The jurisdiction of US criminal courts for acts committed abroad
For the purposes of territorial jurisdiction, the US follows the “effects” doctrine. Most US extraterritorial legislation applies only if the alleged conduct abroad can have a “direct, substantial and predictable effect on its national soil” 1 (effects test), or if the alleged conduct directly causing damage abroad took place on US soil (conduct test). The extraterritorial application of these laws is in this case limited by a requirement of minimal ties to US soil.
The United States applies the principles of active personality and passive personality. 2 Most US criminal laws use active personality as a link, which means the laws apply only if the perpetrator is a US citizen. The criterion of passive personality applies only under certain specific laws, such as the US war crimes statute, in which the offense is committed by a foreigner and the victim is a US citizen. 3
Extraterritorial corporate criminal liability is a question not fully resolved overseas. Various researchers and US courts do not always agree on the legitimacy of the theory and the criteria for its application. Because the common law system depends primarily on legal doctrine and precedent to create law rather than on written law, 4 it is difficult to agree on clear and precise criteria for the application of extraterritorial criminal liability. Some defend the proposition that corporations should be held accountable for criminal acts they commit abroad, based on a common law principle known as ultra vires (beyond the powers conferred by a company’s rules and regulations).
In effect, this means that companies today which receive their powers and privileges (legal personhood, limited liability) from the state, must not only uphold the laws of the state but also the international legal obligations to which the state has committed to respect.
Several US laws such as RICO and the FCPA render multinational corporations criminally liable, but the laws apply only to certain offenses.
The Constitution limits the degree to which states exercise federal jurisdiction. 5 US states cannot extend their jurisdiction beyond those crimes committed on their soil. 6 The federal government itself can enact extraterritorial criminal laws, 7 although they contain only minor extensions of US law and do not truly create universal jurisdiction.
Conventions protecting human rights
- The Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, entered into force on 20 November 1994,
- The Convention against Genocide of 9 December 1948, and
- The Geneva Conventions of 1949 and related protocols.
The United States is party to the Convention against Torture and Other Cruel, Inhuman and Degrading Treatment or Punishment and has incorporated it into national law. Thus the Torture Statute 8 enjoys quasi-universal jurisdiction provided the alleged perpetrator is a US citizen, or the alleged perpetrator is present on US soil, regardless of the nationality of either the victim or the alleged perpetrator.
The United States is also party to the Convention against Genocide. Federal law has since affirmed that US courts have universal jurisdiction over the crime of genocide. However, federal law does establish jurisdictional requirements, 9 including the US citizenship of the accused or his or her presence on US soil.
In fact, no international legal instrument requires states to exercise jurisdiction over cases of genocide and crimes against humanity if the facts present no ties to a country’s territory. Because these crimes are considered part of jus cogens, however, states have a customary obligation to end it. 10
The United States has also incorporated an element of the Geneva Conventions through the War Crimes Statute. 11 US courts have jurisdiction to hear war crimes if the perpetrator or victim is a US citizen or a member of the US armed forces. War crimes aside, other provisions of the Geneva Conventions, including laws to tackle crimes against humanity, have not been incorporated into the American legal code. 12
It is worth noting that the United States has not ratified the Rome Statute and thus the International Criminal Court has no jurisdiction over international crimes committed by US nationals.
In situations where these international conventions have been incorporated into US domestic law, it should be noted that they generally apply when crimes are committed abroad by US perpetrators or with US victims. a tie with the US is always required. 13
The applicability of these federal statutes against torture, war crimes and genocide to legal persons (e.g. companies) remains an unresolved issue. Despite the lack of clarity, one could legitimately consider a case, particularly under the Torture Statute, in which the use of the generic term “person” permits both legal persons and individuals to be held liable. even if no provision expressly excludes the applicability of these laws to companies, prior to undertaking any legal proceedings it would be prudent to examine the preparatory work that led to a particular law’s drafting.
The special case of the Foreign Corrupt Practices Act (FCPA) and Racketeering Influenced and Corrupt Organisations (RICO)
Several US criminal laws render companies criminally liable for human rights violations in which they participate abroad. The US has extraterritorial laws against money laundering, in situations where laundering would bring into the US money obtained illegally in a foreign country. There is also a law against the importation of stolen objects and a law against importing illicit drugs. 14
The most important laws are the anti-bribery law (FCPA) and the law against organised crime (RICO):
At the international level, the United States is bound by two conventions: the Inter-American Convention Against Corruption of 29 March 1996 and the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 18 December 1998. The first falls under the framework of the Organisation of American States (OAS) and the second under the Organisation for economic Co-operation and Development (OECD).
At the national level, the matter is addressed by two texts: the FCPA and recommendations from the Securities and Exchange Commission (SEC). The FCPA applies to illegal activities carried out abroad by US companies. Above all, the law criminalises the bribery of foreign government officials in order to obtain advantages of any kind. US companies cannot be prosecuted, however, for practices that are not criminalised in the laws of the host country. Nor can they be prosecuted when payments are made for the purposes of demonstrating or explaining a product, or when they facilitate the execution of a contract already signed with a foreign government.
Companies guilty of bribing foreign officials are liable for fines up to $2,000,000. Officers, directors, shareholders, employees and agents face fines of up to $100,000 and/or five years imprisonment.
Securities and exchange Commission v. ABB ltd, 2004
In 2004, the SEC investigated ABB Ltd, a Swiss engineering group in Sweden.
In its complaint, the SEC determined that between 1998 and 2003, ABB subsidiaries in the US and overseas seeking to enter into business relationships with Nigeria, Angola and Kazakhstan offered illicit payments of more than U.SD. 1.1 million to officials in those countries. According to the complaint, all of the payments were made to influence the actions and decisions of foreign officials in order to assist ABB’s subsidiaries in establishing and maintaining business relationships in the countries.
The complaint further alleged that the payments were made with the knowledge and approval of certain members of staff responsible for managing ABB subsidiaries, and that payments worth at least $865,726 were made after ABB registered with the SEC in April 2001 and was from that point on subject to the SEC’s reporting obligations.
Finally, the complaint accused ABB of having poorly accounted for the payments in its books and records, and of failing to have implemented significant internal controls to prevent and detect such illicit payments.
The SEC held that in making the payments through its subsidiaries, ABB violated the antibribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934).
The SEC also held that ABB’s improper recording of the payments violated the FCPA’s relevant books and records provisions (Article 13 (b) (2) (A) of the Securities Exchange Act of 1934).
Finally, the SEC held that in failing to develop or maintain an effective system of internal controls to prevent and detect the FCPA violations, ABB violated the FCPA’s internal accounting controls (Section 13(b)(2) (B) of the Securities Exchange Act of 1934).
Determined to accept ABB’s settlement offer, the SEC took into account the full co-operation that ABB provided SEC staff during its investigation. The Commission also considered the fact that ABB itself brought the matter to the attention of SEC staff and the US Department of Justice.
In 2004, the SEC ordered ABB Ltd. to pay a fine of $10.5 million and an additional sum of $5.9 million.
In addition, ABB paid approximately $17 million in legal fees.
The FCPA’s extraterritoriality has given rise to discussion, in part because some consider it to be an affront to the host nation’s sovereignty. However, most doctrines and jurisprudence recognise an extraterritorial character within the FCPA. 15
Only the Sec and Department of Justice can seek justice. Individuals can address the SEC and DOJ and inform them of offenses of which they are aware.
Racketeering Influenced and Corrupt Organisations (RICO)
This law has been incorporated into Title 18 of the US Code and targets organised crime. Title 18 USC A§ 1962 states: “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 pattern of racketeering activity.” 16
RICO employs a very broad definition of what an enterprise might be: according to RICO, an enterprise is a “group of persons associated together for a common purpose of engaging in a course of conduct.” 17 A parent company and a subsidiary can be treated as a single enterprise if an offense is committed as part of their relationship. 18
The company must have committed “a pattern of racketeering activity”, which is to say a series of criminal acts related to one another. These crimes must feature a certain continuity. The criminal acts prosecutable under RICO are those cited in the Hobbs Act and in Title 18 USC A§ 1962 (c). In addition to the list of crimes contained therein, a company can be charged under RICO for acts considered criminal in the country in which it operates. A criminal complaint under RICO may thus be introduced on the basis of a violation of foreign law if the violation corresponds with a violation of US law. 19 RICO applies, however, only if the alleged situation involves a direct link with the united States and may have a direct effect on US commerce 20 (conduct/effects test).
The possibility of applying RICO extraterritorially in the absence of US ties is a subject of current debate in US courts and may evolve in the coming years.