Silk Road Report - Justice for Iran · Justice for Iran Silk Road Report: April 2017 3 About The...

DomesticLawsandBusiness&HumanRightsApril2017

SilkRoadReport

JusticeforIranSilkRoadReport:April2017

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SilkRoadReport

DomesticLawsandBusiness&HumanRights

JusticeforIran

April2017

Email:[email protected]

Website:www.justiceforiran.org

Copyright©JusticeforIran2017

Reproductionofanyorallpartsofthisdocumentispermissibleonlywithpropercitation.


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TableofContents

ABOUTTHESILKROADPROJECT........................................................................................3

ABOUTTHEREPORT...........................................................................................................4

I. INTRODUCTION...........................................................................................................5

II. CANADA.....................................................................................................................5

III. FRANCE.....................................................................................................................8

IV. GERMANY...............................................................................................................13

V. ITALY........................................................................................................................15

VI. SPAIN......................................................................................................................16

VII. SWITZERLAND........................................................................................................18

VIII. UNITEDKINGDOM................................................................................................18

IX. UNITEDSTATES.......................................................................................................20


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AboutTheSilkRoadProjectTheSilkRoadwasanancientnetworkoftraderoutesthatwereforcenturiescentral

to cultural interaction through regions of the Asian continent connecting the East

andWest, fromChina to theMediterranean Sea. Tradeon the Silk Roadplayed a

significant role in the development of the civilizations of China, the Subcontinent,

Persia, Europe, the Horn of Africa and Arabia, opening long-distance political and

economicrelationsbetweenthecivilizations.

The Silk Roadproject aims to promote accountability andprotect human rights in

thecontextofIran’srapidreturntotheworldmarketsafterthe2015NuclearDeal.1

ThroughpublishingreportsonbusinessandhumanrightsinIran,thisprojectintends

to increase awareness among advocates of human rights, particularly lawyers and

civil societyactivists,andaccountability inbusinessandcorporaterelations. Italso

aimstoholdaccountablecorporateswhichareinvolvedorcomplicitinhumanright

violations,usinglegalandotheravailablemechanisms.

1TheJointComprehensivePlanofAction(JCPOA)knowncommonlyasthe Irandealor Irannucleardeal, isaninternationalagreementon thenuclearprogramof Iran reached inViennaon14 July2015between Iran, theP5+1 (the five permanent members of the United Nations Security Council—China, France, Russia, UnitedKingdom,UnitedStates—plusGermany),andtheEuropeanUnion.Undertheagreement,IranwillreceiverelieffromU.S.,EuropeanUnion,andUnitedNationsSecurityCouncilnuclear-relatedeconomicsanctions.


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AbouttheReportThisisourfourthreportfromtheSilkRoadReportserieswhichaimtoshedlighton

theunderlyingconceptsandinstrumentsaswellasmechanismsthatcanbeapplied

to specific cases of recent contracts and agreements between multinational

corporationsandIraniancompanies,someofwhicharecloselylinkedtoorpartially

ownedbyhumanrightsviolators. Inthisreport,wewillbrieflyexplorethegeneral

principlesapplicableinanumberofcountries’domesticlawsinrelationtoclaimsof

violationofhumanrightsbytheirnationalcompaniesabroad,aswellastheirefforts

toadoptNationalActionPlansfor implementationoftheUNGuidingPrincipleson

BusinessandHumanRightsandOECDGuidelines.Itshouldbenotedthatthisreport

isnotintendedtoprovideanexhaustivereviewoftheapplicablelawsbuttoprovide

an overview of certain aspects of this rapidly evolving area of the law in Canada,

France, Germany, Italy, Spain, Switzerland, the United Kingdom and the United

States.


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I. IntroductionDomestic laws generally do not cover the issue of business and human rights,

althoughsomeEUMemberStatesareintheprocessofdevelopingorhavelaunched

nationalactionplansfortheimplementationoftheUNGuidingPrinciples.2However

severalexistinglegislationsintheareaoftransnationalcorruption,tortsorworkers

health and security could be of use to the extent that they regulate activities of

transnationalcorporationsandotherbusinessenterprises.Thissectionexaminesthe

nationallawsofanumberofcountriesincludingsomeEUmemberstatesinrelation

tobusinessandhumanrights.

II. Canada

IntheCanadiancontext,therehavebeenatleasttwofailedattemptstolegislateon

theissueofCSR,namelyBillC-584:TheCorporateSocialResponsibilityofExtractive

CorporationsOutsideCanadaAct(2013)andBillC-300:TheCorporateAccountability

ofMining,OilandGasCorporationsinDevelopingCountriesAct(2009).

In the extractives industries such as mining, oil, and gas, the country’s largest

industrial sectors, recent debates are focused on the creation of an ad hoc

ombudspersontoinvestigateCanadiancompaniesimplicatedinwrongdoingabroad3

tocomplementthelatestCorporateSocialResponsibilityStrategy.4

2AccordingtoareportpublishedbytheCouncilofEurope,asofApril2016nineEuropeancountrieshavealreadypublishedNAPsonbusinessandhumanrights:Finland,Denmark,Italy,Lithuania,theNetherlands,Norway,Spain,Sweden,andtheUnitedKingdom.NinefurtherNAPsareonthewayinAzerbaijan,Belgium,CzechRepublic,Germany,Greece,Ireland,Portugal,SloveniaandSwitzerland:http://www.coe.int/ca/web/commissioner/-/business-enterprises-begin-to-recognise-their-human-rights-responsibilities3https://www.hilltimes.com/2016/11/09/feds-seriously-considering-mining-ombudsman-says-canadas-corporate-social-responsibility-envoy/866914http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse.aspx?lang=eng


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However, various provincial legislative schemes impose specific personal liabilities

ondirectors, thereby creating incentives for directors tomonitor legal compliance

withapplicablelaws,includinghumanrightslaws.Incommonlaw,directors’duties

encompass both a duty to serve the best interest of the corporation, including

ensuringthereiscompliancewithalllegalobligationsapplyingtoacompany,andto

avoidconduct that isoppressive to the“reasonableexpectations”of stakeholders.

Suchanexpectationmaybethatacorporationiscompliantwithapplicablehuman

rightslegislation.

Atthefederallevel,sections217and217.1oftheCriminalCode,forexample,apply

to and extend liability to officers with directing capacity within a corporation,

creatinga legalduty toperform their functions “if anomission todo theact isor

maybedangeroustolife”and“totakereasonablestepstopreventbodilyharmto

thatperson,oranyotherperson,arisingfromthatworkortask.”Theseprovisions

have been interpreted as establishing a legal duty for a business to conduct due

diligence to protect against the risk of bodily harm of employees and the public,

includingforinstanceenvironmentaldamages.

Withrespecttooffencesofnegligencecommittedbyanorganization,s.22.1ofthe

CriminalCodesetsoutatwo-steptesttoestablishtheguiltofanorganization.The

firststeprequiresproofthata“representative”ofthatorganizationisapartytothe

offence.A“representative”, inrespectofanorganization, isdefinedas“adirector,

partner,employee,member,agentorcontractoroftheorganization”.Thisdefinition

extends liability of a company beyond the national jurisdictional borders which it

occupies and includes those in which it carries its operations. The second step

requiresproofthata“seniorofficer”withintheorganizationhasdepartedmarkedly

from a standard of care that, in the circumstances, could have reasonably been

expectedtopreventarepresentativeoftheorganizationfrombeingapartytothe

offence.


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It isalsoworthnotingthatCanadiancourtshavetraditionallyappliedtheForumof

Necessitydoctrine to assume jurisdictionover claimsagainstCanadian companies’

activities abroad inexceptional cases,where there isnoother forum inwhich the

plaintiffcanreasonablyseekrelief.5Examplesofsituationsinwhichthedoctrinehas

relevance include, but are not limited to, the breakdown of diplomatic or

commercialrelationswithaforeignState;theneedtoprotectapoliticalrefugee;or

theexistenceofaseriousphysicalthreatifthedebateweretobeundertakenbefore

theforeigncourt.

CaseStudy:GizeYebeyoAraya,KeseteTekleEshazionandMihretabYemaneTeklev.NebsunResources6(monitorprogress)The first modern-day slavery lawsuit brought by 3 Eritrean workers before theSupremeCourtofBritishColumbiaIn November 2014, three Eritreans filed a lawsuit against Nevsun Resources inVancouver,BritishColumbia,Canada,allegingthatthecompanywascomplicitintheuseofforcedlabourbyNevsun’slocalsub-contractor,SegenConstruction(ownedbyEritrea’s ruling party), at the Bisha mine in Eritrea. Nevsun, headquartered inVancouver, has denied the allegations. This lawsuit is the first in Canada whereclaimsarebaseddirectlyonviolationsofinternationallaw.

The plaintiffs, Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab YemaneTekle,claimthattheyworkedattheBishamineagainsttheirwillandweresubjectto“cruel, inhuman and degrading treatment”. They allege that they were forced towork long hours and lived in constant fear of threats of torture andintimidation.Nevsunhasrejectedtheallegationsas“unfounded”anddeclaredthat“theBishaMinehasadheredatall timesto internationalstandardsofgovernance,workplaceconditions,andhealthandsafety”.

5VanBredav.VillageResortsLtd.,2010ONCA84,WestVanInc.v.Daisley,2014ONCA232,Bouzariv.Bahremani,2013ONSC63376http://www.lexpert.ca/article/court-decision-to-hear-slavery-case-has-major-implications-across-industries/;http://www.canlii.org/en/bc/bcsc/doc/2016/2016bcsc1856/2016bcsc1856.html?resultIndex=3.


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InOctober2016,theSupremeCourtofBritishColombiarejectedNevsun’smotiontodismiss the lawsuit and ruled that the case should proceed in British Colombia asthereweredoubtsthattheplaintiffswouldgetafairtrialinEritrea.

III. FranceOnFebruary21,2017,aftera lengthyandcontroversialprocessofexchangesback

andforthbetweentheFrenchNationalAssemblyandSenate,Franceadoptedanew

law entitled “Act regarding the Duty of Care of Parent Companies and Ordering

Companies”7. The Bill of law was initially adopted by the National Assembly on

March30,20158,followingwhich itwasrejectedandre-adoptedunderamodified

versiontwicebytheSenate(November19,2015andOctober13,2016)andtwiceby

theNationalAssembly(March23,2016andFebruary21,2017).9

TheAct,asadoptedon21February2017,wassubsequentlychallengedbeforethe

FrenchConstitutionalCouncil.OnMarch23,2017,bydecisionNo2017-750DC,the

FrenchConstitutionalCouncilheldthattheprovisionsrelatingtotheestablishment

of a civil fine mechanism imposing a maximum penalty of 10 million euros for

companies breaching their obligations under the new duty of vigilance were

unconstitutional, given the lack of clarity in the terms used by the legislator in

definingthenewobligations.10

7Loin°399relativeaudevoirdevigilancedessociétésmèresetdesentreprisesdonneusesd’ordre:https://www.legifrance.gouv.fr/eli/loi/2017/3/27/2017-399/jo/texte.TheActintroducestwonewprovisionsunderthesectionoftheFrenchCommercialCodeconcerningFrenchlimitedcompanies(sociétésanonymes(SA))(articlesL.225-102-4andL.225-102-5oftheCommercialCode).Byreference,thesenewprovisionsalsoapplytoFrenchsimplifiedlimitedcompanies(sociétésparactionssimplifiées(SAS))andFrenchlimitedpartnerships(sociétésencommanditeparactions(SCA)).8Projetdeloirelativeaudevoirdevigilancedessociétésmeresetdesentreprisesdonneusesd’ordre:http://www.assemblee-nationale.fr/14/propositions/pion2578.asp9AllversionsoftheBillandreportsoftheJointParliamentaryCommitteetaskedwithfindingacomprimisebetweenthetwochambersareavailableat:http://www.assemblee-nationale.fr/14/dossiers/devoir_vigilance_entreprises_donneuses_ordre.asp10http://www.conseil-constitutionnel.fr/conseil-constitutionnel/francais/les-decisions/acces-par-date/decisions-depuis-1959/2017/2017-750-dc/decision-n-2017-750-dc-du-23-mars-2017.148843.html


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The new Act essentially imposes procedural due diligence obligations throughout

theirsupplychainsonallcompanieswithatleast5000employees(includingthose

of their direct and indirect subsidiaries) if the company holds its registered head

officeontheFrenchterritoryoratleast10000employees(includingthoseoftheir

directandindirectsubsidiaries)ifthecompanyholdsitsregisteredheadofficeonor

outside French territory. On an exceptional basis, the subsidiaries or controlled

companiesexceedingtheaforementionedthresholdsaredeemedtohavesatisfied

the above obligation. In such cases, the company controlling them, within the

meaning of article L. 233-3 of the French Commercial Code, establishes and

implementsavigilanceplanrelatingtothebusinessactivitiesofthecompanyandof

allofthesubsidiariesorcompaniescontrolledbyit.

CompaniessubjecttothenewActarerequiredtoadoptvariousmeasuresintended

to prevent any serious violations with respect to human rights and fundamental

freedoms,thehealthandsafetyofpersonsandtheenvironment,namely:

- completingariskmapintendedtoidentify,analyseandclassifyrisks;

- implementing a mechanism to regularly assess the situation of the

subsidiaries,subcontractorsorsupplierswithwhichtheyhaveanestablished

commercialrelationship,forthepurposesofriskmapping;

- carrying out any measures designed to mitigate risks or prevent serious

violations;

- establishing an alert and warning system regarding the existence or

occurrenceofrisks;and

- establishing a follow-up mechanism for measures implemented and an

assessmentproceduretoevaluatetheirefficiency.

Accordingly, theActprovides for (i) theestablishmentofa formal “VigilancePlan”

(oraduediligenceplan),including“appropriatemeasuresofreasonablevigilancein

order to identify risks and prevent serious breaches of human rights and

fundamental liberties,healthand securityofpeopleaswell asenvironment in the


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various relevant entities”, and (ii) the publication of a report on its effective

implementation,bothofwhichshouldbeincludedinthemanagementreportofthe

affectedcompanyreferredto inarticleL.225-102oftheFrenchCommercialCode.

Since an SAS is not required to issue such management report, this provision

requiresfurtherclarificationregardingSASs.

The relevant risksor infringementsmustbe identifiednotonlywith regard to the

company’s own activities but also with regard to the activities of its directly or

indirectly controlled companies, as well as the activities of subcontractors and

supplierswithwhoma commercial relationship isestablished.UnderFrench lawa

company is controlled (i)when amajority of its voting rights are held by another

company, (ii) when amajority of themembers of its administrative, executive or

supervisorybodiesareappointedbyanothercompany for twosuccessive financial

years,or(iii)whenadominantinfluenceisexertedoverthecompanybyvirtueofa

contract or the terms and conditions of its constitution (Article L.233-16 of the

FrenchCommercialCode).

TheVigilancePlanmustbeestablished from the financial periodduringwhich the

Act is published, i.e. as of the current 2017 financial period for companieswith a

financialyearendingonDecember31.Theprovisionsrelatingto(i)thereportofthe

effective implementation of the Vigilance Plan and (ii) the liability of the parent

companyapplyfromtheissuingdateofthemanagementreportrelatingtothefirst

financial period after the publication of the law, i.e. as of the issuing date of the

managementreportforthe2018financialyearforcompanieswithafinancialyear

endingonDecember31.

Intheeventofanybreachoftheobligationsunderthedutyofvigilance,threetypes

ofenforcementmeasuresmaybe soughtagainstnon-compliant companiesbefore

courtsofcompetentjurisdiction:

1) Injunctivemeasures,subjecttoapplicablepenalties.


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2) Anorderforcompensationforanyharmwhichcouldhavebeenavoidedhad

theobligationsunderthedutyofvigilancebeendulyperformed,pursuantto

theconditionssetoutinarticles1240and1241oftheFrenchCivilCode(fault

ortortbasedliability).

3) An order for the publication, public release or posting of the decision

renderedagainstthenon-compliantcompanyoranexcerptthereof.

Asmentionedearlier,anon-taxdeductiblecivilfinenotexceedingtheamountof10

millioneuros,whichcouldbeincreasedto30millionEurosincertaincases,wasalso

initially provided for but was ultimately declared unconstitutional by the French

ConstitutionalCouncil.

On the issue of standing, the Act simply states that “any person justifying of an

interest to act” can bring an action against a non-compliant company within 3

monthsfromtheformalnoticeofnon-compliance.Notethatunliketheearlieranti-

corruptionactknownasSapinII11,whichattributesthepowertoissueaninjunction

toorderthesettingofaplantothenewFrenchAnticorruptionAgency,theActdoes

notmentiontherelevantorganismresponsiblefortheissuanceofformalnoticesof

noncompliance.

GiventheAct’slackofclarityinseveralrespects,itisexpectedthatadecreebythe

French Administrative Supreme Court, the Conseil d’Etat, would supplement the

measures provided and specify the terms of development and implementation of

theVigilancePlanamongotherissues.

TheAct regarding theDuty of Care of Parent Companies andOrdering Companies

tiesinwiththeearlieranti-corporatecorruptionlawknownasSapinII,extendingits

scope to include protection against serious violations of fundamental rights and 11Loin°2016-1691du9décembre2016relativeàlatransparence,àlaluttecontrelacorruptionetàlamodernisationdelavieéconomique;https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000033558528&categorieLien=id.Forfurtherinformationonthislaw,see:https://www.lw.com/thoughtLeadership/Frances-major-anti-CorruptionReformWhatsNextforCompaniesandTheirTopManagementorhttp://www.elexica.com/en/legal-topics/crime-fraud-and-investigations/14-sapin-ii-law-is-france-at-the-cutting-edge-of-anti-corruption-legislation


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freedomsandthreatstothesafetyofpersonsandtheenvironment.Otherlegislative

provisionswhichaimatreducingsocial,health-relatedandenvironmentaldamages

andaddressviolationsofhuman rights committedoutsideofFranceasa resultof

director indirectactivitiesofFrenchcompaniesexist includings.5ofActn°2014-

773, Orientation and planning relating to development policy and international

solidarity, July 7, 2014; this includes measures encouraging French companies to

implement OECD Guidelines. Furthermore, on April 26, 2017, the French

government released its first National Action Plan (NAP), which includes several

measurestofacilitatethemandateoftheFrenchNationalContactPoint(NCP).12

The jurisprudential context in France is generally favourable to holding companies

liableforactscommittedoutsideoftheFrenchterritory.Forinstance,inSeptember

2005,inacaseknownasErika,France’shighestcourt(Courdecassation)uphelda

conviction of negligence and fines imposed on Total for an oil spill disaster in

internationalwatersneartheSpanishcoast.13

CaseStudy:FinancialComplicity

InNovember 2016, a criminal complaintwas filed inSherpa v. Lafarge before theTribunaldegrandeinstancedeParisbySherpaandtheECCHR(EuropeanCentreforConstitutionalandHumanRights),aswellas11complainantswhoareformerSyrianemployeesof LafargeHolcim, theFranco-Swiss cementproducer.14While the legalbasisoftheclaimiscomplicityinwarcrimesandcrimesagainsthumanityinSyria,atissue is the question of potential “financial complicity” of Lafarge in the crimescommitted by the Islamic State of Iraq and Syria (ISIS) on the basis that Lafarge

12http://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/droits-de-l-homme/entreprises-et-droits-de-l-homme/article/adoption-du-plan-national-d-action-pour-la-mise-en-oeuvre-des-principes13https://www.courdecassation.fr/jurisprudence_2/chambre_criminelle_578/arret_n_24143.html;https://www.legifrance.gouv.fr/affichJuriJudi.do?oldAction=rechJuriJudi&idTexte=JURITEXT000026430035&fastReqId=796592764&fastPos=114http://www.reuters.com/article/us-mideast-crisis-syria-lafarge-idUSKBN13A24Z;http://www.globalcement.com/news/itemlist/tag/Lafarge%20Syria;http://www.lemonde.fr/syrie/article/2016/11/15/l-ong-sherpa-porte-plainte-contre-lafarge-pour-financement-du-terrorisme_5031474_1618247.html;http://www.thelocal.no/20161124/norways-oil-fund-invested-in-company-with-alleged-isis-ties


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entered into financial arrangements with ISIS in order to maintain production bypayingforpasses issuedbythegroupandpurchasedrawmaterialssuchasoilandpozzalanainthecourseofitsoperationsinconflictzonesunderISIScontrol.15ThiscaseisanimportantdevelopmentandexpectedtoprovidefurtherclarificationsonlegalactionsbroughtbeforecourtsofdomesticjurisdictionagainsthumanrightsviolationscommittedbyFrenchcompaniesabroad.

IV. GermanyOn December 21, 2016, the German federal cabinet formally adopted a National

ActionPlanforimplementationoftheUNGuidingPrinciplesonBusinessandHuman

Rights.16DespiteconsiderablecampaigningandadvocacyworkonthepartofNGOs

for thesemeasures tobemade compulsory for all companies17, theActionPlan is

binding only for public companies and recommended for private companies with

over5000employees.

AsfarasGermandomestic lawisconcerned,criminalprosecutionsofcorporations

(asopposedtoindividualmanagersandexecutives)cannottakeplaceunderGerman

law.However,undertheAdministrativeOffensesAct(Ordnungswidrigkeitengesetz),

agents, representatives or board members of a corporate entity, acting in that

capacity,canbeheldfinanciallyresponsibleformonetarypenaltiesiftheyarefound

to have committed an act that results in the violation of a legal duty by the

corporate entity or intentionally or negligently omitting necessary supervisory

measuresforpreventingcriminaloffenses.Asaresult,themajorityofcurrentcases

againstcorporationsthatdonotmeettheirinternationalduediligenceobligationsat

15Forfurtherinformation,seecasereportbyECCHRandSheraathttps://www.ecchr.eu/en/business-and-human-rights/lafarge-syria.htmlandhttps://www.asso-sherpa.org/service/lafarge-sued-for-financing-isis-and-complicity-in-war-crimes-and-crimes-against-humanity-in-syria16AvailableinGermanonly:http://www.cora-netz.de/cora/wp-content/uploads/2016/12/Nationaler-Aktionsplan-Wirtschaft-und-Menschenrechte_Dtl_2016-12-21.pdf17SeeCoraNetworkasanexample:http://www.cora-netz.de/cora/


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different levelsareeithercriminalaccusationsagainst individualmanagers18ortort

claimsagainstthecompanyitself.

CaseStudy:PakistanfactoryfirevictimssuingKiK

InSeptember2012,260workersdiedinafireattheAliEnterprisestextilefactoryinKarachi, Pakistan. 32 people were injured, some critically. Many of the windowswerebarred, the factory’s emergencyexitswere lockedand thebuildinghadonlyone unobstructed exit, impeding the exit of employees who suffocated or wereburnedaliveinside.Thefactory’sbiggestclientwasKiK,aGermandiscountretailerwhichdisclosedthatitbought70%ofthetextilesproducedbythefactoryin2011.KiKhasstatedthatitwasitsbusinessthatenabledthePakistanimanufacturingfirmtogrowintoamajorcompany.KiKalsostated thatauditingcompanieswerehired to reviewsafetyandotherworkingconditionsatthefactoryonaregularbasis.KiKkneworshouldhaveknown about the working conditions, as well as construction details, such as thebarredwindows–initsCSRreports,thecompanyexplicitlyindicatedthatitssupplyfactoriesare inspectedona regularbasis. Justa fewweeksbefore the fire, ItaliancompanyRINAissuedthefactorywithanSA8000certificate,whichissupposedtoact as a guarantee of safety as well as social and environmental sustainabilitystandards.InPakistan,acriminalinvestigationintotheownerofthefactorywasdiscontinued.On13March2015,fourofthoseaffectedbythedisasterfiledacompensationclaimagainstKiKattheRegionalCourtinDortmund.MuhammadHanif,MuhammadJabbir,AbdulAzizKhanYousufZaiandSaeedaKhatoonareallmembersofBaldiaFactoryFireAssociation,anorganizationrunbythoseaffectedbythefire,andareseeking30,000euroeachincompensation.Thecaseisstillpending.On30August2016thecourtissuedaninitialdecision,assumingjurisdictionoverthematterandgrantinglegalaidtotheclaimantstocovertheircosts.Thisdecisionisa

18SeeforexamplesLahmeyerandDanzercasesbroughtbeforeGermancourtsbyECCHR:https://www.ecchr.eu/en/our_work/business-and-human-rights.html


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firststeptowardsdealingwithhumanrightsviolationsbyGermancompaniesabroadbeforeGermancourts.19

V. ItalyOn December 1, 2016, Italy released its latest National Action Plan (NAP), which

includes non-binding due diligence measures and procedures for companies

operatingdomesticallyandabroad.20

Prior to the NAPs, Legislative Decree n° 231/2001 entitled “Regulation of

administrativeliabilityoflegalentities,companiesandassociations,includingthose

without legal status”, as amended on 21 November 200721, set out a regime of

administrative liability (mainly of criminal nature) applicable to transnational

corruption-related crimes committed, namely receiving, laundering, and using

money, assets or profits of unlawful origin, committedby companies, associations

andconsortiainthecourseoftheirbusinessactivities(s.648CriminalCode).Specific

crimesforwhichacorporateentitycanbeeheldliableunderLD231arelistedunder

articles24and25andincludecybercrimesandbreachofdataprotection;criminal

conspiracy;extortionandcorruption; counterfeitof cash, treasurybondsor stamp

duties;tradefraud;corporateoffences(including:falsefinancialstatements,market

abuse and obstruction of regulators); terrorism; market abuse; manslaughter and

breachesofhealthandsafetylegislation;moneylaundering:copyrightoffences;and

obstructionofjusticeoffices.LD231appliestoallcrimesdescribedthereunderand

totheconductofaidingandabettingthecommissionofsuchcrimes.

19https://www.ecchr.eu/en/our_work/business-and-human-rights/working-conditions-in-south-asia/pakistan-kik.html;http://grundundmenschenrechtsblog.de/supply-chain-liability-the-lawsuit-by-karachi-claimants-against-retailer-kik-in-historic-perspective/20http://www.cidu.esteri.it/resource/2016/12/49117_f_NAPBHRENGFINALEDEC152017.pdf21ImplementingEuropeandirective2005/60/ECconcerningthepreventionoftheuseofthefinancialsystemtolaunderproceedsofcrimeandterroristfinancing,aswellasdirective2006/70/EC,containingimplementationmeasures.


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TheDecreeprovidesforfinancialpenaltiesaswellasmeasuresofconfiscationand

prohibition and publication of judgments rendered against the non-compliant

company.22However,thecorporateentityhasanaffirmativedefenceifitcanshow

thatithadinplaceandeffectivelyimplementedadequatemanagementsystemsand

controls.

Under Italian law, corporate wrongdoing is dealt with through a system of

administrativeoffencesandpenalties.Generally,nocriminal liabilitycanbesought

against a corporate entity. The liability of individuals, whether civil or criminal, is

completelyindependentofthecorporateentity’sliabilityandisdeterminedundera

different set of rules. A finding against a corporate entity cannot be used to

determinetheliabilityofanindividual.However,inproceedingsbroughtagainstan

individual,acourthasdiscretiontointroducetheconvictionofacorporateentity,if

relevant,asevidenceofthefindingsofthosefacts.

VI. SpainSince2012,workhasbeenongoingonthedraftingofthe“NationalPlanonBusiness

andHumanRights”,whichisatthefinalstageofprocessing,priortobeingsentto

the Council of Ministers for approval. 23 The Spanish NAP is one of the most

ambitiousones in Europe: in addition to civil recourses, it envisionsextending the

powersoftheAttorneyGeneralifsufficientevidenceexiststoestablishthataparent

companyhasbeeninvolvedinviolationsofhumanrights.24

22http://www.posteitaliane.it/resources/editoriale/pdf/En/Model231.pdf23https://business-humanrights.org/en/spain24Forfurtherinformationseehttp://forumcitoyenpourlarse.org/wp-content/uploads/2016/10/Impunite_multinationales-Europe_avance.pdf


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On24October2014,theCouncilofMinistersapprovedtheSpanishCorporateSocial

ResponsibilityStrategy,whichhasahuman rights focus.25Many largecorporations

have already put in place a CSR strategy pursuant to this model and have their

governancebodiesmonitorthestrategyofthegroupworldwide.

TheOrganicLaw5/2010of22June2010incorporatedintheSpanishCriminalCode

(CódigoPenal)establishesanexpressregulationofthecriminalliabilityofcorporate

entitiesforcrimescommittedontheirbehalfbytheirrepresentatives,defactoand

dejureadministrators,employeesand/orcontractedworkers.Corporateentitiesare

only liable for crimesexpressly applicable to themunder corporate law, including:

discoveryanddisclosureofsecrets;fraudandpunishableinsolvency;crimesrelated

to intellectual and industrial property, the market and consumers; tax fraud and

money laundering; urban planning offences and crimes against the environment;

andcorruptionoffences.LO5/2010requiresthat,inorderforacorporateentityto

be criminally liable for offences committed by its employees and/or contracted

workers, the former must have been able to commit the offence due to lack of

supervision in accordance with the specific circumstances of the case. Therefore,

corporateentitieswillnotbecriminallyliableiftheyenforceappropriatesupervision

policiesovertheiremployees,asrequiredunderthelaw.

Penalties which may be imposed on a corporate entity under LO 5/2010 include

monetary fines (calculated according to the damage caused or the revenue

obtained);dissolutionofthelegalentity;suspensionofactivitiesforatermofupto

fiveyears;closureofthepremisesandestablishmentsforatermofuptofiveyears;

temporary or indefinite prohibition from carrying out in the future any activities

which led to the crime being committed, favoured or concealed; disqualification

from obtaining subsidies and public aid, from entering into agreements with the

25http://www.lamoncloa.gob.es/lang/en/gobierno/councilministers/Paginas/2014/20141024-councilministers.aspx


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publicsectorandfromobtainingtaxorsocialsecuritybenefitsandincentivesfora

termofupto15years;andlegalinterventionforatermofuptofiveyears.

VII. SwitzerlandOnDecember9,2016,over5yearsaftertheadoptionoftheUNGuidingPrinciples

on Business and Human Rights, Switzerland finally published its implementation

strategyorNationalActionPlan.26TheSwissNAPrecognizesthattheUNGPslaythe

foundation for regulating business from a human rights perspective but explicitly

excludesanybindingmeasures forcompanies.AccordingtotheSwissCoalition for

Corporate Justice (SCCJ), the published version of the NAP represents a step

backwards compared to the draft submitted for consultation in June of this year.

Whereasmandatoryhumanrightsduediligenceforstate-ownedenterpriseswasin

thepriorversion, it isabsent in the finalNAP.Thecurrent textmerely requiresan

inventoryofCSRactivitiesofthoseenterprises.27

VIII. UnitedKingdomTheUK has created or endorsed a number of instruments thatmotivate different

aspectsofgoodcorporatebehaviourandrespectforhumanrights.Theseinclude:

• theUKBriberyActof2010where, in linewithourOECDcommitments,

provides grounds for holdingUK companies liable in theUK for acts of

briberycommittedanywhereintheworld;

• section172oftheCompaniesActof2006,whichprovidesthatdirectors

mustconsidertheimpactonthecommunityofthecompany’soperations. 26Availableat:http://konzern-initiative.ch/initiativtext/?lang=en27http://konzern-initiative.ch/switzerlands-disappointing-action-plan/?lang=en


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The Act was revised in October 2013 to ensure that directors of

companies consider human rights issues when making their annual

strategicreports;

• theModernSlaveryActof2015createsadutyoftransparencyinsupply

chains as well as reporting requirements.28 This Act requires certain

entitiesconductingallorpartoftheirbusinessactivitiesintheUKtoissue

and publish an annual statement regarding the methodology used to

controltheirsupplychaininordertodeterminetheexistenceofanyrisk

ofslaverypracticesorhumantrafficking.Anybreachofthisobligationis

subjecttoanunlimitedfine;

• theDeclarationonFundamentalPrinciplesandRightsatWorkadoptedin

1998 and the 8 core ILO Conventions ratified by the UK on labour

standards;

• the OECD Guidelines for Multinational Enterprises and establishing a

NationalContactPoint.

The UK government also exercises controls on exports that could cause harm,

including strategic products such as arms and surveillance equipment through the

export licensing system. All export licence applications are rigorously assessed

against the Consolidated EU and National Arms Export Licensing Criteria. These

assessmentstakefullaccountofpossiblehumanrightsimpacts;alicencewouldnot

be granted if the government judge that there is a clear risk that the proposed

exportmightbeusedforinternalrepression.Anybreachoftherelevantregulations

mayalsoresultinrevocationofacompany’sexportlicenceorevenprosecution.

The broad categories of goods which are subject to control under the UK export

licencingregimeare:

28Readmore:https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide


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• Most items that have been specially designed ormodified formilitary use

andtheircomponents;

• Dual-useitems-thosethatcanbeusedforcivilormilitarypurposes-which

meetcertainspecifiedtechnicalstandardsandsomeoftheircomponents;

• Associatedtechnologyandsoftware;

• Goodsthatmightbeusedfortorture;

• Radioactivesources.29

The UK has also implemented the requirements of the OECD 2012 Common

Approaches,andconsidersrelevantadverseproject-relatedhumanrightsimpactsin

providingapplicableExportCreditAgency(ECA)supportthroughUKExportFinance

(UKEF).ECAwill consider relevantadverseproject-relatedhuman rights impacts in

providingapplicableexportcredit.UKEFwillalsoconsideranyreportsmadepublicly

available by the UK National Contact Point (NCP) in respect of the human rights

recordofacompanywhenconsideringaprojectforexportcredit.

IX. UnitedStatesOnDecember16,2016theObamaAdministrationreleasedtheU.S.NationalAction

PlanonResponsibleBusinessConduct.30TheUSNAPdoesnotcreateanynewlegal

rights or binding obligations for companies. Rather, it catalogues existing laws,

regulations and policies to ensure responsible business conduct. According to

commentators, had the Obama administration outlined its expectations of

companiesforresponsibleconductandtheupholdingofhumanrightsandanalysed

where gaps exist in the US legal framework that prevent corporate abuses and

ensure accountability, the Trump administration and the Republican-led Congress

would have affirmatively rejected it. Instead, the bar has been set low, giving

Trump’s corporate cabinet little in the way of a roadmap for how to drive 29Seethefulldetailshere:https://www.gov.uk/guidance/uk-strategic-export-control-lists-the-consolidated-list-of-strategic-military-and-dual-use-items30Availableat:https://www.state.gov/documents/organization/265918.pdf


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responsiblebusinessforwardorhowthey’llbeheldtoaccountfornotdoingso.31

Under US law, corporations are subject to a variety of state and federal legal

requirementswithrespecttorisk-creatingactivity,includingthepotentialforliability

for human rights violations. Although grounded in various areas of the US legal

system, these requirements compel risk-conscious US corporations to act in a

socially responsiblemannerboth in theUnited States andabroad.32The following

stateandfederalregulatoryschemesincludepotentiallyusefulprovisions:

• CommonLawFiduciaryDuties:Corporatedirectorsaregenerallyrequiredto

exerciseordinary careandprudence in the conductof corporateaffairs (the

“dutyof care”)andact ingood faith in thebest interestsof thecorporation

and its shareholders (the “duty of loyalty”). Under Delaware law, which

governs the internal affairs ofmany Fortune 500 corporations, the fiduciary

duty encompasses a duty to implement appropriate information, reporting

and internalcontrolsystemsatthecompany,andrequiresthatdirectorsuse

thesesystemstomonitorandoverseethecompany’soperations.

Directorsalsoareresponsibleforassessingtherisksthataresignificanttotheir

organizations (including, as appropriate, actions thatmay infringeonhuman

rights) and for ensuring that management is taking the steps necessary to

identify,measure,monitor and control these risks. Insofar as certain human

rights violations impose a meaningful risk to the corporation, boards of US

corporations are required to be aware and implement appropriate

mechanismstocontrolforsuchrisks.

31http://politicsofpoverty.oxfamamerica.org/2016/12/obamas-missed-opportunity-to-reign-in-corporate-abuses/32Submissions made to the UN Special Representative in the context of "Protect, Respect and Remedy"Framework and Guiding Principles (June 2008): http://corpgov.law.harvard.edu/wp-content/uploads/2008/06/weilgotshal-response-to-un-report-on-human-rights-and-business.pdf


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• AlienTortStatute:AfederalstatuteintheUS,knownastheAlienTortClaims

Act (ATCA) provides the basis for a tort (civil) action for the violation of

internationallaw.Thestatuterequiresthattheplaintiff(injuredparty)mustbe

an alien (i.e., non U.S. citizen) and that the alleged harm be “a tort only,

committedinviolationofthelawofnationsoratreatyoftheUnitedStates”33.

BothindividualsandbusinessentitieshavebeendefendantsinATCAlawsuits.

Extensive litigation against corporations for breaches of international

humanitarian and/or international criminal law has occurred in the United

StatesundertheATCA,sincetheseminalDoeIvUnocalCorp34case.

Notethatthislegislationisuniqueandthereisnoanalogueinothercountries’

legislation. Also note that relevant case law is not consistent and US courts

continue to shape and define the limits of liability under the ATCA. For

instance, inSosa v.Alvarez-Machain, the SupremeCourtheld that theATCA

was intended to permit only claims for wrongs based on “a norm of

international character accepted by the civilizedworld and definedwith (…)

specificity.”35Nineyears later, in the recentKiobelv.RoyalDutchPetroleum,

Co. (Shell) case, where the Supreme Court held that the application of the

ATCA is subject to the “presumption against extraterritorial application” and

thususuallywillnotapplytoclaims involvingallegedviolationsofcustomary

internationallawhavingoccurredinforeigncountries,butdidnotforecloseits

applicationagainstacorporation’sdirectorsoremployees.36

• Foreign Corrupt Practices Act: The FCPA prohibits bribery of foreign

governmentalofficials,candidatesforoffice,andofficialsofpoliticalpartiesfor

thepurposeofobtainingormaintainingbusiness,subjecttocriminalandcivil

enforcementactions. Italso imposes indirect liabilityofaparentcompany in 33ATCA,28USC§1350(2007)34963FSupp880(CDCal,1997)35542U.S.692,724(2004)36133S.Ct.1659(2013)


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relationtoactsofcorruptioncommittedoutsideUSterritorybyasubsidiary,

subcontractor or supplier. For offences committed under the FCPA an

individual can be fined up to US$250,000 per violation and may also be

sentencedtouptofiveyearsimprisonment.Acompanyfoundguiltyunderthe

FCPAisliableforafineofuptoUS$2,000,000perviolation.

US companies doing business abroad typically perform due diligence

investigations to evaluate potential sources of liability under the FCPA and,

whereviolationsorpotentialviolationsareuncovered, implementpreventive

measures.

• US Federal Sentencing Guidelines: The amended US Federal Sentencing

Guidelines provide that the fine payable by a corporation found guilty of a

federal crime will be substantially reduced if the corporation has an

appropriate compliance program in place prior to the crime. The Guidelines

therefore serve as a powerful incentive for corporations to implement and

monitoreffectivecomplianceprograms.

• Federal Securities Laws: The existing US securities regulations impose a

vigorous disclosure regime on corporations that are publicly traded on US

exchanges with the goal of protecting investors and furthering efficiency

throughamarket-basedmonitoringofcompanies, includingcivilandcriminal

penalties fordisclosureviolations,enforcementactionsbyregulators,and, in

certain cases, permit private citizens to bring lawsuits for alleged violations.

Material foreseeable risks faced by public corporations are required to be

disclosed in public filings and securities offering documents. As such, public

companiesarerequiredtodiscloseoperationsandactivitiesaffectinghuman

rights in the United States and abroad that create material risks to their

business.


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About The Silk Road Project

The Silk Road was an ancient network of trade routes that were for centuries central

to cultural interaction through regions of the Asian continent connecting the East and

West, from China to the Mediterranean Sea. Trade on the Silk Road played a

significant role in the development of the civilizations of China, the Subcontinent,

Persia, Europe, the Horn of Africa and Arabia, opening long-distance political and

economic relations between the civilizations.

The Silk Road project aims to promote accountability and protect human

rights in the context of Iran’s rapid return to the world markets after the 2015

Nuclear Deal.1 Through publishing reports on business and human rights in Iran, this

project intends to increase awareness among advocates of human rights, particularly

lawyers and civil society activists, and accountability in business and corporate

relations. It also aims to hold accountable corporates which are involved or complicit

in human right violations, using legal and other available mechanisms.

Justice for Iran

April 2017

Email: [email protected]

Website: www.justiceforiran.org

Copyright © Justice for Iran 2017

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