuals because the
corporate defendant may have greater assets than an
3) Criminal prosecution is less expensive for plaintiffs.
While U.S. civil discovery is perhaps the broadest in the
world, its costs may *313
be born by the litigant. 152
For poor plaintiffs, criminal prosecution may be in practice
the only solution - especially internationally where "winner
takes all" is the rule, and the losing side pays the winner's
Finally, it may be difficult to identify the proper individual
defendants in a case of corporate wrongdoing. For these
reasons, corporate criminal liability serves a complementary
role to private liability and corporate self-regulation. 154
II. Extraterritorial Criminal Jurisdiction Over Criminal
Enterprises In U.S. Law
Several U.S. criminal laws also include
implied civil causes of action - remedies similar to torts but
arising out of criminal law violations. 155
But applying civil causes of action to overseas conduct is
somewhat problematic since foreign legal systems generally do
not recognize punitive damages. While private claims for
compensation arising out of crimes exist in France, Belgium
and Germany (respectively, the action civile and
adhaesionsverfahren) punitive damages do not. 156
Punitive damages are not allowed in the civil law because they
result in overcompensation of plaintiffs. 157
A. The Racketeering Influenced
and Corrupt Organizations Act (RICO) 158
RICO is a U.S. law crafted to fight
organized crime which offers litigants a claim against
international tortfeasors. 159
It also offers both criminal and civil remedies, including
treble damages for criminal enterprises. 160
It is an open question whether and to what extent RICO has
extraterritorial jurisdiction. But, if there is
extraterritorial jurisdiction for RICO, then it may be used to
vindicate human rights. A brief analysis of RICO is required
to determine the jurisdictional question of whether the
private right to compensation applies extraterritorially and
if so, under what circumstances.
1. Substantive Law: Definition of a RICO
RICO, like the FCPA and SEC Rule 10b-5, is
a legal platypus; it has some features that make it resemble a
tort and others that make it resemble a criminal statute.
Whether and when these statutes have extraterritorial
application adds to the confusion. All three of these statutes
offer both criminal and civil remedies. 161
The legislative purpose of RICO is to
fight organized criminal enterprises. 162
Title 18 U.S.C. § 1962(c)
provides: "It shall be unlawful for any person employed by or
associated with any enterprise engaged in, or the activities
of which affect, interstate or foreign commerce, to conduct or
participate, directly or indirectly, in the conduct of such
enterprise's affairs through a *315
pattern of racketeering
Thus, to make a claim in RICO, one must prove a pattern of
in furtherance of a criminal conspiracy. Specifically, the
plaintiff under § 1962(c)
has the burden of
proving: "(1) conduct (2) of an enterprise (3) through a
pattern (4) of racketeering activity." 165
a. "Conduct of an Enterprise"
An enterprise, for RICO purposes, is "a
group of persons associated together for a common purpose of
engaging in a course of conduct." 166
A person is an "individual or entity capable of holding a
legal or beneficial interest in property." 167
Further, a RICO enterprise "includes any individual,
partnership, corporation, association or other legal entity,
and any union or group of individuals associated in fact
although not a legal entity." 168
Governmental entities can be enterprises
for RICO. 169
The enterprise, however, must be distinct from the "person"
conducting the racketeering activities. 170
"[A]lleging a RICO enterprise that consists merely of a
corporate defendant associated with its own employees or
agents carrying on regular affairs of the defendant" 171
will not satisfy RICO's definition of enterprise. A parent
corporation and two subsidiary corporations constitute a RICO
"enterprise" if the predicate acts were committed within the
scope of the agency relationship. 172
Although a RICO "enterprise" cannot generally be comprised of
corporation and its employees
or subsidiaries, it is possible for two entities in a
principal-agent relationship to constitute "persons" if the
agent-subsidiary is not acting in the scope of the agency
To prove a RICO claim, the plaintiff must
show "a pattern of racketeering activity" or a conspiracy to
commit racketeering activity. 174
A "pattern of racketeering activity" is formed by two or more
acts of racketeering, such as extortion, occurring within ten
years of each other. 175
These two or more predicate crimes must be related to each
other, present some level of continuity, and present a threat
of future criminality. 176
That is, the plaintiff must prove "a series of allegedly
criminal acts" independent of the enterprise. 177
To prove the existence of a "pattern" of "racketeering
activity" plaintiffs must prove "that each defendant . . .
committed . . . at least two RICO predicate acts, and that the
alleged predicate acts relate to each other and "amount to, or
. . . otherwise constitute a threat of, continuing
racketeering activity." 178
c. "Of Racketeering Activity"
Racketeering activities are broadly
defined as one of several substantive criminal offenses in
Title 18 of the U.S. Code. 179
RICO predicate acts are essentially varieties of extortion
whether by murder, robbery, or threats of violence. 180
These are *317
specifically defined in the
following provisions: 1) the Hobbs Act, 181
2) Title 18 U.S.C. § 1962(a)
; 3) 18 U.S.C. § 1962(d)
; and, 4) state law
claims. The exercise
of federal jurisdiction must be justified since RICO is a
federal statute; therefore, the RICO offense must also
obstruct interstate or international commerce. 182
We now look at the elements of each of these four claims.
First, RICO predicate acts are
specifically defined in the Hobbs Act and include interference
with commerce, robbery extortion, and conspiracy to commit
these substantive crimes. 183
Second, 18 U.S.C. § 1962(c)
liability in crime and in tort for any person or group
"associated with any enterprise, engaged in, or the activities
of which affect, interstate or foreign commerce, to conduct or
participate, directly or indirectly, in the conduct of such
enterprise's affairs through a pattern of racketeering
for example, criminal enterprises. Third, Under 18 U.S.C. § 1962(d)
can be liable for conspiracy to commit a substantive offense,
such as an agreement between defendant and others, to
facilitate commission of a violation of § 1962(d)
although no overt act in furtherance of the conspiracy must be
proven to demonstrate its existence. 186
Conspirators do not have to know each other to be liable for
conspiracy under 18 U.S.C. § 1962(d)
Finally, in addition to the various federal claims (the Hobbs
Act and the provisions of 18 U.S.C. § 1962
), a RICO case
can also be based on substantive state law, and *318
foreign laws as well. 188
For example, crimes in Illinois that are not federal offenses
can be the basis for RICO action where there is a pattern of
activity affecting interstate or international commerce. 189
When using state laws as a basis for a
RICO action, however, the federal courts look to the substance
of the state law and not its procedure. United States v.
Bagaric provides, "under RICO . . . state offenses are
included by generic designation, . . . references to state law
serve [merely] a definitional purpose, to identify generally
the kind of activity made illegal by the federal statute." 190
Thus, state acquittal or procedural defenses will not preclude
a federal charge under RICO, 191
even when the predicate act must "include the essential
elements of the state crime." 192
Although the location of the crime will trigger the particular
state's law to be examined, the relevant information for a
RICO action is the substantive, not procedural, portion of the
state's law. 193
RICO can have extraterritorial effect because only substantive
foreign law is applied in the U.S. as the foundation for a
violation of the U.S. domestic RICO statute. 194
2. Jurisdiction: Does RICO
Have Extraterritorial Effect?
Though it is possible to apply foreign law
in the U.S. (i.e. Chinese law could be the basis of a RICO
that does not necessarily imply the reciprocal proposition
(i.e. U.S. domestic violations of RICO have extraterritorial
effect). RICO is silent concerning its potential
extraterritorial effect. 196
Although a foreign corporation is not shielded from RICO
liability merely because of its location, 197
the amount of activity a foreign corporation must maintain in
the United States to obtain jurisdiction for a RICO claim is
Thus, the key problem does not seem to be whether RICO can
have extraterritorial effect but rather under what
circumstances would sufficient contacts exist to the U.S. in
order to justify the exercise of U.S. jurisdiction over a
transaction at least partly occurring outside the U.S. 199
In United States v. Noriega, RICO was
found to have extraterritorial application in the context of
illegal drug sales. 200
A later federal district court case held, 201
however, that RICO does not apply extraterritorially because
U.S. legislation is presumed to have no extraterritorial
effect, and none will ordinarily be inferred absent an
explicit congressional indication. 202
Since cases must be interpreted consistently where possible,
and later cases have made clear that extraterritorial *320
jurisdiction under RICO is
the better view is to limit Jose et al. v. M/V Fir Grove to
the facts in that case and not to see it as prohibiting
extraterritorial application of RICO in all cases. This view
is supported in U.S. v. Bowman where the court held that,
although extraterritorial jurisdiction may not be inferred in
civil cases, it may be inferred in criminal cases. 204
Essentially, statutes that do not explicitly claim to have
extraterritorial application are presumed to be applicable
only domestically, but in criminal cases that presumption is
Courts do have some guidance in
determining the extraterritorial application of RICO by
looking to "precedents concerning subject matter jurisdiction
for international securities transactions and antitrust
The appropriate test for jurisdiction "var[ies] depending on
the substantive law to be applied." 207
Securities fraud can be a RICO predicate act, 208
and U.S. securities fraud statutes can have extraterritorial
In order for subject matter jurisdiction for the
extraterritorial application of RICO, the complaint must pass
either the "conduct" or "effects' test used in securities
and antitrust cases. *321
However, tests developed in
securities and antitrust may not correspond exactly to RICO
because each statute serves a different purpose. 211
It seems that in order to obtain subject
matter jurisdiction for a RICO claim, the plaintiff must show
that either the conduct "within the United States directly
caused the loss" 212
or that "a predominantly foreign transaction has substantial
effects within the United States." 213
The former is known as the "effects test" and the latter as
the "conduct test." 214
Although both the "conduct" and "effects" test arise out of
case law that interprets U.S. Securities laws, they apply to
RICO as well. 215
Under the conduct test, federal
jurisdiction in securities fraud cases exists outside U.S.
territory only if the conduct "within the United States
directly caused" 216
Mere preparation in the United States alone will not support
jurisdiction for the extraterritorial injury. 217
Alternatively, "actual execution" (e.g., fraudulent statements
made in the U.S.), 218
or execution of sales contract based on overseas fraud would.
For example, in Psimenos v.
E.F. Hutton fraudulent statements were made overseas,
primarily in Greece. 220
However, several of the contracts were executed in New York. 221
Further, the company accused was an American company whose
agents defrauded the foreign plaintiff. 222
The court determined that the U.S. had sufficient interest in
the claim because the claim, that an agent of a U.S. company
overseas made fraudulent statements to a foreign person, if
not remedied by exercise of jurisdiction, would imply
corruption of U.S. markets in New York. 223
Thus, the court determined that hearing the claim for the
fraudulent statements in Greece would serve the interests of
justice would be served by protecting the integrity of the
U.S. market. 224
In that case, the preparatory acts (fraudulent statements and
conclusion of a series of unfair contracts) were undertaken in
Europe, but the actual execution of the sales-orders occurred
in the U.S. 225
It is worth pointing out that interpretative schemes in one
branch of securities law are interpretive aids in
understanding other securities laws. 226
The logic of the conduct test is to prevent "the United States
[from being used] as a base for manufacturing fraudulent
security devices for export, even when these are peddled only
to foreigners." 227
The effects test dictates that securities
fraud statutes "may be given extraterritorial reach whenever a
predominantly foreign transaction has substantial effects
within the United States." 228
Extraterritorial effect can be given to U.S. antitrust
statutes "if *323
the conduct is intended to
and actually does have an effect on United States imports or
exports which the state reprehends." 229
The relevant inquiry is whether the antitrust violation "has,
or is intended to have, any anticompetitive effect upon United
States commerce, either commerce within the United States or
export commerce from the United States." 230
The rationale behind the application of
the effects test to anti-fraud statutes in securities cases
and anti-trust cases is "to protect domestic. . . markets from
corrupt foreign influences." 231
With that teleology 232
it seems reasonable that RICO could have an extraterritorial
effect in cases of human rights abuse, although there is
little clear federal authority on the question.
c. Extraterritorial Jurisdiction in
Antitrust law, like securities law, also
has an extraterritorial effect 233
and can be the basis for a RICO claim; 234
therefore, it seems that the test for the extraterritorial
effectiveness of RICO will be that of the underlying predicate
acts. RICO can have extraterritorial effect where the
underlying predicate act, whether it is securities fraud or
anti-trust violations, allows the exercise of extraterritorial
To demonstrate this reasoning a maiore ad minus, 236
where a law is derived from a *324
law that has extraterritorial
effect, then the new law by logical implication must also have
extraterritorial effect. Thus, RICO's criminal provisions
certainly apply outside of U.S. territory and it is likely
that RICO's civil provisions do so as well.
d. Should RICO Have Extraterritorial
While RICO's potential extraterritorial
application in certain circumstances seems clear, the question
remains whether it should be applied in such a manner.
Comparing RICO with Helms-Burton 237
and the FCPA may help to understand this point. Helms-Burton
attempts to remedy Cuban expropriation of U.S. assets by
creating a private cause of action against successors in
interest to expropriated property. 238
Helms-Burton provides extraterritorial treble damages. 239
However, the underlying claim of recapturing expropriated
assets via successors in interest is much more controversial
than RICO. This is one argument for RICO's extraterritorial
application. Helms-Burton, which is another treble damage
statute, goes much further in exercising U.S. jurisdiction
The Foreign Corrupt Practices Act also has
extraterritorial effect. 241
It makes bribery of foreign government officials intended to
obtain or retain business 242
a punishable offense in the U.S. even where the conduct
occurred outside of U.S. territory. 243
SEC statutes against securities fraud also have *325
extraterritorial effect. This
is logical because organized crime, tax evasion, money
laundering, and postal fraud, like classical pirates, ignore
So, why should criminals benefit from borders they do not
respect? Although the court has not decided this issue, valid
reasons exist for applying RICO internationally.
3. Standing (Injury in Fact) and Remedies
a. Standing (injury in fact) to Bring a
In order to bring a claim under RICO, the
plaintiff must have suffered an injury-in-fact. This means the
plaintiff must have been "injured in his business or property
by reason of a violation of § 1962
Courts also use the term standing. The violation of § 1962
must have been the
proximate cause 246
(e.g., the legal cause) 247
of the injury 248
to the business or property of the plaintiff. 249
A predicate act is a proximate cause if it is a "substantial
factor in the sequence of responsible causation, and if the
injury is reasonably foreseeable or anticipated as a natural
Once RICO jurisdiction has been
established and a judgment against the plaintiff is entered,
the remedial provisions of RICO come into play. These include
treble damages 251
and forfeiture. 252
RICO provides for treble damages to be
awarded to plaintiffs (e.g., twice the substantive damages
plus the initial damages and also attorneys fees and court
costs) which is similar to certain tort remedies. 253
RICO also provides for the possibility of prison, similar to
the criminal law. 254
Internationally, punitive damages are viewed as an aspect of
criminal law rather than tort law. 255
Civil law systems do not recognize punitive damages in their
tort system. 256
Because RICO is probably viewed as a penal statute rather than
a civil statute in terms of international law, courts are led
to question its extraterritorial application due to concerns
over comity. 257
Therefore, an argument against applying RICO internationally
is that it is a criminal statute because it provides for
treble damages and imprisonment. 258
Since exercise of criminal law overseas is
a greater invasion of the sovereignty of a foreign country
courts are less likely to *327
application of the criminal statute. 259
One way around this jurisdictional objection might be to
simply waive claims for treble damages and imprisonment in
international cases and to argue that the civil portions of
RICO are in tort. While foreign courts such as Germany will
not enforce U.S. treble damages claims, 260
they do enforce U.S. substantive tort law - even though U.S.
compensatory awards are much higher than in Europe. 261
But in RICO, because the statute contains provisions for
imprisonment, execution of the U.S. judgment overseas would be
even less likely to be obtained than in the case of treble
damages in tort.
RICO also includes a forfeiture provision
wherein any interest in the enterprise, or any property
derived from any illegal acts will be surrendered to the U.S.
Again, controlling precedent seems to be lacking. However, in
U.S. v. Approximately $25,829,681.80 in Funds, 263
extraterritorial application of a federal civil forfeiture
was permissible. 265
One main argument of the government was based on an analogy to
the domestic application of RICO for civil forfeitures. 266
Thus, it is very likely that the civil forfeiture provisions
of RICO can have extraterritorial effect. However, actual
enforcement of judgment overseas becomes problematic because
of the possibility of imprisonment and treble damages *328
against the defendant. These
features transform what the common law regards as a civil
statute into what the civil law regards as a criminal law,
with a correspondingly increased infringement of national
sovereignty. Thus treble damages forfeiture statutes might be
unenforceable overseas, where ordinary damages would be.
c. RICO in the Context of the ATCA
As earlier noted, RICO has been invoked in
the context of the ATCA and TVPA. 267
Its applicability in this context has not, to the best of the
author's knowledge, been determined. For example, RICO was
invoked, especially before the trial court, in Wiwa v. Royal
Dutch Petroleum. 268
In Wiwa, the plaintiff argued that the defendant's actions
were in furtherance of a criminal conspiracy. 269
The plaintiff alleged that that Shell hired and bribed
Nigerian officials to intimidate opponents with violence and
to corrupt the law to the profit of Shell. The RICO claim was
not addressed in the Wiwa appeal as the case was remanded for
further proceedings. 270
The court did note, however, that as to forum non conveniens a
foreign forum was still adequate despite the absence of
similar conspiracy statute in the foreign jurisdiction. 271
RICO was also invoked by plaintiffs in Doe v. Unocal 272
for reasons similar to Wiwa. Namely, that Unocal hired
security forces of the government of Myanmar (Burma) to
intimidate and enslave indigenous persons, to force them to
flee from oil fields and to force them to work as slave labour
- all of which profited Unocal. 273
But, in Unocal the four-year statute of limitations for a RICO
claim had passed. Consequently the RICO claim was dismissed.
The plaintiff in Unocal could have - but did not - argue that
the statute of limitation should have been tolled ("put on
hold" so to speak) under the doctrine of *329
equitable tolling. Equity may
toll a federal statute of limitations where defendant's
wrongful conduct prevented plaintiff from asserting the claim
or where extraordinary circumstances outside the plaintiff's
control made it impossible assert the claim in time. 274
Not having argued for equitable tolling their claim for RICO
B. Anti-Bribery Laws
1. Anti-Bribery Laws In International Law
Internationally, efforts to combat
corruption are expressed in at least two regional
anti-corruption conventions sponsored by the Organization of
American States (OAS), 275
and the Organization for Economic Co-operation and Development
The OECD Convention was signed on November 21, 1997 by the
twenty-six member countries of the OECD and by five non-member
countries: Argentina, Brazil, Bulgaria, Chile and the Slovak
Republic. Further, human rights implicate the various
Bretton-Woods institutions, 277
such as the International *330
Bank for Reconstruction and
Development (IBRD), also known as the World Bank Group (WB), 278
and the International Monetary Fund (IMF), 279
which also opposes corruption and seeks to find methods to
solve it: these anti-corruption treaties include prohibitions
2. The Foreign Corrupt Practices Act
Under American law, companies that commit
bribery violate the U.S. Foreign Corrupt Practices Act (FCPA)
and regulations of the Securities and Exchange Commission
For example, SEC regulations make secret bank accounts illegal
for use in bribery as a contravention of the requirement of
complete and accurate financial disclosure under the SEC's
A convention similar to the FCPA exists and applies to members
of the EU and its associated states in the third world under
the Cotonou Agreement. 283
Bribery may also be a violation of international law. 284
The FCPA, like the Convention
on Bribery, 285
makes the worst instances of bribery illegal. The FCPA
regulates illegal activity by U.S. companies outside of U.S.
territory. It criminalizes bribery of foreign government
officials involving U.S. corporations outside the United
States by making such conduct a punishable offense within the
where such bribery is intended to obtain or retain business. 287
Liability for violations of the FCPA generally consist of
fines, which are determined according to guidelines, 288
although an indictment can result in suspension of the right
to do business with the federal government, or result in
suspension of export licenses for military equipment. 289
b. Does the FCPA Imply a Private Cause of
The explicit remedy of the FCPA is that
the Attorney General can sue for injunction and obtain civil
or criminal penalties. 290
As to whether there is an implied private right of action
against a company guilty of bribery within the FCPA, the
Federal Circuit in Scientific Drilling Int'l, Inc. v. Gyrodata
determined that there is none. The court noted, however, that
the legislative *332
history on that point is in
fact unclear. 292
There is evidence both for and against a finding of a private
remedy under the FCPA. 293
The court's reasoning in Scientific
Drilling seems tautological. The court argues that the FCPA
creates no implicit private cause of action because there is
no explicit text to that end. 294
The illogic is further demonstrated in the court's argument
that a private cause of action would be "inconsistent" with
the FCPA, even though the FCPA explicitly provides the
possibility of civil penalties. 295
In dicta, the Scientific Drilling court also noted that even
if an implied remedy were found, practical facts would block
its application. Although an illegal contract can constitute
commercial activity under the Foreign Sovereign Immunities
and can be the basis for a finding of jurisdiction under the
the equitable doctrine of clean hands would bar recovery. 298
There is a problem with this justification of the court for
its decision. Unless a statute states otherwise, its remedies
are legal not equitable. 299
"Unclean hands" is a doctrine based in *333
Even if the plaintiff had invoked equity, and thus permitted
the court to apply the equitable doctrine of unclean hands to
prohibit a particular case from going forward, that is not an
argument for all cases to be categorically rejected from the
outset. The court in Scientific Drilling makes basic errors in
logic and law that could, and in fact, should be easily
The reasoning of the court in Scientific
Drilling is unconvincing. Better arguments reaching the same
result could have been found. For example, under a plain
meaning, or "black letter" interpretation, the statute was
unambiguous. Thus, there was no need to imply meanings not
facially evident. The court could have reasoned that the
express remedy excluded all other implicit remedies. Instead,
the court in Scientific Drilling struggles, perhaps
unconvincingly, with legislative history it considers
The court noted the statements of the House committee report,
which stated "[t]he committee intends that courts shall
recognize a private cause of action based on this legislation"
However, Senator Tower contradicted the House committee
report, as did the statements of Representative Devine, also a
member of the conference committee. 303
Rejecting the contradictory statements, the court concludes
with a tautology. The court explains that there is no implicit
remedy because the remedy is not explicitly stated. 304
This is based on a questionable teleology; namely, that the
statute aims at deterrence not compensation. The teleological
argument, however, is not based on legislative intent but
rather the inference of the court. The court holds that the
detailed enforcement scheme did not explicitly include a
private remedy. 305
That is, of course, an expressio unius 306
however, the court does not
appear to recognize this or use the term. For these reasons,
it would be possible in future litigation to limit or reverse
Scientific Drilling and find an implied right of action
similar to that in SEC Rule 10b-5, which addresses stock
fraud. Alternatively, Congress could simply amend the FCPA to
specifically provide a private cause of action. 307
Presently, however, individuals can call
the attention of the government to violations of the law, 308
but enforcement of the FCPA is only possible via government
Private parties cannot ordinarily bring suit under the FCPA, 310
although an FCPA claim may be evidence of a pattern of
racketeering necessary to support a RICO claim. 311
The FCPA is an extraterritorial
application of U.S. law, unlike the Alien Tort Claims Act and
Torture Victims Protection Act. 312
The FCPA has incited some
objection internationally 313
as an invasion of the sovereignty of other countries. Those
objections, however, are not well founded. In fact, the FCPA
is not so unusual; similar legislation also exists under
and international law. 315
For example, the European Union 316
also has anti-bribery legislation 317
and the United Nations has entered a resolution of the General
Assembly to curb corruption and bribery. 318
Nevertheless, it is necessary to consider the jurisdictional
aspects of the FCPA to determine whether there is any
substance to the critique.
The exercise of jurisdiction by U.S.
courts over companies outside of U.S. territory, whether for
violations of SEC disclosure laws or violations the FCPA, 319
raises the same jurisdictional problems found elsewhere in the
case of tort liability in the U.S. for torts committed outside
of U.S. territory under either the Alien Tort Claims Act or
the Torture Victims' Protection Act. In SEC v. Montedison,
an Italian corporation was prosecuted by the SEC under 5
U.S.C. §§ 78a, 78dd-1, 78dd-2, *336
and 78ff 321
for violations of the FCPA, for acts wholly undertaken in
In that case, defective internal accounting led to failure to
report bribery of Italian officials in Italy and ultimately,
the company was held liable. While there are many procedural,
jurisdictional, and prudential obstacles in exercising "long
arm" (ex orbitante) jurisdiction, U.S. exercise of "long arm"
jurisdiction overseas seems to be a part of the current
international legal landscape. 323
Although jurisdictional obstacles are not
necessarily going to block application of the FCPA outside
American territory, there are some loopholes in the FCPA,
which allow substantive acts to escape liability. Not all acts
of bribery are illegal under the FCPA. 324
The FCPA does, however, establish accounting requirements for
companies registered with the SEC, 325
effectively granting the SEC new regulatory powers outside of
U.S. territory 326
with far reaching implications. 327
While the FCPA is functionally enforceable, it raises
jurisdictional questions; namely, when may an extraterritorial
transaction or defendant be brought before a U.S. court. Those
questions can be partially answered by the fact that the SEC
does not compel all companies to register, but only requires
registration for publicly traded companies in the United
Therefore, companies *337
benefiting from trading in
U.S. markets should not be surprised when that includes
regulation by the U.S. laws. Thus, jurisdiction for the FCPA
(and, by extension, the Securities and Exchange Act) may be
considered universal jurisdiction under the protective
Unilateral remedies to criminal activity,
such as the FCPA, are generally criticized. 330
Multilateral remedies, however, do not seem any more or less
effective in reducing the worst instances of bribery. The
various anti-bribery conventions and federal laws are a small
step in the direction of transparent markets, which also
respect human rights.
Corporations can be held liable either as
principals or accomplices for activity overseas which is
against U.S. law, international law, and violations of foreign
domestic law. Violations of criminal law often include civil
damages as a remedy and/or imply violations of tort law. This
article has tried to outline some of the problems and
possibilities in bringing extraterritorial criminal law to
bear on corporations. As so often is the case in criminal law
if prosecutors wish to bring the power of the state to bear
they can, but they must be aware of the limits on the exercise
of their power, not the least of which is their limited
resources. Hopefully, this outline of possible remedies will
stretch those resources a bit into creative attacks on
wrongful activity Salus Reipublicae. 331
Ayoub, Note, Nike Just Does It - and Why the United States
Shouldn't: The United States International Obligation to Hold
MNCs Accountable for Their Labor Rights Violations Abroad, 11
DePaul Bus. L.J. 395
, 400-01 (1999) (chronicling unfair
labor practices perpetrated abroad by United States based
multinational corporations); see also Barbara
Crutchfield George & Kathleen A. Lacey, A Coalition of
Industrialized Nations, Developing Nations, Multilateral
Development Banks, and Non-Governmental Organizations: A Pivotal
Complement to Current Anti-Corruption Initiatives, 33 Cornell
Int'l L.J. 547
, 550 (2000) (theorizing that "international
business transactions carry the inherent threat and temptation for
bribery and corruption").
For an account of corporate facilitation of and complicity with
human rights abuses perpetrated by a corrupt political regime, see
Doddamani, Note, Fighting for the Right to Hold Multinational
Corporations Accountable: Indonesian Villagers Battle Oil Giant
Exxon Mobil, 49 Wayne L. Rev. 835
, 835-38 (2003), detailing
Exxon Mobil's employment of the security forces of the Indonesian
military dictator General Suharto, which allegedly perpetrated
human rights abuses against Achenese dissidents while protecting
the company's facilities in Aceh, Indonesia.
B. Metzger, Corporate Criminal Liability for Defective Products:
Policies, Problems, and Prospects, 73 Geo. L. J. 1, 47-48 (1984)
(recounting early common law view that, inasmuch as a corporation
lacked a mind with which to formulate requisite intent, and a
physical form to perpetrate actus reus, a corporation could not be
held criminally liable).
Orland, & Charles Cachera, Corporate Crime and Punishment in
France: Criminal Responsibility of Legal Entities (Personnes
Morales) under the New French Criminal Code (Nouveau Code
Pénal), 11 Conn. J. Int'l L. 111,
117 (1995) (quoting 1
William Blackstone, Commentaries *476).
See Orland, supra note 4, at 114-17 (explaining traditional French
model's rejection of vicarious imputation of criminal
responsibility to corporations because culpability was viewed as
unique to the individual and the model's influence on Western
European nations such as Belgium and the Netherlands).
Literally, "corporations cannot commit crimes." Orland, supra note
4, at 115 n.23. This maxim is the genesis of the traditional
French model. Inasmuch as the corporation lacks a mind with which
to formulate a criminal intent, imputation of criminal liability
to corporations was viewed as anathema to the principle that the
guilty mind formed the basis for criminal law. Nor could a
corporation commit the actus reus warranting criminal sanction.
See Orland, supra, note 4, at 115-16. Interestingly, the ancien
regime did recognize penal responsibility of corporations. However
the bourgeois revolutions' individualist ideal abolished
collective responsibility (e.g. "corruption of the blood", the
idea that descendants of a criminal are implicated in the
ascendant's crime are unconstitutional in the U.S.). Orland notes
that "before the French Revolution... criminal sanctioning of
corporations was generally accepted on the continent" and the "the
French Grande Ordonannce Criminelle of 1670 mentioned the subject
in great detail;" however, "the French Revolution ideal of
individualism... did away with the concept." Orland, supra note 4,
at 115 (quoting Guy
Stessens, Corporate Criminal Liability: A Comparative
Perspective, 43 Int'l & Comp. L.Q. 493
, 494 (1994)).
For an extensive discussion of corporate criminal liability in
French law, see Orland, supra note 4 at 114-17. The authors note
that beginning in the early 20th
century the American model imputed criminal liability vicariously
to the corporate entity for the culpable acts or omissions of its
employees and contrasts this with the French model, which did not
assign corporate liability for crime. Id. at 114-15. Each model
respectively influenced the common law and the civil law. However,
the U.S. model has since prevailed even in France. Id. at 115.
See Orland, supra note 4, at 116 (noting that German legal system
has not recognized corporate criminal liability per se, but has
implemented a system wherein administrative bodies may impose
fines on corporations).
Ramasastry, Corporate Complicity: From Nuremberg to Rangoon An
Examination of Forced Labor Cases And Their Impact on the
Liability of Multinational Corporations, 20 Berkeley J. Int'l L.
, 152 (2002) (noting that corporations can commit
international crimes and can therefore be tried nationally).
Sara Sun Beale & Adam G. Safwat, What Developments in
Western Europe Tell Us About American Critiques of Corporate
Criminal Liability, 8 Buff. Crim. L. Rev. 89
, 107-16 (2004)
(summarizing movement amongst various Western European nations
towards adopting corporate criminal liability).
S. Laufer, Corporate Bodies and Guilty Minds, 43 Emory L. J. 648
651-55 (1994) (discussing evolution of corporate criminal
liability in United States).
See Beale, supra note 10, at 158-59 (noting that European
advocates of corporate criminal liability posit that modern
criminal sanctions are more apt to circumscribe the corporations'
potential for harm); Metzger, supra note 3, at 47-48 (noting
corporation's inability to be subjected to imprisonment as
contributing to common law's rejection of corporate criminal
See generally Beale, supra note 10, at 159 (detailing alternative
European corporate criminal sanctions, including forced
Fisse, Reconstructing Corporate Criminal Law: Deterrence,
Retribution Fault, and Sanctions, 56 S. Cal. L. Rev. 1141
1163 n.96 (1983) (enumerating corporate criminal sanctions
provided for pursuant to United States federal law, including
Marie Amann, Capital Punishment: Corporate Criminal Liability
for Gross Violations of Human Rights, 24 Hastings Int'l &
Comp. L. Rev. 327
, 332 (2001). Amann also notes the
possibility of criminal liability of a corporation in Sweden and
J. Paust, The Other Side of Right: Private Duties Under Human
Rights Law, 5 Harv. Hum. Rts. J. 51,
58 (1992) (noting that
"individuals can be punished for human rights violations during
times of war" and specifying that prior to and after Nuremberg
"private individuals had been prosecuted for related violations of
the law of war").
See generally Gail
Partin, International Criminal Law, ASIL Guide to Electronic
Resources for International Law, Aug. 8, 2005
(noting that "most legal scholars agree that a recognizable body
of international criminal law does exist," but that "the precise
parameters of this body of law are often unclear, perhaps due to
the rapid and complex developments of our global society").
See Ramasastry, supra note 9, at 153 (listing international
See Kenneth C. Randall, Universal Jurisdiction under International
Law, 66 Tex. L. Rev. 785, 788 (1988) (defining the principle of
universal jurisdiction as conferring upon every state
"jurisdiction over a limited category of offenses generally
recognized as of universal concern, regardless of the situs of the
offense, and the nationalities of the offender and the offended").
See Ramasastry, supra note 9, at 153 (noting that nature of listed
crimes generates universal jurisdiction).
Nations Convention against Transnational Organized Crime
opened for signature Dec. 12, 2000, http://untreaty.un.org/English/notpubl/18-12E.doc
[hereinafter UN Convention]. The treaty has been signed by 147
states, including the United States. See United Nations Office on
Drugs and Crime, Signatories to the UN Convention against
Transnational Organized Crime and its Protocols, UN Convention
Signatories, Nov. 8, 2005, http://www.unodc.org/unodc/crime_cicp_signatures.html
See UN Convention, supra note 20.
McLaughlin, Improving Compliance: Making Non-State International
Actors Responsible for Environmental Crimes, 11 Colo. J. Int'l
Envtl. L. & Pol'y 377
, 393 (2000) (noting that the
International Law Commission has found certain violations of the
rules concerning environment may qualify as international crimes).
R. Ratner, Corporations and Human Rights: A Theory of Legal
Responsibility, 111 Yale L. J. 443
, 447 (2001) (positing
that trials of German industry leaders conducted by American
courts sitting in occupied Germany evidenced "the willingness of
key legal actors to contemplate corporate responsibility at the
States v. Krupp, IX Trials of War Criminals Before the Nuermberg
, at 1327 (1948).
See Ramasastry, supra note 9, at 108 (noting lengthy discussion of
firm's involvement in and perpetration of war crimes and crimes
against humanity in tribunal's decision).
States v. Krupp, IX Trials of War Criminals Before the
Nuerenberg Military Tribunals
, at 1412, 1416.
See Ramasastry, supra note 9, at 112 (citing Krupp as an exemplar
of judicial attribution of criminal liability to corporations).
States v. Krauch, et. al, [The I.G. Farben Case]
Trials of War Criminals Before the Nuremberg Military Tribunals
No. 10 (1952).
Ratner, Corporations and Human Rights: A Theory of Legal
Responsibility, 111 Yale L.J. 443
, 478 (2002) (positing that
court, by focusing on firms themselves, acknowledged a corporate
duty regarding human rights).
See Ramasastry, supra note 10, at 106 (commenting on corporation
in Farber being used as instrument of individual actors).
See Amann, supra note 24, at 331-32 (highlighting that
International Military Tribunal at Nuremberg found several Nazi
security services criminally liable).
32. See id. (finding
Nuremberg hearings opened door for artificial persons to be
guilty of crime); see also International
Council on Human Rights Policy, Beyond Voluntarism: Human
Rights and the Developing International Legal Obligations of
Companies, Clean Clothes Campaign, 2002, http://www.cleanclothes.org/ftp/beyond_voluntarism.pdf
(expanding idea of criminal liability from beyond states to
individuals and corporations).
Vogel, Elemente der Straftat: Bemerkungen zur franzoesischen
Straftatlehre und zur Straftatlehre des common law,
Goltdammer's Archiv fuer Strafrecht 127 (1998),
(concluding that numerous criminal law systems hold directors
and managers of corporations criminally liable for subordinates'
34. Some Anglophone
commentators think that the common law rule that a criminal must
have both criminal intent (mens rea) and have undertaken a
criminal act (actus reus) is also a principle of international
law. See, e.g., Jeanne
L. Bakker, The Defense of Obedience to Superior Orders: The
Mens Rea Requirement, 17 Am. J. Crim. L. 55, 66 (1989).
International Council on Human Rights Policy, supra note 32, at 55
(clarifying that "international law is traditionally made by
states and for states" and that "[i]t aims above all to bring some
order to inter-state relations").
See Eric Allen Engle, Alvarez-Machain v. United States and
Alvarez-Machain v. Sosa: The Brooding Omnipresence of Natural Law,
13 Willamette J. Int'l L. & Dispute Res. 149, 153 (2005)
(finding that "international law resembles the national legal
structure of pre-codification civilian legal systems").
The two elements of all common law crimes are actus reus (an act)
and mens rea (culpable intent). Some are willing to impose those
concepts on international criminal law. While mens rea is a
general principle of common law and thus is evidence of
international practice, civil law criminal theory could be very
different and must at least be consulted before making such
pronouncements. See, e.g., Bakker, supra note 34, at 56.
See id. (explaining both war crimes and other crimes require act
forbidden by law as well as guilty or culpable condition of mind).
See Ramasastry, supra note 10, at 153 (emphasizing higher burden
of proof imposed on prosecution in criminal cases).
States v. Parness, 408 F.Supp. 440
, 442 (1975) (arguing for new trial because "government's
attorney knew or should have known about material evidence...
[and] the government's attorney had failed to disclose or make
such evidence available to them").
See, e.g., Bakker, supra note 34, at 66 (explaining that obedience
to orders can manifest illegality when action is so obviously
See, e.g. United
States v. Lee, 937 F.2d 1388
, 1394 (1991) (holding that importation of fish from
Taiwan, illegal under Taiwanese law, was basis of U.S. conviction
because defendant knew or should have known that activity, illegal
in Taiwan, would also be illegal in the U.S.).
v. Furundzija, [1998 ICTY 3, P 245 (Dec. 10, 1998)
ICTY 3, P 245 (Dec. 10, 1998), available at http://www.worldlii.org/int/cases/ICTY/1998/3.html
(acknowledging it is not required that accomplice share in mens
rea of principal actor).
44. See Vietnam
Ass'n for Victims of Agent Orange/Dioxin v. Dow Chemical Co.,
373 F. Supp. 2d 7, 54-55 (2005) (citing several law review
articles for traditional argument against imposing corporate
See id. at 58
(commenting on need for
corporate liability in today's society); see also Restatement
(Third) Foreign Relations Law § 421(2)(e) (1987) (theorizing that
"in general, a state's exercise of jurisdiction to adjudicate with
respect to a person or thing is reasonable if, at the time of
jurisdiction is asserted:... the person, if a corporation or
comparable juridical person, is organized pursuant to the law of
The maxim "actus non facit reum, nisi mens sit rea" was introduced
into French Canadian law by the English. See Wallace
Schwab & Roch Pagé, Locutions Latines Utilisées En Droit
(last visited **
Jan. 18, 2006). The text reads "cette maxime provient du
Common law où on dit que l'intention et l'acte doivent être en
concordance pour constituer un crime, (this maxim comes from
Common law where it is said that the intention and the act must
be in agreement to constitute a crime)." Id. Because Canadian
criminal law is federal and essentially modeled on the common
law, the appearance of mens rea and actus reus in Quebec case
law is not especially strong evidence that these principles
exist in civilian law and by extension international law. Id.
See, e.g., The
Queen v. Parent
(defining common law and statutory definition of
provation and its effect in distinguishing between criminal charge
of murder and manslaugher).
See, e.g.,Vogel, supra note 33 (comparing when mens rea is a
requirement as oppose to exceptions where vicarious liability of
superiors does not require liability in French and German criminal
For example, the term "mens rea"does not appear at all in
monolingual French or German dictionaries of law. In a bi-lingual
English-German law dictionary suggested translations of "mens
, and "Schuldbewusstsein
Von Beseler & Barbara Jacobs-Wustefeld, Law Dictionary:
Technical Dictionary of the Anglo-American Legal Terminology
Including Commercial & Political Terms: German-English
1056 (1st ed. 1986).
See, e.g., Commission
of the European Communities, Green Paper on Criminal-law
Protection of the Financial Interests of the Community and the
Establishment of a European Prosecutor, COM (01)715 final, Nov.
at 40 n.26, http://europa.eu.int/eur-lex/en/com/gpr/2001/com2001_0715en01.pdf
(confirming the acceptance of criminal liability for corporations
for all the Member States); see
Brought on 18 January 1999 by HFB Holding fuer
Fernwaermetechnik Beteiligungsgesellschaft mbH & Co. KG
and Others against the Commission of the European Communities
(HFB Holding fuer Fernwaermetechnik Beteiligungsgesellschaft
mbH & Co KG and Others v. Commission), 1999 J.O. (C 86)
24, available at http://europa.eu.int/eur-lex/pri/en/oj/dat/1999/c_086/c_08619990327en00240025.pdf
(pleading "infringement of Article 6(2) of the European
Convention on Human Rights and the principle of mens rea under
Article 15(2) of Regulation No 17/62").
Church of Sudan v. Talisman Energy Inc.
Supp. 2d 289
, 316 (2003) (explaining mens rea requirement
for corporate liability in international law).
See Black's Law Dictionary 459 (8th ed. 2004) (defining "de
a latin phrase meaning "from law to be
passed" as "a proposed principle that might be applied to a given
situation instead or in the absence of a legal principle that is
in force"); Beck's Law Dictionary: A Compendium Of International
(last visited **
Jan. 18, 2006) (defining "lex
as "what the law is (as opposed to what the law should
See generally Presbyterian
Church of Sudan, 244 F. Supp. 2d
at 315 (noting that
Nuremburg trials were root in common law for imposing criminal
liability against corporations).
See generally Jens
David Ohlin, Is the Concept of a Person Necessary for Human
Rights?, 105 Colum. L. Rev. 209
, 227 (2005) (noting
recognition of rights of corporations in tax realm and in other
areas has spurred a push for domestic and international criminal
liability for corporations).
Damaska, The Shadow Side of Command Responsibility, 49 Am. J.
Cop. L. 455
, 456 (2001) (commenting that international
criminal law is more hospitable when it comes to the doctrine of
complicity and other forms of vicarious liability); see also
Kendel Drew and Kyle A. Clark, Twentieth Survey of White Collar
Crime, 42 Am. Crim. L. Rev. 277, 280 (2005) (clarifying that the
agency relationship is established for criminal liability purposes
when employee acts within scope of employment).
See The American Law Institute, Restatement of the Law (Second)
Agency, § 1 (1958) (defining agency as "the fiduciary relation
which results from the manifestation consent by one person to
another that the other shall act on his behalf and subject to his
control, and consent by the other so to act").
See Ramasastry, supra note 10, at 155 n.267 (describing how some
common law systems have resolved issue of "imputing the acts of a
natural person to a corporation" by "adopting vicarious
See id. (defining attribution as "identification of the acts of
those representing the corporate "mind" or "will" as acts of the
are acts that are "crime[s] merely because [they
are] prohibited by statute, although the act[s] [themselves are]
not necessarily immoral." Black's Law Dictionary 971 (7th ed.
1999). Mala prohibita have also been defined as acts which are "made
offenses by positive laws, and prohibited as such."
Law Dictionary 956 (6th ed. 1990).
See Ramasastry, supra note 10, at 155 n.267 (referencing H.L.
Bolton (Eng'g.) Co. Ltd. v. Graham & Sons Ltd., 1 Q.B.
, for the United Kingdom's version of the
identification principle known as "the directing mind doctrine").
See id. (describing how acts and mens rea of employee can become
acts and mens rea of corporation).
See id. (explaining that civil law jurisdictions have enacted
legislation providing for application of "specific penal laws to
Mala in se are "act[s] that [are] inherently
immoral, such as murder, arson, or rape," Black's Law Dictionary
971 (7th ed. 1999), while Mala in se are described as
"[w]rongs in themselves" or "acts morally wrong" or "offenses
against conscience," Black's Law Dictionary 956 (6th
ed. 1990). For example,
parking violations are mala prohibita; there is nothing inherently
evil about a car being in a metered parking space but when the
meter runs out, the act becomes wrongful by operation of positive
law. In contrast, drunken driving is a mala in se; the act is
inherently evil because the drunken driver cannot properly judge
his speed or the distance of objects and, thus, kills people.
Further, the mala in se and mala prohibita distinction parallels
that of natural law and positive law. Because mala in se are evils
so wrong that they are inscribed on the heart of all living
beings, they are naturally recognized by all as wrongs, need not
be declared by the legislator to be evil, and may be banned ex
post facto. On the other hand, mala prohibita are only positive
wrongs and, thus, are wrong merely by operation.
See Ramasastry, supra note 10, at 100 (including accomplice
liability as one of three ways in which a corporation could be
liable for violating international guidelines).
See Partin, supra note 16, at P 1 (declaring international
criminal law as being derived from general principles of
international law, customary law, and treaties).
Clapham & Scott Jerbi, Categories of Corporate Complicity in
Human Rights Abuses, 24 Hastings Int'l & Comp. L. Rev. 339
342-43 (2001) (positing that corporation could be accomplice in
human rights violation if it violates customary international law
See id. at 342 (noting that it is not necessary for accomplice to
intend eventual, criminal result).
Id. at 345.
See Ramasastry, supra note 10, at 101 (denoting the three types of
complicity for which multi-national corporations might be held
See Clapham & Jerbi, supra note 66, at 342 (noting direct
participation requires "intentional participation").
See id. at 342 (saying that "only knowledge of the foreseeable
harmful effects" is required to be a direct participant).
See id. at 346 (identifying situations where complicity found by
business receiving benefit from "human rights abuses" of another).
See id. at 347-48 (explaining that notion of silent complicity
stems from expectation that companies alert proper authorities to
known human rights abuses based on principle that "[s]ilence is
See id. at 348 (viewing silent complicity more as moral issue than
as issue likely to be pursued and penalized by respective
See generally Clapham & Jerbi, supra note 66, at 341 (working
from premise that levels of complicity mirror levels of complicity
likely to be attributed to offending corporation).
sine qua non
is a "[a]
necessary cause; the cause without which the thing cannot be or
the event could not have occurred." Black's Law Dictionary
211 (7th ed. 1999). It has also been described as "[a]n
indispensable requisite or condition." Black's Law Dictionary 1385
(6th ed. 1990).
v. Kunarac, Case Nos. IT-96-23-T, IT-96-23/1-T,
391 (Int'l Crim. Trib. for Former Yugoslavia Feb. 22, 2001),
available at http://www.un.org/icty/foca/trialc2/judgement/index.htm
(last visited **
Jan. 18, 2006) (stating that "[t]he act of assistance need not
have caused the act of the principal").
v. Tadic, Case No. ICTY-94-1-T, P 688 (Int'l Crim. Trib. for
Former Yugoslavia, May 7, 1997)
, available at http://www.un.org/icty/tadic/trialc2/judgement/index.htm
(last visited **
Jan. 18, 2006) (explaining that in order to be held responsible
individual must know that they are assisting in commission of
Doe I v. Unocal Corp.
(9th Cir. 2002), vacated by 395 F.3d 978 (9th Cir. 2003)
court in John Doe I v. Unocal Corp., 395
(9th Cir. 2003), later determined that this case would
be reheard by the 9th Circuit en banc, and that the earlier
decision will only be cited to the extent consistent with the en
banc rehearing. Id.
See Unocal, 395 F.3d at 948 (finding that District Court "erred"
in applying "active participation" standard).
See Clapham & Jerbi, supra note 66, at 342 (clarifying that
neither identity of principal perpetrator nor proven guilt of
principal perpetrator need be proven for corporation to be found
criminally liable under theory of direct complicity).
See id. at 343 (noting crime itself need not be known to
accomplice in order to be criminally liable).
See, e.g., Joel
R. Paul, Symposium, Holding Multi-National Corporations
Responsible Under International Law, 24 Hastings Int'l &
Comp. L. Rev. 285
, 293 (2001) (acknowledging that while
multinational corporations may be held liable for intentional
human rights violations, "it is uncertain whether corporations may
also be held liable for silent complicity in human rights
States v. von Weizsaecker [The Ministries Case], XIV Trials of
War Criminals Before the Nuremberg Military Tribunals Under
Control Council Law No. 10
, at 621-22 (1949).
See Ramasastry, supra note 10, at 112-13 (holding that
"the mere act of providing credit to finance criminal activities
does not constitute a violation of customary international law,
even where the bank had knowledge of the purpose for such
Anderson, Transnational Corporations and Environmental Damage:
Is Tort Law the Answer?, 41 Washburn L.J. 399
, 401 (2002).
A. Williams, Corporate Social Responsibility In An Era Of
Economic Globalisation, 35 U.C. Davis L. Rev. 705
(2002) (describing problem of "judgment proof" companies in third
world held by or trading with solvent first world companies).
See, e.g., Case
286/98 P, Stora Kopparbergs Bergslags AB v. Commission
, para. 79 (2000) (stating that legal personalities
of subsidiary companies are not sufficient to prevent liability of
the parent company).
Everett, New Concern For Transnational Corporations: Potential
Liability For Tortious Acts Committed By Foreign Partners, 35
San Diego L. Rev. 1123
, 1124-27 (1998) (noting that Doe v.
Unocal Corp., 963
F. Supp. 880
(C.D. Cal. 1997), implies potential parent
liability for tortious acts of subsidiaries and expressing
concerns as to limits of such liability).
Anderson, supra note 86, at 402.
Goldman, Multinational Enterprises, Justitia et Pace Institut de
Droit international, Sept. 7, 1977
(clarifying that "enterprises which consist of a decision-making
centre located in one country and of operating centres, with or
without the legal personality, situated in one or more countries
should, in law, be considered as multinational enterprises").
See, e.g., Amann, supra note 14, at 333 (commenting that Chevron
and Unocal were never prosecuted by the U.S. government or the
State of California for human rights abuse in the third world).
See generally Kent
Greenfield, Ultra Vires Lives! A Stakeholder Analysis Of
Corporate Illegality (With Notes On How Corporate Law Could
Reinforce International Law Norms), 87 Va L. Rev. 1279
1279-92 (2001) (positing that decision to violate international
laws should be based on costs of violating the law (citing Frank
H. Easterbrook & Daniel R. Fischel, Antitrust Suits by
Targets of Tender Offers, 80 Mich. L. Rev. 1155
, 1168 n.36
See Greenfield, supra note 93, at 1329-30 (acknowledging that
corporation's power is derived from the state).
See id. at 1329-30 (noting "a state has no authority to authorize
anyone, including a corporation, to engage in acts that are
illegal in another jurisdiction").
See id. at 1326-28 (concluding that interests of both the state
and the corporation are better served by compliance with the law).
See Black's Law Dictionary 1525 (7th ed. 1999) (defining ultra
vires as "unauthorized; beyond the scope of power allowed or
granted by a corporate charter or by law").
See Greenfield, supra note 93, at 1280-81 (stating corporations
are not authorized under charters to act unlawfully).
See id. at 1281-83 (noting that corporations are bound to act in
accordance with, not only laws of the corporation, but with laws
of the state).
See id. at 1282-83 (arguing that obligation to abide by law
extends beyond jurisdiction of incorporation to foreign
See id. at 1373 (interpreting doctrine of ultra vires as meaning
"corporations have the duty, as a matter of domestic corporate
law, to act lawfully even in foreign nations").
See Ramasastry, supra note 10, at 155 n.267 (discussing
difficulties in finding requisite mens rea to commit crime for
See id. at 155 n.267 (stating that some jurisdictions attribute
mens rea of employee to corporation).
A. Whytock, Thinking Beyond the Domestic-International Divide:
Toward a Unified Concept of Public Law, 36 Geo. J. Int'l L. 155
193 n.5 (2004) (acknowledging domestic laws generally arise from
constitutions and legislation while international law is from
treaties and international custom).
Shelton, Human Rights and the Hierarchy of International Law
Sources and Norms: Hierarchy of Norms and Human Rights: Of
Trumps and Winners, 65 Sask. L. Rev. 299
, 322 (2002)
(discussing peremptory norms as a source of customary
Acts & Docs 59, available at http://www.yale.edu/lawavalon/decade/decad026.htm#art59
(clarifying "the decision of the Court has no binding force except
between the parties and in respect of that particular case").
Black's Law Dictionary 865 (7th ed. 1999) (defining jus gentium as
"the law of nations").
38, available at http://www.yale.edu/lawavalon/decade/decad026.htm#art38
(stating "the Court, whose function is to decide in accordance
with international law such disputes as are submitted to it, shall
apply: ... the general principles of law recognized by civilized
E. Edwards, International Human Rights Law Challenges to the New
International Criminal Court: The Search and Seizure Right to
Privacy, 26 Yale J. Int'l L. 323
, 388-89 (2001) (stating
"two elements must be present for a principle or rule of customary
international law to exist: (1) state practice as proof of custom;
and (2) opinio juris vel necessitatis (opinio juris)").
Id. at 389 (defining internal law of relevant states as proof of
"state practice" element and explaining that opinio juris
"requires an examination of a State's motives in engaging in a
particular act or practice").
The problem of ultra vires in international law is complicated by
the fact that ultra vires is both a common law principle of
corporations and of public entities. The indifferent application
of a legal theory to a private artificial legal person and a
public one is essentially contrary to civilian legal theory, which
sees a strict split between interpretations of private and public
laws and definitive attributions of powers and limitations to
artificial persons based on their status as public or private.
Under classic international law, a corporation would not be
recognized as having any legal personality because states are the
only subjects of international law. Thus, in the corporate sense,
ultra vires could have no application in the international arena.
Furthermore, international law has long recognized that a state is
liable internationally for its acts regardless of its internal
legal order and will be held responsible for its wrongs even if
those wrongful acts were also, in the internal order, legal and
constitutional. Therefore, ultra vires really had no place in the
international system. For an example of a common law lawyer who,
citing to the Inter-American Court of Human Rights, reaches the
correct result - that ultra vires, as to states, is irrelevant to
the question of state liability to other states see Theodor Meron,
State Responsibility for Violations of Human Rights, 83 Am. Soc'y
Int'l L. Proc., 372, 375-76 (1989). To read Mizushima Tomonori, a
Japanese civil law legal scholar's view that ultra vires does not
apply to states because a state can be liable internationally even
for those acts which it undertakes in violation of its own laws
Tomonori, Holland and Hart Private International Law Award: The
Individual as Beneficiary of State Immunity: Problems of the
Attribution of Ultra Vires Conduct, 29 Denv. J. Int'l L. &
, 277-78 (2001).
Butler, Models Of Modern Corporations: A Comparative Analysis Of
German And U.S. Corporate Structure, 17 Ariz. J. Int'l &
Comp. L. 555
, 568 (2000) (stating German law has no
equivalent to the ultra vires doctrine).
Grunson & Uwe H. Schneider, The German Landesbanken, 1995
Colum. Bus. L. Rev. 337
, 376 (1995) (noting while ultra
vires is not recognized for German corporations, the German
Supreme Court has applied the doctrine twice when certain public
law entities acted outside their function as defined by law).
Guillien et al., Lexique de Termes Juridiques
384 (4th ed.
Cornu, Vocabulaire juridique
847 (6th ed. 1996).
The general principles of law are like axioms and postulates of
the law. They are true of any civil law jurisdiction. Thus, for
example, the principle of legality implies nul crimen sine lege
(there can be no crime where there is no law); the principle of
equality implies that all persons are equal before the law; the
principle of self defense means that one has the right to an
attorney. Aside from international law and vestigial through the
maxims of equity, general principles of law simply do not exist as
a source of law in the common law. The nearest parallel in the
U.S. is the idea of "fundamental rights;" however, the overlap
between "fundamental rights" and "general principles of law" is
only partial. For comparison, see Restatement (Third) of Foreign
Relations Law of the United States § 102 (4) (1987), which allows
common general principles of law to be invoked to supplement the
rules of international law.
See generally James
A. Fanto, The Transformation of French Corporate Governance and
United States Institutional Investors, 21 Brook. J. Int'l L. 1
29-67 (1995) (discussing structure and transformation of French
See Greenfield, supra note 93, at 1373 (proposing that if ultra
vires were applied, a shareholder could sue a corporation for
breaking the law of a foreign country).
The German Aktiengesellschaft (AG) is similar to a corporation or
to the French SNC (Société en nom Collectif). The AG and SNC
find their equivalent in the archaic but still existing "joint
stock company." They are partnerships with limited liability, but
alienable shares. For a discussion on AG see David
J. Berger, Guidelines for Mergers and Acquisitions in France,
Nw. J. Int'l L. & Bus. 484,
500-01 (1991). For an
explanation of the nature of the AG and tracing its origins to
early British joint stock companies see Ingrid
Lynn Lenhardt, Eighth Annual Corporate Law Symposium: Limited
Liability Companies: The Corporate And Tax Advantages of Limited
Liability Company: A German Perspective, 64 U. Cin. L. Rev. 551
Société Anonyme avec Responsabilité Limité (SARL), an
anonymous association with limited liability, is, in other words,
a corporation. The SARL is one French equivalent of the
corporation. For further explanation of the nature of a SARL see
Berger, supra note 119, at 495-96.
See Greenfield, supra note 93, at 1372-73 (explaining application
of ultra vires in international sense would allow shareholder to
hold corporation to contractual obligation even if the host
government was unwilling to do so).
See Greenfield, supra note 93, at 1373-74 (suggesting ultra vires
would offer remedy against corporations who violate international
customary law, decreasing abuses of human rights).
principle created to apply to a given situation, rather than
from existing precedents; law created for changing
Black's Law Dictionary 438 (7th ed. 1999).
"Existing law. The principle that a court should decide based on
actual law and not on how it thinks the law ought to be."
See Comment, Herald
Co. v. Seawell: A New Corporate Social Responsibility?, 121 U.
Pa. L. Rev. 1157
, 1157 (1973) (proposing there is lack of
social responsibility in corporate realm).
v. Ford Motor Co
684 (Mich. 1919) (positing that business corporation is
organized and carried on primarily for profit of stockholders).
Friedman, Capitalism and Freedom
133 (Univ. of Chicago Press
1971) (1962) (advancing notion that corporation has sole
responsibility of increasing profits of shareholders).
See id. at 133 (stating corporations must "stay within the rules
of the game" when seeking to increase its profits); see also
Greenfield, supra note 93, at 1281-82 (emphasizing often
overlooked requirement that articles of incorporation require
charter corporations only for lawful purposes).
Co. v. Seawell, 472 F.2d 1081
(10th Cir. 1972).
See id. at 1095 (acknowledging that defendant corporation, not
unlike other corporations, has duty to its employees over and
above maximizing profit).
Wai, Transnational Liftoff and Juridical Touchdown: The
Regulatory Function of Private International Law in an Era of
Globalization, 40 Colum. J. Transnat'l L. 209,
(suggesting that progressive corporate practices may become more
common because they make good business sense rather than out of
Moore Dickerson, How Do Norms and Empathy Affect Corporation Law
and Corporate Behavior?: Human Rights: The Emerging Norm Of
Corporate Social Responsibility, 76 Tul. L. Rev. 1431
(2002) (suggesting that directors face lower risk of liability for
human rights violations in U.S. courts than for violating duties
to shareholders, but holding out hope that there is growing trend
for liability for human rights violations).
See id. at 1432 (noting that, in actual behavior, corporations are
moving beyond the classic model of limited social responsibility
and that "[a]s a matter of conduct, multinationals recognize the
rights of persons other than shareholders").
doctrine holding an employer or principal liable for the
employee's or agent's wrongful acts committed within the scope
of the employment or agency."
Black's Law Dictionary 1313
(7th ed. 1999).
See id. at 632 (defining rule).
Khanna, Corporate Liability Standards: When Should Corporations
be Held Criminally Liable?, 37 A. Crim. L. Rev. 1239
(2000) (explaining strict liability imposes liability on
corporation for acts or omissions of its agents, whenever these
acts or omissions result in harm); see also Symeon C. Symeonides,
Choice of Law in the American Courts in 2001, 50 Am. J. Comp. L.
1, 78 (2002) (holding that through adoption of strict liability
laws, Texas has expressed interest in protecting its consumers
while simultaneously regulating products in stream of commerce).
Rex Jacobson, Doing Business with the Devil: The Challenges of
Prosecuting Corporate Officials Whose Business Transactions
Facilitate War Crimes and Crimes Against Humanity, 56 A.F. L.
, 214 (2005) (noting that recognition of corporate
criminal and civil liability, has allowed victims of human rights
abuses to better vindicate rights).
K. Block, Optimal Penalties, Criminal Law and the Control of
Corporate Behavior, 71 B.U.L. 395
, 397-98 (1991) (arguing
that optimal penalties for corporate criminal liability set at
level which reflects costs to society forces economic agents to
internalize total cost of activities rather than force society to
bear costs of harm).
See id. at 398
(stating that calculating
fines based on harm to society promotes the most efficient
Nesteruk, Bellotti and the Question of Corporate Moral Agency,
1988 Colum. Bus. L. Rev. 683
, 687-89 (1988) (positing that
corporations are incapable of exercising moral freedom because
they are ultimately controlled by their structures).
Betz, Holding Multinational Corporations Responsible for Human
Rights Abuses Committed by Security Forces in Conflict Ridden
Nations: An Argument Against Exporting Federal Jurisdiction for
the Purpose of Regulating Corporate Behaviour Abroad, 14 DePaul
Bus. L.J. 163
, 164 (2001) (advancing theory that investments
of multinational corporations are politically neutral and should
not influence behavior of sovereign nations).
See generally Dickerson, supra note 132, at 1432-33 (noting both
Nike and Wal-Mart have adopted codes of conduct to articulate
concern and regulate the working conditions of developing country
workers); Ramasastry, supra note 10, at 93-94 (examining history
of corporate liability for forced labor and arguing that MNCs
should be either criminally or tortuously liable for egregious
abuses of human rights).
See Ratner, supra note 29, at 464-65 (explaining deterrence
rationale, as applied to corporate criminal liability, places
incentives to curb human rights violations on party with greatest
ability and interest in addressing corporate conduct).
Friedman, In Defense of Corporate Criminal Liability, 23 Harv.
J. L. & Pub. Pol'y 833
, 840-41 (2000) (citing Kant for
proposition that "the state must punish individuals who violate
the law because they have violated the law and only because they
have violated the law - without regard, that is, for the
consequences that might flow from the imposition of punishment").
A. Pollard, Wrongful Analysis in Wrongful Life Jurisprudence, 55
Ala. L. Rev. 327
, 340 (2004) (referring to Restatement of
Torts for the proposition that main purposes of tort litigation is
giving compensation, indemnity, or restitution for harm,
determining rights, deterring wrongful conduct and vindicating
146. See John
C. Coffee, Jr., Does "Unlawful" Mean "Criminal?": Reflections
on the Disappearing Tort/Crime Distinction in America Law, 71
B.U.L Rev. 193, 231 (1991) (stating traditional concept
that tort law serves to compensate while criminal law serves to
punish and positing that perhaps distinction can be correlated
with decline in private enforcement of criminal law).
147. See Beth
Stephens, Conceptualizing Violence: Present and Future
Developments in International Law: Panel I: Human Rights &
Civil Wrongs at Home and Abroad: Old Problems and New
Paradigms: Conceptualizing Violence under International Law:
Do Tort Remedies Fit the Crime?, 60 Alb. L. Rev. 579, 585
(1997) (outlining moral underpinnings of international
tort/crime distinction and noting that international crimes
involve entire community while torts only affect parties
See Friedman, supra note 144, at 852 (discussing modern
corporation's unique position as entity separate from its managers
and employees and arguing that corporation can therefore be held
criminally responsible for its conduct in same manner as
See Ramasastry, supra note 10, at 153 (explaining that criminal
sanctions are greater deterrent than civil sanctions for corporate
criminal liability because criminal sanctions have much more
stigmatizing side effects than do civil sanctions).
Id. at 153 (advancing universality principle as granting
jurisdiction to national court regardless of where offense
occurred or of the nationality of defendant).
151. See Joseph
F.C. DiMento, Gilbert Geis and Julia M. Gelfand, Corporate
Criminal Liability: A Bibliography, 28 W. St. U.L. Rev. 1,
2 (2000) (noting that corporations almost always have more
assets than individuals and therefore from a restitution
perspective are better able to compensate victims).
B. Shephard, Time and Money: Discovery Leads to Hourly Billing,
1999 U. Ill. L. Rev. 91,
98 (1999) (explaining that broad
discovery standards actually hurt many potential litigants because
they raise cost of litigation and therefore deny many vulnerable
groups legal recourse).
Stephens, Corporate Liability: Enforcing Human Rights Through
Domestic Litigation, 24 Hastings Int'l & Comp. L. Rev. 401
411 (2001) (noting that most countries have "loser pays" policy in
that prevailing party can be compensated for legal fees by the
See Eric Allen Engle, Corporate Social Responsibility (CSR):
Market-Based Remedies for International Human Rights Violations?,
40 Willamette L. Rev. 103, 120-21 (2004) (commenting that while
codes of conduct or corporate self-regulation alone will not spur
reform of corporate human rights abuses, when combined with
binding civil or criminal law they can be used to promote higher
standards of conduct).
U.S.C. §§ 1963-1964 (2005)
(enumerating both civil and
criminal remedies for violation of the Racketeering Influenced and
Corrupt Organizations Act); see also 17
§ 240.10b-5 (2003)
(listing civil causes of action).
James Nicholas Boeving, Aggression, International Law, and the
ICC: An Argument for the Withdrawal of Aggression from the Rome
Statute, 43 Colum. J. Transnat'l L. 557
, 607 (2005) (noting
that punitive damages are not available in international civil
See Transp. Ins. Co. v. Moriel, 879
18 (Tex. 1994) (explaining that tort law recognizes
compensation and not punishment as its objective and therefore,
punitive damages are reserved only for most exceptional cases).
18 U.S.C. §§ 1961-1968 (2005)
v. Royal Dutch Petroleum, No. 96 Civ. 8386, 2002
LEXIS 3293, at *66-67 (S.D.N.Y Feb. 22, 2002) (holding that even
though RICO is silent on extraterritorial application, it is clear
that foreign corporation is not shielded from liability merely
because of location).
(2005) (listing possible criminal penalties, such as
fines and imprisonment for violation of RICO); 18
§ 1964 (2005)
(enumerating possible civil remedies implicit
U.S.C.A. § 78dd-3 (2005)
. Subsection (e) lists the criminal
penalties and subsection (d) provides for injunctive relief as a
civil remedy to the FCPA. 18 U.S.C. § 1963-1964 (2005). RICO's
criminal penalties are provided for in § 1963 and a civil remedy
is listed in § 1964. Notably, a "defendant can be both criminally
and civilly liable under Rule 10-b." Securities Fraud, 37 Am.
Crim. L. Rev. 941, 946 (2000).
Crime Control Act of 1970, Pub. L. No. 91-452, 84 Stat. 922, 923
(proclaiming that it is "the purpose of this act to
seek the eradication of organized crime in the United States...").
S.P.R.L. v. Imrex Co., Inc.
-96 (1985) (discussing pattern of racketeering as
sufficient to establish claim under RICO).
See Sedima, 473 U.S. at 496 (noting that plaintiff must allege
each of these elements in order to state a claim).
& Gamble Co. v. Big Apple Indus. Bldgs., Inc
, 15 (2d Cir. 1989) (defining "enterprise" for RICO
States v. Angelilli
, 30-33 (2d Cir. 1981) (discussing broad definition of
"enterprise" as encompassing governmental entity due to lack of
contrary legislative intent).
U.S.C. § 1962(c) (2000)
. The act prohibits racketeering
activities by "any person employed by or associated with any
Chappaqua Corp. v. Marine Midland Bank, N.A
, 344 (2d Cir. 1994).
Inc. v. NYNEX Corp.
, 1064 (2d Cir. 1996) (applying Riverwoods to NYNEX
Group and its three subsidiary corporations), rev'd on other
grounds, 525 U.S. 128 (1998)
Kushner Promotions v. King, 533
-66 (2001) (suggesting that in such a situation the
two would qualify under RICO as distinct entities).
See 18 U.S.C. § 1962(c)-(d) (2000). Subsection (d) makes it
unlawful to conspire to violate the other provisions of the
See 18 U.S.C. § 1961(5) (2000) (providing definition of "pattern
of racketeering activity" for purposes of RICO Act).
Inc. v. Northwestern Bell Tel. Co.
-39 (1989) (noting "it is not the number of
predicates but the relationship that they bear to each other or to
some external organization" that is relevant for RICO purposes).
& Gamble Co. v. Big Apple Indus. Bldgs., Inc., 879
, 15 (2d Cir. 1989) (specifying complaint must
independently allege both an enterprise and pattern of
Falco v. Dirie, 923 F. Supp. 473, 477 (S.D.N.Y. 1996)
H.J. Inc., 492 U.S. at 240).
18 U.S.C. § 1961(1)(A)-(B) (2000) (outlining crimes qualifying as
(2005). Extortion is defined by the act as "the
obtaining of property from another, with his consent, induced by
wrongful use of actual or threatened force, violence, or fear, or
under color of official right." Id. It seems logical that an act
of extortion could be furthered through the use of these other
crimes listed as predicate acts.
(2000) (codifying federal crime of racketeering).
See 18 U.S.C. § 1951(a) (2000) (requiring this element
Id. Specifically, "whoever in any way or degree obstructs, delays,
or affects commerce or the movement of any article or commodity in
commerce, by robbery or extortion or attempts or conspires so to
do, or commits or threatens physical violence to any person or
property in furtherance of a plan or purpose to do anything in
violation of this section shall be fined under this title or
imprisoned not more than twenty years, or both." Id.
(2000). This conspiracy provision applies to all
of the provisions of subsections (a), (b), or (c). Id.
v. United States, 522
52, 65 (1997)
(clarifying that § 1962(d) omitted
requirement of an overt act).
States v. Zichettello
, 99 (2d Cir. 2000) (holding that it is not necessary that
conspirator knows of all acts done in furtherance of conspiracy
for RICO charge).
See, e.g., Orion
Tire Corp. v. Goodyear Tire & Rubber Co.
, 1137 (9th Cir. 2001) (examining facts under RICO,
state law, and foreign law claims).
See United States v. Paone, 782
, 393 (2d Cir. 1985) (explaining that RICO predicate acts
may be acts "chargeable by state law" and that, particularly in
this case, all were New York state offenses).
United States v. Bagaric, 706
, 62 (2d Cir. 1983), abrogated on other grounds by, Nat'l
Org. for Women v. Scheidler, 510
See, e.g., United States v. Coonan, 938
, 1564-65 (2d Cir. 1991) (striking down defendant's
argument regarding Double Jeopardy clause because Congress'
intention in using state law to define predicate acts in RICO was
for generic definitory purposes rather than specific procedural
United States v. Carillo, 229
, 186 (2d Cir. 2000).
See Paone, 782 F.2d at 393 (concluding that the court is
"satisfied that Congressdid not intend to incorporate the various
states' procedural and evidentiary rules into the RICO statute"
and that "[t]he statute is meant to define, in a more generic
sense, the wrongful conduct that constitutes the predicates for a
federal racketeering charge"); see also Coonan, 938 F.2d at 1564
(alluding to Paone and its progeny). But see Peters v. Welsh Dev.
Agency, No. 86 Civ. 2646, 1991 WL 172950, at *7 (N.D. Ill. Aug.
29, 1991) (asserting that allowing state law charges as predicate
acts extends bounds of RICO too far).
See Orion Tire Corp. v. Goodyear Tire & Rubber Co., 268
, 1137 (9th Cir. 2001) (opening possibility of using
foreign law for predicate offenses).
See id. at 1137 (theorizing that Chinese law may be considered
when interpreting intentions of RICO statute).
See N. S. Fin. Corp. v. Al Turki, 100
, 1051 (2d Cir. 1996) (ascertaining whether Congress,
under RICO, intended federal courts to extend jurisdiction over
international controversies because RICO statute is textually
silent regarding extraterritoriality).
See Alfadda v. Fenn, 935
, 479 (2d Cir. 1991) cert. denied, 419
(noting proposition that foreign corporations
are not immune from RICO liability because they are not located
within the United States (citing United States v. Parness, 503
(2d Cir. 1974))).
See N. S. Fin. Corp., 100 F.3d at 1051 (expressing lack of
definitive precedent regarding amounts of activity necessary for
RICO subject matter jurisdiction).
See id. at 1051-52 (reiterating that extraterritorial jurisdiction
is possible, but must meet standards of "conduct" and "effects"
United States v. Noriega, 746
, 1516 (S.D. Fla.
) (concluding RICO applied extraterritorially).
v. M/V Fir Grove, 801 F. Supp. 349 (D. Or. 1991).
See id. at 357 (asserting that unless Congress made its intentions
clear within statutory language, it would not be considered to
extend extraterritorially and emphasizing because RICO is silent
on the matter, it should not be considered to extend
Extraterritorial jurisdiction may be established under RICO
claims, but delicate prerequisites must first be solidified. There
are two tests that have been developed to examine whether
jurisdiction may be extended extraterritorially: the "effects"
test and the "conducts" test. See generally N.
S. Fin. Corp. v. Al Turki, 100 F.3d 1046, 1052 (2d Cir. 1996).
See United States v. Bowman, 260
-98 (1922) (advocating broad statutory interpretation
in federal criminal cases regarding offenses not necessarily
confined to local territory, such as those that may make the
United States vulnerable by acting on the high seas or in foreign
See United States v. Layton, 509
, 217-18 (N.D. Cal. 1981) (advancing that
extraterritorial jurisdiction may be inferred by courts when
statutes represent vulnerabilities to the United States if only
construed as permitting domestic jurisdiction).
N. S. Fin. Corp., 100 F.3d at 1052 (recognizing that there is
little caselaw within the circuit regarding extraterritorial
application using RICO and that, accordingly, the court relies on
precedent from international securities and antitrust matters).
Id. at 1052 (suggesting that substantive law must be carefully
scrutinized by courts to determine whether each particular statute
suggests extraterritorial jurisdiction).
See 18 U.S.C. § 1961(1)(D) (2005) (including "fraud in the sale
of securities" in definition of "racketeering activity" for
purposes of RICO).
See Itoba Ltd. v. LEP Group PLC, 54
, 121-22 (2d Cir. 1995) (holding that although the
Securities Exchange Act itself does not express extraterritorial
jurisdiction, courts have surmised that it does based upon
The court in Alfadda
held that the possibility for RICO to
extend extraterritorially should be extended because the act is
based upon a pattern of racketeering activity, which may include
securities or antitrust violations. Both securities and antitrust
violations must surpass either the "conduct" or the "effects" test
for application of extraterritorial jurisdiction. Accordingly,
RICO must, at least, pass these tests. See Alfadda v. Fenn, 935
, 479 (2d Cir. 1991).
See N. S. Fin. Corp. v. Al Turki, 100
, 1052 (2d Cir. 1996) (qualifying use of securities and
antitrust violations as RICO predicates because tests regarding
former acts were developed specifically with them in mind and
noting that because RICO is a different statute with different
congressional intent, it must be approached differently).
v. E.F. Hutton & Co.
, 1046 (2d Cir. 1983) (quoting Bersch v. Drexel
Firestone, Inc., 519
, 993 (2d Cir. 1975)).
Gold Fields PLC v. Minorco, S.A.
, 261-62 (2d Cir. 1989).
Ltd. v. LEP Group PLC
, 122 (2d Cir. 1995) (highlighting two jurisdictional
at 479 (opening possibility that extraterritorial
jurisdictional tests will be used as predicates for securities and
antitrust violations in RICO violations). But see N. S. Fin.
Corp., 100 F.3d at 1052 (distingushing line between intent for
extraterritorial jurisdiction with securities and antitrust
violations and intent in RICO).
at 1046 (quoting Bersch, 519 F.2d at 993).
v. Drexel Firestone, Inc.
, 987 (holding that jurisdiction will not be taken when
acts in country are "merely preparatory or take the form of
culpable nonfeasance and are relatively small in comparison to
Data Processing Equip. Corp. v. Maxwell, 468
, 1334-35 (2d Cir. 1972) (recalling that defendants made
telephone calls and mailed fraudulent statements within the U.S.).
See Psimenos v. E.F. Hutton & Co., 722
, 1046 (2d Cir. 1983) (upholding jurisdiction where
fraudulent acts were committed in Greece and contracts executed in
Id. at 1043.
Id. at 1044 (highlighting that trading contracts were often
executed in New York).
Id. at 1043 (recalling that defendant was Delaware corporation
with its principal place of business in New York).
Id. at 1046 (finding potential use of United States commodities
markets as place to commit improprieties persuasive in determining
Psimenos v. E.F. Hutton & Co., 722
, 1047 (2d Cir. 1983) (holding foreigners have standing
to bring claims of breach of U.S. securities laws).
Id. at 1024.
v. Girofinance, S.A., 544
, 817 n.8 (1982) (noting proposition that "securities
cases and principles are used as persuasive aids to interpretation
of the C[ommidities] E[xchange] A[ct]") (citing Miller v. New York
Produce Exchange, 550
, 769 n.4 (2d Cir. 1977), cert denied, 434
823, 54 (1977)
and CFTC v. J.S. Love & Assoc. Options
, 660 (S.D.N.Y. 1976))
v. Vencap, Ltd., 519 F.2d 1001
, 1017 (2d Cir. 1975).
S. Fin. Corp. v. Al-Turki, 100
, 1051 (2d Cir. 1996) (quoting Consol. Gold Fields PLC
v. Minorco, S.A., 871
, 261-62 (2d Cir. 1989)).
N. S. Fin. Corp., 100 F.3d at 1052 (citing United States v.
Aluminum Co. of Am., 148 F.2d 416, 443-44 (2d Cir. 1945)); see
Hartford Fire Ins. Co. v. California, 509
764, 798 (1993)
(rejecting argument that international
comity prevents U.S. courts from taking jurisdiction over overseas
parties who conspire to restrain illegally interstate or foreign
commerce in the United States).
Nat'l Bank of Canada v. Interbank Card Ass'n., 666
, 8 (2d Cir. 1981).
Madanes v. Madanes, 981 F. Supp. 241, 250 (S.D.N.Y. 1997).
Teleology, or final causality, is the ultimate reason for a
thing's becoming. The final cause of a child, for example, is an
adult. Likewise, the teleology of a law is its ultimate purpose.
When we know a law's reason, the goal it seeks to accomplish, in
addition to its historical or textual interpretation, we can
understand that law in its proper context. Merriam-Webster Online
defines teleology as "the fact or character attributed to nature
or natural processes of being directed toward an end or shaped by
a purpose." Merriam-Webster Online Dictionary, http://www.m-w.com/dictionary/teleology
(last visited **
Jan. 20, 200).
States v. Pac. & Arctic Ry. & Navigation Co.
87, 106 (1913)
(upholding jurisdiction for violations of
Sherman Antitrust Act and Interstate Commerce Act on shipping
routes outside of the U.S.).
v. Fenn, 935 F.2d 475
, 477-80 (2d Cir. 1991) (stating that
foreign violation of Securities Exchange Act and RICO may serve as
basis of subject matter jurisdiction even though these statutes
are silent as to extraterritorial application).
See id. at 480. (holding that securities fraud violation may serve
as predicate act justifying RICO claim)
Literally, the Latin phrase a maiore ad minus, a simili, a pari
means "from the greater to the lesser, similarities or
differences." Sir Edward Coke, A Commentarie Upon Littleton,
(last visited **
Jan. 20, 2006). In other words, the greater includes the lesser.
Thus, if the substantive offense has extraterritorial effect then
RICO also has extraterritorial application, at least as to that
Cuban Liberty and Democratic Solidarity (LIBERTAD or Helms-Burton)
Act of 1996, Pub.L.
, 110 Stat. 785 (codified as amended in 22 U.S.C.
§ 6082 (a)
(2005) (providing civil remedy for U.S.
nationals whose property was confiscated by Cuban Government and
then sold to third party).
(a)(3)(C) (2005) (delineating recovery scheme which
triples initial damages available in earlier section).
Kern Alexander, Trafficking in Confiscated Cuban Property:
Lender Liability Under the Helms-Burton Act and Customary
International Law, 16 Dick. J. Int'l L. 523
, 561 (1998)
(positing that United States has extended extraterritorial reach
under Helms-Burton to such extent that it violates international
Sperber, Foreign Corrupt Practices Act, 39 Am. Crim. L. Rev.
679, 680-81 (2002)
(commenting that 1998 Amendments to FCPA
broadened the Act's jurisdiction to allow prosecution of foreign
Id. at 686 (stating that FCPA prohibits bribery of foreign
government officials in order to obtain or retain business).
Id. at 687 (finding that FCPA covers any act person, foreign or
national, who commits bribery within U.S.).
A. Lacey & Barbara Crutchfield George, Crackdown on Money
Laundering: A Comparative Analysis of Feasibility and
Effectiveness of Domestic and Multilateral Policy Reforms, 23
Nw. J. Int'l L. & Bus. 263
, 265 (2003) (noting
international economic impact of corrupt business practices).
Hecht v. Commerce Clearing House, 897
, 23 (2d Cir. 1990) (quoting 18 U.S.C. § 1964(c) (1988)).
See Sedima, S.P.R.L. v. Imrex Co., 473
479, 497 (1985)
(holding that injuries proximately caused by
forbidden conduct under RICO are compensable).
See First Nationwide Bank v. Gelt Funding Corp., 27
, 769 (2d Cir. 1994) (explaining "proximate" or "legal"
cause required in RICO cases).
See Beck v. Prupis, 529 U.S. 494, 505-06 (2000) (concluding, in
congruence with common-law tort principles that recovery under
RICO is limited to injuries caused by conduct forbidden by RICO).
See De Falco v. Dirie, 923 F. Supp. 473, 476 (S.D.N.Y. 1996)
(explaining how to satisfy injury to business or property
requirement for RICO violation).
Hecht v. Commerce Clearing House, 897
, 23-24 (2d Cir. 1990) (defining proximate cause).
(2005) (listing civil remedies such as treble
(2005) (listing criminal penalties such as
See 18 U.S.C. § 1964(a) (2005) (specifying that "whoever violates
any provision of section 1962 of this chapter... shall be fined
under this title or imprisoned not more than 20 years (or for life
if the violation is based on a racketeering activity for which the
maximum penalty includes life imprisonment), or both...").
Behr, Punitive Damages in American and German Law - Tendencies
Towards Approximation of Apparently Irreconcilable Concepts, 78
Chi-Kent L. Rev. 105
, 106 (2003) (stating that in German
law, punitive damages are seen as function of criminal law because
they punish the wrongdoer as opposed to compensating the
Punitive damages are not recognized in French law. See C. civ. §
1382 (1995). Secton 1382 requires the tortfeasor to simply "make
reparation [s];" thus, it suggests that the tortfeasor is
liability for only compensatory damages. Additionally, German
civil law only requires a tortfeasor to "indemnify" the plaintiff.
See §§ 249-255 BGB. It defines "indemnity" as "restor[ing] the
condition, which would exist if the circumstance causing the
indemnity had not occurred." Punitive damages for torts are a
specificity of the common law. For an explanation of the evolution
of punitive damages in torts see Browning-Ferris Indus. of Vt.,
Inc. v. Kelco Disposal, Inc., 492
-99 (1989) (O'Connor, J., dissenting).
See N.S. Fin. Corp. v. Al-Turki, 100
, 1052 (2d Cir. 1996) (noting that extraterritorial
application of RICO is "delicate work" due to comity concerns).
See 18 U.S.C. § 1964(c) (2005) (allowing for treble damages).
See N.S. Fin. Corp., 100 F.3d at 1052 (expressing comity concerns
over application of criminal aspects of RICO due to treble
The Germans regard such claims as criminal, and not civil, because
they lead to the overcompensation of plaintiffs. See Behr, supra
note 255, at 108. "Thus, to this day, American punitive damage
awards are not enforced in Germany." Id.
L. Priest, Lawyers, Liability, and Law Reform: Effects on
American Economic Growth and Trade Competitiveness, 71 Denv. U.
L. Rev. 115,
147 (1993) (noting sexual assault case where
German court refused to enforce punitive damages on public policy
grounds, but awarded medical expenses and pain and suffering
See 18 U.S.C. § 1964(a) (2005). "Whoever violates any provision
of section 1962 of this chapter... shall be fined under this title
or imprisoned not more than 20 years (or for life if the violation
is based on a racketeering activity for which the maximum penalty
includes life imprisonment), or both...." Id.
56 Fed. Appx. 40 (2d Cir. 2003).
See Approximately $25,829,681.80 in Funds, 56 Fed. Appx. at 41
(holding that court had jurisdiction over funds in controversy).
v. Approximately $25,829,681.80 in Funds, No. 98 Civ. 2682, 1999
U.S. Dist. LEXIS 18499, at *13-14 (S.D.N.Y. 1999) (using RICO
analogy to establish jurisdiction over forfeiture action at bar).
See supra text accompanying notes 79-80 (discussing RICO in the
context of ATCA).
, 93-94 (2d Cir. 2000) (discussing trial level
See id. at 92-93 (describing facts of case).
See id. at 108 (remanding case for further proceedings).
See id. at 101 (citing PT United Can Co. v. Crown Cork & Seal
, 74 (2d Cir. 1998)).
See Doe v. Unocal Corp., 110
Supp. 2d 1294
, 1303 (2000) (stating plaintiff's allegation
of RICO violation).
See id. at 1295-1303 (describing Unocal's relationship with
Burmese security forces that utilized forced labor).
See Forti v. Suarez-Mason, 672
, 1549 (N.D. Cal. 1987) (discussing recognition
and application of equitable tolling of statutes of limitations
with respect to federal claims where it is in the interest of
justice), pet. for extradition sub nom. In re Requested
Extradition of Suarez-Mason, 694
, 679-80 (N.D. Cal. 1988) (granting Argentina's
request for respondent's extradition on thirtynine murder charges,
also granting extradition on forgery charge, but denying petition
for writ of habeas corpus), reconsideration granted in part and
denied in part, 694 F. Supp. 707, 712 (N.D. Cal.1988) (granting
leave to file Second Amended Complaint including allegations of
"Disappearance and Presumed Summary Execution" and "Torture or
other Cruel, Inhuman or Degrading Treatment").
of American States: Inter-American Convention Against
Corruption, Mar. 29, 1996
, 35 I.L.M. 724 [hereinafter
Inter-American Convention] (creating treaty among Argentina,
Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic,
Ecuador, El Salvador, Guyana, Haiti, Hondura, Jamaica, Mexico,
Nicaragua, Panama, Paraguay, Pery, Suriname, Uruguay, and
Republic-Organization for Economic Cooperation and Development:
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions, Dec. 18, 1998, 37 I.L.M.
1 [hereinafter Convention Combating Bribery] (stating its purpose
to criminalize bribery because it undermines both good governance
and economic development, as well as, distorts international
See Breton Woods Project, http://www.brettonwoodsproject.org/project/index.shtml
(last visited **
Jan. 20, 2006) (stating "Bretton Woods Project operates as a
networker, information-provider, media informant and watchdog to
scrutinize and influence the World Bank and International Monetary
Fund."); see also International Covenant on Economic, Social and
Cultural Rights art. 2(1), Dec. 16, 1966, available at http://www.unhchr.ch/html/menu3/b/a_cescr.htm
(providing each state party will "take steps, individually and
through international assistance and co-operation" to achieve
rights recognized by Covenant). See generally Dinah Shelton,
Protecting Human Rights in a Globalized World, 25 B.C. Int'l &
Comp. L. Rev. 273, 304-05 (2002) (suggesting that in accordance to
International Covenant on Economic, Social and Cultural Rights
art.2(1), voting in World Bank or International Monetary Fund for
human rights programs promoting regression would violate voters'
Posadas, Combating Corruption Under International Law, 10 Duke
J. Comp. & Int'l L. 345
, 347 (2000) (discussing World
Bank Group's involvement in combating corruption under
See id. at 399-400 (stating that World Bank and International
Monetary Fund took active roles against corruption in mid 1990's
only after emergence of anti-corruption initiatives).
Corrupt Practices (FCPA) Act of 1977
, Pub. L. No. 95-213, 91
Stat. 1494 (1977) (amending Securities Exchange Act of 1934 so
that those individuals paying foreign officials and other foreign
persons are required to maintain accurate records).
(2005) (mandating that national securities
exchange members shall keep current employment records including
any arrests or indictment for bribery).
See Posadas, supra note 278, at 346 (reiterating Security Exchange
Commission's contention that unaccountably distributing money
abroad through "secret slush funds" contravenes United States
securities law, which requires public companies to file accurate
Agreement Between the Members of the African, Caribbean and
Pacific Group of States of the One Part, and the European
Community and its Member States, of the Other Part, Signed in
Cotonou on 23 June 2000
, Chapter 1 art. 1, art. 3,) (stating
"good governance, which underpins the ACP-EU Partnership, shall
underpin the domestic and international policies of the Parties
and constitute a fundamental element of this Agreement. The
Parties agree that only serious cases of corruption, including
acts of bribery leading to such corruption, as defined in Article
97 constitute a violation of that element.").
Kofele-Kale, The Right to a Corruption-Free Society as an
Individual and Collective Human Right: Elevating Official
Corruption to a Crime Under International Law, 34 Int'l Law. 149
155-56 (2000) (arguing that Article Three of Convention Combating
Bribery proscribes intentionally receiving undue advantage from
foreign public officials).
Convention Combating Bribery, supra note 276 (criminalizing
bribery of foreign public officials).
See Morgan & O'Grady, supra note 243 (advancing that
regardless of whether companies are publicly traded, they are
prohibited from bribing foreign officials to gain or retain
See Sperber, supra note 241, at 686 (furthering it is also illegal
to bribe foreign government officials for purpose of directing
business to another person under FCPA).
See id. at 699 (delineating penalties for bribing foreign
officials and citing example as those who willfully violate FCPA
accounting provisions may be punished by fines up to $ 1,000,000
and may be jailed for up to ten years).
See id. at 700 (warning that a likely result of a violation of the
FCPA is debarment before several government agencies).
Drilling Int'l, Inc. v. Gyrodata Corp., No. 90-1077, 1999
U.S. App. LEXIS 20790, at *8 (Fed. Cir. Aug. 30, 1999) (explaining
that Congress created enforcement scheme for FCPA and gave
Attorney General authority to file actions for injunctive relief,
civil, or criminal penalties).
Id. at *7 (dismissing Gyrodata Corp's counterclaim because FCPA
does not grant private cause of action).
See id. at *7-*8 (explaining that legislative history of FCPA
gives credence both to permitting private claims, as well as
prohibiting them, and, therefore, it does not assist discovery of
See id. at *7 (acknowledging that defendant's legislative history
argument is not conclusive as FCPA's legislative also offers equal
support for opposite contention).
See id. at *8-*9 (finding that lack of creation of explicit
private cause of action under FCPA is conclusive evidence that
Congress meant to exclude such right).
Scientific Drilling Int'l, Inc. v. Gyrodata Corp., No. 90-1077,
1999 U.S. App. LEXIS 20790, at *8 (Fed. Cir. Aug. 30, 1999)
(explaining irreconcilability of private cause of action under
FCPA due to its explicit text granting right to bring suit to
United States Foreign Sovereign Immunities Act of 1976 §
1603(d)-(e) (1988), available at http://www.law.berkeley.edu/faculty/ddcaron/Documents/RPID20Documents/rp04039.html
(defining international commercial activity as "regular course of
commercial conduct or a particular commercial transaction or act"
where the United States has substantial contact with another
See Adler v. Federal Republic of Nigeria, 219
, 871 (9th Cir. 2000) (holding that illegal contract was
actionable pursuant to Foreign Sovereign Immunities Act because it
constituted commercial activity), amended by No. 98-55456, 2000
U.S. App. LEXIS 20687, at *4 (9th Cir. Aug. 17, 2000) (noting
definition of "commercial activity" in previous case was erroneous
since Supreme Court ruled that "question is not whether the
foreign government is acting... with the aim of fulfilling
uniquely sovereign activities").
Id. at 876-77 (explaining that doctrine of unclean hands "closes
the doors of equity to one tainted with inequitableness or bad
faith relative to the matter in which he seeks relief, however
improper may have been the behaviour of the defendant").
See Time Warner Cable of NYC v. Kline Davis and Mann, Inc., No. 00
Civ. 2897, 2000 U.S. Dist. LEXIS 18280, at *9-*10 (S.D.N.Y. 2000)
(stating statutory damages are punitive and are, thus, legal, not
See Keystone Driller Co. v. General Excavator Co., 290
240, 244 (1933)
(explaining that fundamental principle of
equity jurisprudence is that plaintiffs have "clean hands" before
coming into court).
See Scientific Drilling Int'l, Inc. v. Gyrodata Corp., No.
90-1077, 1999 U.S. App. LEXIS 20790, at *7-* 8 (Fed. Cir. Aug. 30,
1999) (acknowledging that one can opt to use legislative history
of FCPA to support existence of private rights of action under
Id. at *7 (citing H.R. Rep. No. 95-640, at 10 (1977)).
Id. at *8 (arguing that FCPA is for Securities and Exchange
Commission and Justice Department to enforce with no right to a
private cause of action (citing 123 Cong. Rec. 38, 778 (1977)).
Id. at *8-*9 (stating that FCPA's structure, which consists of
detailed enforcement schemes, tends to negate possibility of
Id. at *8 (finding that lack of explicit private remedy implies
that no private right was intended).
Expressio unius is defined as a "canon of construction holding
that to express or include one thing implies the exclusion of the
other." Black's Law Dictionary 265 (2d pocket ed. 2001).
See Daniel Pines, Amending the Foreign Corrupt Practices Act to
Include a Right of Private Action, 82 Cal. L. Rev. 185, 216 (1994)
(explaining that government agencies have failed to enforce the
vague terms of FCPA and that a possible solution would be to
create private cause of action for general public for violations
In a similar context, Robert J. Liubicic describes the former
Secretary of Labor's recognition that private enforcement via
private action may be more effective since it relies on the self
interest of the corporation and argues that corporations can be
encouraged to compete against each other through the pointing out
of their competitors' human rights violations. See Robert J.
Liubicic, Corporate Codes Of Conduct And Product Labelling
Schemes: The Limits And Possibilities Of Promoting International
Labor Rights Trough Private Initiatives, 30 Law & Pol'y Int'l
Bus. 111, 121-22 (1998).
See Sperber, supra note 241, at 692 (explaining that the DOJ and
SEC are "solely responsible" for enforcing FCPA).
See Lamb v. Phillip Morris, Inc., 915
, 1027-30 (6th Cir. 1990) (explaining that private
action is not recognized under FCPA as it is inconsistent with its
legislative scheme, it is not in congressional intent behind
enactment of FCPA, and the FCPA provides adequate means of redress
in the private realm).
See Envtl. Tectonics v. W.S. Kirkpatrick, Inc., 847
, 1063-64 (3d Cir. 1988) (allowing evidence of
violations of the FCPA admissible for evidence of racketeering);
see also United States v. Young & Rubicam, Inc., 741
, 339 (D. Conn. 1990) (holding, as valid,
violations of the Travel Act based upon violations of FCPA); Korea
Supply Co. v. Lockheed Martin Corp., 90 Cal. App. 4th 902, 909
(Cal. Ct. App. 2001) (finding permissible private unfair
competition claims based upon allegations of FCPA violations).
(2001) (giving US district courts original
jurisdiction for torts committed in violation of laws of nations
or treaties by aliens and allowing civil suit for damages against
individuals under actual or apparent authority of foreign nations
that subject individuals to torture or extrajudicial killing).
See Christopher J. Duncan, The 1998 Foreign Corrupt Practices Act
Amendments: Moral Empiricism or Moral Imperialism?, 1 Asian-Pac.
L. & Pol'y J. 16, *1-*5 (2000) (stating that objection stems
from different customs and values in other nations, such as gift
giving in Asian countries).
See Inter-American Convention, supra note 198, at 724, 729-30
(providing agreement, among Central and South American countries,
to establish measures preventing corruption, including bribery,
and allowing each member state to establish jurisdiction for
offenses committed in its territory or offenders located in its
See Convention Combating Bribery, supra note 273, at 1, 4
(providing criminal penalties among agreeing countries for bribery
of foreign officials in international business transactions).
See Sperber, supra note 241, at 696 (noting that European Union
has adopted "Convention on the Fight Against Corruption Involving
Officials of the European Communities or Officials of Member
States of the European Union," prohibiting bribery of public
officials within European Union).
But see Philip M. Nichols, Outlawing Transnational Bribery Through
The World Trade Organization, 28 Law & Pol'y Int'l Bus. 305,
306 (1997) (describing that problem with current international
laws against bribery is that most countries have laws prohibiting
payment of bribes to its officials, but only two countries make it
illegal to make transactional bribes).
See Sperber, supra note 241, at 695-96 (describing that objective
of UN resolutions is to have its member states criminalize payment
of bribes and to deny tax deductibility of bribes).
See H. Lowell Brown, Extraterritorial Jurisdiction Under the 1998
Amendments to the Foreign Corrupt Practices Act: Does the
Government's Reach Now Exceed its Grasp?, 26 N.C. J. Int'l L.
& Com. Reg. 239, 297-302 (2001) (explaining that 1998 FCPA
amendments give US extraterritorial jurisdiction, but such
jurisdiction must be exercised with reasonableness, taking into
account foreign states interests).
SEC v. Montedison, S.p.A., Lit. Release No. 15164, 1996 WL 673757
15 U.S.C. §§ 78a, 78dd-1, 78dd-2, 78ff (1998).
See Montedison, 1996
WL at (explaining the charges against
Montedison were, among other things, falsifying documents to
artificially inflate company's financial statements).
International Business Law: E-Commerce and the Impact of
Globalization on the Law, 8 New Eng. Int'l & Comp. L. Ann.
, 27-30 (2002) (outlining six basis for establishing
jurisdiction of extranationals under international law, several of
which bear resemblance to the concept of long arm jurisdiction).
Lowell Brown, Extraterritorial Jurisdiction Under the 1998
Amendments to the Foreign Corrupt Practices Act: Does the
Government's Reach Now Exceed its Grasp?, 26 N.C.J. Int'l L.
& Com. Reg. 239
, 289 (2001) (acknowledging that not all
payments to officials are prohibited by the FCPA but rather only
payments intended to secure markets or gain other improper
advantages are prohibited).
(1998) (outlining accounting standards for persons
and businesses involved in secutities exchange).
See SEC v. World-Wide Coin Invs., Ltd., 567
, 747 (N.D. Ga. 1983) (commenting that the FCPA
gives the SEC greater involvement in all activities of the
Crutchfield et al., Responsibilities of Domestic Corporate
Management Under the Foreign Corrupt Practices Act, 31 Syracuse
L. Rev. 865
, 880 (1980) (positing that the "SEC may be
changing from an agency that chiefly regulates the securities
markets to a wide-reaching federal corporations commission").
See 69 Am Jur 2d SECURITIES REGULATION--FEDERAL § 577 (finding
"the Exchange Act registration requirements apply, generally, to
publicly-traded securities and require current information to be
available to the marketplace in which such securities are
Brown, supra note 324, at 258-59 (acknowledging that Congress must
address issue of bribery internationally if it were to have any
P. Caggiano, The Foreign Corrupt Practices Act: The Case for
Multilateral Cooperation, 5 N. Eng. Int'l & Comp. L. Ann.
, available at http://www.nesl.edu/intljournal/vol5/caggiano.htm
(delineating the criticisms of the FCPA such as problems with
enforcement, cost of compliance, vagueness, among others).