Lessons from the Khulumani (Apartheid) Case

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Last night I had the chance to attend a lecture by Ingrid Gubbay, European Head of Human Rights and Environmental Law at Hausfeld & Co LLP, at the Institute of Advanced Legal Studies in London. She talked about the Khulumani litigation before US Courts. The Khulumani litigation is among the handful of cases brought under the US Alien Tort Statute against corporations (prominent manufacturers and banks) that have “done business” with rogue regimes, in this case the South African regime at the time of Apartheid.

In her dense lecture she highlighted some of the key difficulties associated with this type of cases from forum non conveniens to the act of state doctrine. She also criticized the “purpose test” established in the Presbyterian Church of Sudan v. Talisman Energy, Inc ruling, according to which a company is only liable for aiding and abetting violations of international law where it has provided substantial assistance with the specific aim of furthering the violation. In Talisman the application of this test led to the conclusion that by letting the Sudanese regime use their airstrips the company had not aided and abetted the international crimes of the regime because they did not share the intent of furthering the crimes. She instead favoured a looser test, known as the “knowledge” test, whereby aiding and abetting is established if the company knew or should have known about the violations, without necessarily aiming to furthering the crimes.

She also rejected the idea often put forward that the fact that international criminal tribunals have not extended their jurisdiction to corporations shows that corporate liability for international crimes does not exist under international law. As she rightly pointed out, international tribunals are the products of political compromise, whether they were created through a UN Security Council Resolution, as the International Criminal Tribunals for the Former Yugoslavia and for Rwanda, or through an international treaty, as the International Criminal Court. Their jurisdiction reflects their mode of creation. The fact that these institutions’ jurisdiction is limited to individual criminal liability and does not extent to corporate liability “says nothing about the existence or non existence of a norm”.

Talking specifically about the liability of the funders of international crimes, such as banks and other financial institutions, she recognised that “the legal theory about financing human rights violations is still in its early days.” Indeed, there are many unresolved questions in this area, including how to distinguish between “doing business” and “being complicit”, and whether the purpose for which the loan was granted should make a difference. It seems clear that simply “doing business” will not entail liability, as “international law does not impose liability for declining to boycott a pariah regime”. Moreover, as she emphasized, “aiding a criminal is not the same as aiding and abetting their crimes”. That said, we know that without funds international crimes cannot be committed. We also know that the law on the financing of terrorism is much more advanced than the law on the financing of international crimes, and that, as Ingrid pointed out, “the fear of a court case is a much more powerful incentive to change than a set of voluntary principles”. I certainly share her opinion that all this calls for changes in the law.

Incidentally I am currently looking into these issues in a chapter on “Establishing Liability for Financial Complicity in International Crimes” which will be part of the forthcoming book Making Sovereign Financing & Human Rights Work (Hart Publishing) co-edited by Juan Pablo Bohoslavsky and Jernej Letnar Černič .