CORPORATE MANSLAUGHTER AND CORPORATE HOMICIDE: A COMPARATIVE ANALYSIS AND ITS EXIGENCY IN INDIA
Author: Tejashree J,
3rd year of BBA LLB (Hons.),
School of Law, Christ (Deemed to be University).
The concept of Corporate criminal liability is a developing topic but has remained stagnant for several years due to the nature of the corporations. The artificial personality of corporations has caused serious concerns regarding the attribution of liability for offences that warrant for punishments such as imprisonment. Under the offence of corporate manslaughter, companies and organisations can be found guilty as a result of serious management failures resulting in a gross breach of a duty of care. Offences such as Corporate Homicide or Corporate Manslaughter are new to Indian jurisprudence, but are covered by various labour legislations which deal with various dimensions of corporate homicide. The author aims to identify the dimensions covered by various labour legislations and the nature, extent and method of the liability imposed in India. This paper analyses the Corporate Manslaughter and Corporate Homicide Act, 2007, in the United Kingdom which made it an indictable offence. It also identifies the significance of the Act with respect to the deterrence that the Act envisages by virtue of the nature of sanctions imposed by the legislation. The need for such a legislation in addition to already existing legislations is examined by comparing the law in U.K. with that of India. In the same parlance, the symbolic approach of the legislation is analysed and aims to vision the possibility of its introduction or partial adoption of the sanctions provided in that legislation. This comparative study and examination of its exigency in India is the focal point of the paper.
Keywords: corporate homicide; corporate manslaughter; deterrence; gross breach; sanctions.
A Corporation is a separate legal entity, which is established through some process of registration and legislation. Apart from shareholders, even corporation has separate rights and liabilities. During the course of its operation, a company incurs liabilities and so also losses in capacity of an ‘artificial legal person’ which is absolutely liable. The concept of Corporate Criminal Liability has been an established doctrine in India, governed by doctrines such as vicarious liability, strict liability and absolute liability. For a corporation to be held criminally liable, the employee committing the crime must act within the scope of his employment and must have actual or apparent authority to engage in the act, without which there are least or no possibilities to hold corporations liable. The problem of attributing ‘mens rea’ to artificial persons has been an unsettled position till date. Lifting of Corporate Veil is one of the solutions for identifying and attributing responsibility to the corporations but is not sufficient as far as corporate homicide is considered as no one can identify the responsible individual accurately. Corporate Manslaughter and corporate homicide refer to the decisions undertaken by a company that went wrong either in regards to their execution (owning to negligence) or due to existence of some inherent fault or loophole in the decision making. Another important aspect is with respect to the problem of the nature of sanctions that
can be imposed on corporations. Since corporations are artificial persons, there is no option to impose punishments like imprisonment.
can be imposed on corporations. Since corporations are artificial persons, there is no option to impose punishments like imprisonment.
The principle followed in India is absolute liability along with deep pocket theory which makes it simple for corporations to escape liability with minimal fines. The Corporate Manslaughter and Corporate Homicide Act, 2007 was enacted in U.K. which was the first step addressing issues such as corporate homicide. The Act brings in innovative sanctions which are imposed on the corporations. The symbolic response of the Act has a strong deterrent effect on the corporations. It is important to analyse if such enactment of a similar legislation is needed in India. Though, India has existing laws such as the Environment Protection Act and Public Liability Insurance Act, they merely impose fines which does not seem substantial for large corporations. The nature of corporate crimes covered under these legislations are also essentially different. Introduction of such an Act in India, can be a positive step towards evolving the concept of corporate homicide.
ORIGIN OF THE CONCEPT OF CORPORATE HOMICIDE
Ambiguity in Attribution of Criminal Liability
The principle of corporate criminal liability has over the period of time, evolved and gained much importance as far as terms such as “corporate manslaughter” and “corporate homicide” are considered. These crimes are not nascent and the legal focus has been unsettled due to inherent nature of these artificial entities. From a situation in which corporations were considered capable of committing no (or almost no) crimes, there has developed the situation in which corporations are considered capable of committing all (or almost all) crimes, with a restriction on certain punishments due to their artificial nature. Several attempts have been made to charge corporations with criminal homicide in 1917, but in those cases the corporations were charged with negligent manslaughter or negligent homicide, where the statutes defining the offenses were not precise about the nature of the offenders. There were four fundamental problems in the attribution of criminal liability to an artificial person, out of which may still remain unanswered due to a set precedent in law to that effect. Firstly, the non-natural or artificial personality of the corporations that exist only in the contemplation of law. Secondly, the problem of attributing mens rea to artificial persons. Thirdly, the doctrine of ‘ultra vires’ due to which corporations cannot be held liable for acts outside the scope of the memorandum of association. Lastly, the literal interpretation of jurists regarding the ‘human individuality’ required in criminal proceedings.
- Development of the Concept of Corporate Manslaughter
The two main principles followed in assigning criminal liability to corporations have in the past been, vicarious liability and the identification principle. The ingredients for vicarious liability are that the corporate agent must have committed an illegal act with a requisite state of mind and should have acted within the scope of authority. This concept was first implemented in Mousell Bros. v. London and North Western Railway, in which the court held that the corporation can also be held vicariously liable for a mens rea offence outside the confines of the strict liability and nuisance. The identification principle was given recognition in 1940 but was observed by the court in Lennard’s Carrying Co. v. Asiatic Petroleum Co., in 1915, that the directing mind of the company must be sought in person who is the very ego of the company, who are the agents or board of directors. However, R. v. Cory Bros., was one of the first few cases to address the issue of corporate liability for manslaughter. In this case, a miner was electrocuted by an electrified fence erected by the directors of the defendant company (Cory Bros.) around a power house belonging to it “for the purpose of protecting the bunkers against pilfering” during the miners’ strike of 1926. As a result, prosecutions were initiated against the company and three of its engineers. However, the court expressed its inability to hold the corporation criminally liable for manslaughter. In 1996, the Law Commission reported on the Law of Involuntary Manslaughter which focussed on the issue of corporate manslaughter. The report rejected the Vicarious Liability Principle and the Doctrine of Identification, and suggested the creation of a separate offence of corporate killing. In 2006, the Corporate Manslaughter Draft Bill was proposed in the British Parliament. After a process of thorough scrutiny on the practicality of its application, the Bill was passed in 2007 as the Corporate Manslaughter and Corporate Homicide Act.
- CORPORATE MANSLAUGHTER AND CORPORATE HOMICIDE ACT, 2007
Corporate Manslaughter is commonly defined under U.K law as the death of someone caused by an act of corporate negligence. Due to the introduction of the Corporate Manslaughter and the Corporate Homicide Act, 2007 which came in to force on 6th April 2008, the nature of the offence of corporate killing and the kind and nature of sanctions imposed on corporations have changed. The Act introduced a new statutory offence of corporate manslaughter which was previously known at corporate killing. It also made the commission of such an offence punishable with fine, a remedial order and a publicity order. In effect, this Act sets out a new offence followed by a novel sanction. It can, therefore, be said that the Corporate Manslaughter and Corporate Homicide Act, 2007 is a result of a long process of consultation and policy development. The Act broadens the ‘identification principle’ by introducing a test of ‘senior management failure,’ which aggregates the faults of a group of managers to facilitate prosecution. Attributing liability by aggregation means that the level of recklessness or negligence or indifference is gathered from a number of officers representative and responsible for the operation and management of the affairs of the Company, as opposed to that of an individual officer. According to the Government, the new offence is designed to secure, in a wider range of situations, a conviction for a specific, serious criminal offence that properly reflects the gravity and consequences of the conduct involved in “the worst instances of management failure causing death.
- The Offence:
Sections 1 to 5 set out the elements of the new offence. Section 1(1) states that if the manner in which an organization carries out/manages its activities causes a person’s death or ‘amounts to a gross breach of relevant duty of care on the part of the organisation, to the deceased,’ then such organization is guilty and liable to compensate the victim and abide by other innovative sanctions under this Act.
1. the Corporation’s conduct must result in a person’s death; or
2. a breach of a relevant duty of care;
3. such duty of care must be owed by the organisation to the deceased;
4. such breach must be ‘gross’;
5. the conduct must involve an element of ‘senior management failure’.
- Exclusion of individual liability:
Two tiers of potential liability were envisaged: one, for contributing to (or, in the words of the document, for having had ‘some influence on, or responsibility for) the corporate offence, would have led to disqualification from acting in a management capacity in any future undertaking, two, a more serious offence, for substantially contributing to the corporate offence, which would have carried the potential for a sentence of imprisonment.
The Corporate Manslaughter and Corporate Homicide Act also makes reference to an organisation’s culture. Among the factors that a court may consider in determining whether a gross breach of a duty has occurred is the extent to which the evidence shows that there were policies, systems or accepted practices within the organisation that were likely to have encouraged or ignorantly accepted the gross breach or to have tolerated it.
Similarly, the senior management test aims at holding the corporation liable only if there is a substantial control over the actions of the subordinates and the liability is not limited only to the senior management but leads to operation level executives or managers as well under whose authority the failure happens directly. Section 1(6) of the Act states that an organisation found guilty of corporate manslaughter or corporate homicide is liable to a fine on conviction. Section 18 of the Act absolves the offending Corporation from any individual liability for aiding, abetting, counselling or procuring the commission of an offence of corporate manslaughter or corporate homicide.
Hence, under this Act, individuals cannot be held liable. It is the organisation that will face prosecution. However, individuals can be prosecuted for gross negligence manslaughter/culpable homicide and for health and safety offences under such other respective statutes and still be charged under this Act. It acts complementary to other such legislations dealing with such corporate mishaps. Hence, prosecutions against individuals will continue in the same manner as it was before the introduction of this Act. It is also to be noted that Corporations are no longer liable for the offence of Manslaughter by gross negligence at Common Law under Section 20.
The Punishment that can be imposed under this Act are as follows:
- Fines: The rationale behind imposing fine on a Company is that every Corporation function with a profit motive and aims at maximizing its financial turnover. Hence, imposing a penalty in terms of fine is one way to punish the Company for its wrong and deter them from committing such offences again in the future, due to their financial inability to correct such errors by way of sanctions such as fines. However, it may also be argued that for a large Corporation, a financial sanction is not of much consequence as the fine amount might be very minimal compared to the size of company and profit earned by the company. Another disadvantage of fines is the ‘spill over effect,’ i.e. it may be passed on to the consumers which is definitely not warranted for by any economy.
- Remedial order: In holding a Corporation liable for the new offence under this Act, apart from imposing fine, Courts have been empowered under Section 9 to make an order requiring the Corporation found guilty of an offence to remedy the breach committed by it. This novel penalty is called a remedial order. It can be made by the prosecution, specifying the terms of the proposed order. The objective of a remedial order is to reform the Company. So, this sanction is reformative in nature in as much as it seeks to remedy the breach and prevent further harm.
- Publicity order: Another novel penalty imposed under this Act is a Publicity order. Under Section 10, a Court can make an order requiring the Corporation convicted of an offence under this Act, to publicize in a specified manner:
1.The fact that it has been convicted of the offence;
2. Specified particulars of the offence;
3. The amount of any fine imposed;
4. The terms of any remedial order made.
This way, the reputation of a Corporation is at high risk which would serve best in terms of deterrence to corporate crimes, considering that, the reputation of a Corporation is much treasured and valued. Imposition of such a sanction would affect the company in the short and long run. The Company may lose valuable customers, investors, and insurers to their loss of reputation. It turns out that the idea of adverse publicity is not new.
- CORPORATE CRIMINAL LIABILITY IN INDIA
The law commission of India has over the period of time suggested new type of criminal sanctions for corporate crimes such as imposing exemplary fines, loss of license and loss of fiscal benefits. However, the courts were of the view that corporations cannot be held liable for crimes which impose corporeal punishment or imprisonment which was later changed that corporations can be held liable for such crimes but cannot be imposed imprisonment but will be restricted to fines only which is the law of the land today. A varied view however was observed in Keshub Mahindra v. Union of India, and he was held personally responsible on charges of manslaughter as Managing Director of Mahindra & Mahindra.
The nature of the offence is yet to be identified in the Indian scenario. Therefore, in addition to the various labour legislations that are precautionary, standard setting and sometimes penal seem to be insufficient to resolve this issue. There new methods or sanctions are necessary to be introduced, independent of the functioning of the existing standards.
Corporate Manslaughter and Corporate Homicide are comprehensive crimes committed by corporations which exist only in the comprehension of law. To remedy it, corporate veil concept was introduced. From the doctrine of lifting of corporate veil came about the principles of identification principle and the principle of determining mind and will. The attribution of mens rea has always been a concern as far as corporations are concerned.
Corporate killings in India take place primarily because of adultered goods produced by corporations, resulting in death of consumers and workmen, deaths due to environmental disasters caused by the corporations, working conditions of the workplace. Various legislations have been framed to tackle such situations, however, do not exclusively deal with the crime of Corporate homicide and hence there is a need for a separate legislation and also a need to adopt the standard of punishments imposed under the Corporate Manslaughter and Corporate Homicide Act, 2007 in the United Kingdom.
Corporate criminal wrongdoings in India are primarily punished by reading progressively and not literally; the provisions of the Indian Penal Code of 1860, but the punishments provisioned under the Code in no eventuality appear to be deterrent in nature. The principle of deep-pocket theory says, the amount of compensation in cases of industrial disasters involving hazardous substances will depend on or shall be proportional to the size of business organisation and the volume of profits it makes. The Supreme Court has failed to reflect on what shall happen if debacle of the size of Bhopal happens and the accused is not a multi-national corporate giant but a small indigenous company, earning low profits. The liabilities imposed by various Indian legislations are non-substantial fines and do not even carry forward the split of the absolute liability principle. India is in need for a concrete and comprehensive legislation that recognises crimes like corporate killings and classifies them under the broad areas of corporate homicide.
The Corporate manslaughter legislation proposed must adopt the symbolic approach taken by the United Kingdom and take note of only the qualitative factors but should lay equal emphasis on the goodwill of the organisation. It should also contain provisions for black-listing industries that do not comply with the established standards and enforce publicity orders to ensure strong deterrence. Powerful implementation and innovative legislations are two ways to tackle these crimes like corporate killings. Hence, it will be efficient to introduce such a legislation in order to ensure that Rule of Law prevails over both natural as well as artificial persons. This proposed legislation should include the sanctions envisaged in the U.K. Act, which are much more deterrent than mere fines imposed under the Indian penal laws as it is not essentially a matter related to merely labour laws or, criminal laws or, corporate laws but comprises a mixture of problems which are inter connected. Hence, a legislation that brings in new sanctions that serves the purpose of deterrence is absolutely necessary.
 Tejashree J
 Dr. Girjesh Shukla, ‘Criminology: Crime Causation, Sentencing And Rehabilitation Of Victims’ (2013) Lexis Nexis
 Mousell Bros. v London and North Western Railway  2 KB 836
 Lennard’s Carrying Co. v Asiatic Petroleum Co.  AC 705
 R. v Cory Bros.  1 KB 810
 Celia Wells, ‘Corporations and Criminal Responsibility’ (2001) Oxford University Press
 Consultation Paper on sentencing for Corporate Manslaughter, Sentencing Advisory Panel, information available at <http://www.sentencingguidelines.gov.uk/docs/SAP%20(07)K3%20%20Corporate%20manslaughter%202007-10-31 -v%203. 10.AR.pdf.>
Ananthi S. Bharadwaj, ‘Corporate Criminal Liability Vis-a-Vis the Corporate Manslaughter and Corporate Homicide Act, 2007 (UK)’ (2009) 3 NUALS LJ 42
 Corporate Manslaughter and Corporate Homicide Act 2007, s 8(3)
 Supra note 25 at 57
 Supra note 25 at 58
 Supra note 10
James Gobert and Maurice Punch, Rethinking Corporate Crime (Butterworths London 2003)
 Supra note 25 at 58.
  State of Maharashtra v Jugamander Lal A.I.R.,  SC 940
  Standard Chartered Bank v Directorate of Enforcement A.I.R.,  SC 1227
 M / s Champa Agency v R. Chowdhury  CHN 400;  Sunil Chandra Bannerjee v Krishna Chandra Nath AIR,  Cal 689
 Keshub Mahindra v. Union of India  6 SCC 1456.