Eric Engle, Extraterritorial Corporate Criminal
Liability: A Remedy for Human Rights Violations? 20 St.
John's J. Legal Comment., 287 (2006).
Many business opportunities in the third
world are of questionable legality (e.g. child labor) or are
formally illegal (e.g., bribery). [FN1]
Political instability often
implicates corporations with *288
brutal regimes and
even illegal acts. [FN2]
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 law.
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 itself.
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. [FN3]
In Anglo-American common law Blackstone wrote that a corporation
cannot commit "treason, or felony, or other crime, in its
corporate capacity." [FN4]
In continental civil law this
was also true [FN5]
following the maxim "societas
delinquere non-potest." [FN6]
One must distinguish between
the two different legal systems. [FN7]
However both the civil law
(e.g., France, Sweden, Denmark, Germany [FN8]
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 [FN9]
in national and international law. [FN10] *290
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. [FN11]
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. [FN12]
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
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. [FN14]
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), [FN15]
they can now be liable for crimes under *291
international law. [FN16]
Recognized customary international crimes include piracy, slave
trading, war crimes, crimes against humanity (that are part of
systematic conduct), genocide, and torture. [FN17]
At least those crimes are subject to universal jurisdiction [FN18]
- meaning any state may punish them. [FN19]
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.
State parties must establish criminal, civil, or administrative
liability for legal persons (including corporations) who commit
these crimes. [FN21]
Environmental crimes [FN22]
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. [FN23]
In the Krupp trial [FN24]
it is clear that the
was implicated in the crimes of its directors. [FN25]
Because of the Krupp firm's desire to employ compulsory labor [FN26]
the tribunal imputed criminal intent to the corporation -
although the court did not actually declare the Krupp
Corporation a criminal organization. [FN27]
The Farben trial [FN28]
also implicated corporations
as criminal instrumentalities. In Farben the court refers to
corporate obligations [FN29]
and treats the corporation
as a criminal instrument. [FN30]
Moreover, Nuremberg also
recognized that a corporate body - the state security service
(the SD) could be guilty of a crime. [FN31]
Thus the Nuremberg trials
mark a shift from a principle of "no criminal liability" of
corporations to the view that corporations may be culpable [FN32]
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. [FN33]
*293 B. Legal Bases of Corporate Criminal Liability
1. Mens Rea [FN34]
as a Basis of Corporate
Though customary international law is a
reflection of state practice, [FN35]
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
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 [FN37]
crimes are defined as the
union of mens rea (a criminal intent) and actus reus (a criminal
in one legal person. The burden of proof in criminal law lies
with the prosecution. [FN39]
However, knowledge of
criminality may be imputed via a "knew or should have known"
In criminal law it is common
to impute criminal knowledge to a *294
defendant in cases of
their willful blindness as to wrongful activity. [FN41]
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. [FN42]
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. [FN43]
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. [FN45]
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 [FN46]
(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. [FN47]
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 [FN49]
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
and into international practice [FN51]
largely due to international
criminal tribunals. Thus mens rea in international law may be de
lege ferenda - but it is probably not lex lata. [FN52]
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. [FN53]
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
- 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). [FN55]
The theory of agency [FN56]
imposes liability on the company for the wrongful acts of its
employees. This is also known as vicarious liability [FN57]
or attribution theory. [FN58]
This theory permits the
corporation to be sued for mala prohibita. [FN59]
Alternatively, the theory of identification [FN60]
imputes liability on the corporation for blameful conduct of an
officer or director, thereby allowing *297
prosecution for mala
in se. [FN61]
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 [FN62]
for criminal acts which are mala in se. [FN63]
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, [FN64]
as expressed in custom, treaty, or jus cogens. [FN65]
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). [FN66]
Culpable actions may range
from indirect complicity to direct complicity to actual
commission of wrongful acts. [FN67]
Accomplice liability will
arise out of "practical assistance, encouragement, or moral
in obtaining the criminal *298
object. There are three types of complicity under
which a corporation can be held liable. [FN69]
In descending order of likelihood of criminal conviction these
are: 1) direct corporate complicity, 2) beneficial complicity,
and 3) silent complicity. Direct corporate complicity [FN70]
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 act. [FN71]
In beneficial complicity, corporations may also be liable as
accomplices merely due to benefiting [FN72]
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 complicity [FN73]
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. [FN74]
Active complicity will be
more culpable than passive complicity when endeavouring to find
criminal liability. [FN75]
Although assistance does not
need to be the causae sine qua non [FN76]
of the principal's criminal
the accomplice must have had a substantial effect on the
commission of the crime. [FN78]
Corporate accomplice liability also arises in the
context of intentional torts. In Doe v. Unocal, [FN79]
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. [FN80]
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. [FN81]
This is true in both common
law and civilian legal systems [FN82]
and will therefore likely be
true in international law as well.
b. Limitations of Accomplice Liability
There are however, limitations on corporate
accomplice liability. [FN83]
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, [FN84]
and has been affirmed more
recently in litigation over dormant Swiss bank accounts held by
victims of the National Socialist *300
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. [FN86]
Corporate entities often try to structure
their operations to disguise the fact that they profit from
human rights abuses [FN87]
by using subsidiary business
associations or by sub-contracting illegal acts. However, courts
are willing to pierce the corporate veil [FN88]
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." [FN90]
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
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 exception. [FN92]
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. [FN94]
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. [FN95]
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
b. Ultra Vires as a Contract Theory
Ultra vires [FN97]
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 [FN98]
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, [FN99]
including the states'
obligations under international law. [FN100]
From this perspective the
corporation has a duty to act lawfully even outside the
jurisdiction where it is incorporated [FN101]
and thus can be held liable within its jurisdiction of
incorporation for its unlawful foreign acts.
2. Problems with Ultra Vires in International
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 [FN102]
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 proposition, [FN103]
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. [FN104]
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. [FN105]
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. [FN106]
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 International Law
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 [FN107]
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
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
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). [FN109]
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. [FN111]
Ultra vires is not a
principle of German corporate law. [FN112]
The idea of "ultra vires"
has only been recognized in German law for public law entities.
Moreover, ultra vires does not appear to exist in French law
(the maxim "ultra vires hereditatis" exists in *306
French law), [FN114]
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 shareholders. [FN115]
Although ultra vires may
not exist in international law, the "general principle of
legality" (principe généraux de la légalité) [FN116]
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. [FN117]
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 treaties. [FN118]
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 [FN119]
or a SARL [FN120]
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 theoretical interest.
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 [FN121]
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. [FN122]
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 [FN123]
and not de lege lata. [FN124]
Without specific proof of such a principle existing in the
national legal orders of civil law *308
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, [FN125]
other than to maximize profit of its shareholders. [FN126]
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. [FN127]
The corporation, however, must act legally. [FN128]
Further, in Herald Co. v. Seawell, [FN129]
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
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. [FN131]
However social policy is ambiguous and verifying whether
directors are implementing these policies in the public interest
is difficult. [FN132]
The extreme view of
Professor Milton Friedman is that corporations have only one
duty of profit maximization, which is empirically untrue. [FN133]
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 phenomenon.
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"), [FN135]
and in strict products
liability in tort. [FN136]
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. [FN137]
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. [FN138]
However, this is
inefficient for the market as a whole. [FN139]
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. [FN140]
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. [FN141]
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. [FN142]
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, [FN143]
and sometimes restitution or compensation; [FN144]
although, these last two justifications occur more often in tort
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. [FN146]
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. [FN147]
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 misfeasance. [FN148]
Criminal sanctions are also justified because they are a more
effective deterrent than civil sanctions, as well as being
reprehensible to potential wrongdoers. [FN149]
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 action; [FN150]
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 individual;
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. [FN152]
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 costs.
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. [FN154]
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. [FN155]
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
adhÃ¤sionsverfahren) punitive damages do not. [FN156]
Punitive damages are not allowed in the civil law because they
result in overcompensation of plaintiffs. [FN157]
*314 A. The Racketeering Influenced and Corrupt
Organizations Act (RICO) [FN158]
RICO is a U.S. law crafted to fight
organized crime which offers litigants a claim against
international tortfeasors. [FN159]
It also offers both
criminal and civil remedies, including treble damages for
criminal enterprises. [FN160]
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. [FN161]
The legislative purpose of RICO is to fight
organized criminal enterprises. [FN162] Title 18 U.S.C. § 1962(c)
"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
racketeering activity." [FN163]
Thus, to make a claim in
RICO, one must prove a pattern of racketeering [FN164]
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." [FN165]
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." [FN166]
A person is an "individual
or entity capable of holding a legal or beneficial interest in
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." [FN168]
Governmental entities can be enterprises for
The enterprise, however, must be distinct from the "person"
conducting the racketeering activities. [FN170]
"[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" [FN171]
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. [FN172]
Although a RICO
"enterprise" cannot generally be comprised of a *316
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 relationship. [FN173]
To prove a RICO claim, the plaintiff must
show "a pattern of racketeering activity" or a conspiracy to
commit racketeering activity. [FN174]
A "pattern of racketeering
activity" is formed by two or more acts of racketeering, such
as extortion, occurring within ten years of each other. [FN175]
These two or more predicate crimes must be related to each
other, present some level of continuity, and present a threat of
future criminality. [FN176]
That is, the plaintiff
must prove "a series of allegedly criminal acts" independent of
the enterprise. [FN177]
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."" [FN178]
c. "Of Racketeering Activity"
Racketeering activities are broadly defined
as one of several substantive criminal offenses in Title 18 of
the U.S. Code. [FN179]
RICO predicate acts are
essentially varieties of extortion whether by murder, robbery,
or threats of violence. [FN180]
These are *317
specifically defined in the following provisions:
1) the Hobbs Act, [FN181]
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. [FN182]
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
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)
, defendants 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. [FN186]
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. [FN188]
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. [FN189]
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." [FN190]
Thus, state acquittal or procedural defenses will not preclude a
federal charge under RICO, [FN191]
even when the predicate
act must "include the essential elements of the state crime." [FN192]
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. [FN193]
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. [FN194]
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. [FN196]
Although a foreign corporation is not shielded from RICO
liability merely because of its location, [FN197]
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. [FN199]
In United States v. Noriega, RICO was found
to have extraterritorial application in the context of illegal
drug sales. [FN200]
A later federal district
court case held, [FN201]
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
Since cases must be
interpreted consistently where possible, and later cases have
made clear that extraterritorial *320
RICO is possible, [FN203]
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. [FN204]
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 rebuttable. [FN205]
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 matters." [FN206]
The appropriate test for jurisdiction "var[ies] depending on the
substantive law to be applied." [FN207]
Securities fraud can be a
RICO predicate act, [FN208]
and U.S. securities fraud
statutes can have extraterritorial effect. [FN209]
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
developed in securities and antitrust may not correspond exactly
to RICO because each statute serves a different purpose. [FN211]
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" [FN212]
or that "a predominantly
foreign transaction has substantial effects within the United
The former is known as the
"effects test" and the latter as the "conduct test." [FN214]
Although both the "conduct" and "effects" test arise out of
case law that interprets U.S. Securities laws, they apply to
RICO as well. [FN215]
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" [FN216]
Mere preparation in the United States alone will not support
jurisdiction for the extraterritorial injury. [FN217]
Alternatively, "actual execution" (e.g., fraudulent statements
made in the U.S.), [FN218]
or execution of sales
contract based on overseas fraud would. [FN219]
For example, in
Psimenos v. E.F. Hutton fraudulent statements were made
overseas, primarily in Greece. [FN220]
However, several of the
contracts were executed in New York. [FN221]
Further, the company
accused was an American company whose agents defrauded the
foreign plaintiff. [FN222]
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
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.
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. [FN225]
It is worth pointing out that interpretative schemes in one
branch of securities law are interpretive aids in understanding
other securities laws. [FN226]
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." [FN227]
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." [FN228]
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
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." [FN230]
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." [FN231]
With that teleology [FN232]
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 [FN233]
and can be the basis for a
RICO claim; [FN234]
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 jurisdiction. [FN235]
To demonstrate this reasoning a maiore ad minus, [FN236]
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 Effect?
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 [FN237]
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.
Helms-Burton provides extraterritorial treble damages. [FN239]
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 extraterritorially. [FN240]
The Foreign Corrupt Practices Act also has
extraterritorial effect. [FN241]
It makes bribery of
foreign government officials intended to obtain or retain
a punishable offense in
the U.S. even where the conduct occurred outside of U.S.
SEC statutes against
securities fraud also have *325
effect. This is logical because organized crime, tax evasion,
money laundering, and postal fraud, like classical pirates,
ignore borders. [FN244]
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
3. Standing (Injury in Fact) and Remedies
a. Standing (injury in fact) to Bring a RICO
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
(e.g., the legal cause) [FN247]
of the injury [FN248]
to the business or property of the plaintiff. [FN249]
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
and forfeiture. [FN252]
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. [FN253]
RICO also provides for the possibility of prison, similar to the
criminal law. [FN254]
damages are viewed as an aspect of criminal law rather than tort
Civil law systems do not recognize punitive damages in their
tort system. [FN256]
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. [FN257]
Therefore, an argument against applying RICO internationally is
that it is a criminal statute because it provides for treble
damages and imprisonment. [FN258]
Since exercise of criminal law overseas is a
greater invasion of the sovereignty of a foreign country courts
are less likely to *327
extraterritorial application of the criminal statute. [FN259]
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, [FN260]
they do enforce U.S.
substantive tort law - even though U.S. compensatory awards are
much higher than in Europe. [FN261]
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.
precedent seems to be lacking. However, in U.S. v. Approximately
$25,829,681.80 in Funds, [FN263]
application of a federal civil forfeiture statute [FN264]
was permissible. [FN265]
One main argument of the
government was based on an analogy to the domestic application
of RICO for civil forfeitures. [FN266]
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
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. [FN267]
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. [FN268]
In Wiwa, the plaintiff argued that the defendant's actions were
in furtherance of a criminal conspiracy. [FN269]
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
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. [FN271]
RICO was also invoked by
plaintiffs in Doe v. Unocal [FN272]
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
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
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.
Not having argued for equitable tolling their claim for RICO was
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), [FN275]
and the Organization for
Economic Co-operation and Development (OECD). [FN276]
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, [FN277]
such as the International
Bank for Reconstruction and Development (IBRD),
also known as the World Bank Group (WB), [FN278]
and the International Monetary Fund (IMF), [FN279]
which also opposes corruption and seeks to find methods to solve
it: these anti-corruption treaties include prohibitions against
2. The Foreign Corrupt Practices Act (FCPA)
Under American law, companies that commit
bribery violate the U.S. Foreign Corrupt Practices Act (FCPA) [FN280]
and regulations of the Securities and Exchange Commission (SEC).
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
Bribery may also be a
violation of international law. [FN284]
The FCPA, like the
Convention on Bribery, [FN285]
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 U.S., [FN286]
where such bribery is
intended to obtain or retain business. [FN287]
Liability for violations of the FCPA generally consist of fines,
which are determined according to guidelines, [FN288]
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. [FN289]
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. [FN290]
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 [FN291]
determined that there is
none. The court noted, however, that the legislative *332
history on that point is in fact unclear. [FN292]
There is evidence both for and against a finding of a private
remedy under the FCPA. [FN293]
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. [FN294]
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. [FN295]
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 Act,
and can be the basis for a finding of jurisdiction under the
the equitable doctrine of clean hands would bar recovery. [FN298]
There is a problem with this justification of the court for its
decision. Unless a statute states otherwise, its remedies are
legal not equitable. [FN299]
"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 overturned.
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 ambiguous. [FN301]
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. [FN303]
contradictory statements, the court concludes with a tautology.
The court explains that there is no implicit remedy because the
remedy is not explicitly stated. [FN304]
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. [FN305]
That is, of course, an expressio unius [FN306]
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. [FN307]
Presently, however, individuals can call the
attention of the government to violations of the law, [FN308]
but enforcement of the FCPA is only possible via government
Private parties cannot
ordinarily bring suit under the FCPA, [FN310]
although an FCPA claim may be evidence of a pattern of
racketeering necessary to support a RICO claim. [FN311]
The FCPA is an extraterritorial application
of U.S. law, unlike the Alien Tort Claims Act and Torture
Victims Protection Act. [FN312] *335
The FCPA has incited
some objection internationally [FN313]
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 regional [FN314]
and international law. [FN315]
For example, the European
also has anti-bribery legislation [FN317]
and the United Nations has
entered a resolution of the General Assembly to curb corruption
and bribery. [FN318]
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, [FN319]
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, S.p.A., [FN320]
an Italian corporation was prosecuted by the SEC under 5 U.S.C.
§§ 78a, 78dd-1, 78dd-2, *336
and 78ff [FN321]
for violations of the FCPA, for acts wholly undertaken in Italy.
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. [FN323]
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. [FN324]
The FCPA does, however,
establish accounting requirements for companies registered with
the SEC, [FN325]
effectively granting the
SEC new regulatory powers outside of U.S. territory [FN326]
with far reaching implications. [FN327]
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 States. [FN328]
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 principle. [FN329]
Unilateral remedies to criminal activity,
such as the FCPA, are generally criticized. [FN330]
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
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. [FN331]
[FN1]. See Lena 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").
[FN2]. For an account of corporate
facilitation of and complicity with human rights abuses
perpetrated by a corrupt political regime, see Sunita 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.
[FN3]. See Michael 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
[FN4]. Leonard 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).
[FN5]. 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
[FN6]. 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
[FN7]. 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.
[FN8]. 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).
[FN9]. See Anita 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. 91, 152 (2002)
(noting that corporations can commit international crimes and can
therefore be tried nationally).
[FN10]. See generally 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
[FN11]. See William S. Laufer,
Corporate Bodies and Guilty Minds, 43 Emory L. J. 648, 651-55
(1994) (discussing evolution of corporate criminal liability in
[FN12]. 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 liability).
[FN13]. See generally Beale, supra
note 10, at 159 (detailing alternative European corporate criminal
sanctions, including forced dissolution); Brent 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 dissolution).
[FN14]. See Diane 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 Denmark. Id.
[FN15]. See Jordan 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").
[FN16]. See generally Gail Partin,
International Criminal Law, ASIL Guide to Electronic Resources for
International Law, Aug. 8, 2005, http://www.asil.org/resource/crim1.htm
(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").
[FN17]. See Ramasastry, supra note
9, at 153 (listing international crimes).
[FN18]. 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").
[FN19]. See Ramasastry, supra note
9, at 153 (noting that nature of listed crimes generates universal
[FN20]. United 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.
[FN21]. See UN Convention, supra
[FN22]. See Robert 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).
[FN23]. See Steven 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 international
[FN24]. United States v. Krupp, IX
Trials of War Criminals Before the Nuermberg Military Tribunals,
at 1327 (1948).
[FN25]. 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
[FN26]. See United States v. Krupp,
IX Trials of War Criminals Before the Nuerenberg Military
Tribunals, at 1412, 1416.
[FN27]. See Ramasastry, supra note
9, at 112 (citing Krupp as an exemplar of judicial attribution of
criminal liability to corporations).
[FN28]. United States v. Krauch, et.
al, [The I.G. Farben Case], VIII Trials of War Criminals Before
the Nuremberg Military Tribunals No. 10 (1952).
[FN29]. See Steven 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
[FN30]. See Ramasastry, supra note
10, at 106 (commenting on corporation in Farber being used as
instrument of individual actors).
[FN31]. See Amann, supra note 24, at
331-32 (highlighting that International Military Tribunal at
Nuremberg found several Nazi security services criminally liable).
[FN32]. 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,
(expanding idea of criminal liability from beyond states to
individuals and corporations).
[FN33]. Joachim Vogel, Elemente der
Straftat: Bemerkungen zur franzÃ¶sischen Straftatlehre und zur
Straftatlehre des common law, Goltdammer's Archiv fÃ¼r Strafrecht
127 (1998), (concluding that numerous criminal law systems hold
directors and managers of corporations criminally liable for
[FN34]. 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).
[FN35]. 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
[FN36]. See Eric 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").
[FN37]. 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.
[FN38]. See id. (explaining both war
crimes and other crimes require act forbidden by law as well as
guilty or culpable condition of mind).
[FN39]. See Ramasastry, supra note
10, at 153 (emphasizing higher burden of proof imposed on
prosecution in criminal cases).
[FN40]. See United States v.
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").
[FN41]. See, e.g., Bakker, supra
note 34, at 66 (explaining that obedience to orders can manifest
illegality when action is so obviously illegal).
[FN42]. See, e.g. United States v.
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.).
[FN43]. See Prosecutor v.
Furundzija,  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).
[FN44]. 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 liability).
[FN45]. 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
[FN46]. 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 Positif Québécois, http://www.obiter2.ca/B109AH.html
(last visited Jan. 18, 2006). The text reads "cette maxime
provient du Common law oÃ¹ on dit que l'intention et l'acte
doivent Ãªtre 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.
[FN47]. See, e.g., The Queen v.
 S.C.R. 761 (defining common law and statutory
definition of provation and its effect in distinguishing between
criminal charge of murder and manslaugher).
[FN48]. 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 law systems).
[FN49]. 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 rea" are "subjecktiver
Tatbestand", and "Schuldbewusstsein." Dora 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).
[FN50]. 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. 12, 2001, at 40
(confirming the acceptance of criminal liability for corporations
for all the Member States); see also Action Brought on 18 January
1999 by HFB Holding fÃ¼r FernwÃ¤rmetechnik
Beteiligungsgesellschaft mbH & Co. KG and Others against the
Commission of the European Communities (HFB Holding fÃ¼r
FernwÃ¤rmetechnik 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").
[FN51]. See Presbyterian Church of
Sudan v. Talisman Energy Inc., 244
F. Supp. 2d 289, 316 (2003) (explaining mens rea requirement
for corporate liability in international law).
[FN52]. See Black's Law Dictionary
459 (8th ed. 2004) (defining "de lege ferenda," 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 Law, http://www.people.virginia.edu/~rjb3v/latin.html
(last visited Jan. 18, 2006) (defining "lex lata" as "what the
law is (as opposed to what the law should be)").
[FN53]. 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
[FN54]. 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
[FN55]. See Mirjan 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).
[FN56]. 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").
[FN57]. 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 liability").
[FN58]. See id. (defining
attribution as "identification of the acts of those representing
the corporate "mind" or "will" as acts of the corporation").
[FN59]. Mala prohibita 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." Black's Law Dictionary 956 (6th
[FN60]. See Ramasastry, supra note
10, at 155 n.267 (referencing H.L. Bolton (Eng'g.) Co. Ltd. v.
Graham & Sons Ltd., 1 Q.B. (1957), for the United Kingdom's
version of the identification principle known as "the directing
[FN61]. See id. (describing how acts
and mens rea of employee can become acts and mens rea of
[FN62]. See id. (explaining that
civil law jurisdictions have enacted legislation providing for
application of "specific penal laws to legal persons").
[FN63]. 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.
[FN64]. 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
[FN65]. See Partin, supra note 16,
at P 1 (declaring international criminal law as being derived from
general principles of international law, customary law, and
[FN66]. See Andrew 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 principles).
[FN67]. See id. at 342 (noting that
it is not necessary for accomplice to intend eventual, criminal
[FN68]. Id. at 345.
[FN69]. See Ramasastry, supra note
10, at 101 (denoting the three types of complicity for which
multi-national corporations might be held liable).
[FN70]. See Clapham & Jerbi,
supra note 66, at 342 (noting direct participation requires
[FN71]. See id. at 342 (saying that
"only knowledge of the foreseeable harmful effects" is required
to be a direct participant).
[FN72]. See id. at 346 (identifying
situations where complicity found by business receiving benefit
from "human rights abuses" of another).
[FN73]. 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 not
[FN74]. See id. at 348 (viewing
silent complicity more as moral issue than as issue likely to be
pursued and penalized by respective governing authority).
[FN75]. 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
[FN76]. A causae 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.
[FN77]. See Prosecutor v.
Kunarac, Case Nos. IT-96-23-T, IT-96-23/1-T, P 391
(Int'l Crim. Trib. for Former Yugoslavia Feb. 22, 2001), available
(last visited Jan. 18, 2006) (stating that "[t]he act of
assistance need not have caused the act of the principal").
[FN78]. See Prosecutor 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 crime).
[FN79]. John Doe I v. Unocal Corp.,
F.3d 932 (9th Cir. 2002), vacated by 395 F.3d 978 (9th Cir. 2003). The
court in John Doe I v. Unocal Corp., 395
F.3d 978 (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.
[FN80]. See Unocal, 395 F.3d at 948
(finding that District Court "erred" in applying "active
[FN81]. 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).
[FN82]. See id. at 343 (noting crime
itself need not be known to accomplice in order to be criminally
[FN83]. 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 abuses").
[FN84]. See United 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).
[FN85]. 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 financing").
[FN86]. Michael Anderson,
Transnational Corporations and Environmental Damage: Is Tort Law
the Answer?, 41 Washburn L.J. 399, 401 (2002).
[FN87]. See Cynthia A. Williams,
Corporate Social Responsibility In An Era Of Economic
Globalisation, 35 U.C. Davis L. Rev. 705, 769 (2002) (describing
problem of "judgment proof" companies in third world held by or
trading with solvent first world companies).
[FN88]. See, e.g., Case 286/98 P,
Stora Kopparbergs Bergslags AB v. Commission, 2000
E.C.R. I-09925, para. 79 (2000) (stating that legal
personalities of subsidiary companies are not sufficient to
prevent liability of the parent company).
[FN89]. See Danielle 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).
[FN90]. Anderson, supra note 86, at
[FN91]. See Berthold Goldman,
Multinational Enterprises, Justitia et Pace Institut de Droit
international, Sept. 7, 1977, http://www.idi-iil.org/idiE/resolutionsE/1977_oslo_02_en.pdf
(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").
[FN92]. 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).
[FN93]. 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 (1982))).
[FN94]. See Greenfield, supra note
93, at 1329-30 (acknowledging that corporation's power is derived
from the state).
[FN95]. 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
[FN96]. See id. at 1326-28
(concluding that interests of both the state and the corporation
are better served by compliance with the law).
[FN97]. 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
[FN98]. See Greenfield, supra note
93, at 1280-81 (stating corporations are not authorized under
charters to act unlawfully).
[FN99]. 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).
[FN100]. See id. at 1282-83
(arguing that obligation to abide by law extends beyond
jurisdiction of incorporation to foreign jurisdictions).
[FN101]. 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").
[FN102]. See Ramasastry, supra note
10, at 155 n.267 (discussing difficulties in finding requisite
mens rea to commit crime for fictional entity).
[FN103]. See id. at 155 n.267
(stating that some jurisdictions attribute mens rea of employee to
[FN104]. See Christopher 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).
[FN105]. See Dinah 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 international law).
[FN106]. See 1945
I.C.J. 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").
[FN107]. Black's Law Dictionary 865
(7th ed. 1999) (defining jus gentium as "the law of nations").
I.C.J. 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
[FN109]. See George 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)").
[FN110]. 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
[FN111]. 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 see Mizushima
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. &
Pol'y 261, 277-78 (2001).
[FN112]. See Susan-Jacqueline
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).
[FN113]. See Michael 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).
[FN114]. See Raymond Guillien et
al., Lexique de Termes Juridiques 384 (4th ed. 1978).
[FN115]. See Gerard Cornu,
Vocabulaire juridique 847 (6th ed. 1996).
[FN116]. 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
[FN117]. 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
[FN118]. 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
[FN119]. 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, 551 (1996).
[FN120]. 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.
[FN121]. 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).
[FN122]. 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).
[FN123]. "A principle created to
apply to a given situation, rather than from existing precedents;
law created for changing circumstances." Black's Law Dictionary
438 (7th ed. 1999).
[FN124]. "Existing law. The
principle that a court should decide based on actual law and not
on how it thinks the law ought to be." Id.
[FN125]. 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).
[FN126]. See Dodge v. Ford Motor
N.W. 668, 684 (Mich. 1919) (positing that business
corporation is organized and carried on primarily for profit of
[FN127]. Milton Friedman,
Capitalism and Freedom 133 (Univ. of Chicago Press 1971) (1962)
(advancing notion that corporation has sole responsibility of
increasing profits of shareholders).
[FN128]. 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
[FN129]. Herald Co. v. Seawell, 472
F.2d 1081 (10th Cir. 1972).
[FN130]. See id. at 1095
(acknowledging that defendant corporation, not unlike other
corporations, has duty to its employees over and above maximizing
[FN131]. See Robert 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, 261 (2002) (suggesting that
progressive corporate practices may become more common because
they make good business sense rather than out of altruism).
[FN132]. Cf. Claire 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, 1459 (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).
[FN133]. 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").
[FN134]. "The 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).
[FN135]. See id. at 632 (defining
[FN136]. See V.S. Khanna, Corporate
Liability Standards: When Should Corporations be Held Criminally
Liable?, 37 A. Crim. L. Rev. 1239, 1246 (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).
[FN137]. See Kyle 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. Rev. 167, 214
(2005) (noting that recognition of corporate criminal and civil
liability, has allowed victims of human rights abuses to better
[FN138]. See Michael 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
[FN139]. See id. at 398 (stating that calculating
fines based on harm to society promotes the most efficient
[FN140]. See Jeffrey 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).
[FN141]. See Demian 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).
[FN142]. 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).
[FN143]. 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).
[FN144]. See Lawrence 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").
[FN145]. See Deana 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 parties).
[FN146]. 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).
[FN147]. 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
[FN148]. 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 individual wrongdoer).
[FN149]. 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).
[FN150]. Id. at 153 (advancing
universality principle as granting jurisdiction to national court
regardless of where offense occurred or of the nationality of
[FN151]. 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
[FN152]. See George 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
[FN153]. See Beth 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 loser).
[FN154]. See Eric 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).
[FN155]. See 18 U.S.C. §§ 1963-1964
(2005) (enumerating both civil and criminal remedies for violation
of the Racketeering Influenced and Corrupt Organizations Act); see
CFR § 240.10b-5 (2003) (listing civil causes of action).
[FN156]. See 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 litigation).
[FN157]. See Transp. Ins. Co. v.
S.W.2d 10, 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
[FN158]. 18 U.S.C. §§ 1961-1968
[FN159]. See Wiwa v. Royal Dutch
Petroleum, No. 96 Civ. 8386, 2002 U.S. Dist. 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
[FN160]. See 18
U.S.C. § 1963 (2005) (listing possible criminal penalties,
such as fines and imprisonment for violation of RICO); 18
U.S.C. § 1964 (2005) (enumerating possible civil remedies
implicit in RICO).
[FN161]. See 15 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
[FN162]. See Organized Crime
Control Act of 1970, Pub. L. No. 91-452, 84 Stat. 922, 923 (1970)
(proclaiming that it is "the purpose of this act to seek the
eradication of organized crime in the United States...").
U.S.C. § 1962(c) (2005).
[FN164]. See Sedima S.P.R.L. v.
Imrex Co., Inc., 473
U.S. 479, 495-96 (1985) (discussing pattern of racketeering
as sufficient to establish claim under RICO).
[FN165]. See Sedima, 473 U.S. at
496 (noting that plaintiff must allege each of these elements in
order to state a claim).
[FN166]. See Procter & Gamble
Co. v. Big Apple Indus. Bldgs., Inc., 879
F.2d 10, 15 (2d Cir. 1989) (defining "enterprise" for RICO
U.S.C. § 1961(3) (2000).
U.S.C. § 1961(4) (2000).
[FN169]. See United States v.
F.2d 23, 30-33 (2d Cir. 1981) (discussing broad definition
of "enterprise" as encompassing governmental entity due to lack
of contrary legislative intent).
[FN170]. See 18 U.S.C. § 1962(c)
(2000). The act prohibits racketeering activities by "any person
employed by or associated with any enterprise..." Id.
[FN171]. Riverwoods Chappaqua Corp.
v. Marine Midland Bank, N.A., 30
F.3d 339, 344 (2d Cir. 1994).
[FN172]. See Discon, Inc. v. NYNEX
F.3d 1055, 1064 (2d Cir. 1996) (applying Riverwoods to NYNEX
Group and its three subsidiary corporations), rev'd on other
grounds, 525 U.S. 128 (1998).
[FN173]. See Cedric Kushner
Promotions v. King, 533
U.S. 158, 165-66 (2001) (suggesting that in such a situation
the two would qualify under RICO as distinct entities).
[FN174]. See 18 U.S.C. §
1962(c)-(d) (2000). Subsection (d) makes it unlawful to conspire
to violate the other provisions of the section. Id.
[FN175]. See 18 U.S.C. § 1961(5)
(2000) (providing definition of "pattern of racketeering
activity" for purposes of RICO Act).
[FN176]. See H.J. Inc. v.
Northwestern Bell Tel. Co., 492
U.S. 229, 237-39 (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).
[FN177]. See Procter & Gamble
Co. v. Big Apple Indus. Bldgs., Inc., 879
F.2d 10, 15 (2d Cir. 1989) (specifying complaint must
independently allege both an enterprise and pattern of
[FN178]. De Falco v. Dirie, 923 F.
Supp. 473, 477 (S.D.N.Y. 1996) (citing H.J. Inc., 492 U.S. at
[FN179]. 18 U.S.C. § 1961(1)(A)-(B)
(2000) (outlining crimes qualifying as "racketeering activity").
[FN180]. See 18
U.S.C. 1951(b)(2) (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.
U.S.C. § 1951 (2000) (codifying federal crime of
[FN182]. See 18 U.S.C. § 1951(a)
(2000) (requiring this element specifically).
[FN183]. 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.
U.S.C. § 1962(c) (2000).
U.S.C. § 1962(d) (2000). This conspiracy provision applies
to all of the provisions of subsections (a), (b), or (c). Id.
[FN186]. See Salinas v. United
U.S. 52, 65 (1997) (clarifying that § 1962(d) omitted
requirement of an overt act).
[FN187]. See United States v.
F.3d 72, 99 (2d Cir. 2000) (holding that it is not necessary
that conspirator knows of all acts done in furtherance of
conspiracy for RICO charge).
[FN188]. See, e.g., Orion Tire
Corp. v. Goodyear Tire & Rubber Co., 268
F.3d 1133, 1137 (9th Cir. 2001) (examining facts under RICO,
state law, and foreign law claims).
[FN189]. See United States v.
F.2d 386, 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).
[FN190]. United States v. Bagaric,
F.2d 42, 62 (2d Cir. 1983), abrogated on other grounds by,
Nat'l Org. for Women v. Scheidler, 510
U.S. 249 (1994).
[FN191]. See, e.g., United States
v. Coonan, 938
F.2d 1553, 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
[FN192]. United States v. Carillo,
F.3d 177, 186 (2d Cir. 2000).
[FN193]. 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).
[FN194]. See Orion Tire Corp. v.
Goodyear Tire & Rubber Co., 268
F.3d 1133, 1137 (9th Cir. 2001) (opening possibility of
using foreign law for predicate offenses).
[FN195]. See id. at 1137
(theorizing that Chinese law may be considered when interpreting
intentions of RICO statute).
[FN196]. See N. S. Fin. Corp. v. Al
F.3d 1046, 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).
[FN197]. See Alfadda v. Fenn, 935
F.2d 475, 479 (2d Cir. 1991) cert. denied, 419
U.S. 1105 (1975) (noting proposition that foreign
corporations are not immune from RICO liability because they are
not located within the United States (citing United States v.
F.2d 430 (2d Cir. 1974))).
[FN198]. See N. S. Fin. Corp., 100
F.3d at 1051 (expressing lack of definitive precedent regarding
amounts of activity necessary for RICO subject matter
[FN199]. See id. at 1051-52
(reiterating that extraterritorial jurisdiction is possible, but
must meet standards of "conduct" and "effects" test).
[FN200]. United States v. Noriega,
F. Supp. 1506, 1516 (S.D. Fla.
1990) (concluding RICO applied extraterritorially).
[FN201]. Jose v. M/V Fir Grove, 801
F. Supp. 349 (D. Or. 1991).
[FN202]. 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 extraterritorially).
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).
[FN204]. See United States v.
U.S. 94, 97-98 (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
[FN205]. See United States v.
F. Supp. 212, 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).
[FN206]. 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).
[FN207]. Id. at 1052 (suggesting
that substantive law must be carefully scrutinized by courts to
determine whether each particular statute suggests
[FN208]. 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).
[FN209]. See Itoba Ltd. v. LEP
Group PLC, 54
F.3d 118, 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
[FN210]. 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
F.2d 475, 479 (2d Cir. 1991).
[FN211]. See N. S. Fin. Corp. v. Al
F.3d 1046, 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
[FN212]. Psimenos v. E.F. Hutton
& Co., 722
F.2d 1041, 1046 (2d Cir. 1983) (quoting Bersch v. Drexel
Firestone, Inc., 519
F.2d 974, 993 (2d Cir. 1975)).
[FN213]. Consol. Gold Fields PLC v.
Minorco, S.A., 871
F.2d 252, 261-62 (2d Cir. 1989).
[FN214]. See Itoba Ltd. v. LEP
Group PLC, 54
F.3d 118, 122 (2d Cir. 1995) (highlighting two
[FN215]. See Alfadda, 935 F.2d 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
[FN216]. Psimenos, 722 F.2d at 1046
(quoting Bersch, 519 F.2d at 993).
[FN217]. See Bersch v. Drexel
Firestone, Inc., 519
F.2d 974, 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
[FN218]. See Leasco Data Processing
Equip. Corp. v. Maxwell, 468
F.2d 1326, 1334-35 (2d Cir. 1972) (recalling that defendants
made telephone calls and mailed fraudulent statements within the
[FN219]. See Psimenos v. E.F.
Hutton & Co., 722
F.2d 1041, 1046 (2d Cir. 1983) (upholding jurisdiction where
fraudulent acts were committed in Greece and contracts executed in
[FN220]. Id. at 1043.
[FN221]. Id. at 1044 (highlighting
that trading contracts were often executed in New York).
[FN222]. Id. at 1043 (recalling
that defendant was Delaware corporation with its principal place
of business in New York).
[FN223]. Id. at 1046 (finding
potential use of United States commodities markets as place to
commit improprieties persuasive in determining jurisdiction).
[FN224]. Psimenos v. E.F. Hutton
& Co., 722
F.2d 1041, 1047 (2d Cir. 1983) (holding foreigners have
standing to bring claims of breach of U.S. securities laws).
[FN225]. Id. at 1024.
[FN226]. Mormels v. Girofinance,
F.Supp. 815, 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
F.2d 762, 769 n.4 (2d Cir. 1977), cert denied, 434
U.S. 823, 54 (1977) and CFTC v. J.S. Love & Assoc.
Options Ltd., 422
F. Supp. 652, 660 (S.D.N.Y. 1976))
[FN227]. ITT v. Vencap, Ltd., 519
F.2d 1001, 1017 (2d Cir. 1975).
[FN228]. N. S. Fin. Corp. v.
F.3d 1046, 1051 (2d Cir. 1996) (quoting Consol. Gold Fields
PLC v. Minorco, S.A., 871
F.2d 252, 261-62 (2d Cir. 1989)).
[FN229]. 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.
U.S. 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).
[FN230]. Nat'l Bank of Canada v.
Interbank Card Ass'n., 666
F.2d 6, 8 (2d Cir. 1981).
[FN231]. Madanes v. Madanes, 981 F.
Supp. 241, 250 (S.D.N.Y. 1997).
[FN232]. 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).
[FN233]. See United States v. Pac.
& Arctic Ry. & Navigation Co., 228
U.S. 87, 106 (1913) (upholding jurisdiction for violations
of Sherman Antitrust Act and Interstate Commerce Act on shipping
routes outside of the U.S.).
[FN234]. See Alfadda 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
[FN235]. See id. at 480. (holding
that securities fraud violation may serve as predicate act
justifying RICO claim)
[FN236]. 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, http://www.la.utexas.edu/research/poltheory/coke/coke.pa01.c01.s03.html
(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 offense.
[FN237]. Cuban Liberty and
Democratic Solidarity (LIBERTAD or Helms-Burton) Act of 1996, Pub.L.
Stat. 785 (codified as amended in 22 U.S.C. §§ 6021-6091).
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).
U.S.C. § 6082 (a)(3)(C) (2005) (delineating recovery scheme
which triples initial damages available in earlier section).
[FN240]. See S. 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 law.)
[FN241]. See Melysa 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 offenders).
[FN242]. Id. at 686 (stating that
FCPA prohibits bribery of foreign government officials in order to
obtain or retain business).
[FN243]. Id. at 687 (finding that
FCPA covers any act person, foreign or national, who commits
bribery within U.S.).
[FN244]. See Kathleen 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
[FN245]. Hecht v. Commerce Clearing
F.2d 21, 23 (2d Cir. 1990) (quoting 18 U.S.C. § 1964(c)
[FN246]. See Sedima, S.P.R.L. v.
Imrex Co., 473
U.S. 479, 497 (1985) (holding that injuries proximately
caused by forbidden conduct under RICO are compensable).
[FN247]. See First Nationwide Bank
v. Gelt Funding Corp., 27
F.3d 763, 769 (2d Cir. 1994) (explaining "proximate" or
"legal" cause required in RICO cases).
[FN248]. 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).
[FN249]. 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).
[FN250]. Hecht v. Commerce Clearing
F.2d 21, 23-24 (2d Cir. 1990) (defining proximate cause).
[FN251]. See 18
U.S.C. § 1964 (2005) (listing civil remedies such as treble
[FN252]. See 18
U.S.C. § 1963 (2005) (listing criminal penalties such as
[FN253]. RICO provides:
Any person injured in his
business or property by reason of a violation of s
ection 1962 of this chapter...may
sue therefore in any appropriate United States district court
and shall recover threefold the damages he sustains and the cost
of the suit, including a reasonable attorney's fee, except that
no person may rely upon any conduct that would have been
actionable as fraud in the purchase or sale of securities to
establish a violation of section 1962... The exception contained
in the preceding sentence does not apply to an action against
any person that is criminally convicted in connection with the
fraud, in which case the statute of limitations shall start to
run on the date on which the conviction becomes final.
[FN254]. 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...").
[FN255]. See Volkher 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 plaintiff).
[FN256]. 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
U.S. 257, 283-99 (1989) (O'Connor, J., dissenting).
[FN257]. See N.S. Fin. Corp. v.
F.3d 1046, 1052 (2d Cir. 1996) (noting that extraterritorial
application of RICO is "delicate work" due to comity concerns).
[FN258]. See 18 U.S.C. § 1964(c)
(2005) (allowing for treble damages).
[FN259]. See N.S. Fin. Corp., 100
F.3d at 1052 (expressing comity concerns over application of
criminal aspects of RICO due to treble damages).
[FN260]. 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.
[FN261]. See George 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 damages).
[FN262]. 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.
[FN263]. 56 Fed. Appx. 40 (2d Cir.
U.S.C. § 981 (2005).
[FN265]. See Approximately
$25,829,681.80 in Funds, 56 Fed. Appx. at 41 (holding that court
had jurisdiction over funds in controversy).
[FN266]. See U.S. 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).
[FN267]. See supra text
accompanying notes 79-80 (discussing RICO in the context of ATCA).
F.3d 88, 93-94 (2d Cir. 2000) (discussing trial level
[FN269]. See id. at 92-93
(describing facts of case).
[FN270]. See id. at 108 (remanding
case for further proceedings).
[FN271]. See id. at 101 (citing PT
United Can Co. v. Crown Cork & Seal Co., 138
F.3d 65, 74 (2d Cir. 1998)).
[FN272]. See Doe v. Unocal Corp., 110
F. Supp. 2d 1294, 1303 (2000) (stating plaintiff's
allegation of RICO violation).
[FN273]. See id. at 1295-1303
(describing Unocal's relationship with Burmese security forces
that utilized forced labor).
[FN274]. See Forti v. Suarez-Mason,
F. Supp. 1531, 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
F. Supp. 676, 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").
[FN275]. Organization 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 Venezuela).
Argentina-Brazil-Bulgaria-Chile-Slovak 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 competitive
[FN277]. See Breton Woods Project,
(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'
[FN278]. See Alejandro 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 international law).
[FN279]. 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).
[FN280]. Foreign 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).
C.F.R. § 240.17a-3 (2005) (mandating that national
securities exchange members shall keep current employment records
including any arrests or indictment for bribery).
[FN282]. 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 financial statements).
[FN283]. Partnership 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
[FN284]. See Ndiva 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
[FN285]. Convention Combating
Bribery, supra note 276 (criminalizing bribery of foreign public
[FN286]. 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 business).
[FN287]. 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).
[FN288]. 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).
[FN289]. See id. at 700 (warning
that a likely result of a violation of the FCPA is debarment
before several government agencies).
[FN290]. See 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 that Congress
created enforcement scheme for FCPA and gave Attorney General
authority to file actions for injunctive relief, civil, or
[FN291]. Id. at *7 (dismissing
Gyrodata Corp's counterclaim because FCPA does not grant private
cause of action).
[FN292]. 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 congressional intent).
[FN293]. See id. at *7
(acknowledging that defendant's legislative history argument is
not conclusive as FCPA's legislative also offers equal support for
[FN294]. 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
[FN295]. 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 Attorney General).
[FN296]. United States Foreign
Sovereign Immunities Act of 1976 § 1603(d)-(e) (1988), available
(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
[FN297]. See Adler v. Federal
Republic of Nigeria, 219
F.3d 869, 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").
[FN298]. 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").
[FN299]. 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 equitable,
[FN300]. See Keystone Driller Co.
v. General Excavator Co., 290
U.S. 240, 244 (1933) (explaining that fundamental principle
of equity jurisprudence is that plaintiffs have "clean hands"
before coming into court).
[FN301]. 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 FCPA).
[FN302]. Id. at *7 (citing H.R.
Rep. No. 95-640, at 10 (1977)).
[FN303]. 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)).
[FN304]. Id. at *8-*9 (stating that
FCPA's structure, which consists of detailed enforcement schemes,
tends to negate possibility of implicit remedies).
[FN305]. Id. at *8 (finding that
lack of explicit private remedy implies that no private right was
[FN306]. 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).
[FN307]. 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 of Act).
[FN308]. 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,
[FN309]. See Sperber, supra note
241, at 692 (explaining that the DOJ and SEC are "solely
responsible" for enforcing FCPA).
[FN310]. See Lamb v. Phillip
Morris, Inc., 915
F.2d 1024, 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).
[FN311]. See Envtl. Tectonics v.
W.S. Kirkpatrick, Inc., 847
F.2d 1052, 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
F. Supp. 334, 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).
U.S.C. § 1350 (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).
[FN313]. 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
[FN314]. 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 territory).
[FN315]. 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).
[FN316]. 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).
[FN317]. 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).
[FN318]. 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).
[FN319]. 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
[FN320]. SEC v. Montedison, S.p.A.,
Lit. Release No. 15164, 1996 WL 673757 (D.D.C. 1996).
[FN321]. 15 U.S.C. §§ 78a, 78dd-1,
78dd-2, 78ff (1998).
[FN322]. See Montedison, 1996
WL at (explaining the charges against Montedison were, among other
things, falsifying documents to artificially inflate company's
[FN323]. See Symposium,
International Business Law: E-Commerce and the Impact of
Globalization on the Law, 8 New Eng. Int'l & Comp. L. Ann. 19,
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).
[FN324]. 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, 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).
[FN325]. See 15
U.S.C. § 78m (1998) (outlining accounting standards for
persons and businesses involved in secutities exchange).
[FN326]. See SEC v. World-Wide Coin
Invs., Ltd., 567
F. Supp. 724, 747 (N.D. Ga. 1983) (commenting that the FCPA
gives the SEC greater involvement in all activities of the
[FN327]. See Barbara 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").
[FN328]. 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 traded").
[FN329]. Brown, supra note 324, at
258-59 (acknowledging that Congress must address issue of bribery
internationally if it were to have any effect).
[FN330]. See Diane P. Caggiano, The
Foreign Corrupt Practices Act: The Case for Multilateral
Cooperation, 5 N. Eng. Int'l & Comp. L. Ann. 277 (1999),
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).
[FN331]. For the health of the