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Corporations and Criminal Responsibility

December 3, 2014

By Celia Wells, Professor of Criminal Law at the University of Bristol. She is the author of Corporations and Criminal Responsibility, now available on Oxford Scholarship Online.

Corporations and Criminal Studies

Corporate criminal liability has assumed great significance in the last 20 years. International organisations such as the OECD, the Council of Europe, EU and the UN have required signatory states to apply criminal penalties to corporations for economic and environmental offences. Transnational corporations have exponentially increased their influence on world trade and global trade is characterised by complex and circuitous ‘global value chains’ (GVCs). The world’s biggest multinational corporations are disproportionately located in the US and Europe.  An appreciation of the theoretical and historical development is essential to an understanding of contemporary domestic and international debates about corporate accountability, whether in relation to corporate manslaughter, bribery and corruption, or violations of human rights.

If we are to talk about corporate criminal liability, against whom should action be taken? The corporation itself? Directors of the company? The employees and agents? Or the shareholds? Are perhaps all of them liable, or just some of them, or even none of them at all? This book addresses a range of fundamental questions. Corporate liability proceeds from the assumption that a corporation is a separate legal person, a term that can include states, local authorities, and universities. But what is a corporation and when do we want to ascribe responsibility to a corporation as a collection or aggregation of individuals and when as a unified whole? Can a corporation be a responsible agent? This is often seen as the stumbling block to corporate or organizational liability for it appears to assume human cognition and volition. If we are to accept the idea of corporate responsibility, we must necessarily find a different way of expressing capacity than one that immediately precludes anything other than an individual human. Organizations acquire an autonomous character or, as some have put it, take on a social reality. We also need to find a way of dealing with causal responsibility where there are both individual and organizational actors.

What is distinctive about criminal law? It is backed by a system of state punishment, and usually requires proof of fault such as intention, knowledge, or recklessness. In contrast, private law, which functions mainly to compensate for harm caused, has a lower standard of proof, and uses broad objective notions of negligence; a company or other person can insure against the risk of civil, but not criminal, liability. As this book argues, there is much in modern regulatory systems that challenges the simple functional distinction between criminal laws that punish and private laws that compensate. Health and safety, financial, and environmental regulation are prime examples of the blurred edges between these two visions. In some jurisdictions, health and safety regulation occupies a formal position outside criminal law, attracting administrative penalties, which to some extent sidestep the problem of corporate criminal liability. In England and Wales, health and safety laws (and other regulation) have been tacked on to criminal law, rather like an ill-fitting and unwelcome extension. 

These regulatory schemes share some characteristics of mainstream criminal law – not least that they use criminal procedures and impose criminal penalties – but in other ways they are quite different from, and are certainly perceived by the specialist enforcement agencies and those they regulate as quite distinct from, criminal law. There is often a close relationship between the regulators and the regulated.  

The essence of the debate can be seen at two levels. One is whether it makes any sense at all to analogise from criminal liability of individual human beings to the legal construct of the corporation (or other legal persons). If we accept that corporations can do harm, behave badly or however we wish to characterise it, the second level of debate is about how we attribute blame to this legal person.  In relation to offences enforced by specialist regulators, the debate is about the appropriateness of using criminal law and criminal penalties rather than preventive mechanisms.  In relation to general offences such as manslaughter and fraud, the debate is whether there is any point in applying these to corporate entities as well as, or instead of, to human persons.  

It is important to appreciate that corporate criminal liability can take a number of forms. Jurisdictions across the world have developed different answers in terms of schemes and types of corporate liability.  The expansion of corporate criminal liability has been driven by international conventions such as the OECD Anti Bribery Convention 1997. This requires signatories to introduce liability of legal persons, a concept that was unfamiliar to many European civil code jurisdictions. In the UK the idea of the legal person is readily accepted but translating that in to criminal law has been a far less comfortable journey. Case law tended to limit the potential for corporate liability, even as statutory intervention sought to broaden it. The Bribery Act 2010 is an example of statutory modification. In contrast, federal courts in the In the US adopted a wide and therefore less corporation friendly approach from the beginning. In the code jurisdictions in Europe, where legal person liability is generally excluded, a framework of administrative sanctions has often been used as an alternative. Corporations and Criminal Responsibility provides the theoretical foundation against which to assess these global legal developments. 

 

If objective moral reasoning is possible, how does it get started?  Sidgwick’s answer is, in brief, that it starts with a self-evident intuition. He does not mean by this, however, the intuitions of what he calls “common sense morality.”  To see what he does mean, we must draw a distinction between intuitions that are self-evident truths of reason, and a very different kind of intuition. This distinction will become clearer if we look at an objection to the idea of moral intuition as a source of moral truth.

Sidgwick was a contemporary of Charles Darwin, so it is not surprising that already in his time the objection was raised that an evolutionary view of the origins of our moral judgments would completely discredit them. Sidgwick denied that any theory of the origins of our capacity for making moral judgments could discredit the very idea of morality, because he thought that no matter what the origin of our moral judgments, we will still have to decide what we ought to do, and answering that question is a worthwhile enterprise.

On the other hand, he agreed that some accounts of the origins of particular moral judgments might suggest that they are unlikely to be true, and therefore discredit them. We defend this important insight, and press it further. Many of our common and widely shared moral intuitions are the outcome of evolutionary selection, but the fact that they helped our ancestors to survive and reproduce does not show them to be true.

This might be taken as a ground for skepticism about morality as a whole, but our capacity for reasoning saves morality from this skeptical critique. The ability to reason has, of course, evolved, and clearly confers evolutionary advantages on those who possess it, but it does so by making it possible for us to discover the truth about our world, and this includes the discovery of some non-natural moral truths.

Sidgwick thought that his greatest work was a failure because it concluded by accepting that both egoism and universal benevolence were rational. Yet they pointed to different conclusions about what we ought to do. We argue that the evolutionary critique of some moral intuitions can be applied to egoism, but not to universal benevolence. The principle of universal benevolence can be seen as self-evident, once we understand that our own good is, from “the point of view of the universe” of no more importance than the similar good of anyone else. This is a rational insight, not an evolved moral intuition.

In this way, we resolve the so-called “dualism of practical reason.” This leaves us  with a utilitarian reason for action that can be presented in the form of a utilitarian principle: we ought to maximize the good generally.

What  is this good thing that we should maximize? Is my having a positive attitude towards something enough to make bringing it about good for me? Preference utilitarians have argued that it is, and one of us has, for many years, been well-known as a representative of that view.

Sidgwick, however, rejected such theories, arguing that the good must be, not what I actually desire but what I would desire if I were thinking rationally. He then develops the view that the only things that it is rational to desire for themselves are desirable mental states, or pleasure, and the absence of pain.

For those who hold that practical reasoning must start from desires, it is hard to understand the idea of what it would be rational to desire – or at least, that idea can be understood only in relation to other desires that the agent may have, so as to produce a greater harmony of desire.

This leads to a desire-based theory of the good.

One of us, for many years, became well-known as a defender of one such desire-based theory, namely preference utilitarianism. But if reason can take us to a more universal perspective, then we can understand the claim that it would be rational for us to desire some goods, even if we have no present desire for them. On that basis, it becomes more plausible to argue for the view that the good consists in having certain mental states, rather than in the satisfaction of desires or preferences.

- See more at: http://blog.oup.com/2014/06/the-point-of-view-of-the-universe/#sthash.LhtDta11.dpuf

 

 

Discover more: the chapter 'Safety and Public Welfare' in Corporations and Criminal Responsibility is now free and available to read until the end of January. Get access to the full text of this book, as well as over 1,000 Oxford Law titles, by recommending OSO to your librarian today.