Open Access Research Article
Corporate Criminal Liability With Respect To Environment (By- Muskan Sethi)
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Article Details
Corporate Criminal Liability With
Respect To Environment
Authored By- Muskan Sethi
Introduction
According
to the 2000 data for the first time in the history of humanity among the 100
largest economies of the world 51 are global corporations. These are serious threat
to the environment which has also been demonstrated by the FOEI (Friends of the
Earth International) in the study where the ExxonMobil produced almost 20.3
billion tons of Carbon Dioxide (CO2) emissions since its 120 years of
existence. This measures around 3 times the annual global emissions thereby
meaning that it has since its foundation of the Standard Oil Trust in 1882
caused almost 5.3% man-made CO2 emissions across the globe.[1]
The
‘environmental crime’ term is a relatively recent addition to the lexicon of
criminal law. Until the 1980s (mid), environmental enforcement was only like
the civil enforcement. But with the advance of the modern environmental
legislations in the 1980s a new era of increased public and congressional
support for sending polluters to the jail began. As the Congress (US) began
transforming the environmental law by importing criminal law principles, the
Justice Department too established an Environmental Crimes Section which is
concerned with the effective criminal law enforcement of the environmental
laws. The EPA (Environmental Protection Agency) acquired the criminal
investigation power and created an Office of Criminal Enforcement. The
violations of air/water quality standards, hazardous waste regulations became
subject of prosecution as felonies. These events heralded a sea change in the
environmental law enforcement jurisprudence.[2]
The
concerns for the preservation of the environment have gained momentum recently.
The courts have also adopted various policies and principles to restore the
environmental degradation and damages. However the matter with regard to the
imposition of the sanctions for the violation of the environmental laws has
sill remained a dream. Though some efforts have been made and imposition of
fines/imprisonment is done but most of the cases have viewed the problem more
from the civil perspective than that of criminal responsibility.[3]
Sarah D. Himmelhoch said that the current
environmental problems fall into 3 general categories: Resource depletion, Climatic
changes and Waste disposal. Traditional criminal law is inappropriate to
control the above problems. This is because they are the result of the millions
of small actions that are not prone to prevention through the use of
traditional law. The effort and time to address each individual action would
outweigh the benefits of such program. People and organisations release toxic
waste and also engage in actions that harms significantly the environment.[4]
Now we come
to the question as to what is corporate crime. With the varying degrees of
seriousness, crimes impacting the environment are happening all the time and
are being committed not only by the individuals but also by the
businesses/corporate bodies/organizations.[5]
The term ‘corporate environmental crime’ can be defined as any environmental
crime which is committed by the corporate body. This includes fly-tipping
(illegal dumping of the waste), fly-posting (plastering public spaces with
advertising posters thereby ruining the area). It also includes other pollution
incidents whether as a result of chemicals/general sewage of waste/farm slurry
being discharged into the water.
Corporate
Green-washing is the term used by the civil society activist/environmental
activists to expose the dirty game played by the large corporations. It is a
kind of reputation washing under the cover of environmental concerns.
Blue-washing is another kind of reputation washing by using an affiliation with
the United Nations. It simply means that the corporate violator of the
environmental laws would become the greatest saviour of the environment with
the help of money infused into media campaigns. Kenny Bruno (environmentalist) said that the world’s leading ozone
destroyer takes the credit for the leadership in ozone protection. A major
agrichemical manufacturer trades in a banned hazardous pesticide and implies
that it is actually helping in feeding the hungry. A petrochemical firm uses
the waste from one polluting process as raw material for another hazardous
process and still boasting it as a recycling initiative. Big MNCs cuts timber
from virgin rainforest and replaces it with monoculture transplantations
thereby calling it as sustainable forest development project.[6]
The
green-washing is basically the mechanism to fool the regulators and innocent
public as they get carried away by the false claims made by these corporations
about their environment friendly measures. These games are played with the
regulators and the compliance done is with the objective of making a good image
initially and violating the rules/regulations later. For example a company
having many industrial units may show a strict compliance and gain confidence
of the authorities. Through the corporate social responsibility they have also
gain the confidence of the local people. Under the garb of this many other
units would be passed unchecked or with minimum checking. Company even does not
hesitate to bribe the official which opens up another channel of crime. Even
India has incorporated the provisions of Corporate Social Responsibility in the
Companies Act through the 2013 amendment.[7]
Environmental
crimes are not easy to understand. This could be because of the lack of
information about the legislations, reckless/negligent/intentional/deliberate
violation. To assess the situation from each of these perspectives it is
important to tackle the environmental crime problems. Most of the environmental
damage arises not from malice but from ignorance of the environmental impact of
one’s actions/one’s obligations under the law. Unless and until there is a real
threat of being detected, the offender will continue to commit the crime. Other
problems are like inconsistent approach of the enforcement agency, low
penalties etc. According to the Environmental Industries Commission (UK), low
fines sends a wrong message in trying to create a culture where environmental
compliance is taken seriously by the industry. The experience says that
companies are willing to pay a fine than to properly address their
environmental performance because it serves economical to them. Current fines
are low and inconsistent therefore the need of the hour is to raise it so that
it deters the companies from polluting the environment. Those companies who are
not dissuaded from their illegal activity by the threat of detection,
prosecution and sentencing (financial penalty/custodial sentence) other means
must be searched in order to ensure their compliance with the environmental
legislations/regulations. More expansive conception of environmental crime
control which would harness the institutions is the need of the hour. A
comprehensive approach is required which will improve the environmental
performance and also prevent the environmental crimes.[8]
On 3rd
December, 1984 the gas leak at a Union Carbide agrochemical plant in Bhopal
(Central India) took place. Bhopal Gas Leak Disaster (India) involves a gas
leak in an Indian Subsidiary of Union Carbide claimed more than 8000 in its
immediate wake. Even today the death toll is well over 20,000. 120,000 survivors
are in desperate need of medical help for chronic exposure induced diseases,
breathlessness, persistent cough, loss of appetite, recurrent fever, early age
cataracts, back/body aches, loss of sensation in limbs, weakness, depression,
anxiety, fatigue, menstrual irregularities etc. this leak was found to be due
to the negligence and recklessness of the higher officials. This crime took an
International dimension as the US holding company was evolved.[9]
Exxon Corporation paid around $125 million for the 1991 Valdez oil spill for
the unforeseen and direct damage to the Alaskan Wilderness and fisheries. It is
contesting another 5 million dollars as punitive damages. Others in line were
Chevron, Marathon oil, Unalocal Corporation. They pled guilty to criminal
violations under the Clean Water Act. This shows that the major violations
related to environmental pollution is done by oil companies.[10]
Between
February 2000 and August 2001, DLH Nordisk (an importer in Denmark) purchased
the Mahogany from 5 companies at the forefront of an illegal chain of supply in
Brazil.[11]
TCR case is an illustration of the crime-facilitative industries in which one
can discern a disproportionate and recurring pattern of criminal activity. The
actions of the TCR were not only that of breach of the contracts but also
causing serious environmental offences. Even lax government enforcement of
regulatory laws hampered the obstruction of such crimes. The company was able
to receive substantial subsidies despite the warning to the officials regarding
the criminal records of the principal managers. The individuals were finally
tried and convicted for sentences ranging from 3 to 6 years. The Norlisk Mining
Company produces a 7th of all factory pollution in Russia (2 million
tons of waste gas and 85 million cubic meters of dirty water annually). The
effect of the same is also felt in Norway and Canada. Thus the life-expectancy
of factory workers in the sub-Arctic Siberia is 10 years below the Russian
average.[12]
Corporate Criminal Liability Under
The Environmental Legislations
The Bhopal
Gas Leak disaster[13]
raised the very pertinent issue of the environmental pollution in a grand way.
It even hit the International news stands and discussions as corporate crimes.
Today degradation/pollution of environment has become a global problem. India
being a party to the global environment consciousness has enacted three
anti-pollution legislations (Water (Prevention and Control of Pollution) Act, 1974,
Air (Prevention and Control of Pollution) Act, 1981, Environment (Protection)
Act, 1986). These laws have included both natural as well as legal persons as
the potential polluters of the environment and subjected them to criminal
liabilities for failing to adhere to the prescribed environmental standards.[14]
However the quantum of liability imposed on the individuals appears to be
adequate and appreciable but the same is not true in case of corporations. The
liabilities in case of corporations for curbing their injurious activities to
the environment are grossly inadequate. It is failed to deter the huge
enterprises and transnational corporations and is not able to thus prevent them
from causing deterioration of the environment.[15]
There is inconsistency in the punishments in the different laws. This raises a
conflict thereby hindering the proper functioning of such enactments. This
inconsistency is taken advantage by the corporations and they get through the
crime by paying minor penalties.
Pollution
Control Boards and Environmental Protection Agencies are empowered to prosecute
environmental offenders and to prevent the further degradation of the
environment. The Supreme Court in case[16]
directed the Sterlite Industries to deposit 100 crores rupees as a compensation
for its copper plant on Tuticorin which was ordered by the Madras High Court to
be closed down. Due to the political interference these Boards are restrained
from discharging their functions. The political parties are reluctant to
prosecute the MNCs, TNCs and domestic corporations since the country receives
huge taxes from them which add to the economic development of the country.
This
inadequate legislative response was many times cured by the judicial wing of
the State but it has its own limitations. In case[17]
the Orissa High Court categorised the environmental law liabilities as follows:
·
Criminal liabilities- In recent years the regulatory
agencies have shown increased willingness to prosecute the environmental
offenders. The number of criminal offences for non-compliance is huge. Private
prosecution is also possible. Generally fines are charged from the offenders.
For serious offences even imprisonment is incurred on directors and senior
managers of the corporations.
·
Clean up Costs- The environmental laws gives the power
to the authorities to clean up the premises after the pollution incident and to
incur the costs from the polluter.
·
Civil Liability- There is a growing trend of tort
claims and environmental actions against the perpetrator of the environmental
crimes.
·
Administrative Sanctions- The regulator has been given
the power to suspend vary or revoke the license of the corporation which helps
the environment in the long run.
·
Adverse Publicity- The bad publicity leads to great
economic damage to the company’s reputation thus deterring it to be cautious in
the future and to adhere by the strict norms of the environmental laws.
The
criminal liability for environmental offences has been adhered to only in few
cases. On the other hand after the formation of National Green Tribunal there
has been effective and expeditious disposal of environment related cases. It
has helped in protecting, preserving and conserving the environment including
the natural resources.[18]
The infamous Bhopal tragedy shows the drawback of our legal system. It is the
biggest instance of corporate crime. This highlights that the law is only a
part of the equation and the determination on the part of those applying/enforcing
the same is also important. The Indian government insisted on the conjoining of
all claims against the Union Carbide into a single action. The criminal case of
culpable homicide against the officials and Union Carbide were dropped. In India
the criminal law proved wholly inadequate and indeed was largely swept aside by
focusing on the civil law claims. The Indian government was simply lacking the
fortitude to take on the Union Carbide and its lawyers in either the civil
courts (US) or in the civil/criminal courts (India). Thus the Indian criminal
law remains substantially underdeveloped in dealing with the corporate criminal
liability.
Even the
Judiciary has avoided the question of the applicability of mens rea to the
corporations on the ground that it is not the appropriate case to answer the
question. The case[19]
held that even the corporations can be held liable under the criminal law and
huge fines as a penalty can be incurred from these corporations. Though the
corporation has no mind/body of its own still by way of the alter-ego theory,
the Board of directors, officers, etc. can be imprisoned under the criminal law
since they are the directing minds of the corporations. This case overruled the
case[20]
in which it was held that the corporations cannot be held criminally liable
since they have no mind/body of their own.
Section 58[21],
section 47[22],
section 40[23],
section 16[24],
section 16[25]
and section 27[26]
talks about the liability of the offences committed by the companies under the
various environmental enactments. The environmental law incorporates the
principle of strict, absolute and vicarious liability. There is a general and
common definition given under the environmental laws for the company. The
company means body corporate and includes firm/other association of
individuals. The various sections states that where any environmental offence
is committed by the company then every person (who at the time when the offence
was committed) was directly in charge and was responsible to the company for
the conduct of the business would be deemed to be guilty along with the company.
Thus they are liable to be prosecuted and punished accordingly. It further
states that where the offence committed by the company is done with the
consent/connivance or neglect can be attributed to any director, manager,
secretary, officer of the company then they would also be held liable along
with the company. There is a general presumption of guilt on their part and the
burden of disapproving the same lies on them. They can take the defence of due
diligence or no knowledge. The accused in such cases has to prove that the
offence committed under the environmental enactments by the company was without
his/her knowledge and even when he/she became aware of the same he/she
exercised due diligence to prevent the commission of the said offences. It is not
enough that they took the normal standard of care but they must show that they
took every reasonable precaution. The law expects every person to act freely,
reasonably and diligently.
Conclusion
The 42nd
Amendment[27]
to the Indian Constitution added Article 48A and Article 51A (g) thereby leading
to the evolution of environmental jurisprudence. Article 48A of the
Constitution of India gives the directions to the State that it shall endeavour
to protect and improve the environment and also to safeguard the forests and
wild-life of the country. Article 51A (g) is the fundamental duty of every
Indian citizen to protect and improve the natural environment (including
rivers, forests, lakes, wildlife) and to have compassion for living creatures.
The various environmental legislations were founded in compliance with these
constitutional ideals. The environmental legislations are very fine in our
country. The legislative intent is reflected in every provision. The general
legislation like Environment (Protection) Act, 1986 and the various special
legislations like Air Act, 1981, Water Act, 1974 cover every aspect of the
environment. Even the Forest Act, 1927 and Forest (Conservation) Act, 1980
protects and preserves the flora of our country. Fauna on the other hand is
protected by the Wildlife (Protection) Act, 1974. National Green Tribunal is
working greatly and is incorporating various principles like polluter pays,
precautionary principles in dealing with the preservation and protection of the
environment. The Public Liability Insurance Act, 1991 is providing immediate
relief to the victims of the accident by making the public liability insurance
mandatory.
Despite the
above constitutional and statutory safeguards the environmental degradation
does not stop. In meeting the challenges of the Globalisation, environmental
laws are relaxed. This provides a favourable environment to the Multi-National
Companies and they exploit the environment without giving it enough time for
rejuvenation. The discharge of pollutants in the air/water affects the health
not only of the animals/fishes but also of the plants which in the long run
affects the food-chain. The diseases and other health issues among the humans
also increase. The debate between the choice of development and environment
protection always rises. But seeing the scenario we are ignoring the basic
premise of sustainable development that is the development must not be done in
a manner that future generations would be left with nothing. The laxity on the
part of the government shows that it is only concerned with the filling of
their coffers and is not concerned with the environment.
The poor
regulation on the part of the government, corruption and lack of awareness
among the public encourages these big shot companies to commit environmental
violations. The Environmental Impact Assessment (EIA) which is to be mandatory
carried down before the construction of industries/factories is not complied
with and even if it is done then the reports gets manipulated. This is done by
bribing the Indian officials directly or through political interference. No
matter how well drafted the legislation is but its success depends upon how
well it is implemented. Implementation becomes a problem. The Supreme Court by
relaxing the locus-standi rule have evolved the principle of ‘public interest
litigation’ where by a highly public spirited individual can file a PIL under
the Supreme Court for preservation and protection of the environment. But recently
it has been seen that PIL is used as a tool to get publicity or for personal
vendetta against the respondent. If we want to improve as a Nation the need of
the hour is to sensitize ourselves to the environmental chaos we are living in.
Another
problem lies with the inadequate fines under the environmental legislations.
The MNCs prefer to pay the fine as penalty than by complying with the
requirements of the enactments since it serve more economical to them.
Therefore the need of the hour is to increase the penalties to a huge amount
and huge discretion must be given to the Court so that it can impose such fines
meeting the demands of the justice in particular facts and circumstances of the
case. The problem often comes with the dealing of corporates since there is no
proper jurisprudential understanding regarding the crimes. But with the above
enactments and judicial decisions it is clear that the directors etc. along
with the company can be punished either or both with the imprisonment and
fines. These white collar criminals are also dealt in the socio-economic
legislations and the standard for punishing them has been changed. Strict and
absolute liability principle governs the environmental statutes. The procedure
and evidence is not entirely governed by the general statutes like the Code of
Criminal procedure, 1973 and Indian Evidence Act, 1872 and the NGT can also
take help of precautionary and polluter pays principle.[28]
When it is believed that irreparable damage will be caused to the environment
the enterprise can be held liable even when as a matter of scientific certainty
the same cannot be validated. The developer/occupier of the factory is presumed
to be guilty and he/she has to prove that his/her acts are environmentally
benign. The polluter has to pay to the victim for all the damage caused and
also the restoration costs that will be incurred for restoring the environment
to a state prior to the damage caused by the polluter.
Another
issue is that not very much significance is given to environmental crimes as it
is given to other traditional crimes. This could be because of the imagination
one has due to what one reads or sees. Even movies, fictions and novels focus
more on the traditional crimes than on the environmental ones. Even today most
of the jurists see environmental law as largely covering civil liabilities and
even if some criminal liability is recognised then that is largely of huge
fines. This has given lot of incentives to the corporates and big
Trans-National Corporations to work secretly and exploit the environment
unscrupulously. Afforestation and reforestation must be adhered to especially
on sites where large deforestation has been caused for the construction of
factories/industries. Right to healthy environment has been recognised as a
fundamental right under Article 21 of the Indian Constitution. Article 21
states that no person shall be deprived of life and personal liberty except
according to the procedure established by law. It not only means a mere animal
existence but includes everything that makes the life of an individual worth
living or meaningful. Thus everyone should realise that it not only that they
have the right to healthy environment but also have the duty to
protect/preserve the environment for others. The State is also obligated to
preserve and protect the natural environment. As a welfare state it has to keep
the balance between the economic needs of the Nation and the environmental
protection. Development must not bring along with it the ill-effects on the
environment. The State must ensure that the corporate social responsibility as
mandated by the Companies Act, 2013 must be done by the corporations in a
manner improving the environment and preventing the environmental damage.
Though it
is true that the corporations don’t have the body on which imprisonment can be
incurred. They even don’t possess the mind by which the intention to commit a
crime can be imputed. But none the less the directing mind is the Board of
Directors. Even other officers like manager, secretary can be punished if they
had sufficient knowledge of the acts committed by the company thereby damaging
the environment. This is clear at least on text of the law but the practical
implication of the same becomes difficult especially when the corporation is
very big and huge both in size and reputation. Thus there is a need of
effective amendments in the environmental legislations for adequate fines, for
sensitizing the public of how grave the environmental damage can be in the long
run and also for inculcating the ethical values in the regulatory authorities
so that they can also shoulder the burden of protecting/preserving the
environment and don’t fall into the hands of the greedy powerful business
enterprises.
Bibliography
- Primary
Sources:
a.
Statutes:
·
The Air (Prevention and Control of Pollution) Act,
1981.
·
The Companies Act, 2013.
·
The Constitution (Forty-second Amendment) Act,
1976.
·
The Environment (Protection) Act, 1986.
·
The National Green Tribunal Act, 2010.
·
The Public Liability Insurance Act, 1991.
·
The Water (Prevention and Control of Pollution)
Act, 1974.
·
The Wild Life (Protection) Act, 1972.
b.
Case Laws:
·
Assistant
Commissioner, Assessment-II, Bangalore and Ors. v. Velliappa Textiles Ltd. and Ors., AIR
2004 SC 86.
·
Centre for
Environmental Law World Wide Fund for Nature, India v. State of Orissa, AIR 1999 Ori 15.
·
Standard
Chartered Bank and Ors. v. Directorate
of Enforcement and Ors., AIR 2005 SC 2622.
·
Sterlite
Industries (India) Ltd. v. Union
of India (UOI) and Ors., (2013) 4 SCC 575.
·
Union
Carbide Corporation v. Union of
India, 1989 SCC (2) 540.
- Secondary
Sources:
Books/Articles/Reports:
·
Dr. Vijay Kumar, “Criminal Liability of
Corporations-An Environmental
Perspective” in G. Radha Kalyani (ed.), Criminal
Law and Environment, (Amicus Books, ICFAI Press, 2009).
·
Corporate Environmental Crime, Second Report of
Session 2004-05, UK House of Commons Environmental Audit Committee (January 26,
2005).
·
Grabosky, Peter and Frances Gant, “Improving
Environmental Performance, Preventing Environmental Crime” 27 Australian
Institute of Criminology Research and Public Policy (June 2000).
·
Indrajit Dube, Environmental
Jurisprudence: Polluters Liability (LexisNexis-Buttersworth, 2007).
·
Nick Walsh, “Hell on Earth” The Guardian, April 18, 2003.
·
Vijay Kumar Singh, Corporate Power to Corporate Crimes: Understanding Corporate Criminal
Liability in India (Satyam Law International, New Delhi, 2013).
Article Information
Corporate Criminal Liability With Respect To Environment (By- Muskan Sethi)
Author Name: Muskan Sethi
Title: Corporate Criminal Liability With Respect To Environment
Email Id: muskansethi2001@gmail.com
- Journal IJLRA
- ISSN 2582-6433
- Published 2022/06/29
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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